Manchester United plc 2013 First Quarter Results

  Manchester United plc 2013 First Quarter Results

  *Record First Quarter Revenue of £76.3 Million
  *Sponsorship Revenue Increased 32.4%
  *First Quarter Net Income £20.5M

Business Wire

MANCHESTER, England -- November 14, 2012

Manchester United (NYSE: MANU; the “Company” and “Group”) – one of the most
popular and successful sports teams in the world - today announced financial
results for the 2013 fiscal first quarter ended 30 September 2012.

                                  Highlights

  *Commercial revenues grew 24%

       *Sponsorship revenue increased 32.4%
       *Retail, merchandising apparel & product licensing revenue increased
         11.9%
       *New media & mobile increased 11.5%

  *Ten new Sponsorship deals were entered into in the first quarter – General
    Motors, Bwin, Toshiba Medical Systems, Yanmar (global); Kagome (regional);
    Santander, Shinsei Bank and MBNA (financial services); Bakcell (mobile);
    and Fuji TV (MUTV)
  *Our new Hong Kong office opened in August 2012 and has already made a
    positive impact on sponsorship
  *1^st place in Premier League & Champions League Group H

                                  Commentary

Ed Woodward, Executive Vice Chairman commented, ‘Manchester United had a
record first quarter driven by our commercial operation, which continues to
experience extremely strong global revenue growth in new media & mobile,
retail merchandising & sponsorship. The team has also made a strong start to
the 12/13 season – currently 1st place in the Premier League and 1st place
(and undefeated) in our Champions League Group’.

                                   Outlook

For fiscal 2013, Manchester United continues to expect:

  *Revenue to be £350m to £360m.
  *Adjusted EBITDA to be £107m to £110m.

                                                                  
Key Financials (unaudited)
                                                                 
                                                  Three months ended
£ million                                                          
                                                  30 September
                                                                       
                                              2012      2011     Change
Commercial revenue                             43.0      34.6     24.3%
Broadcasting revenue                           13.7      21.9     (37.4%)
Matchday revenue                               19.6      17.3     13.3%
Total revenue                                  76.3      73.8     3.4%
Adjusted EBITDA*                               16.3      19.3     (15.5%)
Profit/(loss) for the period from              20.5      (5.0)    N/A
continuing operations (i.e. Net Income)
Basic and diluted earnings/(loss) per          0.13      (0.03)   N/A
share**
Gross debt***                                  359.7     433.2    (17.0%)
Cash and cash equivalents                      52.5      65.0     (19.2%)
                                                          

*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, 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.

*** Gross debt is down 18% compared with 30 June 2012, £436.9m.

                               Revenue Analysis

Commercial

Commercial revenue for the quarter increased 24.3% to £43.0 million driven by
the addition of several new global (including General Motors - Chevrolet) and
regional sponsorships; an increase in receipts from existing partnerships; an
increase in profit share pursuant to the arrangement with Nike; and the
commencement of new mobile partnerships. For the quarter:

  *Sponsorship revenue increased 32.4% year on year to £27.8 million.
    Manchester United entered into ten new sponsorship agreements during the
    quarter;
  *Retail, Merchandising, Apparel & Product Licensing revenue increased 11.9%
    year on year to £9.4 million; and
  *New Media & Mobile revenue increased 11.5% year on year to £5.8 million.

Broadcasting

Broadcasting revenues for the quarter decreased 37.4% year on year to £13.7
million. The main components of this reduction are:

     timing differences of £5.6m as a result of playing one UEFA Champions
     League game in the current year quarter compared to two games in the
a)  prior year quarter; a ‘residual receipt’ from UEFA relating to the
     2011/12 UEFA Champions League competition will be received in Q2; and two
     fewer live FAPL broadcasts this year compared to the same period in the
     prior year.
     permanent differences of c.£2.6m resulting largely from lower
b)   distributions from the UEFA Champions League fixed pool, as a consequence
     of finishing 2^nd in the Premier League in season 2011/12 compared to
     finishing 1^st in season 2010/11.

