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Manchester United(MANU) - 2024 Q1 - Quarterly Report

Corporate Release and Overview Key Highlights & Outlook The company achieved record revenues in fiscal 2023, driven by strong Commercial and Matchday performance, and projects record revenues of £650-£680 million for fiscal 2024, reflecting strong on-pitch progress and commercial momentum Fiscal 2024 Guidance | Metric | Guidance Range (in millions) | | :--- | :--- | | Revenue | £650 - £680 | | Adjusted EBITDA | £140 - £165 | - Achieved record revenues for fiscal 2023, driven by Commercial and Matchday revenue2 - Announced an industry-leading kit deal with adidas through 2035 and a new front-of-shirt sponsorship with Qualcomm's Snapdragon brand2 - Both men's and women's first teams achieved significant on-pitch progress, including Champions League qualification for both2 Key Financials Summary For the full fiscal year 2023, total revenue grew 11.2% to a record £648.4 million, Adjusted EBITDA increased significantly by 91.0% to £154.9 million, and the net loss narrowed by 75.2% to £28.7 million Fiscal Year 2023 vs 2022 Financial Performance (£ million) | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 648.4 | 583.2 | 11.2% | | Adjusted EBITDA | 154.9 | 81.1 | 91.0% | | Net Loss | (28.7) | (115.5) | 75.2% | | Adjusted Net Loss | (42.1) | (34.0) | (23.8)% | Fourth Quarter 2023 vs 2022 Financial Performance (£ million) | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 167.3 | 118.5 | 41.2% | | Adjusted EBITDA | 43.2 | (8.4) | 614.3% | | Net Loss | (2.9) | (70.7) | 95.9% | - Non-current borrowings remained constant at $650.0 million, with an outstanding revolving credit facility balance of £100.0 million as of 30 June 202356 Operational and Business Highlights Football & Fan Engagement The club actively strengthened both the men's and women's squads with new signings and key contract extensions, while expanding fan engagement initiatives globally - The men's squad was strengthened with additions like Mason Mount, Andre Onana, and Rasmus Hojlund, while Marcus Rashford and Diogo Dalot signed new long-term contracts7 - The women's squad was significantly reinforced with multiple new signings, including Geyse Da Silva Ferreira and Hinata Miyazawa7 - The club delivered a successful summer tour with nearly 400,000 supporters in attendance across 8 cities and 5 countries7 - The number of official Manchester United Supporters' Clubs reached a record 289 in 96 countries7 Facilities - Venue & Operations Fiscal 2023 set new records for match attendance and match-by-match hospitality revenues, with the club continuing to invest in infrastructure upgrades at Old Trafford and Carrington - Achieved record match attendance and match-by-match hospitality revenues in fiscal year 20238 - Sold a record 2.4 million tickets for the 2022/23 season, with 2023/24 season tickets selling out in record time and over 150,000 supporters on the waiting list8 - Ongoing infrastructure upgrades include a new facility for the Women's and Academy teams at Carrington and enhancements at Old Trafford, such as additional rail seats and improved WIFI8 Partnerships The club secured major long-term commercial partnerships, highlighted by a global record kit deal extension with adidas and a new strategic front-of-shirt sponsorship with Qualcomm's Snapdragon brand - Announced a global record kit deal, extending the partnership with adidas as kit supplier through 20359 - Announced a strategic partnership expansion with Qualcomm's Snapdragon brand to become the front-of-shirt sponsor starting with the 2024/25 season9 Digital Products & Experiences The club demonstrated strong digital growth, achieving a 21% increase in e-commerce sales and a record 360,000 paid global memberships, believed to be the largest in world sport - E-commerce sales for fiscal 2023 grew by 21% when excluding the one-off impact from Ronaldo kit sales in the prior year10 - Achieved record sales of global memberships, reaching 360,000 members for the 2022/23 program, believed to be the largest paid membership program in world sport10 - Generated over 318 million digital interactions and 1.5 billion video views across global social platforms in the fourth quarter10 Financial Performance Analysis Revenue Analysis Total revenue for fiscal 2023 increased by 11.2% to £648.4 million, driven by a 17.5% rise in Commercial revenue and a 23.4% increase in Matchday revenue, partially offset by a 2.7% decline in Broadcasting revenue Commercial Revenue Commercial revenue for the full year increased by 17.5% to £302.9 million, primarily due to a significant 28.1% growth in sponsorship revenue reflecting new agreements and the men's first team's 2022 pre-season tour Full Year Commercial Revenue Breakdown (£ million) | Category | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Sponsorship | 189.5 | 147.9 | 28.1% | | Retail, Merchandising, etc. | 113.4 | 109.9 | 3.2% | | Total Commercial | 302.9 | 257.8 | 17.5% | Broadcasting Revenue Broadcasting revenue for the full year decreased by 2.7% to £209.1 million, primarily due to the men's first team's participation in the UEFA Europa League instead of the more lucrative UEFA Champions League - The decrease in annual broadcasting revenue was primarily due to the men's first team participating in the UEFA Europa League compared to the UEFA Champions League in the prior year13 - Quarterly broadcasting revenue increased 91.4% year-over-year, mainly due to playing seven more games and finishing 3rd in the Premier League compared to 6th in the prior year13 Matchday Revenue Matchday revenue for the full year saw strong growth, increasing by 23.4% to £136.4 million, driven by playing seven more home games across all competitions coupled with high demand for match-by-match hospitality - The 