Accounting policies

These consolidated financial statements for the financial year from 1 July 2019 to 30 June 2020, including the prior-year information, were prepared in accordance with International Financial Reporting Standards (IFRSs), as adopted in the European Union and in force at the end of the reporting period, and the supplementary provisions of German commercial law required to be observed in accordance with § 315e (1) HGB. The term "IFRS" includes the recent International Financial Reporting Standards (IFRSs) and the International Accounting Standards (IASs) issued by the International Accounting Standards Board (IASB) in London as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC).

Borussia Dortmund applied the following Standards, Interpretations and amendments to existing Standards, as adopted by the European Union, for the first time in the 2019/2020 financial year:

Amendments to IFRS 9 – Prepayment Features with Negative Compensation

The amendments introduce a narrow-scope modification of the assessment criteria relevant for classifying financial assets. Under certain circumstances, financial assets that include prepayment features with negative compensation do not have to be measured at fair value through profit of loss but may instead be measured at amortised cost or at fair value through other comprehensive income.

The amendments did not have any material impact on the consolidated financial statements of Borussia Dortmund.

IFRIC 23 – Uncertainty over Income Tax Treatments

IFRIC 23 clarifies how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. Recognition and measurement require the use of assumptions, for instance whether an entity should consider uncertain certain treatments separately or together with other uncertainties, whether a probable or expected value should be used for the uncertainty and whether changes have occurred since the prior period. The risk of detection is insignificant with respect to accounting for uncertain items of the statement of financial position. Items are accounted for under the assumption that the taxation authorities will examine the treatment in question and that all relevant information is available to them.

The estimates, assumptions and judgements used must be disclosed in the notes. Furthermore, an entity must disclose the potential effect of the uncertainty as a tax-related contingency applying paragraph 88 of IAS 12.

The amendments did not have any material impact on the consolidated financial statements of Borussia Dortmund.

Amendments to IAS 28 – Long-term Interests in Associates and Joint Ventures

The amendments clarify that IFRS 9 must be applied to long-term interests in associates or joint ventures that are not accounted for using the equity method.

The amendments did not have any material impact on the consolidated financial statements of Borussia Dortmund.

Amendments to IAS 19 – Plan Amendment, Curtailment or Settlement

In accordance with IAS 19, pension obligations must be remeasured using updated assumptions whenever plan amendments, curtailments or settlements take place.

The amendments clarify that updated assumptions must be used to determine the service cost and net interest for the remainder of the period after the change to the plan.

The amendments did not have any material impact on the consolidated financial statements of Borussia Dortmund.

Improvements to IFRS 2015 – 2017

Four IFRSs were amended in connection with the Annual Improvements to IFRSs (2015 – 2017 cycle).

The amendments to IFRS 3 clarify that a company must apply the requirements for a business combination achieved in stages when it obtains control of a business in which it previously held an interest as a joint operation. The interest previously held by the acquirer must be remeasured.

IFRS 11 clarifies that an entity does not remeasure its previously held interest in a joint operation when it obtains joint control of the business.

The amendments to IAS 12 clarify that an entity accounts for all income tax consequences of dividend payments in the same way.

The amendments to IAS 23 clarify that when an entity calculates its borrowing costs it shall exclude from this calculation borrowing costs applicable to borrowings made specifically for the purpose of obtaining a qualifying asset until substantially all the activities necessary to prepare that asset for its intended use or sale are complete.

The amendments did not have any material impact on the consolidated financial statements of Borussia Dortmund.

Amendments to IAS 1 and IAS 8 – Definition of Material

The amendments create a uniform and more consistent definition of materiality of information presented in financial statements in the IFRSs and provide accompanying examples. In that connection, the definitions set out in the Conceptual Framework, IAS 1, IAS 8 and IFRS Practice Statement 2 Making Materiality Judgements have been aligned. The amendments are applicable for the first time from 1 January 2020. Earlier application is permitted.

Borussia Dortmund currently does not expect any material impact on the consolidated financial statements.

Amendments to References to the Conceptual Framework in IFRS Standards

The revised Conceptual Framework comprises a new, overarching section entitled "Status and purpose of the conceptual framework" and eight distinct chapters.

The Framework now includes chapters relating to "The reporting entity" and "Presentation and disclosure"; the "Recognition" chapter has been expanded to include "Derecognition".

Substantive amendments were also made: for instance, the distinction between revenues on the one hand and gains on the other is no longer drawn for income.

As part of the amendments to the Conceptual Framework, references to the Conceptual Framework in various standards have been amended. The amendments are applicable for the first time from 1 January 2020. Earlier application is permitted.

Borussia Dortmund currently does not expect any material impact on the consolidated financial statements.

Accounting standards issued by the IASB, but not yet adopted by the EU and not yet applied by the Company:

Restatements in Accordance with IAS 8.42

On 26 June 2020, the IFRS Interpretations Committee (Committee) published its final agenda decision on Player Transfer Payments (IAS 38) as part of its June 2020 IFRIC Update.

In accordance with that decision, transfer proceeds received must not be recognised as revenue. Borussia Dortmund had already adjusted its accounting to reflect the preliminary agenda decision of 16 December 2019. The final decision did not result in any material changes as compared to the preliminary decision. From now on, transfer proceeds will no longer be recognised as revenue, but rather as the net gain on disposal less any residual carrying amount and presented separately in the new "net transfer income" item in the statement of comprehensive income. Please refer to the statements under the heading "Accounting policies". The change in presentation has no effect on the result from operating activities, total comprehensive income or earnings per share.

As a result, the presentation in the statement of cash flows was also changed. Going forward, transfer proceeds received will be reported net of any directly attributable payments made in connection with the respective transfer in the new "Net proceeds from transfers" item under cash flows from investing activities. These payments as well as changes in receivables and liabilities from transfer deals had previously been reported under cash flows from operating activities. The change does not have any impact on the free cash flow.

The retrospective restatement of the consolidated statement of comprehensive income and the consolidated statement of cash flows due to the matters presented is as follows: