Manchester United(MANU) - 2024 Q2 - Quarterly Report

Revenue Performance - Total revenue for the three months ended 31 December 2023 was £225.8 million, a 34.9% increase compared to the same period in 2022[7] - Broadcasting revenue for the three months ended 31 December 2023 was £106.4 million, an 81.0% increase compared to the same period in 2022[10] - Matchday revenue for the three months ended 31 December 2023 was £47.6 million, a 59.2% increase compared to the same period in 2022[11] - Total revenue for the six months ended 31 December 2023 was £382.9 million, a 23.1% increase compared to the same period in 2022[19] - Broadcasting revenue for the six months ended 31 December 2023 was £145.7 million, a 55.5% increase compared to the same period in 2022[22] - Matchday revenue for the six months ended 31 December 2023 was £75.0 million, a 46.5% increase compared to the same period in 2022[23] - Revenue from contracts with customers for the six months ended 31 December 2023 was £382.852 million, compared to £311.022 million for the same period in 2022[65] - Broadcasting revenue for the six months ended 31 December 2023 was £145.8 million, a significant increase from £93.8 million in the same period in 2022[99] - Matchday revenue for the six months ended 31 December 2023 was £74.9 million, up from £51.2 million in the same period in 2022[99] - Commercial revenue for the six months ended 31 December 2023 was £162.1 million, slightly down from £166.1 million in the same period in 2022[99] Operating Expenses - Total operating expenses for the three months ended 31 December 2023 were £198.7 million, an 18.6% increase compared to the same period in 2022[12] - Employee benefit expenses for the three months ended 31 December 2023 were £95.1 million, a 23.0% increase compared to the same period in 2022[12] - Total operating expenses for the six months ended 31 December 2023 were £383.4 million, a 15.7% increase compared to the same period in 2022[24] - Employee benefit expenses increased to £185.4 million for the six months ended 31 December 2023, compared to £159.6 million in the same period in 2022[105] Financial Performance - Operating profit for the six months ended 31 December 2023 was £29.309 million, compared to an operating loss of £6.242 million for the same period in 2022[65] - The company reported a loss of £5.383 million for the six months ended 31 December 2023, compared to a loss of £20.210 million in the same period in 2022[117] - Basic loss per share for the six months ended 31 December 2023 was 3.30 pence, compared to 12.39 pence in the same period in 2022[117] - The Group's profit before income tax for the three months ended 31 December 2023 was £27,219,000, compared to a loss of £5,585,000 for the six months ended 31 December 2023[175] Cash Flow and Liquidity - As of 31 December 2023, the company had cash resources of £62.8 million and access to an undrawn revolving facility of £40 million[30] - Net cash outflow from operating activities for the six months ended 31 December 2023 was £25.1 million, compared to £67.5 million in 2022[39] - Net cash outflow from investing activities for the six months ended 31 December 2023 was £146.2 million, an increase of £23.0 million from 2022[42] - Net cash inflow from financing activities for the six months ended 31 December 2023 was £159.5 million, driven by a £160.0 million drawdown on revolving facilities[43] - Net cash outflow from operating activities was £25.1 million for the six months ended 31 December 2023, compared to £67.6 million in the same period in 2022[77] - Net cash outflow from investing activities increased to £146.2 million for the six months ended 31 December 2023, primarily due to higher payments for intangible assets related to player registrations[77] - Cash and cash equivalents stood at £62.8 million as of 31 December 2023, with access to undrawn revolving facilities of £40 million[82] - The company received a cash injection of $200 million related to a minority investment by Sir Jim Ratcliffe, with an additional $100 million expected by 31 December 2024[83] - The Group repaid £120 million of revolving facilities in February 2024, reducing total drawdown to £140 million from available facilities of £300 million[199] Debt and Borrowings - The company's senior secured notes outstanding as of 31 December 2023 were £331.6 million, with a principal amount of $425.0 million[45] - The secured term loan facility outstanding as of 31 December 2023 was £174.9 million, with a principal amount of $225.0 million[49] - Manchester United has £135 million in outstanding loans and £15 million in borrowing capacity under its initial revolving facility as of 31 December 2023[54] - The new revolving facility has £62.5 million in outstanding loans and £12.5 million in borrowing capacity as of 31 December 2023, with a maturity date of 25 June 2027[56] - The bilateral revolving facility also has £62.5 million in outstanding loans and £12.5 million in borrowing capacity as of 31 December 2023, with a maturity date of 25 June 2027[57] - The company has outstanding loans of £260 million under revolving facilities, with secured notes and term loans maturing in 2027 and 2029 respectively[82] - Total borrowings as of 31 December 2023 were £773,301,000, up from £613,296,000 in June 2023 but down from £741,900,000 in December 2022[162] - Senior secured notes as of 31 December 2023 were £331,572,000, slightly down from £332,112,000 in June 2023 and £350,626,000 in December 2022[162] - Secured term loan facility as of 31 December 2023 was £174,937,000, slightly down from £175,223,000 in June 2023 and £185,028,000 in December 2022[166] - The Group has £260,000,000 in outstanding loans and £40,000,000 in borrowing capacity under revolving facilities, with £150,000,000 of the facilities terminating on 4 April 2025 and the remainder on 25 June 2027[167] Assets and Liabilities - Total assets as of 31 December 2023 were £1.472 billion, compared to £1.427 billion as of 31 December 2022[70] - Total equity as of 31 December 2023 was £96.017 million, compared to £109.752 million as of 31 December 2022[73] - Current liabilities as of 31 December 2023 were £661.426 million, compared to £608.290 million as of 31 December 2022[73] - Total equity decreased from £127.5 million at 30 June 2022 to £96.0 million at 31 December 2023, reflecting a comprehensive loss over the period[75] - The net book amount of property, plant, and equipment as of 31 December 2023 was £255.246 million, up from £243.434 million in the same period in 2022[124] - Investment properties had a fair value of £32,970,000 as of 30 June 2023, with no impairment indicators noted as of 31 December 2023[137] - Goodwill remained unchanged at £421,453,000 as of 31 December 2023, with no impairment indicators identified[140] - Additions to registrations (intangible assets) were £215,086,000 in the six months ended 31 December 2023, contributing to a net book amount of £494,157,000[141] - Deferred tax liability decreased to £924,000 as of 31 December 2023 from £3,304,000 as of 30 June 2023[147] - Inventories as of 31 December 2023 increased to £4,024,000 from £3,165,000 in June 2023 and £3,272,000 in December 2022[149] - Net trade receivables as of 31 December 2023 were £105,886,000, up from £53,470,000 in June 2023 but down from £137,633,000 in December 2022[150] - Gross contractual trade receivables as of 31 December 2023 were £108,900,000, compared to £54,393,000 in June 2023 and £139,199,000 in December 2022[151] - Cash and cash equivalents as of 31 December 2023 were £62,809,000, down from £76,019,000 in June 2023 but up from £31,045,000 in December 2022[156] - Trade payables as of 31 December 2023 increased to £348,707,000 from £302,708,000 in June 2023 and £290,239,000 in December 2022[160] - Gross contractual trade payables as of 31 December 2023 were £378,560,000, compared to £317,809,000 in June 2023 and £307,913,000 in December 2022[161] - The Group's total provisions decreased from £12,939,000 at 30 June 2023 to £11,063,000 at 31 December 2023, with a significant reassessment of provisions leading to a £1,876,000 credit[168] - The Group's pension scheme deficit was £27.5 million as of 31 August 2020, with current annual contributions of £573,000 increasing by 5% annually from September 2024[173] - The Group's hedging reserve decreased from £4,002,000 at 30 June 2023 to a negative £25,000 at 31 December 2023, primarily due to changes in the cash flow hedge reserve[187] - Capital commitments for property, plant, and equipment were £2,166,000 as of 31 December 2023, down from £5,152,000 in June 2023[193] Player Transfers and Contingent Liabilities - The maximum additional amount payable for contingent consideration related to player transfers is £158.0 million as of 31 December 2023[61] - The maximum additional amount payable for contingent consideration related to player registrations could impact the net book value of registrations[143] - The Group's contingent liabilities for potential additional transfer fees increased to £158,040,000 at 31 December 2023, up from £133,142,000 at 30 June 2023[190] - The Group has probable contingent assets of £250,000 from player transfer