Manchester United plc

Management’s discussion and analysis of financial condition and results of operations

GENERAL INFORMATION AND FORWARD-LOOKING STATEMENTS

The following Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the interim consolidated financial statements and notes thereto included as part of this report. This report 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 interim report 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 Annual Report on Form 20-F for the year ended 30 June 2012, as filed with the Securities and Exchange Commission on 25 October 2012 (File No. 001-35627).

GENERAL

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 61 trophies, enabling us to develop what we believe is one of the world’s leading sports brands 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.

RESULTS OF OPERATIONS

Three months ended 31 March 2013 as compared to the three months ended 31 March 2012

	Unaudited three months ended 31 March (in £ millions)				% change 2013 over
	2013		2012		2012
Revenue	91.7		70.8		29.5	%
Commercial revenue	36.0		27.3		31.9	%
Broadcasting revenue	21.7		16.9		28.4	%
Matchday revenue	34.0		26.6		27.8	%
Total operating expenses	(79.0	)	(66.6	)	18.6	%
Employee benefit expenses	(44.9	)	(35.9	)	25.1	%
Other operating expenses	(21.8	)	(14.5	)	50.3	%
Depreciation	(1.9	)	(2.1	)	(9.5	)%
Amortisation of players’ registrations	(10.4	)	(9.7	)	7.2	%
Exceptional items	—		(4.4	)	—
Profit on disposal of players’ registrations	2.5		2.1		19.0	%
Net finance costs	(18.3	)	(3.5	)	422.9	%
Tax credit/(expense)	6.7		(1.7	)	—

Revenue

Consolidated revenue for the three months ended 31 March 2013 increased to £91.7 million, an increase of £20.9 million, or 29.5%, over £70.8 million for the three months ended 31 March 2012, as a result of an increase in revenue in each of our revenue sectors, as described below.

Commercial revenue

Commercial revenue for the three months ended 31 March 2013 was £36.0 million, an increase of £8.7 million, or 31.9%, over £27.3 million for the three months ended 31 March 2012. This increase was primarily driven by the addition of several new sponsorship deals — see discussion on page 5 in relation to commercial revenue for the nine months ended 31 March 2013 for further details.

· Sponsorship revenue for the three months ended 31 March 2013 was £21.0 million, an increase of £7.2 million, or 52.2%, over £13.8 million for the three months ended 31 March 2012.

· Retail, merchandising, apparel & product licensing revenue for the three months ended 31 March 2013 was £9.2 million, an increase of £0.8 million, or 9.5%, over £8.4 million for the three months ended 31 March 2012.

· New media & mobile revenue for the three months ended 31 March 2013 was £5.8 million, an increase of £0.7 million, or 13.7%, over £5.1 million for the three months ended 31 March 2012.

Broadcasting revenue

Broadcasting revenue for the three months ended 31 March 2013 was £21.7 million, an increase of £4.8 million, or 28.4%, over £16.9 million for the three months ended 31 March 2012. The main reasons for this increase relate to progress to the Champions League Round of 16 (compared to exiting at the group stages in the prior year) and an improved performance relative to other English clubs (compared to the prior year).

Matchday revenue

Matchday revenue for the three months ended 31 March 2013 was £34.0 million, an increase of £7.4 million, or 27.8%, over £26.6 million for the three months ended 31 March 2012, due primarily to an additional three home cup games in the quarter compared to the prior year quarter.

Total operating expenses

Total operating expenses (defined as employee benefit expenses, other operating expenses, depreciation, amortisation of players’ registrations and exceptional items) for the three months ended 31 March 2013 were £79.0 million, an increase of £12.4 million, or 18.6%, over £66.6 million for the three months ended 31 March 2012.

Employee benefit expenses

Employee benefit expenses for the three months ended 31 March 2013 were £44.9 million, an increase of £9.0 million, or 25.1%, over £35.9 million for the three months ended 31 March 2012, primarily due to new player signings, existing player wage increases and growth in commercial headcount.

Other operating expenses

Other operating expenses for the three months ended 31 March 2013 were £21.8 million, an increase of £7.3 million or 50.3% over £14.5 million for the three months ended 31 March 2012, primarily due to an increase in domestic cup gateshare costs, catering direct costs, and police and security costs —

Nine months ended 31 March 2013 as compared to the nine months ended 31 March 2012

	Unaudited nine months ended 31 March (in £ millions)				% change 2013 over
	2013		2012		2012
Revenue	278.1		245.8		13.1	%
Commercial revenue	114.5		89.5		27.9	%
Broadcasting revenue	75.0		76.4		(1.8	)%
Matchday revenue	88.6		79.9		10.9	%
Total operating expenses	(227.0	)	(203.0	)	11.8	%
Employee benefit expenses	(129.4	)	(112.4	)	15.1	%
Other operating expenses	(57.2	)	(48.8	)	17.2	%
Depreciation	(5.7	)	(5.7	)	—
Amortisation of players’ registrations	(30.8	)	(29.8	)	3.4	%
Exceptional items	(3.9	)	(6.3	)	(38.1	)%
Profit on disposal of players’ registrations	8.0		7.9		1.3	%
Net finance costs	(39.9	)	(35.0	)	14.0	%
Tax credit	21.1		22.5		(6.2	)%

Revenue

Consolidated revenue for the nine months ended 31 March 2013 increased to £278.1 million, an increase of £32.3 million, or 13.1%, over £245.8 million for the nine months ended 31 March 2012, as a result of an increase in revenue in our Commercial and Matchday sectors, partially offset by an small decrease in revenue in our Broadcasting sector, as described below.

Commercial revenue

Commercial revenue for the nine months ended 31 March 2013 was £114.5 million, an increase of £25.0 million, or 27.9%, over £89.5 million for the nine months ended 31 March 2012. The increase in Commercial revenue was driven by the addition of several new global and regional sponsorships including revenue recognised in respect of General Motors — Chevrolet pre-shirt sponsorship support and exposure, an increase in revenue from existing partnerships, an increase in profit share pursuant to the arrangement with Nike, and the commencement of several new mobile partnerships.

· Sponsorship revenue for the nine months ended 31 March 2013 was £69.6 million, an increase of £20.8 million, or 42.6%, over £48.8 million for the nine months ended 31 March 2012, primarily as a result of the General Motors sponsorship, other new sponsorship agreements and an increase in revenue from existing sponsorships.

· Retail, merchandising, apparel & product licensing revenue for the nine months ended 31 March 2013 was £28.1 million, an increase of £2.9 million, or 11.5%, over £25.2 million for the nine months ended 31 March 2012.

· New media & mobile revenue for the nine months ended 31 March 2013 was £16.8 million, an increase of £1.3 million, or 8.4%, over £15.5 million for the nine months ended 31 March 2012.

Broadcasting revenue

Broadcasting revenue for the nine months ended 31 March 2013 was £75.0 million, a decrease of £1.4 million, or 1.8%, over £76.4 million for the nine months ended 31 March 2012. The main component of this decrease was a reduction in Champions League revenue as a result of (i) a reduction in the Champions League market pool distribution to English clubs and (ii) a reduction in our share of the market pool distribution to English clubs as a consequence of finishing second in the Premier League in season 2011/12 compared to finishing first in season 2010/11, partially offset by higher Champions League Round of 16 match fees compared to Europa League fees in the previous year.

Matchday revenue

Matchday revenue for the nine months ended 31 March 2013 was £88.6 million, an increase of £8.7 million, or 10.9%, over £79.9 million for the nine months ended 31 March 2012, principally as a result

of progress in the FA Cup with four home games in the period compared to none in the previous year plus one-off fees earned from the staging of nine Olympic Games football matches at Old Trafford.

Total operating expenses

Total operating expenses (defined as employee benefit expenses, other operating expenses, depreciation, amortisation of players’ registrations and exceptional items) for the nine months ended 31 March 2013 were £227.0 million, an increase of £24.0 million, or 11.8%, over £203.0 million for the nine months ended 31 March 2012.

Employee benefit expenses

Employee benefit expenses for the nine months ended 31 March 2013 were £129.4 million, an increase of £17.0 million, or 15.1%, over £112.4 million for the nine months ended 31 March 2012, primarily due to new player signings, existing player wage increases and growth in commercial headcount.

