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MANCHESTER UNITED PLC PRELIMINARY RESULTS 2001 1 OCTOBER 2001 AGENDA INTRODUCTION Sir Roland Smith OVERVIEW OF RESULTS Peter Kenyon RESULTS IN DETAIL David Gill (P&L / B. SHEET / CASHFLOW) STRATEGY & FUTURE Peter Kenyon QUESTIONS OVERVIEW OF RESULTS Peter Kenyon

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manchester united plc

MANCHESTER UNITED PLC

PRELIMINARY RESULTS 2001

1 OCTOBER 2001

agenda
AGENDA
  • INTRODUCTION Sir Roland Smith
  • OVERVIEW OF RESULTS Peter Kenyon
  • RESULTS IN DETAIL David Gill

(P&L / B. SHEET / CASHFLOW)

  • STRATEGY & FUTURE Peter Kenyon
  • QUESTIONS
summary of results
Summary of Results
  • Record turnover up 12% to £129.6m (2000 - £116.0m)
  • Operating profit before player amortisation and exceptional costs of £31.7m (2000 - £30.1m)
  • Player trading (amortisation and disposals) of £7.9m (2000 - £11.5m)
  • MUTV / Hotels losses of £0.6m (2000 - losses of £1.0m)
  • Exceptional costs of £2.1m (2000 - £1.3m)
  • Profit before tax £21.8m (£16.8m)
  • Total dividend increased by 5% to 2.0p (1.9p) - dividend covered 2.9 times (2.4)
  • EPS 5.8p (4.6p) [Pre players and exceptional costs 8.6p (8.1p)]
summary profit loss account
Summary Profit & Loss Account

Year ended

31 July 2001

£’000

Year ended

31 July 2000

£’000

Turnover 129,569 116,005

Profit before player amortisation and exceptionals 31,680 30,073

Player amortisation (10,173) (13,092)

Exceptional costs (2,073) (1,300)

MUTV / Hotels (602) (982)

Profit on player disposals 2,219 1,633

Net interest receivable 727 456

Profit before taxation 21,778 16,788

Taxation (6,841) (4,838)

Profit after taxation 14,937 11,950

Earnings per share - basic 5.8p 4.6p

- pre player trading 8.6p 8.1p

Dividend per share 2.0p 1.9p

trading background
Trading Background
  • Premier League Champions for 7th time in 9 years and for the 3rd consecutive season
  • Quarter-final of European Champions League (reached quarter-final or better in each of the last 5 seasons)
  • Gate receipts up 26% to £46.2m
    • Stadium operated at full capacity of 67,700 for the whole season (2000 - average capacity of 58,000)
    • 27 home games (up from 26) - 1 extra domestic cup game
    • Aggregate attendance 1,811,000 (1,497,900) - average of 67,100 (57,600)
  • TV income up 2% to £31.2m - increases from FAPL and ECL partially offset by no income in 2001 from World Club Championship, Inter Continental Cup and UEFA Super Cup

(Note: £7m deposits received from new FAPL TV contracts not included (being deferred until 2001/02 to 2003/04)

trading background cont d
Trading Background - Cont’d
  • Sponsorship income up 21% to £22.5m - Vodafone and additional income from Platinum sponsors
  • Record conference and catering income of £7.8m - increase in match day events (MU plus non MU) and the additional facilities in the extended stadium
  • Merchandising & Other turnover down 7% to £21.9m - margin impact as well as we reduce stock levels in advance of handover to Nike (stocks down 45%)
  • Administrative expenses higher by £10m - increased player wage costs of £4.5m and additional depreciation charges of £1.5m
  • Exceptional costs of £2.1m - £1.8m from merchandising restructuring plus £0.3m of Football League Pension Scheme
turnover analysis
Turnover Analysis

Year ended 31 July 2001£’000

Year ended31 July 2000

£’000

PercentChange

Gate Receipts 46,202 +26% 36,626

Television 31,237 +2% 30,546

Sponsorship 22,451 +21% 18,513

Conference & Catering 7,754 +16% 6,698

Merchandising & Other 21,925 -7% 23,622

Total Sales 129,569 +12% 116,005

turnover analysis10
Turnover Analysis

Merchandising & Other

Merchandising & Other

Gate

Receipts

Gate

Receipts

Conference &

Catering

Conference &

Catering

Sponsorship &

Royalties

Sponsorship &

Royalties

Television

Television

Note: Improved mix of turnover - 77% derived from high

margin gate, sponsorship and TV revenue streams (2000 - 74%)

profit before player trading and exceptional costs
Profit before player trading and exceptional costs

