Manchester United (NYSE: MANU; the “Company” and “Group”) – one
of the most popular and successful sports team in the world - today
announced financial results for the fourth quarter and full year
ended 30 June 2012.
Highlights
- Earnings Per Share increased 87.5%
to £0.15 and Net Income grew 79.2% to £23m.
- New sponsorship deals since 1
July 2012 include Bwin, Toshiba Medical Systems, Yanmar, Fuji TV,
Santander, Shinsei Bank and MBNA.
- A world-record $559m sponsorship
deal with General Motors for Chevrolet to be our exclusive
shirt sponsor for seven years beginning in our 2014/15 season – an
increase of approximately 120% in annual revenues over our existing
shirt sponsor Aon
- the deal includes $37m to be received
for pre-sponsorship support and exposure in fiscal 2013 and
2014.
- Commercial revenues grew 13.7% for
fiscal 2012 to a record £117.6m due to:
- the innovative DHL training kit
deal
- New Media and Mobile up 20.3% to £20.7
million
- continued growth in renewals,
additional categories and regional deals.
- Broadcasting update
- Premier League UK live TV rights
increased 70% to £1bn a year for 2013/14 to 2015/16.
- UEFA Champions League distributions
available to clubs increased 20.7% to €910m a year for 2012/13
to 2014/15.
- IPO completed in August raising
net primary proceeds of $110.3m (approximately £68m) used to reduce
our senior secured notes.
Commentary
Ed Woodward, Executive Vice Chairman commented, ‘We are
delighted to announce our first results as a NYSE listed company;
fiscal 2012 was the best year ever for Manchester United’s
commercial business. Our world-record $559m shirt sponsorship deal
with Chevrolet and the Premier League’s new £1bn a year UK
television rights deal (a 70% increase) highlight the outstanding
growth prospects for the future. We also expect a substantial
increase in the value of the Premier League’s international
television contracts scheduled to be announced later this year.
‘In addition, we continued to strengthen our team by signing
world-class players such as Robin van Persie and Shinji Kagawa over
the summer. We also opened a new commercial sales office in Hong
Kong (our first outside the UK) to better position ourselves for
growth in a region that represents 325 million of our 659 million
followers.’
Outlook
For fiscal 2013, Manchester United expects:
- Revenue to be £350m to £360m.
- Adjusted EBITDA to be £107m to
£110m.
This assumes the team reaches the quarter-finals of the UEFA
Champions League and the domestic cups.
Key Financials
(unaudited)
Twelve months ended
Three months ended
£ million
30 June
30 June
2012 2011 Change
2012 2011 Change Commercial
revenue
117.6 103.4 13.7%
28.1 26.7 5.2% Broadcasting revenue
104.0 117.2 (11.3%)
27.5
43.9 (37.4%) Matchday revenue
98.7
110.8 (10.9%)
18.9 29.2
(35.3%) Total revenue
320.3 331.4
(3.3%)
74.5 99.8 (25.4%)
Adjusted EBITDA*
91.6 109.7 (16.5%)
7.0 29.0 (75.9%) Profit/(loss)
for the year from continuing operations (i.e. Net Income)
23.3 13.0 79.2%
(14.9)
(0.4) - Basic and diluted earnings/(loss) per share**
0.15 0.08 87.5%
(0.10) (0.00) - Gross debt
436.9
458.9 (4.8%)
436.9 458.9
(4.8%) Cash and cash equivalents
70.6
150.6 (53.1%)
70.6 150.6
(53.1%)
Our Net Debt/Adjusted EBITDA (Pro-forma for the IPO) as at 30
June 2012 was 3.3x.
*Adjusted EBITDA is a non-IFRS measure. We define Adjusted
EBITDA as profit/(loss) for the period from continuing operations
before net finance costs, tax credit/(expense), depreciation,
amortisation of, and profit on disposal of, players’ registrations
and exceptional items. 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 capital structure
(primarily interest expense), asset base (primarily depreciation
and amortisation) and items outside the control of our management
(primarily income taxes and interest income and expense). 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 IASB. A reconciliation
of Adjusted EBITDA to profit/(loss) for the period from continuing
operations is presented in supplemental note 3.
**Basic and diluted earnings/(loss) per share is calculated by
dividing the profit/(loss) attributable to owners of the Company by
the weighted average number of ordinary shares in issue during the
year, as adjusted for the reorganisation transactions described in
supplemental note 1.
