Manchester United (NYSE: MANU; the “Company” and “Group”) – one
of the most popular and successful sports teams in the world -
today announced financial results for the 2013 fiscal first quarter
ended 30 September 2012.
Highlights
- Commercial revenues grew 24%
- Sponsorship revenue increased
32.4%
- Retail, merchandising apparel &
product licensing revenue increased 11.9%
- New media & mobile increased
11.5%
- Ten new Sponsorship deals were
entered into in the first quarter – General Motors, Bwin,
Toshiba Medical Systems, Yanmar (global); Kagome (regional);
Santander, Shinsei Bank and MBNA (financial services); Bakcell
(mobile); and Fuji TV (MUTV)
- Our new Hong Kong office opened in
August 2012 and has already made a positive impact on
sponsorship
- 1st place in Premier
League & Champions League Group H
Commentary
Ed Woodward, Executive Vice Chairman commented, ‘Manchester
United had a record first quarter driven by our commercial
operation, which continues to experience extremely strong global
revenue growth in new media & mobile, retail merchandising
& sponsorship. The team has also made a strong start to the
12/13 season – currently 1st place in the Premier League and 1st
place (and undefeated) in our Champions League Group’.
Outlook
For fiscal 2013, Manchester United continues to expect:
- Revenue to be £350m to £360m.
- Adjusted EBITDA to be £107m to
£110m.
Key Financials
(unaudited)
£ million
Three months ended
30 September
2012
2011 Change Commercial revenue
43.0 34.6 24.3% Broadcasting revenue
13.7 21.9 (37.4%) Matchday
revenue
19.6 17.3 13.3%
Total revenue
76.3 73.8
3.4% Adjusted EBITDA*
16.3 19.3
(15.5%) Profit/(loss) for the period from continuing
operations (i.e. Net Income)
20.5
(5.0) N/A Basic and diluted earnings/(loss) per
share**
0.13 (0.03) N/A
Gross debt***
359.7 433.2
(17.0%) Cash and cash equivalents
52.5
65.0 (19.2%)
*Adjusted EBITDA is a non-IFRS measure. We define Adjusted
EBITDA as profit/(loss) for the period from continuing operations
before net finance costs, tax credit, depreciation, amortisation
of, and profit on disposal of, players’ registrations and
exceptional items. We believe Adjusted EBITDA is useful as a
measure of comparative operating performance from period to period
and among companies as it is reflective of changes in pricing
decisions, cost controls and other factors that affect operating
performance, and it removes the effect of our capital structure
(primarily interest expense), asset base (primarily depreciation
and amortisation) and items outside the control of our management
(primarily income taxes and interest income and expense). Adjusted
EBITDA has limitations as an analytical tool, and you should not
consider it in isolation, or as a substitute for an analysis of our
results as reported under IFRS as issued by IASB. A reconciliation
of Adjusted EBITDA to profit/(loss) for the period from continuing
operations is presented in supplemental note 3.
**Basic and diluted earnings/(loss) per share is calculated by
dividing the profit/(loss) attributable to owners of the Company by
the weighted average number of ordinary shares in issue during the
year, as adjusted for the reorganisation transactions described in
supplemental note 1.
*** Gross debt is down 18% compared with 30 June 2012,
£436.9m.
Revenue
Analysis
Commercial
Commercial revenue for the quarter increased 24.3% to £43.0
million driven by the addition of several new global (including
General Motors - Chevrolet) and regional sponsorships; an increase
in receipts from existing partnerships; an increase in profit share
pursuant to the arrangement with Nike; and the commencement of new
mobile partnerships. For the quarter:
- Sponsorship revenue increased 32.4%
year on year to £27.8 million. Manchester United entered into ten
new sponsorship agreements during the quarter;
- Retail, Merchandising, Apparel &
Product Licensing revenue increased 11.9% year on year to £9.4
million; and
- New Media & Mobile revenue
increased 11.5% year on year to £5.8 million.
Broadcasting
Broadcasting revenues for the quarter decreased 37.4% year on
year to £13.7 million. The main components of this reduction
are:
a)
timing differences of £5.6m as a result of
playing one UEFA Champions League game in the current year quarter
compared to two games in the prior year quarter; a ‘residual
receipt’ from UEFA relating to the 2011/12 UEFA Champions League
competition will be received in Q2; and two fewer live FAPL
broadcasts this year compared to the same period in the prior
year.
b)
permanent differences of c.£2.6m resulting
largely from lower distributions from the UEFA Champions League
fixed pool, as a consequence of finishing 2nd in the Premier League
in season 2011/12 compared to finishing 1st in season 2010/11.
