Annual Report 2006/2007 KGaA/Group - BVB Aktie - Borussia ...

aktie.bvb.de

Annual Report 2006/2007 KGaA/Group - BVB Aktie - Borussia ...

Tradition • Passion • Success

Business Report Borussia Dortmund, July 2006 – June 2007


CONTENTS

KEY FIGURES AT A GLANCE 2

PROLOGUE 3

MANAGEMENT'S GREETING 10

SIGNAL IDUNA PARK: History 12

REPORT OF THE SUPERVISORY BOARD 16

GOVERNING BODIES AND CORPORATE STRUCTURE 19

SIGNAL IDUNA PARK: BVB Sponsorship 20

THE BVB SHARE

Share price performance 28

Shareholder structure 29

Investor Relations 30

Corporate governance report 32

THE 2006/2007 SEASON 38

SIGNAL IDUNA PARK: BVB Merchandising 40

MANAGEMENT REPORT

BUSINESS AND FRAMEWORK CONDITIONS

Financial year 2006/2007 in review 44

Development of the market and competitive environment

in German professional football 46

Group structure and business 47

Organisation of management and control 48

Internal management system 51

Corporate strategy 52

POSITION OF THE COMPANY

Results of operations 54

Sales development 55

Development of significant operating expenses

Financial condition 59

Analysis of capital structure

Analysis of investments

Analysis of liquidity

Net assets

Overall summary of results of operations,

financial condition and net assets

COMPENSATION REPORT 60

RISK REPORT 61

Risk management system

Specific risks 62

Strategic risks

Personnel risks

Competitive risks

Sales risks

Financial risks

Risks jeopardising performance and continued existence

The risk situation in summary 65

FORECAST REPORT

Anticipated development of the Company

Expected general economic environment

Expected results of operations 66

Anticipated earnings development

Anticipated development of revenues

Anticipated development of significant

operating expenses

Expected dividends

Expected financial condition

Financial planning

Capital expenditure planning

Anticipated development of liquidity

Opportunities 67

Development forecast in summary

SUPPLEMENTARY REPORT 68

OTHER DISCLOSURES 69

SIGNAL IDUNA PARK: BVB Event 72

ANNUAL FINANCIAL STATEMENTS

Balance sheet 80

Income statement 82

Notes 83

Notes to the balance sheet 84

Changes in fixed assets 85

Notes to the income statement 92

Other disclosures 94

Cash flow statement 98

AUDITORS’ REPORT 99

SIGNAL IDUNA PARK: BVB Media 100

GROUP MANAGEMENT REPORT

BUSINESS AND FRAMEWORK CONDITIONS

Financial year 2006/2007 in review 106

Development of the market and competitive environment

in German professional football 108

Group structure and business 109

Organisation of management and control 112

Internal management system 115

Corporate strategy 116

POSITION OF THE COMPANY

Results of operations 118

Sales development 119

Development of significant operating expenses

Financial condition 122

Analysis of capital structure

Analysis of investments

Analysis of liquidity

Net assets

Overall summary of results of operations,

financial condition and net assets

COMPENSATION REPORT 124

RISK REPORT 125

Risk management system

Specific risks 126

Strategic risks

Personnel risks

Competitive risks

Sales risks

Financial risks

Risks jeopardising performance and continued existence

The risk situation in summary 129

FORECAST REPORT

Anticipated development of the Company

Expected general economic environment

Expected results of operations 130

Anticipated earnings development

Anticipated development of revenues

Anticipated development of significant

operating expenses

Expected dividends

Expected financial condition

Financial planning

Capital expenditure planning

Anticipated development of liquidity

Opportunities 131

Development forecast in summary

SUPPLEMENTARY REPORT 132

OTHER DISCLOSURES 133

SIGNAL IDUNA PARK: BVB Ticketing 136

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet 140

Consolidated income statement 141

Consolidated cash flow statement 144

Notes to the consolidated financial statements 145

Notes to the consolidated balance sheet 154

Notes to the consolidated income statement 161

Other disclosures 165

AUDITORS’ REPORT 170

IMPRINT / FINANCIAL CALENDAR 171

EPILOGUE 172


KEY FIGURES AT A GLANCE

BORUSSIA DORTMUND GmbH & Co. KGaA

2006/2007 2005/2006

30 June 2007 30 June 2006

EUR millions

EUR millions

Equity 100.2 52.9

Investments 16.0 11.3

Gross revenue 99.7 90.0

Operating profit/loss (EBIT) 15.8 -12.0

Financial result (investment income and net interest expense) -5.5 -1.0

Extraordinary income 0 10.2

Net profit/loss for the period 10.3 -3.9

Earnings before interest, taxes, depreciation and amortisation (EBITDA) 22.7 -4.3

Cash flows from operating activities 11.9 -5.5

Number of shares (in thousands) 61,425 43,875

Earnings per share (in EUR) 0.17 -0.09

BORUSSIA DORTMUND GROUP

2006/2007 2005/2006

30 June 2007 30 June 2006

EUR millions

EUR millions

Equity 86.5 37.6

Investments 16.3 11.3

Gross revenue 106.0 92.7

Operating profit/loss (EBIT) 15.6 -11.2

Financial result (investment income and net interest expense) -8.5 -11.4

Net profit/loss for the period 10.1 -20.8

Earnings before interest, taxes, depreciation and amortisation (EBITDA) 29.1 3.0

Cash flows from operating activities 11.9 -5.1

Weighted average number of share

(in thousands) 58,665 31,021

Earnings per share (in EUR) 0.17 -0.67


SIGNAL IDUNA PARK

3


4

SIGNAL IDUNA PARK – THE EIN FUSSBALLSTADION

FOOTBALL STADIUM


PROLOGUE

5


6

SIGNAL IDUNA PARK – MORE THAN 90 MINUTES OF FOOTBALL


PROLOGUE

7


SIGNAL IDUNA PARK – CENTRE FOR BVB SPORT MARKETING

Signal Iduna Park is a football stadium in Dortmund.

With 80,708 seats, it is the largest stadium

in Germany built exclusively for football.

Signal Iduna Park is the ground of the Borussia

Dortmund football Bundesliga team and has

already been the location for numerous international

football tournaments, most recently,

the 2006 FIFA Football World Cup. The stadium,

with its striking yellow pylons in the roof structure,

is a landmark of the city of Dortmund.

Source: Wikipedia.de

SIGNAL IDUNA PARK is the source of revenues.

Ranging from ticketing to income from TV marketing

from Bundesliga matches and (where

applicable) matches in European competition,

from revenues from jersey, perimeter board

and interior advertising to marketing of hospitality

seats, from merchandising to event marketing:

Borussia Dortmund GmbH & Co.

KGaA's business activities have their source in

a piece of earth of some 5,000 square metres

covered with a roll-out pitch near Bundes -

As described in the definition in the free encyclopaedia

“Wikipedia”, the general public

straße 1. SIGNAL IDUNA PARK is the Company's

heart. Since summer 2006, it has again

been owned by BVB.

regards SIGNAL IDUNA PARK merely as a football

ground, but it is also the POI (Point of

Interest) – the location – around which much of

Borussia Dortmund GmbH & Co. KGaA's activi

ties revolve. Despite numerous measures and

improvements in recent years, it continues to

offer undeveloped marketing potential.

In this business report, we outline potential

for marketing the stadium in the “Sponsoring”,

“Merchandising”, “Event”, “Media” and

“Ticketing” sections. Moreover, we provide a

short outlook on what will hopefully be a

great future.

8


PROLOGUE

History Page 12

BVB Sponsorship Page 20

BVB Merchandising Page 40

BVB Event Page 72

BVB Media Page 100

BVB Ticketing Page 136

Epilogue Page 172

9


Dear Shareholders,

Borussia Dortmund GmbH & Co. KGaA performed

well and in accordance with expectations

in the 2006/2007 financial year. The capital

increase implemented at the beginning of the

year, which is reflected by our significantly

Metzelder was out for practically the entire first

half of the season due to injury. World Cup player

Sebastian Kehl was injured so seriously in the

first Bundesliga match that he was unavailable

for games for the whole remainder of the season.

improved equity position in the balance sheet,

was renewed proof of the trust and value you

place in us. We would like to thank you for that.

Our stated goal for the future is to bring our

sporting performance in line with the positive

economic performance of our company as soon

We are pleased to be able to report net profit of

EUR 10.3 million in this annual report. This

pleasing result was due not only to the World

Cup but particularly also to the transfer of the

club's David Odonkor to Real Betis Sevilla, a

club in the Spanish Primera Division.

as we can. For the first time, part of our transfer

income was able to be invested again for contracting

players for the beginning of the

2007/2008 season, and this investment promises

to strengthen our squad considerably. We have

contracted Thomas Doll, a dynamic coach, who

was able to take 16 points from the last nine

To our great regret we did not achieve our ambitious

sporting goals this past financial year, even

games of the past season, and in so doing steer

the BVB ship back into calmer waters.

though the gate to Europe, in other words participation

in international competition, lay open

right up until the last match day, despite the turbulent

season.

You, the shareholder, can be confident that we

will patiently and doggedly forge ahead while at

the same time strictly observing our credo: sporting

success cannot be achieved without exercising

good business sense.

At the beginning of last season it was quite apparent

that our team would have a fight on its hands

in the aftermath of the World Cup, which was

hosted by Germany. World Cup player Christoph

Yours faithfully

Hans-Joachim Watzke

Managing Director (Chairman)

Thomas Treß

Managing Director

10


GREETING

Hans-Joachim Watzke

Managing Director (Chairman)

Thomas Treß

Managing Director

11


SIGNAL IDUNA PARK – THE CREATION

From the “white meadow” to Germany's largest stadium

Every sports club needs a sports ground, and

BVB's history therefore begins in 1906 on the

so-called “white meadow” (Weiße Wiese) in

Wambeler Straße. Here, members of the

“Holy Trinity Youth” (Dreifaltigkeits-Jugend)

regularly meet to play football. Three years

later, an initial group of 18 people splits from

the church because they feel “systematically

attacked and slandered by it”. On 19 December

1909, BV. Borussia 09 e.V. Dortmund is

founded. The sporting home remains the

“white meadow”.

BVB's history commences on the “white meadow” in the

suburb of Brackel.

On 10 August 1924, the “white meadow” is

given a new name: “Borussia-Sportplatz”

(Borussia Sports Ground). Over many years of

hard work, including the investment of 50,000

Reichsmarks, club members have expanded

the former urban sports ground into a jewel

for 18,000 visitors. This own initiative is

unique to date in Germany. In 1937, BVB has to

relinquish the “Borussia Sports Ground”. It is

allegedly intended for the Hoesch expansion,

road construction and as a reserve for the

planned “Hoesch Park”.

Already years earlier, on 6 June 1926, the

“Red Earth Stadium” (Kampfbahn Rote Erde)

is opened in Dortmund's south in Strobelallee,

in direct proximity to the Westfalenhalle.

In 1937, it becomes the new home of

Borussia Dortmund. Using wooden structures,

capacity can be expanded to up to

43,000 viewers in the 1960s during BVB's

peak, when it wins the German championship

in 1956, 1957 and 1963, and then becomes the

first German club to win a European Cup in

The “Red Earth Stadium” in its original

condition. Next to it: two training areas.

In 1971, construction of the former

Westfalenstadion was commenced.

The new ground almost completed: Roofs

are covered, while the pitch is still missing.

12


HISTORY

The former Westfalenstadion under construction: steel tube construction of the roof over the western stand.

The stand's steps have not yet been fully completed.

1966. However, urban planners realise at an

early stage that this cannot be a permanent

solution, yet a solid expansion or conversion

would be too expensive.

In 1965 the seeds are instead sown for building

a new stadium. However, the project

receives the decisive push only at the beginning

of the 1970s, when Cologne decides not

to be a World Cup city and Dortmund is able to

apply to be a site for the 1974 World Cup. On 4

October 1971, the City Council decides to build

the Westfalenstadion, which, for cost reasons,

is built as a prefabricated system using a

cement-slab structure based on the example

of the Olympic city, Montreal (1976). For

approximately EUR 17 million, a modern stadium

with 54,000 seats is constructed and

inaugurated on 2 April 1974.

Until 1992, visitors attend the former Westfalenstadion

in its original condition for 18

years. However, in the 14 years that follow

there are many changes.

For years a standard image: Former

Westfalenstadion and Red Earth.

After the first and second expansion

stages: Space for 68,600 spectators.

In the current construction stage, but still

with the old name: The temple in Strobelallee.

13


1974 to 1995: For 21 years the former Westfalenstadion offered this picture, particularly attractive during floodlit games,

and space for 54,000 visitors, most of whom were standing. For a long time it was regarded as the most modern stadium.

In 1992, capacity is reduced to 42,800 viewers

due to conversion of standing places to

seats in the northern stand. As part of the

“first expansion stage”, just three years later

the western and eastern stands are

expanded by upper terraces with 6,000 seats

each. In the second expansion stage, capac-

ity is increased to 68,600 in 1999. In this

case, the southern stand – the heart of Dortmund’s

footballing passion – is expanded to

24,454 seats, thus becoming Europe's

largest standing space area. The standing

places can be converted to seats for international

matches.

After completion of the first to third expansion stages, SIGNAL IDUNA PARK is Germany's largest stadium with a capacity

at one point of 83,000 visitors (currently 80,708).

14


HISTORY

Always impressive: The “yellow wall” of the southern stand, the largest free-standing standing place areas in Europe,

offering room for more spectators than the total capacity of some other Bundesliga stadiums.

On 6 May 2002, work is commenced on closure

and expansion of the corner areas. This permits

a capacity increase by approximately

14,000 viewers to initially 83,000 seats. Three

years later, for the 2006 World Cup, exactly

80,708 visitors fit into Germany's largest stadium

due to various official requirements.

Since 1 December 2005, the stadium has been

called SIGNAL IDUNA PARK. Signal Iduna, the

insurance and financial services provider with

its registered office in Dortmund and Hamburg,

has had a close relationship with BVB as

sponsor for many years and for now has

secured the naming rights until 30 June 2011.

View from the stadium forecourt

to the northern stand

(1999).

Old home, new name:

SIGNAL IDUNA PARK

(2005).

First expansion stage:

The roof is yet to come

(1995/1996).

Celebrations for the inauguration:

Stadium with

sponsor name.

15


REPORT OF THE SUPERVISORY BOARD

Borussia Dortmund GmbH & Co. KGaA succeeded

in getting back into the black in the

2006/2007 financial year. The Supervisory Board

sees this as the tangible fruits of the restructuring

measures introduced at the end of 2004/beginning

of 2005 which have been steadily implemented

since that time. In the 2006/2007 financial

year, the Supervisory Board again dealt

intensively with the condition and performance

of the Company and the Group, exercising its

rights and duties under the law and the

Company's articles of association without

restriction.

WORK OF THE SUPERVISORY BOARD,

MEETINGS

The Supervisory Board supervised the transaction of

the Company's business by the general partner and

its managing directors. During the reporting period,

the Supervisory Board kept management informed in

a timely and comprehensive manner, specifically by

providing regular oral and written reports within the

meaning of § 90 German Stock Corporation Act

(AktG). The reports related primarily to the liquidity

situation and financial condition, planned investments,

corporate planning (financial, investment and

human resources planning) and the risk situation of

the Company and of the Group. Deviations in the

course of business from plans and objectives were

explained in detail to the Supervisory Board, which

then reviewed and discussed these with management.

The Supervisory Board reviewed and discussed in

detail transactions of significance to the Company

based on reports by management. These reports and

discussions not only concerned economic performance

but also sporting performance, particularly during

the changeable yet ultimately pleasing second half

of the 2006/2007 Bundesliga season. The Supervisory

Board was also kept informed between sessions by

means of written documentation. Outside of meetings,

the chairman of the Supervisory Board was also

in regular contact with management and was kept

apprised of developments in the business as well as

material events and transactions as they occurred.

The Supervisory Board met five times in the

2006/2007 financial year (on 15 August 2006, 6

October 2006, 5 March 2007, 16 April 2007 and 24

May 2007). Resolutions of the Supervisory Board

were adopted in accordance with the relevant statutory

provisions and provisions of the Company's

Articles of Association, in some cases outside of meetings

by circular memorandum (Umlaufverfahren).

The Supervisory Board is composed of six persons.

Since committees must consist of three persons in

order to have quorum, no Committees were created

in view of the size of the Supervisory Board. There

exists no information subject to disclosure concerning

the frequency of Supervisory Board members'

attendance at meetings.

The Supervisory Board's resolutions during the

reporting period essentially related to its motions to

the extraordinary General Shareholders' Meeting on

15 August 2006 and the ordinary General

Shareholders' Meeting on 28 November 2006, as well

as to amendment of § 4 and § 5 no. 1 of the Articles

of Association in connection with implementing the

capital increase approved at the extraordinary

General Shareholders' Meeting on 15 August 2006,

and to approval of the agreement to transfer the

handball division to Ballspielverein Borussia 09 e.V.

Dortmund. The Supervisory Board also dealt with the

accounting principles applied in the 2005/2006 financial

year and preparation of both of the aforementioned

shareholders' meetings.

16


REPORT OF THE SUPERVISORY BOARD

CORPORATE GOVERNANCE

The Supervisory Board and management of the

general partner also dealt with the issue of corporate

governance in the reporting period. In

November 2006, they issued a Statement of

Compliance (Entsprechenserklärung) with the

German Corporate Governance Code, taking into

account the amendments in the version dated 12

June 2006. This statement was made permanently

available through publication in the Internet

under www.borussia-aktie.de. Other details and

information in this regard will be provided in a

separate section in the Annual Report (Corporate

Governance Report) in accordance with Section

3.10 of the German Corporate Governance Code.

ANNUAL AND CONSOLIDATED

FINANCIAL STATEMENTS 2006/2007

The annual financial statements of Borussia

Dortmund GmbH & Co. KGaA and the consolidated

financial statements as at 30 June 2007 as

well as the management report for the Company

and for the Group (each including an explanatory

report on the figures in accordance with

§§ 289 (4), 315 (4) German Commercial Code

(HGB)), which were prepared and submitted

within the prescribed time by management, were

audited along with the accounts in accordance

with statutory provisions by the appointed auditor,

BDO Westfalen-Revision GmbH Wirt -

schafts prüfungs gesellschaft, Dortmund, and

were issued with an unqualified opinion (un-

eingeschränkter Bestätigungsvermerk).

on 6 September 2007, at which the auditor personally

presented the key findings of the audit.

The Supervisory Board is in agreement with the

results of the auditor's review and, based on the

final result of its own examination, has no objections.

The Supervisory Board adopted the annual

financial statements of Borussia Dortmund

GmbH & Co. KGaA and the consolidated financial

statements as at 30 June 2007 at its meeting

on 6 September 2007.

Furthermore, the Supervisory Board conducted

its own audit of the report prepared by the general

partner pursuant to § 312 AktG concerning

relationships with affiliated enterprises (dependent

company report) for the 2006/2007 financial

year. The dependent company report was

also reviewed by the auditor and the following

auditor's opinion was issued thereon:

“Pursuant to our duly conducted audit and evaluation

we hereby confirm that

1. the factual information in the report is accurate;

2. with respect to the reported transactions, the

consideration paid by the Company was not

unreasonably high, or any disadvantages have

been compensated for;

3. with respect to the reported actions taken, no

facts or circumstances exist that would argue

for any assessment substantially different than

that made by management.”

The annual financial statements, the consoli dated

financial statements, the management report for

the company, the Group management report, the

risk report and the corresponding auditor's

reports were provided to all members of the

Supervisory Board and discussed in the auditor's

presence at the Supervisory Board meeting held

Based on the final result of its review, the

Supervisory Board raised no objection to the

general partner's statement at the conclusion of

the dependent company report. The Supervisory

Board approved and took note of the results of the

auditor's review of the dependent company

report.

17


REPORT OF THE SUPERVISORY BOARD

The Supervisory Board recommends that the

General Shareholders' Meeting adopt the annual

financial statements as at 30 June 2007. The

Supervisory Board also agrees with management's

proposal to transfer the net retained profits for the

2006/2007 financial year of A 4.592.026,83 to other

revenue reserves. The Supervisory Board also

recommends ratification (Entlastung) of the acts

of the general partner, Borussia Dortmund

Geschäftsführungs-GmbH, for the 2006/2007

financial year.

PERSONNEL MATTERS

Patrick Albert Lynch, of London (Great Britain),

resigned from the Supervisory Board effective 26

February 2007. In his place, Christian Kullmann,

of Hamminkeln, was appointed to the Supervisory

Board by virtue of an order applied for by the general

partner and handed down by the Local Court

(Amtsgericht) of Dortmund on 21 May 2007 in

accordance with § 104 (2) AktG. The number of

Supervisory Board members therefore meets the

requirements of the Articles of Association.

Pursuant to § 8 no. 3 sentence 6 of the Articles of

Association, the next General Shareholders'

Meeting will have to elect a new Supervisory Board

member for the remainder of the departing member's

term of office.

The Executive Committee of the Advisory Board

of Borussia Dortmund Geschäftsführungs-GmbH

reached an agreement earlier than required with

the managing director and chairman, Hans-

Joachim Watzke, to extend his managing director's

agreement (the term of which was originally limited

until 31 December 2008) by a further three

years, i.e. until 31 December 2011. The term of

office of the other managing director, Thomas

Treß, currently runs until the end of 2008.

The Supervisory Board wishes to thank management

and all the employees for their once again

successful work over the past financial year and

their exceptional efforts on behalf of the Company.

Many thanks also to the business partners, shareholders

and fans of Borussia Dortmund for the

confidence they have shown in us.

Dortmund, 6 September 2007

The Supervisory Board

Gerd Pieper

Chairman

18


GOVERNING BODIES AND CORPORATE STRUCTURE

GOVERNING BODIES

BV. BORUSSIA 09 e.V. DORTMUND

Management Board

Dr. Reinhard Rauball

Dr. Albrecht Knauf

Dr. Reinhold Lunow

President

Vice President

Treasurer

BORUSSIA DORTMUND GmbH & Co. KGaA

Supervisory Board

Gerd Pieper

Chairman

Proprietor and Managing Director of Stadtparfümerie Pieper GmbH, Herne

Harald Heinze

Deputy Chairman

Bernd Geske

Managing partner of Bernd Geske Lean Communication, Meerbusch

Ruedi Baer

Delegate of the Board of Directors of mobilezone Group, Regensdorf (Switzerland)

Othmar Freiherr von Diemar

Proprietor and manager of Othmar von Diemar Vermögensverwaltung + Beratung, Cologne

Christian Kullmann since 23 May 2007

Head of the corporate communications division and board office of RAG Aktiengesellschaft, Essen

Departed from the Supervisory Board

Patrick Albert Lynch until 26 February 2007

Bank employee, London

BORUSSIA DORTMUND GESCHÄFTSFÜHRUNGS-GmbH

Hans-Joachim Watzke

Thomas Treß

Managing Director (Chairman)

Managing Director

CORPORATE STRUCTURE

BORUSSIA DORTMUND GmbH & Co. KGaA

100,00% BVB Stadionmanagement GmbH

(formerly: Westfalenstadion Dortmund Verwaltungs-GmbH)

100,00% goool.de Sportswear GmbH

100,00% Sports & Bytes GmbH

100,00% BVB Merchandising GmbH

(formerly: Borussia Dortmund Beteiligungs-GmbH)

99,74% BVB Stadion GmbH

(formerly: Westfalenstadion Dortmund GmbH & Co. KG)

94,90% BVB Beteiligungs GmbH

51,00% B.E.S.T. - Borussia Euro Lloyd Sports Travel GmbH

33,33% Orthomed GmbH

19


BVB

Sponsoring

21


Since 1 December 2005, Germany's largest football

stadium has been called SIGNAL IDUNA PARK.

SIGNAL IDUNA PARK & SPONSORSHIP

PRIMARY SPONSOR

The three most important partners of a football

club are the jersey sponsor, the sponsor

providing the stadium name and the equipment

supplier. Borussia Dortmund has contractual

ties with three high-level partners in

the form of Evonik Industries AG, SIGNAL

IDUNA Group and Nike.

The primary and jersey

sponsor of BVB is

Evonik Industries AG.

Since 14 September

2007, the BVB players

have worn this name

on their breast. This

photo shows the scorer

of two goals in the

game against Werder

Bremen (final score

3:0), Mladen Petric.

In addition to many other marketing options,

the primary sponsor is entitled to put its name

on the breast of the players' jerseys. Since

July 2006, BVB's partner in this respect has

been Evonik, which was created in autumn

2007 from RAG and formed from the former

group companies Degussa, Steag and RAG

Immobilien. With activities in more than 100

countries, about 43,000 employees generate

sales of approximately EUR 14.8 billion (2006).

In the 2006/2007 season relevant for the

reporting period, EVONIK established more

than 3.7 billion contacts as a result of its commitment

to BVB from advertising and media.

Like earlier jersey sponsors, “EVONIK” will

also succeed in significantly increasing its

public profile.

SPONSOR PROVIDING THE STADIUM NAME

In December 2005, Borussia Dortmund was

able to acquire SIGNAL IDUNA Group as the

sponsor providing the stadium name. Since

then, Germany's largest football stadium has

been called SIGNAL IDUNA PARK. 77 percent

of German companies are involved in sponsorship,

spending EUR 3.8 billion on it each

year, more than two-thirds of this amount

flowing into sport. SIGNAL IDUNA Group also

pursues this strategy. “In terms of public profile,

BVB is some way ahead of us”, realises

the financial and insurance provider’s

Chairman of the Managing Board, Reinhold

Schulte, revealing that: “We want to share in

this public profile via SIGNAL IDUNA PARK.”

22


BVB

Sponsorship

Jerseys, trousers, socks and boots, as well as BVB’s complete training

and match equipment, are provided by Nike.

EQUIPMENT SUPPLIER

In the fight for market share, the major sports

article manufacturers rely on the platform

offered by the major clubs. Top sportsmen are

multipliers and act as examples for fashion

and trend-conscious children and youths, who

wish to wear the same shoes, trousers, jerseys

and tracksuits as their icons.

The American sports article manufacturer,

Nike, which employs approximately 26,000

employees worldwide, has been BVB's equip-

ment supplier since July 2004. All teams right

down to young talent play in jerseys and boots

bearing the world famous Nike logo known as

“Swoosh”. It is one of the best known trademarks

in the world.

Nike acts as the exclusive equipment provider

in the clothing, shoe and other product segments.

As part of its commitment as an equipment

supplier, Nike also uses BVB's commercial

appeal in various ways inside the stadium

(perimeter board advertising), and also utilises

business to business potential in the catering

areas of SIGNAL IDUNA PARK.

The contract between Borussia Dortmund and

its equipment supplier, Nike, runs until summer

2009.

The newest boot by the U.S. sports article manufacturer

– shown here in the current advertising

campaign – appears in the BVB club colours.

At present, for example, the

Swiss national player, Philipp

Degen, wears this model.

23


The basis of the sponsorship

concept is formed

by the more than 500

companies that use the

various catering areas in

SIGNAL IDUNA PARK,

such as “Business Club

09”.

SPONSORSHIP

BVB's sponsorship concept has a clear hierarchy.

The basis is formed by the more than

500 companies that use the various catering

areas in SIGNAL IDUNA PARK in a business to

business context in order to offer their customers

and/or guests something special for

home matches in the form of their business

seats in VIP areas, as well as to establish or

build upon business relations. In same cases,

these companies link their commitment with

advertising measures such as perimeter

board advertising and appearances in print

media and/or on the Internet.

On the next highest level are the so-called

“partners”, who use the BVB platform primarily

in terms of regional exposure and the location.

This principally involves perimeter

board advertising, interior campaigns, naming

rights of the VIP areas or the use of players for

PR appointments. As a partner of BVB, a company

has the right to use this title and the club's

logo for its own purposes or PR work.

One of BVB's champion partners is Sparda-Bank. The

company has created an attractive savings card with

variable interest for fans. Goals scored by the stars are

points earned by the fans.

For years, BVB has been closely connected with

the Warsteiner brewery. It is also represented in

the stadium on perimeter board advertising and

thus reaches a large number of consumers.

24


BVB

Sponsorship

Business Club 09 (level 4) and Borussia

Park (level 3) are located in the northern

stand of SIGNAL IDUNA PARK.

Coca-Cola has been a

committed partner of

BVB for years.

Above these are the “champion partners”.

These are companies that do business in Germany

and internationally, which increase their

public profile through BVB in that they or their

advertising are placed in effective locations for

television, for example, exclusively on the premium

revolving board in the first row and on

cam carpets. Moreover, they are entitled to one

individual team photo. In addition, these companies

enjoy industry exclusivity. This means

that companies from the same business do not

compete on this level. It goes without saying

that the right to use this title and the club's logo

for own purposes and for PR work applies in

this case as well.

Basically, the “champion partners” combine

communication objectives such as public profile

and sympathy; depending on their product,

there are also broader objectives such as acting

as a multiplier for improved sales. In media

linking of the respective measures, the “champion

partners”, the sponsor after whom the

stadium is named, the primary sponsor and

the equipment provider always appear when

BVB can be seen in a context that has a media

impact: this includes advertising on perimeter

boards or in the interior. Furthermore, each

camera that shows a player during an interview

or the coach at a press conference takes in the

background interview boards, which are covered

with advertising.

REGULARS' TABLE AREAS

3,668 business seats and 162 box seats are

available in SIGNAL IDUNA PARK. During the

game, everyone sits close to the action, and

everyone can communicate with each other

accordingly – not only about football, but also

about business.

Whether in Business

Club 09 (photo left)

or in one of the exclusive

boxes, hospitality

is always of

utmost priority.

25


Various hospitality areas

were created during the expansion

stages of SIGNAL

IDUNA PARK. The Dannemann

Lounge is particularly

popular.

View inside the Dannemann

Lounge: Here,

BVB's partners can, in

turn, establish contacts.

This picture shows the

top-quality furnishings of

the interior with the

seating and bar well before

a match.

“This way we satisfy the great interest of our

customers”, says Gerd Rossenbach, managing

director of a BVB sponsor that keeps two

boxes: “Here we can look after our guests

individually. The service is excellent and the

view is outstanding.”

Just as long as the tradition of the “regulars'

table area”, which was created in 1996, is the

waiting list of companies that want to be

involved. During the course of the stadium

expansion, two new, high-quality areas (AIDA

lounge and Dannemann lounge) were built.

The customers of the regulars' tables enjoy

comfortable seats in the western stand,

reserved corporate tables, reserved parking

spaces directly at the stadium and much

more. The concept for “Borussia Park” is

similar.

Borussia also offers total

solutions: The Conference

Center, here leased to

a partner from the IT

industry.

The variety of the areas is intended to offer

something for every wish and wallet. The

conference centre and the golf area also

offer the possibility of purchasing larger

ticket quotas for selected games, including

full catering, as part of incentive packages.

26


BVB

Sponsorship

Young BVB fans and

families with children

find a home in the Langnese

family block.

LANGNESE FAMILY BLOCK

The Langnese family block has enjoyed great

popularity for years and its service and comfort

were further improved for the current

season. Amongst other things, parents and

children moved closer to the playing field,

and there is a strict smoking ban. There are

numerous offers and attractions in the interior

areas of the stands. Apart from provi-

ding a location and care that caters to families,

the idea behind this is to tie children

and youths to the club Borussia Dortmund at

an early stage, to awaken passions and to

turn them into loyal fans who will later

remain BVB customers as season ticket holders

or maybe even in the catering areas.

The family block was specially

relocated for the

new season in order to

give children and parents

a better view of the pitch.

27


Borussia Dortmund

THE BVB SHARE

SHARE PRICE PERFORMANCE

In the 2006/2007 financial year, the factors affecting

the performance of the share price were the successful

conclusion of the restructuring and reorganisation

programme and also the club's sporting position, in

particular the unsatisfactory second half of the most

recent Bundesliga season.

Borussia Dortmund GmbH & Co. KGaA's shares

started the 2006/2007 financial year at EUR 2.21 and

reached their high for the reporting period of EUR

2.49 at the start of the season. The additional capital

increase of a further 17,550,000 shares (existing number

of shares: 43,875,000), resolved by the extraordinary

General Shareholders' Meeting on 15 August

2006 and publicised by means of an ad hoc announcement

on 15 August 2006, did not have a negative

impact on the share price, which remained stable

until well into October 2006 in a range of between

EUR 2.50 and EUR 2.40.

The first sporting setbacks as a result of failing to win

several home games in a row subsequently led to a

modest downward trend, the share price reaching

EUR 2.15 on 1 November 2006. The price recovered,

however, thanks to the management's profit forecast

of EUR 9-10 million (EBIT for the KGaA), the

record profits for the first quarter of 2006/2007 communicated

in an ad hoc announcement on 13

November 2006 and the improved mood of investors

following the General Shareholders' Meeting on 28

November 2006. In the following period, the share

price ranged between EUR 2.30 and EUR 2.20.

With the commencement on 20 December 2006 of

trading in both tranches of the new shares from the

capital increases in May and August 2006, the share

price came under selling pressure and was quoted at

the stock exchange year-end on 29 December 2006

at EUR 2.17. The share price fell further at the start

of the second half of the financial year as a result of

increasing discussion about the position of the coach,

Bert van Marwijk, which had already started at the

end of 2006, the replacement of the coach with

Jürgen Röber and the continued failure, despite the

change, to achieve sporting successes. Following a

brief recovery thanks to the home win against Bayern

Munich at the start of the second half of the season

on 26 January 2007, the share price was initially

quoted at between EUR 2.10 and EUR 2.00. A further

change of coach then became necessary and

Thomas Doll was appointed on 12/13 March 2007,

which resulted in a fall in the share price to

EUR 1.90. When the club entered the relegation

zone following the defeat against Arminia Bielefeld

on 30 March 2007, the share price finally fell to

EUR 1.59 on the next trading day, unhappily reaching

its all-time low.

With Thomas Doll and the unparalleled fans' initiative

“Wir sind Borussia” (“We are Borussia”) lending their

support to Borussia Dortmund, a sporting turnaround

and a change in the financial climate followed. Inves -

tors regained confidence. The share price recovered,

and was quoted initially in April 2007 in a range

between EUR 1.60 and EUR 1.70, and in May and

June 2007 in a range between EUR 1.70 and EUR

1.80. This was due not least to the positive licensing

decision from the DFL for the 2007/2008 Bundesliga

season, communicated to shareholders in the ad hoc

announcement on 20 April 2007, and to the management

maintaining an unchanged profit forecast. A

noticeable feature was that the recovery in the share

price was successful with high trading volumes – with

daily turnover in many cases of over 300,000 shares.

28


THE BVB SHARE

Price performance

SHAREHOLDER STRUCTURE

At the beginning of the 2006/2007 financial year, the

share capital of Borussia Dortmund GmbH & Co.

KGaA amounted to EUR 43,875,000, divided into the

same number of no-par value shares with a notional

value of EUR 1.00 each.

In the period from June to August 2006, the Com -

pany was informed of changes in the shareholder

structure as a result of notifications of voting rights

by BlueBay Asset Management Ltd., London (United

Kingdom), Absolute Capital Management Holdings

Limited, Grand Cayman (Cayman Islands), Absolute

Return Europe Fund Limited, George Town, Grand

Cayman (Cayman Islands) and CSI Asset Man -

agement Establishment, Vaduz (Liechtenstein).

The capital increase of 17,550,000 new shares re -

solved by the extraordinary General Shareholders'

Meeting on 15 August 2006 was successfully placed in

its entirety. The capital increase was entered in the

commercial register on 19 September 2006 and the

share capital of the Company was thereby increased

to a present amount of EUR 61,425,000, divided into

the same number of no-par value shares with a

notional value of EUR 1.00 each. Having been admitted

to listing, the new shares have been tradable on

the stock exchange since 20 December 2006.

Following the successful placement of the capital

increase, the Company was informed of further

changes in the shareholder structure in the period

from September 2006 to June 2007 as a result of notifications

of voting rights by Morgan Stanley & Co.

International Limited, London (United Kingdom),

Morgan Stanley, Wilmington (Delaware/USA),

Morgan Stanley International Inc., Wilmington

(Delaware/USA), Morgan Stanley International

Limited, London (United Kingdom), Morgan Stanley

Group (Europe), London (United Kingdom),

Morgan Stanley UK Group, London (United

Kingdom), Morgan Stanley Bank International

Limited, London (United Kingdom), Morgan

29


Borussia Dortmund

Stanley International Holdings Inc., New York

(USA), Morgan Stanley Laxton, London (United

Kingdom), Morgan Stanley Domestic Capital Inc.,

Wilmington (Delaware/USA), Morgan Stanley

Capital Management LLC., Wilmington (Delaware/

USA), Ballspielverein Borussia 09 Dortmund e.V.,

Dortmund (Germany), European Catalyst Fund

Limited, George Town, Grand Cayman (Cayman

Islands), Absolute Octane Fund Limited, George

Town, Grand Cayman (Cayman Islands), Absolute

Capital Management Holdings Limited, Grand

Cayman (Cayman Islands), CSI Asset Management

Establishment, Vaduz (Liechtenstein), Credit Suisse

Group, Zürich (Switzerland), Credit Suisse

Securities (Europe) Limited, London (United

Kingdom), Credit Suisse, Zürich (Switzerland),

Credit Suisse (International) Holding AG, Zug

(Switzerland), Credit Suisse Investments (UK),

London (United Kingdom) and Credit Suisse

Investment Holdings (UK), London (United

Kingdom), as well as OZ Management LLC, New

York (USA) and Och-Ziff Management Europe

Limited, London (United Kingdom).

Following the completion of the capital increase and

the notifications of voting rights received by the

Company, the shareholder structure of Borussia

Dortmund GmbH & Co. KGaA at the close of the

2006/2007 financial year was therefore as follows:

• Morgan Stanley International Limited: 16,25%

• Absolute Capital Management Holdings

Limited: 13,04%

• BlueBay Asset Management: 17,09%

• BV. Borussia 09 e.V. Dortmund: 7,24%

• Bernd Geske: 6,51%

• Free float: 39.87%

The total number of invitations to the 2006 General

Shareholders' Meeting sent out by banks suggests

that the number of shareholders in Borussia Dort -

mund GmbH & Co. KGaA is around 47,000.

INVESTOR RELATIONS

The high level of interest in Borussia Dortmund

GmbH & Co. KGaA again increased significantly in

the 2006/2007 financial year. The Company responded

to the demand for information and devoted even

more attention to institutional and private investors

and analysts.

Market participants were kept informed promptly

and comprehensively on developments at Borussia

Dortmund GmbH & Co. KGaA. Great importance

was attached to ensuring that communication with

the public and the financial world was consistent, sustained

and transparent, and not just against the background

of two successfully placed capital increases in

the reporting period.

Borussia Dortmund GmbH & Co. KGaA published

its financial figures in its interim report for the period

from July to December 2006 and for the full

2005/2006 financial year. Changes in the shareholder

structure were published by the Company in the official

journals for the publication of statutory stock

market notices. With the coming into effect of the

reform of the German Securities Trading Act

(Wertpapierhandels gesetz, “WpHG”) on 20 January

2007, the Company made the change to publishing

its mandatory announcements under capital market

law on a Europe-wide basis in accordance with the

statutory requirements. In this context, an overview

of the Company's principal publications is provided

by the “Annual Document” required by § 10 German

Securities Prospectus Act (Wertpapier pro spekt -

gesetz, “WpPG”), which can be found online at

www.borussia-aktie.de, under Corporate Governance

(CG). Here investors and shareholders can find all ad

hoc announcements, directors' dealings disclosures,

notifications of voting interests, information regarding

subscription offers etc.

