- PROGRESSED TO THE FINAL OF THE UEFA
EUROPA LEAGUE TO BE HELD ON 24TH MAY IN STOCKHOLM.
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 2017 fiscal third quarter
and nine months ended 31 March 2017.
Highlights
- Won the English Football League Cup
Final at Wembley.
- Broadcasting revenues of £31.4
million up 12.9% for the quarter.
- Two sponsorship deals announced in
the quarter.
- Uber (Global)
- Aladdin Street (Global)
Commentary
Ed Woodward, Executive Vice Chairman, commented, “As we near the
end of the season, I am delighted we have picked up two trophies so
far, and look forward to competing for a third in the Europa League
final, the only trophy we have never won.
We are forecasting better full year financial performance than
expected and as such have raised our revenue and profit guidance
for the year. We look forward to a strong finish to 2016-17, both
on and off the pitch.”
Outlook
For fiscal 2017, Manchester United expects:
- Revenue to be £560m to £570m.
- Adjusted EBITDA to be £185m to
£195m.
Key Financials
(unaudited)
£ million (except (loss)/earnings per share)
Three months
ended
31 March
Nine months ended
31 March
2017 2016 Change
2017 2016 Change Commercial revenue
66.5 65.8 1.1%
207.6
203.1 2.2% Broadcasting revenue
31.4
27.8 12.9%
113.0 92.7
21.9% Matchday revenue
29.3 29.8 (1.7%)
84.7 85.0 (0.4%) Total revenue
127.2 123.4 3.1%
405.3
380.8 6.4% Adjusted EBITDA1
30.0 44.9
(33.2%)
130.2 142.6 (8.7%)
Operating (loss)/profit
(4.1) 23.2 -
39.7 65.3 (39.2%) (Loss)/profit
for the period (i.e. net income)
(3.8) 13.7
-
14.9 37.3 (60.1%) Basic
(loss)/earnings per share
(2.30) 8.40 -
9.10 22.78 (60.1%) Adjusted
(loss)/profit for the period (i.e. adjusted net income)1
(6.3) 11.7 -
11.8 32.1
(63.2%) Adjusted basic (loss)/earnings per share (pence)1
(3.84) 7.17 -
7.22
19.60 (63.2%) Net debt1/2
366.3
348.7 5.0%
366.3 348.7 5.0% 1
Adjusted EBITDA, adjusted (loss)/profit for the period,
adjusted basic (loss)/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. 2 The gross USD debt principal remains
unchanged. The increase in net debt is due to the strengthening US
dollar, with the USD/GBP exchange rate moving from 1.4332 at 31
March 2016 to 1.2520 at 31 March 2017.
Revenue
Analysis
Commercial
Commercial revenue for the quarter was £66.5 million, an
increase of £0.7 million, or 1.1%, over the prior year quarter.
- Sponsorship revenue for the quarter was
£39.6 million, an increase of £0.8 million, or 2.1%, over the prior
year quarter;
- Retail, Merchandising, Apparel &
Product Licensing revenue for the quarter was £24.7 million, an
increase of £0.3 million, or 1.2%, over the prior year quarter;
and
- Mobile & Content revenue for the
quarter was £2.2 million, a decrease of £0.4 million, or 15.4%,
over the prior year quarter.
Broadcasting
Broadcasting revenue for the quarter was £31.4 million, an
increase of £3.6 million, or 12.9%, over the prior year quarter,
primarily due to the impact of the new PL broadcasting agreement,
partially offset by playing one fewer PL home game.
Matchday
Matchday revenue for the quarter was £29.3 million, a decrease
of £0.5 million, or 1.7%, over the prior year quarter.
Other Financial
Information
Operating expenses
Total operating expenses for the quarter were £129.8 million, an
increase of £27.6 million, or 27.0%, over the prior year
quarter.
Employee benefit expenses
Employee benefit expenses for the quarter
were £66.5 million, an increase of £10.3 million, or 18.3%, over
the prior year quarter.
Other operating expenses
Other operating expenses for the quarter were
£30.7 million, an increase of £8.4 million, or 37.7%, over the
prior year quarter, reflecting higher home domestic cup revenue
share costs and adverse foreign exchange movements.
