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Manchester United Post Record Second Quarter Profits

Thu 14th Feb 2013 | Money & Finance

Manchester United have posted an increase in profit before tax of 47.9% with record second quarter revenue of £110.1m.

The latest set of financial results released today for the three and six month periods ending 31 December 2012, have shown the strength of Manchester United’s commercial activity with the addition of six new global and regional sponsorship deals executed during the reporting period. Commercial revenue for the second quarter increased 29.0% year on year to £35.6 million as a result of these deals giving United a second quarter EBITDA of £50.2m.

Ed Woodward, Executive Vice Chairman commented, ‘Manchester United achieved record revenue and record adjusted EBITDA in the second quarter driven by our commercial operation, which continues to experience extremely strong growth particularly in sponsorship.”

United recently announced strategic acquisition of BskyB’s one-third stake in MUTV, taking full control of their global television channel. This will likely see further growth in the club’s New Media and Mobile business which saw an increase of 1.9% to £5.3 million.

“In addition, our acquisition of BskyB’s one third stake in Manchester United’s global television channel MUTV will be key in expanding our media business in the future,” added Woodward.

Retail, Merchandising, Apparel and Product Licensing increased 13.1% to £9.5m whilst broadcasting revenues for the second quarter increased 4.8% year on year to £39.5m due to one extra Champions League game being played and two additional live Premier League TV appearances compared to the same period last year.

Matchday revenues for the second quarter decreased 2.8% year on year to £35.0 million, due mainly to one less domestic cup home game being played in the period.

Total operating expenses for the second quarter increased 4.6% year on year to £73.2m with staff costs increasing 14.2% year on year to £44.2 million, primarily due to new player signings, player wage increases and growth in commercial headcount. The six months year to date increase is 10.5% year on year to £84.5 million.

Other operating expenses decreased 11.3% year on year to £15.7 million, primary due to a reduction in gateshare costs relating to the one less domestic cup home game compared with the same period last year.

Exceptional items for the second quarter were £0.8 million and related to professional adviser fees in connection with the IPO compared with £2.0 million in the prior year quarter.

Net finance costs for the second quarter decreased 25.2% year on year to £9.2m. The decline was driven by the re-purchase and retirement of the sterling equivalent of £62.6m of senior secured notes comprising US$101.7m of US dollar denominated notes and a favourable foreign exchange movement of £2.3m year on year on translation of the US dollar denominated senior secured notes.

Profit from continuing operations decreased to £16.2m, compared with a profit of £42.1m in the prior year quarter. Earnings per share for the second quarter decreased to £0.10, compared with £0.27 in the prior year quarter. This decrease is largely due to a tax credit of £22.9m realised in the prior year quarter, compared to a tax charge of £12.2m in this year’s second quarter.

Cash generated from operating activities was £25.4m, an increase of £31.7m compared to £6.3m cash used in the prior year quarter.

Capital expenditures on property, plant and equipment and investment property for the second quarter were £5.9m, an increase of £4.3m compared to £1.6m in the prior year quarter mainly due to the continuing redevelopment of the Carrington training facility.

Cash and cash equivalents at 31 December 2012 were £66.6m compared to £50.9m at 31 December 2011.

Total borrowings stood at £366.6m compared to £439.0m the previous year. During the six months United re-purchased and retired the sterling equivalent of £62.6m of senior secured notes comprising US$101.7m of US dollar denominated notes.

Posted by: Aaron Gourley

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