In addition to the Group reporting, the business 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).
As a result of the definition of revenues amended by the “Accounting Directive Implementation Act” (BilRUG), the format for the income statement and the reporting of particular types of expenses and income (including the previous year’s amounts shown) were adapted. Accordingly, the income from services that are atypical for the business (including leasing and rental) will be reported under revenues, and the expenses that are directly attributable to this income will be reported under cost of materials.
The results of operations of Bertelsmann SE & Co. KGaA will continue to be significantly affected by the amount of income from other participations. With an increase in income from other participations, the fall in the net income of €88 million is primarily attributable to the increase in taxes on income of €98 million as a result of a corporate income tax loss carryforward that was fully used up.
The decrease in other operating income by €96 million mainly results from a reduction in write-ups on shares in Bertelsmann Inc., Wilmington (2016: €53 million, previous year: €143 million).
The increase in the income from other participations in the reporting period is characterized in particular by the contrasting development of the net income of two key subsidiaries with which profit and loss transfer agreements exist. Income of €118 million was generated from the existing profit and loss transfer agreement with Reinhard Mohn GmbH, Gütersloh, in the financial year 2016. For the previous year, a loss of €146 million had to be assumed as a result of writedowns of investment carrying amount of a subsidiary of Reinhard Mohn GmbH, Gütersloh. The profits contributed by Bertelsmann Capital Holding GmbH, Gütersloh, declined year on year (2016: €691 million, previous year: €863 million).
|in € millions||2016||2015|
|Other operating income||179||275|
|Cost of materials||(25)||(21)|
|Amortization, depreciation and write-downs||(16)||(15)|
|Other operating expenses||(188)||(211)|
|Income from other participations||857||815|
|Write-downs of long-term financial assets||(59)||(91)|
|Taxes on income||(130)||(32)|
|Earnings after taxes||456||538|
|Income brought forward from previous year||402||304|
|Transfer to retained earnings from net income||(210)||(260)|
The increase in intangible and tangible assets to €359 million (previous year: €322 million) mainly resulted from the acquisition of land and buildings for leasing to subsidiaries. The increase in long-term financial assets of €358 million to €14,714 million primarily concerns the change in the carrying amount of shares in affiliated companies by €678 million in connection with the payment of contributions to subsidiaries. In the financial year 2016, the investment carrying amount of Bertelsmann Capital Holding GmbH, Gütersloh, increased by €422 million due to a payment made by Bertelsmann SE & Co. KGaA in connection with the profit and loss transfer agreement between Bertelsmann Capital Holding GmbH, Gütersloh, and RTL Group Deutschland GmbH, Cologne. The loans to affiliated companies fell by €500 million as a result of an intercompany disposal of a loan granted to RTL Group Deutschland GmbH, Cologne in the reporting period. The increase in receivables and other assets includes €1,031 million of receivables from affiliated companies. The increase primarily concerns the receivable from Reinhard Mohn GmbH, Gütersloh, in connection with the transfer of an intercompany financing function to a subsidiary of this company.
The equity of Bertelsmann SE & Co. KGaA increased to €9,322 million as a result of the net income of the reporting year by €450 million, less distributions to shareholders by €180 million. The increase in provisions to €484 million is mainly attributable to increased provisions for taxes. Of the liabilities, liabilities to affiliated companies account for €5,439 million, which increased by €923 million during the reporting period. The amount of the loan granted to subsidiaries of Bertelsmann SE & Co. KGaA is affected by the development of the business and financial position of these subsidiaries.
|in € millions||12/31/2016||12/31/2015|
|Intangible and tangible assets||359||322|
|Receivables and other assets||4,067||3,082|
|Securities, cash and cash equivalents||326||500|
|Shareholders’ equity and liabilities|
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).
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).
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 the German Stock Corporation Act, in which it outlines its relationships with affiliated companies for the financial year 2016. 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.