Matchday
Matchday revenues for the quarter increased 13.3% year on year
to £19.6 million principally as a result of one-off fees earned
from the staging of nine Olympic Games football matches at Old
Trafford together with the impact of a home fixture in the League
Cup (compared with nil in the prior year quarter).
Other Financial
Information
Operating expenses
Total operating expenses for the quarter increased 12.7% year on
year to £74.8 million.
Staff costs
Staff costs for the quarter increased 6.6%
year on year to £40.3 million, primarily due to growth in
commercial headcount, partially offset by a one-off receipt of
£1.3m for players on International duty at Euro 2012. Staff costs
for the remaining quarters of the year are expected to be higher
due to this one-off receipt and the fact that certain player
acquisitions did not take place until half way through the
period.
Other operating expenses
Other operating expenses for the quarter
increased 18.0% year on year to £19.7 million, primarily due
to increased pre-season tour travel costs, gateshare payments to
domestic cup opponents following our home League Cup fixture (£nil
in the prior year quarter due to the equivalent fixture being
played away from home), and one-off Olympic games costs.
Depreciation & amortisation of
players’ registrations
Depreciation for the quarter increased 4.2%
year on year to £1.9 million; and amortisation of players’
registrations for the quarter decreased 2.7% year on year to £9.8
million. The unamortised balance of existing players’ registrations
at 30 September 2012 was £135.6 million.
Exceptional items
Exceptional items for the quarter were for
£3.1 million and related to professional advisor fees in connection
with the IPO (compared with £nil for the prior year quarter).
Profit on disposal of players’ registrations
Profit on the disposal of players’ registrations for the quarter
was £4.8 million (compared with £5.6 million in the prior year
quarter) - key disposals being Berbatov and Park.
Net finance costs
Net finance costs for the quarter decreased 35.9% year on year
to £12.4 million compared with the same quarter last year. The main
reasons for this decrease are a favourable FX movement of £13.9
million year on year on translation of the Group’s US dollar
denominated senior secured notes, partially offset by a £3.3
million increase in premium paid on repurchases of US dollar
denominated senior secured notes and a £2.3 million increase in
accelerated amortisation of debt issue costs on repurchased notes
with proceeds for the IPO.
Foreign exchange gains or losses are not a cash benefit or
charge and could reverse depending on dollar/sterling exchange rate
movements. Any gain or loss on a cumulative basis will not be
realised until 2017 (or earlier if our senior secured notes are
refinanced or redeemed prior to their stated maturity). This
exposure to FX movements has been reduced now that the net IPO
proceeds (of approximately $110.3m) have been used to reduce our
USD denominated senior secured notes.
Tax
The tax credit for the quarter was £26.5 million (compared with
a credit of £1.4 million in the prior year quarter). Following the
transfer of Red Football Shareholder Ltd and its subsidiaries from
the controlling shareholders to the Company, the Company has
assumed certain US tax bases. A related deferred tax asset has been
recognised in respect of the US tax bases in the period, relating
to future tax deductions. The amount recognised reflects
management’s current best assessment of probable taxable profits in
the future against which the tax deductions may be offset. This has
been determined on the basis of only those commercial agreements in
place at the balance sheet date. An element of this deferred tax
asset will unwind during fiscal 2013. The potential deferred tax
asset available, but which currently remains unrecognised, amounts
to at least £60m and will be recognised when key commercial
contracts are renewed or replaced.
Profit/(loss) for the period from continuing
operations
Profit for the period from continuing operations for the quarter
increased to £20.5 million, compared to a loss in the prior year
quarter of £5.0 million.
Cash flows
Cash generated from operating activities for the quarter were
£9.3 million, an increase of £10.9 million compared to £1.6 million
cash used in the prior year quarter.
Capital expenditures on property, plant and equipment and
investment property for the quarter were £3.4 million, a decrease
of £10.4 million compared to £13.8 million in the prior year
quarter. Expenditure in the current year quarter mainly related to
the redevelopment of the First Team’s training facility at
Carrington. In the prior year quarter we acquired investment
properties amounting to £8.1m around the Old Trafford stadium.
Net player capital expenditure for the quarter was £29.5
million, a decrease of £17.6 million compared to £47.1 million in
the prior year quarter. Expenditure in the current year quarter
mainly related to the acquisition of Shinji Kagawa and Nick Powell
and the first of two staged payments for Robin van Persie.
Net cash generated from financing activities for the quarter was
£7.6 million, an increase of £30.7 million compared to £23.1
million cash used in the prior year quarter. In the current year
quarter the Company raised £70.3 million following the public
offering of shares on the New York Stock Exchange. The proceeds
were used to repurchase the Company’s US dollar denominated senior
secured notes (see “Borrowings” below) – the principal value of
which was £62.6 million.
