Last close As at 05/08/2026
EUR3.07
▲ 0.03 (0.99%)
Market capitalisation
EUR339m
Research: Consumer
Borussia Dortmund
Borussia Dortmund |
Fresh start |
Revised forecasts |
Travel & leisure |
15 July 2016 |
Share price performance
Business description
Next events
Analysts
Borussia Dortmund is a client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||||
While the simultaneous loss of key players Hummels, Mkhitaryan and Gündogan necessarily invites caution, coach Tuchel’s record of player development and the availability of significant funds for reinvestment make for exciting opportunity. Understandably, given squad rebuilding, financial implications are uncertain. However, assuming maintained positive sporting prospects and further c €40m player spend, we still look for a doubling in pre-transfer EBITDA (our key metric) in FY17, albeit from a reduced base in the face of inflationary wage pressure (we are lowering EBITDA forecasts by €6m for FY16 and by €13m for the year just started).
Year end |
Revenue* (€m) |
EBITDA* |
PBT** |
EPS** |
DPS |
EV/EBITDA |
06/14 |
256.3 |
44.7 |
37.1 |
0.51 |
0.10 |
9.1 |
06/15 |
263.6 |
48.0*** |
44.2*** |
0.43*** |
0.05 |
6.9 |
06/16e |
281.0 |
18.0 |
82.5 |
0.76 |
0.05 |
19.4**** |
06/17e |
307.0 |
35.0 |
58.0 |
0.53 |
0.05 |
9.5 |
Note: *Before player transfer income. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. ***Including insurance claim benefit (our estimate €12m). ****15.8x including estimated €65m player sales proceeds
Reduction in EBITDA forecasts reflects investment
The changes to our EBITDA forecasts, detailed on page 2, relate substantially to labour costs, which may now be expected to continue to rise sharply, assuming on-field success. We had previously envisaged a moderation to +2% in the current period on the premise that the squad is already run on Champions League lines. Our new forecast of labour expenses up 11%, ie by €15m, is based on likely expenditure on new players of over €100m, ie reported transactions estimated at c €60m by www.transfermarkt.de plus, importantly, further as yet unspecified c €40m spend, thereby effectively representing reinvestment of the proceeds from the aforementioned high-profile disposals. In this context, H216 labour costs may also be assumed to have endured double-digit growth (we had expected +8%). Our FY16 EBITDA downgrade also reflects unexpectedly high material costs driven by the very success of the newly enhanced catering and events activities.
Successful value creation
Cost inflation apart, there is considerable encouragement from the company’s active revenue generation (we are raising forecasts by €11m and €7m for FY16 and FY17) and realisation of very significant surpluses to book value on player disposals, while ensuring a balance between financial and sporting interests. With regard to the Mkhitaryan transaction, management was evidently a reluctant seller but accepted that the offer by Manchester United was simply too good to refuse. The forecast increases in PBT and EPS reflect net transfer gains (see page 2).
Valuation: Fair
At an EV/EBITDA of 9.5x, FY17e recognises the long-term potential of powerful brand development, valuable media rights and strong cash flow, backed by season ticket sales and hidden reserves from player investment. We await details of the recent lucrative deal on Bundesliga media rights for four seasons from 2017/18.
