TOTAL REVENUES OF £95.0 MILLION
ADJUSTED EBITDA OF £25.4 MILLION
RAISED EBITDA GUIDANCE TO £103 TO £110 MILLION
FROM £90 TO £95 MILLION
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 2015 fiscal third quarter
and nine months ended 31 March 2015.
Highlights
- Commercial revenues of £47.8 million
up 11.7% for the quarter.
- Three sponsorship deals announced in
the quarter – Kama Games as official global social games
partner, Swissquote as global Forex & Online Financial Trading
Partner and Emtel as our triple play partner in Mauritius.
- Domestic Premier League Live
Broadcasting rights up 70% – BSkyB and BT will pay £5.14
billion for the 2017-19 EPL seasons compared to £3.0 billion for
the 2014-16 seasons.
- UEFA announced that the amount
available for distribution to clubs participating in the Champions
League has increased for the 2016-18 cycle to €1.257bn representing
an increase of over 25%.
Commentary
Ed Woodward, Executive Vice Chairman commented, “Our commercial
revenues were up year over year and we are raising EBITDA guidance
for fiscal year 2015 from £90-£95 million to £103-£110 million.
As the season approaches its conclusion, we are pleased with the
team’s performance in Louis van Gaal’s first season as manager and
are well positioned to achieve a top four finish in the Premier
League and to return to European football next year. As we look
forward to next season, on the playing side we expect to be
challenging for trophies in all competitions and on the commercial
side we are excited by the numerous opportunities for further
growth, including the first year of our ten year partnership with
adidas. ”
Outlook
For fiscal 2015, Manchester United expect:
- Revenue to be £385m to £395m.
- Adjusted EBITDA to be £103m to
£110m.
Key Financials (unaudited) £ million (except adjusted
diluted earnings per share)
Three months ended
31 March
Nine months ended
31 March
2015 2014 Change
2015 2014 Change Commercial revenue
47.8 42.8 11.7%
151.0
145.0 4.1% Broadcasting revenue
21.7
35.6 (39.0%)
66.9 101.8
(34.3%) Matchday revenue
25.5 37.1
(31.3%)
71.5 90.1 (20.6%) Total revenue
95.0 115.5 (17.7%)
289.4
336.9 (14.1%) Adjusted EBITDA*
25.4
40.0 (36.5%)
88.1 113.2
(22.2%) (Loss)/profit for the period (i.e. net income)
(2.9) 11.0 -
6.0
29.7 (79.8%) Adjusted (loss)/profit for the period (i.e.
adjusted net income)*
(7.1) 13.0 -
1.5 35.0 (95.7%) Adjusted diluted
(loss)/earnings per share (pence)*
(4.34) 7.93
-
0.91 21.49 (95.8%)
Gross debt**
395.4 351.7 12.4%
395.4 351.7 12.4% Cash and cash equivalents
11.2 34.3 (67.3%)
11.2
34.3 (67.3%)
* Adjusted EBITDA, adjusted (loss)/profit for the period and
adjusted diluted (loss)/earnings per share are non-IFRS measures.
See “Non-IFRS Measures: Definitions and Use” below and the
accompanying Supplemental Notes for the definitions and
reconciliations for these non-IFRS measures and the reasons we
believe these measures provide useful information to investors
regarding the Group’s financial condition and results of
operations.
** Gross debt increased primarily because of
movements in USD/GBP exchange rate from 1.6662 at 31 March 2014 to
1.4861 at 31 March 2015.
Revenue Analysis
Commercial
Commercial revenue for the third quarter was £47.8 million, an
increase of £5.0 million, or 11.7%, over the prior year
quarter.
- Sponsorship revenue for the third
quarter was £37.5 million, an increase of £6.8 million, or 22.1%,
over the prior year quarter, primarily due to an increase in shirt
and other sponsorships.
- Retail, Merchandising, Apparel &
Product Licensing revenue for the third quarter was £7.6 million, a
decrease of £0.8 million, or 9.5%, over the prior year quarter,
primarily due to reduced Nike guaranteed revenue due to
non-participation in UEFA competitions in the current season.
- Mobile & Content revenue for the
third quarter was £2.7 million, a decrease of £1.0 million, or
27.0%, over the prior year quarter, due to the expiration of a few
of our mobile partnerships.
Broadcasting
Broadcasting revenue for the third quarter was £21.7 million, a
decrease of £13.9 million, or 39.0%, over the prior year quarter,
primarily due to five fewer FAPL live broadcast games and two fewer
FAPL home games in the current quarter, and non-participation in
the UEFA Champions League.
Matchday
Matchday revenue for the third quarter was
£25.5 million, a decrease of £11.6 million, or 31.3%, over the
prior year quarter, primarily due to two fewer FAPL home games in
the current quarter and non-participation in the UEFA Champions
League.