performance conditions as of 31 December 2023, compared to £nil in previous periods[192] - Total performance-related conditions for players amount to £158,040,000, including £112,368,000 for first team squad appearances and success[194] - Post-31 December 2023, player registration disposals generated net proceeds of £989,000 and additional receivables of £207,000[196] Strategic Investments and Shareholder Changes - Sir Jim Ratcliffe acquired 27.7% of Manchester United's voting rights through a $200 million investment, with an additional $100 million to be invested by 31 December 2024[197] - Post-transaction, the Glazer family controls 69.1% of voting power, while Sir Jim Ratcliffe holds 27.7%[200] Accounting and Financial Policies - Revenue recognition is subject to seasonality, with the highest revenue typically recognized in the second and third fiscal quarters due to match scheduling[89] - Commercial revenue includes sponsorship agreements, retail sales, and licensing, with revenue recognized over the term of sponsorship agreements based on performance obligations[90] - The company's financial statements are prepared on a going concern basis, with management confident in meeting obligations for at least 12 months from the report date[83] - The adoption of new accounting standards, such as amendments to IAS 1 regarding deferred tax, has not materially affected the financial statements[84] - The Group signed a 10-year extension with adidas, with a total minimum guarantee of £1,650 million (£750 million original term + £900 million extension), subject to adjustments based on team performance[93] - Payments may increase by up to £4.4 million annually if the men's or women's teams win major competitions, or decrease by £10 million per year if the men's team fails to participate in the UEFA Champions League starting from the 2025/26 season[93] - The estimated weighted average annual tax rate for the year to 30 June 2024 is 15.72%, down from 20.99% in the previous year[114] - The US federal corporate income tax rate of 21% is lower than the UK corporation tax rate of 25%, potentially sheltering future US cash tax with UK tax credits[145] Miscellaneous - Amortization for the three months ended 31 December 2023 was £50.5 million, a 12.2% increase compared to the same period in 2022[14] - Exceptional items for the six months ended 31 December 2023 were a cost of £9.6 million, primarily related to the strategic review and sale of shares to Sir Jim Ratcliffe[26] - Profit on disposal of intangible assets for the six months ended 31 December 2023 was £29.9 million, compared to £14.0 million in the same period in 2022[27] - Net finance costs for the six months ended 31 December 2023 increased to £34.9 million from £18.9 million in 2022, driven by higher interest costs and derivative valuation changes[28] - Income tax credit for the six months ended 31 December 2023 was £0.2 million, down from £4.9 million in 2022[29] - Exceptional items for the three and six months ended 31 December 2023 were £9.6 million, related to strategic review and share sale agreement with Sir Jim Ratcliffe[107] - Profit on disposal of registrations for the six months ended 31 December 2023 was £29.9 million, compared to £14.0 million in the same period in 2022[108] - Net finance costs for the six months ended 31 December 2023 were £34.894 million, compared to £18.873 million in the same period in 2022[109] - Total finance costs for the six months ended 31 December 2023 were £37.842 million, up from £21.956 million in the same period in 2022[109] - Total finance income for the six months ended 31 December 2023 was £2.948 million, down from £3.083 million in the same period in 2022[109] - No dividends were paid in the six months ended 31 December 2023, consistent with the same period in 2022[121] - Additions to right-of-use assets for the six months ended 31 December 2023 amounted to £113,000, down from £301,000 in the same period in 2022[126] - Total lease liabilities decreased to £8,565,000 as of 31 December 2023 from £8,880,000 as of 30 June 2023[129] - Additions to lease liabilities were £6,084,000 in the first half of 2023, significantly increasing from £300,000 in the second half of 2022[130] - Depreciation charge for right-of-use assets totaled £639,000 for the six months ended 31 December 2023, compared to £1,020,000 for the same period in 2022[131] - The cost of inventories recognized as an expense for the six months ended 31 December 2023 was £8,614,000, compared to £12,307,000 for the year ended 30 June 2023 and £7,042,000 for the six months ended 31 December 2022[149]