Celtic plc Annual Report

Year Ended 30 June 2004

CONTENTS

Chairmans Statement Highlights of the Results Operating Review Financial Review

1 2 3 7

Directors Report Corporate Governance Remuneration Report Statement of Directors Responsibilities

13 17 19

23

Five Year Record Independent Auditors Report to the Members Celtic Charity Fund

23

Group Balance Sheet Company Balance Sheet

28 29 30

Notice and Notes Explanatory Notes Directors, Officers and Advisers

45 46

24 Group Cash Flow Statement 25 Notes to the Financial Statements 31 48

Group Profit and Loss Account 27

Chairmans Statement Brian Quinn CBE

...further progress in building the Celtic brand and the business.

The last twelve months at Celtic were marked by outstanding success on the football field and further progress in building the Celtic brand and the business. Participation in European competition was essential to our financial performance. Endeavouring to sustain our footballing success without running excessive risks with our finances remains the principal challenge looking ahead. Conditions for Scottish football clubs remained very difficult and, indeed, several SPL clubs either went into administration or came close to doing so. The measures taken to deal with this situation were severe, and in some cases drastic, involving the reduction of playing squads, outward transfers of players and reductions and delays in players' wages. It is too early to say what the effects of this crisis management will have on the longer-term quality of Scottish football. But clubs have faced up to the need to take these difficult decisions which, over time, should go a considerable way to restoring equilibrium and, one hopes, greater competitiveness to the domestic game. The current imbalance in Scottish football competition may work to Celtic's short-term advantage, but has reduced the economic value of the local football product, with predictable effects on all sources of income.

In these circumstances Celtic has worked hard to remain on course to achieve a sustainable balance between football progress and financial stability. Let me emphasise how difficult it can be to achieve those objectives. Success may or may not generate further success in football; but it certainly feeds expectations among supporters and demands by the media. Those expectations and demands have to be managed in a climate in which public focus on finances becomes important only when serious problems arise. Many are guilty of assuming that these problems only happen to others. That said, Celtic supporters have again shown themselves to be quite extraordinary in their loyalty and commitment. During the year the Presidents of both FIFA and UEFA came to Celtic Park to present awards to our supporters, a unique accomplishment. It is a matter of great pride that our supporters have drawn attention to themselves in a wholly positive way. At a time when attendances in Scotland have been falling, our sales of season tickets have been maintained at the highest level in the UK. The average paid league attendance at Celtic Park last season rose to 58,420 with over 1.75 million supporters attending the 31 home matches played. On the field, Celtic recorded a number of achievements. The Bank of Scotland Premierleague was won by a margin of 17 points and the title secured in mid April while the team was still unbeaten. All four league games against our closest and oldest rivals were won; and victories were posted in 25 consecutive games, breaking a Scottish record of some 40 years standing. Celtic also won the Tennents Scottish Cup for the 39th time; making it the 13th time we have won the double. In Europe, Celtic was again unbeaten at home in both the UEFA Champions

League and the UEFA Cup. Narrow defeats away from home in Munich and Lyon meant that the team did not go on to the knockout stage of the UEFA Champions League; but it did reach the quarter-final of the UEFA Cup after a memorable victory over Barcelona. Deprived through injury of 3 of our 4 recognised strikers, Celtic went out to Villarreal. Once again Martin ONeill, supported by his very able staff, has given the team great leadership and drive. He has also introduced several members of our Youth Team to the first team squad. Celtic's under 19 and under 21 squads both won their league championships last season, a very important development looking ahead to our fortunes on and off the field. The departure of Henrik Larsson after 7 marvellous seasons at Celtic cannot, of course, be seen as anything other than a matter of great regret. We will miss him, no doubt, and wish him every success at Barcelona. Total turnover rose for the 10th successive year to 69.02m, an increase of 14%. Revenues from football also rose by some 14%, while merchandising again grew strongly, recording a 17% increase to 13.42m. Indeed revenues rose in almost all areas of the Company's business including this years European campaign, which generated a contribution to operating profit of 11.50m in comparison to 10.23m last year. The higher level of activity during the year had its effect on operating expenditures, which rose by over 19% to 64.15m, with increases in the cost of sales, labour costs and other overheads. The increase in professional and youth football costs, at 20%, reflected primarily contractual salary payments and bonuses payable in respect of football success domestically and in Europe.

As a consequence, profit from operations declined from 6.73m to 4.87m and, taking account of amortisation and other operating expenses, pre-tax losses increased from 5.79 m to 7.47m. There was no tax charge this year. Interest payments on debt rose from 1.21m to 1.33m as interest rates rose steadily during the year. However, with total debt falling to 15.80m, compared to 17.78m a year ago, these costs were lower than would otherwise have been the case. Looking ahead, there are some other significant positive points to make. We have taken steps to improve our infrastructure, with the quality of the players' facilities at Celtic Park materially enhanced and further improvements in entertainment and corporate facilities under way. A rationalisation programme to reduce non-football costs will yield further savings going forward. Pressure on retail merchandise margins, which is general in football, should be offset by the modernisation of the Celtic Superstore and the opening of new stores. Equally, the decision to retain the conference and banqueting business in-house should bring additional financial benefits. The biggest test is to control football costs, while meeting our objective of maintaining the quality of the football squad. In the short term this is proving a taxing challenge to the Company. As I pointed out in previous Annual Reports, contractual commitments entered into when conditions were quite different, together with the bonuses necessary to

Highlights of the results

Winners of the Bank of
Scotland Premierleague, the Tennents Scottish Cup and UEFA Cup Quarter Finalists.

reward success in domestic and European football, have pushed up football costs this year by an amount that cannot be sustained without additional revenues. Total labour costs, at 58.7% of turnover have moved up by over 4%. As players' contracts expire and the current deceleration in contracts feeds into our cost base, we should be able to look forward to recovering lost ground; but in the meantime we will have to continue to seek economies in this crucial area of the business. The arrival of Peter Lawwell at the end of October of last year as Executive Director, Head of Operations is already showing welcome and positive results. He has tackled the issues facing us with vigour and sensitivity. He and Martin ONeill have worked closely together during the year to manage our affairs on and off the field. The Celtic name and the Celtic brand, our reputation for good football and careful management of our business, and our standing in European and global football have, I believe, been enhanced in the last twelve months. It is no exaggeration to state that this is a continuing struggle, given the issues confronting football clubs in Scotland and abroad. Your Board and management give their time and energies tirelessly to keeping Celtic moving forward. We look for your continuing support in the year ahead. Brian Quinn CBE Chairman 16 August 2004

Turnover increased by
14.0% to 69.02m.

Operating expenses
increased by 19.2% to 64.15m.

Profit from operations of

4.87m (2003: 6.73m).

Loss after taxation of

7.47m (2003: 11.66m).

Year end debt of 15.80m

(2003: 17.78m).

Extended contracts have

been awarded to Chris Sutton, Alan Thompson, Jackie McNamara, Stanislav Varga and a number of the younger first team players.

Operating Review Executive Director, Peter T Lawwell

INTRODUCTION The last 12 months have seen Celtic record a series of notable on-field successes, including reclaiming the Bank of Scotland Premierleague title, winning the Tennents Scottish Cup and, for the second year in succession, delivering a very strong run in the UEFA Cup after narrowly missing out on the knockout stage of the UEFA Champions League. After such a historic European run the previous year, it is to the great credit of everyone involved with the Club that high standards have been maintained in the past season, perhaps most notably in the two emotionallycharged matches against Barcelona. Automatic qualification for the group stage of the UEFA Champions League for the first time ever is a tangible reward for the superb efforts of the team under the inspirational leadership of Martin ONeill and his two assistants, John Robertson and Steve Walford. Off the field, a comprehensive business review was conducted leading to a revised 5-year plan, designed to achieve improved levels of financial performance, efficiency and customer service at the Club. The overall objective is to support our main business driver - a winning team on the field. The review identified the need for a number of changes, which resulted in the implementation of several revenue generating initiatives and a rationalisation programme that will improve the Clubs cost base going forward. Given the excellent football achievements of the past few seasons, there is undoubtedly a strong degree of anticipation for the season ahead, and the changes we have implemented are designed to help ensure, wherever possible, that our fans, investors and all those associated with Celtic have further cause to celebrate.

FINANCIAL PERFORMANCE For the tenth consecutive year, the Group has recorded increased turnover, up by 8.45m, 14%, to 69.02m. This is particularly encouraging as the team played 31 home games in the year, in comparison with 32 home games and a UEFA Cup final the previous year. Operating expenses increased by 19.2% to 64.15m, primarily due to the increased business activity, particularly in merchandising and catering, and the increase in investment in football salaries and bonuses. This increase is net of the initial overhead savings achieved through the cost rationalisation programme. The amortisation charge was 10.77m, 4% up on last year. The pre-tax loss of 7.47m reflects the fact that, despite excellent on field performances and success, there are still significant challenges in balancing the costs of achieving football success with long term financial stability. Total debt fell from 17.78m to 15.80m.

In previous years Celtic incurred significant levels of investment in transfer fees. This investment has resulted in an amortisation charge in the current year of 10.77m. As player contracts terminate and the value of transfer fees decline the annual amortisation charge is expected to decrease. Celtics approach to maintaining the standard of our team combines three elements: new player signings; contract renewals for proven, successful performers at the Club; and, importantly, the development and retention of our exciting young talent. Stephen Pearson was acquired from Motherwell in January 2004 on a four and a half year contract and played a meaningful role in the successes of last season. Since the year end Henri Camara has been acquired from Wolverhampton Wanderers on a loan agreement with an option to acquire the players registration. In addition, a sizeable investment has been made in retaining the services of a number of key players who have been central to the success of the club in recent seasons. In all, 17 players were given contract extensions, including core team members such as Alan Thompson, Chris Sutton, Jackie McNamara, Stanislav Varga, Shaun Maloney, David Marshall and John Kennedy. Notwithstanding the difficult football market, retention of such talented players is not achieved without financial impact. Maloney, Marshall and Kennedy are excellent examples of the benefits now being realised from Celtics strong investment in youth development in recent years, and in addition, exciting young players such as Aiden McGeady, Michael McGovern, Kevin McBride and Gary Irvine have agreed extended contracts.

FOOTBALL INVESTMENT The current financial climate in football remains extremely difficult, with clubs in Scotland, England and indeed worldwide experiencing major challenges in balancing financial stability with football success. However, I believe that our recent fiscal policies place us in a better position to deal with these challenges than many of our competitors. Total football labour costs rose from 27.9m to 33.5m, predominantly due to success bonuses and increases in basic salaries to maintain the quality of the squad. This cost reflects a continued and significant investment in the football operation and cannot be sustained, in the long term, without increased revenues.

In total, Celtics first team squad includes 15 full internationalists and 4 current Under 21 internationalists. The requirement to improve the level of training facilities has long been recognised. A number of options have been considered and narrowed. Negotiations with interested parties are being conducted and we hope to make a decision in the course of the current year. FOOTBALL OPERATIONS Revenues from Football Operations increased by 4.25m, 13.9% from 30.48m to 34.73m, despite one less home game being played in the year. This uplift in turnover was largely as a result of the continued high take-up of standard season tickets following a price increase of approximately 3%, together with the revenues generated from participation in the group stage of the UEFA Champions League and success both domestically and in reaching the quarter-final of the UEFA Cup. Ticket demand during season 2003/04 was unprecedented. The ticket office sold 50,618 Standard Season Tickets and 2,540 Premium Season Tickets. In addition to season tickets, a total of 631,726 match tickets were sold for the seasons 31 home matches and a further 168,000 tickets were sold for away matches which meant the Club handled 86,000 more tickets than the previous season. Increased ticket sales were largely as a result of qualification for the group stage of the UEFA Champions League, which provided 174,000 sales and saw the Club effectively achieve capacity attendances for all three home matches. During March, the Club was drawn at home against Rangers in the Tennents Scottish Cup and Barcelona

in the UEFA Cup, meaning over 113,000 tickets were sold for both matches within a two-week period. Demand at these levels brought into focus the need to improve customer service in this crucial area, and two major initiatives have been launched to make it more convenient for fans to purchase tickets in future. An online ticket sales option was introduced which has proved highly successful, enabling season ticket holders, for the first time ever, to use the Internet to purchase tickets for their regular seats for non-season ticket matches. This option was also available for season ticket renewals and almost 7,000 supporters renewed their season tickets in this way. For the forthcoming season, the ticket office has selected Ticketmaster, an experienced business partner, to handle all telephone ticket sales for home matches, a move which will greatly reduce waiting times and offer a significantly improved service to supporters. YOUTH DEVELOPMENT The Club is now beginning to reap the rewards of increased investment in identifying and nurturing some of the best young talents in the UK. This is testament to a combination of hard work and commitment by our youth development team and suitable provision of funding. Whilst the quality and number of home-grown players making an impact on the first team will always be the most important determining factor in the success of the Clubs youth development programme, the sterling achievements of our youth sides give much cause for confidence. Both the Under 21s and the Under 19s won their respective League Championships and

the Under 17s enjoyed an unbeaten season at home and abroad, including matches against Liverpool, AC Milan, Arsenal and Brescia. Former youth players Craig Beattie, Ross Wallace, David Marshall, Stephen McManus, Aiden McGeady, John Kennedy, Liam Miller and Shaun Maloney continued to contribute significantly to the success of the first team, making 141 appearances in total. Continued investment in the Clubs Youth Academy, of 1.5m per annum, together with ground-breaking structural improvements in coaching, scouting and sports science have seen the set-up at Celtic rightly regarded as one of the most advanced and successful in Europe, which certainly bodes well for the future of the first team in the years ahead. Donations from Celtic Development Pools continue to provide much of the funding for the youth development operation noted above. Operating in a mature market place Celtic Pools, primarily through its weekly lottery and the match day lottery the "Paradise Windfall", has once again donated more than any other football lottery operator in Britain. The weekly pool operation involves around 1,000 agents collecting lottery stakes from 38,000 stakeholders around the country. The Paradise Windfall pays out the largest single cash prize in UK football. The development income for the year was 1.36m, which was slightly down on the previous year due to one less home game.

