Tradition • Passion • Success Financial Condition and Net Assets COMPENSATION REPORT Tradition • Passion • Success RISK REPORT Risk Management System

Home , David Odonkor, Ebi Smolarek, FC Energie Cottbus, Gerald Asamoah, Giovanni Federico, Marc Ziegler

KEY FIGURES AT A GLANCE PROLOGUE MANAGEMENT'S GREETING SIGNAL IDUNA PARK: History REPORT OF THE SUPERVISORY BOARD GOVERNING BODIES AND CORPORATE STRUCTURE SIGNAL IDUNA PARK: BVB Sponsorship THE BVB SHARE Share price performance Shareholder structure Investor Relations Corporate governance report THE 2006/2007 SEASON SIGNAL IDUNA PARK: BVB Merchandising

MANAGEMENT REPORT

BUSINESS AND FRAMEWORK CONDITIONS

Development of the market and competitive environment

POSITION OF THE COMPANY

Development of significant operating expenses

Analysis of capital structure Analysis of investments Analysis of liquidity Net assets Overall summary of results of operations, Tradition • Passion • Success financial condition and net assets COMPENSATION REPORT Tradition • Passion • Success RISK REPORT Risk management system

Strategic risks Personnel risks Competitive risks Sales risks Financial risks

FORECAST REPORT Anticipated development of the Company Expected general economic environment

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

Development forecast in summary SUPPLEMENTARY REPORT OTHER DISCLOSURES

SIGNAL IDUNA PARK: BVB Event ANNUAL FINANCIAL STATEMENTS Balance sheet Income statement Notes

Other disclosures Cash flow statement AUDITORS’ REPORT SIGNAL IDUNA PARK: BVB Media Business Report Borussia Dortmund, July 2006 - June 2007 2006 - June Dortmund, July Business Report Borussia

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 GROUP MANAGEMENT REPORT

BUSINESS AND FRAMEWORK CONDITIONS BUSINESS AND FRAMEWORK CONDITIONS Financial year 2006/2007 in review 44 Financial year 2006/2007 in review 106 Development of the market and competitive environment Development of the market and competitive environment in German professional football 46 in German professional football 108 Group structure and business 47 Group structure and business 109 Organisation of management and control 48 Organisation of management and control 112 Internal management system 51 Internal management system 115 Corporate strategy 52 Corporate strategy 116 POSITION OF THE COMPANY POSITION OF THE COMPANY Results of operations 54 Results of operations 118 Sales development 55 Sales development 119 Development of significant operating expenses Development of significant operating expenses Financial condition 59 Financial condition 122 Analysis of capital structure Analysis of capital structure Analysis of investments Analysis of investments Analysis of liquidity Analysis of liquidity Net assets Net assets Overall summary of results of operations, Overall summary of results of operations, financial condition and net assets financial condition and net assets COMPENSATION REPORT 60 COMPENSATION REPORT 124 Tradition • Passion • Success RISK REPORT 61 RISK REPORT 125 Risk management system Risk management system Specific risks 62 Specific risks 126 Strategic risks Strategic risks Personnel risks Personnel risks Competitive risks Competitive risks Sales risks Sales risks Financial risks Financial risks Risks jeopardising performance and continued existence Risks jeopardising performance and continued existence The risk situation in summary 65 The risk situation in summary 129 FORECAST REPORT FORECAST REPORT Anticipated development of the Company Anticipated development of the Company Expected general economic environment Expected general economic environment Expected results of operations 66 Expected results of operations 130 Anticipated earnings development Anticipated earnings development Anticipated development of revenues Anticipated development of revenues Anticipated development of significant Anticipated development of significant operating expenses operating expenses Expected dividends Expected dividends Expected financial condition Expected financial condition Financial planning Financial planning Capital expenditure planning Capital expenditure planning Anticipated development of liquidity Anticipated development of liquidity Opportunities 67 Opportunities 131 Development forecast in summary Development forecast in summary SUPPLEMENTARY REPORT 68 SUPPLEMENTARY REPORT 132 OTHER DISCLOSURES 69 OTHER DISCLOSURES 133

SIGNAL IDUNA PARK: BVB Event 72 SIGNAL IDUNA PARK: BVB Ticketing 136 ANNUAL FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS Balance sheet 80 Consolidated balance sheet 140 Income statement 82 Consolidated income statement 141 Notes 83 Consolidated cash flow statement 144 Notes to the balance sheet 84 Notes to the consolidated financial statements 145 Changes in fixed assets 85 Notes to the consolidated balance sheet 154 Notes to the income statement 92 Notes to the consolidated income statement 161 Other disclosures 94 Other disclosures 165 Cash flow statement 98 AUDITORS’ REPORT 99 AUDITORS’ REPORT 170 SIGNAL IDUNA PARK: BVB Media 100 IMPRINT / FINANCIAL CALENDAR 171 EPILOGUE 172

Business Report Borussia Dortmund, July 2006 – June 2007 KEY FIGURES AT A GLANCE

BORUSSIA DORTMUND GmbH & Co. KGaA

2006/2007 2005/2006 30 June 2007 30 June 2006 EUR millions EUR millions SIGNAL IDUNA PARK – MORE THAN 90 MINUTES OF FOOTBALL 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

173 KEY FIGURES AT A GLANCE

BORUSSIA DORTMUND GmbH & Co. KGaA

2006/2007 2005/2006 30 June 2007 30 June 2006 EUR millions EUR millions SIGNAL IDUNA PARK – MORE THAN 90 MINUTES OF FOOTBALL 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

173 SIGNAL IDUNA PARK

3 SIGNAL IDUNA PARK – THEEIN FUSSBALLSTADIONFOOTBALL STADIUM

4 PROLOGUE

5 SIGNAL IDUNA PARK – MORE THAN 90 MINUTES OF FOOTBALL

6 PROLOGUE

7 SIGNAL IDUNA PARK – CENTRE FOR BVB SPORT MARKETING

Signal Iduna Park is a football stadium in Dort- SIGNAL IDUNA PARK is the source of revenues.

mund. With 80,708 seats, it is the largest stadi- Ranging from ticketing to income from TV mar-

um in Germany built exclusively for football. keting from Bundesliga matches and (where

Signal Iduna Park is the ground of the Borussia applicable) matches in European competition,

Dortmund football Bundesliga team and has from revenues from jersey, perimeter board

already been the location for numerous inter- and interior advertising to marketing of hospi-

national football tournaments, most recently, tality seats, from merchandising to event mar-

the 2006 FIFA Football World Cup. The stadium, keting: Borussia Dortmund GmbH & Co.

with its striking yellow pylons in the roof struc- KGaA's business activities have their source in

ture, is a landmark of the city of Dortmund. a piece of earth of some 5,000 square metres

Source: Wikipedia.de covered with a roll-out pitch near Bundes-

straße 1. SIGNAL IDUNA PARK is the Compa-

As described in the definition in the free ency- ny's heart. Since summer 2006, it has again

clopaedia “Wikipedia”, the general public been owned by BVB.

regards SIGNAL IDUNA PARK merely as a foot-

ball ground, but it is also the POI (Point of In this business report, we outline potential

Interest) – the location – around which much of for marketing the stadium in the “Sponsor-

Borussia Dortmund GmbH & Co. KGaA's activ- ing”, “Merchandising”, “Event”, “Media” and

i ties revolve. Despite numerous measures and “Ticketing” sections. Moreover, we provide a

improvements in recent years, it continues to short outlook on what will hopefully be a

offer undeveloped marketing potential. 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 per- Metzelder was out for practically the entire first formed well and in accordance with expectations half of the season due to injury. World Cup play- in the 2006/2007 financial year. The capital er Sebastian Kehl was injured so seriously in the increase implemented at the beginning of the first Bundesliga match that he was unavailable year, which is reflected by our significantly 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 Our stated goal for the future is to bring our place in us. We would like to thank you for that. 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 as we can. For the first time, part of our transfer EUR 10.3 million in this annual report. This income was able to be invested again for con- pleasing result was due not only to the World tracting players for the beginning of the Cup but particularly also to the transfer of the 2007/2008 season, and this investment promises club's David Odonkor to Real Betis Sevilla, a to strengthen our squad considerably. We have club in the Spanish Primera Division. 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 ambi- games of the past season, and in so doing steer tious sporting goals this past financial year, even the BVB ship back into calmer waters. though the gate to Europe, in other words participation in international competition, lay open You, the shareholder, can be confident that we right up until the last match day, despite the tur- will patiently and doggedly forge ahead while at bulent season. the same time strictly observing our credo: sporting success cannot be achieved without exercis- At the beginning of last season it was quite appar- ing good business sense. ent 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 Thomas Treß Managing Director (Chairman) Managing Director

10 GREETING

Hans-Joachim Watzke Thomas Treß Managing Director (Chairman) 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 Decem- ber 1909, BV. Borussia 09 e.V. Dortmund is BVB's history commences on the “white meadow” in the founded. The sporting home remains the suburb of Brackel. “white meadow”.

On 10 August 1924, the “white meadow” is given a new name: “Borussia-Sportplatz” Already years earlier, on 6 June 1926, the (Borussia Sports Ground). Over many years of “Red Earth Stadium” (Kampfbahn Rote Erde) hard work, including the investment of 50,000 is opened in Dortmund's south in Stro- Reichsmarks, club members have expanded belallee, in direct proximity to the Westfalen- the former urban sports ground into a jewel halle. In 1937, it becomes the new home of for 18,000 visitors. This own initiative is Borussia Dortmund. Using wooden struc- unique to date in Germany. In 1937, BVB has to tures, capacity can be expanded to up to relinquish the “Borussia Sports Ground”. It is 43,000 viewers in the 1960s during BVB's allegedly intended for the Hoesch expansion, peak, when it wins the German championship road construction and as a reserve for the in 1956, 1957 and 1963, and then becomes the planned “Hoesch Park”. first German club to win a European Cup in

The “Red Earth Stadium” in its original In 1971, construction of the former The new ground almost completed: Roofs condition. Next to it: two training areas. Westfalenstadion was commenced. 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 the Westfalenstadion, which, for cost reasons, early stage that this cannot be a permanent is built as a prefabricated system using a solution, yet a solid expansion or conversion cement-slab structure based on the example would be too expensive. of the Olympic city, Montreal (1976). For approximately EUR 17 million, a modern sta- In 1965 the seeds are instead sown for build- dium with 54,000 seats is constructed and ing a new stadium. However, the project inaugurated on 2 April 1974. receives the decisive push only at the beginning of the 1970s, when Cologne decides not Until 1992, visitors attend the former West- to be a World Cup city and Dortmund is able to falenstadion in its original condition for 18 apply to be a site for the 1974 World Cup. On 4 years. However, in the 14 years that follow October 1971, the City Council decides to build there are many changes.

For years a standard image: Former After the first and second expansion In the current construction stage, but still Westfalenstadion and Red Earth. stages: Space for 68,600 spectators. 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 view- ity is increased to 68,600 in 1999. In this ers due to conversion of standing places to case, the southern stand – the heart of Dort- seats in the northern stand. As part of the mund’s footballing passion – is expanded to “first expansion stage”, just three years lat- 24,454 seats, thus becoming Europe's er the western and eastern stands are largest standing space area. The standing expanded by upper terraces with 6,000 seats places can be converted to seats for interna- each. In the second expansion stage, capac- tional 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 Since 1 December 2005, the stadium has been and expansion of the corner areas. This per- called SIGNAL IDUNA PARK. Signal Iduna, the mits a capacity increase by approximately insurance and financial services provider with 14,000 viewers to initially 83,000 seats. Three its registered office in Dortmund and Ham- years later, for the 2006 World Cup, exactly burg, has had a close relationship with BVB as 80,708 visitors fit into Germany's largest sta- sponsor for many years and for now has dium due to various official requirements. secured the naming rights until 30 June 2011.

View from the stadium fore- Old home, new name: court to the northern stand SIGNAL IDUNA PARK (1999). (2005).

First expansion stage: Celebrations for the inau- The roof is yet to come guration: Stadium with (1995/1996). sponsor name.

15 REPORT OF THE SUPERVISORY BOARD

Borussia Dortmund GmbH & Co. KGaA suc- Board was also kept informed between sessions by ceeded in getting back into the black in the means of written documentation. Outside of meet- 2006/2007 financial year. The Supervisory Board ings, the chairman of the Supervisory Board was also sees this as the tangible fruits of the restructuring in regular contact with management and was kept measures introduced at the end of 2004/begin- apprised of developments in the business as well as ning of 2005 which have been steadily imple- material events and transactions as they occurred. mented since that time. In the 2006/2007 financial year, the Supervisory Board again dealt The Supervisory Board met five times in the intensively with the condition and performance 2006/2007 financial year (on 15 August 2006, 6 of the Company and the Group, exercising its October 2006, 5 March 2007, 16 April 2007 and 24 rights and duties under the law and the May 2007). Resolutions of the Supervisory Board Company's articles of association without were adopted in accordance with the relevant statu- restriction. tory provisions and provisions of the Company's Articles of Association, in some cases outside of meet- WORK OF THE SUPERVISORY BOARD, ings by circular memorandum (Umlaufverfahren). MEETINGS The Supervisory Board is composed of six persons. The Supervisory Board supervised the transaction of Since committees must consist of three persons in the Company's business by the general partner and order to have quorum, no Committees were created its managing directors. During the reporting period, in view of the size of the Supervisory Board. There the Supervisory Board kept management informed in exists no information subject to disclosure concern- a timely and comprehensive manner, specifically by ing the frequency of Supervisory Board members' providing regular oral and written reports within the attendance at meetings. meaning of § 90 German Stock Corporation Act (AktG). The reports related primarily to the liquidity The Supervisory Board's resolutions during the situation and financial condition, planned invest- reporting period essentially related to its motions to ments, corporate planning (financial, investment and the extraordinary General Shareholders' Meeting on human resources planning) and the risk situation of 15 August 2006 and the ordinary General the Company and of the Group. Deviations in the Shareholders' Meeting on 28 November 2006, as well course of business from plans and objectives were as to amendment of § 4 and § 5 no. 1 of the Articles explained in detail to the Supervisory Board, which of Association in connection with implementing the then reviewed and discussed these with management. capital increase approved at the extraordinary The Supervisory Board reviewed and discussed in General Shareholders' Meeting on 15 August 2006, detail transactions of significance to the Company and to approval of the agreement to transfer the based on reports by management. These reports and handball division to Ballspielverein Borussia 09 e.V. discussions not only concerned economic perform- Dortmund. The Supervisory Board also dealt with the ance but also sporting performance, particularly dur- accounting principles applied in the 2005/2006 finan- ing the changeable yet ultimately pleasing second half cial year and preparation of both of the aforemen- of the 2006/2007 Bundesliga season. The Supervisory tioned shareholders' meetings.

16 REPORT OF THE SUPERVISORY BOARD

CORPORATE GOVERNANCE on 6 September 2007, at which the auditor per- The Supervisory Board and management of the sonally presented the key findings of the audit. general partner also dealt with the issue of corporate governance in the reporting period. In The Supervisory Board is in agreement with the November 2006, they issued a Statement of results of the auditor's review and, based on the Compliance (Entsprechenserklärung) with the final result of its own examination, has no objec- German Corporate Governance Code, taking into tions. The Supervisory Board adopted the annu- account the amendments in the version dated 12 al financial statements of Borussia Dortmund June 2006. This statement was made permanent- GmbH & Co. KGaA and the consolidated finan- ly available through publication in the Internet cial statements as at 30 June 2007 at its meeting under www.borussia-aktie.de. Other details and on 6 September 2007. information in this regard will be provided in a separate section in the Annual Report (Corporate Furthermore, the Supervisory Board conducted Governance Report) in accordance with Section its own audit of the report prepared by the gen- 3.10 of the German Corporate Governance Code. eral partner pursuant to § 312 AktG concerning relationships with affiliated enterprises (depen- ANNUAL AND CONSOLIDATED dent company report) for the 2006/2007 finan- FINANCIAL STATEMENTS 2006/2007 cial year. The dependent company report was The annual financial statements of Borussia also reviewed by the auditor and the following Dortmund GmbH & Co. KGaA and the consoli- auditor's opinion was issued thereon: dated financial statements as at 30 June 2007 as well as the management report for the Company “Pursuant to our duly conducted audit and evalu- and for the Group (each including an explanato- ation we hereby confirm that ry report on the figures in accordance with 1. the factual information in the report is accu- §§ 289 (4), 315 (4) German Commercial Code rate; (HGB)), which were prepared and submitted 2. with respect to the reported transactions, the within the prescribed time by management, were consideration paid by the Company was not audited along with the accounts in accordance unreasonably high, or any disadvantages have with statutory provisions by the appointed audi- been compensated for; tor, BDO Westfalen-Revision GmbH Wirt - 3. with respect to the reported actions taken, no schaftsprüfungs gesellschaft, Dortmund, and facts or circumstances exist that would argue were issued with an unqualified opinion (un - for any assessment substantially different than eingeschränkter Bestätigungsvermerk). that made by management.”

The annual financial statements, the consolidated Based on the final result of its review, the financial statements, the management report for Supervisory Board raised no objection to the the company, the Group management report, the general partner's statement at the conclusion of risk report and the corresponding auditor's the dependent company report. The Supervisory reports were provided to all members of the Board approved and took note of the results of the Supervisory Board and discussed in the auditor's auditor's review of the dependent company presence at the Supervisory Board meeting held report.

17 REPORT OF THE SUPERVISORY BOARD

The Supervisory Board recommends that the The Executive Committee of the Advisory Board General Shareholders' Meeting adopt the annual of Borussia Dortmund Geschäftsführungs-GmbH financial statements as at 30 June 2007. The reached an agreement earlier than required with Supervisory Board also agrees with management's the managing director and chairman, Hans- proposal to transfer the net retained profits for the Joachim Watzke, to extend his managing director's 2006/2007 financial year of A 4.592.026,83 to oth- agreement (the term of which was originally limit- er revenue reserves. The Supervisory Board also ed until 31 December 2008) by a further three recommends ratification (Entlastung) of the acts years, i.e. until 31 December 2011. The term of of the general partner, Borussia Dortmund office of the other managing director, Thomas Geschäftsführungs-GmbH, for the 2006/2007 Treß, currently runs until the end of 2008. financial year. The Supervisory Board wishes to thank manage- PERSONNEL MATTERS ment and all the employees for their once again Patrick Albert Lynch, of London (Great Britain), successful work over the past financial year and resigned from the Supervisory Board effective 26 their exceptional efforts on behalf of the Company. February 2007. In his place, Christian Kullmann, Many thanks also to the business partners, share- of Hamminkeln, was appointed to the Supervisory holders and fans of Borussia Dortmund for the Board by virtue of an order applied for by the gen- confidence they have shown in us. eral partner and handed down by the Local Court (Amtsgericht) of Dortmund on 21 May 2007 in Dortmund, 6 September 2007 accordance with § 104 (2) AktG. The number of The Supervisory Board 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 mem- Gerd Pieper ber's term of office. Chairman

18 GOVERNING BODIES AND CORPORATE STRUCTURE

GOVERNING BODIES

BV. BORUSSIA 09 e.V. DORTMUND

Management Board Dr. Reinhard Rauball President Dr. Albrecht Knauf Vice President Dr. Reinhold Lunow 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 Managing Director (Chairman) Thomas Treß 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 20 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 primary and jersey sponsor of BVB is The three most important partners of a foot- Evonik Industries AG. ball club are the jersey sponsor, the sponsor Since 14 September 2007, the BVB players providing the stadium name and the equip- have worn this name ment supplier. Borussia Dortmund has con- on their breast. This photo shows the scorer tractual ties with three high-level partners in of two goals in the game against Werder the form of Evonik Industries AG, SIGNAL Bremen (final score IDUNA Group and Nike. 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 SPONSOR PROVIDING THE STADIUM NAME July 2006, BVB's partner in this respect has In December 2005, Borussia Dortmund was been Evonik, which was created in autumn able to acquire SIGNAL IDUNA Group as the 2007 from RAG and formed from the former sponsor providing the stadium name. Since group companies Degussa, Steag and RAG then, Germany's largest football stadium has Immobilien. With activities in more than 100 been called SIGNAL IDUNA PARK. 77 percent countries, about 43,000 employees generate of German companies are involved in spon- sales of approximately EUR 14.8 billion (2006). sorship, spending EUR 3.8 billion on it each In the 2006/2007 season relevant for the year, more than two-thirds of this amount reporting period, EVONIK established more flowing into sport. SIGNAL IDUNA Group also than 3.7 billion contacts as a result of its com- pursues this strategy. “In terms of public pro- mitment to BVB from advertising and media. file, BVB is some way ahead of us”, realises Like earlier jersey sponsors, “EVONIK” will the financial and insurance provider’s also succeed in significantly increasing its Chairman of the Managing Board, Reinhold public profile. 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 ment supplier since July 2004. All teams right article manufacturers rely on the platform down to young talent play in jerseys and boots offered by the major clubs. Top sportsmen are bearing the world famous Nike logo known as multipliers and act as examples for fashion “Swoosh”. It is one of the best known trade- and trend-conscious children and youths, who marks in the world. wish to wear the same shoes, trousers, jerseys and tracksuits as their icons. Nike acts as the exclusive equipment provider in the clothing, shoe and other product seg- The American sports article manufacturer, ments. As part of its commitment as an equip- Nike, which employs approximately 26,000 ment supplier, Nike also uses BVB's commer- employees worldwide, has been BVB's equip- cial appeal in various ways inside the stadium (perimeter board advertising), and also utilis- es 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 manu- At present, for example, the facturer – shown here in the current advertising Swiss national player, Philipp campaign – appears in the BVB club colours. 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 hier- board advertising and appearances in print archy. The basis is formed by the more than media and/or on the Internet. 500 companies that use the various catering On the next highest level are the so-called areas in SIGNAL IDUNA PARK in a business to “partners”, who use the BVB platform prima- business context in order to offer their cus- rily in terms of regional exposure and the lo- tomers and/or guests something special for cation. This principally involves perimeter home matches in the form of their business board advertising, interior campaigns, naming seats in VIP areas, as well as to establish or rights of the VIP areas or the use of players for build upon business relations. In same cases, PR appointments. As a partner of BVB, a com- these companies link their commitment with pany has the right to use this title and the club's advertising measures such as perimeter logo for its own purposes or PR work.

One of BVB's champion partners is Sparda-Bank. The For years, BVB has been closely connected with company has created an attractive savings card with the Warsteiner brewery. It is also represented in variable interest for fans. Goals scored by the stars are the stadium on perimeter board advertising and points earned by the fans. 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”. there are also broader objectives such as act- These are companies that do business in Ger- ing as a multiplier for improved sales. In media many and internationally, which increase their linking of the respective measures, the “cham- public profile through BVB in that they or their pion partners”, the sponsor after whom the advertising are placed in effective locations for stadium is named, the primary sponsor and television, for example, exclusively on the pre- the equipment provider always appear when mium revolving board in the first row and on BVB can be seen in a context that has a media cam carpets. Moreover, they are entitled to one impact: this includes advertising on perimeter individual team photo. In addition, these com- boards or in the interior. Furthermore, each panies enjoy industry exclusivity. This means camera that shows a player during an interview that companies from the same business do not or the coach at a press conference takes in the compete on this level. It goes without saying background interview boards, which are cov- that the right to use this title and the club's logo ered with advertising. for own purposes and for PR work applies in this case as well. REGULARS' TABLE AREAS 3,668 business seats and 162 box seats are Basically, the “champion partners” combine available in SIGNAL IDUNA PARK. During the communication objectives such as public pro- game, everyone sits close to the action, and file and sympathy; depending on their product, 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 Danne- mann Lounge is particularly popular.

“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 inside the Danne- view is outstanding.” mann Lounge: Here, BVB's partners can, in turn, establish contacts. 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, This picture shows the top-quality furnishings of reserved corporate tables, reserved parking the interior with the spaces directly at the stadium and much seating and bar well before a match. more. The concept for “Borussia Park” is similar.

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 Borussia also offers total solutions: The Conference full catering, as part of incentive packages. Center, here leased to a partner from the IT industry.

26 BVB Sponsorship

Young BVB fans and families with children find a home in the Lang- nese family block.

LANGNESE FAMILY BLOCK The Langnese family block has enjoyed great ding a location and care that caters to fami- popularity for years and its service and com- lies, the idea behind this is to tie children fort were further improved for the current and youths to the club Borussia Dortmund at season. Amongst other things, parents and an early stage, to awaken passions and to children moved closer to the playing field, turn them into loyal fans who will later and there is a strict smoking ban. There are remain BVB customers as season ticket hol- numerous offers and attractions in the inte- ders or maybe even in the catering areas. rior areas of the stands. Apart from provi-

The family block was spe- cially 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 stock exchange year-end on 29 December 2006 the performance of the share price were the success- at EUR 2.17. The share price fell further at the start ful conclusion of the restructuring and reorganisation of the second half of the financial year as a result of programme and also the club's sporting position, in increasing discussion about the position of the coach, particular the unsatisfactory second half of the most Bert van Marwijk, which had already started at the recent Bundesliga season. end of 2006, the replacement of the coach with Jürgen Röber and the continued failure, despite the Borussia Dortmund GmbH & Co. KGaA's shares change, to achieve sporting successes. Following a started the 2006/2007 financial year at EUR 2.21 and brief recovery thanks to the home win against Bayern reached their high for the reporting period of EUR Munich at the start of the second half of the season 2.49 at the start of the season. The additional capital on 26 January 2007, the share price was initially increase of a further 17,550,000 shares (existing num- quoted at between EUR 2.10 and EUR 2.00. A fur- ber of shares: 43,875,000), resolved by the extraordi- ther change of coach then became necessary and nary General Shareholders' Meeting on 15 August Thomas Doll was appointed on 12/13 March 2007, 2006 and publicised by means of an ad hoc announce- which resulted in a fall in the share price to ment on 15 August 2006, did not have a negative EUR 1.90. When the club entered the relegation impact on the share price, which remained stable zone following the defeat against Arminia Bielefeld until well into October 2006 in a range of between on 30 March 2007, the share price finally fell to EUR 2.50 and EUR 2.40. EUR 1.59 on the next trading day, unhappily reaching its all-time low. The first sporting setbacks as a result of failing to win several home games in a row subsequently led to a With Thomas Doll and the unparalleled fans' initiative modest downward trend, the share price reaching “Wir sind Borussia” (“We are Borussia”) lending their EUR 2.15 on 1 November 2006. The price recovered, support to Borussia Dortmund, a sporting turnaround however, thanks to the management's profit forecast and a change in the financial climate followed. Inves - of EUR 9-10 million (EBIT for the KGaA), the tors regained confidence. The share price recovered, record profits for the first quarter of 2006/2007 com- and was quoted initially in April 2007 in a range municated in an ad hoc announcement on 13 between EUR 1.60 and EUR 1.70, and in May and November 2006 and the improved mood of investors June 2007 in a range between EUR 1.70 and EUR following the General Shareholders' Meeting on 28 1.80. This was due not least to the positive licensing November 2006. In the following period, the share decision from the DFL for the 2007/2008 Bundesliga price ranged between EUR 2.30 and EUR 2.20. season, communicated to shareholders in the ad hoc announcement on 20 April 2007, and to the manage- With the commencement on 20 December 2006 of ment maintaining an unchanged profit forecast. A trading in both tranches of the new shares from the noticeable feature was that the recovery in the share capital increases in May and August 2006, the share price was successful with high trading volumes – with price came under selling pressure and was quoted at 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 the Company was thereby increased share capital of Borussia Dortmund GmbH & Co. to a present amount of EUR 61,425,000, divided into KGaA amounted to EUR 43,875,000, divided into the the same number of no-par value shares with a same number of no-par value shares with a notional notional value of EUR 1.00 each. Having been admit- value of EUR 1.00 each. ted to listing, the new shares have been tradable on the stock exchange since 20 December 2006. In the period from June to August 2006, the Com - pany was informed of changes in the shareholder Following the successful placement of the capital structure as a result of notifications of voting rights increase, the Company was informed of further by BlueBay Asset Management Ltd., London (United changes in the shareholder structure in the period Kingdom), Absolute Capital Management Holdings from September 2006 to June 2007 as a result of noti- Limited, Grand Cayman (Cayman Islands), Absolute fications of voting rights by Morgan Stanley & Co. Return Europe Fund Limited, George Town, Grand International Limited, London (United Kingdom), Cayman (Cayman Islands) and CSI Asset Man - Morgan Stanley, Wilmington (Delaware/USA), agement Establishment, Vaduz (Liechtenstein). Morgan Stanley International Inc., Wilmington (Delaware/USA), Morgan Stanley International The capital increase of 17,550,000 new shares re - Limited, London (United Kingdom), Morgan Stanley solved by the extraordinary General Shareholders' Group (Europe), London (United Kingdom), Meeting on 15 August 2006 was successfully placed in Morgan Stanley UK Group, London (United its entirety. The capital increase was entered in the Kingdom), Morgan Stanley Bank International commercial register on 19 September 2006 and the Limited, London (United Kingdom), Morgan

29 Borussia Dortmund

Stanley International Holdings Inc., New York Kingdom), as well as OZ Management LLC, New (USA), Morgan Stanley Laxton, London (United York (USA) and Och-Ziff Management Europe Kingdom), Morgan Stanley Domestic Capital Inc., Limited, London (United Kingdom). Wilmington (Delaware/USA), Morgan Stanley Capital Management LLC., Wilmington (Delaware/ Following the completion of the capital increase and USA), Ballspielverein Borussia 09 Dortmund e.V., the notifications of voting rights received by the Dortmund (Germany), European Catalyst Fund Company, the shareholder structure of Borussia Limited, George Town, Grand Cayman (Cayman Dortmund GmbH & Co. KGaA at the close of the Islands), Absolute Octane Fund Limited, George 2006/2007 financial year was therefore as follows:

Town, Grand Cayman (Cayman Islands), Absolute • Morgan Stanley International Limited: 16,25% Capital Management Holdings Limited, Grand • Absolute Capital Management Holdings Cayman (Cayman Islands), CSI Asset Management Limited: 13,04% Establishment, Vaduz (Liechtenstein), Credit Suisse • BlueBay Asset Management: 17,09% Group, Zürich (Switzerland), Credit Suisse • BV. Borussia 09 e.V. Dortmund: 7,24% Securities (Europe) Limited, London (United • Bernd Geske: 6,51% Kingdom), Credit Suisse, Zürich (Switzerland), • Free float: 39.87% Credit Suisse (International) Holding AG, Zug The total number of invitations to the 2006 General (Switzerland), Credit Suisse Investments (UK), Shareholders' Meeting sent out by banks suggests London (United Kingdom) and Credit Suisse that the number of shareholders in Borussia Dort- Investment Holdings (UK), London (United mund GmbH & Co. KGaA is around 47,000.