Cash and cash equivalents
Cash and cash equivalents at 30 September 2012 were £52.5
million compared to £65.0 million at 30 September 2011.
Borrowings
Total borrowings were £359.7 million at 30 September 2012
compared to £436.9 million at 30 June 2012. During the quarter we
re-purchased and retired the sterling equivalent of £62.6 million
of senior secured notes comprising US$101.7 million of US dollar
denominated notes. The consideration paid amounted to £67.9
million.
Conference Call
Information
The Company’s conference call to review first quarter fiscal
2013 results will be broadcast live over the internet today, 14
November 2012 at 8:00 am Eastern Time and will be available on
Manchester United’s investor relations website at
http://ir.manutd.com. Thereafter, a replay of the webcast will be
available for thirty days.
About Manchester
United
Manchester United is one of the most popular and successful
sports team in the world, playing one of the most popular spectator
sports on Earth.
Through our 134-year heritage we have won 60 trophies, enabling
us to develop the world’s leading sports brand and a global
community of 659 million followers. Our large, passionate
community provides Manchester United with a worldwide platform to
generate significant revenue from multiple sources, including
sponsorship, merchandising, product licensing, new media &
mobile, broadcasting and matchday.
Cautionary
Statement
This press release contains forward-looking statements. You
should not place undue reliance on such statements because they are
subject to numerous risks and uncertainties relating to the
Company’s operations and business environment, all of which are
difficult to predict and many are beyond the Company’s control.
Forward-looking statements include information concerning the
Company’s possible or assumed future results of operations,
including descriptions of its business strategy. These statements
often include words such as “may,” “might,” “will,” “could,”
“would,” “should,” “expect,” “plan,” “anticipate,” “intend,”
“seek,” “believe,” “estimate,” “predict,” “potential,” “continue,”
“contemplate,” “possible” or similar expressions. The
forward-looking statements contained in this press release are
based on our current expectations and estimates of future events
and trends, which affect or may affect our businesses and
operations. You should understand that these statements are not
guarantees of performance or results. They involve known and
unknown risks, uncertainties and assumptions. Although the Company
believes that these forward-looking statements are based on
reasonable assumptions, you should be aware that many factors could
affect its actual financial results or results of operations and
could cause actual results to differ materially from those in these
forward-looking statements. These factors are more fully discussed
in the “Risk Factors” section and elsewhere in the Company’s
Registration Statement on Form F-1, as amended (File No.
333-182535) and the Company's Annual Report on Form 20-F (File No.
001-35627).
Key Performance
Indicators
Three months ended 30 September 2012
2011
Commercial % of total revenue
56.4% 46.8% Nike and Aon % of Commercial
33.1% 38.2%
Partners and other % of Commercial
66.9% 61.8%
Broadcasting % of total revenue
18.0% 29.7%
Matchday % of total revenue
25.6% 23.5% Home Matches
Played FAPL
3 3 UEFA competitions
1 1 Domestic Cups
1 - Away Matches Played* UEFA competitions
- 1
Domestic Cups
- 1 *Away matches played includes games at a
neutral venue, where appropriate
Other Employees at period
end
735 670 Staff costs % of revenue
52.8% 51.3%
Phasing
of Premier League home games Quarter 1 Quarter
2 Quarter 3 Quarter 4
Total 2012/13 season* 3 7 5 4 19 2011/12 season 3 7 5 4 19
2010/11 season 3 7 5 4 19
*Note - Games can be rescheduled for TV
or clashes due to domestic cup competitions. We will update each
Quarter.
CONSOLIDATED INCOME STATEMENT
(unaudited; in £ thousands, except per
share data)
Three months ended
30 September
2012 2011
Revenue
76,316 73,782 Operating expenses
(74,811)
(66,426) Profit on disposal of players’ registrations
4,818 5,624
Operating profit
6,323 12,980 Finance costs
(12,476) (19,619) Finance income
89 284 Net finance costs
(12,387) (19,335)
Loss on ordinary activities
before tax (6,064) (6,355) Tax credit
26,532 1,385
Profit/(loss) for the period
from continuing operations(1)
20,468 (4,970)
Attributable to:
Owners of the Company
20,386 (5,018) Non-controlling interest
82 48
20,468
(4,970)
Earnings/(loss) per share attributable to
the equity holders of the Company during the period Basic and
diluted earnings/(loss) per share (Pounds Sterling)
0.13 (0.03)(2)
(1) Also referred to as Net Income.
