Last close As at 05/08/2026
EUR3.07
▲ 0.03 (0.99%)
Market capitalisation
EUR339m
Research: Consumer
Borussia Dortmund
Borussia Dortmund |
Warming up |
Annual report |
Travel & leisure |
5 October 2016 |
Share price performance
Business description
Next events
Analysts
Borussia Dortmund is a client of Edison Investment Research Limited |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
A broadly positive start to the season both at home and in the Champions League confirms coach Tuchel’s successful record of squad development after high-profile departures. Renewed strength in depth and typically attractive style of play complement escalating scope for transfer gains. Despite inflationary wage pressure we still look for a doubling this year in pre-transfer EBITDA (our key metric), albeit from a reduced base (FY16 pre-transfer EBITDA was slightly below our expectations). A new lucrative deal on Bundesliga media rights drives FY18 growth prospects, assuming continued Champions League. Finances remain impressively disciplined.
Year end |
Revenue* (€m) |
EBITDA* |
PBT** |
EPS** |
DPS |
EV/EBITDA |
06/15 |
263.6 |
48.0*** |
44.2*** |
0.43*** |
0.05 |
8.8 |
06/16 |
281.3 |
15.3 |
73.8 |
0.68 |
0.06 |
27.5 |
06/17e |
307.0 |
30.0 |
51.0 |
0.47 |
0.06 |
13.6 |
06/18e |
340.0 |
42.0 |
66.0**** |
0.61**** |
0.06 |
9.1 |
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). ****Assuming €37m player transfer profit.
Q4: Success at a price
Dortmund ended the year well with Q4 pre-transfer revenue up 13% on the back of Europa League involvement, Champions League qualification and a return to the German Cup Final. However, also as expected, costs were again an issue, hence pre-transfer EBITDA reduced to €1m from €4m in Q415, as adjusted for a ‘negative outcome’ insurance claim. This is attributed to pressures associated with key player retention and variable expenses, eg player bonuses, advertising agency commissions and match operations. For the full year, advertising was especially buoyant (+12%) thanks to on-field success and a growing presence in Asia.
Profit growth to resume
Our forecasts, detailed on page 2, are notable for strong revenue generation from renewed Champions League access and a new Bundesliga broadcasting deal from FY18. On the other hand, labour costs are also set to continue to rise sharply; after +19% last year we now assume +14% in the current period, which explains our pre-transfer EBITDA downgrade from €35m, and +10% next year. Our forecast FY18 PBT and EPS reflect transfer gains, which are notional but reasonable, given the company’s record and significant surplus of market value to net player assets (c €165m if the June 2016 carrying value of €65m plus estimated subsequent spend of c €110m is set against the current www.transfermarkt.de valuation of €340m).
Valuation: Possible breakout
The market’s positive appreciation of Dortmund rebuilding and a possible step-change in profit is welcome, albeit early days. Even after recent share price buoyancy, an EV/EBITDA of 9.1x FY18e does not fully recognise 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.