Matchday

Matchday revenues for the quarter increased 13.3% year on year to £19.6
million principally as a result of one-off fees earned from the staging of
nine Olympic Games football matches at Old Trafford together with the impact
of a home fixture in the League Cup (compared with nil in the prior year
quarter).

                         Other Financial Information

Operating expenses

Total operating expenses for the quarter increased 12.7% year on year to
£74.8million.

Staff costs

Staff costs for the quarter increased 6.6% year on year to £40.3million,
primarily due to growth in commercial headcount, partially offset by a one-off
receipt of £1.3m for players on International duty at Euro 2012. Staff costs
for the remaining quarters of the year are expected to be higher due to this
one-off receipt and the fact that certain player acquisitions did not take
place until half way through the period.

Other operating expenses

Other operating expenses for the quarter increased 18.0% year on year to
£19.7million, primarily due to increased pre-season tour travel costs,
gateshare payments to domestic cup opponents following our home League Cup
fixture (£nil in the prior year quarter due to the equivalent fixture being
played away from home), and one-off Olympic games costs.

Depreciation & amortisation of players’ registrations

Depreciation for the quarter increased 4.2% year on year to £1.9 million; and
amortisation of players’ registrations for the quarter decreased 2.7% year on
year to £9.8 million. The unamortised balance of existing players’
registrations at 30 September 2012 was £135.6 million.

Exceptional items

Exceptional items for the quarter were for £3.1 million and related to
professional advisor fees in connection with the IPO (compared with £nil for
the prior year quarter).

Profit on disposal of players’ registrations

Profit on the disposal of players’ registrations for the quarter was £4.8
million (compared with £5.6 million in the prior year quarter) - key disposals
being Berbatov and Park.

Net finance costs

Net finance costs for the quarter decreased 35.9% year on year to £12.4
million compared with the same quarter last year. The main reasons for this
decrease are a favourable FX movement of £13.9 million year on year on
translation of the Group’s US dollar denominated senior secured notes,
partially offset by a £3.3 million increase in premium paid on repurchases of
US dollar denominated senior secured notes and a £2.3 million increase in
accelerated amortisation of debt issue costs on repurchased notes with
proceeds for the IPO.

Foreign exchange gains or losses are not a cash benefit or 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 been reduced now that the net IPO
proceeds (of approximately $110.3m) have been used to reduce our USD
denominated senior secured notes.

Tax

The tax credit for the quarter was £26.5 million (compared with a credit of
£1.4 million in the prior year quarter). Following the transfer of Red
Football Shareholder Ltd and its subsidiaries from the controlling
shareholders to the Company, the Company has assumed certain US tax bases. A
related deferred tax asset has been recognised in respect of the US tax bases
in the period, relating to future tax deductions. The amount recognised
reflects management’s current best assessment of probable taxable profits in
the future against which the tax deductions may be offset. This has been
determined on the basis of only those commercial agreements in place at the
balance sheet date. An element of this deferred tax asset will unwind during
fiscal 2013. The potential deferred tax asset available, but which currently
remains unrecognised, amounts to at least £60m and will be recognised when key
commercial contracts are renewed or replaced.

Profit/(loss) for the period from continuing operations

Profit for the period from continuing operations for the quarter increased to
£20.5 million, compared to a loss in the prior year quarter of £5.0 million.

Cash flows

Cash generated from operating activities for the quarter were £9.3 million, an
increase of £10.9 million compared to £1.6 million cash used in the prior year
quarter.

Capital expenditures on property, plant and equipment and investment property
for the quarter were £3.4 million, a decrease of £10.4 million compared to
£13.8 million in the prior year quarter. Expenditure in the current year
quarter mainly related to the redevelopment of the First Team’s training
facility at Carrington. In the prior year quarter we acquired investment
properties amounting to £8.1m around the Old Trafford stadium.

