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 2019 fiscal fourth quarter and twelve months ended 30 June 2019.
Management Commentary
Ed Woodward, Executive Vice Chairman, commented, “We remain focused on our plan of rebuilding the team and continuing to strengthen our youth system, in line with the philosophy of the club and the manager. This is reflected in the recent addition of three exciting first team players, key player contract extensions and the talent we have coming through our Academy. Everyone at Manchester United is committed to delivering on our primary objective of winning trophies.”
Outlook
For fiscal 2020, the company expects total revenues to be in a range of £560 to £580 million and total adjusted EBITDA to be in a range of £155 to £165 million. For fiscal 2020, the team will compete in the UEFA Europa League contributing to a reduction versus fiscal 2019 due to the absence of Champions’ League competition revenues.
Phasing of Premier League games |
Quarter 1 |
Quarter 2 |
Quarter 3 |
Quarter 4 |
Total |
2019/20 season* |
7 |
13 |
12 |
6 |
38 |
2018/19 season |
7 |
13 |
11 |
7 |
38 |
2017/18 season |
7 |
14 |
10 |
7 |
38 |
*Subject to changes in broadcasting scheduling
Key Financials (unaudited)
£ million (except earnings/(loss) per share) |
Twelve months ended 30 June |
|
Three months ended 30 June |
|
||
|
2019 |
Restated(1) 2018 |
Change |
2019 |
Restated(1) 2018 |
Change |
Commercial revenue |
275.1 |
275.8 |
(0.3%) |
66.7 |
63.4 |
5.2% |
Broadcasting revenue |
241.2 |
204.2 |
18.1% |
40.9 |
38.8 |
5.4% |
Matchday revenue |
110.8 |
109.8 |
0.9% |
23.8 |
19.4 |
22.7% |
Total revenue |
627.1 |
589.8 |
6.3% |
131.4 |
121.6 |
8.1% |
Adjusted EBITDA(2) |
185.8 |
176.8 |
5.1% |
10.9 |
10.6 |
2.8% |
Operating profit/(loss) |
50.0 |
43.9 |
13.9% |
(22.1) |
(23.5) |
(6.0%) |
|
||||||
Profit/(loss) for the period (i.e. net income/(loss)) (3) |
18.9 |
(37.6) |
- |
(22.2) |
(34.4) |
(35.5%) |
Basic earnings/(loss) per share |
11.48 |
(22.92) |
- |
(13.49) |
(20.95) |
(35.6%) |
Adjusted profit/(loss) for the period (i.e. adjusted net income/(loss))(2) |
39.6 |
17.2 |
130.2% |
(21.5) |
(19.5) |
10.3% |
Adjusted basic earnings/ (loss) per share (pence)(2) |
24.06 |
10.47 |
129.8% |
(13.06) |
(11.90) |
9.7% |
|
||||||
Net debt(2)/(4) |
203.6 |
253.7 |
(19.7%) |
203.6 |
253.7 |
(19.7%) |
(1) Comparative amounts have been restated following the implementation of IFRS 15 – see supplemental note 5 for further details.
(2) Adjusted EBITDA, adjusted profit/(loss) for the period, adjusted basic earnings/(loss) per share and net debt are non-IFRS measures. See “Non-IFRS Measures: Definitions and Use” on page 6 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 US federal corporate income tax rate reduced from 35% to 21% following the enactment of US tax reform on 22 December 2017. This necessitated a re-measurement of the then existing US deferred tax position in the period to 31 December 2017. As a result the loss for the twelve months ended 30 June 2018 included a non-cash tax accounting write off of £49.0 million.
(4) The gross USD debt principal remains unchanged.
Revenue Analysis
Commercial
Commercial revenue for the year was £275.1 million, a decrease of £0.7 million, or 0.3%, over the prior year.
- Sponsorship revenue was £173.0 million, consistent with the prior year, reflecting lower tour revenue as a result of a shorter summer tour, offset by an increase in underlying sponsorship revenues.
