EX-99.1 2 a13-23603_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

·                  TOTAL REVENUE UP 29.1%

·                  RECORD FIRST QUARTER REVENUE OF £98.5 MILLION

·                  COMMERCIAL REVENUE INCREASED 39.3%

·                  RECORD ADJUSTED EBITDA UP 36.2%

 

MANCHESTER, U.K. — 14 November 2013 — Manchester United (NYSE: MANU; the “Company” and the “Group”) — one of the most popular and successful sports teams in the world - today announced financial results for the 2014 fiscal first quarter ended 30 September 2013.

 

Highlights

 

·                  Commercial revenues of £59.9 million

 

·                  Sponsorship revenue increased 62.6%.

·                  Retail, merchandising apparel & product licensing revenue up 13.8%.

 

·                  Twelve new sponsorship deals activated in the first quarter — Aeroflot and Bulova (global); Pepsi, Apollo Tyres, Federal Tyres and Manda Fermentation (regional); Commercial Bank Qatar, Emirates Bank, MBNA and afb (financial services); Sky NZ (MUTV) and True Corporation (mobile and MUTV).

 

·                  Broadcasting revenues increased 40.9% due to the new FAPL domestic and international TV rights agreements.

 

Commentary

 

Ed Woodward, Executive Vice Chairman commented, “We are pleased to have achieved another record first quarter, driven by the strength of our commercial business and increased broadcasting revenues.  Our unique approach to the commercial business will continue to drive future growth. We are also excited by the continuing rise in the value of sports content, evidenced, amongst other things, by the recently announced BT deal for the UK rights to broadcast the Champions League and Europa League matches for three seasons from 2015/16. This deal represents a meaningful increase over the current arrangement, which should translate into higher broadcasting revenues for the participating clubs.”

 

Outlook

 

For fiscal 2014, Manchester United continues to expect:

 

·                  Revenue to be £420m to £430m.

·                  Adjusted EBITDA to be £128m to £133m.

 

This assumes the team finishes third in the FA Premier League and reaches the quarter-finals of the UEFA Champions League and the domestic cups.

 



 

Key Financials (unaudited)

 

 

 

Three months ended
30 September

 

 

 

£ million (except adjusted earnings per share)

 

2013

 

2012

 

Change

 

Commercial revenue

 

59.9

 

43.0

 

39.3

%

Broadcasting revenue

 

19.3

 

13.7

 

40.9

%

Matchday revenue

 

19.3

 

19.6

 

(1.5

)%

Total revenue

 

98.5

 

76.3

 

29.1

%

Adjusted EBITDA*

 

22.2

 

16.3

 

36.2

%

 

 

 

 

 

 

 

 

(Loss)/profit for the period (i.e. Net Income)

 

(0.3

)

20.5

 

N/A

 

Adjusted profit/(loss) for the period (i.e. Adjusted Net Income/(Loss))*

 

2.2

 

(0.6

)

N/A

 

Adjusted basic and diluted earnings/(loss) per share (pence)*

 

1.37

 

(0.39

)

N/A

 

 

 

 

 

 

 

 

 

Gross debt

 

361.0

 

359.7

 

0.4

%

Cash and cash equivalents

 

83.6

 

52.5

 

59.2

%

 


* Adjusted EBITDA, adjusted profit for the period and adjusted basic and diluted earnings/(loss) per share are non-IFRS measures. See “Non-IFRS Measures: Definitions and Use” below and the accompanying Supplemental Notes for the definitions and reconciliations for these non-IFRS measures and the reasons we believe these measures provide useful information to investors regarding the Group’s financial condition and results of operations.

 

Revenue Analysis

 

Commercial

 

Commercial revenue for the quarter was £59.9 million, an increase of £16.9 million, or 39.3%, over the prior year quarter.

 

·                  Sponsorship revenue for the quarter was £45.2 million, an increase of £17.4 million, or 62.6%, over the prior year quarter primarily due to a significant increase from the pre-season tour, higher renewals and the activation of new global and regional sponsorships.

·                  Retail, Merchandising, Apparel & Product Licensing revenue for the quarter was £10.7 million, an increase of £1.3 million, or 13.8%, over the prior year quarter, primarily due to additional profit share pursuant to the agreement with Nike.

·                  New Media & Mobile revenue for the quarter was £4.0 million, a decrease of £1.8 million over the prior year quarter, due to the expiration of a few of our mobile partnerships.

