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Financial risk management | 6 Months Ended
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Dec. 31, 2023
Financial risk management |
Financial risk management | 30Financial risk management 30.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, and cash flow and fair value interest rate risk), credit risk, and liquidity risk. The interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended 30 June 2023, as filed with the Securities and Exchange Commission on 27 October 2023, contained within the Company’s Annual Report on Form 20-F. There have been no changes in risk management since the previous financial year end or in any risk management policies. 30.2 Hedging activities The Group uses derivative financial instruments to hedge certain exposures and has designated certain derivatives as hedges of cash flows (cash flow hedge). The Group hedges the foreign exchange risk on contracted future US dollar revenues whenever possible using the Group’s US dollar net borrowings as the hedging instrument. The foreign exchange gains or losses arising on re-translation of the Group’s US dollar net borrowings used in the hedge are initially recognized in other comprehensive income, rather than being recognized in the statement of profit or loss immediately. Amounts previously recognized in other comprehensive income and accumulated in the hedging reserve are subsequently reclassified into the statement of profit or loss in the same accounting period, and within the same statement of profit or loss line (i.e. commercial revenue), as the underlying future US dollar revenues, which given the varying lengths of the commercial revenue contracts will be between January 2024 to June 2027. The foreign exchange gains or losses arising on re-translation of the Group’s unhedged US dollar borrowings are recognized in the statement of profit or loss immediately (within net finance costs). The table below details the net borrowings being hedged at the balance sheet date: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 31 December | ​ | 30 June | ​ | 31 December
​ |  | 2023 |  | 2023 |  | 2022
​ | ​ | $’000 | ​ | $’000 | ​ | $’000
USD borrowings |  | 650,000 |  | 650,000 |  | 650,000
Hedged USD cash |  | (33,200) |  | (57,500) |  | (8,900)
Net USD debt |  | 616,800 |  | 592,500 |  | 641,100
Hedged future USD revenues (1) |  | (253,600) |  | (52,000) |  | (50,780)
Unhedged USD borrowings |  | 363,200 |  | 540,500 |  | 590,320
Closing USD exchange rate ($: £) |  | 1.2746 |  | 1.2716 |  | 1.2040
(1)A further portion of the profit and loss exposure (within net finance income/costs) on unhedged USD borrowings is naturally offset by the fair value of foreign exchange based embedded derivatives in host Commercial revenue contracts. 30Financial risk management (continued) 30.2 Hedging activities (continued) The Group hedges its cash flow interest rate risk where considered appropriate using interest rate swaps. Such interest rate swaps have the economic effect of converting a portion of variable rate borrowings from floating rates to fixed rates. The effective portion of changes in the fair value of the interest rate swap is initially recognized in other comprehensive income, rather than being recognized in the statement of profit or loss immediately. Amounts previously recognized in other comprehensive income and accumulated in the hedging reserve are subsequently reclassified into the statement of profit or loss in the same accounting period, and within the same statement of profit or loss line (i.e. net finance costs), as the underlying interest payments, which given the term of the swap will be between January 2024 to June 2024. The following table details the interest rate swaps at the reporting date that are used to hedge borrowings: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 31 December | ​ | 30 June | ​ | 31 December | ​
​ |  | 2023 |  | 2023 |  | 2022 | ​
Principal value of loan outstanding ($’000) |  | 150,000 |  | 150,000 |  | 150,000 | ​
Rate received |  | 1 month $ SOFR |  | 1 month $ SOFR |  | 1 month $ LIBOR | ​
Rate paid |  | Fixed 1.9215 | % | Fixed 1.9215 | % | Fixed 2.032 | %
Expiry date |  | 30 June 2024 |  | 30 June 2024 |  | 30 June 2024 | ​
​ As of 31 December 2023, the fair value of the above interest rate swap was an asset of £2,211,000 (30 June 2023: asset of £4,173,000; 31 December 2022: asset of £4,901,000). The Group also seeks to hedge the majority of the foreign exchange risk on revenue arising as a result of participation in UEFA club competitions, either by using contracted future foreign exchange expenses (including player transfer fee commitments) or by placing forward foreign exchange contracts, at the point at which it becomes reasonably certain that it will receive the revenue. The Group also seeks to hedge the foreign exchange risk on other contracted future foreign exchange expenses using available foreign exchange cash balances and forward foreign exchange contracts. ​ Summary of hedging reserve ​ The Group’s hedging reserve comprises of two separate hedging reserves, the cash flow hedge reserve and the cost of hedging reserve. Details of balances in each reserve (net of tax) are shown below. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | At 31 December 2023 | ​ | At 30 June 2023 | ​ | At 31 December 2022
​ |  | £’000 |  | £’000 |  | £’000
Cash flow hedge reserve |  | 1,521 |  | 2,815 |  | 2,249
Cost of hedging reserve |  | (1,546) |  | 1,187 |  | —
Total hedging reserve |  | (25) |  | 4,002 |  | 2,249
​

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