Operating Review Executive Director, Peter T Lawwell

MERCHANDISING Merchandising again reported significant revenue growth in the year of 1.97m, 17.2%, following the successful away kit launches in August 2003 and May 2004 together with sales of Seville and Larsson merchandise remaining extremely buoyant throughout the year. In addition, the "100 Years of the Hoops" home strip is now the most successful ever, with sales of approximately 100,000 units from Celtics retail outlets alone prior to 30 June 2004. The green away kit launched in May 2004 also reached record levels and surpassed the highly successful black away kit. The superstore at Celtic Park was refurbished in February and this has resulted in a significant uplift in revenues. The opening of the new store at Glasgow Airport in June 2004 increased the number of Celtic merchandise stores to ten. During the year additional concession stores were opened within Debenhams in Inverness, East Kilbride, Stirling and Dundee. Further investment is planned in new units and to improve distribution and the home shopping operation that has seen e-commerce revenues increase by 61.5% in the last year. MULTIMEDIA The Clubs multimedia division has benefited from the impact of the first teams on-field performance. Multimedia revenues at 16.06m are up by 462,000, 3%, on the 15.60m achieved in 2003 with all major revenue streams at or in excess of last year. Income from the sale of television rights continued to benefit significantly from European progression and was comparable with that reported last year. The Scottish Premier League Limited has sold the live television rights to domestic

league games to Setanta Sport for 4 years commencing in season 2004/05 on a subscription basis, the success of which will be based on the number of subscribers secured. During the year, progress was achieved in the development of Celtic TV as a pay per view product. Improvements in the quality of production and presentation resulted in approximately 150,000 purchases in respect of the eight matches screened. This represents an uplift of over 100% on the customer levels achieved in the previous year. Advances were also made in respect of internet broadcasting with the launch of Celtic Live in November 2003, running in parallel with the popular Celtic Replay. As a result our increasing number of subscribers had access to either match highlights or live Bank of Scotland Premierleague action via the internet. This subscriber base is anticipated to grow as the availability of broadband becomes more widespread and plans are currently being advanced to supplement the content currently available such that the service to subscribers is enhanced. The development of Celtic TV including the successful pay per view events initiated further discussions regarding the concept of a club channel. Plans were formulated to enhance Celtics broadcasting capability and in June 2004 a joint venture was agreed with Setanta Sport (PPV) Limited creating a dedicated Celtic TV channel. A further development of multimedia was the in-house production of 3 DVDs "The Bhoy Who Would be King", "The Beating of Barca" and "In a League of Their Own". Given the success of the DVDs it is planned to continue this initiative.

It was also encouraging that publishing income, represented mainly by the Celtic View and matchday programme, was maintained at levels consistent with last year despite the multitude of competitive information channels. PARTNER PROGRAMME The partner programme, established during the 2002/03 season continued to go from strength to strength during 2003/04. Last year saw the introduction of Coors Brewers Limited as our shirt sponsor with their Carling brand, T-Mobile as the official mobile communications network for the Club and MBNA as the Clubs official credit card partner. These three joined our long-standing partners Umbro and Phoenix. This season we have added three new partners to the programme: Lonsdale Travel Group as the official travel partner, Primus for fixed line telecoms and Ladbrokes.com for online betting. STADIUM The Stadium Division reported an uplift in income in the year of 109.8% to 3.45m, largely as a result of changes to catering and hospitality noted below. This year catering generated sales of 2.96m in comparison to fee income of 1.09m last year. Income from external security and stewarding contracts awarded to Protectevent Limited was down on last year. CATERING AND CORPORATE HOSPITALITY Season 2003/04 was a period of significant change for retail and concourse catering and corporate hospitality. The conclusion of the previous arrangements with Sodexho in summer 2003 meant that all catering services were once again based in house. We have seen significant improvements in quality, service and financial performance.

In addition, as part of the rationalisation programme, non-profit making areas were closed. However, in keeping with the objectives of greater company efficiency and financial performance, we have decided to sub-contract out the concourse catering operation on a five-year contract to Lindley Catering Limited from Season 2004/05. STADIUM DEVELOPMENT Season 2003/04 saw the completion of the dressing rooms, players` facilities and on site medical treatment facilities within the South Stand. Further internal refurbishment works, primarily to the main reception, corporate entertainment areas and public corridors and stairwells commenced at the start of the close season. These works, together with the formation of a new "Champions Club" lounge facility within the North Stand are part of the Clubs Five Year Stadium Refurbishment Plan and will ensure that we remain on track to achieve UEFA`s five star stadium status. To maintain the operational integrity of the facility and to ensure ongoing compliance with the requirements of the Stadium Safety Certificate, a number of system improvements are being carried out, most notably the installation of full-height turnstiles, the upgrading of key life support systems and the re-routing of the Celtic Walkway due to the ongoing housing construction works around the stadium. SUPPORTER RELATIONS Once again our fans have surpassed themselves with their financial and emotional commitment to the Club. This is recognised and appreciated and I would like to take this opportunity to thank them. A key element of my role at Celtic is to help ensure the relationship between the fans and the Club is as strong and mutually beneficial as possible. With that in mind, it has been a priority since I joined at the end of October 2003 to increase regular contact with supporters representatives in Scotland, Ireland

and the USA. I have instigated monthly rather than quarterly meetings and it has been extremely encouraging to witness the positive and constructive nature of these sessions and to see the strengthened connections with supporters at this crucial level. Detailed feedback on a range of issues affecting our supporters has been received, and in response I believe that real progress has been made in improving customer service levels in a number of areas such as ticket sales, merchandising and catering. CELTIC CHARITY FUND 2003/04 was a particularly special one for the Celtic Charity Fund, the charitable arm of Celtic Football Club. The Fund reached the fantastic milestone of 1m in funds raised since its formation in 1995. A more detailed report on their activities is contained in pages 25 and 26. The Club would like to thank all those who have contributed to the success of the Celtic Charity Fund including supporters, players, and all those people who make up the Celtic Charity Fund Trustees and Fund-raising action groups. COMMUNITY WORK 2003/04 saw the launch of the Celtic Education Programme initiative in partnership with Glasgow City Council and local schools. The programme uses the focus of Celtic Football Club to develop the skills, motivation and confidence of young people who have faced challenges at school. As well as educational work carried out at Celtic Park, the programme also included sporting activities, with coaching in football and other sports available. Over 90% of pupils responded with an increase in their perceived level of fitness and health. HUMAN RESOURCES I would like to thank all Celtic staff both on and off the field for their contribution to what was another successful year on the pitch. For the non-football staff it was a particularly difficult year with the implementation of the rationalisation plan and resultant redundancies, but

we will put these difficulties behind us and look ahead with confidence. SUMMARY Following on from what was a memorable season in 2002/03, Celtic maintained its European progress in 2003/04 by achieving qualification for the UEFA Champions League group stage and progressing to the quarter final of the UEFA Cup. The Tennents Scottish Cup was secured in addition to winning the Bank of Scotland Premierleague, which provides direct entry into the group stage of the UEFA Champions League in season 2004/05. This entry provides a meaningful revenue stream that will assist with trading activities next year. It is clearly recognised that the football sector remains under severe financial pressure largely as a result of wage inflation in a period when media revenue values continue to soften. Celtic is not immune to this and our task is to achieve a sustainable balance between football progress and financial stability.

Peter T Lawwell Executive Director, Head of Operations 16 August 2004

Financial Review Financial Director, Eric J Riley

ACCOUNTING POLICIES Details of the main accounting policies adopted by the Group are disclosed in Note 1 to the Financial Statements and are consistent with last year.

and is particularly encouraging having played 31 home matches in the current year in comparison to 32 and a UEFA Cup Final last year. This years European campaign with 8 home games has generated a net contribution of approximately 11.50m in comparison to the 10.23m reported from the 7 European home matches and the UEFA Cup Final last season and demonstrates the importance to Celtic of its participation in European competition. This increased contribution together with the uplift in turnover in most areas of the business, as noted below, and the return of catering in-house, which was previously outsourced to Sodexho, has assisted the trading performance of the Group. Operating expenses increased by 19.2% to 64.15m as explained below.

FINANCIAL RESULTS Celtics belief that success on the football field will drive turnover improvements in other areas of the Group was borne out by the financial results for the full year. The Groups financial performance in the current year has been assisted by continuing football success. Participation in the group stage of the UEFA Champions League, progressing to the quarterfinal of the UEFA Cup and domestic success were all instrumental in turnover increasing by 8.45m, 14.0%, to 69.02m. This is the tenth consecutive year in which the Group has reported an increase in turnover

As a result, profit from operations of 4.87m is down on the 6.73m reported last year. The net loss for the year after exceptional costs, amortisation of intangible fixed assets, gain on sale of intangible fixed assets, net loss on disposal of tangible fixed assets, interest and tax amounted to 7.47m in comparison to a loss of 11.66m in 2003. Dividends of 1.45m (2003: 1.46m) are payable, which provides a retained loss for the year of 8.93m (2003: 13.12m).

TURNOVER A summary of turnover per business operation is set out in Note 2 to the Financial Statements and a detailed analysis of performance of each division is given in the report by the Executive Director, Head of Operations on pages 3 to 6.

OPERATING EXPENSES Total operating expenses increased by 10.31m to 64.15m which represents an uplift of 19.2% from the previous year. This increase is primarily due to increased cost of sales, labour costs and other overheads directly related to the increased activity in the year. Cost of sales increased as a result of the uplift in turnover, particularly in merchandising and catering, which reported turnover uplifts of 1.97m and 1.87m respectively. Labour costs increased by 7.42m, mainly reflecting higher contractual remuneration in the football division in the year, bonus payments to the first team and backroom staff in respect of the football success achieved, loyalty payments contained within existing football contracts and the effect of bringing the catering operation back in-house in June 2003. The ratio of total labour costs to turnover has increased to 58.7% from

the 54.6% reported last year. This ratio compares with an average of 61.1% recently reported for the English Premiership in season 2002/03. However the Board recognises the need to maintain strict control of wage inflation in an area that continues to cause concern throughout the worldwide football industry. It is recognised that a large element of our labour cost is fixed because of the duration of many player contracts entered into at the peak of the market several years ago. The incremental revenue from European success is effectively required to enable a favourable labour ratio to be maintained. The intent of the Board is to retain a manageable ratio between turnover and labour costs, whilst acknowledging the sector is financially difficult and supporting the delivery of on-field success. The ability to field a competitive side and retain control on costs remains a challenge.

In addition, matchday costs increased as a result of increased policing charges and UEFA Champions League requirements and there was an uplift in rent and rates following reviews undertaken. Other operating expenses increased in line with trading activity, with no significant variations reported.

EXCEPTIONAL OPERATING EXPENSES The exceptional operating expenses of 390,000 reflect the redundancy and ancillary costs incurred in respect of the rationalisation plan implemented during the year. The previous year the exceptional operating expenses of 872,000 reflect 397,000 of operating costs and 475,000 of impairment provision. The majority of these costs were attributable to the early termination of Rafael Scheidts contract and registration.

Financial Review Financial Director, Eric J Riley

AMORTISATION OF INTANGIBLE FIXED ASSETS The amortisation charge in the year of 10.77m represents an increase of 438,000, 4.2%, in comparison to the year to 30 June 2003, mainly as a result of the additional capital payments in the year to 30 June 2004 and the absence of any disposals during the year with a significant net book value. NET GAIN ON DISPOSAL OF INTANGIBLE FIXED ASSETS The net gain on sale of 306,000 represents the gain on sale of Stephen Crainey to Southampton and Mark Fotheringham to Dundee, offset by the free transfer of Steve Guppy to Leicester City. Last years loss of 70,000 included the disposal of Simon Lynch and Jonathan Gould together with the disposal of certain youth players.

INTEREST PAYABLE The interest payable for the year to 30 June 2004 of 1.34m (2003: 1.21m) reflects interest due on the Groups overdraft, term loans and the Hire Purchase agreement for the big screens. The increase over last year is largely due to the progressive increase in interest rates. TAXATION No provision for corporation tax is required for the year ended 30 June 2004. In the 12 months ended 30 June 2003, the Group wrote off the deferred tax asset of 5.61m and advance corporation tax of 250,000, resulting in a tax charge of 5.86m. The advance corporation tax of 250,000 is recoverable against future taxable profits of the Group. The deferred tax asset not reflected in the Groups Financial Statements at 30 June 2004 of 8.57m (2003: 7.41m) is also recoverable against future taxable profits of the Group.

