EX-99.1 2 a16-4009_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

·             RECORD Q2 REVENUES OF £133.8 MILLION, UP 26.6%

·             RECORD Q2 ADJUSTED EBITDA OF £56.1 MILLION, UP 32.3%

·             EBITDA GUIDANCE RAISED TO £178 TO £188 MILLION

 

MANCHESTER, England. — 11 February 2016 — 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 second quarter and six months ended 31 December 2015.

 

Highlights

 

·                  Commercial revenues of £66.1 million up 42.5% for the quarter.

 

·                  Broadcasting revenues of £37.3 million up 31.3% for the quarter

 

·                  Two sponsorship deals announced in the quarter:

·                  Renewal of partnership with Thomas Cook

·                  Cable and Wireless Communications

 

·                  Announced licensing deals with New Era and Heroes

 

Commentary

 

Ed Woodward, Executive Vice Chairman, commented, “Our strong commitment to investing in our squad, youth academy and the broader club are ultimately underpinned by our financial strength and the hard work and dedication of everyone at the Club. Our solid results off the pitch help contribute to what remains our number one priority - success on the pitch.”

 

Outlook

 

For fiscal 2016, Manchester United expects:

 

·                  Revenue to be £500m to £510m.

·                  Adjusted EBITDA to be £178m to £188m.

 

1



 

Key Financials (unaudited)

 

£ million (except adjusted
diluted earnings per share)

 

Three months ended
31 December

 

 

 

Six months ended
31 December

 

 

 

 

 

2015

 

2014

 

Change

 

2015

 

2014

 

Change

 

Commercial revenue

 

66.1

 

46.4

 

42.5

%

137.3

 

103.2

 

33.0

%

Broadcasting revenue

 

37.3

 

28.4

 

31.3

%

64.9

 

45.2

 

43.6

%

Matchday revenue

 

30.4

 

30.9

 

(1.6

)%

55.2

 

46.0

 

20.0

%

Total revenue

 

133.8

 

105.7

 

26.6

%

257.4

 

194.4

 

32.4

%

Adjusted EBITDA*

 

56.1

 

42.4

 

32.3

%

97.7

 

62.7

 

55.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period (i.e. net income)

 

18.6

 

0.0

 

 

23.6

 

8.9

 

165.2

%

Adjusted profit for the period (i.e. adjusted net income)*

 

17.7

 

4.4

 

302.3

%

20.4

 

8.6

 

137.2

%

Adjusted diluted earnings per share (pence)*

 

10.77

 

2.66

 

304.9

%

12.41

 

5.25

 

136.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

 

322.1

 

343.4

 

(6.2

)%

322.1

 

343.4

 

(6.2

)%

 


* Adjusted EBITDA, adjusted profit for the period and adjusted 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 £66.1 million, an increase of £19.7 million, or 42.5%, over the prior year quarter.

 

·                  Sponsorship revenue for the second quarter was £37.4 million, an increase of £1.6 million, or 4.5%, over the prior year quarter.

·                  Retail, Merchandising, Apparel & Product Licensing revenue for the second quarter was £25.7 million, an increase of £17.8 million, or 225.3% over the prior year quarter, 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 businesses previously operated by Nike.

·                  Mobile & Content revenue for the second quarter was £3.0 million, an increase of £0.3 million, or 11.1% over the prior year quarter.

 

Broadcasting

 

Broadcasting revenue for the second quarter was £37.3 million, an increase of £8.9 million, or 31.3%, over the prior year quarter, primarily due to participation in the UEFA Champions League, partially offset by two fewer FAPL home games and two fewer FAPL live broadcast games in the current quarter.

 

Matchday

 

Matchday revenue for the three months ended 31 December 2015 was £30.4 million, a decrease of £0.5 million, or 1.6%, over the three months ended 31 December 2014, primarily due to playing two fewer FAPL home games and hosting a friendly international game (in the second quarter last year), largely offset by two UEFA Champions League home games and one domestic cup home game in the current quarter.

 

2



 

Other Financial Information

 

Operating expenses

 

Total operating expenses for the second quarter were £101.8 million, an increase of £8.7 million, or 9.3%, over the prior year quarter.

 

Employee benefit expenses

 

Employee benefit expenses for the second quarter were £55.7 million, an increase of £7.0 million, or 14.4%, over the prior year quarter, primarily due to renewals of existing player contracts, coupled with an uplift from participation in the UEFA Champions League.