Exhibit 1: Revenue and profit analysis
Year end June (€m) |
2015 |
H116 |
Q316 |
Q416 |
FY16 |
FY17e |
FY18e |
Home matches |
|||||||
Bundesliga |
17 |
8 |
5 |
4 |
17 |
17 |
17 |
Champions League |
4 |
- |
- |
- |
- |
4** |
4**. |
Europa League |
- |
3+2qual. |
2 |
1 |
6+2qual. |
- |
- |
DFB Cup |
1 |
1 |
- |
- |
1 |
2*** |
2*** |
Super Cup |
1 |
- |
- |
- |
- |
1 |
1 |
Away matches: |
|||||||
Champions League |
4 |
- |
- |
- |
- |
4** |
4** |
Europa League |
- |
3+2qual. |
2 |
1 |
6+2qual. |
- |
- |
DFB Cup |
4+Final |
2 |
1 |
1+Final |
4+Final |
2*** |
2*** |
Revenue |
|||||||
Match operations: |
|||||||
Bundesliga |
26.8 |
12.9e |
7.9e |
6.4e |
27.1 |
27.1 |
27.5 |
Champions League |
7.4 |
- |
- |
- |
- |
7.9 |
8.0 |
Europa League |
- |
7.5e |
4.0e |
1.9e |
13.4 |
- |
- |
DFB Cup / Super Cup |
4.4 |
1.3e |
0.5e |
1.9e |
3.7 |
3.5 |
3.5 |
Other |
1.3 |
1.8e |
0.3e |
0.4e |
2.5 |
3.0 |
3.0 |
Total |
39.9 |
23.5 |
12.7 |
10.6 |
46.8 |
41.5 |
42.0 |
TV marketing: |
|||||||
Bundesliga |
43.6 |
30.0 |
14.9 |
15.9 |
60.8 |
65.0 |
90.0 |
Champions League |
32.5 |
3.2 |
- |
- |
3.2 |
40.0 |
43.0 |
Europa League |
- |
8.3 |
2.3 |
3.4 |
14.0 |
- |
- |
DFB Cup / Super Cup |
6.0 |
0.7 |
0.7 |
3.0 |
4.4 |
4.0 |
4.0 |
Total |
82.1 |
42.2 |
17.9 |
22.5 |
82.6 |
109.0 |
137.0 |
Advertising |
75.7 |
40.0 |
20.0 |
24.6 |
84.6 |
87.0 |
89.5 |
Merchandising |
39.3 |
24.4 |
7.4 |
8.0 |
39.8 |
41.0 |
42.5 |
Catering/other |
26.6 |
13.3 |
6.2 |
8.0 |
27.5 |
28.5 |
29.0 |
Total |
263.6 |
143.5 |
64.2 |
73.6 |
281.3 |
307.0 |
340.0 |
Other operating income |
17.0* |
1.9 |
0.5 |
1.1 |
3.5 |
4.0 |
4.0 |
Labour costs |
(117.9) |
(66.1) |
(35.0) |
(39.1) |
(140.2) |
(160.0) |
(176.0) |
Share of revenue |
45% |
46% |
54% |
53% |
50% |
52% |
52% |
Material costs |
(20.7) |
(14.5) |
(5.2) |
(6.0) |
(25.7) |
(27.0) |
(28.0) |
Other operating costs |
(94.0) |
(53.0) |
(22.0) |
(28.6) |
(103.6) |
(94.0) |
(98.0) |
EBITDA before transfers |
48.0 |
11.8 |
2.5 |
1.0 |
15.3 |
30.0 |
42.0 |
Margin |
18% |
8% |
4% |
1% |
5% |
10% |
12% |
Profit on disposal of players |
7.6 |
13.7 |
(0.3) |
58.0 |
71.4 |
33.0**** |
37.0***** |
Transfer income |
12.4 |
24.7 |
8.2 |
62.1 |
95.0 |
42.0 |
50.0 |
Less: Carrying value/selling costs |
(4.8) |
(11.0) |
(8.5) |
(4.1) |
(23.6) |
(9.0) |
(13.0) |
Source: Edison Investment Research. Note: *Including €12m insurance claim benefit (our estimate). **Assuming exit in Round of 16. ***Assuming exit in quarter-final. ****Predominantly on disposal of Mkhitaryan. *****Notional (assumed average of transfer profit in FY15, FY16 and FY17e).
