Manchester United plc 2012 Fourth Quarter and Full Year Results

  Manchester United plc 2012 Fourth Quarter and Full Year Results

  *EPS FOR FISCAL 2012 INCREASED 87.5%
  *NET INCOME FOR THE YEAR INCREASED 79.2%
  *EBITDA OUTLOOK FOR FISCAL 2013: INCREASE OF 17% to 20%

Business Wire

MANCHESTER, England -- September 18, 2012

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               Three months      
                    ended                          ended
£ million          30 June                    30 June            
                  2012     2011    Change    2012      2011    Change
Commercial         117.6    103.4   13.7%     28.1      26.7    5.2%
revenue
Broadcasting       104.0    117.2   (11.3%)   27.5      43.9    (37.4%)
revenue
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         23.3     13.0    79.2%     (14.9)    (0.4)   -
operations (i.e.
Net Income)
Basic and diluted
earnings/(loss)    0.15     0.08    87.5%     (0.10)    (0.00)  -
per share**
Gross debt         436.9    458.9   (4.8%)    436.9     458.9   (4.8%)
Cash and cash      70.6     150.6   (53.1%)   70.6      150.6   (53.1%)
equivalents


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 £285.1million,
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 659million
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         30.8%          33.4%        25.4%         29.3%
revenue
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     32.5%          35.4%        36.9%         44.0%
revenue
Commercial % of total       36.7%          31.2%        37.7%         26.7%
revenue
Nike and Aon % of           44.0%          47.4%        43.0%         52.6%
Commercial
Partners and other % of     56.0%          52.6%        57.0%         47.4%
Commercial
Other
Employees at period end     696            628          696           628
Staff costs % of            50.5%          46.1%        66.2%         50.7%
revenue

                                                                
Phasing of Premier       Quarter 1  Quarter 2  Quarter 3  Quarter 4  Total
League home games
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’          9,691      4,466          1,795     1,096   
registrations
Operating            44,872     63,254         (5,851  )  13,784  
profit/(loss)
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   (4,664   )   12,004            (20,339 )   173
before tax
Tax                  27,977     986            5,434     (524    )
credit/(expense)
Profit/(loss) for
the period from      23,313     12,990         (14,905 )  (351    )
continuing
operations^(1)
Attributable to:
                      22,986       12,649            (14,998 )   (501    )
Owners of the
Company
Non-controlling      327        341            93        150     
interest
                    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  0.15       0.08     ^(2)   (0.10   )  (0.00   )^(2)
share (Pounds
Sterling)
^(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           80,302      125,140        66,523      84,208
operations (note 2)
Interest paid                 (47,068 )   (167,499 )     (3,515  )   (7,775  )
Debt finance costs relating   -           (118     )     -           (118    )
to borrowings
Interest received             1,010       1,774          187         233
Income tax paid              (3,333  )  (70      )   (59     )  -       
Net cash generated
from/(used in) operating     30,911    (40,773  )   63,136    76,548  
activities
Cash flows from investing
activities
Purchases of property,        (15,323 )   (7,263   )     (5,685  )   (1,529  )
plant and equipment
Purchases of investment       (7,364  )   -              -           -
property
Proceeds from sale of
property, plant and           -           107            -           30
equipment
Purchases of players’         (58,971 )   (25,369  )     (5,818  )   (1,207  )
registrations
Proceeds from sale of        9,409     13,956      3,285     1,818   
players’ registrations
Net cash used in investing   (72,249 )  (18,569  )   (8,218  )  (888    )
activities
Cash flows from financing
activities
Proceeds from issue of        -           249,105        -           -
shares
Repayment of secured          -           (138,000 )     -           -
payment in kind loan
Repayment of other            (28,774 )   (64,499  )     (311    )   (37,947 )
borrowings
Dividends paid               (10,000 )  -           (10,000 )  -       
Net cash (used
in)/generated from           (38,774 )  46,606      (10,311 )  (37,947 )
financing activities
Net (decrease)/increase in    (80,112 )   (12,736  )     44,607      37,713
cash and cash equivalents
Cash and cash equivalents     150,645     163,833        25,576      113,045
at beginning of period
Exchange gains/(losses) on   70        (452     )   420       (113    )
cash and cash equivalents
Cash and cash equivalents    70,603    150,645     70,603    150,645 
at end of period


                            MANCHESTER UNITED plc
                              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. 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             23,313     12,990        (14,905 )  (351    )
continuing operations
Tax (credit)/expense          (27,977 )  (986    )   (5,434  )  524     
(Loss)/profit on ordinary      (4,664  )   12,004        (20,339 )   173
activities before tax
Impairment charges             -           2,013         -           2,013
Depreciation charges           7,478       6,989         1,807       1,737
Amortisation of players’       38,262      39,245        8,495       9,896
registrations
Profit on disposal of          (9,691  )   (4,466  )     (1,795  )   (1,096  )
players’ registrations
Net finance costs              49,536      51,250        14,488      13,611
Profit on disposal of
property, plant and            -           (46     )     -           (15     )
equipment
Fair value (gains)/losses on
derivative financial           (91     )   1,047         174         (372    )
instruments
Increase in trade and other    (9,414  )   (17,483 )     (20,537 )   (14,562 )
receivables
Increase in trade and other
payables and deferred          9,625       34,727        84,407      72,735
revenue
(Decrease)/increase in        (739    )  (140    )   (177    )  88      
provisions
Cash generated from           80,302    125,140    66,523    84,208  
operations

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   23,313      12,990        (14,905 )   (351    )
from continuing operations
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          (9,691  )   (4,466  )     (1,795  )   (1,096  )
players’ registrations
Depreciation                   7,478       6,989         1,807       1,738
Amortisation of players’       38,262      39,245        8,495       9,896
registrations
Exceptional items             10,728    4,667      4,365     4,667   
Adjusted EBITDA               91,649    109,689    7,021     28,989  

Contact:

Investor Relations:
ICR
Brendon Frey / Rachel Schacter
+1-203-682-8200
ir@manutd.co.uk
or
Media:
Manchester United plc
Philip Townsend, +44 161 868 8148
philip.townsend@manutd.co.uk
or
Sard Verbinnen & Co
Jim Barron / Michael Henson
+1-212-687-8080
 
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