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, 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 ¨

 

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). ¨

 

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). ¨

 

 

 

 

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 21, 2020

 

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

 

 

 

EXHIBIT INDEX

 

Exhibit 
Number
  Description
99.1   Press Release of Manchester United plc, dated May 21, 2020

 

 

 

Exhibit 99.1

 

  

 

CORPORATE RELEASE 21 May 2020

 

Manchester United PLC Reports Third Quarter Fiscal 2020 Results

and Provides COVID-19 Impact

 

Key Points

 

·The COVID-19 pandemic and related lockdown measures resulted in the suspension of all Premier League, FA Cup and UEFA Europa League matches since 13 March
·In compliance with relevant guidelines, Premier League clubs have resumed training on 19 May in preparation for potential restart of the 2019/20 season in June; Europa League to potentially restart in August
·The Club and its Foundation have committed significant resources to COVID-19 responses including support for local hospitals, food banks, schools and other community-based initiatives

 

MANCHESTER, England. – 21 May 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 third quarter ended 31 March 2020.

 

Management Commentary

 

Ed Woodward, Executive Vice Chairman, commented, “Our focus remains on the health and well-being of our colleagues, fans and partners around the world and we are extremely proud of how those connected to the club have responded during this crisis. Since the start of the pandemic, Manchester United and our Foundation have provided assistance to hospitals, charities and schools in our communities, as well as support for frontline workers and vulnerable fans. These actions reflect our core values as a club and the resilience through adversity that we have demonstrated many times throughout our long history and will do so again to weather these current challenges. In that spirit, we look forward to the team safely returning to the pitch and building on the exciting momentum that Ole and the players had previously achieved, while taking all necessary steps to protect public health. Our thoughts remain with all those affected during this unprecedented time.”

 

1

 

 

Fiscal 2020 Guidance

 

The Company is withdrawing its previously issued Fiscal 2020 Revenue and Adjusted EBITDA guidance. Given ongoing uncertainty due to COVID-19 and the evolving related economic and financial consequences, the Company is not providing updated guidance at this time.

 

Key Financials (unaudited)

 

   Three months ended 31 March       Nine months ended 31 March     
£ million (except (loss)/earnings per share)  2020   2019   Change   2020   2019   Change 
Commercial revenue   68.6    66.6    3.0%   219.6    208.4    5.4%
Broadcasting revenue   26.0    53.8    (51.7)%   123.6    200.3    (38.3)%
Matchday revenue   29.1    31.7    (8.2)%   84.3    87.0    (3.1)%
Total revenue   123.7    152.1    (18.7)%   427.5    495.7    (13.8)%
Adjusted EBITDA(1)   27.9    41.2    (32.3)%   134.8    174.9    (22.9)%
Operating (loss)/profit   (3.3)   14.2    -    44.2    72.1    (38.7)%
(Loss)/profit for the period (i.e. net (loss)/income)(2)   (22.8)   7.7    -    13.3    41.1    (67.6)%
Basic (loss)/earnings per share (pence)   (13.89)   4.65    -    8.07    24.96    (67.7)%
Adjusted (loss)/profit for the period (i.e. adjusted net (loss)/income)(1)   (7.3)   7.8    -    22.4    61.1    (63.3)%
Adjusted basic (loss)/earnings per share (pence)(1)   (4.42)   4.72    -    13.61    37.12    (63.3)%
Net debt(1)/(2)   429.1    301.7    42.2%   429.1    301.7    42.2%

 

(1) Adjusted EBITDA, adjusted (loss)/profit for the period, adjusted basic (loss)/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

 

 

COVID-19 Impact

 

Manchester United has taken a range of measures to support its communities in response to the COVID-19 pandemic, including donations to food banks and outreach to elderly and disabled supporters. In addition, the Manchester United Foundation has committed over £1M to community initiatives, including the supply of 60,000 meals for health workers in local hospitals and support for schools and vulnerable children across Greater Manchester. The Club has also used its media platforms to deliver public health messages and to support frontline workers around the world.