(2) As adjusted retrospectively to reflect the reorganisation
transactions described in supplemental note 1.
CONSOLIDATED BALANCE SHEET
(unaudited; in £ thousands)
30 September
2012
30 June
2012
30 September
2011
ASSETS Non-current assets Property, plant and
equipment
250,479 247,866 244,746 Investment property
14,169 14,197 13,816 Goodwill
421,453 421,453 421,453
Players’ registrations
135,634 112,399 120,234 Trade and
other receivables
1,500 3,000 13,000 Non-current tax
receivable
- - 2,500 Deferred tax asset
24,589 - -
847,824 798,915 815,749
Current assets Derivative financial instruments
1,228
967 643 Trade and other receivables
69,887 74,163 55,860
Current tax receivable
3,551 2,500 - Cash and cash
equivalents
52,527 70,603
64,967
127,193
148,233 121,470
Total assets
975,017 947,148
937,219
CONSOLIDATED BALANCE SHEET
(continued)
(unaudited; in £ thousands)
30 September
2012
30 June
2012(1)
30 September
2011(1)
EQUITY AND LIABILITIES Equity Share capital
52
50 50 Share premium
68,666 25 25 Merger reserve
249,030 249,030 249,030 Hedging reserve
791 666 482
Retained earnings/(deficit)
8,069
(12,671) (30,818)
Equity attributable to owners of
the Company 326,608 237,100
218,769
Non-controlling interests
(1,921) (2,003) (2,282)
324,687 235,097 216,487
Non-current liabilities Derivative financial instruments
1,701 1,685 - Trade and other payables
23,232 22,305
23,073 Borrowings
353,966 421,247 426,299 Deferred revenue
7,131 9,375 16,106 Provisions
1,247 1,378 1,795
Deferred tax liabilities
25,608
26,678 53,347
412,885
482,668 520,620
Current liabilities Derivative
financial instruments
- - 1,725 Current tax liabilities
1,128 1,128 1,127 Trade and other payables
79,437
83,664 55,197 Borrowings
5,740 15,628 6,942 Deferred revenue
150,714 128,535 134,642 Provisions
426 428 479
237,445 229,383 200,112
Total equity and
liabilities 975,017 947,148
937,219
(1) As adjusted retrospectively to reflect the reorganisation
transactions described in supplemental note 1.
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
(unaudited; in £ thousands)
Share capital
Share premium
Merger reserve
Hedging reserve
Retained
earnings/(deficit)
Total attributable to
owners of the Company
Non-controlling
interests
Total equity
Balance at 1 July 2011 - 249,105
- (466) (25,886) 222,753 (2,330)
220,423 (Loss)/profit for the period - - - - (5,018) (5,018)
48 (4,970) Cash flow hedges, net of tax - - - 948 - 948 - 948
Currency translation differences - -
- - 86 86 - 86
Total
comprehensive income/(loss) for the period - - - 948 (4,932)
(3,984) 48 (3,936) Proceeds from shares issued 50 25 - - - 75 - 75
Capital reorganisation(1) - (249,105)
249,030 - - (75) - (75)
Balance at 30 September 2011 50
25 249,030 482 (30,818) 218,769
(2,282) 216,487 Profit for the period - - - - 28,004 28,004
279 28,283 Cash flow hedges, net of tax - - - 184 - 184 - 184
Currency translation differences - -
- - 143 143 - 143
Total comprehensive income for the period - - - 184 28,147
28,331 279 28,610 Dividends - -
- - (10,000) (10,000) - (10,000)
Balance at 30 June 2012 50 25
249,030 666 (12,671) 237,100
(2,003) 235,097 Profit for the period - - - - 20,386 20,386
82 20,468 Cash flow hedges, net of tax - - - 125 - 125 - 125
Currency translation differences - -
- - 27 27 - 27
Total
comprehensive income for the period - - - 125 20,413 20,538 82
20,620 Equity settled share-based payments - - - - 327 327 - 327
Proceeds from shares issued(2) 2 68,641
- - - 68,643 - 68,643
Balance at 30 September 2012 52
68,666 249,030 791
8,069 326,608 (1,921)
324,687
(1) Adjusted retrospectively to reflect the reorganisation
transactions described in supplemental note 1.
(2) See supplemental note 1.2.