Year ended31 July 2001

£’000

Year ended31 July 2000

£’000

PercentChange

Turnover 129,569 +12% 116,005

Cost of Sales (22,120) +10% (20,134)

Gross Profit 107,449 +12% 95,871

Gross Margin 83% 83%

Operating Expenses (75,769) +15% (65,798)

Operating Profit 31,680 +5% 30,073

Operating Margin 24.5% 25.9%

MUTV / Hotels (602) -39% (982)

Interest Receivable 727 +59% 456

Profit before player trading and

exceptional costs 31,805 +8% 29,547

operating expenses
Operating Expenses

Year ended31 July 2001

£’000

Year ended31 July 2000

£’000

PercentChange

Wages and salaries 50,002 +12% 44,791

Other operating expenses 25,767 +23% 21,007

Total 75,769 +15% 65,798

Average number of employees 536 526

Temporary match day staff 1,346 1,275

Staff Costs / Turnover 39% 39%

Note: Player wage costs increased by £4.5m (including social security costs)

impact of european champions cup
Impact of European Champions Cup

EUROPEAN CHAMPIONS CUP

00/01 99/00 £m £m

Turnover 23.6 20.9

Operating Profit 19.2 16.9

Margin 81% 81%

% of total operating 60% 56%

profit before player trading

and exceptional items

NOTE: Qtr-final of European Champions Cup in both years

Note: ECL includes variable costs only - no fixed player wage allocation

balance sheet
Balance Sheet

31 July 2001£’000

31 July 2000 £’000

Fixed Assets - Tangible 122,710 124,509

- Investments (1,128) (652)

- Intangible (players) 71,117 32,315

Net (debt) / cash (1,237) 10,563

Debtors/Stocks 22,790 21,706

Creditors, Tax, Etc. (46,902) (41,693)

Deferred Income (42,658) (31,798)

NET ASSETS 124,692 114,950

NET ASSETS (pence per share) 48p 44p

cash flow
Cash Flow

Year ended

31 July 2001

£’000 £’000

Net cash at 1 August 2000 10,563

Cash generated from operating activities 50,882

Transfer fee expenditure (43,310)

Dividends / Interest / Tax (11,844)

Fixed asset investment (7,802)

Grant received 400

Investment in associate (126)

(11,800)

Net debt at 31 July 2001 (1,237)

gross cash balances
Gross cash balances

Average balance

99/00 - £11m

00/01 - £14m

Average

base rate

99/00 - 5.66%

00/01 - 5.74%

slide17

Capital Expenditure

Year ended Projected 31/07/01 y/e 31/07/02 £’000 £,000

  • Carrington training ground (II) 1,768 5,732
  • Stadium expansion 1,139 -
  • Ticket / Membership building 481 1,654
  • Land / Property / Car Parks 1,641 -
  • Stadium scoreboards 303 150
  • Plant, fixtures, computers, cars 2,452
  • Other identified projects - 7,364

7,784 14,900

Movement in creditors 1,448

Disposal proceeds (1,430)

Per cashflow statement 7,802

slide18

Enhancing shareholder value

  • FINANCIAL
    • Growth in top-line revenue more than funded increase in costs - increases at the key operating profit level of £1.6m and at the PBT level of £5.0m
  • INVESTMENT
    • Infrastructure funding now complete except Carrington Phase II (due to be completed by Spring 2002)
    • £50m gross investment in players
    • Post year end disposal of Stam for £15.25m
  • COMMERCIAL
    • Agreements reached to grow current revenue streams and develop new ones (Nike, Financial Services, Media etc.)
    • Renegotiation of contracts of key players within agreed and sensible parameters
strategy liberating the brand
Strategy - “Liberating the brand”

Gate receipts

Sponsorship

CORE ACTIVITY = FOOTBALL

Conference & Catering

Television

On-field Success

Increasing Fan-base

(Loyalty & Affinity)

Products & Services / Brand Extension

Monetising the Fan-base

Examples

Financial Services

Merchandising (Nike)

Media

future prospects football
Future Prospects - Football
  • Players
    • Majority of first team squad secured on new contracts
    • Young, high quality squad designed to compete at the highest level in the UK and Europe
    • New international transfer rules - satisfactory outcome.
    • Balance Sheet values protected whilst investment in youth development is still encouraged
  • Manager
    • Considering a list of potential candidates
    • No progress expected until early 2002
future prospects media
Future Prospects - Media
  • TV
    • New FAPL contracts - £1.6 billion over 3 years from 2001/02
    • PPV trial
    • UEFA Champions League contracts due for renewal from 2003/04
  • Other media
    • MUTV - Delayed rights now available 48 hours after each FAPL game
    • manutd.com - New agreement with TWIi - website will be revamped and relaunched in early 2002
    • Media rights reverting back to the clubs from FAPL
future prospects customers
Future Prospects - Customers

