- RECORD TOTAL REVENUE OF £515.3
MILLION
- RECORD ADJUSTED EBITDA OF £191.9
MILLION
- RECORD OPERATING PROFIT OF £68.9
MILLION
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 2016
fiscal fourth quarter and twelve months ended 30 June 2016.
Highlights
- Won the FA Cup for a record
equalling 12th time
- Premier League Domestic live
broadcasting rights up 70% and International rights up
approximately 40% for the 2017 to 2019 cycle
- 14 Sponsorship deals announced during
the fiscal year:
- 6 global sponsorship partnerships
- 5 regional sponsorship partnerships,
and
- 3 financial services, MUTV and telecom
partnerships.
- Initiated the partnership with
adidas on 1 August 2015.
- Very successful launch of 2015/16 new
kit
- Brought the management of Old Trafford
Megastore in-house
- Signed several licensing deals
including Sbenu, New Era and Columbia
- Appointed José Mourinho as
manager
Commentary
Ed Woodward, Executive Vice Chairman commented,
“Our record Fiscal 2016 financial performance reflects the
continued underlying strength of the business and the Club is on
target to achieve record revenues in 2017, even without a
contribution from the Champions League. This strong financial
performance has enabled us to invest in our squad, team management
and facilities to position us to challenge for, and win, trophies
in the coming years.”
Outlook
For fiscal 2017, Manchester United expect:
- Revenue to be £530m to £540m.
- Adjusted EBITDA to be £170m to
£180m.
Key Financials (unaudited)
£ million (except earnings per share)
Twelve months ended
30 June
Three months ended
30 June
2016 2015
Change
2016 2015 Change
Commercial revenue
268.3 196.9
36.3%
65.2 45.9 42.0%
Broadcasting revenue
140.4 107.7
30.4%
47.7 40.8 16.9% Matchday
revenue
106.6 90.6 17.7%
21.6 19.1 13.1% Total revenue
515.3 395.2 30.4%
134.5 105.8 27.1% Adjusted EBITDA*
191.9 120.3 59.5%
49.3 32.2 53.1% Operating profit
68.9 31.6 >100%
3.6
8.9 (59.6%) Profit/(loss) for the period (i.e.
net income)
36.4 (0.9) -
(0.9) (6.9) (87.0%) Basic
earnings/(loss) per share
22.19
(0.55) -
(0.58) (4.22) (86.3%)
Adjusted profit for the period (i.e. adjusted net income)*
40.8 3.4 >100%
8.7 1.4 >100% Adjusted basic earnings per
share (pence)*
24.91 2.09
>100%
5.31 0.85 >100% Net
Debt*
260.9 255.2 2.2%
260.9 255.2 2.2%
* Adjusted EBITDA, adjusted profit for the
period, adjusted basic earnings per share and net debt 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 year was £268.3 million, an increase
of £71.4 million, or 36.3%, over the prior year.
- Sponsorship revenue was £160.1 million,
an increase of £5.2 million, or 3.4%, over the prior year.
- Retail, Merchandising, Apparel &
Product Licensing revenue was £97.3 million, an increase of £65.7
million, or 207.9%, over the prior year, primarily due to the
commencement of the new agreement with adidas from 1 August 2015,
which included a step-up in minimum guaranteed revenues and the
contribution from several business previously operated by
Nike.
- Mobile & Content revenue was £10.9
million, an increase of £0.5 million, or 4.8%, over the prior
year.
For the quarter, commercial revenue was £65.2 million, an
increase of £19.3 million, or 42.0%, over the prior year
quarter.
- Sponsorship revenue was £37.6 million,
an increase of £2.3 million, or 6.5%, over the prior year
quarter.
- Retail, Merchandising, Apparel &
Product Licensing revenue was £24.9 million, an increase of £16.6
million, or 200.0%, over the prior year quarter.
- Mobile & Content revenue was £2.7
million, an increase of £0.4 million, or 17.4%, over the prior year
quarter.
Broadcasting
Broadcasting revenue for the year was £140.4 million, an
increase of £32.7 million, or 30.4%, over the prior year, primarily
due to participation in UEFA competitions.
