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 February, 2020
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

 

 

 


 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

99.1

 

Press Release of Manchester United plc, dated February 25, 2020

 

2


 

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: February 25, 2019

 

 

MANCHESTER UNITED PLC

 

 

 

 

 

By:

/s/ Edward Woodward

 

 

 

Name: Edward Woodward

 

 

Title: Executive Vice Chairman

 

 

3


Exhibit 99.1

 

 

CORPORATE RELEASE

25 February 2020

 

Manchester United PLC Reports Second Quarter Fiscal 2020 Results;

Reiterates Fiscal Year 2020 Guidance

 

·                                          2Q Fiscal 2020 Revenues of £168.4 million

·                                          2Q Fiscal 2020 Adjusted EBITDA of £72.1 million

·                                          2Q Fiscal 2020 Operating Profit of £36.5 million

 

Highlights

 

·                      Announced recent first team addition of Bruno Fernandes

·                      Announced new global partnership with Mondelez International — the multinational group behind many renowned brands including Cadbury, Oreo and belVita

·                      Commenced strategic partnership with Alibaba including future cross-platform collaboration

·                      The Premier League announced a ground-breaking new 6-year pan-Nordic broadcasting deal with NENT Group effective in 2022 through 2028

·                      Reiterates Fiscal Year 2020 guidance of Revenues of £560 to £580 million and Total Adjusted EBITDA of £155 to £165 million

 

MANCHESTER, England. — 25 February 2020 — 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 2020 fiscal second quarter ended 31 December 2019.

 

Management Commentary

 

Ed Woodward, Executive Vice Chairman, commented, “We are pushing for a strong finish in the Premier League, the Europa League and the FA Cup as we enter the final third of the season. We have continued to make progress on our squad rebuild, with many changes in terms of players that we have brought in and players that have come through our Academy; the foundation for delivering the long-term success that we are all working towards is in place as we implement our plan and our footballing vision with Ole.”

 

1


 

Outlook

 

For fiscal 2020, the Company continues to expect total revenues to be in a range of £560 to £580 million and total adjusted EBITDA to be in a range of £155 to £165 million.

 

Phasing of Premier League
games

 

Quarter 1

 

Quarter 2

 

Quarter 3

 

Quarter 4

 

Total

 

2019/20 season*

 

7

 

13

 

11

 

7

 

38

 

2018/19 season

 

7

 

13

 

11

 

7

 

38

 

 


*Subject to changes in broadcasting scheduling

 

Key Financials (unaudited)

 

 

 

Three months ended
31 December

 

 

 

Six months ended
31 December

 

 

 

£ million (except earnings
per share)

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

Commercial revenue

 

70.6

 

65.9

 

7.1

%

151.0

 

141.8

 

6.5

%

Broadcasting revenue

 

64.7

 

103.7

 

(37.6

)%

97.6

 

146.5

 

(33.4

)%

Matchday revenue

 

33.1

 

39.0

 

(15.1

)%

55.2

 

55.3

 

(0.2

)%

Total revenue

 

168.4

 

208.6

 

(19.3

)%

303.8

 

343.6

 

(11.6

)%

Adjusted EBITDA(1)

 

72.1

 

104.3

 

(30.9

)%

106.9

 

133.7

 

(20.0

)%

Operating profit

 

36.5

 

44.0

 

(17.0

)%

47.5

 

57.9

 

(18.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period (i.e. net income)(2)

 

35.0

 

26.8

 

30.6

%

36.1

 

33.4

 

8.1

%

Basic earnings per share (pence)

 

21.27

 

16.27

 

30.7

%

21.96

 

20.31

 

8.1

%

Adjusted profit for the period (i.e. adjusted net income)(1)

 

25.8

 

46.3

 

(44.3

)%

29.7

 

53.3

 

(44.3

)%

Adjusted basic earnings per share (pence)(1)

 

15.67

 

28.13

 

(44.3

)%

18.02

 

32.40

 

(44.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt(1)/(2)

 

391.3

 

317.7

 

23.2

%

391.3

 

317.7

 

23.2

%

 


(1) Adjusted EBITDA, adjusted profit for the period, adjusted basic earnings per share and net debt are non-IFRS measures. See “Non-IFRS Measures: Definitions and Use” on page 6 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 gross USD debt principal remains unchanged.