INVESTOR RELATIONS

The high level of interest in Borussia Dortmund 2005/2006 financial year. Changes in the shareholder GmbH & Co. KGaA again increased significantly in structure were published by the Company in the offi- the 2006/2007 financial year. The Company respond- cial journals for the publication of statutory stock ed to the demand for information and devoted even market notices. With the coming into effect of the more attention to institutional and private investors reform of the German Securities Trading Act and analysts. (Wertpapierhandels gesetz, “WpHG”) on 20 January 2007, the Company made the change to publishing Market participants were kept informed promptly its mandatory announcements under capital market and comprehensively on developments at Borussia law on a Europe-wide basis in accordance with the Dortmund GmbH & Co. KGaA. Great importance statutory requirements. In this context, an overview was attached to ensuring that communication with of the Company's principal publications is provided the public and the financial world was consistent, sus- by the “Annual Document” required by § 10 German tained and transparent, and not just against the back- Securities Prospectus Act (Wertpapierpro spekt - ground of two successfully placed capital increases in gesetz, “WpPG”), which can be found online at the reporting period. www.borussia-aktie.de, under Corporate Governance (CG). Here investors and shareholders can find all ad Borussia Dortmund GmbH & Co. KGaA published hoc announcements, directors' dealings disclosures, its financial figures in its interim report for the peri- notifications of voting interests, information regard- od from July to December 2006 and for the full ing subscription offers etc.

30 THE BVB SHARE

Turnover of shares

In addition to financial reporting and the mandatory 1,430 limited liability shareholders and guests. The announcements required under capital market law, shareholders present represented around 70.4% of online communication represents the Company's the share capital. The ordinary General Shareholders' principal means of providing information, with more Meeting was held in turn during the reporting peri- than 100,000 hits each month. All items of informa- od on 28 November 2006, also in the Westfalenhalle tion relevant to the stock exchange listing can be in Dortmund. This event was attended by more than accessed at www.borussia-aktie.de. Registered users 1,000 limited liability shareholders and guests. In this are provided with up-to-date ad hoc announcements, case, the shareholders present represented around and Company and football news, by means of the free 72.2% of the share capital. The shareholders formal- newsletter. In the 2006/2007 financial year, the ly approved the actions of management by an extraor- Company also made the information on the Borussia dinary and remarkable voting percentage of 99.9% share website available in English. In addition, the and thus expressed their confidence in the Chairman, printed magazine “Borussia Invest”, which appears Hans-Joachim Watzke, and the Chief Financial twice a year, also has a secure place in the Company's Officer, Thomas Treß. communications strategy. This publication is primarily aimed at private investors in Borussia Dortmund During the reporting period, Borussia Dortmund GmbH & Co. KGaA, with background reports, GmbH & Co. KGaA continued to work together with announcements, interviews and analysis by financial its designated sponsor, Gebhard & Co. Wertpapier- experts. handelsbank AG, based in Munich. Increased liquidity in the BVB share and consistent price quality were As the final step in the Company's reorganisation, the ensured by maintaining bid and offered prices in the extraordinary General Shareholders' Meeting held on XETRA electronic trading system. The Company 15 August 2006 in the Westfalenhalle in Dortmund thereby acknowledged the continuing central impor- cleared the way for a capital increase of 17,550,000 tance of the XETRA electronic trading system, which no-par value shares (existing number of shares: now accounts for around 90% of stock exchange 43,875,000). The event was attended by more than turnover.

31 CORPORATE GOVERNANCE REPORT

Corporate Governance stands for transparent and interests, openness, and transparent corporate com- responsible corporate management and supervision munication. The management of Borussia Dort- aimed at achieving long-term shareholder value. mund Geschäftsführungs-GmbH, the general part- Key aspects of good corporate governance include ner of Borussia Dortmund GmbH & Co. KGaA efficient co-operation between management and (the “Company”), and the Supervisory Board of our the Supervisory Board, due regard to shareholders' Company are guided by these principles.

GENERAL INFORMATION ON CORPORATE GOVERNANCE AT BORUSSIA DORTMUND GmbH & Co. KGaA

Section 161 AktG requires the management board rations and are at most applicable by analogy to and supervisory board of any listed company to is- partnerships limited by shares (Kommandit ge - sue an annual statement as to whether and to what sell schaften auf Aktien, “KGaA”), i.e. to our extent recommendations by the “Government Company. Commission for the German Corporate Gover- nance Code” (Regierungskommission Deutscher A KGaA is a hybrid corporate form combining el- Corporate Governance Kodex) contained in the ements of a German stock corporation (Aktienge- German Corporate Governance Code (the “Code”) sellschaft) and a limited partnership (Kommandit- as published in the official section of the Elec- gesellschaft). A KGaA is a separate legal entity tronic Federal Gazette (elektronischer Bunde- whose share capital is divided into shares which are sanzeiger) were followed in the past and are being held by at least one shareholder (the general part- or will be followed now or in the future. ner) that has unlimited liability as against creditors of the Company and limited liability shareholders As a rule, the Code is reviewed once annually and (Kommanditaktionäre) that are not personally li- amended as required. It contains basic statutory able for the debts of the Company (§ 278 (1) AktG). provisions on the management and supervision of German listed companies based on internationally The key differences between a KGaA and a Ger- and nationally recognised standards for good and man stock corporation can be characterised as responsible corporate governance. The Code aims follows: to make the German system of corporate governance transparent and understandable in an effort • Borussia Dortmund GmbH & Co. KGaA has no to boost the confidence of international and na- Management Board. Instead, the general part- tional investors, customers, employees and the gen- ner, Borussia Dortmund Geschäftsführungs- eral public in the management and supervision of GmbH, is solely responsible for its manage- German listed companies. ment and representation. This company, in turn, is represented by one or more managing Many of the Code's recommendations (“should” directors; Ballspielverein Borussia 09 e.V. Dort- provisions) are tailored exclusively to stock cor po- mund is the sole shareholder of this company.

32 CORPORATE GOVERNANCE REPORT

• The rights and duties of the Supervisory Board The general partner's management and the Su- of the limited partnership (“KGaA”) elected by pervisory Board will issue the next Statement of the General Shareholders' Meeting are limited. Compliance as scheduled in December 2007, at Specifically, it has no authority with respect to which time the amendments to the Code dated 14 matters involving personnel, i.e., no authority to June 2007, which were published in the electronic appoint and dismiss managing directors at Federal Gazette on 20 July 2007, must also be Borussia Dortmund Geschäftsführungs-GmbH addressed. or to regulate the terms of their contracts. Nor is the Supervisory Board authorised to adopt in- With respect to the Statement of Compliance ternal rules of procedure for the general part- from November 2006, to date the following key ner or any list of transactions requiring its con- issues regarding corporate governance should be sent. Rather, such rights and duties are vested mentioned: in the governing bodies of Borussia Dortmund Geschäftsführungs-GmbH, namely its Advisory • Compliance with the recommendations of the Board and the Executive Committee created by Code relating to the treatment of so-called “sev- the Advisory Board. erance pay caps” (Abfindungs-Caps) under management board employment agreements • Additional distinctions exist with respect to the (these recommendations are directed at the su- General Shareholders' Meeting of the KGaA, pervisory board of stock corporations) is not a which are primarily controlled by §§ 285 and matter for the Supervisory Board at our Com- 286 (1) AktG and the Articles of Association of pany because it has no authority in relation to our Company. personnel matters. Instead, severance pay caps fall within the purview of the Advisory Board of Consequently, the management of the general Borussia Dortmund Geschäftsführungs-GmbH. partner and the Supervisory Board of Borussia Subject to this proviso, the recommendations Dortmund GmbH & Co. KGaA are required to have been and are being complied with mutatis provide a Statement of Compliance (Ent spre - mutandis. chens erklärung) pursuant to § 161 AktG, taking into account the organisational distinctions of the • Committees, specifically an audit committee, legal form of a KGaA and their expression in the were not or are not being established by the Su- Articles of Association. The Statement of Com- pervisory Board, because the Supervisory Board pliance must be made permanently available to comprises only 6 persons, and committees the shareholders. This is done by publishing the would have to consist of 3 persons in order to Statement of Compliance on our Company's In- have quorum. The Company intends to retain vestor Relations website (www.borussia-aktie.de, its existing practice in this regard, in other under the heading “Corporate Governance words all pending matters will be dealt with by [CG]”). The Statement of Compliance (including the full Supervisory Board. explanations of any deviations from the Code's recommendations), which was provided in No- • It is for the same reason that the Supervisory vember 2006, is reproduced in the annex to this Board has not created a nomination committee Corporate Governance Report. as is now recommended by the Code. In any

33 case, if a nomination committee is established, ordinary General Shareholders' Meeting will be held the Code requires that it comprise shareholder on Tuesday, 27 November 2007 in Dortmund. At representatives only; however, that is already the end of February 2008 we will publish the in- the case with regard to the Supervisory Board. terim report for the first six months of the 2007/2008 financial year. The consolidated financial statements • The Executive Committee of the Advisory and the interim reports are prepared in accordance Board of Borussia Dortmund Geschäftsfüh - with internationally accepted accounting principles. rungs-GmbH reached an agreement with the The annual financial statements of Borussia Dort- managing director and chairman, Hans-Joachim mund GmbH & Co. KGaA were and will continue to Watzke, in June 2007, which was earlier than be prepared in accordance with the provisions of the required, to extend his managing director's German Commercial Code (“HGB”). The 2005/2006 agreement (the term of which was originally Annual Report is the first to be made available in limited until 31 December 2008) by a further English as well as German, and the entire website three years, i.e. until 31 December 2011. This www.borussia-aktie.de has also been available in Eng- was in order to show continuity in terms of who lish since 15 June 2007. This is a suggestion under the would head up management. Code which we intend to follow now and in the future. Other means of communicating with market This Corporate Governance Report herewith sub- participants include the newsletter, “Borussia In- mitted by our Company will be published in the vest”, which appears every 6 months, and the publi- Annual Report for the 2006/2007 financial year cation of analysts' recommendations and research and on our website at www.borussia-aktie.de un- studies on our website at “www.borussia-aktie.de” der the heading “Publications”. under the heading “Publications”.

Transparency Management compensation Our Company informs the limited liability share- Compensation for members of management is not holders and shareholder associations, financial ana- stipulated by the Supervisory Board of our Company lysts and the interested public regularly as to the but rather by the Executive Committee of the general companies' condition and any material changes in its partner. Management compensation comprises two business. In particular, the ad hoc notices and direc- components: a fixed amount and a variable compo- tors' dealings disclosures we receive and the current nent. The fixed compensation component is stipu- version of the Articles of Association and the finan- lated by contract and is paid out in twelve equal cial calendar are all published on our website. The monthly instalments. The variable compensation Annual Document under § 10 WpPG, which is also component is based on the performance of the busi- available on the website www.borussia-aktie.de under ness and is granted as a bonus contingent on the “Corporate Governance”, provides an overview consolidated net income for the year before taxes and of the companies' key publications during the managing directors' bonuses. Any additional non- 2006/2007 financial year. The financial calendar con- cash or ancillary benefits granted primarily include tains key Company events and can also be viewed on insurance benefits at standard market conditions and the website www.borussia-aktie.de under “Financial the provision of a company car. There are no stock Calendar”. Borussia Dortmund GmbH & Co. KGaA's option plans or similar incentive plans. The com-

34 CORPORATE GOVERNANCE REPORT

pensation components provided are reasonable in tion presented above, this information is provided and of themselves and overall. Compensation bene- only as an aggregated amount rather than being bro- fits paid to members of management are set out in ken down by individual. In the 2006/2007 financial the notes to the annual and consolidated financial year, the Company did not pay members of the statements in the aggregate and broken down by Supervisory Board any additional compensation or individual. grant them any additional benefits.

Supervisory Board compensation Disclosures relating to the ownership Pursuant to § 13 (1) of the Articles of Association, of shares in the Company by manage- members of the Supervisory Board receive only a ment or the Supervisory Board fixed compensation, which is set at a comparatively As at 30 June 2007, one member of management low amount of EUR 7,000 annually; the chairman held 4,545 shares in our Company. As at the same receives twice this amount and the deputy chairman date, members of the Supervisory Board held a total receives one and a half times this amount. Super - of 4,000,765 shares. In total, the shareholdings of visory Board members' compensation is set out in the management and the Supervisory Board constitute notes to the consolidated financial statements. In more than 1 % of the shares issued by Borussia Dort- the interest of simplicity and in view of the informa- mund 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 mund Geschäftsführungs-GmbH have not in the past Dortmund Geschäftsführungs-GmbH) and the regarded it as necessary to also enact separate rules of Supervisory Board of Borussia Dortmund GmbH & procedure for management. Co. KGaA hereby state in accordance with § 161 AktG that since the last Statement of Compliance issued in As to Sections 4.2.2, 4.2.3 and 4.2.5 and Section December 2005, Borussia Dortmund & Co. KGaA has 7.1.3: Section 7 of our Company's Articles of Asso - complied with the recommendations of the German ciation provides that the general partner is entitled to Corporate Governance Code (the “Code”) dated 2 reimbursement of personnel costs and the cost of June 2005 up until publication of the new version of materials incurred in connection with managing the the Code in the electronic Federal Gazette on 24 July Company, plus compensation equivalent to 3% of any 2006, and has also complied with the recommenda- otherwise accruing annual net income for the year of tions of the Code dated 12 June 2006 from the time of the Company. Compensation and the compensation its publication in the electronic Federal Gazette on 24 system for managing directors of Borussia Dortmund July 2006, and the recommendations in the amended Geschäftsführungs-GmbH are otherwise determined version dated 12 June 2006 will be complied with in by its Executive Committee (deviation from the the future; excepted herefrom are the following devi- powers of the Supervisory Board stipulated under ations which in part are due to organisational distinc- Section 4.2.2 sentence 1 due to the Company's legal tions specific to the legal form of the KGaA and their form). Compensation for the managing directors con- expression in the Articles of Association: sisting of components that are long-term or risk-based in nature, such as stock options, was not and is not As to Section 3.8 sentence 3: The D&O insurance being provided, nor are pension commitments, and does not provide for any deductible. Based on our thus no further disclosures or explanations primarily understanding, such an agreement would not be suit- relating to these issues were or will be made (deviation able as an incentive, nor would it strengthen the sense from Section 4.2.3 sentences 6 to 9, Section 4.2.5 sen- of responsibility with which members of corporate tences 2 and 3 and Section 7.1.3). bodies conduct their duties and functions. As to Section 4.3.4 sentence 3: Material transac- As to Section 4.2.1 sentence 2: The Supervisory tions between the general partner and certain related Board of Borussia Dortmund GmbH & Co. KGaA has parties on the one hand, and the Company on the oth- no authority with respect to personnel matters; this is er, within the meaning of §§ 89, 112 in conjunction the purview of the Executive Committee of Borussia with § 278 (3), 283 No. 5 AktG (e.g., loans) require Dortmund Geschäftsführungs-GmbH. Since January the involvement of the Supervisory Board. In this 2006, the management of Borussia Dortmund respect, the recommendation was and is being fol- Geschäftsführungs-GmbH has comprised Hans- lowed. The Supervisory Board is not otherwise autho- Joachim Watzke (managing director/chairman) and rised to adopt a list of transactions requiring its con- Thomas Treß (managing director). As their areas of sent for the general partner or its managing directors. responsibility have been adequately defined in their respective contracts and the managing directors As to Section 4.3.5: Because the Supervisory Board otherwise exercise their statutory powers and powers lacks authority in matters involving personnel, the under the Articles of Association in close co-operation, Advisory Board of Borussia Dortmund Geschäfts - the competent governing bodies of Borussia Dort - führungs-GmbH is responsible for approving any side

36 CORPORATE GOVERNANCE REPORT

activities of the managing directors of the general As to Section 5.4.3 sentence 3: Proposals for can- partner. Subject to this proviso, the recommendations didates for the chair of the Supervisory Board have have been and are being complied with mutatis not been made public in the past, nor will they be mutandis. made public in the future, because the Supervisory Board feels that the individual election of its members As to Section 5.1.2 sentences 2 and 6: These Code already conducted is sufficient and does not feel that recommendations directed at the supervisory board a vote in the General Shareholders' Meeting for or of stock corporations are at most applicable by against a given candidate is practicable in view of analogy to our Company, whose Supervisory Board his/her position on the Supervisory Board. does not have any authority with respect to personnel matters. The managing directors and the Executive As to Section 5.4.7 sentences 3, 4 and 6: Pursuant Committee of Borussia Dortmund Geschäftsfüh - to § 13 (1) of the Articles of Association, the mem- rungs-GmbH are responsible for making succe ssor bers of the Supervisory Board receive only a com- arrangements over the long term (in accordance with paratively low annual fixed compensation of EUR Section 5.1.2 sentence 2). The Executive Committee 7,000; the chairman receives twice this amount and has and will have in the future the discretion to the deputy chairman receives one and a half times decide in the case of pending (re)appointments of this amount. It was and is considered sufficient to managing directors on the age limit for managing provide the information on the Supervisory Board's directors of the general partner; without this gener- compensation only as an aggregate figure in the notes ally needing to be stipulated (in deviation from to the consolidated financial statements. Section 5.1.2 sentence 6). As to Section 5.5.3 sentence 1: The recommenda- As to Sections 5.2 sentence 2, 5.3.1 sentence 1 tion that the Supervisory Board inform the General and 5.3.2: No committees have been or will be Shareholders' Meeting in its report of any conflicts of established by the Supervisory Board, because it com- interest that may arise and how these are handled has prises only 6 persons, and committees would have to not been and is not being followed. The principle of consist of 3 persons in order to have quorum. The confidentiality of discussions within the Supervisory Company intends to retain its existing practice in this Board (see, § 116 sentence 2 AktG and Section 3.5 of regard, in other words all pending matters will be the Code) is accorded priority over this. dealt with by the full Supervisory Board. As to Section 7.1.2 sentence 3: The consolidated As to Section 5.4.1 sentence 2: There has been no financial statements for the reporting period of set age limit for Supervisory Board members to date, 2005/2006 were published with a slight delay on 16 nor will there be any in the future. The Supervisory October 2006 (= 108 days after the close of the financial Board feels that such a limitation is not justified as year). The interim report was and will be published with- against other criteria for proposed candidates for the in a reasonable period, which may in the specific case election of Supervisory Board members. 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

orussia Dortmund experienced turbulent times Blast 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.

Trainer Thomas Doll 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 the first time in 1972 for a period of four years – had GmbH & Co. KGaA. “I don't want to have to go even slipped to a relegation position. through anything like that again.” Shortly before, Borussia had again changed head The 2:0 victory against archrival FC Schalke 04 coach. in the final home game in front of 80,708 spectators in the sold-out SIGNAL IDUNA PARK resulted Thomas Doll came from Hamburg in order to steer in a reconciliation with most fans following a the black and yellow ship back into safe waters and to season in which “things were fairly chaotic,” which put it onto a successful course, which, after a few ini- was how Christian Wörns, the team captain and tial difficulties, the 41-year-old former national play- old-hand defender, summed up the season. er and HSV coach succeeded in doing. Doll proved to be the saviour. “He dissolved the blockages,” was Twice during the 2006/2007 season the Clubs' man- team captain Wörns' praise for the work of the foot- agement felt it had to pull the ripcord and change ball teacher, looking back on a rocky season. The club coach in order to stop the sporting freefall. Bert van wishes to continue to work with Doll in the long term. Marwijk was followed in the winter break by the luckless Jürgen Röber, who managed a much cele- Doll brought fresh verve, optimism and a clear sport- brated 3:2 victory against FC Bayern Munich in his ing concept to Dortmund, awakening new self-confi- first match, but who then had just one win from the dence in his team and bringing to life his philosophy: following seven matches – with six defeats. “Fear is a poor companion in all situations”. His first objective was to stabilise the unsettled defence. The BVB was standing on the precipice: following the 27th necessary goals were scored, above all, by the Swiss round, the six-time German football champion – national captain, Alexander Frei, who had joined which had had to leave football's “upper echelon” for 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 izens, companies and public authorities. After the vic- goals, he was able to make a decisive contribution to tory at VfL Wolfsburg and the resultant securing of the fact that, in the final analysis, the season finished non-relegation on the third last Bundesliga match day, on an acceptable note. the local derby against Schalke 04 finished 2:0, which finally chased away all dark thoughts and gave fans and Nevertheless, when discussing the 2006/2007 season, sympathisers hope for a successful new season. sport director Michael Zorc said it was “a nightmare at times”. Hans-Joachim Watzke, the Managing The high level of enthusiasm and anticipation is Director and Chairman, called the preceding months shown by the 50,549 season tickets sold for the “the most difficult period of my life”. The horror sce- 2007/2008 season, a new Bundesliga record. BVB also nario of relegation would have been a major setback held the old record, with 50,415 season tickets in for the successfully concluded financial reorganisa- 2003/2004. tion of the Borussia Dortmund enterprise. With six new players, Thomas Doll's team should be During the troubled times, the meaning of solidarity in a better position than in the previous season both by the people of Dortmund with their flagship – in quantitative and qualitative terms. “We have suc- Borussia – became clear. The “We are Borussia” ini- ceeded in giving the squad more depth, and the sense tiative by the BVB fan department resulted in a of competition within the team has increased,” con- unique closing of the ranks between Dortmund's cit- cluded sport director Michael Zorc.

39 40 BVB Merchandising

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

SIGNAL IDUNA PARK & MERCHANDISING

ike all other clubs, Borussia Dortmund By its nature, the retail business is stronger. Lclassically defines “merchandising” as In this respect, BVB has four fan shops of its the “fan article business”. In this respect, a own in Dortmund. Furthermore, as additional distinction is drawn between retail and modern distribution channels, there is an licensed business. For the latter, a Internet shop, an internal and external licensed company may give its call centre and the possibility of products the look and feel of ordering by mail order using the Borussia Dortmund and use its BVB fan article catalogue. The own distribution channels for distribution channels are round- sales. As licensor, Borussia ed off by a commercial network Dortmund receives a minimum across Germany involving 150 part- licence fee and performance- ners (sports stores and chains such based, per unit royalties. The as Karstadt, Kaufhof, Intersport, grant of licences lends itself par- Sport2000, Decathlon). ticularly to niche products where the licensee, as a specialist, has a strong dis- In this way, the “Borussia Dortmund” brand is tribution network. transported and multiplied as best as possible.

The complete range of fan articles is, of course, also covered in the new fan shop at the stadium. 42 BVB Merchandising

Off the rack: The current jerseys are of course a “hit” in the merchandising business.

The successes are reflected in the current In recent years, BVB has placed ever more business report: Revenues increased to EUR emphasis on fan articles 5.2 million compared to the previous financial especially for women. With success. 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 BVB opened its fourth fan shop in Dortmund aspects to a service provider. only at the beginning of 2007, right beside Sig- nal 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.

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 KG and for related incidental costs. Ownership of our Company in November 2006, Gerd Pieper, SIGNAL IDUNA PARK has therefore been almost Chairman of the Supervisory Board, was able to completely (99.7%) regained. The remaining loan announce an extraordinary voting result. 99.99 per amount of EUR 21.7 million was used for the pur- cent of the shareholders present formally approved pose of reducing and refinancing the existing liabili- the actions of the management and thereby expressed ties of Borussia Dortmund GmbH & Co. KGaA their confidence in us. (“BVB-KGaA”). In addition, BVB-KGaA was granted a revolving credit line amounting to EUR 10.0 mil- We see this acknowledgement as a confirmation of lion by Morgan Stanley. the work we are doing and will continue to practise the transparency and openness that received your As part of the restructuring process, the creditors' stamp of approval at the last General Shareholders' agreement of March 2005 was annulled in June 2006 Meeting, as well as a high level of cost consciousness and the steering committee set up at that time was and an appropriate policy on investments. dissolved. Furthermore, this created the essential conditions for the implementation of the capital Having overcome a life-threatening situation, our increase resolved in May 2006 (utilisation of Company is once again in the black, which confirms authorised capital with a nominal amount of up that the nature of our actions was correct and rein- to EUR 14,625,000) with an issue amount of forces our belief that we should continue down our EUR 29,250,000. This entire amount was used for a chosen path. On 7 June 2006, i. e. in the past finan- further reduction of existing liabilities in July 2006. cial year, a loan agreement was signed between Borussia Dortmund GmbH & Co. KGaA, and its sub- Borussia Dortmund was also able to buy back the sidiaries, and the US investment bank Morgan “goool.de” trademark on 3 July 2006. Gerling- Stanley for credit facilities amounting in total to EUR Konzern Globale Rückversicherungs-AG, Cologne, 79.2 million with a term of 15 years, thereby laying had entered into an agreement with Borussia the foundations for the long-term stabilisation of the Dortmund in 2000 for the purchase and immediate Company. A total of EUR 57.5 million of the loan was relicensing of the “goool.de” trademark and thus used for the payment to MOLSIRIS Vermietungs - became the legal owner of the BVB merchandising gesellschaft mbH & Co. Objekt Westfalenstadion KG trademark rights. As a result of the repurchase, all the of the price for the repurchase of the limited partner's trademark rights once again rest with the Borussia share in Westfalenstadion Dortmund GmbH & Co. Dortmund Group.

1st Round 2nd Round 11 August 2006 19 August 2006 FC Bayern 2:0 BVB BVB 1:1 FSV Mainz 05

A foul with nasty results: Kehl is badly What a start: What a start: with this injured during this tackle from header, Amedick puts BVB 1:0 in front. Salihamidzic and is out for months. Right: Pienaar, Pekovic. 44 MANAGEMENT REPORT

The capital increase resolved by the General The capital increase was entered in the commercial Shareholders' Meeting of Borussia Dortmund GmbH register of the Local Court of Dortmund on 19 Sep - & Co. KGaA on 15 August 2006 for a nominal amount tember 2006. Thus, the Company's share capital is of up to EUR 17,550,000 to EUR 61,425,000 was ful- EUR 61,425,000 (previously EUR 43,875,000) and is ly placed. The indirect subscription right for a total divided into the same amount of no-par value shares. of 7,567,585 new shares was exercised by the Company's limited liability shareholders. Morgan Management used EUR 10 million of the new cash Stanley & Co. International Limited, London, funds generated from the capital increase (approxi- England (“MSIL”) subscribed for an additional mately EUR 15.1 million in total) to finance working 9,982,415 new shares in accordance with the resolu- capital and put the remainder toward reducing exist- tion authorising the capital increase dated 15 August ing liabilities. 2006. MSIL paid in its non-cash contribution by The restructuring of the liability side of the balance assigning to the Company a partial claim held by its sheet, with the aim of strengthening equity resources, sister company, Morgan Stanley Bank International achieving a more manageable debt maturity structure Limited, against the Company for a nominal amount and improving interest rate terms, has now been fully of EUR 21,961,313. 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

3rd Round DFB Cup 26 August 2006 9 September 2006 VfB Stuttgart 1:3 BVB Thannhausen 0:3 BVB

Frei, Brzenska and Kringe celebrate TSG Thannhausen brought about many the victory in Stuttgart with their fans. opportunities, but BVB won 3:0.