Other Financial Information
Operating expenses
Total operating expenses for the third quarter were £99.0
million, an increase of £7.5 million, or 8.2%, over the prior year
quarter.
Staff costs
Staff costs for the third quarter were £50.2
million, a decrease of £3.2 million, or 6.0%, over the prior year
quarter.
Other operating expenses
Other operating expenses for the third
quarter were £19.4 million, a decrease of £2.7 million, or 12.2%,
over the prior year quarter, primarily due to non-participation in
the UEFA Champions League.
Depreciation & amortization
Depreciation for the third quarter was £2.5
million, an increase of £0.3 million, or 13.6%, over the prior year
quarter. Amortization for the third quarter was £25.7 million, an
increase of £11.9 million, or 86.2%, over the prior year quarter.
The unamortized balance of players’ registrations at 31 March 2015
was £237.0 million.
Exceptional items
Exceptional items for the third quarter were
£1.2 million being the present value of the additional
contributions the Club is expected to pay to remedy the revised
deficit of the Football League pension scheme as per the latest
triennial actuarial valuation at 31 August 2014. Exceptional items
for the prior year quarter were £nil.
Net finance costs
Net finance costs for the third quarter were £5.8 million, a
decrease of £0.1 million, or 1.7%, over the prior year quarter.
Tax
The tax credit for the third quarter was £8.5 million, compared
to an expense of £9.5 million in the prior year quarter.
Cash flows
Net cash used in operating activities for the third quarter was
£15.0 million, an increase of £2.4 million over the prior year
quarter.
Capital expenditure on property, plant and equipment for the
third quarter was £0.3 million, a decrease of £1.4 million over the
prior year quarter.
Net player and other intangible assets capital
expenditure for the third quarter was £11.0 million, a decrease of
£12.3 million over the prior year quarter.
Conference Call Information
The Company’s conference call to review third
quarter fiscal 2015 results will be broadcast live over the
internet today, 14 May 2015 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 137-year heritage we have won 62
trophies, enabling us to develop the world’s leading sports brand
and a global community of 659 million followers. Our large,
passionate community provides Manchester United with a worldwide
platform to generate significant revenue from multiple sources,
including sponsorship, merchandising, product licensing, 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) 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 players’
registrations, exceptional items, net finance costs, and tax.
We believe adjusted EBITDA is useful as a measure of comparative
operating performance from period to period and among companies as
it is reflective of changes in pricing decisions, cost controls and
other factors that affect operating performance, and it removes the
effect of our asset base (primarily depreciation and amortization),
capital structure (primarily finance costs), and items outside the
control of our management (primarily taxes). Adjusted EBITDA has
limitations as an analytical tool, and you should not consider it
in isolation, or as a substitute for an analysis of our results as
reported under IFRS as issued by the IASB. A reconciliation of
profit for the period to adjusted EBITDA is presented in
supplemental note 2.
2. Adjusted
(loss)/profit for the period (i.e. adjusted net income)
Adjusted (loss)/profit for the period is calculated, where
appropriate, by adjusting for charges/credits related to
exceptional items, foreign exchange gains/losses on US dollar
denominated bank accounts, fair value movements on derivative
financial instruments, and hedge ineffectiveness on cash flow
hedges, 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 35%; 2014: 35%). The
normalized tax rate of 35% is management’s estimate of the tax rate
likely to be applicable to the Group in the long-term.
We believe that in assessing the comparative performance of the
business, in order to get a clearer view of the underlying
financial performance of the business, it is useful to strip out
the distorting effects of charges/credits related to ‘one-off’
transactions and then to apply a ‘normalized’ tax rate (for both
the current and prior periods) of the US federal income tax rate of
35%. A reconciliation of (loss)/profit for the period to adjusted
(loss)/profit for the period is presented in supplemental note
3.
3. Adjusted basic and diluted
(loss)/earnings per share
Adjusted basic and diluted (loss)/earnings per share are
calculated by dividing the adjusted (loss)/profit for the period by
the weighted average number of ordinary shares in issue during the
period. Adjusted diluted (loss)/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
(loss)/earnings per share are presented in supplemental note 3.