 

Broadcasting

 

Broadcasting revenue for the quarter was £19.3 million, an increase of £5.6 million, or 40.9%, over the prior year quarter, due to increased revenue from the Premier League domestic and international rights agreements, one additional live Premier League game compared to the prior year quarter, and increases in share of UEFA Champions League fixed pool distributions as we finished 1st in the Premier League in season 2012/13 compared to 2nd in the 2011/12 season.

 



 

Matchday

 

Matchday revenue for the quarter was £19.3 million compared to £19.6 million in the prior year quarter, which included one-off fees earned from the staging of Olympic Games football matches at Old Trafford whereas the current year quarter included fees earned from participating in this season’s Community Shield match which we did not participate in last season.

 

Other Financial Information

 

Operating expenses

 

Total operating expenses for the quarter were £90.2 million, an increase of £15.4 million, or 20.6%, over the prior year quarter.

 

Staff costs

 

Staff costs for the quarter were £52.9 million, an increase of £12.6 million, or 31.3%, over the prior year quarter. This increase was primarily due to the impact of a full period of wage costs relating to players signed part way through the prior year quarter, contractual player wage increases and bonuses associated with the growth of our commercial business. Additionally, the prior year quarter benefitted from a one-off receipt of £1.3 million in respect of players on International duty at Euro 2012.

 

Other operating expenses

 

Other operating expenses for the quarter were £23.4 million, an increase of £3.7 million, or 18.8%, over the prior year quarter primarily due to increased pre-season tour travel costs, and higher gateshare payments to domestic cup opponents and sponsorship servicing.

 

Depreciation & amortization of players’ registrations

 

Depreciation for the quarter was £2.0 million, an increase of £0.1 million, or 5.3%, over the prior year quarter. Amortization of players’ registrations was £11.9 million, £2.1 million or 21.4% higher than the prior year quarter. The unamortized balance of players’ registrations at 30 September 2013 was £144.7 million.

 

Net finance costs

 

Net finance costs for the quarter were £9.8 million, a decrease of £2.6 million, or 21.0%, over the prior year quarter. The decrease was primarily due to a £4.1 million reduction in interest payable on our secured borrowings and a £7.8 million reduction in premium paid and accelerated amortization related to the senior secured note repurchases in the prior year quarter; partially offset by a £7.6 million gain on re-translation of our US dollar borrowings in the prior year quarter.

 

On 1 July 2013 we started hedging the foreign exchange risk on a portion of our future US dollar revenues using our US dollar borrowings as the hedging instrument. As a result, FX gains or losses arising on re-translation of our US dollar borrowings are now initially recognized in other comprehensive income, rather than recognized in the income statement immediately. Amounts previously recognized in other comprehensive income and accumulated in a hedging reserve are subsequently reclassified into the income statement in the same accounting period and within the same income statement line (i.e. commercial revenue) as the underlying future US dollar revenues. This will reduce foreign exchange volatility in our income statement.

 

More recently, we have entered into a floating to fixed interest rate swap on our $315.7 million secured term loan creating a maximum and minimum interest rate of approximately 4.1% and 2.8% respectively (subject to leverage grid) from 25 November 2013 for the remaining life of the facility.

 



 

Tax

 

The tax credit for the quarter was £0.2 million, compared to a credit of £26.5 million in the prior year quarter (which predominantly related to the recognition of a deferred tax asset for the US tax basis inherited from Red Football LP). There have been no changes to the estimates and judgements in relation to the valuation of deferred tax assets since the June 2013 year end.

 

Cash flows

 

Net cash generated from operating activities for the quarter was £23.2 million, an increase of £13.9 million, primarily due to a £15.4 million reduction in interest paid.

 

Capital expenditure on property, plant and equipment for the quarter was £4.1 million, £0.7 higher than the £3.4 million in the prior year quarter.

 

Net player capital expenditure for the quarter was £26.8 million, a decrease of £2.7 million from the prior year quarter.

 

Net cash used in financing activities for the quarter was £0.1 million, a decrease of £7.6 million from £7.5 million net cash generated in the prior year quarter. In the prior year quarter the Company raised £70.3 million from our IPO, the proceeds of which were used to repurchase a portion of our US dollar denominated senior secured notes, comprising a principal value of £62.6 million and a premium on repurchase of £5.3 million.

 



 

Conference Call Information

 

The Company’s conference call to review first quarter fiscal 2014 results will be broadcast live over the internet today, 14 November 2013 at 8:00 a.m. 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 135-year heritage we have won 62 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).

