News Release

Printer Friendly Version View printer-friendly version
<< Back
Manchester United Plc: 2014 Second Quarter Results

RECORD SECOND QUARTER REVENUE OF £122.9 MILLION

SPONSORSHIP REVENUE FOR THE SECOND QUARTER INCREASED 39.4%

YEAR-TO-DATE ADJUSTED NET INCOME UP 19.6%

MANCHESTER, England--(BUSINESS WIRE)--Feb. 12, 2014-- 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 second quarter and six months ended 31 December 2013.

Highlights

  • Commercial revenues of £42.3 million up 18.8% for the quarter and 30.0% for the year to date.
  • Six new sponsorship deals activated in the second quarterUnilever and Hong Kong Jockey Club (regional); Banif Bank (financial services); Fuji TV and SPOTV Korea (MUTV) and STC (mobile).
  • Broadcasting revenues increased 18.7% for the quarter primarily due to the new FAPL domestic and international TV rights agreements.

Commentary

Ed Woodward, Executive Vice Chairman commented, “We once again achieved a record revenue quarter with strong contributions from our commercial and broadcasting businesses despite the current league position, which everyone from the Team Manager down has acknowledged is disappointing. We continue to see meaningful opportunities to grow our commercial business and the popularity of football on TV is leading to continued broadcasting revenue growth – all of which bodes well for the long-term stability and financial strength of our business. We are also very pleased to have added a world class player in Juan Mata to our squad, who has already made a positive impact."

Outlook

For fiscal 2014, Manchester United continues to expect:

  • Revenue to be £420m to £430m.
  • Adjusted EBITDA to be £128m to £133m.

Key Financials (unaudited)

£ million (except adjusted earnings/(loss) per share)   Three months ended

31 December

      Six months ended

31 December

   
  2013   2012 Change 2013   2012 Change
Commercial revenue 42.3 35.6 18.8% 102.2 78.6 30.0%
Broadcasting revenue 46.9 39.5 18.7% 66.2 53.2 24.4%
Matchday revenue 33.7 35.0 (3.7%) 53.0 54.6 (2.9%)
Total revenue 122.9 110.1 11.6% 221.4 186.4 18.8%
Adjusted EBITDA* 51.0 50.2 1.6% 73.2 66.5 10.1%
 
Profit for the period (i.e. net income) 19.0 16.2 17.3% 18.7 36.7 (49.0%)
Adjusted profit for the period (i.e. adjusted net income)* 19.8 19.0 4.2% 22.0 18.4 19.6%
Adjusted basic and diluted earnings per share (pence)* 12.08 11.60 4.1% 13.45 11.34 18.6%
 
Gross debt 356.6 366.6 (2.7%) 356.6 366.6 (2.7%)
Cash and cash equivalents 72.1 66.6 8.3% 72.1 66.6 8.3%

* Adjusted EBITDA, adjusted profit for the period and adjusted basic and diluted earnings 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 second quarter was £42.3 million, an increase of £6.7 million, or 18.8%, over the prior year quarter.

  • Sponsorship revenue for the second quarter was £29.0 million, an increase of £8.2 million, or 39.4%, primarily due to higher renewals and the activation of new global and regional sponsorships.
  • Retail, Merchandising, Apparel & Product Licensing revenue for the second quarter was £9.1 million, a decrease of £0.4 million. For the year to date, revenue was £19.8 million, an increase of £0.9 million, or 4.8%.
  • New Media & Mobile revenue for the second quarter was £4.2 million, a decrease of £1.1 million, due to the expiration of a few of our mobile partnerships.

Broadcasting

Broadcasting revenue for the second quarter was £46.9 million, an increase of £7.4 million, or 18.7%, over the prior year quarter, due to increased revenue from the Premier League domestic and international rights agreements, partly offset by one fewer Premier League game, 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 second quarter was £33.7 million, a decrease of £1.3 million, or 3.7%, over the prior year quarter, primarily due to playing one fewer home Premier League game, partly offset by one more Capital One cup game.