Sector
Results
Commercial
Commercial revenue for the year increased 13.7% to £117.6
million driven by the addition of several new global and regional
sponsorships including the innovative training kit deal signed with
DHL, an increase in profit share pursuant to the arrangement with
Nike, and the commencement of new mobile partnerships and increased
payments from existing partnerships. For the year:
- Sponsorship revenue increased 14.9% to
£63.1 million;
- Retail, Merchandising, Apparel &
Product Licensing revenue increased 8.0% to £33.8 million; and
- New Media & Mobile revenue
increased 20.3% to £20.7 million.
For the fourth quarter, Commercial revenue increased 5.2% to
£28.1 million, with:
- Sponsorship revenue up 14.4% to £14.3
million,
- Retail, Merchandising, Apparel &
Product Licensing down 10.4% to £8.6 million, and
- New Media & Mobile up 15.5% to £5.2
million.
Broadcasting
Broadcasting revenues for the year decreased 11.3% to £104.0
million primarily as a result of our elimination at the group
stages of the Champions League. For the fourth quarter, revenues
decreased 37.4% to £27.5 million as no participation fees were
earned compared to Champions League participation fees from the
quarter-final, semi-final and final in the fourth quarter of the
prior year. In addition, we earned minimal revenues from the FA Cup
following our fourth round exit, compared with reaching the
semi-final in the previous year.
In June the Premier League has awarded the UK live rights to
BSkyB and BT Vision (a new entrant) for £1bn a year (a 70%
increase) for seasons 2013/14 to 2015/16. Since the year end UEFA
have announced that the distributions available to clubs from the
2012/13 UEFA Champions League will increase by 20.7% to €910m.
Matchday
Matchday revenues for the year decreased 10.9% to £98.7 million
as a result of having played four fewer home games compared with
the prior season when we also received a share of the gate receipts
from the Champions League final and FA Cup semi-final, both of
which were held at Wembley Stadium. For the fourth quarter,
revenues decreased 35.3% to £18.9 million as a result of playing
two fewer home games compared with the prior year period and the
impact from the previously mentioned gate receipts received in the
fourth quarter of 2011.
Other Financial
Information – Full Year
Operating Expenses
Total operating expenses increased 4.6% for the year to
£285.1 million, primarily due to an increase in football
player and staff compensation as we continue to invest in the team
(partially offset by lower success related bonuses compared to the
prior year); together with an increase in costs related to
additional non-player headcount driven by the continued growth of
our commercial operations.
Net Finance Costs
Net finance costs for the year decreased 3.5% to £49.5 million.
The main reasons for this decrease are a £6.4 million decrease in
interest payable on bank loans and senior secured notes primarily
due to repurchases of senior secured notes (which were subsequently
retired as part of the IPO process) and a £16.9 million decrease in
interest payable and accelerated amortisation of debt issue costs
on the payment in kind loan repaid in fiscal 2011, partially offset
by an adverse FX swing of £21.6 million on the translation of the
Group’s U.S. dollar denominated senior secured notes. In fiscal
2012, the Group reported an unrealized FX loss of £5.2 million
compared to an unrealized gain of £16.4 million in fiscal 2011.
Foreign exchange gains or losses are not a cash charge and could
reverse depending on dollar/sterling exchange rate movements. Any
gain or loss on a cumulative basis will not be realised until 2017
(or earlier if our senior secured notes are refinanced or redeemed
prior to their stated maturity). This exposure to FX movements has
now been reduced now that the net primary proceeds (of
approximately $110.3m) have been used to reduce our USD denominated
senior secured notes.
Depreciation & Amortisation of Players’
Registrations
Depreciation for the year increased 7.1% to £7.5 million; and
amortisation of players’ registrations for the year was relatively
flat at £38.3 million. Increases in amortisation due to player
acquisitions (primarily Phil Jones, David de Gea and Ashley Young)
were offset by reductions due to contract extensions (primarily
Luis Anderson, Chris Smalling and Antonio Valencia) and departed
players (mainly Owen Hargreaves). The unamortised balance of
existing players’ registrations at 30 June 2012 was £112.4
million.
Profit on the disposal of Players’ registration
Profit on the disposal of players’ registrations for the year
was £9.7 million (as compared with £4.5 million the previous
year).
