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Manchester United PLC Reports First Quarter Fiscal 2024 Results

Key Points

  • Achieved record total first quarter revenue driven by record Matchday and Commercial revenue
  • Club continues to achieve record ticket sales and attendance while paid global memberships recently surpassed a record 400K, the largest membership program of any global sports team
  • Signed a new multi-year global partnership with WOW HYDRATE, and renewed partnerships with Konami, Concho Y Toro and Mlily
  • Achieved record Megastore turnover during the quarter driven by a strong finish to the 2022/23 season and record 2023/24 kit launches
  • Club opened expanded Women’s facilities at the Carrington Training Complex
  • Club launched an online Official Supporters’ Club Hub during the first quarter

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 2024 fiscal first quarter ended 30 September 2023.

Outlook

For fiscal 2024, the Company is forecasting revenue guidance to be within a range of £635 million to £665 million from prior guidance of £650 million to £680 million and adjusted EBITDA guidance to be within a range of £125 million to £150 million from prior guidance of £140 million to £165 million, owing to the early Champions League exit and related reduction in Broadcasting revenues.

Phasing of Premier League games

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Total

2023/24 season

7

13

10

8

38

2022/23 season

6

10

10

12

38

2021/22 season

6

12

11

9

38

Key Financials (unaudited)

£ million (except loss per share)

Three months ended

30 September

 

 

2023

2022

Change

Commercial revenue

90.4

87.4

3.4%

Broadcasting revenue

39.3

35.0

12.3%

Matchday revenue

27.4

21.3

28.6%

Total revenue

157.1

143.7

9.3%

Adjusted EBITDA(1)

23.3

23.6

(1.3%)

Operating profit/(loss)

1.9

(3.4)

155.9%

 

Loss for the period (i.e. net loss)

(25.8)

(26.5)

2.6%

Basic loss per share (pence)

(15.79)

(16.26)

2.9%

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

(8.6)

(9.9)

13.1%

Adjusted basic loss per share (pence)(1)

(5.27)

(6.08)

13.3%

 

Non-current borrowings in USD (contractual currency) (2)

$650.0

$650.0

0.0%

(1) Adjusted EBITDA, adjusted loss for the period and adjusted basic loss per share 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) In addition to non-current borrowings, the Group maintains a revolving credit facility which varies based on seasonal flow of funds. The outstanding balance of the revolving credit facility as of 30 September 2023 was £200.0 million and total current borrowings including accrued interest payable was £204.4 million.

Revenue Analysis

Commercial

Commercial revenue for the quarter was £90.4 million, an increase of £3.0 million, or 3.4%, over the prior year quarter.

  • Sponsorship revenue was £56.2 million, a decrease of £1.6 million, or 2.8%, over the prior year quarter.
  • Retail, Merchandising, Apparel & Product Licensing revenue was £34.2 million, an increase of £4.6 million, or 15.5%, over the prior year quarter, primarily due to the extension of our partnership with adidas until the end of the 2034/35 season and strong Megastore performance.

Broadcasting

Broadcasting revenue for the quarter was £39.3 million, an increase of £4.3 million, or 12.3%, over the prior year quarter, primarily due to our men’s first team participating in the UEFA Champions League compared to the UEFA Europa League in the prior year quarter, as well as increased income from the Premier League.

Matchday

Matchday revenue for the quarter was £27.4 million, an increase of £6.1 million, or 28.6%, over the prior year quarter, primarily due to playing one more home game in the current year quarter, compared to the prior year quarter.

Other Financial Information

Operating expenses

Total operating expenses for the quarter were £184.7 million, an increase of £21.0 million, or 12.8%, over the prior year quarter.

Employee benefit expenses

Employee benefit expenses for the quarter were £90.3 million, an increase of £8.0 million, or 9.7%, over the prior year quarter, primarily due to the men’s first team participating in the UEFA Champions League in the current year, in addition to investment in the first team playing squad.

