Manchester United PLC Reports Second Quarter Fiscal 2023 Results

Key Points

• The men's first team won the Carabao Cup on 26 February at Wembley for the 6^th time; the team also advances to the FA Cup Semi-finals
• For the 2022/23 domestic and European seasons to date, the men's first team is currently in third place in the Premier League and has advanced to the UEFA Europa League Quarter-finals
• For the 2022/23 Women's Super League season, the women's team is currently in first place in the league and has advanced to the Semi-finals of the Women's FA Cup
• Club continues to achieve record-breaking attendance and Matchday hospitality revenues, as well as record global memberships and record Museum & Tour visits; season to date 2022/23 ticket sales have surpassed the record set in 2016/17
• Club recently announced a return to the US for its Summer Tour 2023 with a first announced match against Wrexham AFC in San Diego at Snapdragon Stadium on 25 July
• For fiscal 2023, the Company reiterates its previous revenue guidance of £590 million to £610 million and its adjusted EBITDA guidance of £125 million to £140 million
• Company reports net profit for the second quarter of £6.3 million

Manchester United (NYSE:MANU, the "Company, " the "Group" and the "Club"))) – one of the most popular and successful sports teams in the world – today announced financial results for the 2023 fiscal second quarter ended 31 December 2022.

Outlook

For fiscal 2023, the Company reiterates its previous revenue guidance of £590 million to £610 million and its previous adjusted EBITDA guidance of £125 million to £140 million.

Key Financials (unaudited)

Football

• The men's first team won the Carabao Cup on 26 February at Wembley for the 6^th time
• The men's first team advances to the Semi-finals of the FA Cup
• For the 2022/23 domestic and European seasons to date, the men's first team is currently in third place in the Premier League and has advanced to the UEFA Europa League Quarter-finals
• In the January transfer window, the men's first team signed Marcel Sabitzer, Wout Weghorst and Jack Butland on loan until the end of the 2022/23 season
• For the 2022/23 Women's Super League season, the women's team is currently placed first in the league and has advanced to the Semi-finals of the Women's FA Cup
• In the January transfer window, the women's team signed Jayde Riviere, Estelle Cascarino and Lisa Naalsund
• Club appointed David Harrison as Director of Football Operations
• Club recently announced a return to the US for its Summer Tour 2023 with a first announced match against Wrexham AFC in San Diego at Snapdragon Stadium on 25 July; information on additional tour matches in the US will be released in the upcoming weeks

Fan Engagement

• Club held quarterly meetings of the Fans' Advisory Board and the Fans' Forum
• Implemented the Premier League Fan Engagement Standard
• Following consultation with fan representatives, the Club committed to restore the Stretford End to all-general admission seating in time for the 2024/25 season
• During the quarter, fan supporters' clubs reached a record 275 clubs in 94 countries
• Partnered with fan groups to commemorate 65^th anniversary of the Munich Air Disaster at events in Munich and Manchester attended by thousands of fans on 6 February
• Red and white scarves were gifted to the 33,000 United fans who travelled to the Carabao Cup Final at Wembley on 26 February

Facilities – Venue and Operations

• Record match attendance and match-by-match hospitality revenues were driven by strong pitch performance across all competitions; ticket sales for the current 2022/23 season have surpassed the record set in 2016/17 totalling a cumulative 2.3 million tickets sold
• Record sales of global memberships, including sell-out of a new Premium Membership tier; memberships currently stand at 360,000 for the 2022/23 season, the largest paid membership program in world sport; in February, the club also launched a dedicated Junior membership package tailored to a younger fanbase
• Continued exceptional demand for tickets, with over 145,000 individuals currently on the Season Ticket waiting list; 2023/24 renewals were launched in February, with prices of adult Season Tickets increasing by approximately 5%, following 11 consecutive seasons of frozen ticket pricing; ticket prices at Old Trafford – along with matchday food and beverage prices – remain among the most affordable in the Premier League
• Continued momentum in demand for women's football with Leigh Sport Village ticket sales at the end of the second quarter approximately 60% higher than the entire 2021/22 season
• During the second quarter, Old Trafford hosted a third Women's Super League fixture against Aston Villa on 3 December
• Old Trafford hosted the Rugby League World Cup final on 19 November

Partnerships

• On 15 December, the Club and its primary shirt sponsor, TeamViewer mutually agreed that Manchester United has the option to buy back the rights to the front of shirt sponsorship; TeamViewer will remain the primary shirt sponsor under the original financial terms during the interim period
• Club held an #ILoveUnited event in Kolkata, India, in October with a record-breaking fan attendance featuring activations from 15 global partners for the largest ever football screening in India
• On 5 March, Club held an #ILoveUnited event in Los Angeles with activations from 19 global partners
• Successfully launched a new global partnership with Doo Group
• Club attended the World Economic Forum in Davos

Digital Products & Experiences

• Club gained more than 3.5 million followers and generated more than 395 million digital interactions and 1.15 billion video views across all global social platforms in the second quarter
• Club launched its first digital collectibles in partnership with Tezos; the launch was the biggest in sport consisting of two ‘drops' during December, including a sell-out for the first paid drop; more digital collectibles will be released throughout 2023
• Club launched a Discord community in November with a following of ~85,000 members, the biggest in football
• Record-breaking first year on TikTok for the Manchester United Women's account; the first women's team to reach 500k followers and 6 million video likes

Revenue Analysis

Commercial

Commercial revenue for the quarter was £78.7 million, an increase of £14.3 million, or 22.2%, over the prior year quarter.

