IFRS 8 Operating Segments requires that external segment reporting must be based on internal organizational and management structure and on management and reporting indicators used internally. At the beginning of the financial year 2016, the strategic growth segments of music and education and the fund activities previously reported under the Corporate Investments division were divided into the three independent divisions of BMG, Bertelsmann Education Group and Bertelsmann Investments. BMG is an international music company. The Bertelsmann Education Group division comprises the growth businesses and investments specializing in providing high-quality education services. Bertelsmann Investments comprises the funds Bertelsmann Digital Media Investments (BDMI), Bertelsmann Asia Investments (BAI), Bertelsmann Brazil Investments (BBI) and Bertelsmann India Investments (BII), investing in innovative, promising businesses. In addition, the division Bertelsmann Printing Group bundles the Group’s offset and gravure printing activities as of January 1, 2016. It comprises the businesses Mohn Media, GGP Media and Vogel Druck previously considered part of the Arvato division, the gravure activities of Prinovis in Germany and the United Kingdom previously operating under Be Printers, and the offset and digital printers of Be Printers in the United States. The new division also includes further businesses previously classified as part of the Arvato division, including the RTV Media Group, the lettershop services company Campaign and the storage media replication business Sonopress. Furthermore, Medienfabrik, a company that was previously allocated to the Arvato division until December 31, 2015, has been a part of Gruner + Jahr since January 1, 2016. As of January 1, 2016, the Bertelsmann Executive Board manages and monitors the three new divisions separately so that, since 2016, internal reporting and external segment reporting reflect eight operating reportable segments (RTL Group, Penguin Random House, Gruner + Jahr, BMG, Arvato, Bertelsmann Printing Group, Bertelsmann Education Group and Bertelsmann Investments). As a result of the realignment of the Bertelsmann Printing Group, this division experiences a shift in its revenue sources from revenue from products and merchandise to revenue from services since the financial year 2016. For comparability, the figures from the previous year in segment information and in note 1 “Revenues” were adjusted accordingly in this report.

Each of the eight segments is run by a segment manager who is responsible for results. This manager reports to the Executive Board of Bertelsmann Management SE in its role as the chief operating decision maker in accordance with IFRS 8. Corporate is mainly responsible for activities in the areas of accounting and reporting, taxes, legal, human resources, information technology, internal auditing, corporate communications and management, internal control and strategic development of the Group, financing, risk management and the optimization of the Group’s investment portfolio.

Intersegment eliminations are carried in the column “Consolidation“.

As in the past, specific segment information is defined according to the definitions on which Group management is based. As a rule, accounting and measurement in the segment reporting uses the same IFRS principles as in the Consolidated Financial Statements. Invested capital is calculated on the basis of the Group’s operating assets less non-interest-bearing operating liabilities. In addition, 66 percent of the net present value of the operating leases is considered in the calculation of invested capital. Intercompany revenues are recognized using the same arm’s length conditions applied to transactions with third parties.

Operating EBITDA serves as a key performance indicator for a sustainable determination of operating result. Assessment of the operating segments’ performance is based on this performance indicator as well. Operating EBITDA represents the operating earnings generated by the respective segment management before interest and income taxes, and depreciation, amortization and impairment, and it is adjusted for special items. Elimination of these special items allows the determination of a normalized performance indicator, thus simplifying forecasting and comparability. Segment depreciation and amortization include the depreciation of property, plant and equipment and the amortization of intangible assets as set out in notes 10 “Intangible Assets” and 11 “Property, Plant and Equipment”. The business development of Bertelsmann Investments is determined primarily on the basis of EBIT. Due to misstatements in previous years at one entity in the RTL Group division, an additional charge was recognized to EBITDA in the amount of €11 million. This effect had no impact on the cash flow from operating activities. The figures from the previous year’s Consolidated Financial Statements were not adjusted for reasons of immateriality at the Group level.

Each segment shows the investments accounted for using the equity method and their results, provided these companies can be clearly allocated to the segment concerned. Results from investments accounted for using the equity method are shown before impairment. In addition to the segment breakdown, revenues are broken down by customer location and revenue source. Non-current assets are also stated according to the location of the respective company.

Tabular information on the segment information is presented on „Segment Information (Continuing Operations)“.

The following table shows the reconciliation of segment information to the Consolidated Financial Statements:

Reconciliation of Segment Information to the Consolidated Financial Statements  

in € millions20162015
Operating EBITDA from continuing operations2,5682,485
Amortization/depreciation, impairment losses and reversals of intangible assets and property, plant and
Adjustments on amortization/depreciation, impairment losses and reversals of intangible assets andproperty, plant and
equipment included in special items
Special items139191
EBIT from continuing operations1,7991,681
Financial result(244)(230)
Earnings before taxes from continuing operations1,5551,451
Income tax expense(419)(346)
Earnings after taxes from continuing operations1,1361,105
Earnings after taxes from discontinued operations13
Group profit or loss1,1371,108