Other operating expenses

Other operating expenses for the quarter were £43.5 million, an increase of £5.7 million, or 15.1%, over the prior year quarter. This is primarily due to increased commercial costs and increased matchday costs, due to hosting one additional home game in the current year quarter.

Depreciation and amortization

Depreciation for the quarter was £4.1 million, an increase of £0.6 million, or 17.1%, over the prior year quarter. Amortization for the quarter was £46.8 million, an increase of £6.7 million, or 16.7%, over the prior year quarter, due to investment in the first team playing squad. The unamortized balance of registrations at 30 September 2023 was £539.9 million.

Profit on disposal of intangible assets

Profit on disposal of intangible assets for the quarter was £29.5 million, an increase of £12.9 million, or 77.7%, over the prior year quarter, primarily due to the disposals of Elanga, Fred and Henderson.

Net finance costs

Net finance costs for the quarter were £34.7 million, compared to £31.0 million in the prior year quarter. This is primarily due to an unfavorable swing in foreign exchange rates resulting in unrealized foreign exchange losses on unhedged USD borrowings.

Income tax

The income tax credit for the quarter was £7.0 million, compared to an income tax credit of £7.9 million in the prior year quarter.

Cash flows

Overall cash and cash equivalents (including the effects of exchange rate movements) increased by £5.7 million in the quarter to 30 September 2023 compared to the cash position at 30 June 2023.

Net cash inflow from operating activities for the quarter was £21.5 million, compared to net cash outflow of £6.0 million in the prior year quarter.

Net capital expenditure on property, plant and equipment for the quarter was £9.1 million, an increase of £4.7 million over the prior year quarter, primarily due to expenditure relating to training facilities for our Academy and Women’s teams

Net capital expenditure on intangible assets for the quarter was £106.5 million, an increase of £18.2 million over the prior year quarter, due to increased investment in the first team playing squad.

Net cash inflow from financing activities for the quarter was £99.8 million, compared to a net cash outflow of £0.9m in the prior year quarter, due to a drawdown of £100.0 million on our revolving facilities.

Balance sheet

Our USD non-current borrowings as of 30 September 2023 were $650 million, which was unchanged from 30 September 2022. As a result of the year-on-year change in the USD/GBP exchange rate from 1.1173 at 30 September 2022 to 1.2208 at 30 September 2023, our non-current borrowings when converted to GBP were £528.8 million, compared to £577.4 million at the prior year quarter.

In addition to non-current borrowings, the Group maintains a revolving credit facility which varies based on seasonal flow of funds. Current borrowings at 30 September 2023 were £204.4 million compared to £102.9 million at 30 September 2022.

As of 30 September 2023, cash and cash equivalents were £80.8 million compared to £24.3 million at the prior year quarter.

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 146-year football heritage we have won 67 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. 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.

Non-IFRS Measures: Definitions and Use

1. Adjusted EBITDA

Adjusted EBITDA is defined as loss for the period before depreciation, amortization, profit on disposal of intangible assets, net finance costs, 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), 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 loss for the period to adjusted EBITDA is presented in supplemental note 2.

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

Adjusted loss for the period is calculated, where appropriate, by adjusting for foreign exchange losses/gains on unhedged US dollar denominated borrowings (including foreign exchange gains/losses immediately reclassified from the hedging reserve following change in contract currency denomination of future revenues), and fair value movements on embedded foreign exchange derivatives, subtracting/adding the actual tax credit/expense for the period, and adding the adjusted tax credit for the period (based on an normalized tax rate of 21%; 2022: 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% (2022: 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 per share

Adjusted basic and diluted loss per share are calculated by dividing the adjusted loss for the period by the weighted average number of ordinary shares in issue during the period. Adjusted diluted loss 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 per share are presented in supplemental note 3.

