
Overview and Highlights This section details key management changes, new commercial partnerships, and significant expected growth in international Premier League rights revenue Key Highlights The company announced a new CEO, Richard Arnold, and is actively searching for a permanent manager, while securing a new training kit partnership and anticipating a 30% growth in international Premier League rights revenue - Richard Arnold was appointed as the new Chief Executive Officer, effective February 1, 2022, with Ralf Rangnick serving as Interim Manager for the remainder of the season1 - A new principal training kit partnership was announced with blockchain partner, Tezos1 - The new Premier League rights cycle, commencing in 2022/23, is expected to grow international revenues by 30%, with total international rights anticipated to exceed UK domestic rights for the first time1 Management Commentary CEO Richard Arnold outlined a clear vision for winning and strengthening fan engagement, while CFO Cliff Baty highlighted robust Q2 revenue growth despite COVID-related match postponements - CEO Richard Arnold emphasized a clear vision and strategy to win, fostering a culture of excellence and strengthening the role of fans2 - CFO Cliff Baty noted robust revenue growth of 7.3% for the second fiscal quarter, despite the postponement of two matches due to COVID-192 Financial Performance This section provides a comprehensive overview of the company's Q2 fiscal 2022 financial results, including revenue, EBITDA, net loss, and net debt analysis Key Financials Summary For the second quarter of fiscal 2022, total revenue increased by 7.3% YoY to £185.4 million, primarily driven by a massive recovery in Matchday revenue, while Adjusted EBITDA decreased by 17.6% to £57.9 million, and net debt rose by 8.6% to £494.8 million Q2 & Six Months Fiscal 2022 Financials (£ million) | Metric | Three months ended 31 Dec 2021 | Three months ended 31 Dec 2020 | Change | Six months ended 31 Dec 2021 | Six months ended 31 Dec 2020 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total revenue | 185.4 | 172.8 | 7.3% | 311.9 | 281.8 | 10.7% | | Adjusted EBITDA | 57.9 | 70.3 | (17.6)% | 69.1 | 91.1 | (24.1)% | | (Loss)/profit for the period | (1.4) | 63.9 | - | (16.9) | 33.6 | - | | Basic (loss)/earnings per share (pence) | (0.86) | 39.17 | - | (10.39) | 20.60 | - | | Net debt | 494.8 | 455.5 | 8.6% | 494.8 | 455.5 | 8.6% | Revenue Analysis Total revenue for Q2 was £185.4 million, with Matchday revenue surging by 2,206.7% due to the return of fans, Commercial revenue growing 2.9% from retail, and Broadcasting revenue falling 20.5% due to fewer games played Revenue Breakdown for Q2 FY2022 vs Q2 FY2021 (£ million) | Revenue Stream | Q2 2022 | Q2 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Commercial | 64.4 | 62.6 | 2.9% | | Broadcasting | 86.4 | 108.7 | (20.5)% | | Matchday | 34.6 | 1.5 | 2,206.7% | - Commercial revenue growth was driven by a 17.7% increase in Retail, Merchandising, Apparel & Product Licensing, while Sponsorship revenue decreased by 6.9% due to the expiry of a training kit deal10 - The surge in the Omicron variant in December 2021 resulted in the postponement of two Premier League matches (one home, one away)5 Operating Expenses and Other Financial Items Total operating expenses for the quarter increased by 29.7% YoY to £179.7 million, driven by higher employee benefit expenses and other operating costs related to full-capacity matches, alongside £10.0 million in exceptional compensation costs - Total operating expenses rose 29.7% YoY to £179.7 million11 - Employee benefit expenses increased 19.6% to £97.7 million due to investment in the first team playing squad12 - Exceptional items of £10.0 million were recorded, which includes compensation to the former men's first team manager and certain coaching staff for loss of office15 - Net finance costs were £7.5 million, compared to net finance income of £19.7 million in the prior year quarter, due to unfavorable foreign exchange movements17 Cash Flow