 



 

Non-IFRS Measures: Definitions and Use

 

1.                  Adjusted EBITDA

 

Adjusted EBITDA is defined as profit for the period before depreciation, amortisation of, and profit on disposal of, players’ registrations, exceptional items, net finance costs, and tax credit.

 

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 asset base (primarily depreciation and amortisation), capital structure (primarily finance costs), and items outside the control of our management (primarily taxes).  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 the IASB. A reconciliation of profit for the period to adjusted EBITDA is presented in supplemental note 2.

 

2.                  Adjusted profit/(loss) for the period (i.e. Adjusted Net Income/(Loss))

 

Adjusted profit/(loss) for the period is the adjusted profit/(loss) for the period attributable to owners of the parent, calculated, where appropriate, by adding the profit for the period attributable to non-controlling interest to the (loss)/profit for the period attributable to owners of the parent, adjusting for material charges related to the IPO, the repurchase of senior secured notes, foreign exchange losses/gains on US dollar denominated bank accounts and borrowings, and fair value movements on derivative financial instruments, subtracting the actual tax credit for the period, (subtracting)/adding the adjusted tax (expense)/credit for the period (based on an normalized tax rate of 35%; 2012: 35%) and subtracting the profit for the period attributable to non-controlling interest. The normalized tax rate of 35% is management’s estimate of the tax rate likely to be applicable to the Group in the long-term.

 

We believe that in assessing the comparative performance of the business, in order to get a clearer view of the underlying financial performance of the business, it is useful to strip out the distorting effects of material charges related to ‘one-off’ transactions such as the IPO (including the associated recognition of deferred tax assets or liabilities) and repurchase of senior secured notes, plus the impact of foreign exchange reflected in the retranslation of the US dollar denominated bank accounts and borrowings, and in the fair value movement on derivative financial instruments; and then to apply a ‘normalized’ tax rate (for both the current and prior periods) of the US statutory rate of 35%. We have refined the calculation of adjusted profit/(loss) by also now adjusting for foreign exchange losses/gains on US dollar denominated bank accounts and borrowings and fair value movements on derivative financial instruments. A reconciliation of (loss)/profit for the period attributable to owners of the parent to adjusted profit/(loss) for the period attributable to owners of the parent is presented in supplemental note 3.

 

3.                  Adjusted basic and diluted earnings/(loss) per share

 

Adjusted basic and diluted earnings/(loss) per share is calculated by dividing the adjusted profit/(loss) for the period attributable to owners of the parent by the weighted average number of ordinary shares in issue during the period, and is presented in supplemental note 3.

 



 

Key Performance Indicators

 

 

 

Three months ended
30 September

 

 

 

2013

 

2012

 

Commercial % of total revenue

 

60.8

%

56.4

%

Broadcasting % of total revenue

 

19.6

%

18.0

%

Matchday % of total revenue

 

19.6

%

25.6

%

Home Matches Played

 

 

 

 

 

FAPL

 

3

 

3

 

UEFA competitions

 

1

 

1

 

Domestic Cups

 

1

 

1

 

 

 

 

 

 

 

Other

 

 

 

 

 

Employees at period end

 

810

 

735

 

Staff costs % of revenue

 

53.7

%

52.8

%

 

Phasing of Premier League
home games

 

Quarter 1

 

Quarter 2

 

Quarter 3

 

Quarter 4

 

Total

 

2013/14 season*

 

3

 

6

 

7

 

3

 

19

 

2012/13 season

 

3

 

7

 

5

 

4

 

19

 

2011/12 season

 

3

 

7

 

5

 

4

 

19

 

 


*Subject to changes in broadcasting scheduling

 

Contacts

 

Investor Relations:

Samanta Stewart

+44 207 054 5928

ir@manutd.co.uk

 

Media: Philip Townsend

Manchester United plc

+44 161 868 8148

philip.townsend@manutd.co.uk

 

 

 

 

 

Jim Barron / Michael Henson

Sard Verbinnen & Co + 1 212 687 8080

 



 

CONSOLIDATED INCOME STATEMENT

(unaudited; in £ thousands, except per share and shares outstanding data)

 

 

 

Three months ended
 30 September

 

 

 

2013

 

2012

 

Revenue

 

98,521

 

76,316

 

Operating expenses

 

(90,208

)

(74,811

)