Other operating expenses

Other operating expenses for the nine months ended 31 March 2013 were £57.2 million, an increase of £8.4 million or 17.2% over £48.8 million for the nine months ended 31 March 2012, primarily due to increased domestic cup gateshare costs, increased sponsorship and marketing costs, increased pre-season tour travel costs, and one-off costs associated with staging Olympic Games football matches.

Depreciation

Depreciation for the nine months ended 31 March 2013 amounted to £5.7 million, unchanged from £5.7 million for the nine months ended 31 March 2012.

Amortisation of players’ registrations

Amortisation of players’ registrations for the nine months ended 31 March 2013 amounted to £30.8 million, an increase of £1.0 million, or 3.4%, over £29.8 million for the nine months ended 31 March 2012.

Exceptional items

Exceptional items for the nine months ended 31 March 2013 were £3.9 million and related to professional advisor fees in connection with our initial public offering. Exceptional items for the nine months ended 31 March 2012 were £6.3 million and related to professional advisor fees in connection with a proposed public offering of shares and an increase in the provision relating to the Football League Pension Scheme deficit following an actuarial valuation.

Profit on disposal of players’ registrations

Profit on the disposal of players’ registrations for the nine months ended 31 March 2013 were £8.0 million, an increase of £0.1 million, or 1.3%, over £7.9 million for the nine months ended 31 March 2012. Key disposals in the nine months ended 31 March 2013 were Berbatov, Brady, Pogba and Park.

Net finance costs

Net finance costs for the nine months ended 31 March 2013 were £39.9 million, an increase of £4.9 million, or 14.0%, over £35.0 million for the nine months ended 31 March 2012. The main reasons for this increase are a £3.1 million increase in the premium paid on repurchases of senior secured notes, a £2.2 million increase in accelerated amortisation of debt issue costs on repurchased senior secured notes, and a £2.9 million increase in unrealised foreign exchange losses on translation of the Group’s US dollar denominated senior secured notes, partially offset by a reduction in interest payable following the repurchase of US$101.7 million of US dollar denominated senior secured notes in September 2012.

Tax credit

The tax credit for the nine months ended 31 March 2013 was £21.1 million. Following the transfer of Red Football Shareholder Limited and its subsidiaries from the controlling shareholders to Manchester United plc, Manchester United plc has assumed certain US tax bases. A £25.0 million deferred tax asset was

recognised in respect of these US tax bases, 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. A portion of this deferred tax asset has been utilised in the nine months ended 31 March 2013. The potential deferred tax asset available, which remains unrecognised, is currently estimated to amount to at least £60 million. This asset will be recognised as and when key commercial contracts are renewed or replaced.

The tax credit for the prior year nine month period of £22.5 million primarily represents the recognition of a deferred tax asset relating to pre-existing UK losses.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash requirements stem from the payment of transfer fees for the acquisition of players’ registrations, capital expenditure for the improvement of facilities at Old Trafford and Carrington, payment of interest on our borrowings, employee benefit expenses and other operating expenses. Historically, we have met these cash requirements through a combination of operating cash flow and proceeds from the transfer fees from the sale of players’ registrations. Our existing borrowings primarily consist of our senior secured notes, although we have in the past, and may from time to time in the future, repurchase our senior secured notes in open market transactions. Repurchased senior secured notes have been retired. Additionally, although we have not needed to draw any borrowings under our revolving credit facility since 2009, we have no intention of retiring our revolving credit facility and may draw on it in the future in order to satisfy our working capital requirements. We manage our cash flow interest rate risk where appropriate using interest rate swaps at contract lengths consistent with the repayment schedule of our long term borrowings. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. We also have foreign exchange rate forward contracts outstanding that we use to hedge our Euro exposure relating to distributions from UEFA.

Our business generates a significant amount of the cash from our gate revenues and commercial contractual arrangements at or near the beginning of our fiscal year, with a steady flow of other cash received throughout the fiscal year. In addition, we generate a significant amount of our cash through advance receipts, including season tickets (which include general admission season tickets and seasonal hospitality tickets), most of which are received prior to the end of June for the following season. Our Broadcasting revenue from the Premier League and UEFA are paid periodically throughout the season, with primary payments made in the late summer, December, January and the end of the football season. Our sponsorship and other commercial revenue tends to be paid either quarterly or annually in advance. However, while we typically have a high cash balance at the beginning of each fiscal year, this is largely attributable to deferred revenue, the majority of which falls under current liabilities in the consolidated balance sheet, and this deferred revenue is unwound through the income statement over the course of the fiscal year. Over the course of a year, we use our cash on hand to pay operating expenses, staff costs, interest payments and other liabilities as they become due. This typically results in negative working capital at certain times during the year. In the event it ever became necessary to access additional operating cash, we also have access to cash through our revolving credit facility. As of 31 March 2013, we had no borrowings under our revolving credit facility.

Pursuant to our contract with Nike, we are entitled to share in the cumulative net profits (incremental to the guaranteed sponsorship and licensing fees) generated by Nike from the licensing, merchandising and retail operations. The annual installment Nike pays us in respect of the £303 million in minimum guaranteed sponsorship and licensing fees can be affected each year by the level of cumulative profits generated. Nike is required to pay us the cumulative profit share in cash as the first installment of the minimum guarantee in each fiscal year, with the balance (up to the portion of the minimum guarantee for that year) paid to us in equal quarterly installments. In the event the cumulative profit share paid to us in the first installment exceeds the portion of the minimum guarantee for that year, no additional payments are made for the remainder of the year. The excess of the amount received in cash from Nike above the

minimum guarantee, if any, for any particular year is deemed to be the amount of cumulative profit retained in a particular year. At the end of the contract, we will receive a cash payment equal to the cumulative profit not previously retained, as described above. We are currently accruing cumulative profit share revenue on our balance sheet that will be paid to us by Nike at the end of the contract, in 2015.

Our cost base is more evenly spread throughout the fiscal year than our cash inflows. Employee benefit expenses and fixed costs constitute the majority of our cash outflows and are generally paid throughout the 12 months of the fiscal year. Our working capital levels tend to be at their lowest in November, in advance of Premier League and UEFA broadcasting receipts in December.

In addition, transfer windows for acquiring and disposing of players’ registrations occur in January and the summer. During these periods, we may require additional cash to meet our acquisition needs for new players and we may generate additional cash through the sale of existing players’ registrations. Depending on the terms of the agreement, transfer fees may be paid or received by us in multiple installments, resulting in deferred cash paid or received. Although we have not historically drawn on our revolving credit facility during the summer transfer window, if we seek to acquire players with values substantially in excess of the values of players we seek to sell, we may be required to draw on our revolving credit facility to meet our cash needs.

Acquisition and disposal of players’ registrations also affects our current trade receivables and payables, which affects our overall working capital. Our current trade receivables include accrued income from sponsors as well as transfer fees receivable from other football clubs, whereas our trade payables include transfer fees and other associated costs in relation to the acquisition of players’ registrations.

Cash Flow

The following table summarises the Group’s cash flows for the nine months ended 31 March 2013 and 31 March 2012:

	Unaudited nine months ended 31 March (in £ millions)
	2013		2012
Cash flows from operating activities
Cash generated from operations	56.9		13.8
Interest paid	(46.9	)	(43.5	)
Interest received	0.4		0.8
Income tax received/(paid)	0.6		(3.3	)
Net cash generated from/(used in) operating activities	11.0		(32.2	)
Cash flows from investing activities
Purchases of property, plant and equipment	(10.6	)	(9.6	)
Purchases of investment property	—		(7.4	)
Purchases of players’ registrations	(41.3	)	(53.1	)
Proceeds from sale of players’ registrations	8.0		6.1
Net cash used in investing activities	(43.9	)	(64.0	)
Cash flows from financing activities
Proceeds from issue of shares	70.3		—
Expenses directly attributable to issue of shares	(1.5	)	—
Acquisition of additional interest in subsidiary	(2.7	)	—
Repayment of borrowings	(67.3	)	(28.5	)
Net cash used in financing activities	(1.2	)	(28.5	)
Net decrease in cash and cash equivalents	(34.1	)	(124.7	)

Net cash generated from/(used in) operating activities

Cash flows from operating activities represents our operating results and net movements in our working capital. Our working capital is generally impacted by the timing of cash received from the sale of tickets and hospitality and other matchday sales, broadcasting revenue from the Premier League and UEFA and sponsorship and commercial revenue. Cash flows from operating activities for the nine months ended 31 March 2013 produced a cash inflow of £11.0 million, an increase of £43.2 million over a cash outflow of £32.2 million for the nine months ended 31 March 2012, primarily driven by a £32.6 million improvement in working capital. Interest paid in the nine months ended 31 March 2013 was £46.9 million, an increase of £3.3 million over £43.6 million for the nine months ended 31 March 2012. Interest paid in the nine months ended 31 March 2013 includes £2.9 million accrued interest on the loan stock issued to the former minority shareholder of MUTV Limited.