INTANGIBLE FIXED ASSETS The decrease in the net book value of intangible assets from 30 June 2003 of 8.48m to 12.03m reflects the investment in the playing squad of 2.46m less the amortisation charge of 10.77m and net book value of disposals of 169,000. STOCK The level of stock held at 30 June 2004 of 1.76m compares to 2.06m as at 30 June 2003, which included increased stock of the new home kit launched just prior to the UEFA Cup Final in Seville. The reduction is largely attributable to the uplift in stock at that point in time and improved stock control procedures.

Financial Review Financial Director, Eric J Riley

CREDITORS DUE WITHIN ONE YEAR The increase in creditors due within one year of 3.85m is detailed in note 18 to the Financial Statements. Much of this increase is in respect of the dividend accrual which has increased by 2.54m given that the 4% dividend accrued for the first three years of the Convertible Preferred Ordinary Shares is payable on 31 August 2004. The dividend accrual includes 1.64m which was reported within creditors falling due after more than one year in 2003 as noted below.

In addition, the increase in other taxation and accruals over last year of 2.76m is mainly a result of increased football success and loyalty payments due following completion of the football season. The above increases are offset by a reduction in trade creditors of 1.12m over last year, primarily in respect of a reduction in instalments due for the acquisition of player registrations. The level of deferred income, amounts received prior to 30 June 2004 in respect of the following football season, at 10.91m is marginally ahead of the 10.83m reported last year. CREDITORS DUE AFTER MORE THAN ONE YEAR Creditors due after more than one year is reported as 16.00m at 30 June 2004 in comparison to 19.64m the previous year. This reflects the decrease in amounts drawn down under the Groups 24.00m term loan facility at 16.00m in comparison to 18.00m at the same time last year. In addition the dividend accrual of 1.64m from last year in respect of the Convertible Preferred Ordinary Shares payable on 31 August 2004 is now held in creditors falling due within one year. FUNDING The cash generated from trading operations less the funds invested in tangible and intangible fixed assets has assisted in the net debt at 30 June 2004 reducing to 15.80m (2003: 17.78m). The net debt figure incorporates all bank loans, overdrafts, other loans and cash as detailed in the cash flow statement on page 30.

The Group has internal procedures in place to ensure efficient cash flow and treasury management in order to maximise return or minimise risk where appropriate. Details of the Groups financial instruments and debt profile are included in Notes 18, 20 and 27 to the Financial Statements. INTERNATIONAL ACCOUNTING STANDARDS The Group will be required to first adopt International Accounting Standards ("IAS") when preparing its Financial Statements for the year ended 30 June 2006. Comparative figures for the year ended 30 June 2005, which will be prepared under UK GAAP, will require to be restated and presented under IAS. In preparation for this the Group has, in conjunction with its auditors, identified the key standards which will most likely impact upon the presentation of its Financial Statements. As a result, procedures have been, and continue to be, implemented such that the accounting systems will capture data to facilitate a successful conversion to financial reporting under IAS by the transition date.

Eric J Riley Financial Director 16 August 2004

11

Directors Report

The Directors are pleased to present their report together with the audited Financial Statements for the year ended 30 June 2004. PRINCIPAL ACTIVITY The principal activity of the Group continues to be the operation of a professional football club together with related and ancillary activities. Details of the Groups activities can be found in the Operating and the Financial Review. RESULTS AND DIVIDENDS Turnover has increased by 8.45m to 69.02m from 60.57m in 2003. Operating costs have risen by 19.2% resulting in a profit from operations of 4.87m (2003: 6.73m). The loss on ordinary activities before taxation amounted to 7.47m (2003: 5.79m). The Preference Share dividend of 6% will be paid on 31 August 2004 to

those preference shareholders on the register at 6 August 2004. The Fixed Preferred Dividend (as defined in the Articles of Association) on Convertible Preferred Ordinary Shares of 4% will be paid on 31 August 2004 to holders of those shares on the register at 30 June 2004. The Fixed Preferred Dividend for the years ending 30 June 2002 and 30 June 2003 will also be paid on 31 August 2004. No Participating Dividend on Convertible Preferred Ordinary Shares is payable. The Directors do not recommend the payment of an Ordinary Share dividend. The retained loss of 8.93m has been taken to reserves. BUSINESS REVIEW A review of the Groups business and operational activities is contained within the Chairmans Statement, the Operating Review and the Financial Review.

EVENTS SINCE THE YEAR END On 1 July, Celtic announced a joint venture with Setanta Sport (PPV) Limited creating a dedicated Celtic TV channel. Also since the year end, Celtics concourse matchday catering operation has been outsourced to Lindley Catering Limited. On 30 July the registration of the player Henri Camara was acquired on a one-year loan from Wolverhampton Wanderers.

DIRECTORS AND THEIR INTERESTS IN THE COMPANYS SHARE CAPITAL The Directors serving during the year and at 30 June 2004 (unless otherwise indicated) and their interests including those of connected persons in the share capital of the Company were as below:

30 June 2004
No. of Convertible Preferred Ordinary Shares of 1 each No. of Ordinary Shares of 1p each No. of Convertible Cumulative Preference Shares of 60p each No. of Convertible Preferred Ordinary Shares of 1 each

1 July 2003
No. of Ordinary Shares of 1p each No. of Convertible Cumulative Preference Shares of 60p each

Brian Quinn CBE Peter T Lawwell Eric J Riley Thomas E Allison Dermot F Desmond Eric Hagman CBE Sir Patrick Sheehy2 Kevin Sweeney
3 1

20,000 8,000 8,000,000

7,350 20,000 5,000 20,000 6,273,770 5,000

7,775 5,000 5,131,300

20,000 8,000 8,000,000 20,000 2,500

7,350 5,000 20,000 6,273,770 13,000

7,775 5,000 5,131,300 5,500

Mr Desmond is beneficially interested in the shares noted above, which are held in the name of Line Nominees Limited. Certain of the beneficial interests of Brian Quinn in the shares noted above are held in the name of Brewin Nominees Limited. Similarly, the beneficial interests of Peter Lawwell and Eric Hagman are held in the name of R.C. Greig Nominees Limited. There were no changes in Directors shareholdings between 30 June 2004 and 16 August 2004 reported to the Company.
1 2

Appointed with effect from 25 October 2003 Resigned with effect from 13 August 2003 3 Resigned with effect from 3 October 2003

13

Brief biographical details of the Directors serving as at 30 June 2004 are as follows: Brian Quinn, CBE (Chairman) has been a non-executive Director since March 1996, and non-executive Chairman since June 2000. Formerly a senior executive director and acting Deputy Governor at the Bank of England, Mr Quinn has extensive experience in international finance and economics. He is a non-executive director of G.E. Mortgage Insurance Limited. Mr Quinn is Chairman of the Nomination Committee and a member of the Remuneration Committee. Thomas E. Allison joined the Board as a non-executive Director in September 2001 and is a member of the Audit, Nomination and Remuneration Committees. Mr Allison is Chief Executive of Peel Ports Limited, Chairman of Wood McKenzie Limited and Eco-European Limited and a non-executive director of the Prince and Princess of Wales Hospice in Glasgow. He is a member of the Council of CBI Scotland. Dermot F. Desmond has been a nonexecutive Director of the Company since May 1995. He is chairman and founder of International Investment & Underwriting Limited ("IIU"), a private investment company. Mr Desmond is Chairman of the Remuneration Committee and is also a member of the Audit and Nomination Committees.

Eric Hagman, CBE was appointed to the board as a non-executive Director with effect from 15 May 2003 and is Chairman of the Audit Committee. An accountant by training, Mr Hagman is currently a non-executive director of British Polythene Industries plc, and a board member of the Scottish Rugby Union and of the Royal College of Art in London. He is a former member of the Council of CBI Scotland and of the Board of Scottish Enterprise. Peter T Lawwell, Executive Director, Head of Operations, a qualified accountant, joined the Company in October 2003 from his position as commercial director with ports and property company, Clydeport plc. Previously he held the position of financial controller at Celtic Park from 1990 to 1991, thereafter filling a number of senior executive Board positions with international organisations such as ICI, Hoffman-LaRoche and Scottish Coal. Mr Lawwell also served as an unpaid non-executive director of The Scottish Premier League Limited during the year. Eric J. Riley is the Financial Director and joined the Company in August 1994. Mr Riley is a chartered accountant and has executive responsibility for operational areas of corporate strategy and finance. Until the appointment of Mr Lawwell, Mr Riley adopted temporary responsibility for certain aspects of the role formerly carried out by the outgoing Chief Executive, Ian McLeod.

During the year Mr Riley was an unpaid non-executive director of The Scottish Premier League Limited and of the Scottish Football Association Limited. Policy on appointment of non-executive directors Non-executive appointments are regularly reviewed within the formalised process of the Nomination Committee. Re-appointment is not automatic. It is the Boards policy to seek high quality candidates for available Board positions who have substantial experience, knowledge and understanding which will further the interests of the Company and its shareholders. Retirement and re-election of Directors In accordance with the Articles of Association of the Company, Eric Riley and Tom Allison retire by rotation. Both, being eligible, offer themselves for re-election. Peter Lawwell was appointed to the Board during the financial year and, in accordance with the Combined Code on Corporate Governance, he retires and offers himself for election at the forthcoming Annual General Meeting. The Directors recommend that Mr Lawwell be elected and that Mr Riley and Mr Allison be re-elected as Directors of the Company. During the year the Company maintained liability insurance for its Directors and officers.

SUBSTANTIAL INTERESTS In addition to the Directors interests (left page) the Company has been notified or is aware of the following interests of over 3% in its issued Ordinary Share capital as at 16 August 2004: Ordinary Shares of 1p each John S Keane Christopher D Trainer 1,808,080 933,748 % of Issued Ordinary Share Capital 5.90% 3.05%

In addition to the Directors interests (left page) the Company has also been notified or is aware of the following interests of over 3% in the issued Convertible Preferred Ordinary Share capital: Registered Owner NY Nominees Ltd Martin ONeill Pearse Flynn Aurum Nominees Ltd Princella Investments Ltd Convertible Preferred Ordinary Shares of 1 each 1,606,000 1,600,000 800,000 800,000 800,000 % of Issued Convertible Preferred Ordinary Shares 8.92% 8.88% 4.44% 4.44% 4.44%

14

Directors Report

DONATIONS Details of the many charitable activities of Celtic and the charitable donations made by Celtic Charity Fund during the year are narrated on pages 25 and 26. The Group also made direct charitable donations of 17,845 (2003: 15,372). CREDITORS PAYMENT POLICY It is the Groups policy to pay creditors within the terms agreed when the contract of supply is made, to the extent that the creditors have fulfilled and performed their contractual obligations. Where no terms are agreed, creditors are paid within thirty days of the month end in which the invoice is received. The ratio expressed in days between amounts invoiced to the Group by its suppliers in the year and the amounts owed to its trade creditors at the end of the year was 29 days (2003: 31 days). GENERAL GROUP POLICIES Employee Communications Within the limits of confidentiality, colleagues at all levels are kept informed regularly of matters which affect the progress of the Group and may be of interest. In addition to regular departmental meetings, regular communication presentations are held and an annual employee opinions survey is conducted to identify progress and improvement areas. To encourage the involvement of employees in the Groups performance, the Company operates an executive share option scheme and bonus scheme. Further details of these schemes are set out in the Remuneration Report.

Employment Policies The Group is an equal opportunity employer, committed to positive policies in recruitment, training and career development for all colleagues (and potential colleagues) regardless of marital status, religion, colour, race, ethnic origin or disability. The Group is registered with Disclosure Scotland and continues to work towards Investors In People accreditation. Full consideration is given to applications for employment by disabled persons where the requirement of the job can be adequately fulfilled by a handicapped or disabled person. Where existing colleagues become disabled it is the Groups policy, where practical, to provide continuing employment under similar terms and conditions and to provide training and career development. HEALTH AND SAFETY The Group operates strict health and safety regulations and policies. It complies with the requirements of the Green Guide to Safety at Sports Grounds (4th Edition), and seeks to achieve consistent compliance at all levels with the Health and Safety at Work Act etc 1974, the Management of Health and Safety at Work Regulations 1992 and associated regulations. THE INTRODUCTION OF THE EURO Currently the majority of the Groups business is carried out within the UK, which remains outside European Monetary Union ("EMU"). If that position should change, limited modification of certain systems and some training will be required in order

to accommodate dual currencies. These modifications will be performed within the timescale of any UK entry into EMU. Although the costs associated with these modifications cannot be readily quantified at this time, in the opinion of the Directors these are unlikely to have a material impact upon future results. AUDITORS PKF has indicated its willingness to continue in office and a resolution to re-appoint PKF as auditors will be proposed at the forthcoming Annual General Meeting.

BY ORDER OF THE BOARD Robert M Howat, Secretary Celtic Park, Glasgow, G40 3RE 16 August 2004

16

Corporate Governance

Changes were made to the Combined Code on Corporate Governance ("the Combined Code") in July 2003. Those changes apply to reporting years beginning on or after 1 November 2003. Consequently, the new Combined Code provisions do not apply to the financial year for which this Report has been prepared. Nevertheless, work has been and will continue to be undertaken to take account of the changes made in the new Combined Code. The report for the financial year ending 30 June 2005 will be against that new background. The Board confirms that the Group has complied with the provisions of the Combined Code in force for the accounting period ending 30 June 2004, with the exception that not all non-executive Directors have been appointed for specified periods. However, all Directors are subject to election at the first available opportunity after appointment and re-election at least every 3 years. The Groups system of governance is reviewed regularly.