45 Borussia Dortmund GmbH & Co. KGaA

DEVELOPMENT OF THE MARKET cushion the effect of relegation from the Bundesliga. AND COMPETITIVE ENVIRONMENT An additional consideration is to ensure that the split IN GERMAN PROFESSIONAL FOOTBALL of revenues between the Bundesliga and the Second Bundesliga remains stable. Ticketing Spectator numbers in the Bundesliga continue to be In concrete terms, this means that a club in the unusually high. However, a slight decline of 1.43% Bundesliga can achieve a maximum of around EUR was recorded in comparison with the record set in 23.3 million but a minimum of around EUR 11.7 mil- the previous year. This was most likely due to the lion from domestic income for championship games. smaller stadium capacities of the three teams pro- In the Second Bundesliga, the range is between EUR moted, Alemannia Aachen, FC Energie Cottbus and 3.6 million and EUR 7.2 million. On top of that, the VfL Bochum, compared with the relegated teams, 1. Bundesliga clubs benefit separately from the income FC Köln, 1. FC Kaiserslautern and MSV Duisburg. from foreign marketing. The German champion The biggest attraction for spectators in the receives EUR 4.0 million from this source, while an Bundesliga was once again Borussia Dortmund with average of EUR 0,518 million goes to the club in 18th 1,161,769 tickets sold, ahead of Bayern Munich position on the league table. (1,133,973) and Schalke 04 (1,028,317). Three Bundesliga clubs therefore reached the coveted tar- Sponsorship get of more than 1 million spectators. Nor has the Bundesliga lost any of its attraction as an In sales of season tickets, Borussia Dortmund advertising forum. On the contrary, the clubs can look (44,018) outperformed Schalke 04 (42,339), as in the back on a successful season with further increases in previous year, and was a long way ahead of the com- income from sponsorship and other revenue sources. petition in the Bundesliga. On average, each club in The Bundesliga therefore continues to be a growth sec- the Bundesliga sold 20,450 season tickets last season. tor, with professional management ensuring that the economic basis is in place for an exciting competition TV-marketing and so guaranteeing a highly attractive product for fans, The continuing enthusiasm for football can also be media partners and, above all, sponsors. seen in the revenues generated for the clubs by TV The sector's continuing attractiveness and strong marketing. The three-year contract for TV marketing television presence also ensure great interest from for the Bundesliga and the Second Bundesliga entered the advertising industry. In an anonymous survey con- into by the German Football League (DFL) in ducted by the trade magazine “Sponsors”, the clubs' December 2005 was for a total amount of over EUR leading sponsors awarded the Bundesliga's image a 1.2 billion. This represents an increase of around 40% score of 2.18 on a scale of 1-6, 1 being the highest compared with the previous TV marketing agreement. mark. The average rating of 1.75 for the Bundesliga as With the coming into effect of the new TV marketing an advertising platform is an outstanding achieve- agreement, the basis of allocating revenues to the ment. Interest on the part of sponsors may also be clubs was adjusted. The new basis of allocation is linked to the enormous level of brand recognition intended to link payment more closely to perform- enjoyed by the Bundesliga. 98.7% of those ques- ance, to generate higher income for all clubs and to tioned had heard of the top German division.

4th Round 5th Round 16 September 2006 22 September 2006 BVB 1:0 Hamburger SV Bor. M’gladbach 1:0 BVB

Guerrero (left) and Ljuboja (right) The scene that possibly decided the watch as Wörns jumps for the header. match: Frei is beaten by Keller, which Brzenska is already hoping for the goal... created the counter attack that led to 1:0. 46 MANAGEMENT REPORT

GROUP STRUCTURE AND BUSINESS Sportswear GmbH (100.00%), Sports & Bytes GmbH (100.00%), BVB Merchandising GmbH In addition to its core activities of football and the (100.00%), BVB Stadion GmbH (99.74%), BVB marketing of SIGNAL IDUNA PARK, Borussia Beteiligungs-GmbH (94.90%), B.E.S.T. Borussia Dortmund is involved in lines of business related to Euro Lloyd Sports Travel GmbH (51.00%) and football. At present, the Company holds direct and Orthomed GmbH (33.33%). indirect interests in the following companies: BVB Some of these companies have concluded mutu- Stadionmanagement GmbH (100.00%), goool.de al control and/or profit and loss transfer agreements.

Borussia Dortmund GmbH & Co. KGaA

94,90% BVB Stadion GmbH 100% goool.de sportswear GmbH 5,10% 94,90% BVB 5,10% BV. Borussia 09 Beteiligungs-GmbH e.V. Dortmund 100% BVB Stadionmanagement GmbH

100% BVB Merchandising GmbH

100% Sports & Bytes GmbH

51,00% B.E.S.T. 49,00% Hogg Robinson Germany Borussia Euro Lloyd Sports Travel GmbH GmbH & Co. KG

33,33% 66,67% Orthomed GmbH Other shareholders

6th Round 7th Round 29 September 2006 15 October 2006 BVB 2:2 Hannover 96 Cottbus 2:3 BVB

Borussia devastated: Even two goals by Two goals by a defender: Brzenska (here Smolarek (on the ground) were not against Kioyo) scored twice in a match enough to secure a victory against a for the first time in the Bundesliga. rejoicing Hanover. 47 Borussia Dortmund GmbH & Co. KGaA

ORGANISATION OF MANAGEMENT The remuneration of the Managing Directors is made AND CONTROL up of fixed and performance-related components, with the latter based on the consolidated net profit The general partner, Borussia Dortmund Geschäfts - for the year before income taxes. führungs-GmbH, is responsible for management and representation of Borussia Dortmund GmbH & Co. The following chart shows the structures and KGaA. This limited liability company (“GmbH”) is in responsibilities as between Ballspielverein Borussia turn represented by its Managing Directors Hans- 09 e.V. Dortmund, Borussia Dortmund GmbH & Joachim Watzke and Thomas Treß; its sole share- Co. KGaA and Borussia Dortmund Geschäfts- holder is Ballspielverein Borussia 09 e.V. Dortmund. führungs-GmbH.

Ballspielverein Borussia 09 e.V. Dortmund

Executive Council of Board economic affairs Borussia Dortmund elects appoints Geschäftsführungs-GmbH Members Meeting (General Partner) appoints and supervises

Advisory Board Managing Directors Borussia Dortmund

GmbH & Co. KGaA (Consisting of members of the Executive Board, Council of economic affairs and non-voting, associated members) Supervisory Board NoNo rightright of appointment, only rigrightht of supervision elects

General Shareholders’ Meeting

8th Round DFB Cup 20 October 2006 24 October 2006 BVB 1:1 VfL Bochum BVB 0:1 Hannover 96

With this spectacular move Pienaar set up Dariusz Zuraw wins the battle against the equaliser in the home match against Ebi Smolarek. the regional neighbour VfL Bochum. 48 MANAGEMENT REPORT

The rights and duties of the KGaA's Supervisory The members of the Supervisory Board are as follows:

Board, which is appointed by the General Gerd Pieper (Chairman) Shareholders' Meeting, are limited. Specifically, it Proprietor and Managing Director of has no authority with respect to matters involving Stadtparfümerie Pieper GmbH, Herne personnel, i.e., no authority to appoint and dismiss Harald Heinze (Deputy Chairman) managing directors at Borussia Dortmund Ge- schäftsführungs-GmbH or to regulate the terms of Ruedi Baer their contracts. Nor is the Supervisory Board autho- Delegate of the Board of Directors of mobilezone rised to adopt internal rules of procedure for the group, Regensdorf (Switzerland) general partner or issue any list of transactions requiring its consent. Rather, such rights and duties Othmar Freiherr von Diemar Proprietor and manager of Othmar von Diemar are vested in the governing bodies of Borussia Vermögensverwaltung + Beratung, Cologne Dortmund Geschäftsführungs-GmbH, namely its

Advisory Board and the Executive Committee cre- Bernd Geske ated by the Advisory Board. 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)

9th Round 10th Round 28 October 2006 4 November 2006 1. FC Nuremberg 1:1 BVB BVB 1:1 Arm. Bielefeld

Tinga gets through in the penalty area Artistic: Pienaar against Bielefeld’s Kauf, and gives keeper Schäfer no chance to who would later set up Wichniarek's save from a tight angle. goal for Arminia's 1:0 lead. 49 Borussia Dortmund GmbH & Co. KGaA

Within Borussia Dortmund GmbH & Co. KGaA, sports, finance and organisation. The responsible there are four independent areas of responsibility employees and the divisions for which they are below the management, namely, communications, responsible can be seen from the following chart.

BORUSSIA DORTMUND GmbH & Co. KGaA

Management Management

Hans-Joachim Watzke Thomas Treß [Chairman]

Communications Sport Finance Organisation J. Schneck M. Zorc M. Knipping Dr. C. Hockenjos

Corporate Finances and General Professional football communications accounting organisation

Sport communications Amateurs Controlling Stadium management

Publications Youth Investor Relations Match organisation

IT (Information Fan support Training fields V.I.P. – Hospitality Technology)

Stadium announcements Personnel Sportfive and program (sponsors)

PR work Risk Management Events

Complaints Merchandising DFB/DFL management

Affiliates Ticketing

Sportfive (Commission Real estate processing)

Third party events

11th Round 12th Round 7 November 2006 10 November 2006 BVB 0:0 Aachen Werder Bremen 1:3 BVB

It was not Dede's fault that Borussia did Sahin – here against Schulz – had a no better than 0:0 against Alemannia strong match on the Weser and set up (tackle with Ebbers). the first two goals. 50 MANAGEMENT REPORT

INTERNAL MANAGEMENT SYSTEM result means earnings before interest and taxes (EBIT). Therefore we are constantly monitoring the Sports management operating results in all lines of business and areas of The great challenge for the future will be to play foot- responsibility based on monthly comparisons ball successfully with a cost-optimised budget. In between the budget and the actual situation. The order to achieve this aim, BVB will continue to try to most important drivers for the operating result are present a strong, competitive team in the future and, further improvement in sales revenues in the major in this respect, will back young players with potential, revenue sources of ticketing, sponsorship, TV mar- who will create a healthy mixture with the seasoned keting and merchandising, and disciplined manage- players. This will create a realistic chance of qualify- ment of operating expenses. ing for international competitions. In coming years we will concentrate on achieving The sporting objectives will be aligned with financial the best possible balance between limiting operating circumstances. This means that the salary budget will expenditure and, at the same time, generating sales generally be tied to realistic sporting objectives and growth. In this respect, the decisive factor is quali- that the target for the sporting management with Mr. fying for international competitions. Watzke, Mr. Zorc and the coach will be to lead BVB into an international competition again in the next Capital management few years. This would increase the financial flexibili- In addition to securing the KGaA's equity as deter- ty for acquiring new players, although no unknown mined in accordance with HGB, the management's risks will be taken. There will be no new debt in order capital management responsibilities also include sta- to strengthen the team. bilising and increasing the consolidated equity as determined in accordance with IFRS. We will reach Financial management these targets, in particular, by improving the oper- One of the main aims of BVB's management is to ating result and through effective investments. increase profitability in the long-term and thus to further improve Borussia Dortmund GmbH & Co. The utilisation of the authorised capital with a nom- KGaA's equity resources. In addition, there is a focus inal amount of EUR 21.9 million resolved by the on financial strength. As well as a constant improve- extraordinary General Shareholders' Meeting on 15 ment in the operating result, generating positive cash August 2006 represents an instrument enabling flow is therefore the most important financial objec- management to respond flexibly to future require- tive of our Company. We are seeking to optimise cash ments for capital. The same applies to the ability to flow by concentrating on the impacting factors of issue convertible bonds and bonds with warrants “operating results” and “investments”. (conditional capital with a nominal amount of EUR 14.6 million). At the present time, however, the The operating result is the most important indica- management has no specific plans to make use of tor for measuring success. For us, the operating these instruments.

13th Round 14th Round 18 November 2006 25 November 2006 BVB 1:2 Hertha BSC Berlin Frankfurt 1:1 BVB

Kringe kept trying to push the game for- Tinga shoots, but his shot is blocked. ward. But here he was stopped by Only in the 79th minute did Smolarek Samba. (right) score for the final score of 1:1. 51 Borussia Dortmund GmbH & Co. KGaA

CORPORATE STRATEGY less dependent on short-term sporting success in the future, Borussia Dortmund will push ahead Borussia Dortmund's aim is to establish itself over further with national and international market- the medium-term as one of the leading German ing of its brand name. football clubs after Bayern Munich. Following the successful implementation of the reorganisation, the • Germany continues to be Europe's largest foot- restructuring of our financial liabilities and the first ball market, which, however, is behind some moderate investments in the professional squad, we other European markets in financial terms. This consider ourselves to be on the right path. provides great growth potential.

The financial foundations of the first and to date only All financial activities at Borussia Dortmund are ori- listed German football company have been expand- ented around the target groups that are relevant for ed with the exclusive marketing right for SIGNAL a football club: its fans, members and business part- IDUNA PARK, more effective use of the “Borussia ners. Products and services should be tailored to Dortmund” brand and the establishment of football- these groups in the best way possible. Through its related lines of business. However, the core business existing brand potential, Borussia Dortmund will in future also be professional football together intends to utilise all the commercial opportunities with its classic income sources of TV marketing, presented by professional club football in an inter- sponsorship, ticketing and merchandising. For the national context for the benefit of the shareholders. following reasons, BVB is convinced that it will be able to further stabilise and expand its position: The current business strategy can principally be summarised as follows: • Borussia Dortmund is in sporting terms one of • Strengthening the financial condition the most successful, well known and most popu-

lar German football clubs with an outstanding • Sustainable adjustment of sporting perspec- fan base that provides BVB with one of the high- tives est average numbers of spectators in Europe. • Intensifying the promotion of up and coming talent • A football company can only be financially suc- • Fan involvement cessful if it enjoys sporting success in the long term. In order to make its financial performance • Utilisation of the “Borussia Dortmund” brand

15th Round 16th Round 2 December 2006 10 December 2006 BVB 1:0 VfL Wolfsburg FC Schalke 04 3:1 BVB

Hofland wins this tackle against Valdez suffered a serious knee injury Smolarek – but in the decisive scene during this tackle with Pander (who Smolarek prevails. was not at fault). 52 MANAGEMENT REPORT

However, financial and business development is goals. In such cases, management weighs up the largely dependent on sporting success. Since sport- opportunities and risks to find a solution that is ing success can only be planned to a very limited broadly in line with our strategic objectives from a degree, the best management can do is to create a medium-term point of view. foundation for success. Investments, particularly in the professional squad, are therefore a necessary We plan to further increase gross revenue in the prerequisite for achieving sporting objectives, such medium term. The first steps in bringing us closer to as qualifying for the UEFA Cup. However, in order this goal have been taken with the marketing of the to meet financial goals, planned investments and stadium name, the new main sponsor agreement decisions must under certain circumstances be post- with RAG and the conclusion of the new TV agree- poned to the extent these would only be possible by ment by DFL. Moreover, further significant rev- incurring new debt. Moreover, a player may be sold enue potential is available, especially by qualifying based on financial considerations in cases where this for international competitions, which would have a would not have happened had the decision been positive effect on all Borussia Dortmund's revenue made based solely on sporting criteria. sources.

A conflict, or a situation where sporting considera- Positive operating results and moderate invest- tions and financial considerations affect each other ments, mainly in the professional squad, depending adversely, therefore arises between the pursuit of on those results, are expected to enable Borussia financial interests and sporting interests, particular- Dortmund GmbH & Co. KGaA to achieve stable, ly if the club continually falls short of its sporting positive cash flows over the long term.

17th Round 18th Round 17 December 2006 26 January 2007 BVB 1:2 Leverkusen BVB 3:2 FC Bayern

Two of the three goal scorers in one pictu- Even van Bommel could not stop an outs- re: Amedick, who had bad luck in hitting tanding Frei that evening. Pienaar wat- the post, in a duel with Voronin. ches 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, son of 9.2%, from EUR 83.3 million to EUR 90.9 mil- Borussia Dortmund GmbH & Co. KGaA achieved an lion, in its core business activities of ticketing, spon- increase in revenues compared with the previous sea- sorship, TV rights, catering, licences and transfers.

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

16%

20%

34% 23%

Transfer income Ticketing TV rights Sponsorship Catering, licences and other

19th Round 20th Round 31 January 2007 4 February 2007 FSV Mainz 05 1:0 BVB BVB 0:1 VfB Stuttgart

Niculae tries to thread the ball past Metzelder tackling goal scorer Gomez. Kruska. Metzelder watches the situati- “Metze” was unfortunate that his hea- on in the background. der was cleared off the line 54 MANAGEMENT REPORT

SALES DEVELOPMENT

Despite a season with few high points from a sporting and sponsors, because substantial revenue growth was point of view, Borussia Dortmund GmbH & Co. KGaA recorded both in ticket sales (+6.2%) and in income again achieved an increase in revenues of EUR 7.6 mil- from sponsorship (+12.4%). lion to more than EUR 90 million. In addition to the Gross revenue for the 2006/2007 financial year of new basis of allocating TV marketing income which EUR 99.7 million was only just short of the EUR 100 came into effect in the past financial year, the 9.2% million target and was achieved even without partici- increase is owed mainly to the loyalty of the supporters pation in an international competition

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

100

6,8

75 12.4 14,1

11,7 21,3

50 14,8

27,2 30,5 25

17,2 18,3

0 2005/06 2006/07

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

21st Round 22nd Round 10 February 2007 17 February 2007 Hamburger SV 3:0 BVB BVB 1:0 Bor. M’gladbach

The scene that resulted in the penalty: After the final whistle: the twins David Mahdavikia dives in front of Weidenfeller, and Philipp Degen. Both had their oppor- referee Wagner falls for the performance. tunities to score... 55 Borussia Dortmund GmbH & Co. KGaA

Details of the performance of the individual revenue Income from sponsorship sources are provided in the following paragraphs. Borussia Dortmund's income from sponsorship conformed to the upward trend enjoyed by all clubs in Income from ticketing the Bundesliga and reached EUR 30.5 million, thus Borussia Dortmund's receipts from match opera- exceeding the EUR 30 million target for the first time tions, i.e. income from ticketing and friendly games, with an increase of 12.4% compared with the prior- increased by EUR 1.1 million to EUR 18.3 million year figure. in the past financial year for the 2006/2007 season. Despite not participating in an international compe- The largest individual contribution to growth tition, BVB's games were watched by an average of amounting to EUR 0.7 million was made by income 72,164 spectators and therefore represented an from Bundesliga match and season ticket sales. In attractive advertising platform, especially for region- addition the home game against Hannover 96 in the al companies. The creation of additional capacity for second main round of the DFB Cup generated a sur- perimeter boards also created the opportunity to plus of EUR 0.1 million, while various friendly games offer perimeter board advertising to new potential and match operations for the regional league team clients. provided additional income of EUR 0.3 million. In addition to RAG, acting as main sponsor for the The average number of spectators was increased from first time in the last financial year, and SIGNAL 71,378 to 72,164, despite lower season ticket sales IDUNA, which has given its name to the largest sta- compared with the previous year and a rather difficult dium in the Bundesliga, Borussia Dortmund and its season from the sporting point of view, with the club's marketing partner SPORTFIVE succeeded once participation in the first division next season not made again in increasing the number of so-called “champi- certain until the 32nd match day. On an international on partners” and partners compared with the previ- basis, Borussia Dortmund therefore continues to ous year. occupy third place in terms of numbers of spectators behind Manchester United and Real Madrid, despite The development of the hospitality areas also made a not participating in an international competition. substantial contribution to the increase in income from sponsorship. In addition to the reserved seating The loyalty of the club's supporters, even following area in the West Stand at SIGNAL IDUNA PARK an unsuccessful sporting season, is made clear by the which has been fully booked for years, the new number of season tickets already sold for next sea- Business Club 09 concept was gratefully received by son. With 50,549 tickets sold for the 2007/2008 sea- many customers. Not only does it offer participants son, Borussia Dortmund has beaten its own the chance to experience all BVB matches at Bundesliga record of 50,415 season tickets sold for SIGNAL IDUNA PARK close up, it also creates the 2003/2004. In comparison, an average of 20,450 sea- opportunity to benefit from the “Borussia Dortmund” son tickets were sold in the Bundesliga for the phenomenon away from the pitch. The number of 2006/2007 season. seats sold was more than double the previous year's

23rd Round 24th Round 24 February 2007 4 March 2007 Hannover 96 4:2 BVB BVB 2:3 Cottbus

During the game in Hanover, Valdez did Three goals (of which only two coun- not have his nerves under control. Here ted) – and still Frei had to be consoled he starts a fight with Vinicius. by Cvitanovic. 56 Left: referee Fandel. MANAGEMENT REPORT

figure. Regular meetings on journeys to away games tion on the table on average during the season, it and many other events promote a constant exchange benefited from its positions in previous years and between the companies and Borussia Dortmund. The continues to rank seventh on the allocation list. successful development of this initiative is reflected in the figures, with an increase in advertising income The absence of the live game in the DFB Cup and the from Business Club 09 of 120%. club's non-participation in the UI Cup resulted in a loss of income of around EUR 0.3 million, but the pro- Incentive packages were also especially heavily motion of the amateur squad to the regional league booked by business customers during the last finan- and the associated TV receipts made up for this. cial year. These enable companies to invite their guests to SIGNAL IDUNA PARK on individual Transfer income match days, independently of a season package. In Income from transfers recorded a decline of EUR 5.6 order to satisfy all the requests in this segment, the million to EUR 6.8 million. While three key players indoor golf area located at the south of SIGNAL with unexpired contracts, Henrique Ewerthon, Niclas IDUNA PARK and the newly built Conference Jensen and Tomas Rosicky, were sold in one go in the Center were converted into hospitality areas on 2005/2006 financial year, in the most recent season match days. Borussia Dortmund GmbH & Co. KGaA only said goodbye to David Odonkor, who transferred to the Income from TV marketing Spanish first division club Betis Sevilla following an Income from TV marketing amounted to EUR 21.3 outstanding World Cup. million in the past financial year and was therefore approximately EUR 6.5 million higher than in the Income from catering and licences previous year. The reason for this was the new TV including other income agreement which came into effect for the first time Borussia Dortmund achieved income from catering, in the 2006/2007 season, under which the clubs in licences and other income of EUR 14.1 million in the the Bundesliga and the Second Bundesliga will 2006/2007 financial year compared with EUR 11.7 receive around EUR 1.2 billion over three years. million in the 2005/2006 financial year. This represents an increase in the amount distributed annually of around 40% compared with the The growth in income mainly reflected the perform- previous TV agreement. As well as the increase in ance in catering. The marketing successes already the amount distributed, a new basis of allocation was mentioned in the context of sponsorship also had an also introduced at the start of the past financial year impact here, because the majority of agreements with under which the football clubs are ranked in order business customers provide for an element of cater- of preference, using a weighted method of calcula- ing services as well as advertising space. This item con- tion based on the last four years' seasons. In addi- tinues to include income from catering on match days, tion, a bonus is paid at the end of the season depend- the sale of publications, advance booking fees and ing on the club's position on the league table. licence fees for events at SIGNAL IDUNA PARK on Although Borussia Dortmund occupied ninth posi- non-match days. The latter also recorded an upward

25th Round 26th Round 10 March 2007 17 March 2007 VfL Bochum 2:0 BVB BVB 0:0 1. FC Nuremberg

Here Weidenfeller still manages to save: He brought new energy: Together with Borussia's keeper stops an early goal Tinga, Marc Kruska (right) attacks from Gekas. Left: Wörns. Nuremberg's Jan Polak. 57 Borussia Dortmund GmbH & Co. KGaA

trend, as did catering income in the circulation areas around EUR 2.2 million was once again achieved in at SIGNAL IDUNA PARK, which were able to the professional match operations area alone, despite achieve an increase of EUR 0.20 in spending per head several changes of coach. In the 2004/2005 season, thanks to a wider range of items offered. Income in these expenses amounted to EUR 36.6 million. this area will also participate in the general upward trend in future as a result of the construction of the Depreciation and amortisation Conference Center, a state-of-the-art conference Depreciation and amortisation fell as planned by facility, and the letting of the Center by Stadionlive EUR 0.8 million compared with the previous year to GmbH, which has been marketing and organising the EUR 6.9 million. other events successfully since 2005. Other operating expenses Other income, which mainly comprises rental and Other operating expenses amounted to EUR 42.7 lease income, amounted to EUR 5.7 million. This million in the 2006/2007 financial year compared with item represents rental income from the letting of EUR 57.0 million in the previous year. The decline SIGNAL IDUNA PARK for the 2006 FIFA World was mainly due to a fall of EUR 5.8 million in trans- Cup. fer expenses, a reduction of EUR 4.4 million in legal and advisory costs, valuation allowances on receiv- Other operating income ables lower by EUR 2.4 million, a reduction of Other operating income achieved growth of around EUR 3.2 in other administrative expenses and a fall of EUR 2.0 million to EUR 8.7 million in the most EUR 1.3 million in licence fees. The decline was off- recent financial year. This item included receipts set principally by higher marketing commissions from distributions and allocations of profit from the (EUR 1.3 million). In addition to the expenses of FIFA 2006 World Cup, which alone accounted for match operations and the rental costs for SIGNAL income of EUR 4.6 million. IDUNA PARK and the training ground, marketing represents the major item of expenses.

DEVELOPMENT OF SIGNIFICANT Income taxes OPERATING EXPENSES No income taxes were required to be included in the financial statements because, with the repurchase of Personnel expenses the trademark rights, the provision for anticipated A further reduction of EUR 3.0 million was achieved losses on pending transactions established in previ- in personnel expenses which amounted to EUR 34.3 ous years in the HGB financial statements was also million compared with EUR 37.3 million in the recognised for tax purposes in the 2006/2007 finan- 2005/2006 financial year. A reduction in expenses of cial year.

27th Round 28th Round 30 March 2007 7 April 2007 Arm. Bielefeld 1:0 BVB Aachen 1:4 BVB

Relegation battle: Following the 0:1 in Outstanding: Tinga played his best match Bielefeld (here Schuler), BVB slipped to date in the BVB strip at the Tivoli. with Valdez to 17th position. Here he leaves Aachen's Pinto behind. 58 MANAGEMENT REPORT

FINANCIAL CONDITION

ANALYSIS OF CAPITAL STRUCTURE transaction which results in a rate of interest payable, on this loan, of 6.195% per annum, irrespective of With the capital increase resolved by the extraordinary actual changes in market rates of interest. General Shareholders' Meeting on 15 August 2006, the share capital of Borussia Dortmund GmbH & Co. ANALYSIS OF INVESTMENTS KGaA (previously EUR 43.875 million) rose by EUR 17.550 million to EUR 61.425 million, while equity, Additions to intangible assets amounting to EUR after taking into account the net profit for the year, 13.910 million related almost entirely to investments increased to EUR 100.230 million compared with in the professional squad. EUR 52.875 million in the previous year. The equity Additions to tangible fixed assets amounted to ratio therefore improved from 29% to 62% as planned. EUR 2,317 million. Significant individual investments worthy of mention were the conversion of the The funds generated by the capital increases in the former offices at the stadium, the August Lenz build- previous and current financial years have been used ing, into a fan shop and the construction of a confer- mainly to reduce financial liabilities, achieve a more ence centre on Level 4 of the stadium's North Stand. manageable debt maturity structure and obtain improved interest-rate terms. Liabilities were ANALYSIS OF LIQUIDITY reduced significantly compared with the previous year from EUR 93.366 million to EUR 51.101 mil- As at 30 June 2007, Borussia Dortmund GmbH & lion. The main component of the financial liabilities Co. KGaA held cash of EUR 13.393 million, of which is the loan from Morgan Stanley in an amount of EUR 0.019 million was subject to restrictions. In EUR 21.7 million. In order to minimise the inter- addition, the revolving credit facility granted by est-rate-related cash flow risk associated with this Morgan Stanley for EUR 10.000 million and an over- loan and the loans granted by Morgan Stanley to draft facility of EUR 2.500 million are available to the subsidiaries amounting to EUR 57.5 million, the Group for their full amounts. The cash flow state- Company has entered into an interest rate hedging ment gives details of the development of liquidity.

NET ASSETS

The total assets of Borussia Dortmund GmbH & Co. were the reduction in cash funds and lower non-cur- KGaA declined from EUR 181.0 million to EUR rent trade receivables. At the same time, intangible 162.8 million. The principal reasons for the decline assets were higher.

29th Round 30th Round 15 April 2007 21 April 2007 BVB 0:2 Werder Bremen Hertha BSC Berlin 0:1 BVB

Stumble: Metzelder & Co had to face the Scorer of the winning goal on the Spree: last defeat for five weeks against Wiese’s Markus Brzenska. First to congratulate him Werder Bremen. 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 side of the balance sheet. Particular mention should assets of Borussia Dortmund GmbH & Co. KGaA be made of the improvement in the operating result, showed significant positive development following the the Group's equity resources and the reduction in lia- successful implementation of the reorganisation meas- bilities, which will once again allow BVB room for ures and the completed restructuring of the liability manoeuvre in its future sporting development.

COMPENSATION REPORT

The structure of the compensation system for man- can be made on the basis of resolutions approved by agement is determined and regularly reviewed by the the Executive Committee of the Advisory Board. Executive Committee of the Advisory Board. The Executive Committee is also responsible for deter- The component not related to performance compris- mining the compensation of management in detail es a fixed annual salary and benefits in kind, mainly and sets the appropriate amount of compensation. derived from the amounts required to be taken into The principal criteria for determining the appropriate account in accordance with tax regulations e.g. for the amount of compensation are the responsibilities of use of company cars. the particular member of management, their personal performance and the financial condition, success The Supervisory Board's compensation is governed and future prospects of Borussia Dortmund. by § 13 of the Articles of Association, pursuant to which each member of the Supervisory Board As well as annual payments not related to perform- receives fixed compensation amounting to EUR 7 ance and based on market rates at comparable com- thousand; the Chairman receives twice that amount, panies, the compensation includes a performance- while the Deputy Chairman receives one and a half related component that is based on consolidated times that amount. Value-added tax is reimbursed to earnings before taxes. In addition, special payments the members of the Supervisory Board.

31st Round 32nd Round 28 April 2007 5 May 2007 BVB 2:0 Frankfurt VfL Wolfsburg 0:2 BVB

Alexander Frei – here against Chris – “shot In the third last round, Valdez scored down” Eintracht almost by himself with two the longed-for first goal for BVB. Van attractive free kicks. der Leegte cannot stop him. 60 MANAGEMENT REPORT

RISK REPORT

In the course of its business activities, Borussia Company's operations. The identification, assessment Dortmund GmbH & Co. KGaA is constantly exposed and management of these dangers define the areas of to risks which may have a negative effect on the responsibility of a company's risk management system.