and Net Debt In Q2, the company experienced a net cash outflow from operating activities of £31.5 million, a significant shift from the prior year, leading to a decrease in cash and cash equivalents and an increase in net debt to £494.8 million - Net cash outflow from operating activities was £31.5 million for the quarter, compared to a £1.0 million outflow in the prior year quarter19 - Net Debt increased to £494.8 million as of Dec 31, 2021, up from £455.5 million a year earlier21 - The company drew down £40.0 million on its revolving credit facilities during the quarter20 Consolidated Financial Statements This section presents the company's consolidated profit or loss, balance sheet, and cash flow statements for the period, highlighting key financial positions and movements Consolidated Statement of Profit or Loss For the three months ended December 31, 2021, the company reported an operating profit of £5.4 million, significantly down from £48.5 million in the prior year, resulting in a net loss of £1.4 million compared to a £63.8 million profit previously Consolidated Statement of Profit or Loss (Three Months Ended Dec 31, 2021; in £ thousands) | Item | Three months ended 31 Dec 2021 | Three months ended 31 Dec 2020 | | :--- | :--- | :--- | | Revenue | 185,440 | 172,850 | | Operating profit/(loss) | 5,405 | 48,469 | | Net finance (costs)/income | (7,472) | 19,702 | | (Loss)/profit before income tax | (2,067) | 68,171 | | (Loss)/profit for the period | (1,402) | 63,828 | Consolidated Balance Sheet As of December 31, 2021, total assets were £1.366 billion, slightly down from the prior year, while total equity decreased significantly to £246.7 million, and total liabilities increased to £1.119 billion Consolidated Balance Sheet Summary (in £ thousands) | Item | As of 31 Dec 2021 | As of 31 Dec 2020 | | :--- | :--- | :--- | | Total Assets | 1,365,858 | 1,381,600 | | Total Equity | 246,745 | 405,579 | | Total Liabilities | 1,119,113 | 976,021 | | Non-current borrowings | 477,052 | 471,026 | | Current borrowings | 105,185 | 65,114 | Consolidated Statement of Cash Flows For the three months ended December 31, 2021, the company reported a net cash outflow from operating activities of £31.5 million, an outflow from investing activities of £18.7 million, and an inflow from financing activities of £39.6 million, resulting in a net decrease in cash and cash equivalents of £10.6 million Consolidated Statement of Cash Flows (Three Months Ended Dec 31, 2021; in £ thousands) | Item | Three months ended 31 Dec 2021 | Three months ended 31 Dec 2020 | | :--- | :--- | :--- | | Net cash (outflow)/inflow from operating activities | (31,493) | (1,039) | | Net cash outflow from investing activities | (18,657) | (37,255) | | Net cash inflow from financing activities | 39,568 | 59,588 | | Net (decrease)/increase in cash and cash equivalents | (10,582) | 21,294 | Supplemental Information This section explains the company's use of non-IFRS financial measures, such as Adjusted EBITDA and Adjusted profit, and provides their reconciliations to IFRS equivalents Non-IFRS Measures and Reconciliations The company utilizes non-IFRS measures like Adjusted EBITDA and Adjusted profit to offer a clearer perspective on underlying performance, with Q2 Adjusted EBITDA at £57.9 million and Adjusted profit at £7.4 million - The company uses non-IFRS measures such as Adjusted EBITDA, Adjusted profit/(loss), and Net debt to provide insight into its operating performance and financial condition252730 Reconciliation of Net Loss to Adjusted EBITDA (Q2 FY2022; in £ thousands) | Description | Amount | | :--- | :--- | | (Loss)/profit for the period | (1,402) | | Adjustments (Tax, Finance, Amortization, etc.) | 59,349 | | Adjusted EBITDA | 57,947 | Reconciliation of Net Loss to Adjusted Profit (Q2 FY2022; in £ thousands) | Description | Amount | | :--- | :--- | | (Loss)/profit for the period | (1,402) | | Adjustments (Exceptional items, FX, etc.) | 10,739 | | Adjusted income tax expense | (1,966) | | Adjusted profit for the period | 7,396 |