30


THE BVB SHARE

Turnover of shares

In addition to financial reporting and the mandatory

announcements required under capital market law,

online communication represents the Company's

principal means of providing information, with more

than 100,000 hits each month. All items of information

relevant to the stock exchange listing can be

accessed at www.borussia-aktie.de. Registered users

are provided with up-to-date ad hoc announcements,

and Company and football news, by means of the free

newsletter. In the 2006/2007 financial year, the

Company also made the information on the Borussia

share website available in English. In addition, the

printed magazine “Borussia Invest”, which appears

twice a year, also has a secure place in the Company's

communications strategy. This publication is primarily

aimed at private investors in Borussia Dortmund

GmbH & Co. KGaA, with background reports,

announcements, interviews and analysis by financial

experts.

As the final step in the Company's reorganisation, the

extraordinary General Shareholders' Meeting held on

15 August 2006 in the Westfalenhalle in Dortmund

cleared the way for a capital increase of 17,550,000

no-par value shares (existing number of shares:

43,875,000). The event was attended by more than

1,430 limited liability shareholders and guests. The

shareholders present represented around 70.4% of

the share capital. The ordinary General Shareholders'

Meeting was held in turn during the reporting period

on 28 November 2006, also in the Westfalenhalle

in Dortmund. This event was attended by more than

1,000 limited liability shareholders and guests. In this

case, the shareholders present represented around

72.2% of the share capital. The shareholders formally

approved the actions of management by an extraordinary

and remarkable voting percentage of 99.9%

and thus expressed their confidence in the Chairman,

Hans-Joachim Watzke, and the Chief Financial

Officer, Thomas Treß.

During the reporting period, Borussia Dortmund

GmbH & Co. KGaA continued to work together with

its designated sponsor, Gebhard & Co. Wertpapier -

handelsbank AG, based in Munich. Increased liquidity

in the BVB share and consistent price quality were

ensured by maintaining bid and offered prices in the

XETRA electronic trading system. The Company

thereby acknowledged the continuing central importance

of the XETRA electronic trading system, which

now accounts for around 90% of stock exchange

turnover.

31


CORPORATE GOVERNANCE REPORT

Corporate Governance stands for transparent and

responsible corporate management and supervision

aimed at achieving long-term shareholder value.

Key aspects of good corporate governance include

efficient co-operation between management and

the Supervisory Board, due regard to shareholders'

interests, openness, and transparent corporate communication.

The management of Borussia Dortmund

Geschäftsführungs-GmbH, the general partner

of Borussia Dortmund GmbH & Co. KGaA

(the “Company”), and the Supervisory Board of our

Company are guided by these principles.

GENERAL INFORMATION ON CORPORATE GOVERNANCE

AT BORUSSIA DORTMUND GmbH & Co. KGaA

Section 161 AktG requires the management board

and supervisory board of any listed company to issue

an annual statement as to whether and to what

extent recommendations by the “Government

Commission for the German Corporate Governance

Code” (Regierungskommission Deutscher

Corporate Governance Kodex) contained in the

German Corporate Governance Code (the “Code”)

as published in the official section of the Electronic

Federal Gazette (elektronischer Bundesanzeiger)

were followed in the past and are being

or will be followed now or in the future.

As a rule, the Code is reviewed once annually and

amended as required. It contains basic statutory

provisions on the management and supervision of

German listed companies based on internationally

and nationally recognised standards for good and

responsible corporate governance. The Code aims

to make the German system of corporate governance

transparent and understandable in an effort

to boost the confidence of international and national

investors, customers, employees and the general

public in the management and supervision of

German listed companies.

Many of the Code's recommendations (“should”

provisions) are tailored exclusively to stock cor po-

rations and are at most applicable by analogy to

partnerships limited by shares (Kommandit ge -

sell schaften auf Aktien, “KGaA”), i.e. to our

Company.

A KGaA is a hybrid corporate form combining elements

of a German stock corporation (Aktiengesellschaft)

and a limited partnership (Kommanditgesellschaft).

A KGaA is a separate legal entity

whose share capital is divided into shares which are

held by at least one shareholder (the general partner)

that has unlimited liability as against creditors

of the Company and limited liability shareholders

(Kommanditaktionäre) that are not personally liable

for the debts of the Company (§ 278 (1) AktG).

The key differences between a KGaA and a German

stock corporation can be characterised as

follows:

Borussia Dortmund GmbH & Co. KGaA has no

Management Board. Instead, the general partner,

Borussia Dortmund Geschäftsführungs-

GmbH, is solely responsible for its management

and representation. This company, in

turn, is represented by one or more managing

directors; Ballspielverein Borussia 09 e.V. Dortmund

is the sole shareholder of this company.

32


CORPORATE GOVERNANCE REPORT

• The rights and duties of the Supervisory Board

of the limited partnership (“KGaA”) elected by

the General Shareholders' Meeting are limited.

Specifically, it has no authority with respect to

matters involving personnel, i.e., no authority to

appoint and dismiss managing directors at

Borussia Dortmund Geschäftsführungs-GmbH

or to regulate the terms of their contracts. Nor

is the Supervisory Board authorised to adopt internal

rules of procedure for the general partner

or any list of transactions requiring its consent.

Rather, such rights and duties are vested

in the governing bodies of Borussia Dortmund

Geschäftsführungs-GmbH, namely its Advisory

Board and the Executive Committee created by

the Advisory Board.

• Additional distinctions exist with respect to the

General Shareholders' Meeting of the KGaA,

which are primarily controlled by §§ 285 and

286 (1) AktG and the Articles of Association of

our Company.

Consequently, the management of the general

partner and the Supervisory Board of Borussia

Dortmund GmbH & Co. KGaA are required to

provide a Statement of Compliance (Ent spre -

chens erklärung) pursuant to § 161 AktG, taking

into account the organisational distinctions of the

legal form of a KGaA and their expression in the

Articles of Association. The Statement of Compliance

must be made permanently available to

the shareholders. This is done by publishing the

Statement of Compliance on our Company's Investor

Relations website (www.borussia-aktie.de,

under the heading “Corporate Governance

[CG]”). The Statement of Compliance (including

explanations of any deviations from the Code's

recommendations), which was provided in November

2006, is reproduced in the annex to this

Corporate Governance Report.

The general partner's management and the Supervisory

Board will issue the next Statement of

Compliance as scheduled in December 2007, at

which time the amendments to the Code dated 14

June 2007, which were published in the electronic

Federal Gazette on 20 July 2007, must also be

addressed.

With respect to the Statement of Compliance

from November 2006, to date the following key

issues regarding corporate governance should be

mentioned:

• Compliance with the recommendations of the

Code relating to the treatment of so-called “severance

pay caps” (Abfindungs-Caps) under

management board employment agreements

(these recommendations are directed at the supervisory

board of stock corporations) is not a

matter for the Supervisory Board at our Company

because it has no authority in relation to

personnel matters. Instead, severance pay caps

fall within the purview of the Advisory Board of

Borussia Dortmund Geschäftsführungs-GmbH.

Subject to this proviso, the recommendations

have been and are being complied with mutatis

mutandis.

• Committees, specifically an audit committee,

were not or are not being established by the Supervisory

Board, because the Supervisory Board

comprises only 6 persons, and committees

would have to consist of 3 persons in order to

have quorum. The Company intends to retain

its existing practice in this regard, in other

words all pending matters will be dealt with by

the full Supervisory Board.

• It is for the same reason that the Supervisory

Board has not created a nomination committee

as is now recommended by the Code. In any

33


Management compensation

Compensation for members of management is not

stipulated by the Supervisory Board of our Company

but rather by the Executive Committee of the general

partner. Management compensation comprises two

components: a fixed amount and a variable component.

The fixed compensation component is stipulated

by contract and is paid out in twelve equal

monthly instalments. The variable compensation

component is based on the performance of the business

and is granted as a bonus contingent on the

consolidated net income for the year before taxes and

managing directors' bonuses. Any additional noncash

or ancillary benefits granted primarily include

insurance benefits at standard market conditions and

the provision of a company car. There are no stock

option plans or similar incentive plans. The comcase,

if a nomination committee is established,

the Code requires that it comprise shareholder

representatives only; however, that is already

the case with regard to the Supervisory Board.

• The Executive Committee of the Advisory

Board of Borussia Dortmund Geschäftsfüh -

rungs-GmbH reached an agreement with the

managing director and chairman, Hans-Joachim

Watzke, in June 2007, which was earlier than

required, to extend his managing director's

agreement (the term of which was originally

limited until 31 December 2008) by a further

three years, i.e. until 31 December 2011. This

was in order to show continuity in terms of who

would head up management.

This Corporate Governance Report herewith submitted

by our Company will be published in the

Annual Report for the 2006/2007 financial year

and on our website at www.borussia-aktie.de under

the heading “Publications”.

ordinary General Shareholders' Meeting will be held

on Tuesday, 27 November 2007 in Dortmund. At

the end of February 2008 we will publish the interim

report for the first six months of the 2007/2008

financial year. The consolidated financial statements

and the interim reports are prepared in accordance

with internationally accepted accounting principles.

The annual financial statements of Borussia Dortmund

GmbH & Co. KGaA were and will continue to

be prepared in accordance with the provisions of the

German Commercial Code (“HGB”). The 2005/2006

Annual Report is the first to be made available in

English as well as German, and the entire website

www.borussia-aktie.de has also been available in English

since 15 June 2007. This is a suggestion under the

Code which we intend to follow now and in the future.

Other means of communicating with market

participants include the newsletter, “Borussia Invest”,

which appears every 6 months, and the publication

of analysts' recommendations and research

studies on our website at “www.borussia-aktie.de”

under the heading “Publications”.

Transparency

Our Company informs the limited liability shareholders

and shareholder associations, financial analysts

and the interested public regularly as to the

companies' condition and any material changes in its

business. In particular, the ad hoc notices and directors'

dealings disclosures we receive and the current

version of the Articles of Association and the financial

calendar are all published on our website. The

Annual Document under § 10 WpPG, which is also

available on the website www.borussia-aktie.de under

“Corporate Governance”, provides an overview

of the companies' key publications during the

2006/2007 financial year. The financial calendar contains

key Company events and can also be viewed on

the website www.borussia-aktie.de under “Financial

Calendar”. Borussia Dortmund GmbH & Co. KGaA's

34


CORPORATE GOVERNANCE REPORT

pensation components provided are reasonable in

and of themselves and overall. Compensation benefits

paid to members of management are set out in

the notes to the annual and consolidated financial

statements in the aggregate and broken down by

individual.

tion presented above, this information is provided

only as an aggregated amount rather than being broken

down by individual. In the 2006/2007 financial

year, the Company did not pay members of the

Supervisory Board any additional compensation or

grant them any additional benefits.

Supervisory Board compensation

Pursuant to § 13 (1) of the Articles of Association,

members of the Supervisory Board receive only a

fixed compensation, which is set at a comparatively

low amount of EUR 7,000 annually; the chairman

receives twice this amount and the deputy chairman

receives one and a half times this amount. Super -

visory Board members' compensation is set out in the

notes to the consolidated financial statements. In

the interest of simplicity and in view of the informa-

Disclosures relating to the ownership

of shares in the Company by management

or the Supervisory Board

As at 30 June 2007, one member of management

held 4,545 shares in our Company. As at the same

date, members of the Supervisory Board held a total

of 4,000,765 shares. In total, the shareholdings of

management and the Supervisory Board constitute

more than 1 % of the shares issued by Borussia Dortmund

GmbH & Co. KGaA.

Dortmund, September 2007

On behalf of the Supervisory Board

On behalf of Borussia Dortmund Geschäftsführungs-GmbH

Gerd Pieper Hans-Joachim Watzke Thomas Treß

35


STATEMENT OF COMPLIANCE BY THE MANAGEMENT AND

SUPERVISORY BOARD OF BORUSSIA DORTMUND GMBH & CO. KGAA

UNDER § 161 AktG (NOVEMBER 2006)

The management of the general partner (Borussia

Dortmund Geschäftsführungs-GmbH) and the

Supervisory Board of Borussia Dortmund GmbH &

Co. KGaA hereby state in accordance with § 161 AktG

that since the last Statement of Compliance issued in

December 2005, Borussia Dortmund & Co. KGaA has

complied with the recommendations of the German

Corporate Governance Code (the “Code”) dated 2

June 2005 up until publication of the new version of

the Code in the electronic Federal Gazette on 24 July

2006, and has also complied with the recommendations

of the Code dated 12 June 2006 from the time of

its publication in the electronic Federal Gazette on 24

July 2006, and the recommendations in the amended

version dated 12 June 2006 will be complied with in

the future; excepted herefrom are the following deviations

which in part are due to organisational distinctions

specific to the legal form of the KGaA and their

expression in the Articles of Association:

As to Section 3.8 sentence 3: The D&O insurance

does not provide for any deductible. Based on our

understanding, such an agreement would not be suitable

as an incentive, nor would it strengthen the sense

of responsibility with which members of corporate

bodies conduct their duties and functions.

As to Section 4.2.1 sentence 2: The Supervisory

Board of Borussia Dortmund GmbH & Co. KGaA has

no authority with respect to personnel matters; this is

the purview of the Executive Committee of Borussia

Dortmund Geschäftsführungs-GmbH. Since January

2006, the management of Borussia Dortmund

Geschäftsführungs-GmbH has comprised Hans-

Joachim Watzke (managing director/chairman) and

Thomas Treß (managing director). As their areas of

responsibility have been adequately defined in their

respective contracts and the managing directors

otherwise exercise their statutory powers and powers

under the Articles of Association in close co-operation,

the competent governing bodies of Borussia Dort -

mund Geschäftsführungs-GmbH have not in the past

regarded it as necessary to also enact separate rules of

procedure for management.

As to Sections 4.2.2, 4.2.3 and 4.2.5 and Section

7.1.3: Section 7 of our Company's Articles of Asso -

ciation provides that the general partner is entitled to

reimbursement of personnel costs and the cost of

materials incurred in connection with managing the

Company, plus compensation equivalent to 3% of any

otherwise accruing annual net income for the year of

the Company. Compensation and the compensation

system for managing directors of Borussia Dortmund

Geschäftsführungs-GmbH are otherwise determined

by its Executive Committee (deviation from the

powers of the Supervisory Board stipulated under

Section 4.2.2 sentence 1 due to the Company's legal

form). Compensation for the managing directors consisting

of components that are long-term or risk-based

in nature, such as stock options, was not and is not

being provided, nor are pension commitments, and

thus no further disclosures or explanations primarily

relating to these issues were or will be made (deviation

from Section 4.2.3 sentences 6 to 9, Section 4.2.5 sentences

2 and 3 and Section 7.1.3).

As to Section 4.3.4 sentence 3: Material transactions

between the general partner and certain related

parties on the one hand, and the Company on the other,

within the meaning of §§ 89, 112 in conjunction

with § 278 (3), 283 No. 5 AktG (e.g., loans) require

the involvement of the Supervisory Board. In this

respect, the recommendation was and is being followed.

The Supervisory Board is not otherwise authorised

to adopt a list of transactions requiring its consent

for the general partner or its managing directors.

As to Section 4.3.5: Because the Supervisory Board

lacks authority in matters involving personnel, the

Advisory Board of Borussia Dortmund Geschäfts -

führungs-GmbH is responsible for approving any side

36


CORPORATE GOVERNANCE REPORT

activities of the managing directors of the general

partner. Subject to this proviso, the recommendations

have been and are being complied with mutatis

mutandis.

As to Section 5.1.2 sentences 2 and 6: These Code

recommendations directed at the supervisory board

of stock corporations are at most applicable by

analogy to our Company, whose Supervisory Board

does not have any authority with respect to personnel

matters. The managing directors and the Exe cutive

Committee of Borussia Dortmund Geschäfts füh -

rungs-GmbH are responsible for making suc ce ssor

arrangements over the long term (in accordance with

Section 5.1.2 sentence 2). The Executive Committee

has and will have in the future the discretion to

decide in the case of pending (re)appointments of

managing directors on the age limit for managing

directors of the general partner; without this generally

needing to be stipulated (in deviation from

Section 5.1.2 sentence 6).

As to Sections 5.2 sentence 2, 5.3.1 sentence 1

and 5.3.2: No committees have been or will be

established by the Supervisory Board, because it comprises

only 6 persons, and committees would have to

consist of 3 persons in order to have quorum. The

Company intends to retain its existing practice in this

regard, in other words all pending matters will be

dealt with by the full Supervisory Board.

As to Section 5.4.1 sentence 2: There has been no

set age limit for Supervisory Board members to date,

nor will there be any in the future. The Supervisory

Board feels that such a limitation is not justified as

against other criteria for proposed candidates for the

election of Supervisory Board members.

As to Section 5.4.3 sentence 3: Proposals for candidates

for the chair of the Supervisory Board have

not been made public in the past, nor will they be

made public in the future, because the Supervisory

Board feels that the individual election of its members

already conducted is sufficient and does not feel that

a vote in the General Shareholders' Meeting for or

against a given candidate is practicable in view of

his/her position on the Supervisory Board.

As to Section 5.4.7 sentences 3, 4 and 6: Pursuant

to § 13 (1) of the Articles of Association, the members

of the Supervisory Board receive only a comparatively

low annual fixed compensation of EUR

7,000; the chairman receives twice this amount and

the deputy chairman receives one and a half times

this amount. It was and is considered sufficient to

provide the information on the Supervisory Board's

compensation only as an aggregate figure in the notes

to the consolidated financial statements.

As to Section 5.5.3 sentence 1: The recommendation

that the Supervisory Board inform the General

Shareholders' Meeting in its report of any conflicts of

interest that may arise and how these are handled has

not been and is not being followed. The principle of

confidentiality of discussions within the Supervisory

Board (see, § 116 sentence 2 AktG and Section 3.5 of

the Code) is accorded priority over this.

As to Section 7.1.2 sentence 3: The consolidated

financial statements for the reporting period of

2005/2006 were published with a slight delay on 16

October 2006 (= 108 days after the close of the financial

year). The interim report was and will be published within

a reasonable period, which may in the specific case

exceed 45 days after the end of the reporting period.

Dortmund, November 2006

On behalf of the Supervisory Board

On behalf of Borussia Dortmund Geschäftsführungs-GmbH

Gerd Pieper Hans-Joachim Watzke Thomas Treß

37


Borussia Dortmund

AFTER A TURBULENT SEASON, A DEPARTURE FOR NEW SHORES

Borussia Dortmund experienced turbulent times

last season. During the most difficult phase at

the end of March 2007, the team had slipped into the

relegation zone of the Bundesliga table. But in

mid-May, as the season was coming to an end, the

distress and worries had been forgotten. BVB managed

a great final burst, won 16 points from the last

nine games and enjoyed a happy ending that many

sceptics had no longer believed possible. Prior to the

final match day, it even seemed possible to reach a

place in the table that would have allowed the team

to take part in international competition. In the end,

ninth place meant a solid position in the middle of

the table.

Almost all is well that ends well. “I’m glad that this

season is over,” said Hans-Joachim Watzke, Managing

Director and Chairman of Borussia Dortmund

GmbH & Co. KGaA. “I don't want to have to go

through anything like that again.”

The 2:0 victory against archrival FC Schalke 04

in the final home game in front of 80,708 spectators

in the sold-out SIGNAL IDUNA PARK resulted

in a reconciliation with most fans following a

season in which “things were fairly chaotic,” which

was how Christian Wörns, the team captain and

old-hand defender, summed up the season.

Twice during the 2006/2007 season the Clubs' man-

agement felt it had to pull the ripcord and change

coach in order to stop the sporting freefall. Bert van

Marwijk was followed in the winter break by the

luckless Jürgen Röber, who managed a much celebrated

3:2 victory against FC Bayern Munich in his

first match, but who then had just one win from the

following seven matches – with six defeats.

BVB was standing on the precipice: following the 27 th

round, the six-time German football champion –

which had had to leave football's “upper echelon” for

Trainer Thomas Doll

the first time in 1972 for a period of four years – had

even slipped to a relegation position.

Shortly before, Borussia had again changed head

coach.

Thomas Doll came from Hamburg in order to steer

the black and yellow ship back into safe waters and to

put it onto a successful course, which, after a few initial

difficulties, the 41-year-old former national player

and HSV coach succeeded in doing. Doll proved to

be the saviour. “He dissolved the blockages,” was

team captain Wörns' praise for the work of the football

teacher, looking back on a rocky season. The club

wishes to continue to work with Doll in the long term.

Doll brought fresh verve, optimism and a clear sporting

concept to Dortmund, awakening new self-confidence

in his team and bringing to life his philosophy:

“Fear is a poor companion in all situations”. His first

objective was to stabilise the unsettled defence. The

necessary goals were scored, above all, by the Swiss

national captain, Alexander Frei, who had joined

Borussia Dortmund at the beginning of the season

38


THE 2006/2007 SEASON

Giovanni Federico Mladen Petric Jakub Blaszczykowski („Kuba“)

Diego Fernando Klimowicz Robert Kovac Marc Ziegler

from the French league's Stade Rennes. With his 16

goals, he was able to make a decisive contribution to

the fact that, in the final analysis, the season finished

on an acceptable note.

Nevertheless, when discussing the 2006/2007 season,

sport director Michael Zorc said it was “a nightmare

at times”. Hans-Joachim Watzke, the Managing

Director and Chairman, called the preceding months

“the most difficult period of my life”. The horror scenario

of relegation would have been a major setback

for the successfully concluded financial reorganisation

of the Borussia Dortmund enterprise.

During the troubled times, the meaning of solidarity

by the people of Dortmund with their flagship –

Borussia – became clear. The “We are Borussia” initiative

by the BVB fan department resulted in a

unique closing of the ranks between Dortmund's cit-

izens, companies and public authorities. After the victory

at VfL Wolfsburg and the resultant securing of

non-relegation on the third last Bundesliga match day,

the local derby against Schalke 04 finished 2:0, which

finally chased away all dark thoughts and gave fans and

sympathisers hope for a successful new season.

The high level of enthusiasm and anticipation is

shown by the 50,549 season tickets sold for the

2007/2008 season, a new Bundesliga record. BVB also

held the old record, with 50,415 season tickets in

2003/2004.

With six new players, Thomas Doll's team should be

in a better position than in the previous season both

in quantitative and qualitative terms. “We have succeeded

in giving the squad more depth, and the sense

of competition within the team has increased,” concluded

sport director Michael Zorc.

39


BVB

Merchandising

41


The fan shop in the August Lenz building, directly adjacent to the stadium forecourt.

SIGNAL IDUNA PARK & MERCHANDISING

Like all other clubs, Borussia Dortmund

classically defines “merchandising” as

the “fan article business”. In this respect, a

distinction is drawn between retail and

licensed business. For the latter, a

licensed company may give its

products the look and feel of

Borussia Dortmund and use its

own distribution channels for

sales. As licensor, Borussia

Dortmund receives a minimum

licence fee and performancebased,

per unit royalties. The

grant of licences lends itself particularly

to niche products where

the licensee, as a specialist, has a strong distribution

network.

By its nature, the retail business is stronger.

In this respect, BVB has four fan shops of its

own in Dortmund. Furthermore, as additional

modern distribution channels, there is an

Internet shop, an internal and external

call centre and the possibility of

ordering by mail order using the

BVB fan article catalogue. The

distribution channels are rounded

off by a commercial network

across Germany involving 150 partners

(sports stores and chains such

as Karstadt, Kaufhof, Intersport,

Sport2000, Decathlon).

In this way, the “Borussia Dortmund” brand is

transported and multiplied as best as possible.

42

The complete range of fan articles

is, of course, also covered in the

new fan shop at the stadium.


BVB

Merchandising

Off the rack: The current

jerseys are of course a

“hit” in the merchandising

business.

The successes are reflected in the current

business report: Revenues increased to EUR

5.2 million compared to the previous financial

year. With these figures, Borussia Dortmund is

in the top five in the Bundesliga. In contrast to

many other clubs, the entire trading structure

is controlled by Borussia Dortmund: this

ranges from product range planning through

to procurement and logistics, while some other

clubs have outsourced some of these

aspects to a service provider.

BVB opened its fourth fan shop in Dortmund

only at the beginning of 2007, right beside Signal

Iduna Park, and thus corrected a “strategic

error of not having a suitable merchandising

store right where the fans are”, according

to managing director Hans-Joachim Watzke.

This deficiency no longer exists: 600 square

meters of sales space is available, and the

entire product range is covered. The fan shops

are open on match days until kick-off (at the

stadium, even until well after the final whistle)

in order to satisfy the fans' needs. Moreover,

there are mobile stands at and in SIGNAL

IDUNA PARK.

In recent years, BVB

has placed ever more

emphasis on fan articles

especially for women.

With success.

Always popular, and not only on

match days: The August Lenz

building fan shop at the stadium.

43


Borussia Dortmund GmbH & Co. KGaA

BUSINESS AND FRAMEWORK CONDITIONS

FINANCIAL YEAR 2006/2007 IN REVIEW

At the close of the General Shareholders' Meeting of

our Company in November 2006, Gerd Pieper,

Chairman of the Supervisory Board, was able to

announce an extraordinary voting result. 99.99 per

cent of the shareholders present formally approved

the actions of the management and thereby expressed

their confidence in us.

We see this acknowledgement as a confirmation of

the work we are doing and will continue to practise

the transparency and openness that received your

stamp of approval at the last General Shareholders'

Meeting, as well as a high level of cost consciousness

and an appropriate policy on investments.

Having overcome a life-threatening situation, our

Company is once again in the black, which confirms

that the nature of our actions was correct and reinforces

our belief that we should continue down our

chosen path. On 7 June 2006, i. e. in the past financial

year, a loan agreement was signed between

Borussia Dortmund GmbH & Co. KGaA, and its subsidiaries,

and the US investment bank Morgan

Stanley for credit facilities amounting in total to EUR

79.2 million with a term of 15 years, thereby laying

the foundations for the long-term stabilisation of the

Company. A total of EUR 57.5 million of the loan was

used for the payment to MOLSIRIS Vermietungs -

gesellschaft mbH & Co. Objekt Westfalenstadion KG

of the price for the repurchase of the limited partner's

share in Westfalen stadion Dortmund GmbH & Co.

KG and for related incidental costs. Ownership of

SIGNAL IDUNA PARK has therefore been almost

completely (99.7%) regained. The remaining loan

amount of EUR 21.7 million was used for the purpose

of reducing and refinancing the existing liabilities

of Borussia Dortmund GmbH & Co. KGaA

(“BVB-KGaA”). In addition, BVB-KGaA was granted

a revolving credit line amounting to EUR 10.0 million

by Morgan Stanley.

As part of the restructuring process, the creditors'

agreement of March 2005 was annulled in June 2006

and the steering committee set up at that time was

dissolved. Furthermore, this created the essential

conditions for the implementation of the capital

increase resolved in May 2006 (utilisation of

authorised capital with a nominal amount of up

to EUR 14,625,000) with an issue amount of

EUR 29,250,000. This entire amount was used for a

further reduction of existing liabilities in July 2006.

Borussia Dortmund was also able to buy back the

“goool.de” trademark on 3 July 2006. Gerling-

Konzern Globale Rückversicherungs-AG, Cologne,

had entered into an agreement with Borussia

Dortmund in 2000 for the purchase and immediate

relicensing of the “goool.de” trademark and thus

became the legal owner of the BVB merchandising

trademark rights. As a result of the repurchase, all the

trademark rights once again rest with the Borussia

Dortmund Group.

1 st Round

11 August 2006

FC Bayern 2:0 BVB

2 nd Round

19 August 2006

BVB 1:1 FSV Mainz 05

44

A foul with nasty results: Kehl is badly

injured during this tackle from

Salihamidzic and is out for months.

What a start: What a start: with this

header, Amedick puts BVB 1:0 in front.

Right: Pienaar, Pekovic.


MANAGEMENT REPORT

The capital increase resolved by the General

Shareholders' Meeting of Borussia Dortmund GmbH

& Co. KGaA on 15 August 2006 for a nominal amount

of up to EUR 17,550,000 to EUR 61,425,000 was fully

placed. The indirect subscription right for a total

of 7,567,585 new shares was exercised by the

Company's limited liability shareholders. Morgan

Stanley & Co. International Limited, London,

England (“MSIL”) subscribed for an additional

9,982,415 new shares in accordance with the resolution

authorising the capital increase dated 15 August

2006. MSIL paid in its non-cash contribution by

assigning to the Company a partial claim held by its

sister company, Morgan Stanley Bank International

Limited, against the Company for a nominal amount

of EUR 21,961,313.

The capital increase was entered in the commercial

register of the Local Court of Dortmund on 19 Sep -

tember 2006. Thus, the Company's share capital is

EUR 61,425,000 (previously EUR 43,875,000) and is

divided into the same amount of no-par value shares.

Management used EUR 10 million of the new cash

funds generated from the capital increase (approximately

EUR 15.1 million in total) to finance working

capital and put the remainder toward reducing existing

liabilities.

The restructuring of the liability side of the balance

sheet, with the aim of strengthening equity resources,

achieving a more manageable debt maturity structure

and improving interest rate terms, has now been fully

implemented.

Key financial indicators

Key financial figures Borussia Dortmund GmbH & Co. KGaA

2006/2007 2005/2006

EUR millions 30.06.2007 30.06.2006

Equity 100.2 52.9

Investments 16.0 11.3

Gross revenue 99.7 90.0

Operating profit/loss (EBIT) 15.8 -12.0

Financial result (investment income and net interest expense) -5.5 -1.0

Extraordinary income 0 10.2

Net profit/loss for the period 10.3 -3.9

Earnings before interest, taxes, depreciation and

amortisation (EBITDA) 22.7 -4.3

Cash flows from operating activities 11.9 -5.5

Number of shares (in thousands) 61,425 43,875

Earnings per share (in EUR) 0.17 -0.09

3 rd Round

26 August 2006

VfB Stuttgart 1:3 BVB

DFB Cup

9 September 2006

Thannhausen 0:3 BVB

Frei, Brzenska and Kringe celebrate

the victory in Stuttgart with their fans.

TSG Thannhausen brought about many

opportunities, but BVB won 3:0.

45


Borussia Dortmund GmbH & Co. KGaA

DEVELOPMENT OF THE MARKET

AND COMPETITIVE ENVIRONMENT

IN GERMAN PROFESSIONAL FOOTBALL

Ticketing

Spectator numbers in the Bundesliga continue to be

unusually high. However, a slight decline of 1.43%

was recorded in comparison with the record set in

the previous year. This was most likely due to the

smaller stadium capacities of the three teams promoted,

Alemannia Aachen, FC Energie Cottbus and

VfL Bochum, compared with the relegated teams, 1.

FC Köln, 1. FC Kaiserslautern and MSV Duisburg.

The biggest attraction for spectators in the

Bundesliga was once again Borussia Dortmund with

1,161,769 tickets sold, ahead of Bayern Munich

(1,133,973) and Schalke 04 (1,028,317). Three

Bundesliga clubs therefore reached the coveted target

of more than 1 million spectators.

In sales of season tickets, Borussia Dortmund

(44,018) outperformed Schalke 04 (42,339), as in the

previous year, and was a long way ahead of the competition

in the Bundesliga. On average, each club in

the Bundesliga sold 20,450 season tickets last season.

TV-marketing

The continuing enthusiasm for football can also be

seen in the revenues generated for the clubs by TV

marketing. The three-year contract for TV marketing

for the Bundesliga and the Second Bundesliga entered

into by the German Football League (DFL) in

December 2005 was for a total amount of over EUR

1.2 billion. This represents an increase of around 40%

compared with the previous TV marketing agreement.

With the coming into effect of the new TV marketing

agreement, the basis of allocating revenues to the

clubs was adjusted. The new basis of allocation is

intended to link payment more closely to performance,

to generate higher income for all clubs and to

cushion the effect of relegation from the Bundesliga.

An additional consideration is to ensure that the split

of revenues between the Bundesliga and the Second

Bundesliga remains stable.

In concrete terms, this means that a club in the

Bundesliga can achieve a maximum of around EUR

23.3 million but a minimum of around EUR 11.7 million

from domestic income for championship games.

In the Second Bundesliga, the range is between EUR

3.6 million and EUR 7.2 million. On top of that, the

Bundesliga clubs benefit separately from the income

from foreign marketing. The German champion

receives EUR 4.0 million from this source, while an

average of EUR 0,518 million goes to the club in 18th

position on the league table.

Sponsorship

Nor has the Bundesliga lost any of its attraction as an

advertising forum. On the contrary, the clubs can look

back on a successful season with further increases in

income from sponsorship and other revenue sources.

The Bundesliga therefore continues to be a growth sector,

with professional management ensuring that the

economic basis is in place for an exciting competition

and so guaranteeing a highly attractive product for fans,

media partners and, above all, sponsors.

The sector's continuing attractiveness and strong

television presence also ensure great interest from

the advertising industry. In an anonymous survey conducted

by the trade magazine “Sponsors”, the clubs'

leading sponsors awarded the Bundesliga's image a

score of 2.18 on a scale of 1-6, 1 being the highest

mark. The average rating of 1.75 for the Bundesliga as

an advertising platform is an outstanding achievement.

Interest on the part of sponsors may also be

linked to the enormous level of brand recognition

enjoyed by the Bundesliga. 98.7% of those questioned

had heard of the top German division.

4 th Round

16 September 2006

BVB 1:0 Hamburger SV

5 th Round

22 September 2006

Bor. M’gladbach 1:0 BVB

46

Guerrero (left) and Ljuboja (right)

watch as Wörns jumps for the header.

Brzenska is already hoping for the goal...

The scene that possibly decided the

match: Frei is beaten by Keller, which

created the counter attack that led to 1:0.


MANAGEMENT REPORT

GROUP STRUCTURE AND BUSINESS

In addition to its core activities of football and the

marketing of SIGNAL IDUNA PARK, Borussia

Dortmund is involved in lines of business related to

football. At present, the Company holds direct and

indirect interests in the following companies: BVB

Stadionmanagement GmbH (100.00%), goool.de

Sportswear GmbH (100.00%), Sports & Bytes

GmbH (100.00%), BVB Merchandising GmbH

(100.00%), BVB Stadion GmbH (99.74%), BVB

Beteiligungs-GmbH (94.90%), B.E.S.T. Borussia

Euro Lloyd Sports Travel GmbH (51.00%) and

Orthomed GmbH (33.33%).

Some of these companies have concluded mutual

control and/or profit and loss transfer agreements.

Borussia Dortmund GmbH & Co. KGaA

100%

100%

goool.de

sportswear GmbH

BVB Stadionmanagement

GmbH

94,90%

94,90%

BVB Stadion GmbH

5,10%

BVB

Beteiligungs-GmbH

5,10%

BV. Borussia 09

e.V. Dortmund

100%

BVB Merchandising

GmbH

100%

Sports & Bytes GmbH

51,00%

B.E.S.T.

Borussia Euro Lloyd

Sports Travel GmbH

49,00%

Hogg Robinson Germany

GmbH & Co. KG

33,33%

Orthomed GmbH

66,67%

Other shareholders

6 th Round

29 September 2006

BVB 2:2 Hannover 96

7 th Round

15 October 2006

Cottbus 2:3 BVB

Borussia devastated: Even two goals by

Smolarek (on the ground) were not

enough to secure a victory against a

rejoicing Hanover.

Two goals by a defender: Brzenska (here

against Kioyo) scored twice in a match

for the first time in the Bundesliga.

47


Borussia Dortmund GmbH & Co. KGaA

ORGANISATION OF MANAGEMENT

AND CONTROL

The general partner, Borussia Dortmund Geschäfts -

führungs-GmbH, is responsible for management and

representation of Borussia Dortmund GmbH & Co.

KGaA. This limited liability company (“GmbH”) is in

turn represented by its Managing Directors Hans-

Joachim Watzke and Thomas Treß; its sole shareholder

is Ballspielverein Borussia 09 e.V. Dortmund.

The remuneration of the Managing Directors is made

up of fixed and performance-related components,

with the latter based on the consolidated net profit

for the year before income taxes.

The following chart shows the structures and

responsibilities as between Ballspielverein Borussia

09 e.V. Dortmund, Borussia Dortmund GmbH &

Co. KGaA and Borussia Dortmund Geschäfts -

führungs-GmbH.

Ballspielverein

Borussia 09 e.V. Dortmund

elects

Executive

Board

appoints

Members Meeting

Council of

economic affairs

Borussia Dortmund

Geschäftsführungs-GmbH

(General Partner)

appoints and supervises

elects

Borussia Dortmund

GmbH & Co. KGaA

Supervisory Board

Advisory Board

Managing Directors

(Consisting of members of the Executive Board,

Council of economic affairs and non-voting,

associated members)

No right of appointment, only right of supervision

General Shareholders’ Meeting

8 th Round

20 October 2006

BVB 1:1 VfL Bochum

DFB Cup

24 October 2006

BVB 0:1 Hannover 96

48

With this spectacular move Pienaar set up

the equaliser in the home match against

the regional neighbour VfL Bochum.

Dariusz Zuraw wins the battle against

Ebi Smolarek.


MANAGEMENT REPORT

The rights and duties of the KGaA's Supervisory

Board, which is appointed by the General

Shareholders' Meeting, are limited. Specifically, it

has no authority with respect to matters involving

personnel, i.e., no authority to appoint and dismiss

managing directors at Borussia Dortmund Ge -

schäftsführungs-GmbH or to regulate the terms of

their contracts. Nor is the Supervisory Board authorised

to adopt internal rules of procedure for the

general partner or issue any list of transactions

requiring its consent. Rather, such rights and duties

are vested in the governing bodies of Borussia

Dortmund Geschäftsführungs-GmbH, namely its

Advisory Board and the Executive Committee created

by the Advisory Board.

The members of the Supervisory Board are as follows:

Gerd Pieper (Chairman)

Proprietor and Managing Director of

Stadtparfümerie Pieper GmbH, Herne

Harald Heinze (Deputy Chairman)

Ruedi Baer

Delegate of the Board of Directors of mobilezone

group, Regensdorf (Switzerland)

Othmar Freiherr von Diemar

Proprietor and manager of Othmar von Diemar

Vermögensverwaltung + Beratung, Cologne

Bernd Geske

Managing partner of Bernd Geske Lean

Communication, Meerbusch

Patrick Albert Lynch

Bank employee, London

(until 26 February 2007)

Christian Kullmann

Head of the corporate communications division

and board office of RAG Aktiengesellschaft, Essen

(since 23 May 2007, by decision of the Local

Court of Dortmund dated 21 May 2007)

9 th Round

28 October 2006

1. FC Nuremberg 1:1 BVB

10 th Round

4 November 2006

BVB 1:1 Arm. Bielefeld

Tinga gets through in the penalty area

and gives keeper Schäfer no chance to

save from a tight angle.

Artistic: Pienaar against Bielefeld’s Kauf,

who would later set up Wichniarek's

goal for Arminia's 1:0 lead.

