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Last close As at 09/06/2023
EUR4.35
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EUR480m
Research: Consumer
Borussia Dortmund’s Q123 results demonstrated the expected recovery in its more variable revenue streams as the club welcomed the return of more fans to the stadium versus the COVID-19-affected Q122. The return to normality was also reflected in a relatively busy transfer window in the summer with five player additions and three sales, involving a transfer fee. The team’s performance on the pitch is consistent with our existing financial estimates, therefore we make no changes to our forecasts. Our asset-backed sum-of the-parts valuation is unchanged at €10.50 per share.
Borussia Dortmund |
Encouraging start to FY23 |
Q123 results |
Travel and leisure |
15 November 2022 |
Share price performance
Business description
Next events
Analysts
Borussia Dortmund is a research client of Edison Investment Research Limited |
Borussia Dortmund’s Q123 results demonstrated the expected recovery in its more variable revenue streams as the club welcomed the return of more fans to the stadium versus the COVID-19-affected Q122. The return to normality was also reflected in a relatively busy transfer window in the summer with five player additions and three sales, involving a transfer fee. The team’s performance on the pitch is consistent with our existing financial estimates, therefore we make no changes to our forecasts. Our asset-backed sum-of the-parts valuation is unchanged at €10.50 per share.
Year end |
Revenue (€m) |
EBITDA (€m) |
PBT* |
EPS* |
DPS |
P/E |
EV/EBITDA |
06/21 |
334.2 |
39.0 |
24.3 |
0.26 |
0.0 |
13.7 |
10.5 |
06/22 |
351.6 |
80.8 |
63.2 |
0.63 |
0.0 |
5.7 |
5.0 |
06/23e |
395.0 |
105.9 |
91.6 |
0.76 |
0.0 |
4.7 |
3.8 |
06/24e |
420.5 |
120.2 |
105.9 |
0.88 |
0.0 |
4.1 |
3.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q123: Growth against an easy comparative
Borussia Dortmund’s Q123 revenue, EBITDA and operating income grew y-o-y by 11% to €104m, 7% to €73m, and 15% to €48m, respectively. More Bundesliga home games (four versus three in Q122) with near sell-out crowds (average crowds of 25k in Q122) drove good growth in Match Operations and Conference, Catering and Miscellaneous revenues. The extension of existing/signing of new sponsorship partners continued the strong growth of Advertising revenue, +17% y-o-y. The slight (2%) decline in TV Marketing was attributable to less success on the pitch in the prior year ie no Super Cup appearance at the start of the current season and lower performance-related bonuses. The lower EBITDA margin reflects positive operational gearing on personnel expenses, depreciation and amortisation, and a higher absolute net transfer income than Q122, offset by higher relative other operating expenses. The period end net debt position increased to €8.6m (€6.6m end-FY22) as higher net investment in the squad led to a small free cash outflow in the period.
FY23: No changes to estimates
We make no changes to our estimates as, at this early stage in the season, the first team’s performance appears in line with our assumptions. Most importantly, the club has qualified for the next stage, Round of 16, in the Champions League. However, we note that, at the date of writing, the team is placed sixth in the Bundesliga, albeit with just two points separating it from the fourth-placed team. There is no reference in the results release to any change in management’s guidance for FY23.
Valuation: Attractively valued
Our asset-backed sum-of-the parts valuation is unchanged at €10.5/share. With an FY23e EV/sales multiple of 1.0x, we believe the share price continues to look very attractive versus its own long-term average multiple of 1.6x.
Exhibit 1: Financial summary
€m |
2020 |
2021 |
2022 |
2023e |
2024e |
||
30-June |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
370.2 |
334.2 |
351.6 |
395.0 |
420.5 |
Cost of Sales |
(22.4) |
(19.6) |
(22.6) |
(25.2) |
(26.3) |
||
Gross Profit |
347.8 |
314.6 |
329.0 |
369.9 |
394.2 |
||
EBITDA |
|
|
63.0 |
39.0 |
80.8 |
105.9 |
120.2 |
Operating profit (before amort. and excepts.) |
|
49.1 |
25.3 |
67.4 |
92.2 |
106.3 |
|
Amortisation of acquired intangibles |
(88.3) |
(92.6) |
(87.5) |
(85.4) |
(93.9) |
||
Exceptionals |
(3.9) |
(4.8) |
(9.1) |
0.0 |
0.0 |
||
