Celtic enjoyed success at home and abroad last season

Celtic have announced a profit for the second successive year, with the Scottish champions recording a pre-tax gain of �4.44m.

The preliminary results for the year ended 30 June also reveal that Celtic's bank debt has dropped to �3.52m.

In his first annual report as chairman, John Reid said: "Our business model is starting to deliver profits each year.

"Although we have seen in the last two years the difference that participation in European competition makes."

Celtic won a third consecutive league title in May and reached the last 16 of the Champions League for the second season running.

However, the club suffered early exits in both domestic cup competitions.

Celtic have been quiet on the transfer front this summer and Reid conceded that it is difficult to attract high-calibre players to Scotland.

We have never been in better shape off the park and we are in good shape on it Celtic chief executive Peter Lawwell

"In the current football player market, it is increasingly clear that our ability to compete on transfer fees and wages with clubs from the five main footballing nations, and particularly in England, is limited," he added.

"In consequence, we look to gain advantage through improved scouting, player development and coaching and the use of sports science and performance analysis."

Following record turnover and income, last year's pre-tax profit was just over �15m.

"We must compete effectively, manage costs well and provide good value for money if we are to maintain our position," said Reid.

Chief executive Peter Lawwell, , who joined the club in October 2003 when Celtic were �35m in debt, says the Glasgow club are in a position of strength.

"We have never been in better shape off the park and we are in good shape on it," he said.

"The season, I came here we had reached the final of the Uefa Cup and lost �8m. That couldn't go on.

"What we were looking for is something that was sustainable.

"We wanted success on the pitch and off the pitch and we have achieved that.

"Reducing the debt completely has not been our driving force.

"What we want to do is continue to win the league and progress in Europe within financial restriction.

"Everything else follows on from that."