Key Performance Indicators Three months
ended Nine months ended 31 March
31 March 2015 2014
2015 2014
Commercial % of total revenue
50.3% 37.1%
52.2% 43.0%
Broadcasting % of total revenue
22.8%
30.8%
23.1% 30.2%
Matchday % of total
revenue
26.9% 32.1%
24.7%
26.8% Home Matches Played
FAPL
5 7
15
16 UEFA competitions
- 1
-
4 Domestic Cups
2 2
2
4 Away Matches Played
UEFA competitions
- 1
- 4 Domestic Cups
3 1
4 2
Other
Employees at period end
791 875
791 875 Staff costs % of
revenue
52.8% 46.2%
51.2%
46.9%
Phasing of Premier League home games
Quarter 1 Quarter 2 Quarter
3 Quarter 4 Total 2014/15 season 3
7 5 4 19 2013/14 season 3 6 7 3 19
2012/13 season 3 7 5 4 19
CONSOLIDATED INCOME STATEMENT
(unaudited; in £ thousands, except per
share and shares outstanding data)
Three months ended
31 March
Nine months ended
31 March
2015 2014
2015 2014
Revenue 94,970 115,495
289,401
336,943 Operating expenses
(98,976) (91,499)
(284,864) (269,422) (Loss)/profit on disposal of players’
registrations
(1,556) 2,361
18,204 4,203
Operating (loss)/profit
(5,562) 26,357
22,741 71,724
Finance costs
(5,904) (5,959)
(18,381) (21,562)
Finance income
37 36
136
143 Net finance costs
(5,867) (5,923)
(18,245) (21,419)
(Loss)/profit before tax
(11,429) 20,434
4,496 50,305 Tax credit/(expense)
8,555 (9,520)
1,519
(20,644)
(Loss)/profit for the period (2,874)
10,914
6,015 29,661
Basic
(loss)/earnings per share: Basic (loss)/earnings per share
(pence)
(1.75) 6.66
3.67 18.11 Weighted average
number of ordinary shares outstanding (thousands)
163,797
163,812
163,794 163,815
Diluted (loss)/earnings per
share: Diluted (loss)/earnings per share (pence)
(1.75)
6.66
3.66 18.11 Weighted average number of ordinary shares
outstanding (thousands)
164,140 163,812
164,140 163,815
CONSOLIDATED BALANCE SHEET
(unaudited; in £ thousands)
As of
31 March
2015
As of
30 June
2014
As of
31 March
2014
ASSETS Non-current assets Property, plant and
equipment
252,494 254,859 255,332 Investment property
13,587 13,671 13,700 Goodwill
421,453 421,453 421,453
Players’ registrations and other intangible assets
237,760
204,572 161,769 Derivative financial instruments
1,323 - 791
Trade and other receivables
1,000 41 141 Deferred tax asset
147,284 129,631 128,368
1,074,901 1,024,227 981,554
Current
assets Derivative financial instruments
1,354 - 317
Trade and other receivables
107,716 125,119 77,014 Current
tax receivable
124 - - Cash and cash equivalents
11,204 66,365 34,344
120,398 191,484 111,675
Total assets
1,195,299 1,215,711 1,093,229
CONSOLIDATED BALANCE SHEET
(continued)
(unaudited; in £ thousands)
As of
31 March
2015
As of
30 June
2014
As of
31 March
2014
EQUITY AND LIABILITIES Equity Share capital
52
52 52 Share premium
68,822 68,822 68,822 Merger reserve
249,030 249,030 249,030 Hedging reserve
(6,566)
25,918 21,156 Retained earnings
161,872
154,828 160,431
473,210 498,650
499,491
Non-current liabilities Derivative financial
instruments
4,087 1,602 1,919 Trade and other payables
39,827 42,464 27,941 Borrowings
392,480 326,803
339,679 Deferred revenue
24,464 15,631 14,440 Deferred tax
liabilities
26,569 28,837 29,140
487,427 415,337 413,119
Current
liabilities Derivative financial instruments
2,340 875
1,072 Current tax liabilities
1,753 2,999 3,147 Trade and
other payables
118,135 102,232 76,468 Borrowings
2,950 15,005 11,991 Deferred revenue
109,484
180,613 87,941
234,662
301,724 180,619
Total equity and liabilities
1,195,299 1,215,711 1,093,229
CONSOLIDATED STATEMENT OF CASH
FLOWS
(unaudited; in £ thousands)
Three months ended
31 March
Nine months ended
31 March
2015 2014
2015
2014
Cash flows from operating activities Cash
(used in)/generated from operations (see supplemental note 4)
(3,189) (3,970)
45,732 30,693 Interest paid
(10,907) (8,830)
(24,136) (22,794) Debt finance costs
relating to borrowings
- -
(824) (123) Interest
received
368 36
457 143 Tax (paid)/refund
(1,271) 175
(2,281) (1,071)
Net cash (used in)/generated from operating activities
(14,999) (12,589)
18,948
6,848
Cash flows from investing activities Purchases of
property, plant and equipment
(293) (1,679)
(4,086)
(8,557) Proceeds from sale of property, plant and equipment
- -
- 50 Purchases of players’ registrations and
other intangible assets
(14,406) (24,815)
(101,272)
(62,102) Proceeds from sale of players’ registrations
3,447 1,500
20,163 8,556
Net
cash used in investing activities (11,252)
(24,994)
(85,195) (62,053)
Cash flows from
financing activities Proceeds from borrowings
- -
4,704 - Repayment of borrowings
(102)
(97)
(301) (284)
Net cash (used
in)/generated from financing activities (102)
(97)
4,403 (284)
Net decrease in
cash and cash equivalents (26,353) (37,680)
(61,844) (55,489) Cash and cash equivalents at beginning of
period
37,115 72,144
66,365 94,433 Foreign exchange
gains/(losses) on cash and cash equivalents
442
(120)
6,683 (4,600)
Cash and cash
equivalents at end of period 11,204 34,344
11,204 34,344
SUPPLEMENTAL NOTES
1 General information
Manchester United plc (the “Company”) and its subsidiaries
(together the “Group”) is a professional football club together
with related and ancillary activities. The Company incorporated
under the Companies Law (2011 Revision) of the Cayman Islands, as
amended and restated from time to time.