Net cash used in investing activities

Capital expenditure on the acquisition, disposal and trading of players’ registrations tends to vary significantly from year to year depending on the requirements of our first team, overall availability of players, our assessment of their relative value and competitive demand for players from other clubs. By contrast, capital expenditure on the purchase of property, plant and equipment tends to remain relatively stable as we continue to make improvements at Old Trafford and invest in the expansion of our training facility at Carrington. As part of the planned investment for Carrington, we will enhance the viewing facilities to provide current and potential partners with unique access to the Manchester United experience.

Net cash used in investing activities for the nine months ended 31 March 2013 was £43.9 million, a decrease of £20.1 million over £64.0 million for the nine months ended 31 March 2012.

For the nine months ended 31 March 2013, net capital expenditure was £10.6 million, a decrease of £6.4 million over £17.0 million for the nine months ended 31 March 2012. Expenditure in the nine months ended 31 March 2013 mainly related to the redevelopment of the First Team’s training facility at Carrington. In the nine months ended 31 March 2012, we acquired investment and other properties around the Old Trafford stadium amounting to £8.7 million.

For the nine months ended 31 March 2013, net player capital expenditure was £33.3 million, a decrease of £13.7 million over £47.0 million for the nine months ended 31 March 2012. Expenditure in the nine months ended 31 March 2013 mainly related to the acquisitions of Robin van Persie (the first of two stage payments), Shinji Kagawa and Nick Powell. Expenditure in the nine months ended 31 March 2012 mainly related to the acquisitions of Phil Jones, David De Gea and Ashley Young.

Net cash used in financing activities

Net cash used in financing activities for the nine months ended 31 March 2013 was £1.2 million, a decrease of £27.3 million over £28.5 million for the nine months ended 31 March 2012. In the nine months ended 31 March 2013 the Company raised £70.3 million ($110.2 million) following the public offering of shares on the New York Stock Exchange. Expenses of £1.5 million directly attributable to this issue of new shares have been offset against the proceeds. The net proceeds of the share issue were used to repurchase a portion of the Group’s US dollar denominated senior secured notes, comprising a principal value of £62.6 million ($101.7 million) and a premium on repurchase of £5.2 million ($8.5 million). On 2 January 2013 the Group acquired the remaining 33.3% of the issued share capital of MUTV Limited for a purchase consideration (including transaction costs) of £2.7 million. The Group now holds 100% of the issued share capital of MUTV Limited. The Group also repaid the loan stock issued to the former minority shareholder of MUTV Limited amounting to £4.4 million.

Indebtedness

Our primary sources of indebtedness consist of our pound sterling denominated 83/4% senior secured notes due 2017 and our US dollar denominated 83/8% senior secured notes due 2017. As part of the

security for our senior secured notes and revolving credit facility, substantially all of our assets are subject to liens and mortgages.

Description of principal indebtedness

83/4% pound sterling senior secured notes due 2017 and 83/8% US dollar senior secured notes due 2017. Our senior secured notes initially consisted of two tranches: £250 million 83/4% senior secured notes due 2017 and $425 million 83/8% senior secured notes due 2017. Our senior secured notes were issued by our wholly-owned finance subsidiary, MU Finance plc, are guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited and Manchester United Football Club Limited and are secured against all of the assets of Red Football Limited and each of the guarantors.

The indenture governing our senior secured notes contains customary covenants and restrictions on the activities of Red Football Limited and each of Red Football Limited’s subsidiaries, including, but not limited to, the incurrence of additional indebtedness; dividends or distributions in respect of capital stock or certain other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers, consolidations or the sale of substantially all of Red Football Limited’s assets. The covenants in the indenture governing our senior secured notes are subject to certain thresholds and exceptions described in the indenture governing our senior secured notes.

Using all of the net proceeds from our initial public offering we repurchased £62.6 million of our senior secured notes during the nine months ended 31 March 2013, comprising $101.7 million of our senior secured notes from the US dollar tranche. All repurchased senior secured notes have been retired. The total amount of senior secured notes outstanding at 31 March 2013, net of unamortised discounts and issue costs of £13.7 million, was the sterling equivalent of £355.9 million. The outstanding notes comprise principal amounts of £177.8 million 83/4% senior secured notes and $291.3 million 83/8% senior secured notes.

Alderley facility.

The Alderley facility consists of a bank loan to Alderley Urban Investments Limited, a subsidiary of Manchester United Limited. The loan attracts interest at LIBOR plus 1%. As of 31 March 2013, £2.4 million of the loan is repayable in quarterly installments through July 2018, and the remaining balance of approximately £4.2 million is repayable at par on 9 July 2018. The loan is secured against the Manchester International Freight Terminal which is owned by Alderley Urban Investments Limited.

Revolving credit facility.

Our revolving credit facility agreement allows Manchester United Limited and Manchester United Football Club Limited to borrow up to £75 million from a syndicate of lenders and J.P. Morgan Europe Limited as agent and security trustee. The facility consists of two individual facilities of £50 million and £25 million. As of 31 March 2013, we had no outstanding borrowings under the revolving credit facility. Our revolving credit facility is scheduled to expire in 2016.

Our revolving credit facility is guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited, Manchester United Football Club Limited and MU Finance plc and secured against the assets of those entities.

RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

We do not conduct research and development activities.

OFF BALANCE SHEET ARRANGEMENTS

Transfer fees payable

Under the terms of certain contracts with other football clubs in respect of player transfers, additional amounts would be payable by us if certain specific performance conditions are met. As noted above, we estimate the fair value of any contingent consideration at the date of acquisition based on the probability of conditions being met and monitor this on an ongoing basis. A provision of £0.5 million relating to this contingent consideration has been recognised in our balance sheet as of 31 March 2013, and the maximum additional amount that could be payable as of that date is £25.3 million.

Transfer fees receivable

Similarly, under the terms of contracts with other football clubs for player transfers, additional amounts would be payable to us if certain specific performance conditions are met. In accordance with the recognition criteria for contingent assets, such amounts are only disclosed by the Company when probable and recognised when virtually certain. As of 31 March 2013, we do not believe receipt of any such amounts to be probable.

Other commitments

In the ordinary course of business, we enter into operating lease commitments and capital commitments. These transactions are recognised in the consolidated financial statements in accordance with IFRS as issued by IASB and are more fully disclosed therein.

As of 31 March 2013, we had not entered into any other off-balance sheet transactions.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

Contractual Obligations

The following table summarises our contractual obligations as of 31 March 2013:

	Payments due by period(1)
	Less than 1 year	1-3 years	3-5 years	More than five years	Total
	(in £ thousands)
Long-term debt obligations(2)	37,110	64,065	404,821	4,444	510,440
Operating lease obligations(3)	2,762	3,803	162	4,291	11,018
Purchase obligations(4)	73,787	21,152	977	1,422	97,338
Total	113,659	89,020	405,960	10,157	618,796

(1) This table reflects contractual non-derivative financial obligations including interest and operating lease payments and therefore differs from the carrying amounts in our consolidated financial statements.

(2) As of 31 March 2013, we had the following amounts outstanding of our 83/4% senior secured notes due 2017 and 83/8% senior secured notes due 2017: £177.8 million of the sterling tranche of senior secured notes and $291.3 million of the US dollar tranche of senior secured notes. Other long-term indebtedness comprises a bank loan to Alderley Urban Investments, a subsidiary of Manchester United Limited. As of 31 March 2013, we had £6.6 million outstanding under the Alderley facility.

(3) We enter into operating leases in the normal course of business. Most lease arrangements provide us with the option to renew the leases at defined terms. The future operating lease obligations would change if we were to exercise these options, or if we were to enter into additional new operating leases.

Manchester United plc

Interim consolidated income statement

		Unaudited three months ended 31 March				Unaudited nine months ended 31 March
	Note	2013 £’000		2012 £’000		2013 £’000		2012 £’000
Revenue	6	91,721		70,768		278,093		245,828
Operating expenses	7	(79,069	)	(66,544	)	(227,049	)	(203,001	)
Profit on disposal of players’ registrations		2,520		2,066		8,025		7,896
Operating profit		15,172		6,290		59,069		50,723
Finance costs		(18,607	)	(3,662	)	(40,360	)	(35,724	)
Finance income		285		198		441		676
Net finance costs	9	(18,322	)	(3,464	)	(39,919	)	(35,048	)
(Loss)/profit before tax		(3,150	)	2,826		19,150		15,675
Tax credit/(expense)	10	6,784		(1,709	)	21,170		22,543
Profit for the period		3,634		1,117		40,320		38,218

Attributable to:
Owners of the Company		3,634		1,035		40,151		37,984
Non-controlling interest		—		82		169		234
		3,634		1,117		40,320		38,218

Earnings per share attributable to owners of the Company:
Basic and diluted earnings per share (Pounds Sterling)	11	0.02		0.01	(1)	0.25		0.24	(1)

(1) As adjusted retrospectively to reflect the reorganisation transactions described in note 1.1.

See accompanying notes to the interim consolidated financial statements.

Manchester United plc

Interim consolidated statement of comprehensive income

		Unaudited three months ended 31 March			Unaudited nine months ended 31 March
	Note	2013 £’000		2012 £’000	2013 £’000		2012 £’000
Profit for the period		3,634		1,117	40,320		38,218
Items that may subsequently be reclassified to the income statement:
Other comprehensive income/(loss):
Fair value movements on cash flow hedges, net of tax	10	397		99	(268	)	565
Exchange (loss)/gain on translation of overseas subsidiary	10	(64	)	4	(68	)	174
Other comprehensive income/(loss) for the period		333		103	(336	)	739
Total comprehensive income for the period		3,967		1,220	39,984		38,957

Attributable to:
Owners of the Company		3,967		1,138	39,815		38,723
Non-controlling interest		—		82	169		234
		3,967		1,220	39,984		38,957

Items in the statement above are disclosed net of tax. The tax relating to each component of other comprehensive income is disclosed in note 10.

See accompanying notes to the interim consolidated financial statements.

Manchester United plc

Interim consolidated balance sheet

	Note	Unaudited 31 March 2013 £’000	Audited 30 June 2012 £’000	Unaudited 31 March 2012 £’000
ASSETS
Non-current assets
Property, plant and equipment	13	252,888	247,866	243,863
Investment property	14	14,111	14,197	14,210
Goodwill	15	421,453	421,453	421,453
Players’ registrations	16	126,457	112,399	99,362
Trade and other receivables	18	2,500	3,000	13,000
Non-current tax receivable	19	—	—	2,500
Deferred tax asset	24	16,402	—	—
		833,811	798,915	794,388
Current assets
Derivative financial instruments	17	546	967	401
Trade and other receivables	18	74,297	74,163	45,199
Current tax receivable	19	2,500	2,500	—
Cash and cash equivalents		36,211	70,603	25,576
		113,554	148,233	71,176
Total assets		947,365	947,148	865,564

See accompanying notes to the interim consolidated financial statements.

Manchester United plc

Interim consolidated balance sheet (continued)

	Note	Unaudited 31 March 2013 £’000	Audited 30 June 2012(1) £’000		Unaudited 31 March 2012(1) £’000
EQUITY AND LIABILITIES
Equity
Share capital	25	52	50		50
Share premium		68,822	25		25
Merger reserve		249,030	249,030		249,030
Hedging reserve		398	666		99
Retained earnings/(deficit)		23,548	(12,671	)	12,272
Equity attributable to owners of the Company		341,850	237,100		261,476
Non-controlling interests		—	(2,003	)	(2,096	)
		341,850	235,097		259,380
Non-current liabilities
Derivative financial instruments	17	1,571	1,685		1,628
Trade and other payables	20	21,384	22,305		22,645
Borrowings	21	362,102	421,247		416,676
Deferred revenue	22	17,980	9,375		11,619
Provisions	23	1,092	1,378		1,530
Deferred tax liabilities	24	22,416	26,678		31,995
		426,545	482,668		486,093
Current liabilities
Derivative financial instruments	17	154	—		6
Current tax liabilities		1,128	1,128		1,127
Trade and other payables	20	76,804	83,664		47,509
Borrowings	21	5,487	15,628		6,604
Deferred revenue	22	94,936	128,535		64,408
Provisions	23	461	428		437
		178,970	229,383		120,091
Total equity and liabilities		947,365	947,148		865,564

(1) As adjusted retrospectively to reflect the reorganisation transactions described in note 1.1.

See accompanying notes to the interim consolidated financial statements.

Manchester United plc

Interim consolidated statement of changes in equity

	Share capital £’000	Share premium £’000		Merger reserve £’000	Hedging reserve £’000		Retained earnings/ (deficit) £’000		Total attributable to owners of the Company £’000		Non- controlling interests £’000		Total equity £’000
Balance at 1 July 2011 (audited)	—	249,105		—	(466	)	(25,886	)	222,753		(2,330	)	220,423
Profit for the period	—	—		—	—		37,984		37,984		234		38,218
Cash flow hedges, net of tax	—	—		—	565		—		565		—		565
Currency translation differences	—	—		—	—		174		174		—		174
Total comprehensive income for the period	—	—		—	565		38,158		38,723		234		38,957
Proceeds from shares issued	50	25		—	—		—		75		—		75
Capital reorganisation(1)	—	(249,105	)	249,030	—		—		(75	)	—		(75	)
Balance at 31 March 2012 (unaudited)	50	25		249,030	99		12,272		261,476		(2,096	)	259,380
(Loss)/profit for the period	—	—		—	—		(14,998	)	(14,998	)	93		(14,905	)
Cash flow hedges, net of tax	—	—		—	567		—		567		—		567
Currency translation differences	—	—		—	—		55		55		—		55
Total comprehensive income/(loss) for the period	—	—		—	567		(14,943	)	(14,376	)	93		(14,283	)
Dividends	—	—		—	—		(10,000	)	(10,000	)	—		(10,000	)
Balance at 30 June 2012 (audited)	50	25		249,030	666		(12,671	)	237,100		(2,003	)	235,097
Profit for the period	—	—		—	—		40,151		40,151		169		40,320
Cash flow hedges, net of tax	—	—		—	(268	)	—		(268	)	—		(268	)
Currency translation differences	—	—		—	—		(68	)	(68	)	—		(68	)
Total comprehensive (loss)/income for the period	—	—		—	(268	)	40,083		39,815		169		39,984
Equity settled share-based payments	—	—		—	—		634		634		—		634
Proceeds from shares issued(2)	2	68,797		—	—		—		68,799		—		68,799
Acquisition of non-controlling interest in MUTV Limited(3)	—	—		—	—		(4,498	)	(4,498	)	1,834		(2,664	)
Balance at 31 March 2013 (unaudited)	52	68,822		249,030	398		23,548		341,850		—		341,850

(1) Adjusted retrospectively to reflect the reorganisation transactions described in note 1.1.

(2) See note 1.2.

(3) See note 27.

See accompanying notes to the interim consolidated financial statements.

Manchester United plc

Interim consolidated statement of cash flows

		Unaudited three months ended 31 March				Unaudited nine months ended 31 March
	Note	2013 £’000		2012 £’000		2013 £’000		2012 £’000
Cash flows from operating activities
Cash (used in)/generated from operations	26	(4,938	)	(6,055	)	56,925		13,779
Interest paid		(18,963	)	(18,601	)	(46,897	)	(43,553	)
Interest received		285		444		442		823
Income tax (paid)/received		—		(64	)	600		(3,274	)
Net cash (used in)/generated from operating activities		(23,616	)	(24,276	)	11,070		(32,225	)
Cash flows from investing activities
Purchases of property, plant and equipment		(1,311	)	(1,597	)	(10,649	)	(9,638	)
Purchases of investment property		—		—		—		(7,364	)
Purchases of players’ registrations		(3,009	)	(864	)	(41,267	)	(53,153	)
Proceeds from sale of players’ registrations		1,606		1,751		7,969		6,124
Net cash used in investing activities		(2,714	)	(710	)	(43,947	)	(64,031	)
Cash flows from financing activities
Proceeds from issue of shares		—		—		70,258		—
Expenses directly attributable to issue of shares		—		—		(1,459	)	—
Acquisition of additional interest in subsidiary	27	(2,664	)	—		(2,664	)	—
Repayment of borrowings		(4,534	)	(86	)	(67,330	)	(28,463	)
Net cash used in financing activities		(7,198	)	(86	)	(1,195	)	(28,463	)
Net decrease in cash and cash equivalents		(33,528	)	(25,072	)	(34,072	)	(124,719	)
Cash and cash equivalents at beginning of period		66,631		50,900		70,603		150,645
Exchange gains/(losses) on cash and cash equivalents		3,108		(252	)	(320	)	(350	)
Cash and cash equivalents at end of period		36,211		25,576		36,211		25,576

See accompanying notes to the interim consolidated financial statements.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

3 Accounting policies (continued)

New and amended standards and interpretations issued but not yet effective and not adopted early by the Group

The following standards, amendments and interpretations are not yet effective and have not been adopted early by the Group. The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group’s results, net assets or equity. Adoption may affect the disclosures in the Group’s financial statements in the future.

· Amendment to IFRS 7, ‘Financial Instruments: asset and liability offsetting’

· IFRS 10, ‘Consolidated financial statements’

· IFRS 12, ‘Disclosures of interests in other entities’

· IFRS 13, ‘Fair value measurement’

· Amendment to IAS 19, ‘Employee benefits’

· IAS 27 (revised 2011), ‘Separate financial statements’

· Annual improvements to IFRSs 2011

· IFRS 9, ‘Financial instruments: classification, measurement’

· IFRS 11, ‘Joint arrangements’

· IAS 28 (revised 2011). ‘Associates and joint ventures’

· Amendment to IAS 32, ‘Financial instruments: Presentation’ on offsetting financial assets and financial liabilities

4 Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim consolidated financial statements are considered to be impairment of goodwill and non-current assets, intangible assets — players’ registrations, revenue recognition - estimates in certain commercial contracts, and recognition of deferred tax assets.

In preparing these interim consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30 June 2012, with the exception of changes in estimates that are required in determining the provision for income taxes. Following the reorganisation transactions (see note 1.1) the Company has assumed certain US tax bases. A related deferred tax asset was recognised in respect of the US tax bases in the three months ended 30 September 2012, 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. A portion of this deferred tax asset has been utilised in the six months ended 31 March 2013. The potential deferred tax asset available, which remains unrecognised, is currently estimated to be around £60 million. The asset will be recognised as and when key commercial contracts are renewed or replaced.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

5 Seasonality of revenue

We experience seasonality in our sales and cash flow, limiting the overall comparability of interim financial periods. In any given interim period, our total revenue can vary based on the number of games played in that period, which affects the amount of Matchday and Broadcasting revenue recognised. Similarly, certain of our costs are derived from hosting games at Old Trafford, and these costs will also vary based on the number of games played in the period. We historically recognise the most revenue in our second and third fiscal quarters due to the scheduling of matches. However, a strong performance by our first team in the Champions League and domestic cups could result in significant additional Broadcasting and Matchday revenue, and consequently we may also recognise the most revenue in our fourth fiscal quarter in those years.

Commercial revenue comprises revenue receivable from the exploitation of the Manchester United brand through sponsorship and other commercial agreements, including minimum guaranteed revenue, and fees for the Manchester United first team undertaking tours. For sponsorship contracts any additional revenue receivable over and above the minimum guaranteed revenue contained in the sponsorship and licensing agreements is taken to revenue when a reliable estimate of the future performance of the contract can be obtained and it is probable that the amounts will not be recouped by the sponsor in future years. Revenue is recognised over the term of the sponsorship agreement in line with the performance obligations included within the contract and based on the sponsorship benefits enjoyed by the individual sponsor. This typically results in more revenue being recognised in the later stages of the contract as the level of support provided to sponsors increases over the term of the sponsorship agreement, which is consistent with the payment profiles typically set out in the contract. Commercial revenue includes additional commercial contracts profit share recognised in the nine months ended 31 March 2013 amounting to £8.6 million, cumulative £25.9 million (2012: £6.2 million, cumulative £15.1 million); recognised in the three months ended 31 March 2013 amounting to £2.9 million (2012: £2.1 million).

Broadcasting rights revenue represents revenue receivable from all UK and overseas media contracts, including contracts negotiated centrally by the FA Premier League and UEFA. Distributions from the FA Premier League comprise a fixed element (which is recognised evenly as domestic home matches are played), facility fees for live coverage and highlights of domestic home and away matches (which are recognised when the respective match is played), and merit awards (which are only recognised when they are known at the end of the football season). Distributions from UEFA relating to participation in European cup competitions comprise market pool payments (which are recognised over the matches played in the competition, a portion of which reflects Manchester United’s performance relative to the other FA Premier League clubs in the competition) and fixed amounts for participation in individual matches (which are recognised when the matches are played).

Matchday revenue is recognised based on matches played throughout the year with revenue from each match being recognised only after the match to which the revenue relates has been played. Revenue from related activities such as Conference and Events or the Museum is recognised as the event or service is provided or the facility is enjoyed. Matchday revenue includes revenue receivable from all domestic and European match day activities from Manchester United games at Old Trafford, together with the Group’s share of gate receipts from cup matches not played at Old Trafford (where applicable), and fees for arranging other events at the Old Trafford stadium. The share of gate receipts payable to the other participating club and competition organiser for cup matches played at Old Trafford (where applicable) is treated as an operating expense.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

6 Segment information

The principal activity of the Group is the operation of a professional football club. All of the activities of the Group support the operation of the football club and the success of the First Team is critical to the on-going development of the Group.

Consequently the Chief Operating Decision Maker (being the Board and Executive Officers of Manchester United plc) regards the Group as operating in one material segment, being the operation of a professional football club.

Revenue, all of which arises within the United Kingdom from the Group’s principal activity, can be analysed into its three main components as follows:

	Unaudited three months ended 31 March		Unaudited nine months ended 31 March
	2013 £’000	2012 £’000	2013 £’000	2012 £’000
Commercial	35,978	27,329	114,522	89,535
Broadcasting	21,758	16,862	74,988	76,433
Matchday	33,985	26,577	88,583	79,860
	91,721	70,768	278,093	245,828

All non-current assets, other than deferred tax assets, are held within the United Kingdom.

7 Operating expenses

	Unaudited three months ended 31 March				Unaudited nine months ended 31 March
	2013 £’000		2012 £’000		2013 £’000		2012 £’000
Employee benefit expense	(44,877	)	(35,866	)	(129,363	)	(112,386	)
Other operating expenses	(21,829	)	(14,483	)	(57,192	)	(48,814	)
Depreciation - property, plant and equipment (note 13)	(1,945	)	(2,045	)	(5,654	)	(5,579	)
Depreciation - investment property (note 14)	(29	)	(66	)	(89	)	(92	)
Amortisation of players’ registrations (note 16)	(10,389	)	(9,747	)	(30,872	)	(29,767	)
Exceptional items (note 8)	—		(4,337	)	(3,879	)	(6,363	)
	(79,069	)	(66,544	)	(227,049	)	(203,001	)

Manchester United plc

Notes to the interim consolidated financial statements (continued)

8 Exceptional items

	Unaudited three months ended 31 March			Unaudited nine months ended 31 March
	2013 £’000	2012 £’000		2013 £’000		2012 £’000
Professional adviser fees relating to issue of shares	—	(2,738	)	(3,879	)	(4,764	)
Football League Pension Scheme deficit	—	(1,599	)	—		(1,599	)
	—	(4,337	)	(3,879	)	(6,363	)

Professional adviser fees relating to the issue of shares are recognised as an expense when they are not directly attributable to the issue of new shares.