Broadcasting revenue for the quarter was £47.7 million, an
increase of £6.9 million, or 16.9%, over the prior year quarter,
primarily due to domestic cup progression and UEFA competition
wash-up payments.
Matchday
Matchday revenue for the year was £106.6 million, an increase of
£16.0 million, or 17.7%, over the prior year, primarily due to
participation in UEFA competitions plus domestic cup
progression.
Matchday revenue for the quarter was £21.6
million, an increase of £2.5 million, or 13.1%, over the prior year
quarter, primarily due to playing one more FAPL home game in the
quarter plus domestic cup progression.
Other Financial Information
Operating expenses
Total operating expenses for the year were £436.6 million, an
increase of £49.4 million, or 12.8%, over the prior year.
Employee benefit expenses
Employee benefit expenses for the year were
£232.2 million, an increase of £29.6 million, or 14.6%, over the
prior year, primarily due to renewals of existing player contracts,
coupled with an uplift in annual player salaries due to
participation in the UEFA Champions League.
Other operating expenses
Other operating expenses for the year were
£91.2 million, an increase of £18.9 million, or 26.1%, over the
prior year, primarily due to retail, merchandising, apparel and
licensing costs now being recognized in-house, plus an increase in
matchday costs as a result of playing eight additional home games
in the current year.
Depreciation & amortization
Depreciation for the year was £10.1 million,
a decrease of £0.2 million, or 1.9%, over the prior year.
Amortization for the year was £88.0 million, a decrease of £11.7
million, or 11.7%, over the prior year quarter. The unamortized
balance of players’ registrations at 30 June 2016 was £241.7
million.
Exceptional items
Exceptional costs for the year were £15.1
million, of which £8.4 million related to compensation to the
former manager and certain members of the coaching staff for loss
of office and £6.7 million related to a registrations’ impairment
charge regarding a reduction in the carrying value of a player no
longer considered to be a member of the first team playing squad.
Exceptional costs for the prior year were £2.3 million.
Net finance costs
Net finance costs for the year were £20.0 million, a decrease of
£15.2 million, or 43.2%, over the prior year, including the
reduction in interest payable on the secured term loan facility and
senior secured notes following the refinancing in June 2015.
Tax
The tax expense for the year was £12.5 million, compared to a
credit of £2.7 million in the prior year.
Cash flows
Net cash generated from operating activities for the year was
£186.1 million, an increase of £42.2 million over the prior year
primarily related to a reduction in interest payments.
Net capital expenditure on property, plant and equipment for the
year was £5.1 million, a decrease of £0.4 million over the prior
year.
Net capital expenditure on intangible assets for the year was
£99.7 million, an increase of £2.9 million over the prior year.
Net cash used in financing activities for the year was £20.5
million, an increase of £65.1 million compared to £44.6 million net
cash generated from financing activities in the prior year which
reflected the refinancing in June 2015.
Overall cash and cash equivalents (including the effects of
exchange rate changes) increased by £73.4 million in the year.
Net Debt
Net Debt as of 30 June 2016 was £260.9 million, an increase of
£5.7 million over the prior year primarily due to the impact of
foreign exchange rate movements on our USD denominated debt
(USD/GBP exchange rate moved from 1.5712 at 30 June 2015 to 1.3332
at 30 June 2016) offsetting the increase in cash outlined
above.
Dividend
The Board of Directors recently approved
replacing the previous quarterly cash dividend with a regular
semi-annual cash dividend on the Company's outstanding Class A and
Class B ordinary shares of $0.09 per share which will be paid in
January and June 2017. The specific record, ex dividend, and
payment dates with respect to each semi-annual cash dividend will
be announced in future releases.
Conference Call Information
The Company’s conference call to review fiscal
2016 and fourth quarter results will be broadcast live over the
internet today, 12 September 2016 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 138-year heritage we have won 64
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).