Exceptional items
Exceptional items for the year were for £10.7 million (as
compared with £4.7 million the previous year).
Income Taxes
The tax credit for the year increased £27.0 million to £28.0
million primarily due to the recognition of previously unrecognised
tax losses as a deferred tax asset and the continuing release of
the deferred tax liabilities.
Profit for the year from continuing operations
Profit for the year from continuing operations for the year
increased 79.2% to £23.3 million primarily as a result of the
increase in our tax credit.
Cash Flow
Cash flow from operating activities for the year decreased 35.8%
to £80.3 million primarily due to lower Broadcasting and Matchday
revenues, partially offset by increased Commercial revenues.
Net capital expenditures on property, plant and equipment and
investment property for the year increased £15.4 million to £22.7
million relating mainly to the expansion of the Group’s property
portfolio around Old Trafford, upgrades to its corporate
hospitality facilities and general developments at Old Trafford,
together with the commencement of the redevelopment of the First
Team’s training facility at Carrington.
Net player capital expenditure for the year increased £38.2
million to £49.6 million relating primarily to the 2011
acquisitions of David de Gea, Phil Jones and Ashley Young partially
offset by payments received from various disposals.
Net cash used in financing activities for the year was £38.8
million compared to net cash generated from financing activities of
£46.6 million in the prior year. In fiscal 2012, the Company
repurchased £28.2 million of the Company’s senior secured notes in
open market transactions and paid an interim dividend of £10.0
million.
Cash and cash equivalents
Cash and cash equivalents at the year-end were £70.6
million.
Borrowings
Total borrowings were £436.9 million at 30 June 2012 compared to
£458.9 million at 30 June 2011, and since the year end we have used
the net primary proceeds from the IPO to reduce our U.S. dollar
denominated senior secured notes.
Conference Call
Information
The Company’s conference call to review fourth quarter and
fiscal 2012 results will be broadcast live over the internet today,
18 September 2012 at 11:00 am 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 134-year heritage we have won 60 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, new media &
mobile, 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).
Key Performance
Indicators
Twelve months ended
Three months ended 30 June 30 June
2012 2011
2012 2011
Matchday %
of total revenue
30.8% 33.4%
25.4% 29.3% Home Matches
Played FAPL
19 19
4 4 UEFA competitions
5 6
- 2 Domestic Cups
1 4
- - Away Matches Played*
UEFA competitions
5 7
- 3 Domestic Cups
4 4
- 1 *Away matches played includes games played at a neutral
venue (i.e. UCL final /FA Cup semi-final)
Broadcasting % of total revenue
32.5% 35.4%
36.9% 44.0%
Commercial % of total revenue
36.7% 31.2%
37.7% 26.7% Nike and Aon % of Commercial
44.0% 47.4%
43.0% 52.6% Partners and other % of
Commercial
56.0% 52.6%
57.0% 47.4%
Other
Employees at period end
696 628
696 628 Staff costs %
of revenue
50.5% 46.1%
66.2% 50.7%
Phasing
of Premier League home games Quarter 1 Quarter
2 Quarter 3 Quarter 4
Total 2012/13 season* 3 7 5 4 19
2011/12 season 3 7 5 4 19 2010/11 season 3 7 5
4 19
*Note - Games can be rescheduled for TV or clashes due to
domestic cup competitions. We will update each Quarter.
MANCHESTER UNITED plc
CONSOLIDATED INCOME STATEMENT
(unaudited; in £ thousands, except per
share data)
Year ended
Three months ended
30 June
30 June
2012 2011
2012
2011
Revenue 320,320 331,441
74,492
99,801 Operating expenses
(285,139 ) (272,653
)
(82,138 ) (87,113 ) Profit on disposal of players’
registrations
9,691 4,466
1,795 1,096
Operating
profit/(loss) 44,872 63,254
(5,851 ) 13,784 Finance
costs
(50,315 ) (52,960 )
(14,591 )
(13,967 ) Finance income
779 1,710
103 356 Net
finance costs
(49,536 ) (51,250 )
(14,488 ) (13,611 )
(Loss)/profit on ordinary activities before tax
(4,664 ) 12,004
(20,339 ) 173 Tax
credit/(expense)
27,977 986
5,434 (524 )
Profit/(loss)
for the period from continuing operations(1)
23,313 12,990
(14,905 ) (351 )
Attributable to:
Owners of the Company
22,986 12,649
(14,998 ) (501 ) Non-controlling
interest
327 341
93 150
23,313
12,990
(14,905 )
(351 )
Earnings/(loss) per share attributable to
the equity holders of the Company during the year Basic and
diluted earnings/(loss) per share (Pounds Sterling)
0.15
0.08
(2)
(0.10 )
(0.00
)(2)
(1) Also referred to as Net Income.