CONSOLIDATED STATEMENT OF CASH
FLOWS
(unaudited; in £ thousands)
Three months ended
30 September
2012 2011
Cash
flows from operating activities Cash generated from
operations (note 2)
33,883 22,560 Interest paid
(24,503) (21,124) Interest received
85 146 Income tax
paid
(202) (3,210)
Net cash
generated from/(used in) operating activities
9,263 (1,628)
Cash flows from investing
activities Purchases of property, plant and equipment
(3,396) (6,411) Purchases of investment property
-
(7,364) Purchases of players’ registrations
(34,897)
(51,034) Proceeds from sale of players’ registrations
5,364 3,966
Net cash used in investing
activities (32,929) (60,843)
Cash flows from financing activities Proceeds from issue of
shares
70,258 - Repayment of borrowings
(62,704) (23,126)
Net cash generated from/(used
in) financing activities 7,554
(23,126)
Net decrease in cash and cash equivalents
(16,112) (85,597) Cash and cash equivalents at beginning of
period
70,603 150,645 Exchange losses on cash and cash
equivalents
(1,964) (81)
Cash
and cash equivalents at end of period
52,527 64,967
MANCHESTER UNITED plcSUPPLEMENTAL
NOTES
1 General information
Manchester United plc (‘the Company’) and its subsidiaries
(together ‘the Group’) is a professional football club together
with related and ancillary activities. The Company is incorporated
under the Companies Law (2011 Revision) of the Cayman Islands. The
Company became the parent of the Group as a result of
reorganisation transactions which were completed immediately prior
to the completion of the public offering of Manchester United plc
shares on the New York Stock Exchange (“NYSE”) in August 2012 as
described more fully below.
1.1 The reorganisation transactions
The Group had historically conducted business through Red
Football Shareholder Limited, a private limited company
incorporated in England and Wales, and its subsidiaries. Prior to
the reorganisation transactions, Red Football Shareholder Limited
was a direct, wholly owned subsidiary of Red Football LLC, a
Delaware limited liability company. On 30 April 2012, Red Football
LLC formed a wholly-owned subsidiary, Manchester United Ltd., an
exempted company with limited liability incorporated under the
Companies Law (2011 Revision) of the Cayman Islands, as amended and
restated from time to time. On 8 August 2012, Manchester United
Ltd. changed its legal name to Manchester United plc.
On 9 August 2012, Red Football LLC contributed all of the equity
interest of Red Football Shareholder Limited to Manchester United
plc. As a result of these reorganisation transactions, Red Football
Shareholder Limited became an indirect, wholly-owned subsidiary of
Manchester United plc.
The new parent, Manchester United plc had 155,352,366 shares in
issue immediately after the reorganisation transactions and before
the issue of new shares pursuant to the public offering. The
reorganisation transactions have been treated as a capital
reorganisation arising at the reorganisation date (9 August 2012).
In accordance with International Financial Reporting Standards,
historic earnings per share calculations and the balance sheet as
at 30 June 2012 and 30 September 2011 have been restated
retrospectively to reflect the capital structure of the new parent
rather than that of the former parent, Red Football Shareholder
Limited.
1.2 Initial public offering (“IPO”)
On 10 August 2012, the Company issued a further 8,333,334
ordinary shares at an issue price of US$14 per share and listed
such shares on the NYSE. Net of underwriting costs and discounts,
proceeds of US$110,250,000 (£70,258,000) were received. Expenses of
£1,615,000 directly attributable to this issue of new shares have
been offset against share premium.
MANCHESTER UNITED plc.
SUPPLEMENTAL NOTES (continued)
(unaudited; in £ thousands)
2 Cash generated from
operations
Three months ended
30 September
2012 2011
Profit/(loss) from continuing operations
20,468
(4,970) Tax credit
(26,532)
(1,385) Loss on ordinary activities before tax
(6,064)
(6,355) Depreciation charges
1,917 1,839 Amortisation of
players’ registrations
9,823 10,094 Profit on disposal of
players’ registrations
(4,818) (5,624) Net finance costs
12,387 19,335 Share-based payments
327 - Fair value
gains on derivative financial instruments
(111) -
Decrease/(Increase) in trade and other receivables
6,358
(665) Increase in trade and other payables and deferred revenue
14,210 4,138 Decrease in provisions
(146) (202)
Cash generated from operations
33,883 22,560
3 Reconciliation of
Adjusted EBITDA to Profit/(loss) for the period from continuing
operations
Three months ended
30 September
2012 2011
Adjusted EBITDA 16,343 19,289 Adjustments:
Depreciation
(1,917) (1,839) Amortisation of players’
registrations
(9,823) (10,094) Exceptional items
(3,098) - Profit on disposal of players’ registrations
4,818 5,624 Net finance costs
(12,387) (19,335) Tax
credit
26,532 1,385
Profit/(loss) for the period from continuing operations
20,468 (4,970)
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