Nice finish

Borussia Dortmund 1 June 2021 Update
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Borussia Dortmund

Nice finish

Q321 results

Travel & leisure

1 June 2021

Price

€6.04

Market cap

€556m

€/£0.86

Net debt (€m) at 31 March 2021

52.2

Shares in issue

92.0m

Free float

59.9

Code

BVB

Primary exchange

Frankfurt

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.1

9.9

(4.1)

Rel (local)

1.2

(1.8)

(28.0)

52-week high/low

€6.81

€4.21

Business description

The group operates Borussia Dortmund, a leading football club, placed third in the Bundesliga in 2020/21, DFB Super Cup winners in 2019/20, and DFB-Pokal winners in 2020/21. The club has qualified for the Champions League in nine of the last 10 seasons.

Next events

FY21 results

August 2021

Q122 results

November 2021

H122 results

February 2022

Analysts

Russell Pointon

+44 (0)20 3077 5700

Richard Finch

+44 (0)20 3077 5700

Borussia Dortmund is a research client of Edison Investment Research Limited

Borussia Dortmund’s Q321 results reflected ongoing cost control, while COVID continued to affect attendance-related revenues. The team’s late surge to finish third in the Bundesliga, and more silverware by winning the DFB-Pokal ensured a pleasing end to a challenging year. We increase our FY22 EBITDA forecast by 33% to reflect a more positive outlook for attendance at matches given the roll-out of COVID vaccines. There will be much speculation about the futures of a number of key players during the summer transfer window, but the improving financial outlook means the company can remain firm on player valuations, with a number of open managerial roles at the major European teams following ‘poor’ seasons.

Year end

Revenue (€m)

EBITDA
(€m)

PBT*
(€m)

EPS*
(€)

P/E
(x)

EV/EBITDA
(x)

06/19

370.3

116.0

101.5

0.88

6.9

5.6

06/20

370.2

63.0

45.6

0.47

12.9

10.3

06/21e

335.2

32.3

16.1

0.18

34.5

20.1

06/22e

369.9

80.8

63.9

0.62

9.7

8.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Q321: Flat revenue and operating costs

In Q321, Borussia Dortmund’s revenue (excluding net transfer income) of €80.0m and total operating expenses (excluding materials) of €101.9m were broadly flat year-on-year, leading to unsurprising lower net transfer income (€22.5m less than Q320) dropping straight through to lower EBITDA (Q321 €7.9m versus €28.6m in Q320). Higher TV marketing revenue y-o-y offset lower attendance-related revenues, and on the cost side higher personnel expenses were offset by lower other expenses. The €19.9m y-o-y decline in net income to a loss of €18.8m, was lower than the EBITDA decline as a result of more favourable tax and financial expenses. The net debt position of €52.2m for the first nine months of FY21 (9M21) was modestly ahead of the H121 position €50.9m.

FY22: Looking forward to the return of fans

Subsequent to the results release, management finessed its financial guidance for FY21, incorporating unbudgeted success in the DFB-Pokal and better performance (quarter finalists) in the Champions League versus FY20 (Round of 16). Guidance is for EBITDA of €33m (€25–30m previously) and a net loss of €75m (€70–75m previously). We trim our FY21 EBITDA forecast to be consistent with the guidance and increase FY22 EBITDA by 33% to incorporate the phased return of fans to the stadium, given the success of the vaccine roll-out. We assume c 70% attendance through the season (less than 50% capacity in H122 and 100% capacity in H22).

Valuation: Asset-backed valuation upside of 118%

The share price has been strong, reflecting improved on-the-pitch performance, as well as a more optimistic outlook for attendance at games. Our asset-based valuation increases by c 1% to €13.2, reflecting recent changes in peer valuations and the valuation of the squad (€576.1m, source: Transfermarkt.com), as well as updates for the company’s net debt and other assets.