Reported operating profit |
(43.1) |
(72.1) |
(29.2) |
6.9 |
12.3 |
||
Net Interest |
(3.4) |
(1.1) |
(4.2) |
(0.6) |
(0.3) |
||
Joint ventures & associates (post tax) |
(0.0) |
0.1 |
0.1 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
45.6 |
24.3 |
63.2 |
91.6 |
105.9 |
Profit Before Tax (reported) |
|
|
(46.6) |
(73.2) |
(33.4) |
6.2 |
12.0 |
Reported tax |
2.6 |
0.3 |
(1.7) |
0.0 |
0.0 |
||
Profit After Tax (norm) |
43.0 |
24.2 |
66.4 |
84.3 |
97.5 |
||
Profit After Tax (reported) |
(44.0) |
(72.8) |
(35.1) |
6.2 |
12.0 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
43.0 |
24.2 |
66.4 |
84.3 |
97.5 |
||
Net income (reported) |
(44.0) |
(72.8) |
(35.1) |
6.2 |
12.0 |
||
Average Number of Shares Outstanding (m) |
92.0 |
92.0 |
105.4 |
110.4 |
110.4 |
||
EPS - normalised (c) |
|
|
46.8 |
26.3 |
63.0 |
76.3 |
88.3 |
EPS - normalised fully diluted (c) |
|
|
46.8 |
26.3 |
63.0 |
76.3 |
88.3 |
EPS - basic reported (€) |
|
|
(0.48) |
(0.79) |
(0.33) |
0.06 |
0.11 |
Dividend (€) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
(0.0) |
(9.7) |
5.2 |
12.3 |
6.4 |
||
Gross Margin (%) |
94.0 |
94.1 |
93.6 |
93.6 |
93.7 |
||
EBITDA Margin (%) |
17.0 |
11.7 |
23.0 |
26.8 |
28.6 |
||
Normalised Operating Margin |
13.2 |
7.6 |
19.2 |
23.3 |
25.3 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
441.5 |
389.8 |
358.4 |
364.4 |
355.6 |
Intangible Assets |
229.7 |
193.4 |
124.4 |
132.0 |
131.1 |
||
Tangible Assets |
193.0 |
183.5 |
172.5 |
170.8 |
162.9 |
||
Investments & other |
18.8 |
12.9 |
61.6 |
61.6 |
61.6 |
||
Current Assets |
|
|
76.5 |
60.7 |
96.6 |
99.3 |
115.7 |
Stocks |
6.8 |
6.8 |
4.4 |
4.4 |
4.4 |
||
Debtors |
36.5 |
29.9 |
45.8 |
49.8 |
49.8 |
||
Cash & cash equivalents |
3.3 |
1.7 |
10.6 |
9.3 |
25.7 |
||
Other |
29.9 |
22.2 |
35.8 |
35.8 |
35.8 |
||
Current Liabilities |
|
|
(122.6) |
(163.6) |
(130.6) |
(133.1) |
(133.1) |
Creditors |
(110.2) |
(100.1) |
(125.9) |
(132.9) |
(132.9) |
||
Tax and social security |
(0.0) |
(0.0) |
(0.0) |
(0.0) |
(0.0) |
||
Short term borrowings |
(8.0) |
(56.9) |
0.0 |
0.0 |
0.0 |
||
Finance leases |
(4.4) |
(4.2) |
(4.6) |
(0.1) |
(0.1) |
||
Other |
0.0 |
(2.3) |
0.0 |
0.0 |
0.0 |
||
Long Term Liabilities |
|
|
(89.9) |
(54.3) |
(44.0) |
(44.0) |
(39.5) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Finance leases |
(20.1) |
(16.8) |
(12.5) |
(12.5) |
(12.5) |
||
Other long term liabilities |
(69.9) |
(37.5) |
(31.4) |
(31.4) |
(26.9) |
||
Net Assets |
|
|
305.4 |
232.6 |
280.5 |
286.7 |
298.7 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
305.4 |
232.6 |
280.5 |
286.7 |
298.7 |
CASH FLOW |
|||||||
Operating Cash Flow |
59.5 |
37.9 |
76.6 |
105.2 |
119.9 |
||
Working capital |
(18.0) |
(6.9) |
16.3 |
(4.0) |
0.0 |
||
Exceptional & other |
(38.9) |
(13.6) |
(57.5) |
(52.4) |
(59.7) |
||
Tax |
0.3 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net operating cash flow |
|
|
3.0 |
17.4 |
35.4 |
48.9 |
60.2 |
Capex |
(6.1) |
(3.4) |
(1.7) |
(12.0) |
(6.0) |
||
Net investment in intangibles |
(44.6) |
(58.6) |
(49.4) |
(33.0) |
(33.0) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net interest |
(3.3) |
(1.4) |
(0.3) |
(0.6) |
(0.3) |
||
Equity financing |
0.0 |
0.0 |
86.5 |
0.0 |
0.0 |
||
Dividends |
(5.5) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(3.9) |
52.5 |
(61.6) |
(4.5) |
(4.5) |
||
Net Cash Flow |
(60.6) |
6.4 |
8.8 |
(1.3) |
16.4 |
||
Opening net debt/(cash) |
|
|
(44.4) |
29.1 |
76.2 |
6.6 |
3.4 |
Other non-cash movements |
(12.9) |
(53.6) |
60.8 |
4.5 |
0.0 |
||
Closing net debt/(cash) |
|
|
29.1 |
76.2 |
6.6 |
3.4 |
(13.0) |
Source: Borussia Dortmund, Edison Investment Research
|
|
Research: TMT
Progress of whistleblowing legislation through the German Bundestag has been slower than hoped, with transposition now likely in December, with a three-month implementation period. This delay means that management is now guiding to FY22e revenue growth of 25%, with EBITDA of €6.0m (was €6–10m). The EBITDA figure is in line with our forecast, despite the lower revenue (€3.2m below) reflecting a degree of flexibility on costs. The underlying boost from legislation coming into force across Europe remains a strong positive from FY23. EQS reported 9M22 revenue growth of 27% (10% organic), with 702 new SaaS customers signed up, including 555 for whistleblowing.
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