49


Borussia Dortmund GmbH & Co. KGaA

Within Borussia Dortmund GmbH & Co. KGaA,

there are four independent areas of responsibility

below the management, namely, communications,

sports, finance and organisation. The responsible

employees and the divisions for which they are

responsible can be seen from the following chart.

BORUSSIA DORTMUND GmbH & Co. KGaA

Management

Hans-Joachim Watzke

[Chairman]

Management

Thomas Treß

Communications Sport Finance Organisation

J. Schneck

M. Zorc M. Knipping Dr. C. Hockenjos

Corporate

communications

Professional football

Finances and

accounting

General

organisation

Sport communications

Amateurs

Controlling

Stadium management

Publications

Youth

Investor Relations

Match organisation

Fan support

Training fields

IT (Information

Technology)

V.I.P. – Hospitality

Stadium announcements

and program

Personnel

Sportfive

(sponsors)

PR work

Risk Management

Events

Complaints

management

Merchandising

DFB/DFL

Affiliates

Ticketing

Sportfive (Commission

processing)

Real estate

Third party events

11 th Round

7 November 2006

BVB 0:0 Aachen

12 th Round

10 November 2006

Werder Bremen 1:3 BVB

50

It was not Dede's fault that Borussia did

no better than 0:0 against Alemannia

(tackle with Ebbers).

Sahin – here against Schulz – had a

strong match on the Weser and set up

the first two goals.


MANAGEMENT REPORT

INTERNAL MANAGEMENT SYSTEM

Sports management

The great challenge for the future will be to play football

successfully with a cost-optimised budget. In

order to achieve this aim, BVB will continue to try to

present a strong, competitive team in the future and,

in this respect, will back young players with potential,

who will create a healthy mixture with the seasoned

players. This will create a realistic chance of qualifying

for international competitions.

The sporting objectives will be aligned with financial

circumstances. This means that the salary budget will

generally be tied to realistic sporting objectives and

that the target for the sporting management with Mr.

Watzke, Mr. Zorc and the coach will be to lead BVB

into an international competition again in the next

few years. This would increase the financial flexibility

for acquiring new players, although no unknown

risks will be taken. There will be no new debt in order

to strengthen the team.

Financial management

One of the main aims of BVB's management is to

increase profitability in the long-term and thus to

further improve Borussia Dortmund GmbH & Co.

KGaA's equity resources. In addition, there is a focus

on financial strength. As well as a constant improvement

in the operating result, generating positive cash

flow is therefore the most important financial objective

of our Company. We are seeking to optimise cash

flow by concentrating on the impacting factors of

“operating results” and “investments”.

The operating result is the most important indicator

for measuring success. For us, the operating

result means earnings before interest and taxes

(EBIT). Therefore we are constantly monitoring the

operating results in all lines of business and areas of

responsibility based on monthly comparisons

between the budget and the actual situation. The

most important drivers for the operating result are

further improvement in sales revenues in the major

revenue sources of ticketing, sponsorship, TV marketing

and merchandising, and disciplined management

of operating expenses.

In coming years we will concentrate on achieving

the best possible balance between limiting operating

expenditure and, at the same time, generating sales

growth. In this respect, the decisive factor is qualifying

for international competitions.

Capital management

In addition to securing the KGaA's equity as determined

in accordance with HGB, the management's

capital management responsibilities also include stabilising

and increasing the consolidated equity as

determined in accordance with IFRS. We will reach

these targets, in particular, by improving the operating

result and through effective investments.

The utilisation of the authorised capital with a nominal

amount of EUR 21.9 million resolved by the

extraordinary General Shareholders' Meeting on 15

August 2006 represents an instrument enabling

management to respond flexibly to future requirements

for capital. The same applies to the ability to

issue convertible bonds and bonds with warrants

(conditional capital with a nominal amount of EUR

14.6 million). At the present time, however, the

management has no specific plans to make use of

these instruments.

13 th Round

18 November 2006

BVB 1:2 Hertha BSC Berlin

14 th Round

25 November 2006

Frankfurt 1:1 BVB

Kringe kept trying to push the game forward.

But here he was stopped by

Samba.

Tinga shoots, but his shot is blocked.

Only in the 79 th minute did Smolarek

(right) score for the final score of 1:1.

51


Borussia Dortmund GmbH & Co. KGaA

CORPORATE STRATEGY

Borussia Dortmund's aim is to establish itself over

the medium-term as one of the leading German

football clubs after Bayern Munich. Following the

successful implementation of the reorganisation, the

restructuring of our financial liabilities and the first

moderate investments in the professional squad, we

consider ourselves to be on the right path.

less dependent on short-term sporting success in

the future, Borussia Dortmund will push ahead

further with national and international marketing

of its brand name.

• Germany continues to be Europe's largest football

market, which, however, is behind some

other European markets in financial terms. This

provides great growth potential.

The financial foundations of the first and to date only

listed German football company have been expanded

with the exclusive marketing right for SIGNAL

IDUNA PARK, more effective use of the “Borussia

Dortmund” brand and the establishment of footballrelated

lines of business. However, the core business

will in future also be professional football together

with its classic income sources of TV marketing,

sponsorship, ticketing and merchandising. For the

following reasons, BVB is convinced that it will be

able to further stabilise and expand its position:

Borussia Dortmund is in sporting terms one of

the most successful, well known and most popular

German football clubs with an outstanding

fan base that provides BVB with one of the highest

average numbers of spectators in Europe.

• A football company can only be financially successful

if it enjoys sporting success in the long

term. In order to make its financial performance

All financial activities at Borussia Dortmund are oriented

around the target groups that are relevant for

a football club: its fans, members and business partners.

Products and services should be tailored to

these groups in the best way possible. Through its

existing brand potential, Borussia Dortmund

intends to utilise all the commercial opportunities

presented by professional club football in an international

context for the benefit of the shareholders.

The current business strategy can principally be

summarised as follows:

• Strengthening the financial condition

• Sustainable adjustment of sporting perspectives

• Intensifying the promotion of up and coming

talent

• Fan involvement

• Utilisation of the “Borussia Dortmund” brand

15 th Round

2 December 2006

BVB 1:0 VfL Wolfsburg

16 th Round

10 December 2006

FC Schalke 04 3:1 BVB

52

Hofland wins this tackle against

Smolarek – but in the decisive scene

Smolarek prevails.

Valdez suffered a serious knee injury

during this tackle with Pander (who

was not at fault).


MANAGEMENT REPORT

However, financial and business development is

largely dependent on sporting success. Since sporting

success can only be planned to a very limited

degree, the best management can do is to create a

foundation for success. Investments, particularly in

the professional squad, are therefore a necessary

prerequisite for achieving sporting objectives, such

as qualifying for the UEFA Cup. However, in order

to meet financial goals, planned investments and

decisions must under certain circumstances be postponed

to the extent these would only be possible by

incurring new debt. Moreover, a player may be sold

based on financial considerations in cases where this

would not have happened had the decision been

made based solely on sporting criteria.

goals. In such cases, management weighs up the

opportunities and risks to find a solution that is

broadly in line with our strategic objectives from a

medium-term point of view.

We plan to further increase gross revenue in the

medium term. The first steps in bringing us closer to

this goal have been taken with the marketing of the

stadium name, the new main sponsor agreement

with RAG and the conclusion of the new TV agreement

by DFL. Moreover, further significant revenue

potential is available, especially by qualifying

for international competitions, which would have a

positive effect on all Borussia Dortmund's revenue

sources.

A conflict, or a situation where sporting considerations

and financial considerations affect each other

adversely, therefore arises between the pursuit of

financial interests and sporting interests, particularly

if the club continually falls short of its sporting

Positive operating results and moderate investments,

mainly in the professional squad, depending

on those results, are expected to enable Borussia

Dortmund GmbH & Co. KGaA to achieve stable,

positive cash flows over the long term.

17 th Round

17 December 2006

BVB 1:2 Leverkusen

18 th Round

26 January 2007

BVB 3:2 FC Bayern

Two of the three goal scorers in one picture:

Amedick, who had bad luck in hitting

the post, in a duel with Voronin.

Even van Bommel could not stop an outstanding

Frei that evening. Pienaar watches

on the left.

53


Borussia Dortmund GmbH & Co. KGaA

POSITION OF THE COMPANY

RESULTS OF OPERATIONS

In the past financial year for the 2006/2007 season,

Borussia Dortmund GmbH & Co. KGaA achieved an

increase in revenues compared with the previous sea-

son of 9.2%, from EUR 83.3 million to EUR 90.9 million,

in its core business activities of ticketing, sponsorship,

TV rights, catering, licences and transfers.

Borussia Dortmund GmbH & Co. KGaA – Revenues in per cent

16%

7%

20%

34%

23%

Transfer income

Ticketing

TV rights

Sponsorship

Catering, licences and other

19 th Round

31 January 2007

FSV Mainz 05 1:0 BVB

20 th Round

4 February 2007

BVB 0:1 VfB Stuttgart

54

Niculae tries to thread the ball past

Kruska. Metzelder watches the situation

in the background.

Metzelder tackling goal scorer Gomez.

“Metze” was unfortunate that his header

was cleared off the line


MANAGEMENT REPORT

SALES DEVELOPMENT

Despite a season with few high points from a sporting

point of view, Borussia Dortmund GmbH & Co. KGaA

again achieved an increase in revenues of EUR 7.6 million

to more than EUR 90 million. In addition to the

new basis of allocating TV marketing income which

came into effect in the past financial year, the 9.2%

increase is owed mainly to the loyalty of the supporters

and sponsors, because substantial revenue growth was

recorded both in ticket sales (+6.2%) and in income

from sponsorship (+12.4%).

Gross revenue for the 2006/2007 financial year of

EUR 99.7 million was only just short of the EUR 100

million target and was achieved even without participation

in an international competition

Borussia Dortmund GmbH & Co. KGaA – Revenues in EUR millions

100

6,8

75

12.4

14,1

50

11,7

14,8

21,3

25

27,2 30,5

17,2 18,3

0

2005/06 2006/07

Transfer income Catering and licences incl. other TV marketing Sponsorship Ticketing

21 st Round

10 February 2007

Hamburger SV 3:0 BVB

22 nd Round

17 February 2007

BVB 1:0 Bor. M’gladbach

The scene that resulted in the penalty:

Mahdavikia dives in front of Weidenfeller,

referee Wagner falls for the performance.

After the final whistle: the twins David

and Philipp Degen. Both had their opportunities

to score...

55


Borussia Dortmund GmbH & Co. KGaA

Details of the performance of the individual revenue

sources are provided in the following paragraphs.

Income from ticketing

Borussia Dortmund's receipts from match operations,

i.e. income from ticketing and friendly games,

increased by EUR 1.1 million to EUR 18.3 million

in the past financial year for the 2006/2007 season.

The largest individual contribution to growth

amounting to EUR 0.7 million was made by income

from Bundesliga match and season ticket sales. In

addition the home game against Hannover 96 in the

second main round of the DFB Cup generated a surplus

of EUR 0.1 million, while various friendly games

and match operations for the regional league team

provided additional income of EUR 0.3 million.

The average number of spectators was increased from

71,378 to 72,164, despite lower season ticket sales

compared with the previous year and a rather difficult

season from the sporting point of view, with the club's

participation in the first division next season not made

certain until the 32nd match day. On an international

basis, Borussia Dortmund therefore continues to

occupy third place in terms of numbers of spectators

behind Manchester United and Real Madrid, despite

not participating in an international competition.

The loyalty of the club's supporters, even following

an unsuccessful sporting season, is made clear by the

number of season tickets already sold for next season.

With 50,549 tickets sold for the 2007/2008 season,

Borussia Dortmund has beaten its own

Bundesliga record of 50,415 season tickets sold for

2003/2004. In comparison, an average of 20,450 season

tickets were sold in the Bundesliga for the

2006/2007 season.

Income from sponsorship

Borussia Dortmund's income from sponsorship conformed

to the upward trend enjoyed by all clubs in

the Bundesliga and reached EUR 30.5 million, thus

exceeding the EUR 30 million target for the first time

with an increase of 12.4% compared with the prioryear

figure.

Despite not participating in an international competition,

BVB's games were watched by an average of

72,164 spectators and therefore represented an

attractive advertising platform, especially for regional

companies. The creation of additional capacity for

perimeter boards also created the opportunity to

offer perimeter board advertising to new potential

clients.

In addition to RAG, acting as main sponsor for the

first time in the last financial year, and SIGNAL

IDUNA, which has given its name to the largest stadium

in the Bundesliga, Borussia Dortmund and its

marketing partner SPORTFIVE succeeded once

again in increasing the number of so-called “champion

partners” and partners compared with the previous

year.

The development of the hospitality areas also made a

substantial contribution to the increase in income

from sponsorship. In addition to the reserved seating

area in the West Stand at SIGNAL IDUNA PARK

which has been fully booked for years, the new

Business Club 09 concept was gratefully received by

many customers. Not only does it offer participants

the chance to experience all BVB matches at

SIGNAL IDUNA PARK close up, it also creates the

opportunity to benefit from the “Borussia Dortmund”

phenomenon away from the pitch. The number of

seats sold was more than double the previous year's

23 rd Round

24 February 2007

Hannover 96 4:2 BVB

24 th Round

4 March 2007

BVB 2:3 Cottbus

56

During the game in Hanover, Valdez did

not have his nerves under control. Here

he starts a fight with Vinicius.

Left: referee Fandel.

Three goals (of which only two counted)

– and still Frei had to be consoled

by Cvitanovic.


MANAGEMENT REPORT

figure. Regular meetings on journeys to away games

and many other events promote a constant exchange

between the companies and Borussia Dortmund. The

successful development of this initiative is reflected

in the figures, with an increase in advertising income

from Business Club 09 of 120%.

Incentive packages were also especially heavily

booked by business customers during the last financial

year. These enable companies to invite their

guests to SIGNAL IDUNA PARK on individual

match days, independently of a season package. In

order to satisfy all the requests in this segment, the

indoor golf area located at the south of SIGNAL

IDUNA PARK and the newly built Conference

Center were converted into hospitality areas on

match days.

Income from TV marketing

Income from TV marketing amounted to EUR 21.3

million in the past financial year and was therefore

approximately EUR 6.5 million higher than in the

previous year. The reason for this was the new TV

agreement which came into effect for the first time

in the 2006/2007 season, under which the clubs in

the Bundesliga and the Second Bundesliga will

receive around EUR 1.2 billion over three years.

This represents an increase in the amount distri -

buted annually of around 40% compared with the

previous TV agreement. As well as the increase in

the amount distributed, a new basis of allocation was

also introduced at the start of the past financial year

under which the football clubs are ranked in order

of preference, using a weighted method of calculation

based on the last four years' seasons. In addition,

a bonus is paid at the end of the season depending

on the club's position on the league table.

Although Borussia Dortmund occupied ninth posi-

tion on the table on average during the season, it

benefited from its positions in previous years and

continues to rank seventh on the allocation list.

The absence of the live game in the DFB Cup and the

club's non-participation in the UI Cup resulted in a

loss of income of around EUR 0.3 million, but the promotion

of the amateur squad to the regional league

and the associated TV receipts made up for this.

Transfer income

Income from transfers recorded a decline of EUR 5.6

million to EUR 6.8 million. While three key players

with unexpired contracts, Henrique Ewerthon, Niclas

Jensen and Tomas Rosicky, were sold in one go in the

2005/2006 financial year, in the most recent season

Borussia Dortmund GmbH & Co. KGaA only said

goodbye to David Odonkor, who transferred to the

Spanish first division club Betis Sevilla following an

outstanding World Cup.

Income from catering and licences

including other income

Borussia Dortmund achieved income from catering,

licences and other income of EUR 14.1 million in the

2006/2007 financial year compared with EUR 11.7

million in the 2005/2006 financial year.

The growth in income mainly reflected the performance

in catering. The marketing successes already

mentioned in the context of sponsorship also had an

impact here, because the majority of agreements with

business customers provide for an element of catering

services as well as advertising space. This item continues

to include income from catering on match days,

the sale of publications, advance booking fees and

licence fees for events at SIGNAL IDUNA PARK on

non-match days. The latter also recorded an upward

25 th Round

10 March 2007

VfL Bochum 2:0 BVB

26 th Round

17 March 2007

BVB 0:0 1. FC Nuremberg

Here Weidenfeller still manages to save:

Borussia's keeper stops an early goal

from Gekas. Left: Wörns.

He brought new energy: Together with

Tinga, Marc Kruska (right) attacks

Nuremberg's Jan Polak.

57


Borussia Dortmund GmbH & Co. KGaA

trend, as did catering income in the circulation areas

at SIGNAL IDUNA PARK, which were able to

achieve an increase of EUR 0.20 in spending per head

thanks to a wider range of items offered. Income in

this area will also participate in the general upward

trend in future as a result of the construction of the

Conference Center, a state-of-the-art conference

facility, and the letting of the Center by Stadionlive

GmbH, which has been marketing and organising the

other events successfully since 2005.

Other income, which mainly comprises rental and

lease income, amounted to EUR 5.7 million. This

item represents rental income from the letting of

SIGNAL IDUNA PARK for the 2006 FIFA World

Cup.

Other operating income

Other operating income achieved growth of around

EUR 2.0 million to EUR 8.7 million in the most

recent financial year. This item included receipts

from distributions and allocations of profit from the

FIFA 2006 World Cup, which alone accounted for

income of EUR 4.6 million.

around EUR 2.2 million was once again achieved in

the professional match operations area alone, despite

several changes of coach. In the 2004/2005 season,

these expenses amounted to EUR 36.6 million.

Depreciation and amortisation

Depreciation and amortisation fell as planned by

EUR 0.8 million compared with the previous year to

EUR 6.9 million.

Other operating expenses

Other operating expenses amounted to EUR 42.7

million in the 2006/2007 financial year compared with

EUR 57.0 million in the previous year. The decline

was mainly due to a fall of EUR 5.8 million in transfer

expenses, a reduction of EUR 4.4 million in legal

and advisory costs, valuation allowances on receivables

lower by EUR 2.4 million, a reduction of

EUR 3.2 in other administrative expenses and a fall of

EUR 1.3 million in licence fees. The decline was offset

principally by higher marketing commissions

(EUR 1.3 million). In addition to the expenses of

match operations and the rental costs for SIGNAL

IDUNA PARK and the training ground, marketing

represents the major item of expenses.

DEVELOPMENT OF SIGNIFICANT

OPERATING EXPENSES

Personnel expenses

A further reduction of EUR 3.0 million was achieved

in personnel expenses which amounted to EUR 34.3

million compared with EUR 37.3 million in the

2005/2006 financial year. A reduction in expenses of

Income taxes

No income taxes were required to be included in the

financial statements because, with the repurchase of

the trademark rights, the provision for anticipated

losses on pending transactions established in previous

years in the HGB financial statements was also

recognised for tax purposes in the 2006/2007 financial

year.

27 th Round

30 March 2007

Arm. Bielefeld 1:0 BVB

28 th Round

7 April 2007

Aachen 1:4 BVB

58

Relegation battle: Following the 0:1 in

Bielefeld (here Schuler), BVB slipped

with Valdez to 17 th position.

Outstanding: Tinga played his best match

to date in the BVB strip at the Tivoli.

Here he leaves Aachen's Pinto behind.


MANAGEMENT REPORT

FINANCIAL CONDITION

ANALYSIS OF CAPITAL STRUCTURE

With the capital increase resolved by the extraordinary

General Shareholders' Meeting on 15 August 2006, the

share capital of Borussia Dortmund GmbH & Co.

KGaA (previously EUR 43.875 million) rose by EUR

17.550 million to EUR 61.425 million, while equity,

after taking into account the net profit for the year,

increased to EUR 100.230 million compared with

EUR 52.875 million in the previous year. The equity

ratio therefore improved from 29% to 62% as planned.

The funds generated by the capital increases in the

previous and current financial years have been used

mainly to reduce financial liabilities, achieve a more

manageable debt maturity structure and obtain

improved interest-rate terms. Liabilities were

reduced significantly compared with the previous

year from EUR 93.366 million to EUR 51.101 million.

The main component of the financial liabilities

is the loan from Morgan Stanley in an amount of

EUR 21.7 million. In order to minimise the interest-rate-related

cash flow risk associated with this

loan and the loans granted by Morgan Stanley to

subsidiaries amounting to EUR 57.5 million, the

Company has entered into an interest rate hedging

transaction which results in a rate of interest payable,

on this loan, of 6.195% per annum, irrespective of

actual changes in market rates of interest.

ANALYSIS OF INVESTMENTS

Additions to intangible assets amounting to EUR

13.910 million related almost entirely to investments

in the professional squad.

Additions to tangible fixed assets amounted to

EUR 2,317 million. Significant individual investments

worthy of mention were the conversion of the

former offices at the stadium, the August Lenz building,

into a fan shop and the construction of a conference

centre on Level 4 of the stadium's North Stand.

ANALYSIS OF LIQUIDITY

As at 30 June 2007, Borussia Dortmund GmbH &

Co. KGaA held cash of EUR 13.393 million, of which

EUR 0.019 million was subject to restrictions. In

addition, the revolving credit facility granted by

Morgan Stanley for EUR 10.000 million and an overdraft

facility of EUR 2.500 million are available to the

Group for their full amounts. The cash flow statement

gives details of the development of liquidity.

NET ASSETS

The total assets of Borussia Dortmund GmbH & Co.

KGaA declined from EUR 181.0 million to EUR

162.8 million. The principal reasons for the decline

were the reduction in cash funds and lower non-current

trade receivables. At the same time, intangible

assets were higher.

29 th Round

15 April 2007

BVB 0:2 Werder Bremen

30 th Round

21 April 2007

Hertha BSC Berlin 0:1 BVB

Stumble: Metzelder & Co had to face the

last defeat for five weeks against Wiese’s

Werder Bremen.

Scorer of the winning goal on the Spree:

Markus Brzenska. First to congratulate him

are Ebi Smolarek (left) and Florian Kringe.

59


Borussia Dortmund GmbH & Co. KGaA

OVERALL SUMMARY OF RESULTS OF OPERATIONS,

FINANCIAL CONDITION AND NET ASSETS

The results of operations, financial condition and net

assets of Borussia Dortmund GmbH & Co. KGaA

showed significant positive development following the

successful implementation of the reorganisation measures

and the completed restructuring of the liability

side of the balance sheet. Particular mention should

be made of the improvement in the operating result,

the Group's equity resources and the reduction in liabilities,

which will once again allow BVB room for

manoeuvre in its future sporting development.

COMPENSATION REPORT

The structure of the compensation system for management

is determined and regularly reviewed by the

Executive Committee of the Advisory Board. The

Executive Committee is also responsible for determining

the compensation of management in detail

and sets the appropriate amount of compensation.

The principal criteria for determining the appropriate

amount of compensation are the responsibilities of

the particular member of management, their personal

performance and the financial condition, success

and future prospects of Borussia Dortmund.

As well as annual payments not related to performance

and based on market rates at comparable companies,

the compensation includes a performancerelated

component that is based on consolidated

earnings before taxes. In addition, special payments

can be made on the basis of resolutions approved by

the Executive Committee of the Advisory Board.

The component not related to performance comprises

a fixed annual salary and benefits in kind, mainly

derived from the amounts required to be taken into

account in accordance with tax regulations e.g. for the

use of company cars.

The Supervisory Board's compensation is governed

by § 13 of the Articles of Association, pursuant to

which each member of the Supervisory Board

receives fixed compensation amounting to EUR 7

thousand; the Chairman receives twice that amount,

while the Deputy Chairman receives one and a half

times that amount. Value-added tax is reimbursed to

the members of the Supervisory Board.

31 st Round

28 April 2007

BVB 2:0 Frankfurt

32 nd Round

5 May 2007

VfL Wolfsburg 0:2 BVB

60

Alexander Frei – here against Chris – “shot

down” Eintracht almost by himself with two

attractive free kicks.

In the third last round, Valdez scored

the longed-for first goal for BVB. Van

der Leegte cannot stop him.


MANAGEMENT REPORT

RISK REPORT

In the course of its business activities, Borussia

Dortmund GmbH & Co. KGaA is constantly exposed

to risks which may have a negative effect on the

Company's operations. The identification, assessment

and management of these dangers define the areas of

responsibility of a company's risk management system.

RISK MANAGEMENT SYSTEM

Risk management as an ongoing task is an integral part

and major precondition of sound company management.

With the aid of a properly implemented internal

monitoring system, developments which endanger the

continued existence of Borussia Dortmund GmbH &

Co. KGaA and its subsidiaries can be recognised and

counteracted at an early stage. In the risk management

system, management has laid down principles and

guidelines to enable uncertainties to be identified and

countermeasures to be taken in good time.

Borussia Dortmund's risk management system is

integrated into the organisational structure of the

whole Company and therefore ensures that the

responsible employees maintain a high level of valueoriented

risk awareness. It implements the requirements

of the German Control and Transparency Act.

The Group-wide risk management system ensures

that risks are identified at an early stage, recorded

consistently, evaluated, managed and monitored.

Within the framework of its risk management system,

Borussia Dortmund, together with the specialist

departments, identifies, documents and evaluates

possible risks on the basis of the potential amount of

loss they may cause and their likelihood of occurring,

and collates them at the level of the corporate divisions.

The risks are categorised and steps are taken

to ensure that they are constantly monitored and that

appropriate measures to manage the risks are implemented

right from the start.

The aim of the risk management system is to obtain

information about risks and their financial and other

consequences as early as possible and to enable the

Company to take appropriate countermeasures.

Particular attention is paid to risks which could endanger

the continued existence of Borussia Dortmund

GmbH & Co. KGaA or its subsidiaries in their existing

form (high priority risk). Responsibilities have

been established for the individual corporate divisions

and the procedures to be observed and the monitoring

system have been defined as follows:

• The risk position is regularly recorded on a consistent

basis and compared with the existing data.

This enables countermeasures to be taken in good

time if negative developments can be identified.

• The executives responsible are required to inform

management immediately of any significant chan -

ges in the risk profile.

• Constant observation of the market enables

changes in the environment to be recognised

promptly and action to be taken in response.

• Differences in the Company's results of operations

and net assets from the budgeted figures are

identified and analysed using detailed monthly

and quarterly financial reports.

33 rd Round

12 May 2007

BVB 2:0 FC Schalke 04

34 th Round

17 May 2007

Leverkusen 2:1 BVB

Total commitment: Christian Wörns in a

tackle against the Schalke player, Gerald

Asamoah. BVB wins 2:0.

The last chance of the 2006/2007 season:

Lars Ricken just misses Leverkusen's goal

in time added on.

61


Borussia Dortmund GmbH & Co. KGaA

In this context, Borussia Dortmund applies the following

principles/rules of conduct:

• Management determines the basis on which risks

are to be assessed and identified.

• The identification of risks takes place in the individual

corporate divisions since that is where

knowledge about specific risks is available.

• Risks are assessed by a group of people chosen by

the management. The criteria to be applied are

also defined by management.

The governing bodies of Borussia Dortmund are kept

regularly informed of the current risk position. The

efficiency and effectiveness of the risk management

system is examined as part of the audit carried out by

the Company's auditors.

The following paragraphs describe in more detail the

specific risks to which Borussia Dortmund GmbH &

Co. KGaA is exposed, which affect the Company's

business operations as a result of internal and external

factors and may have a major influence on them

over the long term.

SPECIFIC RISKS

STRATEGIC RISKS

In addition to financial success, the primary objective

of a company participating in the football business in

the Bundesliga remains sporting success, irrespective

of business plans which do not depend on the club's

position on the league table and the maintenance of

profitability in a variety of different sporting scenarios.

This can be justified solely on the grounds of public

interest, which is largely focused on the winning of

titles. If the club has no success over longer periods,

the management is faced with a balancing act,

attempting to keep the profitability of the company

and the sporting objectives in harmony with each other.

Measures which are necessary for sporting success,

such as investments, must not be allowed to

endanger the financial objectives, for example, ensuring

adequate liquidity, even over several years. But

economic success also depends to a large extent on

sporting achievements, because winning titles generates

additional demand from spectators, business customers,

sponsors and in other areas of the business. A

conflict of objectives therefore arises. The achievement

of one company objective may therefore necessarily

entail abandoning or modifying another

objective. In such cases, management will weigh up

the risks and opportunities and attempt to find a solution

that is broadly in line with the strategic objectives

from a medium-term point of view, while

remaining within the range of defined company performance

indicators in order not to jeopardise the

financial objectives.

PERSONNEL RISKS

The available potential of its employees, from both a

sporting and a financial point of view, forms the basis for

DFB Cup

4 August 2007

1. FC Magdeburg 1:4 BVB

1 st Round

12 August 2007

BVB 1:3 MSV Duisburg

62

In overcoming Magdeburg, Tinga and

Co were not quite as in control as the

result suggests.

Sebastian Kehl in a tackle against the

Duisburg player, Manasseh Ishiaku.


MANAGEMENT REPORT

Borussia Dortmund's future development as a business.

Their ability, commitment and performance will play a

decisive role in future sporting and financial success.

In this regard the professional squad is of critical

importance. The wrong investments in this area

would have far-reaching effects on the Company's

sporting objectives, and therefore financial objectives,

as would insufficient identification with the club and

a lack of commitment. To some extent, it may not be

possible to make up for the loss of key players as a

result of injury and, as a result, the ability to meet

internally defined objectives may be endangered.

The Company's success is based on making business

decisions and putting them into effect, and both are

largely determined by the quality of the relevant

employees. The structure of Borussia Dortmund's

organisation is based on a clear separation of the

individual corporate divisions, which thus enables

business decisions to be analysed and prepared in

individual departments with the relevant expertise

before a decision is made for the Company as a

whole. The constant exchange between the corporate

divisions through the medium of well established

meetings contributes beforehand to optimising

the quality of the decisions made and avoiding

conflicts of objectives.

From the point of view of risk management, it is

equally indispensable for a company to be able to rely

on qualified executives and their staff. Management

and all the Company's employees have a permanent

responsibility to identify risks at an early stage, to

monitor and therefore limit them, and at the same

time to pursue business opportunities rigorously.

COMPETITIVE RISKS

Competition between football clubs, for example in

obtaining sponsors, has intensified, and not just as

result of the stadiums built for the 2006 FIFA World

Cup. Differing decisions made under the influence

of regional politics can also affect the ability to attract

and retain interested companies. In the most recent

season, in particular, sponsors have been rated differently

by regional politicians, and in some cases

have therefore been approved for certain competitors

while being simultaneously banned for others.

An additional difficulty is that there is an unusually

high concentration of competitors in North Rhine-

Westphalia in particular, with six clubs currently in

the Bundesliga and several in the Second Bun -

desliga. This can have negative consequences for

attracting sponsors based in the region because, in

contrast to other regions, there is the risk for sponsors

that they will be in conflict with each other for

potential customers.

SALES RISKS

The future performance of Borussia Dortmund's

individual lines of business depends on its sporting

success. A lack of sporting success over a long period

could have a major impact on demand for the

products offered and therefore on the achievement

of financial and sporting objectives. It is also not

possible to be fully certain in advance of the

consequences for the Company of statutory provisions.

Equally, the development of pay TV will have a longterm

effect on TV income achievable in future.

2 nd Round

18 August 2007

FC Schalke 04 4:1 BVB

3 rd Round

25 August 2007

BVB 3:0 Cottbus

Gerald Asamoah's actions in this scene

with Robert Kovac do not look like a

tender embrace...

Diego Klimowicz – scorer of two goals –

heading against Cottbus.

63


Borussia Dortmund GmbH & Co. KGaA

FINANCIAL RISKS

Borussia Dortmund finances itself primarily from

long-term bank loans, trade payables, season tickets

paid for in advance and payments from sponsors. The

related risks arising comprise interest-rate-related

cash flow risks, market risks, liquidity risks and credit

risks. On the other hand, the Company is not exposed

to any significant currency risks. Under the terms of

the loan agreements entered into by Borussia

Dortmund and its subsidiaries with Morgan Stanley

& Co. International Ltd., London, England, the

lender has an early right of termination in the event

of failure to maintain certain contractually defined

financial ratios (covenants). The methods of managing

the individual types of risk are described in the

following.

After taking account of this interest rate swap, all the

Company's significant financial liabilities carried a

fixed rate of interest as of June 30, 2007. Future

changes in the level of interest rates will therefore

have only a small impact on the interest expense,

even in the medium term.

CREDIT RISK

The Company conducts business exclusively with

third parties of high credit standing. Concentrations

of credit risk can arise in the context of a player transfer

and from long-term sponsorship agreements.

Such concentrations of risk are monitored in the

course of the Company's operating activities.

INTEREST RATE RISKS

The financial liabilities consist mainly of a variable-rate

loan from Morgan Stanley & Co. International Ltd.,

London, England, based on Euribor. The interest

expense associated with this loan is therefore dependent

on the future development of the general level of

interest rates. In order to minimise the interest-raterelated

cash flow risk associated with the loan, the

Company therefore entered into an interest rate swap

in respect of this loan in August 2006. The effect of this

interest rate hedging transaction is an overall future

rate of interest payable of 6.195% per annum, irrespective

of actual changes in market rates of interest.

The counterparty for the interest rate swap described

above was a major German bank with the highest

credit rating.

LIQUIDITY RISK

The Group constantly monitors the risk of possible

liquidity bottlenecks, taking into account the probable

maturities of its financial liabilities and the timing

of the expected cash flows from operating activities.

Following the restructuring completed in the

2005/2006 financial year, liquidity risks have been

sharply reduced thanks to the Company's new financing

structure, which is overwhelmingly long-term.

RISKS JEOPARDISING PERFORMANCE AND CONTINUED EXISTENCE

In order to participate in Bundesliga matches,

Borussia Dortmund requires a licence from DFL

Deutsche Fußball Liga GmbH (German Football

League, “DFL”) which is issued for each season. If

the licence were to be revoked or denied because of

failure to comply with conditions or evidence of

inability to meet financial criteria, this would result

in automatic relegation. But relegation to the Second

Bundesliga can also result from lack of sporting suc-

cess. The effects of relegation on earnings and liquidity

could jeopardise the Company's existence.

Following the successful implementation of the

restructuring and in accordance with its current

financial condition and results of operations, Borussia

Dortmund was awarded the licences for both the

Bundesliga and for the Second Bundesliga, which

had to be applied for in view of the sporting situation,

without conditions.

64


MANAGEMENT REPORT

In order to minimise the risk of relegation,

Borussia Dortmund has strengthened the professional

squad significantly for the 2007/2008 season

and therefore at the same time substantially

improved the chances of qualifying for international

competitions in the following season.

THE RISK SITUATION IN SUMMARY

Borussia Dortmund takes appropriate measures to

counteract the risks it faces. New risks are systematically

incorporated in the risk management system as

they arise, communicated and highlighted, and a

search is made for effective countermeasures. At the

present time, there are no recognisable risks that

could endanger the continued existence of the

Borussia Dortmund Group.

Borussia Dortmund has succeeded in minimising

risks which could adversely impact its development

or jeopardise its existence. The fact that we are not

involved in competitions on an international level is

no longer a threat to Borussia Dortmund's existence.

If we succeed in qualifying for the UEFA Cup or the

Champions League, our financial condition and

results of operations will improve even further.

FORECAST REPORT

ANTICIPATED DEVELOPMENT OF THE COMPANY

After having completed the restructuring of the liabilities

of Borussia Dortmund GmbH & Co. KGaA

and the selective strengthening of its professional

squad, Borussia Dortmund should once again be in a

position in the medium term to compete for one of

the first five places on the Bundesliga table.

We will continue on the course we have set for ourselves

on a solid equity base and without exposing

ourselves to financial risks, so that BVB will once

more become a leading football club in Germany and

preferably also in Europe.

EXPECTED GENERAL ECONOMIC ENVIRONMENT

Professional football in Germany is booming as never

before. The Bundesliga's unfailing popularity with the

fans and the resulting interest of media companies and

sponsors has also made it a commercial success story.

Since the formation of the League Association

(Ligaverband) in 2000, the clubs and corporations of

professional football have not been able to produce any

figures as good as those in the past football season. And

this although the increase in TV revenues is not yet

included in the present figures because the media con-

tracts only entered into effect in July 2006. As the

KirchGruppe had been the chief source of money for

the clubs, its insolvency presented them with a major

challenge. Now, five years down the line, the league is

in a better position than ever before. Professional football

has emerged all the stronger from the crisis in the

television and advertising markets. Tough cutbacks on

the one hand, and a long-term approach to management

with a readiness to invest in the future on the

other, are starting to pay off.

65


Borussia Dortmund GmbH & Co. KGaA

EXPECTED RESULTS OF OPERATIONS

ANTICIPATED EARNINGS

DEVELOPMENT

We anticipate that, including all the control and

profit and loss transfer agreements, the Company will

generate a net profit for the year for the 2007/2008

season.

The amount of profit cannot be forecasted reliably on

the basis of the information currently available,

because earnings depend to a large degree on the

sporting performance and on successful transactions

in the transfer market.

ANTICIPATED DEVELOPMENT

OF REVENUES

Revenues are expected to amount to between around

EUR 80 million and EUR 83 million in the 2007/2008

financial year. Qualification for the UEFA Cup or the

UEFA Champions League, or possible income from

transfers, could result in a significantly higher revenue

figure than this.

ANTICIPATED DEVELOPMENT OF

SIGNIFICANT OPERATING EXPENSES

With the exception of expenditure on the professional

squad, operating expenses will continue to decline

in the 2007/2008 financial year.

EXPECTED DIVIDENDS

Against the background of the Group's financial liabilities,

which are still high in relation to current profitability,

we are not planning any dividend distributions

in the next few financial years despite a marked

improvement in earnings. We expect that it will be

possible to discuss a dividend payment at the earliest

in 3 – 4 years' time.

EXPECTED FINANCIAL CONDITION

FINANCIAL PLANNING

CAPITAL EXPENDITURE PLANNING

As a result of the improved earnings situation and the

debt restructuring, which also includes, in particular,

long-term financing of the stadium shares, we will

again achieve a further substantial reduction in our

liabilities. This will be implemented, in particular,

through the repayment in instalments of the longterm

stadium financing as from the 2007/2008 financial

year, while the amount of the other liabilities in

the context of our operating activities will be relatively

unchanged.

Our future investment activities will be focussed on

the professional squad, further modernisation of

SIGNAL IDUNA PARK and its environs and the

construction of the Borusseum in the north-east

corner of SIGNAL IDUNA PARK.

The conversion of the August Lenz building into a

merchandising shop and catering operation, and the

construction of the Conference Center in the North

Stand, on the other hand, were completed in the past

financial year.

66


MANAGEMENT REPORT

Thus we will concentrate on the core business of

Borussia Dortmund and, in so doing, will not be taking

any financial risks which cannot be calculated in

advance. In essence, this means that we will only be

incurring capital expenditure to the extent permitted

by the anticipated financial leeway. In preparing

the capital expenditure budget, we will therefore not

include any uncertain sporting successes which, if

they failed to materialise, would result in new indebtedness.

ANTICIPATED DEVELOPMENT OF

LIQUIDITY

Following the implementation of the capital increases,

the further reduction in debt consequent thereto

and the improvement in earnings, we will as from the

2007/2008 financial year be in a position to generate

substantial financial surpluses, which will significantly

improve Borussia Dortmund's room for manoeuvre

and its competitiveness.