 

Other operating expenses

 

Other operating expenses for the second quarter were £22.0 million, an increase of £7.4 million, or 50.7%, over the prior year quarter, 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 two UEFA Champions League games in the quarter compared to the prior year quarter.

 

Depreciation & amortization

 

Depreciation for the second quarter was £2.5 million, a decrease of £0.1 million, or 3.8%, over the prior year quarter. Amortization for the second quarter was £21.6 million, a decrease of £5.4 million, or 20.0%, over the prior year quarter. The unamortized balance of players’ registrations at 31 December 2015 was £240.4 million.

 

Net finance costs

 

Net finance costs for the second quarter were £4.7 million, a decrease of £1.6 million, or 25.4%, over the prior year quarter. The decrease was primarily due to a 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 second quarter was £9.3 million, compared to an expense of £7.8 million in the prior year quarter.

 

Cash flows

 

Net cash used in operating activities for the second quarter was £9.2 million, a decrease of £29.8 million over the prior year quarter, primarily due to increased profit and movements in working capital.

 

Capital expenditure on property, plant and equipment for the second quarter was £0.2 million, a decrease of £1.7 million over the prior year quarter.

 

Net player and other intangible assets capital expenditure for the second quarter was £10.2 million, a decrease of £4.0 million over the prior year quarter.

 

Dividend

 

As previously approved, a $0.045 per share quarterly cash dividend on the Company's outstanding Class A and Class B ordinary shares will be payable on 10 March 2016, to shareholders of record on 25 February 2016. The stock will begin to trade ex-dividend on 23 February 2016.

 

3



 

Conference Call Information

 

The Company’s conference call to review second quarter fiscal 2016 results will be broadcast live over the internet today, 11 February 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 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, 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 players’ registrations, 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 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, fair value movements on

 

4



 

derivative financial instruments, and hedge ineffectiveness on cash flow hedges, adding/subtracting the actual tax expense/credit for the period, and subtracting the adjusted tax expense for the period (based on an normalized tax rate of 35%; 2014: 35%). 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 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 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. 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.

 

5



 

Key Performance Indicators

 

 

 

Three months ended

 

Six months ended

 

 

 

31 December

 

31 December

 

 

 

2015

 

2014

 

2015

 

2014

 

Commercial % of total revenue

 

49.4

%

43.0

%

53.3

%

52.7

%

Broadcasting % of total revenue

 

27.9

%

27.3

%

25.2

%

23.4

%

Matchday % of total revenue

 

22.7

%

29.7

%

21.5

%

23.9

%

Home Matches Played

 

 

 

 

 

 

 

 

 

FAPL

 

5

 

7

 

9

 

10

 

UEFA competitions

 

2

 

 

4

 

 

Domestic Cups

 

1

 

 

2

 

 

Away Matches Played

 

 

 

 

 

 

 

 

 

UEFA competitions

 

2

 

 

4

 

 

Domestic Cups

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Employees at period end

 

788

 

814

 

788

 

814

 

Staff costs % of revenue

 

41.6

%

46.1

%

44.5

%

50.5

%

 

Phasing of Premier League home
games

 

Quarter 1

 

Quarter 2

 

Quarter 3

 

Quarter 4

 

Total

 

2015/16 season*

 

4

 

5

 

6

 

4

 

19

 

2014/15 season

 

3

 

7

 

5

 

4

 

19

 

2013/14 season

 

3

 

6

 

7

 

3

 

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

JBarron@SARDVERB.com

 

6



 

CONSOLIDATED INCOME STATEMENT

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

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

2015

 

2014

 

2015

 

2014

 

Revenue

 

133,764

 

105,761

 

257,326

 

194,431

 

Operating expenses

 

(101,804

)

(93,137

)

(208,410

)

(185,888

)

Profit/(loss) on disposal of players’ registrations

 

648

 

1,432

 

(6,788

)

19,760

 

Operating profit

 

32,608

 

14,056

 

42,128

 

28,303

 

Finance costs

 

(4,799

)

(6,241

)

(9,178

)

(12,477

)

Finance income

 

67

 

 

105

 

99

 

Net finance costs

 

(4,732

)

(6,241

)

(9,073

)

(12,378

)

Profit before tax

 

27,876

 

7,815

 

33,055

 

15,925

 

Tax expense

 

(9,269

)

(7,870

)

(9,488

)

(7,036

)

Profit/(loss) for the period

 

18,607

 

(55

)

23,567

 

8,889

 

 

 

 

 

 

 

 

 

 

 

Basic earnings/(loss) per share:

 

 

 

 

 

 

 

 

 