 

2


 

Revenue Analysis

 

Commercial

 

Commercial revenue for the quarter was £70.6 million, an increase of £4.7 million, or 7.1%, over the prior year quarter.

 

·                  Sponsorship revenue was £45.1 million, an increase of £4.8 million, or 11.9%, over the prior year quarter, primarily due to increased sponsorship deals.

 

·                  Retail, Merchandising, Apparel & Product Licensing revenue was £25.5 million, a decrease of £0.1 million, or 0.4%, over the prior year quarter.

 

Broadcasting

 

Broadcasting revenue for the quarter was £64.7 million, a decrease of £39.0 million, or 37.6%, over the prior year quarter, primarily due to non-participation in the UEFA Champions League. Guaranteed UEFA broadcasting revenues are typically recognised evenly over the course of the competition’s group stages. Given 5 of the 6 group stage matches were played in the quarter, the majority of the full year revenue impact has occurred in Q2.

 

Matchday

 

Matchday revenue for the quarter was £33.1 million, a decrease of £5.9 million, or 15.1%, over the prior year quarter, primarily due to playing two fewer home games across the Premier League and UEFA competitions; partially offset by playing an additional domestic cup home game.

 

Other Financial Information

 

Operating expenses

 

Total operating expenses for the quarter were £131.2 million, a decrease of £29.1 million, or 18.2%, over the prior year quarter.

 

Employee benefit expenses

 

Employee benefit expenses for the quarter were £70.9 million, a decrease of £7.0 million, or 9.0%, over the prior year quarter, primarily due to reductions in player salaries as a result of non-participation in the UEFA Champions League.

 

Other operating expenses

 

Other operating expenses for the quarter were £25.4 million, a decrease of £1.0 million, or 3.8%, over the prior year quarter.

 

Depreciation and amortization

 

Depreciation for the quarter was £3.7 million, an increase of £0.7 million, or 23.3%, over the prior year quarter. Amortization for the quarter was £31.2 million, a decrease of £2.2 million, or 6.6%, over the prior year quarter. The unamortized balance of registrations at 31 December 2019 was £329.2 million.

 

Exceptional items

 

Exceptional items for the quarter were £nil. Exceptional items for the prior year quarter £19.6 million, relating to compensation to the former manager and certain members of the coaching staff for loss of office.

 

3


 

Loss on disposal of intangible assets

 

Loss on disposal of intangible assets for the quarter was £0.7 million, compared to £4.3 million for the prior year quarter.

 

Net finance income/(costs)

 

Net finance income for the quarter was £15.3 million, compared to net finance costs of £6.3 million in the prior year quarter, primarily due to unrealized foreign exchange gains on unhedged USD borrowings compared to losses in the prior year quarter.

 

Income tax

 

The income tax expense for the quarter was £16.8 million, compared to £10.9 million in the prior year quarter.

 

Cash flows

 

Overall cash and cash equivalents (including the effects of exchange rate movements) decreased by £39.4 million in the quarter, compared to a decrease of £57.1 million in the prior year quarter.

 

Net cash outflow from operating activities for the quarter was £15.2 million, a decrease of £27.2 million over the prior year quarter. This is primarily due to lower working capital movements as a result of non-participation in the UEFA Champions League.

 

Net capital expenditure on property, plant and equipment for the quarter was £9.9 million, an increase of £7.5 million over the prior year quarter.

 

Net capital expenditure on intangible assets for the quarter was £7.1 million, a decrease of £9.1 million over the prior year quarter.

 

Net debt

 

Net Debt as of 31 December 2019 was £391.3 million, an increase of £73.6 million over the year, primarily due to an overall decrease in cash and cash equivalents. The gross USD debt principal remains unchanged.

