UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May, 2019
Commission File Number: 001-35627

 

MANCHESTER UNITED PLC

(Translation of registrant’s name into English)

 

Old Trafford

Manchester M16 0RA

United Kingdom

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F x Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1). o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7). o

 

 

 

THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE FOLLOWING REGISTRATION STATEMENT OF THE REGISTRANT:

 

REGISTRATION STATEMENT ON FORM F-3 (NO. 333-227606) ORIGINALLY FILED WITH THE SEC ON SEPTEMBER 28, 2018, AS AMENDED.

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 17, 2019

 

	MANCHESTER UNITED PLC
	By:	/s/ Edward Woodward
	Name: Edward Woodward
	Title: Executive Vice Chairman

 

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Manchester United plc Interim report (unaudited) for the three and nine months ended 31 March 2019

 

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Exhibit 99.1

 

Manchester United plc

Interim report (unaudited) for the three and nine months ended 31 March 2019

 

 

Contents

 

Management’s discussion and analysis of financial condition and results of operations	2
Interim consolidated statement of profit or loss for the three and nine months ended 31 March 2019 and 2018	12
Interim consolidated statement of comprehensive income for the three and nine months ended 31 March 2019 and 2018	13
Interim consolidated balance sheet as of 31 March 2019, 30 June 2018, 31 March 2018 and 30 June 2017	14
Interim consolidated statement of changes in equity for the nine months ended 31 March 2019, the three months ended 30 June 2018 and the nine months ended 31 March 2018	16
Interim consolidated statement of cash flows for the three and nine months ended 31 March 2019 and 2018	17
Notes to the interim consolidated financial statements	18

 

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Manchester United plc

Management’s discussion and analysis of financial condition and results of operations

 

GENERAL INFORMATION AND FORWARD-LOOKING STATEMENTS

 

The following Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the interim consolidated financial statements and notes thereto included as part of this report. This report contains forward-looking statements. You should not place undue reliance on such statements because they are subject to numerous risks and uncertainties relating to Manchester United plc’s (“the Company”) 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 interim report 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 Annual Report on Form 20-F for the year ended 30 June 2018, as filed with the Securities and Exchange Commission on 28 September 2018 (File No. 001-35627).

 

GENERAL

 

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 141-year heritage we have won 66 trophies, including a record 20 English league titles, 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. We attract leading global companies such as adidas, Aon, General Motors (Chevrolet) and Kohler that want access and exposure to our community of followers and association with our brand.

 

RESULTS OF OPERATIONS

 

Manchester United adopted IFRS 9 ‘Financial instruments’ and IFRS 15 ‘Revenue from contracts with customers’ with effect from 1 July 2018. The implementation of IFRS 9 did not have an impact on the Group’s financial statements as at 1 July 2018. The implementation of IFRS 15 did have an impact on the Group’s financial statements as at 1 July 2018 and consequently prior year amounts have been restated. Further details can be found in note 34 to the interim consolidated financial statements.

 

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Three months ended 31 March 2019 as compared to the three months ended 31 March 2018 (as restated)

 

		Three months ended 31 March (in £ millions)				% Change
		2019		2018		2019 over 2018
Revenue		152.1		147.1		3.4	%
Commercial revenue		66.6		66.6		0.0	%
Broadcasting revenue		53.8		49.4		8.9	%
Matchday revenue		31.7		31.1		1.9	%
Total operating expenses		(144.2	)	(136.4	)	5.7	%
Employee benefit expenses		(84.8	)	(75.1	)	12.9	%
Other operating expenses		(26.1	)	(26.3	)	(0.8	)%
Depreciation		(2.8	)	(2.6	)	7.7	%
Amortization		(30.5	)	(32.4	)	(5.9	)%
Profit/(loss) on disposal of intangible assets		6.3		(3.4	)	—
Net finance (costs)/income		(3.1	)	1.0		—
Tax expense		(3.4	)	(1.4	)	142.9	%

 

Revenue

 

Total revenue for the three months ended 31 March 2019 was £152.1 million, an increase of £5.0 million, or 3.4%, over the three months ended 31 March 2018, as a result of an increase in revenue in our broadcasting and matchday sectors, as described below.

 

Commercial revenue

 

Commercial revenue for the three months ended 31 March 2019 was £66.6 million, unchanged over the three months ended 31 March 2018.

 

·                  Sponsorship revenue for the three months ended 31 March 2019 was £41.6 million, unchanged over the three months ended 31 March 2018;

·                  Retail, Merchandising, Apparel & Product Licensing revenue for the three months ended 31 March 2019 was £25.0 million, unchanged over the three months ended 31 March 2018.

 

Broadcasting revenue

 

Broadcasting revenue for the three months ended 31 March 2019 was £53.8 million, an increase of £4.4 million, or 8.9%, over the three months ended 31 March 2018, primarily due to the new UEFA Champions League broadcasting rights agreement and playing one additional FAPL game.

 

Matchday revenue

 

Matchday revenue for the three months ended 31 March 2019 was £31.7 million, an increase of £0.6 million, or 1.9%, over the three months ended 31 March 2018.

 

Total operating expenses

 

Total operating expenses (defined as employee benefit expenses, other operating expenses, depreciation, and amortization) for the three months ended 31 March 2019 were £144.2 million, an increase of £7.8 million, or 5.7%, over the three months ended 31 March 2018.

 

Employee benefit expenses

 

Employee benefit expenses for the three months ended 31 March 2019 were £84.8 million, an increase of £9.7 million, or 12.9%, over the three months ended 31 March 2018, primarily due to investment in the first team playing squad.

 

Other operating expenses

 

Other operating expenses for the three months ended 31 March 2019 were £26.1 million, a decrease of £0.2 million, or 0.8%, over the three months ended 31 March 2018.

 

Depreciation

 

Depreciation for the three months ended 31 March 2019 was £2.8 million, an increase of £0.2 million, or 7.7%, over the three months ended 31 March 2018.