Key Performance Indicators

 

Three months ended

30 September

 

2023

2022

 

 

 

Revenue

 

 

Commercial % of total revenue

57.5%

60.8%

Broadcasting % of total revenue

25.0%

24.4%

Matchday % of total revenue

17.5%

14.8%

 

 

 

 

 

2023/24

Season

 

2022/23

Season

Home Matches Played

 

 

 

PL

4

3

UEFA competitions

1

1

Domestic Cups

-

-

Away Matches Played

 

 

 

PL

3

3

UEFA competitions

1

1

Domestic Cups

-

-

 

 

 

Other

 

 

Employees at period end

1,142

1,205

Employee benefit expenses % of revenue

57.5%

57.3%

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

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

 

 

Three months ended

30 September

 

2023

 

2022

 

Revenue from contracts with customers

157,096

 

143,654

 

Operating expenses

(184,762

)

(163,644

)

Profit on disposal of intangible assets

29,481

 

16,608

 

Operating profit/(loss)

1,815

 

(3,382

)

Finance costs

(34,968

)

(49,730

)

Finance income

349

 

18,742

 

Net finance costs

(34,619

)

(30,988

)

Loss before income tax

(32,804

)

(34,370

)

Income tax credit

7,047

 

7,854

 

Loss for the period

(25,757

)

(26,516

)

 

 

 

Basic and diluted loss per share:

 

 

Basic and diluted loss per share (pence) (1)

(15.79

)

(16.26

)

Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share (thousands) (1)

163,159

 

163,062

 

(1) For the three months ended 30 September 2023 and the three months ended 30 September 2022, 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.

 

CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)

 

 

As of

 

30 September

2023

30 June

2023

30 September

2022

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

256,961

253,282

244,642

Right-of-use assets

8,417

8,760

3,677

Investment properties

19,923

19,993

20,203

Intangible assets

966,766

812,382

920,941

Deferred tax asset

6,244

-

644

Trade receivables

45,014

22,303

19,325

Derivative financial instruments

190

7,492

36,683

 

1,303,515

1,124,212

1,246,115

Current assets

 

 

 

Inventories

5,046

3,165

3,752

Prepayments

36,418

16,487

30,912

Contract assets – accrued revenue

47,343

43,332

46,139

Trade receivables

28,920

31,167

51,224

Other receivables

11,677

9,928

1,929

Income tax receivable

-

5,317

4,547

Derivative financial instruments

6,646

8,317

12,137

Cash and cash equivalents

80,829

76,019

24,277

 

216,879

193,732

174,917

Total assets

1,520,394

1,317,944

1,421,032

 

CONSOLIDATED BALANCE SHEET (continued)

(unaudited; in £ thousands)

 

 

As of

 

30 September

2023

30 June

2023

30 September

2022

EQUITY AND LIABILITIES

 

 

 

Equity

 

 

 

Share capital

53

 

53

 

53

 

Share premium

68,822

 

68,822

 

68,822

 

Treasury shares

(21,305

)

(21,305

)

(21,305

)

Merger reserve

249,030

 

249,030

 

249,030

 

Hedging reserve

(2,947

)

4,002

 

659

 

Retained deficit

(221,669

)

(196,652

)

(196,029

)

 

71,984

 

103,950

 

101,230

 

Non-current liabilities

 

 

 

Deferred tax liabilities

-

 

3,304

 

-

 

Contract liabilities - deferred revenue

7,816

 

6,659

 

20,382

 

Trade and other payables

203,853

 

161,141

 

172,977

 

Borrowings

528,787

 

507,335

 

577,367

 

Lease liabilities

7,766

 

7,844

 

2,588

 

Derivative financial instruments

850

 

748

 

-

 

Provisions

95

 

93

 

11,706

 

 

749,167

 

687,124

 

785,020

 

Current liabilities

 

 

 

Contract liabilities - deferred revenue

214,666

 

169,624

 

171,344

 

Trade and other payables

267,728

 

236,472

 

258,443

 

Income tax liabilities

684

 

-

 

-

 

Borrowings

204,380

 

105,961

 

102,892

 

Lease liabilities

971

 

1,036

 

1,000

 

Derivative financial instruments

499

 

931

 

-

 

Provisions

10,315

 

12,846

 