- Retail, Merchandising, Apparel & Product Licensing revenue was £102.1 million, a decrease of £0.7 million, or 0.7%, over the prior year.
For the quarter, commercial revenue was £66.7 million, an increase of £3.3 million, or 5.2%, over the prior year quarter.
- Sponsorship revenue was £41.5 million, an increase of £2.6 million, or 6.7%, over the prior year quarter.
- Retail, Merchandising, Apparel & Product Licensing revenue was £25.2 million, an increase of £0.7 million, or 2.9%, over the prior year quarter.
Broadcasting
Broadcasting revenue for the year was £241.2 million, an increase of £37.0 million, or 18.1%, over the prior year, primarily due to the new UEFA Champions League broadcasting rights agreement.
Broadcasting revenue for the quarter was £40.9 million, an increase of £2.1 million, or 5.4%, over the prior year quarter.
Matchday
Matchday revenue for the year was £110.8 million, an increase of £1.0 million, or 0.9%, over the prior year.
Matchday revenue for the quarter was £23.8 million, an increase of £4.4 million, or 22.7%, over the prior year quarter, primarily due to playing two additional home games in the quarter.
Other Financial Information
Operating expenses
Total operating expenses for the year were £602.9 million, an increase of £38.9 million, or 6.9%, over the prior year.
Employee benefit expenses
Employee benefit expenses for the year were £332.3 million, an increase of £36.3 million, or 12.3%, over the prior year, primarily due to investment in the first team playing squad.
Other operating expenses
Other operating expenses for the year were £109.0 million, a decrease of £8.0 million, or 6.8%, over the prior year, in part due to a shorter summer tour and reduced domestic cup related costs.
Depreciation, impairment and amortization
Depreciation and impairment for the year was £12.8 million, an increase of £2.1 million, or 19.6%, over the prior year. Amortization for the year was £129.2 million, a decrease of £9.2 million, or 6.6%, over the prior year. The unamortized balance of registrations at 30 June 2019 was £340.4 million.
Exceptional items
Exceptional items for the year were £19.6 million, relating to compensation to the former manager and certain members of the coaching staff for loss of office. Exceptional costs for the prior year were £1.9 million, relating to the present value of the additional contributions the Group is expected to pay to make good the increased deficit of the Football League pension scheme pursuant to the latest triennial actuarial valuation at 31 August 2017.
Profit on disposal of intangible assets
Profit on disposal of intangible assets for the year was £25.8 million, compared to £18.1 million for the prior year.
Net finance costs
Net finance costs for the year were £22.5 million, an increase of £4.4 million, or 24.3%, over the prior year. The increase was due to unrealized foreign exchange losses on unhedged USD borrowings.
Tax
The tax expense for the year was £8.6 million, compared to £63.4 million in the prior year. The prior year charge included a non-cash, tax accounting write-off of £49.0 million following the enactment of US tax reform on 22 December 2017. The non-cash write-off was primarily due to the reduction in the US federal corporate income tax rate from 35% to 21%, which necessitated re-measurement of the then existing US deferred tax position in the period to 31 December 2017.
Cash flows
Overall cash and cash equivalents (including the effects of exchange rate movements) increased by £65.6 million in the year.
Net cash inflow from operating activities for the year was £244.8 million, an increase of £149.6 million over the prior year, primarily due to timing of cash receipts on commercial contractual arrangements.
Net capital expenditure on property, plant and equipment for the year was £13.7 million, an increase of £0.5 million over the prior year.
Net capital expenditure on investment properties for the year was £12.4 million compared to £nil in the prior year.
Net capital expenditure on intangible assets for the year was £135.2 million, an increase of £27.1 million over the prior year.
Net debt
Net Debt as of 30 June 2019 was £203.6 million, a decrease of £50.1 million over the year, primarily due to an overall increase in cash and cash equivalents as described above. The gross USD debt principal remains unchanged.
Dividend
Two semi-annual dividends of $0.09 per share were paid during the year.
Conference Call Details
The Company’s conference call to review fiscal 2019 and fourth quarter results will be broadcast live over the internet today, 24 September 2019 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 141-year football heritage we have won 66 trophies, enabling us to develop what we believe is one of the world’s leading sports and entertainment brands with a global community of 1.1 billion fans and followers. Our large, passionate and highly engaged fan base provides Manchester United with a worldwide platform to generate significant revenue from multiple sources, including sponsorship, merchandising, product licensing, new media & mobile, broadcasting and matchday initiatives which in turn, directly fund our ability to continuously reinvest in the club.
Cautionary Statements
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).
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth is preliminary and subject to adjustments. The audit of the financial statements and related notes to be included in our annual report on Form 20-F for the year ended 30 June 2019 is still in progress. Adjustments to the financial statements may be identified when audit work is completed, which could result in significant differences from this preliminary unaudited financial information.
Non-IFRS Measures: Definitions and Use
1. Adjusted EBITDA
Adjusted EBITDA is defined as profit/(loss) for the period before depreciation and impairment, 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, impairment and amortization), material volatile items (primarily profit on disposal of intangible assets and exceptional items), 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/(loss) for the period to adjusted EBITDA is presented in supplemental note 2.
2. Adjusted profit/(loss) for the period (i.e. adjusted net income/(loss)
Adjusted profit/(loss) 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/adding the adjusted tax expense/credit for the period (based on an normalized tax rate of 21%; 2018: 28%). 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) of the weighted average US federal corporate income tax rate of 21% (2018: 28%) applicable during the financial year. A reconciliation of profit/(loss) for the period to adjusted profit/(loss) for the period is presented in supplemental note 3.
3. Adjusted basic and diluted earnings/(loss) per share
Adjusted basic and diluted earnings/(loss) per share are calculated by dividing the adjusted profit/(loss) for the period by the weighted average number of ordinary shares in issue during the period. Adjusted diluted earnings/(loss) 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/(loss) 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
|
Twelve months ended |
Three months ended |
||
30 June |
30 June |
|||
|
2019 |
Restated(1) 2018 |
2019 |
Restated(1) 2018 |
Commercial % of total revenue |
43.9% |
46.8% |
50.8% |
52.1% |
Broadcasting % of total revenue |
38.4% |
34.6% |
31.1% |
31.9% |
Matchday % of total revenue |
17.7% |
18.6% |
18.1% |
16.0% |
Home Matches Played |
|
|
|
|
PL |
19 |
19 |
4 |
3 |
UEFA competitions |
5 |
4 |
1 |
- |
Domestic Cups |
2 |
3 |
- |
- |
Away Matches Played |
|
|
|
|
PL |
19 |
19 |
3 |
4 |
UEFA competitions |
5 |
5 |
1 |
- |
Domestic Cups |
3 |
6 |
- |
2 |
|
||||
Other |
|
|
|
|
Employees at period end |
958 |
922 |
958 |
922 |
Employee benefit expenses % of revenue |
53.0% |
50.2% |
70.5% |
66.9% |
(1) Comparative amounts have been restated following the implementation of IFRS 15 – see supplemental note 5 for further details.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(unaudited; in £ thousands, except per share and shares outstanding data)
|
Twelve months ended 30 June |
Three months ended 30 June |
||
|
2019 |
Restated(1) 2018 |
2019 |
Restated(1) 2018 |
Revenue from contracts with customers |
627,122 |
589,758 |
131,416 |
121,619 |
Operating expenses |
(602,936) |
(564,006) |
(154,906) |
(148,307) |
Profit on disposal of intangible assets |
25,799 |
18,119 |
1,342 |
3,273 |
Operating profit/(loss) |
49,985 |
43,871 |
(22,148) |
(23,415) |
Finance costs |
(25,470) |
(24,233) |
(8,593) |
(14,868) |
Finance income |
2,961 |
6,195 |
704 |
884 |
Net finance costs |
(22,509) |
(18,038) |
(7,889) |
(13,984) |
Profit/(loss) before tax |
27,476 |
25,833 |
(30,037) |
(37,399) |
Tax (expense)/credit(2) |
(8,595) |
(63,462) |
7,849 |
3,004 |
Profit/(loss) for the period(2) |
18,881 |
(37,629) |
(22,188) |
(34,395) |
|
|
|
|
|
Basic earnings/(loss) per share: |
|
|
|
|
Basic earnings/(loss) per share (pence)(2) |
11.48 |
(22.92) |
(13.49) |
(20.95) |
Weighted average number of ordinary shares outstanding (thousands) |
164,526 |
164,195 |
164,526 |
164,195 |
Diluted earnings/(loss) per share: |
|
|
|
|
Diluted earnings/(loss) per share (pence)(2)/(3) |
11.47 |
(22.92) |
(13.49) |
(20.95) |
Weighted average number of ordinary shares outstanding (thousands) |
164,666 |
164,610 |
164,666 |
164,610 |
(1) Comparative amounts have been restated following the implementation of IFRS 15 – see supplemental note 5 for further details.