 

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Amortization

 

Amortization, primarily of registrations, for the three months ended 31 March 2019 was £30.5 million, a decrease of £1.9 million, or 5.9%, over the three months ended 31 March 2018. The unamortized balance of registrations as of 31 March 2019 was £288.0 million.

 

Profit/(loss) on disposal of intangible assets

 

Profit on disposal of intangible assets for the three months ended 31 March 2019 was £6.3 million, compared to a loss of £3.4 million for the three months ended 31 March 2018.

 

Net finance (costs)/income

 

Net finance costs for the three months ended 31 March 2019 was £3.1 million, compared to net finance income of £1.0 million for the three months ended 31 March 2018, due to a reduction in unrealized, non-cash foreign exchange gains on unhedged USD borrowings.

 

Tax expense

 

The tax expense for the three months ended 31 March 2019 was £3.4 million, compared to £1.4 million for the three months ended 31 March 2018.

 

Nine months ended 31 March 2019 as compared to the nine months ended 31 March 2018 (as restated)

 

		Nine months ended 31 March (in £ millions)				% Change
		2019		2018		2019 over 2018
Revenue		495.7		468.2		5.9	%
Commercial revenue		208.4		212.4		(1.9	)%
Broadcasting revenue		200.3		165.4		21.1	%
Matchday revenue		87.0		90.4		(3.8	)%
Total operating expenses		(448.0	)	(415.7	)	7.8	%
Employee benefit expenses		(239.7	)	(214.7	)	11.6	%
Other operating expenses		(81.1	)	(87.3	)	(7.1	)%
Depreciation		(8.6	)	(7.9	)	8.9	%
Amortization		(99.0	)	(105.8	)	(6.4	)%
Exceptional items		(19.6	)	—		—
Profit on disposal of intangible assets		24.4		14.9		63.8	%
Net finance costs		(14.6	)	(4.2	)	247.6	%
Tax expense		(16.4	)	(66.4	)	(75.3	)%

 

Revenue

 

Consolidated revenue for the nine months ended 31 March 2019 was £495.7 million, an increase of £27.5 million, or 5.9%, over the nine months ended 31 March 2018, as a result of an increase in revenue in our broadcasting sector, partially offset be a decrease in our commercial and matchday sectors, as described below.

 

Commercial revenue

 

Commercial revenue for the nine months ended 31 March 2019 was £208.4 million, a decrease of £4.0 million, or 1.9%, over the nine months ended 31 March 2018.

 

·                  Sponsorship revenue for the nine months ended 31 March 2019 was £131.5 million, a decrease of £2.6 million, or 1.9%, over the nine months ended 31 March 2018, primarily due to a smaller summer tour; and

 

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·                  Retail, Merchandising, Apparel & Product Licensing revenue for the nine months ended 31 March 2019 was £76.9 million, a decrease of £1.4 million, or 1.8%, over the nine months ended 31 March 2018, in part due to playing two fewer home games in the period.

 

Broadcasting revenue

 

Broadcasting revenue for the nine months ended 31 March 2019 was £200.3 million, an increase of £34.9 million, or 21.1%, over the nine months ended 31 March 2018, primarily due to the new UEFA Champions League broadcasting rights agreement.

 

Matchday revenue

 

Matchday revenue for the nine months ended 31 March 2019 was £87.0 million, a decrease of £3.4 million, or 3.8%, over the nine months ended 31 March 2018 primarily due to playing two fewer home games in the period.

 

Total operating expenses

 

Total operating expenses (defined as employee benefit expenses, other operating expenses, depreciation, amortisation, and exceptional items) for the nine months ended 31 March 2019 were £448.0 million, an increase of £32.3 million, or 7.8%, over the nine months ended 31 March 2018.

 

Employee benefit expenses

 

Employee benefit expenses for the nine months ended 31 March 2019 were £239.7 million, an increase of £25.0 million, or 11.6%, over the nine months ended 31 March 2018, primarily due to investment in the first team playing squad.

 

Other operating expenses

 

Other operating expenses for the nine months ended 31 March 2019 were £81.1 million, a decrease of £6.2 million, or 7.1%, over the nine months ended 31 March 2018, primarily due to a smaller summer tour.

 

Depreciation

 

Depreciation for the nine months ended 31 March 2019 was £8.6 million, an increase of £0.7 million, or 8.9%, over the nine months ended 31 March 2018.

 

Amortization

 

Amortization, primarily of registrations, for the nine months ended 31 March 2019 was £99.0 million, a decrease of £6.8 million, or 6.4%, over the nine months ended 31 March 2018. The unamortized balance of registrations as of 31 March 2019 was £288.0 million.

 

Exceptional items

 

Exceptional items for the nine months ended 31 March 2019 were £19.6 million, relating to compensation to the former manager and certain members of the coaching staff for loss of office. Exceptional items for the nine months ended 31 March 2018 were £nil.

 

Profit on disposal of intangible assets

 

Profit on disposal of intangible assets for the nine months ended 31 March 2019 was £24.4 million, compared with a profit of £14.9 million for the nine months ended 31 March 2018.

 

Net finance costs

 

Net finance costs for the nine months ended 31 March 2019 were £14.6 million, an increase of £10.4 million, or 247.6%, over the nine months ended 31 March 2018, due to significant unrealized, non-cash foreign exchange gains on unhedged USD borrowings in the prior year period.