 

Operationally, the impact of the pandemic and measures to prevent further spread continues to disrupt its businesses in a number of ways, most significantly in Broadcasting and Matchday operations. Old Trafford and its flagship Megastore operations have been closed to visitors since 20 March 2020 and Museum, Stadium Tour and Red Café operations have been closed since 17 March 2020. Government imposed restrictions have also resulted in the postponement of the Premier League, UEFA competitions and FA Cup competition since 13 March 2020. Postponement of the Premier League and changes to match scheduling has resulted in a reduction in the total broadcasting revenue expected for the season and has impacted broadcasting revenue during the quarter for matches played to date. In addition, during the quarter, Broadcasting and Matchday revenues were impacted due to the postponement of three matches: one away Premier League match, one home Round of 16 Europa League match and one away FA cup quarter-final match.

 

Working Capital and Liquidity

 

As of 31 March 2020, the Company had £90.3m of cash balances together with access to an additional £150m available under the Company’s revolving credit facility. This provides financial flexibility to support the Club through the disruption caused by COVID-19.

 

3

 

 

Revenue Analysis

 

Commercial

 

Commercial revenue for the quarter was £68.6 million, an increase of £2.0 million, or 3.0%, over the prior year quarter.

 

·Sponsorship revenue was £44.7 million, an increase of £3.1 million, or 7.5%, over the prior year quarter, primarily due to new sponsorship deals.
·Retail, Merchandising, Apparel & Product Licensing revenue was £23.9 million, a decrease of £1.1 million, or 4.4%, over the prior year quarter, in part due to the closure of the Old Trafford Megastore mid-March.

 

Broadcasting

 

Broadcasting revenue for the quarter was £26.0 million, a decrease of £27.8 million, or 51.7%, over the prior year quarter, primarily due to an estimated £15.0m Premier League rebate due to broadcasters, following delay and broadcast schedule changes to the 2019/20 football season, non-participation in the UEFA Champions League, and the impact of playing two fewer Premier League away games.

 

Matchday

 

Matchday revenue for the quarter was £29.1 million, a decrease of £2.6 million, or 8.2%, over the prior year quarter, including the impact of postponement of the Round of 16 Europa League home match and closure of non-match day operations in mid-March.

 

Other Financial Information

 

Operating expenses

 

Total operating expenses for the quarter were £131.8 million, a decrease of £12.4 million, or 8.6%, over the prior year quarter.

 

Employee benefit expenses

 

Employee benefit expenses for the quarter were £69.5 million, a decrease of £15.3 million, or 18.0%, over the prior year quarter, due to the impact of net player disposals, loan deals and 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 £26.3 million, an increase of £0.2 million, or 0.8%, over the prior year quarter.

 

Depreciation and amortization

 

Depreciation for the quarter was £3.7 million, an increase of £0.9 million, or 32.1%, over the prior year quarter. Amortization for the quarter was £32.3 million, an increase of £1.8 million, or 5.9 %, over the prior year quarter. The unamortized balance of registrations at 31 March 2020 was £356.4 million.

 

Profit on disposal of intangible assets

 

Profit on disposal of intangible assets for the quarter was £4.8 million, compared to £6.3 million for the prior year quarter.

 

4

 

 

Net finance costs

 

Net finance costs for the quarter were £25.3 million, compared to £3.1 million in the prior year quarter. The increase was due to unrealized foreign exchange losses on unhedged USD borrowings.

 

Income tax

 

The income tax credit for the quarter was £5.8 million, compared to a charge of £3.4 million in the prior year quarter.

 

Cash flows

 

Overall cash and cash equivalents (including the effects of exchange rate movements) decreased by £10.6 million in the quarter, compared to an increase of £3.5 million in the prior year quarter.

 

Net cash inflow from operating activities for the quarter was £26.3 million, an increase of £4.1 million over the prior year quarter.

 

Net capital expenditure on property, plant and equipment for the quarter was £4.7 million, an increase of £3.1 million over the prior year quarter.

 

Net capital expenditure on intangible assets for the quarter was £21.2 million, an increase of £19.2 million over the prior year quarter.

 

Net debt

 

Net Debt as of 31 March 2020 was £429.1 million, an increase of £127.4 million over the prior year quarter, due to an overall decrease in cash and cash equivalents and adverse movements in the GBP:USD exchange rate. The gross USD debt principal remains unchanged.