OPPORTUNITIES

Borussia Dortmund's greatest opportunities lie in

unlocking and exploiting additional revenue potential

by participating in international competitions,

such as the UEFA Cup and the UEFA Champions

League. Participation in the UEFA Cup group phase

alone would result in additional revenues of around

EUR 5 million, generated through extra TV, ticketing

and sponsorship revenues. According to our estimations,

we would be guaranteed at least EUR 10

million in additional sales if we were to reach the

group phase of the UEFA Champions League. In

addition, an international presence would almost

certainly have a positive impact on the merchandising

business.

Participation in the national cup competitions, the

DFB Cup and the DFL League Cup, represents further

significant earnings potential. However, the

financial benefits also depend, to a large extent, on

which teams we are drawn against.

Borussia Dortmund's professional squad, which

includes a large number of young and talented players,

has enormous potential. These players will be

able in the future to lead BVB back to the top of the

table in Germany, and possibly even further. In addition

to the sporting success we are striving for, this

team will enable us to achieve a significant improvement

in profitability and offers tremendous transfer

potential for the future.

DEVELOPMENT FORECAST IN SUMMARY

Since the completion of the restructuring focusing on

the buyback of the stadium shares, Borussia

Dortmund is once again in a position to make investments

in the professional squad, which will significantly

improve the quality of the team. The contracts

with the professional players Marc Ziegler, Robert

Kovac, Mladen Petric, Giovanni Federico, Diego

Klimowicz and Jakub “Kuba” Blaszczykowski demonstrate

the point impressively.

In our future development, we will not enter into any

further financial risks that could jeopardise the existence

of Borussia Dortmund. Generating financial

surpluses will be a prerequisite for further investments

in the professional squad. We are convinced

that this is the right way to establish Borussia

Dortmund in the medium term as one of the leading

clubs in the Bundesliga.

67


Borussia Dortmund GmbH & Co. KGaA

SUPPLEMENTARY REPORT

BVB was standing on the precipice: following the

27 th round, the six-time German football champion –

which had had to leave football's “upper echelon” for

the first time in 1972 for a period of four years – had

even slipped to a relegation position.

During the troubled times, the meaning of solidarity

by the people of Dortmund with their flagship –

Borussia – became clear. The “We are Borussia” initiative

launched by the BVB fan department resulted

in a unique closing of the ranks between Dortmund's

citizens, companies and public authorities and the

whole region.

The high level of enthusiasm and excitement in anticipation

of the new 2007/2008 season is demonstrated

by the 50,549 season tickets sold, a new Bundesliga

record.

From the sporting point of view, things are looking

distinctly encouraging. With six new players, Thomas

Doll's team is in a better position both in terms of

numbers and of quality than in the previous season.

"We have succeeded in giving the squad more depth,

and the sense of competition within the team has

increased," concluded sport director Michael Zorc.

Head coach Thomas Doll is also convinced that this

will result in an ability to produce better performances

and more attractive football.

One week before the start of the 2007/2008

Bundesliga season, Borussia Dortmund has already

given a positive sign of its sporting potential. In the

DFB Cup, coach Thomas Doll's team achieved a 4:1

victory over 1. FC Magdeburg. In addition to Ebi

Smolarek, goals were also scored by new signings

Diego Klimowicz (2) and Mladen Petric. The draw

for the 2nd main round of the DFB Cup on 12

August 2007 provided Borussia Dortmund with an

attractive opponent in the form of Eintracht

Frankfurt, also a Bundesliga club. The match is

expected to be played on 30 or 31 October 2007 at

SIGNAL IDUNA PARK.

After outstanding performances during the run-up to

the 2007/2008 Bundesliga season, Borussia Dort -

mund began with a false start by losing 1:3 to the

newly promoted MSV Duisburg on 12 August 2007 in

front of 75,700 spectators at SIGNAL IDUNA

PARK. Ishiaku (2) and Tararache were the goalscorers

for the “Zebras” and Kringe for BVB. It was the

first win for MSV at Strobelallee for 35 years and only

the second ever.

On 6 July 2007, the Bundesrat approved the act

implementing the reform of corporate taxation in

2008. As a consequence, the future effects of the

reform were not yet required to be reflected in the

consolidated balance sheet prepared as of 30 June

2007.

The reform of corporate taxation included substantial

cuts in the rates of both trade tax and corporation

tax. While the act results in a net reduction in

the tax burden on companies intended by the legislature,

it will also give rise to some extra tax payments

as a result of broadening the basis of assessment to

taxation.

An initial analysis of the future effects of the reform

of corporate taxation on the BVB Group did not

reveal any indications of particular tax risks in future

as a result of the reform.

68


MANAGEMENT REPORT

OTHER DISCLOSURES

REPORT IN ACCORDANCE WITH § 289 (4) HGB

The Company gives the following information in

response to the requirements of § 289 (4) Nos. 1 to 9

HGB:

1. The share capital of Borussia Dortmund GmbH

& Co. KGaA amounts to EUR 61,425,000.00 and

is divided into 61,425,000 no-par value ordinary

bearer shares. All of the shares have been admitted

to trading on the Official Market (General

Standard) of the Frankfurt Stock Exchange and

in the over-the-counter markets (Regulated

Unofficial Markets) in Berlin-Bremen, Stuttgart,

Munich, Hamburg and Düsseldorf. Each no-par

value share entitles the holder to one vote at the

General Shareholders' Meeting. The Company

therefore has only one class of shares and all

shares carry the same rights and obligations.

Additional rights and responsibilities attaching to

the Company's shares are determined in accordance

with the German Stock Corporation Act

(Aktiengesetz, “AktG”).

5. There is no control of voting rights in cases where

employees are shareholders.

6. Because of its legal form as a partnership limited

by shares, Borussia Dortmund GmbH & Co.

KGaA does not have a management board.

Instead, the Company's management and representation

is the responsibility of the general partner.

The terms of § 6 No. 1 of the Articles of

Association provide that this executive body of the

Company is Borussia Dortmund Geschäfts -

führungs-GmbH, whose registered office is in

Dortmund, on a permanent basis and not for a

limited period of time, by virtue of its status as a

shareholder. The appointment and removal of

managing directors of Borussia Dortmund

Geschäftsführungs-GmbH is governed by § 8 No.

6 of its shareholders' agreement and is the responsibility

of the Executive Committee of its Advisory

Board, and therefore not of the Supervisory Board

of Borussia Dortmund GmbH & Co. KGaA.

2. There are no restrictions affecting the voting

rights or transfer of the shares.

3. As of 30 June 2007, the Company had been notified

of the following interests in the share capital

of Borussia Dortmund GmbH & Co. KGaA in

excess of 10% of the voting rights:

- Morgan Stanley International Limited: 16.25%

- Absolute Capital Management Holdings Limited: 13.04%

- BlueBay Asset Management: 17.09%

4. There are no shares with special rights which confer

powers of control.

In principle, changes may be made to the Articles

of Association of Borussia Dortmund GmbH & Co.

KGaA only by a resolution of its General

Shareholders' Meeting, which must be passed, in

accordance with § 133 (1) AktG, by a simple majority

of votes and also, in accordance with § 15 No. 3

of the Articles of Association of the Company

together with § 179 (1) and (2) AktG, by a simple

majority of the capital represented at the passing

of the resolution, except to the extent that there are

mandatory statutory provisions to the contrary or

the Articles of Association provide otherwise. It is

a mandatory provision of statute that a resolution of

69


Borussia Dortmund GmbH & Co. KGaA

the General Shareholders' Meeting passed by a

majority of three-quarters of the share capital re -

presented at the passing of the resolution is required

for changes to the Articles of Association relating to

the objects of the Company (§ 179 (2) sentence 2

AktG), the issuance of non-voting preferred shares

(§ 182 (1) sentence 2 AktG), capital increases

where subscription rights have been disapplied

(§ 186 (3) AktG), the creation of conditional capital

(§ 193 (1) AktG), the creation of authorised

capital (§ 202 (2) AktG) – where appropriate with

authorisation to disapply subscription rights (§ 203

(2) sentence 2 together with § 186 (3) AktG) –, the

ordinary or simplified reduction of capital (§ 222

(1) sentence 2 and/or § 229 (3) AktG) or a

change of legal form (§ 233 (2) and/or § 240 (1)

German Reorganisation Act (Umwand lungs -

gesetz, “UmwG”)). In addition, capital increases,

other changes to the Articles of Association and

other decisions of a fundamental nature may only

be resolved with the approval of the general partner,

in accordance with § 285 (2) sentence 1

AktG. The Supervisory Board is authorised in

accordance with § 12 No. 5 of the Articles of

Association to resolve changes to the Articles of

Association which relate only to their wording, in

particular in connection with the amount of capital

increases out of authorised and conditional capital.

7. In accordance with § 5 No. 4 of the Articles of

Association of Borussia Dortmund GmbH & Co.

KGaA, the general partner is authorised until 31

July 2011, with the approval of the Supervisory

Board, to increase the share capital by the issue of

up to 21,937,500 new no-par value ordinary bearer

shares against cash or non-cash contributions

on one or more occasions, but by a maximum of

EUR 21,937,500.00 in total (Authorised Capital

2006). In all cases, the new shares participate in

profits from the beginning of the financial year in

which they are issued. The general partner is fur-

ther authorised, with the approval of the

Supervisory Board, to disapply the statutory subscription

right of the limited liability shareholders

in certain circumstances.

In addition, by a resolution of the General

Shareholders' Meeting held on 22 November 2005,

the share capital of Borussia Dortmund GmbH &

Co. KGaA has been conditionally increased by up

to EUR 14,625,000.00 by the issue of up to

14,625,000 new no-par value ordinary bearer

shares. The general partner is authorised until 31

October 2010, with the approval of the Supervisory

Board, to issue bearer bonds with warrants and/or

convertible bonds with a total nominal amount of

up to EUR 40,000,000.00 and a maximum maturity

of 25 years on one or more occasions. The holders

of bonds with warrants may be granted rights to

subscribe for, and the holders of convertible bonds

may be granted rights to convert into, a total of up

to 14,625,000 new no-par value ordinary bearer

shares of the Company in accordance with the

detailed terms and conditions of the bonds with

warrants and/or convertible bonds.

In the event of a takeover offer for shares issued

by the Company and admitted to trading on an

organised market, general statutory responsibilities

and powers also apply to the general partner. For

example, if a takeover offer were to be received,

the general partner and the Supervisory Board

would be required to issue and publish a response

to the offer, giving their reasons, in accordance

with § 27 of the German Securities Acquisition and

Takeover Act (Wertpapiererwerbs- und Übernahmegesetz,

“WpÜG”), so that the limited liability

shareholders can make a decision on the offer on

an informed basis. Moreover, in accordance with §

33 WpÜG, once a takeover offer has been

announced, the general partner may not take any

actions outside the ordinary course of business

70


MANAGEMENT REPORT

which could frustrate the success of the offer,

unless those actions have been authorised by the

General Shareholders' Meeting, or the Supervisory

Board has given its approval to the actions or the

actions relate to obtaining a competing offer. In

making their decisions, the general partner and the

Supervisory Board are bound to have regard to the

interests of the Company, its employees and its

shareholders. At the balance sheet date, there were

no provisions of the Articles of Association within

the meaning of §§ 33a – 33c WpÜG (European

prohibition on frustrating action, European breakthrough

rule, reservation of reciprocity).

8. The Company is not a party to any material agreements

which are conditional on a change of control

following a takeover offer for the issued shares

of Borussia Dortmund GmbH & Co. KGaA.

9. The Company is not a party to any compensation

agreements applying in the event of a takeover

offer.

STATEMENT OF THE GENERAL PARTNER CONCERNING RELATIONS WITH

AFFILIATED COMPANIES

The Dependent Company Report prepared by

Borussia Dortmund GmbH & Co. KGaA pursuant to

§ 312 AktG sets out the relations with BV. Borussia 09

e.V. Dortmund as the controlling entity and its affiliated

companies. The general partner – represented by

its Managing Directors – issued the following concluding

statement:

that was in each case reasonable under the circumstances

known to us at the time such transactions were

entered into. In all other cases, the Company has been

compensated for any disadvantages having arisen. No

other measures within the meaning of § 312 (1) AktG

were taken or omitted during the financial year.

With respect to the transactions set out in the report

concerning relations with affiliated companies, the

Company received consideration in the financial year

Dortmund, 15 August 2007

Borussia Dortmund GmbH & Co. KGaA

Borussia Dortmund Geschäftsführungs- GmbH

Hans-Joachim Watzke

Managing Director (Chairman)

Thomas Treß

Managing Director

71


BVB

Event

73


Event and entertainment:

The Blue Man

Group played before the

game against Bayern

Munich (final score: 3-2)

on 26 January 2007.

SIGNAL IDUNA PARK & EVENT

Only about decade ago, a pure football stadium

such as that in Dortmund was an

open, drafty building that was used for only approximately

25 events each year. Namely,

when the relevant club used the stadium for a

league or cup match. Then it was closed. Until

the next match.

In the meantime, stadiums in Germany have developed

into modern, comfortable arenas that

invite visitors to linger longer: well beyond the

final whistle – and on all other days. This development

is also being pursued consistently

by Borussia Dortmund. Although for statics-

related reasons no rock or pop concerts can

(yet) be held in SIGNAL IDUNA PARK – which

was designed at the beginning of the 1970s –,

the “Strobelallee temple” (as it is referred to by

fans due to its impressive structural character)

is open 365 days a year.

The “stadion live!” agency, commissioned by

BVB, alone holds approximately 200 events a

year. In SIGNAL IDUNA PARK with its different

VIP levels there is always a suitable location,

ranging from birthday parties to meetings in the

newly built Conference Center in the belly of the

northern stand through to large corporate

BVB shows its colours:

Fan representatives from

more than 20 nations,

who otherwise stand together

in the southern

stand, showed where

they come from during a

parade of flags and thus

made a statement against

racism and xenophobia.

74


BVB

Event

One of BVB's pretty

faces: Anna-Lisa Herrmann

held the title

“Miss Borussia” in the

2006/2007 season.

parties in one of the large regulars' tables areas

for up to 1,500 people. “There is no comparable

opportunity in Dortmund”, says the former

professional player, Norbert Dickel, who

is responsible for event marketing at Borussia

Dortmund: “There is something going on almost

every day in the Dannemann or Aida lounge and

in Borussia Park. Even on Christmas and New

Year's Eve.”

Signal Iduna Park is no ordinary location. Many

football-related themes can be transmitted and

absorbed at the place where they originally took

place, for example, through a stadium tour or

a champagne reception in the stand. The experts

also take care of culinary and cultural

highlights: ranging from the simple hot dog

through to the three course menu, from table

magicians through to the live band, no desires

are left unfulfilled. Coupled with the nearby hotels

and the optimal transport links, Signal

Iduna Park is the top address for meetings and

celebrations in the eastern Ruhr region.

Even smaller trade fairs with up to 100

exhibitors are held there, as well as the socalled

“internal trade fairs”, where sponsors

Magdalena Tomaszewski is the current “Miss Borussia”.

In the current fan catalogue, she presents the BVB

women's collection. Here she poses before the camera

with the professional player Sebastian Kehl (middle)

and special prize winner Hannelore Kettler (left).

75


The Borusseum will

tell the history of

Borussia Dortmund.

The opening is planned

for 2008/2009.

and promoters of BVB are able to make

presentations and develop business contacts.

The spacious (parking) area surrounding

Germany's largest stadium is also available

for a monthly flea market. The market is

organised by the Essen event organiser, EXPO

Concept, which has already successfully

established stadium markets in Cologne and

Düsseldorf.

And it is not only football lovers who find a

home in SIGNAL IDUNA PARK. In the southeastern

corner of the stadium, the motto is

“drive, putt and pitch at any weather” – golf for

anyone at any time! It is home to one of the

most modern and largest indoor golf facilities

in Germany, with an area in excess of 1,000

square metres. Eight real image golf

simulators make it possible for players to play

virtual rounds on the most beautiful and best

known golf courses in the world. Moreover,

through precision analysis, the simulators

conduct checks to measure the ball speed, the

swing path, club speed and the stroke direction

in order to optimise each player's technique.

“Stadium Cinema” was the name of an event

which was initiated for the first time in

summer 2007 and proved a success despite

the poor weather. There were 35 showings,

Other types of sport also

want to get close to

crowd pleasers like

Borussia Dortmund: BVB

is a member of the Superleague

Formula – a car

racing series commencing

in 2008. Borussia receives

a royalty for this.

BVB and its sponsors

kick off the season with

many campaigns

around SIGNAL

IDUNA PARK

Sponsors present their products at the BVB internal trade fair.

76


BVB

Event

Stadium Cinema: In summer 2007, selected film highlights could be seen at SIGNAL

IDUNA PARK. There were 35 showings attended by 31,200 viewers.

during which a total of 4,602 film minutes

from all well-known “blockbusters” flickered

on the huge screen, attended

by 31,200 viewers. “A

great festival”, was

the résumé of Dr.

Christian Hocken -

jos, the or ganisational

head of

Borussia Dortmund,

who was able to point

to profits and announced a

repeat performance for summer 2008:

“This series of events not only provided

positive impetus for the partners, sponsors

and SIGNAL IDUNA PARK, it was also a

financial success the first time round.”

Another big attraction for SIGNAL IDUNA

PARK is just about to open: the Borussia

Dortmund Museum, or “Borusseum”. The

project is being managed by Dr. Reinhold

Lunow, the treasurer of the registered

association BV. Borussia 09 e.V. Dortmund:

“We hope that we will be able

to open as early as

2008. However, it

will be ready by

no later than

the anniversary

in 2009.” Access

is being built via a

bridge from the August

Lenz building fan shop to

SIGNAL IDUNA PARK. Thus there is a

possibility for visitors to stock up on

merchandising articles before or after a visit.

In the “Borusseum”, the interior revolves

around seven thematic sections ranging from

the history of Borsigplatz through to BVB's

greatest games and major successes.

BVB has also “rediscovered” its stadium for

itself and has held the season opening

BVB's mascot is called

“Emma” and is intended

to tie young fans to the

Borussia Dortmund

brand at an early stage.

Associated campaigns in Signal Iduna Park, such as this one by Sparda-Bank:

Infostand and campaigns in the interior in front of the sponsors' boards.

77


Social Marketing:

Borussia Dortmund is

happy to offer various

institutions a platform

on which to present

their concerns to a

broad public.

celebrations of the last two years here. A total

of more than 80,000 visitors came to the two

family days alone. “Farewell matches”, such

as those for the legends Julio César, Jürgen

Kohler and Michael Zorc, offer further

occasions on which to use Germany's largest

football stadium outside of competition.

However, SIGNAL IDUNA PARK is also an

ideal location for promotion campaigns. For

example, the candidates for the Pro7

television show “Germany's Next Top Model”

used the pitch as a catwalk during the halftime

break of a match.

However, Borussia Dortmund does not just

pursue commercial aims with SIGNAL IDUNA

PARK. The responsible individuals are open

minded specifically with regard to “social

marketing”, and offer charitable organisations

such as the network against child prostitution,

“Roter Keil”, the “Mein Körper gehört mir”

(my body belongs to me) initiative for the

prevention of sexual abuse of children,

With the construction of the

Conference Center of almost

400 square meters in the

northern stand, with capa -

city for 300 persons, Borussia

Dortmund wishes to bring

plenty of life to SIGNAL

IDUNA PARK. And thus to

create added value.

Use of the stadium on nonmatch

days is actively promoted.

This can certainly

involve football, such as

here for the farewell match

of the former BVB legend,

Jürgen Kohler, who said

“adieu” before a huge backdrop.

78


BVB

Event

BVB has also “rediscovered”

its stadium for itself

and has held the

season opening celebrations

of the last two

years here. A total of

more than 80,000 visitors

came to the two

family days alone.

“Kindernothilfe” and many other institutions

a platform to present their concerns to a broad

public. The “BVB Learning Centre” beneath

the northern stand is another of the social

components. The idea – like football itself –

comes from England: In most stadiums of

Premier League clubs there are so-called

“eLearning centres”, in which youths with

social or schooling problems are given a

chance to utilise educational opportunities

and to gather experience with new media. This

“unschooled type of learning”, which relies

upon voluntary participation, is particularly

motivating for many youths due to the

project's location – the stadium – and the

proximity to the club.

79


Borussia Dortmund GmbH & Co. KGaA

BALANCE SHEET

A S S E T S 30 June 2007 30 June 2006

EUR

EUR

A. Fixed assets

I. Intangible assets

1. Concessions, industrial property rights and similar rights

and assets and licences in such rights and assets 11,867,828.67 3,530,191.35

2. Payments on account 3,670,532.10 3,125,200.00

II. Tangible fixed assets

15,538,360.77 6,655,391.35

1. Land, land rights and buildings on

third-party land 22,477,623.50 21,959,674.59

2. Other equipment, operating and office equipment 8,010,661.99 8,063,598.97

3. Payments on account and assets under construction 0.00 466.46

III. Non-current financial assets

30,488,285.49 30,023,740.02

1. Shares in affiliated companies 82,265,049.37 55,329,247.37

2. Loans to affiliated companies 0.00 23,763,531.19

3. Other equity investments 95,632.18 95,632.18

4. Other loans 252,543.51 200,703.82

82,613,225.06 79,389,114.56

B. Current assets

I. Inventories

1. Merchandise 51,878.54 52,187.44

2. Payments on account 0.00 1,404.60

51,878.54 53,592.04

II. Receivables and other assets

1. Trade receivables 15,622,970.15 19,815,852.43

2. Receivables from affiliated companies 293,106.97 3,352,509.16

3. Receivables from other long-term

investees and investors 726.00 0.00

4. Other assets 2,642,262.37 1,527,953.61

18,559,065.49 24,696,315.20

III. Securities

Own shares 41,124.90 54,425.88

IV. Cash-in-hand and bank balances 13,393,419.72 39,551,503.95

C. Prepaid expenses 2,105,113.70 610,503.87

162,790,473.67 181,034,586.87

80


ANNUAL FINANCIAL STATEMENTS

E Q U I T Y A N D L I A B I L I T I E S 30 June 2007 30 June 2006

EUR

EUR

A. Equity

I. Subscribed capital 61,425,000.00 43,875,000.00

II. Capital reserves 34,171,483.00 14,625,000.00

III. Revenue reserves

Reserve for own shares 41,124.90 54,425.88

IV. Net retained profits/net accumulated losses for the period 4,592,026.83 -5,679,000.60

100,229,634.73 52,875,425.28

B. Provisions

1. Provisions for taxes 843,000.00 2,899,200.00

2. Other provisions 2,248,450.00 23,011,300.00

3,091,450.00 25,910,500.00

C. Liabilities

1. Liabilities to banks 23,380,578.32 64,782,592.56

2. Trade payables 4,972,984.49 8,229,651.93

3. Liabilities to affiliated companies 8,737,596.45 6,355,295.91

4. Other liabilities 14,009,501.28 13,998,168.53

51,100,660.54 93,365,708.93

D. Deferred income 8,368,728.40 8,882,952.66

162,790,473.67 181,034,586.87

81


Borussia Dortmund GmbH & Co. KGaA

INCOME STATEMENT

7/2006 - 6/2007 7/2005 - 6/2006

EUR

EUR

1. Revenues 90,939,271.06 83,255,581.53

2. Other operating income 8,719,325.41 6,750,784.31

99,658,596.47 90,006,365.84

3. Personnel expenses

a) Wages and salaries 32,671,758.79 35,702,134.04

b) Social security and other

pension costs 1,591,926.54 34,263,685.33 1,623,917.72

4. Depreciation and amortisation 6,880,242.22 7,700,819.33

5. Other operating expenses 42,712,426.16 56,962,607.53

6. Income from investments 39,473.08 60,813.13

of which from affiliated companies: 2006/2007: € 39,473.08 / 2005/2006: € 60,813.13

7. Income from profit and loss transfer agreements 231,232.38 119,429.06

8. Income from other securities and long-term loans 0.00 1,417,583.16

of which from affiliated companies: 2006/2007: € 0.00 / 2005/2006: € 1,417,583.16

9. Other interest and similar income 1,050,748.98 2,016,805.43

10. Write-downs of financial assets and securities classified as current assets 11,689.04 2,541.93

11. Expenses from profit and loss transfer agreements 3,585,699.18 271,292.87

12. Interest and similar expenses 3,257,977.51 4,310,139.15

13. Profit/loss from ordinary activities 10,268,331.47 -12,952,455.95

14. Extraordinary income 0.00 10,195,794.96

15. Taxes on income 0.00 588,500.00

16. Other taxes 10,605.02 567,821.61

17. Net profit/loss for the year 10,257,726.45 -3,912,982.60

18. Accumulated losses brought forward -5,679,000.60 -1,770,730.22

19. Withdrawals from revenue reserves 13,300.98 4,712.22

20. Net retained profits/net accumulated losses for the period 4,592,026.83 -5,679,000.60

82


ANNUAL FINANCIAL STATEMENTS

NOTES

GENERAL DISCLOSURES TO THE ANNUAL FINANCIAL STATEMENTS

The annual financial statements of Borussia

Dortmund GmbH & Co. KGaA for the 2006/2007

financial year have been prepared in accordance

with the requirements of the German Commercial

Code (Handelsgesetzbuch, “HGB”) and the particular

accounting requirements of the German Stock

Corporation Act (Aktiengesetzbuch, “AktG”).

There is an additional obligation in accordance with

§ 315a (1) HGB to prepare consolidated financial

statements applying international financial reporting

standards (IFRS).

The balance sheet classifications comply with

the classification format under commercial law in

accordance with § 266 HGB, while the income

statement has been prepared in the vertical format

using the nature of expense method in accordance

with § 275 HGB. The additional information to be

provided in accordance with the statutory requirements

is presented in the notes for reasons of clarity

and accessibility.

As a result of the fact that BV. Borussia 09 e.V.

Dortmund holds 100% of the shares in Borussia

Dortmund Geschäftsführungs-GmbH and is

therefore regarded indirectly as a controlling company,

Borussia Dortmund GmbH & Co. KGaA

qualifies as a dependent company within the

meaning of § 17 AktG and accordingly is required

to prepare a Dependent Company Report in

accordance with § 312 AktG. This report must also

contain the statutory concluding statement

required in accordance with § 312 AktG which

must be included in the management report.

ACCOUNTING POLICIES

Fixed assets

Intangible assets are measured at cost less amortisation

based on their expected useful lives or at the

lower fair value. Player registrations reported in

these financial statements are measured at cost,

taking into account the decision of the Federal

Court of Finance (Bundesfinanzhof, “BFH”) of 26

August 1992, I R 24/91 and the FIFA Regulations

for the Status and Transfer of Players contained in

circular no. 769 of 24 August 2001 which came into

force on 21 September 2001, and are amortised on

a straight-line basis in accordance with the term of

the individual contracts for professional players.

Tangible assets are measured at cost less accumulated

depreciation. Low-value items are fully written

off in the year of acquisition. Depreciation is

based on the useful lives authorised for tax purposes.

Financial assets are measured at cost.

Inventories

Inventories are measured at cost less any discounts,

subject to the strict lower of cost or market

principle.

83


Borussia Dortmund GmbH & Co. KGaA

Receivables and other assets,

securities and cash funds

Receivables and other assets are measured at their

nominal amounts. General valuation allowances

are made for the overall credit and interest-rate

risk while separate allowances are recognised for

identifiable individual risks. Non-interest-bearing

items with a remaining maturity over one year are

reported at their discounted present value.

Securities classified as current assets are measured

at cost or the lower fair value taking account

of the lower of cost or market principle.

Cash and balances with banks are recognised at

their nominal amounts.

Prepaid expenses

Prepaid expenses consist principally of prepayments

relating to the professional squad and insurance

premiums. The amounts are reversed ratably

over the terms/lives of the individual items.

Provisions

Provisions for taxes and other provisions are

recognised in appropriate amounts for all identifiable

uncertain liabilities on the basis of careful

estimates. They are measured in all cases at the

amount necessary at the balance sheet date, in

accordance with prudent business judgment, to

cover future payment obligations.

Liabilities

Liabilities are recognised at the repayment amount.

Deferred income

Deferred income comprises receipts from ticket

sales, sponsorship and licences relating to the following

season. The amounts are reversed ratably

over the periods to which they relate.

NOTES TO THE BALANCE SHEET

Fixed assets

The breakdown of fixed assets is as follows:

in EUR thousands 30 June 2007 30 June2006

Intangible assets 15,538 6,655

Tangible assets 30,488 30,024

Financial assets 82,613 79,389

128,639 116,068

84


ANNUAL FINANCIAL STATEMENTS

Computer software, purchased trademark rights

and player registrations are reported as intangible

assets. The main changes to this item in the

2006/2007 financial year were additions (EUR

13,910 thousand), amortisation (EUR 4,973 thousand)

and write-downs (EUR 54 thousand) of

player registrations to the lower fair value as a

result of expected permanent impairment. The

players Valdez, Frei, Tinga and Blaszczykowski

(payment on account) were signed up in return for

transfer payments.

Tangible assets consist principally of real property

in the stadium site and the adjoining area “Am

Luftbad”. They also include the commercial premises

constructed on land subject to hereditary

building rights and buildings and sporting facilities

at the training ground, the youth centre, the catering

extensions and other movable components of

the stadium, as well as operating and office equipment

at these facilities and at the administrative

headquarters. The training ground in Dortmund-

Brackel was constructed in the previous financial

year by DSW 21 Dortmunder Stadtwerke AG and

let to the Company on a long-term lease. In the

2006/2007 financial year, work on the conversion

of the former offices at the stadium, the August

Lenz building, into a merchandising shop and the

construction of a conference centre on the circulation

level of the stadium were completed.

Financial assets, in addition to the direct equity

investments described in more detail in the list of

shareholdings, principally comprise a tenant's loan

relating to the administration building reported

under other loans. The Company has entered into

control and profit and loss transfer agreements

with its subsidiaries BVB Stadionmanagement

GmbH, BVB Merchandising GmbH and goool.de

Sportswear GmbH. For its part, goool.de

Sportswear GmbH has entered into profit and loss

transfer agreements with BVB Stadion GmbH and

BVB Beteiligungs-GmbH.

During the reporting period, the Company transferred

the tenant's loan in an amount of EUR

21,900 thousand granted to BVB Stadion GmbH

to the capital reserves of goool.de Sportswear

GmbH and the latter in turn to those of BVB

Stadion GmbH with the result that the claims

arising from the loan have been extinguished

because debtor and creditor are the same legal

person (confusion of debts). In addition, Borussia

Dortmund GmbH & Co. KGaA transferred further

receivables amounting to EUR 5,037 thousand

to the capital reserves of goool.de Sportswear

GmbH.

Land, land rights and equity investments have

been assigned or pledged in order to provide security

for loans.

The development of gross fixed assets and of accumulated

depreciation and amortisation for the

individual items of fixed assets are shown in the

following analysis.

85


Borussia Dortmund GmbH & Co. KGaA

CHANGES IN FIXED ASSETS

Cost

At

At

01 July 2006 Additions Disposals Reclassifications 30 June 2007

EUR EUR EUR EUR EUR

I. Intangible assets

1. Concessions, industrial property rights and

similar rights and assets and licences in

such rights and assets 37,951,978.08 10,239,856.00 18,456,581.44 3,125,200.00 32,860,452.64

2. Payments on account 3,125,200.00 3,670,532.10 0.00 -3,125,200.00 3,670,532.10

41,077,178.08 13,910,388.10 18,456,581.44 0.00 36,530,984.74

II.

Tangible fixed assets

1. Land, land rights and buildings on

third-party land 25,648,694.76 194,558.54 0.00 899,876.83 26,743,130.13

2. Other equipment, operating and

office equipment 17,342,824.32 757,016.22 0.00 466,390.39 18,566,230.93

3. Payments on account and assets

under construction 466.46 1,365,800.76 0.00 -1,366,267.22 0.00

42,991,985.54 2,317,375.52 0.00 0.00 45,309,361.06

III.

Non-current financial assets

1. Shares in affiliated companies 55,329,247.37 3,172,270.81 0.00 23,763,531.19 82,265,049.37

2. Loans to affiliated companies 23,763,531.19 0.00 0.00 -23,763,531.19 0.00

3. Other equity investments 95,632.18 0.00 0.00 0.00 95,632.18

4. Other loans 200,703.82 77,803.21 25,963.52 0.00 252,543.51

79,389,114.56 3,250,074.02 25,963.52 0.00 82,613,225.06

163,458,278.18 19,477,837.64 18,482,544.96 0.00 164,453,570.86

Current assets

Current assets are made up as follows::

in EUR thousands 30 June 2007 30 June 2006

Inventories 52 54

Receivables and other assets 18,559 24,696

– of which with a remaining term over one year:

EUR 4,290 thousand (2005/2006: EUR 8,852 thousand)

Securities 41 54

Cash-in-hand and bank balances 13,393 39,552

32,045 64,356

Inventories represent the material value of decorative

shares in the form of printed physical share

certificates, measured at cost.

Receivables and other assets declined largely as a

result of payments received in respect of transfer

receivables and receivables from the jersey sponsor

86


ANNUAL FINANCIAL STATEMENTS

Accumulated depreciation and amortisation

Net carrying amount

At At As at As at

01 July 2006 Additions Disposals 30 June 2007 30 June 2007 30 June 2006

EUR EUR EUR EUR EUR EUR

34,421,786.73 5,027,412.17 18,456,574.93 20,992,623.97 11,867,828.67 3,530,191.35

0.00 0.00 0.00 0.00 3,670,532.10 3,125,200.00

34,421,786.73 5,027,412.17 18,456,574.93 20,992,623.97 15,538,360.77 6,655,391.35

3,689,020.17 576,486.46 0.00 4,265,506.63 22,477,623.50 21,959,674.59

9,279,225.35 1,276,343.59 0.00 10,555,568.94 8,010,661.99 8,063,598.97

0.00 0.00 0.00 0.00 0.00 466.46

12,968,245.52 1,852,830.05 0.00 14,821,075.57 30,488,285.49 30,023,740.02

0.00 0.00 0.00 0.00 82,265,049.37 55,329,247.37

0.00 0.00 0.00 0.00 0.00 23,763,531.19

0.00 0.00 0.00 0.00 95,632.18 95,632.18

0.00 0.00 0.00 0.00 252,543.51 200,703.82

0.00 0.00 0.00 0.00 82,613,225.06 79,389,114.56

47,390,032.25 6,880,242.22 18,456,574.93 35,813,699.54 128,639,871.32 116,068,245.93

and main sponsor. Future claims from season ticket

sales (excluding the hospitality area), TV income

and the agreement for the rights to the stadium

name, have been assigned as security for loans.

The securities item includes the Company's own

shares relating to the decorative share certificates.

Under the terms of a resolution of the General

Shareholders' Meeting held on 16 November

2004, the Company is authorised to sell its own

shares either on or off the stock market. Off-market

sales are permitted, among other purposes, for

the sale of shares in the form of printed physical

share certificates which are freely transferable and

tradable. In such cases, shareholders' subscription

rights are excluded in accordance with § 71 (1)

No. 8 AktG. In the period between the date of

admission of the Company's shares to trading (31

October 2000) and the balance sheet date, the

Company acquired a total of 34,000 no-par value

shares and sold 10,365 no-par value shares offmarket

in the form of printed physical share certificates.

The gain on disposal has been reported

separately under other operating income. At the

balance sheet date, the Company's holding of its

own securities consisted of 23,635 no-par value

shares. They were measured at the rate prevailing

on the balance sheet date. A reserve for own shares

in the amount of the asset item has been set up in

accordance with § 272 (4) HGB.

87


Borussia Dortmund GmbH & Co. KGaA

Further disclosures required in accordance with § 160 AktG are given in the following overview, the income

from the sale of shares has been included in the profit from operating activities:

Purchases Sales Holding

of own of own of own Amount of Percentage of Purchase Sale

Month shares shares shares share capital share capital price price

Euro % Euro Euro

Holdings at June 2006 23,871 23,871 0.054

July 2006 - Dec. 2006 -67 -67 0.000 737.00

Holdings at Dec. 2006 23,804 23,804 0.039

January 2007 - June 2007 -169 -169 0.000 1,859.00

Holdings at June 2007 23,635 23,635 0.038

Bank balances amounting to EUR 19 thousand (prior year: EUR 3,608 thousand) are subject to restrictions.

Prepaid expenses

Prepaid expenses consist principally of personnel

expenses relating to the professional squad and

insurance premiums paid in advance.

Equity

in EUR thousands 30 June 2007 30 June 2006

Subscribed capital 61,425 43,875

Capital reserves 34,172 14,625

Revenue reserves 41 54

Net retained profits/accumulated losses 4,592 -5,679

100,230 52,875

The Company's subscribed capital amounts to

EUR 61,425,000 and is divided into just as many

no-par value shares, each representing a notional

share in the share capital of EUR 1.00.

During the reporting period, the share capital was

increased by EUR 17,550,000 to EUR 61,425,000

by means of cash and non-cash contributions in

accordance with the resolution of the extraordinary

General Shareholders' Meeting held on 15

August 2006. The limited liability shareholders

exercised their indirect subscription right to purchase

new shares in the ratio of 5:2 at an issue price

of EUR 2.00 per share for a total of 7,567,585 new

shares. Morgan Stanley & Co. International

Limited, London subscribed for a further

9,982,415 shares at a price of EUR 2.20 per share

in the form of a non-cash contribution. The capital

increase was entered in the commercial register

on 19 September 2006. The premium of EUR

19,547 thousand over the nominal amount of the

issue was added to capital reserves.

88


ANNUAL FINANCIAL STATEMENTS

In addition, a conditional increase in the share

capital of up to EUR 14,625,000 was resolved by

the General Shareholders' Meeting on 22

November 2005. The purpose of the conditional

capital is to cover the grant of option rights and the

agreement of option obligations and the settlement

of conversion rights and obligations, in all

cases issued by the Company during the period

until 31 October 2010 on the basis of the authorisation

granted by the General Shareholders'

Meeting on 22 November 2005. To date, no use

has been made of the authorisation referred to.

The extraordinary General Shareholders' Meeting

held on 15 August 2006 also authorised the general

partner until 31 July 2011, with the approval of

the Supervisory Board, to increase the share capital

by the issue of up to 21,937,500 new no-par value

shares for cash or non-cash contributions

(Authorised Capital 2006).

The development of reserves was as shown below:

in EUR thousands 01 July 2006 Additions Withdrawals 30 June 2007

Capital reserves 14,625 19,547 0 34,172

Revenue reserves

(Reserve for own shares) 54 0 -13 41

The premium resulting from the capital increase

resolved in August 2006 amounting to EUR

19,547 thousand was added to capital reserves.

The withdrawal reflects the adjustment of the

reserves to the amount of own shares held.

Changes in equity were as follows:

Changes in equity

01 July 2006 Additions/ Profit for 30 June 2007

in EUR thousands Withdrawals the year

Subscribed capital 43,875 17,550 0 61,425

Capital reserves 14,625 19,547 0 34,172

Revenue reserves 54 -13 0 41

Net accumulated losses/

retained profits -5,679 13 10,258 4,592

52,875 37,097 10,258 100,230

The annual financial statements for 2005/2006 were approved at the General Shareholders' Meeting held

on 28 November 2006.