RISK MANAGEMENT SYSTEM

Risk management as an ongoing task is an integral part appropriate measures to manage the risks are imple- and major precondition of sound company manage- mented right from the start. ment. With the aid of a properly implemented internal monitoring system, developments which endanger the The aim of the risk management system is to obtain continued existence of Borussia Dortmund GmbH & information about risks and their financial and other Co. KGaA and its subsidiaries can be recognised and consequences as early as possible and to enable the counteracted at an early stage. In the risk management Company to take appropriate countermeasures. system, management has laid down principles and guidelines to enable uncertainties to be identified and Particular attention is paid to risks which could endan- countermeasures to be taken in good time. ger the continued existence of Borussia Dortmund GmbH & Co. KGaA or its subsidiaries in their exist- Borussia Dortmund's risk management system is ing form (high priority risk). Responsibilities have integrated into the organisational structure of the been established for the individual corporate divisions whole Company and therefore ensures that the and the procedures to be observed and the monitor- responsible employees maintain a high level of value- ing system have been defined as follows: oriented risk awareness. It implements the require- • The risk position is regularly recorded on a con- ments of the German Control and Transparency Act. sistent basis and compared with the existing data. The Group-wide risk management system ensures This enables countermeasures to be taken in good that risks are identified at an early stage, recorded time if negative developments can be identified. consistently, evaluated, managed and monitored. • The executives responsible are required to inform management immediately of any significant chan- Within the framework of its risk management system, ges in the risk profile. Borussia Dortmund, together with the specialist • Constant observation of the market enables departments, identifies, documents and evaluates changes in the environment to be recognised promptly and action to be taken in response. possible risks on the basis of the potential amount of loss they may cause and their likelihood of occurring, • Differences in the Company's results of operations and net assets from the budgeted figures are and collates them at the level of the corporate divi- identified and analysed using detailed monthly sions. The risks are categorised and steps are taken and quarterly financial reports. to ensure that they are constantly monitored and that

33rd Round 34th Round 12 May 2007 17 May 2007 BVB 2:0 FC Schalke 04 Leverkusen 2:1 BVB

Total commitment: Christian Wörns in a The last chance of the 2006/2007 season: tackle against the Schalke player, Gerald Lars Ricken just misses Leverkusen's goal Asamoah. BVB wins 2:0. in time added on. 61 Borussia Dortmund GmbH & Co. KGaA

In this context, Borussia Dortmund applies the fol- regularly informed of the current risk position. The lowing principles/rules of conduct: efficiency and effectiveness of the risk management system is examined as part of the audit carried out by • Management determines the basis on which risks the Company's auditors. are to be assessed and identified. • The identification of risks takes place in the individual corporate divisions since that is where The following paragraphs describe in more detail the knowledge about specific risks is available. specific risks to which Borussia Dortmund GmbH & • Risks are assessed by a group of people chosen by Co. KGaA is exposed, which affect the Company's the management. The criteria to be applied are business operations as a result of internal and exter- also defined by management. nal factors and may have a major influence on them The governing bodies of Borussia Dortmund are kept over the long term.

SPECIFIC RISKS

STRATEGIC RISKS sporting achievements, because winning titles generates additional demand from spectators, business cus- In addition to financial success, the primary objective tomers, sponsors and in other areas of the business. A of a company participating in the football business in conflict of objectives therefore arises. The achieve- the Bundesliga remains sporting success, irrespective ment of one company objective may therefore nec- of business plans which do not depend on the club's essarily entail abandoning or modifying another position on the league table and the maintenance of objective. In such cases, management will weigh up profitability in a variety of different sporting scenar- the risks and opportunities and attempt to find a solu- ios. This can be justified solely on the grounds of pub- tion that is broadly in line with the strategic objec- lic interest, which is largely focused on the winning of tives from a medium-term point of view, while titles. If the club has no success over longer periods, remaining within the range of defined company per- the management is faced with a balancing act, formance indicators in order not to jeopardise the attempting to keep the profitability of the company financial objectives. and the sporting objectives in harmony with each other. Measures which are necessary for sporting success, such as investments, must not be allowed to PERSONNEL RISKS endanger the financial objectives, for example, ensuring adequate liquidity, even over several years. But The available potential of its employees, from both a economic success also depends to a large extent on sporting and a financial point of view, forms the basis for

DFB Cup 1st Round 4 August 2007 12 August 2007 1. FC Magdeburg 1:4 BVB BVB 1:3 MSV Duisburg

In overcoming Magdeburg, Tinga and Sebastian Kehl in a tackle against the Co were not quite as in control as the Duisburg player, Manasseh Ishiaku. result suggests. 62 MANAGEMENT REPORT

Borussia Dortmund's future development as a business. COMPETITIVE RISKS Their ability, commitment and performance will play a decisive role in future sporting and financial success. Competition between football clubs, for example in obtaining sponsors, has intensified, and not just as In this regard the professional squad is of critical result of the stadiums built for the 2006 FIFA World importance. The wrong investments in this area Cup. Differing decisions made under the influence would have far-reaching effects on the Company's of regional politics can also affect the ability to attract sporting objectives, and therefore financial objectives, and retain interested companies. In the most recent as would insufficient identification with the club and season, in particular, sponsors have been rated dif- a lack of commitment. To some extent, it may not be ferently by regional politicians, and in some cases possible to make up for the loss of key players as a have therefore been approved for certain competi- result of injury and, as a result, the ability to meet tors while being simultaneously banned for others. internally defined objectives may be endangered. An additional difficulty is that there is an unusually high concentration of competitors in North Rhine- The Company's success is based on making business Westphalia in particular, with six clubs currently in decisions and putting them into effect, and both are the Bundesliga and several in the Second Bun- largely determined by the quality of the relevant desliga. This can have negative consequences for employees. The structure of Borussia Dortmund's attracting sponsors based in the region because, in organisation is based on a clear separation of the contrast to other regions, there is the risk for spon- individual corporate divisions, which thus enables sors that they will be in conflict with each other for business decisions to be analysed and prepared in potential customers. individual departments with the relevant expertise before a decision is made for the Company as a SALES RISKS whole. The constant exchange between the corporate divisions through the medium of well estab- The future performance of Borussia Dortmund's lished meetings contributes beforehand to optimis- individual lines of business depends on its sporting ing the quality of the decisions made and avoiding success. A lack of sporting success over a long period conflicts of objectives. could have a major impact on demand for the products offered and therefore on the achievement From the point of view of risk management, it is of financial and sporting objectives. It is also not equally indispensable for a company to be able to rely possible to be fully certain in advance of the on qualified executives and their staff. Management consequences for the Company of statutory provi- and all the Company's employees have a permanent sions. responsibility to identify risks at an early stage, to monitor and therefore limit them, and at the same Equally, the development of pay TV will have a long- time to pursue business opportunities rigorously. term effect on TV income achievable in future.

2nd Round 3rd Round 18 August 2007 25 August 2007 FC Schalke 04 4:1 BVB BVB 3:0 Cottbus

Gerald Asamoah's actions in this scene Diego Klimowicz – scorer of two goals – with Robert Kovac do not look like a heading against Cottbus. tender embrace... 63 Borussia Dortmund GmbH & Co. KGaA

FINANCIAL RISKS

Borussia Dortmund finances itself primarily from After taking account of this interest rate swap, all the long-term bank loans, trade payables, season tickets Company's significant financial liabilities carried a paid for in advance and payments from sponsors. The fixed rate of interest as of June 30, 2007. Future related risks arising comprise interest-rate-related changes in the level of interest rates will therefore cash flow risks, market risks, liquidity risks and credit have only a small impact on the interest expense, risks. On the other hand, the Company is not exposed even in the medium term. to any significant currency risks. Under the terms of the loan agreements entered into by Borussia CREDIT RISK Dortmund and its subsidiaries with Morgan Stanley & Co. International Ltd., London, England, the The Company conducts business exclusively with lender has an early right of termination in the event third parties of high credit standing. Concentrations of failure to maintain certain contractually defined of credit risk can arise in the context of a player trans- financial ratios (covenants). The methods of manag- fer and from long-term sponsorship agreements. ing the individual types of risk are described in the Such concentrations of risk are monitored in the following. course of the Company's operating activities.

INTEREST RATE RISKS The counterparty for the interest rate swap described above was a major German bank with the highest The financial liabilities consist mainly of a variable-rate credit rating. loan from Morgan Stanley & Co. International Ltd., London, England, based on Euribor. The interest LIQUIDITY RISK expense associated with this loan is therefore dependent on the future development of the general level of The Group constantly monitors the risk of possible interest rates. In order to minimise the interest-rate- liquidity bottlenecks, taking into account the proba- related cash flow risk associated with the loan, the ble maturities of its financial liabilities and the timing Company therefore entered into an interest rate swap of the expected cash flows from operating activities. in respect of this loan in August 2006. The effect of this Following the restructuring completed in the interest rate hedging transaction is an overall future 2005/2006 financial year, liquidity risks have been rate of interest payable of 6.195% per annum, irre- sharply reduced thanks to the Company's new financ- spective of actual changes in market rates of interest. ing structure, which is overwhelmingly long-term.

RISKS JEOPARDISING PERFORMANCE AND CONTINUED EXISTENCE

In order to participate in Bundesliga matches, cess. The effects of relegation on earnings and liq- Borussia Dortmund requires a licence from DFL uidity could jeopardise the Company's existence. Deutsche Fußball Liga GmbH (German Football Following the successful implementation of the League, “DFL”) which is issued for each season. If restructuring and in accordance with its current the licence were to be revoked or denied because of financial condition and results of operations, Borussia failure to comply with conditions or evidence of Dortmund was awarded the licences for both the inability to meet financial criteria, this would result Bundesliga and for the Second Bundesliga, which in automatic relegation. But relegation to the Second had to be applied for in view of the sporting situation, Bundesliga can also result from lack of sporting suc- without conditions.

64 MANAGEMENT REPORT

In order to minimise the risk of relegation, and therefore at the same time substantially Borussia Dortmund has strengthened the profes- improved the chances of qualifying for international sional squad significantly for the 2007/2008 season competitions in the following season.

THE RISK SITUATION IN SUMMARY

Borussia Dortmund takes appropriate measures to Borussia Dortmund has succeeded in minimising counteract the risks it faces. New risks are systemat- risks which could adversely impact its development ically incorporated in the risk management system as or jeopardise its existence. The fact that we are not they arise, communicated and highlighted, and a involved in competitions on an international level is search is made for effective countermeasures. At the no longer a threat to Borussia Dortmund's existence. present time, there are no recognisable risks that If we succeed in qualifying for the UEFA Cup or the could endanger the continued existence of the Champions League, our financial condition and Borussia Dortmund Group. results of operations will improve even further.

FORECAST REPORT

ANTICIPATED DEVELOPMENT OF THE COMPANY

After having completed the restructuring of the lia- We will continue on the course we have set for our- bilities of Borussia Dortmund GmbH & Co. KGaA selves on a solid equity base and without exposing and the selective strengthening of its professional ourselves to financial risks, so that BVB will once squad, Borussia Dortmund should once again be in a more become a leading football club in Germany and position in the medium term to compete for one of preferably also in Europe. the first five places on the Bundesliga table.

EXPECTED GENERAL ECONOMIC ENVIRONMENT

Professional football in Germany is booming as never tracts only entered into effect in July 2006. As the before. The Bundesliga's unfailing popularity with the KirchGruppe had been the chief source of money for fans and the resulting interest of media companies and the clubs, its insolvency presented them with a major sponsors has also made it a commercial success story. challenge. Now, five years down the line, the league is Since the formation of the League Association in a better position than ever before. Professional foot- (Ligaverband) in 2000, the clubs and corporations of ball has emerged all the stronger from the crisis in the professional football have not been able to produce any television and advertising markets. Tough cutbacks on figures as good as those in the past football season. And the one hand, and a long-term approach to manage- this although the increase in TV revenues is not yet ment with a readiness to invest in the future on the included in the present figures because the media con- other, are starting to pay off.

65 Borussia Dortmund GmbH & Co. KGaA

EXPECTED RESULTS OF OPERATIONS

ANTICIPATED EARNINGS UEFA Champions League, or possible income from DEVELOPMENT transfers, could result in a significantly higher revenue figure than this. We anticipate that, including all the control and profit and loss transfer agreements, the Company will ANTICIPATED DEVELOPMENT OF generate a net profit for the year for the 2007/2008 SIGNIFICANT OPERATING EXPENSES season. With the exception of expenditure on the profession- The amount of profit cannot be forecasted reliably on al squad, operating expenses will continue to decline the basis of the information currently available, in the 2007/2008 financial year. because earnings depend to a large degree on the sporting performance and on successful transactions EXPECTED DIVIDENDS in the transfer market. Against the background of the Group's financial lia- ANTICIPATED DEVELOPMENT bilities, which are still high in relation to current prof- OF REVENUES itability, we are not planning any dividend distributions in the next few financial years despite a marked Revenues are expected to amount to between around improvement in earnings. We expect that it will be EUR 80 million and EUR 83 million in the 2007/2008 possible to discuss a dividend payment at the earliest financial year. Qualification for the UEFA Cup or the in 3 – 4 years' time.

EXPECTED FINANCIAL CONDITION

FINANCIAL PLANNING CAPITAL EXPENDITURE PLANNING

As a result of the improved earnings situation and the Our future investment activities will be focussed on debt restructuring, which also includes, in particular, the professional squad, further modernisation of long-term financing of the stadium shares, we will SIGNAL IDUNA PARK and its environs and the again achieve a further substantial reduction in our construction of the Borusseum in the north-east liabilities. This will be implemented, in particular, corner of SIGNAL IDUNA PARK. through the repayment in instalments of the long- The conversion of the August Lenz building into a term stadium financing as from the 2007/2008 finan- merchandising shop and catering operation, and the cial year, while the amount of the other liabilities in construction of the Conference Center in the North the context of our operating activities will be relatively Stand, on the other hand, were completed in the past unchanged. financial year.

66 MANAGEMENT REPORT

Thus we will concentrate on the core business of ANTICIPATED DEVELOPMENT OF Borussia Dortmund and, in so doing, will not be tak- LIQUIDITY ing any financial risks which cannot be calculated in advance. In essence, this means that we will only be Following the implementation of the capital increas- incurring capital expenditure to the extent permit- es, the further reduction in debt consequent thereto ted by the anticipated financial leeway. In preparing and the improvement in earnings, we will as from the the capital expenditure budget, we will therefore not 2007/2008 financial year be in a position to generate include any uncertain sporting successes which, if substantial financial surpluses, which will significant- they failed to materialise, would result in new indebt- ly improve Borussia Dortmund's room for manoeuvre edness. and its competitiveness.

OPPORTUNITIES

Borussia Dortmund's greatest opportunities lie in Participation in the national cup competitions, the unlocking and exploiting additional revenue poten- DFB Cup and the DFL League Cup, represents fur- tial by participating in international competitions, ther significant earnings potential. However, the such as the UEFA Cup and the UEFA Champions financial benefits also depend, to a large extent, on League. Participation in the UEFA Cup group phase which teams we are drawn against. alone would result in additional revenues of around Borussia Dortmund's professional squad, which EUR 5 million, generated through extra TV, ticket- includes a large number of young and talented playing and sponsorship revenues. According to our esti- ers, has enormous potential. These players will be mations, we would be guaranteed at least EUR 10 able in the future to lead BVB back to the top of the million in additional sales if we were to reach the table in Germany, and possibly even further. In addi- group phase of the UEFA Champions League. In tion to the sporting success we are striving for, this addition, an international presence would almost team will enable us to achieve a significant improve- certainly have a positive impact on the merchandis- ment in profitability and offers tremendous transfer ing business. potential for the future.

DEVELOPMENT FORECAST IN SUMMARY

Since the completion of the restructuring focusing on In our future development, we will not enter into any the buyback of the stadium shares, Borussia further financial risks that could jeopardise the exis- Dortmund is once again in a position to make invest- tence of Borussia Dortmund. Generating financial ments in the professional squad, which will signifi- surpluses will be a prerequisite for further invest- cantly improve the quality of the team. The contracts ments in the professional squad. We are convinced with the professional players Marc Ziegler, Robert that this is the right way to establish Borussia Kovac, Mladen Petric, Giovanni Federico, Diego Dortmund in the medium term as one of the leading Klimowicz and Jakub “Kuba” Blaszczykowski demon- clubs in the Bundesliga. strate the point impressively.

67 Borussia Dortmund GmbH & Co. KGaA

SUPPLEMENTARY REPORT

BVB was standing on the precipice: following the for the 2nd main round of the DFB Cup on 12 27th round, the six-time German football champion – August 2007 provided Borussia Dortmund with an which had had to leave football's “upper echelon” for attractive opponent in the form of Eintracht the first time in 1972 for a period of four years – had Frankfurt, also a Bundesliga club. The match is even slipped to a relegation position. expected to be played on 30 or 31 October 2007 at SIGNAL IDUNA PARK. During the troubled times, the meaning of solidarity by the people of Dortmund with their flagship – After outstanding performances during the run-up to Borussia – became clear. The “We are Borussia” ini- the 2007/2008 Bundesliga season, Borussia Dort- tiative launched by the BVB fan department resulted mund began with a false start by losing 1:3 to the in a unique closing of the ranks between Dortmund's newly promoted MSV Duisburg on 12 August 2007 in citizens, companies and public authorities and the front of 75,700 spectators at SIGNAL IDUNA whole region. PARK. Ishiaku (2) and Tararache were the goalscorers for the “Zebras” and Kringe for BVB. It was the The high level of enthusiasm and excitement in antic- first win for MSV at Strobelallee for 35 years and only ipation of the new 2007/2008 season is demonstrated the second ever. by the 50,549 season tickets sold, a new Bundesliga record. On 6 July 2007, the Bundesrat approved the act From the sporting point of view, things are looking implementing the reform of corporate taxation in distinctly encouraging. With six new players, Thomas 2008. As a consequence, the future effects of the Doll's team is in a better position both in terms of reform were not yet required to be reflected in the numbers and of quality than in the previous season. consolidated balance sheet prepared as of 30 June "We have succeeded in giving the squad more depth, 2007. and the sense of competition within the team has increased," concluded sport director Michael Zorc. The reform of corporate taxation included substan- Head coach Thomas Doll is also convinced that this tial cuts in the rates of both trade tax and corpora- will result in an ability to produce better perform- tion tax. While the act results in a net reduction in ances and more attractive football. the tax burden on companies intended by the legislature, it will also give rise to some extra tax payments One week before the start of the 2007/2008 as a result of broadening the basis of assessment to Bundesliga season, Borussia Dortmund has already taxation. given a positive sign of its sporting potential. In the DFB Cup, coach Thomas Doll's team achieved a 4:1 An initial analysis of the future effects of the reform victory over 1. FC Magdeburg. In addition to Ebi of corporate taxation on the BVB Group did not Smolarek, goals were also scored by new signings reveal any indications of particular tax risks in future Diego Klimowicz (2) and Mladen Petric. The draw 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 5. There is no control of voting rights in cases where response to the requirements of § 289 (4) Nos. 1 to 9 employees are shareholders. HGB: 6. Because of its legal form as a partnership limited 1. The share capital of Borussia Dortmund GmbH by shares, Borussia Dortmund GmbH & Co. & Co. KGaA amounts to EUR 61,425,000.00 and KGaA does not have a management board. is divided into 61,425,000 no-par value ordinary Instead, the Company's management and repre- bearer shares. All of the shares have been admit- sentation is the responsibility of the general part- ted to trading on the Official Market (General ner. The terms of § 6 No. 1 of the Articles of Standard) of the Frankfurt Stock Exchange and Association provide that this executive body of the in the over-the-counter markets (Regulated Company is Borussia Dortmund Geschäfts - Unofficial Markets) in Berlin-Bremen, Stuttgart, führungs-GmbH, whose registered office is in Munich, Hamburg and Düsseldorf. Each no-par Dortmund, on a permanent basis and not for a value share entitles the holder to one vote at the limited period of time, by virtue of its status as a General Shareholders' Meeting. The Company shareholder. The appointment and removal of therefore has only one class of shares and all managing directors of Borussia Dortmund shares carry the same rights and obligations. Geschäftsführungs-GmbH is governed by § 8 No. Additional rights and responsibilities attaching to 6 of its shareholders' agreement and is the respon- the Company's shares are determined in accor- sibility of the Executive Committee of its Advisory dance with the German Stock Corporation Act Board, and therefore not of the Supervisory Board (Aktiengesetz, “AktG”). of Borussia Dortmund GmbH & Co. KGaA.

2. There are no restrictions affecting the voting In principle, changes may be made to the Articles rights or transfer of the shares. of Association of Borussia Dortmund GmbH & Co. KGaA only by a resolution of its General 3. As of 30 June 2007, the Company had been noti- Shareholders' Meeting, which must be passed, in fied of the following interests in the share capital accordance with § 133 (1) AktG, by a simple major- of Borussia Dortmund GmbH & Co. KGaA in ity of votes and also, in accordance with § 15 No. 3 excess of 10% of the voting rights: of the Articles of Association of the Company - Morgan Stanley International Limited: 16.25% together with § 179 (1) and (2) AktG, by a simple - Absolute Capital Management Holdings Limited: 13.04% majority of the capital represented at the passing - BlueBay Asset Management: 17.09% of the resolution, except to the extent that there are mandatory statutory provisions to the contrary or 4. There are no shares with special rights which con- the Articles of Association provide otherwise. It is fer powers of control. a mandatory provision of statute that a resolution of

69 Borussia Dortmund GmbH & Co. KGaA

the General Shareholders' Meeting passed by a ther authorised, with the approval of the majority of three-quarters of the share capital re- Supervisory Board, to disapply the statutory sub- presented at the passing of the resolution is required scription right of the limited liability shareholders for changes to the Articles of Association relating to in certain circumstances. the objects of the Company (§ 179 (2) sentence 2 AktG), the issuance of non-voting preferred shares In addition, by a resolution of the General (§ 182 (1) sentence 2 AktG), capital increases Shareholders' Meeting held on 22 November 2005, where subscription rights have been disapplied the share capital of Borussia Dortmund GmbH & (§ 186 (3) AktG), the creation of conditional capi- Co. KGaA has been conditionally increased by up tal (§ 193 (1) AktG), the creation of authorised to EUR 14,625,000.00 by the issue of up to capital (§ 202 (2) AktG) – where appropriate with 14,625,000 new no-par value ordinary bearer authorisation to disapply subscription rights (§ 203 shares. The general partner is authorised until 31 (2) sentence 2 together with § 186 (3) AktG) –, the October 2010, with the approval of the Supervisory ordinary or simplified reduction of capital (§ 222 Board, to issue bearer bonds with warrants and/or (1) sentence 2 and/or § 229 (3) AktG) or a convertible bonds with a total nominal amount of change of legal form (§ 233 (2) and/or § 240 (1) up to EUR 40,000,000.00 and a maximum maturi- German Reorganisation Act (Umwand lungs- ty of 25 years on one or more occasions. The hold- gesetz, “UmwG”)). In addition, capital increases, ers of bonds with warrants may be granted rights to other changes to the Articles of Association and subscribe for, and the holders of convertible bonds other decisions of a fundamental nature may only may be granted rights to convert into, a total of up be resolved with the approval of the general part- to 14,625,000 new no-par value ordinary bearer ner, in accordance with § 285 (2) sentence 1 shares of the Company in accordance with the AktG. The Supervisory Board is authorised in detailed terms and conditions of the bonds with accordance with § 12 No. 5 of the Articles of warrants and/or convertible bonds. Association to resolve changes to the Articles of Association which relate only to their wording, in In the event of a takeover offer for shares issued particular in connection with the amount of capital by the Company and admitted to trading on an increases out of authorised and conditional capital. organised market, general statutory responsibilities and powers also apply to the general partner. For 7. In accordance with § 5 No. 4 of the Articles of example, if a takeover offer were to be received, Association of Borussia Dortmund GmbH & Co. the general partner and the Supervisory Board KGaA, the general partner is authorised until 31 would be required to issue and publish a response July 2011, with the approval of the Supervisory to the offer, giving their reasons, in accordance Board, to increase the share capital by the issue of with § 27 of the German Securities Acquisition and up to 21,937,500 new no-par value ordinary bear- Takeover Act (Wertpapiererwerbs- und Übernah- er shares against cash or non-cash contributions megesetz, “WpÜG”), so that the limited liability on one or more occasions, but by a maximum of shareholders can make a decision on the offer on EUR 21,937,500.00 in total (Authorised Capital an informed basis. Moreover, in accordance with § 2006). In all cases, the new shares participate in 33 WpÜG, once a takeover offer has been profits from the beginning of the financial year in announced, the general partner may not take any which they are issued. The general partner is fur- actions outside the ordinary course of business

70 MANAGEMENT REPORT

which could frustrate the success of the offer, prohibition on frustrating action, European break- unless those actions have been authorised by the through rule, reservation of reciprocity). General Shareholders' Meeting, or the Supervisory Board has given its approval to the actions or the 8. The Company is not a party to any material agree- actions relate to obtaining a competing offer. In ments which are conditional on a change of con- making their decisions, the general partner and the trol following a takeover offer for the issued shares Supervisory Board are bound to have regard to the of Borussia Dortmund GmbH & Co. KGaA. interests of the Company, its employees and its shareholders. At the balance sheet date, there were 9. The Company is not a party to any compensation no provisions of the Articles of Association within agreements applying in the event of a takeover the meaning of §§ 33a – 33c WpÜG (European offer.

STATEMENT OF THE GENERAL PARTNER CONCERNING RELATIONS WITH AFFILIATED COMPANIES

The Dependent Company Report prepared by that was in each case reasonable under the circums- Borussia Dortmund GmbH & Co. KGaA pursuant to tances known to us at the time such transactions were § 312 AktG sets out the relations with BV. Borussia 09 entered into. In all other cases, the Company has been e.V. Dortmund as the controlling entity and its affilia- compensated for any disadvantages having arisen. No ted companies. The general partner – represented by other measures within the meaning of § 312 (1) AktG its Managing Directors – issued the following conclu- were taken or omitted during the financial year. ding statement:

With respect to the transactions set out in the report Dortmund, 15 August 2007 concerning relations with affiliated companies, the Borussia Dortmund GmbH & Co. KGaA Company received consideration in the financial year Borussia Dortmund Geschäftsführungs- GmbH

Hans-Joachim Watzke Thomas Treß Managing Director (Chairman) Managing Director

71 72 BVB Event

73 Event and entertain- ment: The Blue Man Group played before the game against Bayern Munich (final score: 3-2) on 26 January 2007.

SIGNAL IDUNA PARK & EVENT

nly about decade ago, a pure football sta- related reasons no rock or pop concerts can Odium such as that in Dortmund was an (yet) be held in SIGNAL IDUNA PARK – which open, drafty building that was used for only ap- was designed at the beginning of the 1970s –, proximately 25 events each year. Namely, the “Strobelallee temple” (as it is referred to by when the relevant club used the stadium for a fans due to its impressive structural character) league or cup match. Then it was closed. Un- is open 365 days a year. til the next match. The “stadion live!” agency, commissioned by In the meantime, stadiums in Germany have de- BVB, alone holds approximately 200 events a veloped into modern, comfortable arenas that year. In SIGNAL IDUNA PARK with its different invite visitors to linger longer: well beyond the VIP levels there is always a suitable location, final whistle – and on all other days. This de- ranging from birthday parties to meetings in the velopment is also being pursued consistently newly built Conference Center in the belly of the by Borussia Dortmund. Although for statics- 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 Her- rmann 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 ho- tels and the optimal transport links, Signal Iduna Park is the top address for meetings and celebrations in the eastern Ruhr region.

Magdalena Tomaszewski is the current “Miss Borussia”. Even smaller trade fairs with up to 100 In the current fan catalogue, she presents the BVB exhibitors are held there, as well as the so- women's collection. Here she poses before the camera with the professional player Sebastian Kehl (middle) called “internal trade fairs”, where sponsors 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 most modern and largest indoor golf facilities presentations and develop business contacts. in Germany, with an area in excess of 1,000 The spacious (parking) area surrounding square metres. Eight real image golf Germany's largest stadium is also available simulators make it possible for players to play for a monthly flea market. The market is virtual rounds on the most beautiful and best organised by the Essen event organiser, EXPO known golf courses in the world. Moreover, Concept, which has already successfully through precision analysis, the simulators established stadium markets in Cologne and conduct checks to measure the ball speed, the Düsseldorf. swing path, club speed and the stroke direction in order to optimise each player's technique. And it is not only football lovers who find a home in SIGNAL IDUNA PARK. In the south- “Stadium Cinema” was the name of an event eastern corner of the stadium, the motto is which was initiated for the first time in “drive, putt and pitch at any weather” – golf for summer 2007 and proved a success despite anyone at any time! It is home to one of the the poor weather. There were 35 showings,

Other types of sport also BVB and its sponsors want to get close to kick off the season with crowd pleasers like many campaigns Borussia Dortmund: BVB around SIGNAL is a member of the Super- IDUNA PARK league Formula – a car racing series commencing in 2008. Borussia receives a royalty for this.

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 Lunow, the treasurer of the registered from all well-known “blockbusters” flickered association BV. Borussia 09 e.V. Dortmund: on the huge screen, attended “We hope that we will be able by 31,200 viewers. “A to open as early as great festival”, was 2008. However, it the résumé of Dr. will be ready by BVB's mascot is called Christian Hocken - no later than “Emma” and is intended to tie young fans to the jos, the organi- the anniversary Borussia Dortmund sational head of in 2009.” Access brand at an early stage. Borus sia Dort mund, is being built via a who was able to point bridge from the August to profits and announced a Lenz building fan shop to repeat performance for summer 2008: SIGNAL IDUNA PARK. Thus there is a “This series of events not only provided possibility for visitors to stock up on positive impetus for the partners, sponsors merchandising articles before or after a visit. and SIGNAL IDUNA PARK, it was also a In the “Borusseum”, the interior revolves financial success the first time round.” around seven thematic sections ranging from the history of Borsigplatz through to BVB's Another big attraction for SIGNAL IDUNA greatest games and major successes. PARK is just about to open: the Borussia Dortmund Museum, or “Borusseum”. The BVB has also “rediscovered” its stadium for project is being managed by Dr. Reinhold itself and has held the season opening

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: celebrations of the last two years here. A total Borussia Dortmund is happy to offer various of more than 80,000 visitors came to the two institutions a platform family days alone. “Farewell matches”, such on which to present their concerns to a as those for the legends Julio César, Jürgen broad public. 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 half- time 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 Use of the stadium on non- Conference Center of almost match days is actively pro- 400 square meters in the moted. This can certainly northern stand, with capa - involve football, such as city for 300 persons, Borussia here for the farewell match Dortmund wishes to bring of the former BVB legend, plenty of life to SIGNAL Jürgen Kohler, who said IDUNA PARK. And thus to “adieu” before a huge back- create added value. drop.

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 social or schooling problems are given a a platform to present their concerns to a broad chance to utilise educational opportunities public. The “BVB Learning Centre” beneath and to gather experience with new media. This the northern stand is another of the social “unschooled type of learning”, which relies components. The idea – like football itself – upon voluntary participation, is particularly comes from England: In most stadiums of motivating for many youths due to the Premier League clubs there are so-called project's location – the stadium – and the “eLearning centres”, in which youths with 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 15,538,360.77 6,655,391.35

II. Tangible fixed assets 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 30,488,285.49 30,023,740.02

III. Non-current financial assets 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 with § 275 HGB. The additional information to be Dortmund GmbH & Co. KGaA for the 2006/2007 provided in accordance with the statutory require- financial year have been prepared in accordance ments is presented in the notes for reasons of clar- with the requirements of the German Commercial ity and accessibility. Code (Handelsgesetzbuch, “HGB”) and the partic- As a result of the fact that BV. Borussia 09 e.V. ular accounting requirements of the German Stock Dortmund holds 100% of the shares in Borussia Corporation Act (Aktiengesetzbuch, “AktG”). Dortmund Geschäftsführungs-GmbH and is There is an additional obligation in accordance with therefore regarded indirectly as a controlling com- § 315a (1) HGB to prepare consolidated financial pany, Borussia Dortmund GmbH & Co. KGaA statements applying international financial report- qualifies as a dependent company within the ing standards (IFRS). meaning of § 17 AktG and accordingly is required The balance sheet classifications comply with to prepare a Dependent Company Report in the classification format under commercial law in accordance with § 312 AktG. This report must also accordance with § 266 HGB, while the income contain the statutory concluding statement statement has been prepared in the vertical format required in accordance with § 312 AktG which using the nature of expense method in accordance must be included in the management report.

ACCOUNTING POLICIES

Fixed assets Intangible assets are measured at cost less amorti- Tangible assets are measured at cost less accumu- sation based on their expected useful lives or at the lated depreciation. Low-value items are fully writ- lower fair value. Player registrations reported in ten off in the year of acquisition. Depreciation is these financial statements are measured at cost, based on the useful lives authorised for tax pur- taking into account the decision of the Federal poses. Court of Finance (Bundesfinanzhof, “BFH”) of 26 August 1992, I R 24/91 and the FIFA Regulations Financial assets are measured at cost. for the Status and Transfer of Players contained in circular no. 769 of 24 August 2001 which came into Inventories force on 21 September 2001, and are amortised on Inventories are measured at cost less any dis- a straight-line basis in accordance with the term of counts, subject to the strict lower of cost or market the individual contracts for professional players. principle.

83 Borussia Dortmund GmbH & Co. KGaA

Receivables and other assets, ance premiums. The amounts are reversed ratably securities and cash funds over the terms/lives of the individual items. Receivables and other assets are measured at their nominal amounts. General valuation allowances Provisions are made for the overall credit and interest-rate Provisions for taxes and other provisions are risk while separate allowances are recognised for recognised in appropriate amounts for all identifi- identifiable individual risks. Non-interest-bearing able uncertain liabilities on the basis of careful items with a remaining maturity over one year are estimates. They are measured in all cases at the reported at their discounted present value. amount necessary at the balance sheet date, in accordance with prudent business judgment, to Securities classified as current assets are meas- cover future payment obligations. ured at cost or the lower fair value taking account of the lower of cost or market principle. Liabilities Liabilities are recognised at the repayment amount. Cash and balances with banks are recognised at their nominal amounts. Deferred income Deferred income comprises receipts from ticket Prepaid expenses sales, sponsorship and licences relating to the fol- Prepaid expenses consist principally of prepay- lowing season. The amounts are reversed ratably ments relating to the professional squad and insur- 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 shareholdings, principally comprise a tenant's loan and player registrations are reported as intangible relating to the administration building reported assets. The main changes to this item in the under other loans. The Company has entered into 2006/2007 financial year were additions (EUR control and profit and loss transfer agreements 13,910 thousand), amortisation (EUR 4,973 thou- with its subsidiaries BVB Stadionmanagement sand) and write-downs (EUR 54 thousand) of GmbH, BVB Merchandising GmbH and goool.de player registrations to the lower fair value as a Sportswear GmbH. For its part, goool.de result of expected permanent impairment. The Sportswear GmbH has entered into profit and loss players Valdez, Frei, Tinga and Blaszczykowski transfer agreements with BVB Stadion GmbH and (payment on account) were signed up in return for BVB Beteiligungs-GmbH. transfer payments. During the reporting period, the Company trans- Tangible assets consist principally of real property ferred the tenant's loan in an amount of EUR in the stadium site and the adjoining area “Am 21,900 thousand granted to BVB Stadion GmbH Luftbad”. They also include the commercial prem- to the capital reserves of goool.de Sportswear ises constructed on land subject to hereditary GmbH and the latter in turn to those of BVB building rights and buildings and sporting facilities Stadion GmbH with the result that the claims at the training ground, the youth centre, the cater- arising from the loan have been extinguished ing extensions and other movable components of because debtor and creditor are the same legal the stadium, as well as operating and office equip- person (confusion of debts). In addition, Borussia ment at these facilities and at the administrative Dortmund GmbH & Co. KGaA transferred fur- headquarters. The training ground in Dortmund- ther receivables amounting to EUR 5,037 thou- Brackel was constructed in the previous financial sand to the capital reserves of goool.de Sports- year by DSW 21 Dortmunder Stadtwerke AG and wear GmbH. let to the Company on a long-term lease. In the 2006/2007 financial year, work on the conversion Land, land rights and equity investments have of the former offices at the stadium, the August been assigned or pledged in order to provide secu- Lenz building, into a merchandising shop and the rity for loans. construction of a conference centre on the circulation level of the stadium were completed. The development of gross fixed assets and of accumulated depreciation and amortisation for the Financial assets, in addition to the direct equity individual items of fixed assets are shown in the investments described in more detail in the list of 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 deco- Receivables and other assets declined largely as a rative shares in the form of printed physical share result of payments received in respect of transfer certificates, measured at cost. 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 tick- rights are excluded in accordance with § 71 (1) et sales (excluding the hospitality area), TV income No. 8 AktG. In the period between the date of and the agreement for the rights to the stadium admission of the Company's shares to trading (31 name, have been assigned as security for loans. October 2000) and the balance sheet date, the Company acquired a total of 34,000 no-par value The securities item includes the Company's own shares and sold 10,365 no-par value shares off- shares relating to the decorative share certificates. market in the form of printed physical share cer- Under the terms of a resolution of the General tificates. The gain on disposal has been reported Shareholders' Meeting held on 16 November separately under other operating income. At the 2004, the Company is authorised to sell its own balance sheet date, the Company's holding of its shares either on or off the stock market. Off-mar- own securities consisted of 23,635 no-par value ket sales are permitted, among other purposes, for shares. They were measured at the rate prevailing the sale of shares in the form of printed physical on the balance sheet date. A reserve for own shares share certificates which are freely transferable and in the amount of the asset item has been set up in tradable. In such cases, shareholders' subscription 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 exercised their indirect subscription right to pur- EUR 61,425,000 and is divided into just as many chase new shares in the ratio of 5:2 at an issue price no-par value shares, each representing a notional of EUR 2.00 per share for a total of 7,567,585 new share in the share capital of EUR 1.00. shares. Morgan Stanley & Co. International Limited, London subscribed for a further During the reporting period, the share capital was 9,982,415 shares at a price of EUR 2.20 per share increased by EUR 17,550,000 to EUR 61,425,000 in the form of a non-cash contribution. The capi- by means of cash and non-cash contributions in tal increase was entered in the commercial regis- accordance with the resolution of the extraordi- ter on 19 September 2006. The premium of EUR nary General Shareholders' Meeting held on 15 19,547 thousand over the nominal amount of the August 2006. The limited liability shareholders issue was added to capital reserves.

88 ANNUAL FINANCIAL STATEMENTS

In addition, a conditional increase in the share Meeting on 22 November 2005. To date, no use capital of up to EUR 14,625,000 was resolved by has been made of the authorisation referred to. the General Shareholders' Meeting on 22 November 2005. The purpose of the conditional The extraordinary General Shareholders' Meeting capital is to cover the grant of option rights and the held on 15 August 2006 also authorised the gener- agreement of option obligations and the settle- al partner until 31 July 2011, with the approval of ment of conversion rights and obligations, in all the Supervisory Board, to increase the share capi- cases issued by the Company during the period tal by the issue of up to 21,937,500 new no-par val- until 31 October 2010 on the basis of the authori- ue shares for cash or non-cash contributions sation granted by the General Shareholders' (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.

8989 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 pay- and one-off payments etc, other provisions include ments resulting from a wages tax audit for the peri- provisions for cost and supplier invoices not yet od 1 July 2000 – 30 June 2004 which have not yet received. The provision recognised in previous been finally determined. years for expected losses from pending transactions In addition to staff-related obligations such as in connection with the reversal of trademark rights unclaimed holiday entitlements, contributions to amounting to EUR 17,487 thousand was utilised employer's liability insurance schemes, bonuses 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 ing to EUR 5,284 thousand, other liabilities con- EUR 23,381 thousand (previous year: EUR 23,433 sist mainly of wages and salaries outstanding at the thousand) by the real property liens, assignments end of the financial year and the associated social and pledges described in greater detail above. security contributions. In addition, there are lia- As well as short- to medium-term loans amount- bilities relating to wages tax and VAT.

90 ANNUAL FINANCIAL STATEMENTS

Deferred income Other financial obligations and Deferred income includes income from licences, contingent liabilities sponsorship and payments received from season At the balance sheet date, there were financial ticket sales. 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 secured, among other methods, by real property the stadium by subsidiaries, there were contingent liens, assignments and pledges granted by liabilities at the reporting date from guarantee Borussia Dortmund GmbH & Co. KGaA, and agreements in favour of affiliated companies which gave rise to the following financial obliga- amounting to EUR 57,550 thousand which are tions 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 from the 2006/2007 season onward. the 2005/2006 financial year as a result of the mar- In addition, transfer income for the first half of keting of the stadium name and the conclusion of the year and one-time receipts from the marketing a new main sponsor agreement with RAG. of the stadium during the 2006 Football World Revenues from TV marketing were also higher fol- Cup made a significant contribution to the rise in lowing the conclusion of the new TV agreement 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 ings in the expenses for the professional squad million in 2004/2005 and EUR 37.3 million in which fell from EUR 36.6 million in 2004/2005 2005/2006 to the current level of EUR 34.3 mil- and EUR 31.4 million in 2005/2006 to EUR 29.2 lion. This reflected the positive effects of the sav- 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 Taxes 14,251 thousand in comparison with the previous No income taxes were required to be included in year. The principal contributory factors to this the financial statements because, with the repur- were lower transfer expenses, a reduction in advi- chase of the trademark rights, the provision for sory costs following completion of the restructur- anticipated losses on pending transactions estab- ing of the Company's equity and debt capital and lished in previous years in the HGB financial state- lower valuation allowances on receivables com- ments was also recognised for tax purposes in the pared with the previous year. In contrast, expens- 2006/2007 financial year. es 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.

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 by § 161 AktG. The statement has been made issued the statement of compliance with the available to the shareholders and can be viewed at German Corporate Governance Code prescribed any time at www.borussia-aktie.de.

EXECUTIVE BODIES

General partner The general partner is Borussia Dortmund Court of Dortmund, HRB No. 14206. The Geschäftsführungs-GmbH, whose registered Managing Directors of this company are Mr. Hans- office is in Dortmund and which does not have an Joachim Watzke (Dipl.-Kfm.) (Chairman) and Mr. interest in the Company's share capital. Its share Thomas Treß (Dipl.-Kfm.), each of whom has sole capital amounts to EUR 30,000. It is exempt from power of representation. In the most recent finan- the restrictions contained in § 181 of the German cial year, the members of management received Civil Code (Bürgerliches Gesetzbuch, “BGB”) and the following amounts for their activities, including is listed in the commercial register of the Local 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 In the past financial year, the Supervisory Board received Company, their names, occupations and further responsibili- remuneration amounting to EUR 52.5 thousand. ties in other management bodies are listed below.

Dipl.-Kfm. Harald Heinze Othmar Freiherr Bernd Geske Ruedi Baer Patrick Albert Christian Gerd Pieper von Diemar Lynch Kullmann

Chairman Deputy Chairman (until 26 Feb 2007) (since 23 May 2007)

Occupations

Proprietor and – Proprietor and Managing partner of Delegate of the Managing Director Head of the board Managing Director manager of Othmar Bernd Geske Lean Board of Directors of Morgan Stanley & office and corporate of Stadtparfümerie von Diemar Vermö- Communication, of the mobilezone Co., London communications Pieper GmbH, Herne gensverwaltung + Meerbusch group, Regensdorf (England) division of RAG Beratung, Cologne (Switzerland) Aktiengesellschaft, Essen

Other responsibilities

Member of the Member of the Chairman of the Chairman of the Member of the Supervisory Board Supervisory Board Supervisory Board Board of Directors Supervisory Board of of Beauty Alliance of E-M-S new media of Informium AG, of mobilezone AG, Ploucquet Holding Deutschland GmbH AG, Dortmund Cologne Regensdorf GmbH, Unterföhring & Co. KG, Bielefeld (Switzerland) Member of the Member of the Member of the Supervisory Board Supervisory Board of Chairman of the Supervisory Board of of WV Energie AG, 004 Beratungs- und Board of Directors Herner Sparkasse, Frankfurt am Main Dienstleistungs- of mobilezone com Herne GmbH, AG Regensdorf Member of the Aschaffenburg (Switzerland) Supervisory Board of M-Exchange AG, Substitute member Chairman of the Frankfurt am Main of the Supervisory Board of Directors Board of Arques of Europe Trade AG Member of the Industries AG, Regensdorf Advisory Board of Starnberg (Switzerland) Haftpflichtverband öffentlicher Chairman of the Verkehrsbetriebe Board of Directors (HÖV), Dortmund of Destination Travel AG, Liebefeld (Switzerland)

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 Rehabilitations- zentrum 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 Proposal on the appropriation of profit financial instruments The 2006/2007 financial year finished with a net In order to protect against the interest rate risk profit for the year of EUR 10,257,726.45. After associated with the variable-rate loan from deducting accumulated losses brought forward Morgan Stanley to the Company and its sub- amounting to EUR 5,579,000.60 and adding a sidiaries, the Company has entered into a fixed- partial release of the reserve for own shares rate swap for a similar term and amount. As at 30 amounting to EUR 13,300.98, there remains an June 2007, the fair value of the swap amounted to unappropriated net profit amounting to EUR EUR 2,888 thousand. The fair value of the swap 4,592,026.83. The management proposes that the was determined on the basis of widely recognised unappropriated net profit amounting to EUR valuation models (Black-Scholes, Health-Jarrow- 4,592,026.83 reported for the 2006/2007 financial Morton). 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 funds amounting to EUR 19 thousand (previous year: EUR cash flow statement: 3,608 thousand) and overdraft facilities used amounting to Cash funds for the purposes of the cash flow statement are EUR 0 (previous year: EUR 8,000 thousand). defined as cash-in-hand plus bank balances less restricted

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 Hans-Joachim Watzke Thomas Treß Borussia Dortmund Geschäftsführungs-GmbH Managing Director (Chairman) Managing Director

98 ANNUAL FINANCIAL STATEMENTS

AUDITORS‘ REPORT

We have audited the annual financial statements – Knowledge of the business activities and the eco- consisting of the balance sheet, income statement nomic and legal environment of the Company and and notes – together with the bookkeeping system expectations as to possible misstatements are taken and the management report of Borussia into account in the determination of audit proce- Dortmund GmbH & Co. KGaA, Dortmund, for dures. The effectiveness of the accounting-related the financial year from 1 July 2006 to 30 June 2007. internal control system and the evidence suppor- The maintenance of the bookkeeping system and ting the disclosures in the books and records, the the preparation of the annual financial statements annual financial statements and the management and management report in accordance with report are examined primarily on a test basis within German commercial law and the supplementary the framework of the audit. The audit includes provisions in the Articles of Association is the res- assessing the accounting principles used and signi- ponsibility of the Company’s legal representatives. ficant estimates made by the Company's legal Our responsibility is to express an opinion on the representatives, as well as evaluating the overall annual financial statements, together with the presentation of the annual financial statements and bookkeeping system, and on the management the management report. We believe that our audit report, based on our audit.. provides a reasonable basis for our opinion.

We conducted our audit of the annual financial sta- Our audit has not led to any reservations. tements in accordance with § 317 of the German Commercial Code (Handelsgesetzbuch, HGB)and In our opinion, based on the results of our audit, the generally accepted standards for the audit of the annual financial statements comply with the financial statements in Germany promulgated by statutory requirements and the supplementary the German Institute of Chartered Accountants provisions in the Articles of Association and give a (Institut der Wirtschaftsprüfer, IDW). Those stan- true and fair view of the net assets, financial positi- dards require that we plan and perform the audit on and results of operations of the Company in such that misstatements materially affecting the accordance with German principles of proper presentation of the net assets, financial position and accounting. The management report is consistent results of operations in the annual financial state- with the annual financial statements, provides as a ments in accordance with German principles of whole a suitable view of the Company's position proper accounting and in the management report and suitably presents the opportunities and risks of are detected with reasonable assurance. 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

n mid-September 2007, a Borussia Dort- called “global players” have since recognised Imund match was able to be seen live on the advertising value of what was once the television in more countries than ever before. strongest football league in the world, media Football fans worldwide could watch the presence is a factor that cannot be underesti- Bundesliga match between BVB and Werder mated in marketing the company. Bremen in 139 countries. This was the second highest penetration ever achieved by the Dortmund is a household name not only in Bundesliga. domestic football, but also internationally. SIGNAL IDUNA PARK, constructed for the 1974 This might be of subordinate importance for World Cup, has often hosted major interna- those partners of Borussia Dortmund with a tional events with corresponding TV penetra- regional focus, but due to the fact that the so- tion. 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 Dort- mund. 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 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 which appeared at the halfway line, was esti- the 2006 FIFA World Cup. mated at EUR 500,000 per match and thus a total amount of EUR 3 million. According to And it was once again in Dortmund where one experts' estimates, the tournament as such of the finalists was decided when, on 4 July and the associated global reporting had an 2006, the German and Italian team faced each advertising value of EUR 200 million for the other at SIGNAL IDUNA PARK. At its peak, 31.3 city of Dortmund. 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. A Time to Make Friends in Dortmund 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 con- fronted by the name “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

Geschäftsbericht Juli 2006 - Juni 2007

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 min- Media experts predict in any event that the utes and 22 seconds of which were on free-to- future lies with the Internet. In the last 11 air television. The television sector recorded years, the worldwide web has established 11 billion contacts and therefore almost 50 itself as the third greatest pillar of media con- percent more than the league average. sumption and has recorded the largest growth. In 2007, average use of the Internet was 54 BVB makes its partners known via the media. minutes per person per day (TV: 225 minutes). The jersey sponsor RAG, which today does business under the company name EVONIK Borussia Dortmund was one of the first Industries AG, generated a total of 3.7 billion providers that recognised the significance and, contacts. This figure consists of fade-ins at above all, strengths of the “www” for football. 30 second intervals in the television segment BVB has already been using the Internet as a (1.9 billion), and images of the jersey in communications platform since 1996. Since newspapers and magazines (1.1 billion) and then, the online presence of the six-time Ger- on the Internet (700 million). man 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 The view of press and television representa- itself and has it placed it on the web via its sub- tives is that “Borussia Dortmund's online offer sidiary, Sports & Bytes. BVB is represented on is by far the best of the Bundesliga”. Inde- its own website with its own net radio and pendent analyses see BVB's online offer as video reports on the games and important amongst or at the top of the league in terms of events and can expect revenues potential here. content and implementation.

With BVB Club, Borussia Dort- mund has already been a trend- setter 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 related incidental costs. Ownership of SIGNAL of our Company in November 2006, Gerd Pieper, IDUNA PARK has therefore been almost completely Chairman of the Supervisory Board, was able to (99.7%) regained. The remaining loan amount of announce an extraordinary voting result. 99.99 EUR 21.7 million was used for the purpose of redu - per cent of the shareholders present formally cing and refinancing the existing liabilities of Borussia approved the actions of the management and there- Dortmund GmbH & Co. KGaA (“BVB-KGaA”). In by expressed their confidence in us. addition, BVB-KGaA was granted a revolving credit line amounting to EUR 10.0 million by Morgan We see this acknowledgement as a confirmation of Stanley. the work we are doing and will continue to practise the transparency and openness that received your As part of the restructuring process, the creditors' stamp of approval at the last General Shareholders' agreement of March 2005 was annulled in June 2006 Meeting, as well as a high level of cost consciousness and the steering committee set up at that time was and an appropriate policy on investments. dissolved. Furthermore, this created the essential conditions for the implementation of the capital Having overcome a life-threatening situation, our increase resolved in May 2006 (utilisation of autho- Company is once again in the black, which confirms rised capital with a nominal amount of up to that the nature of our actions was correct and rein- EUR 14,625,000) with an issue amount of forces our belief that we should continue down our EUR 29,250,000. This entire amount was used for a chosen path. On 7 June 2006, i. e. in the past financial further reduction of existing liabilities in July 2006. year, a loan agreement was signed between Borussia Dortmund GmbH & Co. KGaA, and its subsidiaries, Borussia Dortmund was also able to buy back the and the US investment bank Morgan Stanley for cre - “goool.de” trademark on 3 July 2006. Gerling- dit facilities amounting in total to EUR 79.2 million Konzern Globale Rückversicherungs-AG, Cologne, with a term of 15 years, thereby laying the foundations had entered into an agreement with Borussia for the long-term stabilisation of the Company. A total Dortmund in 2000 for the purchase and immediate of EUR 57.5 million of the loan was used for the pay- relicensing of the “goool.de” trademark and thus ment to MOLSIRIS Vermietungsgesellschaft mbH & became the legal owner of the BVB merchandising Co. Objekt Westfalenstadion KG of the price for the trademark rights. As a result of the repurchase, all repurchase of the limited partner's share in West - the trademark rights once again rest with the falenstadion Dortmund GmbH & Co. KG and for Borussia Dortmund Group.

1st Round 2nd Round 11 August 2006 19 August 2006 FC Bayern 2:0 BVB BVB 1:1 FSV Mainz 05

The capital increase resolved by the extraordinary The capital increase was entered in the commercial General Shareholders' Meeting of Borussia register of the Local Court of Dortmund on 19 Dortmund GmbH & Co. KGaA on 15 August 2006 September 2006. Thus, the Company's share capital for a nominal amount of up to EUR 17,550,000 to is EUR 61,425,000 (previously EUR 43,875,000) and EUR 61,425,000 was fully placed. The indirect sub- is divided into the same amount of no-par value scription right for a total of 7,567,585 new shares shares. Management used EUR 10 million of the new was exercised by the Company's limited liability cash funds generated from the capital increase shareholders. Morgan Stanley & Co. International (approximately EUR 15.1 million in total) to finance Limited, London, England (“MSIL”) subscribed for working capital and put the remainder toward reduc- an additional 9,982,415 new shares in accordance ing existing liabilities. with the resolution authorising the capital increase dated 15 August 2006. MSIL paid in its non-cash The restructuring of the liability side of the balance contribution by assigning to the Company a partial sheet, with the aim of strengthening equity resources, claim held by its sister company, Morgan Stanley achieving a more manageable debt maturity structure Bank International Limited, against the Company and improving interest rate terms, has now been ful- for a nominal amount of EUR 21,961,313. ly 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

3rd Round DFB Cup 26 August 2006 9 September 2006 VfB Stuttgart 1:3 BVB Thannhausen 0:3 BVB

Frei, Brzenska and Kringe celebrate TSG Thannhausen brought about many the victory in Stuttgart with their fans. opportunities, but BVB won 3:0.

107 Borussia Dortmund

DEVELOPMENT OF THE MARKET AND to generate higher income for all clubs and to cushion COMPETITIVE ENVIRONMENT IN the effect of relegation from the Bundesliga. An GERMAN PROFESSIONAL FOOTBALL additional consideration is to ensure that the split of revenues between the Bundesliga and the Second Ticketing Bundesliga remains stable. Spectator numbers in the Bundesliga continue to be unusually high. However, a slight decline of 1.43% In concrete terms, this means that a club in the was recorded in comparison with the record set in Bundesliga can achieve a maximum of around EUR the previous year. This was most likely due to the 23.3 million but a minimum of around EUR 11.7 mil- smaller stadium capacities of the three teams pro- lion from domestic income for championship games. moted, Alemannia Aachen, FC Energie Cottbus and In the Second Bundesliga, the range is between EUR VfL Bochum, compared with the relegated teams, 3.6 million and EUR 7.2 million. On top of that, the 1. FC Köln, 1. FC Kaiserslautern and MSV Duisburg. Bundesliga clubs benefit separately from the income from foreign marketing. The German champion The biggest attraction for spectators in the Bun- receives EUR 4.0 million from this source, while an desliga was once again Borussia Dortmund with average of EUR 0,518 million goes to the club in 18th 1,161,769 tickets sold, ahead of Bayern Munich position on the league table. (1,133,973) and Schalke 04 (1,028,317). Three Bundesliga clubs therefore reached the coveted tar- Sponsorship get of more than 1 million spectators. Nor has the Bundesliga lost any of its attraction as an advertising forum. On the contrary, the clubs can look In sales of season tickets, Borussia Dortmund back on a successful season with further increases in (44,018) outperformed Schalke 04 (42,339), as in the income from sponsorship and other revenue sources. previous year, and was a long way ahead of the com- The Bundesliga therefore continues to be a growth petition in the Bundesliga. On average, each club in sector, with professional management ensuring that the Bundesliga sold 20,450 season tickets last season. the economic basis is in place for an exciting competition and so guaranteeing a highly attractive product TV marketing for fans, media partners and, above all, sponsors. The continuing enthusiasm for football can also be seen in the revenues generated for the clubs by TV The continuing attractiveness and the strong television marketing. The three-year contract for TV marketing presence also ensure great interest in the advertising for the Bundesliga and the Second Bundesliga industry. In an anonymous survey conducted by the entered into by the German Football League (DFL) trade magazine “Sponsors”, the clubs' leading sponsors in December 2005 was for a total amount of over awarded the Bundesliga's image a score of 2.18 on a EUR 1.2 billion. This represents an increase of scale of 1-6, 1 being the highest mark. The average rat- around 40% compared with the previous TV marketing of 1.75 for the Bundesliga as an advertising platform ing agreement. With the coming into effect of the is an outstanding achievement. Interest on the part of new TV marketing agreement, the basis of allocating sponsors may also be linked to the enormous level of revenues were adjusted. The new basis of allocation is brand recognition enjoyed by the Bundesliga. 98.7% of intended to link payment more closely to performance, those questioned had heard of the top German division.

4th Round 5th Round 16 September 2006 22 September 2006 BVB 1:0 Hamburger SV Bor. M’gladbach 1:0 BVB

GROUP STRUCTURE AND BUSINESS Stadionmanagement GmbH (100.00%), goool.de Sportswear GmbH (100.00%), Sports & Bytes GmbH Group legal structure (100.00%), BVB Merchandising GmbH (100.00%), The Group management report is based on the con- BVB Stadion GmbH (99.74%), BVB Beteiligungs- solidated group of Borussia Dortmund GmbH & Co. GmbH (94.90%), B.E.S.T. Borussia Euro Lloyd KGaA. In addition to its core activities of football and Sports Travel GmbH (51.00%) and Orthomed GmbH the marketing of SIGNAL IDUNA PARK, Borussia (33.33%). Dortmund is involved in lines of business related to football. At present, the Company holds direct and Some of these companies have concluded mutual indirect interests in the following companies: BVB control and/or profit and loss transfer agreements.