 

Dividend

 

A semi-annual cash dividend of $0.09 per share was paid on 6 January 2020. A further semi-annual cash dividend of $0.09 per share will be paid on 3 June 2020, to shareholders of record on 24 April 2020. The stock will begin to trade ex-dividend on 23 April 2020.

 

4


 

Conference Call Details

 

The Company’s conference call to review fiscal 2020 second quarter results will be broadcast live over the internet today, 25 February 2020 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 142-year football heritage we have won 66 trophies, enabling us to develop what we believe is one of the world’s leading sports and entertainment brands with a global community of 1.1 billion fans and followers. Our large, passionate and highly engaged fan base provides Manchester United with a worldwide platform to generate significant revenue from multiple sources, including sponsorship, merchandising, product licensing, broadcasting and matchday initiatives which in turn, directly fund our ability to continuously reinvest in the club.

 

Cautionary Statements

 

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).

 

5


 

Non-IFRS Measures: Definitions and Use

 

1.                  Adjusted EBITDA

 

Adjusted EBITDA is defined as profit for the period before depreciation, amortization, profit/loss on disposal of intangible assets, exceptional items, net finance costs/income, and tax.

 

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), material volatile items (primarily profit on disposal of intangible assets and exceptional items), 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 for the period to adjusted EBITDA is presented in supplemental note 2.

 

2.                  Adjusted profit for the period (i.e. adjusted net income)

 

Adjusted 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 embedded foreign exchange derivatives, 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 21%; 2018: 21%). The normalized tax rate of 21% is the current US federal corporate income tax rate.

 

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 21% (2018: 21%) applicable during the financial year. A reconciliation of profit for the period to adjusted profit for the period is presented in supplemental note 3.

 

3.    Adjusted basic and diluted earnings per share

 

Adjusted basic and diluted earnings per share are calculated by dividing the adjusted profit for the period by the weighted average number of ordinary shares in issue during the period. Adjusted diluted 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. There is 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 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.

 

6


 

Key Performance Indicators

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

 

 

 

 

2019

 

2018

 

2019

 

2018

 

Commercial % of total revenue

 

41.9

%

31.6

%

49.7

%

41.3

%

Broadcasting % of total revenue

 

38.4

%

49.7

%

32.1

%

42.6

%

Matchday % of total revenue

 

19.7

%

18.7

%

18.2

%

16.1

%

Home Matches Played

 

 

 

 

 

 

 

 

 

PL

 

6

 

7

 

10

 

10

 

UEFA competitions

 

2

 

3

 

3

 

3

 

Domestic Cups

 

1

 

 

2

 

1

 

Away Matches Played

 

 

 

 

 

 

 

 

 

PL

 

7

 

6

 

10

 

10

 

UEFA competitions

 

3

 

2

 

3

 

3

 

Domestic Cups

 

1

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Employees at period end

 

979

 

937

 

979

 

937

 

Employee benefit expenses % of revenue

 

42.1

%

37.3

%

46.5

%

45.1

%

 

Contacts

 

Investor Relations:

Media Relations:

Corinna Freedman

Charlie Brooks

Head of Investor Relations

Director of Communications

+44 161 868 8431

+44 161 868 8148

Corinna.Freedman@manutd.co.uk

charlie.brooks@manutd.co.uk

 

 

 

Sard Verbinnen & Co

 

Jim Barron / Devin Broda

 

+ 1 212 687 8080

 

JBarron@SARDVERB.com

 

dbroda@SARDVERB.com

 

7


 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

(unaudited; in £ thousands, except per share and shares outstanding data)

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

2019

 

2018

 

2019

 

2018

 

Revenue from contracts with customers

 

168,455

 

208,612

 

303,826

 

343,638

 

Operating expenses

 

(131,253

)

(160,269

)

(267,674

)

(303,849

)

(Loss)/profit on disposal of intangible assets

 

(715

)

(4,349

)

11,302

 

18,079

 

Operating profit

 

36,487

 

43,994

 

47,454

 

57,868

 

Finance costs

 

(5,386

)

(7,131

)

(11,912

)

(12,946

)

Finance income

 

20,644

 

785

 

18,732

 

1,474

 

Net finance income/(costs)

 

15,258

 

(6,346

)

6,820

 

(11,472

)

Profit before income tax

 

51,745

 

37,648

 

54,274

 

46,396

 

Income tax expense

 

(16,738

)

(10,878

)

(18,139

)

(12,980

)

Profit for the period

 

35,007

 

26,770

 

36,135

 

33,416

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Basic earnings per share (pence)

 

21.27

 

16.27

 

21.96

 

20.31

 

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share (thousands)

 

164,573

 

164,526

 

164,573

 

164,526

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Diluted earnings per share (pence)

 

21.25

 

16.26

 

21.94

 

20.29

 

Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share (thousands)

 

164,746

 

164,663

 

164,737

 

164,663

 

 

8


 

CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)

 

 

 

As of

 

 

 

31 December
2019

 

30 June
2019

 

31 December
2018

 

ASSETS

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

253,523

 

246,032

 

246,910

 

Right-of-use assets(1)

 

5,168

 

 

 

Investment properties

 

24,792

 

24,979

 

13,772

 

Intangible assets

 

758,476

 

768,857

 

739,472

 

Deferred tax asset

 

53,862

 

58,415

 

57,636

 

Trade receivables

 

40,586

 

9,889

 

10,387

 

Income tax receivable

 

 

 

547

 

Derivative financial instruments

 

 

30

 

2,559

 

 

 

1,136,407

 

1,108,202

 

1,071,283

 

Current assets

 

 

 

 

 

 

 

Inventories

 

2,535

 

2,130

 

2,610

 

Prepayments

 

13,211

 

13,030

 

10,320

 

Contract assets — accrued revenue

 

78,098

 

39,532

 

79,496

 

Trade receivables

 

26,313

 

23,851

 

32,819

 

Other receivables

 

614

 

1,188

 

1,597

 

Income tax receivable

 

618

 

643

 

598

 

Derivative financial instruments

 

 

312

 

625

 

Cash and cash equivalents

 

100,856

 

307,637

 

190,395

 

 

 

222,245

 

388,323

 

318,460

 

Total assets

 

1,358,652

 

1,496,525

 

1,389,743

 

 


(1) Relates to adoption of IFRS 16, “Leases” with effect from 1 July 2019. See supplemental note 5 for further details.

 

9


 

CONSOLIDATED BALANCE SHEET (continued)

(unaudited; in £ thousands)

 

 

 

As of

 

 

 

31 December
2019

 

30 June
2019

 

31 December
2018

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

Share capital

 

53

 

53

 

53

 

Share premium

 

68,822

 

68,822

 

68,822

 

Merger reserve

 

249,030

 

249,030

 

249,030

 

Hedging reserve

 

(26,247

)

(35,544

)

(35,693

)

Retained earnings

 

169,341

 

132,841

 

170,544

 

 

 

460,999

 

415,202

 

452,756

 

Non-current liabilities

 

 

 

 

 

 

 

Deferred tax liabilities

 

37,766

 

31,865

 

33,302

 

Contract liabilities - deferred revenue

 

23,605

 

33,354

 

32,952

 

Trade and other payables

 

31,241

 

79,183

 

46,644

 

Borrowings

 

486,852

 

505,779

 

502,576

 

Lease liabilities(1)

 

3,626

 

 

 

Derivative financial instruments

 

2,323

 

2,298

 

 

 

 

585,413

 

652,479

 

615,474

 

Current liabilities

 

 

 

 

 

 

 

Contract liabilities - deferred revenue

 

143,577

 

190,146

 

129,662

 

Trade and other payables

 

152,093

 

230,386

 

180,588

 

Income tax liabilities

 

9,429

 

2,859

 

5,771

 

Borrowings

 

5,288

 

5,453

 

5,492

 

Lease liabilities(1)

 

1,622

 

 

 

Derivative financial instruments

 

231

 

 

 

 

 

312,240

 

428,844

 

321,513

 

Total equity and liabilities

 

1,358,652

 

1,496,525

 

1,389,743

 

 


(1) Relates to adoption of IFRS 16, “Leases” with effect from 1 July 2019. See supplemental note 5 for further details.