Other Financial Information

Operating expenses

Total operating expenses for the second quarter were £87.7 million, an increase of £14.5 million, or 19.8%, over the prior year quarter.

Staff costs

Staff costs for the second quarter were £51.6 million, an increase of £7.4 million, or 16.7%, primarily due to the impact of player acquisitions and renegotiated player contracts.

Other operating expenses

Other operating expenses for the second quarter were £20.3 million, an increase of £4.6 million, or 29.3% primarily due to foreign exchange losses and an increase in domestic cup gate share expenses from having one home domestic cup game in the second quarter (none in the prior year quarter).

Depreciation & amortisation of players’ registrations

Depreciation for the second quarter was £2.1 million, an increase of £0.3 million, or 16.7%, over the prior year quarter. Amortisation of players’ registrations was £13.4 million, an increase of £2.7 million, or 25.2%, over the prior year quarter. The unamortised balance of players’ registrations at 31 December 2013 was £132.1 million.

Exceptional items

Exceptional items for the second quarter of £0.3 million related to investment property impairment charges. Exceptional items for the prior year quarter were £0.8 million and related to professional advisor fees in connection with our initial public offering.

Net finance costs

Net finance costs for the second quarter were £5.7 million, a decrease of £3.5 million, or 38.0%, over the prior year quarter. The decrease was primarily due to a reduction in interest payable on our secured borrowings following the refinancing in June 2013.

Tax

The tax expense for the second quarter was £11.3 million, compared to an expense of £12.2 million in the prior year quarter. 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 used in operating activities for the second quarter was £3.7 million, a decrease of £29.1 million from £25.4 million net cash generated in the prior year quarter, primarily due to adverse movements in working capital.

Capital expenditure on property, plant and equipment for the second quarter was £2.8 million, a decrease of £3.1 million from the prior year quarter.

Net player capital expenditure for the second quarter was £3.4 million, a decrease of £1.0 million from the prior year quarter.

Conference Call Information

The Company’s conference call to review second quarter fiscal 2014 results will be broadcast live over the internet today, 12 February 2014 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 for the period (i.e. adjusted net income)

Adjusted profit for the period is the adjusted profit 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 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, the fair value movements on derivative financial instruments, and hedge ineffectiveness on cash flow hedges, adding/(subtracting) the actual tax expense/(credit) for the period, subtracting the adjusted tax expense 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, the fair value movement on derivative financial instruments, and hedge ineffectiveness on cash flow hedges; and then to apply a ‘normalized’ tax rate (for both the current and prior periods) of the US statutory rate of 35%. A reconciliation of profit for the period attributable to owners of the parent to adjusted profit for the period attributable to owners of the parent is presented in supplemental note 3.

3. Adjusted basic and diluted earnings per share

Adjusted basic and diluted earnings per share is calculated by dividing the adjusted profit 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   Six months ended
31 December 31 December
  2013   2012 2013   2012
Commercial % of total revenue 34.4% 32.3% 46.2% 42.2%
Broadcasting % of total revenue 38.2% 35.9% 29.9% 28.5%
Matchday % of total revenue 27.4% 31.8% 23.9% 29.3%
Home Matches Played        
FAPL 6 7 9 10
UEFA competitions 2 2 3 3
Domestic Cups 1 - 2 1
Away Matches Played        
UEFA competitions 3 3 3 3
Domestic Cups 1 1 1 1
 
Other        
Employees at period end 849 779 849 779
Staff costs % of revenue 42.5% 40.2% 47.5% 45.3%
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

CONSOLIDATED INCOME STATEMENT

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

    Three months ended

31 December

  Six months ended

31 December

 

2013   2012 2013   2012
Revenue 122,927 110,056 221,448 186,372
Operating expenses (87,715) (73,169) (177,923) (147,980)
Profit on disposal of players’ registrations 846 687 1,842 5,505
Operating profit 36,058 37,574 45,367 43,897
Finance costs (5,765) (9,277) (15,603) (21,753)
Finance income 48 67 107 156
Net finance costs (5,717) (9,210) (15,496) (21,597)
Profit before tax 30,341 28,364 29,871 22,300
Tax (expense)/credit (11,301) (12,146) (11,124) 14,386
Profit for the period 19,040 16,218 18,747 36,686