Borussia Dortmund GmbH & Co. KGaA

94,90% BVB Stadion GmbH 100% goool.de sportswear GmbH 5,10% 94,90% BVB 5,10% BV. Borussia 09 Beteiligungs-GmbH e.V. Dortmund 100% BVB Stadionmanagement GmbH

100% BVB Merchandising GmbH

100% Sports & Bytes GmbH

51,00% B.E.S.T. 49,00% Hogg Robinson Germany Borussia Euro Lloyd Sports Travel GmbH GmbH & Co. KG

33,33% 66,67% Orthomed GmbH Other shareholders

6th Round 7th Round 29 September 2006 15 October 2006 BVB 2:2 Hannover 96 Cottbus 2:3 BVB

BVB Merchandising GmbH GmbH. This channel alone recorded growth of Despite an unconvincing season from a sporting point around EUR 0.4 million, and therefore accounts for of view, BVB Merchandising GmbH, which was spun approximately 29% of all income from retailing. The off from Borussia Dortmund GmbH & Co. KGaA on reasons for this are the new online shop and the po - 1 July 2005, was able to benefit from the positive sitive reception of the fan merchandise catalogue. trend of interest in and loyalty to BVB, and the associated demand. Sports & Bytes GmbH A further increase in the revenues of Sports & Bytes An increase of EUR 1.2 million in revenues to EUR GmbH, which rose by EUR 28 thousand to 5.3 million was achieved compared with the 2005/2006 EUR 729 thousand, was achieved compared with financial year. In its operating business, BVB Mer - the previous financial year, while earnings of chandising GmbH generated an earnings contribution EUR -2 thousand (prior year EUR 55.7 thousand) to consolidated earnings of EUR 0.5 million. were almost at break even.

Major contributory factors to this were the revamped The responsibilities of Sport & Bytes, a wholly- product range, focused more specifically on areas of owned subsidiary, continue to be the optimisation demand, and the creation of new sales channels, and implementation of IT processes, as well as the together with the optimisation of existing ones. design and development of the BVB website. Borussia Dortmund's website is currently recording By converting the August Lenz building into a modern the highest number of web visitors since its launch, fan shop on two levels, Borussia Dortmund has with up to 12.5 million hits per month on the addressed what has hitherto been a strategic short- German-language football pages alone. In addition coming, namely the lack of a fan shop directly next to to the 150 or so news items monthly just relating to SIGNAL IDUNA PARK. At the beginning of 2007, football, BVB TV, the Netradio service with live the fourth fan shop located in Dortmund created an reports from the Bundesliga games and the BVB additional sales channel, giving supporters access to club have become firmly established media. The the complete range of fan merchandise even on match review of the season produced by Sports & Bytes days, both before and after the game, with a floor GmbH, now already in its third year of publication, space of around 600 square metres. But even apart is also highly popular. from match operations, the new fan shop is receiving a warm reception from customers thanks to the plen- At the same time, demand is rising from non-Group tiful supply of parking spaces and the growing number companies for consultancy and design assistance in of other services available around SIGNAL IDUNA setting up their own websites and making photo- PARK, such as the professional stadium tours and the graphic and video material available. new Strobels bar and restaurant for supporters. New business opportunities are therefore opening up Mail order via the Internet has now become the most to Sports & Bytes GmbH in addition to its original important sales channel for BVB Merchandising area of activity.

8th Round DFB Cup 20 October 2006 24 October 2006 BVB 1:1 VfL Bochum BVB 0:1 Hannover 96

With this spectacular move Pienaar set up Dariusz Zuraw wins the battle against the equaliser in the home match against Ebi Smolarek. the regional neighbour VfL Bochum. 110 GROUP MANAGEMENT REPORT

Sports & Bytes GmbH recently completed work on a management services and organises sports-related completely redesigned website and on the Internet and incentive trips. portal meinBVB (“my BVB”), which allows customers to maintain their personal data themselves and B.E.S.T. Borussia Euro Lloyd Sports Travel GmbH enables them to use a single login to access all aspects closed the financial year with a profit of EUR 116 of BVB's Internet presence. In addition to the advan- thousand. tages for customers, the new portal with its single login also benefits Borussia Dortmund GmbH & Co. BVB Stadionmanagement GmbH KGaA and its subsidiaries. By integrating the Group- (formerly: Westfalenstadion wide ERP system, access to an improved and more Verwaltungs GmbH) up-to-date customer base can be achieved. The object of the business activities of BVB Stadion - management GmbH, trading as Westfalenstadion goool.de Sportswear GmbH Dortmund Verwaltungs – GmbH until 25 August Following the buyback of the stadium shares by 2006, is the provision of personnel and other servic- means of a purchase agreement dated 12 May 2006, es for the management and administration of the goool.de Sportswear GmbH, a wholly-owned sub- operating facilities of Borussia Dortmund GmbH & sidiary, directly and indirectly holds 99.74% of the Co. KGaA, in particular SIGNAL IDUNA PARK. shares in BVB Stadion GmbH. The company's earnings for the financial year under review were impac- In October 2006, BVB Stadionmanagement GmbH ted by net finance costs amounting to EUR -3.3 mil- entered into a profit and loss transfer agreement with lion as a result of financing the stadium shares. Borussia Dortmund GmbH & Co. KGaA. The company ended the financial year with a net profit goool.de Sportswear GmbH is a manufacturer of amounting to EUR 120 thousand before transfers. sports articles and finished the 2006/2007 financial year with a loss before transfers to the KGaA Orthomed GmbH amounting to EUR 3.4 million (prior year EUR -1.3 Borussia Dortmund has a 33.3% interest in Ortho- million). med Medizinisches Leistungs- und Rehabili tations - zentrum GmbH. The business of the company in the B.E.S.T. Borussia Euro Lloyd Sports most recent financial year consisted of all kinds of Travel GmbH rehabilitation activities, in particular services relating Borussia Dortmund GmbH & Co. KGaA has a 51% to extended ambulant physiotherapy under medical interest in Borussia Euro Lloyd Sports Travel GmbH. supervision.

B.E.S.T offers all the specific services of a travel Orthomed offers an all round concept for medical operator combined with the expertise of a sports spe- rehabilitation, particularly for competitive athletes. cialist under one roof. In addition to business and All of Borussia Dortmund's sporting departments are private travel services, the company provides event therefore also attended to by Orthomed.

9th Round 10th Round 28 October 2006 4 November 2006 1. FC Nuremberg 1:1 BVB BVB 1:1 Arm. Bielefeld

Tinga gets through in the penalty area Artistic: Pienaar against Bielefeld’s Kauf, and gives keeper Schäfer no chance to who should later set up Wichniarek's save from a tight angle. goal for Arminia's 1:0 lead. 111 Borussia Dortmund

In the most recent financial year, gross revenue BVB Beteiligungs-GmbH increased slightly by EUR 44 thousand, while the net The newly formed BVB Beteiligungs-GmbH was profit for the year ended 31 December 2006 amount- entered in the commercial register on 2 May 2006. ed to EUR 57 thousand (previous year: EUR 149 The company holds 5.1% of the shares in BVB thousand). Stadion GmbH.

As a result of the profit and loss transfer agreement BVB Stadion GmbH entered into on 24 August 2006, the loss amounting Following the buyback of the stadium shares, the to EUR -0.3 million, caused by the costs of financing holding company for SIGNAL IDUNA PARK is the shareholding, will be transferred to goool.de almost wholly-owned by the BVB Group. B.V. sportswear GmbH. 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 ORGANISATION OF MANAGEMENT an indirect 0.26% holding in BVB Stadion GmbH as AND CONTROL a minority shareholder. The remaining 99.74% is held by the BVB Group via goool.de sportswear The general partner, Borussia Dortmund Geschäfts - GmbH and BVB Beteiligungs-GmbH. führungs-GmbH, is responsible for management and representation of Borussia Dortmund GmbH & Co. BVB Stadion GmbH is the legal successor company KGaA. This limited liability company (“GmbH”) is in to Westfalenstadion Dortmund GmbH & Co. KG. turn represented by its Managing Directors Hans- On 29 June 2006, the company entered into a lease Joachim Watzke and Thomas Treß; its sole shareholder agreement with Borussia Dortmund GmbH & Co. is Ballspielverein Borussia 09 e.V. Dortmund. KGaA for the use of SIGNAL IDUNA PARK with a fixed term until 30 June 2027. The remuneration of the Managing Directors is made up of fixed and performance-related components, with BVB Stadion GmbH concluded a profit and loss the latter based on the consolidated net profit for the transfer agreement with goool.de Sportswear GmbH year before income taxes. on 3 August 2006. The net loss for the financial year from 1 July 2006 to 30 June 2007 determined in The following chart shows the structures and responsi- accordance with IFRS amounted to EUR -3.4 mil- bilities as between Ballspielverein Borussia 09 e.V. lion before profit and loss transfers (previous year: Dortmund, Borussia Dortmund GmbH & Co. KGaA EUR -9.9 million). and Borussia Dortmund Geschäftsführungs-GmbH.

11th Round 12th Round 7 November 2006 10 November 2006 BVB 0:0 Aachen Werder Bremen 1:3 BVB

It was not Dede's fault that Borussia did Sahin – here against Schulz – had a no better than 0:0 against Alemannia strong match at the Weser and set up (tackle with Ebbers). the first two goals. 112 GROUP MANAGEMENT REPORT

Ballspielverein Borussia 09 e.V. Dortmund

Executive Council of Board economic affairs Borussia Dortmund elects appoints Geschäftsführungs-GmbH Members Meeting (General Partner) appoints and supervises

Advisory Board Managing Directors Borussia Dortmund

GmbH & Co. KGaA (Consisting of members of the Executive Board, Council of economic affairs and non-voting, associated members) Supervisory Board NoNo rigrightht of appointment, only rigrightht of supervision elects

General Shareholders’ Meeting

The rights and duties of the KGaA's Supervisory The members of the Supervisory Board are as follows:

Board, which is appointed by the General Gerd Pieper (Chairman) Shareholders' Meeting, are limited. Specifically, it Proprietor and Managing Director of has no authority with respect to matters involving Stadtparfümerie Pieper GmbH, Herne personnel, i.e., no authority to appoint and dismiss Harald Heinze (Deputy Chairman) managing directors at Borussia Dortmund Ge- Ruedi Baer schäftsführungs-GmbH or to regulate the terms of Founder and CEO of the mobilezone group, their contracts. Nor is the Supervisory Board autho- Watt (Switzerland) rised to adopt internal rules of procedure for the Othmar Freiherr von Diemar general partner or issue any list of transactions Proprietor and manager of Othmar von Diemar requiring its consent. Rather, such rights and duties Vermögensverwaltung + Beratung, Cologne are vested in the governing bodies of Borussia Bernd Geske Dortmund Geschäftsführungs-GmbH, namely its Managing partner of Bernd Geske Lean Advisory Board and the Executive Committee cre- Communication, Meerbusch ated by the Advisory Board. 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)

13th Round 14th Round 18 November 2006 25 November 2006 BVB 1:2 Hertha BSC Berlin Frankfurt 1:1 BVB

Within Borussia Dortmund GmbH & Co. KGaA, sports, finance and organisation. The responsible there are four independent areas of responsibility employees and the divisions for which they are res- below the management, namely, communications, ponsible can be seen from the following chart.

BORUSSIA DORTMUND GmbH & Co. KGaA

Management Management

Hans-Joachim Watzke Thomas Treß [Chairman]

Communications Sport Finance Organisation J. Schneck M. Zorc M. Knipping Dr. C. Hockenjos

Corporate Finances and General Professional football communications accounting organisation

Sport communications Amateurs Controlling Stadium management

Publications Youth Investor Relations Match organisation

IT (Information Fan support Training fields V.I.P. – Hospitality Technology)

Stadium announcements Personnel Sportfive and program (sponsors)

PR work Risk Management Events

Complaints Merchandising DFB/DFL management

Affiliates Ticketing

Sportfive (Commission Real estate processing)

Third party events

15th Round 16th Round 2 December 2006 10 December 2006 BVB 1:0 VfL Wolfsburg FC Schalke 04 3:1 BVB

INTERNAL MANAGEMENT SYSTEM The operating result is the most important indicator for measuring success. For us, the operating result Sports management means earnings before interest and taxes (EBIT). The great challenge for the future will be to play Therefore we are constantly monitoring the operating football successfully with a cost-optimised budget. In results in all lines of business and areas of responsi- order to achieve this aim, BVB will continue to try to bility based on monthly comparisons between the present a strong, competitive team in the future and, budget and the actual situation. The most important in this respect, will back young players with potential, drivers for the operating result are further improve- who will create a healthy mixture with the seasoned ment in sales revenues in the major revenue sources players. This will create a realistic chance of qualify- of ticketing, sponsorship, TV marketing and mer- ing for international competitions. chandising, and disciplined management of operating expenses. The sporting aims will be aligned with financial circumstances. This means that the salary budget will In coming years we will concentrate on achieving the generally be tied to realistic sporting objectives and best possible balance between limiting operating that the target for the sporting management with expenditure and, at the same time, generating sales Mr. Watzke, Mr. Zorc and the coach will be to lead growth. In this respect, the decisive factor is qualify- BVB into an international competition again in the ing for international competitions. next few years. This would increase the financial flex- ibility for acquiring new players, although no Capital management unknown risks will be taken. There will be no new In addition to securing the KGaA's equity as deter- debt in order to strengthen the team. mined in accordance with HGB, the management's capital management responsibilities also include sta- Financial management bilising and increasing the consolidated equity as One of the main aims of BVB's management is to determined in accordance with IFRS. We will reach increase profitability in the long-term and thus to these targets, in particular, by improving the operat- further improve the Group's equity resources. In ing result and through effective investments. addition, there is a focus on financial strength. As well as a constant improvement in the operating The utilisation of the authorised capital with a nomi- result, generating positive cash flow is therefore the nal amount of EUR 21.9 million resolved by the most important financial objective of our Company. extraordinary General Shareholders' Meeting on 15 We are seeking to optimise cash flow by concentrat- August 2006 represents an instrument enabling man- ing on the impacting factors of “operating results” agement to respond flexibly to future requirements and “investments”. for capital. The same applies to the ability to issue

17th Round 18th Round 17 December 2006 26 January 2007 BVB 1:2 Leverkusen BVB 3:2 FC Bayern

Two of the three goal scorers in one pictu- Even van Bommel could not stop an out- re: Amedick, who had bad luck in hitting standing Frei that evening. Pienaar wat- the post, in a duel with Voronin. ches on the left. 115 Borussia Dortmund

• A football company can only be financially suc- convertible bonds and bonds with warrants (condi- cessful if it enjoys sporting success in the long tional capital with a nominal amount of EUR 14.6 term. In order to make its financial performance million). At the present time, however, the manage- less dependent on short-term sporting success in ment has no specific plans to make use of these the future, Borussia Dortmund will push ahead instruments. further with national and international market-

CORPORATE STRATEGY ing of its brand name. • Germany continues to be Europe's largest foot- Borussia Dortmund's aim is to establish itself over the ball market, which, however, is behind some oth- medium-term as one of the leading German football er European markets in financial terms. This pro- clubs after Bayern Munich. Following the successful vides great growth potential. implementation of the reorganisation, the restructuring of our financial liabilities and the first mode- All financial activities at Borussia Dortmund are ori- rate investments in the professional squad, we ented around the target groups that are relevant for consider ourselves to be on the right path. a football club: Its fans, members and business partners. Products and services should be tailored to The financial foundations of the first and to date only these groups in the best way possible. Through its listed German football company have been expanded existing brand potential, Borussia Dortmund intends with the exclusive marketing right for SIGNAL to utilise all the commercial opportunities presented IDUNA PARK, more effective use of the “Borussia by professional club football in an international con- Dortmund” brand and the establishment of football- text for the benefit of the shareholders. related lines of business. However, the core business will in future also be professional football together The current business strategy can principally be sum- with its classic income sources of TV marketing, spon- marised as follows: sorship, ticketing and merchandising. For the follow- • Strengthening the financial condition ing reasons, BVB is convinced that it will be able to further stabilise and expand its position: • Sustainable adjustment of sporting perspectives

• Borussia Dortmund is in sporting terms one of • Intensifying the promotion of up and coming the most successful, well known and most popu- talent

lar German football clubs with an outstanding fan • Fan involvement base that provides BVB with one of the highest • Utilisation of the “Borussia Dortmund” brand average numbers of spectators in Europe.

19th Round 20th Round 31 January 2007 4 February 2007 FSV Mainz 05 1:0 BVB BVB 0:1 VfB Stuttgart

However, financial and business development is In such cases, management weighs up the opportu- largely dependent on sporting success. Since sport- nities and risks to find a solution that is broadly in line ing success can only be planned to a very limited with our strategic objectives from a medium-term degree, the best management can do is to create a point of view. foundation for success. Investments, particularly in the professional squad, are therefore a necessary pre- We plan to further increase gross revenue in the requisite for achieving sporting objectives, such as medium term. The first steps in bringing us closer to qualifying for the UEFA Cup. However, in order to this goal have been taken with the marketing of the meet financial goals, planned investments and deci- stadium name, the new main sponsor agreement with sions must under certain circumstances be postponed RAG and the conclusion of the new TV agreement to the extent these would only be possible by incur- by DFL. Moreover, further significant revenue ring new debt. Moreover, a player may be sold based potential is available, especially by qualifying for on financial considerations in cases where this would international competitions, which would have a pos- not have happened had the decision been made itive effect on all Borussia Dortmund's revenue based solely on sporting criteria. sources.

A conflict, or a situation where sporting considera- Positive operating results and moderate investments, tions and financial considerations affect each other mainly in the professional squad, depending on those adversely, therefore arises between the pursuit of results, are expected to enable Borussia Dortmund financial interests and sporting interests, particularly GmbH & Co. KGaA to achieve stable, positive cash if the club continually falls short of its sporting goals. flows over the long term.

21st Round 22nd Round 10 February 2007 17 February 2007 Hamburger SV 3:0 BVB BVB 1:0 Bor. M’gladbach

POSITION OF THE COMPANY

RESULTS OF OPERATIONS

In the past financial year for the 2006/2007 season, 9.1%, from EUR 89.1 million to EUR 97.1 million, the Borussia Dortmund Group achieved an increase in its core business activities of ticketing, sponsor- in revenues compared with the previous season of ship, TV rights, catering, licences and transfers.

Borussia Dortmund Group – Revenues in per cent

7% 21%

19%

31% 22%

Transfer income Ticketing TV rights Sponsorship Catering, licences and other

23rd Round 24th Round 24 February 2007 4 March 2007 Hannover 96 4:2 BVB BVB 2:3 Cottbus

SALES DEVELOPMENT

Despite a season with few high points from a sport- year, the 9.1% increase is owed mainly to the loyal- ing point of view, the Group again achieved an ty of the supporters and sponsors, because substan- increase in revenues of EUR 8.0 million. In addi- tial revenue growth was recorded both in ticket tion to the new basis of allocating TV marketing sales (+6.2%) and in income from sponsorship income which came into effect in the past financial (+11.4%).

Borussia Dortmund Konzern – Revenues in EUR millions

100 6,8

12.4 20,2 75

17,2

21,3

50 14,8

27,4 30,5 25

17,2 18,3

0 2005/06 2006/07

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

25th Round 26th Round 10 March 2007 17 March 2007 VfL Bochum 2:0 BVB BVB 0:0 1. FC Nuremberg

Details of the performance of the individual revenue Income from sponsorship sources are provided in the following paragraphs. Borussia Dortmund's income from sponsorship conformed to the upward trend enjoyed by all clubs Income from ticketing in the Bundesliga and reached EUR 30.5 million, Borussia Dortmund's receipts from match opera- thus exceeding the EUR 30 million target for the tions, i.e. income from ticketing and friendly games, first time. increased by EUR 1.1 million to EUR 18.3 million in the past financial year for the 2006/2007 season. Despite not participating in an international competition, BVB's games were watched by an average The largest individual contribution to growth amoun - of 72,164 spectators and therefore represented an ting to EUR 0.7 million was made by income from attractive advertising platform, especially for Bundesliga match and season ticket sales. In addition regional companies. The creation of additional the home game against Hannover 96 in the second capacity for perimeter boards also created the main round of the DFB Cup generated a surplus of opportunity to offer perimeter board advertising to EUR 0.1 million, while various friendly games and new potential clients. match operations for the regional league team provided additional income of EUR 0.3 million. In addition to RAG, acting as main sponsor for the first time in the last financial year, and SIGNAL The average number of spectators was increased IDUNA, which has given its name to the largest from 71,378 to 72,164, despite lower season ticket stadium in the Bundesliga, Borussia Dortmund and sales compared with the previous year and a rather its marketing partner SPORTFIVE succeeded difficult season from the sporting point of view, with once again in increasing the number of so-called the club's participation in the first division next sea- “champion partners” and partners compared with son not made certain until the 32nd match day. On the previous year. an international basis, Borussia Dortmund therefore continues to occupy third place in terms of numbers The development of the hospitality areas also made of spectators behind Manchester United and Real a substantial contribution to the increase in income Madrid, despite not participating in an international from sponsorship. In addition to the reserved seating competition. area in the West Stand at SIGNAL IDUNA PARK which has been fully booked for years, the new The loyalty of the club's supporters, even following Business Club 09 concept was gratefully received by an unsuccessful sporting season, is made clear by the many customers. Not only does it offer participants number of season tickets already sold for next sea- the chance to experience all BVB matches at son. With 50,549 tickets sold for the 2007/2008 SIGNAL IDUNA PARK close up, it also creates the season, Borussia Dortmund has beaten its own opportunity to benefit from the “Borussia Dort - Bundesliga record of 50,415 season tickets sold for mund” phenomenon away from the pitch. The num- 2003/2004. By comparison: On average, 20,450 sea- ber of seats sold was more than double the previous son tickets were sold in the Bundesliga for the year's figure. Regular meetings on journeys to away 2006/2007 season. games and many other events promote a constant

27th Round 28th Round 30 March 2007 7 April 2007 Arm. Bielefeld 1:0 BVB Aachen 1:4 BVB

exchange between the companies and Borussia The absence of the live game in the DFB Cup and Dortmund. The successful development of this ini- the club's non-participation in the UI Cup resulted tiative is reflected in the figures, with an increase in in a loss of income of around EUR 0.3 million, but advertising income from Business Club 09 of 120%. the promotion of the amateur squad to the regional league and the associated TV receipts made up Incentive packages were also especially heavily for this. booked by business customers during the last financial year. These enable companies to invite their Transfer income guests to SIGNAL IDUNA PARK on individual Income from transfers recorded a decline of EUR match days, independently of a season package. In 5.6 million to EUR 6.8 million. While three key play- order to satisfy all the requests in this segment, the ers with unexpired contracts, Henrique Ewerthon, indoor golf area located at the south of SIGNAL Niclas Jensen and Tomas Rosicky, were sold in one IDUNA PARK and the newly built Conference go in the 2005/2006 financial year, in the most recent Center were converted into hospitality areas on season Borussia Dortmund only said goodbye to match days. David Odonkor, who transferred to the Spanish first division club Betis Sevilla following an outstanding Income from TV marketing World Cup. Income from TV marketing amounted to EUR 21.3 million in the past financial year and was therefore Income from catering and licences approximately EUR 6.5 million higher than in the including other income previous year. The reason for this was the new TV Borussia Dortmund achieved income from catering, agreement which came into effect for the first time licences, merchandising and other income of in the 2006/2007 season, under which the clubs in EUR 20.2 million in the 2006/2007 financial year the Bundesliga and the Second Bundesliga will compared with EUR 17.2 million in the 2005/2006 receive around EUR 1.2 billion over three years. financial year. This represents an increase in the amount distributed annually of around 40% compared with the The growth in income mainly reflected the perform- previous TV agreement. As well as the increase in ance in catering and a substantial increase in retail the amount distributed, a new basis of allocation was sales at BVB Merchandising GmbH. also introduced at the start of the past financial year under which the football clubs are ranked in order The marketing successes already mentioned in the of preference, using a weighted method of calcula- context of sponsorship also had an impact here, tion based on the last four years' seasons. In addi- because the majority of agreements with business tion, a bonus is paid at the end of the season depend- customers provide for an element of catering services ing on the club's position on the league table. as well as advertising space. This item continues to Although Borussia Dortmund occupied ninth posi- include income from catering on match days, the sale tion on the table on average during the season, it of publications, advance booking fees and licence fees benefited from its positions in previous years and for events at SIGNAL IDUNA PARK on non-match continues to rank seventh on the allocation list. days. The latter also recorded an upward trend, as did

29th Round 30th Round 15 April 2007 21 April 2007 BVB 0:2 Werder Bremen Hertha BSC Berlin 0:1 BVB

catering income in the circulation areas at SIGNAL DEVELOPMENT OF SIGNIFICANT IDUNA PARK, which were able to achieve an OPERATING EXPENSES increase of EUR 0.20 in spending per head thanks to a wider range of items offered. Income in this area Personnel expenses will also participate in the general upward trend in A further reduction of EUR 2.8 million was achieved future as a result of the construction of the in personnel expenses which amounted to EUR 37.0 Conference Center, a state-of-the-art conference million compared with EUR 39.8 million in the facility, and the letting of the Center by Stadionlive 2005/2006 financial year. A reduction in expenses of GmbH, which has been marketing and organising the around EUR 2.2 million was once again achieved in other events successfully since 2005. the professional match operations area alone, despite several changes of coach. Despite an unconvincing season from a sporting point of view, BVB Merchandising GmbH, which Depreciation and amortisation was spun off from Borussia Dortmund GmbH & Co. Depreciation and amortisation fell as planned by KGaA on 1 July 2005, was able to benefit from the EUR 0.7 million compared with the previous year to positive trend of interest in and loyalty to BVB, and EUR 13.5 million. the associated demand, and to increase its revenues accordingly. Other operating expenses Other operating expenses amounted to EUR 36.6 Other operating income achieved growth of around million in the 2006/2007 financial year compared with EUR 5.3 million to EUR 8.9 million in the most EUR 46.3 million in the previous year. The decline recent financial year. This item included receipts mainly reflected the fall in transfer expenses, lower from distributions and allocations of profit from the legal and advisory costs and a reduction in valuation FIFA 2006 World Cup, which alone accounted for allowances on receivables. This was offset principal- income of EUR 4.6 million. ly by higher marketing commissions.

FINANCIAL CONDITION

ANALYSIS OF CAPITAL STRUCTURE after taking into account the net profit for the year, increased to EUR 86.536 million compared with EUR With the capital increase resolved by the extraordinary 37.624 million in the previous year. The equity ratio General Shareholders' Meeting on 15 August 2006, the therefore improved from 13.6% to 33.5% as planned. share capital of Borussia Dortmund GmbH & Co. KGaA (previously EUR 43.875 million) rose by EUR The funds generated by the capital increases in the 17.550 million to EUR 61.425 million, while equity, previous and current financial years have been used

31st Round 32nd Round 28 April 2007 5 May 2007 BVB 2:0 Frankfurt VfL Wolfsburg 0:2 BVB

mainly to reduce financial liabilities, achieve a more Additions to property, plant and equipment amount- manageable debt maturity structure and obtain ed to EUR 3.869 million. Significant individual improved interest-rate terms. Liabilities were investments worthy of mention were the conversion reduced significantly compared with the previous of the former offices at the stadium, the August Lenz year from EUR 239.8 million to EUR 171.6 million. building, into a fan shop and the construction of a conference centre on Level 4 of the stadium's North Current liabilities fell from EUR 99.7 million to Stand. EUR 36.3 million as a result of the repayment of liabilities following the capital increases. ANALYSIS OF LIQUIDITY

Non-current liabilities declined by EUR 4.8 million As at 30 June 2007, the Borussia Dortmund Group during the financial year to EUR 135.3 million. held cash of EUR 13.905 million, of which EUR 0.019 million was subject to restrictions. In addition, ANALYSIS OF INVESTMENTS the revolving credit facility granted by Morgan Stanley for EUR 10.000 million and an overdraft Additions to intangible assets amounting to EUR facility of EUR 2.500 million are available to the 13.931 million related almost entirely to investments Group for their full amounts. The cash flow state- in the professional squad. ment gives details of the development of liquidity.

NET ASSETS

The Group's total assets declined from EUR 277.4 (in particular short-term financial liabilities) of million to EUR 258.2 million. The substantial EUR 68.1 million, financed mainly from cash funds improvement of EUR 48.9 million in consolidated and the capital increase referred to above. equity contrasted with reductions in liabilities

OVERALL SUMMARY OF RESULTS OF OPERATIONS, FINANCIAL CONDITION AND NET ASSETS

The results of operations, financial condition and net balance sheet. Particular mention should be made of assets of Borussia Dortmund showed significant pos- the improvement in the operating result, the Group's itive development following the successful imple- equity resources and the reduction in liabilities, mentation of the reorganisation measures and the which will once again allow BVB room for manoeuvre completed restructuring of the liability side of the in its future sporting development.

