- Q1 REVENUES OF £135 MILLION
- Q1 ADJUSTED EBITDA OF £29.4
MILLION
- Q1 OPERATING PROFIT OF £13.9
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 2019 fiscal first quarter
ended 30 September 2018.
Highlights
- Successfully launched partnership
with Kohler achieving over 1 billion social and editorial
impressions worldwide
- Announced global partnership with
denim brand True Religion
- Renewed two global partnerships,
Canon Medical Systems and Deezer
Commentary
Ed Woodward, Executive Vice Chairman, commented, "Our financial
strength enables us to continue to attract and retain top players
and to invest in our academy, as we look to drive the success on
the pitch that the club and our fans expect. We remain on track to
deliver our record full-year revenue guidance, underpinning our
long-term, strategic plan to create sustainable growth across all
areas of the club."
Outlook
For fiscal 2019, Manchester United continues to expect:
- Revenue to be £615m to £630m.
- Adjusted EBITDA to be £175m to
£190m.
Key Financials
(unaudited)
£ million (except earnings per share)
Three
months ended
30 September
2018
Restated(1)
2017
Change Commercial revenue
75.9 80.5 (5.7%)
Broadcasting revenue
42.8
40.8 4.9% Matchday revenue
16.3 22.4
(27.2%) Total revenue
135.0
143.7 (6.1%) Adjusted
EBITDA(2)
29.4
39.3 (25.2%) Operating profit
13.9 17.9
(22.3%) Profit for the period (i.e. net income)
6.6 9.6
(31.3%) Basic earnings per share
4.04 5.83 (30.7%)
Adjusted profit for the period (i.e. adjusted net income)(2)
7.0 7.9
(11.4%) Adjusted basic earnings per share (pence)(2)
4.27 4.82
(11.4%) Net Debt(2)/(3)
247.2 268.1 (7.8%)
(1) Comparative amounts have been restated following
implementation of IFRS 15. See supplemental note 5 for further
details. (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” on page 5
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. (3) The gross USD debt principal remains unchanged.
Revenue
Analysis
Commercial Commercial revenue for the quarter was £75.9
million, a decrease of £4.6 million, or 5.7%, over the prior year
quarter.
- Sponsorship revenue for the quarter was
£49.6 million, a decrease of £3.6 million, or 6.8%, over the prior
year quarter, primarily due to a smaller summer tour; and
- Retail, Merchandising, Apparel &
Product Licensing revenue for the quarter was £26.3 million, a
decrease of £1.0 million, or 3.7%, over the prior year quarter,
primarily due to playing two fewer home games across all
competitions.
Broadcasting Broadcasting revenue for the quarter was
£42.8 million, an increase of £2.0 million, or 4.9%, over the prior
year quarter.
Matchday Matchday revenue for the quarter was £16.3
million, a decrease of £6.1 million, or 27.2% over the prior year
quarter, primarily due to playing two fewer home games across all
competitions.
Other Financial
Information
Operating expenses Total operating expenses for the
quarter were £143.5 million, an increase of £0.4 million, or 0.3%,
over the prior year quarter.
Employee benefit expenses Employee
benefit expenses for the quarter were £77.0 million, an increase of
£7.1 million, or 10.2%, over the prior year quarter primarily due
to investment in the first team playing squad.
Other operating expenses Other
operating expenses for the quarter were £28.6 million, a decrease
of £5.9 million, or 17.1%, over the prior year quarter primarily
due to a smaller summer tour.
Depreciation & amortization
Depreciation for the quarter was £2.8 million, an increase of £0.2
million, or 7.7%, over the prior year quarter. Amortization for the
quarter was £35.1 million, a decrease of £1.0 million, or 2.8%,
over the prior year quarter. The unamortized balance of players’
registrations at 30 September 2018 was £336.9 million.
Profit on disposal of intangible assets Profit on
disposal of intangible assets for the quarter was £22.4 million,
compared to profit of £17.3 million in the prior year quarter.
Net finance costs Net finance costs for the quarter were
£5.2 million, an increase of £4.4 million, or 550.0%, over the
prior year quarter, due to unrealised foreign exchange losses on
unhedged USD borrowings compared to gains in the prior year
quarter.
Tax The tax expense for the quarter was £2.1 million,
compared to £7.5 million in the prior year quarter. The decrease is
due in part to a reduction in the US federal corporate income tax
rate in December 2017 from 35% to 21%.
