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Manchester United plc 2018 Fourth Quarter and Full Year Results

September 25, 2018

MANCHESTER, England--(BUSINESS WIRE)--Sep 25, 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 fourth quarter and twelve months ended 30 June 2018.

7 sponsorship deals announced including first shirt sleeve partnership with Kohler 5 global partnerships 1 regional partnership; and 1 financial services partnership. Successfully launched Manchester United new club website and app Commencement of a new UEFA club competitions cycle with gross commercial revenue up 33% to €3.2 billion Favourable change to EPL international distribution effective 19/20 Established Manchester United Women’s Football Club competing in the 18/19 FA Women’s Championship

Ed Woodward, Executive Vice Chairman, commented, “Everyone at the club is working tirelessly to add to Manchester United’s 66 and Jose’s 25 trophies.  That is what our passionate fans and our history demands.  We are committed to our philosophy of blending top academy graduates with world class players and are proud that, once again, last season we had more academy graduate minutes on the pitch than any other Premier League club.  Our increased revenue expectation for the year demonstrates our continued strong long-term financial performance which underpins everything we do and allows us to compete for top talent in an increasingly competitive transfer market.”

For fiscal 2019, Manchester United expect:

Revenue to be £615m to £630m Adjusted EBITDA to be £175m to £190m

1 Adjusted EBITDA, adjusted profit/(loss) for the period, adjusted basic earnings/(loss) 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 twelve months ended 30 June 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 year was £276.1 million, an increase of £0.6 million, or 0.2%, over the prior year.

Sponsorship revenue was £173.2 million, an increase of £1.7 million, or 1.0%, over the prior year. Retail, Merchandising, Apparel & Product Licensing revenue was £102.9 million, a decrease of £1.1 million, or 1.1%, over the prior year.

For the quarter, commercial revenue was £63.5 million, a decrease of £4.4 million, or 6.5%, over the prior year quarter.

Sponsorship revenue was £38.9 million, a decrease of £3.2 million, or 7.6%, over the prior year quarter. Retail, Merchandising, Apparel & Product Licensing revenue was £24.6 million, a decrease of £1.2 million, or 4.7%, over the prior year quarter.

Broadcasting Broadcasting revenue for the year was £204.1 million, an increase of £10.0 million, or 5.2%, over the prior year, primarily due to finishing runners up in the Premier League compared to sixth in the prior year.

Broadcasting revenue for the quarter was £64.7 million, a decrease of £16.4 million, or 20.2%, over the prior year quarter, primarily due to winning the UEFA Europa League in the prior year.

Matchday Matchday revenue for the year was £109.8 million, a decrease of £1.8 million, or 1.6%, over the prior year.

Matchday revenue for the quarter was £19.4 million, a decrease of £7.5 million, or 27.9%, over the prior year quarter, primarily due to quarterly phasing of Premier League home games and impact of UEFA Europa League quarter-final and semi-final home games in the prior year quarter.

Operating expenses Total operating expenses for the year were £564.0 million, an increase of £52.7 million, or 10.3%, over the prior year.

Employee benefit expenses Employee benefit expenses for the year were £295.9 million, an increase of £32.4 million, or 12.3%, over the prior year, primarily due to player salary uplifts related to participation in the UEFA Champions League.

Other operating expenses Other operating expenses for the year were £117.0 million, a decrease of £0.9 million, or 0.8%, over the prior year.

Depreciation and amortization Depreciation for the year was £10.8 million, an increase of £0.5 million, or 4.9%, over the prior year. Amortization for the year was £138.4 million, an increase of £14.0 million, or 11.3%, over the prior year. The unamortized balance of registrations at 30 June 2018 was £369.5 million.

Exceptional items Exceptional costs for the year were £1.9 million, relating to the present value of the additional contributions the Group is expected to pay to make good the increased deficit of the Football League pension scheme pursuant to the latest triennial actuarial valuation at 31 August 2017. Exceptional credit for the prior year was £4.8 million, relating to a reversal of a player registration impairment charge for a player considered to be re-established as a member of the first team playing squad.

Profit on disposal of intangible assets Profit on disposal of intangible assets for the year was £18.1 million, compared to £10.9 million for the prior year. The profit on disposal of intangible assets for the year primarily relates to the disposal of Januzaj (Real Sociedad) and sell on fees relating to former players.

Net finance costs Net finance costs for the year were £18.0 million, a decrease of £6.3 million, or 25.9%, over the prior year. The decrease was primarily due to unrealized foreign exchange gains on unhedged USD borrowings.

Tax The tax expense for the year was £63.4 million, compared to £17.3 million in the prior year. The current year charge includes a non-cash, tax accounting write-off of £48.8 million following the substantive enactment of US tax reform on 22 December 2017. The non-cash write-off was primarily due to the reduction in the US federal corporate income tax rate from 35% to 21%, which necessitated re-measurement of the existing US deferred tax position in the period to 31 December 2017.

Cash flows Overall cash and cash equivalents (including the effects of exchange rate movements) decreased by £48.2 million in the year.

Net cash generated from operating activities for the year was £95.2 million, a decrease of £132.5 million over the prior year, primarily due to timing of cash receipts on commercial contractual arrangements.

Net capital expenditure on property, plant and equipment for the year was £13.2 million, an increase of £4.9 million over the prior year.

Net capital expenditure on intangible assets for the year was £108.1 million, a decrease of £33.9 million over the prior year.

Net debt Net Debt as of 30 June 2018 was £253.7 million, an increase of £40.6 million over the year, primarily due to an overall decrease in cash and cash equivalents as described above. The gross USD debt principal remains unchanged.

Dividend Two semi-annual dividends of $0.09 per share were paid during the year.

The Company’s conference call to review fiscal 2018 and fourth quarter results will be broadcast live over the internet today, 25 September 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.

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).

Statement Regarding Unaudited Financial Information The unaudited financial information set forth is preliminary and subject to adjustments. The audit of the financial statements and related notes to be included in our annual report on Form 20-F for the year ended 30 June 2018 is still in progress. Adjustments to the financial statements may be identified when audit work is completed, which could result in significant differences from this preliminary unaudited financial information.

1.Adjusted EBITDA Adjusted EBITDA is defined as (loss)/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 (loss)/profit for the period to Adjusted EBITDA is presented in supplemental note 2.

2.Adjusted profit/(loss) for the period (i.e. adjusted net income/(loss)) Adjusted profit/(loss) 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 an 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 corporate income tax rate of 28% (2017: 35%) applicable during the financial year. A reconciliation of (loss)/profit for the period to adjusted profit/(loss) for the period is presented in supplemental note 3.

3. Adjusted basic and diluted earnings/(loss) per share Adjusted basic and diluted earnings/(loss) per share are calculated by dividing the adjusted profit/(loss) for the period by the weighted average number of ordinary shares in issue during the period. Adjusted diluted earnings/(loss) 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/(loss) 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

1 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 tax expense for the year ended 30 June 2018 includes a non-cash tax accounting write off of £48.8 million. Accordingly, this has resulted in a loss for the twelve months ended 30 June 2018 and also a basic and diluted loss per share.

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