BOARD OF DIRECTORS The Board of Directors ("the Board") currently comprises a nonexecutive chairman, three other non-executive Directors and two executive Directors. Peter Lawwell joined the Board as Executive Director, Head of Operations in October 2003. Sir Patrick Sheehy retired from the Board in August 2003. Kevin Sweeney also retired, in October 2003. The roles and responsibilities of the Chairman, executive Directors and non-executive Directors are clearly separated. Each of the nonexecutive Directors is currently considered by the Board to be independent and save for individual shareholdings, none has a financial interest in the Company. The non-executive Directors do not participate in Company share option schemes, pension plans or the bonus scheme and are selected from diverse business backgrounds. Board approval is required for all key decisions. These cover, for

example, financial policies, budgets, strategy and long term planning, major capital expenditure, material contracts, risk management and controls policy, health and safety and the appointment of the Companys principal external advisers. The Board meets formally at least ten times per year and is supplied in a timely fashion with appropriate information. Independent professional advice can be sought by all Directors, at the Companys expense, to assist them in the performance of their duties. The Directors also have access to the advice and services of the Company Secretary. The Board has three standing committees to which certain responsibilities are delegated, namely: Audit, Remuneration and Nomination. Each Committee has written terms of reference and comprises solely of non-executive Directors. Executive Directors attend Committee meetings as required but are not Committee members.

17

Audit Committee During the year, Eric Hagman, Dermot Desmond, Tom Allison, Kevin Sweeney and Sir Patrick Sheehy served on the Audit Committee. Sir Patrick Sheehy and Kevin Sweeney stepped down on retirement during the year. Eric Hagman was appointed Chairman in succession to Sir Patrick. The Committee meets at least three times a year and reviews the Groups accounting policies, internal controls and financial reporting and, in support of the role of the Board, monitors health and safety issues. It also monitors the scope, quality and independence of the external and internal audit functions. The external auditor and Financial Director are routinely invited to attend. Business is also conducted without executive Directors being present, when appropriate. The Committee has responsibility for the appointment and fees of the external auditors. The external audit partner responsible for the Groups audit matters is changed every five years in accordance with current guidance. Remuneration Committee This Committee meets at least three times per year and is chaired by Dermot Desmond. The other members during the year were Brian Quinn, Tom Allison and Sir Patrick Sheehy, who retired in August 2003. The Remuneration Committee determines the terms of engagement and remuneration of the Company's executive Directors, Company Secretary and certain senior executives, on behalf of the Board. The Committee also monitors the Company's executive share option scheme, determines overall policy on executive and employee bonuses and monitors implementation of these schemes. The Remuneration Report is set out on pages 19 to 22. Nomination Committee This Committee comprised Brian Quinn as Chairman, Dermot Desmond, Tom Allison and Sir Patrick Sheehy, who retired during the year. It meets as necessary, principally to consider and recommend new appointments to the Board and senior positions in the

Company for succession purposes. Executive search consultants are used by the Committee where considered appropriate to assist in this process. INVESTOR COMMUNICATION The Company welcomes dialogue with institutional and other shareholders in order to communicate and examine the Companys objectives. The Annual General Meeting is used as an opportunity to encourage communication and participation from shareholders, who are invited to ask questions and to meet with the Directors informally after the meeting. The results of proxy voting are announced at the Annual General Meeting. The Group Financial Statements are published on the Companys website shortly after release. REPORTING AND INTERNAL CONTROLS The Boards Review of Internal Control Risk management, compliance and internal control are monitored and reviewed by the Audit Committee in detail throughout the year on behalf of the Board. The results of the programmes of control assessment and internal audit in place are reported to the Audit Committee at each of its meetings and then communicated to the Board for discussion at the next following Board meeting. The Board is satisfied that there is an ongoing and effective process for identifying, assessing and managing all significant risks facing the Group. Internal Financial Control The Board has ultimate responsibility for ensuring that a balanced and understandable assessment of the Groups financial position and prospects is presented. The Annual Report and Financial Statements are an essential part of this presentation. The Directors also aim to ensure that high levels of disclosure are achieved without damaging the Groups competitive position or breaching commercial confidentiality.

The internal financial control procedures are designed to give reasonable but not absolute assurance that the assets of the Company and the Group are safeguarded against material misstatement or loss and that proper accounting records are maintained.

The key features of the control system are as follows:

Control Environment:
an appropriate framework is in place to plan, control and monitor the Groups activities. This allows for appropriate delegation of authority and accountability having regard to acceptable levels of risk.

Business Risk Assessment:

the financial implications of significant business risks are kept under review and controlled by the Board.

Financial Reporting:
comprehensive internal forecasting is carried out and updated regularly. Monthly results are reported and significant variances from budget identified and investigated.

The effectiveness of the system of internal financial control takes account of any material developments which have taken place in the Group and in applicable rules and legislation. The review is performed on the basis of the criteria in the Turnbull Guidance. GOING CONCERN After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Financial Statements.

18

Remuneration Report

This Report has been prepared in accordance with applicable regulations and the Listing Rules of the United Kingdom Listing Authority. It has been approved and adopted by the Board. The information contained within the tables on pages 20 and 22 and the paragraphs entitled "Pension" and "Share options" below has been subject to audit in accordance with The Directors Remuneration Report Regulations 2002. The Remuneration Committee ("the Committee") The Committee met five times during the year and following the retirement of Sir Patrick Sheehy has three members: Dermot F Desmond (Chairman), Brian Quinn and Tom E Allison. It considers, for recommendation to the Board, Company policy on remuneration and decides upon the terms of the service contracts and remuneration levels of executive directors and certain other senior executives. The Committee is also responsible for considering the grant of share options and monitoring the operation of the share option and Group bonus schemes. Remuneration Policy The Company complies with the Combined Code, as applicable to the financial year ended 30 June 2004, in connection with executive remuneration in force during this financial year. The main policy objective is to ensure, without paying more than is reasonable or necessary, that the Company can attract, retain and motivate experienced and capable individuals who will make a significant contribution to the Companys success. When determining remuneration policy account is taken of the level of packages available within other comparable companies, the Companys corporate performance in the year and from year to year, as well

as achievement of specific corporate and personal objectives. This year, the Company has not sought information or advice from external consultants but has obtained independent research information and is advised by the Company Secretary. Executive Directors service contracts are terminable on no more than one years notice and do not provide for pre-determined compensation on termination, or for loss of office. Compensation due, if any, is determined by reference to the applicable notice period and reason for termination. Performance-related remuneration for executive Directors and senior executives is assessed through an annual bonus scheme (see below) and the operation of the Celtic plc Executive Share Option Scheme. Remuneration of Executive Directors and Senior Executives Payments made to Directors in the financial year are set out in the table on page 22 and demonstrate the relative values of basic salary and performancebased remuneration. There are several main elements to the Companys executive remuneration packages:

The Company allows all regular employees a discount on Company merchandise and products.

Annual Performance Related Bonus Scheme

The Group operates a bonus scheme for executive Directors and all full and part-time employees on regular contracts, with the following key objectives: (A) Improving and sustaining the financial performance of the Group from year to year; (B) Delivering and enhancing shareholder value; (C) Enhancing the reputation and standing of Celtic; (D) Delivering consistently high standards of service to Celtic and its customers; and (E) Attracting, retaining and motivating talented individuals whose skills and services will enable Celtic to meet its strategic objectives.

Basic salary and benefits The Committee reviews base salaries for executive Directors and senior executives annually, on promotion and exceptionally during the year if significant additional responsibilities have been undertaken. Benefits for executive Directors include the provision of a fully expensed company vehicle or equivalent non-pensionable vehicle allowance, relocation allowance, private medical insurance and critical illness cover. These benefits may be, but are not automatically, extended to senior executives. Those receiving such benefits are assessed for income tax on them.

Performance conditions reflect corporate financial performance and satisfaction of personal objectives. Corporate financial performance incorporates both performance against budget and the previous years results. Maximum award levels depend upon seniority and contractual entitlements but the maximum award under the scheme for executive Directors is 60% of salary. The Committee reviews the bonus scheme structure and performance conditions annually. Bonus payments are not pensionable. Football players and the football management team are subject to a separate bonus scheme that rewards on-field success.

19

Pension The Company operates a Group pension plan, with defined contributions, in which the Financial Director, several senior executives and a number of other employees participate. Pension contributions for Peter Lawwell are made to an independent pension provider. Stakeholder arrangements are available to qualifying employees. The Company does not operate any defined benefit (final salary) schemes. Share options The Celtic plc Executive Share Option Scheme ("the Scheme") is operated by the Company as part of remuneration policy and to assist in aligning the interests of executive Directors and selected employees with the Companys financial performance. The Scheme was first established in December 1994 and was last amended in September 2001.
Employees in participating Group companies and Directors devoting substantially all of their working time to the Groups affairs are eligible to participate, subject to the discretion of the Committee. At present, the only Directors participating in the Scheme are Peter Lawwell and Eric Riley. The last grant of options over Ordinary Shares of 1p under the Scheme was on 27 October 2003 to Peter Lawwell at an option price of 51p. The options granted then and in the preceding grant in September 2001, including those granted to the Directors, are exercisable in total only after three years from the date of grant and provided that over three consecutive financial years:

if the percentage growth in

earnings per share over three consecutive financial years exceeds percentage growth in RPI over the same period by an average of at least 3% per year.

The market price of Ordinary Shares on 30 June 2004 was 59.0p (2003: 40.0p). The price range during the year was 40.0p to 74.5p. The market price of the Convertible Preferred Ordinary Shares on 30 June 2004 was 124.0p (2003: 97.5p) and the price range during the year was 97.5p to 124.0p. Service Agreements Executive Directors Peter Lawwells service contract as Executive Director, Head of Operations commenced on 25 October 2003. It continues subject to 12 months notice by him to the Company or by the Company to him. The Financial Directors service agreement commenced on 19 August 1994 and continues subject to termination on twelve months notice from the Company, or three months notice from the Financial Director. Termination by the Company of the contracts of these Directors on shorter notice than provided for in the contracts, other than for misconduct, would be likely to create a requirement for payment of compensation related to the unexpired element of the notice period.

The performance criteria stated above are regarded as a challenging and realistic test of comparative financial performance, with a view to securing consistent growth and shareholder return against the sector. These options, unless exercised or lapsing earlier, lapse on the tenth anniversary of the date of the grant. The interests of executive Directors serving during the year under the Scheme are set out in the table below. Options over 1,538,461 Convertible Preferred Ordinary Shares of 1 were granted to the Football Manager in September 2001 at an exercise price of 130p. These options, in addition to parameters stated above, are also subject to conditions relating to football success and remain current. On 24 April 1997, a limited number of employees were granted options over Ordinary Shares (then having a nominal value of 1.00 each, now 1p each) at the market value on that date of 3.00. During the year 20,000 of those options lapsed. At the balance sheet date, options from that grant over 70,000 Ordinary Shares of 1p remained. These options are exercisable at any time between 24 April 2002 and 24 April 2007 and are not subject to performance conditions. 349,172 options over Ordinary Shares from the grant in September 2001 lapsed during the year. At 30 June 2004, the total number of options outstanding over Ordinary Shares, including those of the executive Directors and those remaining from the grant in 1997 was 1,587,182.

the increase in market value of the

Companys shares would place the Company in the top one third of companies within the Leisure, Entertainment and Hotels sector of the FTSE; and

Non-executive Directors Individual letters govern the appointments of the Chairman and the non-executive Directors. Typically, non-executive Directors are expected to serve for at least three years but, until the most recent appointment of Mr Hagman, appointment letters have not provided for a specific period. It is anticipated that future non-executive Director appointments will also be for a stated duration, in accordance with best practice.

Balance at 1 July 2003 Number

Granted 2003/04

Exercised/ Lapsed 2003/ 04

Balance at 30 June 2004 Number

Excercise Price

Class

Option Period

P T Lawwell E J Riley

413,053

588,234

588,234 413,053

51.01p 107.5p

Ordinary 1p Ordinary 1p

Sept 2006-2013 Sept 2004-2011

20

Remuneration Report
Remuneration of Directors Directors remuneration and benefits are set out in the table below.
Individual Directors Emoluments and Pension Entitlement

Salary () 30,000 102,884 118,220 15,000 15,000 15,000 1,827 3,923 301,854

Bonus () 38,582 29,555 68,137

Benefits () 9,063 17,060 26,123

Pension () 15,432 17,733 33,165

2004 Total () 30,000 165,961 182,568 15,000 15,000 15,000 1,827 3,923 429,279

2003 Total () 30,000 217,429 15,000 15,000 1,875 15,000 15,000 784,762 1,094,066

B Quinn CBE P Lawwell (appointed 25 /10 / 03) E J Riley T E Allison D F Desmond E Hagman CBE Sir Patrick Sheehy ( resigned 13/ 08 / 03 ) K Sweeney ( resigned 03/10 / 03 ) I McLeod ( resigned 30 / 04 / 03 )

Remuneration of non-executive Directors is for service on the Board and its Committees and is reviewed by the Board as a whole each year against fees in comparable companies of a similar size and taking account of overall financial performance of the Company. The non-executive Directors have no personal financial interest other than as shareholders. They are not members of the Companys pension scheme and do not participate in any bonus scheme, share option or other profit schemes. All Directors are entitled to one seat in the

Presidential Box without charge for each home match, to assist them in performing their duties. The Company Chairman is entitled to take up to 50% of his fees in Ordinary Shares of the Company and has the use of a Company car and driver on Company business. Shareholder Return The graph below compares the total shareholder return on an investment of 100 in the Ordinary Shares of Celtic plc over a five year period commencing on 1 July 1999 with the total shareholder return over the

PERFORMANCE GRAPH

same period on a notional investment of 100 made up of shares of the same kind and number as those by reference to which the FTSE Leisure and Hotels index is calculated. In the opinion of the Directors, the FTSE Leisure and Hotels index, of which the Company is a constituent, is currently the most appropriate index against which the total shareholder return of the Company should be measured, as it is most likely to be used by investors, shareholders and management as a measure of performance in the leisure and hotel sector. This index includes other listed football clubs and is currently utilised as the benchmark against which performance under the Companys Executive Share Option Scheme is assessed. Total shareholder return represents the change in value of a holding of shares over the relevant period assuming immediate reinvestment of dividends. The Chairman of the Committee will be available to answer questions concerning directors remuneration at the Companys Annual General Meeting. Dermot. F. Desmond Chairman 16 August 2004

22

Statement of Directors Responsibilities

Company law requires the Directors to prepare Financial Statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group and of the Groups profit or loss for that period. In preparing those Financial Statements, the Directors are required to: suitable accounting policies select and then apply them consistently; judgements and estimates make that are reasonable and prudent; whether applicable state accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and the financial statements prepare on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the Financial Statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the Directors Report, Remuneration Report and other information included in the Annual Report is prepared in accordance with company law in the United Kingdom. They are also responsible for ensuring that the Annual Report includes information required by the Listing Rules of the UK Listing Authority. The Directors intend to publish these Financial Statements on the website www.celticfc.net. The maintenance and integrity of the website is the responsibility of the Directors. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

Five Year Record

Financial Turnover Profit from Operations Loss after Taxation Dividends Net Assets Shares in Issue ( Excl. Deferred ) ( '000 ) Loss per Ordinary Share Diluted Loss Per Share Number of Employees Football League Position League Points Scottish Cup European Ties Played Celtic Park Stadium Investment To Date (000) Stadium Seating Capacity Average Home League Attendance Season Ticket Sales 2004 000 69,020 4,870 (7,471) 1,455 25,393 65,762 (29.15p) (29.15p) 493 2004 1 98 WINNERS 8 2004 56,408 60,355 58,420 53,158 2003 000 60,569 6,730 (11,659) 1,457 34,319 65,762 (42.91p) (42.91p) 418 2003 2 97 QUARTER FINAL FINAL 8 2003 55,632 60,355 57,154 53,464 2002 000 56,892 5,370 (3,039) 1,301 47,435 65,762 (14.26p) (14.26p) 392 2002 1 103 FINAL SEMI FINAL 5 2002 54,069 60,501 58,589 53,457 2001 000 42,007 871 (8,123) 599 30,059 47,750 (29.82p) (29.82p) 381 2001 1 97 WINNERS WINNERS 3 2001 52,513 60,506 59,170 54,253 2000 000 38,579 4,676 (3,956) 599 38,781 47,750 (15.63p) (15.63p) 444 2000 2 69 THIRD RD WINNERS 3 2000 51,632 60,506 58,163 53,397

League Cup QUARTER FINAL

23

Independent Auditors Report to the Members

We have audited the Financial Statements of Celtic plc for the year ended 30 June 2004 which comprise the Group Profit and Loss Account, the Group and Company Balance Sheets, the Group Cash Flow Statement and the related notes. These Financial Statements have been prepared under the accounting policies set out therein. We have also audited the information in the Remuneration Report that is described as having been audited. This report is made solely to the Companys members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Companys members those matters we are required to state to them in an auditors report, and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Companys members, as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The Directors responsibilities for preparing the Annual Report, the Remuneration Report and the Financial Statements in accordance with applicable law and United Kingdom Accounting Standards are set out in the Statement of Directors Responsibilities. Our responsibility is to audit the Financial Statements and the part of the Remuneration Report to be audited in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards. We report to you our opinion as to whether the Financial Statements give a true and fair view and whether the Financial Statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors Report is not consistent with the Financial Statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors remuneration and transactions with the Company and other members of the Group is not disclosed. We review whether the Corporate Governance Statement reflects the Companys compliance with the seven provisions of the Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the Boards statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group's corporate governance procedures or its risk and control procedures. We read other information contained in the Annual Report and consider whether it is consistent with the audited Financial Statements. This other information comprises only the Directors Report, the Chairmans Statement, the Operating & Financial Reviews, the Corporate Governance Statement and the unaudited part of the Remuneration Report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Financial Statements. Our responsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Financial Statements and the part of the Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the Financial Statements, and of whether the accounting policies are appropriate to the Companys circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Financial Statements and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the Financial Statements and the part of the Remuneration Report to be audited. Opinion In our opinion: the Financial Statements give a true and fair view of the state of affairs of the Group and the Company as at 30 June 2004 and of the Groups loss for the year then ended; and

Financial Statements and the the part of the Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985.

PKF Registered Auditors Glasgow, UK 16 August 2004

24

Celtic Charity Fund

Celtic Charity Fund, the charitable arm of Celtic Football Club has enjoyed one of its most successful years yet. Hard work and the overwhelming generosity of our supporters helped raise the greatest ever amount for the Fund in a single year. This fantastic achievement resulted in the Fund smashing through the million pound barrier for total funds raised since its inception in 1995. We believe that Celtic is unique in world football as the only club formed to raise money for the needy. The Celtic Charity Fund strives to continue that work and ensure that those areas of need identified by Brother Walfrid over a century ago still receive our support. As always, the money raised has come from Celtic Football Club, Celtic supporters, colleagues, directors, players, as well as corporate clients and many members of the general public who support Celtics charitable traditions. To these people we owe our gratitude for allowing the Celtic Charity Fund to flourish and provide help and support to so many people in need. The two main fundraising events held during the year were the annual Celtic Charity Fund Sporting Dinner (April 2004) and the inaugural Badge Day held prior to a Bank of Scotland Premierleague fixture versus Dundee (December 2003), where supporters were encouraged to make a donation in return for a Celtic Charity Fund badge. The exceptional fundraising efforts allowed the Charity Fund to disburse donations in excess of 165,000 (the highest ever annual total) to deserving causes during the year.

In addition to the many cash donations made throughout the year, Celtic also donated hundreds of autographed shirts and footballs, complimentary tickets and a range of other items to numerous worthwhile charitable organisations. Representatives from Celtic also made many visits to hospitals and to charity and community events. The principal beneficiary of our Charity Fund Sporting Dinner this year was the Craighalbert Centre, Scotlands national centre for children with cerebral palsy. The Centre, based in Cumbernauld, combines conductive education (as devised at the Peto Institute in Budapest) with the Scottish curriculum. Craighalbert teaches the children independence, everyday activities and life skills within a nursery or school day. The donation is being used to develop new facilities at the Centre. Jimmy Johnstone, voted Greatest Ever Celt by supporters, has been diagnosed with motor neurone disease and substantial donations were made to both the National and the Scottish Motor Neurone Disease Associations. Each association provides assistance to people affected by the disease and funds research into treatments. Yorkhill Hospitals Schiehallion Unit for seriously ill children was again treated to a Christmas Party attended by Celtics first team squad and members of our football management team. A donation for several thousand pounds was presented towards the excellent work being undertaken at the Unit.

For the sixth successive year, Celtic Charity Fund was the principal sponsor of the famous Glasgow Taxis Outing Fund for Sick Children. Around 300 black cabs took approximately 800 children with special needs or from disadvantaged circumstances on the trip of a lifetime from Glasgow to Troon, with the colourful convoy making its way through the city and treating some very deserving children to a great day out. Over the last year, Celtic Charity Fund has again made donations to a number of homeless organisations. The street work charity Loaves & Fishes received a donation of several thousand pounds towards its excellent work in caring for Glasgows homeless. The Glasgow Simon Community also received support from Celtic, with a cheque being presented at a Christmas Dinner for around 300 of the citys homeless people. Celtics efforts to work against bigotry and our promotion of social inclusion continued throughout the year. The Clubs joint work with Glasgow City Council and Rangers Football Club continued to deliver our new education programme through schools and we continued to operate our Matchday Visit programmes at Celtic Park. Celtic Charity Fund also maintained its support of the Sense over Sectarianism initiative, the first project of its kind which aims to deliver funding to individuals working to change attitudes within their communities.

25

Through close co-operation with a number of organisations including Glasgow City Council and the Scottish Asian Sports Association, Celtic was pleased to continue its support of a number of multicultural initiatives. These included the UK Asian Football Championships, which were again held at Celtic Park. This co-operation will continue as we look for new and meaningful ways to work in partnership to support new and emerging international communities in Glasgow and in Scotland. The Charity Fund continued its policy of supporting initiatives at both local and national level, with the West Scotland Deaf Childrens Society, Glasgow Old Peoples Welfare Association, Marie Curie Cancer Care and the Northern Irelands Childrens Hospice being just a few of the many beneficiaries. Celtic Football Club is proud that today it continues to honour the charitable objectives of the Clubs founder Brother Walfrid. Through its

charitable arm the Club is already considering a number of worthwhile organisations for the coming year.

Celtic Charity Fund has the following aims:

To raise funds and support

specific areas of charity work, selected each year by Celtic Football Club; To uphold and promote the charitable principles and heritage of Celtic Football Club.

We would like once again to record our sincere thanks to the Celtic Charity Fund Raising Action Group members Charles Barnett, Liam Donnelly and Martin Super for their continued efforts as well as the Trustees and many volunteers who have worked extremely hard to again achieve such a high level of success throughout the year and have ensured that Celtics charitable principles are maintained.

Celtic Charity Fund has identified three principal areas of support:

Charities in support of
childrens needs;

Community action on drugs; Projects that develop religious

and ethnic harmony. And three subsidiary areas:

If you wish to support Celtic Charity Fund, please send your donation to: Celtic Charity Fund Public Relations Department Celtic Football Club Celtic Park Glasgow G40 3RE

Supporting the homeless; Helping the unemployed; Support and research for
projects aiding the afflictions of illness.

26

Group Profit and Loss Account

(Year ended 30 June 2004 )

Notes

Operations excluding player trading 2004 000

Player trading 2004 000

Total 2004 000

2003 000

Turnover Operating expenses Profit from operations Exceptional Operating Expenses Amortisation of intangible fixed assets Operating Profit /(Loss) Profit / (Loss) on disposal of intangible fixed assets Loss on disposal of tangible fixed assets Profit / (Loss) before interest and taxation Net interest payable Loss on ordinary activities before taxation Tax charge on ordinary activities Loss for the year Dividends - non equity Retained Loss for the year Loss per ordinary share Diluted loss per share

2 3 3,4 3,13

69,020 (64,150) 4,870 (390) 4,480 (150) 4,330

(10,770) (10,770) 306 (10,464)

69,020 (64,150) 4,870 (390) (10,770) (6,290) 306 (150) (6,134) (1,337) (7,471) (7,471) (1,455) (8,926) (29.15p) (29.15p)

60,569 (53,839) 6,730 (872) (10,332) (4,474) (70) (41) (4,585) (1,209) (5,794) (5,865) (11,659) (1,457) (13,116) (42.91p) (42.91p)

8 9 22 10 11 11

All amounts relate to continuing operations. There were no gains or losses recognised in 2004 other than the loss for the year.

27

Group Balance Sheet

(30 June 2004)

Note

2004 000

2004 000

2003 000

2003 000

FIXED ASSETS Tangible assets Intangible assets CURRENT ASSETS Stocks Debtors Cash at bank and in hand CREDITORS - Amounts falling due within one year Income deferred less than one year NET CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES CREDITORS - Amounts falling due after more than one year NET ASSETS CAPITAL AND RESERVES Called up share capital (includes non-equity) Other reserve Profit and loss account SHAREHOLDERS FUNDS 21 22 22 29,405 21,222 (25,234) 25,393 29,405 21,222 (16,308) 34,319 20 (16,000) 25,393 (19,644) 34,319 18 19 (15,610) (10,908) (26,518) (19,067) 41,393 (11,760) (10,826) (22,586) (15,114) 53,963 15 17 1,763 5,317 371 7,451 2,059 4,660 753 7,472 12 13 48,428 12,032 60,460 48,564 20,513 69,077

Approved by the Board on 16 August 2004 Brian Quinn Director Peter T Lawwell Director

28

Company Balance Sheet

(30 June 2004)

Note

2004 000

2004 000

2003 000

2003 000

FIXED ASSETS Tangible assets Intangible assets CURRENT ASSETS Debtors Cash at bank and in hand CREDITORS - Amounts falling due within one year 18 (7,000) (6,271) 17 14,532 161 14,693 8,515 114 8,629 12 13 48,428 12,032 60,460 48,564 20,513 69,077

NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES CREDITORS - Amounts falling due after more than one year NET ASSETS CAPITAL AND RESERVES Called up share capital (includes non-equity) Other reserve Profit and loss account SHAREHOLDERS FUNDS 21 22 22 20

7,693 68,153

2,358 71,435

(16,000) 52,153

(19,644) 51,791

29,405 21,222 1,526 52,153

29,405 21,222 1,164 51,791

Approved by the Board on 16 August 2004 Brian Quinn Director Peter T Lawwell Director

29

Group Cash Flow Statement

(Year ended 30 June 2004)

2004 000

2003 000

RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES Operating loss Depreciation Amortisation of intangible fixed assets Provision for impairment of intangible fixed assets Grants release Decrease / ( increase ) in stock Increase in debtors Increase in creditors Net cash inflow from operating activities CASH FLOW STATEMENT Net cash inflow from operating activities Returns on investments and servicing of finance (Note 24) Capital expenditure and financial investment (Note 24) Cash inflow/(outflow) before financing Financing (Note 24) (Decrease )/ increase in cash RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (Note 25) (Decrease) / increase in cash in the period Cash outflow/(inflow) from decrease /(increase) in debt Change in net debt resulting from cash flows Movement in net debt in the period Net debt at 1 July Net debt at 30 June (382) 2,359 1,977 1,977 (17,782) (15,805) 220 (1,529) (1,309) (1,309) (16,473) (17,782) 8,735 (1,893) (4,865) 1,977 (2,359) (382) 6,694 (1,767) (6,236) (1,309) 1,529 220 (6,290) 1,371 10,770 296 (333) 2,921 8,735 (4,474) 1,405 10,332 475 (1) (801) (1,853) 1,611 6,694

30

Notes to the Financial Statements

(Year ended 30 June 2004)

ACCOUNTING POLICIES

(A) Accounting convention & basis of preparation The Financial Statements are prepared under the historical cost convention and comply with applicable accounting standards. The Groups Profit and Loss Account follows the Financial Reporting Guidance for Football Clubs issued in February 2003 by The Football League, The FA Premier League and the FA, although the turnover within Note 2 continues to be analysed in accordance within the headings of the business operations of the Group.