Profit on disposal of players’ registrations

 

996

 

4,818

 

Operating profit

 

9,309

 

6,323

 

Finance costs

 

(9,838

)

(12,476

)

Finance income

 

59

 

89

 

Net finance costs

 

(9,779

)

(12,387

)

Loss before tax

 

(470

)

(6,064

)

Tax credit

 

177

 

26,532

 

(Loss)/profit for the period

 

(293

)

20,468

 

Attributable to:

 

 

 

 

 

Owners of the parent

 

(293

)

20,386

 

Non-controlling interest

 

 

82

 

 

 

(293

)

20,468

 

 

 

 

 

 

 

(Loss)/earnings per share attributable to owners of the parent:

 

 

 

 

 

Basic and diluted (loss)/earnings per share (pence)

 

(0.18

)

12.73

 

Weighted average number of ordinary shares outstanding (thousands)

 

163,819

 

160,134

 

 



 

CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)

 

 

 

As of
30 September
2013

 

As of
30 June
2013

 

As of
30 September
2012

 

ASSETS

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

256,244

 

252,808

 

250,479

 

Investment property

 

14,051

 

14,080

 

14,169

 

Goodwill

 

421,453

 

421,453

 

421,453

 

Players’ registrations

 

144,680

 

119,947

 

135,634

 

Trade and other receivables

 

241

 

1,583

 

1,500

 

Deferred tax asset

 

139,434

 

145,128

 

24,589

 

 

 

976,103

 

954,999

 

847,824

 

Current assets

 

 

 

 

 

 

 

Derivative financial instruments

 

882

 

260

 

1,228

 

Trade and other receivables

 

64,292

 

68,619

 

69,887

 

Current tax receivable

 

 

 

3,551

 

Cash and cash equivalents

 

83,602

 

94,433

 

52,527

 

 

 

148,776

 

163,312

 

127,193

 

Total assets

 

1,124,879

 

1,118,311

 

975,017

 

 



 

CONSOLIDATED BALANCE SHEET (continued)

(unaudited; in £ thousands)

 

 

 

As of
30 September
2013

 

As of
30 June
2013

 

As of
30 September
2012

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

Share capital

 

52

 

52

 

52

 

Share premium

 

68,822

 

68,822

 

68,666

 

Merger reserve

 

249,030

 

249,030

 

249,030

 

Hedging reserve

 

16,342

 

231

 

791

 

Retained earnings

 

129,949

 

129,825

 

8,069

 

Equity attributable to owners of the parent

 

464,195

 

447,960

 

326,608

 

Non-controlling interest

 

 

 

(1,921

)

 

 

464,195

 

447,960

 

324,687

 

Non-current liabilities

 

 

 

 

 

 

 

Derivative financial instruments

 

1,649

 

1,337

 

1,701

 

Trade and other payables

 

18,014

 

18,413

 

23,232

 

Borrowings

 

353,476

 

377,474

 

353,966

 

Deferred revenue

 

18,023

 

17,082

 

7,131

 

Provisions

 

845

 

988

 

1,247

 

Deferred tax liabilities

 

14,913

 

17,168

 

25,608

 

 

 

406,920

 

432,462

 

412,885

 

Current liabilities

 

 

 

 

 

 

 

Derivative financial instruments

 

571

 

29

 

 

Current tax liabilities

 

5,472

 

900

 

1,128

 

Trade and other payables

 

72,929

 

78,451

 

79,437

 

Borrowings

 

7,571

 

11,759

 

5,740

 

Deferred revenue

 

166,757

 

146,278

 

150,714

 

Provisions

 

464

 

472

 

426

 

 

 

253,764

 

237,889

 

237,445

 

Total equity and liabilities

 

1,124,879

 

1,118,311

 

975,017

 

 



 

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)

 

 

 

Three months ended
30 September

 

 

 

2013

 

2012

 

Cash flows from operating activities

 

 

 

 

 

Cash generated from operations (see supplemental note 4)

 

32,770

 

33,883

 

Interest paid

 

(9,146

)

(24,503

)

Debt finance costs relating to borrowings

 

(19

)

 

Interest received

 

59

 

85

 

Income tax paid

 

(487

)

(202

)

Net cash generated from operating activities

 

23,177

 

9,263

 

Cash flows from investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(4,093

)

(3,396

)

Purchases of players’ registrations

 

(33,450

)

(34,897

)

Proceeds from sale of players’ registrations

 