(2) The US federal corporate income tax rate reduced from 35% to 21% following the enactment of US tax reform on 22 December 2017. This necessitated a re-measurement of the then existing US deferred tax position in the period to 31 December 2017. As a result the tax expense for the year ended 30 June 2018 included a non-cash tax accounting write off of £49.0 million. Accordingly, this resulted in a loss for the twelve months ended 30 June 2018 and also a basic and diluted loss per share.
(3) For the three months ended 30 June 2019, and the twelve and three months ended 30 June 2018, 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 30 June 2019 |
Restated(1) As of 30 June 2018 |
ASSETS |
|
|
Non-current assets |
|
|
Property, plant and equipment |
246,032 |
245,401 |
Investment properties |
24,979 |
13,836 |
Intangible assets |
768,857 |
799,640 |
Deferred tax asset |
58,415 |
63,332 |
Trade receivables |
9,889 |
4,724 |
Tax receivables |
- |
547 |
Derivative financial instruments |
30 |
4,807 |
|
1,108,202 |
1,132,287 |
Current assets |
|
|
Inventories |
2,130 |
1,416 |
Prepayments |
13,030 |
10,862 |
Contract assets – accrued revenue |
39,532 |
38,018 |
Trade receivables |
23,851 |
119,073 |
Other receivables |
1,188 |
107 |
Tax receivables |
643 |
800 |
Derivative financial instruments |
312 |
1,159 |
Cash and cash equivalents |
307,637 |
242,022 |
|
388,323 |
413,457 |
Total assets |
1,496,525 |
1,545,744 |
(1) Comparative amounts have been restated following the implementation of IFRS 15 – see supplemental note 5 for further details.
CONSOLIDATED BALANCE SHEET (continued)
(unaudited; in £ thousands)
|
As of 30 June 2019 |
Restated(1) As of 30 June 2018 |
EQUITY AND LIABILITIES |
|
|
Equity |
|
|
Share capital |
53 |
53 |
Share premium |
68,822 |
68,822 |
Merger reserve |
249,030 |
249,030 |
Hedging reserve |
(35,544) |
(27,558) |
Retained earnings |
132,841 |
136,757 |
|
415,202 |
427,104 |
Non-current liabilities |
|
|
Deferred tax liabilities |
31,865 |
29,134 |
Contract liabilities - deferred revenue |
33,354 |
37,085 |
Trade and other payables |
79,183 |
104,271 |
Borrowings |
505,779 |
486,694 |
Derivative financial instruments |
2,298 |
- |
|
652,479 |
657,184 |
Current liabilities |
|
|
Contract liabilities - deferred revenue |
190,146 |
180,512 |
Trade and other payables |
230,386 |
267,996 |
Tax liabilities |
2,859 |
3,874 |
Borrowings |
5,453 |
9,074 |
|
428,844 |
461,456 |
Total equity and liabilities |
1,496,525 |
1,545,744 |
(1) Comparative amounts have been restated following the implementation of IFRS 15 – see supplemental note 5 for further details.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited; in £ thousands)
