EX-99.1 2 a16-21783_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

·     Q1 REVENUES OF £120.2 MILLION

·     Q1 ADJUSTED EBITDA OF £31.2 MILLION

·     Q1 OPERATING PROFIT OF £6.2 MILLION

 

MANCHESTER, England. — 17 November 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 2017 fiscal first quarter ended 30 September 2016.

 

Highlights

 

·                  Five sponsorship deals announced in the quarter.

·                  EA Sports (Global)

·                  Tag Heuer (Global)

·                  Apollo (regional to global)

·                  Renewal of Hong Kong Jockey Club (regional)

·                  Virgin Money (financial services)

 

·                  Signed four leading players in Eric Bailly, Zlatan Ibrahimović, Henrikh Mkhitaryan and Paul Pogba

 

·                  Won the Community Shield under new manager Jose Mourinho

 

Commentary

 

Ed Woodward, Executive Vice Chairman, commented, “While our financial results for this quarter reflect the impact of our non-participation in the UEFA Champions League, we are pleased that we remain on track to deliver record revenues for the coming year. During the quarter we added a number of top quality players to our squad, which once again demonstrates our determination to challenge for trophies.”

 

Outlook

 

For fiscal 2017, Manchester United continues to expect:

 

·                  Revenue to be £530m to £540m.

·                  Adjusted EBITDA to be £170m to £180m.

 

1



 

Key Financials (unaudited)

 

 

 

Three months ended
30 September

 

 

 

£ million (except earnings per share)

 

2016

 

2015

 

Change

 

Commercial revenue

 

74.3

 

71.2

 

4.4

%

Broadcasting revenue

 

29.1

 

27.6

 

5.4

%

Matchday revenue

 

16.8

 

24.8

 

(32.3

)%

Total revenue

 

120.2

 

123.6

 

(2.8

)%

Adjusted EBITDA(1)

 

31.2

 

41.6

 

(25.0

)%

Operating profit

 

6.2

 

9.5

 

(34.7

)%

 

 

 

 

 

 

 

 

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

 

1.2

 

5.0

 

(76.0

)%

Basic earnings per share

 

0.71

 

3.03

 

(76.6

)%

Adjusted profit for the period (i.e. adjusted net income)(1)

 

0.7

 

2.7

 

(74.1

)%

Adjusted basic earnings per share (pence)(1)

 

0.43

 

1.63

 

(73.6

)%

 

 

 

 

 

 

 

 

Net Debt(1)/(2)

 

337.7

 

286.2

 

18.0

%

 


(1) 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.

(2) A key contributor to the increase in net debt was the strengthening US dollar; with the USD/GBP exchange rate moving from 1.5128 at 30 September 2015 to 1.2941 at 30 September 2016. The US$ debt principal remains unchanged.

 

Revenue Analysis

 

Commercial

 

Commercial revenue for the quarter was £74.3 million, an increase of £3.1 million, or 4.4%, over the prior year quarter.

 

·                  Sponsorship revenue for the quarter of £44.4 million, a decrease of £1.9 million, or 4.1%, over the prior year quarter, due to playing fewer Tour matches;

·                  Retail, Merchandising, Apparel & Product Licensing revenue for the quarter was £27.4 million, an increase of £5.1 million, or 22.9%, over the prior year quarter, due to the commencement of the adidas agreement and bringing in-house of several businesses, both only commencing part way through the prior year quarter (on 1 August 2015); and

·                  Mobile & Content revenue for the quarter was £2.5 million, compared with £2.6 million in the prior year quarter.

 

Broadcasting

 

Broadcasting revenue for the quarter was £29.1 million, an increase of £1.5 million, or 5.4%, over the prior year quarter, primarily due to commencement of new FAPL broadcasting rights agreement, partially offset by non-participation in the UEFA Champions League and playing one fewer FAPL home game.

 

2



 

Matchday

 

Matchday revenue for the quarter was £16.8 million, a decrease of £8.0 million, or 32.3% over the prior year quarter, primarily due to playing three fewer home games across all competitions.

 

Other Financial Information

 

Operating expenses

 

Total operating expenses for the quarter were £122.2 million, an increase of £15.5 million, or 14.5%, over the prior year quarter.

 

Employee benefit expenses

 

Employee benefit expenses for the quarter were £62.3 million, an increase of £3.4 million, or 5.8%, over the prior year quarter.

 

Other operating expenses

 

Other operating expenses for the quarter were £26.7 million, an increase of £3.6 million, or 15.6%, over the prior year quarter primarily due to adverse unrealised foreign exchange movements.

 

Depreciation & amortization

 

Depreciation for the quarter was £2.4 million, a decrease of £0.1 million, or 4.0%, over the prior year quarter. Amortization for the quarter was £30.8 million, an increase of £8.6 million, or 38.7%, over the prior year quarter. The unamortized balance of players’ registrations at 30 September 2016 was £374.0 million.

 

Profit/(loss) on disposal of intangible assets

 

Profit on disposal of intangible assets for the quarter was £8.2 million compared to a loss of £7.4 million in the prior year quarter.