89


Borussia Dortmund GmbH & Co. KGaA

Provisions

in EUR thousands 30 June2007 30 June2006

Provisions for taxes 843 2,899

Other provisions 2,248 23,012

3,091 25,911

The provisions for taxes comprise additional payments

resulting from a wages tax audit for the period

1 July 2000 – 30 June 2004 which have not yet

been finally determined.

In addition to staff-related obligations such as

unclaimed holiday entitlements, contributions to

employer's liability insurance schemes, bonuses

and one-off payments etc, other provisions include

provisions for cost and supplier invoices not yet

received. The provision recognised in previous

years for expected losses from pending transactions

in connection with the reversal of trademark rights

amounting to EUR 17,487 thousand was utilised

on the repurchase of the trademark rights.

Liabilities

The maturities and security granted in respect of liabilities reported at 30 June 2007 are shown in the following

overview.

in EUR thousands

of which with a remaining term of

Total up to 1 to 5 more than

1 year years 5 years

1. Liabilities to banks 23,381 1,123 5,833 16,425

2. Trade payables 4,973 4,728 245 0

3. Liabilities to affiliated companies 8,738 4,506 4,232 0

4. Other liabilities

- of which from taxes:

EUR 4,480 thousand

(2005/2006: EUR 2,552 thousand)

- of which relating to social security:

EUR 2 thousand

(2005/2006: EUR 24 thousand) 14,009 9,127 1,976 2,906

51,101 19,484 12,286 19,331

The liabilities to banks are secured in an amount of

EUR 23,381 thousand (previous year: EUR 23,433

thousand) by the real property liens, assignments

and pledges described in greater detail above.

As well as short- to medium-term loans amount-

ing to EUR 5,284 thousand, other liabilities consist

mainly of wages and salaries outstanding at the

end of the financial year and the associated social

security contributions. In addition, there are liabilities

relating to wages tax and VAT.

90


ANNUAL FINANCIAL STATEMENTS

Deferred income

Deferred income includes income from licences,

sponsorship and payments received from season

ticket sales.

Other financial obligations and

contingent liabilities

At the balance sheet date, there were financial

obligations resulting, among other things, from

rental, leasing, hereditary lease and licensing

agreements, and inter-company agreements.

The classification by maturity is shown in the following

table:

in EUR thousands

of which with a remaining term of

Total up to 1 to 5 more than

1 year years 5 years

Stadium rent 107,536 5,377 21,507 80,652

Marketing fees 24,972 8,324 16,648 0

Rental and leasing 28,921 2,450 8,966 17,505

Agreements between companies 29,267 3,520 12,276 13,471

Purchase commitments 4,700 2,600 2,100 0

Other 2,087 45 178 1,864

197,483 22,316 61,675 113,492

In connection with the repurchase of the shares in

the stadium by subsidiaries, there were contingent

liabilities at the reporting date from guarantee

agreements in favour of affiliated companies

amounting to EUR 57,550 thousand which are

secured, among other methods, by real property

liens, assignments and pledges granted by

Borussia Dortmund GmbH & Co. KGaA, and

which gave rise to the following financial obligations

corresponding to the redemption amounts:

in EUR thousands

of which with a remaining term of

Total up to 1 to 5 more than

1 year years 5 years

goool.de sportswear GmbH 51,775 2,429 11,320 38,026

BVB Beteiligungs-GmbH 5,725 269 1,252 4,204

57,500 2,698 12,572 42,230

91


Borussia Dortmund GmbH & Co. KGaA

NOTES TO THE INCOME STATEMENT

Revenues

The following table shows sales classified by area

of activity as required by the German Football

League (Deutsche Fußball Liga GmbH, “DFL”)

for the licensing procedure:

in EUR thousands 2006/2007 2005/2006

Ticketing 18,262 17,190

Sponsorship 30,549 27,170

TV marketing 21,250 14,843

Transfer income 6,767 12,399

Catering, licences and other 14,111 11,654

90,939 83,256

Sponsorship revenues increased compared with

the 2005/2006 financial year as a result of the marketing

of the stadium name and the conclusion of

a new main sponsor agreement with RAG.

Revenues from TV marketing were also higher following

the conclusion of the new TV agreement

from the 2006/2007 season onward.

In addition, transfer income for the first half of

the year and one-time receipts from the marketing

of the stadium during the 2006 Football World

Cup made a significant contribution to the rise in

revenues and the improvement in earnings.

Personnel expenses

The breakdown of personnel expenses is as follows:

in EUR thousands 2006/2007 2005/2006

Wages and salaries 32,672 35,702

Social security and pensions and other benefits 1,592 1,624

34,264 37,326

Personnel expenses were reduced from EUR 45.9

million in 2004/2005 and EUR 37.3 million in

2005/2006 to the current level of EUR 34.3 million.

This reflected the positive effects of the savings

in the expenses for the professional squad

which fell from EUR 36.6 million in 2004/2005

and EUR 31.4 million in 2005/2006 to EUR 29.2

million.

92


ANNUAL FINANCIAL STATEMENTS

Other operating expenses

in EUR thousands 2006/2007 2005/2006

Match operations 20,819 18,748

Advertising and marketing 10,752 9,437

Transfers 1,967 7,772

Media and printing 1,198 1,291

Administration 6,925 13,408

Other 1,051 6,307

42,712 56,963

Other operating expenses fell by a total of EUR

14,251 thousand in comparison with the previous

year. The principal contributory factors to this

were lower transfer expenses, a reduction in advisory

costs following completion of the restructuring

of the Company's equity and debt capital and

lower valuation allowances on receivables compared

with the previous year. In contrast, expenses

for marketing fees were higher as a result of the

growth in revenues while the expenses of match

operations rose due to the rental of the training

ground in Brackel.

Taxes

No income taxes were required to be included in

the financial statements because, with the repurchase

of the trademark rights, the provision for

anticipated losses on pending transactions established

in previous years in the HGB financial statements

was also recognised for tax purposes in the

2006/2007 financial year.

Extraordinary income

There were no items of extraordinary income in

the past financial year. In the previous year, the

merchandising division was transferred to an existing

wholly-owned subsidiary with retrospective

effect as of 1 July 2005 at fair value, thereby giving

rise to an extraordinary non-cash gain amounting

to EUR 10.2 million.

93


Borussia Dortmund GmbH & Co. KGaA

OTHER DISCLOSURES

Corporate Governance

The management and Supervisory Board have

issued the statement of compliance with the

German Corporate Governance Code prescribed

by § 161 AktG. The statement has been made

available to the shareholders and can be viewed at

any time at www.borussia-aktie.de.

EXECUTIVE BODIES

General partner

The general partner is Borussia Dortmund

Geschäftsführungs-GmbH, whose registered

office is in Dortmund and which does not have an

interest in the Company's share capital. Its share

capital amounts to EUR 30,000. It is exempt from

the restrictions contained in § 181 of the German

Civil Code (Bürgerliches Gesetzbuch, “BGB”) and

is listed in the commercial register of the Local

Court of Dortmund, HRB No. 14206. The

Managing Directors of this company are Mr. Hans-

Joachim Watzke (Dipl.-Kfm.) (Chairman) and Mr.

Thomas Treß (Dipl.-Kfm.), each of whom has sole

power of representation. In the most recent financial

year, the members of management received

the following amounts for their activities, including

responsibilities relating to subsidiary companies:

in EUR thousands 2006/2007 2005/2006

Hans-Joachim Watzke

fixed components

- fixed remuneration 400 400

- other remuneration 14 11

performance-related components

- special remuneration 0 250

- bonus 232 0

Thomas Treß

fixed components

- fixed remuneration 400 200

- other remuneration 26 19

performance-related components

- special remuneration 0 250

- bonus 155 0

1,227 1,130

94


ANNUAL FINANCIAL STATEMENTS

Supervisory Board

The current members of the Supervisory Board of the

Company, their names, occupations and further responsibilities

in other management bodies are listed below.

In the past financial year, the Supervisory Board received

remuneration amounting to EUR 52.5 thousand.

Dipl.-Kfm.

Gerd Pieper

Harald Heinze

Othmar Freiherr

von Diemar

Bernd Geske

Ruedi Baer

Patrick Albert

Lynch

Christian

Kullmann

Chairman

Deputy Chairman

(until 26 Feb 2007)

(since 23 May 2007)

Occupations

Proprietor and

Managing Director

of Stadtparfümerie

Pieper GmbH, Herne


Proprietor and

manager of Othmar

von Diemar Vermögensverwaltung

+

Beratung, Cologne

Managing partner of

Bernd Geske Lean

Communication,

Meerbusch

Delegate of the

Board of Directors

of the mobilezone

group, Regensdorf

(Switzerland)

Managing Director

of Morgan Stanley &

Co., London

(England)

Head of the board

office and corporate

communications

division of RAG

Aktiengesellschaft,

Essen

Other responsibilities

Member of the

Supervisory Board

of Beauty Alliance

Deutschland GmbH

& Co. KG, Bielefeld

Member of the

Supervisory Board

of E-M-S new media

AG, Dortmund

Member of the

Member of the Supervisory Board

Supervisory Board of of WV Energie AG,

Herner Sparkasse, Frankfurt am Main

Herne

Member of the

Supervisory Board

of M-Exchange AG,

Frankfurt am Main

Member of the

Advisory Board of

Haftpflichtverband

öffentlicher

Verkehrsbetriebe

(HÖV), Dortmund

Chairman of the

Supervisory Board

of Informium AG,

Cologne

Member of the

Supervisory Board of

004 Beratungs- und

Dienstleistungs-

GmbH,

Aschaffenburg

Substitute member

of the Supervisory

Board of Arques

Industries AG,

Starnberg

Chairman of the

Board of Directors

of mobilezone AG,

Regensdorf

(Switzerland)

Chairman of the

Board of Directors

of mobilezone com

AG Regensdorf

(Switzerland)

Chairman of the

Board of Directors

of Europe Trade AG

Regensdorf

(Switzerland)

Chairman of the

Board of Directors

of Destination Travel

AG, Liebefeld

(Switzerland)

Member of the

Supervisory Board of

Ploucquet Holding

GmbH, Unterföhring

Chairman of the

Board of Directors of

B&B Beratungs AG,

Watt (Switzerland)

Chairman of the

Board of Directors of

Bablo Immobilien AG,

Watt (Switzerland)

Member of the

Board of Directors of

Immoplaza AG,

Regensdorf

(Switzerland)

Chairman of the

Board of Directors of

AP Fashion AG, Watt

(Switzerland)

95


Borussia Dortmund GmbH & Co. KGaA

Employees

The average number of employees during the year

was 175 (previous year: 193). The reduction is

mainly the result of staff cuts and the transfer of

employment contracts to subsidiaries.

List of shareholdings

The following table gives summarised information

relating to companies in which the Company has a

shareholding of more than 20%:

Company Registered Capital Share- Equity Profit/loss

office EUR thou. holding % EUR thou. EUR thou.

BVB Stadionmanagement GmbH * Dortmund 52.0 100.00 66 121

goool.de Sportswear GmbH * Dortmund 260.0 100.00 67,526 -3,069

B.E.S.T. Borussia

Euro Lloyd Sports Travel GmbH Dortmund 50.0 51.00 166 116

BVB Merchandising GmbH * Dortmund 75.0 100.00 10,881 -142

Sports & Bytes GmbH Dortmund 200.0 100.00 168 -2

BVB Stadion GmbH* Dortmund 25.5 99.74 27,769 -50

BVB Beteiligungs-GmbH * Dortmund 25.5 94.90 15 -324

Orthomed Medizinisches

Leistungs-und Rehabilitationszentrum

GmbH Dortmund 51.6 33.33 383 57

* Companies subject to profit and loss transfer agreements, profit/loss from 1. January - 30. June 2007 before transfers to tax group parent.

The companies are included in the consolidated financial statements of Borussia Dortmund GmbH & Co.

KGaA, Dortmund.

96


ANNUAL FINANCIAL STATEMENTS

Information relating to expenses recognised for audit fees for the single-entity

and consolidated financial statements

The audit fees recognised in the income statement in the 2006/2007 financial year were made up as follows:

in EUR thousands 2006/2007 2005/2006

Audit of the consolidated, interim and single-entity

financial statements 337 300

Other audit-related work 0 50

Tax advice 57 47

Other services 188 32

Notifiable shareholdings under § 160 (1 ) No. 8 AktG together with § 21 of the German

Securities Trading Act (Wertpapierhandelsgesetz, “WpHG”)

We have been informed of the following notifiable shareholdings:

(in %)

Blue Bay Asset Management 17.09

Morgan Stanley (via Morgan Stanley & Co. International Ltd., London) 16.25

Absolute Capital Management Holding Limited 13.04

Ballspielverein Borussia 09 e.V. Dortmund 7.24

Bernd Geske 6.51

60.13

Information relating to derivative

financial instruments

In order to protect against the interest rate risk

associated with the variable-rate loan from

Morgan Stanley to the Company and its subsidiaries,

the Company has entered into a fixedrate

swap for a similar term and amount. As at 30

June 2007, the fair value of the swap amounted to

EUR 2,888 thousand. The fair value of the swap

was determined on the basis of widely recognised

valuation models (Black-Scholes, Health-Jarrow-

Morton).

Proposal on the appropriation of profit

The 2006/2007 financial year finished with a net

profit for the year of EUR 10,257,726.45. After

deducting accumulated losses brought forward

amounting to EUR 5,579,000.60 and adding a

partial release of the reserve for own shares

amounting to EUR 13,300.98, there remains an

unappropriated net profit amounting to EUR

4,592,026.83. The management proposes that the

unappropriated net profit amounting to EUR

4,592,026.83 reported for the 2006/2007 financial

year be transferred to other revenue reserves.

97


Borussia Dortmund GmbH & Co. KGaA

CASH FLOW STATEMENT

The following additional information is given in relation to the

cash flow statement:

Cash funds for the purposes of the cash flow statement are

defined as cash-in-hand plus bank balances less restricted

funds amounting to EUR 19 thousand (previous year: EUR

3,608 thousand) and overdraft facilities used amounting to

EUR 0 (previous year: EUR 8,000 thousand).

2006/2007 2005/2006

EUR thou.

EUR thou.

Net profit/loss for the year 10,258 -3,913

Depreciation and amortisation 6,880 7,701

Extraordinary income from the hive-down of company divisions 0 -10,196

Profit from disposals of fixed assets -6,767 -5,857

Loss from disposals of fixed assets 0 0

Changes in balance sheet items

Provisions -2,918 5,131

Inventories 2 560

Trade receivables and other assets 3,682 11,543

Prepaid expenses -1,494 669

Deferred income -514 -5,098

Trade payables and other liabilities -825 -2,866

Change in restricted funds 3,589 -3,143

Cash flow from operating activities 11,893 -5,469

Proceeds from the disposal of tangible assets 0 121

Proceeds from the disposal of intangible assets 6,065 9,988

Payments for investments in tangible assets -2,317 -6,032

Payments for investments in intangible assets -13,599 -4,976

Proceeds from the disposal of financial assets 25 23

Payments for investments in financial assets -79 -247

Cash flows from investing activities -9,905 -1,123

Cash inflows and outflows from new borrowings and repayments of borrowings

- new borrowings 0 27,253

- repayments of borrowings -31,692 -24,496

Changes in equity and capital and revenue reserves 15,135 29,250

Cash flows from financing activities -16,557 32,007

Net change in cash funds -14,569 25,415

Cash funds at the beginning of the financial year 27,943 2,528

Cash funds at the end of the financial year 13,374 27,943

Dortmund, 15 August 2007

Borussia Dortmund GmbH & Co. KGaA

Borussia Dortmund Geschäftsführungs-GmbH

Hans-Joachim Watzke

Managing Director (Chairman)

Thomas Treß

Managing Director

98


ANNUAL FINANCIAL STATEMENTS

AUDITORS‘ REPORT

We have audited the annual financial statements –

consisting of the balance sheet, income statement

and notes – together with the bookkeeping system

and the management report of Borussia

Dortmund GmbH & Co. KGaA, Dortmund, for

the financial year from 1 July 2006 to 30 June 2007.

The maintenance of the bookkeeping system and

the preparation of the annual financial statements

and management report in accordance with

German commercial law and the supplementary

provisions in the Articles of Association is the responsibility

of the Company’s legal representatives.

Our responsibility is to express an opinion on the

annual financial statements, together with the

bookkeeping system, and on the management

report, based on our audit..

Knowledge of the business activities and the economic

and legal environment of the Company and

expectations as to possible misstatements are taken

into account in the determination of audit procedures.

The effectiveness of the accounting-related

internal control system and the evidence supporting

the disclosures in the books and records, the

annual financial statements and the management

report are examined primarily on a test basis within

the framework of the audit. The audit includes

assessing the accounting principles used and significant

estimates made by the Company's legal

representatives, as well as evaluating the overall

presentation of the annual financial statements and

the management report. We believe that our audit

provides a reasonable basis for our opinion.

We conducted our audit of the annual financial statements

in accordance with § 317 of the German

Commercial Code (Handelsgesetzbuch, HGB)and

the generally accepted standards for the audit of

financial statements in Germany promulgated by

the German Institute of Chartered Accountants

(Institut der Wirtschaftsprüfer, IDW). Those standards

require that we plan and perform the audit

such that misstatements materially affecting the

presentation of the net assets, financial position and

results of operations in the annual financial statements

in accordance with German principles of

proper accounting and in the management report

are detected with reasonable assurance.

Our audit has not led to any reservations.

In our opinion, based on the results of our audit,

the annual financial statements comply with the

statutory requirements and the supplementary

provisions in the Articles of Association and give a

true and fair view of the net assets, financial position

and results of operations of the Company in

accordance with German principles of proper

accounting. The management report is consistent

with the annual financial statements, provides as a

whole a suitable view of the Company's position

and suitably presents the opportunities and risks of

future development.

Dortmund, 17 August 2007

BDO WESTFALEN-REVISION GmbH

Wirtschaftsprüfungsgesellschaft

R. Schepers ppa. J. Königshoven

Auditor

Auditor

99


100


BVB

Media

101


SIGNAL IDUNA PARK & MEDIA

In mid-September 2007, a Borussia Dort -

mund match was able to be seen live on

television in more countries than ever before.

Football fans worldwide could watch the

Bundesliga match between BVB and Werder

Bremen in 139 countries. This was the second

highest penetration ever achieved by the

Bundesliga.

This might be of subordinate importance for

those partners of Borussia Dortmund with a

regional focus, but due to the fact that the so-

called “global players” have since recognised

the advertising value of what was once the

strongest football league in the world, media

presence is a factor that cannot be underestimated

in marketing the company.

Dortmund is a household name not only in

domestic football, but also internationally.

SIGNAL IDUNA PARK, constructed for the 1974

World Cup, has often hosted major international

events with corresponding TV penetration.

The finals of two European Cup competitions

have been held in Strobelallee: in 1993

between Borussia Dortmund and Juventus

Turin (Italy), and in 2001 between CD Alaves

(Spain) and FC Liverpool (England).

During both World Cup tournaments, the

entire football world was looking at Dortmund.

In 1974, the stadium – then called

Westfalenstadion – was the scene, amongst

other things, for the knockout semi-final

between the Netherlands and Brazil. In 2006,

television cameras broadcast images from the

four group matches in Dortmund and the second

round match between Cup holders Brazil

and the outsider, Ghana. There was an aver-

Interview in front of the sponsors' wall: Player Mladen

Petric with media representatives (above) and Philipp

Degen in the cameras’ sights (bottom).

102


Geschäftsbericht Juli 2006 - Juni 2007

BVB

Media

Watched by an audience of millions: World star Ronaldo in front of the advertising board with the text ”Dortmund” at the 2006 FIFA World Cup.

age of 260 million viewers for each match at

the 2006 FIFA World Cup.

And it was once again in Dortmund where one

of the finalists was decided when, on 4 July

2006, the German and Italian team faced each

other at SIGNAL IDUNA PARK. At its peak, 31.3

million viewers sat before their television sets

in Germany alone, a number which does not

even count the contacts through the successful

“public viewing”, while the global number was

approximately half a billion television viewers.

They saw an exciting match. They saw the late

goals in extra time scored by Grosso and del

Piero. They saw the advertising messages

of the sponsors and partners of the world

football association, FIFA. And they were confronted

by the name “Dortmund”.

which appeared at the halfway line, was estimated

at EUR 500,000 per match and thus a

total amount of EUR 3 million. According to

experts' estimates, the tournament as such

and the associated global reporting had an

advertising value of EUR 200 million for the

city of Dortmund.

A Time to Make Friends in Dortmund

Just the advertising value of the perimeter

board for the organising city of Dortmund,

BVB print media: Yearbook, stadium and member magazine,

business report, investor information.

Tradition • Leidenschaft • Erfolg

103


BVB

TV

BVB NetRadio BVB online

The club's own media also report in detail on BVB: Net radio reporters Norbert Dickel and Boris Rupert.

During the 2006/2007 Bundesliga season relevant

to the reporting period, during which

only the final phase of the championship could

be described as “successful” for Borussia

Dortmund, BVB and hence its advertising

partners as well could be seen for a total 176.5

hours on television, exactly 74 hours 52 minutes

and 22 seconds of which were on free-toair

television. The television sector recorded

11 billion contacts and therefore almost 50

percent more than the league average.

BVB makes its partners known via the media.

The jersey sponsor RAG, which today does

business under the company name EVONIK

Industries AG, generated a total of 3.7 billion

contacts. This figure consists of fade-ins at

30 second intervals in the television segment

(1.9 billion), and images of the jersey in

newspapers and magazines (1.1 billion) and

on the Internet (700 million).

Media experts predict in any event that the

future lies with the Internet. In the last 11

years, the worldwide web has established

itself as the third greatest pillar of media consumption

and has recorded the largest growth.

In 2007, average use of the Internet was 54

minutes per person per day (TV: 225 minutes).

Borussia Dortmund was one of the first

providers that recognised the significance and,

above all, strengths of the “www” for football.

BVB has already been using the Internet as a

communications platform since 1996. Since

then, the online presence of the six-time German

champion has constantly been expanded

BVB and new media:

Season DVD, website

with cutting-edge reports

and detailed investor

relations area:

www.borussia-aktie.de

104


BVB

Media

Pure emotions: A flying camera (halfway in from the left in picture) captures the dancing BVB stars in front of the southern stand (Dortmund 2:0 Schalke, 12 May 2007).

and optimised. The club prepares the content

itself and has it placed it on the web via its subsidiary,

Sports & Bytes. BVB is represented on

its own website with its own net radio and

video reports on the games and important

events and can expect revenues potential here.

The view of press and television representatives

is that “Borussia Dortmund's online offer

is by far the best of the Bundesliga”. Independent

analyses see BVB's online offer as

amongst or at the top of the league in terms of

content and implementation.

With BVB Club, Borussia Dortmund

has already been a trendsetter

in the paid Internet segment

since 2003.

The camera is ever present and caters to the enormous public interest.

105


Borussia Dortmund

BUSINESS AND FRAMEWORK CONDITIONS

FINANCIAL YEAR 2006/2007 IN REVIEW

At the close of the General Shareholders' Meeting

of our Company in November 2006, Gerd Pieper,

Chairman of the Supervisory Board, was able to

announce an extraordinary voting result. 99.99

per cent of the shareholders present formally

approved the actions of the management and thereby

expressed their confidence in us.

We see this acknowledgement as a confirmation of

the work we are doing and will continue to practise

the transparency and openness that received your

stamp of approval at the last General Shareholders'

Meeting, as well as a high level of cost consciousness

and an appropriate policy on investments.

Having overcome a life-threatening situation, our

Company is once again in the black, which confirms

that the nature of our actions was correct and reinforces

our belief that we should continue down our

chosen path. On 7 June 2006, i. e. in the past financial

year, a loan agreement was signed between Borussia

Dortmund GmbH & Co. KGaA, and its subsidiaries,

and the US investment bank Morgan Stanley for cre -

dit facilities amounting in total to EUR 79.2 million

with a term of 15 years, thereby laying the foundations

for the long-term stabilisation of the Company. A total

of EUR 57.5 million of the loan was used for the payment

to MOLSIRIS Vermietungsgesellschaft mbH &

Co. Objekt Westfalenstadion KG of the price for the

repurchase of the limited partner's share in West -

falenstadion Dortmund GmbH & Co. KG and for

related incidental costs. Ownership of SIGNAL

IDUNA PARK has therefore been almost completely

(99.7%) regained. The remaining loan amount of

EUR 21.7 million was used for the purpose of redu -

cing and refinancing the existing liabilities of Borussia

Dortmund GmbH & Co. KGaA (“BVB-KGaA”). In

addition, BVB-KGaA was granted a revolving credit

line amounting to EUR 10.0 million by Morgan

Stanley.

As part of the restructuring process, the creditors'

agreement of March 2005 was annulled in June 2006

and the steering committee set up at that time was

dissolved. Furthermore, this created the essential

conditions for the implementation of the capital

increase resolved in May 2006 (utilisation of authorised

capital with a nominal amount of up to

EUR 14,625,000) with an issue amount of

EUR 29,250,000. This entire amount was used for a

further reduction of existing liabilities in July 2006.

Borussia Dortmund was also able to buy back the

“goool.de” trademark on 3 July 2006. Gerling-

Konzern Globale Rückversicherungs-AG, Cologne,

had entered into an agreement with Borussia

Dortmund in 2000 for the purchase and immediate

relicensing of the “goool.de” trademark and thus

became the legal owner of the BVB merchandising

trademark rights. As a result of the repurchase, all

the trademark rights once again rest with the

Borussia Dortmund Group.

1 st Round

11 August 2006

FC Bayern 2:0 BVB

2 nd Round

19 August 2006

BVB 1:1 FSV Mainz 05

106

A foul with nasty results: Kehl is badly

injured during this tackle from

Salihamidzic and is out for months.

What a start: What a start: with this

header, Amedick puts BVB 1:0 in front.

Right: Pienaar, Pekovic.


GROUP MANAGEMENT REPORT

The capital increase resolved by the extraordinary

General Shareholders' Meeting of Borussia

Dortmund GmbH & Co. KGaA on 15 August 2006

for a nominal amount of up to EUR 17,550,000 to

EUR 61,425,000 was fully placed. The indirect subscription

right for a total of 7,567,585 new shares

was exercised by the Company's limited liability

shareholders. Morgan Stanley & Co. International

Limited, London, England (“MSIL”) subscribed for

an additional 9,982,415 new shares in accordance

with the resolution authorising the capital increase

dated 15 August 2006. MSIL paid in its non-cash

contribution by assigning to the Company a partial

claim held by its sister company, Morgan Stanley

Bank International Limited, against the Company

for a nominal amount of EUR 21,961,313.

The capital increase was entered in the commercial

register of the Local Court of Dortmund on 19

September 2006. Thus, the Company's share capital

is EUR 61,425,000 (previously EUR 43,875,000) and

is divided into the same amount of no-par value

shares. Management used EUR 10 million of the new

cash funds generated from the capital increase

(approximately EUR 15.1 million in total) to finance

working capital and put the remainder toward reducing

existing liabilities.

The restructuring of the liability side of the balance

sheet, with the aim of strengthening equity resources,

achieving a more manageable debt maturity structure

and improving interest rate terms, has now been fully

implemented.

Key financial indicators

Key financial figures Borussia Dortmund Group

2006/2007 2005/2006

EUR millions 30.06.2007 30.06.2006

Equity 86.5 37.6

Investments 16.3 11.3

Gross revenue 106.0 92.7

Operating profit/loss (EBIT) 15.6 -11.2

Financial result (investment income and net interest expense) -8.5 -11.4

Net profit/loss for the period 10.1 -20.8

Earnings before interest, taxes, depreciation

and amortisation (EBITDA) 29.1 3.0

Cash flows from operating activities 11.9 -5.1

Weighted average number of shares (in thousands) 58,665 31,021

Earnings per share (in EUR) 0.17 -0.67

3 rd Round

26 August 2006

VfB Stuttgart 1:3 BVB

DFB Cup

9 September 2006

Thannhausen 0:3 BVB

Frei, Brzenska and Kringe celebrate

the victory in Stuttgart with their fans.

TSG Thannhausen brought about many

opportunities, but BVB won 3:0.

107


Borussia Dortmund

DEVELOPMENT OF THE MARKET AND

COMPETITIVE ENVIRONMENT IN

GERMAN PROFESSIONAL FOOTBALL

Ticketing

Spectator numbers in the Bundesliga continue to be

unusually high. However, a slight decline of 1.43%

was recorded in comparison with the record set in

the previous year. This was most likely due to the

smaller stadium capacities of the three teams promoted,

Alemannia Aachen, FC Energie Cottbus and

VfL Bochum, compared with the relegated teams,

1. FC Köln, 1. FC Kaiserslautern and MSV Duisburg.

The biggest attraction for spectators in the Bun -

desliga was once again Borussia Dortmund with

1,161,769 tickets sold, ahead of Bayern Munich

(1,133,973) and Schalke 04 (1,028,317). Three

Bundesliga clubs therefore reached the coveted target

of more than 1 million spectators.

In sales of season tickets, Borussia Dortmund

(44,018) outperformed Schalke 04 (42,339), as in the

previous year, and was a long way ahead of the competition

in the Bundesliga. On average, each club in

the Bundesliga sold 20,450 season tickets last season.

TV marketing

The continuing enthusiasm for football can also be

seen in the revenues generated for the clubs by TV

marketing. The three-year contract for TV marketing

for the Bundesliga and the Second Bundesliga

entered into by the German Football League (DFL)

in December 2005 was for a total amount of over

EUR 1.2 billion. This represents an increase of

around 40% compared with the previous TV marketing

agreement. With the coming into effect of the

new TV marketing agreement, the basis of allocating

revenues were adjusted. The new basis of allocation is

intended to link payment more closely to performance,

to generate higher income for all clubs and to cushion

the effect of relegation from the Bundesliga. An

additional consideration is to ensure that the split of

revenues between the Bundesliga and the Second

Bundesliga remains stable.

In concrete terms, this means that a club in the

Bundesliga can achieve a maximum of around EUR

23.3 million but a minimum of around EUR 11.7 million

from domestic income for championship games.

In the Second Bundesliga, the range is between EUR

3.6 million and EUR 7.2 million. On top of that, the

Bundesliga clubs benefit separately from the income

from foreign marketing. The German champion

receives EUR 4.0 million from this source, while an

average of EUR 0,518 million goes to the club in 18th

position on the league table.

Sponsorship

Nor has the Bundesliga lost any of its attraction as an

advertising forum. On the contrary, the clubs can look

back on a successful season with further increases in

income from sponsorship and other revenue sources.

The Bundesliga therefore continues to be a growth

sector, with professional management ensuring that

the economic basis is in place for an exciting competition

and so guaranteeing a highly attractive product

for fans, media partners and, above all, sponsors.

The continuing attractiveness and the strong television

presence also ensure great interest in the advertising

industry. In an anonymous survey conducted by the

trade magazine “Sponsors”, the clubs' leading sponsors

awarded the Bundesliga's image a score of 2.18 on a

scale of 1-6, 1 being the highest mark. The average rating

of 1.75 for the Bundesliga as an advertising platform

is an outstanding achievement. Interest on the part of

sponsors may also be linked to the enormous level of

brand recognition enjoyed by the Bundesliga. 98.7% of

those questioned had heard of the top German division.

4 th Round

16 September 2006

BVB 1:0 Hamburger SV

5 th Round

22 September 2006

Bor. M’gladbach 1:0 BVB

108

Guerrero (left) and Ljuboja (right)

watch as Wörns jumps for the header.

Brzenska is already hoping for the goal...

The scene that possibly decided the

match: Frei is beaten by Keller, which

created the counter attack that led to 1:0.


GROUP MANAGEMENT REPORT

GROUP STRUCTURE AND BUSINESS

Group legal structure

The Group management report is based on the consolidated

group of Borussia Dortmund GmbH & Co.

KGaA. In addition to its core activities of football and

the marketing of SIGNAL IDUNA PARK, Borussia

Dortmund is involved in lines of business related to

football. At present, the Company holds direct and

indirect interests in the following companies: BVB

Stadionmanagement GmbH (100.00%), goool.de

Sportswear GmbH (100.00%), Sports & Bytes GmbH

(100.00%), BVB Merchandising GmbH (100.00%),

BVB Stadion GmbH (99.74%), BVB Beteiligungs-

GmbH (94.90%), B.E.S.T. Borussia Euro Lloyd

Sports Travel GmbH (51.00%) and Orthomed GmbH

(33.33%).

Some of these companies have concluded mutual

control and/or profit and loss transfer agreements.

Borussia Dortmund GmbH & Co. KGaA

100%

100%

goool.de

sportswear GmbH

BVB Stadionmanagement

GmbH

94,90%

94,90%

BVB Stadion GmbH

5,10%

BVB

Beteiligungs-GmbH

5,10%

BV. Borussia 09

e.V. Dortmund

100%

BVB Merchandising

GmbH

100%

Sports & Bytes GmbH

51,00%

B.E.S.T.

Borussia Euro Lloyd

Sports Travel GmbH

49,00%

Hogg Robinson Germany

GmbH & Co. KG

33,33%

Orthomed GmbH

66,67%

Other shareholders

6 th Round

29 September 2006

BVB 2:2 Hannover 96

7 th Round

15 October 2006

Cottbus 2:3 BVB

Borussia devastated: Even two goals by

Smolarek (on the ground) were not

enough to secure a victory against a

rejoicing Hanover.

Two goals by a defender: Brzenska (here

against Kioyo) scored twice in a match

for the first time in the Bundesliga.

109


Borussia Dortmund

BVB Merchandising GmbH

Despite an unconvincing season from a sporting point

of view, BVB Merchandising GmbH, which was spun

off from Borussia Dortmund GmbH & Co. KGaA on

1 July 2005, was able to benefit from the positive

trend of interest in and loyalty to BVB, and the associated

demand.

An increase of EUR 1.2 million in revenues to EUR

5.3 million was achieved compared with the 2005/2006

financial year. In its operating business, BVB Mer -

chandising GmbH generated an earnings contribution

to consolidated earnings of EUR 0.5 million.

GmbH. This channel alone recorded growth of

around EUR 0.4 million, and therefore accounts for

approximately 29% of all income from retailing. The

reasons for this are the new online shop and the po -

sitive reception of the fan merchandise catalogue.

Sports & Bytes GmbH

A further increase in the revenues of Sports & Bytes

GmbH, which rose by EUR 28 thousand to

EUR 729 thousand, was achieved compared with

the previous financial year, while earnings of

EUR -2 thousand (prior year EUR 55.7 thousand)

were almost at break even.

Major contributory factors to this were the revamped

product range, focused more specifically on areas of

demand, and the creation of new sales channels,

together with the optimisation of existing ones.

By converting the August Lenz building into a modern

fan shop on two levels, Borussia Dortmund has

addressed what has hitherto been a strategic shortcoming,

namely the lack of a fan shop directly next to

SIGNAL IDUNA PARK. At the beginning of 2007,

the fourth fan shop located in Dortmund created an

additional sales channel, giving supporters access to

the complete range of fan merchandise even on match

days, both before and after the game, with a floor

space of around 600 square metres. But even apart

from match operations, the new fan shop is receiving

a warm reception from customers thanks to the plentiful

supply of parking spaces and the growing number

of other services available around SIGNAL IDUNA

PARK, such as the professional stadium tours and the

new Strobels bar and restaurant for supporters.

Mail order via the Internet has now become the most

important sales channel for BVB Merchandising

The responsibilities of Sport & Bytes, a whollyowned

subsidiary, continue to be the optimisation

and implementation of IT processes, as well as the

design and development of the BVB website.

Borussia Dortmund's website is currently recording

the highest number of web visitors since its launch,

with up to 12.5 million hits per month on the

German-language football pages alone. In addition

to the 150 or so news items monthly just relating to

football, BVB TV, the Netradio service with live

reports from the Bundesliga games and the BVB

club have become firmly established media. The

review of the season produced by Sports & Bytes

GmbH, now already in its third year of publication,

is also highly popular.

At the same time, demand is rising from non-Group

companies for consultancy and design assistance in

setting up their own websites and making photographic

and video material available.

New business opportunities are therefore opening up

to Sports & Bytes GmbH in addition to its original

area of activity.

8 th Round

20 October 2006

BVB 1:1 VfL Bochum

DFB Cup

24 October 2006

BVB 0:1 Hannover 96

110

With this spectacular move Pienaar set up

the equaliser in the home match against

the regional neighbour VfL Bochum.

Dariusz Zuraw wins the battle against

Ebi Smolarek.


GROUP MANAGEMENT REPORT

Sports & Bytes GmbH recently completed work on a

completely redesigned website and on the Internet

portal meinBVB (“my BVB”), which allows customers

to maintain their personal data themselves and

enables them to use a single login to access all aspects

of BVB's Internet presence. In addition to the advantages

for customers, the new portal with its single

login also benefits Borussia Dortmund GmbH & Co.

KGaA and its subsidiaries. By integrating the Groupwide

ERP system, access to an improved and more

up-to-date customer base can be achieved.

goool.de Sportswear GmbH

Following the buyback of the stadium shares by

means of a purchase agreement dated 12 May 2006,

goool.de Sportswear GmbH, a wholly-owned subsidiary,

directly and indirectly holds 99.74% of the

shares in BVB Stadion GmbH. The company's earnings

for the financial year under review were impac -

ted by net finance costs amounting to EUR -3.3 million

as a result of financing the stadium shares.

goool.de Sportswear GmbH is a manufacturer of

sports articles and finished the 2006/2007 financial

year with a loss before transfers to the KGaA

amounting to EUR 3.4 million (prior year EUR -1.3

million).

B.E.S.T. Borussia Euro Lloyd Sports

Travel GmbH

Borussia Dortmund GmbH & Co. KGaA has a 51%

interest in Borussia Euro Lloyd Sports Travel GmbH.

management services and organises sports-related

and incentive trips.

B.E.S.T. Borussia Euro Lloyd Sports Travel GmbH

closed the financial year with a profit of EUR 116

thousand.

BVB Stadionmanagement GmbH

(formerly: Westfalenstadion

Verwaltungs GmbH)

The object of the business activities of BVB Stadion -

management GmbH, trading as Westfalen stadion

Dortmund Verwaltungs – GmbH until 25 August

2006, is the provision of personnel and other services

for the management and administration of the

operating facilities of Borussia Dortmund GmbH &

Co. KGaA, in particular SIGNAL IDUNA PARK.

In October 2006, BVB Stadionmanagement GmbH

entered into a profit and loss transfer agreement with

Borussia Dortmund GmbH & Co. KGaA. The company

ended the financial year with a net profit

amounting to EUR 120 thousand before transfers.

Orthomed GmbH

Borussia Dortmund has a 33.3% interest in Ortho -

med Medizinisches Leistungs- und Reha bili tations -

zentrum GmbH. The business of the company in the

most recent financial year consisted of all kinds of

rehabilitation activities, in particular services relating

to extended ambulant physiotherapy under medical

supervision.

B.E.S.T offers all the specific services of a travel

operator combined with the expertise of a sports specialist

under one roof. In addition to business and

private travel services, the company provides event

Orthomed offers an all round concept for medical

rehabilitation, particularly for competitive athletes.