 

Tax

 

The tax expense for the nine months ended 31 March 2019 was £16.4 million, compared to an expense of £66.4 million for the nine months ended 31 March 2018. The US federal corporate income tax rate reduced from 35% to 21% following the enactment of US tax reform on 22 December 2017. This necessitated a re-measurement of the

 

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then existing US deferred tax position in the period to 31 December 2017. As a result the nine months ended 31 March 2018 included a non-cash tax accounting write off of £49.0 million.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our primary cash requirements stem from the payment of transfer fees for the acquisition of players’ registrations, capital expenditure for the improvement of facilities at Old Trafford and the Aon Training Complex, payment of interest on our borrowings, employee benefit expenses, other operating expenses and dividends on our Class A ordinary shares and Class B ordinary shares. Historically, we have met these cash requirements through a combination of operating cash flow and proceeds from the transfer fees from the sale of players’ registrations. Our existing borrowings primarily consist of our secured term loan facility and our senior secured notes. Additionally, although we have not needed to draw any borrowings under our revolving facility since 2009, we have no intention of retiring our revolving facility and may draw on it in the future in order to satisfy our working capital requirements. We manage our cash flow interest rate risk where appropriate using interest rate swaps at contract lengths consistent with the repayment schedule of our long term borrowings. Such interest rate swaps have the economic effect of converting borrowings from floating to fixed rates. We have US dollar borrowings that we use to hedge our US dollar commercial revenue exposure. We continue to evaluate our financing options and may, from time to time, take advantage of opportunities to repurchase or refinance all or a portion of our existing indebtedness to the extent such opportunities arise.

 

We currently intend to continue paying regular semi-annual cash dividends on our Class A ordinary shares and Class B ordinary shares of $0.09 per share from our operating cash flows. The declaration and payment of any future dividends, however, will be at the sole discretion of our board of directors or a committee thereof, and our expectations and policies regarding dividends are subject to change as our business needs, capital requirements or market conditions change.

 

Our business generates a significant amount of cash from our matchday revenues and commercial contractual arrangements at or near the beginning of our fiscal year, with a steady flow of other cash received throughout the fiscal year. In addition, we generate a significant amount of our cash through advance receipts, including season tickets (which include general admission season tickets and seasonal hospitality tickets), most of which are received prior to the end of June for the following season. Our broadcasting revenue from the Premier League and UEFA are paid periodically throughout the season, with primary payments made in late summer, December, January and the end of the football season. Our sponsorship and other commercial revenue tends to be paid either quarterly or annually in advance. However, while we typically have a high cash balance at the beginning of each fiscal year, this is largely attributable to deferred revenue, the majority of which falls under current liabilities in the consolidated balance sheet, and this deferred revenue is unwound through the statement of profit or loss over the course of the fiscal year. Over the course of a year, we use our cash on hand to pay employee benefit expenses, other operating expenses, interest payments and other liabilities as they become due. This typically results in negative working capital movement at certain times during the year. In the event it ever became necessary to access additional operating cash, we also have access to cash through our revolving facility. As of 31 March 2019, we had no borrowings under our revolving facility.

 

We also maintain a mixture of long-term debt and capacity under our revolving facility in order to ensure that we have sufficient funds available for short-term working capital requirements and for investment in the playing squad and other capital projects.

 

Our cost base is more evenly spread throughout the fiscal year than our cash inflows. Employee benefit expenses and fixed costs constitute the majority of our cash outflows and are generally paid evenly throughout the 12 months of the fiscal year.

 

In addition, transfer windows for acquiring and disposing of registrations occur in January and the summer. During these periods, we may require additional cash to meet our acquisition needs for new players and we may generate additional cash through the sale of existing registrations. Depending on the terms of the agreement, transfer fees may be paid or received by us in multiple installments, resulting in deferred cash paid or received. Although we have not historically drawn on our revolving facility during the summer transfer window, if we seek to acquire

 

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players with values substantially in excess of the values of players we seek to sell, we may be required to draw on our revolving facility to meet our cash needs.

 

Acquisition and disposal of registrations also affects our trade receivables and payables, which affects our overall working capital. Our trade receivables include accrued income from sponsors as well as transfer fees receivable from other football clubs, whereas our trade payables include transfer fees and other associated costs in relation to the acquisition of registrations.

 

Cash Flow

 

The following table summarizes our cash flows for the nine months ended 31 March 2019 and 2018:

 

		Nine months ended 31 March (in £ millions)
		2019		2018
Cash flows from operating activities
Cash generated from operations		112.1		17.3
Net interest paid		(15.1	)	(16.2	)
Tax paid		(2.4	)	(6.4	)
Net cash generated from/(used in) operating activities		94.6		(5.3	)
Cash flows from investing activities
Payments for property, plant and equipment		(8.9	)	(9.6	)
Proceeds from sale of property, plant and equipment		—		0.1
Payments for intangible assets		(159.8	)	(136.0	)
Proceeds from sale of intangible assets		37.9		40.6
Net cash used in investing activities		(130.8	)	(104.9	)
Cash flows from financing activities
Repayment of borrowings		(3.8	)	(0.3	)
Dividends paid		(11.6	)	(10.9	)
Net cash used in financing activities		(15.4	)	(11.2	)
Net decrease in cash and cash equivalents (1)		(51.6	)	(121.4	)

 

(1) Excludes the effects of exchange rate changes on cash and cash equivalents.

 

Net cash generated from operating activities

 

Net cash generated from operations represents our operating results and net movements in our working capital. Our working capital is generally impacted by the timing of cash received from the sale of tickets and hospitality and other matchday revenues, broadcasting revenue from the Premier League and UEFA and commercial revenue. Cash generated from operations for the nine months ended 31 March 2019 produced a cash inflow of £112.1 million, an increase of £94.8 million from a cash inflow of £17.3 million for the nine months ended 31 March 2018.

 

Additional changes in net cash generated from operating activities generally reflect our finance costs. We currently pay fixed rates of interest on our senior secured notes and variable rates of interest on our secured term loan facility. We use interest rate swaps to manage the cash flow interest rate risk. Such swaps have the economic effect of converting interest from variable rates to a fixed rate. Drawdowns from our revolving facility, if any, are also subject to variable rates of interest. Net cash generated from operating activities for the nine months ended 31 March 2019 was £94.6 million, compared to net cash used in operating activities of £5.3 million for the nine months ended 31 March 2018.