Cash flows Net cash generated from operating activities
for the quarter was £114.8 million, an increase of £96.9 million
over the prior year quarter, primarily due to the timing of
sponsorship payments.
Net capital expenditure on property, plant and equipment and
investment property for the quarter was £4.9 million, an increase
of £0.5 million over the prior year quarter. Net capital
expenditure on intangible assets for the quarter was £103.7
million, an increase of £18.8 million over the prior year
quarter.
Overall cash and cash equivalents (including the effects of
exchange rate changes) increased by £5.5 million in the
quarter.
Net Debt Net Debt as of 30 September 2018 was £247.2
million, a decrease of £20.9 million over the year. The gross USD
debt principal remains unchanged.
Dividend A semi-annual cash dividend of
$0.09 per share will be paid on 4 January 2019,
to shareholders of record on 30 November 2018. The stock will begin
to trade ex-dividend on 29 November 2018.
Conference Call
Information
The Company’s conference call to review first quarter fiscal
2019 results will be broadcast live over the internet today, 15
November 2018 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 teams in the world, playing one of the most popular
spectator sports on Earth.
Through our 140-year heritage we have won 66 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,
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 on disposal of intangible assets, exceptional
items, net finance costs, and tax.
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 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 embedded foreign exchange derivatives, adding/subtracting the
actual tax expense/credit for the period, and subtracting the
adjusted tax expense for the period (based on a normalized tax rate
of 21%; September 2017: 35%). The normalized tax rate of 21% is the
current US federal corporate income tax rate.
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 the items referred to above and then to apply a ‘normalized’ tax
rate (for both the current and prior periods) equivalent to the US
federal corporate income tax rate of 21% (September 2017: 35%). A
reconciliation of profit for the period to adjusted profit 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. There is 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
Three months ended 30 September
2018 2017(1)
Commercial % of
total revenue
56.2% 56.0%
Broadcasting
% of total revenue
31.7% 28.4%
Matchday
% of total revenue
12.1% 15.6% Home Matches
Played PL
3 4 UEFA
competitions
- 1 Domestic Cups
1
1 Away Matches Played UEFA
competitions(2)
1 2 Domestic Cups
- -
Other
Employees at period end
915 914 Employee
benefit expenses % of revenue
57.1% 48.6%
(1) Comparative amounts have been
restated. See supplemental note 5 for further details.
(2) Prior period includes Super Cup final
following UEFA Europa League win in 2016/17.
Phasing of Premier League home games Quarter 1
Quarter 2 Quarter 3 Quarter
4 Total 2018/19 season* 3 7 6 3 19 2017/18 season
4 7 5 3 19
*Subject to changes in broadcasting
scheduling
CONSOLIDATED INCOME STATEMENT
(unaudited; in £ thousands, except per
share and shares outstanding data)
Three months ended
30 September
2018
Restated(1)
2017
Revenue 135,026 143,665
Operating expenses
(143,580 ) (143,036 ) Profit on
disposal of intangible assets
22,428
17,279
Operating profit
13,874
17,908 Finance costs
(5,815 ) (1,001 ) Finance
income
689
218 Net finance costs
(5,126
) (783 )
Profit before tax
8,748 17,125 Tax expense
(2,102
) (7,555 )
Profit for the period
6,646 9,570
Basic earnings per share: Basic earnings per
share (pence)
4.04 5.83 Weighted average number of ordinary
shares outstanding (thousands)
164,526 164,195
Diluted
earnings per share: Diluted earnings per share (pence)
4.04 5.81 Weighted average number of ordinary shares
outstanding (thousands)
164,698
164,585
(1) Comparative amounts have been
restated. See supplemental note 5 for further details.
CONSOLIDATED BALANCE SHEET
(unaudited; in £ thousands)
30 September
2018
Restated(1)
30 June
2018
Restated(1)
30 September
2017
ASSETS Non-current assets Property, plant and
equipment
247,542 245,401 246,831 Investment property
13,804 13,836 13,934 Intangible assets
767,435
799,640 805,694 Derivative financial instruments
5,576 4,807
479 Trade and other receivables
10,146 4,724 9,991 Tax
receivable
547 547 - Deferred tax asset
61,386 63,332
135,619
1,106,436 1,132,287
1,212,548
Current assets
Inventories
2,666 1,416 2,074 Derivative financial
instruments
518 1,159 2,433 Trade and other receivables
91,861 168,060
85,243
Tax receivable
800 800 - Cash and cash equivalents
247,505 242,022
216,236
343,350 413,457
305,986
Total assets 1,449,786
1,545,744
1,518,534
(1) Comparative amounts have been
restated. See supplemental note 5 for further details.