 

5

 

 

Conference Call Details

 

The Company’s conference call to review fiscal 2020 third quarter results will be broadcast live over the internet today, 21 May 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 certain expectations and uncertainties related to the COVID-19 pandemic and 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) as supplemented by the risk factors contained in the Company’s other filings with the Securities and Exchange Commission.

 

6

 

 

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

 

Adjusted (loss)/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%; 2019: 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% (2019: 21%) applicable during the financial year. A reconciliation of (loss)/profit for the period to adjusted (loss)/profit for the period is presented in supplemental note 3.

 

3.Adjusted basic and diluted (loss)/earnings per share

 

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

 

7

 

 

 

Key Performance Indicators

 

   Three months ended   Nine months ended 
   31 March   31 March 
   2020   2019   2020   2019 
Commercial % of total revenue   55.5%   43.8%   51.4%   42.0%
Broadcasting % of total revenue   21.0%   35.4%   28.9%   40.4%
Matchday % of total revenue   23.5%   20.8%   19.7%   17.6%
Home Matches Played                    
PL   5    5    15    15 
UEFA competitions   1    1    4    4 
Domestic Cups   2    1    4    2 
Away Matches Played                    
PL   4    6    14    16 
UEFA competitions   2    1    5    4 
Domestic Cups   4    3    5    3 
Other                    
Employees at period end   997    950    997    950 
Employee benefit expenses % of revenue   56.2%   55.8%   49.3%   48.4%

 

Contacts

 

Investor Relations:

Corinna Freedman

Head of Investor Relations

+44 161 868 8431

Corinna.Freedman@manutd.co.uk

 

Media Relations:

Charlie Brooks

Director of Communications

+44 161 868 8148

charlie.brooks@manutd.co.uk

 

 

Sard Verbinnen & Co

Jim Barron / Devin Broda

+ 1 212 687 8080

JBarron@SARDVERB.com

dbroda@SARDVERB.com

 

8

 

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

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

 

    Three months ended
31 March
    Nine months ended
31 March
 
    2020     2019     2020     2019  
Revenue from contracts with customers     123,711       152,068       427,537       495,706  
Operating expenses     (131,783 )     (144,181 )     (399,457 )     (448,030 )
Profit on disposal of intangible assets     4,765       6,378       16,067       24,457  
Operating (loss)/profit     (3,307 )     14,265       44,147       72,133  
Finance costs     (25,758 )     (5,361 )     (19,701 )     (16,877 )
Finance income     511       2,213       1,274       2,257  
Net finance costs     (25,247 )     (3,148 )     (18,427 )     (14,620 )
(Loss)/profit before income tax     (28,554 )     11,117       25,720       57,513  
Income tax credit/(expense)     5,701       (3,464 )     (12,438 )     (16,444 )
(Loss)/profit for the period     (22,853 )     7,653       13,282       41,069  
                                 
Basic (loss)/earnings per share:                                
Basic (loss)/earnings per share (pence)     (13.89 )     4.65       8.07       24.96  
Weighted average number of ordinary shares used as the denominator in calculating basic (loss)/earnings per share (thousands)     164,544       164,526       164,563       164,526  
Diluted (loss)/earnings per share:                                
Diluted (loss)/earnings per share (pence)(1)     (13.89 )     4.65       8.06       24.94  
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted (loss)/earnings per share (thousands) (1)     164,544       164,664       164,746       164,664  

 

(1) For the three months ended 31 March 2020 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.