 

Net cash used in investing activities

 

Capital expenditure for the acquisition of intangible assets as well as for improvements to property, principally at Old Trafford and the Aon Training Complex, are funded through cash flow generated from operations, proceeds from the sale of intangible assets and, if necessary, from our revolving facility. Capital expenditure on the

 

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acquisition, disposal and trading of intangible assets tends to vary significantly from year to year depending on the requirements of our first team, overall availability of players, our assessment of their relative value and competitive demand for players from other clubs. By contrast, capital expenditure on the purchase of property, plant and equipment tends to remain relatively stable as we continue to make improvements at Old Trafford and the Aon Training Complex.

 

Net cash used in investing activities for the nine months ended 31 March 2019 was £130.8 million, an increase of £25.9 million from £104.9 million for the nine months ended 31 March 2018.

 

For the nine months ended 31 March 2019, net capital expenditure on property, plant and equipment was £8.9 million, a decrease of £0.6 million from £9.5 million for the nine months ended 31 March 2018.

 

For the nine months ended 31 March 2019, net capital expenditure on intangible assets was £121.9 million, an increase of £26.5 million from £95.4 million for the nine months ended 31 March 2018.

 

Net cash used in financing activities

 

Net cash used in financing activities for the nine months ended 31 March 2019 was £15.4 million, an increase of £4.2 million from £11.2 million for the nine months ended 31 March 2018. The remaining balance of the secured bank loan amounting to £3.8 million was repaid on 9 July 2018.

 

Indebtedness

 

Our primary sources of indebtedness consist of our senior secured notes and our secured term loan facility. As part of the security for our senior secured notes, our secured term loan facility and our revolving facility, substantially all of our assets are subject to liens and mortgages.

 

Description of principal indebtedness

 

Senior secured notes

 

Our wholly-owned subsidiary, Manchester United Football Club Limited, issued $425 million in aggregate principal amount of 3.79% senior secured notes. As of 31 March 2019 the sterling equivalent of £322.6 million (net of unamortized issue costs of £3.5 million) was outstanding. The outstanding principal amount was $425.0 million. The senior secured notes mature on 25 June 2027.

 

The senior secured notes are guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited and MU Finance Limited and secured against substantially all of the assets of those entities and Manchester United Football Club Limited. These entities are wholly owned subsidiaries.

 

The note purchase agreement governing the senior secured notes contains a financial maintenance covenant requiring us to maintain consolidated profit/(loss) for the period before depreciation, amortization of, and profit/(loss) on disposal of, intangible assets, exceptional items, net finance costs, and tax (“EBITDA”) of not less than £65 million for each 12 month testing period. We are able to claim certain dispensations from complying with the consolidated EBITDA floor up to twice (in non-consecutive years) during the life of the senior secured notes if we fail to qualify for the first round group stages (or its equivalent from time to time) of the Champions League. The covenant is tested on a quarterly basis and we were in compliance for the quarter ended 31 March 2019.

 

The note purchase agreement governing the senior secured notes contains events of default typical for securities of this type, as well as customary covenants and restrictions on the activities of Red Football Limited and each of Red Football Limited’s subsidiaries, including, but not limited to, the incurrence of additional indebtedness; dividends or distributions in respect of capital stock or certain other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers, consolidations or the sale of substantially all of Red Football Limited’s assets. The covenants in the note purchase agreement governing the senior secured notes are subject to certain thresholds and exceptions described in the note purchase agreement governing the senior secured notes.

 

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The senior secured notes may be redeemed in part, in an amount not less than 5% of the aggregate principal amount of the senior secured notes then outstanding, or in full, at any time at 100% of the principal amount plus a “make-whole” premium of an amount equal to the discounted value (based on the US Treasury rate) of the remaining interest payments due on the senior secured notes up to 25 June 2027.

 

Secured term loan facility

 

Our wholly-owned subsidiary, Manchester United Football Club Limited, has a secured term loan facility with Bank of America, N.A. as lender. As of 31 March 2019 the sterling equivalent of £170.7 million (net of unamortized issue costs of £2.0 million) was outstanding. The outstanding principal amount was $225.0 million. We have the option to repay the secured term loan facility at any time. The remaining balance of the secured term loan facility is repayable on 26 June 2025.

 

Loans under the secured term loan facility bear interest at a rate per annum equal to US dollar LIBOR (provided that if the rate is less than zero, LIBOR shall be deemed to be zero) plus the applicable margin. The applicable margin, if no event of default has occurred and is continuing, means the following:

 

Total net leverage ratio (as defined in the secured term loan facility agreement)		Margin % (per annum)
Greater than 3.5		1.75
Greater than 2.0 but less than or equal to 3.5		1.50
Less than or equal to 2.0		1.25

 

While any event of default is continuing, the applicable margin shall be the highest level set forth above.

 

Our secured term loan facility is guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited, MU Finance Limited and Manchester United Football Club Limited and secured against substantially all of the assets of those entities. These entities are wholly owned subsidiaries.

 

The secured term loan facility contains a financial maintenance covenant requiring us to maintain consolidated profit/(loss) for the period before depreciation, amortization of, and profit/(loss) on disposal of, intangible assets, exceptional items, net finance costs, and tax (“EBITDA”) of not less than £65 million for each 12 month testing period. We are able to claim certain dispensations from complying with the consolidated EBITDA floor up to twice (in non-consecutive years) during the life of the secured term loan facility if we fail to qualify for the first round group stages (or its equivalent from time to time) of the Champions League. The covenant is tested on a quarterly basis and we were in compliance for the quarter ended 31 March 2019.

 

Revolving facility

 

Our revolving facilities agreement allows MU Finance Limited or Manchester United Football Club Limited (or any direct or indirect subsidiary of Red Football Limited that becomes a borrower thereunder) to borrow up to £125 million, plus (subject to certain conditions) the ability to incur a further £25 million by way of incremental facilities, from a syndicate of lenders with Bank of America Merrill Lynch International Limited as agent and security trustee. As of 31 March 2019, we had no outstanding borrowings and had £125 million (exclusive of capacity under the incremental facilities) in borrowing capacity under our revolving facility agreement.

