Manchester United PLC
Preliminary Results to 31 July 2004
27 September 2004
Preliminary Results – July 04Preliminary Results – July 04Striving to be the best…..on and off the pitchStriving to be the best…..on and off the pitch
Agenda• Overview David Gill
• Financial Review Nick Humby
• Vision & Strategy David Gill
• Commercial Review Andy Anson
• Summary David Gill
Preliminary Results – July 04Preliminary Results – July 04Financial highlightsFinancial highlights
• Strong revenue performance - £169m• Operating profit before depreciation
and amortisation up 6% to £58.3m• PBT down due to player trading
losses of £3.1m• EPS 7.4p (11.5p)• Solid balance sheet - cash held
£36.0mConsistent financial performance
Preliminary Results – July 04Preliminary Results – July 04DividendsDividends
• Progressive dividend policy continues
• Basic up 6% to 2.65p (2.50p)
• Basic increased for 12th consecutive year
• Dividend covered 2.8 times
• Strategic decision to expand stadium takes precedent over special dividend
Consistent dividend policy
Preliminary Results – July 04Preliminary Results – July 04Player / Agent disclosures
• First UK club to provide full disclosure of all player trading activity
• Aim to set benchmark for the sector
• Transparency key to improving industry standards
Consistent high standards of governance
Preliminary Results – July 04Preliminary Results – July 04Profit and loss summary
July 04 July 03
£m Change £m
Turnover 169.0 -2% 173.0
Group operating profit before depreciation and amortisation
58.3 +2% 57.3
Depreciation (6.6) -10% (7.3)
Amortisation (21.8) +4% (21.0)
Exceptional Costs - - (2.2)
Group Operating Profit 29.9 +12% 26.8
(Loss)/profit on disposals (3.1) 12.9
Interest, JV’s etc. 1.1 (0.4)
Profit before tax 27.9 -29% 39.3
Strong operating performance – PBT impacted by player trading
Preliminary Results – July 04Preliminary Results – July 04 Revenue analysisRevenue analysis
Media£62.5m
(£56.2m)
Matchday£61.2m
(£70.6m)
Commercial £45.3m
(£46.2m)
£m £m2003 Revenue 173.0
Less one-off items in 2003ECL Final (3.5)Nike – yr 1 of contract (3.5) (7.0)
166.0MatchdayDomestic cup gate receipts (3.6)ECL – reduced no’ games (4.4)Other 2.1 (5.9)MediaFAPL TV 0.9ECL – new contracts 3.0Domestic Cup 2.4 6.3CommercialVodafone / Platinum 1.1Other 1.5 2.6
2004 Revenue 169.0
Revenue down but improved mix benefits Operating Profit
Preliminary Results – July 04Preliminary Results – July 04 Revenue mixRevenue mix
Underlying revenue from FAPL up
104.7
23.0
1.9
114.9
29.9
1.3
129.9
27.6
8.5
7.0
136.8
25.0
7.3
0
20
40
60
80
100
120
140
160
180
200
2001 2002 2003 2004
One-off factors
Cup
ECL
FAPL
£m
Preliminary Results – July 04 Preliminary Results – July 04 Operating profit before depreciation and Operating profit before depreciation and amortisation upamortisation up
Staff costs£76.9m
(£79.5m)
Operating Profit
£58.3m (£57.3m)
Other Operating Charges£33.9m
(£36.2m)
£m2002/03
55.1Exceptionals 2.2ECL Final (1.3)Nike – yr 1 of contract
(3.5)
52.5Contribution from domestic cup 0.3Contribution from ECL 0.2Staff costs 2.6Other revenues net of costs 2.72003/04
58.3
Operating profit margin 34%
Preliminary Results – July 04 Preliminary Results – July 04
Operating profit before depreciation and Operating profit before depreciation and amortisation by competition amortisation by competition
Premiership and other activities
£30.0m (£26.5m)
ECL£23.6m (£22.3m)
One off factors£0m (£2.6m)
Domestic cup£4.7m (£3.7m)
UCL contribution 40%
