Manchester United PLC Reports First Quarter Fiscal 2022 Results

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 2022 fiscal first quarter ended 30 September 2021.

Ed Woodward, Executive Vice Chairman, commented, “While these financial results today demonstrate our resilience through the pandemic, our top priority is success on the pitch. The manager, players and everyone at the club are determined to achieve that objective.”

Key Financials (unaudited)

£ million (except loss per share)

Three months ended
30 September

2021

2020

Change

Commercial revenue

64.4

59.7

7.9%

Broadcasting revenue

43.3

47.6

(9.0%)

Matchday revenue

18.8

1.7

1005.9%

Total revenue

126.5

109.0

16.1%

Adjusted EBITDA(1)

11.2

20.8

(46.2%)

Operating loss

(10.2)

(27.1)

(62.4%)

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

(15.5)

(30.3)

(48.8%)

Basic loss per share (pence)

(9.53)

(18.58)

(48.7%)

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

(12.5)

(24.6)

(49.2%)

Adjusted basic loss per share (pence)(1)

(7.67)

(15.12)

(49.3%)

Non-current and current borrowings(2)

538.4

499.5

7.8%

Cash and cash equivalents(2)

98.7

58.9

67.6%

Net debt(1)/(2)

439.7

440.6

(0.2%)

(1) Adjusted EBITDA, adjusted loss for the period, adjusted basic loss per share and net debt are non-IFRS measures. See “Non-IFRS Measures: Definitions and Use” on page 7 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. Non-current and current borrowings and cash and cash equivalents as of 30 September 2021 reflect the impact of a £60.0 million drawdown on our £200 million revolving credit facilities during the second quarter of fiscal 2021.

COVID-19 Impact
Due to remaining summer restrictions on overseas travel, we did not undertake a first team overseas tour at the start of fiscal 2022, and instead we played four domestic games, two of which were held at Old Trafford. Whilst the nature of the ongoing pandemic may result in UK government restrictions being re-imposed in the future, the majority of such restrictions were lifted ahead of the start of the 2021/22 season, with Old Trafford stadium welcoming back fans at full capacity.

Phasing of Premier League games

 

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Total

2021/22 season*

 

6

14

10

8

38

2020/21 season

 

2

13

14

9

38

2019/20 remaining season

 

6

-

-

-

6

Total FY 2021

 

8

13

14

9

44

2019/20 season

 

7

13

9

3

32

 

*Subject to changes in broadcasting scheduling

Revenue Analysis

Commercial
Commercial revenue for the quarter was £64.4 million, an increase of £4.7 million, or 7.9%, over the prior year quarter.

  • Sponsorship revenue was £36.3 million, a decrease of £0.2 million, or 0.5%, over the prior year quarter.
  • Retail, Merchandising, Apparel & Product Licensing revenue was £28.1 million, an increase of £4.9 million, or 21.1%, over the prior year quarter primarily due to increased Megastore footfall as a result of home games being played in front of a full capacity crowd, combined with the impact of new player signings. In the prior year quarter all home games were played behind closed doors.

Broadcasting
Broadcasting revenue for the quarter was £43.3 million, a decrease of £4.3 million, or 9.0%, over the prior year quarter, primarily due to playing four fewer home and away games across domestic competitions, due to the completion of the 2019/20 Premier League and FA Cup competitions during the prior year quarter. This is partially offset by the impact of playing two UEFA Champions League games in the current quarter compared to three UEFA Europa League games in the prior year quarter (relating to completion of the 2019/20 UEFA competition).

Matchday
Matchday revenue for the quarter was £18.8 million, an increase of £17.1 million, or 1005.9%, over the prior year quarter, due to all five home games being played in front of a full capacity crowd. All five home games in the prior year quarter were played behind closed doors.

Other Financial Information

Operating expenses
Total operating expenses for the quarter were £154.1 million, an increase of £30.6 million, or 24.8%, over the prior year quarter.

Employee benefit expenses
Employee benefit expenses for the quarter were £88.5 million, an increase of £16.6 million, or 23.1%, over the prior year quarter due to investment in the first team playing squad.

Other operating expenses
Other operating expenses for the quarter were £26.8 million, an increase of £10.5 million, or 64.4%, over the prior year quarter. This includes the impact of all home games being played in front of a full capacity crowd and costs related to the increased activity at the Old Trafford Megastore. In the prior year quarter all home games were played behind closed doors.

Depreciation and amortization
Depreciation for the quarter was £3.7 million, a decrease of £0.1 million, or 2.6%, over the prior year quarter. Amortization for the quarter was £35.1 million, an increase of £3.6 million, or 11.4%, over the prior year quarter. The unamortized balance of registrations at 30 September 2021 was £422.5 million.

Profit/(loss) on disposal of intangible assets
Profit on disposal of intangible assets for the quarter was £17.4 million, compared to a loss of £12.6 million for the prior year quarter.