(B) Basis of consolidation The consolidation includes the Financial Statements of the Company and its subsidiary undertakings and is based on their audited Financial Statements for the year ended 30 June 2004. All subsidiaries are accounted for using acquisition accounting. As provided by Section 230 of the Companies Act 1985 a separate profit and loss account has not been presented for the Company. The Group has taken advantage of the exemption provided by Paragraph 3(C) of Financial Reporting Standard 8 and accordingly has not disclosed any transactions with Group undertakings.

(C) Depreciation Tangible fixed assets are written off over their estimated useful lives at the following annual rates: Plant and vehicles Fixtures, fittings and equipment Buildings (excluding stadium) 10% - 25% reducing balance 10% - 33% reducing balance 2% - 10% straight line

The football stadium is not depreciated within the Financial Statements. The Directors are of the opinion that, having assessed the expected useful life of the asset, any annual charge for depreciation would be immaterial. In accordance with FRS 15 the Group carries out an annual impairment review of the stadium. Freehold land is not depreciated.

(D) Intangible fixed assets Costs associated with the acquisition and retention of football personnel are capitalised and treated as intangible fixed assets. These amounts are amortised evenly over the contract period, on the basis of nil residual values.

(E) Turnover Turnover which is exclusive of value added tax represents match receipts and other income associated with the continuing principal activity of running a professional football club.

(F) Grants Grants in respect of capital expenditure on assets, which are depreciated, are treated as deferred income, a proportion of which is transferred to revenue annually over the estimated useful life of the asset. Grants in respect of capital expenditure on assets which are not depreciated are deducted from the cost of the asset. This represents a departure from the requirements of the Companies Act 1985; the financial effect of this departure is disclosed in Note 12. In the opinion of the Directors the accounting treatment adopted is appropriate in order to show a true and fair view on the basis that the grants are specific to the acquisition of the assets concerned and not made as a contribution to finance the general activities of the Company or the Group. Other grants of a revenue nature are credited to revenue as received.

31

Notes to the Financial Statements

(Year ended 30 June 2004)

ACCOUNTING POLICIES contd

(G) Leasing obligations and hire purchase Leasing charges in respect of operating leases are recognised in the Group Profit and Loss Account over the lives of the lease agreements as incurred. Assets acquired under hire purchase contracts are treated as tangible fixed assets and depreciation is provided accordingly. The present value of future rentals is shown as a liability and the interest element of rental obligations is charged to the Group Profit and Loss Account over the period of the agreement on a straight line basis.

(H) Stocks Stocks are stated at the lower of cost and net realisable value. Cost is determined on a first-in first-out basis.

(I) Pension costs The Group operates a defined contribution scheme providing benefits for employees additional to those from the state. The pension cost charge includes contributions payable by the Group to the fund in respect of the year.

(J) Foreign exchange Transactions denominated in foreign currency are translated at the date of the transaction. Foreign currency assets and liabilities at the year-end are translated at the year end exchange rate or the exchange rate of a related forward contract if applicable. The resulting exchange gain or loss is dealt with in the Group Profit and Loss Account at the date of crystallisation.

(K) Deferred tax Deferred tax is provided using the full provision method and is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, discounted to reflect the time value of money. Deferred tax assets are incorporated within the Financial Statements to the extent that it is more likely than not that they will be recoverable in the foreseeable future.

TURNOVER

2004 000

2003 000

Turnover in respect of the five business operations comprised: Professional football Multimedia and communications Merchandising Stadium enterprises Youth development 34,728 16,062 13,425 3,449 1,356 69,020 30,480 15,600 11,456 1,644 1,389 60,569

32

Notes to the Financial Statements

(Year ended 30 June 2004)

OPERATING EXPENSES

2004 000

2003 000

Total operating expenses comprised: Staff costs (Note 5) Depreciation of tangible fixed assets (Note 12) Other operating charges Amortisation of intangible fixed assets (Note 13) Exceptional operating expenses (Note 4) Total operating expenses 40,502 1,371 22,277 64,150 10,770 390 75,310 33,079 1,405 19,355 53,839 10,332 872 65,043

Other operating charges include: Auditors' remuneration : audit fees : other fees Operating lease payments : land and buildings : plant & vehicles
Auditors other fees relate to taxation and value added tax advisory services.

2004 000

2003 000

29 16 515 55

28 22 522 56

EXCEPTIONAL OPERATING EXPENSES

The exceptional operating expenses of 390,000 (2003: 872,000) incorporated in the profit and loss account reflect redundancy and other ancillary costs of the rationalisation programme implemented during the year. Last years exceptional costs mainly reflected the early termination of Rafael Scheidts contract and registration.

STAFF PARTICULARS

2004 000

2003 000

Wages and salaries Social security costs Other pension costs

35,161 4,330 1,011 40,502

28,873 3,456 750 33,079

Number

Average number of full time equivalent employed in the year: Professional football and youth development Other business operations

Number

165 328 493

167 251 418

DIRECTORS EMOLUMENTS

Details of Directors emoluments are included within the Remuneration Report on pages 19 to 22.

33

Notes to the Financial Statements

7 PENSION COSTS

(Year ended 30 June 2004)

The assets of the Group pension scheme are held separately from those of the Group by The Standard Life Assurance Company. Contributions made by the Group to the scheme during the year amounted to 164,438 (2003: 152,513). Contributions of 17,626 (2003: 19,167) were payable to the fund at the year-end.

INTEREST PAYABLE AND SIMILAR CHARGES

2004 000

2003 000

Interest payable and similar charges comprised: On bank overdrafts On bank and other loans On hire purchase contracts 128 1,143 66 1,337 273 870 66 1,209

TAX ON ORDINARY ACTIVITIES GROUP

2004 000

2003 000

(a) Analysis of charge in period: Current tax: UK corporation tax (below) Deferred tax: Origination and reversal of timing differences Irrecoverable advance corporation tax Tax charge on ordinary activities
An explanation of the movement in deferred tax is provided in Note 16

5,615 250 5,865

(b) Factors affecting tax charge/(credit) for period: The corporation tax assessed for the year is different from the standard rate of corporation tax in the United Kingdom of 30% (2003: 30%). The differences are explained below: Loss on ordinary activities before tax Loss on ordinary activities multiplied by the standard rate of corporation tax in the United Kingdom of 30% (2003: 30%) Effects of: Expenses not deductible for tax purposes Capital allowances for period in excess of depreciation Depreciation for the period in excess of capital allowances Untaxed income Losses created in year Current corporation tax charge for year (2,241) 21 439 (342) 2,123 (1,738) 33 (556) (354) 2,615
2004 000 2003 000

(7,471)

(5,794)

No provision for corporation tax is required in respect of the year ended 30 June 2004. Estimated tax losses available for set-off against future trading profits amount to approximately 35.00m (2003: 33.00m). This estimate is subject to the agreement of the current and prior years' corporation tax computations with the Inland Revenue.

34

Notes to the Financial Statements

(Year ended 30 June 2004)

10 DIVIDENDS The non-equity dividend for the year of 1,454,773 (2003: 1,456,588) comprises the dividend of 6% of 554,151 (2003: 555,966) payable on 31 August 2004 to those holders of Convertible Cumulative Preference Shares on the share register at 6 August 2004, together with the amount due in respect of the Convertible Preferred Ordinary Shares fixed dividend of 4% of 900,622 (2003: 900,622) which is payable on 31 August 2004

11 LOSS PER SHARE The loss per share has been calculated by dividing the retained loss for the period of 8.93m (2003: 13.12m) by the weighted average number of Ordinary Shares of 30.62 million (2003: 30.56 million) in issue during the year. The diluted loss per share has been calculated using the same figures as the basic calculation. No account has been taken of share purchase options, as these potential ordinary shares are not considered to be dilutive under the definitions of the applicable accounting standards.

12 FIXED ASSETS TANGIBLE ASSETS Group and Company The movement on these accounts during the year was as follows: Cost: At 1 July 2003 Additions Disposals At 30 June 2004 Accumulated Depreciation At 1 July 2003 Charge for year Eliminated on disposal At 30 June 2004 Net Book Value At 30 June 2004 At 30 June 2003

Freehold Land and Buildings 000

Plant and Vehicles 000

Fixtures, Fittings & Equipment 000

Total 000

37,496 1 (11) 37,486

3,121 3,121

15,937 1,393 (307) 17,023

56,554 1,394 (318) 57,630

97 34 (1) 130

1,010 171 1,181

6,883 1,166 (158) 7,891

7,990 1,371 (159) 9,202

37,356 37,399

1,940 2,111

9,132 9,054

48,428 48,564

Freehold Land and Buildings are net of grants received of 2,999,000 (2003: 2,999,000). Depreciation charged in respect of as assets held under hire purchase contracts in the year ended 30 June 2004 amounted to 56,000 (2003: 62,000)

35

Notes to the Financial Statements

(Year ended 30 June 2004)

13 FIXED ASSETS - INTANGIBLE ASSETS Group and Company Cost At 1 July Additions Disposals At 30 June Amortisation At 1 July Charge for year Provision for impairment Disposals At 30 June Net Book Value At 30 June

2004 000

2003 000

52,250 2,458 (6,147) 48,561 31,737 10,770 (5,978) 36,529 12,032

47,915 5,425 (1,090) 52,250 22,020 10,332 475 (1,090) 31,737 20,513

The net gain on sale of player registrations in the year was 306,000 (2003: 70,000 loss).

14 SUBSIDIARY COMPANIES The Companys subsidiary undertaking continued to be Celtic F.C. Limited. In turn, Celtic F.C. Limited holds 100% of the issued ordinary share capital in each of the following companies:

Subsidiary undertaking Protectevent Limited Glasgow Eastern Developments Limited The Celtic Football and Athletic Company Limited

Activity Stewarding and security services Management of properties Football Club management & promotional services

These companies are registered in Scotland and are all included in the consolidated Financial Statements. The information above has been extracted from their Financial Statements for the year ended 30 June 2004. The Company also holds an investment of 8.33% in the equity share capital of The Scottish Premier League Limited, a company registered in Scotland.

15 STOCKS Goods for resale Consumable stock

Group 2004 000

Group 2003 000

Company 2004 000

Company 2003 000

1,729 34 1,763

2,048 11 2,059

36

Notes to the Financial Statements

16 DEFERRED TAX Group

(Year ended 30 June 2004)

The Group continues to follow the accounting treatment for deferred taxation as prescribed in FRS19. However, given the financial difficulties experienced by the football sector and the uncertainty over the timing of future taxable profits, the Group wrote off the deferred tax and advance corporation tax assets in the year to 30 June 2003 which provided a tax charge of 5.86m. At the balance sheet date the value of deferred tax asset not reflected in the Groups Financial Statements was 8.57m (2003: 7.41m). This asset will be recoverable against future taxable profits of the Group. In addition advance corporation tax of 250,000 also not reflected in the Groups Financial Statements is recoverable against future taxable profits of the Group.

Company At 30 June 2004, the deferred tax asset not reflected in the Companys Financial Statements was 0.13m (2003: 0.28m, liability). This asset will be recovered against future taxable profits of the Company.

17 DEBTORS Debtors comprised: Trade debtors Other debtors Prepayments and accrued income Due from subsidiary undertaking

Group 2004 000

Group 2003 000

Company 2004 000

Company 2003 000

2,275 965 2,077 5,317

2,075 489 2,096 4,660

101 320 425 13,686 14,532

7 320 211 7,977 8,515

Included in trade debtors is an amount of 100,000 (2003: nil) in respect of sums due from the sale of intangible fixed assets. The amount due to the Company by its subsidiary undertaking reflects the intercompany balance between the Company and its principal subsidiary, Celtic F. C. Limited. This balance is likely to be recoverable in full after more than one year.

37

Notes to the Financial Statements

Group 2004 000

(Year ended 30 June 2004)

18 CREDITORS - amounts falling due within one year Creditors comprised: Loan instalments Other loans Trade creditors Other taxation and social security Proposed dividends Other creditors Accruals Obligations under hire purchase agreement

Group 2003 000

Company 2004 000

Company 2003 000

176 2,865 4,941 3,098 392 4,138 15,610

2 180 3,984 3,416 556 365 2,904 353 11,760

176 873 1,149 3,098 303 1,401 7,000

2 180 1,349 1,190 556 279 2,362 353 6,271

Other loans comprise interest free loans from members of the Executive Club which are repayable within thirty days of demand. Included in trade creditors is an amount of nil (2003: 1.04m) in respect of instalments due for the acquisition of player registrations. The proposed dividends reflect the annual dividend of 0.55m payable in respect of the Convertible Cumulative Preference Shares and dividends of 2.54m payable in respect of the Convertible Preferred Ordinary Shares for the period 1 August 2001 until 30 June 2004. These dividends are payable on 31 August 2004. The increase in other taxation and accruals is largely a result of increased football success and loyalty payments due following the completion of the football season.

19 INCOME DEFERRED LESS THAN ONE YEAR Deferred income

Group 2004 000

Group 2003 000

Company 2004 000

Company 2003 000

10,908

10,826

Deferred income comprises season ticket, sponsorship and other elements of income which have been received prior to the year-end in respect of the following football season.

38

Notes to the Financial Statements

Group 2004 000

(Year ended 30 June 2004)

20 CREDITORS - amounts falling due after more than one year Loan instalments Proposed dividends

Group 2003 000

Company 2004 000

Company 2003 000

16,000 16,000

18,000 1,644 19,644

16,000 16,000

18,000 1,644 19,644

2004 000

2003 000

Group and Company Loan instalments are repayable as follows: In one year or less Between one and two years In more than five years 16,000 16,000 2 18,000 18,002

Loans repayable by instalments include bank loans of 16.00m (2003: 18.00m). These loans bear interest at London Inter-Bank Offered Rate plus 1.125%. These loans form part of a 24.00m loan facility which is repayable in equal quarterly instalments from October 2009 until April 2019 and 16.69m is repayable in July 2019. The Group has the option to repay the loans earlier than these dates without penalty. The bank loans are secured over Celtic Park.

2004 000

2003 000

Obligations under the hire purchase agreement are repayable in instalments as follows: In one year or less Between one and five years 353 353

39

Notes to the Financial Statements

Authorised 2004 No.000 Authorised 2003 No.000

(Year ended 30 June 2004)

21 SHARE CAPITAL GROUP AND COMPANY Equity Ordinary Shares of 1p each Deferred Shares of 1p each Non Equity Convertible Preferred Ordinary Shares of 1 each Convertible Cumulative Preference Shares of 60p each

2004 No.000

Allotted, called up and fully paid 2003 No.000 2004 000

2003 000

36,397 82,397

36,341 79,093

30,647 82,397

306 824

30,591 79,093

306 790

20,000 19,603 158,397

20,000 19,659 155,093

18,012 17,103 148,159

18,012 10,263 29,405

18,012 17,159 144,855

18,012 10,297 29,405

Each Convertible Preferred Ordinary Share carries, in priority to the rights of the holders of any other class of shares, the right to payment of a fixed cumulative preferential cash dividend at the rate of 4% per year applied to the amount subscribed for. This dividend accrues from day to day and is payable annually in arrears on 31 August in each appropriate year until 31 August 2007. However, the first payment of this dividend and the additional dividend referred to below, has been calculated to 30 June 2004 and is due to be paid, subject to the availability of distributable profits, on 31 August 2004 and thereafter annually until 31 August 2007. An additional dividend is also payable on Convertible Preferred Ordinary Shares by reference to the success of the first team in the UEFA Champions League. This additional amount ranges from an additional 2% of the offer price per share if the first team progresses to the final sixteen of the UEFA Champions League up to a maximum additional amount of 6% of the offer price per share, on reaching the semi-finals in the competition. On 1 September 2007, the Convertible Preferred Ordinary Shares will convert into Ordinary Shares and Deferred Shares. The number of Ordinary Shares and Deferred Shares to which a holder of Convertible Preferred Ordinary Shares is entitled on conversion is determined by reference to the middle market price of Ordinary Shares in the three dealing days immediately prior to conversion, in accordance with the formula stated in the Companys Articles of Association and also takes account of any dividends which have accrued on the Convertible Preferred Ordinary Shares but which are unpaid as at the conversion date. Each Convertible Cumulative Preference Share of 60p carries the right, subject to the availability of distributable profits and the priority accorded to the Convertible Preferred Ordinary Shares, to the payment of a fixed preference dividend equal to 6% (before tax credit deduction) of its nominal value, cumulative with effect from 1 July 1996. The first dividend was paid on 31 August 1997. Following amendments to the Companys Articles of Association approved at the Extraordinary General Meetings of the Company on 31 July 2001, holders of Preference Shares of 60p are entitled on or at any time after 30 June 2001 to convert each Preference Share into one Ordinary Share of 1p and 59 Deferred Shares of 1p each. During the year ended 30 June 2004, 56,000 Preference Shares were converted in accordance with these provisions. The Ordinary Shares of 1p each arising on conversion rank pari passu in all respects with the existing Ordinary Shares of 1p each. The Deferred Shares are nontransferable, carry no voting rights, no class rights and have no valuable economic rights. As at 16 August 2004, the latest practicable date before publication, no further conversion notices had been received in respect of the Preference Shares. Details of Directors and other share options are included within the Remuneration Report on pages 19 to 22.

40

Notes to the Financial Statements

Group Other Reserve

(Year ended 30 June 2004)

22 RESERVES The movement of reserves during the year was as follows: At 1 July 2003 (Loss)/profit for the year Dividends At 30 June 2004

000

Group Profit and Loss Account 000

Company Other Reserve 000

Company Profit and Loss Account 000

21,222 21,222

(16,308) (7,471) (1,455) (25,234

21,222 21,222

1,164 1,817 (1,455) 1,526

The parent Company's profit for the financial year is 1.82m (2003: 1.37m). In accordance with Resolution No 8 at the 2002 Annual General Meeting and the Court Order obtained on 9 May 2003, the Share Premium Account was cancelled and the balance therein transferred to the Other Reserve. Under the terms of this transfer, an amount equal to three times the Executive Club loans, currently equal to 528,000 (2003: 540,000) will remain non-distributable from this Other Reserve until such loans are repaid by the Company.

23 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS At 1 July Movements in year: Retained loss for the year At 30 June

Group 2004 000

Group 2003 000

34,319 (8,926) 25,393

47,435 (13,116) 34,319

At 30 June 2004 Non-Equity Shareholders' Funds, defined in accordance with FRS4, amounted to 31.37m (2003: 30.51m). This relates to the Convertible Preferred Ordinary Shares, the Convertible Cumulative Preference Shares and the associated accrued dividends.

41

Notes to the Financial Statements

(Year ended 30 June 2004)

24 ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT Returns on investments and servicing of finance Preference dividend paid Interest paid Interest element of hire purchase payments Net cash outflow from returns on investments and servicing of finance Capital expenditure and financial investment Payments to acquire tangible fixed assets Payments to acquire intangible fixed assets Proceeds from sales of tangible fixed assets Proceeds from sales of intangible fixed assets Net cash outflow from capital expenditure and financial investment Financing Loans (paid) / received Loan instalments paid Capital element of hire purchase payments Net cash ( outflow ) / inflow from financing

2004 000

2003 000

(556) (1,271) (66) (1,893)

(558) (1,143) (66) (1,767)

(1,250) (3,765) 150 (4,865) (2,000) (6) (353) (2,359)

(2,113) (5,738) 10 1,605 (6,236) 2,000 (29) (442) 1,529

25 ANALYSIS OF NET DEBT Cash at bank and in hand

At 1 July 2003 000

Cash Flow 000

At 30 June 2004 000

753 753

(382) (382) 6 2,000 353 2,359 1,977

371 371 (176) (16,000) (16,176) (15,805)

Debt due within 1 year Debt due after 1 year Hire purchase creditor

(182) (18,000) (353) (18,535)

Net debt

(17,782)

42

Notes to the Financial Statements

(Year ended 30 June 2004)

26 CAPITAL AND OTHER FINANCIAL COMMITMENTS (A) Capital commitments Group & Company Authorised and contracted for:

2004 000

2003 000

3,404

1,051

Land & Buildings 2004 000

Land & Buildings 2003 000

Other 2004 000

Other 2003 000

(B) Other commitments At 30 June the Group had annual commitments under operating leases as follows: Expiry date: Within 1 year Between 2 and 5 years In more than 5 years 80 555 25 595 31 16 12 52

(C) Transfer fees payable/receivable Under the terms of certain contracts with other football clubs in respect of the transfer of player registrations, additional amounts would be payable/receivable by the Group if specific future conditions are met. Amounts in respect of such contracts at 30 June 2004 could result in an amount payable of 966,000 (2003: 1.42m), of which 901,000 could arise within one year and amounts receivable of 925,000 (2003: 750,000), of which 675,000 could arise within one year.

(D) Cross guarantees Cross guarantees exist between the Company and its subsidiary undertakings. The extent of these at 30 June 2004 was nil (2003: Nil).

43

Notes to the Financial Statements

(Year ended 30 June 2004)

27 FINANCIAL INSTRUMENTS

Details of the financial instruments of the Group during the financial year ended 30 June 2004, and as at the balance sheet date are as follows: Short term debtors and creditors have been excluded from the following disclosures in accordance with appropriate accounting standards. The Group has no financial assets other than cash (2003 : Nil). The bank loans and overdraft bear interest at LIBOR plus 1.125% and base rate plus 1.0% respectively, as was the case in the year ended 30 June 2003. The Company also has the ability to utilise up to 8m of the loan facility by way of acceptance credits. The other loans of the Group are interest free. It is the Groups policy to secure funding at the most cost-effective rates of interest available to the Group. The Companys non-equity Convertible Preferred Ordinary Shares are convertible to equity (Ordinary and Deferred) shares on 1 September 2007. Until these are converted, the holders are entitled to a fixed dividend of 4% and an additional dividend which is dependent on the success of the first team as set out in Note 21. The Companys non-equity Convertible Cumulative Preference Shares are convertible to equity (Ordinary and Deferred) shares on or any time after 1 July 2001. Until these shares are converted to equity, the holders are entitled to a fixed dividend of 6%. The majority of the transactions undertaken in the year are in sterling, therefore the Groups exposure to foreign currency risk is minimal. The Group has, during the current accounting period, entered into three forward foreign exchange contracts in respect of US dollars receivable in July and September 2004. The value of these contracts is $1.4m at an average exchange rate of $1.83. The maturity profile of the Groups financial liabilities at 30 June 2004 and 30 June 2003 and details of applicable interest rates on these liabilities are disclosed in notes 18 and 20. The fair value of the Groups financial assets and liabilities are not materially different to their book value. The Group achieves short-term liquidity flexibility through use of a bank overdraft. Of the available bank facilities of 36.00m (2003: 36.00m), of which 24.00m is represented by long term loans and 12.00m by overdraft, 20.00m (2003: 18.00m) remains undrawn at the balance sheet date as follows:

2004 000

2003 000

Loans repayable in more than five years Overdraft repayable on demand

8,000 12,000 20,000

6,000 12,000 18,000

28 POST BALANCE SHEET EVENTS Capital Expenditure Since the balance sheet date further capital expenditure on intangible assets of 1.53m (2003: nil) has been incurred.

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Notice and Notes

CELTIC plc (Incorporated in Scotland No. SC003487) Registered Office: Celtic Park, Glasgow. G40 3RE 16 August 2004 NOTICE OF ANNUAL GENERAL MEETING The Annual General Meeting of Celtic plc (the "Company") will be held at Celtic Park, Glasgow, G40 3RE on Wednesday 13 October 2004 at 10.30am for the following purposes:AS ROUTINE BUSINESS The following resolutions will be proposed as Ordinary Resolutions:1. To receive and adopt the audited accounts of the Company for the year ended 30 June 2004, together with the reports of the Directors and Auditors thereon. 2. That the Directors Remuneration Report contained within the Annual Report of the Company for the year ended 30 June 2004 be and is hereby approved. 3. To elect Peter Lawwell as a Director of the Company. 4. To re-elect Tom Allison, who retires by rotation, as a Director of the Company. 5. To re-elect Eric Riley, who retires by rotation, as a Director of the Company. 6. To re-appoint PKF as auditors of the Company and to authorise the Directors to determine its remuneration. AS SPECIAL BUSINESS Resolutions will be proposed as follows:7. To consider and if thought fit, pass the following resolution as an Ordinary Resolution of the Company: THAT the authority of the Directors contained within the Companys Articles of Association (" the Articles") pursuant to and in accordance with Section 80 of the Companies Act 1985 ("the Act") to exercise all the powers of the Company to allot relevant securities (within the meaning of Section 80 (2) of the Act up to an aggregate nominal amount equal to the Section 80 Amount (as defined in Article 5(d)(ii) of the Articles) be and is hereby renewed so that the Section 80 Amount for the purpose of this authority shall be for relevant securities up to an aggregate nominal amount equal to 3,545,053 and that this authority shall expire (save as provided in Article 5 (c) of the Articles) on 12 October 2009. 8. To consider and, if thought fit, pass the following resolution as a Special Resolution of the Company: THAT the power of the Directors contained in Article 5 (b) of the Companys Articles of Association (" the Articles") to allot equity securities (within the meaning of Section 94 (2) of the Companies Act 1985 ("the Act")) wholly for cash pursuant to and within the terms of the authority conferred by Resolution 7 above (i) in connection with a Rights Issue (as defined in Article 5(d)(v) of the Articles), shall be without limit; and (ii) otherwise than in connection with a Rights Issue, up to an aggregate nominal amount equal to the Section 89 Amount (as defined in Article 5(d)(iv) of the Articles); as if Section 89(1) of the Act did not apply to any such allotment, be and is hereby renewed, provided that the Section 89 Amount for the purposes of this renewed power shall be equity securities up to an aggregate nominal amount of 1,470,247 and that this renewed power shall expire (save as provided in Article 5(c) of the Articles) on the earlier of the date of the next Annual General Meeting of the Company after the passing of this Resolution and 12 January 2006. SHAREHOLDER REQUISITION 9. THAT the board is requested to propose a scheme at the next Annual General Meeting for the appointment to the board[s] of the Company and/or Celtic Football and Athletic Club Limited of an elected representative of supporters organisations/small shareholders/season ticket-holders/wider supporter opinion. 10. THAT the board is requested to introduce a dividend re-investment scheme for all classes of shares in the Company as an alternative to receiving cash dividends.