All of Borussia Dortmund's sporting departments are

therefore also attended to by Orthomed.

9 th Round

28 October 2006

1. FC Nuremberg 1:1 BVB

10 th Round

4 November 2006

BVB 1:1 Arm. Bielefeld

Tinga gets through in the penalty area

and gives keeper Schäfer no chance to

save from a tight angle.

Artistic: Pienaar against Bielefeld’s Kauf,

who should later set up Wichniarek's

goal for Arminia's 1:0 lead.

111


Borussia Dortmund

In the most recent financial year, gross revenue

increased slightly by EUR 44 thousand, while the net

profit for the year ended 31 December 2006 amounted

to EUR 57 thousand (previous year: EUR 149

thousand).

BVB Beteiligungs-GmbH

The newly formed BVB Beteiligungs-GmbH was

entered in the commercial register on 2 May 2006.

The company holds 5.1% of the shares in BVB

Stadion GmbH.

BVB Stadion GmbH

Following the buyback of the stadium shares, the

holding company for SIGNAL IDUNA PARK is

almost wholly-owned by the BVB Group. B.V.

Borussia 09 e.V. Dortmund holds 5.1% of the shares

in BVB Beteiligungs-GmbH, which, in turn, holds

5.1% in BVB Stadion GmbH. Therefore the club has

an indirect 0.26% holding in BVB Stadion GmbH as

a minority shareholder. The remaining 99.74% is

held by the BVB Group via goool.de sportswear

GmbH and BVB Beteiligungs-GmbH.

BVB Stadion GmbH is the legal successor company

to Westfalenstadion Dortmund GmbH & Co. KG.

On 29 June 2006, the company entered into a lease

agreement with Borussia Dortmund GmbH & Co.

KGaA for the use of SIGNAL IDUNA PARK with a

fixed term until 30 June 2027.

BVB Stadion GmbH concluded a profit and loss

transfer agreement with goool.de Sportswear GmbH

on 3 August 2006. The net loss for the financial year

from 1 July 2006 to 30 June 2007 determined in

accordance with IFRS amounted to EUR -3.4 million

before profit and loss transfers (previous year:

EUR -9.9 million).

As a result of the profit and loss transfer agreement

entered into on 24 August 2006, the loss amounting

to EUR -0.3 million, caused by the costs of financing

the shareholding, will be transferred to goool.de

sportswear GmbH.

ORGANISATION OF MANAGEMENT

AND CONTROL

The general partner, Borussia Dortmund Geschäfts -

führungs-GmbH, is responsible for management and

representation of Borussia Dortmund GmbH & Co.

KGaA. This limited liability company (“GmbH”) is in

turn represented by its Managing Directors Hans-

Joachim Watzke and Thomas Treß; its sole shareholder

is Ballspielverein Borussia 09 e.V. Dortmund.

The remuneration of the Managing Directors is made

up of fixed and performance-related components, with

the latter based on the consolidated net profit for the

year before income taxes.

The following chart shows the structures and responsibilities

as between Ballspielverein Borussia 09 e.V.

Dortmund, Borussia Dortmund GmbH & Co. KGaA

and Borussia Dortmund Geschäftsführungs-GmbH.

11 th Round

7 November 2006

BVB 0:0 Aachen

12 th Round

10 November 2006

Werder Bremen 1:3 BVB

112

It was not Dede's fault that Borussia did

no better than 0:0 against Alemannia

(tackle with Ebbers).

Sahin – here against Schulz – had a

strong match at the Weser and set up

the first two goals.


GROUP MANAGEMENT REPORT

Ballspielverein

Borussia 09 e.V. Dortmund

elects

Executive

Board

appoints

Members Meeting

Council of

economic affairs

Borussia Dortmund

Geschäftsführungs-GmbH

(General Partner)

appoints and supervises

elects

Borussia Dortmund

GmbH & Co. KGaA

Supervisory Board

Advisory Board

Managing Directors

(Consisting of members of the Executive Board,

Council of economic affairs and non-voting,

associated members)

No right of appointment, only right of supervision

General Shareholders’ Meeting

The rights and duties of the KGaA's Supervisory

Board, which is appointed by the General

Shareholders' Meeting, are limited. Specifically, it

has no authority with respect to matters involving

personnel, i.e., no authority to appoint and dismiss

managing directors at Borussia Dortmund Ge -

schäftsführungs-GmbH or to regulate the terms of

their contracts. Nor is the Supervisory Board authorised

to adopt internal rules of procedure for the

general partner or issue any list of transactions

requiring its consent. Rather, such rights and duties

are vested in the governing bodies of Borussia

Dortmund Geschäftsführungs-GmbH, namely its

Advisory Board and the Executive Committee created

by the Advisory Board.

The members of the Supervisory Board are as follows:

Gerd Pieper (Chairman)

Proprietor and Managing Director of

Stadtparfümerie Pieper GmbH, Herne

Harald Heinze (Deputy Chairman)

Ruedi Baer

Founder and CEO of the mobilezone group,

Watt (Switzerland)

Othmar Freiherr von Diemar

Proprietor and manager of Othmar von Diemar

Vermögensverwaltung + Beratung, Cologne

Bernd Geske

Managing partner of Bernd Geske Lean

Communication, Meerbusch

Patrick Albert Lynch

Bank employee, London,

(until 26 February 2007)

Christian Kullmann

Head of the corporate communications division

and board office of RAG Aktiengesellschaft, Essen

(since 23 May 2007, by decision of the Local

Court of Dortmund dated 21 May 2007)

13 th Round

18 November 2006

BVB 1:2 Hertha BSC Berlin

14 th Round

25 November 2006

Frankfurt 1:1 BVB

Kringe kept trying to push the game forward.

But here he was stopped by

Samba.

Tinga shoots, but his shot is blocked.

Only in the 79 th minute did Smolarek

(right) score for the final score of 1:1.

113


Borussia Dortmund

Within Borussia Dortmund GmbH & Co. KGaA,

there are four independent areas of responsibility

below the management, namely, communications,

sports, finance and organisation. The responsible

employees and the divisions for which they are responsible

can be seen from the following chart.

BORUSSIA DORTMUND GmbH & Co. KGaA

Management

Hans-Joachim Watzke

[Chairman]

Management

Thomas Treß

Communications Sport Finance Organisation

J. Schneck

M. Zorc M. Knipping Dr. C. Hockenjos

Corporate

communications

Professional football

Finances and

accounting

General

organisation

Sport communications

Amateurs

Controlling

Stadium management

Publications

Youth

Investor Relations

Match organisation

Fan support

Training fields

IT (Information

Technology)

V.I.P. – Hospitality

Stadium announcements

and program

Personnel

Sportfive

(sponsors)

PR work

Risk Management

Events

Complaints

management

Merchandising

DFB/DFL

Affiliates

Ticketing

Sportfive (Commission

processing)

Real estate

Third party events

15 th Round

2 December 2006

BVB 1:0 VfL Wolfsburg

16 th Round

10 December 2006

FC Schalke 04 3:1 BVB

114

Hofland wins this tackle against

Smolarek – but in the decisive scene

Smolarek prevails.

Valdez suffered a serious knee injury

during this tackle with Pander (who

was not at fault).


GROUP MANAGEMENT REPORT

INTERNAL MANAGEMENT SYSTEM

Sports management

The great challenge for the future will be to play

football successfully with a cost-optimised budget. In

order to achieve this aim, BVB will continue to try to

present a strong, competitive team in the future and,

in this respect, will back young players with potential,

who will create a healthy mixture with the seasoned

players. This will create a realistic chance of qualifying

for international competitions.

The sporting aims will be aligned with financial circumstances.

This means that the salary budget will

generally be tied to realistic sporting objectives and

that the target for the sporting management with

Mr. Watzke, Mr. Zorc and the coach will be to lead

BVB into an international competition again in the

next few years. This would increase the financial flexibility

for acquiring new players, although no

unknown risks will be taken. There will be no new

debt in order to strengthen the team.

Financial management

One of the main aims of BVB's management is to

increase profitability in the long-term and thus to

further improve the Group's equity resources. In

addition, there is a focus on financial strength. As

well as a constant improvement in the operating

result, generating positive cash flow is therefore the

most important financial objective of our Company.

We are seeking to optimise cash flow by concentrating

on the impacting factors of “operating results”

and “investments”.

The operating result is the most important indicator

for measuring success. For us, the operating result

means earnings before interest and taxes (EBIT).

Therefore we are constantly monitoring the operating

results in all lines of business and areas of responsibility

based on monthly comparisons between the

budget and the actual situation. The most important

drivers for the operating result are further improvement

in sales revenues in the major revenue sources

of ticketing, sponsorship, TV marketing and merchandising,

and disciplined management of operating

expenses.

In coming years we will concentrate on achieving the

best possible balance between limiting operating

expenditure and, at the same time, generating sales

growth. In this respect, the decisive factor is qualifying

for international competitions.

Capital management

In addition to securing the KGaA's equity as determined

in accordance with HGB, the management's

capital management responsibilities also include stabilising

and increasing the consolidated equity as

determined in accordance with IFRS. We will reach

these targets, in particular, by improving the operating

result and through effective investments.

The utilisation of the authorised capital with a nominal

amount of EUR 21.9 million resolved by the

extraordinary General Shareholders' Meeting on 15

August 2006 represents an instrument enabling management

to respond flexibly to future requirements

for capital. The same applies to the ability to issue

17 th Round

17 December 2006

BVB 1:2 Leverkusen

18 th Round

26 January 2007

BVB 3:2 FC Bayern

Two of the three goal scorers in one picture:

Amedick, who had bad luck in hitting

the post, in a duel with Voronin.

Even van Bommel could not stop an out -

standing Frei that evening. Pienaar watches

on the left.

115


Borussia Dortmund

convertible bonds and bonds with warrants (conditional

capital with a nominal amount of EUR 14.6

million). At the present time, however, the management

has no specific plans to make use of these

instruments.

CORPORATE STRATEGY

Borussia Dortmund's aim is to establish itself over the

medium-term as one of the leading German football

clubs after Bayern Munich. Following the successful

implementation of the reorganisation, the restructuring

of our financial liabilities and the first mode -

rate investments in the professional squad, we

consider ourselves to be on the right path.

The financial foundations of the first and to date only

listed German football company have been expanded

with the exclusive marketing right for SIGNAL

IDUNA PARK, more effective use of the “Borussia

Dortmund” brand and the establishment of footballrelated

lines of business. However, the core business

will in future also be professional football together

with its classic income sources of TV marketing, sponsorship,

ticketing and merchandising. For the following

reasons, BVB is convinced that it will be able to

further stabilise and expand its position:

Borussia Dortmund is in sporting terms one of

the most successful, well known and most popular

German football clubs with an outstanding fan

base that provides BVB with one of the highest

average numbers of spectators in Europe.

• A football company can only be financially successful

if it enjoys sporting success in the long

term. In order to make its financial performance

less dependent on short-term sporting success in

the future, Borussia Dortmund will push ahead

further with national and international marketing

of its brand name.

• Germany continues to be Europe's largest football

market, which, however, is behind some other

European markets in financial terms. This provides

great growth potential.

All financial activities at Borussia Dortmund are oriented

around the target groups that are relevant for

a football club: Its fans, members and business partners.

Products and services should be tailored to

these groups in the best way possible. Through its

existing brand potential, Borussia Dortmund intends

to utilise all the commercial opportunities presented

by professional club football in an international context

for the benefit of the shareholders.

The current business strategy can principally be summarised

as follows:

• Strengthening the financial condition

• Sustainable adjustment of sporting perspectives

• Intensifying the promotion of up and coming

talent

• Fan involvement

• Utilisation of the “Borussia Dortmund” brand

19 th Round

31 January 2007

FSV Mainz 05 1:0 BVB

20 th Round

4 February 2007

BVB 0:1 VfB Stuttgart

116

Niculae tries to thread the ball past

Kruska. Metzelder watches the situation

in the background.

Metzelder tackling goal scorer Gomez.

“Metze” was unfortunate that his header

was cleared off the line


GROUP MANAGEMENT REPORT

However, financial and business development is

largely dependent on sporting success. Since sporting

success can only be planned to a very limited

degree, the best management can do is to create a

foundation for success. Investments, particularly in

the professional squad, are therefore a necessary prerequisite

for achieving sporting objectives, such as

qualifying for the UEFA Cup. However, in order to

meet financial goals, planned investments and decisions

must under certain circumstances be postponed

to the extent these would only be possible by incurring

new debt. Moreover, a player may be sold based

on financial considerations in cases where this would

not have happened had the decision been made

based solely on sporting criteria.

In such cases, management weighs up the opportunities

and risks to find a solution that is broadly in line

with our strategic objectives from a medium-term

point of view.

We plan to further increase gross revenue in the

medium term. The first steps in bringing us closer to

this goal have been taken with the marketing of the

stadium name, the new main sponsor agreement with

RAG and the conclusion of the new TV agreement

by DFL. Moreover, further significant revenue

potential is available, especially by qualifying for

international competitions, which would have a positive

effect on all Borussia Dortmund's revenue

sources.

A conflict, or a situation where sporting considerations

and financial considerations affect each other

adversely, therefore arises between the pursuit of

financial interests and sporting interests, particularly

if the club continually falls short of its sporting goals.

Positive operating results and moderate investments,

mainly in the professional squad, depending on those

results, are expected to enable Borussia Dortmund

GmbH & Co. KGaA to achieve stable, positive cash

flows over the long term.

21 st Round

10 February 2007

Hamburger SV 3:0 BVB

22 nd Round

17 February 2007

BVB 1:0 Bor. M’gladbach

The scene that resulted in the penalty:

Mahdavikia dives in front of Weidenfeller,

referee Wagner falls for the performance.

After the final whistle: the twins David

and Philipp Degen. Both had their opportunities

to score...

117


Borussia Dortmund

POSITION OF THE COMPANY

RESULTS OF OPERATIONS

In the past financial year for the 2006/2007 season,

the Borussia Dortmund Group achieved an increase

in revenues compared with the previous season of

9.1%, from EUR 89.1 million to EUR 97.1 million,

in its core business activities of ticketing, sponsorship,

TV rights, catering, licences and transfers.

Borussia Dortmund Group – Revenues in per cent

21%

7%

19%

31%

22%

Transfer income

Ticketing

TV rights

Sponsorship

Catering, licences and other

23 rd Round

24 February 2007

Hannover 96 4:2 BVB

24 th Round

4 March 2007

BVB 2:3 Cottbus

118

During the game in Hanover, Valdez did

not have his nerves under control. Here

he starts a fight with Vinicius.

Left: referee Fandel.

Three goals (of which only two counted)

– and still Frei had to be consoled

by Cvitanovic.


GROUP MANAGEMENT REPORT

SALES DEVELOPMENT

Despite a season with few high points from a sporting

point of view, the Group again achieved an

increase in revenues of EUR 8.0 million. In addition

to the new basis of allocating TV marketing

income which came into effect in the past financial

year, the 9.1% increase is owed mainly to the loyalty

of the supporters and sponsors, because substantial

revenue growth was recorded both in ticket

sales (+6.2%) and in income from sponsorship

(+11.4%).

Borussia Dortmund Konzern – Revenues in EUR millions

100

6,8

75

50

12.4

17,2

14,8

20,2

21,3

25

27,4 30,5

17,2 18,3

0

2005/06 2006/07

Transfer income Catering and licences incl. other TV marketing Sponsorship Ticketing

25 th Round

10 March 2007

VfL Bochum 2:0 BVB

26 th Round

17 March 2007

BVB 0:0 1. FC Nuremberg

Here Weidenfeller still manages to save:

Borussia's keeper stops an early goal

from Gekas. Left: Wörns.

He brought new energy: Together with

Tinga, Marc Kruska (right) attacks

Nuremberg's Jan Polak.

119


Borussia Dortmund

Details of the performance of the individual revenue

sources are provided in the following paragraphs.

Income from ticketing

Borussia Dortmund's receipts from match operations,

i.e. income from ticketing and friendly games,

increased by EUR 1.1 million to EUR 18.3 million

in the past financial year for the 2006/2007 season.

The largest individual contribution to growth amo un -

ting to EUR 0.7 million was made by income from

Bundesliga match and season ticket sales. In addition

the home game against Hannover 96 in the second

main round of the DFB Cup generated a surplus of

EUR 0.1 million, while various friendly games and

match operations for the regional league team provided

additional income of EUR 0.3 million.

The average number of spectators was increased

from 71,378 to 72,164, despite lower season ticket

sales compared with the previous year and a rather

difficult season from the sporting point of view, with

the club's participation in the first division next season

not made certain until the 32nd match day. On

an international basis, Borussia Dortmund therefore

continues to occupy third place in terms of numbers

of spectators behind Manchester United and Real

Madrid, despite not participating in an international

competition.

The loyalty of the club's supporters, even following

an unsuccessful sporting season, is made clear by the

number of season tickets already sold for next season.

With 50,549 tickets sold for the 2007/2008

season, Borussia Dortmund has beaten its own

Bundesliga record of 50,415 season tickets sold for

2003/2004. By comparison: On average, 20,450 season

tickets were sold in the Bundesliga for the

2006/2007 season.

Income from sponsorship

Borussia Dortmund's income from sponsorship

conformed to the upward trend enjoyed by all clubs

in the Bundesliga and reached EUR 30.5 million,

thus exceeding the EUR 30 million target for the

first time.

Despite not participating in an international competition,

BVB's games were watched by an average

of 72,164 spectators and therefore represented an

attractive advertising platform, especially for

regional companies. The creation of additional

capacity for perimeter boards also created the

opportunity to offer perimeter board advertising to

new potential clients.

In addition to RAG, acting as main sponsor for the

first time in the last financial year, and SIGNAL

IDUNA, which has given its name to the largest

stadium in the Bundesliga, Borussia Dortmund and

its marketing partner SPORTFIVE succeeded

once again in increasing the number of so-called

“champion partners” and partners compared with

the previous year.

The development of the hospitality areas also made

a substantial contribution to the increase in income

from sponsorship. In addition to the reserved seating

area in the West Stand at SIGNAL IDUNA PARK

which has been fully booked for years, the new

Business Club 09 concept was gratefully received by

many customers. Not only does it offer participants

the chance to experience all BVB matches at

SIGNAL IDUNA PARK close up, it also creates the

opportunity to benefit from the “Borussia Dort -

mund” phenomenon away from the pitch. The number

of seats sold was more than double the previous

year's figure. Regular meetings on journeys to away

games and many other events promote a constant

27 th Round

30 March 2007

Arm. Bielefeld 1:0 BVB

28 th Round

7 April 2007

Aachen 1:4 BVB

120

Relegation battle: Following the 0:1 in

Bielefeld (here Schuler), BVB slipped

with Valdez to 17 th position.

Outstanding: Tinga played his best match

to date in the BVB strip at the Tivoli.

Here he leaves Aachen's Pinto behind.


GROUP MANAGEMENT REPORT

exchange between the companies and Borussia

Dortmund. The successful development of this initiative

is reflected in the figures, with an increase in

advertising income from Business Club 09 of 120%.

Incentive packages were also especially heavily

booked by business customers during the last financial

year. These enable companies to invite their

guests to SIGNAL IDUNA PARK on individual

match days, independently of a season package. In

order to satisfy all the requests in this segment, the

indoor golf area located at the south of SIGNAL

IDUNA PARK and the newly built Conference

Center were converted into hospitality areas on

match days.

Income from TV marketing

Income from TV marketing amounted to EUR 21.3

million in the past financial year and was therefore

approximately EUR 6.5 million higher than in the

previous year. The reason for this was the new TV

agreement which came into effect for the first time

in the 2006/2007 season, under which the clubs in

the Bundesliga and the Second Bundesliga will

receive around EUR 1.2 billion over three years.

This represents an increase in the amount distri -

buted annually of around 40% compared with the

previous TV agreement. As well as the increase in

the amount distributed, a new basis of allocation was

also introduced at the start of the past financial year

under which the football clubs are ranked in order

of preference, using a weighted method of calculation

based on the last four years' seasons. In addition,

a bonus is paid at the end of the season depending

on the club's position on the league table.

Although Borussia Dortmund occupied ninth position

on the table on average during the season, it

benefited from its positions in previous years and

continues to rank seventh on the allocation list.

The absence of the live game in the DFB Cup and

the club's non-participation in the UI Cup resulted

in a loss of income of around EUR 0.3 million, but

the promotion of the amateur squad to the regional

league and the associated TV receipts made up

for this.

Transfer income

Income from transfers recorded a decline of EUR

5.6 million to EUR 6.8 million. While three key players

with unexpired contracts, Henrique Ewerthon,

Niclas Jensen and Tomas Rosicky, were sold in one

go in the 2005/2006 financial year, in the most recent

season Borussia Dortmund only said goodbye to

David Odonkor, who transferred to the Spanish first

division club Betis Sevilla following an outstanding

World Cup.

Income from catering and licences

including other income

Borussia Dortmund achieved income from catering,

licences, merchandising and other income of

EUR 20.2 million in the 2006/2007 financial year

compared with EUR 17.2 million in the 2005/2006

financial year.

The growth in income mainly reflected the performance

in catering and a substantial increase in retail

sales at BVB Merchandising GmbH.

The marketing successes already mentioned in the

context of sponsorship also had an impact here,

because the majority of agreements with business

customers provide for an element of catering ser vices

as well as advertising space. This item continues to

include income from catering on match days, the sale

of publications, advance booking fees and licence fees

for events at SIGNAL IDUNA PARK on non-match

days. The latter also recorded an upward trend, as did

29 th Round

15 April 2007

BVB 0:2 Werder Bremen

30 th Round

21 April 2007

Hertha BSC Berlin 0:1 BVB

Stumble: Metzelder & Co had to face the

last defeat for five weeks against Wiese’s

Werder Bremen.

Scorer of the winning goal on the Spree:

Markus Brzenska. First to congratulate him

are Ebi Smolarek (left) and Florian Kringe.

121


Borussia Dortmund

catering income in the circulation areas at SIGNAL

IDUNA PARK, which were able to achieve an

increase of EUR 0.20 in spending per head thanks to

a wider range of items offered. Income in this area

will also participate in the general upward trend in

future as a result of the construction of the

Conference Center, a state-of-the-art conference

facility, and the letting of the Center by Stadionlive

GmbH, which has been marketing and organising the

other events successfully since 2005.

Despite an unconvincing season from a sporting

point of view, BVB Merchandising GmbH, which

was spun off from Borussia Dortmund GmbH & Co.

KGaA on 1 July 2005, was able to benefit from the

positive trend of interest in and loyalty to BVB, and

the associated demand, and to increase its revenues

accordingly.

Other operating income achieved growth of around

EUR 5.3 million to EUR 8.9 million in the most

recent financial year. This item included receipts

from distributions and allocations of profit from the

FIFA 2006 World Cup, which alone accounted for

income of EUR 4.6 million.

DEVELOPMENT OF SIGNIFICANT

OPERATING EXPENSES

Personnel expenses

A further reduction of EUR 2.8 million was achieved

in personnel expenses which amounted to EUR 37.0

million compared with EUR 39.8 million in the

2005/2006 financial year. A reduction in expenses of

around EUR 2.2 million was once again achieved in

the professional match operations area alone, despite

several changes of coach.

Depreciation and amortisation

Depreciation and amortisation fell as planned by

EUR 0.7 million compared with the previous year to

EUR 13.5 million.

Other operating expenses

Other operating expenses amounted to EUR 36.6

million in the 2006/2007 financial year compared with

EUR 46.3 million in the previous year. The decline

mainly reflected the fall in transfer expenses, lower

legal and advisory costs and a reduction in valuation

allowances on receivables. This was offset principally

by higher marketing commissions.

FINANCIAL CONDITION

ANALYSIS OF CAPITAL STRUCTURE

With the capital increase resolved by the extraordinary

General Shareholders' Meeting on 15 August 2006, the

share capital of Borussia Dortmund GmbH & Co.

KGaA (previously EUR 43.875 million) rose by EUR

17.550 million to EUR 61.425 million, while equity,

after taking into account the net profit for the year,

increased to EUR 86.536 million compared with EUR

37.624 million in the previous year. The equity ratio

therefore improved from 13.6% to 33.5% as planned.

The funds generated by the capital increases in the

previous and current financial years have been used

31 st Round

28 April 2007

BVB 2:0 Frankfurt

32 nd Round

5 May 2007

VfL Wolfsburg 0:2 BVB

122

Alexander Frei – here against Chris – “shot

down” Eintracht almost by himself with two

attractive free kicks.

In the third last round, Valdez scored

the longed-for first goal for BVB. Van

der Leegte cannot stop him.


GROUP MANAGEMENT REPORT

mainly to reduce financial liabilities, achieve a more

manageable debt maturity structure and obtain

improved interest-rate terms. Liabilities were

reduced significantly compared with the previous

year from EUR 239.8 million to EUR 171.6 million.

Current liabilities fell from EUR 99.7 million to

EUR 36.3 million as a result of the repayment of liabilities

following the capital increases.

Additions to property, plant and equipment amounted

to EUR 3.869 million. Significant individual

investments worthy of mention were the conversion

of the former offices at the stadium, the August Lenz

building, into a fan shop and the construction of a

conference centre on Level 4 of the stadium's North

Stand.

ANALYSIS OF LIQUIDITY

Non-current liabilities declined by EUR 4.8 million

during the financial year to EUR 135.3 million.

ANALYSIS OF INVESTMENTS

Additions to intangible assets amounting to EUR

13.931 million related almost entirely to investments

in the professional squad.

As at 30 June 2007, the Borussia Dortmund Group

held cash of EUR 13.905 million, of which EUR

0.019 million was subject to restrictions. In addition,

the revolving credit facility granted by Morgan

Stanley for EUR 10.000 million and an overdraft

facility of EUR 2.500 million are available to the

Group for their full amounts. The cash flow statement

gives details of the development of liquidity.

NET ASSETS

The Group's total assets declined from EUR 277.4

million to EUR 258.2 million. The substantial

improvement of EUR 48.9 million in consolidated

equity contrasted with reductions in liabilities

(in particular short-term financial liabilities) of

EUR 68.1 million, financed mainly from cash funds

and the capital increase referred to above.

OVERALL SUMMARY OF RESULTS OF OPERATIONS,

FINANCIAL CONDITION AND NET ASSETS

The results of operations, financial condition and net

assets of Borussia Dortmund showed significant positive

development following the successful implementation

of the reorganisation measures and the

completed restructuring of the liability side of the

balance sheet. Particular mention should be made of

the improvement in the operating result, the Group's

equity resources and the reduction in liabilities,

which will once again allow BVB room for manoeuvre

in its future sporting development.

33 rd Round

12 May 2007

BVB 2:0 FC Schalke 04

34 th Round

17 May 2007

Leverkusen 2:1 BVB

Total commitment: Christian Wörns in a

tackle against the Schalke player, Gerald

Asamoah. BVB wins 2:0.

The last chance of the 2006/2007 season:

Lars Ricken just misses Leverkusen's goal

in time added on.

123


Borussia Dortmund

COMPENSATION REPORT

The structure of the compensation system for management

is determined and regularly reviewed by the

Executive Committee of the Advisory Board. The

Executive Committee is also responsible for determining

the compensation of management in detail

and sets the appropriate amount of compensation.

The principal criteria for determining the appropriate

amount of compensation are the responsibilities of

the particular member of management, their personal

performance and the financial condition, success

and future prospects of Borussia Dortmund.

As well as annual payments not related to performance

and based on market rates at comparable companies,

the compensation includes a performancerelated

component that is based on consolidated

earnings before taxes. In addition, special payments

can be made on the basis of resolutions approved by

the Executive Committee of the Advisory Board.

The component not related to performance comprises

a fixed annual salary and benefits in kind,

mainly derived from the amounts required to be taken

into account in accordance with tax regulations

e.g. for the use of company cars.

The Supervisory Board's compensation is governed

by § 13 of the Articles of Association, pursuant to

which each member of the Supervisory Board

receives fixed compensation amounting to EUR 7

thousand; the Chairman receives twice that amount,

while the Deputy Chairman receives one and a half

times that amount. Value-added tax is reimbursed

to the members of the Supervisory Board.

DFB Cup

4 August 2007

1. FC Magdeburg 1:4 BVB

1 st Round

12 August 2007

BVB 1:3 MSV Duisburg

124

In overcoming Magdeburg, Tinga and

Co were not quite as in control as the

result suggests.

Sebastian Kehl in a tackle against the

Duisburg player, Manasseh Ishiaku.


GROUP MANAGEMENT REPORT

RISK REPORT

In the course of its business activities, Borussia

Dortmund is constantly exposed to risks which may

have a negative effect on the Company's operations.

The identification, assessment and management of

these dangers define the areas of responsibility of a

company's risk management system.

RISK MANAGEMENT SYSTEM

Risk management as an ongoing task is an integral part

and major precondition of sound company management.

With the aid of a properly implemented internal

monitoring system, developments which endanger the

continued existence of Borussia Dort mund GmbH &

Co. KGaA and its subsidiaries can be recognised and

counteracted at an early stage. In the risk management

system, management has laid down principles and

guidelines to enable uncertainties to be identified and

countermeasures to be taken in good time.

Borussia Dortmund's risk management system is

integrated into the organisational structure of the

whole Company and therefore ensures that the

responsible employees maintain a high level of valueoriented

risk awareness. It implements the requirements

of the German Control and Transparency Act.

The Group-wide risk management system ensures

that risks are identified at an early stage, recorded

consistently, evaluated, managed and monitored.

Within the framework of its risk management system,

Borussia Dortmund, together with the specialist

departments, identifies, documents and evaluates

possible risks on the basis of the potential amount of

loss they may cause and their likelihood of occurring,

and collates them at the level of the corporate divisions.

The risks are categorised and steps are taken to

ensure that they are constantly monitored and that

appropriate measures to manage the risks are implemented

right from the start.

The aim of the risk management system is to obtain

information about risks and their financial and other

consequences as early as possible and to enable the

Company to take appropriate countermeasures.

Particular attention is paid to risks which could endanger

the continued existence of Borussia Dortmund

GmbH & Co. KGaA or its subsidiaries in their existing

form (high priority risk). Responsibilities have

been established for the individual corporate divisions

and the procedures to be observed and the monitoring

system have been defined as follows:

• The risk position is regularly recorded on a consistent

basis and compared with the existing data.

This enables countermeasures to be taken in

good time if negative developments can be identified.

• The executives responsible are required to

inform management immediately of any significant

changes in the risk profile.

• Constant observation of the market enables

changes in the environment to be recognised

promptly and action to be taken in response.

• Differences in the Company's results of operations

and net assets from the budgeted figures

are identified and analysed using detailed

monthly and quarterly financial reports.

2 nd Round

18 August 2007

FC Schalke 04 4:1 BVB

3 rd Round

25 August 2007

BVB 3:0 Cottbus

Gerald Asamoah's actions in this scene

with Robert Kovac do not look like a

tender embrace...

Diego Klimowicz – scorer of two goals –

heading against Cottbus.

125


Borussia Dortmund

In this context, Borussia Dortmund applies the following

principles/rules of conduct:

• Management determines the basis on which

risks are to be assessed and identified.

• The identification of risks takes place in the individual

corporate divisions since that is where

knowledge about specific risks is available.

• Risks are assessed by a group of people chosen

by the management. The criteria to be applied

are also defined by management.

The governing bodies of Borussia Dortmund are kept

regularly informed of the current risk position. The

efficiency and effectiveness of the risk management

system is examined as part of the audit carried out by

the Company's auditors.

The following paragraphs describe in more detail

the specific risks to which Borussia Dortmund is

exposed, which affect the Company's business operations

as a result of internal and external factors and may

have a major influence on them over the long term.

SPECIFIC RISKS

STRATEGIC RISKS

In addition to financial success, the primary objective

of a company participating in the football business

in the Bundesliga remains sporting success, irrespective

of business plans which do not depend on

the club's position on the league table and the maintenance

of profitability in a variety of different sporting

scenarios. This can be justified solely on the

grounds of public interest, which is largely focused

on the winning of titles. If the club has no success

over longer periods, the management is faced with a

balancing act, attempting to keep the profitability of

the company and the sporting objectives in harmony

with each other. Measures which are necessary for

sporting success, such as investments, must not be

allowed to endanger the financial objectives, for

example, ensuring adequate liquidity, even over several

years. But economic success also depends to a

large extent on sporting achievements, because winning

titles generates additional demand from spectators,

business customers, sponsors and in other

areas of the business. A conflict of objectives therefore

arises. The achievement of one company objective

may therefore necessarily entail abandoning or

modifying another objective. In such cases, management

will weigh up the risks and opportunities and

attempt to find a solution that is broadly in line with

the strategic objectives from a medium-term point

of view, while remaining within the range of defined

company performance indicators in order not to

jeopardise the financial objectives.

PERSONNEL RISKS

The available potential of its employees, from both a

sporting and a financial point of view, forms the basis

for Borussia Dortmund's future development as a

business. Their ability, commitment and performance

will play a decisive role in future sporting and financial

success.

In this regard the professional squad is of critical

importance. The wrong investments in this area

would have far-reaching effects on the Company's

sporting objectives, and therefore financial objectives,

as would insufficient identification with the club

and a lack of commitment. To some extent, it may not

be possible to make up for the loss of key players as a

result of injury and, as a result, the ability to meet

internally defined objectives may be endangered.

The Company's success is based on making business

decisions and putting them into effect, and both are

largely determined by the quality of the relevant

employees. The structure of Borussia Dortmund's

126


GROUP MANAGEMENT REPORT

organisation is based on a clear separation of the

individual corporate divisions, which thus enables

business decisions to be analysed and prepared in

individual departments with the relevant expertise

before a decision is made for the Company as a

whole. The constant exchange between the corporate

divisions through the medium of well established

meetings contributes beforehand to optimising

the quality of the decisions made and avoiding

conflicts of objectives.

From the point of view of risk management, it is

equally indispensable for a company to be able to rely

on qualified executives and their staff. Management

and all the Company's employees have a permanent

responsibility to identify risks at an early stage, to

monitor and therefore limit them, and at the same

time to pursue business opportunities rigorously.

COMPETITIVE RISKS

Competition between football clubs, for example in

obtaining sponsors, has intensified, and not just as

result of the stadiums built for the 2006 FIFA World

Cup. Differing decisions made under the influence

of regional politics can also affect the ability to attract

and retain interested companies. In the most recent

season, in particular, sponsors have been rated differently

by regional politicians, and in some cases

have therefore been approved for certain competitors

while being simultaneously banned for others.

An additional difficulty is that there is an unusually

high concentration of competitors in North Rhine-

Westphalia in particular, with six clubs currently in

the Bundesliga and several in the Second Bun -

desliga. This can have negative consequences for

attracting sponsors based in the region because, in

contrast to other regions, there is the risk for sponsors

that they will be in conflict with each other for

potential customers.

SALES RISKS

The future performance of Borussia Dortmund's

individual lines of business depends on its sporting

success. A lack of sporting success over a long period

could have a major impact on demand for the products

offered and therefore on the achievement of

financial and sporting objectives. It is also not possible

to be fully certain in advance of the consequences

for the Company of statutory provisions.

Equally, the development of pay TV will have a longterm

effect on TV income achievable in future.

FINANCIAL RISKS

Borussia Dortmund finances itself primarily from longterm

bank loans, trade payables, season tickets paid for

in advance and payments from sponsors. The related

risks arising comprise interest-rate-related cash flow

risks, market risks, liquidity risks and credit risks. On

the other hand, the Company is not exposed to any significant

currency risks. The methods of managing the

individual types of risk are described in the following.

Under the terms of the loan agreements entered into

by Borussia Dortmund and its subsidiaries with

Morgan Stanley & Co. International Ltd., London,

England, the lender has an early right of termination

in the event of failure to maintain certain contractually

defined financial ratios (covenants).

127


Borussia Dortmund

INTEREST RATE RISKS

CREDIT RISK

The financial liabilities consist mainly of a variablerate

loan from Morgan Stanley & Co. International

Ltd., London, England, based on EURIBOR. The

interest expense associated with this loan is therefore

dependent on the future development of the general

level of interest rates. In order to minimise the

interest-rate-related cash flow risk associated with the

loan, the Company therefore entered into an interest

rate swap in respect of this loan in August 2006. The

effect of this interest rate hedging transaction is an

overall future rate of interest payable of 6.195% per

annum, irrespective of actual changes in market rates

of interest.

After taking account of this interest rate swap, all the

Company's significant financial liabilities carried a

fixed rate of interest as of June 30, 2007. Future

changes in the level of interest rates will therefore

have only a small impact on the interest expense,

even in the medium term.

The Company conducts business exclusively with

third parties of high credit standing. Concentrations

of credit risk can arise in the context of a player transfer

and from long-term sponsorship agreements.

Such concentrations of risk are monitored in the

course of the Company's operating activities.

The counterparty for the interest rate swap

described above was a major German bank with the

highest credit rating.

LIQUIDITY RISK

The Group constantly monitors the risk of possible

liquidity bottlenecks, taking into account the probable

maturities of its financial liabilities and the timing

of the expected cash flows from operating activities.

Following the restructuring completed in the

2005/2006 financial year, liquidity risks have been

sharply reduced thanks to the Company's new financing

structure, which is overwhelmingly long-term.

RISKS JEOPARDISING PERFORMANCE AND CONTINUED EXISTENCE

In order to participate in Bundesliga matches,

Borussia Dortmund requires a licence from DFL

Deutsche Fußball Liga GmbH (German Football

League, “DFL”) which is issued for each season. If

the licence were to be revoked or denied because of

failure to comply with conditions or evidence of

inability to meet financial criteria, this would result

in automatic relegation. But relegation to the Second

Bundesliga can also result from lack of sporting success.

The effects of relegation on earnings and liquidity

could jeopardise the Company's existence.

Following the successful implementation of the

restruc turing and in accordance with its current financial

condition and results of operations, Borussia

Dortmund was awarded the licences for both the

Bundesliga and for the Second Bundesliga, which had

to be applied for in view of the sporting situation, without

conditions.

In order to minimise the risk of relegation, Borussia

Dortmund has strengthened the professional squad

significantly for the 2007/2008 season and therefore

at the same time substantially improved the chances

of qualifying for international competitions in the following

season.

128


GROUP MANAGEMENT REPORT

THE RISK SITUATION IN SUMMARY

Borussia Dortmund takes appropriate measures to

counteract the risks it faces. New risks are systematically

incorporated in the risk management system

as they arise, communicated and highlighted, and a

search is made for effective countermeasures. At the

present time, there are no recognisable risks that

could endanger the continued existence of the

Borussia Dortmund Group.

Borussia Dortmund has succeeded in minimising

risks which could adversely impact its development

or jeopardise its existence. The fact that we are not

involved in competitions on an international level is

no longer a threat to Borussia Dortmund's existence.

If we succeed in qualifying for the UEFA Cup or the

Champions League, our financial condition and

results of operations will improve even further.

FORECAST REPORT

ANTICIPATED DEVELOPMENT OF THE COMPANY

After having completed the restructuring of the liabilities

of Borussia Dortmund GmbH & Co. KGaA

and the selective strengthening of its professional

squad, Borussia Dortmund should once again be in a

position in the medium term to compete for one of

the first five places on the Bundesliga table.