Net player capital expenditure for the quarter was £29.5 million, a decrease
of £17.6 million compared to £47.1 million in the prior year quarter.
Expenditure in the current year quarter mainly related to the acquisition of
Shinji Kagawa and Nick Powell and the first of two staged payments for Robin
van Persie.

Net cash generated from financing activities for the quarter was £7.6 million,
an increase of £30.7 million compared to £23.1 million cash used in the prior
year quarter. In the current year quarter the Company raised £70.3 million
following the public offering of shares on the New York Stock Exchange. The
proceeds were used to repurchase the Company’s US dollar denominated senior
secured notes (see “Borrowings” below) – the principal value of which was
£62.6 million.

Cash and cash equivalents

Cash and cash equivalents at 30 September 2012 were £52.5 million compared to
£65.0 million at 30 September 2011.

Borrowings

Total borrowings were £359.7 million at 30 September 2012 compared to £436.9
million at 30 June 2012. During the quarter we re-purchased and retired the
sterling equivalent of £62.6 million of senior secured notes comprising
US$101.7 million of US dollar denominated notes. The consideration paid
amounted to £67.9 million.

                         Conference Call Information

The Company’s conference call to review first quarter fiscal 2013 results will
be broadcast live over the internet today, 14 November 2012 at 8:00 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) and the Company's Annual Report on Form 20-F (File No. 001-35627).

                                                        
Key Performance Indicators
                                                            
                                                            Three months ended
                                                            30 September
                                                            2012       2011
                                                                        
Commercial % of total revenue                               56.4%       46.8%
Nike and Aon % of Commercial                                33.1%       38.2%
Partners and other % of Commercial                          66.9%       61.8%
Broadcasting % of total revenue                             18.0%       29.7%
Matchday % of total revenue                                 25.6%       23.5%
Home Matches Played
FAPL                                                        3           3
UEFA competitions                                           1           1
Domestic Cups                                               1           -
Away Matches Played*
UEFA competitions                                           -           1
Domestic Cups                                               -           1
*Away matches played includes games at a neutral
venue, where appropriate
Other
Employees at period end                                     735         670
Staff costs % of revenue                                    52.8%       51.3%
                                                                        

                                                                 
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.

                                                     
CONSOLIDATED INCOME STATEMENT

(unaudited; in £ thousands, except per share data)
                                                         
                                                         Three months ended

                                                         30 September
                                                         
                                                     2012      2011
Revenue                                                  76,316    73,782
Operating expenses                                       (74,811)   (66,426)
Profit on disposal of players’ registrations          4,818     5,624
Operating profit                                      6,323     12,980
Finance costs                                            (12,476)   (19,619)
Finance income                                        89        284
Net finance costs                                     (12,387)  (19,335)
Loss on ordinary activities before tax                   (6,064)    (6,355)
Tax credit                                            26,532    1,385
Profit/(loss) for the period from continuing          20,468    (4,970)
operations^(1)
Attributable to:
                                                         20,386     (5,018)
Owners of the Company
Non-controlling interest                              82        48
                                                     20,468    (4,970)
                                                                    
Earnings/(loss) per share attributable to the
equity holders of the Company during the period
Basic and diluted earnings/(loss) per share           0.13      (0.03)^(2)
(Pounds Sterling)
                                                                    

^(1) Also referred to as Net Income.

^(2) As adjusted retrospectively to reflect the reorganisation transactions
described in supplemental note 1.

