Notes to the Financial Statements of Bertelsmann SE & Co. KGaA (in Accordance with HGB, German Commercial Code)

In addition to the Group reporting, the development of Bertelsmann SE & Co. KGaA is outlined below. Bertelsmann SE & Co. KGaA is a parent company and a management holding company of the Bertelsmann Group. Its tasks include management functions for the Bertelsmann Group as well as the management of its investments and financing. There are also service functions for individual divisions within the Corporate Center. It also bears the tax liability for most of the subsidiaries in Germany. The position of Bertelsmann SE & Co. KGaA is essentially determined by the business success of the Bertelsmann Group.

The Annual Financial Statements of Bertelsmann SE & Co. KGaA, in contrast to the Consolidated Financial Statements, have not been prepared in accordance with the International Financial Reporting Standards (IFRS) but in accordance with the regulations of the German Commercial Code (HGB) and the supplementary regulations of the German Stock Corporation Act (AktG).

Results of Operations of Bertelsmann SE & Co. KGaA

Income from participations for Bertelsmann SE & Co. KGaA fell to €815 million in the reporting period (previous year: €899 million). The reduction is primarily attributable to the result of Reinhard Mohn GmbH, with which a profit and loss transfer agreement exists. In the financial year just ended, the result of Reinhard Mohn GmbH of €-146 million (previous year: €26 million) was characterized in particular by write-downs on share values of a subsidiary.

The increase in other operating income is mainly attributable to a write-up on shares in Bertelsmann Inc., Wilmington recognized in the amount of €143 million. The other operating expenses mainly consist of expenses for property rental and maintenance, consulting costs and risks from Group receivables, and were characterized by exchange rate losses in the reporting period. The financial result fell to €-203 million from €-130 million in the previous year. The deviation is primarily attributable to depreciation on financial assets, including a write-down of €74 million on shares in Prinovis GmbH and a write-down of €13 million on shares in Bertelsmann Portuguesa, SGPS, Lda, as well as to the interest income which has increased as a result of the bonds issued.

The profit from ordinary activities fell to €570 million (previous year: €577 million). After deduction of tax totaling €-32 million (previous year: €-69 million), the remaining net income came to €538 million (previous year: €422 million). The previous year was burdened by an extraordinary loss of €-86 million, resulting from a debt waiver in respect of the subsidiary Societa Holding Industriale di Grafica S.p.A., Bergamo. Taking into account the retained profits of €304 million carried forward from the previous year, and after the appropriation of €260 million to revenue reserves, net retained profits totaled €582 million (previous year: €484 million).

Income Statement of Bertelsmann SE & Co. KGaA in accordance with HGB (German Commercial Code)  

in € millions20152014
Results from investments815899
Other operating income364211
Personnel costs(159)(113)
Amortization of intangible assets and depreciation of property, plant and equipment(15)(13)
Other operating expenses(232)(277)
Financial result(203)(130)
Profit from ordinary activities570577
 
Extraordinary income(86)
Income taxes(32)(69)
Net income538422
 
Retained profits304272
Appropriations to revenue reserves from net income(260)(210)
Net retained profits582484

Net Assets and Financial Position of Bertelsmann SE & Co. KGaA

Tangible and intangible fixed assets increased slightly to €322 million (previous year: €319 million). The financial assets increased to €14,356 million (previous year: €13,337 million). The increase is attributable, among other things, to an increase of €472 million in the carrying amount of the participation in Bertelsmann Capital Holding GmbH as a result of payments made by Bertelsmann SE & Co. KGaA in connection with the profit and loss transfer agreement between Bertelsmann Capital Holding GmbH and RTL Group Deutschland GmbH. Furthermore, long-term securities of €472 million were acquired which are held and managed by Bertelsmann Pension Trust e. V. They are used to secure and fulfill pension obligations of Bertelsmann SE & Co. KGaA and selected subsidiaries. Receivables and other assets are comprised of, in particular, receivables from affiliated companies. The year-on-year increase in receivables from €2,696 million to €3,082 million primarily results from the performance of the loans to Reinhard Mohn GmbH, Bertelsmann Inc. and Bertelsmann UK Limited, London. With the share capital remaining unchanged from the previous year, equity totaled €9,052 million as of December 31, 2015 (previous year: €8,694 million). Provisions amounted to €398 million (previous year: €362 million). Financial debt increased as a result of the measures described in the “Financing Activities” section. Other liabilities essentially include liabilities to affiliated companies which have changed year on year, among other things as a result of the increase in a loan from CLT-UFA S.A., Luxembourg, in the amount of €146 million.

Balance Sheet of Bertelsmann SE & Co. KGaA in accordance with HGB (German Commercial Code) (Summary)  

in € millions12/31/201512/31/2014
Assets
Fixed assets
Tangible and intangible fixed assets322319
Long-term financial assets14,35613,337
 14,67813,656
Current assets
Receivables and other assets3,0822,696
Securities, cash500246
 3,5822,942
Deferred items1213
 18,27216,611
 
Equity and liabilities
Equity9,0528,694
 
Provisions398362
 
Financial debt4,2093,139
Other liabilities4,6134,416
Deferred income
18,27216,611

Risks and Opportunities for Bertelsmann SE & Co. KGaA

As Bertelsmann SE & Co. KGaA is largely linked to the Bertelsmann Group companies, among other things through the financing and guarantee commitments as well as through direct and indirect investments in the subsidiaries, the situation of Bertelsmann SE & Co. KGaA in terms of risks and opportunities is primarily dependent on the risks and opportunities of the Bertelsmann Group. In this respect, the statements made by corporate management concerning the overall assessment of the risks and opportunities also constitute a summary of the risks and opportunities of Bertelsmann SE & Co. KGaA (see the “Risks and Opportunities” section).

Outlook for Bertelsmann SE & Co. KGaA

As the parent company of the Bertelsmann Group, Bertelsmann SE & Co. KGaA receives dividend distributions from its subsidiaries as well as income from services provided to them. Consequently, the performance of Bertelsmann SE & Co. KGaA is primarily determined by the business performance of the Bertelsmann Group (see the “Outlook” section).

Dependent Company Report (Statement in accordance with Section 312 of Germany’s Stock Corporation Act, AktG)

The Executive Board of Bertelsmann Management SE, as general partner of Bertelsmann SE & Co. KGaA, has submitted a voluntary report to the Supervisory Board of Bertelsmann SE & Co. KGaA in accordance with sections 278 (3) and 312 (1) of Germany’s Stock Corporation Act, in which it outlines its relationships with affiliated companies for the financial year 2015. The Executive Board hereby declares that Bertelsmann SE & Co. KGaA received adequate consideration in return for each and every legal transaction under the circumstances known at the time that the transactions were undertaken.