(2) As adjusted retroactively for all
periods presented to reflect the reorganisation transactions
described in supplemental note 1.
MANCHESTER UNITED plc
CONSOLIDATED BALANCE SHEET
(unaudited; in £ thousands)
2012
2011
ASSETS
Non-current assets Property, plant and equipment
247,866 240,540 Investment property
14,197 6,938
Goodwill
421,453 421,453 Players’ registrations
112,399 129,709 Trade and other receivables
3,000
10,000 Non-current tax receivable
-
2,500
798,915 811,140
Current assets
Derivative financial instruments
967 - Trade and other
receivables
74,163 55,403 Current tax receivable
2,500 - Cash and cash equivalents
70,603 150,645
148,233 206,048
Total
assets 947,148
1,017,188
MANCHESTER UNITED plc
CONSOLIDATED BALANCE SHEET
(continued)
(unaudited; in £ thousands)
2012
2011
EQUITY AND LIABILITIES
Equity Share capital - - Share premium
249,105 249,105 Hedging reserve
666 (466 ) Retained
deficit
(12,671 )
(25,886 )
Equity attributable to owners of the
Company 237,100 222,753
Non-controlling interests
(2,003 )
(2,330 )
235,097
220,423
Non-current liabilities
Derivative financial instruments
1,685 - Trade and other
payables
22,305 28,416 Borrowings
421,247 442,330
Deferred revenue
9,375 18,349 Provisions
1,378 1,940
Deferred tax liabilities
26,678
54,406
482,668 545,441
Current liabilities Derivative financial instruments
- 2,034 Current tax liabilities
1,128 4,338 Trade and
other payables
83,664 117,800 Borrowings
15,628
16,573 Deferred revenue
128,535 110,043 Provisions
428 536
229,383
251,324
Total equity and liabilities
947,148 1,017,188
MANCHESTER UNITED plc
CONSOLIDATED STATEMENT OF CASH
FLOWS
(unaudited; in £ thousands)
Year ended
Three months ended
30 June
30 June
2012 2011
2012
2011
Cash flows from operating activities
Cash generated from operations (note 2)
80,302
125,140
66,523 84,208 Interest paid
(47,068
)
(167,499 )
(3,515 ) (7,775 ) Debt finance costs
relating to borrowings
- (118 )
- (118 ) Interest
received
1,010 1,774
187 233 Income tax paid
(3,333 ) (70 )
(59
) -
Net cash generated from/(used in)
operating activities 30,911 (40,773
)
63,136 76,548
Cash
flows from investing activities Purchases of property, plant
and equipment
(15,323 ) (7,263 )
(5,685
) (1,529 ) Purchases of investment property
(7,364
) -
- - Proceeds from sale of property, plant and
equipment
- 107
- 30 Purchases of players’
registrations
(58,971 ) (25,369 )
(5,818
) (1,207 ) Proceeds from sale of players’ registrations
9,409 13,956
3,285 1,818
Net cash used in
investing activities (72,249 )
(18,569 )
(8,218 ) (888 )
Cash flows from financing activities Proceeds from issue of
shares
- 249,105
- - Repayment of secured payment in
kind loan
- (138,000 )
- - Repayment of other
borrowings
(28,774 ) (64,499 )
(311 )
(37,947 ) Dividends paid
(10,000 ) -
(10,000 ) -
Net
cash (used in)/generated from financing activities
(38,774 ) 46,606
(10,311 ) (37,947 )
Net (decrease)/increase
in cash and cash equivalents (80,112 ) (12,736 )
44,607 37,713 Cash and cash equivalents at beginning of
period
150,645 163,833
25,576 113,045 Exchange
gains/(losses) on cash and cash equivalents
70
(452 )
420 (113 )
Cash
and cash equivalents at end of period 70,603
150,645
70,603
150,645
MANCHESTER UNITED plcSUPPLEMENTAL
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. The
Company became the parent of the Group as a result of
reorganisation transactions which were completed immediately prior
to the completion of the public offering of Manchester United plc
shares on the New York Stock Exchange (“NYSE”) in August 2012 as
described more fully below.