|
Exhibit 1: Revenue and profit analysis |
|||||||||
Year end June (€m) |
H115 |
Q315 |
Q415 |
FY15 |
H116 |
Q316 |
Q416e |
FY16e |
FY17e |
Home matches |
|||||||||
Bundesliga |
8 |
4 |
5 |
17 |
8 |
5 |
4 |
17 |
17 |
Champions League |
3 |
1 |
- |
4 |
- |
- |
- |
- |
4**** |
Europa League |
- |
- |
- |
- |
2qual + 3 |
2 |
1 |
2qual + 6 |
- |
DFB Cup |
- |
- |
1 |
1 |
1 |
- |
- |
1 |
2***** |
Away matches: |
|||||||||
Champions League |
3 |
1 |
4 |
- |
- |
- |
- |
4**** |
|
Europa League |
- |
- |
- |
- |
2qual + 3 |
2 |
1 |
2qual + 6 |
- |
DFB Cup |
2 |
1 |
1+Final |
4+Final |
2 |
1 |
1+Final |
4+Final |
2***** |
Revenue |
|||||||||
Match operations: |
|||||||||
Bundesliga |
13.1e |
6.3e |
7.4e |
26.8 |
13.6e |
8.0e |
6.4 |
28.0 |
29.0 |
Champions League |
5.2e |
2.2e |
- |
7.4 |
- |
- |
- |
- |
9.0 |
Europa League |
- |
- |
- |
- |
7.5e |
4.0e |
1.5 |
13.0 |
- |
DFB Cup |
0.6e |
0.3e |
3.5e |
4.4 |
1.3e |
0.5e |
1.7 |
3.5 |
3.5 |
Other |
0.9e |
0.1e |
0.3e |
1.3 |
1.1e |
0.2e |
0.2 |
1.5 |
1.5 |
Total |
19.8 |
8.9 |
11.2 |
39.9 |
23.5 |
12.7 |
12.7 |
46.0 |
43.0 |
Broadcasting: |
|||||||||
Bundesliga |
21.6 |
9.0 |
12.9 |
43.6 |
30.0 |
14.9 |
16.1 |
61.0 |
64.0 |
Champions League |
27.7 |
4.8 |
- |
32.5 |
3.2 |
- |
- |
3.2 |
38.0 |
Europa League |
- |
- |
- |
- |
8.3 |
2.3 |
2.2 |
12.8 |
- |
DFB Cup |
1.8 |
0.3 |
3.9 |
6.0 |
0.7 |
0.7 |
4.6 |
6.0 |
3.0 |
Total |
51.2 |
14.1 |
16.8 |
82.1 |
42.2 |
17.9 |
22.9 |
83.0 |
105.0 |
Advertising |
37.5 |
18.1 |
20.1 |
75.7 |
40.0 |
20.0 |
22.0 |
82.0 |
85.0 |
Merchandising |
23.9 |
6.9 |
8.5 |
39.3 |
24.4 |
7.4 |
9.2 |
41.0 |
44.0 |
Catering/other |
12.4 |
5.5 |
8.7 |
26.6 |
13.3 |
6.2 |
9.5 |
29.0 |
30.0 |
Total |
144.7 |
53.6 |
65.3 |
263.6 |
143.5 |
64.2 |
73.3 |
281.0 |
307.0 |
Other operating income |
2.8 |
0.8 |
13.4* |
17.0* |
1.9 |
0.5 |
1.6 |
4.0 |
5.0 |
Labour costs |
(56.6) |
(28.7) |
(32.6) |
(117.9) |
(66.1) |
(35.0) |
(35.9) |
(137.0) |
(152.0) |
Share of revenue |
39% |
53% |
50% |
45% |
46% |
54% |
49% |
49% |
51% |
Material costs |
(12.0) |
(4.1) |
(4.6) |
(20.7) |
(14.5) |
(5.2) |
(10.3) |
(30.0) |
(33.0) |
Other operating costs |
(49.8) |
(19.1) |
(25.1) |
(94.0) |
(53.0) |
(22.0) |
(25.0) |
(100.0) |
(92.0) |
EBITDA before transfers |
29.1 |
2.5 |
16.4 |
48.0 |
11.8 |
2.5 |
3.7 |
18.0 |
35.0 |
Margin |
20% |
5% |
25% |
18% |
8% |
4% |
5% |
6% |
11% |
Profit on disposal of players |
1.6 |
0.2 |
5.8 |
7.6 |
13.7 |
(0.3) |
62.6** |
76.0** |
35.0*** |
Transfer income |
5.6 |
0.2 |
6.6 |
12.4 |
24.7 |
8.2 |
65.1 |
98.0 |
42.0 |
Less: Carrying value |
(4.0) |
- |
(0.8) |
(4.8) |
(11.0) |
(8.5) |
(2.5) |
(22.0) |
(7.0) |
Source: Edison Investment Research. Note: *Including €12m insurance claim benefit (our estimate). **Predominantly gains on disposals of Hummels (estimated proceeds €38m and carrying value €1.5m) and Gündogan (estimated proceeds €27m and carrying value €1m). ***Gain on disposal of Mkhitaryan. ****Assuming exit in Round of 32. *****Assuming exit in quarter-final.