2 Reconciliation of profit for the period to adjusted
EBITDA
Three months ended
31 March
Nine months ended
31 March
2015
£’000
2014
£’000
2015
£’000
2014
£’000
(Loss)/profit for the period (2,874) 10,914
6,015 29,661 Adjustments: Tax (credit)/expense
(8,555) 9,520
(1,519) 20,644 Net finance costs
5,867 5,923
18,245 21,419 Loss/(profit) on disposal
of players’ registrations
1,556 (2,361)
(18,204)
(4,203) Exceptional items
1,275 -
2,336 293
Amortization
25,708 13,841
73,931 39,163 Depreciation
2,469 2,206
7,365 6,274
Adjusted EBITDA 25,446 40,043
88,169 113,251
3 Reconciliation of (loss)/profit for the period to
adjusted (loss)/profit for the period and adjusted basic and
diluted (loss)/earnings per share
Three months ended
31 March
Nine months ended
31 March
2015
£’000
2014
£’000
2015
£’000
2014
£’000
(Loss)/profit for the period (2,874) 10,914
6,015 29,661 Exceptional items
1,275 -
2,336 293 Foreign exchange losses/(gains) on US dollar
denominated bank accounts
468 -
(530) 2,712 Fair
value movement on derivative financial instruments
(1,511)
90
(3,997) 1,640 Ineffectiveness of cash flow hedges
234 (543)
- (791) Tax (credit)/expense
(8,555) 9,520
(1,519) 20,644
Adjusted (loss)/profit before tax
(10,963) 19,981
2,305 54,159
Adjusted tax credit/(expense) (using a
normalised tax rate of 35% (2014: 35%))
3,837 (6,993)
(807)
(18,956)
Adjusted (loss)/profit for the period (i.e. adjusted
net income) (7,126) 12,988
1,498 35,203
Adjusted basic (loss)/earnings
per share: Adjusted basic (loss)/earnings per share (pence)
(4.35) 7.93
0.91 21.49 Weighted average number of
ordinary shares outstanding (thousands)
163,797 163,812
163,794 163,815
Adjusted diluted (loss)/earnings per
share: Adjusted diluted (loss)/earnings per share (pence)
(4.34) 7.93
0.91 21.49 Weighted average number of
ordinary shares outstanding (thousands)
164,140
163,812
164,140 163,815
4 Cash generated from operations
Three months ended
31 March
Nine months ended
31 March
2015
£’000
2014
£’000
2015
£’000
2014
£’000
(Loss)/profit for the period
(2,874) 10,914
6,015 29,661 Tax (credit)/expense
(8,555) 9,520
(1,519) 20,644
(Loss)/profit before tax
(11,429) 20,434
4,496 50,305
Depreciation
2,469 2,206
7,365 6,274 Impairment
- -
- 293 Amortization
25,708 13,841
73,931 39,163 Loss/(profit) on disposal of players’
registrations
1,556 (2,361)
(18,204) (4,203) Net
finance costs
5,867 5,923
18,245 21,419 Profit on
disposal of property, plant and equipment
- -
5 (43)
Equity-settled share-based payments
322 377
1,029 918
Foreign exchange losses/(gains) on operating activities
438
97
(530) 469 Other fair value losses/(gains) on derivative
financial instruments
3,131 (58)
4,342 (184)
Reclassified from hedging reserve
(1,383) (260)
(3,774) (778) (Increase)/decrease in trade and other
receivables
(22,468) (7,594)
29,930 (11,535) Decrease
in trade and other payables and deferred revenue
(7,400)
(36,575)
(71,103) (69,930) Decrease in provisions
- -
- (1,475)
Cash (used
in)/generated from operations (3,189)
(3,970)
45,732 30,693
Investor Relations:Samanta Stewart, +44 207 054
5928ir@manutd.co.ukorMedia:Philip Townsend, +44 161 868
8148Manchester United plcphilip.townsend@manutd.co.ukorSard
Verbinnen & CoJim Barron / Michael Henson,+ 1 212 687
8080JBarron@SARDVERB.com
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