|
Twelve months ended 30 June |
Three months ended 30 June |
||
|
2019 |
2018 |
2019 |
2018 |
Cash flows from operating activities |
|
|
|
|
Cash generated from operations (see supplemental note 4) |
263,609 |
119,604 |
151,469 |
102,350 |
Interest paid |
(18,986) |
(18,904) |
(1,800) |
(2,055) |
Interest received |
2,857 |
1,187 |
805 |
533 |
Tax paid |
(2,696) |
(6,637) |
(308) |
(249) |
Net cash inflow from operating activities |
244,784 |
95,250 |
150,166 |
100,579 |
Cash flows from investing activities |
|
|
|
|
Payments for property, plant and equipment |
(13,737) |
(13,260) |
(4,860) |
(3,675) |
Proceeds from sale of property, plant and equipment |
- |
81 |
- |
6 |
Payments for investment properties |
(12,424) |
- |
(12,424) |
- |
Payments for intangible assets |
(178,175) |
(154,955) |
(18,310) |
(19,022) |
Proceeds from sale of intangible assets |
42,994 |
46,865 |
5,102 |
6,220 |
Net cash outflow from investing activities |
(161,342) |
(121,269) |
(30,492) |
(16,471) |
Cash flows from financing activities |
|
|
|
|
Repayment of borrowings |
(3,750) |
(419) |
- |
(107) |
Dividends paid |
(23,326) |
(21,982) |
(11,716) |
(11,053) |
Net cash outflow from financing activities |
(27,076) |
(22,401) |
(11,716) |
(11,160) |
Net increase/(decrease) in cash and cash equivalents |
56,366 |
(48,420) |
107,958 |
72,948 |
Cash and cash equivalents at beginning of period |
242,022 |
290,267 |
193,855 |
161,717 |
Effects of exchange rate changes on cash and cash equivalents |
9,249 |
175 |
5,824 |
7,357 |
Cash and cash equivalents at end of period |
307,637 |
242,022 |
307,637 |
242,022 |
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/(loss) for the period to adjusted EBITDA
|
Twelve months ended 30 June |
Three months ended 30 June |
||
|
2019 £’000 |
Restated(1) 2018 £’000 |
2019 £’000 |
Restated(1) 2018 £’000 |
Profit/(loss) for the period |
18,881 |
(37,629) |
(22,188) |
(34,395) |
Adjustments: |
|
|
|
|
Tax expense/(credit) |
8,595 |
63,462 |
(7,849) |
(3,004) |
Net finance costs |
22,509 |
18,038 |
7,889 |
13,984 |
Profit on disposal of intangible assets |
(25,799) |
(18,119) |
(1,342) |
(3,273) |
Exceptional items |
19,599 |
1,917 |
- |
1,917 |
Amortization |
129,154 |
138,380 |
30,149 |
32,591 |
Depreciation and impairment |
12,850 |
10,755 |
4,219 |
2,804 |
Adjusted EBITDA |
185,789 |
176,804 |
10,878 |
10,624 |
(1) Comparative amounts have been restated following the implementation of IFRS 15 – see supplemental note 5 for further details.