 

The revolving facility was amended on 4 April 2019 to, among other things, extend the expiry date to 4 April 2025 (although it may be possible for any subsequent incremental facility thereunder to expire after this date). Any amount still outstanding at that time will be due in full immediately on the applicable expiry date.

 

Our revolving facility is guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited, MU Finance Limited and Manchester United Football Club Limited and secured against substantially all of the assets of those entities. These entities are wholly owned subsidiaries.

 

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RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

 

We do not conduct research and development activities.

 

OFF BALANCE SHEET ARRANGEMENTS

 

Transfer fees payable

 

Under the terms of certain contracts with other football clubs in respect of player transfers, additional amounts would be payable by us if certain specific performance conditions are met. We estimate the fair value of any contingent consideration at the date of acquisition based on the probability of conditions being met and monitor this on an ongoing basis. The maximum additional amount that could be payable as of 31 March 2019 is £64.8 million.

 

Transfer fees receivable

 

Similarly, under the terms of contracts with other football clubs for player transfers, additional amounts would be payable to us if certain specific performance conditions are met. In accordance with the recognition criteria for contingent assets, such amounts are only disclosed by the Company when probable and recognized when virtually certain. As of 31 March 2019, we believe receipt of £2.0 million to be probable.

 

Other commitments

 

In the ordinary course of business, we enter into operating lease commitments and capital commitments. These transactions are recognized in the consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), and are more fully disclosed therein.

 

As of 31 March 2019, we had not entered into any other off-balance sheet transactions.

 

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

 

Contractual Obligations

 

The following table summarizes our contractual obligations as of 31 March 2019:

 

		Less than 1 year		1-3 years		3-5 years		More than five years		Total contractual cash flows(1)		Total per consolidated financial statements
Long-term debt obligations(2)		18,604		37,208		37,208		546,787		639,807		495,533
Operating lease obligations(3)		1,826		1,478		162		3,806		7,272		—
Purchase obligations(4)		181,950		43,985		3,595		—		229,530		220,681
Total		202,380		82,671		40,965		550,593		876,609		716,214

 

(1)             Total contractual cash flows reflect contractual non-derivative financial obligations including interest, operating lease payments, purchase order commitments and capital commitments and therefore differs from the carrying amounts in our consolidated financial statements.

(2)             As of 31 March 2019, we had $425.0 million of our senior secured notes outstanding and $225.0 million of our secured term loan facility outstanding.

(3)             We enter into operating leases in the normal course of business. Most lease arrangements provide us with the option to renew the leases at defined terms. The future operating lease obligations would change if we were to exercise these options, or if we were to enter into additional new operating leases.

(4)             Purchase obligations include current and non-current obligations related to the acquisition of registrations, purchase order commitments and capital commitments. Purchase obligations do not include contingent transfer fees of £64.8 million which are potentially payable by us if certain specific performance conditions are met.

 

10

 

Except as disclosed above and in notes 27 and 28.3 to the unaudited interim consolidated financial statements as of and for the three and nine months ended 31 March 2019 included elsewhere in this interim report, as of 31 March 2019, we did not have any material contingent liabilities or guarantees.

 

11

 

Manchester United plc

Interim consolidated statement of profit or loss - unaudited

 

				Three months ended 31 March				Nine months ended 31 March
		Note		2019 £’000		Restated(1) 2018 £’000		2019 £’000		Restated(1) 2018 £’000
Revenue from contracts with customers		6		152,068		147,059		495,706		468,139
Operating expenses		7		(144,181	)	(136,411	)	(448,030	)	(415,699	)
Profit/(loss) on disposal of intangible assets		9		6,378		(3,446	)	24,457		14,846
Operating profit				14,265		7,202		72,133		67,286
Finance costs				(5,361	)	(5,935	)	(16,877	)	(18,293	)
Finance income				2,213		7,027		2,257		14,239
Net finance (costs)/income		10		(3,148	)	1,092		(14,620	)	(4,054	)
Profit before tax				11,117		8,294		57,513		63,232
Income tax expense		11		(3,464	)	(1,401	)	(16,444	)	(66,466	)
Profit/(loss) for the period				7,653		6,893		41,069		(3,234	)
Earnings/(loss) per share during the period:
Basic earnings/(loss) per share (pence)		12		4.65		4.20		24.96		(1.97	)
Diluted earnings/(loss) per share (pence)(2)		12		4.65		4.19		24.94		(1.97	)

 

(1) Comparative amounts have been restated - see note 34 to the interim consolidated financial statements for further details.

 

(2) For the nine months ended 31 March 2018 potential ordinary shares are anti-dilutive, as their inclusion in the diluted loss per share calculation would reduce the loss per share, and hence have been excluded.

 

See accompanying notes to the interim consolidated financial statements.

 

12

 

Manchester United plc

Interim consolidated statement of comprehensive income - unaudited

 

		Three months ended 31 March				Nine months ended 31 March
		2019 £’000		Restated(1) 2018 £’000		2019 £’000		Restated(1) 2018 £’000
Profit/(loss) for the period		7,653		6,893		41,069		(3,234	)
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Cash flow hedges		4,974		14,472		(2,312	)	32,391
Income tax expense relating to cash flow hedges		(129	)	(3,039	)	(978	)	(13,632	)
Other comprehensive income for the period, net of tax		4,845		11,433		(3,290	)	18,759
Total comprehensive income for the period		12,498		18,326		37,779		15,525

 

(1) Comparative amounts have been restated - see note 34 to the interim consolidated financial statements for further details.

 

See accompanying notes to the interim consolidated financial statements.

