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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 Group 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

Results from investments for Bertelsmann SE & Co. KGaA fell to €899 million in the reporting period (previous year: €2,168 million). The decline is primarily attributable to the result of Bertelsmann Capital Holding GmbH, which holds the shares in RTL Group. The profit of Bertelsmann Capital Holding, which was transferred in the last financial year, was €899 million (previous year: €2,429 million). The high figure for the previous year included the special dividends of RTL Group and a book profit from the placement of RTL Group shares.

The increase in other operating income is mainly thanks to book profits from the sale of securities as well as fixtures, furniture and office equipment. The other operating expenses mainly consist of valuation allowances on Group receivables, exchange-rate losses and expenses for property rental and maintenance. The year-on-year increase primarily stems from increased foreign exchange losses. The financial result increased to €-130 million from €-232 million in the previous year. The deviation was primarily attributable to lower interest expenses as a result of the repayment of financial debt with a comparatively high interest rate at the start of the reporting period. The previous year’s figure was also burdened by one-time expenses from the early repayment of financial debt.

The profit from ordinary activities fell by €1,179 million to €577 million (previous year: €1,756 million). The extraordinary income of €-86 million (previous year: €1 million) results from a debt waiver in respect of the subsidiary Societa Holding Industriale di Grafica S.p.A., Bergamo. After deduction of tax totaling €-69 million (previous year: €-49 million), the remaining net income came to €422 million (previous year: €1,708 million). Taking into account the retained profits of €272 million carried forward from the previous year and after the appropriation of €210 million to revenue reserves, net retained profits totaled €484 million (previous year: €1,190 million).

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

in € millions20142013
Results from investments8992,168
Other operating income211181
Personnel costs(113)(114)
Depreciation and amortization on intangible fixed assets and property, plant and equipment(13)(13)
Other operating expenses(277)(234)
Financial result(130)(232)
Result from ordinary activities5771,756
  
Extraordinary income(86)1
Income taxes(69)(49)
Net income4221,708
  
Retained profits272332
Appropriations to revenue reserves from net income(210)(850)
Net retained profits4841,190

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

Tangible and intangible fixed assets increased to €319 million (previous year: €292 million). The increase is attributable to the purchase of two company aircraft which are leased to Bertelsmann Aviation GmbH. Financial assets increased to €13,337 million (previous year: €12,747 million) following an increase of €326 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 and also due to a contribution of €234 million to Bertelsmann UK Limited, London. Receivables and other assets are comprised of, in particular, receivables from affiliated companies. The year-on-year increase is primarily attributable to the loans granted to RTL Group Deutschland GmbH, Cologne, totaling €536 million, to Bertelsmann, Inc., Wilmington, totaling €335 million and to Bertelsmann UK Limited, London, totaling €119 million.

With the share capital remaining unchanged from the previous year, equity totaled €8,694 million as of December 31, 2014 (previous year: €8,452 million). Provisions amounted to €363 million (previous year: €361 million). Financial debt was reduced as a result of the measures described in the “Financing Activities” section. Other liabilities essentially include liabilities to affiliated companies which have increased year on year, among other things as a result of the increase in a loan from Bertelsmann Capital Holding GmbH to €4,415 million (previous year: €3,894 million).

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

in € millions12/31/201412/31/2013
Assets
Fixed assets
Tangible and intangible fixed assets319292
Long-term financial assets13,33712,747
 13,65613,039
Current assets
Receivables and other assets2,6961,736
Securities, cash2461,425
 2,9423,161
Prepaid expenses1313
 16,61116,213
 
Equity and liabilities
Equity8,6948,452
 
Provisions363361
 
Financial debt3,1393,506
Other liabilities4,4153,894
Deferred income
16,61116,213

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 concerning the overall assessment of the risks and opportunities made by corporate management 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 financial year 2014. 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.