Exhibit 2: Financial summary
€'000s |
2015 |
2016 |
2017e |
2018e |
||
June |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
263,600 |
281,600 |
307,000 |
340,000 |
EBITDA |
|
|
48,000* |
15,300 |
30,000 |
42,000 |
Player transfers |
|
|
7,600 |
71,400 |
34,000 |
37,000 |
Operating Profit (before amort. and except.) |
46,100 |
75,900 |
53,000 |
68,000 |
||
Intangible Amortisation |
(32,900) |
(32,000) |
(50,000) |
(53,000) |
||
Exceptionals |
0 |
(7,500)*** |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Operating Profit |
13,200 |
36,400 |
3,000 |
15,000 |
||
Net Interest |
(1,900) |
(2,100) |
(2,000) |
(2,000) |
||
Other financial items |
(5,300)** |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
44,200 |
73,800 |
51,000 |
66,000 |
Profit Before Tax (FRS 3) |
|
|
6,000 |
34,300 |
1,000 |
13,000 |
Tax |
(500) |
(4,900) |
(200) |
(1,500) |
||
Profit After Tax (norm) |
43,700 |
68,900 |
50,800 |
64,500 |
||
Profit After Tax (FRS 3) |
5,500 |
29,400 |
800 |
11,500 |
||
Average Number of Shares Outstanding (m) |
87.3 |
92.0 |
92.0 |
92.0 |
||
EPS - normalised (c) |
|
|
42.7 |
68.2 |
47.1 |
61.0 |
EPS - (IFRS) (c) |
|
|
6.0 |
32.0 |
0.9 |
12.5 |
Dividend per share (c) |
5.0 |
6.0 |
6.0 |
6.0 |
||
EBITDA Margin (%) |
18.2 |
5.4 |
9.8 |
12.4 |
||
Operating Margin (before GW and except.) (%) |
17.5 |
27.0 |
17.3 |
20.0 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
289,500 |
302,800 |
311,000 |
245,000 |
Intangible Assets |
96,300 |
65,300 |
120,000 |
55,000 |
||
Tangible Assets |
189,500 |
188,400 |
187,000 |
186,000 |
||
Investments |
3,700 |
49,100 |
4,000 |
4,000 |
||
Current Assets |
|
|
97,000 |
121,800 |
111,500 |
182,500 |
Stocks |
9,400 |
10,200 |
11,000 |
12,000 |
||
Debtors |
29,700 |
51,100 |
32,000 |
76,000 |
||
Cash |
53,700 |
51,700 |
64,500 |
90,500 |
||
Other |
4,200 |
8,800 |
4,000 |
4,000 |
||
Current Liabilities |
|
|
(61,600) |
(78,800) |
(78,500) |
(79,500) |
Creditors |
(59,100) |
(76,200) |
(76,000) |
(77,000) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Finance leases |
(2,500) |
(2,600) |
(2,500) |
(2,500) |
||
Long Term Liabilities |
|
|
(38,800) |
(36,200) |
(38,000) |
(36,000) |
Long term borrowings |
0 |
0 |
0 |
0 |
||
Finance leases |
(21,600) |
(19,000) |
(19,000) |
(19,000) |
||
Other long term liabilities |
(17,200) |
(17,200) |
(19,000) |
(17,000) |
||
Net Assets |
|
|
286,100 |
309,600 |
306,000 |
312,000 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
24,400 |
44,400 |
30,000 |
42,000 |
Net Interest |
(7,200) |
(1,400) |
(400) |
(300) |
||
Tax |
(200) |
(300) |
(2,000) |
(200) |
||
Capex |
(10,400) |
(9,400) |
(10,200) |
(10,000) |
||
Acquisitions/disposals |
(61,700) |
(20,500)**** |
1,000***** |
0 |
||
Financing |
135,700 |
(7,700) |
0 |
0 |
||
Dividends |
(6,100) |
(4,600) |
(5,500) |
(5,500) |
||
Net Cash Flow |
74,500 |
500 |
12,900 |
26,000 |
||
Opening net debt/(cash) |
|
|
44,900 |
(29,600) |
(30,100) |
(43,000) |
Finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(29,600) |
(30,100) |
(43,000) |
(69,000) |
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 Schürrle, Götze, Dembélé, Rode, Guerreiro, Bartra and Mor and disposals of Mkhitaryan, Hummels and Gündogan NB valuations estimated by www.transfermarkt.de.
|
|