 

10


 

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)

 

 

 

Three months ended 
31 December

 

Six months ended
31 December

 

 

 

2019

 

2018

 

2019

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Cash (used in)/generated from operations (see supplemental note 4)

 

(13,833

)

(41,019

)

(18,439

)

82,337

 

Interest paid

 

(1,585

)

(1,734

)

(9,951

)

(9,507

)

Debt finance costs paid

 

 

 

(555

)

 

Interest received

 

406

 

722

 

1,050

 

1,355

 

Tax paid

 

(208

)

(376

)

(1,697

)

(1,810

)

Net cash (outflow)/inflow from operating activities

 

(15,220

)

(42,407

)

(29,592

)

72,375

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Payments for property, plant and equipment

 

(9,879

)

(2,414

)

(13,030

)

(7,318

)

Payments for intangible assets

 

(11,598

)

(16,418

)

(187,311

)

(145,056

)

Proceeds from sale of intangible assets

 

4,530

 

255

 

22,009

 

25,183

 

Net cash outflow from investing activities

 

(16,947

)

(18,577

)

(178,332

)

(127,191

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Repayment of borrowings

 

 

 

 

(3,750

)

Principal elements of lease payments(1)

 

(382

)

 

(761

)

 

Net cash outflow from financing activities

 

(382

)

 

(761

)

(3,750

)

Net decrease in cash and cash equivalents

 

(32,549

)

(60,984

)

(208,685

)

(58,566

)

Cash and cash equivalents at beginning of period

 

140,307

 

247,505

 

307,637

 

242,022

 

Effects of exchange rate changes on cash and cash equivalents

 

(6,902

)

3,874

 

1,904

 

6,939

 

Cash and cash equivalents at end of period

 

100,856

 

190,395

 

100,856

 

190,395

 

 


(1) Relates to adoption of IFRS 16, “Leases” with effect from 1 July 2019. See supplemental note 5 for further details.

 

11


 

SUPPLEMENTAL NOTES

1                                         General information

 

Manchester United plc (the “Company”) and its subsidiaries (together the “Group”) is a men’s and women’s professional football club together with related and ancillary activities. The Company incorporated under the Companies Law (as amended) of the Cayman Islands.

 

2                               Reconciliation of profit for the period to adjusted EBITDA

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

2019
£’000

 

2018
£’000

 

2019
£’000

 

2018
£’000

 

Profit for the period

 

35,007

 

26,770

 

36,135

 

33,416

 

Adjustments:

 

 

 

 

 

 

 

 

 

Income tax expense

 

16,738

 

10,878

 

18,139

 

12,980

 

Net finance (income)/costs

 

(15,258

)

6,346

 

(6,820

)

11,472

 

Loss/(profit) on disposal of intangible assets

 

715

 

4,349

 

(11,302

)

(18,079

)

Exceptional items

 

 

19,599

 

 

19,599

 

Amortization

 

31,257

 

33,440

 

63,444

 

68,571

 

Depreciation

 

3,626

 

2,970

 

7,268

 

5,779

 

Adjusted EBITDA

 

72,085

 

104,352

 

106,864

 

133,738

 

 

12


 

3                               Reconciliation of profit for the period to adjusted profit for the period and adjusted basic and diluted earnings per share

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

2019
£’000

 

2018
£’000

 

2019
£’000

 

2018
£’000

 

Profit for the period

 

35,007

 

26,770

 

36,135

 

33,416

 

Exceptional items

 

 

19,599

 

 

19,599

 

Foreign exchange (gains)/losses on unhedged US dollar denominated borrowings

 

(19,522

)

1,316

 

(17,074

)

1,535

 

Fair value movement on embedded foreign exchange derivatives

 

425

 

25

 

346

 

(56

)

Income tax expense

 

16,738

 

10,878

 

18,139

 