 

Net finance costs

 

Net finance costs for the quarter were £5.9 million, an increase of £1.6 million, or 37.2%, over the prior year quarter, primarily due to adverse exchange rate movements.

 

Tax

 

The tax credit for the quarter was £0.9 million, compared to an expense of £0.2 million in the prior year quarter.

 

Cash flows

 

Net cash generated from operating activities for the quarter was £52.6 million, an increase of £16.9 million over the prior year quarter.

 

Net capital expenditure on property, plant and equipment and investment property for the quarter was £2.2 million, an increase of £1.8 million over the prior year quarter.

 

Net capital expenditure on intangible assets for the quarter was £122.7 million, an increase of £72.8 million over the prior year quarter, reflecting continued investment in the first team playing squad.

 

Overall cash and cash equivalents (including the effects of exchange rate changes) decreased by £64.9 million in the quarter.

 

3



 

Net Debt

 

Net Debt as of 30 September 2016 was £337.7 million, an increase of £51.5 million over the year primarily due to the impact of foreign exchange rate movements on our USD denominated debt (USD/GBP exchange rate moved from 1.5128 at 30 September 2015 to 1.2941 at 30 September 2016) and the decrease in cash outlined above.

 

Dividend

 

A semi-annual cash dividend of $0.09 per share will be paid on 5 January 2017, to shareholders of record on 30 November 2016. The stock will begin to trade ex-dividend on 28 November 2016.

 

Conference Call Information

 

The Company’s conference call to review first quarter fiscal 2017 results will be broadcast live over the internet today, 17 November 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, 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

 

4



 

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 derivative financial instruments, 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%; 2015: 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 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.

 

4.                  Net debt

 

Net debt is calculated as non-current and current borrowings minus cash and cash equivalents.

 

5



 

Key Performance Indicators

 

 

 

Three months ended

 

 

 

30 September

 

 

 

2016

 

2015

 

Commercial % of total revenue

 

61.8

%

57.6

%

Broadcasting % of total revenue

 

24.2

%

22.3

%

Matchday % of total revenue

 

14.0

%

20.1

%

Home Matches Played

 

 

 

 

 

FAPL

 

3

 

4

 

UEFA competitions

 

1

 

2

 

Domestic Cups

 

 

1

 

Away Matches Played

 

 

 

 

 

UEFA competitions

 

1

 

2

 

Domestic Cups

 

1

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Employees at period end

 

837

 

798

 

Staff costs % of revenue

 

51.8

%

47.6

%

 

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

 

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
30 September

 

 

 

2016

 

2015

 

Revenue

 

120,213

 

123,562

 

Operating expenses

 

(122,242

)

(106,606

)

Profit/(loss) on disposal of intangible assets

 

8,205

 

(7,436

)

Operating profit

 

6,176

 

9,520

 

Finance costs

 

(6,098

)

(4,379

)

Finance income

 

180

 

38

 

Net finance costs

 

(5,918

)

(4,341

)

Profit before tax

 

258

 

5,179

 

Tax credit/(expense)

 

903

 

(219

)

Profit for the period

 

1,161

 

4,960

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

Basic earnings per share (pence)

 

0.71

 

3.03

 

Weighted average number of ordinary shares outstanding (thousands)

 

164,025

 

163,833

 

Diluted earnings per share:

 

 

 

 

 

Diluted earnings per share (pence)

 

0.71

 

3.02

 

Weighted average number of ordinary shares outstanding (thousands)

 

164,483

 

164,268

 

 

7



 

CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)

 

 

 

As of
30 September
2016

 

As of
30 June
2016

 

As of
30 September
2015

 

ASSETS

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

245,004

 

245,714

 

249,449

 

Investment property

 

14,060

 

13,447

 

13,531

 

Intangible assets

 

800,290

 

665,634

 

682,694

 

Derivative financial instruments

 

3,313

 

3,760

 

944

 

Trade and other receivables

 

4,005

 

11,223

 

10,331

 

Deferred tax asset

 

148,016

 

145,460

 

137,214

 

 

 

1,214,688

 

1,085,238

 

1,094,163

 

Current assets

 

 

 

 

 

 

 

Inventories

 

1,422

 

926

 

1,360

 

Derivative financial instruments

 

5,218

 

7,888

 

902

 

Trade and other receivables

 

68,600

 

128,657

 

104,925

 

Tax receivable

 

97

 

 

99

 

Cash and cash equivalents

 

164,277

 

229,194

 

143,525

 

 

 

239,614

 

366,665

 

250,811

 

Total assets

 

1,454,302

 

1,451,903

 

1,344,974

 

 

8



 

CONSOLIDATED BALANCE SHEET (continued)

(unaudited; in £ thousands)

 

 

 

As of
30 September
2016

 

As of
30 June
2016

 

As of
30 September
2015

 

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

 

(37,619

)

(32,989

)

(5,116

)

Retained earnings

 

174,985

 

173,367

 

160,620

 

 

 

455,270

 

458,282

 

473,408

 

Non-current liabilities

 

 

 

