Manchester United plc 2018 First Quarter Results

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 2018 fiscal first quarter ended 30 September 2017.

• Total revenue for the first quarter £141m – up 17% from first quarter 2017
• Played five tour matches across the US to a cumulative stadium audience of more than 250,000
• Signed three new players in Victor Lindelof, Romelu Lukaku and Nemanja Matic

Ed Woodward, Executive Vice Chairman, commented, “We are just over a quarter of the way through what promises to be another exciting season. In the Champions League we have won all four games played to-date; we are through to the Quarter Final of the Carabao Cup; and are looking forward to the next few months as the number of matches ramps up.”

For fiscal 2018, Manchester United continues to expect:

• Revenue to be £575m to £585m.
• Adjusted EBITDA to be £175m to £185m.

1 Adjusted EBITDA, adjusted profit for the period, adjusted basic earnings per share and net debt are non-IFRS measures. See “Non-IFRS Measures: Definitions and Use” below and the accompanying Supplemental Notes for the definitions and reconciliations for these non-IFRS measures and the reasons we believe these measures provide useful information to investors regarding the Group’s financial condition and results of operations.

2 The gross USD debt principal remains unchanged.

Commercial
Commercial revenue for the quarter was £80.5 million, an increase of £6.2 million, or 8.3%, over the prior year quarter.

• Sponsorship revenue for the quarter of £53.2 million, an increase of £6.3 million, or 13.4%, over the prior year quarter, primarily due to playing a greater number of Tour matches. This quarter includes £2.0 million of mobile and content revenue (prior year quarter £2.5 million) previously shown separately in commercial revenue;
• Retail, Merchandising, Apparel & Product Licensing revenue for the quarter was £27.3 million, a decrease of £0.1 million, or 0.4%, over the prior year quarter.

Broadcasting
Broadcasting revenue for the quarter was £38.1 million, an increase of £9.0 million, or 30.9%, over the prior year quarter, primarily due to participation in the UEFA Champions League, playing one additional PL home game and participation in the UEFA Super Cup final, partially offset by one fewer PL game broadcast live.

Matchday
Matchday revenue for the quarter was £22.4 million, an increase of £5.6 million, or 33.3% over the prior year quarter, primarily due to playing two additional home games across all competitions.

Operating expenses
Total operating expenses for the quarter were £143.1 million, an increase of £20.9 million, or 17.1%, over the prior year quarter.

Employee benefit expenses
Employee benefit expenses for the quarter were £69.9 million, an increase of £7.6 million, or 12.2%, over the prior year quarter primarily due to player salary uplifts due to participation in the UEFA Champions League.

Other operating expenses
Other operating expenses for the quarter were £34.5 million, an increase of £7.8 million, or 29.2%, over the prior year quarter primarily due to playing a greater number of Tour matches and playing two additional games across all competitions.

Depreciation & amortization
Depreciation for the quarter was £2.6 million, an increase of £0.2 million, or 8.3%, over the prior year quarter. Amortization for the quarter was £36.1 million, an increase of £5.3 million, or 17.2%, over the prior year quarter. The unamortized balance of players’ registrations at 30 September 2017 was £378.4 million.

Profit on disposal of intangible assets
Profit on disposal of intangible assets for the quarter was £17.3 million compared to profit of £8.2 million in the prior year quarter.

Net finance costs
Net finance costs for the quarter were £0.8 million, a decrease of £5.1 million, or 86.4%, over the prior year quarter, due to foreign exchange gains on unhedged USD borrowings.

Tax
The tax expense for the quarter was £6.5 million, compared to a credit of £0.9 million in the prior year quarter.

Cash flows
Net cash generated from operating activities for the quarter was £17.9 million, a decrease of £34.7 million over the prior year quarter.

Net capital expenditure on property, plant and equipment and investment property for the quarter was £4.4 million, an increase of £2.2 million over the prior year quarter.

Net capital expenditure on intangible assets for the quarter was £84.9 million, a decrease of £37.8 million over the prior year quarter.

Overall cash and cash equivalents (including the effects of exchange rate changes) decreased by £74.1 million in the quarter.

Net Debt
Net Debt as of 30 September 2017 was £268.1 million, a decrease of £69.6 million over the year. The gross USD debt principal remains unchanged.

Dividend
A semi-annual cash dividend of $0.09 per share will be paid on 5 January 2018, to shareholders of record on 30 November 2017. The stock will begin to trade ex-dividend on 29 November 2017.

The Company’s conference call to review first quarter fiscal 2018 results will be broadcast live over the internet today, 16 November 2017 at 8:00 a.m. Eastern Time and will be available on Manchester United’s investor relations website at http://ir.manutd.com. Thereafter, a replay of the webcast will be available for thirty days.

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.

Through our 139-year heritage we have won 66 trophies, enabling us to develop what we believe is one of the world’s leading sports brands 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, broadcasting and matchday.

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).

1. Adjusted EBITDA
Adjusted EBITDA is defined as profit for the period before depreciation, amortization, profit on disposal of intangible assets, exceptional items, net finance costs, and tax.

We believe Adjusted EBITDA is useful as a measure of comparative operating performance from period to period and among companies as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance, and it removes the effect of our asset base (primarily depreciation and amortization), capital structure (primarily finance costs), and items outside the control of our management (primarily taxes). Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of our results as reported under IFRS as issued by the IASB. A reconciliation of profit for the period to Adjusted EBITDA is presented in supplemental note 2.

2. Adjusted profit for the period (i.e. adjusted net income)
Adjusted profit for the period is calculated, where appropriate, by adjusting for charges/credits related to exceptional items, foreign exchange gains/losses on unhedged US dollar denominated borrowings, and fair value movements on derivative financial instruments, adding/subtracting the actual tax expense/credit for the period, and subtracting the adjusted tax expense for the period (based on a normalized tax rate of 35%; 2017: 35%). The normalized tax rate of 35% is the current US federal income tax rate.

We believe that in assessing the comparative performance of the business, in order to get a clearer view of the underlying financial performance of the business, it is useful to strip out the distorting effects of the items referred to above and then to apply a ‘normalized’ tax rate (for both the current and prior periods) equivalent to the US federal income tax rate of 35%. A reconciliation of profit for the period to adjusted profit for the period is presented in supplemental note 3.

3. Adjusted basic and diluted earnings per share
Adjusted basic and diluted earnings per share are calculated by dividing the adjusted profit for the period by the weighted average number of ordinary shares in issue during the period. Adjusted diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to assume conversion of all dilutive potential ordinary shares. We have one category of dilutive potential ordinary shares: share awards pursuant to the 2012 Equity Incentive Plan (the “Equity Plan”). Share awards pursuant to the Equity Plan are assumed to have been converted into ordinary shares at the beginning of the financial year. Adjusted basic and diluted earnings per share are presented in supplemental note 3.

4. Net debt
Net debt is calculated as non-current and current borrowings minus cash and cash equivalents.

*Subject to changes in broadcasting scheduling

SUPPLEMENTAL NOTES

1 General information

Manchester United plc (the “Company”) and its subsidiaries (together the “Group”) is a professional football club together with related and ancillary activities. The Company incorporated under the Companies Law (2011 Revision) of the Cayman Islands, as amended and restated from time to time.

2 Reconciliation of profit for the period to Adjusted EBITDA

3 Reconciliation of profit for the period to adjusted profit for the period and adjusted basic and diluted earnings per share

4 Cash generated from operations

View source version on businesswire.com: http://www.businesswire.com/news/home/20171116005664/en/