Attributable to:

Owners of the parent

19,040 16,131 18,747 36,517
Non-controlling interest - 87 - 169
  19,040 16,218 18,747 36,686
 
Earnings per share attributable to owners of the parent:
Basic and diluted earnings per share (pence) 11.62 9.85 11.44 22.54
Weighted average number of ordinary shares outstanding (thousands) 163,812 163,826 163,816 161,980

CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)

    As of

31 December

2013

  As of

30 June

2013

  As of

31 December

2012

ASSETS      
Non-current assets
Property, plant and equipment 256,511 252,808 253,609
Investment property 13,728 14,080 14,140
Goodwill 421,453 421,453 421,453
Players’ registrations 132,123 119,947 125,945
Derivative financial instruments 1,013 - -
Trade and other receivables 141 1,583 1,500
Deferred tax asset   134,261   145,128   15,481
    959,230   954,999   832,128
Current assets
Derivative financial instruments 201 260 161
Trade and other receivables 68,787 68,619 61,970
Current tax receivable - - 2,500
Cash and cash equivalents   72,144   94,433   66,631
    141,132   163,312   131,262
Total assets   1,100,362   1,118,311   963,390
    As of

31 December

2013

  As of

30 June

2013

  As of

31 December

2012

EQUITY AND LIABILITIES      
Equity
Share capital 52 52 52
Share premium 68,822 68,822 68,822
Merger reserve 249,030 249,030 249,030
Hedging reserve 20,483 231 1
Retained earnings   149,139   129,825   24,323  
Equity attributable to owners of the parent 487,526 447,960 342,228
Non-controlling interest   -   -   (1,834 )
    487,526   447,960   340,394  
Non-current liabilities
Derivative financial instruments 1,864 1,337 1,629
Trade and other payables 14,829 18,413 21,086
Borrowings 341,121 377,474 349,005
Deferred revenue 12,828 17,082 4,888
Provisions - 988 1,158
Deferred tax liabilities   22,184   17,168   28,161  
    392,826   432,462   405,927  
Current liabilities
Derivative financial instruments 1,048 29 60
Current tax liabilities 5,813 900 1,128
Trade and other payables 67,221 78,451 66,106
Borrowings 15,438 11,759 17,625
Deferred revenue 130,490 146,278 131,712
Provisions   -   472   438  
    220,010   237,889   217,069  
Total equity and liabilities   1,100,362   1,118,311   963,390  

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)

  Three months ended 31 December   Six months ended

31 December

  2013   2012 2013   2012
Cash flows from operating activities
Cash generated from operations (see supplemental note 4) 1,893

27,980

34,663 61,863
Debt finance costs relating to borrowings (104) - (123) -
Interest paid (4,818) (3,431) (13,964) (27,934)
Interest received 48 72 107 157
Income tax (paid)/refund (759) 802 (1,246) 600
Net cash (used in)/generated from operating activities (3,740) 25,423 19,437 34,686
Cash flows from investing activities
Purchases of property, plant and equipment (2,785) (5,942) (6,878) (9,338)
Proceeds from sale of property, plant and equipment 50 - 50 -
Purchases of players’ registrations (3,837) (3,361) (37,287) (38,258)
Proceeds from sale of players’ registrations 401 999 7,056 6,363
Net cash used in investing activities (6,171) (8,304) (37,059) (41,233)
Cash flows from financing activities
Proceeds from issue of shares - - - 70,258
Expenses directly related to the issue of shares - (1,459) - (1,459)
Repayment of borrowings (96) (92) (187) (62,796)
Net cash (used in)/generated from financing activities (96) (1,551) (187) 6,003
Net (decrease)/increase in cash and cash equivalents (10,007) 15,568 (17,809) (544)
Cash and cash equivalents at beginning of period 83,602 52,527 94,433 70,603
Exchange losses on cash and cash equivalents (1,451) (1,464) (4,480) (3,428)
Cash and cash equivalents at end of period 72,144 66,631 72,144 66,631