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth
is preliminary and subject to adjustments. The audit of the
financial statements and related notes to be included in our annual
report on Form 20-F for the year ended 30 June 2016 is still in
progress. Adjustments to the financial statements may be identified
when audit work is completed, which could result in significant
differences from this preliminary unaudited financial
information.
Non-IFRS Measures: Definitions and Use
1. Adjusted
EBITDA
Adjusted EBITDA is defined as profit/(loss) for the period
before depreciation, amortization, (loss)/profit on disposal of
intangible assets, exceptional items, net finance costs, and
tax.
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 amortization),
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/(loss) 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 calculated, where appropriate,
by adjusting for charges/credits related to exceptional items,
foreign exchange gains/losses on unhedged US dollar denominated
borrowings, and fair value movements on derivative financial
instruments, adding/subtracting the actual tax expense/credit for
the period, and subtracting/adding the adjusted tax expense/credit
for the period (based on an normalized tax rate of 35%; 2015: 35%).
The normalized tax rate of 35% is management’s estimate of the tax
rate likely to be applicable to the Group in the foreseeable
future.
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 charges/credits related to ‘one-off’
transactions and then to apply a ‘normalized’ tax rate (for both
the current and prior periods) of the US federal income tax rate of
35%. A reconciliation of (loss)/profit for the period to adjusted
profit/(loss) for the period is presented in supplemental note
3.
3. Adjusted basic and diluted earnings per
share
Adjusted basic and diluted earnings per share are calculated by
dividing the adjusted profit for the period by the weighted average
number of ordinary shares in issue during the period. Adjusted
diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares in issue during the period to
assume conversion of all dilutive potential ordinary shares. We
have one category of dilutive potential ordinary shares: share
awards pursuant to the 2012 Equity Incentive Plan (the “Equity
Plan”). Share awards pursuant to the Equity Plan are assumed to
have been converted into ordinary shares at the beginning of the
financial year. Adjusted basic and diluted earnings per share are
presented in supplemental note 3.
4. Net debt
Net debt is calculated as non-current and current borrowings
minus cash and cash equivalents.
Key Performance Indicators
Twelve months ended Three months ended 30
June 30 June
2016 2015
2016 2015
Commercial % of total revenue
52.1% 49.8%
48.5% 43.4%
Broadcasting % of total revenue
27.2% 27.3%
35.5% 38.6%
Matchday % of total revenue
20.7% 22.9%
16.0% 18.0% Home
Matches Played
FAPL
19 19
5 4 UEFA competitions
6 -
- - Domestic Cups
4 2
- - Away
Matches Played
UEFA competitions
6 -
- - Domestic Cups
5 4
3 -
Other
Employees at period end
810 778
810 778 Employee benefit
expenses % of revenue
45.1%
51.4%
45.7% 51.7%
Phasing of
Premier League home games Quarter 1
Quarter 2 Quarter 3 Quarter
4 Total 2016/17 season* 3 7 4
5 19 2015/16 season 4 5 5 5
19
*Subject to changes in broadcasting
scheduling
CONSOLIDATED INCOME STATEMENT
(unaudited; in £ thousands, except per share and shares
outstanding data)
Twelve months ended 30
June
Three months ended 30
June
2016 2015
2016
2015
Revenue 515,345 395,178
134,575 105,777 Operating expenses
(436,709
) (387,179 )
(126,131 ) (102,315 )
(Loss)/profit on disposal of intangible assets
(9,786 ) 23,649
(4,948
) 5,445
Operating profit
68,850 31,648
3,496 8,907 Finance costs
(20,459 ) (35,419 )
(7,534 ) (17,038 ) Finance income
442 204
152
68 Net finance costs
(20,017 ) (35,215 )
(7,382
) (16,970 )
Profit/(loss) before tax
48,833 (3,567 )
(3,886 ) (8,063 ) Tax (expense)/credit
(12,462 ) 2,672
2,929 1,153
Profit/(loss) for the
period 36,371 (895 )
(957 ) (6,910 )
Basic
earnings/(loss) per share: Basic earnings/(loss) per share
(pence)
22.19 (0.55 )
(0.58 ) (4.22 ) Weighted
average number of ordinary shares outstanding (thousands)
163,890 163,795
163,892 163,798
Diluted
earnings/(loss) per share: Diluted earnings/(loss) per share
(pence)
22.13
(0.55
)
1
(4.21
) Weighted average number of ordinary shares outstanding
(thousands)
164,319
164,132
164,319 164,132
(1) For the three months ended 30 June 2016, potential
ordinary shares are anti-dilutive, as their inclusion in the
diluted loss per share calculation would reduce the loss per share,
and hence have been excluded.