We will continue on the course we have set for ourselves

on a solid equity base and without exposing

ourselves to financial risks, so that BVB will once

more become a leading football club in Germany and

preferably also in Europe.

EXPECTED GENERAL ECONOMIC ENVIRONMENT

Professional football in Germany is booming as never

before. The Bundesliga's unfailing popularity with the

fans and the resulting interest of media companies and

sponsors has also made it a commercial success story.

Since the formation of the League Association

(Ligaverband) in 2000, the clubs and corporations of

professional football have not been able to produce any

figures as good as those in the past football season. And

this although the increase in TV revenues is not yet

included in the present figures because the media con-

tracts only entered into effect in July 2006. As the

KirchGruppe had been the chief source of money for

the clubs, its insolvency presented them with a major

challenge. Now, five years down the line, the league is

in a better position than ever before. Professional football

has emerged all the stronger from the crisis in the

television and advertising markets. Tough cutbacks on

the one hand, and a long-term approach to management

with a readiness to invest in the future on the

other, are starting to pay off.

129


Borussia Dortmund

EXPECTED RESULTS OF OPERATIONS

ANTICIPATED EARNINGS

DEVELOPMENT

We anticipate that, including all the control and profit

and loss transfer agreements, positive consolidated

earnings (EBIT) will be generated for the 2007/2008

season.

The amount of the operating profit cannot be forecasted

reliably on the basis of the information currently

available, because earnings depend to a large

degree on the sporting performance and on successful

transactions in the transfer market.

ANTICIPATED DEVELOPMENT

OF REVENUES

Revenues are expected to amount to between around

EUR 87 million and EUR 90 million in the 2007/2008

financial year. Qualification for the UEFA Cup or the

UEFA Champions League, or possible income from

transfers, could result in a significantly higher revenue

figure than this.

ANTICIPATED DEVELOPMENT

OF SIGNIFICANT OPERATING EXPENSES

With the exception of expenditure on the professional

squad, operating expenses will continue to decline

in the 2007/2008 financial year.

EXPECTED DIVIDENDS

Against the background of the Group's financial liabilities,

which are still high in relation to current profitability,

we are not planning any dividend distributions

in the next few financial years despite a marked

improvement in earnings. We expect that it will be

possible to discuss a dividend payment at the earliest

in 3 – 4 years' time.

EXPECTED FINANCIAL CONDITION

FINANCIAL PLANNING

CAPITAL EXPENDITURE PLANNING

As a result of the improved earnings situation and the

debt restructuring, which also includes, in particular,

long-term financing of the stadium shares, we will

again achieve a further substantial reduction in our

liabilities. This will be implemented, in particular,

through the repayment in instalments of the longterm

stadium financing as from the 2007/2008 financial

year, while the amount of the other liabilities in

the context of our operating activities will be relatively

unchanged.

Our future investment activities will be focussed on

the professional squad, further modernisation of

SIGNAL IDUNA PARK and its environs and the

construction of the Borusseum in the north-east

corner of SIGNAL IDUNA PARK.

The conversion of the August Lenz building into a

merchandising shop and catering operation, and the

construction of the Conference Center in the North

Stand, on the other hand, were completed in the past

financial year.

130


GROUP MANAGEMENT REPORT

Thus we will concentrate on the core business of

Borussia Dortmund and, in so doing, will not be

taking any financial risks which cannot be calculated

in advance. In essence, this means that we will only

be incurring capital expenditure to the extent permitted

by the anticipated financial leeway. In pre -

paring the capital expenditure budget, we will therefore

not include any uncertain sporting successes

which, if they failed to materialise, would result in

new indebtedness.

ANTICIPATED DEVELOPMENT

OF LIQUIDITY

Following the implementation of the capital increases,

the further reduction in debt consequent thereto

and the improvement in earnings, we will as from the

2007/2008 financial year be in a position to generate

substantial financial surpluses, which will significantly

improve Borussia Dortmund's room for manoeuvre

and its competitiveness.

OPPORTUNITIES

Borussia Dortmund's greatest opportunities lie in

unlocking and exploiting additional revenue potential

by participating in international competitions,

such as the UEFA Cup and the UEFA Champions

League. Participation in the UEFA Cup group phase

alone would result in additional revenues of around

EUR 5 million, generated through extra TV, ticketing

and sponsorship revenues. According to our estimations,

we would be guaranteed at least EUR 10

million in additional sales if we were to reach the

group phase of the UEFA Champions League. In

addition, an international presence would almost

certainly have a positive impact on the merchandising

business.

Participation in the national cup competitions, the

DFB Cup and the DFL League Cup, represents further

significant earnings potential. However, the

financial benefits also depend, to a large extent, on

which teams we are drawn against.

Borussia Dortmund's professional squad, which

includes a large number of young and talented players,

has enormous potential. These players will be

able in the future to lead BVB back to the top of the

table in Germany, and possibly even further. In addition

to the sporting success we are striving for, this

team will enable us to achieve a significant improvement

in profitability and offers tremendous transfer

potential for the future.

DEVELOPMENT FORECAST IN SUMMARY

Since the completion of the restructuring focusing on

the buyback of the stadium shares, Borussia

Dortmund is once again in a position to make investments

in the professional squad, which will significantly

improve the quality of the team. The contracts

with the professional players Marc Ziegler, Robert

Kovac, Mladen Petric, Giovanni Federico, Diego

Klimowicz and Jakub “Kuba” Blaszczykowski demonstrate

the point impressively.

In our future development, we will not enter into any

further financial risks that could jeopardise the existence

of Borussia Dortmund. Generating financial

surpluses will be a prerequisite for further investments

in the professional squad. We are convinced

that this is the right way to establish Borussia Dort -

mund in the medium term as one of the leading clubs

in the Bundesliga.

131


Borussia Dortmund

SUPPLEMENTARY REPORT

BVB was standing on the precipice: following the

27 th round, the six-time German football champion

– which had had to leave football's “upper echelon”

for the first time in 1972 for a period of four years –

had even slipped to a relegation position.

During the troubled times, the meaning of solidarity

by the people of Dortmund with their flagship –

Borussia – became clear. The “We are Borussia” initiative

launched by the BVB fan department resulted

in a unique closing of the ranks between Dort -

mund's citizens, companies and public authorities

and the whole region.

The high level of enthusiasm and excitement in

anticipation of the new 2007/2008 season is demonstrated

by the 50,549 season tickets sold, a new

Bundesliga record.

From the sporting point of view, things are looking

distinctly encouraging. With six new players, Thomas

Doll's team is in a better position both in terms of

numbers and of quality than in the previous season.

“We have succeeded in giving the squad more depth,

and the sense of competition within the team has

increased,” concluded sport director Michael Zorc.

Head coach Thomas Doll is also convinced that this

will result in an ability to produce better performances

and more attractive football.

One week before the start of the 2007/2008

Bundesliga season, Borussia Dortmund has already

given a positive sign of its sporting potential. In the

DFB Cup, coach Thomas Doll's team achieved a 4:1

victory over 1. FC Magdeburg. In addition to Ebi

Smolarek, goals were also scored by new signings

Diego Klimowicz (2) and Mladen Petric. The draw

for the 2nd main round of the DFB Cup on 12

August 2007 provided Borussia Dortmund with an

attractive opponent in the form of Eintracht

Frankfurt, also a Bundesliga club. The match is

expected to be played on 30 or 31 October 2007 at

SIGNAL IDUNA PARK.

After outstanding performances during the run-up

to the 2007/2008 Bundesliga season, Borussia

Dortmund began with a false start by losing 1:3 to

the newly promoted MSV Duisburg on 12 August

2007 in front of 75,700 spectators at SIGNAL

IDUNA PARK. Ishiaku (2) and Tararache were the

goalscorers for the “Zebras” and Kringe for BVB. It

was the first win for MSV at Strobelallee for 35 years

and only the second ever.

On 6 July 2007, the Bundesrat approved the act implementing

the reform of corporate taxation in 2008. As a

consequence, the future effects of the reform were not

yet required to be reflected in the consolidated balance

sheet prepared as of 30 June 2007.

The reform of corporate taxation included substantial

cuts in the rates of both trade tax and corporation

tax. While the act results in a net reduction in

the tax burden on companies intended by the legislature,

it will also give rise to some extra tax payments

as a result of broadening the basis of assessment to

taxation.

An initial analysis of the future effects of the reform

of corporate taxation on the BVB Group did not

reveal any indications of particular tax risks in future

as a result of the reform.

132


GROUP MANAGEMENT REPORT

OTHER DISCLOSURES

REPORT IN ACCORDANCE WITH § 315 (4) HGB

The Company gives the following information in

response to the requirements of § 315 (4) Nos. 1 to 9

HGB:

1. The share capital of Borussia Dortmund GmbH

& Co. KGaA amounts to EUR 61,425,000.00 and

is divided into 61,425,000 no-par value ordinary

bearer shares. All of the shares have been admitted

to trading on the Official Market (General

Standard) of the Frankfurt Stock Exchange and

in the over-the-counter markets (Regulated

Unofficial Markets) in Berlin-Bremen, Stuttgart,

Munich, Hamburg and Düsseldorf. Each no-par

value share entitles the holder to one vote at the

General Shareholders' Meeting. The Company

therefore has only one class of shares and all

shares carry the same rights and obligations.

Additional rights and responsibilities attaching to

the Company's shares are determined in accordance

with the German Stock Corporation Act

(Aktiengesetz, “AktG”).

5. There is no control of voting rights in cases where

employees are shareholders.

6. Because of its legal form as a partnership limited by

shares, Borussia Dortmund GmbH & Co. KGaA

does not have a management board. Instead, the

Company's management and representation is the

responsibility of the general partner. The terms of

§ 6 No. 1 of the Articles of Association provide that

this executive body of the Company is Borussia

Dortmund Geschäftsführungs-GmbH, whose registered

office is in Dortmund, on a permanent basis

and not for a limited period of time, by virtue of its

status as a shareholder. The appointment and

removal of managing directors of Borussia Dort -

mund Geschäftsführungs-GmbH is governed by

§ 8 No. 6 of its shareholders' agreement and is the

responsibility of the Executive Committee of its

Advisory Board, and therefore not of the

Supervisory Board of Borussia Dortmund GmbH

& Co. KGaA.

2. There are no restrictions affecting the voting

rights or transfer of the shares.

3. As of 30 June 2007, the Company had been notified

of the following interests in the share capital

of Borussia Dortmund GmbH & Co. KGaA in

excess of 10% of the voting rights:

- Morgan Stanley International Limited: 16,25%

- Absolute Capital Management Holdings Limited: 13,04%

- BlueBay Asset Management: 17, 09%

4. There are no shares with special rights which confer

powers of control.

In principle, changes may be made to the Articles of

Association of Borussia Dortmund GmbH & Co.

KGaA only by a resolution of its General

Shareholders' Meeting, which must be passed, in

accordance with § 133 (1) AktG, by a simple majority

of votes and also, in accordance with § 15 No. 3

of the Articles of Association of the Company

together with § 179 (1) and (2) AktG, by a simple

majority of the capital represented at the passing of

the resolution, except to the extent that there are

mandatory statutory provisions to the contrary or

the Articles of Association provide otherwise. It is a

mandatory provision of statute that a resolution of

133


Borussia Dortmund

the General Shareholders' Meeting passed by a

majority of three-quarters of the share capital re -

presented at the passing of the resolution is required

for changes to the Articles of Association relating to

the objects of the Company (§ 179 (2) sentence 2

AktG), the issuance of non-voting preferred shares

(§ 182 (1) sentence 2 AktG), capital increases where

subscription rights have been disapplied (§ 186 (3)

AktG), the creation of conditional capital (§ 193 (1)

AktG), the creation of authorised capital (§ 202 (2)

AktG) – where appropriate with authorisation to

disapply subscription rights (§ 203 (2) sentence 2

together with § 186 (3) AktG) –, the ordinary or

simplified reduction of capital (§ 222 (1) sentence 2

and/or § 229 (3) AktG) or a change of legal form

(§ 233 (2) and/or § 240 (1) German Reorganisation

Act (Umwandlungsgesetz, “UmwG”)). In addition,

capital increases, other changes to the Articles of

Association and other decisions of a fundamental

nature may only be resolved with the approval of

the general partner, in accordance with § 285 (2)

sentence 1 AktG. The Supervisory Board is authorised

in accordance with § 12 No. 5 of the Articles

of Association to resolve changes to the Articles of

Association which relate only to their wording, in

particular in connection with the amount of capital

increases out of authorised and conditional capital.

7. In accordance with § 5 No. 4 of the Articles of

Association of Borussia Dortmund GmbH & Co.

KGaA, the general partner is authorised until 31

July 2011, with the approval of the Supervisory

Board, to increase the share capital by the issue of

up to 21,937,500 new no-par value ordinary bearer

shares against cash or non-cash contributions on

one or more occasions, but by a maximum of EUR

21,937,500.00 in total (Authorised Capital 2006).

In all cases, the new shares participate in profits

from the beginning of the financial year in which

they are issued. The general partner is further

authorised, with the approval of the Supervisory

Board, to disapply the statutory subscription right

of the limited liability shareholders in certain circumstances.

In addition, by a resolution of the General

Shareholders' Meeting held on 22 November 2005,

the share capital of Borussia Dortmund GmbH &

Co. KGaA has been conditionally increased by up

to EUR 14,625,000.00 by the issue of up to

14,625,000 new no-par value ordinary bearer

shares. The general partner is authorised until 31

October 2010, with the approval of the Supervisory

Board, to issue bearer bonds with warrants and/or

convertible bonds with a total nominal amount of

up to EUR 40,000,000.00 and a maximum maturity

of 25 years on one or more occasions. The holders

of bonds with warrants may be granted rights to

subscribe for, and the holders of convertible bonds

may be granted rights to convert into, a total of up

to 14,625,000 new no-par value ordinary bearer

shares of the Company in accordance with the

detailed terms and conditions of the bonds with

warrants and/or convertible bonds.

In the event of a takeover offer for shares issued

by the Company and admitted to trading on an

organised market, general statutory responsibilities

and powers also apply to the general partner. For

example, if a takeover offer were to be received,

the general partner and the Supervisory Board

would be required to issue and publish a response

to the offer, giving their reasons, in accordance

with § 27 of the German Securities Acquisition and

Takeover Act (Wertpapiererwerbs- und Übernahmegesetz,

“WpÜG”), so that the limited liability

shareholders can make a decision on the offer on

an informed basis. Moreover, in accordance with

§ 33 WpÜG, once a takeover offer has been

announced, the general partner may not take any

134


GROUP MANAGEMENT REPORT

actions outside the ordinary course of business

which could frustrate the success of the offer,

unless those actions have been authorised by the

General Shareholders' Meeting, or the Supervisory

Board has given its approval to the actions or the

actions relate to obtaining a competing offer. In

making their decisions, the general partner and the

Supervisory Board are bound to have regard to the

interests of the Company, its employees and its

shareholders. At the balance sheet date, there were

no provisions of the Articles of Association within

the meaning of §§ 33a – 33c WpÜG (European

prohibition on frustrating action, European breakthrough

rule, reservation of reciprocity).

8. The Company is not a party to any material agreements

which are conditional on a change of control

following a takeover offer for the issued shares

of Borussia Dortmund GmbH & Co. KGaA.

9. The Company is not a party to any compensation

agreements applying in the event of a takeover offer.

STATEMENT OF THE GENERAL PARTNER CONCERNING RELATIONS

WITH AFFILIATED COMPANIES

The Dependent Company Report prepared by

Borussia Dortmund GmbH & Co. KGaA pursuant to

§ 312 AktG sets out the relations with BV. Borussia

09 e.V. Dortmund as the controlling entity and its affiliated

companies. The general partner – represented

by its Managing Directors – issued the following concluding

statement:

that was in each case reasonable under the circumstances

known to us at the time such transactions

were entered into. In all other cases, the Company

has been compensated for any disadvantages having

arisen. No other measures within the meaning of

§ 312 (1) AktG were taken or omitted during the

financial year.

With respect to the transactions set out in the report

concerning relations with affiliated companies, the

Company received consideration in the financial year

Dortmund, 15 August 2007

Borussia Dortmund GmbH & Co. KGaA

Borussia Dortmund Geschäftsführungs- GmbH

Hans-Joachim Watzke

Managing Director (Chairman)

Thomas Treß

Managing Director

135


136


BVB

Ticketing

137


SIGNAL IDUNA PARK & TICKETING

Record figures in Germany's largest stadium

With an average of 79,647 people attending

the 17 Bundesliga home matches,

Borussia Dortmund set a European record for

this millennium in the 2003/2004 season. In

the last season, BVB's appeal had reached an

average of 72,164 viewers per match, which

still represents the top place on a domestic

level, and third position internationally behind

Real Madrid and Manchester United.

BVB always creates headlines with its attendance

figures. Since 1998, the club has broken

the magic threshold of one million or more

visitors per Bundesliga season each year.

An analysis by the magazine

“Computer-Bild”

found out ordering

tickets from BVB on the

Internet is exemplary.

Grade: “B+”, second

place in the Bundesliga.

For almost 20 years, the football Bundesliga

has recorded a constant increase in attendance

figures, fluctuating only due to changing

stadium capacities as a result of relegated

and promoted teams or stadium

conversions. Average attendance figures

doubled from 17,631 in the 1988/89 season to

37,644 last season. Yet while the league can

point to an increase of 113 percent, the

increase in interest in Borussia Dortmund

has been disproportionately high, growing

from 29,176 visitors to (most recently) 72,164

visitors per home match.

The strong interest in BVB is a deep rooted

process and not attributable to trends, espe-

79,030 viewers attended the home match on 14 September

2007 live in SIGNAL IDUNA PARK. BVB defeated

Werder Bremen 3:0.

cially as the last major domestic and international

successes of the club at the end of the

last millennium and the beginning of the current

millennium have since faded slightly.

What has remained, however, is the great

interest by the fans in also actually attending

the club's matches.

When, during the first years of its membership

of the football Bundesliga founded in

1963, BVB played its matches in the time honoured

“Red Earth” stadium – a stadium without

any flair or comfort –average attendance

was approximately parallel to that of the

league (see chart).

Interest in BVB exploded with the building of

the Westfalenstadion, which has been called

SIGNAL IDUNA PARK since December 2005.

Even in the second division, the stadium –

built for the 1974 World Cup – was often sold

out, and following the club's return to the top

138


BVB

Ticketing

Long queues form before

the counters of the

BVB office when ticket presales

open for the next game.

flight in the 1976/77 season, interest

remained disproportionately high. Since then,

BVB's average attendance has continually

been higher than that of the league. The curve

declined only in the very meagre years at the

beginning of the 1980s, but again surged

upwards no later than upon winning the DFB

Cup in 1989.

With the stadium's expansion (from 1992 to

the beginning of 1996, capacity was only

42,800 seats) over three stages to a level of

83,000 (currently 80,708 seats), the fans'

interest in enjoying the unique atmosphere in

the Strobelallee football temple with their

own eyes also increased. Year for year, BVB

sells between 45,000 and 50,000 season tickets

– more than any other club. With exactly

50,549 season tickets sold, sales for the current

season were stopped at midnight on 31

July in order to be able

to continue to offer a

sufficient number of

day tickets. Today there

are already waiting lists

for season tickets for the coming season.

The enthusiasm is centred in the southern

stand, Europe's largest standing place area

with capacity for 24,454 fans. Even before the

kick-off for the first game, tickets for the rest

of the season had been sold out.

Attendance figures compared to league average.

Liga

BVB

139


Borussia Dortmund

CONSOLIDATED BALANCE SHEET

A S S E T S Note* 30 June 2007 30 June 2007

Non-current assets

in EUR thousands in EUR thousands

Intangible assets (1) 14,866 5,913

Property, plant and equipment (2) 195,485 200,184

Investments in associates (3) 189 176

Financial assets (4) 253 201

Non-current trade receivables and

other assets (5) 7,608 8,852

Deferred tax assets (16) 6,420 3,672

Current assets

224,821 218,998

Inventories (6) 1,724 1,172

Trade receivables and

other assets (5) 17,700 16,242

Cash and cash equivalents (7) 13,905 41,001

33,329 58,415

258,150 277,413

E Q U I T Y A N D L I A B I L I T I E S

Equity (8)

Subscribed capital 61,425 43,875

Reserves 24,939 -6,412

Own shares -142 -143

Equity attributable to shareholders 86,222 37,320

Minority interest 314 304

86,536 37,624

Non-current liabilities

Non-current financial liabilities (9) 122,652 128,694

Non-current trade payables 245 0

Other non-current liabilities (10) 6,124 5,027

Non-current income tax liabilities (16) 4,232 5,232

Deferred tax liabilities (16) 1,934 1,103

135,187 140,056

Current liabilities

Current financial liabilities (9) 6,288 62,563

Trade payables 5,022 9,519

Other current liabilities (10) 21,448 23,425

Current income tax liabilities (16) 3,669 4,226

36,427 99,733

258,150 277,413

* The relevant sections in the notes can be found on the following pages:

(1), (2) – p. 154, (3) – p. 155, (4), (5) – p. 156, (6), (7), (8) – p. 157, (9) – p. 159, (10) – p. 160, (16) – p. 162.

140


CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

Note* 2006/07 2005/06

in EUR thousands

in EUR thousands

Revenues (11) 97,115 89,055

Other operating income 8,864 3,619

Cost of materials -3,218 -3,557

Personnel expenses (12) -36,981 -39,768

Depreciation and amortisation (13) -13,546 -14,227

Other operating expenses (14) -36,639 -46,326

Profit/loss from operating activities 15,595 -11,204

Income from investments in associates (3) 13 44

Other interest and similar income 1,065 2,045

Interest and similar expenses -9,595 -9,476

Expense from the transfer of profit shares

to limited partners (15) 0 -74

Expense from the increase in the fair value

of minority limited shareholders' compensation entitlement (15) 0 -3,898

Net finance costs -8,517 -11,359

Profit/loss before taxes 7,078 -22,563

Income taxes (16) 3,037 1,786

Consolidated net profit/loss for the year 10,115 -20,777

- of which attributable to shareholders: 10,067 -20,801

- of which minority interest: 48 24

Earnings per share: (20) 0.17 -0.67

* The relevant sections in the notes can be found on the following pages:

(3) – p. 155, (11), (12), (13) – p. 161, (14), (15), (16) – p. 162, (20) – p. 166.

141


Borussia Dortmund

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Reserves

in EUR thousands

Subscribed Capital Revenue Revaluation Own

capital reserves reserves reserve shares

30 June 2005 29,250 -728 -145

Distributions to

subsidiaries

Capital increase 14,625 14,230

Sale of own shares 2

Other changes 887

43,875 14,230 159 0 -143

Consolidated net loss for the year -20,801

Other comprehensive income

Total comprehensive income 0 0 -20,801 0 0

30 June 2006 43,875 14,230 -20,642 0 -143

Distributions to

subsidiaries

Capital increase 17,550 19,548

Sale of own shares 1

61,425 33,778 -20,642 0 -142

Consolidated net profit for the year 10,067

Other comprehensive income 1,736

Total comprehensive income 0 0 10,067 1,736 0

30 June 2007 61,425 33,778 -10,575 1,736 -142

STATEMENT OF CHANGES IN NON-CURRENT ASSETS

in EUR thousands

Cost

At

At

1.July 2006 Additions Disposals Reclassifications 30 June 2007

Intangible assets

Player registrations 36,286 10,218 18,457 3,125 31,172

Industrial property rights

and similar rights 1,457 42 0 0 1,499

Payments on account 3,125 3,671 0 -3,125 3,671

Property, plant and equipment

40,868 13,931 18,457 0 36,342

Land, land rights

and buildings including

buildings on

third-party land 206,793 1,094 0 0 207,887

Other equipment, operating

and office equipment 23,856 2,775 0 0 26,631

230,649 3,869 0 0 234,518

Investments

in associates 176 13 0 0 189

Non-current financial assets 201 78 26 0 253

271,894 17,891 18,483 0 271,302

142


CONSOLIDATED FINANCIAL STATEMENTS

Equity

attributable to Minority Consolidated

shareholders interest equity

28,377 83 28,460

0 -44 -44

28,855 28,855

2 2

887 241 1,128

58,121 280 58,401

-20,801 24 -20,777

0 0

-20,801 24 -20,777

37,320 304 37,624

0 -38 -38

37,098 37,098

1 1

74,419 266 74,685

10,067 48 10,115

1,736 1,736

11,803 48 11,851

86,222 314 86,536

Depreciation and amortisation

Book values

At At At At

1 July 2006 Additions Disposals 30 June 2007 30 June 2007 30 June 2006

33,518 4,944 18,457 20,005 11,167 2,768

1,437 34 0 1,471 28 20

0 0 0 3,671 3,125

34,955 4,978 18,457 21,476 14,866 5,913

19,929 6,799 0 26,728 181,159 186,864

10,536 1,769 0 12,305 14,326 13,320

30,465 8,568 0 39,033 195,485 200,184

0 0 0 0 189 176

0 0 0 0 253 201

65,420 13,546 18,457 60,509 210,793 206,474

143


Borussia Dortmund

CONSOLIDATED CASH FLOW STATEMENT

in EUR thousands

see Note (17)* 2006/07 2005/06

Profit/loss from operating activities +15,595 -11,204

Depreciation and amortisation of non-current assets +13,546 +14,227

Other non-cash income and expense +0 -1,398

Profit/loss from disposals of non-current assets -6,767 -5,857

Changes in other assets not classified as from investing or

financing activities +3,639 +9,928

Changes in other liabilities not classified as from investing or

financing activities -6,634 -3,176

Interest paid -9,504 -4,452

Income taxes paid -1,590 +0

Change in restricted funds +3,589 -3,143

Cash flows from operating activities +11,874 -5,075

Payments for investments in intangible assets -13,619 -4,975

Proceeds from disposals of intangible assets +6,065 +9,988

Payments for investments in property, plant and equipment -2,578 -6,179

Proceeds from the disposal of property, plant and equipment +0 +121

Payments for investments in financial assets -78 -102

Proceeds from disposals of financial assets +26 +0

Interest received +251 +89

Cash flows from investing activities -9,933 -1,058

Proceeds from increases in capital +15,136 +28,855

Dividends paid to minority shareholders -38 -44

Proceeds from finance raised +0 +84,752

Repayments of financial liabilities -32,546 -81,665

Cash flows from financing activities -17,448 +31,898

Net change in cash funds -15,507 +25,765

Cash funds at beginning of period +29,393 +3,628

Cash funds at end of period +13,886 +29,393

* see Note (17) – p. 164.

144


CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

BASIC PRINCIPLES

POLICIES AND METHODS

Borussia Dortmund GmbH & Co. KGaA (“BVB”)

has its headquarters at Rheinlanddamm 207-209,

Dortmund, Germany. BVB's professional team

has participated in the Bundesliga for more than

three decades. In addition, BVB Group companies

are engaged in the sale of merchandise, the manufacture

and sale of sporting articles under the

“goool.de” brand name, the provision of internet

and travel agency services, the running of a medical

rehabilitation centre and the operation of the

football stadium in Dortmund, trading under the

name SIGNAL IDUNA PARK.

These consolidated financial statements of BVB for

the financial year from 1 July 2006 to 30 June 2007,

including the prior-year information, were prepared

in accordance with International Financial

Reporting Standards (IFRS), as adopted in the

European Union and in force at the balance sheet

date, and the supplementary provisions of German

commercial law required to be observed in accordance

with § 315 HGB and § 315a (1) HGB. The

term “IFRS” includes the recent International

Financial Reporting Standards (IFRS) and the

International Accounting Standards (IAS) issued

by the International Accounting Standards Board

(IASB) in London as well as the interpretations

of the International Financial Reporting

Interpretations Committee (IFRIC) and the

Standing Interpretations Committee (SIC).

The following accounting standards and interpretations,

or amendments of existing standards, were

required to be adopted for the first time in the

past financial year and had no effect on the net

assets, financial condition and results of operations

of the Group:

• IFRS 6 “Exploration for and Evaluation of

Mineral Resources”

• IFRIC 4 “Determining whether an

Arrangement contains a Lease”

• IFRIC 5 “Rights to Interests arising from

Decommissioning, Restoration and

Environmental Rehabilitation Funds”

• IFRIC 6 “Liabilities arising from Participating

in a Specific Market - Waste Electrical and

Electronic Equipment”

• IFRIC 7 “Applying the Restatement

Approach under IAS 29 Financial Reporting

in Hyperinflationary Economies”

• IFRIC 8 “Scope of IFRS 2”

• IFRIC 9 “Reassessment of Embedded

Derivatives”

• Amendments to IAS 19 “Employee Benefits”

• Amendments to IAS 39 “Financial

Instruments: Recognition and Measurement”

• Amendments to IAS 39 and IFRS 4

“Insurance Contracts”

The IASB has also issued the following standards,

interpretations and amendments to existing standards

whose adoption is not yet mandatory. No use

has been made of the option of early adoption.

With the exception of additional disclosures in the

notes, the adoption of the following standards is

expected to have no significant effects on the consolidated

financial statements.

• Amendments to IAS 1 “Presentation of

Financial Statements”

• IFRS 7 “Financial Instruments: Disclosures”

• IFRIC 10 “Interim Financial Reporting and

Impairment”

• IFRIC 11 “IFRS 2: Group and Treasury Share

Transactions”

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Borussia Dortmund

In order to improve the clarity and usefulness of

the financial information, certain items in the

income statement and the balance sheet have

been combined. These items are reported separately

and explained in the notes. The income

statement was prepared in accordance with the

nature of expense method.

The consolidated financial statements are presented

in thousands of euros.

By a resolution dated 15 August 2007, the consolidated

financial statements and the Group management

report were authorised by the

Company's management for submission to the

Supervisory Board.

GROUP OF CONSOLIDATED COMPANIES

In addition to Borussia Dortmund GmbH & Co.

KGaA, the consolidated financial statements

include seven (prior year: seven) fully consolidated

subsidiary companies and one associated company

accounted for at equity.

Orthomed GmbH, in which the Group holds

33.33% of the shares and of the voting rights, has

been included in the consolidated financial statements

as an investment in associates under the

equity method in accordance with IAS 28.

The list of shareholdings as at 30 June 2007 and 30 June 2006 was as follows:

Company Registered Shareholding

office %

BVB Stadionmanagement GmbH

(formerly: Westfalenstadion Dortmund Verwaltungs-GmbH Dortmund 100.00

goool.de Sportswear GmbH Dortmund 100.00

sports & bytes GmbH Dortmund 100.00

BVB Merchandising GmbH Dortmund 100.00

BVB Stadion GmbH Dortmund 99.74

BVB Beteiligungs GmbH Dortmund 94.90

B.E.S.T. Borussia Euro Lloyd Sports Travel GmbH Dortmund 51.00

Orthomed GmbH Dortmund 33.33

146


CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATION PRINCIPLES

The annual financial statements of the companies

included in BVB's consolidated financial statements

are prepared in accordance with IFRS

using consistent accounting policies.

The reporting date for the consolidated financial

statements is the reporting date of the parent

company. Where companies consolidated had a

different balance sheet date in the previous financial

year, interim financial statements were prepared

as at the reporting date of the parent company.

The investment in the associate Orthomed

GmbH was made on the basis of annual financial

statements for the calendar year. Interim financial

statements were not prepared because the

company is not material in the context of the

information conveyed by the consolidated financial

statements of BVB, and because there were

no material transactions or other events in the

business of this company between its own yearend

and that of the Group.

Intercompany revenues, income and expenses,

and all receivables and liabilities between companies

included in the consolidated financial statements

are eliminated on consolidation and provisions

relating to other Group companies are

reversed.

On the initial consolidation of subsidiaries, the

cost of the investment is netted against the

Group's share of the carrying amount of the net

assets of the relevant company. The difference

between the cost of the investment and the share

of the net assets is allocated in full to the assets

and liabilities of the subsidiary, to the extent that

it represents unrecognised gains or losses. Any

remaining positive difference is recognised as

goodwill. Subsidiaries are fully consolidated from

the date on which the Group obtains control. The

inclusion of subsidiaries in the consolidated financial

statements ends as soon as the parent company

ceases to have control.

Minority interests represent the share of net assets

that is not attributable to the Group. Accordingly,

minority interests are reported separately within

consolidated equity and the consolidated income

statement.

Associates over which the Group has a significant

but not a controlling influence are accounted for

using the equity method and initially recognised

at cost. The Group's share of profits and losses of

associates is recognised in the income statement

from the date of acquisition, while the share of

changes in reserves is reflected in consolidated

reserves. The carrying amount of the investment

is adjusted to reflect the cumulative changes

since the date of acquisition. There were no

unrealised gains at any date from transactions

between Group companies and associates which

would have been required to be eliminated on

consolidation.

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Borussia Dortmund

ACCOUNTING POLICIES

The significant accounting policies used in the

preparation of these consolidated financial statements

are presented below. The policies described

were applied consistently for the reporting periods

shown, unless otherwise indicated.

Intangible assets

Purchased intangible assets are measured at cost

less amortisation based on their expected useful

lives or at the lower fair value. Player registrations

reported in these financial statements are measured

at cost, taking into account the FIFA

Regulations for the Status and Transfer of Players

contained in circular no. 769 of 24 August 2001

which came into force on 21 September 2001, and

are amortised on a straight-line basis in accordance

with the term of the individual contracts for

professional players. The cost of player registrations

includes transfer payments made and the

costs of advisers directly attributable to the particular

transfer.

Computer software for commercial and technical

applications is amortised on a straight-line basis

over three years.

Property, plant and equipment

The SIGNAL IDUNA PARK stadium buildings

were measured at their fair value amounting to

EUR 177,200 thousand in the IFRS opening balance

sheet as at 1 July 2004, in accordance with

the option permitted by IFRS 1.16. This valuation

is based on the opinion of an independent

external expert. The carrying amount of the stadium

buildings in the balance sheet represents

the carrying amount as at 1 July 2004 less depreciation

charged subsequently.

Land, the other buildings and the remaining items

of property, plant and equipment are measured at

cost less depreciation. Borrowing costs are recorded

as an expense in the period in which they are

incurred. Low-value items are fully written off in

the year of acquisition. Repair and maintenance

costs are recognised in the income statement as

expenses in the current period.

Depreciation, mainly on a straight-line basis, is based on the following useful lives:

Useful life in years

Stadium 30

Other buildings 25 to 50

Technical equipment and machinery 4.5 to 15

Other equipment, operating and office equipment 7 to 15

Significant parts of the stadium building are depreciated over their respective specific useful lives (component

approach).

148


CONSOLIDATED FINANCIAL STATEMENTS

Impairment testing

The useful lives of intangible assets and items of

property, plant and equipment are all finite. If

there are specific indications of possible impairment,

individual assets are tested for impairment.

In the case of intangible assets, the useful life and

the method of amortisation are reviewed at least at

the end of each financial year. An impairment loss

is recognised for the amount by which the carrying

amount exceeds the recoverable amount. The

recoverable amount is the higher of net disposal

proceeds and value in use. If the reason for an

impairment write-down recognised in prior years

no longer exists, the impairment loss is reversed

until the carrying amount of the asset, net of

depreciation and amortisation, equals the amount

that would have been determined if an impairment

loss had not been recognised.

Leases

The Group's leases relate in particular to developed

land and operating and office equipment.

Leased assets in respect of which substantially all

the risks and rewards of ownership have been

transferred to the Group (finance lease) are recognised

at the present value of the lease payments

or at the lower fair value in accordance with IAS

17 and depreciated over the useful life or the

shorter lease term. In the case of leases of land

and buildings, the components of the land and

buildings are considered separately for the purpose

of the classification of the leases.

The payment obligations resulting from finance

lease agreements are recognised as a liability. The

lease payments are apportioned between the

finance charges and the element representing the

repayment of the remaining liability in such a way

that a constant rate of interest is charged on the

outstanding lease obligation over the period of

the lease (effective interest method). Interest

charges are expensed immediately. If substantially

all the risks and rewards of ownership

remain with the lessor (operating lease), the lease

payments are recognised as an expense in the

financial year.

Financial instruments

Under the terms of IAS 39, a financial instrument

is any contract that gives rise to a financial asset of

one entity and a financial liability or equity instrument

of another entity. They include financial

assets, receivables and liabilities arising from

transactions for goods and services, financial liabilities

and other assets and liabilities.

A financial instrument is initially measured at cost.

Transaction costs are included in the cost of the

asset or liability, except in the case of a remeasurement

through profit or loss. Purchases and

sales of financial assets are recorded on the trading

day on which the Group enters into a commitment

to buy or sell the asset.

Financial instruments are subsequently measured

either at fair value or at amortised cost, depending

on their classification according to the following

categories:

• financial instruments at fair value through

profit or loss

• held-to-maturity investments

• loans and receivables

• available-for-sale financial assets

At the balance sheet date and in the comparable

period, the Group held no financial instruments

accounted for at fair value through profit or loss.

149


Borussia Dortmund

Held-to-maturity investments are non-derivative

financial assets with fixed payments and maturities

that the Group intends to hold to maturity.

Held-to-maturity investments are measured at

amortised cost after their initial recognition. As at

30 June 2007, held-to-maturity investments

amounted to EUR 253 thousand (30 June 2006:

EUR 201 thousand).

Loans and receivables are financial assets or liabilities

with fixed or determinable payments that

are not quoted in an active market. Receivables

are recognised at amortised cost less any valuation

allowances required for impairment. Loans

are measured on initial recognition at the amount

of the consideration received less transaction

costs attributable to the issue of the liability.

After initial recognition, interest-bearing loans

are measured at amortised cost using the effective

interest method net of repayments made.

Liabilities from finance leases are reported under

other liabilities at their present values, calculated

using the effective interest method. At 30 June

2007, there were no financial liabilities designated

at fair value through profit or loss (30 June

2006: 0).

Available-for-sale financial assets are measured

at their fair value. Unrealised gains and losses

from subsequent remeasurement are recognised

directly in equity net of deferred taxes until the

financial instrument is sold or suffers permanent

impairment. If evidence of impairment is established

in the course of regular impairment testing,

the relevant expense is recognised immediately

in profit or loss. At the balance sheet date

and in the comparable period, the Group held no

available-for-sale financial assets.

If the maturity of a financial instrument is less

than 12 months after the balance sheet date, it is

reported in the balance sheet under current assets

or liabilities.

Derivative financial instruments and

hedging

In August 2006, the Group entered into an interest

rate swap for the purpose of hedging the cash

flow risks from interest rate changes arising from

the variable-rate long-term loan from Morgan

Stanley & Co. Int. Ltd., London. Associates over

which the Group has a significant but not a controlling

influence are accounted for using the

equity method and initially recognised at cost. The

Group's share of profits and losses of associates is

recognised in the income statement from the date

of acquisition, while the share of changes in

reserves is reflected in consolidated reserves. The

carrying amount of the investment is adjusted to

reflect the cumulative changes since the date of

acquisition. There were no unrealised gains at any

date from transactions between Group companies

and associates which would have been required to

be eliminated on consolidation.