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 profit for the period to adjusted EBITDA

  Three months ended

31 December

  Six months ended

31 December

  2013

£’000

  2012

£’000

2013

£’000

  2012

£’000

Profit for the period 19,040 16,218 18,747 36,686
Adjustments:
Tax expense/(credit) 11,301 12,146 11,124 (14,386)
Net finance costs 5,717 9,210 15,496 21,597
Profit on disposal of players’ registrations (846) (687) (1,842) (5,505)
Exceptional items 293 781 293 3,879

Amortisation of players’ registrations

13,418 10,660 25,322 20,483
Depreciation 2,085 1,852 4,068 3,769
Adjusted EBITDA 51,008 50,180 73,208 66,523

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

  Three months ended

31 December

  Six months ended

31 December

 

2013

£’000

  2012

£’000

2013

£’000

  2012

£’000

Profit for the period attributable to owners of the parent 19,040 16,131 18,747 36,517
Add: profit for the period attributable to non-controlling interest - 87 - 169
Profit for the period 19,040 16,218 18,747 36,686
Professional advisors fees relating to the issue of shares - 781 - 3,879
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 (gain)/loss on US dollar denominated bank accounts (317) 1,464 2,712 3,428
Foreign exchange gain on US dollar denominated borrowings - (1,165) - (8,809)
Fair value movement on derivative financial instruments 666 (73) 1,550 (57)
Hedge ineffectiveness of cash flow hedges (248) - (248) -
Tax expense/(credit) 11,301 12,146 11,124 (14,386)
Adjusted profit before tax 30,442 29,371 33,885 28,528

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

(10,655) (10,280) (11,860) (9,985)
19,787 19,091 22,025 18,543
Subtract: profit for the period attributable to non-controlling interest - (87) - (169)
Adjusted profit for the period (i.e. adjusted net income) 19,787 19,004 22,025 18,374
 
Adjusted basic and diluted earnings per share (pence) 12.08 11.60 13.45 11.34
Weighted average number of ordinary shares outstanding (thousands) 163,812 163,826 163,816 161,980

4 Cash generated from operations

  Three months ended

31 December

  Six months ended

31 December

  2013

£’000

  2012

£’000

2013

£’000

  2012

£’000

Profit for the period 19,040 16,218 18,747 36,686
Tax expense/(credit) 11,301 12,146 11,124 (14,386)
Profit before tax 30,341 28,364 29,871 22,300
Depreciation charges 2,085 1,852 4,068 3,769
Impairment charges 293 - 293 -

Amortisation of players’ registrations

13,418 10,660 25,322 20,483
Profit on disposal of players’ registrations (846) (687) (1,842) (5,505)
Net finance costs 5,717 9,210 15,496 21,597
Profit on disposal of property, plant and equipment (43) - (43) -
Equity-settled share-based payments 158 154 541 481
Exchange losses on operating activities 372 - 372 -
Fair value losses/(gains) on derivative financial instruments 34 102 (126) (9)
Reclassified from hedging reserve (330) - (518) -
(Increase)/decrease in trade and other receivables (3,951) 8,369 (3,941) 14,727
Decrease in trade and other payables and deferred revenue (44,040) (29,954) (33,355) (15,744)
Decrease in provisions (1,315) (90) (1,475) (236)
Cash generated from operations 1,893 27,980 34,663 61,863

Source: Manchester United

Manchester United plc
Investor Relations:
Samanta Stewart
+44 207 054 5928
ir@manutd.co.uk
or
Media: Philip Townsend
+44 161 868 8148
philip.townsend@manutd.co.uk
or
Sard Verbinnen & Co
Jim Barron / Michael Henson
+ 1 212 687 8080

OFFICIAL SPONSORS

Bwin