CONSOLIDATED BALANCE SHEET
(unaudited; in £ thousands)
As of
30 June
2016
As of
30 June
2015
ASSETS Non-current assets Property, plant and
equipment
245,714 250,626 Investment property
13,447
13,559 Intangible assets
665,634 660,397 Derivative
financial instruments
3,760 - Trade and other receivables
11,223 3,836 Deferred tax asset
145,461 133,640
1,085,239 1,062,058
Current assets Inventories
926 - Derivative financial instruments
7,888 27 Trade
and other receivables
128,657 83,627 Tax receivable
-
124 Cash and cash equivalents
229,194
155,752
366,665
239,530
Total assets 1,451,904
1,301,588
CONSOLIDATED
BALANCE SHEET (continued) (unaudited; in £ thousands)
As of
30 June
2016
As of
30 June
2015
EQUITY AND LIABILITIES Equity Share capital
52
52 Share premium
68,822 68,822 Merger reserve
249,030
249,030 Hedging reserve
(32,989) 4,729 Retained earnings
173,367 155,285
458,282 477,918
Non-current
liabilities Derivative financial instruments
10,637
2,769 Trade and other payables
41,450 48,078 Borrowings
484,528 410,482 Deferred revenue
38,899 21,583
Deferred tax liabilities
14,364
17,311
589,878 500,223
Current liabilities Derivative financial instruments
2,800 2,966 Tax liabilities
6,867 2,105 Trade and
other payables
199,669 131,283 Borrowings
5,564 485
Deferred revenue
188,844 186,608
403,744 323,447
Total
equity and liabilities 1,451,904
1,301,588
CONSOLIDATED
STATEMENT OF CASH FLOWS (unaudited; in £ thousands)
Twelve months ended 30
June
Three months ended 30
June
2016 2015
2016 2015
Cash flows from operating activities
Cash generated from operations (see supplemental note
4)
200,864 195,021
155,263 149,289 Interest paid
(13,219 ) (42,624 )
(1,682 ) (18,488 )
Debt finance costs relating to borrowings
- (6,508 )
- (5,684 ) Interest received
487 502
241 45
Tax paid
(2,040 ) (2,466
)
(142 ) (185 )
Net cash generated
from operating activities 186,092
143,925
153,680
124,977
Cash flows from investing activities Payments
for property, plant and equipment
(5,101 ) (5,466 )
(4,318 ) (1,380 ) Proceeds from sale of property,
plant and equipment
19 -
- - Payments for intangible
assets
(138,095 ) (117,446 )
(25,155 )
(16,174 ) Proceeds from sale of intangible assets
38,357 20,649
1,628 486
Net cash used in investing
activities (104,820 )
(102,263 )
(27,845 ) (17,068 )
Cash
flows from financing activities Proceeds from borrowings
- 272,539
- 267,835 Repayment of borrowings
(371 ) (227,950 )
(94 ) (227,649 )
Dividends paid
(20,084 )
-
(5,080 ) -
Net cash
(used in)/generated from financing activities
(20,455 ) 44,589
(5,174 ) 40,186
Net increase in cash
and cash equivalents 60,817 86,251
120,661
148,095 Cash and cash equivalents at beginning of period
155,752 66,365
104,202 11,204 Effects of exchange
rate changes on cash and cash equivalents
12,625 3,136
4,331
(3,547 )
Cash and cash equivalents at end of period
229,194 155,752
229,194 155,752
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/(loss) for the period to adjusted EBITDA
Twelve months ended 30
June
Three months ended 30
June
2016 £’000
2015£’000
2016 £’000
2015£’000
Profit/(loss) for the period 36,371 (895 )
(957 ) (6,910 ) Adjustments: Tax
expense/(credit)
12,462 (2,672 )