CONSOLIDATED BALANCE SHEET
(continued)
(unaudited; in £ thousands)
30 September
2018
Restated(1)
30 June
2018
Restated(1)
30 September
2017
EQUITY AND LIABILITIES Equity Share capital
53
53 53 Share premium
68,822 68,822 68,822 Merger reserve
249,030 249,030 249,030 Hedging reserve
(29,065
) (27,558 ) (23,890 ) Retained earnings
143,613 136,757
203,608
432,453 427,104
497,623
Non-current liabilities
Derivative financial instruments
- - 523 Trade and other
payables
45,460 104,271 69,898 Borrowings
492,438
486,694 478,065 Deferred revenue
35,248 37,085 35,060
Deferred tax liabilities
29,673
29,134 27,058
602,819
657,184 610,604
Current liabilities Tax liabilities
2,675 3,874 8,675
Trade and other payables
185,028 267,996 202,534 Borrowings
2,264 9,074 6,236 Deferred revenue
224,547 180,512
192,862
414,514
461,456
410,307
Total equity and liabilities
1,449,786 1,545,744
1,518,534
(1) Comparative amounts have been
restated. See supplemental note 5 for further details.
CONSOLIDATED STATEMENT OF CASH
FLOWS
(unaudited; in £ thousands)
Three months ended
30 September
2018 2017
Cash flows from operating activities Cash
generated from operations (see supplemental note 4)
123,356
26,951 Interest paid
(7,773 ) (8,018 ) Interest
received
633 218 Tax paid
(1,434
) (1,238 )
Net cash generated from
operating activities 114,782
17,913
Cash flows from investing activities
Payments for property, plant and equipment
(4,904 )
(4,344 ) Payments for intangible assets
(128,638 )
(117,121 ) Proceeds from sale of intangible assets
24,928 32,186
Net cash used
in investing activities (108,614 )
(89,279 )
Cash flows from financing activities
Repayment of borrowings
(3,750 )
(100 )
Net cash used in financing activities
(3,750 ) (100 )
Net
increase/(decrease) in cash and cash equivalents 2,418
(71,466 ) Cash and cash equivalents at beginning of period
242,022 290,267 Effects of exchange rate changes on cash and
cash equivalents
3,065
(2,565 )
Cash and cash equivalents at end of period
247,505 216,236
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
30 September
2018
£’000
Restated(1)
2017
£’000
Profit for the period 6,646
9,570 Adjustments: Tax expense
2,102 7,555 Net
finance costs
5,126 783 Profit on disposal of intangible
assets
(22,428 ) (17,279 ) Amortization
35,131
36,054 Depreciation
2,809 2,574
Adjusted
EBITDA 29,386
39,257
(1) Comparative amounts have been
restated. See supplemental note 5 for further details.
3 Reconciliation of profit for the period to adjusted
profit for the period and adjusted basic and diluted earnings per
share
Three months ended
30 September
2018
£’000
Restated(1)
2017
£’000
Profit for the period 6,646 9,570
Foreign exchange losses/(gains) on unhedged US dollar borrowings
219 (5,496 ) Fair value movement on embedded foreign
exchange derivatives
(81 ) 554 Tax expense
2,102 7,555 Adjusted profit before tax
8,886 12,183 Adjusted tax expense (using a normalized US
federal corporate income tax rate of 21% (2017: 35%))
(1,866 ) (4,264 )
Adjusted profit for the
period (i.e. adjusted net income) 7,020
7,919
Adjusted basic earnings per
share: Adjusted basic earnings per share (pence)
4.27
4.82 Weighted average number of ordinary shares outstanding
(thousands)
164,526 164,195
Adjusted diluted earnings per
share: Adjusted diluted earnings per share (pence)
4.26
4.81 Weighted average number of ordinary shares outstanding
(thousands)
164,698 164,585
(1) Comparative amounts have been
restated. See supplemental note 5 for further details.