1,103

 

 

699,243

 

526,870

 

534,782

 

Total equity and liabilities

1,520,394

1,317,944

1,421,032

 

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)

 

 

Three months ended

30 September

 

2023

 

2022

 

Cash flow from operating activities

 

 

Cash generated from operations (see supplemental note 4)

25,871

 

3,619

 

Interest paid

(10,574

)

(9,628

)

Interest received

349

 

18

 

Tax refunded/(paid)

5,817

 

(52

)

Net cash inflow/(outflow) from operating activities

21,463

 

(6,043

)

Cash flow from investing activities

 

 

Payments for property, plant and equipment

(9,029

)

(4,393

)

Payments for intangible assets

(132,213

)

(100,024

)

Proceeds from sale of intangible assets

25,669

 

11,662

 

Net cash outflow from investing activities

(115,573

)

(92,755

)

Cash flow from financing activities

 

 

Proceeds from borrowings

100,000

 

-

 

Principal elements of lease payments

(200

)

(878

)

Net cash inflow/(outflow) from financing activities

99,800

 

(878

)

Effect of exchange rate changes on cash and cash equivalents

(880

)

2,730

 

Net increase/(decrease) in cash and cash equivalents

4,810

 

(96,946

)

Cash and cash equivalents at beginning of period

76,019

 

121,223

 

Cash and cash equivalents at end of period

80,829

 

24,277

 

 

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 loss for the period to adjusted EBITDA

 

Three months ended

30 September

 

2023

£’000

2022

£’000

Loss for the period

(25,757

)

(26,516

)

Adjustments:

 

 

Income tax credit

(7,047

)

(7,854

)

Net finance costs

34,619

 

30,988

 

Profit on disposal of intangible assets

(29,481

)

(16,608

)

Amortization

46,845

 

40,139

 

Depreciation

4,102

 

3,478

 

Adjusted EBITDA

23,281

 

23,627

 

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

 

Three months ended

30 September

 

 

2023

£’000

2022

£’000

Loss for the period

(25,757)

(26,516)

Foreign exchange losses on unhedged US dollar denominated borrowings

13,753

40,440

Fair value movement on embedded foreign exchange derivatives

8,163

(18,612)

Income tax credit

(7,047)

(7,854)

Adjusted loss before income tax

(10,888)

(12,542)

Adjusted income tax credit (using a normalized tax rate of 21% (2022: 21%))

2,286

2,634

Adjusted loss for the period (i.e. adjusted net loss)

(8,602)

(9,908)

 

 

 

 

Adjusted basic and diluted loss per share:

 

 

 

Adjusted basic and diluted loss per share (pence) (1)

(5.27)

(6.08)

Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share (thousands) (1)

163,159

163,062

(1) For the three months ended 30 September 2023 and the three months ended 30 September 2022 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.

4 Cash generated from operations

 

 

Three months ended

30 September

 

2023

£’000

2022

£’000

Loss for the period

(25,757

)

(26,516

)

Income tax credit

(7,047

)

(7,854

)

Loss before income tax

(32,804

)

(34,370

)

Adjustments for:

 

 

Depreciation

4,102

 

3,478

 

Amortization

46,845

 

40,139

 

Profit on disposal of intangible assets

(29,481

)

(16,608

)

Net finance costs

34,619

 

30,988

 

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

740

 

529

 

Foreign exchange gains on operating activities

(142

)

(1,173

)

Reclassified from hedging reserve

(252

)

(163

)

Changes in working capital:

 

 

Inventories

(1,881

)

(1,552

)

Prepayments

(20,119

)

(15,566

)

Contract assets – accrued revenue

(4,011

)

(9,900

)

Trade receivables

(5,245

)

15,983

 

Other receivables

(1,749

)

(360

)

Contract liabilities – deferred revenue

46,199

 

9,182

 

Trade and other payables

(8,237

)

(17,153

)

Provisions

(2,713

)

165

 

Cash generated from operations

25,871

 

3,619

 

 

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