BY ORDER OF THE BOARD Robert M Howat Company Secretary

45

Notice and Notes

Holders of Ordinary Shares or Convertible Preferred Ordinary Shares are entitled to attend and vote at the Annual General Meeting. Shareholders entitled to attend may appoint a proxy or proxies to attend and, on a poll, vote in his/her place on all resolutions. A proxy does not have to be a shareholder. A Proxy Form and return envelope are enclosed. Completion and return of a form of proxy will not preclude a Shareholder entitled to attend and vote at the Annual General Meeting from doing so if he/she so wishes. If you do not intend to go to the Annual General Meeting or are not sure, please complete the Proxy Form, sign it and return it to Computershare Investor Services PLC, P.O. Box 1075, Bridgwater Road, The Pavilions, Bristol, BS99 3FA at least 24 hours before the time fixed for the Annual General Meeting or any adjourned meeting. In the case of a poll taken more than 48 hours after it is demanded, the Proxy Form should be returned at least 24 hours before the time appointed for the taking of the poll. If the registered shareholder is a corporate body, for example, a trust, company, association or club, the Proxy Form should be accompanied by a power of attorney or other authority under which it is signed or a copy of such authority certified notarially or in some other way approved by the Directors. Under Regulation 41 of the Uncertificated Securities Regulations 2001, the Company has specified that only those Ordinary and Convertible Preferred Ordinary Shareholders registered in the Register of Members of the Company as at 10.30am on 12 October2004 will be entitled to attend or vote at the Annual General Meeting in respect of the number of shares registered in their name at that time. Changes to entries on the Register of Members after 10.30am on 12 October 2004 will be disregarded in determining the rights of any person to attend or vote at the Meeting. If you have any questions about the Proxy Form or the procedures to follow, please telephone the Computershare Investor Services helpline on 0845 143 4004.

Explanatory Notes
RESOLUTION 1: Report and Accounts The Directors are required to present the audited statement of accounts of the Company and the Directors and Auditors Reports for the year ended 30 June 2004 to the Meeting. You are voting to receive and adopt these Reports. RESOLUTION 2: Remuneration Report The Company must present the Remuneration Report to the Meeting for approval of shareholders. The Remuneration Report sets out in particular, the Companys policy on Directors pay and benefits and includes details of the salary and benefits paid to Directors serving during the year. RESOLUTIONS 3: Election of Peter Lawwell The Directors appointed Mr. Lawwell to the Board as an executive Director in October 2003. In accordance with good practice and the provisions of the Combined Code on Corporate Governance, Mr. Lawwell has retired from office and stands for election by shareholders at the first available opportunity. This resolution seeks the approval of shareholders for his election to the Board and is recommended by the Directors. Mr. Lawwells biographical details are set out in the Annual Report. His substantial operational and management experience in industry and commerce has been developed in both private and listed companies and he has quickly established himself as a Board member and key executive within the Company. RESOLUTIONS 4 and 5: Re-election of Directors These resolutions seek the re-election of Tom Allison and Eric Riley, each of whom is willing to stand for re-election as a Director. Mr Allison has been a non-executive Director of Celtic since September 2001 and serves on the Boards three committees. He has a wide-ranging experience in business and company management evidenced by the positions mentioned in the biography on page 14. Mr Allison occupies both executive and nonexecutive roles in other companies and organisations and brings substantial knowledge and expertise to the Board. Mr Riley is the Companys Financial Director and has occupied that post since 1994. He has an extensive knowledge of the Companys operations and financial affairs and is a valued member of the executive team and Board. Mr Riley is a chartered accountant and has represented Company on the board of The Scottish Premier League Limited. He is the current representative of the Scottish Premier League Limited serving on the Board of the SFA. These re-elections have been duly proposed and are recommended by the Board. RESOLUTION 6: Re-appointment and remuneration of auditors The Company is required to appoint auditors, at each general meeting at which accounts are presented, to hold office until the end of the next such meeting. This resolution proposes the reappointment of the Companys existing auditors, PKF, and follows standard practice in giving authority to the Board to determine the auditors fees. PKF is responsible for examining the Companys annual report and accounts and for forming an opinion as to whether they give a true and fair view of the Companys financial position and comply with Companies Act requirements. PKFs audit includes an examination on a test basis of evidence relating to the amounts or disclosures in the accounts. PKF also reviews the Companys compliance with relevant paragraphs of the Combined Code and the Directors Remuneration Report Regulations 2002. Their report is included within the Annual Report and Accounts. The Audit Committee has considered the competence, performance, objectivity and independence of the auditors, on behalf of the Board. The designated audit partner within PKF is rotated at least every 5 years, in accordance with recommended practice. The Directors recommend their re-appointment. RESOLUTION 7: Authority to allot shares The authority of the Directors to allot shares expires at the conclusion of this years Annual General Meeting and this resolution seeks renewal of a general authority in respect of the remaining unissued share capital of the Company (which amounts to 12.06% of the Companys issued share capital at the date of this Notice) for a further period expiring 5 years from the date of the Annual General Meeting. As discussed below, the power relates to the unissued amounts of each of the Ordinary, Preference and Convertible Preferred Ordinary Share capital. The 5-year period is the maximum period permitted by the Articles and Section 80(5) of the Act.

46

Explanatory Notes
RESOLUTION 8 The current power, granted at last years AGM, to disapply statutory pre-emption rights in relation to the allotment of shares for cash, expires at this AGM. This resolution seeks your consent to the renewal of that power. Under section 89(1) of the Act, if the Directors wish to allot any of the unissued shares for cash, they must in the first instance offer them to existing shareholders in proportion to the number of shares that each shareholder has at that time. An offer of this type is called a "rights issue" and the entitlement to be offered a new share is known as a "pre-emption right". There may be circumstances where it is in the interests of the Company for the Directors to allot new shares for cash other than by way of a rights issue. This cannot be done under the terms of the Act unless the shareholders first waive their pre-emption rights. Resolution 8 asks shareholders to agree to this, but only for new shares up to a maximum aggregate nominal value of 1,470,247. That figure represents an amount equal to 5% of the allotted and issued share capital of the Company at the date of this Notice. The 5% limitation is in accordance with good practice guidelines except that the Directors consider that it is in the best interests of the Company that the limitation is calculated by reference to the combined issued Ordinary, Preference and Convertible Preferred Ordinary share capital of the Company, instead of just the issued Ordinary share capital. This is because the Preference Shares and Convertible Preferred Ordinary Shares are convertible into Ordinary Shares. If granted, the Directors will be able to use this power, within the limits stated, to allot new shares without obtaining further authority from shareholders. The authority given by this resolution will last for 15 months or until the conclusion of next years annual general meeting, whichever is earlier. RECOMMENDATIONS The Directors believe that the proposals outlined above are in the best interests of the Company and its shareholders. They intend to vote their own beneficial shareholdings in favour of each of the Resolutions and recommend shareholders to do likewise. SHAREHOLDER REQUISITION Resolutions 9 and 10 have been requisitioned by members of the Company under Section 376 of the Companies Act 1985, acting under the auspices of The Celtic Trust. The Act requires at least 100 members holding shares in the Company, on which there has been paid-up an average sum per member of not less than 100, to participate in order for a requisition to be circulated. These Resolutions are not proposed or supported by the Directors. Resolution 9 - scheme for appointment of Director The position of the Board of Celtic plc remains as communicated previously. In conformity with best practice, and the Combined Code on Corporate Governance, the Board operates on a unitary basis and recognises that directors have a general duty to act in the interests of all shareholders than of any particular group of shareholders or other body, whether large or small. The Board believes firmly that it is inappropriate for representation of a specific interest group to be the underlying basis for appointment. The Combined Code requires appointments to the Board to be on merit and against objective criteria. Appointments must ultimately be ratified by shareholders. The legislative and regulatory requirements imposed upon directors of listed companies continue to increase and candidates must therefore possess relevant skills and experience. The election of directors to the Board is a fundamental right of shareholders, arising by reason of their ownership of shares and enshrined within the Companys Articles of Association. Many of the Companys supporters are smaller shareholders and enjoy those rights already, as do various supporters clubs and associations. The Companies Act provides a basis for the requisitioning of resolutions and it is open to shareholders if those requirements are met, to formally propose a candidate for the Board, should they wish to do so. A scheme created to give effect to the resolution could mean that people other than shareholders and the Directors (as permitted by the Articles) would be entitled to propose candidates for the Board and as a result enjoy certain rights that company law enshrines for shareholders. The primary purpose and objective of the Company relates to the operation of the football club and its associated activities. Celtics supporter base spans more than 200 countries, 400 supporters clubs, 23,000 shareholders and an estimated supporter base of several million people. A fair system to select candidates and enable those referred to in the resolution to participate would, in the opinion of the Directors, be likely to result in the forced application of scarce resources to substantial administrative processes rather than in development of the Companys core activities. The Directors and Company continue to work towards improving dialogue and communications with shareholder and supporter groups. Regular meetings are held with supporters associations and the Celtic Trust as well as consultation with focus and supporter groups on various issues, such as season ticket pricing, strip design and catering supplies. Complaints procedures are in place and many informal opportunities to speak with Company representatives arise in the course of the year. In all of these circumstances and given the financial position and resources of the Company, the Directors believe that the current approach to Board appointments at Celtic is a reasonable one and the proposal is unnecessary. The Directors recommend you to vote against this resolution as they intend to do with their own shareholdings. Resolution 10 - dividend reinvestment scheme This resolution is also proposed by way of shareholder requisition and refers to a dividend reinvestment scheme. There are various types of scheme. Some operate with the grant of a mandate by the shareholder, instructing the scheme administrator to buy shares in the stock market for that shareholder, using the proceeds from the dividend. The shareholder is then required to pay a commission, usually at a low or discounted rate, for the share purchase. Stamp duty will also be payable on the transaction. Others are based on the issue of new shares by the company, rather than a market purchase. The shareholder remains liable for income tax on dividends reinvested under such plans on the same basis as if he or she had received the cash dividend and reinvested it. As well as individual costs to the shareholder, dividend reinvestment schemes can also result in an administrative cost to the company, particularly at the time of inception. This resolution is not specific as to the type of scheme contemplated. The Company will investigate possible schemes in greater depth to establish which, if any, would be of potential benefit to the Company and its shareholders and worthy of recommendation but in the meantime, the Directors do not consider that the resolution, as proposed, would be in the best interests of the Company or the shareholders and therefore intend to vote their own holdings against it. The Directors recommend that shareholders also vote against this resolution.

47

Directors, Officers and Advisers ( As at 30 June 2004)

Directors Brian Quinn CBE (Chairman)* Thomas E Allison* Dermot F Desmond (Senior Independent Director)* Eric Hagman CBE* Peter T Lawwell (Executive Director, Head of Operations) Eric J Riley (Financial Director)
* Independent Non-Executive Director

Bankers The Co-operative Bank plc 29 Gordon Street Glasgow G1 3PF Remuneration Committee Dermot F Desmond (Chairman)* Thomas E Allison* Brian Quinn CBE* Audit Committee Eric Hagman CBE (Chairman)* Thomas E Allison* Dermot F Desmond* Nomination Committee Brian Quinn CBE (Chairman)* Thomas E Allison* (part) Dermot F Desmond* Stockbrokers Arbuthnot Securities 20 Ropemaker Street London EC2Y 9AR Registrars Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 3FA Web Site www.celticfc.net

Company Secretary Robert M Howat Company Number SC3487 Registered Office Celtic Park Glasgow G40 3RE Directors of The Celtic Football and Athletic Company Limited John S Keane* Peter T Lawwell Michael A McDonald* Eric J Riley Kevin Sweeney* Football Manager Martin ONeill MBE OBE Auditors PKF 78 Carlton Place Glasgow G5 9TH Solicitors McGrigors Pacific House 70 Wellington Street Glasgow G2 6SB

48