 

13

 

Manchester United plc

Interim consolidated balance sheet - unaudited

 

		Note		31 March 2019 £’000		Restated(1) 30 June 2018 £’000		Restated(1) 31 March 2018 £’000		Restated(1) 1 July 2017 £’000
ASSETS
Non-current assets
Property, plant and equipment		14		246,396		245,401		245,186		244,738
Investment property		15		13,739		13,836		13,869		13,966
Intangible assets		16		718,551		799,640		752,016		717,544
Derivative financial instruments		18		777		4,807		3,404		1,666
Trade and other receivables		19		9,964		4,724		5,618		15,399
Tax receivable				547		547		1,033		—
Deferred tax asset		25		57,057		63,332		77,064		141,485
				1,047,031		1,132,287		1,098,190		1,134,798
Current assets
Inventories		17		2,083		1,416		1,398		1,637
Derivative financial instruments		18		511		1,159		2,799		3,218
Trade and other receivables		19		185,499		168,060		117,497		103,732
Tax receivable				598		800		258		—
Cash and cash equivalents		20		193,855		242,022		161,717		290,267
				382,546		413,457		283,669		398,854
Total assets				1,429,577		1,545,744		1,381,859		1,533,652

 

(1) Comparative amounts have been restated - see note 34 to the interim consolidated financial statements for further details.

 

See accompanying notes to the interim consolidated financial statements.

 

14

 

Manchester United plc

Interim consolidated balance sheet (continued) - unaudited

 

		Note		31 March 2019 £’000		Restated(1) 30 June 2018 £’000		Restated(1) 31 March 2018 £’000		Restated(1) 1 July 2017 £’000
EQUITY AND LIABILITIES
Equity
Share capital		21		53		53		53		53
Share premium				68,822		68,822		68,822		68,822
Merger reserve				249,030		249,030		249,030		249,030
Hedging reserve				(30,848	)	(27,558	)	(12,512	)	(31,271	)
Retained earnings				166,751		136,757		181,110		193,453
				453,808		427,104		486,503		480,087
Non-current liabilities
Derivative financial instruments		18		21		—		—		655
Trade and other payables		22		45,559		104,271		74,998		83,587
Borrowings		23		493,336		486,694		457,011		497,630
Deferred revenue		24		51,079		37,085		32,208		39,648
Deferred tax liabilities		25		33,678		29,134		39,684		21,536
				623,673		657,184		603,901		643,056
Current liabilities
Derivative financial instruments		18		130		—		—		1,253
Tax liabilities				7,898		3,874		2,166		9,772
Trade and other payables		22		185,733		267,996		208,840		190,315
Borrowings		23		2,197		9,074		5,960		5,724
Deferred revenue		24		156,138		180,512		74,489		203,445
				352,096		461,456		291,455		410,509
Total equity and liabilities				1,429,577		1,545,744		1,381,859		1,533,652

 

(1) Comparative amounts have been restated - see note 34 to the interim consolidated financial statements for further details.

 

See accompanying notes to the interim consolidated financial statements.

 

15

 

Manchester United plc

Interim consolidated statement of changes in equity - unaudited

 

		Share capital £’000		Share premium £’000		Merger reserve £’000		Hedging reserve £’000		Retained earnings £’000		Total equity £’000
Balance at 1 July 2017 as previously reported		53		68,822		249,030		(31,724	)	191,436		477,617
Adjustment(1)		—		—		—		453		2,017		2,470
Restated balance at 1 July 2017		53		68,822		249,030		(31,271	)	193,453		480,087
Loss for the period (restated(1))		—		—		—				(3,234	)	(3,234	)
Cash flow hedges (restated(1))		—		—		—		32,391		—		32,391
Tax expense relating to cash flow hedges (restated(1))		—		—		—		(13,632	)	—		(13,632	)
Total comprehensive income/(loss) for the period		—		—		—		18,759		(3,234	)	15,525
Equity-settled share-based payments		—		—		—		—		1,820		1,820
Dividends paid		—		—		—		—		(10,929	)	(10,929	)
Balance at 31 March 2018		53		68,822		249,030		(12,512	)	181,110		486,503
Loss for the period (restated(1))		—		—		—		—		(34,395	)	(34,395	)
Cash flow hedges (restated(1))		—		—		—		(6,994	)	—		(6,994	)
Tax expense relating to cash flow hedges (restated(1))		—		—		—		(8,052	)	—		(8,052	)
Total comprehensive loss for the period		—		—		—		(15,046	)	(34,395	)	(49,441	)
Equity-settled share-based payments		—		—		—		—		1,095		1,095
Dividends paid		—		—		—		—		(11,053	)	(11,053	)
Balance at 30 June 2018		53		68,822		249,030		(27,558	)	136,757		427,104
Profit for the period		—		—		—		—		41,069		41,069
Cash flow hedges		—		—		—		(2,312	)	—		(2,312	)
Tax expense relating to cash flow hedges		—		—		—		(978	)	—		(978	)
Total comprehensive income for the period		—		—		—		(3,290	)	41,069		37,779
Equity-settled share-based payments		—		—		—		—		535		535
Dividends paid		—		—		—		—		(11,610	)	(11,610	)
Balance at 31 March 2019		53		68,822		249,030		(30,848	)	166,751		453,808

 

(1) Comparative amounts have been restated - see note 34 to the interim consolidated financial statements for further details.

 

See accompanying notes to the interim consolidated financial statements.