33rd Round 34th Round 12 May 2007 17 May 2007 BVB 2:0 FC Schalke 04 Leverkusen 2:1 BVB

COMPENSATION REPORT

The structure of the compensation system for man- can be made on the basis of resolutions approved by agement is determined and regularly reviewed by the the Executive Committee of the Advisory Board. Executive Committee of the Advisory Board. The Executive Committee is also responsible for deter- The component not related to performance com- mining the compensation of management in detail prises a fixed annual salary and benefits in kind, and sets the appropriate amount of compensation. mainly derived from the amounts required to be tak- The principal criteria for determining the appropriate en into account in accordance with tax regulations amount of compensation are the responsibilities of e.g. for the use of company cars. the particular member of management, their personal performance and the financial condition, success The Supervisory Board's compensation is governed and future prospects of Borussia Dortmund. by § 13 of the Articles of Association, pursuant to which each member of the Supervisory Board As well as annual payments not related to perform- receives fixed compensation amounting to EUR 7 ance and based on market rates at comparable com- thousand; the Chairman receives twice that amount, panies, the compensation includes a performance- while the Deputy Chairman receives one and a half related component that is based on consolidated times that amount. Value-added tax is reimbursed earnings before taxes. In addition, special payments to the members of the Supervisory Board.

DFB Cup 1st Round 4 August 2007 12 August 2007 1. FC Magdeburg 1:4 BVB BVB 1:3 MSV Duisburg

In overcoming Magdeburg, Tinga and Sebastian Kehl in a tackle against the Co were not quite as in control as the Duisburg player, Manasseh Ishiaku. result suggests. 124 GROUP MANAGEMENT REPORT

RISK REPORT

In the course of its business activities, Borussia The identification, assessment and management of Dortmund is constantly exposed to risks which may these dangers define the areas of responsibility of a have a negative effect on the Company's operations. company's risk management system.

RISK MANAGEMENT SYSTEM

oriented risk awareness. It implements the require- • The risk position is regularly recorded on a con- ments of the German Control and Transparency Act. sistent basis and compared with the existing data. The Group-wide risk management system ensures This enables countermeasures to be taken in that risks are identified at an early stage, recorded good time if negative developments can be identified. consistently, evaluated, managed and monitored. • The executives responsible are required to inform management immediately of any signifi- Within the framework of its risk management sys- cant changes in the risk profile. tem, Borussia Dortmund, together with the specialist departments, identifies, documents and evaluates • Constant observation of the market enables changes in the environment to be recognised possible risks on the basis of the potential amount of promptly and action to be taken in response. loss they may cause and their likelihood of occurring, • Differences in the Company's results of opera- and collates them at the level of the corporate divi- tions and net assets from the budgeted figures sions. The risks are categorised and steps are taken to are identified and analysed using detailed ensure that they are constantly monitored and that monthly and quarterly financial reports.

2nd Round 3rd Round 18 August 2007 25 August 2007 FC Schalke 04 4:1 BVB BVB 3:0 Cottbus

Gerald Asamoah's actions in this scene Diego Klimowicz – scorer of two goals – with Robert Kovac do not look like a heading against Cottbus. tender embrace... 125 Borussia Dortmund

In this context, Borussia Dortmund applies the fol- The governing bodies of Borussia Dortmund are kept lowing principles/rules of conduct: regularly informed of the current risk position. The

• Management determines the basis on which efficiency and effectiveness of the risk management risks are to be assessed and identified. system is examined as part of the audit carried out by the Company's auditors. • The identification of risks takes place in the individual corporate divisions since that is where The following paragraphs describe in more detail knowledge about specific risks is available. the specific risks to which Borussia Dortmund is exposed, which affect the Company's business opera- • Risks are assessed by a group of people chosen by the management. The criteria to be applied tions as a result of internal and external factors and may are also defined by management. have a major influence on them over the long term.

SPECIFIC RISKS

STRATEGIC RISKS the strategic objectives from a medium-term point of view, while remaining within the range of defined In addition to financial success, the primary objec- company performance indicators in order not to tive of a company participating in the football busi- jeopardise the financial objectives. ness in the Bundesliga remains sporting success, irrespective of business plans which do not depend on PERSONNEL RISKS the club's position on the league table and the maintenance of profitability in a variety of different sport- The available potential of its employees, from both a ing scenarios. This can be justified solely on the sporting and a financial point of view, forms the basis grounds of public interest, which is largely focused for Borussia Dortmund's future development as a on the winning of titles. If the club has no success business. Their ability, commitment and performance over longer periods, the management is faced with a will play a decisive role in future sporting and finan- balancing act, attempting to keep the profitability of cial success. the company and the sporting objectives in harmony with each other. Measures which are necessary for In this regard the professional squad is of critical sporting success, such as investments, must not be importance. The wrong investments in this area allowed to endanger the financial objectives, for would have far-reaching effects on the Company's example, ensuring adequate liquidity, even over sev- sporting objectives, and therefore financial objec- eral years. But economic success also depends to a tives, as would insufficient identification with the club large extent on sporting achievements, because win- and a lack of commitment. To some extent, it may not ning titles generates additional demand from spec- be possible to make up for the loss of key players as a tators, business customers, sponsors and in other result of injury and, as a result, the ability to meet areas of the business. A conflict of objectives there- internally defined objectives may be endangered. fore arises. The achievement of one company objective may therefore necessarily entail abandoning or The Company's success is based on making business modifying another objective. In such cases, manage- decisions and putting them into effect, and both are ment will weigh up the risks and opportunities and largely determined by the quality of the relevant attempt to find a solution that is broadly in line with employees. The structure of Borussia Dortmund's

126 GROUP MANAGEMENT REPORT

organisation is based on a clear separation of the season, in particular, sponsors have been rated dif- individual corporate divisions, which thus enables ferently by regional politicians, and in some cases business decisions to be analysed and prepared in have therefore been approved for certain competi- individual departments with the relevant expertise tors while being simultaneously banned for others. before a decision is made for the Company as a An additional difficulty is that there is an unusually whole. The constant exchange between the corpo- high concentration of competitors in North Rhine- rate divisions through the medium of well estab- Westphalia in particular, with six clubs currently in lished meetings contributes beforehand to optimis- the Bundesliga and several in the Second Bun- ing the quality of the decisions made and avoiding desliga. This can have negative consequences for conflicts of objectives. attracting sponsors based in the region because, in contrast to other regions, there is the risk for spon- From the point of view of risk management, it is sors that they will be in conflict with each other for equally indispensable for a company to be able to rely potential customers. on qualified executives and their staff. Management and all the Company's employees have a permanent SALES RISKS responsibility to identify risks at an early stage, to monitor and therefore limit them, and at the same The future performance of Borussia Dortmund's time to pursue business opportunities rigorously. individual lines of business depends on its sporting success. A lack of sporting success over a long period COMPETITIVE RISKS could have a major impact on demand for the products offered and therefore on the achievement of Competition between football clubs, for example in financial and sporting objectives. It is also not possi- obtaining sponsors, has intensified, and not just as ble to be fully certain in advance of the consequences result of the stadiums built for the 2006 FIFA World for the Company of statutory provisions. Cup. Differing decisions made under the influence of regional politics can also affect the ability to attract Equally, the development of pay TV will have a long- and retain interested companies. In the most recent term effect on TV income achievable in future.

FINANCIAL RISKS

Borussia Dortmund finances itself primarily from long- individual types of risk are described in the following. term bank loans, trade payables, season tickets paid for Under the terms of the loan agreements entered into in advance and payments from sponsors. The related by Borussia Dortmund and its subsidiaries with risks arising comprise interest-rate-related cash flow Morgan Stanley & Co. International Ltd., London, risks, market risks, liquidity risks and credit risks. On England, the lender has an early right of termination the other hand, the Company is not exposed to any sig- in the event of failure to maintain certain contractu- nificant currency risks. The methods of managing the ally defined financial ratios (covenants).

127 Borussia Dortmund

INTEREST RATE RISKS CREDIT RISK

The financial liabilities consist mainly of a variable- The Company conducts business exclusively with rate loan from Morgan Stanley & Co. International third parties of high credit standing. Concentrations Ltd., London, England, based on EURIBOR. The of credit risk can arise in the context of a player trans- interest expense associated with this loan is therefore fer and from long-term sponsorship agreements. dependent on the future development of the gener- Such concentrations of risk are monitored in the al level of interest rates. In order to minimise the course of the Company's operating activities. interest-rate-related cash flow risk associated with the The counterparty for the interest rate swap loan, the Company therefore entered into an interest described above was a major German bank with the rate swap in respect of this loan in August 2006. The highest credit rating. effect of this interest rate hedging transaction is an overall future rate of interest payable of 6.195% per LIQUIDITY RISK annum, irrespective of actual changes in market rates of interest. The Group constantly monitors the risk of possible liquidity bottlenecks, taking into account the proba- After taking account of this interest rate swap, all the ble maturities of its financial liabilities and the timing Company's significant financial liabilities carried a of the expected cash flows from operating activities. fixed rate of interest as of June 30, 2007. Future Following the restructuring completed in the changes in the level of interest rates will therefore 2005/2006 financial year, liquidity risks have been have only a small impact on the interest expense, sharply reduced thanks to the Company's new financ- even in the medium term. ing structure, which is overwhelmingly long-term.

RISKS JEOPARDISING PERFORMANCE AND CONTINUED EXISTENCE

In order to participate in Bundesliga matches, Following the successful implementation of the Borussia Dortmund requires a licence from DFL restructuring and in accordance with its current finan- Deutsche Fußball Liga GmbH (German Football cial condition and results of operations, Borussia League, “DFL”) which is issued for each season. If Dortmund was awarded the licences for both the the licence were to be revoked or denied because of Bundesliga and for the Second Bundesliga, which had failure to comply with conditions or evidence of to be applied for in view of the sporting situation, with- inability to meet financial criteria, this would result out conditions. in automatic relegation. But relegation to the Second Bundesliga can also result from lack of sporting suc- In order to minimise the risk of relegation, Borussia cess. The effects of relegation on earnings and liq- Dortmund has strengthened the professional squad uidity could jeopardise the Company's existence. 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 Borussia Dortmund has succeeded in minimising counteract the risks it faces. New risks are system- risks which could adversely impact its development atically incorporated in the risk management system or jeopardise its existence. The fact that we are not as they arise, communicated and highlighted, and a involved in competitions on an international level is search is made for effective countermeasures. At the no longer a threat to Borussia Dortmund's existence. present time, there are no recognisable risks that If we succeed in qualifying for the UEFA Cup or the could endanger the continued existence of the Champions League, our financial condition and Borussia Dortmund Group. results of operations will improve even further.

FORECAST REPORT

ANTICIPATED DEVELOPMENT OF THE COMPANY

EXPECTED GENERAL ECONOMIC ENVIRONMENT

129 Borussia Dortmund

EXPECTED RESULTS OF OPERATIONS

ANTICIPATED EARNINGS UEFA Champions League, or possible income from DEVELOPMENT transfers, could result in a significantly higher revenue figure than this. We anticipate that, including all the control and profit and loss transfer agreements, positive consolidated ANTICIPATED DEVELOPMENT earnings (EBIT) will be generated for the 2007/2008 OF SIGNIFICANT OPERATING EXPENSES season. With the exception of expenditure on the profession- The amount of the operating profit cannot be fore- al squad, operating expenses will continue to decline casted reliably on the basis of the information cur- in the 2007/2008 financial year. rently available, because earnings depend to a large degree on the sporting performance and on success- EXPECTED DIVIDENDS ful transactions in the transfer market. Against the background of the Group's financial lia- ANTICIPATED DEVELOPMENT bilities, which are still high in relation to current prof- OF REVENUES itability, we are not planning any dividend distributions in the next few financial years despite a marked Revenues are expected to amount to between around improvement in earnings. We expect that it will be EUR 87 million and EUR 90 million in the 2007/2008 possible to discuss a dividend payment at the earliest financial year. Qualification for the UEFA Cup or the in 3 – 4 years' time.

EXPECTED FINANCIAL CONDITION

FINANCIAL PLANNING CAPITAL EXPENDITURE PLANNING

130 GROUP MANAGEMENT REPORT

Thus we will concentrate on the core business of ANTICIPATED DEVELOPMENT Borussia Dortmund and, in so doing, will not be OF LIQUIDITY taking any financial risks which cannot be calculated in advance. In essence, this means that we will only Following the implementation of the capital increas- be incurring capital expenditure to the extent per- es, the further reduction in debt consequent thereto mitted by the anticipated financial leeway. In pre- and the improvement in earnings, we will as from the paring the capital expenditure budget, we will there- 2007/2008 financial year be in a position to generate fore not include any uncertain sporting successes substantial financial surpluses, which will significant- which, if they failed to materialise, would result in ly improve Borussia Dortmund's room for manoeuvre new indebtedness. and its competitiveness.

OPPORTUNITIES

DEVELOPMENT FORECAST IN SUMMARY

Since the completion of the restructuring focusing on In our future development, we will not enter into any the buyback of the stadium shares, Borussia further financial risks that could jeopardise the exis- Dortmund is once again in a position to make invest- tence of Borussia Dortmund. Generating financial ments in the professional squad, which will signifi- surpluses will be a prerequisite for further invest- cantly improve the quality of the team. The contracts ments in the professional squad. We are convinced with the professional players Marc Ziegler, Robert that this is the right way to establish Borussia Dort- Kovac, Mladen Petric, Giovanni Federico, Diego mund in the medium term as one of the leading clubs Klimowicz and Jakub “Kuba” Blaszczykowski demon- in the Bundesliga. strate the point impressively.

131 Borussia Dortmund

SUPPLEMENTARY REPORT

BVB was standing on the precipice: following the Diego Klimowicz (2) and Mladen Petric. The draw 27th round, the six-time German football champion for the 2nd main round of the DFB Cup on 12 – which had had to leave football's “upper echelon” August 2007 provided Borussia Dortmund with an for the first time in 1972 for a period of four years – attractive opponent in the form of Eintracht had even slipped to a relegation position. Frankfurt, also a Bundesliga club. The match is expected to be played on 30 or 31 October 2007 at During the troubled times, the meaning of solidari- SIGNAL IDUNA PARK. ty by the people of Dortmund with their flagship – Borussia – became clear. The “We are Borussia” ini- After outstanding performances during the run-up tiative launched by the BVB fan department result- to the 2007/2008 Bundesliga season, Borussia ed in a unique closing of the ranks between Dort- Dortmund began with a false start by losing 1:3 to mund's citizens, companies and public authorities the newly promoted MSV Duisburg on 12 August and the whole region. 2007 in front of 75,700 spectators at SIGNAL IDUNA PARK. Ishiaku (2) and Tararache were the The high level of enthusiasm and excitement in goalscorers for the “Zebras” and Kringe for BVB. It anticipation of the new 2007/2008 season is demon- was the first win for MSV at Strobelallee for 35 years strated by the 50,549 season tickets sold, a new and only the second ever. Bundesliga record. On 6 July 2007, the Bundesrat approved the act imple- From the sporting point of view, things are looking menting the reform of corporate taxation in 2008. As a distinctly encouraging. With six new players, Thomas consequence, the future effects of the reform were not Doll's team is in a better position both in terms of yet required to be reflected in the consolidated bal- numbers and of quality than in the previous season. ance sheet prepared as of 30 June 2007. “We have succeeded in giving the squad more depth, and the sense of competition within the team has The reform of corporate taxation included substan- increased,” concluded sport director Michael Zorc. tial cuts in the rates of both trade tax and corpora- Head coach Thomas Doll is also convinced that this tion tax. While the act results in a net reduction in will result in an ability to produce better perform- the tax burden on companies intended by the legis- ances and more attractive football. lature, it will also give rise to some extra tax payments as a result of broadening the basis of assessment to One week before the start of the 2007/2008 taxation. Bundesliga season, Borussia Dortmund has already given a positive sign of its sporting potential. In the An initial analysis of the future effects of the reform DFB Cup, coach Thomas Doll's team achieved a 4:1 of corporate taxation on the BVB Group did not victory over 1. FC Magdeburg. In addition to Ebi reveal any indications of particular tax risks in future Smolarek, goals were also scored by new signings 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 5. There is no control of voting rights in cases where response to the requirements of § 315 (4) Nos. 1 to 9 employees are shareholders. HGB: 6. Because of its legal form as a partnership limited by 1. The share capital of Borussia Dortmund GmbH shares, Borussia Dortmund GmbH & Co. KGaA & Co. KGaA amounts to EUR 61,425,000.00 and does not have a management board. Instead, the is divided into 61,425,000 no-par value ordinary Company's management and representation is the bearer shares. All of the shares have been admit- responsibility of the general partner. The terms of ted to trading on the Official Market (General § 6 No. 1 of the Articles of Association provide that Standard) of the Frankfurt Stock Exchange and this executive body of the Company is Borussia in the over-the-counter markets (Regulated Dortmund Geschäftsführungs-GmbH, whose reg- Unofficial Markets) in Berlin-Bremen, Stuttgart, istered office is in Dortmund, on a permanent basis Munich, Hamburg and Düsseldorf. Each no-par and not for a limited period of time, by virtue of its value share entitles the holder to one vote at the status as a shareholder. The appointment and General Shareholders' Meeting. The Company removal of managing directors of Borussia Dort - therefore has only one class of shares and all mund Geschäftsführungs-GmbH is governed by shares carry the same rights and obligations. § 8 No. 6 of its shareholders' agreement and is the Additional rights and responsibilities attaching to responsibility of the Executive Committee of its the Company's shares are determined in accor- Advisory Board, and therefore not of the dance with the German Stock Corporation Act Supervisory Board of Borussia Dortmund GmbH (Aktiengesetz, “AktG”). & Co. KGaA.

2. There are no restrictions affecting the voting In principle, changes may be made to the Articles of rights or transfer of the shares. Association of Borussia Dortmund GmbH & Co. KGaA only by a resolution of its General 3. As of 30 June 2007, the Company had been noti- Shareholders' Meeting, which must be passed, in fied of the following interests in the share capital accordance with § 133 (1) AktG, by a simple major- of Borussia Dortmund GmbH & Co. KGaA in ity of votes and also, in accordance with § 15 No. 3 excess of 10% of the voting rights: of the Articles of Association of the Company - Morgan Stanley International Limited: 16,25% together with § 179 (1) and (2) AktG, by a simple - Absolute Capital Management Holdings Limited: 13,04% majority of the capital represented at the passing of - BlueBay Asset Management: 17, 09% the resolution, except to the extent that there are mandatory statutory provisions to the contrary or 4. There are no shares with special rights which con- the Articles of Association provide otherwise. It is a fer powers of control. mandatory provision of statute that a resolution of

133 Borussia Dortmund

the General Shareholders' Meeting passed by a authorised, with the approval of the Supervisory majority of three-quarters of the share capital re- Board, to disapply the statutory subscription right presented at the passing of the resolution is required of the limited liability shareholders in certain cir- for changes to the Articles of Association relating to cumstances. the objects of the Company (§ 179 (2) sentence 2 AktG), the issuance of non-voting preferred shares In addition, by a resolution of the General (§ 182 (1) sentence 2 AktG), capital increases where Shareholders' Meeting held on 22 November 2005, subscription rights have been disapplied (§ 186 (3) the share capital of Borussia Dortmund GmbH & AktG), the creation of conditional capital (§ 193 (1) Co. KGaA has been conditionally increased by up AktG), the creation of authorised capital (§ 202 (2) to EUR 14,625,000.00 by the issue of up to AktG) – where appropriate with authorisation to 14,625,000 new no-par value ordinary bearer disapply subscription rights (§ 203 (2) sentence 2 shares. The general partner is authorised until 31 together with § 186 (3) AktG) –, the ordinary or October 2010, with the approval of the Supervisory simplified reduction of capital (§ 222 (1) sentence 2 Board, to issue bearer bonds with warrants and/or and/or § 229 (3) AktG) or a change of legal form convertible bonds with a total nominal amount of (§ 233 (2) and/or § 240 (1) German Reorganisation up to EUR 40,000,000.00 and a maximum maturi- Act (Umwandlungsgesetz, “UmwG”)). In addition, ty of 25 years on one or more occasions. The hold- capital increases, other changes to the Articles of ers of bonds with warrants may be granted rights to Association and other decisions of a fundamental subscribe for, and the holders of convertible bonds nature may only be resolved with the approval of may be granted rights to convert into, a total of up the general partner, in accordance with § 285 (2) to 14,625,000 new no-par value ordinary bearer sentence 1 AktG. The Supervisory Board is autho- shares of the Company in accordance with the rised in accordance with § 12 No. 5 of the Articles detailed terms and conditions of the bonds with of Association to resolve changes to the Articles of warrants and/or convertible bonds. Association which relate only to their wording, in particular in connection with the amount of capital In the event of a takeover offer for shares issued increases out of authorised and conditional capital. by the Company and admitted to trading on an organised market, general statutory responsibilities 7. In accordance with § 5 No. 4 of the Articles of and powers also apply to the general partner. For Association of Borussia Dortmund GmbH & Co. example, if a takeover offer were to be received, KGaA, the general partner is authorised until 31 the general partner and the Supervisory Board July 2011, with the approval of the Supervisory would be required to issue and publish a response Board, to increase the share capital by the issue of to the offer, giving their reasons, in accordance up to 21,937,500 new no-par value ordinary bear- with § 27 of the German Securities Acquisition and er shares against cash or non-cash contributions on Takeover Act (Wertpapiererwerbs- und Übernah- one or more occasions, but by a maximum of EUR megesetz, “WpÜG”), so that the limited liability 21,937,500.00 in total (Authorised Capital 2006). shareholders can make a decision on the offer on In all cases, the new shares participate in profits an informed basis. Moreover, in accordance with from the beginning of the financial year in which § 33 WpÜG, once a takeover offer has been they are issued. The general partner is further announced, the general partner may not take any

134 GROUP MANAGEMENT REPORT

actions outside the ordinary course of business the meaning of §§ 33a – 33c WpÜG (European which could frustrate the success of the offer, prohibition on frustrating action, European break- unless those actions have been authorised by the through rule, reservation of reciprocity). General Shareholders' Meeting, or the Supervisory Board has given its approval to the actions or the 8. The Company is not a party to any material agree- actions relate to obtaining a competing offer. In ments which are conditional on a change of con- making their decisions, the general partner and the trol following a takeover offer for the issued shares Supervisory Board are bound to have regard to the of Borussia Dortmund GmbH & Co. KGaA. interests of the Company, its employees and its shareholders. At the balance sheet date, there were 9. The Company is not a party to any compensation no provisions of the Articles of Association within 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 that was in each case reasonable under the circums- Borussia Dortmund GmbH & Co. KGaA pursuant to tances known to us at the time such transactions § 312 AktG sets out the relations with BV. Borussia were entered into. In all other cases, the Company 09 e.V. Dortmund as the controlling entity and its affi- has been compensated for any disadvantages having liated companies. The general partner – represented arisen. No other measures within the meaning of by its Managing Directors – issued the following con- § 312 (1) AktG were taken or omitted during the cluding statement: financial year.

Hans-Joachim Watzke Thomas Treß Managing Director (Chairman) Managing Director

135 136 BVB Ticketing

137 SIGNAL IDUNA PARK & TICKETING

Record figures in Germany's largest stadium

ith an average of 79,647 people attend- Wing 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.

For almost 20 years, the football Bundesliga has recorded a constant increase in attendance figures, fluctuating only due to chang- 79,030 viewers attended the home match on 14 Septem- ber 2007 live in SIGNAL IDUNA PARK. BVB defeated ing stadium capacities as a result of relegat- Werder Bremen 3:0. ed and promoted teams or stadium conversions. Average attendance figures cially as the last major domestic and interna- doubled from 17,631 in the 1988/89 season to tional successes of the club at the end of the 37,644 last season. Yet while the league can last millennium and the beginning of the cur- point to an increase of 113 percent, the rent millennium have since faded slightly. increase in interest in Borussia Dortmund What has remained, however, is the great has been disproportionately high, growing interest by the fans in also actually attending from 29,176 visitors to (most recently) 72,164 the club's matches. visitors per home match. When, during the first years of its member- The strong interest in BVB is a deep rooted ship of the football Bundesliga founded in process and not attributable to trends, espe- 1963, BVB played its matches in the time hon- oured “Red Earth” stadium – a stadium without any flair or comfort –average attendance was approximately parallel to that of the An analysis by the magazine “Computer-Bild” league (see chart). found out ordering tickets from BVB on the Internet is exemplary. Interest in BVB exploded with the building of Grade: “B+”, second place in the Bundesliga. 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 pre- sales open for the next game.

flight in the 1976/77 season, interest sells between 45,000 and 50,000 season tick- remained disproportionately high. Since then, ets – more than any other club. With exactly BVB's average attendance has continually 50,549 season tickets sold, sales for the cur- been higher than that of the league. The curve rent season were stopped at midnight on 31 declined only in the very meagre years at the July in order to be able beginning of the 1980s, but again surged to continue to offer a upwards no later than upon winning the DFB sufficient number of Cup in 1989. day tickets. Today there are already waiting lists With the stadium's expansion (from 1992 to for season tickets for the coming season. the beginning of 1996, capacity was only 42,800 seats) over three stages to a level of The enthusiasm is centred in the southern 83,000 (currently 80,708 seats), the fans' stand, Europe's largest standing place area interest in enjoying the unique atmosphere in with capacity for 24,454 fans. Even before the the Strobelallee football temple with their kick-off for the first game, tickets for the rest own eyes also increased. Year for year, BVB 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 in EUR thousands in EUR thousands Non-current assets

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

224,821 218,998 Current assets

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

Subscribed Capital Revenue Revaluation Own in EUR thousands 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

Cost At At in EUR thousands 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 40,868 13,931 18,457 0 36,342 Property, plant and equipment 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 22 887 241 1,128 58,121 280 58,401 -20,801 24 -20,777 00 -20,801 24 -20,777 37,320 304 37,624

0 -38 -38 37,098 37,098 11 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

see Note (17)* 2006/07 2005/06 in EUR thousands

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 • IFRS 6 “Exploration for and Evaluation of Mineral Resources” Borussia Dortmund GmbH & Co. KGaA (“BVB”) • IFRIC 4 “Determining whether an has its headquarters at Rheinlanddamm 207-209, Arrangement contains a Lease” Dortmund, Germany. BVB's professional team • IFRIC 5 “Rights to Interests arising from has participated in the Bundesliga for more than Decommissioning, Restoration and three decades. In addition, BVB Group companies Environmental Rehabilitation Funds” are engaged in the sale of merchandise, the man- • IFRIC 6 “Liabilities arising from Participating ufacture and sale of sporting articles under the in a Specific Market - Waste Electrical and “goool.de” brand name, the provision of internet Electronic Equipment” and travel agency services, the running of a med- • IFRIC 7 “Applying the Restatement ical rehabilitation centre and the operation of the Approach under IAS 29 Financial Reporting football stadium in Dortmund, trading under the in Hyperinflationary Economies” name SIGNAL IDUNA PARK. • IFRIC 8 “Scope of IFRS 2”

These consolidated financial statements of BVB for • IFRIC 9 “Reassessment of Embedded Derivatives” the financial year from 1 July 2006 to 30 June 2007, including the prior-year information, were pre- • Amendments to IAS 19 “Employee Benefits” pared in accordance with International Financial • Amendments to IAS 39 “Financial Reporting Standards (IFRS), as adopted in the Instruments: Recognition and Measurement” European Union and in force at the balance sheet • Amendments to IAS 39 and IFRS 4 date, and the supplementary provisions of German “Insurance Contracts” commercial law required to be observed in accordance with § 315 HGB and § 315a (1) HGB. The The IASB has also issued the following standards, term “IFRS” includes the recent International interpretations and amendments to existing stan- Financial Reporting Standards (IFRS) and the dards whose adoption is not yet mandatory. No use International Accounting Standards (IAS) issued has been made of the option of early adoption. by the International Accounting Standards Board With the exception of additional disclosures in the (IASB) in London as well as the interpretations notes, the adoption of the following standards is of the International Financial Reporting expected to have no significant effects on the con- Interpretations Committee (IFRIC) and the solidated financial statements. Standing Interpretations Committee (SIC). • Amendments to IAS 1 “Presentation of The following accounting standards and interpre- Financial Statements” tations, or amendments of existing standards, were • IFRS 7 “Financial Instruments: Disclosures” required to be adopted for the first time in the • IFRIC 10 “Interim Financial Reporting and past financial year and had no effect on the net Impairment” assets, financial condition and results of operations • IFRIC 11 “IFRS 2: Group and Treasury Share of the Group: Transactions”

145 Borussia Dortmund

In order to improve the clarity and usefulness of The consolidated financial statements are pre- the financial information, certain items in the sented in thousands of euros. income statement and the balance sheet have By a resolution dated 15 August 2007, the con- been combined. These items are reported sepa- solidated financial statements and the Group man- rately and explained in the notes. The income agement report were authorised by the statement was prepared in accordance with the Company's management for submission to the nature of expense method. Supervisory Board.