6,655

 

5,364

 

Net cash used in investing activities

 

(30,888

)

(32,929

)

Cash flows from financing activities

 

 

 

 

 

Proceeds from issue of shares

 

 

70,258

 

Repayment of borrowings

 

(91

)

(62,704

)

Net cash (used in)/generated from financing activities

 

(91

)

7,554

 

Net decrease in cash and cash equivalents

 

(7,802

)

(16,112

)

Cash and cash equivalents at beginning of period

 

94,433

 

70,603

 

Exchange losses on cash and cash equivalents

 

(3,029

)

(1,964

)

Cash and cash equivalents at end of period

 

83,602

 

52,527

 

 



 

SUPPLEMENTAL 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 incorporated under the Companies Law (2011 Revision) of the Cayman Islands, as amended and restated from time to time.

 

2                               Reconciliation of (loss)/profit for the period to adjusted EBITDA

 

 

 

Three months ended
 30 September

 

 

 

2013
£’000

 

2012
£’000

 

(Loss)/profit for the period

 

(293

)

20,468

 

Adjustments:

 

 

 

 

 

Tax credit

 

(177

)

(26,532

)

Net finance costs

 

9,779

 

12,387

 

Profit on disposal of players’ registrations

 

(996

)

(4,818

)

Exceptional items

 

 

3,098

 

Amortization of players’ registrations

 

11,904

 

9,823

 

Depreciation

 

1,983

 

1,917

 

Adjusted EBITDA

 

22,200

 

16,343

 

 



 

3                               Reconciliation of (loss)/profit for the period attributable to owners of the parent to adjusted profit/(loss) for the period and adjusted basic and diluted earnings/(loss) per share

 

 

 

Three months ended
 30 September

 

 

 

2013
£’000

 

2012
£’000

 

(Loss)/profit for the period attributable to owners of the parent

 

(293

)

20,386

 

Add: profit for the period attributable to non-controlling interest

 

 

82

 

(Loss)/profit for the period

 

(293

)

20,468

 

Professional advisors fees relating to the issue of shares

 

 

3,098

 

Accelerated amortisation of issue discount and debt finance costs associated with the repurchase of senior secured notes

 

 

2,543

 

Premium on repurchase of senior secured notes

 

 

5,244

 

Foreign exchange loss on US dollar denominated bank accounts

 

3,029

 

1,964

 

Foreign exchange gain on US dollar denominated borrowings

 

 

(7,644

)

Fair value movement on derivative financial instruments

 

884

 

16

 

Tax credit

 

(177

)

(26,532

)

Adjusted profit/(loss) before tax

 

3,443

 

(843

)

Adjusted tax (expense)/credit (using a normalised US statutory rate of 35%)

 

(1,205

)

295

 

 

 

2,238

 

(548

)

Subtract: profit for the period attributable to non-controlling interest

 

 

(82

)

Adjusted profit/(loss) for the period (i.e. Adjusted Net Income/(Loss))

 

2,238

 

(630

)

 

 

 

 

 

 

Adjusted basic and diluted earnings/(loss) per share (pence)

 

1.37

 

(0.39

)

Weighted average number of ordinary shares outstanding (thousands)

 

163,819

 

160,134

 

 

The Group has refined the calculation of adjusted profit/(loss) by also now adjusting for foreign exchange losses/gains on US dollar denominated bank accounts and borrowings and fair value movements on derivative financial instruments.

 



 

4                               Cash generated from operations

 

 

 

Three months ended
 30 September

 

 

 

2013
£’000

 

2012
£’000

 

(Loss)/profit from continuing operations

 

(293

)

20,468

 

Tax credit

 

(177

)

(26,532

)

Loss on ordinary activities before tax

 

(470

)

(6,064

)

Depreciation charges

 

1,983

 

1,917

 

Amortisation of players’ registrations

 

11,904

 

9,823

 

Profit on disposal of players’ registrations

 

(996

)

(4,818

)

Net finance costs

 

9,779

 

12,387

 

Share-based payments

 

383

 

327

 

Fair value gains on derivative financial instruments

 

(160

)

(111

)

Reclassified from hedging reserve

 

(188

)

 

Decrease in trade and other receivables

 

10

 

6,358

 

Increase in trade and other payables and deferred revenue

 

10,685

 

14,210

 

Decrease in provisions

 

(160

)

(146

)

Cash generated from operations

 

32,770

 

33,883