12,980

 

Adjusted profit before income tax

 

32,648

 

58,588

 

37,546

 

67,474

 

Adjusted income tax expense (using a normalized tax rate of 21% (2018: 21%))

 

(6,856

)

(12,303

)

(7,885

)

(14,170

)

Adjusted profit for the period (i.e. adjusted net income)

 

25,792

 

46,285

 

29,661

 

53,304

 

 

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per share:

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per share (pence)

 

15.67

 

28.13

 

18.02

 

32.40

 

Weighted average number of ordinary shares used as the denominator in calculating adjusted basic earnings per share (thousands)

 

164,573

 

164,526

 

164,573

 

164,526

 

Adjusted diluted earnings per share:

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share (pence)

 

15.66

 

28.11

 

18.01

 

32.37

 

Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating adjusted diluted earnings per share (thousands)

 

164,746

 

164,663

 

164,737

 

164,663

 

 

13


 

4                               Cash (used in)/generated from operations

 

 

 

Three months ended
31 December

 

Six months ended
31 December

 

 

 

2019
£’000

 

2018
£’000

 

2019
£’000

 

2018
£’000

 

Profit for the period

 

35,007

 

26,770

 

36,135

 

33,416

 

Income tax expense

 

16,738

 

10,878

 

18,139

 

12,980

 

Profit before income tax

 

51,745

 

37,648

 

54,274

 

46,396

 

Adjustments for:

 

 

 

 

 

 

 

 

 

Depreciation

 

3,626

 

2,970

 

7,268

 

5,779

 

Amortization

 

31,257

 

33,440

 

63,444

 

68,571

 

Loss/(profit) on disposal of intangible assets

 

715

 

4,349

 

(11,302

)

(18,079

)

Net finance (income)/costs

 

(15,258

)

6,346

 

(6,820

)

11,472

 

Non-cash employee benefit expense — equity-settled share-based payments

 

227

 

161

 

365

 

371

 

Foreign exchange losses/(gains) on operating activities

 

87

 

(95

)

(286

)

182

 

Reclassified from hedging reserve

 

2,957

 

1,536

 

5,811

 

2,844

 

Changes in working capital:

 

 

 

 

 

 

 

 

 

Inventories

 

129

 

56

 

(405

)

(1,194

)

Prepayments

 

2,171

 

2,336

 

(181

)

542

 

Contract assets — accrued revenue

 

(38,165

)

(33,643

)

(38,566

)

(41,478

)

Trade receivables

 

6,160

 

2,442

 

8,504

 

81,719

 

Other receivables

 

14,655

 

(1,438

)

574

 

(1,490

)

Contract liabilities — deferred revenue

 

(66,449

)

(97,181

)

(56,318

)

(54,983

)

Trade and other payables

 

(7,690

)

54

 

(44,801

)

(18,315

)

Cash (used in)/generated from operations

 

(13,833

)

(41,019

)

(18,439

)

82,337

 

 

14


 

5                                         Adoption of IFRS 16

 

The Group adopted IFRS 16, “Leases” with effect from 1 July 2019. The Group has elected to apply the ‘simplified approach’ on initial adoption of IFRS 16, consequently comparative information has not been restated.

 

The new treatment of leases has resulted in an increase in non-current assets and financial liabilities as well as increasing underlying EBITDA, offset by an increase in depreciation and an increase in finance charges.

 

The Group expects that adjusted EBITDA for the year ended 30 June 2020 will increase by approximately £1.7 million. Profit before tax is expected to decrease by approximately £0.1 million.

 

Lease payments were previously presented as operating cash flows. Lease payments are now split into payments for the principal portion of the lease liability which are presented as financing cash flows, and payments for the interest portion of the lease liability which are presented as operating cash flows. There is no impact on overall cash flow.

 

Note 3 and note 15 to the interim consolidated financial statements for the three and six months ended 31 December 2019 provide further detail on the adoption of IFRS 16 and the impact on the consolidated income statement, consolidated balance sheet, and consolidated statement of cash flows.

 

15