150


CONSOLIDATED FINANCIAL STATEMENTS

Deferred taxes

Deferred taxes are recognised for all temporary

differences between the tax base of assets and liabilities

and their carrying amounts in the IFRS

financial statements (liability method). However,

if in the course of a transaction which is not a

business combination a deferred tax asset or liability

arises from the initial recognition of an asset

or liability which, at the time of the transaction,

affects neither the accounting nor the taxable

profit or loss, the deferred tax asset or liability is

neither recognised at the date of initial recognition

nor afterwards.

Deferred tax assets are recognised to the extent

that it is probable that taxable profits will be available

against which the temporary difference can

be utilised. Deferred tax assets are also recognised

for tax loss carry-forwards that can be

utilised in subsequent periods, provided it is sufficiently

probable that the deferred tax asset will

be recoverable.

Deferred taxes relating to items recognised directly

in equity are also recognised directly in equity.

Deferred tax assets and liabilities are netted

against each other where the Group has a legally

enforceable right to set off current tax assets

against current tax liabilities, and the deferred tax

assets and liabilities relate to income taxes levied

by the same taxation authority on the same taxable

entity.

Deferred tax assets and liabilities are measured on

the basis of the tax laws in force at the balance

sheet date using a rate of income tax of 39.9%.

Inventories

Inventories consist principally of merchandising

articles and goods held by the subsidiary company

goool.de. Inventories are measured at cost less any

individual allowances for goods whose cost may not

be recoverable.

Own shares

The full amount paid for the purchase of own

shares is reported as an item deducted from equity.

The Company has the right to reissue own

shares purchased by it at a later date. Proceeds of

resale in excess of cost are added to capital

reserves, while shortfalls are taken to revenue

reserves.

Provisions and contingent liabilities

In accordance with IAS 37, provisions are recognised

where a present obligation exists to third parties

arising from a past event, which is expected to

result in an outflow of resources and whose

amount can be reliably estimated. No provisions

have been reported in these consolidated financial

statements because it was possible to determine

the amount and timing of all obligations with sufficient

certainty, with the result that these obligations

have been reported under liabilities.

Contingent liabilities which do not meet the criteria

for recognition as a provision are disclosed in

the notes, unless the probability of an obligation

occurring is remote.

Recognition of income and expenses

Revenues are recognised when it is probable that

the economic benefits will flow to the Group and

the amount of income can be measured reliably.

151


Borussia Dortmund

Revenues are measured at the fair value of the

consideration received or receivable and represent

amounts for goods delivered and services provided

in the ordinary course of business, less rebates,

VAT and other taxes arising in relation to revenues.

Interest income and expenses are allocated to the

period to which they relate, taking into account

the outstanding amount of the loan and the effective

interest rate to be applied. The effective interest

rate is the discount rate at which the present

value of the estimated future cash receipts over

the term of the financial asset is equal to its net

carrying amount.

Operating expenses are recognised when the

goods or services are utilised or at the date the

expenses are incurred.

Revenues

In accordance with the classification prescribed by

the German Football League (Deutsche Fußball

Liga GmbH, “DFL”) for the licensing procedure,

income from the sale of transfer rights for player

registrations is reported under revenues. The

expenses associated with the transfer activities

such as the book values of assets sold and incidental

costs of disposal are reported as other operating

expenses.

MANAGEMENT OF FINANCIAL RISKS

The BVB Group finances itself primarily from

long-term bank loans, finance leases, trade

payables, season tickets paid for in advance and

payments from sponsors. The related risks arising

comprise interest-rate-related cash flow risks,

market risks, liquidity risks and credit risks. On

the other hand, the Group is not exposed to any

significant currency risks. The methods of managing

the individual types of risk are described in

the following.

Interest rate risks

The Group's financial liabilities consist mainly of a

variable-rate loan from Morgan Stanley & Co.

International Ltd., London, England. The interest

expense associated with this loan is therefore

dependent on the future development of the general

level of interest rates. In order to minimise the

interest-rate-related cash flow risk associated with

the loan, the Company therefore entered into an

interest rate swap in respect of this loan in August

2006. The effect of this interest rate hedging transaction

is a future rate of interest payable that is

independent of actual changes in market rates of

interest. The interest rate swap is accounted for as

a cash flow hedge within the meaning of IAS 39.

After taking account of this interest rate swap, all

the Group's significant financial liabilities carried

a fixed rate of interest as at 30 June 2007. Future

changes in the level of interest rates will therefore

have only a small impact on the interest expense,

even in the medium term.

152


CONSOLIDATED FINANCIAL STATEMENTS

Credit risk

The Group conducts business exclusively with third

parties of high credit standing. Concentrations of

credit risk can arise in the context of a player transfer

and from long-term sponsorship agreements.

Such concentrations of risk are monitored in the

course of the Group's operating activities.

The counterparty for the interest rate swap

described above was a major German bank with

the highest credit rating.

Liquidity risk

The Group constantly monitors the risk of possible

liquidity bottlenecks, taking into account the probable

maturities of its financial liabilities and the

timing of the expected cash flows from operating

activities. Following the restructuring completed

in the 2006 financial year, liquidity risks have been

sharply reduced thanks to the Company's new

financing structure, which is overwhelmingly

long-term.

SEGMENT REPORTING

BVB's business activities consist of the operation

of a football club including a professional football

team. There are no further business segments

with distinguishable components and risks and

rewards different from those of other business

segments. The business activities of the subsidiary

companies do not meet the criteria for reportable

segments in IAS 14 as a result of their lack of economic

significance and are therefore not subject

to the obligation to prepare segment reporting.

SIGNIFICANT DECISIONS SUBJECT TO

JUDGMENT AND ESTIMATES

Deferred tax assets are recognised in respect of tax

loss carry-forwards to the extent that it is probable

that taxable income will be available to enable the

loss carry-forwards actually to be utilised. In order

to determine the amount of the deferred tax assets

required to be recognised in this context, management

makes significant assumptions with respect

to the expected timing and amount of future taxable

income. As at 30 June 2007, deferred tax

assets recognised in respect of tax loss carry-forwards

amounted to EUR 6,264 thousand (30 June

2006: EUR 3,631 thousand).

153


Borussia Dortmund

NOTES TO THE CONSOLIDATED BALANCE SHEET

(1) Intangible assets

in EUR thousands 30 June 2007 30 June 2006

Player registrations 11,167 2,768

Industrial property rights and similar rights 28 20

Payments on account for player registrations 3,671 3,125

14,866 5,913

Intangible assets consist of purchased player registrations

and computer software. The increase in

player registrations and payments on account is

mainly due to the transfer payments in respect of

the new signings Valdez, Frei, Tinga and

Blaszcykowski. At the balance sheet date, the

weighted remaining contractual term of the significant

player registrations amounted to 3.1 years.

In the previous year, compensation payments for

transfers had been assigned and internally generated

trademark rights had been surrendered for

collateralization.

Changes in intangible assets are presented in a

separate overview forming part of the notes to the

consolidated financial statements.

(2) Property, plant and equipment

in EUR thousands 30 June 2007 30 June 2006

Land, land rights and buildings including

buildings on third-party land 181,159 186,864

Other equipment, operating and office equipment 14,326 13,320

195,485 200,184

Property, plant and equipment consists principally

of the stadium and former offices and the

adjoining area “Am Luftbad”, and also the facilities

at the training ground in Dortmund-Brackel,

the youth centre, catering extensions and items of

operating and office equipment at these facilities

and at the administrative headquarters.

Additions to property, plant and equipment mainly

comprise conversion work on the former offices

at the stadium, the conversion of the August Lenz

building into a merchandising shop and the expansion

of parts of the stadium's circulation level into

a conference centre.

154


CONSOLIDATED FINANCIAL STATEMENTS

Property, plant and equipment include the following assets subject to finance leases:

Net book values

in EUR thousands 30 June 2007 30 June 2006

Buildings 3,244 2,115

Operating and office equipment 2,698 2,935

5,942 5,050

The items of property, plant and equipment recognised

in the balance sheet as a result of finance

leases consist of buildings and other facilities at

the Dortmund-Brackel training ground; the lease

in respect of the land at the training ground, on

the other hand, is classified as an operating lease.

In the 2006/2007 financial year, the adjustment to

the lease payments as a result of the final statement

of building costs resulted in a corresponding

increase in the carrying amount of property, plant

and equipment subject to finance leases and in the

liabilities from finance leases. The Company has

an option to purchase the entire site following the

expiry of the lease term in 2022.

Items of property, plant and equipment with a

remaining book value of EUR 182,342 thousand

have been pledged as security for financial liabilities.

The Group is not the legal owner of property,

plant and equipment with a remaining book

value of EUR 5,942 thousand due to an existing

finance lease.

Changes in property, plant and equipment are

presented in a separate overview forming part of

the notes to the consolidated financial statements.

(3) Investments in associates

in EUR thousands 30 June 2007 30 June 2006

At the beginning of the year 176 132

Share of profits +13 +44

At the end of the year 189 176

The Group's share of the profits of its associated company Orthomed GmbH and its share of the assets

and liabilities are as follows:

in EUR thousands 31 Dec. 2006 31 Dec. 2005

Share of assets 219 231

Share of liabilities 66 56

Share of revenues 1,074 1,045

Share of profit for the year 19 50

155


Borussia Dortmund

(4) Financial assets

Financial assets consist mainly of a tenant's loan

relating to an operating lease agreement and various

employee loans.

The carrying amounts generally reflect market

values.

(5) Trade receivables and other assets

in EUR thousands 30 June 2007 30 June 2006

Trade receivables 17,007 22,117

less: allowances -486 -589

Trade receivables – net 16,521 21,528

other assets 8,787 3,566

25,308 25,094

less: non-current portion -7,608 -8,852

current portion 17,700 16,242

Trade receivables and other assets do not bear

interest and mostly have a maturity of up to 3

months. The non-current portion of trade receivables

is discounted using the effective interest

method and measured at amortised cost. The carrying

amounts of trade receivables generally

reflect their market values. Other assets include

the positive fair value of the outstanding interest

rate swap amounting to EUR 2,888 thousand (previous

year: EUR 0 thousand).

Receivables amounting in total to EUR 9,440

thousand (previous year: EUR 13,277 thousand)

were due from a single debtor.

During the 2006/2007 financial year, the BVB

Group recognised impairment losses in respect of

receivables amounting to EUR 345 thousand (previous

year: EUR 2,827 thousand) under other

operating expenses. Impairment losses amounting

to EUR 850 thousand (previous year: EUR 50

thousand) were reversed; the relevant income was

reported under other operating income.

As in the previous year, future claims, not reflected

in the financial statements, from season ticket

sales (excluding the hospitality area), TV income

and the agreement for the rights to the stadium

name were assigned. In addition, in the previous

year the majority of receivables outstanding at that

time in respect of player transfers was assigned as

security for loans.

156


CONSOLIDATED FINANCIAL STATEMENTS

(6) Inventories

in EUR thousands 30 June 2007 30 June 2006

Inventories 1,737 1,760

- impairment losses -63 -672

Payments on account 50 84

Inventories - net 1,724 1,172

During the financial year, no impairment writedowns

to net realisable value were recognised in

cost of materials, while one write-down amounting

to EUR 646 thousand was made in the previous

year. Sales of impaired items of inventories

did not result in a reduction in cost of materials.

(7) Cash and cash equivalents

in EUR thousands 30 June 2007 30 June 2006

Bank balances and cash-in-hand 13,905 41,001

Balances with banks bear interest at variable rates

of interest applying to demand deposits.

Of the cash and cash equivalents reported at the

balance sheet date, EUR 19 thousand (previous

year: EUR 3,608 thousand) were subject to restrictions

on the right of disposal.

(8) Equity

The development of equity and minority interests

is presented in the statement of changes in equity.

Subscribed capital

The subscribed capital of Borussia Dortmund

GmbH & Co. KGaA is divided into no-par value

shares with a notional share in the share capital of

EUR 1.00 per share. The shares are fully paid-up;

the number of shares issued and the number of

shares in circulation changed as follows:

Own

In

Number of shares Issued shares circulation

1 July 2005 29,250,000 -24,138 29,225,862

Capital increase 2006 14,625,000

Change in holding of own shares 267

30 June 2006 43,875,000 -23,871 43,851,129

Capital increase 2006 17,550,000

Change in holding of own shares 236

30 June 2007 61,425,000 -23,635 61,401,365

157


Borussia Dortmund

In the period between the date of admission of

the Company's shares to trading (31 October

2000) and the balance sheet date, the Company

acquired a total of 34,000 no-par value shares and

sold 10,365 no-par value shares off-market in the

form of printed physical share certificates. At the

balance sheet date, the Company held 23,635 nopar

value shares, representing 0.038% of the

share capital.

On the basis of the authorisation granted by the

General Shareholders' Meeting on 22 November

2005 and the approval of the Supervisory Board of

17 May 2006, the general partner resolved to

utilise the authorised capital to increase the share

capital by up to EUR 14,625,000 to up to EUR

43,875,000 by the issue of up to 14,625,000 new

bearer shares with subscription rights for shareholders.

The capital increase was fully subscribed

at an issue price of EUR 2.00 for each no-par value

share. The premium of EUR 14,625 thousand

in excess of the nominal amount was added to capital

reserves net of the costs of the placement

(EUR 393 thousand). The capital increase was

entered in the commercial register in June 2006.

On the basis of the authorisation granted by the

extraordinary General Shareholders' Meeting on

15 August 2006, the general partner resolved to

increase the share capital by up to EUR

17,550,000 to up to EUR 61,425,000 by the issue

of up to 17,550,000 new bearer shares with subscription

rights for shareholders. The limited liability

shareholders exercised their subscription

right in the ratio of 5:2 for a total of 7,567,585 new

shares at an issue price of EUR 2.00 per no-par

value share. The 9,982,415 new shares not subscribed

for by the existing shareholders were

acquired by Morgan Stanley & Co. International

Ltd., London, at a price of EUR 2.20 per share in

return for a non-cash contribution consisting of

loans from the BVB Group. The premium of EUR

19,548 thousand over the nominal amount of the

issue was added to capital reserves. The capital

increase was entered in the commercial register on

19 September 2006.

At the balance sheet date, as in the previous year,

conditional capital expiring on 31 October 2010 for

the purpose of issuing convertible bonds and bonds

with warrants amounted to EUR 14,625 thousand.

The extraordinary General Shareholders' Meeting

held on 15 August 2006 also authorised the general

partner until 31 July 2011, with the approval of

the Supervisory Board, to increase the share capital

by the issue of up to 21,937,500 new no-par value

shares for cash or non-cash contributions.

Reserves

Capital reserves consist exclusively of transfers in

respect of premiums on the issue of new shares

after deducting the net costs of the placement.

The remaining reserves consist entirely of other

revenue reserves. Revenue reserves comprise

profits generated and not distributed by Group

companies in the current year and previous years

and accumulated losses. In addition, the net

effect, taking account of subsequent adjustments,

of the remeasurement of SIGNAL IDUNA PARK

in accordance with IFRS 1.16 is reported under

this item.

The revaluation reserve relates to the positive fair

value of the interest rate swap entered into

amounting to EUR 2,888 thousand net of deferred

taxes of EUR 1,152 thousand.

158


CONSOLIDATED FINANCIAL STATEMENTS

(9) Financial liabilities

30 June 2007 30 June 2006

weighted carrying weighted carrying

average amount average amount

interest rate EUR thou. interest rate EUR thou.

non-current

Loan from Morgan Stanley & Co. Int. Ltd. 6.5% 73,525 5.1% 77,150

Liabilities to other

banks 5.7% 44,243 5.7% 46,229

Other loans 9.4% 4,884 9.4% 5,315

122,652 128,694

current

Loan from Morgan Stanley & Co. Int. Ltd. 6.5% 3,716 0

Liabilities to other

banks 5.7% 2,171 4.2% 62,162

Other loans 9.1% 401 9.1% 401

6,288 62,563

128,940 191,257

The majority of the Group's financing comprises

the loan raised in June 2006 from Morgan Stanley

& Co. International Ltd., London, England. The

loan has a maturity date of 2021 and bears interest

at Euribor plus a margin of 2% and additional fees.

The loan repayments begin with an amount of

EUR 3,716 thousand in the 2007/2008 financial

year and rise almost linearly to EUR 8,123 thousand

in the subsequent years. An obligation to

make special repayments arises if liquidity surpluses

exceed certain defined thresholds. The

Group has agreed to be bound by appropriate

restrictions on the purchase and sale of significant

assets. In addition, the loan conditions include

covenants relating to the observance of a number

of financial indicators whose values vary over the

term of the loan. The lender has a special right of

termination if the covenants are not observed. An

interest rate swap has been entered into in order to

minimise the interest-rate-related cash flow risk

associated with this loan. This interest rate hedging

transaction will result in interest payments equivalent

to a rate of interest of 6.2%, irrespective of

actual changes in market rates of interest; the

effective interest rate on the loan amounts to 6.5%.

The other liabilities to banks consist of a number of

loans repayable in instalments. The loans have

maturity dates between 2020 and 2026; fixed-interest

periods apply until 2016.

As a result of the interest rate swap entered into

and the long-term fixed-interest periods applying

to the other loans, the BVB Group is not exposed

to any significant risk from changes in interest

rates, even in the long term.

159


Borussia Dortmund

The maturities of non-current financial liabilities were as follows:

in EUR thousands 30 June 2007 30 June 2006

Between 1 and 5 years 31,513 27,771

Over 5 years 91,139 100,923

122,652 128,694

On the basis of the general level of interest rates

at the balance sheet date, the fair value of the

financial liabilities is around EUR 873 thousand

below their carrying amounts. At the balance sheet

date in the previous year, the carrying amounts

were substantially equivalent to the fair values. All

financial liabilities are denominated in euros.

(10) Other liabilities

in EUR thousands 30 June 2007 30 June 2006

non-current

Liabilities from finance leases 6,124 5,027

current

Advance payments received from season ticket sales 7,965 7,487

Advance payments received from sponsors 200 1,323

Other taxes 5,638 6,224

Outstanding salaries 2,619 1,289

Social security 5 129

Holiday entitlements 200 264

Liabilities from finance leases 194 100

Other 4,627 6,609

21,448 23,425

Other liabilities, total 27,572 28,452

The minimum lease payments from finance leases are due for payment as follows:

in EUR thousands 30 June 2007 30 June 2006

Up to 1 year 656 439

Over 1 year and up to 5 years 2,480 2,051

Over 5 years 7,695 6,229

10,831 8,719

Future finance charges from finance leases -4,513 -3,592

Present value of liabilities from finance leases 6,318 5,127

The change in the maturity structure of the present values of liabilities from finance leases was as follows:

in EUR thousands 30 June 2007 30 June 2006

Up to 1 year 194 100

Over 1 year and up to 5 years 2,392 793

Over 5 years 3,732 4,234

6,318 5,127

160


CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED INCOME STATEMENT

(11) Revenues

in EUR thousands 2006/07 2005/06

Ticketing 18,262 17,190

Sponsorship 30,549 27,417

TV marketing 21,250 14,843

Transfer income 6,767 12,399

Merchandising, catering, licences 14,379 12,046

Other 5,908 5,160

97,115 89,055

(12) Personnel expenses

in EUR thousands 2006/07 2005/06

Wages and salaries 34,844 37,660

Social security contributions 2,137 2,108

36,981 39,768

Average number of salaried employees 295 279

No defined benefit pension entitlements have

been granted to employees of the BVB Group.

Payments to the state pension scheme are reported

under social security contributions.

(13) Depreciation and amortisation

in EUR thousands 2006/07 2005/06

Amortisation of intangible assets 4,974 6,050

Depreciation of property, plant and equipment 8,572 8,177

13,546 14,227

Amortisation of intangible assets in the year under

review includes a write-down to the lower fair value

of EUR 54 thousand (previous year: EUR 0

thousand). This amount relates to the write-down

of a player registration to the lower transfer price

already agreed at the balance sheet date.

161


Borussia Dortmund

(14) Other operating expenses

in EUR thousands 2006/07 2005/06

Match operations 12,884 11,144

Advertising 10,752 9,622

Transfers 1,967 7,772

Media and printing 1,386 1,321

Leasing 2,073 1,671

Administration 6,944 6,707

Other 622 6,197

Other taxes 11 1,892

36,639 46,326

(15) Compensation entitlement of limited partners

In the 2005/2006 financial year, the remaining

shares in Westfalenstadion Dortmund GmbH &

Co. KG (“WFS KG”; the company was converted

into BVB Stadion GmbH in 2005/2006) held by

Molsiris Vermietungsgesellschaft mbH & Co.,

Objekt Westfalenstadion KG (“Molsiris”) were

repurchased. Since spring 2006, the BVB Group

has therefore held a total of 99.74% of the shares

in the current BVB Stadion GmbH. The shares still

held by Molsiris at the beginning of the prior-year

period were classified as liabilities in accordance

with IAS 32, because Molsiris had an inalienable

legal right to sell its shares, with a corresponding

entitlement to compensation from the Company.

The change in the fair value of this compensation

obligation was recognised in the income statement

(EUR 3,898 thousand).

The dividends paid by WFS KG to Molsiris in the

2005/2006 financial year (EUR 74 thousand) were

treated as finance costs in keeping with IAS 32.35

and presented separately in the consolidated

income statement.

Following the increase in the BVB Group's interest

in WFS KG to 99.74% in 2006, WFS KG was

converted into BVB Stadion GmbH, entailing a

change of legal form. The remaining interests in

consolidated equity held by minority shareholders

at the 30 June 2006 balance sheet date are now

reported as a separate item within equity.

(16) Income taxes and deferred taxes

Income tax liabilities developed as follows:

in EUR thousands 2006/07 2005/06

Income tax liabilities

non-current 4,232 5,232

current 3,669 4,226

7,901 9,458

162


CONSOLIDATED FINANCIAL STATEMENTS

Non-current income tax liabilities relate to trade

tax resulting from the sale of limited partners'

shares in WFS KG to Molsiris in 2002. In each

subsequent year, the City of Dortmund agreed to

defer settlement of the liability beyond the following

balance sheet date; for the first time, a portion

of this amount is due for payment in the

2007/2008 financial year and has been reclassified

accordingly. The current income tax liabilities

therefore mainly comprise the liability to trade tax

on the resale of the shares in WFS KG held by

Molsiris to BVB.

The deferred tax assets and liabilities reported in the consolidated balance sheet relate to the following

items:

30 June 2007 30 June 2006

in EUR thousands Assets Liabilities Assets Liabilities

Recognition and measurement

of non-current assets 156

Trade receivables and

other assets 1,152 41

Financial liabilities 782 818

Other liabilities 285

Tax loss carry-forwards 6,264 3,631

6,420 1,934 3,672 1,103

The changes in deferred taxes were as follows:

in EUR thousands 30 June 2007 30 June 2006

At the beginning of the year

+ deferred tax assets 3,672 1,518

- deferred tax liabilities -1,103 -5,242

Net amount of deferred taxes at the beginning of the year 2,569 -3,724

Deferred taxes recognised directly in equity -1,152 911

Tax benefit recognised in the consolidated income statement 3,069 5,382

Net amount of deferred taxes at the balance sheet date 4,486 2,569

The income tax expense was made up as follows:

in EUR thousands 2006/07 2005/06

Income taxes for the current period -32 -3,596

Deferred taxes 3,069 5,382

3,037 1,786

163


Borussia Dortmund

The income tax expense for the 2005/2006 financial

year relates mainly to the trade tax liability

resulting from the sale of limited partners' shares

in WFS KG and to the tax element of the costs of

the capital increase taken directly to equity.

The recognition of deferred tax assets in respect

of tax loss carry-forwards resulted in a reduction

in the tax expense of EUR 2,633 thousand (prior

year: EUR 2,155 thousand).

At the balance sheet date, the BVB Group had

corporation tax loss carry-forwards amounting to

EUR 136,211 thousand and trade tax loss carryforwards

amounting to EUR 151,206 thousand

for which no deferred tax assets have been recognised.

Under current tax law, tax loss carry-forwards

may be carried forward for an indefinite

period.

The expected income tax expense which would

theoretically result from applying the weighted

average tax rate of 39.9% (previous year: 39.9%)

can be reconciled with the actual income tax benefit

reported in the consolidated income statement

as follows:

in EUR thousands 2006/07 2005/06

Consolidated profit/loss before taxes 7,078 -22,563

Theoretical tax rate in % 39.9% 39.9%

Expected income tax expense/benefit -2,824 9,003

Effects of non-deductible expenses and income not subject to tax -1,126 -1,996

Taxes relating to earlier periods 38 -329

Trade tax effect of change in partners of WFS KG 0 -2,270

Effect from supplementary tax balance sheets -156 856

Utilisation of current tax losses and losses brought forward 7,100 -3,495

Tax effects of investments accounted for at equity 5 17

Tax benefit recognised in the consolidated income statement 3,037 1,786

Actual tax rate in % -42.9% 7.9%

(17) Consolidated cash flow statement

Cash and cash equivalents reported in the balance sheet are reconciled to cash funds in the consolidated

cash flow statement as follows:

in EUR thousands 30 June 2007 30 June 2006

Cash and cash equivalents 13,905 41,001

- cash and cash equivalents pledged -19 -3,608

- short-term overdrafts 0 -8,000

Cash funds 13,886 29,393

164


CONSOLIDATED FINANCIAL STATEMENTS

OTHER DISCLOSURES

(18) Auditors' fees

in EUR thousands 2006/07 2005/06

Audit of the financial statements 365 340

Other audit-related work 0 50

Tax advice 62 47

Other services 198 33

(19) Other financial obligations

Due after

up to 1-5 more than

30 June 2007 (in EUR thousands) Total 1 year years 5 years

Rental and lease payments

(operating leases) 17,962 1,871 6,624 9,467

Purchase commitments for

investments in intangible assets 4,700 2,600 2,100 0

Marketing fees 24,972 8,324 16,648 0

Other obligations 2,087 45 178 1,864

49,721 12,840 25,550 11,331

Due after

up to 1-5 more than

30 June 2006 (in EUR thousands) Total 1 year years 5 years

Rental and lease payments

(operating leases) 19,469 1,786 6,607 11,076

Purchase commitments for

investments in intangible assets 7,101 5,294 1,807 0

Marketing fees 33,296 8,324 24,972 0

Other obligations 2,164 45 178 1,941

62,030 15,449 33,564 13,017

The minimum lease payments from operating leases

relate mostly to lease agreements for offices, the

land at the Dortmund-Brackel training ground and

various motor vehicles. The Company has an

option to purchase the land at Dortmund-Brackel

and the offices on the expiry of the lease agreements

in 2017 and 2022 respectively. Rental payments

from the non-cancellable period of a sublease

are expected to amount to EUR 605

thousand (previous year: EUR 907 thousand).

165


Borussia Dortmund

(20) Earnings per share

Earnings per share are calculated in accordance

with IAS 33 (Earnings per share) by dividing the

net profit or loss for the period attributable to the

shareholders by the weighted average number of

shares in circulation. The earnings per share

relate only to shares in the parent company. The

bonus element included in the capital increase in

August 2006 has been taken into account in calculating

the weighted average number of shares

in issue. Since there are no potential ordinary

shares, the diluted and undiluted earnings per

share are the same.

2006/07 2005/06

Weighted average number of

shares outstanding 58,665,483 31,020,873

Consolidated net profit/loss after taxes (in EUR thousands) 10,115 -20,777

Earnings attributable to minority shareholders 48 24

Earnings attributable to BVB Group shareholders 10,067 -20,801

Earnings per share (in EUR) 0.17 -0.67

(21) Transactions with related parties

The general partner in Borussia Dortmund

GmbH & Co. KGaA is Borussia Dortmund

Geschäftsführungs-GmbH. The latter is responsible

for the management and legal representation

of Borussia Dortmund GmbH & Co. KGaA.

The power to appoint and remove members of

staff thus rests with Ballspielverein Borussia 09

e.V. Dortmund, in its capacity as the sole shareholder

in Borussia Dortmund Geschäftsführungs-

GmbH. Both Borussia Dortmund Geschäfts -

führungs-GmbH and Ballspielverein Borussia 09

e.V. Dortmund, and all their affiliated companies,

therefore qualify as related parties within the

meaning of IAS 24.

Transactions with related parties:

in EUR thousands 2006/07 2005/06

Transactions with BVB 09 e.V.

Rental income 25 25

Income from other services 47 38

One-time contribution to operating funds for 3 subsequent seasons 0 -450

Transactions with Borussia Dortmund Geschäftsführungs-GmbH

Expense from costs recharged -1,485 -1,113

Transactions with Orthomed GmbH

Expense from other services -202 -270

166


CONSOLIDATED FINANCIAL STATEMENTS

Outstanding items in respect of related parties:

in EUR thousands 30 June 2007 30 June 2006

Other current assets

Intercompany account with BVB 09 e.V. 1,394 1,268

Orthomed GmbH 1 0

Other current liabilities

Intercompany account with Borussia Dortmund

Geschäftsführungs-GmbH 32 -461

(22) Management

The management received the following remuneration

in the past financial year:

in EUR thousands 2006/07 2005/06

Hans-Joachim Watzke (Chairman)

fixed components

fixed remuneration 400 400

other remuneration 14 11

performance-related components

special remuneration 0 250

bonus 232 0

Thomas Treß

fixed components

fixed remuneration 400 200

other remuneration 26 19

performance-related components

special remuneration 0 250

bonus 155 0

1,227 1,130

The remuneration paid to the Company's management

consists exclusively of short-term benefits.

167


Borussia Dortmund

(23) Supervisory Board

The members of the Supervisory Board of the Company,

their occupations and further responsibilities in other

management bodies are listed below. In the past financial

year, the Supervisory Board received remuneration amounting

to EUR 52.5 thousand (previous year: EUR 52.5

thousand).

Dipl.-Kfm.

Gerd Pieper

Harald Heinze

Othmar Freiherr

von Diemar

Bernd Geske

Ruedi Baer

Patrick Albert

Lynch

Christian

Kullmann

Chairman

Deputy Chairman

(until 26 Feb 2007)

(since 23 May 2007)

Occupation

Proprietor and

Managing Director

of Stadtparfümerie

Pieper GmbH, Herne


Proprietor and

manager of Othmar

von Diemar Vermögensverwaltung

+

Beratung, Cologne

Managing partner of

Bernd Geske Lean

Communication,

Meerbusch

Delegate of the

Board of Directors

of the mobilezone

group, Regensdorf

(Switzerland)

Managing Director

of Morgan Stanley &

Co., London

(England)

Head of the board

office and corporate

communications

division of RAG

Aktiengesellschaft,

Essen

Other responsibilities

Member of the

Supervisory Board

of Beauty Alliance

Deutschland GmbH

& Co. KG, Bielefeld

Member of the

Supervisory Board

of E-M-S new media

AG, Dortmund

Member of the

Member of the Supervisory Board

Supervisory Board of of WV Energie AG,

Herner Sparkasse, Frankfurt am Main

Herne

Member of the

Supervisory Board

of M-Exchange AG,

Frankfurt am Main

Member of the

Advisory Board of

Haftpflichtverband

öffentlicher

Verkehrsbetriebe

(HÖV), Dortmund

Chairman of the

Supervisory Board

of Informium AG,

Cologne

Member of the

Supervisory Board of

004 Beratungs- und

Dienstleistungs-

GmbH,

Aschaffenburg

Substitute member

of the Supervisory

Board of Arques

Industries AG,

Starnberg

Chairman of the

Board of Directors

of mobilezone AG,

Regensdorf

(Switzerland)

Chairman of the

Board of Directors

of mobilezone com

AG Regensdorf

(Switzerland)

Chairman of the

Board of Directors

of Europe Trade AG

Regensdorf

(Switzerland)

Chairman of the

Board of Directors

of Destination Travel

AG, Liebefeld

(Switzerland)

Member of the

Supervisory Board of

Ploucquet Holding

GmbH, Unterföhring

Chairman of the

Board of Directors of

B&B Beratungs AG,

Watt (Switzerland)

Chairman of the

Board of Directors of

Bablo Immobilien AG,

Watt (Switzerland)

Member of the

Board of Directors of

Immoplaza AG,

Regensdorf

(Switzerland)

Chairman of the

Board of Directors of

AP Fashion AG, Watt

(Switzerland)

168


CONSOLIDATED FINANCIAL STATEMENTS

(24) Events after the balance sheet date (25) Notifiable shareholdings under § 21

of the German Securities Trading Act

(Wertpapierhandelsgesetz, “WphG”)

On 6 July 2007, the Bundesrat approved the act

implementing the reform of corporate taxation in

2008. As a consequence, the future effects of the

reform were not yet required to be reflected in the

We have been informed of the following notifiable

shareholdings:

1. Morgan Stanley International Ltd., London

(16,25%)

consolidated balance sheet prepared as of 30 June 2. Absolute Capital Management Holding

2007.

Limited (13,04%)

3. Blue Bay Asset Management (17,09%)

The reform of corporate taxation included substantial

cuts in the rates of both trade tax and corporation

tax. While the act results in a net reduction

in the tax burden on companies intended by

the legislature, it will also give rise to some extra

tax payments as a result of broadening the basis of

assessment to taxation.

An initial analysis of the future effects of the

reform of corporate taxation on the BVB Group

did not reveal any indications of particular tax risks

in future as a result of the reform.

Application of the tax rates approved after the balance

sheet date would have resulted in a reduction

of deferred tax income amounting in total to

around EUR 1,176 thousand, and a corresponding

reduction in the overall tax benefit but with no

cash effect. At the same time, there would have

been a reduction of EUR 240 thousand in

deferred taxes recognised directly in equity.

4. BV. Borussia 09 e.V., Dortmund (7,24%)

5. Bernd Geske (6,51%)

(26) Corporate Governance

The management and Supervisory Board of

Borussia Dortmund GmbH & Co. KGaA issued

the statement of compliance with the German

Corporate Governance Code required by § 161 of

the German Stock Corporation Act (Aktiengesetz)

in November 2006 and made it permanently available

to shareholders on the BVB website at

www.bvb.de.

Dortmund, 15 August 2007

Borussia Dortmund GmbH & Co. KGaA

Borussia Dortmund Geschäftsführungs-GmbH

Hans-Joachim Watzke

Managing Director (Chairman)

Thomas Treß

Managing Director

169


Borussia Dortmund

CONSOLIDATED FINANCIAL STATEMENTS

AUDITORS‘ REPORT

We have audited the consolidated financial statements

– consisting of the balance sheet, income

statement, statement of changes in equity, cash

flow statement and notes – prepared by Borussia

Dortmund GmbH & Co. KGaA, Dortmund

and the Group management report for the financial

year from 1 July 2006 to 30 June 2007. The

preparation of the consolidated financial statements

and Group management report in accordance

with IFRS as adopted in the EU and the

additional requirements of commercial law to be

applied under § 315a (1) of the German Com -

mercial Code (Handelsgesetzbuch, “HGB”) as

well as the supplementary provisions in the

Articles of Association is the responsibility of the

Company’s legal representatives. Our responsibility

is to express an opinion on the consolidated

financial statements and the Group management

report, based on our audit.

We conducted our audit of the consolidated financial

statements in accordance with § 317 HGB and

the generally accepted standards for the audit of

financial statements in Germany promulgated by

the German Institute of Chartered Accountants

(Institut der Wirtschaftsprüfer, IDW). Those standards

require that we plan and perform the audit

such that misstatements materially affecting the

presentation of the net assets, financial position

and results of operations in the consolidated financial

statements in accordance with the relevant

financial reporting standards and in the Group

management report are detected with reasonable

assurance. Knowledge of the business activities

and the economic and legal environment of the

Group and expectations of possible misstatements

are taken into account in the determination of

audit procedures. The effectiveness of the internal

accounting control system and the evidence supporting

the disclosures in the consolidated financial

statements and the Group management report

are examined primarily on a test basis within the

framework of the audit. The audit includes the

assessment of the annual financial statements of

the companies included in the consolidated financial

statements, the definition of the group of consolidated

companies, the accounting and consolidation

principles used and significant estimates

made by the legal representatives, as well as the

evaluation of the overall presentation of the con -

solidated financial statements and the Group

management report. We believe that our audit provides

a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the results of our audit,

the consolidated financial statements comply with

IFRS as adopted in the EU and the additional

requirements of commercial law to be applied

under § 315a (1) HGB as well as the supplementary

provisions in the Articles of Association and

give a true and fair view of the net assets, financial

position and results of operations of the Group in

accordance with these requirements. The Group

management report is consistent with the con -

solidated financial statements, provides as a whole

a suitable view of the Group's position and

suitably presents the opportunities and risks of

future development.

Dortmund, 17 August 2007

BDO WESTFALEN-REVISION GmbH

Wirtschaftsprüfungsgesellschaft

R. Schepers ppa J. Königshoven

Auditor

Auditor

170


IMPRINT / FINANCIAL CALENDAR 2007/2008

IMPRINT

Published by:

Borussia Dortmund GmbH & Co. KGaA

Rheinlanddamm 207-209,

44137 Dortmund

Internet: www.borussia-aktie.de

E-Mail: aktie@borussia-dortmund.de

Responsible party:

Marcus Knipping

Communication design/

Concept:

K-werk, Uwe Landskron,

Agentur für Kommunikation,

www.K-werk.de

Editors Prologue/

History:

Boris Rupert

Photos:

BVB-archives,

Susanne Beimann,

Firo sportphoto,

Stefan Michael Grey,

Alexander Hassenstein,

Carsten Kobow,

Archiv Kolbe,

Uwe Landskron,

Christian Lüning,

Press office of the

City of Dortmund,

Sportfive.

Copyright by

the photographers

Printed by:

Hitzegrad medien – druck GmbH & Co. KG

FINANCIAL CALENDAR 2007/2008

25 November 2007 Members Meeting of BV. Borussia 09 e. V. Dortmund, Dortmund

27 November 2007 Annual General Meeting of Borussia Dortmund GmbH & Co. KGaA

for the 2006/2007 financial year, Dortmund

Februar 2008

Half-year report for the 2007/2008 financial year

Further information is available on the Internet at: www.borussia-aktie.de

171


EPILOGUE

Increasing use of the capacity at “SIGNAL

IDUNA PARK” on non-match days is right at the

top of Borussia Dortmund GmbH & Co. KGaA's

list of priorities. The rooms created during the

expansion stages in the belly of the stadium

now have visitors at all times, while in future

– according to management's ideas and plans

– the interior and the circulation levels running

behind the stands of Germany's largest football

stadium should also be utilised.

Thoughts are focusing on the circulation levels

that run behind the stands. “We would like

it if those fans who have no access to the VIP

areas also stayed longer in the stadium before

and after the game”, says CFO Thomas Treß.

In this respect as well, structural measures

would be necessary in order to greatly change

the character of the circulation levels. Experiences

along these lines by other Bundesliga

teams have in any event been positive.

Except for “Stadium Cinema”, the annual

meeting of the “Jehovah's Witnesses” and the

welcome event for the new students of the University

of Dortmund, the 80,708 seats in the

stands remain empty outside Borussia Dortmund's

matches.

The BVB museum – the “Borusseum” - will

provide further life and is expected to be

opened in 2008. Today, stadium tours already

enjoy great popularity. This line of business can

be further pushed ahead in combination with

the “Borusseum”.

172


SIGNAL IDUNA PARK – MORE THAN 90 MINUTES OF FOOTBALL

173


Tradition • Passion • Success

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