                                                          
CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)
                                                                  
                                     30 September     30 June     30 September
                                                         
                                     2012             2012        2011
ASSETS
Non-current assets
Property, plant and equipment        250,479          247,866     244,746
Investment property                  14,169           14,197      13,816
Goodwill                             421,453          421,453     421,453
Players’ registrations               135,634          112,399     120,234
Trade and other receivables          1,500            3,000       13,000
Non-current tax receivable           -                -           2,500
Deferred tax asset                24,589         -         -
                                 847,824        798,915   815,749
Current assets
Derivative financial                 1,228            967         643
instruments
Trade and other receivables          69,887           74,163      55,860
Current tax receivable               3,551            2,500       -
Cash and cash equivalents         52,527         70,603    64,967
                                 127,193        148,233   121,470
Total assets                      975,017        947,148   937,219
                                                                  

                                                            
CONSOLIDATED BALANCE SHEET (continued)

(unaudited; in £ thousands)
                                                                  
                                        30 September   30 June    30 September
                                                           
                                        2012           2012^(1)   2011^(1)
EQUITY AND LIABILITIES
Equity
Share capital                           52             50         50
Share premium                           68,666         25         25
Merger reserve                          249,030        249,030    249,030
Hedging reserve                         791            666        482
Retained earnings/(deficit)          8,069         (12,671)  (30,818)
Equity attributable to owners of     326,608       237,100   218,769
the Company
Non-controlling interests            (1,921)       (2,003)   (2,282)
                                    324,687       235,097   216,487
Non-current liabilities
Derivative financial instruments        1,701          1,685      -
Trade and other payables                23,232         22,305     23,073
Borrowings                              353,966        421,247    426,299
Deferred revenue                        7,131          9,375      16,106
Provisions                              1,247          1,378      1,795
Deferred tax liabilities             25,608        26,678    53,347
                                    412,885       482,668   520,620
Current liabilities
Derivative financial instruments        -              -          1,725
Current tax liabilities                 1,128          1,128      1,127
Trade and other payables                79,437         83,664     55,197
Borrowings                              5,740          15,628     6,942
Deferred revenue                        150,714        128,535    134,642
Provisions                           426           428       479
                                    237,445       229,383   200,112
Total equity and liabilities         975,017       947,148   937,219
                                                                  

^(1) As adjusted retrospectively to reflect the reorganisation transactions
described in supplemental note 1.

                                                                                                 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(unaudited; in £ thousands)
                                                                                                            
                                                                               Total
                         Share     Share       Merger    Hedging   Retained    attributable   Non-          Total
                     capital  premium    reserve  reserve  earnings/  to owners     controlling  equity
                                                                   (deficit)   of the         interests
                                                                               Company
Balance at 1 July     -        249,105    -        (466)    (25,886)   222,753       (2,330)      220,423
2011
(Loss)/profit for        -         -           -         -         (5,018)     (5,018)        48            (4,970)
the period
Cash flow hedges,        -         -           -         948       -           948            -             948
net of tax
Currency
translation           -        -          -        -        86         86            -            86
differences
Total
comprehensive            -         -           -         948       (4,932)     (3,984)        48            (3,936)
income/(loss) for
the period
Proceeds from            50        25          -         -         -           75             -             75
shares issued
Capital               -        (249,105)  249,030  -        -          (75)          -            (75)
reorganisation^(1)
Balance at 30         50       25         249,030  482      (30,818)   218,769       (2,282)      216,487
September 2011
Profit for the           -         -           -         -         28,004      28,004         279           28,283
period
Cash flow hedges,        -         -           -         184       -           184            -             184
net of tax
Currency
translation           -        -          -        -        143        143           -            143
differences
Total
comprehensive            -         -           -         184       28,147      28,331         279           28,610
income for the
period
Dividends             -        -          -        -        (10,000)   (10,000)      -            (10,000)
Balance at 30 June    50       25         249,030  666      (12,671)   237,100       (2,003)      235,097
2012
Profit for the           -         -           -         -         20,386      20,386         82            20,468
period
Cash flow hedges,        -         -           -         125       -           125            -             125
net of tax
Currency
translation           -        -          -        -        27         27            -            27
differences
Total
comprehensive            -         -           -         125       20,413      20,538         82            20,620
income for the
period
Equity settled
share-based              -         -           -         -         327         327            -             327
payments
Proceeds from         2        68,641     -        -        -          68,643        -            68,643
shares issued^(2)
Balance at 30         52       68,666     249,030  791      8,069      326,608       (1,921)      324,687
September 2012
                                                                                                            

^(1) Adjusted retrospectively to reflect the reorganisation transactions
described in supplemental note 1.