 

16

 

Manchester United plc

Interim consolidated statement of cash flows - unaudited

 

				Three months ended 31 March				Nine months ended 31 March
		Note		2019 £’000		2018 £’000		2019 £’000		2018 £’000
Cash flows from operating activities
Cash generated from operations		26		29,803		28,743		112,140		17,254
Interest paid				(7,679	)	(7,210	)	(17,186	)	(16,849	)
Interest received				697		266		2,052		654
Tax paid				(578	)	(620	)	(2,388	)	(6,388	)
Net cash generated from/(used in) operating activities				22,243		21,179		94,618		(5,329	)
Cash flows from investing activities
Payments for property, plant and equipment				(1,559	)	(998	)	(8,877	)	(9,585	)
Proceeds from sale of property, plant and equipment				—		—		—		75
Payments for intangible assets(1)				(14,809	)	(6,812	)	(159,865	)	(135,933	)
Proceeds from sale of intangible assets(1)				12,709		8,203		37,892		40,645
Net cash (used in)/generated from investing activities				(3,659	)	393		(130,850	)	(104,798	)
Cash flows from financing activities
Repayment of borrowings				—		(106	)	(3,750	)	(312	)
Dividends paid				(11,610	)	(10,929	)	(11,610	)	(10,929	)
Net cash used in financing activities				(11,610	)	(11,035	)	(15,360	)	(11,241	)
Net increase/(decrease) in cash and cash equivalents				6,974		10,537		(51,592	)	(121,368	)
Cash and cash equivalents at beginning of period				190,395		155,312		242,022		290,267
Effects of exchange rate changes on cash and cash equivalents				(3,514	)	(4,132	)	3,425		(7,182	)
Cash and cash equivalents at end of period		20		193,855		161,717		193,855		161,717

 

(1) Payments and proceeds for intangible assets primarily relate to player and key football management staff registrations. When acquiring or selling players’ and key football management staff registrations it is normal industry practice for payment terms to spread over more than one year. Details of registrations additions and disposals are provided in note 16. Trade payables in relation to the acquisition of registrations at the balance sheet date are provided in note 22. Trade receivables in relation to the disposal of registrations at the balance sheet date are provided in note 19.

 

See accompanying notes to the interim consolidated financial statements.

 

17

 

Manchester United plc

Notes to the interim consolidated financial statements (continued) - unaudited

 

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. The Company’s shares are listed on the New York Stock Exchange under the symbol “MANU”.

 

These financial statements are presented in pounds sterling and all values are rounded to the nearest thousand (£’000) except when otherwise indicated.

 

These interim consolidated financial statements were approved for issue by the board of directors on 16 May 2019.

 

2                                 Basis of preparation

 

The interim consolidated financial statements of Manchester United plc have been prepared on a going concern basis and in accordance with International Accounting Standard 34 “Interim Financial Reporting”. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended 30 June 2018, as filed with the Securities and Exchange Commission on 28 September 2018, contained within the Company’s Annual Report on Form 20-F, which were prepared in accordance with International Financial Reporting Standards (“IFRSs”), as issued by the International Accounting Standards Board (“IASB”) and IFRS Interpretations Committee (“IFRS IC”) interpretations. The report of the auditors on those financial statements was unqualified and did not contain an emphasis of matter paragraph. The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year.

 

3                                 Accounting policies

 

The accounting policies adopted are consistent with those of the consolidated financial statements for the year ended 30 June 2018, except as described below.

 

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 

New and amended standards adopted by the Group

 

The Group adopted IFRS 9 ‘Financial instruments’ and IFRS 15 ‘Revenue from contracts with customers’ with effect from 1 July 2018. Information on the implementation of new accounting standards is included in the Group’s Annual Report on Form 20-F for the year ended 30 June 2018 — note 2 “Summary of significant accounting policies — Changes in accounting policy and disclosures”.

 

The implementation of IFRS 9 did not have a material impact on the Group’s financial statements as at 1 July 2018.

 

The implementation of IFRS 15 did have a material impact on the Group’s financial statements as at 1 July 2018 and consequently prior year amounts have been restated. Further details can be found in note 34 to the interim consolidated financial statements.

 

18

 

Manchester United plc

Notes to the interim consolidated financial statements (continued) - unaudited

 

3                                 Accounting policies (continued)

 

New and amended standards and interpretations issued but not yet adopted

 

The following new standards, amendments to standards and interpretations are not yet effective and have not been applied in preparing these interim consolidated financial statements. Adoption may affect the recognition, measurement and disclosures in the Group’s financial statements in the future. The adoption of these standards, amendments and interpretations is not expected to have a material impact on the consolidated financial statements of the Group, except as set out below.

 

·                 IFRS 16, “Leases”

 

·                  The Group will adopt IFRS 16 from 1 July 2019. IFRS 16 introduces a single lease accounting model, requiring a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. The lessee is required to recognize a right-of-use asset representing the right to use the underlying asset, and a lease liability representing the obligation to pay lease payments. Thus, leases classified as operating leases with lease payments recorded in the consolidated statement of profit or loss under the existing accounting policy will be included in the consolidated balance sheet.

 

·                  The Group has elected to apply the ‘simplified approach’ on initial adoption of IFRS 16, consequently comparative information will not be restated. The Group has also elected to apply the following transitional practical expedients:

 

·                  lease liabilities will be measured at the present value of the remaining lease payments, discounted using the Group’s incremental borrowing rate as at 1 July 2019;

 

·                  right-of-use assets will be measured at an amount equal to the lease liability.

 

·                  The new treatment of leases will result in an increase in non-current assets and financial liabilities as these leases are capitalised as well as increasing underlying EBITDA, offset by an increase in depreciation and an increase in finance charges. This will result in a higher operating profit. The depreciation charge is constant over the lease period, but finance charges decrease as the remaining lease liability decreases, resulting in a net reduction in profit before tax in the early part of a lease arrangement but a positive profit impact towards the end of the contract in contrast to the typical straight-line treatment of existing operating lease expenses.

 

·                  Based on existing operating lease commitments as at 31 March 2019, the Group expects to recognise right-of-use assets of approximately £4.8 million on 1 July 2019 and lease liabilities of a similar amount. The Group expects that profit before tax for the year ending 30 June 2020 will decrease by approximately £0.1 million as a result of adopting the new standard. Adjusted EBITDA and operating profit are expected to increase by approximately £1.4 million. Operating cash flows will increase and financing cash flows decrease by £1.3 million as repayment of the principal portion of the lease liabilities will be classified as cash flows from financing activities.

 

·                  The Group’s activities as a lessor are not expected to be materially impacted by the new standard.

 

There are no other IFRSs or IFRS IC interpretations that are not yet effective that would be expected to have a material impact on the Group.

