Manchester United plc 2018 Third Quarter Results
MANCHESTER, England--(BUSINESS WIRE)--May 17, 2018--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 third quarter and nine months ended 31 March 2018.
HighlightsProgressed to the FA Cup Final for a record-equalling 20 th time Became the fastest growing sports club channel to launch on Youtube Revenue for the quarter £137.5m – up 8% from third quarter 2017 Four sponsorship deals announced in the quarter PingAn (Financial Services) Science in Sport (Regional) Renewal of Cho-A-Pharm (Regional) Extension of Mlily (Global)
Ed Woodward, Executive Vice Chairman, commented, “As another season nears its close, we have achieved our highest number of points and finish since 2012/13 and we look forward to another trip to Wembley. We anticipate another successful summer tour in the United States in preparation for the 2018/19 season.”
For fiscal 2018, Manchester United continues to expect:Revenue to be £575m to £585m. Adjusted EBITDA to be £175m to £185m.
Key Financials (unaudited)
1 Adjusted EBITDA, adjusted (loss)/profit for the period, adjusted basic (loss)/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 US federal corporate income tax rate reduced from 35% to 21% following the substantive enactment of US tax reform on 22 December 2017. This necessitated a re-measurement of the existing US deferred tax position in the period to 31 December 2017. As a result the loss for the nine months ended 31 March 2018 includes a non-cash tax accounting write off of £48.8 million.
3 The gross USD debt principal remains unchanged.
Commercial Commercial revenue for the quarter was £66.7 million, an increase of £0.2 million, or 0.3%, over the prior year quarter.Sponsorship revenue for the quarter was £41.7 million, a decrease of £0.1 million, or 0.2%, over the prior year quarter; Retail, Merchandising, Apparel & Product Licensing revenue for the quarter was £25.0 million, an increase of £0.3 million, or 1.2%, over the prior year quarter.
Broadcasting Broadcasting revenue for the quarter was £39.7 million, an increase of £8.3 million, or 26.4%, over the prior year quarter, primarily due to playing one additional PL home game and two additional PL games being broadcast live.
Matchday Matchday revenue for the quarter was £31.1 million, an increase of £1.8 million, or 6.1%, over the prior year quarter, primarily due to playing an additional PL home game, partially offset by playing fewer domestic cup games.
Other Financial Information
Operating expenses Total operating expenses for the quarter were £136.4 million, an increase of £6.6 million, or 5.1%, over the prior year quarter.
Employee benefit expenses Employee benefit expenses for the quarter were £75.1 million, an increase of £8.6 million, or 12.9%, over the prior year quarter, primarily due to player salary uplifts related to participation in the UEFA Champions League.
Other operating expenses Other operating expenses for the quarter were £26.3 million, a decrease of £4.4 million, or 14.3%, over the prior year quarter, reflecting lower home domestic cup gate share costs, reduced travel costs and a reduction in foreign exchange losses.
Depreciation & amortization Depreciation for the quarter was £2.6 million, an increase of £0.1 million, or 4.0%, over the prior year quarter. Amortization for the quarter was £32.4 million, an increase of £2.3 million, or 7.6%, over the prior year quarter. The unamortized balance of registrations at 31 March 2018 was £321.3 million.
Loss on disposal of intangible assets Loss on disposal of intangible assets for the quarter was £3.4 million compared to £1.5 million in the prior year quarter.
Net finance income/(costs) Net finance income for the quarter was £1.0 million, compared to net finance costs of £3.3 million in the prior year quarter, primarily due to unrealized foreign exchange gains on unhedged USD borrowings.
Tax The tax credit for the quarter was £1.4 million, compared to £3.6 million in the prior year quarter.
Cash flows Overall cash and cash equivalents (including the effects of exchange rate changes) increased by £6.4 million in the quarter compared to an increase of £29.9 million in the prior year quarter.
Net cash generated from operating activities for the quarter was £21.2 million, a decrease of £18.6 million over the prior year quarter.
Net capital expenditure on property, plant and equipment for the quarter was £1.0 million, a decrease of £1.6 million over the prior year quarter.
Net capital proceeds on intangible assets for the quarter were £1.3 million, a decrease of £5.3 million over the prior year quarter.
Net debt Net debt as of 31 March 2018 was £301.3 million, a decrease of £65.0 million over the year. The gross USD debt principal remains unchanged.
Dividend A semi-annual dividend of $0.09 per share was paid during the quarter. A further semi-annual dividend of $0.09 per share will be paid on 5 June 2018, to shareholders of record on 27 April 2018. The stock began trading ex-dividend on 26 April 2018.
Conference Call Information
The Company’s conference call to review third quarter fiscal 2018 results will be broadcast live over the internet today, 17 May 2018 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.
About Manchester United
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 140-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).
Non-IFRS Measures: Definitions and Use
1. Adjusted EBITDA Adjusted EBITDA is defined as profit/(loss) for the period before depreciation, amortization, profit/(loss) 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/(loss) for the period to Adjusted EBITDA is presented in supplemental note 2.
2. Adjusted (loss)/profit for the period (i.e. adjusted net (loss)/income) Adjusted (loss)/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/adding the adjusted tax expense/credit for the period (based on a normalized tax rate of 28%; 2017: 35%). The normalized tax rate of 28% was the weighted average US federal corporate income tax rate applicable during the financial year.
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) of the weighted average US federal income tax rate of 28% (2017: 35%) applicable during the financial year. A reconciliation of profit/(loss) for the period to adjusted (loss)/profit for the period is presented in supplemental note 3.
3. Adjusted basic and diluted (loss)/earnings per share Adjusted basic and diluted (loss)/earnings per share are calculated by dividing the adjusted (loss)/profit for the period by the weighted average number of ordinary shares in issue during the period. Adjusted diluted (loss)/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 (loss)/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.
Key Performance Indicators
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