Celtic might be riding high at the top of the Scottish Premier League, but that success has not been matched off the pitch.

Higher salary costs and a negligible increase in turnover in the half year to the end of December have meant that operating profits before exceptionals fell to £2.2 million sterling (€3.5 million) from £4.3 million sterling, with pre-tax profits in the period down to £600,000 from £748,000.

And the football club, in which financier Mr Dermot Desmond is the largest shareholder with 19.8 per cent, has warned that operating profits for the full year will fall while any after-tax profits will depend on the sale of players at what the company describes as "realistic" prices.

Celtic's turnover from its football activities increased to £12.7 million sterling from £11.2 million, but the most recent half-year turnover is based on 17 home games at Parkhead compared to 14 home games in the same period the previous year. Turnover from merchandising rose to £4.1 million from £3.6 million although turnover from multimedia operations fell to £4.6 million from £5.2 million. During the period, Celtic spent £15.5 million on new signings and new extended contracts for existing players.

While merchandising growth was strong with a 13 per cent increase in sales, this was more than offset by the failure to get television income from the UEFA Cup at similar levels to the previous year. The company has also warned that season ticket-holders are facing an increase next season.

Celtic chairman Mr Brian Quinn said the company was close to appointing a chief executive after the acrimonious departure of former chief executive Mr Allan McDonald at the end of last year. He also said Celtic was involved in continuing discussions with potential media partners "on how to best exploit our media rights at a price that recognises the full value of the Celtic brand".

The poor results did little to help the Celtic share price which has been falling steadily since hitting a 350p high two years ago. Yesterday, the shares fell 2 1/2p to 161 1/2p sterling, leaving investors who bought former chairman Mr Fergus McCann's shareholding in September 1999 with losses of 43 per cent. These investors include Mr Desmond who bought 2.8 million shares from Mr McCann at the sale price of 280p each.