1.1 The reorganisation
transactions
The Group had historically conducted business through Red
Football Shareholder Limited, a private limited company
incorporated in England and Wales, and its subsidiaries. Prior to
the reorganisation transactions, Red Football Shareholder Limited
was a direct, wholly owned subsidiary of Red Football LLC, a
Delaware limited liability company. On 30 April 2012, Red Football
LLC formed a wholly-owned subsidiary, Manchester United Ltd., an
exempted company with limited liability incorporated under the
Companies Law (2011 Revision) of the Cayman Islands, as amended and
restated from time to time. On 8 August 2012, Manchester United
Ltd. changed its legal name to Manchester United plc.
On 9 August 2012, Red Football LLC contributed all of the equity
interest of Red Football Shareholder Limited to Manchester United
plc. As a result of these reorganisation transactions, Red Football
Shareholder Limited became an indirect, wholly-owned subsidiary of
Manchester United plc.
The new parent, Manchester United plc. had 155,352,366 shares in
issue immediately after the reorganisation transactions and before
the issue of new shares pursuant to the public offering. As a
result historic earnings per share calculations reflect the capital
structure of the new parent. The reorganisation transactions have
been treated as a capital reorganisation arising at the
reorganisation date (9 August 2012) and hence, apart from the
impact on earnings per share, which for the year ended 30 June 2011
has been restated retrospectively in accordance with International
Financial Reporting Standards, the impact of the transactions is
disclosed in our financial statements as a non-adjusting post
balance sheet event, with the accounting impacts to be reflected in
financial statements for periods subsequent to 30 June 2012. As a
result, the share capital disclosed in the balance sheet as of 30
June 2012 is that of the former parent, Red Football Shareholder
Limited. Any impacts arising from the reorganisation transactions,
including changes to share capital and the impact on taxation of
assets and liabilities of the new parent as a consequence of
becoming a US tax resident, will be accounted for at the date of
reorganisation (9 August 2012).
MANCHESTER UNITED plc.
SUPPLEMENTAL NOTES (continued)
(unaudited; in £ thousands)
2
Cash generated from
operations
Year ended
Three months ended
30 June
30 June
2012 2011
2012
2011 Profit/(loss) from continuing operations
23,313
12,990
(14,905 ) (351 ) Tax
(credit)/expense
(27,977 ) (986 )
(5,434 ) 524
(Loss)/profit on ordinary activities before tax
(4,664
) 12,004
(20,339 ) 173 Impairment charges
- 2,013
- 2,013 Depreciation charges
7,478
6,989
1,807 1,737 Amortisation of players’ registrations
38,262 39,245
8,495 9,896 Profit on disposal of
players’ registrations
(9,691 ) (4,466 )
(1,795 ) (1,096 ) Net finance costs
49,536
51,250
14,488 13,611 Profit on disposal of property, plant
and equipment
- (46 )
- (15 ) Fair value
(gains)/losses on derivative financial instruments
(91
) 1,047
174 (372 ) Increase in trade and other
receivables
(9,414 ) (17,483 )
(20,537
) (14,562 ) Increase in trade and other payables and
deferred revenue
9,625 34,727
84,407 72,735
(Decrease)/increase in provisions
(739 )
(140 )
(177 ) 88
Cash generated from operations 80,302
125,140
66,523
84,208
3
Reconciliation of Adjusted EBITDA and profit/(loss) for the
period from continuing operations
Year ended
Three months ended
30 June
30 June
2012 2011
2012
2011
Profit/(loss) for the period from continuing
operations 23,313 12,990
(14,905 ) (351 )
Adjustments: Net finance costs
49,536 51,250
14,488
13,611 Tax (credit)/expense
(27,977 ) (986 )
(5,434 ) 524 Profit on disposal of players’
registrations
(9,691 ) (4,466 )
(1,795
) (1,096 ) Depreciation
7,478 6,989
1,807
1,738 Amortisation of players’ registrations
38,262 39,245
8,495 9,896 Exceptional items
10,728
4,667
4,365 4,667
Adjusted EBITDA 91,649
109,689
7,021 28,989
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