Exhibit 1: Financial summary

€'k

2019

2020

2021e

2022e

30-June

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

370,256

370,196

335,238

369,931

Cost of Sales

(21,273)

(22,392)

(20,000)

(21,000)

Gross Profit

348,983

347,804

315,238

348,931

EBITDA

 

 

115,983

62,992

32,276

80,753

Normalised operating profit

 

 

103,160

49,050

17,981

66,278

Amortisation of acquired intangibles

(65,850)

(88,285)

(90,655)

(94,904)

Exceptionals

(13,809)

(3,903)

0

0

Reported operating profit

23,501

(43,138)

(72,673)

(28,626)

Net Interest

(1,705)

(3,444)

(1,879)

(2,419)

Joint ventures & associates (post tax)

13

(1)

0

0

Profit Before Tax (norm)

 

 

101,468

45,605

16,102

63,859

Profit Before Tax (reported)

 

 

21,809

(46,583)

(74,553)

(31,045)

Reported tax

(4,418)

2,630

0

(6,386)

Profit After Tax (norm)

80,913

43,030

16,102

57,473

Profit After Tax (reported)

17,391

(43,953)

(74,553)

(37,431)

Minority interests

0

0

0

0

Net income (normalised)

80,913

43,030

16,102

57,473

Net income (reported)

17,391

(43,953)

(74,553)

(37,431)

Average number of shares outstanding (m)

92.0

92.0

92.0

92.0

EPS - normalised (c)

 

 

87.95

46.77

17.50

62.47

EPS - diluted normalised (€)

 

 

0.88

0.47

0.18

0.62

EPS - basic reported (€)

 

 

0.19

(0.48)

(0.81)

(0.41)

Dividend (€)

0.06

0.00

0.00

0.00

Revenue growth (%)

18.2

(0.0)

(9.4)

10.3

Gross Margin (%)

94.3

94.0

94.0

94.3

EBITDA Margin (%)

31.3

17.0

9.6

21.8

Normalised Operating Margin

27.9

13.2

5.4

17.9

BALANCE SHEET

Fixed Assets

 

 

371,715

441,455

394,506

346,126

Intangible Assets

163,710

229,667

194,012

154,108

Tangible Assets

184,001

193,037

181,742

173,267

Investments & other

24,004

18,751

18,751

18,751

Current Assets

 

 

128,356

76,512

67,050

72,262

Stocks

4,569

6,754

4,057

5,847

Debtors

30,061

36,520

33,071

36,494

Cash & cash equivalents

55,865

3,317

0

0

Other

37,861

29,921

29,921

29,921

Current Liabilities

 

 

(125,388)

(122,609)

(140,750)

(135,014)

Creditors

(119,779)

(110,188)

(86,173)

(86,889)

Tax and social security

(811)

(40)

(40)

(40)

Short term borrowings

0

(8,031)

(50,187)

(43,735)

Finance leases

(3,127)

(4,350)

(4,350)

(4,350)

Other

(1,671)

0

0

0

Long Term Liabilities

 

 

(19,764)

(89,911)

(89,911)

(89,911)

Long term borrowings

0

0

0

0

Finance leases

(8,381)

(20,054)

(20,054)

(20,054)

Other long term liabilities

(11,383)

(69,857)

(69,857)

(69,857)

Net Assets

 

 

354,919

305,447

230,894

193,463

Minority interests

0

0

0

0

Shareholders' equity

 

 

354,919

305,447

230,894

193,463

CASH FLOW

Op Cash Flow before WC and tax

111,914

59,547

30,397

78,334

Working capital

5,673

(18,011)

(17,870)

(4,496)

Exceptional & other

(84,587)

(38,877)

(8,121)

(47,581)

Tax

(2,834)

305

0

(6,386)

Operating cash flow

 

 

30,166

2,964

4,406

19,872

Capex

(9,872)

(6,143)

(3,000)

(6,000)

Net investment in intangibles

(13,643)

(44,646)

(45,000)

(5,000)

Acquisitions/disposals

0

0

0

0

Net interest

(1,456)

(3,326)

(1,879)

(2,419)

Equity financing

0

0

0

0

Dividends

(5,519)

(5,519)

0

0

Other

(3,275)

4,122

43,000

(7,000)

Net Cash Flow

(3,599)

(52,548)

(2,473)

(548)

Opening net debt/(cash)

 

 

(50,769)

(44,357)

29,118

74,591

Other non-cash movements

(2,813)

(20,927)

(43,000)

7,001

Closing net debt/(cash)

 

 

(44,357)

29,118

74,591

68,138

Source: Company data, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Borussia Dortmund and prepared and issued by Edison, in consideration of a fee payable by Borussia Dortmund. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Borussia Dortmund and prepared and issued by Edison, in consideration of a fee payable by Borussia Dortmund. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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