Exhibit 2: Financial summary
€'000s |
2014 |
2015 |
2016e |
2017e |
||
June |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
256,300 |
263,600 |
281,000 |
307,000 |
EBITDA |
|
|
44,700 |
48,000* |
18,000 |
35,000 |
Player transfers |
|
|
4,400 |
7,600 |
76,000 |
35,000 |
Operating Profit (before amort. and except.) |
40,900 |
46,100 |
84,000 |
59,000 |
||
Intangible Amortisation |
(22,500) |
(32,900) |
(33,000) |
(50,000) |
||
Exceptionals |
0 |
0 |
(7,500)*** |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Operating Profit |
18,400 |
13,200 |
43,500 |
9,000 |
||
Net Interest |
(3,800) |
(1,900) |
(1,500) |
(1,000) |
||
Other financial items |
0 |
(5,300)** |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
37,100 |
44,200 |
82,500 |
58,000 |
Profit Before Tax (FRS 3) |
|
|
14,600 |
6,000 |
42,000 |
8,000 |
Tax |
(2,600) |
(500) |
(5,000) |
(1,000) |
||
Profit After Tax (norm) |
34,500 |
43,700 |
77,500 |
57,000 |
||
Profit After Tax (FRS 3) |
12,000 |
5,500 |
37,000 |
7,000 |
||
Average Number of Shares Outstanding (m) |
61.4 |
87.3 |
92.0 |
92.0 |
||
EPS - normalised (c) |
|
|
50.8 |
42.7 |
75.9 |
53.3 |
EPS - (IFRS) (c) |
|
|
19.1 |
6.0 |
39.9 |
7.3 |
Dividend per share (c) |
10.0 |
5.0 |
5.0 |
5.0 |
||
EBITDA Margin (%) |
17.4 |
18.2 |
6.4 |
11.4 |
||
Operating Margin (before GW and except.) (%) |
16.0 |
17.5 |
29.9 |
19.2 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
249,500 |
289,500 |
259,000 |
314,000 |
Intangible Assets |
61,600 |
96,300 |
63,000 |
115,000 |
||
Tangible Assets |
184,500 |
189,500 |
192,000 |
195,000 |
||
Investments |
3,400 |
3,700 |
4,000 |
4,000 |
||
Current Assets |
|
|
42,800 |
97,000 |
157,100 |
104,100 |
Stocks |
5,900 |
9,400 |
11,000 |
12,000 |
||
Debtors |
14,900 |
29,700 |
100,000 |
34,000 |
||
Cash |
17,800 |
53,700 |
38,100 |
54,100 |
||
Other |
4,200 |
4,200 |
8,000 |
4,000 |
||
Current Liabilities |
|
|
(71,000) |
(61,600) |
(59,500) |
(57,800) |
Creditors |
(60,500) |
(59,100) |
(57,000) |
(55,300) |
||
Short term borrowings |
(8,900) |
0 |
0 |
0 |
||
Finance leases |
(1,600) |
(2,500) |
(2,500) |
(2,500) |
||
Long Term Liabilities |
|
|
(76,000) |
(38,800) |
(38,600) |
(39,600) |
Long term borrowings |
(32,100) |
0 |
0 |
0 |
||
Finance leases |
(20,100) |
(21,600) |
(21,600) |
(21,600) |
||
Other long term liabilities |
(23,800) |
(17,200) |
(17,000) |
(18,000) |
||
Net Assets |
|
|
145,300 |
286,100 |
318,000 |
320,700 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
33,900 |
24,400 |
13,000 |
30,000 |
Net Interest |
(3,600) |
(7,200) |
(500) |
(400) |
||
Tax |
(3,800) |
(200) |
(4,500) |
(2,000) |
||
Capex |
(10,900) |
(10,400) |
(10,000) |
(11,000) |
||
Acquisitions/disposals |
2,100 |
(61,700) |
(9,000)**** |
4,000***** |
||
Financing |
(2,600) |
135,700 |
0 |
0 |
||
Dividends |
(6,100) |
(6,100) |
(4,600) |
(4,600) |
||
Net Cash Flow |
9,000 |
74,500 |
(15,600) |
16,000 |
||
Opening net debt/(cash) |
|
|
53,900 |
44,900 |
(29,600) |
(14,000) |
Finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
44,900 |
(29,600) |
(14,000) |
(30,000) |
Source: Company accounts, Edison Investment Research. Note: *Including estimated c €12m insurance claim benefit. **Early repayment of financial liabilities. ***Player asset write-down. ****Including acquisitions of Castro, Bürki and Weigl and disposals of Kampl, Immobile and Hofmann. *****including acquisitions of Dembélé, Rode, Guerreiro, Mor and Bartra and our assumption of further €40m reinvestment and disposals of Mkhitaryan, Hummels and Gündogan NB valuations estimated by www.transfermarkt.de.
|