4 Cash generated from operations
Three months ended
30 September
2018
£’000
Restated(1)
2017
£’000
Profit for the period
6,646
9,570 Tax expense
2,102
7,555 Profit before tax
8,748 17,125
Depreciation
2,809 2,574 Amortization
35,131 36,054
Profit on disposal of intangible assets
(22,428 )
(17,279 ) Net finance costs
5,126 783 Equity-settled
share-based payments
210 585 Foreign exchange losses on
operating activities
277 991 Reclassified from hedging
reserve
1,308 3,881 Changes in working capital: Inventories
(1,250 ) (437 ) Trade and other receivables
69,596 13,922 Trade and other payables and deferred revenue
23,829
(31,248 )
Cash generated from operations
123,356 26,951
(1) Comparative amounts have been
restated. See supplemental note 5 for further details.
5 Restatement of prior periods following
implementation of IFRS 15
The Group adopted IFRS 15 ‘Revenue from contracts with
customers’ with effect from 1 July 2018. The implementation of IFRS
15 had an impact on the Group’s financial statements as at 1 July
2018 and consequently prior year amounts have been restated. The
table below shows the retrospective impact on revenue for the four
quarters ended 30 June 2018. Note 32 to the interim consolidated
financial statements for the three months ended 30 September 2018
contains tables and notes which explain how the restatement
affected the consolidated income statement, consolidated statement
of comprehensive income, consolidated balance sheet, and
consolidated statement of cash flows.
Commercial revenue IFRS 15 focuses on the identification
and satisfaction of performance obligations and includes specific
guidance on the methods for measuring progress towards complete
satisfaction of a performance obligation therefore revenue on
certain commercial contracts is recognized earlier under IFRS 15.
The effect of the retrospective application is an increase in
cumulative revenue recognized over the financial years up to and
including the year ended 30 June 2018 including a reduction to the
amount of revenue recognized during the financial year ended 30
June 2018 only.
Broadcasting revenue Following adoption of IFRS 15,
certain performance obligations are satisfied over time as each
Premier League match (home and away) is played – accordingly
revenue is recognized evenly as each Premier League match (home and
away) is played. Broadcasting merit awards were previously
recognized one share in the first quarter with the remainder being
recognized when they were known at the end of each football season.
Merit awards represent variable consideration and therefore,
following adoption of IFRS 15, are estimated using the most likely
amount method based on management’s estimate of where the Club’s
finishing position will be at the end of each season. Broadcasting
equal share payments were previously recognized evenly as each
Premier League home match was played. Note, these changes only
affect the amount of broadcasting revenue recognized in each
quarter, they do not affect the amount of broadcasting revenue
recognized for the financial year as a whole.
Matchday revenue Adoption of IFRS 15 has no impact on the
recognition of matchday revenue.
£’000 Three months Three months Three months
Three months Twelve months ended ended ended ended
ended 30 September 31 December 31 March 30 June 30 June 2017 2017
2018 2018 2018
Commercial revenue Reported 80,544 65,366
66,673 63,516 276,099 Adjustment (66 ) (66 )
(66 ) (66 ) (264 ) Restated 80,478
65,300 66,607 63,450
275,835
Broadcasting revenue Reported 38,082
61,628 39,674 64,753 204,137 Adjustment 2,751
13,519 9,656 (25,926 ) -
Restated 40,833 75,147 49,330
38,827 204,137
Matchday
revenue Reported 22,354 36,968 31,122 19,342 109,786 Adjustment
- - - -
- Restated 22,354 36,968
31,122 19,342 109,786
Total revenue Reported 140,980 163,962 137,469
147,611 590,022 Adjustment 2,685 13,453
9,590 (25,992 ) (264 ) Restated
143,665 177,415 147,059
121,619 589,758
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version on businesswire.com: https://www.businesswire.com/news/home/20181115005411/en/
Manchester United plcInvestor Relations:Cliff BatyChief
Financial Officer+44 161 868 8650ir@manutd.co.ukorManchester United
plcMedia:Charlie BrooksDirector of Communications+44 161 868
8148charlie.brooks@manutd.co.ukorSard Verbinnen & CoJim Barron
/ Devin Broda+ 1 212 687
8080JBarron@SARDVERB.comdbroda@SARDVERB.com
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