MANCHESTER UNITED has reduced its net debt by almost £70 million (€79 million) on the back of record full-year revenue ahead of the football club’s expected $1 billion initial public offering (IPO) in Singapore.
Red Football Ltd, the holding company that owns the English Premier League champions, recorded a 15.7 per cent jump in full-year turnover to £331.4 million in its results to June 30th. The results were buoyed by new sponsorship money and higher match-day and media revenues.
The club’s net debt fell from £377 million to £308 million, although annual interest payments increased by £3.5 million to £43.5 million. Part of the rationale for the upcoming IPO in Singapore is to “de-lever the club further”, according to a person close to the company.
The club recorded pretax profits of £29.7 million compared to a loss of £14.9 million in 2010, boosted by a £16.4 million exchange-rate gain on the company’s dollar debts. That helped compensate for a slimmer profit margin, which declined almost two percentage points to 33.5 per cent. Operating profit increased by more than £9 million to £110.8 million.
The club reported a cash balance of £150.6 million, although that was before the summer transfer season in which some £50 million was spent on new players.
The results represent the opening salvo for the IPO, expected to take place in mid to late October. It is expected that the club will use a two-tier share structure that will minimise the influence of outside shareholders over the US-based Glazer family, which acquired Manchester United for £790 million in 2005.
Chris Searle, an analyst at accountants BDO, said the latest results could contribute to the IPO’s success but expressed reservations about the two-tier share structure. – (Copyright The Financial Times Limited 2011)
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