The Football League Pension Scheme deficit reflects the present value of the additional contribution the Group is expected to pay to make good the increased deficit of the scheme as per the latest actuarial valuation at 31 August 2011 (see note 30).

9 Net finance costs

	Unaudited three months ended 31 March				Unaudited nine months ended 31 March
	2013 £’000		2012 £’000		2013 £’000		2012 £’000
Interest payable on bank loans, overdrafts and deferred element of terminated interest rate swap	(770	)	(831	)	(2,333	)	(2,689	)
Foreign exchange gain/(loss) on US Dollar denominated bank accounts	3,108		(252	)	(320	)	(350	)
Interest payable on senior secured notes	(7,770	)	(8,657	)	(24,511	)	(27,278	)
Amortisation of issue discount, debt finance and debt issue costs on senior secured notes	(538	)	(427	)	(4,105	)	(1,812	)
Premium on repurchase of senior secured notes (see note 21)	—		—		(5,244	)	(2,180	)
Foreign exchange (loss)/gain on US Dollar denominated senior secured notes	(12,655	)	6,488		(3,846	)	(933	)
Unwinding of discount factors	(39	)	(90	)	(115	)	(258	)
Fair value movement on derivative financial instruments:
Interest rate swaps	57		107		114		(224	)
Total finance costs	(18,607	)	(3,662	)	(40,360	)	(35,724	)
Total finance income - interest receivable	285		198		441		676
Net finance costs	(18,322	)	(3,464	)	(39,919	)	(35,048	)

Manchester United plc

Notes to the interim consolidated financial statements (continued)

10 Tax

Tax is recognised based on management’s estimate of the weighted average annual tax rate expected for the full financial year. Based on current forecasts, the estimated weighted average annual tax rate used for the year to 30 June 2013 is -110.5% (negative rate) due to the recognition of a deferred tax asset as a result of a change in tax base following the reorganisation transactions.

	Unaudited three months ended 31 March			Unaudited nine months ended 31 March
	2013 £’000	2012 £’000		2013 £’000		2012 £’000
Current tax
Current tax on result for the period		—		—		—
Foreign tax suffered	—	(64	)	(450	)	(64	)
Adjustment in respect of previous years	—	—		1,049		1
Total current tax (expense)/credit	—	(64	)	599		(63	)
Deferred tax
Origination and reversal of timing differences	6,784	(1,645	)	(5,793	)	1,336
Adjustment in respect of previous years	—	—		1,364		—
Recognition of previously unrecognised deferred tax asset	—	—		—		21,270
Recognition of deferred tax asset as a result of change in tax base	—	—		25,000		—
Total deferred tax credit/(expense)	6,784	(1,645	)	20,571		22,606
Total tax credit/(expense)	6,784	(1,709	)	21,170		22,543

In addition to the amount credited to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

	Unaudited three months ended 31 March 2013						Unaudited three months ended 31 March 2012
	Before tax £’000		Tax £’000		After tax £’000		Before tax £’000	Tax £’000		After tax £’000
Arising on income and expenses recognised in other comprehensive income:
Movements in fair value of financial instruments treated as cash flow hedges	515		(118	)	397		130	(31	)	99
Exchange (loss)/gain on translation of overseas subsidiary	(64	)	—		(64	)	4	—		4
Other comprehensive income/(loss)	451		(118	)	333		134	(31	)	103
Deferred tax	—		(118	)	—		—	(31	)	—

Manchester United plc

Notes to the interim consolidated financial statements (continued)

10 Tax (continued)

	Unaudited nine months ended 31 March 2013					Unaudited nine months ended 31 March 2012
	Before tax £’000		Tax £’000	After tax £’000		Before tax £’000	Tax £’000		After tax £’000
Arising on income and expenses recognised in other comprehensive income:
Movements in fair value of financial instruments treated as cash flow hedges	(361	)	93	(268	)	760	(195	)	565
Exchange (loss)/gain on translation of overseas subsidiary	(68	)	—	(68	)	174	—		174
Other comprehensive (loss)/income	(429	)	93	(336	)	934	(195	)	739
Deferred tax (note 24)	—		93	—		—	(195	)	—

11 Earnings per share

Basic and diluted earnings per share is calculated by dividing the profit for the period attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period, as adjusted for the reorganisation transactions described in note 1.1. The Company did not have any dilutive shares during the period (2012: none).

	Unaudited three months ended 31 March			Unaudited nine months ended 31 March
	2013	2012		2013	2012
Profit for the period attributable to owners of the Company (£’000)	3,634	1,035		40,151	37,984
Weighted average Class A ordinary shares (thousands)	39,826	31,352	(1)	38,586	31,352	(1)
Weighted average Class B ordinary shares (thousands)	124,000	124,000	(1)	124,000	124,000	(1)
Basic and diluted earnings per share attributable to owners of the Company (Pounds Sterling)	0.02	0.01	(1)	0.25	0.24	(1)

(1) As adjusted retrospectively to reflect the reorganisation transactions described in note 1.1.

12 Dividends

No dividend has been paid by the Company during the nine month period ended 31 March 2013 (2012: £nil) and the directors are not proposing to pay a dividend relating to the period ended 31 March 2013.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

13 Property, plant and equipment

	Freehold property £’000	Plant and machinery £’000		Fixtures and fittings £’000	Total £’000
Cost
At 1 July 2011	255,326	34,329		22,988	312,643
Additions	4,230	2,048		2,624	8,902
Disposals	—	(29	)	—	(29	)
At 31 March 2012	259,556	36,348		25,612	321,516
Accumulated depreciation
At 1 July 2011	26,924	30,428		14,751	72,103
Charge for the period	2,476	1,262		1,841	5,579
Disposals	—	(29	)	—	(29	)
At 31 March 2012	29,400	31,661		16,592	77,653
Net book amount
At 31 March 2012 (unaudited)	230,156	4,687		9,020	243,863

Cost
At 1 July 2012	264,505	35,845		25,544	325,894
Additions	6,274	1,440		2,962	10,676
Disposals	—	(104	)	—	(104	)
At 31 March 2013	270,779	37,181		28,506	336,466
Accumulated depreciation
At 1 July 2012	30,230	31,204		16,594	78,028
Charge for the period	2,488	1,336		1,830	5,654
Disposals	—	(104	)	—	(104	)
At 31 March 2013	32,718	32,436		18,424	83,578
Net book amount
At 31 March 2013 (unaudited)	238,061	4,745		10,082	252,888
At 30 June 2012 (audited)	234,275	4,641		8,950	247,866

Manchester United plc

Notes to the interim consolidated financial statements (continued)

14 Investment property

		Total £’000
Cost
At 1 July 2011		11,762
Additions		7,364
At 31 March 2012		19,126
Accumulated depreciation and impairment
At 1 July 2011		4,824
Charge for the period		92
At 31 March 2012		4,916
Net book amount
At 31 March 2012 (unaudited)		14,210

Cost
At 1 July 2012		19,126
Additions		3
At 31 March 2013		19,129
Accumulated depreciation and impairment
At 1 July 2012		4,929
Charge for the period		89
At 31 March 2013		5,018
Net book amount
At 31 March 2013 (unaudited)		14,111
At 30 June 2012 (audited)		14,197

Investment properties were last internally valued as at 30 June 2012 by an employee of Manchester United Limited who is knowledgeable about property valuation principles and is familiar with the properties concerned. There were no changes to the carrying amount of investment property following this valuation. Investment properties were last externally valued as at 30 June 2011 in accordance with UK practice statements contained within the Royal Institute of Chartered Surveyors Valuations Standards, 6th edition. The fair value as at 30 June 2012 was £14,197,000. Management has considered the carrying amount of investment property as of 31 March 2013 and concluded that, as there are no indicators of impairment, an impairment test is not required.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