 

 

 

 

Derivative financial instruments

 

8,773

 

10,637

 

4,084

 

Trade and other payables

 

67,412

 

41,450

 

19,598

 

Borrowings

 

499,305

 

484,528

 

426,534

 

Deferred revenue

 

35,836

 

38,899

 

19,422

 

Deferred tax liabilities

 

11,975

 

14,364

 

15,281

 

 

 

623,301

 

589,878

 

484,919

 

Current liabilities

 

 

 

 

 

 

 

Derivative financial instruments

 

1,163

 

2,800

 

1,389

 

Tax liabilities

 

5,054

 

6,867

 

1,666

 

Trade and other payables

 

170,705

 

199,668

 

191,276

 

Borrowings

 

2,683

 

5,564

 

3,187

 

Deferred revenue

 

196,126

 

188,844

 

189,129

 

 

 

375,731

 

403,743

 

386,647

 

Total equity and liabilities

 

1,454,302

 

1,451,903

 

1,344,974

 

 

9



 

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)

 

 

 

Three months ended
30 September

 

 

 

2016

 

2015

 

Cash flows from operating activities

 

 

 

 

 

Cash generated from operations (see supplemental note 4)

 

63,783

 

38,115

 

Interest paid

 

(7,904

)

(1,542

)

Interest received

 

180

 

67

 

Tax paid

 

(3,452

)

(942

)

Net cash generated from operating activities

 

52,607

 

35,698

 

Cash flows from investing activities

 

 

 

 

 

Payments for property, plant and equipment

 

(1,557

)

(353

)

Proceeds from sale of property, plant and equipment

 

 

21

 

Payments for investment property

 

(644

)

 

Payments for intangible assets

 

(158,848

)

(86,532

)

Proceeds from sale of intangible assets

 

36,159

 

36,591

 

Net cash used in investing activities

 

(124,890

)

(50,273

)

Cash flows from financing activities

 

 

 

 

 

Repayment of borrowings

 

(94

)

(89

)

Net cash used in financing activities

 

(94

)

(89

)

Net decrease in cash and cash equivalents

 

(72,377

)

(14,664

)

Cash and cash equivalents at beginning of period

 

229,194

 

155,752

 

Effects of exchange rate changes on cash and cash equivalents

 

7,460

 

2,437

 

Cash and cash equivalents at end of period

 

164,277

 

143,525

 

 

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
30 September

 

 

 

2016
£’000

 

2015
£’000

 

Profit for the period

 

1,161

 

4,960

 

Adjustments:

 

 

 

 

 

Tax (credit)/expense

 

(903

)

219

 

Net finance costs

 

5,918

 

4,341

 

(Profit)/loss on disposal of intangible assets

 

(8,205

)

7,436

 

Amortization

 

30,805

 

22,147

 

Depreciation

 

2,412

 

2,495

 

Adjusted EBITDA

 

31,188

 

41,598

 

 

11



 

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

 

 

 

2016
£’000

 

2015
£’000

 

Profit for the period

 

1,161

 

4,960

 

Foreign exchange losses on unhedged US dollar borrowings

 

2,111

 

759

 

Fair value movement on derivative financial instruments

 

(1,274

)

(1,807

)

Tax (credit)/expense

 

(903

)

219

 

Adjusted profit before tax

 

1,095

 

4,131

 

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

 

(383

)

(1,446

)

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

 

712

 

2,685

 

 

 

 

 

 

 

Adjusted basic earnings per share:

 

 

 

 

 

Adjusted basic earnings per share (pence)

 

0.43

 

1.64

 

Weighted average number of ordinary shares outstanding (thousands)

 

164,025

 

163,883

 

Adjusted diluted earnings per share:

 

 

 

 

 

Adjusted diluted earnings per share (pence)

 

0.43

 

1.63

 

Weighted average number of ordinary shares outstanding (thousands)

 

164,483

 

164,268

 

 

12



 

4                               Cash generated from operations

 

 

 

Three months ended
30 September

 

 

 

2016
£’000

 

2015
£’000

 

Profit for the period

 

1,161

 

4,960

 

Tax (credit)/expense

 

(903

)

219

 

Profit before tax

 

258

 

5,179

 

Depreciation

 

2,412

 

2,494

 

Amortization

 

30,805

 

22,147

 

(Profit)/loss on disposal of intangible assets

 

(8,205

)

7,436

 

Net finance costs

 

5,929

 

4,345

 

Loss on disposal of property, plant and equipment

 

 

9

 

Equity-settled share-based payments

 

457

 

375

 

Foreign exchange (gains)/losses on cash and cash equivalents recognized in operating activities

 

(4,090

)

2,066

 

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

 

2,054

 

(4,247

)

Reclassified from hedging reserve

 

766

 

342

 

Increase in inventories

 

(496

)

(1,360

)

Decrease/(increase) in trade and other receivables

 

39,447

 

(10,166

)

(Decrease)/increase in trade and other payables and deferred revenue

 

(5,554

)

9,495

 

Cash generated from operations

 

63,783

 

38,115

 

 

13