Celtic have announced record annual profits of more than £40million ahead of their latest Champions League campaign.

The club made a profit of £40.7m last season and had £72.3m in the bank “net of bank borrowings” on June 30 this year.

Group revenue was up by more than a third to £120m and the club reported a gain in the transfer market of £14.4m.

The figures were published just after their pre-match media conference in Rotterdam ahead of their Group E opener against Feyenoord.

In a statement, chairman Peter Lawwell stated that factors in a £32m increase in revenue included Champions League football – after the Europa League campaign the previous year – plus a tour of Australia and record retail figures.

He added: “The £34.6m increase in profit before tax resulted from the significant revenue increase outlined above along with a £14.4m gain on sale of player registrations, predominantly from the sales of Jota, (Josip) Juranovic and (Giorgos) Giakoumakis.

“In addition, we recorded £13.5m of other income that came from a combination of compensation received following the departure of Ange Postecoglou and a business interruption insurance recovery in relation to Covid-19, with the two items mentioned being one off in nature and typically non-recurring.”

Lawwell stated that the cash reserves were used to fund the summer transfer plans for the last two seasons, with fees “typically paid in instalments”.

The former Celtic chief executive added: “This sum also contains the cash required to fund the significant investment that the club is planning to make in developing our Barrowfield training facility.

“It is important to highlight that, given the increasing gap between the sums able to be earned between the Champions League and the Europa League, it is vital that we retain a cash buffer in reserve.

“History tells us that we will not always qualify for the Champions League and the benefit of holding cash reserves affords us the optionality of managing through seasons where we participate in the Europa League with the ability to retain our squad as opposed to selling key players to bridge the income shortfall between both competitions.

“The financial sustainability rules are also a key feature of UEFA licencing and we need to be cognisant of running our club accordingly.”

Lawwell stated that a £13m transfer spend took their total outlay to £51.4m over two years and that a further £15m had been invested since the end of June.

Celtic signed seven players on permanent deals this summer – Kwon Hyeok-kyu, Marco Tilio, Yang Hyun-jun, Odin Thiago Holm, Maik Nawrocki, Gustaf Lagerbielke and Luis Palma – and brought in Paulo Bernardo and Nat Phillips on loan.