 

19

 

Manchester United plc

Notes to the interim consolidated financial statements (continued) - unaudited

 

4                                 Estimates and judgements

 

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim consolidated financial statements are considered to be revenue recognition — minimum guarantee, impairment of goodwill and non-current assets, intangible assets - registrations contingent consideration estimates, tax, and recognition of deferred tax assets.

 

In preparing these interim consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30 June 2018, with the exception of changes in estimates that are required in determining the provision for income taxes.

 

20

 

Manchester United plc

Notes to the interim consolidated financial statements (continued) - unaudited

 

5                                 Seasonality of revenue

 

We experience seasonality in our revenue and cash flow, limiting the overall comparability of interim financial periods. In any given interim period, our total revenue can vary based on the number of games played in that period, which affects the amount of Matchday and Broadcasting revenue recognized. Similarly, certain of our costs are derived from hosting games at Old Trafford, and these costs will also vary based on the number of games played in the period. We historically recognize the most revenue in our second and third fiscal quarters due to the scheduling of matches. However, a strong performance by our first team in European competitions and domestic cups could result in significant additional Matchday and Broadcasting revenue, and consequently we may recognize the most revenue in our fourth fiscal quarter in those years.

 

Commercial revenue (whether settled in cash or value in kind) comprises revenue receivable from the exploitation of the Manchester United brand through sponsorship and other commercial agreements, including minimum guaranteed revenue, revenue receivable from retailing Manchester United branded merchandise in the UK and licensing the manufacture, distribution and sale of such goods globally, and fees for the Manchester United first team undertaking tours. For sponsorship contracts any additional revenue receivable over and above the minimum guaranteed revenue contained in the sponsorship and licensing agreements is taken to revenue when a reliable estimate of the future performance of the contract can be obtained and it is probable that the amounts will not be recouped by the sponsor in future years. Revenue is recognized over the term of the sponsorship agreement in line with the performance obligations included within the contract and based on the sponsorship rights enjoyed by the individual sponsor. In instances where the sponsorship rights remain the same over the duration of the contract, revenue is recognized on a straight-line basis. In respect of contracts with multiple elements, the Group allocates the total consideration receivable to each separately identifiable element based on their relative fair values, and then recognizes the allocated revenue on a straight-line basis over the relevant period of each element. Minimum guaranteed revenue under the agreement with adidas is subject to certain adjustments. Management’s current best estimate is that the full minimum guarantee amount will be received, as management do not expect two consecutive seasons of non-participation in the Champions League. Retail revenue is recognized at the point of sale while license revenue is recognized in the period in which the goods and services are provided.

 

Broadcasting rights revenue represents revenue receivable from all UK and overseas media contracts, including contracts negotiated centrally by the Premier League and UEFA. In addition, broadcasting rights revenue includes revenue receivable from the exploitation of Manchester United media rights through the internet or wireless applications. Distributions from the Premier League comprise a fixed element (which is recognized evenly as domestic Premier League matches are played), facility fees for live coverage and highlights of domestic home and away matches (which are recognized when the respective match is played), and merit awards (which are recognized when domestic Premier League matches are played based on management’s estimate of where the first team will finish at the end of the football season). Distributions from UEFA relating to participation in European competitions comprise market pool payments (which are recognized over the matches played in the competition, a portion of which reflects Manchester United’s performance relative to the other Premier League clubs in the competition), fixed amounts for participation in individual matches (which are recognized when the matches are played) and an individual club coefficient share (which is recognized over the group stage matches).

 

Matchday revenue is recognized based on matches played throughout the year with revenue from each match being recognized only when the match has been played. Revenue from related activities such as Conference and Events or the Museum is recognized as the event or service is provided or the facility is used. Matchday revenue includes revenue receivable from all domestic and European match day activities from Manchester United games at Old Trafford, together with the Group’s share of gate receipts from domestic cup matches not played at Old Trafford, and fees for arranging other events at the Old Trafford stadium. As the Group acts as the principal in the sale of match tickets, the share of gate receipts payable to the other participating club and competition organiser for domestic cup matches played at Old Trafford is treated as an operating expense.

 

21

 

Manchester United plc

Notes to the interim consolidated financial statements (continued) - unaudited

 

6                                 Segment information

 

The principal activity of the Group is the operation of men’s and women’s professional football clubs. All of the activities of the Group support the operation of the football clubs and the success of the men’s first team in particular is critical to the on-going development of the Group. Consequently the chief operating decision maker (being the Board and executive officers of Manchester United plc) regards the Group as operating in one material segment, being the operation of professional football clubs.

 

All revenue derives from the Group’s principal activity in the United Kingdom. Revenue can be analysed into its three main components as follows:

 

		Three months ended 31 March				Nine months ended 31 March
		2019 £’000		Restated(1) 2018 £’000		2019 £’000		Restated(1) 2018 £’000
Commercial		66,616		66,607		208,460		212,385
Broadcasting		53,771		49,330		200,289		165,310
Matchday		31,681		31,122		86,957		90,444
		152,088		147,059		495,706		468,139

 

(1) Comparative amounts have been restated - see note 34 to the interim consolidated financial statements for further details.

 

All non-current assets, other than US deferred tax assets, are held within the United Kingdom.

 

7                                        Operating expenses

 

		Three months ended 31 March				Nine months ended 31 March
		2019 £’000		2018 £’000		2019 £’000		2018 £’000
Employee benefit expenses		(84,800	)	(75,101	)	(239,746	)	(214,662	)
Depreciation - property, plant and equipment (note 14)		(2,819	)	(2,590	)	(8,534	)	(7,854	)
Depreciation - investment property (note 15)		(33	)	(32	)	(97	)	(97	)
Amortization (note 16)		(30,434	)	(32,400	)	(99,005	)	(105,789	)
Other operating expenses		(26,095	)	(26,288	)	(81,049	)	(87,297	)
Exceptional items (note 8)		—		—		(19,599	)	—
		(144,181	)	(136,411	)	(448,030	)	(415,699	)

 

22