 

9

 

 

CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)

 

    As of  
    31 March
2020
    30 June
2019
    31 March
2019
 
ASSETS                        
Non-current assets                        
Property, plant and equipment     254,994       246,032       246,396  
Right-of-use assets(1)     4,984       -       -  
Investment properties     24,703       24,979       13,739  
Intangible assets     784,746       768,857       718,551  
Deferred tax asset     54,061       58,415       57,057  
Trade receivables     42,429       9,889       9,964  
Income tax receivable     -       -       547  
Derivative financial instruments     1,134       30       777  
      1,167,051       1,108,202       1,047,031  
Current assets                        
Inventories     2,403       2,130       2,083  
Prepayments     10,868       13,030       13,007  
Contract assets – accrued revenue     42,700       39,532       53,073  
Trade receivables     41,106       23,851       118,983  
Other receivables     121       1,188       436  
Income tax receivable     1,223       643       598  
Derivative financial instruments     690       312       511  
Cash and cash equivalents     90,251       307,637       193,855  
      189,362       388,323       382,546  
Total assets     1,356,413       1,496,525       1,429,577  

 

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

 

10

 

 

 

 

CONSOLIDATED BALANCE SHEET (continued)

(unaudited; in £ thousands)

 

    As of  
    31 March
2020
    30 June
2019
    31 March
2019
 
EQUITY AND LIABILITIES                        
Equity                        
Share capital     53       53       53  
Share premium     68,822       68,822       68,822  
Treasury shares     (3,720 )     -       -  
Merger reserve     249,030       249,030       249,030  
Hedging reserve     (35,521 )     (35,544 )     (30,848 )
Retained earnings     135,391       132,841       166,751  
      414,055       415,202       453,808  
Non-current liabilities                        
Deferred tax liabilities     37,126       31,865       33,678  
Contract liabilities - deferred revenue     25,562       33,354       51,079  
Trade and other payables     51,980       79,183       45,559  
Borrowings     517,075       505,779       493,336  
Lease liabilities(1)     3,416       -       -  
Derivative financial instruments     8,538       2,298       21  
      643,697       652,479       623,673  
Current liabilities                        
Contract liabilities - deferred revenue     99,240       190,146       156,138  
Trade and other payables     191,214       230,386       185,733  
Income tax liabilities     4,214       2,859       7,898  
Borrowings     2,302       5,453       2,197  
Lease liabilities(1)     1,687       -       -  
Derivative financial instruments     4       -       130  
      298,661       428,844       352,096  
Total equity and liabilities     1,356,413       1,496,525       1,429,577  

 

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

 

11

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)

 

    Three months ended
31 March
    Nine months ended
31 March
 
    2020     2019     2020     2019  
Cash flows from operating activities                                
Cash generated from operations (see supplemental note 4)     34,333       29,803       15,894       112,140  
Interest paid     (7,944 )     (7,679 )     (17,895 )     (17,186 )
Debt finance costs paid     -       -       (555 )     -  
Interest received     115       697       1,165       2,052  
Tax paid     (200 )     (578 )     (1,897 )     (2,388 )
Net cash inflow/(outflow) from operating activities     26,304       22,243       (3,288 )     94,618  
Cash flows from investing activities                                
Payments for property, plant and equipment     (4,662 )     (1,559 )     (17,692 )     (8,877 )
Payments for intangible assets     (24,419 )     (14,809 )     (211,730 )     (159,865 )
Proceeds from sale of intangible assets     3,225       12,709       25,234       37,892  
Net cash outflow from investing activities     (25,856 )     (3,659 )     (204,188 )     (130,850 )
Cash flows from financing activities                                
Acquisition of treasury shares     (3,372 )     -       (3,372 )     -  
Repayment of borrowings     -       -       -       (3,750 )
Principal elements of lease payments(1)     (399 )     -       (1,160 )     -  
Dividends paid     (11,323 )     (11,610 )     (11,323 )     (11,610 )
Net cash outflow from financing activities     (15,094 )     (11,610 )     (15,855 )     (15,360 )
Net (decrease)/increase in cash and cash equivalents     (14,646 )     6,974       (223,331 )     (51,592 )
Cash and cash equivalents at beginning of period     100,856       190,395       307,637       242,022  
Effects of exchange rate changes on cash and cash equivalents     4,041       (3,514 )     5,945       3,425  
Cash and cash equivalents at end of period     90,251       193,855       90,251       193,855  

 

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

 

12

 

 

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.

