Manchester United plc — Form 20-F summary
Reporting period: Fiscal year ended June 30, 2021. Although the request metadata refers to “2020 Q4,” this filing is an annual report, not a quarterly filing. Financial statements are prepared under IFRS and presented in pounds sterling.
Business context
Manchester United operates men’s and women’s professional football teams and earns revenue from Commercial activities (sponsorship and merchandise/licensing), Broadcasting, and Matchday operations. The year was heavily affected by COVID-19: all but one home match was played without spectators, the overseas preseason tour was cancelled, and stadium visitor operations and the Megastore were closed for parts of the year.
Financial performance and liquidity
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | £494.1m | £509.0m | Down 2.9% |
| Commercial revenue | £232.2m | £279.0m | Down 16.8% |
| Broadcasting revenue | £254.8m | £140.2m | Up 81.7% |
| Matchday revenue | £7.1m | £89.8m | Down 92.1% |
| Operating (loss)/profit | (£36.9m) | £5.2m | Turned to loss |
| Loss before tax | (£24.0m) | (£20.8m) | Loss widened |
| Net loss | (£92.2m) | (£23.2m) | Loss widened |
| Adjusted EBITDA | £95.1m | £132.1m | Down 28.1% |
| Cash from operating activities | £113.1m | (£3.8m) | Improved |
Operating margin was approximately -7.5% (versus 1.0% in FY2020); Adjusted EBITDA margin was approximately 19.2% (versus 26.0%). Employee benefit expenses rose 13.6% to £322.6m, principally reflecting contracted player salary increases associated with Champions League participation. Other operating expenses fell 17.8% to £76.5m as activity declined.
Net finance income was £12.9m, compared with net finance costs of £26.0m, mainly due to a £48.0m unrealized foreign-exchange gain on unhedged US-dollar borrowings. The £68.2m income tax expense included non-cash deferred tax charges of £11.2m from the UK tax-rate change and £66.6m from writing down a US deferred tax asset. Basic loss per share was 56.60 pence.
At June 30, 2021, cash and cash equivalents were £110.7m, total borrowings £530.2m, and reported net debt £419.6m. The Group had £140m of undrawn revolving facilities and reported compliance with debt covenants. Total assets were £1,260.3m, total liabilities £987.8m, and equity £272.5m. Investing cash outflow was £99.4m, including £92.2m net capital expenditure on intangible assets, principally player registrations.
Material changes versus FY2020
- Broadcasting revenue rebounded with Champions League participation and completion of deferred 2019/20 matches in FY2021; FY2020 had been affected by broadcaster rebates and postponed competitions.
- Commercial revenue declined, including sponsorship revenue down 23.3%, reflecting the cancelled tour, COVID-related contract variations, and a one-time sponsorship credit in the prior year.
- Matchday revenue fell sharply as nearly all matches were played behind closed doors.
- Adjusted EBITDA decreased, while operating performance moved from a small profit to a loss. Net loss increased substantially, largely because of the deferred-tax charges.
- Operating cash flow improved to £113.1m. Cash increased from £51.5m to £110.7m, while borrowings rose to £530.2m, including £60m drawn under revolving facilities.
Outlook, commentary, and risks
- Management said UK restrictions had largely been lifted after year-end and Old Trafford had reopened at full capacity for the start of FY2022. It cautioned that COVID-19, variants, restrictions, attendance and consumer behavior could still affect revenue and cash flow. No numerical revenue or earnings guidance is provided.
- Management concluded the Group could meet obligations for at least 12 months after the report date and prepared the accounts on a going-concern basis, citing cash and committed facilities while acknowledging uncertainty.
- The club’s performance and qualification for European competitions are major revenue drivers. The team qualified for the 2021/22 Champions League; future qualification is not assured. UEFA COVID-related distribution reductions and agreed settlements relating to the proposed European Super League affect distributions; the filing says the settlement costs are to be borne by majority shareholders.
- Key risks include reliance on the men’s first team, match attendance, broadcasting and sponsorship contracts, player recruitment and salary costs, counterparty credit, foreign exchange and interest rates, indebtedness and restrictive covenants, Brexit-related player-registration rules, and regulatory changes.
- The company reported a cyberattack around November 2020 that compromised certain non-consumer data and disrupted enterprise systems; it said additional controls and remediation steps were implemented.
- Potential additional transfer-fee payments were up to £92.0m if specified conditions are met. The Group also disclosed active UK tax-authority discussions regarding player and representative arrangements; the timing and potential exposure are unclear in the filing.
- Regular semi-annual dividends were intended to continue at $0.09 per share, subject to board discretion, cash needs and debt restrictions. A $0.09 dividend was paid after year-end on July 30, 2021. The share repurchase program remained suspended.
Important facts for investors to verify
- Confirm the reporting period: this is FY2021, ended June 30, 2021, not a 2020 fourth-quarter report.
- Track return of matchday and stadium revenue, commercial recoveries, and any renewed COVID-related restrictions.
- Assess the recurring operating outlook separately from the large non-cash tax charges and foreign-exchange gains that influenced FY2021 results.
- Monitor gross and net debt, revolving-facility usage, covenant headroom, refinancing terms, and the timing of debt maturities.
- Review Champions League participation, player-transfer spending and contingent fees, and the resolution of the UK tax discussions.
- Consider governance and control risks: Class B shares carried 10 votes each, and the Glazer family held 96.7% of total voting power; the company also used specified NYSE foreign-private-issuer exemptions.
PwC issued an unqualified audit opinion on the financial statements and reported effective internal control over financial reporting as of June 30, 2021.