MANCHESTER, England--(BUSINESS WIRE)--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 2018 fiscal first quarter ended 30 September 2017.
Highlights |
- Total revenue for the first quarter £141m – up 17% from first quarter 2017
- Played five tour matches across the US to a cumulative stadium audience of more than 250,000
- Signed three new players in Victor Lindelof, Romelu Lukaku and Nemanja Matic
Commentary |
Ed Woodward, Executive Vice Chairman, commented, “We are just over a quarter of the way through what promises to be another exciting season. In the Champions League we have won all four games played to-date; we are through to the Quarter Final of the Carabao Cup; and are looking forward to the next few months as the number of matches ramps up.”
Outlook |
For fiscal 2018, Manchester United continues to expect:
- Revenue to be £575m to £585m.
- Adjusted EBITDA to be £175m to £185m.
Key Financials (unaudited) |
£ million (except earnings per share) |
Three months ended
30 September |
||||||
2017 | 2016 | Change | |||||
Commercial revenue | 80.5 | 74.3 | 8.3% | ||||
Broadcasting revenue | 38.1 | 29.1 | 30.9% | ||||
Matchday revenue | 22.4 | 16.8 | 33.3% | ||||
Total revenue | 141.0 | 120.2 | 17.3% | ||||
Adjusted EBITDA1 | 36.6 | 31.2 | 17.3% | ||||
Operating profit | 15.2 | 6.2 | 145.2% | ||||
Profit for the period (i.e. net income) | 7.9 | 1.2 | 558.3% | ||||
Basic earnings per share | 4.84 | 0.71 | 581.7% | ||||
Adjusted profit for the period (i.e. adjusted net income)1 | 6.2 | 0.7 | 785.7% | ||||
Adjusted basic earnings per share (pence)1 | 3.76 | 0.43 | 774.4% | ||||
Net Debt1/2 | 268.1 | 337.7 | (20.6%) | ||||
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 The gross USD debt principal remains unchanged.
Revenue Analysis |
Commercial
Commercial revenue for the quarter was £80.5
million, an increase of £6.2 million, or 8.3%, over the prior year
quarter.
- Sponsorship revenue for the quarter of £53.2 million, an increase of £6.3 million, or 13.4%, over the prior year quarter, primarily due to playing a greater number of Tour matches. This quarter includes £2.0 million of mobile and content revenue (prior year quarter £2.5 million) previously shown separately in commercial revenue;
- Retail, Merchandising, Apparel & Product Licensing revenue for the quarter was £27.3 million, a decrease of £0.1 million, or 0.4%, over the prior year quarter.
Broadcasting
Broadcasting revenue for the quarter was £38.1
million, an increase of £9.0 million, or 30.9%, over the prior year
quarter, primarily due to participation in the UEFA Champions League,
playing one additional PL home game and participation in the UEFA Super
Cup final, partially offset by one fewer PL game broadcast live.
Matchday
Matchday revenue for the quarter was £22.4 million,
an increase of £5.6 million, or 33.3% over the prior year quarter,
primarily due to playing two additional home games across all
competitions.
Other Financial Information |
Operating expenses
Total operating expenses for the quarter
were £143.1 million, an increase of £20.9 million, or 17.1%, over the
prior year quarter.
Employee benefit expenses
Employee benefit expenses for the
quarter were £69.9 million, an increase of £7.6 million, or 12.2%, over
the prior year quarter primarily due to player salary uplifts due to
participation in the UEFA Champions League.
Other operating expenses
Other operating expenses for the
quarter were £34.5 million, an increase of £7.8 million, or 29.2%, over
the prior year quarter primarily due to playing a greater number of Tour
matches and playing two additional games across all competitions.
Depreciation & amortization
Depreciation for the quarter
was £2.6 million, an increase of £0.2 million, or 8.3%, over the prior
year quarter. Amortization for the quarter was £36.1 million, an
increase of £5.3 million, or 17.2%, over the prior year quarter. The
unamortized balance of players’ registrations at 30 September 2017 was
£378.4 million.
Profit on disposal of intangible assets
Profit on disposal
of intangible assets for the quarter was £17.3 million compared to
profit of £8.2 million in the prior year quarter.
Net finance costs
Net finance costs for the quarter were
£0.8 million, a decrease of £5.1 million, or 86.4%, over the prior year
quarter, due to foreign exchange gains on unhedged USD borrowings.
Tax
The tax expense for the quarter was £6.5 million,
compared to a credit of £0.9 million in the prior year quarter.
Cash flows
Net cash generated from operating activities for
the quarter was £17.9 million, a decrease of £34.7 million over the
prior year quarter.
Net capital expenditure on property, plant and equipment and investment property for the quarter was £4.4 million, an increase of £2.2 million over the prior year quarter.
Net capital expenditure on intangible assets for the quarter was £84.9 million, a decrease of £37.8 million over the prior year quarter.