Depreciation & amortization
Depreciation for the quarter was £2.5
million, which was unchanged from the prior year quarter.
Amortization for the quarter was £30.1 million, an increase of £8.9
million, or 42.0%, over the prior year quarter. The unamortized
balance of registrations at 31 March 2017 was £280.7 million.
(Loss)/profit on disposal of intangible assets
Loss on disposal of intangible assets for the quarter was £1.5
million compared to a profit of £2.0 million in the prior year
quarter.
Net finance costs
Net finance costs for the quarter were £3.3 million, a decrease
of £0.3 million, or 8.3%, over the prior year quarter.
Tax
The tax credit for the quarter was £3.6 million, compared to an
expense of £5.9 million in the prior year quarter.
Cash flows
Net cash generated from operating activities for the quarter was
£39.8 million, an increase of £33.9 million over the prior year
quarter.
Net capital expenditure on property, plant and equipment for the
quarter was £2.6 million, an increase of £2.4 million over the
prior year quarter.
Net capital proceeds on intangible assets for the quarter was
£6.6 million, compared to net capital expenditure of £16.1 million
in the prior year quarter.
Overall cash and cash equivalents (including the effects of
exchange rate movements) increased by £29.9 million in the
quarter.
Net debt
Net debt as of 31 March 2017 was £366.3 million, an increase of
£17.6 million over the year. The gross USD debt principal remains
unchanged.
The increase in net debt is due to the strengthening US dollar,
with the USD/GBP exchange rate moving from 1.4332 at 31 March 2016
to 1.2520 at 31 March 2017.
Dividend
A dividend of $0.09 per share was paid during the quarter. A
further semi-annual cash dividend of $0.09 per share will be paid
on 8 June 2017, to shareholders of record on 28 April 2017. The
shares began trading ex-dividend on 26 April 2017.
Conference Call
Information
The Company’s conference call to review third quarter fiscal
2017 results will be broadcast live over the internet today, 16 May
2017 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 139-year heritage we have won 65 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, mobile &
content, 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, amortization, profit/(loss) 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
(loss)/profit for the period to adjusted EBITDA is presented in
supplemental note 2.
2. Adjusted (loss)/profit for the period
(i.e. adjusted net income)
Adjusted (loss)/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%; 2016: 35%). The normalized tax rate of 35% is management’s
estimate of the tax rate likely to be applicable to the Group for
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
(loss)/profit for the period is presented in supplemental note
3.
3. Adjusted basic and diluted
(loss)/earnings per share
Adjusted basic and diluted (loss)/earnings per share are
calculated by dividing the adjusted (loss)/profit for the period by
the weighted average number of ordinary shares in issue during the
period. Adjusted diluted (loss)/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
(loss)/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
Three months ended Nine months ended
31 March 31 March
2017 2016
2017 2016
Commercial % of total revenue
52.3%
53.3%
51.2% 53.3%
Broadcasting % of
total revenue
24.7% 22.5%
27.9%
24.4%
Matchday % of total revenue
23.0%
24.2%
20.9% 22.3% Home Matches Played
PL
4 5
14 14 UEFA competitions
2 2
5 6 Domestic Cups
3 2
5 4 Away Matches
Played UEFA
competitions
2 2
5 6
Domestic Cups
4 2
5 2
Other
Employees at period end
888 797
888 797 Employee benefit expenses % of revenue
52.3% 45.5%
47.5% 44.8%
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