Net finance (costs)/income
Net finance costs for the quarter were £9.6 million, compared to net finance income of £nil in the prior year quarter, primarily due to an unfavourable swing in unrealized foreign exchange movements in the current quarter compared to a favourable swing in the prior year quarter.

Income tax
The income tax credit for the quarter was £4.3 million, compared to an income tax expense of £3.2 million in the prior year quarter.

Cash flows
Overall cash and cash equivalents (including the effects of exchange rate movements) decreased by £12.0 million in the quarter to 30 September 2021 compared to the cash position at 30 June 2021.

Net cash inflow from operating activities for the quarter was £63.6 million, compared to net cash inflow from operating activities in the prior year quarter of £62.3 million.

Net capital expenditure on property, plant and equipment for the quarter was £3.7 million, an increase of £1.9 million over the prior year quarter.

Net capital expenditure on intangible assets for the quarter was £61.1 million, an increase of £9.5 million over the prior year quarter.

Net cash outflow from financing activities for the quarter was £11.1 million, an increase of £10.7 million over the prior year quarter. Current quarter cash outflow includes a semi-annual cash dividend of $0.09 per share paid on 30 July 2021.

Net debt
Net Debt as of 30 September 2021 was £439.7 million, compared to £440.6 million as of 30 September 2020. As of 30 September 2021, the Company had undrawn credit facilities of £140.0 million.

Dividend
A semi-annual cash dividend of $0.09 per share will be paid on 7 January 2022, to shareholders of record on 1 December 2021. The stock will begin to trade ex-dividend on 30 November 2021.

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 143-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).

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, 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/loss on disposal of intangible assets), capital structure (primarily finance costs/income), 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%; 2020: 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% (2020: 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.

4. Net debt
Net debt is calculated as non-current and current borrowings minus cash and cash equivalents.

Key Performance Indicators

Three months ended
30 September

2021

2020

Revenue

Commercial % of total revenue

50.9%

54.8%

Broadcasting % of total revenue

34.2%

43.7%

Matchday % of total revenue

14.9%

1.5%

2021/22
Season

2020/21
Season

Carryover
2019/20
Season

Home Matches Played

PL

3

1

3

UEFA competitions

1

-

1

Domestic Cups

1

-

-

Away Matches Played

PL

3

1

3

UEFA competitions

1

-

2

Domestic Cups

-

2

1

Other

Employees at period end

1,044

992

Employee benefit expenses % of revenue

70.0%

66.0%

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

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

 

 

Three months ended
30 September

 

2021

2020

Revenue from contracts with customers

 

126,461

108,972

Operating expenses

 

(154,103

)

(123,473

)

Profit/(loss) on disposal of intangible assets

 

17,476

(12,595

)

Operating loss

 

(10,166

)

(27,096

)

Finance costs

 

(15,964

)

(19,574

)

Finance income

 

6,310

19,595

Net finance (costs)/income

 

(9,654

)

21

Loss before income tax

 

(19,820

)

(27,075

)

Income tax credit/(expense)

 

4,281

(3,195

)

Loss for the period

 

(15,539

)

(30,270

)

 

Basic and diluted loss per share:

 

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

 

(9.53

)

(18.58

)

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

 

162,996

162,939

 

(1) For the three months ended 30 September 2021 and the three months ended 30 September 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.

CONSOLIDATED BALANCE SHEET

(unaudited; in £ thousands)

 

 

As of

 

30 September
2021

30 June
2021

30 September
2020

ASSETS

 

Non-current assets

 

Property, plant and equipment

 

247,298

247,059

253,026

Right-of-use assets

 

3,955

4,383

4,179

Investment properties

 

20,483

20,553

20,762

Intangible assets

 

848,859

754,467

780,646

Deferred tax asset

 

-

-

54,712

Trade receivables

 

42,736

20,404

25,078

Derivative financial instruments

 

5,121

499

693

 

1,168,452

1,047,365

1,139,096

Current assets

 

Inventories

 

2,771

2,080

3,542

Prepayments

 

25,781

7,407

19,930

Contract assets – accrued revenue

 

35,357

40,544

26,875

Trade receivables

 

46,715

50,370

69,742

Other receivables

 

1,261

460

438

Income tax receivable

 

1,108

1,108

1,223

Derivative financial instruments

 

1,308

318

1,764

Cash and cash equivalents

 

98,666

110,658

58,940

 

212,967

212,945

182,454

Total assets

 

1,381,419

1,260,310

1,321,550

CONSOLIDATED BALANCE SHEET (continued)

(unaudited; in £ thousands)

 

 

As of

 

30 September
2021

  

30 June
2021

  

30 September
2020

 

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

 

(10,606

)

 

(10,436

)

 

(15,437

)

Retained (deficit)/earnings

 

(39,325

)

 

(13,652

)

 

58,192

 

246,669

 

272,512

 

339,355

Non-current liabilities

 

  

  

 

Deferred tax liabilities

 

30,814

 

35,546

 

24,944

Contract liabilities - deferred revenue

 

16,829

 

22,942

 