(2,929 )
(1,153 ) Net finance costs
20,017 35,215
7,382 16,970
Loss/(profit) on disposal of intangible assets
9,786 (23,649
)
4,948 (5,445 ) Exceptional items
15,135 2,336
15,135 - Amortization
88,009 99,687
23,059
25,756 Depreciation
10,079
10,324
2,588 2,959
Adjusted EBITDA 191,859 120,346
49,226 32,177
3 Reconciliation of
profit/(loss) for the period to adjusted profit for the period and
adjusted basic and diluted earnings per share
Twelve months ended 30
June
Three months ended 30
June
2016 £’000
2015£’000
2016 £’000
2015£’000
Profit/(loss) for the period 36,371 (895 )
(957 ) (6,910 ) Exceptional items
15,135 2,336
15,135 - Accelerated amortisation of
issue discount and debt finance costs
- 3,773
- 3,773
Premium on redemption of senior secured notes
- 3,552
- 3,552 Foreign exchange losses on unhedged US dollar
denominated borrowings
4,136 288
3,164 288 Fair value
movement on derivative financial instruments
(5,288 )
(1,115 )
(1,025 ) 2,596 Tax expense/(credit)
12,462 (2,672 )
(2,929 ) (1,153 ) Adjusted profit before tax
62,816 5,267
13,388 2,146 Adjusted tax expense (using
a normalised tax rate of 35% (2015: 35%))
(21,986 ) (1,843 )
(4,686
) (751 )
Adjusted profit for the period (i.e.
adjusted net income) 40,830
3,424
8,702 1,395
Adjusted basic earnings per share: Adjusted basic
earnings per share (pence)
24.91 2.09
5.31 0.85
Weighted average number of ordinary shares outstanding (thousands)
163,890 163,795
163,892 163,798
Adjusted diluted
earnings per share: Adjusted diluted earnings per share (pence)
24.85 2.09
5.30 0.85 Weighted average number of
ordinary shares outstanding (thousands)
164,319 164,132
164,319
164,132
4 Cash generated from
operations
Twelve months ended
30 June
Three months ended
30 June
2016 £’000
2015£’000
2016 £’000
2015£’000
Profit/(loss) for the period
36,371 (895 )
(957 ) (6,910 ) Tax expense/(credit)
12,462 (2,672 )
(2,929 ) (1,153 ) Profit/(loss) before tax
48,833 (3,567 )
(3,886 ) (8,063 ) Depreciation
10,079 10,324
2,588 2,959 Impairment charges
6,693 -
6,693 - Amortization
88,009 99,687
23,059 25,756 Loss/(profit) on disposal of intangible assets
9,786 (23,649 )
4,948 (5,445 ) Net finance costs
20,017 35,215
7,382 16,970 Loss on disposal of
property, plant and equipment
126 5
116 -
Equity-settled share-based payments
1,795 1,352
625
323 Net exchange differences
570 (584 )
(1,364
) (54 ) Other fair value (gains)/losses on derivative
financial instruments
(8,230 ) 5,498
(2,601
) 1,156 Reclassified from hedging reserve
1,382
(4,713 )
374 (939 ) (Increase)/decrease in inventories
(926 ) -
367 - (Increase)/decrease in trade
and other receivables
(31,741 ) 58,503
(33,515
) 28,573 Increase in trade and other payables and deferred
revenue
54,471 16,950
150,477 88,053
Cash
generated from operations 200,864
195,021
155,263
149,289
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160912005660/en/
Investor Relations:Samanta Stewart, +44 207 054
5928ir@manutd.co.ukorMedia:Manchester United plcPhilip Townsend,
+44 161 868 8148philip.townsend@manutd.co.ukorSard Verbinnen &
CoJim Barron / Michael Henson, + 1 212 687
8080JBarron@SARDVERB.com
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