16 Players’ registrations

	Total £’000
Cost
At 1 July 2011	293,370
Additions	1,714
Disposals	(5,891	)
At 31 March 2012	289,193
Accumulated amortisation
At 1 July 2011	163,661
Charge for the period	29,767
Disposals	(3,597	)
At 31 March 2012	189,831
Net book amount
At 31 March 2012 (unaudited)	99,362

Cost
At 1 July 2012	306,817
Additions	46,843
Disposals	(38,758	)
At 31 March 2013	314,902
Accumulated amortisation
At 1 July 2012	194,418
Charge for the period	30,872
Disposals	(36,845	)
At 31 March 2013	188,445
Net book amount
At 31 March 2013 (unaudited)	126,457
At 30 June 2012 (audited)	112,399

Manchester United plc

Notes to the interim consolidated financial statements (continued)

17 Derivative financial instruments

	Unaudited 31 March 2013			Audited 30 June 2012			Unaudited 31 March 2012
	Assets £’000	Liabilities £’000		Assets £’000	Liabilities £’000		Assets £’000	Liabilities £’000
Derivatives that are designated and effective as hedging instruments carried at fair value:
Forward foreign exchange contracts	546	(154	)	876	—		401	(6	)
Financial instruments carried at fair value through profit or loss:
Interest rate swaps	—	(1,571	)	—	(1,685	)	—	(1,628	)
Forward foreign exchange contracts	—	—		91	—		—	—
	546	(1,725	)	967	(1,685	)	401	(1,634	)
Less non-current portion:
Financial instruments carried at fair value through profit or loss:
Interest rate swaps	—	(1,571	)	—	(1,685	)	—	(1,628	)
Non-current derivative financial instruments	—	(1,571	)	—	(1,685	)	—	(1,628	)
Current derivative financial instruments	546	(154	)	967	—		401	(6	)

Manchester United plc

Notes to the interim consolidated financial statements (continued)

18 Trade and other receivables

	Unaudited 31 March 2013 £’000		Audited 30 June 2012 £’000		Unaudited 31 March 2012 £’000
Trade receivables	40,116		51,425		21,560
Less: provision for impairment of trade receivables	(4,860	)	(2,586	)	(2,651	)
Net trade receivables	35,256		48,839		18,909
Other receivables	48		1,180		10,007
Accrued income	29,752		16,519		23,512
	65,056		66,538		52,428
Prepayments	11,741		10,625		5,771
	76,797		77,163		58,199
Less: non-current portion
Trade receivables	2,500		3,000		3,000
Other receivables (note 32.1)	—		—		10,000
Non-current trade and other receivables	2,500		3,000		13,000
Current trade and other receivables	74,297		74,163		45,199

Net trade receivables include transfer fees receivable from other football clubs of £8,395,000 (30 June 2012: £6,879,000; 31 March 2012: £9,215,000) of which £2,500,000 (30 June 2012: £3,000,000; 31 March 2012: £3,000,000) is receivable after more than one year. Net trade receivables also include £22,859,000 (30 June 2012: £35,637,000; 31 March 2012: £5,700,000) of deferred revenue that is contractually payable to the Company, but recorded in advance of the earnings process, with corresponding amounts recorded as deferred revenue liabilities.

19 Tax receivable

	Unaudited 31 March 2013 £’000	Audited 30 June 2012 £’000	Unaudited 31 March 2012 £’000
Non-current tax receivable	—	—	2,500
Current tax receivable	2,500	2,500	—
Total tax receivable	2,500	2,500	2,500

The current tax receivable of £2,500,000 relates to tax withheld at 25% of the loans made to Directors during 2009 under s455 CTA 2010. The corresponding liability was paid on 1 April 2010 and is recoverable upon repayment of the Directors’ loans. The loans were repaid on 25 April 2012.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

20 Trade and other payables

	Unaudited 31 March 2013 £’000	Audited 30 June 2012 £’000	Unaudited 31 March 2012 £’000
Trade payables	42,065	34,013	15,924
Other payables	18,690	22,070	23,811
Accrued expenses	26,779	34,223	22,553
	87,534	90,306	62,288
Social security and other taxes	10,654	15,663	7,866
	98,188	105,969	70,154
Less: non-current portion:
Trade payables	7,995	6,230	4,337
Other payables	13,389	16,075	18,308
Non-current trade and other payables	21,384	22,305	22,645
Current trade and other payables	76,804	83,664	47,509

Trade payables include transfer fees and other associated costs in relation to the acquisition of players’ registrations of £34,010,000 (30 June 2012: £28,877,000; 31 March 2012: £12,661,000) of which £7,995,000 (30 June 2012: £6,230,000; 31 March 2012: £4,337,000) is due after more than one year.

Other payables include the deferred element of a terminated interest rate swap (related to the former secured senior facilities) of £15,986,000 (30 June 2012: £18,282,000; 31 March 2012: £20,410,000) of which £11,139,000 (30 June 2012: £13,655,000; 31 March 2012: £15,986,000) is due after more than one year. This is being repaid to the bank counterparties over 6 years from 2010 and accrues interest at an effective interest rate of 5.13%.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

21 Borrowings

	Unaudited 31 March 2013 £’000	Audited 30 June 2012 £’000	Unaudited 31 March 2012 £’000
Non-current:
Secured bank loan	6,185	6,469	6,560
Other borrowings	—	4,193	4,268
Senior secured notes	355,917	410,585	405,848
	362,102	421,247	416,676
Current:
Secured bank loan	375	359	354
Other borrowings	—	250	400
Accrued interest on senior secured notes	5,112	15,019	5,850
	5,487	15,628	6,604
Total borrowings	367,589	436,875	423,280

During the nine months ended 31 March 2013 the Group repurchased the sterling equivalent of £62,619,000 (year ended 30 June 2012: £28,211,000; nine months ended 31 March 2012: £28,211,000) of senior secured notes. The consideration paid amounted to £67,863,000 (year ended 30 June 2012: £30,391,000; nine months ended 31 March 2012: £30,391,000) including a premium on repurchase of £5,244,000 (year ended 30 June 2012: £2,180,000; nine months ended 31 March 2012: £2,180,000). The premium on repurchase and consequent accelerated amortisation of issue discount and debt finance costs are immediately recognised in the income statement. The repurchased senior secured notes have been retired.

The Group also has undrawn committed borrowing facilities of £75,000,000 (30 June 2012 and 31 March 2012: £75,000,000). No drawdowns were made from these facilities during 2013 or 2012.

22 Deferred revenue

	Unaudited 31 March 2013 £’000		Audited 30 June 2012 £’000		Unaudited 31 March 2012 £’000
Total	112,916		137,910		76,027
Less non-current deferred revenue	(17,980	)	(9,375	)	(11,619	)
Current deferred revenue	94,936		128,535		64,408

Revenue from commercial, broadcasting and matchday activities received in advance of the period to which it relates is treated as deferred revenue. The deferred revenue is then released to revenue in accordance with the substance of the relevant agreements or, where applicable, as matches are played. The Group receives substantial amounts of deferred revenue prior to the previous year end which is then released to revenue throughout the current and, where applicable, future financial years.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

23 Provisions

The provision relates entirely to an onerous property lease in the Republic of Ireland which contains a break clause that may be exercised in 2015. The movement in the provision was as follows:

	Unaudited 31 March 2013 £’000		Audited 30 June 2012 £’000		Unaudited 31 March 2012 £’000
At the beginning of the period	1,806		2,476		2,476
Utilised	(376	)	(480	)	(371	)
Unwinding of discount	41		69		53
Movements on foreign exchange	82		(259	)	(191	)
At the end of the period	1,553		1,806		1,967

The balance comprises:
Non-current provisions	1,092		1,378		1,530
Current provisions	461		428		437
	1,553		1,806		1,967

24 Deferred tax

The gross movement on the deferred tax (liabilities)/assets account is as follows:

	Unaudited 31 March 2013 £’000		Audited 30 June 2012 £’000		Unaudited 31 March 2012 £’000
At the beginning of the period (net)	(26,678	)	(54,406	)	(54,406	)
Credited to the income statement (note 10)	20,571		28,102		22,606
Credited/(expensed) to other comprehensive income (note 10)	93		(374	)	(195	)
At the end of the period (net)	(6,014	)	(26,678	)	(31,995	)

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

	Unaudited 31 March 2013 £’000		Audited 30 June 2012 £’000		Unaudited 31 March 2012 £’000
Deferred tax assets	16,402		—		—
Deferred tax liabilities (net)	(22,416	)	(26,678	)	(31,995	)
	(6,014	)	(26,678	)	(31,995	)

The Group has a potential deferred tax asset available, which remains unrecognised, currently estimated to be around £60 million. This asset will be recognised as and when key commercial contracts are renewed or replaced.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

25 Share capital

	Unaudited 31 March 2013 £’000	Unaudited 30 June 2012(1) £’000	Unaudited 31 March 2012(1) £’000
Authorised:
650,000,000 ordinary shares of $0.0005 each	200	200	200
Issued and fully paid:
39,825,595 Class A ordinary shares of $0.0005 each (30 June 2012 and 31 March 2012: 31,352,366)	12	10	10
124,000,000 Class B ordinary shares of $0.0005 each (30 June 2012 and 31 March 2012: 124,000,000)	40	40	40
	52	50	50

(1) As adjusted retrospectively to reflect the reorganisation transactions described in note 1.1.