26,970

Trade and other payables

 

105,246

 

67,517

 

56,645

Borrowings

 

476,156

 

465,049

 

497,292

Lease liabilities

 

2,996

 

3,083

 

3,223

Derivative financial instruments

 

4,820

 

5,472

 

8,219

Provisions

 

4,373

 

4,157

 

-

 

641,234

 

603,766

 

617,293

Current liabilities

 

  

  

 

Contract liabilities - deferred revenue

 

189,675

 

117,984

 

165,483

Trade and other payables

 

233,713

 

192,661

 

188,806

Income tax liabilities

 

6,093

 

6,036

 

7,580

Borrowings

 

62,247

 

65,187

 

2,214

Lease liabilities

 

943

 

1,257

 

819

Derivative financial instruments

 

188

 

262

 

-

Provisions

 

657

 

645

 

-

 

493,516

 

384,032

 

364,902

Total equity and liabilities

 

1,381,419

 

1,260,310

 

1,321,550

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited; in £ thousands)

 

 

Three months ended
30 September

 

2021

2020

Cash flow from operating activities

 

Cash generated from operations (see supplemental note 4)

 

71,687

72,410

Interest paid

 

(7,792

)

(7,686

)

Interest received

 

2

1

Tax paid

 

(335

)

(2,415

)

Net cash inflow from operating activities

 

63,562

62,310

Cash flow from investing activities

 

Payments for property, plant and equipment

 

(3,628

)

(1,819

)

Payments for intangible assets

 

(72,200

)

(70,807

)

Proceeds from sale of intangible assets

 

11,083

19,191

Net cash outflow from investing activities

 

(64,745

)

(53,435

)

Cash flow from financing activities

 

Principal elements of lease payments

 

(416

)

(408

)

Dividends paid

 

(10,669

)

-

Net cash outflow from financing activities

 

(11,085

)

(408

)

Net (decrease)/increase in cash and cash equivalents

 

(12,268

)

8,467

Cash and cash equivalents at beginning of period

 

110,658

51,539

Effect of exchange rate changes on cash and cash equivalents

 

276

(1,066

)

Cash and cash equivalents at end of period

 

98,666

58,940

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

 

2021
£’000

 

2020
£’000

 

Loss for the period

 

(15,539

)

(30,270

)

Adjustments:

 

 

 

Income tax (credit)/expense

 

(4,281

)

3,195

Net finance costs/(income)

 

9,654

(21

)

(Profit)/loss on disposal of intangible assets

 

(17,476

)

12,595

Amortization

 

35,134

31,543

Depreciation

 

3,691

3,786

Adjusted EBITDA

 

11,183

20,828

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

 

2021
£’000

  

2020
£’000

 

Loss for the period

 

(15,539

)

 

(30,270

)

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

 

9,969

 

(19,083

)

Foreign exchange losses immediately reclassified from the hedging reserve following change in contract currency denomination of future revenues

 

-

 

14,837

Fair value movement on embedded foreign exchange derivatives

 

(5,982

)

 

130

Income tax (credit)/expense

 

(4,281

)

 

3,195

Adjusted loss before income tax

 

(15,833

)

 

(31,191

)

Adjusted income tax credit (using a normalized tax rate of 21% (2020: 21%))

 

3,325

 

6,550

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

 

(12,508

)

 

(24,641

)

 

  

 

Adjusted basic and diluted loss per share:

 

  

 

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

 

(7.67

)

 

(15.12

)

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

 

162,996

 

162,939

 

(1) For the three months ended 30 September 2021 and the three months ended 30 September 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.

4 Cash generated from operations

 

Three months ended
30 September

 

2021
£’000

  

2020
£’000

 

Loss for the period

 

(15,539

)

 

(30,270

)

Income tax (expense)/credit

 

(4,281

)

 

3,195

Loss before income tax

 

(19,820

)

 

(27,075

)

Adjustments for:

 

  

 

Depreciation

 

3,691

 

3,786

Amortization

 

35,134

 

31,543

(Profit)/loss on disposal of intangible assets

 

(17,476

)

 

12,595

Net finance costs/(income)

 

9,654

 

(21

)

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

 

535

 

1,265

Foreign exchange losses on operating activities

 

96

 

1,124

Reclassified from hedging reserve

 

(60

)

 

(526

)

Changes in working capital:

 

  

 

Inventories

 

(691

)

 

(1,356

)

Prepayments

 

(18,527

)

 

(13,427

)

Contract assets – accrued revenue

 

5,187

 

19,091

Trade receivables

 

291

 

53,306

Other receivables

 

(801

)

 

(199

)

Contract liabilities – deferred revenue

 

65,578

 

2,120

Trade and other payables

 

8,668

 

(9,816

)

Provisions

 

228

 

-

Cash generated from operations

 

71,687

 

72,410

Contacts:

Investor Relations:
Corinna Freedman
Head of Investor Relations
+44 738 491 0828
Corinna.Freedman@manutd.co.uk

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