3 Reconciliation of profit/(loss) for the period to adjusted profit/(loss) for the period and adjusted basic and diluted earnings/(loss) per share
|
Twelve months ended 30 June |
Three months ended 30 June |
||
|
2019 £’000 |
Restated(1) 2018 £’000 |
2019 £’000 |
Restated(1) 2018 £’000 |
Profit/(loss) for the period |
18,881 |
(37,629) |
(22,188) |
(34,395) |
Exceptional items |
19,599 |
1,917 |
- |
1,917 |
Foreign exchange losses/(gains) on unhedged US dollar denominated borrowings |
2,650 |
(4,952) |
2,545 |
8,633 |
Fair value movement on embedded foreign exchange derivatives |
380 |
1,089 |
298 |
(295) |
Tax expense/(credit) |
8,595 |
63,462 |
(7,849) |
(3,004) |
Adjusted profit/(loss) before tax |
50,105 |
23,887 |
(27,194) |
(27,144) |
Adjusted tax (expense)/credit (using a normalized tax rate of 21% (2018: 28%)) |
(10,522) |
(6,688) |
5,711 |
7,600 |
Adjusted profit/(loss) for the period (i.e. adjusted net income/(loss)) |
39,583 |
17,199 |
(21,483) |
(19,544) |
|
|
|
|
|
Adjusted basic earnings/(loss) per share: |
|
|
|
|
Adjusted basic earnings/(loss) per share (pence) |
24.06 |
10.47 |
(13.06) |
(11.90) |
Weighted average number of ordinary shares outstanding (thousands) |
164,526 |
164,195 |
164,526 |
164,195 |
Adjusted diluted earnings/(loss) per share: |
|
|
|
|
Adjusted diluted earnings/(loss) per share (pence)(2) |
24.04 |
10.45 |
(13.06) |
(11.90) |
Weighted average number of ordinary shares outstanding (thousands) |
164,666 |
164,610 |
164.666 |
164,610 |
(1) Comparative amounts have been restated following the implementation of IFRS 15 – see supplemental note 5 for further details.
(2) For the three months ended 30 June 2019 and the three months ended 30 June 2018 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
|
Twelve months ended 30 June |
Three months ended 30 June |
||
|
2019 £’000 |
Restated(1) 2018 £’000 |
2019 £’000 |
Restated(1) 2018 £’000 |
Profit/(loss) for the period |
18,881 |
(37,629) |
(22,188) |
(34,395) |
Tax expense/(credit) |
8,595 |
63,462 |
(7,849) |
(3,004) |
Profit/(loss) before tax |
27,476 |
25,833 |
(30,037) |
(37,399) |
Adjustments for: |
|
|
|
|
Depreciation and impairment |
12,850 |
10,755 |
4,219 |
2,804 |
Amortization |
129,154 |
138,380 |
30,149 |
32,591 |
Profit on disposal of intangible assets |
(25,799) |
(18,119) |
(1,342) |
(3,273) |
Net finance costs |
22,509 |
18,038 |
7,889 |
13,984 |
Profit on disposal of property, plant and equipment |
- |
(81) |
- |
(6) |
Non-cash employee benefit expense - equity-settled share-based payments |
699 |
2,915 |
164 |
1,095 |
Foreign exchange (gains)/losses on operating activities |
(76) |
994 |
(164) |
(206) |
Reclassified from hedging reserve |
6,250 |
13,914 |
2,239 |
2,795 |
Changes in working capital: |
|
|
|
|
Inventories |
(714) |
221 |
(47) |
(18) |
Prepayments |
(2,168) |
2,638 |
(23) |
904 |
Contract assets – accrued revenue |
(1,514) |
(9,263) |
13,541 |
13,533 |
Trade receivables |
82,086 |
(64,492) |
91,650 |
(65,747) |
Other receivables |
(1,081) |
163 |
(752) |
18 |
Contract liabilities – deferred revenue |
5,903 |
(25,496) |
16,283 |
110,901 |
Trade and other payables |
8,034 |
23,204 |
17,700 |
30,374 |
Cash generated from operations |
263,609 |
119,604 |
151,469 |
102,350 |
(1) Comparative amounts have been restated following the implementation of IFRS 15 – see supplemental note 5 for further details.
5 Retrospective impact of adoption 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 36 to the consolidated financial statements for the year ended 30 June 2019, included within the Company’s Annual Report on Form 20-F, contains tables and notes which explain how the restatement affected the consolidated statement of profit or loss, 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 ended 30 September 2017 |
Three months ended 31 December 2017 |
Three months ended 31 March 2018 |
Three months ended 30 June 2018 |
Twelve months ended 30 June 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 |