Following the reorganisation transactions, described more fully in note 1.1, the Company has two classes of ordinary shares outstanding: Class A ordinary shares and Class B ordinary shares. The rights of the holders of Class A ordinary shares and Class B ordinary shares are identical, except with respect to voting and conversion. Each Class A ordinary share is entitled to one vote per share and is not convertible into any other shares. Each Class B ordinary share is entitled to 10 votes per share and is convertible into one Class A ordinary share at any time. In addition, Class B ordinary shares will automatically convert into Class A ordinary shares upon certain transfers and other events, including upon the date when holders of all Class B ordinary shares cease to hold Class B ordinary shares representing, in the aggregate, at least 10% of the total number of Class A and Class B ordinary shares outstanding. For special resolutions (which are required for certain important matters including mergers and changes to the Company’s governing documents), which require the vote of two-thirds of the votes cast, at any time that Class B ordinary shares remain outstanding, the voting power permitted to be exercised by the holders of the Class B ordinary shares will be weighted such that the Class B ordinary shares shall represent, in the aggregate, 67% of the voting power of all shareholders.

Following the reorganisation transactions, described more fully in note 1.1, the Company had 155,352,366 shares in issue before the issue of new shares pursuant to the initial public offering. On 10 August 2012, the Company issued a further 8,333,334 Class A ordinary shares at an issue price of $14 per share and listed such shares on the NYSE. On 15 August 2012, the Company issued a further 139,895 Class A ordinary shares pursuant to the Company’s 2012 Equity Incentive Award Plan and listed such shares on the NYSE.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

26 Cash (used in)/generated from operations

	Unaudited three months ended 31 March				Unaudited nine months ended 31 March
	2013 £’000		2012 £’000		2013 £’000		2012 £’000
(Loss)/profit before tax	(3,150	)	2,826		19,150		15,675
Depreciation charges	1,974		2,111		5,743		5,671
Amortisation of players’ registrations	10,389		9,747		30,872		29,767
Profit on disposal of players’ registrations	(2,520	)	(2,066	)	(8,025	)	(7,896	)
Net finance costs	18,322		3,464		39,919		35,048
Share-based payments	153		—		634		—
Fair value losses/(gains) on derivative financial instruments	224		(25	)	215		(265	)
(Increase)/decrease in trade and other receivables	(12,393	)	3,652		2,334		11,123
Decrease in trade and other payables and deferred revenue	(17,879	)	(25,637	)	(33,623	)	(74,782	)
Decrease in provisions	(58	)	(127	)	(294	)	(562	)
Cash (used in)/generated from operations	(4,938	)	(6,055	)	56,925		13,779

27 Transactions with non-controlling interest

On 2 January 2013, the Group acquired the remaining 33.3% of the issued share capital of MUTV Limited for a purchase consideration (including transaction costs) of £2,664,000. The Group now holds 100% of the issued share capital of MUTV Limited. The carrying amount of the non-controlling interests in MUTV Limited on the date of acquisition was a negative £1,834,000. The Group derecognised non-controlling negative interests of £1,834,000 and recorded a decrease in equity attributable to owners of the Company of £4,498,000. The effect of changes in the ownership interest of MUTV Limited on the equity attributable to owners of the Company during the period is summarised as follows:

	Unaudited three months ended 31 March			Unaudited nine months ended 31 March
	2013 £’000		2012 £’000	2013 £’000		2012 £’000
Carrying amount of non-controlling interests acquired	(1,834	)	—	(1,834	)	—
Consideration paid to non-controlling interests	(2,664	)	—	(2,664	)	—
Amount recognised in equity attributable to owners of the Company	(4,498	)	—	(4,498	)	—

Manchester United plc

Notes to the interim consolidated financial statements (continued)

31 Financial risk management (continued)

31.2 Fair value estimation

The following table presents the assets and liabilities that are measured at fair value. The fair value hierarchy used in measuring fair value has the following levels:

· Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

· Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	Unaudited 31 March 2013 £’000		Audited 30 June 2012 £’000		Unaudited 31 March 2012 £’000

Assets
Derivative financial assets designated as cash flow hedges	546		876		401
Derivative financial assets at fair value through profit or loss	—		91		—

Liabilities
Derivative financial liabilities at fair value through profit or loss	(1,571	)	(1,685	)	(1,628	)
Derivative financial liabilities designated as cash flow hedges	(154	)	—		(6	)
	(1,179	)	(718	)	(1,233	)

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is categorised as Level 2.

All of the derivative assets and liabilities detailed above are categorised as Level 2.

Manchester United plc

Notes to the interim consolidated financial statements (continued)

33 Subsidiaries

The following companies are the principal subsidiary undertakings of the Company as of 31 March 2013:

Subsidiaries	Principal activity	Issued share capital	Description of share classes owned
Red Football Finance Limited	Debt-holding company	USD 0.01	100% Ordinary
Red Football Holdings Limited	Holding company	GBP 1	100% Ordinary
Red Football Shareholder Limited	Holding company	GBP 99	100% Ordinary
Red Football Joint Venture Limited	Holding company	GBP 99	100% Ordinary
Red Football Limited	Holding company	GBP 99	100% Ordinary
Red Football Junior Limited	Holding company	GBP 100	100% Ordinary
Manchester United Limited	Holding company	GBP 26,519,248	100% Ordinary
Manchester United Football Club Limited	Professional football club	GBP 1,008,546	100% Ordinary
MU Finance plc	Debt-holding company	GBP 15,000,000	100% Ordinary
Manchester United Interactive Limited	Media company	GBP 10,000	100% Ordinary
Manchester United Commercial Enterprises (Ireland) Limited	Property investment	EUR 13	100% Ordinary
Alderley Urban Investments Limited	Property investment	GBP 2	100% Ordinary
MUTV Limited	Subscription TV channel	GBP 2,400	100% Ordinary

All of the above were incorporated and operate in England and Wales, with the exception of Red Football Finance Limited which was incorporated and operates in the Cayman Islands and Manchester United Commercial Enterprises (Ireland) Limited which was incorporated and operates in Ireland.

Type of condition	First team squad £’000	Other £’000	Total £’000
MUFC appearances/new contract	13,869	7,223	21,092
International appearances	3,700	460	4,160
	17,569	7,683	25,252

	Page
Management’s discussion and analysis of financial condition and results of operations	2
Interim consolidated income statement for the three and nine months ended 31 March 2013 and 31 March 2012	13
Interim consolidated statement of comprehensive income for the three and nine months ended 31 March 2013 and 31 March 2012	14
Interim consolidated balance sheet as of 31 March 2013, 30 June 2012 and 31 March 2012	15
Interim consolidated statement of changes in equity for the nine months ended 31 March 2013, the three months ended 30 June 2012 and the nine months ended 31 March 2012	17
Interim consolidated statement of cash flows for the three and nine months ended 31 March 2013 and 31 March 2012	18
Notes to the interim consolidated financial statements	19

		Total £’000
Cost and net book value at 31 March 2012 (unaudited), 30 June 2012 (audited) and 31 March 2013 (unaudited)		421,453