CONSOLIDATED INCOME STATEMENT
(unaudited; in £ thousands, except per
share and shares outstanding data)
Three months ended31
March
Nine months ended31
March
2017 2016
2017
2016
Revenue 127,197
123,444
405,268 380,770 Operating expenses
(129,799 ) (102,168 )
(373,197 )
(310,578 ) (Loss)/profit on disposal of intangible assets
(1,521 ) 1,950
7,599
(4,838 )
Operating (loss)/profit
(4,123 ) 23,226
39,670
65,354 Finance costs
(3,391 )
(3,747 )
(21,605 ) (12,925 ) Finance income
113 185
424
290 Net finance costs
(3,278 )
(3,562 )
(21,181 ) (12,635 )
(Loss)/profit before tax (7,401 ) 19,664
18,489 52,719 Tax credit/(expense)
3,632
(5,903 )
(3,564 ) (15,391
)
(Loss)/profit for the period (3,769 )
13,761
14,925 37,328
Basic (loss)/earnings per share: Basic
(loss)/earnings per share (pence)
(2.30 ) 8.40
9.10 22.78 Weighted average number of ordinary shares
outstanding (thousands)
164,025 163,892
164,025
163,889
Diluted (loss)/earnings per share: Diluted
(loss)/earnings per share (pence)1
(2.30 ) 8.38
9.08 22.72 Weighted average number of ordinary shares
outstanding (thousands)
164,025 164,288
164,448 164,288 1
For the three months ended 31 March 2017 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 As of As of
31
March 30 June 31 March
2017 2016
2016
ASSETS Non-current assets
Property, plant and equipment
244,137 245,714 247,200
Investment property
14,017 13,447 13,475 Intangible assets
707,578 665,634 651,683 Derivative financial instruments
2,127 3,760 2,692 Trade and other receivables
14,983
11,223 10,542 Deferred tax asset
144,329 145,460
133,640
1,127,171 1,085,238
1,059,232
Current assets Inventories
1,348 926 1,293 Derivative financial instruments
3,977 7,888 4,553 Trade and other receivables
86,290
128,657 95,238 Tax receivable
375 - - Cash and cash
equivalents
152,653
229,194
104,202
244,643
366,665
205,286
Total assets
1,371,814 1,451,903
1,264,518
CONSOLIDATED BALANCE SHEET
(continued)
(unaudited; in £ thousands)
As of As of As of
31
March 30 June 31 March
2017 2016
2016
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
(37,997) (32,989) (18,324) Retained earnings
177,904
173,367 178,779
457,811
458,282 478,359
Non-current
liabilities Derivative financial instruments
1,398
10,637 7,473 Trade and other payables
63,744 41,450 19,620
Borrowings
516,286 484,528 450,551 Deferred revenue
34,142 38,899 15,961 Deferred tax liabilities
12,092
14,364 12,740
627,662
589,878 506,345
Current
liabilities Derivative financial instruments
2,418 2,800
2,407 Tax liabilities
5,296 6,867 7,626 Trade and other
payables
176,427 199,668 163,014 Borrowings
2,700
5,564 2,356 Deferred revenue
99,500 188,844
104,411
286,341 403,743
279,814
Total equity and liabilities
1,371,814
1,451,903 1,264,518
CONSOLIDATED STATEMENT OF CASH
FLOWS
(unaudited; in £ thousands)
Three months ended 31
March
Nine months ended31
March
2017 2016
2017 2016
Cash flows from operating
activities Cash generated from operations (see
supplemental note 4)
48,070 14,493
71,220 45,601
Interest paid
(8,116 ) (8,419 )
(17,763
) (11,537 ) Interest received
113 129
424 246
Tax paid
(290 ) (296 )
(3,953 ) (1,898 )
Net cash generated from
operating activities 39,777 5,907
49,928 32,412
Cash
flows from investing activities Payments for property, plant
and equipment
(2,644 ) (207 )
(6,352 )
(783 ) Proceeds from sale of property, plant and equipment
-
-
- 19 Payments for investment property
- -
(659 ) - Payments for intangible assets
(4,871
) (17,048 )
(170,282 ) (112,940 ) Proceeds
from sale of intangible assets
11,537
956
50,605 36,729
Net
cash generated from/(used in) investing activities
4,022 (16,299 )
(126,688
) (76,975 )
Cash flows from financing
activities Repayment of borrowings
(101 ) (94 )
(295 ) (277 ) Dividends paid
(11,824
) (10,191 )
(11,824 )
(15,004 )