• Sponsorship revenue was £50.4 million, an increase of £15.2 million, or 43.2%, over the prior year quarter due to the impact of our training kit agreement with Tezos, together with a one-off sponsorship credit.
• Retail, Merchandising, Apparel & Product Licensing revenue was £28.3 million, a decrease of £0.9 million, or 3.1%, over the prior year quarter.

Broadcasting

Broadcasting revenue for the quarter was £58.7 million, a decrease of £27.7 million, or 32.1%, over the prior year quarter, primarily due to the men's first team participating in the UEFA Europa League compared to the UEFA Champions League in the prior year.

Matchday

Matchday revenue for the quarter was £29.9 million, a decrease of £4.7 million, or 13.6%, over the prior year quarter, due to playing two less home games in the current year quarter compared to the prior year quarter.

Other Financial Information

Operating expenses

Total operating expenses for the quarter were £167.6 million, a decrease of £12.1 million, or 6.7%, over the prior year quarter.

Employee benefit expenses

Employee benefit expenses for the quarter were £77.3 million, a decrease of £20.4 million, or 20.9%, over the prior year quarter, as a result of squad turnover and the men's first team not participating in the UEFA Champions League in the current year.

Other operating expenses

Other operating expenses for the quarter were £41.7 million, an increase of £11.9 million, or 39.9%, over the prior year quarter. This is primarily due to the impact of exchange rate fluctuations and rising energy and maintenance costs.

Depreciation and amortization

Depreciation for the quarter was £3.6 million, consistent with the prior year quarter. Amortization for the quarter was £45.0 million, an increase of £6.4 million, or 16.6%, over the prior year quarter, due to investment in the first team playing squad. The unamortized balance of registrations at 31 December 2022 was £445.1 million.

Loss on disposal of intangible assets

Loss on disposal of intangible assets for the quarter was £2.6 million, compared to a loss of £0.3 million for the prior year quarter.

Net finance income/(costs)

Net finance income for the quarter was £12.1 million, compared to net finance costs of £7.5 million in the prior year quarter, due to a favourable swing in unrealized foreign exchange movements in the current quarter compared to an unfavourable swing in the prior year quarter. Income for the current year quarter includes £22.0 million of unrealized non-cash foreign exchange net gains.

Income tax

The income tax expense for the quarter was £2.9 million, compared to an income tax credit of £0.7 million in the prior year quarter.

Cash flows

Overall cash and cash equivalents (including the effects of exchange rate movements) increased by £6.7 million in the quarter to 31 December 2022, compared to a decrease of £11.3 million in the prior year quarter.

Net cash outflow from operating activities for the quarter was £61.5 million, compared to £31.5 million in the prior year quarter.

Net capital expenditure on property, plant and equipment for the quarter was £2.7 million, an increase of £0.9 million over the prior year quarter.

Net capital expenditure on intangible assets for the quarter was £27.8 million, an increase of £11.0 million over the prior year quarter.

Net cash inflow from financing activities for the quarter was £99.4 million, compared to £39.5 million in the prior year quarter. This is due to a £100.0 million drawdown on the revolving credit facilities in the current quarter compared to a £40.0 million drawdown on the revolving credit facilities in the prior year quarter.

Balance sheet

Our USD non-current borrowings as of 31 December 2022 were $650 million, which was unchanged from 31 December 2021. As a result of the year-on-year change in the USD/GBP exchange rate from 1.3486 at 31 December 2021 to 1.2040 at 31 December 2022, our non-current borrowings when converted to GBP were £535.7 million, compared to £477.1 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 31 December 2022 were £206.2 million compared to £105.2 million at 31 December 2021.

As of 31 December 2022, cash and cash equivalents were £31.0 million compared to £87.4 million at the prior year quarter, primarily due to investment in the first team playing squad.

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 145-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. 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) 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 profit/(loss) for the period before depreciation, amortization, (loss)/profit on disposal of intangible assets, exceptional items, net finance income/(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 (loss)/profit on disposal of intangible assets and exceptional items), capital structure (primarily finance income/(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 profit/(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 charges related to exceptional items, foreign exchange gains/(losses) on unhedged US dollar denominated borrowings and fair value movements on embedded foreign exchange derivatives, adding/subtracting the actual tax expense/credit for the period, and adding/subtracting the adjusted tax credit/expense for the period (based on an normalized tax rate of 21%; 2021: 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% (2021: 21%) applicable during the financial year. A reconciliation of profit/(loss) for the period to adjusted loss 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

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 profit/(loss) for the period to adjusted EBITDA

3 Reconciliation of profit for the period to adjusted (loss)/profit for the period and adjusted basic and diluted (loss)/earnings per share

4 Cash (used in)/generated from operations

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