Preliminary Results – July 04 Preliminary Results – July 04 Player trading - disposalsPlayer trading - disposals
Profit & Loss
Net cash rec’d/(paid)
in year
Outstanding
asset £m £m £m
Barthez (5.2) (2.6) -
Beckham 0.8 11.9 -
Veron 0.8 5.9 6.3
Butt 1.5 (0.3) 2.0
Cole / Yorke 0.8 0.8 -
Stam - - 12.0
Forlan (1.9) - 1.4
Others 0.1 0.3 0.1
(3.1) 16.0 21.8
Cash generated by player disposals
Preliminary Results – July 04 Preliminary Results – July 04 Player trading - acquisitionsPlayer trading - acquisitions
Capitalised in
the year
Cash paid in the year
Outstanding
creditor £m £m £m
Djemba Djemba - 3.1 0.2
Bellion 0.7 2.3 0.1
Ferdinand 1.5 2.3 0.3
Ronaldo 12.0 4.9 7.1
Kleberson 5.8 5.4 0.4
Heinze 6.8 3.9 2.9
Saha 12.5 12.5 -
Smith 7.1 6.6 0.5
Others 4.2 3.8 2.0
50.6 44.8 13.5
Reinvesting in the squad
Prior years
Current year
Preliminary Results – July 04 Preliminary Results – July 04 Cash flow summaryCash flow summary
2004 2003 Average 99-04
£m £m £m Operating cash flow 58.8 57.9 49.2
Player trading (net) (28.8) (7.9) (22.0)
Tangible fixed assets (net) (4.7) (4.2) (12.7)
Cash inflow before tax, dividends & interest
25.3
16.8
14.5
Cash balances at year end 36.0 28.6
Net Assets 173.4 156.4
Strong cash generation & balance sheet
Preliminary Results – July 04Preliminary Results – July 04Stadium expansion update
● Develop North East and North West quadrants of the stadium
● Increase capacity by 7,800 to 75,600 from start of2006/07 season
● Costs estimated to be £39 million
● Planning application submitted 10 September
● Expected cash payback of 6 years
Largest club stadium in England
Computer image of North East Quadrant
Preliminary Results – July 04Preliminary Results – July 04Our Vision……to be the best football club in the world both on and off the pitch
Developing key strategies for growth:
• Maintain playing success
• Develop media rights
• Leverage global brand
• Treat fans as customers
• Maximise use of Old Trafford
Consistent strategy designed to deliver long-term value
Maintaining Playing Success
Number Contracts Expire
30/6/05 30/6/06 30/6/07 30/6/08 30/6/09 30/6/10
Goalkeepers 3 2 - 1 - - -
Defenders 7 1 1 2 - 3 -
Midfielders 9 - 3 2 3 1 -
Forwards 6 - 1 1 1 2 1
25 3 5 6 4 6 1
Includes Rooney
Continual process of squad development
Preliminary Results – July 04 Preliminary Results – July 04 Media RevenuesMedia Revenues
• FAPL 04/05 - Total value unchanged but no stepped onwards increases
- £2.3m p.a. deposits finished 03/04
- Additional live games granted under new contracts
- Increase in overseas contracts
- Net impact = £8m decrease in 04/05
• UCL 04/05 - 15% (03/04 – 45%) of fixed TV pool due to 3rd in FAPL in 03/04
- 4 English teams (03/04 – 3)
- Net impact = £6m decrease in 04/05
Impact of centrally negotiated media contracts
Preliminary Results – July 04Preliminary Results – July 04Commercial Focus
• CRM• Targeting key markets• Membership• New business initiatives
• Re-alignment of sponsorship structure
• Nike• Vodafone
• Driving profitability• Re-structuring key deals• Efficiency of content creation• New business initiatives
TREATING OUR FANS AS CUSTOMERS
WORKING WITH THE RIGHT PARTNERS
DEVELOPING OUR OWN MEDIA CONTENT
Preliminary Results – July 04 Preliminary Results – July 04 Treating Fans as Customers
Customer Focused Initiatives
• 1.7 million fans attending games
• MU Finance
– 116,000 customers
– International expansion
• One United
– 193,000 members
– International expansion
• 3.8 million shirts in 1st 2 years
• 6 million unique users p.a.
