Manchester United plc 2013 Third Quarter Results

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Manchester United plc 2013 Third Quarter Results

  • Sponsorship Revenue Increased 52.2%
  • Record Third Quarter Revenue of £91.7 Million
  • Adjusted EBITDA Increased 22.5% to a Third Quarter Record of £25.0 Million

MANCHESTER, England--(BUSINESS WIRE)-- 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 three and nine month periods ended 31 March 2013.

Highlights

  • Increased third quarter commercial revenue 31.9% year on year.
  • Innovative Training Centre sponsorship as part of our eight year partnership with Aon.
  • Announced three new Sponsorship deals - gloops (regional; Japan) our first social gaming agreement; Ekspres Bank (financial services, Denmark); and BIDV (financial services, Vietnam).
  • 2013 Summer Tour - in addition to Australia, Japan, and Hong Kong the Tour will also include Thailand.
  • Won the 2012/13 Premier League title for a record 20 English League titles with four games to spare.

Commentary

Ed Woodward, Executive Vice Chairman commented, 'Each of our three primary sectors - Commercial, Broadcasting and Matchday - delivered strong top-line gains and helped us achieve a record third quarter for both revenue and adjusted EBITDA. In addition, we are delighted to be continuing and deepening our relationship with Aon, as our new Training Kit, Training Centre and Tour Partner, for an additional eight years'.

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)

 

£ million (except earnings
per share)

 

Three months ended
31 March

   

Nine months ended
31 March

  
  2013 

2012

 Change 2013 2012 Change
Commercial revenue 36.0 27.3 31.9% 114.5 89.5 27.9%
Broadcasting revenue 21.7 16.9 28.4% 75.0 76.4 (1.8%)
Matchday revenue 34.0 26.6 27.8% 88.6 79.9 10.9%
Total revenue 91.7 70.8 29.5% 278.1 245.8 13.1%
Adjusted EBITDA* 25.0 20.4 22.5% 91.5 84.6 8.2%
 
(Loss)/profit before tax (3.1) 2.8 - 19.2 15.7 22.3%
Tax credit/(expense) 6.7 (1.7) - 21.1 22.5 (6.2%)
 
Profit for the period (i.e. Net Income) 3.6 1.1 227.3% 40.3 38.2 5.5%

Basic and diluted earnings
per share attributable to
owners of the Company
(Pounds Sterling)

 0.02 0.01 100.0% 0.25 0.24 4.2%
Gross debt** 367.6 423.3 (13.2%) 367.6 423.3 (13.2%)
Cash and cash equivalents 36.2 25.6 41.4% 36.2 25.6 41.4%

* Adjusted EBITDA is a non-IFRS measure. See the accompanying Supplemental Notes and Exhibit for the reconciliation and definition of this non-IFRS measure and the reasons we believe this measure provides useful information to investors regarding the Group's financial condition and results of operations.

** Gross debt has decreased by 15.9% since 30 June 2012 (£436.9 million).

Revenue Analysis

Commercial

Commercial revenue for the third quarter increased 31.9% year on year to £36.0 million driven by the addition of several new sponsorship deals. For the third quarter:

  • Sponsorship revenue increased 52.2% to £21.0 million;
  • Retail, Merchandising, Apparel & Product Licensing increased 9.5% to £9.2 million; and
  • New Media & Mobile increased 13.7% to £5.8 million.

Broadcasting

Broadcasting revenues for the third quarter increased 28.4% year on year to £21.7 million. The main reason for this increase relates to progress to the Champions League Round of 16 (compared to exiting at the group stages in the prior year).

Matchday

Matchday revenues for the third quarter increased 27.8% year on year to £34.0 million, due primarily to an additional three home cup games in the quarter compared to the prior year quarter.

Other Financial Information

Operating expenses

Total operating expenses for the third quarter increased 18.6% year on year to £79.0 million.

Staff costs

Staff costs for the third quarter increased 25.1% year on year to £44.9 million, primarily due to new player signings, existing player wage increases and growth in commercial headcount. The nine months year to date increase is 15.1% year on year to £129.4 million.

Other operating expenses

Other operating expenses for the third quarter increased 50.3% year on year to £21.8 million, primarily due to an increase in domestic cup gateshare costs, catering direct costs, and police and security costs - associated with the four FA cup home games played in the quarter compared with none in the prior year quarter.

Depreciation & amortisation of players' registrations

Depreciation for the third quarter decreased 9.5% year on year to £1.9 million, from £2.1 million in the prior period; and amortisation of players' registrations for the quarter increased 7.2% year on year to £10.4 million. The unamortised balance of existing players' registrations at 31 March 2013 was £126.5 million.

Exceptional items

Exceptional items for the third quarter were £nil compared with £4.4 million in the prior year quarter.

Profit on disposal of players' registrations

Profit on the disposal of players' registrations for the third quarter was £2.5 million compared with £2.1 million in the prior year quarter.

Net finance costs

Net finance costs for the third quarter increased £14.8 million year on year to £18.3 million. The main reason for this increase is a net adverse FX swing of £15.7 million year on year on translation of the Group's US dollar denominated senior secured notes and cash balances, partially offset by a reduction in interest payable of £0.9 million following the re-purchase and retirement earlier in the fiscal year of US$101.7 million of US dollar denominated notes.

Unrealised foreign exchange losses/gains on translation of the Group's US dollar denominated assets and liabilities are not a cash charge/benefit and could reverse depending on dollar/sterling exchange rate movements. Any foreign exchange gain or loss on a cumulative basis on the Group's US dollar denominated senior secured notes will not be realised until maturity in 2017 or earlier if the notes are redeemed prior to their maturity date.

Tax

The Group recorded a non-cash tax credit for the third quarter of £6.7 million. The credit reflects management's revised best estimate of the effective tax rate for the year of 38%, which is lower than the rate estimated as of 31 December 2012. The effective tax rate for the year is higher than the US statutory tax rate of 35%, due to a current mismatch in the recognition of the UK and US deferred tax assets and liabilities. It should be noted that these are all non-cash tax charges. In the prior year third quarter the Group recorded a tax charge of £1.7 million.

Profit for the period

The profit for the period for the third quarter was £3.6 million compared with a profit of £1.1 million in the prior year quarter. Earnings per share attributable to owners of the Company for the third quarter were £0.02 compared with £0.01 in the prior year quarter.

Cash flows

Cash used in operating activities for the third quarter was £23.6 million, a decrease of £0.7 million compared to £24.3 million net cash used in the prior year quarter.

Capital expenditure on property, plant and equipment and investment property for the third quarter was £1.3 million, a decrease of £0.3 million compared to £1.6 million in the prior year quarter.

Net player capital expenditure for the third quarter was £1.4 million, an increase of £2.3 million compared to £0.9 million net inflow in the prior year quarter.

Net cash used in financing activities for the third quarter was £7.2 million, an increase of £7.1 million compared to £0.1 million net cash used in the prior year quarter. During the third quarter the Group acquired the remaining 33.3% of the issued share capital of MUTV Limited for a purchase consideration (including transaction costs) of £2.7 million. The Group also repaid the loan stock issued to the former minority shareholder of MUTV Limited amounting to £4.4 million. The Group now holds 100% of the issued share capital of MUTV Limited.

Cash and cash equivalents

Cash and cash equivalents at 31 March 2013 were £36.2 million compared to £25.6 million at 31 March 2012.

Borrowings

Total borrowings were £367.6 million at 31 March 2013 compared to £423.3 million at 31 March 2012. During the nine months 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 the third quarter and nine months fiscal 2013 results will be broadcast live over the internet today, 2 May 2013 at 08:00 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.

Manchester United is one of the most popular and successful sports teams in the world, playing one of the most popular spectator sports on Earth.

About Manchester United

Through our 135 year heritage we have won 61 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).

  
 

Key Performance Indicators

 
 

Three months ended
31 March

Nine months ended
31 March

  
  2013 2012 2013 2012
Commercial % of total revenue 39.2% 38.6% 41.2% 36.4%
Nike and Aon % of Commercial 38.9% 48.5% 37.1% 44.3%
Partners and other % of Commercial 61.1% 51.5% 62.9% 55.7%
Broadcasting % of total revenue 23.7% 23.8% 27.0% 31.1%
Matchday % of total revenue 37.1% 37.6% 31.8% 32.5%
Home Matches Played        
FAPL 5 5 15 15
UEFA competitions 1 2 4 5
Domestic Cups 4 - 5 1
Away Matches Played        
UEFA competitions 1 2 4 5
Domestic Cups 1 2 2 4
 
Other        
Employees at period end 792 710 792 710
Staff costs % of revenue 48.9% 50.7% 46.5% 45.7%
  

Phasing of Premier League
home games

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
2012/13 season3 7 5 4 19
2011/12 season3 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

 

 2013 2012 2013 2012
Revenue

 

91,721

 

 

70,768

 

278,093

 

 

245,828

Operating expenses(79,069)(66,544)(227,049)(203,001)

Profit on disposal of players'
registrations

  2,520   2,066   8,025   7,896 
Operating profit  15,172   6,290   59,069   50,723 
Finance costs(18,607)(3,662)(40,360)(35,724)
Finance income  285   198   441   676 
Net finance costs  (18,322)  (3,464)  (39,919)  (35,048)
(Loss)/profit before tax(3,150)2,82619,15015,675
Tax credit/(expense)  6,784   (1,709)  21,170   22,543 
Profit for the period  3,634   1,117   40,320   38,218 

Attributable to:

Owners of the Company

3,6341,03540,15137,984
Non-controlling interest  -   82   169   234 
   3,634   1,117   40,320   38,218 
 

Earnings per share attributable to
the owners of the Company:

Basic and diluted earnings per share
(Pounds Sterling)

0.020.01((1))0.250.24((1))

Weighted average shares outstanding
(Thousands)

  163,826   155,352   162,586   155,352 

(1) As adjusted retrospectively to reflect the reorganisatio

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