Overall cash and cash equivalents (including the effects of exchange rate changes) decreased by £74.1 million in the quarter.
Net Debt
Net Debt as of 30 September 2017 was £268.1
million, a decrease of £69.6 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 5 January 2018, to shareholders of record on 30 November
2017. The stock will begin to trade ex-dividend on 29 November 2017.
Conference Call Information |
The Company’s conference call to review first quarter fiscal 2018 results will be broadcast live over the internet today, 16 November 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 teams in the world, playing one of the most popular spectator sports on Earth.
Through our 139-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.
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, 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 a normalized tax rate of 35%; 2017: 35%). The normalized tax rate of
35% is the current US federal income tax rate.
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 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 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.
Key Performance Indicators |
Three months ended |
|||
2017 | 2016 | ||
Commercial % of total revenue | 57.1% | 61.8% | |
Broadcasting % of total revenue | 27.0% | 24.2% | |
Matchday % of total revenue | 15.9% | 14.0% | |
Home Matches Played | |||
PL | 4 | 3 | |
UEFA competitions | 1 | 1 | |
Domestic Cups | 1 | - | |
Away Matches Played | |||
UEFA competitions | 2 | 1 | |
Domestic Cups | - | 1 | |
Other | |||
Employees at period end | 914 | 837 | |
Employee benefit expenses % of revenue | 49.6% | 51.8% |
Phasing of Premier League home |
Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Total | ||||||
2017/18 season* | 4 | 7 | 5 | 3 | 19 | ||||||
2016/17 season | 3 | 7 | 4 | 5 | 19 |
*Subject to changes in broadcasting scheduling
CONSOLIDATED INCOME STATEMENT (unaudited; in £ thousands, except per share and shares outstanding data) |
||||
Three months ended |
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|
2017 | 2016 | ||
Revenue | 140,980 | 120,213 | ||
Operating expenses | (143,036) | (122,242) | ||
Profit on disposal of intangible assets | 17,279 | 8,205 | ||
Operating profit | 15,223 | 6,176 | ||
Finance costs | (1,001) | (6,098) | ||
Finance income | 218 | 180 | ||
Net finance costs | (783) | (5,918) | ||
Profit before tax | 14,440 | 258 | ||
Tax (expense)/credit | (6,493) | 903 | ||
Profit for the period | 7,947 | 1,161 | ||
Basic earnings per share: | ||||
Basic earnings per share (pence) | 4.84 | 0.71 | ||
Weighted average number of ordinary shares outstanding (thousands) | 164,195 | 164,025 | ||
Diluted earnings per share: | ||||
Diluted earnings per share (pence) | 4.83 | 0.71 | ||
Weighted average number of ordinary shares outstanding (thousands) | 164,585 | 164,483 | ||
CONSOLIDATED BALANCE SHEET (unaudited; in £ thousands) |
|||||||||||
As of
30 September 2017 |
As of 30 June 2017 |
As of
30 September 2016 |
|||||||||
ASSETS | |||||||||||
Non-current assets | |||||||||||
Property, plant and equipment | 246,831 | 244,738 | 245,004 | ||||||||
Investment property | 13,934 | 13,966 | 14,060 | ||||||||
Intangible assets | 805,694 | 717,544 | 800,290 | ||||||||
Derivative financial instruments | 479 | 1,666 | 3,313 | ||||||||
Trade and other receivables | 9,991 | 15,399 | 4,005 | ||||||||
Deferred tax asset | 136,705 | 142,107 | 148,016 | ||||||||
1,213,634 | 1,135,420 | 1,214,688 | |||||||||
Current assets | |||||||||||
Inventories | 2,074 | 1,637 | 1,422 | ||||||||
Derivative financial instruments | 2,433 | 3,218 | 5,218 | ||||||||
Trade and other receivables | 80,415 | 103,732 | 68,600 | ||||||||
Tax receivable | - | - | 97 | ||||||||
Cash and cash equivalents | 216,236 | 290,267 | 164,277 | ||||||||
301,158 | 398,854 | 239,614 | |||||||||
Total assets | 1,514,792 | 1,534,274 | 1,454,302 | ||||||||
CONSOLIDATED BALANCE SHEET (continued) (unaudited; in £ thousands) |
|||||||||||
As of
30 September 2017 |
As of 30 June 2017 |
As of
30 September 2016 |
|||||||||
EQUITY AND LIABILITIES | |||||||||||
Equity | |||||||||||
Share capital | 53 | 53 | 52 | ||||||||
Share premium | 68,822 | 68,822 | 68,822 | ||||||||
Merger reserve | 249,030 | 249,030 | 249,030 | ||||||||
Hedging reserve | (24,264) | (31,724) | (37,619) | ||||||||
