CONSOLIDATED FINANCIAL STATEMENTS for the period from 1 July 2020 to 30 June 2021 Interest income and expenses are allocated to the conducted on the basis of euros (EUR) and pounds period to which they relate, taking into account the sterling (GBP). Currency forwards are concluded to outstanding amount of the loan and the effective hedge the cash flows. interest rate to be applied. The effective interest rate is the rate that exactly discounts estimated future Sensitivity analysis (exchange rate risks) cash payments or receipts through the expected life Sensitivity analyses are used to assess the impact of the financial instrument or, when appropriate, a of a strengthening (weakening) of the exchange rate shorter period to the net carrying amount of the as of June 30 on equity or the statement of financial asset or financial liability. comprehensive income. Operating expenses are recognised when the goods Interest rate risks or services are utilised or at the date the expenses Interest rate risks relate to the risk that the interest are incurred. rate associated with an interest-bearing financial instrument will deviate from the market interest rate Management of financial risks due to future market developments. Interest rate The Group finances itself primarily from long-term risks can therefore arise from floating-rate loans, leases, trade payables, season tickets paid for in among other things. These risks are hedged using advance and payments from sponsors. Furthermore, appropriate interest hedging instruments. Because Borussia Dortmund has EUR 120,000 thousand Borussia Dortmund currently does not have any overdraft facility at its disposal, which is secured floating-rate loans or interest rate swaps, there is against EUR 18,465 thousand in sponsorship income no necessity for hedges. and a EUR 60,000 thousand registered land charge in relation to the stadium. Sensitivity analysis (interest rate risk) The related risks arising comprise fair value risks Sensitivity analyses are used to measure how (interest-rate-related cash flow risks), liquidity risks, sensitive financial ratios are to small changes in credit risks and currency/exchange rate risks. The input parameters. Because Borussia Dortmund methods of managing the individual types of risk are currently does not have any floating-rate loans or described in the following. interest rate swaps, there is no necessity to perform sensitivity analyses. Exchange rate risk The Group is exposed to transactional foreign Liquidity risk currency risks to the extent that the quotations of The Group constantly monitors the risk of possible currencies in which disposal and acquisition liquidity bottlenecks, taking into account the transactions as well as receivables and credit probable maturities of its financial liabilities and transactions are carried out do not match the the timing of the expected cash flows from functional currency of the Group companies. The operating activities. Any liquidity risks are aforementioned transactions are primarily countered through appropriate forms of financing. 191