Basic earnings/(loss) per share (pence)

 

11.35

 

(0.03

)

14.38

 

5.43

 

Weighted average number of ordinary shares outstanding (thousands)

 

163,892

 

163,797

 

163,888

 

163,792

 

Diluted earnings/(loss) per share:

 

 

 

 

 

 

 

 

 

Diluted earnings/(loss) per share (pence)

 

11.33

 

(0.03

)

14.35

 

5.42

 

Weighted average number of ordinary shares outstanding (thousands)

 

164,263

 

164,146

 

164,263

 

164,146

 

 

7



 

CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)

 

 

 

As of
31 December
2015

 

As of
30 June
2015

 

As of
31 December
2014

 

ASSETS

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

248,314

 

250,626

 

254,398

 

Investment property

 

13,503

 

13,559

 

13,615

 

Goodwill

 

421,453

 

421,453

 

421,453

 

Players’ registrations and other intangible assets

 

241,892

 

238,944

 

270,061

 

Derivative financial instruments

 

1,680

 

 

857

 

Trade and other receivables

 

10,375

 

3,836

 

 

Deferred tax asset

 

132,910

 

133,640

 

128,797

 

 

 

1,070,127

 

1,062,058

 

1,089,181

 

Current assets

 

 

 

 

 

 

 

Inventories

 

1,504

 

 

 

Derivative financial instruments

 

1,971

 

27

 

544

 

Trade and other receivables

 

81,807

 

83,627

 

83,716

 

Current tax receivable

 

 

124

 

81

 

Cash and cash equivalents

 

121,611

 

155,752

 

37,115

 

 

 

206,893

 

239,530

 

121,456

 

Total assets

 

1,277,020

 

1,301,588

 

1,210,637

 

 

8



 

CONSOLIDATED BALANCE SHEET (continued)

(unaudited; in £ thousands)

 

 

 

As of
31 December
2015

 

As of
30 June
2015

 

As of
31 December
2014

 

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

 

(9,220

)

4,729

 

6,185

 

Retained earnings

 

174,834

 

155,285

 

164,424

 

 

 

483,518

 

477,918

 

488,513

 

Non-current liabilities

 

 

 

 

 

 

 

Derivative financial instruments

 

2,454

 

2,769

 

1,612

 

Trade and other payables

 

19,587

 

48,078

 

47,181

 

Borrowings

 

437,656

 

410,482

 

374,034

 

Deferred revenue

 

16,944

 

21,583

 

14,260

 

Deferred tax liabilities

 

14,070

 

17,311

 

24,085

 

 

 

490,711

 

500,223

 

461,172

 

Current liabilities

 

 

 

 

 

 

 

Derivative financial instruments

 

2,207

 

2,966

 

617

 

Current tax liabilities

 

4,870

 

2,105

 

2,399

 

Trade and other payables

 

164,769

 

131,283

 

123,058

 

Borrowings

 

6,057

 

485

 

6,447

 

Deferred revenue

 

124,888

 

186,608

 

128,431

 

 

 

302,791

 

323,447

 

260,952

 

Total equity and liabilities

 

1,277,020

 

1,301,588

 

1,210,637

 

 

9



 

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

2015

 

2014

 

2015

 

2014

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Cash (used in)/generated from operations (see supplemental note 4)

 

(7,007

)

(34,421

)

31,108

 

48,921

 

Interest paid

 

(1,576

)

(4,500

)

(3,118

)

(13,229

)

Debt finance costs relating to borrowings

 

 

42

 

 

(824

)

Interest received

 

50

 

40

 

117

 

89

 

Income tax paid

 

(660

)

(123

)

(1,602

)

(1,010

)

Net cash (used in)/generated from operating activities

 

(9,193

)

(38,962

)

26,505

 

33,947

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(223

)

(1,851

)

(576

)

(3,793

)

Proceeds from sale of property, plant and equipment

 

(2

)

 

19

 

 

Purchases of players’ registrations and other intangible assets

 

(9,360

)

(15,564

)

(95,892

)

(86,866

)

Proceeds from sale of players’ registrations

 

(818

)

1,273

 

35,773

 

16,716

 

Net cash used in investing activities

 

(10,403

)

(16,142

)

(60,676

)

(73,943

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

 

 

4,704

 

Repayment of borrowings

 

(94

)

(102

)

(183

)

(199

)

Dividends paid

 

(4,813

)

 

(4,813

)

 

Net cash (used in)/generated from financing activities

 

(4,907

)

(102

)

(4,996

)