GROUP OF CONSOLIDATED COMPANIES

In addition to Borussia Dortmund GmbH & Co. Orthomed GmbH, in which the Group holds KGaA, the consolidated financial statements 33.33% of the shares and of the voting rights, has include seven (prior year: seven) fully consolidat- been included in the consolidated financial state- ed subsidiary companies and one associated com- ments as an investment in associates under the pany accounted for at equity. 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 Group's share of the carrying amount of the net assets of the relevant company. The difference The annual financial statements of the companies between the cost of the investment and the share included in BVB's consolidated financial state- of the net assets is allocated in full to the assets ments are prepared in accordance with IFRS and liabilities of the subsidiary, to the extent that using consistent accounting policies. it represents unrecognised gains or losses. Any remaining positive difference is recognised as The reporting date for the consolidated financial goodwill. Subsidiaries are fully consolidated from statements is the reporting date of the parent the date on which the Group obtains control. The company. Where companies consolidated had a inclusion of subsidiaries in the consolidated finan- different balance sheet date in the previous financial statements ends as soon as the parent com- cial year, interim financial statements were pre- pany ceases to have control. pared as at the reporting date of the parent company. The investment in the associate Orthomed Minority interests represent the share of net assets GmbH was made on the basis of annual financial that is not attributable to the Group. Accordingly, statements for the calendar year. Interim finan- minority interests are reported separately within cial statements were not prepared because the consolidated equity and the consolidated income company is not material in the context of the statement. information conveyed by the consolidated financial statements of BVB, and because there were Associates over which the Group has a significant no material transactions or other events in the but not a controlling influence are accounted for business of this company between its own year- using the equity method and initially recognised end and that of the Group. at cost. The Group's share of profits and losses of associates is recognised in the income statement Intercompany revenues, income and expenses, from the date of acquisition, while the share of and all receivables and liabilities between compa- changes in reserves is reflected in consolidated nies included in the consolidated financial state- reserves. The carrying amount of the investment ments are eliminated on consolidation and provi- is adjusted to reflect the cumulative changes sions relating to other Group companies are since the date of acquisition. There were no reversed. unrealised gains at any date from transactions between Group companies and associates which On the initial consolidation of subsidiaries, the would have been required to be eliminated on cost of the investment is netted against the consolidation.

147 Borussia Dortmund

ACCOUNTING POLICIES Computer software for commercial and technical applications is amortised on a straight-line basis The significant accounting policies used in the over three years. preparation of these consolidated financial statements are presented below. The policies described Property, plant and equipment were applied consistently for the reporting peri- The SIGNAL IDUNA PARK stadium buildings ods shown, unless otherwise indicated. were measured at their fair value amounting to EUR 177,200 thousand in the IFRS opening bal- Intangible assets ance sheet as at 1 July 2004, in accordance with Purchased intangible assets are measured at cost the option permitted by IFRS 1.16. This valua- less amortisation based on their expected useful tion is based on the opinion of an independent lives or at the lower fair value. Player registrations external expert. The carrying amount of the sta- reported in these financial statements are meas- dium buildings in the balance sheet represents ured at cost, taking into account the FIFA the carrying amount as at 1 July 2004 less depre- Regulations for the Status and Transfer of Players ciation charged subsequently. contained in circular no. 769 of 24 August 2001 which came into force on 21 September 2001, and Land, the other buildings and the remaining items are amortised on a straight-line basis in accor- of property, plant and equipment are measured at dance with the term of the individual contracts for cost less depreciation. Borrowing costs are record- professional players. The cost of player registra- ed as an expense in the period in which they are tions includes transfer payments made and the incurred. Low-value items are fully written off in costs of advisers directly attributable to the par- the year of acquisition. Repair and maintenance ticular transfer. 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 outstanding lease obligation over the period of The useful lives of intangible assets and items of the lease (effective interest method). Interest property, plant and equipment are all finite. If charges are expensed immediately. If substan- there are specific indications of possible impair- tially all the risks and rewards of ownership ment, individual assets are tested for impairment. remain with the lessor (operating lease), the lease In the case of intangible assets, the useful life and payments are recognised as an expense in the the method of amortisation are reviewed at least at financial year. the end of each financial year. An impairment loss is recognised for the amount by which the carrying Financial instruments amount exceeds the recoverable amount. The Under the terms of IAS 39, a financial instrument recoverable amount is the higher of net disposal is any contract that gives rise to a financial asset of proceeds and value in use. If the reason for an one entity and a financial liability or equity instru- impairment write-down recognised in prior years ment of another entity. They include financial no longer exists, the impairment loss is reversed assets, receivables and liabilities arising from until the carrying amount of the asset, net of transactions for goods and services, financial lia- depreciation and amortisation, equals the amount bilities and other assets and liabilities. that would have been determined if an impairment loss had not been recognised. A financial instrument is initially measured at cost. Transaction costs are included in the cost of the Leases asset or liability, except in the case of a remea- The Group's leases relate in particular to devel- surement through profit or loss. Purchases and oped land and operating and office equipment. sales of financial assets are recorded on the trading day on which the Group enters into a commit- Leased assets in respect of which substantially all ment to buy or sell the asset. the risks and rewards of ownership have been transferred to the Group (finance lease) are recog- Financial instruments are subsequently measured nised at the present value of the lease payments either at fair value or at amortised cost, depending or at the lower fair value in accordance with IAS on their classification according to the following 17 and depreciated over the useful life or the categories: shorter lease term. In the case of leases of land and buildings, the components of the land and • financial instruments at fair value through buildings are considered separately for the pur- profit or loss pose of the classification of the leases. • held-to-maturity investments

• loans and receivables The payment obligations resulting from finance lease agreements are recognised as a liability. The • available-for-sale financial assets lease payments are apportioned between the finance charges and the element representing the At the balance sheet date and in the comparable repayment of the remaining liability in such a way period, the Group held no financial instruments that a constant rate of interest is charged on the accounted for at fair value through profit or loss.

149 Borussia Dortmund

Held-to-maturity investments are non-derivative impairment. If evidence of impairment is estab- financial assets with fixed payments and maturi- lished in the course of regular impairment test- ties that the Group intends to hold to maturity. ing, the relevant expense is recognised immedi- Held-to-maturity investments are measured at ately in profit or loss. At the balance sheet date amortised cost after their initial recognition. As at and in the comparable period, the Group held no 30 June 2007, held-to-maturity investments available-for-sale financial assets. amounted to EUR 253 thousand (30 June 2006: EUR 201 thousand). If the maturity of a financial instrument is less than 12 months after the balance sheet date, it is Loans and receivables are financial assets or lia- reported in the balance sheet under current assets bilities with fixed or determinable payments that or liabilities. are not quoted in an active market. Receivables are recognised at amortised cost less any valua- Derivative financial instruments and tion allowances required for impairment. Loans hedging are measured on initial recognition at the amount In August 2006, the Group entered into an inter- of the consideration received less transaction est rate swap for the purpose of hedging the cash costs attributable to the issue of the liability. flow risks from interest rate changes arising from After initial recognition, interest-bearing loans the variable-rate long-term loan from Morgan are measured at amortised cost using the effec- Stanley & Co. Int. Ltd., London. Associates over tive interest method net of repayments made. which the Group has a significant but not a con- Liabilities from finance leases are reported under trolling influence are accounted for using the other liabilities at their present values, calculated equity method and initially recognised at cost. The using the effective interest method. At 30 June Group's share of profits and losses of associates is 2007, there were no financial liabilities designat- recognised in the income statement from the date ed at fair value through profit or loss (30 June of acquisition, while the share of changes in 2006: 0). reserves is reflected in consolidated reserves. The carrying amount of the investment is adjusted to Available-for-sale financial assets are measured reflect the cumulative changes since the date of at their fair value. Unrealised gains and losses acquisition. There were no unrealised gains at any from subsequent remeasurement are recognised date from transactions between Group companies directly in equity net of deferred taxes until the and associates which would have been required to financial instrument is sold or suffers permanent be eliminated on consolidation.

150 CONSOLIDATED FINANCIAL STATEMENTS

Deferred taxes Inventories Deferred taxes are recognised for all temporary Inventories consist principally of merchandising differences between the tax base of assets and lia- articles and goods held by the subsidiary company bilities and their carrying amounts in the IFRS goool.de. Inventories are measured at cost less any financial statements (liability method). However, individual allowances for goods whose cost may not if in the course of a transaction which is not a be recoverable. business combination a deferred tax asset or liability arises from the initial recognition of an asset Own shares or liability which, at the time of the transaction, The full amount paid for the purchase of own affects neither the accounting nor the taxable shares is reported as an item deducted from equi- profit or loss, the deferred tax asset or liability is ty. The Company has the right to reissue own neither recognised at the date of initial recogni- shares purchased by it at a later date. Proceeds of tion nor afterwards. resale in excess of cost are added to capital reserves, while shortfalls are taken to revenue Deferred tax assets are recognised to the extent reserves. that it is probable that taxable profits will be available against which the temporary difference can Provisions and contingent liabilities be utilised. Deferred tax assets are also recog- In accordance with IAS 37, provisions are recognised for tax loss carry-forwards that can be nised where a present obligation exists to third par- utilised in subsequent periods, provided it is suf- ties arising from a past event, which is expected to ficiently probable that the deferred tax asset will result in an outflow of resources and whose be recoverable. amount can be reliably estimated. No provisions have been reported in these consolidated financial Deferred taxes relating to items recognised direct- statements because it was possible to determine ly in equity are also recognised directly in equity. the amount and timing of all obligations with sufficient certainty, with the result that these obliga- Deferred tax assets and liabilities are netted tions have been reported under liabilities. against each other where the Group has a legally enforceable right to set off current tax assets Contingent liabilities which do not meet the crite- against current tax liabilities, and the deferred tax ria for recognition as a provision are disclosed in assets and liabilities relate to income taxes levied the notes, unless the probability of an obligation by the same taxation authority on the same tax- occurring is remote. able entity. Recognition of income and expenses Deferred tax assets and liabilities are measured on Revenues are recognised when it is probable that the basis of the tax laws in force at the balance the economic benefits will flow to the Group and sheet date using a rate of income tax of 39.9%. the amount of income can be measured reliably.

151 Borussia Dortmund

Revenues are measured at the fair value of the MANAGEMENT OF FINANCIAL RISKS consideration received or receivable and represent amounts for goods delivered and services provid- The BVB Group finances itself primarily from ed in the ordinary course of business, less rebates, long-term bank loans, finance leases, trade VAT and other taxes arising in relation to revenues. payables, season tickets paid for in advance and payments from sponsors. The related risks arising Interest income and expenses are allocated to the comprise interest-rate-related cash flow risks, period to which they relate, taking into account market risks, liquidity risks and credit risks. On the outstanding amount of the loan and the effec- the other hand, the Group is not exposed to any tive interest rate to be applied. The effective inter- significant currency risks. The methods of man- est rate is the discount rate at which the present aging the individual types of risk are described in value of the estimated future cash receipts over the following. the term of the financial asset is equal to its net carrying amount. Interest rate risks The Group's financial liabilities consist mainly of a Operating expenses are recognised when the variable-rate loan from Morgan Stanley & Co. goods or services are utilised or at the date the International Ltd., London, England. The interest expenses are incurred. expense associated with this loan is therefore dependent on the future development of the gen- Revenues eral level of interest rates. In order to minimise the In accordance with the classification prescribed by interest-rate-related cash flow risk associated with the German Football League (Deutsche Fußball the loan, the Company therefore entered into an Liga GmbH, “DFL”) for the licensing procedure, interest rate swap in respect of this loan in August income from the sale of transfer rights for player 2006. The effect of this interest rate hedging trans- registrations is reported under revenues. The action is a future rate of interest payable that is expenses associated with the transfer activities independent of actual changes in market rates of such as the book values of assets sold and inci- interest. The interest rate swap is accounted for as dental costs of disposal are reported as other oper- a cash flow hedge within the meaning of IAS 39. ating expenses. 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 SEGMENT REPORTING The Group conducts business exclusively with third parties of high credit standing. Concentrations of BVB's business activities consist of the operation credit risk can arise in the context of a player trans- of a football club including a professional football fer and from long-term sponsorship agreements. team. There are no further business segments Such concentrations of risk are monitored in the with distinguishable components and risks and course of the Group's operating activities. rewards different from those of other business segments. The business activities of the subsidiary The counterparty for the interest rate swap companies do not meet the criteria for reportable described above was a major German bank with segments in IAS 14 as a result of their lack of eco- the highest credit rating. nomic significance and are therefore not subject to the obligation to prepare segment reporting. 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.

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 reg- In the previous year, compensation payments for istrations and computer software. The increase in transfers had been assigned and internally gener- player registrations and payments on account is ated trademark rights had been surrendered for mainly due to the transfer payments in respect of collateralization. the new signings Valdez, Frei, Tinga and Blaszcykowski. At the balance sheet date, the Changes in intangible assets are presented in a weighted remaining contractual term of the sig- separate overview forming part of the notes to the nificant player registrations amounted to 3.1 years. 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 principal- Additions to property, plant and equipment mainly of the stadium and former offices and the ly comprise conversion work on the former offices adjoining area “Am Luftbad”, and also the facili- at the stadium, the conversion of the August Lenz ties at the training ground in Dortmund-Brackel, building into a merchandising shop and the expan- the youth centre, catering extensions and items of sion of parts of the stadium's circulation level into operating and office equipment at these facilities a conference centre. and at the administrative headquarters.

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 recog- Items of property, plant and equipment with a nised in the balance sheet as a result of finance remaining book value of EUR 182,342 thousand leases consist of buildings and other facilities at have been pledged as security for financial liabili- the Dortmund-Brackel training ground; the lease ties. The Group is not the legal owner of proper- in respect of the land at the training ground, on ty, plant and equipment with a remaining book the other hand, is classified as an operating lease. value of EUR 5,942 thousand due to an existing In the 2006/2007 financial year, the adjustment to finance lease. the lease payments as a result of the final statement of building costs resulted in a corresponding Changes in property, plant and equipment are increase in the carrying amount of property, plant presented in a separate overview forming part of and equipment subject to finance leases and in the the notes to the consolidated financial statements. liabilities from finance leases. The Company has an option to purchase the entire site following the expiry of the lease term in 2022.

(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 The carrying amounts generally reflect market relating to an operating lease agreement and var- values. ious employee loans.

(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 During the 2006/2007 financial year, the BVB interest and mostly have a maturity of up to 3 Group recognised impairment losses in respect of months. The non-current portion of trade receiv- receivables amounting to EUR 345 thousand (pre- ables is discounted using the effective interest vious year: EUR 2,827 thousand) under other method and measured at amortised cost. The car- operating expenses. Impairment losses amounting rying amounts of trade receivables generally to EUR 850 thousand (previous year: EUR 50 reflect their market values. Other assets include thousand) were reversed; the relevant income was the positive fair value of the outstanding interest reported under other operating income. rate swap amounting to EUR 2,888 thousand (previous year: EUR 0 thousand). As in the previous year, future claims, not reflected in the financial statements, from season ticket Receivables amounting in total to EUR 9,440 sales (excluding the hospitality area), TV income thousand (previous year: EUR 13,277 thousand) and the agreement for the rights to the stadium were due from a single debtor. 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 write- ing to EUR 646 thousand was made in the previ- downs to net realisable value were recognised in ous year. Sales of impaired items of inventories cost of materials, while one write-down amount- 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 balance sheet date, EUR 19 thousand (previous of interest applying to demand deposits. year: EUR 3,608 thousand) were subject to restric- Of the cash and cash equivalents reported at the tions on the right of disposal.

(8) Equity Subscribed capital The development of equity and minority interests The subscribed capital of Borussia Dortmund is presented in the statement of changes in equity. 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 Ltd., London, at a price of EUR 2.20 per share in the Company's shares to trading (31 October return for a non-cash contribution consisting of 2000) and the balance sheet date, the Company loans from the BVB Group. The premium of EUR acquired a total of 34,000 no-par value shares and 19,548 thousand over the nominal amount of the sold 10,365 no-par value shares off-market in the issue was added to capital reserves. The capital form of printed physical share certificates. At the increase was entered in the commercial register on balance sheet date, the Company held 23,635 no- 19 September 2006. par value shares, representing 0.038% of the share capital. At the balance sheet date, as in the previous year, conditional capital expiring on 31 October 2010 for On the basis of the authorisation granted by the the purpose of issuing convertible bonds and bonds General Shareholders' Meeting on 22 November with warrants amounted to EUR 14,625 thousand. 2005 and the approval of the Supervisory Board of The extraordinary General Shareholders' Meeting 17 May 2006, the general partner resolved to held on 15 August 2006 also authorised the gener- utilise the authorised capital to increase the share al partner until 31 July 2011, with the approval of capital by up to EUR 14,625,000 to up to EUR the Supervisory Board, to increase the share capi- 43,875,000 by the issue of up to 14,625,000 new tal by the issue of up to 21,937,500 new no-par val- bearer shares with subscription rights for share- ue shares for cash or non-cash contributions. holders. 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 Reserves in excess of the nominal amount was added to cap- Capital reserves consist exclusively of transfers in ital reserves net of the costs of the placement respect of premiums on the issue of new shares (EUR 393 thousand). The capital increase was after deducting the net costs of the placement. entered in the commercial register in June 2006. The remaining reserves consist entirely of other On the basis of the authorisation granted by the revenue reserves. Revenue reserves comprise extraordinary General Shareholders' Meeting on profits generated and not distributed by Group 15 August 2006, the general partner resolved to companies in the current year and previous years increase the share capital by up to EUR and accumulated losses. In addition, the net 17,550,000 to up to EUR 61,425,000 by the issue effect, taking account of subsequent adjustments, of up to 17,550,000 new bearer shares with sub- of the remeasurement of SIGNAL IDUNA PARK scription rights for shareholders. The limited lia- in accordance with IFRS 1.16 is reported under bility shareholders exercised their subscription this item. 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 The revaluation reserve relates to the positive fair value share. The 9,982,415 new shares not sub- value of the interest rate swap entered into scribed for by the existing shareholders were amounting to EUR 2,888 thousand net of deferred acquired by Morgan Stanley & Co. International 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 interest rate swap has been entered into in order to the loan raised in June 2006 from Morgan Stanley minimise the interest-rate-related cash flow risk & Co. International Ltd., London, England. The associated with this loan. This interest rate hedging loan has a maturity date of 2021 and bears interest transaction will result in interest payments equiv- at Euribor plus a margin of 2% and additional fees. alent to a rate of interest of 6.2%, irrespective of The loan repayments begin with an amount of actual changes in market rates of interest; the EUR 3,716 thousand in the 2007/2008 financial effective interest rate on the loan amounts to 6.5%. year and rise almost linearly to EUR 8,123 thousand in the subsequent years. An obligation to The other liabilities to banks consist of a number of make special repayments arises if liquidity sur- loans repayable in instalments. The loans have pluses exceed certain defined thresholds. The maturity dates between 2020 and 2026; fixed-inter- Group has agreed to be bound by appropriate est periods apply until 2016. restrictions on the purchase and sale of significant assets. In addition, the loan conditions include As a result of the interest rate swap entered into covenants relating to the observance of a number and the long-term fixed-interest periods applying of financial indicators whose values vary over the to the other loans, the BVB Group is not exposed term of the loan. The lender has a special right of to any significant risk from changes in interest termination if the covenants are not observed. An 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 date in the previous year, the carrying amounts at the balance sheet date, the fair value of the were substantially equivalent to the fair values. All financial liabilities is around EUR 873 thousand financial liabilities are denominated in euros. below their carrying amounts. At the balance sheet

(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 Payments to the state pension scheme are report- been granted to employees of the BVB Group. ed 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 thousand). This amount relates to the write-down review includes a write-down to the lower fair val- of a player registration to the lower transfer price ue of EUR 54 thousand (previous year: EUR 0 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 The dividends paid by WFS KG to Molsiris in the shares in Westfalenstadion Dortmund GmbH & 2005/2006 financial year (EUR 74 thousand) were Co. KG (“WFS KG”; the company was converted treated as finance costs in keeping with IAS 32.35 into BVB Stadion GmbH in 2005/2006) held by and presented separately in the consolidated Molsiris Vermietungsgesellschaft mbH & Co., income statement. Objekt Westfalenstadion KG (“Molsiris”) were repurchased. Since spring 2006, the BVB Group Following the increase in the BVB Group's inter- has therefore held a total of 99.74% of the shares est in WFS KG to 99.74% in 2006, WFS KG was in the current BVB Stadion GmbH. The shares still converted into BVB Stadion GmbH, entailing a held by Molsiris at the beginning of the prior-year change of legal form. The remaining interests in period were classified as liabilities in accordance consolidated equity held by minority shareholders with IAS 32, because Molsiris had an inalienable at the 30 June 2006 balance sheet date are now legal right to sell its shares, with a corresponding reported as a separate item within equity. 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).

(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 tion of this amount is due for payment in the tax resulting from the sale of limited partners' 2007/2008 financial year and has been reclassified shares in WFS KG to Molsiris in 2002. In each accordingly. The current income tax liabilities subsequent year, the City of Dortmund agreed to therefore mainly comprise the liability to trade tax defer settlement of the liability beyond the fol- on the resale of the shares in WFS KG held by lowing balance sheet date; for the first time, a por- 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 finan- EUR 136,211 thousand and trade tax loss carry- cial year relates mainly to the trade tax liability forwards amounting to EUR 151,206 thousand resulting from the sale of limited partners' shares for which no deferred tax assets have been recog- in WFS KG and to the tax element of the costs of nised. Under current tax law, tax loss carry-for- the capital increase taken directly to equity. wards may be carried forward for an indefinite period. The recognition of deferred tax assets in respect of tax loss carry-forwards resulted in a reduction The expected income tax expense which would in the tax expense of EUR 2,633 thousand (prior theoretically result from applying the weighted year: EUR 2,155 thousand). average tax rate of 39.9% (previous year: 39.9%) can be reconciled with the actual income tax ben- At the balance sheet date, the BVB Group had efit reported in the consolidated income statement corporation tax loss carry-forwards amounting to 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 leas- and the offices on the expiry of the lease agree- es relate mostly to lease agreements for offices, the ments in 2017 and 2022 respectively. Rental pay- land at the Dortmund-Brackel training ground and ments from the non-cancellable period of a sub- various motor vehicles. The Company has an lease are expected to amount to EUR 605 option to purchase the land at Dortmund-Brackel thousand (previous year: EUR 907 thousand).

165 Borussia Dortmund

(20) Earnings per share

Earnings per share are calculated in accordance bonus element included in the capital increase in with IAS 33 (Earnings per share) by dividing the August 2006 has been taken into account in cal- net profit or loss for the period attributable to the culating the weighted average number of shares shareholders by the weighted average number of in issue. Since there are no potential ordinary shares in circulation. The earnings per share shares, the diluted and undiluted earnings per relate only to shares in the parent company. The 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 e.V. Dortmund, in its capacity as the sole share- GmbH & Co. KGaA is Borussia Dortmund holder in Borussia Dortmund Geschäftsführungs- Geschäftsführungs-GmbH. The latter is respon- GmbH. Both Borussia Dortmund Geschäfts- sible for the management and legal representa- führungs-GmbH and Ballspielverein Borussia 09 tion of Borussia Dortmund GmbH & Co. KGaA. e.V. Dortmund, and all their affiliated companies, The power to appoint and remove members of therefore qualify as related parties within the staff thus rests with Ballspielverein Borussia 09 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, year, the Supervisory Board received remuneration amo- their occupations and further responsibilities in other unting to EUR 52.5 thousand (previous year: EUR 52.5 management bodies are listed below. In the past financial thousand).

Dipl.-Kfm. Harald Heinze Othmar Freiherr Bernd Geske Ruedi Baer Patrick Albert Christian Gerd Pieper von Diemar Lynch Kullmann

Chairman Deputy Chairman (until 26 Feb 2007) (since 23 May 2007)

Occupation

Proprietor and — Proprietor and Managing partner of Delegate of the Managing Director Head of the board Managing Director manager of Othmar Bernd Geske Lean Board of Directors of Morgan Stanley & office and corporate of Stadtparfümerie von Diemar Vermö- Communication, of the mobilezone Co., London communications Pieper GmbH, Herne gensverwaltung + Meerbusch group, Regensdorf (England) division of RAG Beratung, Cologne (Switzerland) Aktiengesellschaft, Essen

Other responsibilities

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 We have been informed of the following notifi- implementing the reform of corporate taxation in able shareholdings: 2008. As a consequence, the future effects of the 1. Morgan Stanley International Ltd., London reform were not yet required to be reflected in the (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 sub- 4. BV. Borussia 09 e.V., Dortmund (7,24%) stantial cuts in the rates of both trade tax and cor- 5. Bernd Geske (6,51%) poration 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 (26) Corporate Governance assessment to taxation. The management and Supervisory Board of An initial analysis of the future effects of the Borussia Dortmund GmbH & Co. KGaA issued reform of corporate taxation on the BVB Group the statement of compliance with the German did not reveal any indications of particular tax risks Corporate Governance Code required by § 161 of in future as a result of the reform. the German Stock Corporation Act (Aktiengesetz) in November 2006 and made it permanently avail- Application of the tax rates approved after the bal- able to shareholders on the BVB website at ance sheet date would have resulted in a reduc- www.bvb.de. tion 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 Dortmund, 15 August 2007 cash effect. At the same time, there would have been a reduction of EUR 240 thousand in Borussia Dortmund GmbH & Co. KGaA deferred taxes recognised directly in equity. Borussia Dortmund Geschäftsführungs-GmbH

Hans-Joachim Watzke Thomas Treß Managing Director (Chairman) Managing Director

169 CONSOLIDATED FINANCIAL STATEMENTS Borussia Dortmund

AUDITORS‘ REPORT

We have audited the consolidated financial state- Group and expectations of possible misstatements ments – consisting of the balance sheet, income are taken into account in the determination of statement, statement of changes in equity, cash audit procedures. The effectiveness of the internal flow statement and notes – prepared by Borussia accounting control system and the evidence sup- Dortmund GmbH & Co. KGaA, Dortmund porting the disclosures in the consolidated finan- and the Group management report for the financial statements and the Group management report cial year from 1 July 2006 to 30 June 2007. The are examined primarily on a test basis within the preparation of the consolidated financial state- framework of the audit. The audit includes the ments and Group management report in accor- assessment of the annual financial statements of dance with IFRS as adopted in the EU and the the companies included in the consolidated finan- additional requirements of commercial law to be cial statements, the definition of the group of con- applied under § 315a (1) of the German Com- solidated companies, the accounting and consoli- mercial Code (Handelsgesetzbuch, “HGB”) as dation principles used and significant estimates well as the supplementary provisions in the made by the legal representatives, as well as the Articles of Association is the responsibility of the evaluation of the overall presentation of the con - Company’s legal representatives. Our responsi- solidated financial statements and the Group bility is to express an opinion on the consolidated management report. We believe that our audit pro- financial statements and the Group management vides a reasonable basis for our opinion. report, based on our audit. Our audit has not led to any reservations. We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and In our opinion, based on the results of our audit, the generally accepted standards for the audit of the consolidated financial statements comply with financial statements in Germany promulgated by IFRS as adopted in the EU and the additional the German Institute of Chartered Accountants requirements of commercial law to be applied (Institut der Wirtschaftsprüfer, IDW). Those stan- under § 315a (1) HGB as well as the supplemen- dards require that we plan and perform the audit tary provisions in the Articles of Association and such that misstatements materially affecting the give a true and fair view of the net assets, financial presentation of the net assets, financial position position and results of operations of the Group in and results of operations in the consolidated finan- accordance with these requirements. The Group cial statements in accordance with the relevant management report is consistent with the con- financial reporting standards and in the Group solidated financial statements, provides as a whole management report are detected with reasonable a suitable view of the Group's position and assurance. Knowledge of the business activities suitably presents the opportunities and risks of and the economic and legal environment of the 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: Photos: Borussia Dortmund GmbH & Co. KGaA BVB-archives, Rheinlanddamm 207-209, Susanne Beimann, 44137 Dortmund Firo sportphoto, Internet: www.borussia-aktie.de Stefan Michael Grey, E-Mail: [email protected] Alexander Hassenstein, Carsten Kobow, Responsible party: Archiv Kolbe, Marcus Knipping Uwe Landskron, Christian Lüning, Communication design/ Press office of the Concept: City of Dortmund, K-werk, Uwe Landskron, Sportfive. Agentur für Kommunikation, www.K-werk.de Copyright by the photographers Editors Prologue/ History: Printed by: Boris Rupert 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 Thoughts are focusing on the circulation lev-

IDUNA PARK” on non-match days is right at the els that run behind the stands. “We would like

top of Borussia Dortmund GmbH & Co. KGaA's it if those fans who have no access to the VIP

list of priorities. The rooms created during the areas also stayed longer in the stadium before

expansion stages in the belly of the stadium and after the game”, says CFO Thomas Treß.

now have visitors at all times, while in future In this respect as well, structural measures

– according to management's ideas and plans would be necessary in order to greatly change

– the interior and the circulation levels running the character of the circulation levels. Expe-

behind the stands of Germany's largest foot- riences along these lines by other Bundesliga

ball stadium should also be utilised. teams have in any event been positive.

Except for “Stadium Cinema”, the annual The BVB museum – the “Borusseum” - will

meeting of the “Jehovah's Witnesses” and the provide further life and is expected to be

welcome event for the new students of the Uni- opened in 2008. Today, stadium tours already

versity of Dortmund, the 80,708 seats in the enjoy great popularity. This line of business can

stands remain empty outside Borussia Dort- be further pushed ahead in combination with

mund's matches. the “Borusseum”.

172 KEY FIGURES AT A GLANCE

BORUSSIA DORTMUND GmbH & Co. KGaA SIGNAL IDUNA PARK – MORE THAN 90 MINUTES OF FOOTBALL

Earnings before interest, taxes, depreciation and amortisation (EBITDA) 22.7 -4.3 Cash flows from operating activities 11.9 -5.1

Cash flows from operating activities 11.9 -5.5 Weighted average number of share Number of shares (in thousands) 61,425 43,875 (in thousands) 58,665 31,021

Earnings per share (in EUR) 0.17 -0.09 Earnings per share (in EUR) 0.17 -0.67

173 CONTENTS

2 3 10 12 16 19 20

28 29 30 32 38 40

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, Tradition • Passion • Success 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 Business Report Borussia Dortmund, July 2006 - June 2007 2006 - June Dortmund, July Business Report Borussia

Business Report Borussia Dortmund, July 2006 – June 2007