 

2Reconciliation of (loss)/profit for the period to adjusted EBITDA

 

    Three months ended
31 March
    Nine months ended
31 March
 
    2020
£’000
    2019
£’000
    2020
£’000
    2019
£’000
 
(Loss)/profit for the period     (22,853 )     7,653       13,282       41,069  
Adjustments:                                
Income tax (credit)/expense     (5,701 )     3,464       12,438       16,444  
Net finance costs     25,247       3,148       18,427       14,620  
Profit on disposal of intangible assets     (4,765 )     (6,378 )     (16,067 )     (24,457 )
Exceptional items     -       -       -       19,599  
Amortization     32,346       30,434       95,790       99,005  
Depreciation     3,683       2,852       10,951       8,631  
Adjusted EBITDA     27,957       41,173       134,821       174,911  

 

13

 

 

 

3Reconciliation of (loss)/profit for the period to adjusted (loss)/profit for the period and adjusted basic and diluted (loss)/earnings per share

 

    Three months ended
31 March
    Nine months ended
31 March
 
    2020
£’000
    2019
£’000
    2020
£’000
    2019
£’000
 
(Loss)/profit for the period     (22,853 )     7,653       13,282       41,069  
Exceptional items     -       -       -       19,599  
Foreign exchange losses/(gains) on unhedged US dollar denominated borrowings     19,664       (1,430 )     2,590       105  
Fair value movement on embedded foreign exchange derivatives     (307 )     138       39       82  
Income tax (credit)/expense     (5,701 )     3,464       12,438       16,444  
Adjusted (loss)/profit before income tax     (9,197 )     9,825       28,349       77,299  
 Adjusted income tax credit/(expense) (using a normalized tax rate of 21% (2019: 21%))     1,931       (2,063 )     (5,953 )     (16,233 )
Adjusted (loss)/profit for the period (i.e. adjusted net (loss)/income)     (7,266 )     7,762       22,396       61,066  
                                 
Adjusted basic (loss)/earnings per share:                                
Adjusted basic (loss)/earnings per share (pence)     (4.42 )     4.72       13.61       37.12  
Weighted average number of ordinary shares used as the denominator in calculating adjusted basic (loss)/earnings per share (thousands)     164,544       164,526       164,563       164,526  
Adjusted diluted (loss)/earnings per share:                                
Adjusted diluted (loss)/earnings per share (pence) (1)     (4.42 )     4.71       13.59       37.09  
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating adjusted diluted (loss)/earnings per share (thousands) (1)     164,544       164,664       164,746       164,664  

 

(1) For the three months ended 31 March 2020 potential ordinary shares are anti-dilutive, as their inclusion in the adjusted diluted loss per share calculation would reduce the loss per share, and hence have been excluded.

 

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4Cash generated from operations

 

    Three months ended
31 March
    Nine months ended
31 March
 
    2020
£’000
    2019
£’000
    2020
£’000
    2019
£’000
 
(Loss)/profit for the period     (22,853 )     7,653       13,282       41,069  
Income tax (credit)/expense     (5,701 )     3,464       12,438       16,444  
(Loss)/profit before income tax     (28,554 )     11,117       25,720       57,513  
Adjustments for:                                
Depreciation     3,683       2,852       10,951       8,631  
Amortization     32,346       30,434       95,790       99,005  
Profit on disposal of intangible assets     (4,765 )     (6,378 )     (16,067 )     (24,457 )
Net finance costs     25,247       3,148       18,427       14,620  
Non-cash employee benefit expense – equity-settled share-based payments     226       164       591       535  
Foreign exchange (gains)/losses on operating activities     (640 )     (94 )     (926 )     88  
Reclassified from hedging reserve     3,177       1,167       8,988       4,011  
Changes in working capital:                                
Inventories     132       527       (273 )     (667 )
Prepayments     2,343       (2,687 )     2,162       (2,145 )
Contract assets – accrued revenue     35,398       26,423       (3,168 )     (15,055 )
Trade receivables     (14,475 )     (91,283 )     (5,971 )     (9,564 )
Other receivables     493       1,161       1,067       (329 )
Contract liabilities – deferred revenue     (42,380 )     44,603       (98,698 )     (10,380 )
Trade and other payables     22,102       8,649       (22,699 )     (9,666 )
Cash generated from operations     34,333       29,803       15,894       112,140  

 

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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 nine months ended 31 March 2020 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.

 

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