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 email@example.com or Media: Manchester United plc Philip Townsend, +44 161 868 8148 firstname.lastname@example.org or Sard Verbinnen & Co Jim Barron / Michael Henson + 1 212-687-8080
Manchester United plc 2013 First Quarter Results
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