23.4% increase in annual matchday revenue was due to playing 7 more home games across all competitions and strong demand for hospitality14 Other Financial Information Total operating expenses for the year decreased by 1.7%, mainly due to a 13.7% reduction in employee benefit expenses, while net finance costs fell by 65.6% due to favorable foreign exchange movements, and the overall cash position decreased by £45.2 million reflecting investment in the playing squad Operating Expenses Employee benefit expenses for the year decreased by 13.7% to £331.4 million due to squad turnover and non-participation in the Champions League, while other operating expenses rose by 38.4% to £163.2 million mainly from pre-season tour and increased matchday costs Operating Expenses Breakdown (FY 2023 vs FY 2022) | Expense Category | FY 2023 (£m) | FY 2022 (£m) | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Employee benefit expenses | 331.4 | 384.2 | -13.7% | Squad turnover and no Champions League participation | | Other operating expenses | 163.2 | 117.9 | +38.4% | Pre-season tour and increased matchday costs | Depreciation, Amortization, and Finance Costs Amortization of player registrations increased by 14.0% to £172.7 million due to continued investment in the first team squad, while net finance costs decreased significantly by 65.6% to £21.4 million due to favorable foreign exchange gains - Amortization for the year was £172.7 million, an increase of 14.0%, due to investment in the first team playing squad17 - Net finance costs decreased by 65.6% to £21.4 million, mainly due to favorable unrealized foreign exchange gains on unhedged USD borrowings17 Cash Flows & Balance Sheet Cash and cash equivalents decreased by £45.2 million during the year, ending at £76.0 million, primarily driven by a net cash outflow from investing activities of £140.2 million for player registrations - Overall cash and cash equivalents decreased by £45.2 million in the year, compared to an increase of £10.6 million in the prior year18 - Net capital expenditure on intangible assets (player registrations) was £124.6 million, an increase of £39.5 million over the prior year19 - As of 30 June 2023, cash and cash equivalents were £76.0 million, down from £121.2 million, primarily due to investment in the first team playing squad20 Consolidated Financial Statements (Unaudited) Consolidated Statement of Profit or Loss For the twelve months ended June 30, 2023, the company reported total revenues of £648.4 million and a net loss of £28.7 million, a significant improvement from the prior year's net loss of £115.5 million due to higher revenue and substantially lower net finance costs Consolidated Statement of Profit or Loss Summary (in £ thousands) | Line Item | Twelve months ended 30 June 2023 | Twelve months ended 30 June 2022 | | :--- | :--- | :--- | | Revenue | 648,401 | 583,201 | | Operating loss | (11,180) | (87,384) | | Net finance costs | (21,394) | (62,239) | | Loss before tax | (32,574) | (149,623) | | Loss for the period | (28,678) | (115,510) | Consolidated Balance Sheet As of June 30, 2023, total assets stood at £1.318 billion, a slight increase from £1.294 billion in the prior year, with intangible assets being the largest component, while total equity decreased to £104.0 million and non-current borrowings decreased in GBP terms due to currency fluctuations Consolidated Balance Sheet Summary (in £ thousands) | Category | As of 30 June 2023 | As of 30 June 2022 | | :--- | :--- | :--- | | Total Assets | 1,317,944 | 1,293,665 | | Non-current assets | 1,124,212 | 1,056,503 | | Current assets | 193,732 | 237,162 | | Total Equity and Liabilities | 1,317,944 | 1,293,665 | | Total Equity | 103,950 | 127,508 | | Total Liabilities | 1,213,994 | 1,166,157 | Consolidated Statement of Cash Flows For the fiscal year, net cash inflow from operating activities was stable at £95.8 million, but a significant net cash outflow of £140.2 million from investing activities, primarily for player acquisitions, resulted in an overall net decrease in cash and cash equivalents of £45.2 million Consolidated Statement of Cash Flows Summary (in £ thousands) | Cash Flow Activity | Twelve months ended 30 June 2023 | Twelve months ended 30 June 2022 | | :--- | :--- | :--- | | Net cash inflow from operating activities | 95,769 | 96,371 | | Net cash outflow from investing activities | (140,160) | (93,431) | | Net cash (outflow)/inflow from financing activities | (1,952) | 5,040 | | Net (decrease)/increase in cash | (45,204) | 10,565 | | Cash and cash equivalents at end of period | 76,019 | 121,223 | Supplemental Information Non-IFRS Measures and Reconciliations The company utilizes non-IFRS measures like Adjusted EBITDA and Adjusted Net Loss to offer a clearer perspective on underlying operational performance by excluding specific items, with Adjusted EBITDA for fiscal 2023 reaching £154.9 million, a 91.0% increase - Adjusted EBITDA is defined as loss for the period before depreciation, amortization, profit on disposal of intangible assets, net finance costs, exceptional items, and tax, used as a measure of comparative operating performance2425 Reconciliation of Loss for the period to Adjusted EBITDA (in £ thousands) | Description | Twelve months ended 30 June 2023 | Twelve months ended 30 June 2022 | | :--- | :--- | :--- | | Loss for the period | (28,678) | (115,510) | | Adjustments (Tax, Finance, Amortization, etc.) | 183,606 | 196,659 | | Adjusted EBITDA | 154,928 | 81,149 | Reconciliation of Loss for the period to Adjusted Loss (in £ thousands) | Description | Twelve months ended 30 June 2023 | Twelve months ended 30 June 2022 | | :--- | :--- | :--- | | Loss for the period | (28,678) | (115,510) | | Adjustments (Exceptional items, FX, Tax, etc.) | (13,465) | 81,549 | | Adjusted loss for the period | (42,143) | (33,961) |