Retained earnings | 199,968 | 191,436 | 174,985 | ||||||||
493,609 | 477,617 | 455,270 | |||||||||
Non-current liabilities | |||||||||||
Derivative financial instruments | 523 | 655 | 8,773 | ||||||||
Trade and other payables | 69,898 | 83,587 | 67,412 | ||||||||
Borrowings | 478,065 | 497,630 | 499,305 | ||||||||
Deferred revenue | 35,060 | 39,648 | 35,836 | ||||||||
Deferred tax liabilities | 25,802 | 20,828 | 11,975 | ||||||||
609,348 | 642,348 | 623,301 | |||||||||
Current liabilities | |||||||||||
Derivative financial instruments | - | 1,253 | 1,163 | ||||||||
Tax liabilities | 8,675 | 9,772 | 5,054 | ||||||||
Trade and other payables | 202,534 | 190,315 | 170,705 | ||||||||
Borrowings | 6,236 | 5,724 | 2,683 | ||||||||
Deferred revenue | 194,390 | 207,245 | 196,126 | ||||||||
411,835 | 414,309 | 375,731 | |||||||||
Total equity and liabilities | 1,514,792 | 1,534,274 | 1,454,302 | ||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited; in £ thousands) |
||||
Three months ended
30 September |
||||
2017 | 2016 | |||
Cash flows from operating activities | ||||
Cash generated from operations (see supplemental note 4) | 26,951 | 63,783 | ||
Interest paid | (8,018) | (7,904) | ||
Interest received | 218 | 180 | ||
Tax paid | (1,238) | (3,452) | ||
Net cash generated from operating activities | 17,913 | 52,607 | ||
Cash flows from investing activities | ||||
Payments for property, plant and equipment | (4,344) | (1,557) | ||
Payments for investment property | - | (644) | ||
Payments for intangible assets | (117,121) | (158,848) | ||
Proceeds from sale of intangible assets | 32,186 | 36,159 | ||
Net cash used in investing activities | (89,279) | (124,890) | ||
Cash flows from financing activities | ||||
Repayment of borrowings | (100) | (94) | ||
Net cash used in financing activities | (100) | (94) | ||
Net decrease in cash and cash equivalents | (71,466) | (72,377) | ||
Cash and cash equivalents at beginning of period | 290,267 | 229,194 | ||
Effects of exchange rate changes on cash and cash equivalents | (2,565) | 7,460 | ||
Cash and cash equivalents at end of period | 216,236 | 164,277 | ||
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 |
|||||
2017
£’000 |
2016
£’000 |
||||
Profit for the period | 7,947 | 1,161 | |||
Adjustments: | |||||
Tax expense/(credit) | 6,493 | (903) | |||
Net finance costs | 783 | 5,918 | |||
Profit on disposal of intangible assets | (17,279) | (8,205) | |||
Amortization | 36,054 | 30,805 | |||
Depreciation | 2,574 | 2,412 | |||
Adjusted EBITDA | 36,572 | 31,188 | |||
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 |
|||||
|
2017
£’000 |
2016
£’000 |
|||
Profit for the period | 7,947 | 1,161 | |||
Foreign exchange (gains)/losses on unhedged US dollar borrowings | (5,496) | 2,111 | |||
Fair value movement on derivative financial instruments | 554 | (1,274) | |||
Tax expense/(credit) | 6,493 | (903) | |||
Adjusted profit before tax | 9,498 | 1,095 | |||
Adjusted tax expense (using a normalized US statutory rate of 35%) |
(3,324) | (383) | |||
Adjusted profit for the period (i.e. adjusted net income) | 6,174 | 712 | |||
Adjusted basic earnings per share: | |||||
Adjusted basic earnings per share (pence) | 3.76 | 0.43 | |||
Weighted average number of ordinary shares outstanding (thousands) | 164,195 | 164,025 | |||
Adjusted diluted earnings per share: | |||||
Adjusted diluted earnings per share (pence) | 3.75 | 0.43 | |||
Weighted average number of ordinary shares outstanding (thousands) | 164,585 | 164,483 | |||
4 Cash generated from operations
Three months ended
30 September |
|||||
2017
£’000 |
2016
£’000 |
||||
Profit for the period | 7,947 | 1,161 | |||
Tax expense/(credit) | 6,493 | (903) | |||
Profit before tax | 14,440 | 258 | |||
Depreciation | 2,574 | 2,412 | |||
Amortization | 36,054 | 30,805 | |||
Profit on disposal of intangible assets | (17,279) | (8,205) | |||
Net finance costs | 783 | 5,918 | |||
Equity-settled share-based payments | 585 | 457 | |||
Foreign exchange losses/(gains) on operating activities | 991 | (2,036) | |||
Reclassified from hedging reserve | 4,001 | 766 | |||
Increase in inventories | (437) | (496) | |||
Decrease in trade and other receivables | 16,673 | 39,447 | |||
Decrease in trade and other payables and deferred revenue | (31,434) | (5,543) | |||
Cash generated from operations | 26,951 | 63,783 | |||