4,505

 

Net decrease in cash and cash equivalents

 

(24,503

)

(55,206

)

(39,167

)

(35,491

)

Cash and cash equivalents at beginning of period

 

143,525

 

90,266

 

155,752

 

66,365

 

Foreign exchange gains on cash and cash equivalents

 

2,589

 

2,055

 

5,026

 

6,241

 

Cash and cash equivalents at end of period

 

121,611

 

37,115

 

121,611

 

37,115

 

 

10



 

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

 

 

 

2015
£’000

 

2014
£’000

 

2015
£’000

 

2014
£’000

 

Profit/(loss) for the period

 

18,607

 

(55

)

23,567

 

8,889

 

Adjustments:

 

 

 

 

 

 

 

 

 

Tax expense

 

9,269

 

7,870

 

9,488

 

7,036

 

Net finance costs

 

4,732

 

6,241

 

9,073

 

12,378

 

(Profit)/loss on disposal of players’ registrations

 

(648

)

(1,432

)

6,788

 

(19,760

)

Exceptional items

 

 

185

 

 

1,061

 

Amortization

 

21,639

 

27,046

 

43,786

 

48,223

 

Depreciation

 

2,473

 

2,560

 

4,967

 

4,896

 

Adjusted EBITDA

 

56,072

 

42,415

 

97,669

 

62,723

 

 

11



 

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

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

2015
£’000

 

2014
£’000

 

2015
£’000

 

2014
£’000

 

Profit/(loss) for the period

 

18,607

 

(55

)

23,567

 

8,889

 

Exceptional items

 

 

185

 

 

1,061

 

Foreign exchange losses/(gains) on unhedged US dollar denominated borrowings

 

455

 

(303

)

1,214

 

(998

)

Fair value movement on derivative financial instruments

 

(1,105

)

(1,185

)

(2,912

)

(2,486

)

Hedge ineffectiveness of cash flow hedges

 

 

201

 

 

(234

)

Tax expense

 

9,269

 

7,870

 

9,488

 

7,036

 

Adjusted profit before tax

 

27,226

 

6,713

 

31,357

 

13,268

 

Adjusted tax expense (using a normalised tax rate of 35% (2014: 35%))

 

(9,529

)

(2,350

)

(10,975

)

(4,644

)

Adjusted profit for the period (i.e. adjusted net income)

 

17,697

 

4,363

 

20,382

 

8,624

 

 

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per share:

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per share (pence)

 

10.80

 

2.66

 

12.44

 

5.27

 

Weighted average number of ordinary shares outstanding (thousands)

 

163,892

 

163,797

 

163,888

 

163,792

 

Adjusted diluted earnings per share:

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share (pence)

 

10.77

 

2.66

 

12.41

 

5.25

 

Weighted average number of ordinary shares outstanding (thousands)

 

164,263

 

164,146

 

164,263

 

164,146

 

 

12



 

4                               Cash generated from operations

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

2015
£’000

 

2014
£’000

 

2015
£’000

 

2014
£’000

 

Profit/(loss) for the period

 

18,607

 

(55

)

23,567

 

8,889

 

Tax expense

 

9,269

 

7,870

 

9,488

 

7,036

 

Profit before tax

 

27,876

 

7,815

 

33,055

 

15,925

 

Depreciation

 

2,473

 

2,560

 

4,967

 

4,896

 

Amortization

 

21,639

 

27,046

 

43,786

 

48,223

 

(Profit)/loss on disposal of players’ registrations

 

(648

)

(1,432

)

6,788

 

(19,760

)

Net finance costs

 

4,732

 

6,241

 

9,073

 

12,378

 

Loss on disposal of property, plant and equipment

 

1

 

1

 

10

 

5

 

Equity-settled share-based payments

 

420

 

377

 

795

 

707

 

Foreign exchange losses/(gains) on operating activities

 

123

 

(329

)

2,189

 

(968

)

Other fair value losses/(gains) on derivative financial instruments

 

201

 

577

 

(4,046

)

1,211

 

Reclassified from hedging reserve

 

321

 

(1,196

)

663

 

(2,391

)

Increase in inventories

 

(144

)

 

(1,504

)

 

Decrease/(increase) in trade and other receivables

 

24,541

 

(12,110

)

14,375

 

52,398

 

Decrease in trade and other payables and deferred revenue

 

(88,542

)

(63,971

)

(79,043

)

(63,703

)

Cash (used in)/generated from operations

 

(7,007

)

(34,421

)

31,108

 

48,921

 

 

13