^(2) See supplemental note 1.2.

                                                       
CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)
                                                           
                                                           Three months ended

                                                           30 September
                                                           
                                                       2012      2011
Cash flows from operating activities                                
Cash generated from operations (note 2)                    33,883     22,560
Interest paid                                              (24,503)   (21,124)
Interest received                                          85         146
Income tax paid                                         (202)     (3,210)
Net cash generated from/(used in) operating             9,263     (1,628)
activities
Cash flows from investing activities
Purchases of property, plant and equipment                 (3,396)    (6,411)
Purchases of investment property                           -          (7,364)
Purchases of players’ registrations                        (34,897)   (51,034)
Proceeds from sale of players’ registrations            5,364     3,966
Net cash used in investing activities                   (32,929)  (60,843)
Cash flows from financing activities
Proceeds from issue of shares                              70,258     -
Repayment of borrowings                                 (62,704)  (23,126)
Net cash generated from/(used in) financing             7,554     (23,126)
activities
Net decrease in cash and cash equivalents                  (16,112)   (85,597)
Cash and cash equivalents at beginning of period           70,603     150,645
Exchange losses on cash and cash equivalents            (1,964)   (81)
Cash and cash equivalents at end of period              52,527    64,967
                                                                      

                            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 is 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. The reorganisation transactions have
been treated as a capital reorganisation arising at the reorganisation date (9
August 2012). In accordance with International Financial Reporting Standards,
historic earnings per share calculations and the balance sheet as at 30 June
2012 and 30 September 2011 have been restated retrospectively to reflect the
capital structure of the new parent rather than that of the former parent, Red
Football Shareholder Limited.

1.2 Initial public offering (“IPO”)

On 10 August 2012, the Company issued a further 8,333,334 ordinary shares at
an issue price of US$14 per share and listed such shares on the NYSE. Net of
underwriting costs and discounts, proceeds of US$110,250,000 (£70,258,000)
were received. Expenses of £1,615,000 directly attributable to this issue of
new shares have been offset against share premium.

                                                   
MANCHESTER UNITED plc.

SUPPLEMENTAL NOTES (continued)

(unaudited; in £ thousands)
                                                        
2Cash generated from operations
                                                        
                                                        Three months ended

                                                        30 September
                                                        
                                                    2012        2011
Profit/(loss) from continuing operations                20,468      (4,970)
Tax credit                                           (26,532)    (1,385)
Loss on ordinary activities before tax                  (6,064)      (6,355)
Depreciation charges                                    1,917        1,839
Amortisation of players’ registrations                  9,823        10,094
Profit on disposal of players’ registrations            (4,818)      (5,624)
Net finance costs                                       12,387       19,335
Share-based payments                                    327          -
Fair value gains on derivative financial                (111)        -
instruments
Decrease/(Increase) in trade and other                  6,358        (665)
receivables
Increase in trade and other payables and                14,210       4,138
deferred revenue
Decrease in provisions                               (146)       (202)
Cash generated from operations                       33,883      22,560
                                                                     
3Reconciliation of Adjusted EBITDA to Profit/(loss) for the period from
continuing operations
                                                                     
                                                        Three months ended

                                                        30 September
                                                        
                                                    2012        2011
Adjusted EBITDA                                         16,343       19,289
Adjustments:
Depreciation                                            (1,917)      (1,839)
Amortisation of players’ registrations                  (9,823)      (10,094)
Exceptional items                                       (3,098)      -
Profit on disposal of players’ registrations            4,818        5,624
Net finance costs                                       (12,387)     (19,335)
Tax credit                                           26,532      1,385
Profit/(loss) for the period from continuing         20,468      (4,970)
operations

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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