Net cash used in financing activities
(11,925 ) (10,285 )
(12,119
) (15,281 )
Net increase/(decrease) in cash and
cash equivalents 31,874 (20,677 )
(88,879
) (59,844 ) Cash and cash equivalents at beginning of period
122,704 121,611
229,194 155,752 Effects of exchange
rate changes on cash and cash equivalents
(1,925
) 3,268
12,338
8,294
Cash and cash equivalents at end of period
152,653 104,202
152,653 104,202
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 ended31
March
Nine months ended31
March
2017
£’000
2016
£’000
2017
£’000
2016
£’000
(Loss)/profit for the period (3,769 )
13,761
14,925 37,328 Adjustments: Tax
(credit)/expense
(3,632 ) 5,903
3,564 15,391
Net finance costs
3,278 3,562
21,181 12,635
Loss/(profit) on disposal of intangible assets
1,521 (1,950
)
(7,599 ) 4,838 Exceptional credit
- -
(4,753 ) - Amortization
30,138 21,164
95,159 64,950 Depreciation
2,458 2,524
7,721 7,491
Adjusted EBITDA
29,994
44,964
130,198
142,633
3 Reconciliation of (loss)/profit for the period to
adjusted (loss)/profit for the period and adjusted basic and
diluted (loss)/earnings per share
Three months ended31
March
Nine months ended31
March
2017
£’000
2016
£’000
2017
£’000
2016
£’000
(Loss)/profit for the period (3,769 )
13,761
14,925 37,328 Exceptional credit
- -
(4,753 ) - Foreign exchange (gains)/losses
on unhedged US dollar borrowings
(2,943 ) (242 )
4,151 972 Fair value movement on derivative financial
instruments
645 (1,351 )
344 (4,263 ) Tax
(credit)/expense
(3,632 ) 5,903
3,564 15,391 Adjusted
(loss)/profit before tax
(9,699 ) 18,071
18,231 49,428
Adjusted tax credit/(expense) (using a
normalised tax rate of 35% (2016: 35%))
3,395 (6,325 )
(6,381
) (17,300 )
Adjusted (loss)/profit for the period
(i.e. adjusted net income) (6,304 )
11,746
11,850 32,128
Adjusted basic (loss)/earnings per share: Adjusted
basic (loss)/earnings per share (pence)
(3.84 ) 7.17
7.22 19.60 Weighted average number of ordinary shares
outstanding (thousands)
164,025 163,892
164,025
163,889
Adjusted diluted (loss)/earnings per share: Adjusted
diluted (loss)/earnings per share (pence)1
(3.84 )
7.15
7.21 19.56 Weighted average number of ordinary shares
outstanding (thousands)
164,025 164,288
164,448 164,288 1
For the three months ended 31 March 2017 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.
4 Cash generated from operations
Three months ended31
March
Nine months ended31
March
2017
£’000
2016
£’000
2017
£’000
2016
£’000
(Loss)/profit for the period
(3,769 )
13,761
14,925 37,328 Tax (credit)/expense
(3,632 ) 5,903
3,564
15,391 (Loss)/profit before tax
(7,401
) 19,664
18,489 52,719 Depreciation
2,458
2,524
7,721 7,491 Amortization
30,138 21,164
95,159 64,950 Reversal of impairment
- -
(4,753 ) - Loss/(profit) on disposal of intangible
assets
1,521 (1,950 )
(7,599 ) 4,838 Net
finance costs
3,278 3,562
21,181 12,635 Loss on
disposal of property, plant and equipment
- -
- 10
Equity-settled share-based payments
498 375
1,436
1,170 Foreign exchange losses/(gains) on operating activities
1,526 (1,838 )
2,404 (3,695 ) Reclassified from
hedging reserve
1,161 345
2,407 1,008
(Increase)/decrease in inventories
(255 ) 211
(422 ) (1,293 ) Decrease/(increase) in trade and
other receivables
51,887 (12,605 )
33,270 1,774
Decrease in trade and other payables and deferred revenue
(36,741 ) (16,959 )
(98,073
) (96,006 )
Cash generated from operations
48,070 14,493
71,220 45,601
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170516005824/en/
Manchester United plcInvestor Relations:Cliff BatyChief
Financial Officer+44 161 868 8650ir@manutd.co.ukorMedia: Philip
TownsendManchester United plc+44 161 868
8148philip.townsend@manutd.co.ukorJim Barron / Michael HensonSard
Verbinnen & Co+ 1 212 687 8080JBarron@SARDVERB.com
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