• c100k MUTV subscribers
Customer Relationship Management
• Collected 2.5 million fan records
• Filling data gaps
• Segmentation of fan base
• Tailored communication
• Appropriate products and service
• Contractual improvement of data quality
Preliminary Results – July 04 Preliminary Results – July 04 Targeting Key Markets
‘Must Have’ Business
• Membership
• Merchandise
– Kit
– Non-kit
• Media
– MUTV
– Publishing
– Internet
– Mobile
• Soccer Schools
• Sponsor activation
• Tours to create ‘halo’ effect
Strong focus on most attractive markets
Preliminary Results – July 04 Preliminary Results – July 04 Working With The Right Partners/Media Content
Vodafone
Audi
Re-alignment of sponsorship structure
Media Content
• £36m over 4 years• Mobile JV• Portals Launched in UK, Australia, Sweden and New Zealand
• Significant addition to Platinum tier• 2 Year deal• Cash plus supply of cars
• Nike, Vodafone plus fewer, bigger relationships (primary partners)
• Tailored rights packages• Global activation• Secondary tiers of ‘suppliers’ and ‘promotional partners’
• Importance of MUTV• Content efficiency• New publishing deal
Shirt Sales (000’s)
03/04 02/03 Home 406 1,741Away 631 521Third 259 300
1,296 2,565
Preliminary Results – July 04 Preliminary Results – July 04 Working With The Right Partners - Nike
Europe23%
(22%)
UK55%
(57%)
ROW22%
(21%)• Strong shirt sales for non-
home kit year
• Working closely with Nike to target individuals in key markets more effectively
• Established soccer schools in Hong Kong and Disneyland Paris
• MU Premier Cup - final at Old Trafford
Geographic split of sales
Strong 2nd year of global partnership
Preliminary Results – July 04Preliminary Results – July 04Performance summaryPerformance summary
• FA Cup winners for record 11th time
• Strong results and cash generation
• Continued evolution of playing squad
• Continued success of Nike and Vodafone
partnerships
• Exciting stadium expansion plans
• Progressive growth in basic dividend to 2.65p
Consistently setting high standards
Appendices
Match Day Turnover down 13%Match Day Turnover down 13%
Matchday Catering
£4.1m (£3.4m)
Membership & Travel
£3.1m (£3.8m)
Other(including
tours) £4.8m(£6.8m)
Domestic Cup games
£3.6m (£6.8m)
Executive & Season Ticket
£28.5m (£27.8m)
League Match*£12.2m
(£11.4m)
European games*
£4.9m (£10.6m)
* Includes hospitality
Media Turnover up 11%Media Turnover up 11%
Domestic Cupgames
£3.7m (£1.3m)
UK Radio£0.8m (£0.8m)Overseas
£2.7m (£2.1m)
MUi£1.5m (£1.4m)
ECL TV£20.0m
(£17.0m)
UK Domestic TV equal share
£11.1m (£10.4m)
UK Domestic TV live/merit
£22.7m (£23.2m)
Commercial Turnover down 2%Commercial Turnover down 2%
Other£3.2m (£2.4m)
MU Finance£2.2m (£1.8m)
Non matchday catering
£3.5m (£3.1m)
FAPL Sponsors
£1.1m (£1.3m)
Platinums£5.5m (£5.2m)
Vodafone£9.0m (£8.2m)
Nike£20.8m
(£24.2m)
Media contracts
• Domestic– New FAPL contracts worth £1.3 billion (current £1.4 billion) for 3 years 2004/05 – 2006/07– Distribution principles retained (50% equal share, 25% facility fees, 25% merit awards)– 136 live appearance over 4 packages (current contract = 66 Sky + 40 PPV)– Stepped increases in current contract plus a new limit of 25 live games will mean reduced
income to MU from new contract– Overseas contracts up 29%
• ECL– Current contracts for 3 years from 2003/04 – 2005/06– Distribution
• Participation fee - CHF 2.5m• Group stage - CHF 0.5m per match plus CHF 0.5m win/CHF 0.25m draw• Last 16 - CHF 2.5m• Quarter final - CHF 3.0m• Semi-final - CHF 4.0m• Final - Winner CHF 10m / Runners – up CHF 6m• TV pool - CHF 89m for English clubs
- Fixed = 50% allocated on FAPL prior season finish (1st 40%, 2nd 30%, 3rd 15%, 4th 15%)
- Performance = 50% allocated on number of games played relative to total number of games played by English Clubs.
Number of games played in 2003/04Number of games played in 2003/04
First Half Second Half Year Last Year
Home Games
FAPL 12 7 19 19
ECL 3 1 4 8 FA Cup - 2 2 3
Carling Cup - - - 3
15 10 25 33
Other events 3 1 4 4 18 11 29 37
Away Games FAPL 11 8 19 19
ECL 3 1 4 8
Carling / FA Cup 4 2 6 3
18 11 29 30
Total MU Games 33 21 54 63 TV FAPL
Live Sky 10 4 14 16
PPV 4 2 6 6 Highlights 9 7 16 14
23 13 36 36
Capital Expenditure Since FlotationCapital Expenditure Since Flotation
£,000Stadium developments 1991-2003 93,2192004 – Quadrants development 2,820
96,039
Carrington training ground (phase I & II) 21,268
United Trading Estate 9,125Land/property/car parks 12,5972004 – car parks 1,740 23,462
Other (plant, machinery, fixtures & fittings) 36,0042004 – LED hoardings etc 3,477 39,481
Total to 31 July 2004 180,250