GLOBAL REACH - 50M WORLD WIDE FAN-BASE

  • NIKE
    • Alliance commences 1 August 2002
    • MU retains control of the brand
    • Significant benefit to operating profit in year 1
  • Financial Services
    • New and increased range of products - MU Finance
    • Lending, insurance and investment products alongside our existing credit card and savings account
    • Partnership with Bank of Scotland, Zurich Financial and our existing partners, MBNA and Britannia
future prospects summary
Future Prospects - Summary
  • Investments have been made for the future
  • Playing squad secured on new contracts
  • Initiatives to grow existing revenues and generate new ones
  • Benefits will start to be received in the second half of 2002 calendar year and beyond
  • Focused on delivering shareholder value
competitive position
Competitive Position

MANCHESTER UNITED

A TRULY GLOBAL SPORTS BRAND

>>> MORE FANS IN MORE PLACES

>>> STRATEGIC ALLIANCES WITH GLOBAL COMPANIES

>>> STRATEGY AND VISION TO REMAIN THE LEADER ON AND OFF THE FIELD

key trends
Key Trends

Year ended 31 July

2001 2000 1999 Operating profit

pre players (£m) 31.7 30.1 32.3

Operating margin 24.5% 25.9% 29.2%

Earnings per share

- Pre player trading 8.6p 8.1p 8.8p - Post player trading 5.8p 4.6p 5.9p

Dividend per share 2.00p 1.90p 1.80p

Dividend cover (times) 2.9 2.4 3.3

Net (debt)/cash (£m) (1.2) 10.6 37.6

S’holders’ funds (£m) 124.7 114.9 107.9

nike alliance
Nike Alliance
  • Nike granted certain exclusive sponsorship, licensing and merchandising rights but MU retains control of the brand
  • No’ 1 sportswear brand & No’1 football club brand should drive international growth
  • 13 year agreement from 1 August 2002 - Nike have the option to break after 6 yrs
  • £303m guaranteed payments (subject to MU remaining in FAPL and competing in European competition)

- yrs 1 to 4 - £20.8m p.a., yrs 5 to 8 - £23.2m p.a., yrs 9 to 13 - £25.4m p.a.

- 50/50 profit share after guaranteed payments

  • Profit enhanced significantly from year 1
  • Exceptional restructuring costs of c£2.5m (including non-cash items of £1.7m) to be incurred prior to 31 July 2002
  • Reduction in Umbro royalty fees in 01/02 with contract ceasing 3 months early
first team squad player details
First Team Squad - Player details

Contract Expiry

2002 2003 2004 2005 2006 2007

Van Der Gouw, Irwin, X

Johnsen, Blanc X

Beckham, Keane, May, X

Fortune, Yorke, Silvestre X

Brown, Carroll, Cole, Chadwick X

Giggs, Solskjaer, Butt X

Barthez, Veron, Van Nistelrooy X

Neville G, Neville P, Scholes X

capital expenditure since flotation
Capital Expenditure Since Flotation

£,000

Rebuilding of West Stand 10,300

Refurbishment of South and East Stands 5,790

Acquisition of United Trading Estate 9,125

Rebuilding of North Stand 18,650

North Stand fit-out (including Museum) 17,106

Land / Property / Car parks 8,533

Carrington Training ground (Phase I & II) 15,755

South Stand executive suites 3,004

Stadium expansion - East & West stands (including Megastore) 32,783

Ticketing / Membership building 481

Other (mainly plant, machinery, fixtures & fittings) 30,343

Total to 31 July 2001 151,870

Expenditure on future major projects (estimate) 14,900 166,770

Net Cash received from shareholders (flotation/placing) 23,425

Funded via cash generated 143,345

166,770

player trading
Player trading

NEW BASISOLD BASIS

Year ended Year ended

31 July 31 July

2001 2000 2001 2000

£’000 £’000 £’000 £’000

Player amortisation 10,173 13,092 Expenditure 50,625 19,697

Player disposals (2,219) (1,633) Income (3,869) (6,048)

Player trading 7,95411,459 Net transfers 46,75613,649

Analysis of transfer expenditure for year to 31/07/01

£,000 capital cash cost

cost in the period

van Nistelrooy 19,023 18,217

Veron 28,067 28,067

Carroll 2,925 -

Other 610 1,220 50,625 47,504