Condensed Interim Consolidated
Financial Statements

Consolidated Income Statement

in € millionsH1 2021H1 2020
Revenues8,6917,848
Other operating income382179
Cost of materials(2,688)(2,372)
Royalty and license fees(672)(754)
Personnel costs(2,881)2,660)
Amortization/depreciation, impairment and reversals on intangible assets, property, plant and
equipment and right-of-use assets
(424)(438)
Other operating expenses(1,307)(1,300)
Results from investments accounted for using the equity method3426
Impairment and reversals on investments accounted for using the equity method-(65)
Results from disposals of investments794341
EBIT (earnings before interest and taxes)1,929805
 
Interest income76
Interest expenses(73)(73)
Other financial income35
Other financial expenses(92)(122)
Financial result(155)(184)
 
Earnings before taxes1,774621
Income tax expense(406)(133)
 
Group profit or loss1,368488
 
attributable to:
Bertelsmann shareholders1,052386
Non-controlling interests316102

Consolidated Statement of Comprehensive Income

in € millionsH1 2021H1 2020
Group profit or loss1,368488
 
Items that will not be reclassified subsequently to profit or loss
Remeasurement component of defined benefit plans25120
Changes in fair value of equity instruments1(1)
Share of other comprehensive income of investments accounted for using the equity method
 
Items that will be reclassified subsequently to profit or loss when specific conditions are met
Exchange differences
– changes recognized in other comprehensive income157(100)
– reclassification adjustments to profit or loss(12) (9)
Cash flow hedges
– changes in fair value recognized in other comprehensive income(17)4
– reclassification adjustments to profit or loss25(3)
Share of other comprehensive income of investments accounted for using the equity method21
 
Other comprehensive income net of tax407(88)
 
Group total comprehensive income1,775400
 
attributable to:
Bertelsmann shareholders1,450306
Non-controlling interests32594

Consolidated Balance Sheet

in € millions6/30/202112/31/2020
Assets
Non-current assets
Goodwill7,9327,868
Other intangible assets2,3622,308
Property, plant and equipment and right-of-use assets2,7052,717
Investments accounted for using the equity method836820
Minority stakes and other financial assets1,2821,196
Trade and other receivables9469
Other non-financial assets984881
Deferred tax assets9741,124
17,16916,983
Current assets
Inventories1,7761,658
Trade and other receivables4,1334,570
Other financial assets620178
Other non-financial assets1,076992
Current income tax receivables10356
Cash and cash equivalents3,6754,571
11,38312,025
Assets held for sale173696
28,72529,704
 
Equity and liabilities
Equity
Subscribed capital1,0001,000
Capital reserve2,3452,345
Retained earnings7,0225,751
Bertelsmann shareholders’ equity10,3679,096
Non-controlling interests1,7081,629
12,07510,725
Non-current liabilities
Provisions for pensions and similar obligations1,4602,009
Other provisions125136
Deferred tax liabilities12293
Profit participation capital413413
Financial debt5,3865,911
Lease liabilities1,0371,098
Trade and other payables298246
Other non-financial liabilities397401
9,23810,307
Current liabilities
Other provisions320352
Financial debt156715
Lease liabilities280257
Trade and other payables4,4774,833
Other non-financial liabilities1,8871,926
Current income tax payables177216
7,2978,299
Liabilities related to assets held for sale115373
28,72529,704

Consolidated Cash Flow Statement

in € millionsH1 2021H1 2020
Group earnings before interest and taxes1,929805
Taxes received/paid(407)35
Depreciation and write-ups of non-current assets429504
Results from disposals of investments(794)(341)
Gains/losses from disposals of non-current assets(2)(1)
Change in provisions for pensions and similar obligations(239)48
Change in other provisions(39)3
Change in net working capital(435) 139
Fair value measurement of investments(197) (60)
Other effects(7) 6
Cash flow from operating activities2381,138
Investments in:
– intangible assets(166)(174)
– property, plant and equipment(140)(139)
– financial assets(143) (79)
– purchase prices for consolidated investments (net of acquired cash)(124) (10)
Disposals of subsidiaries and other business units68027
Disposals of other fixed assets468146
Cash flow from investing activities575(229)
Issues of bonds and promissory notes-1,834
Redemption of bonds and promissory notes(1,026)-
Proceeds from/redemption of other financial debt(49)1,279
Redemption of lease liabilities(136) (124)
Interest paid(169)(111)
Interest received916
Dividends to Bertelsmann shareholders(180)-
Dividends to non-controlling interests and payments to partners in partnerships (IAS 32.18(b))(225)(7)
Change in equity(32)(677)
Other effects(23)9
Cash flow from financing activities(1,831)2,219
Change in cash and cash equivalents(1,018) 3,128
Exchange rate effects and other changes in cash and cash equivalents582
Cash and cash equivalents 1/14,6431,643
Cash and cash equivalents 6/303,6834,773
Less cash and cash equivalents included within assets held for sale(8)-
Cash and cash equivalents 6/30 (according to the consolidated balance sheet)3,6754,773

Changes in Net Liabilities Arising from Financing Activities

in € millionsH1 2021H1 2020
Net liabilities arising from financing activities at 1/1(3,410) (4,756)
Cash flow from operating activities2381,138
Cash flow from investing activities575(229)
Interest, dividends and changes in equity, additional payments (IAS 32.18(b))(597)(779)
Exchange rate effects and other changes in net liabilities arising from financing activities10(101)
Net liabilities arising from financing activities at 6/30(3,184)(4,727)

Consolidated Statement of Changes in Equity

in € millions Sub-
scribed
capital
Capital
reserve1)
Retained earnings Bertels-
mann
share-
holders’
equity
Non-
con-
trolling interests
Total
Other
retained
earnings
Accumulated other comprehensive income2)
Exchange
differ-
ences
Fair value
reserve
Cash flow
hedges
Share of
other com-
prehensive
income of
investments
accounted
for using
the equity
method
Balance as of 1/1/2020 1,000 2,345 5,496 3 8 1 1 8,854 1,591 10,445
Group profit or loss 386 386 102 488
Other comprehensive income 20 (101) (1) 1 1 (80) (8) (88)
Group total comprehensive
income
406 (101) (1) 1 1 306 94 400
Dividend distributions - (2) (2)
Changes in ownership
interests in subsidiaries
that do not result in a loss
of control3)
(429) (8) (437) (235) 672)
Equity transactions with
shareholders
(429) (8) (437) (237) 674)
Other changes - - - (1) (1)
Balance as of 6/30/2020 1,000 2,345 5,473 (106) 7 2 2 8,723 1,447 10,170
 
Balance as of 1/1/2021 1,000 2,345 6,086 (331) 9 (11) (2) 9,096 1,629 10,725
Group profit or loss 1,052 1,052 316 1,368
Other comprehensive
income
245 143 1 7 2 398 9 407
Group total comprehensive income 1,297 143 1 7 2 1,450 325 1,775
Dividend distributions (180) - - - - (180) (217) (397)
Changes in ownership interests in subsidiaries that do not result in a loss of control (3) - (3) (40) (43)
Equity transactions with
shareholders
(183) - (183) (257) (440)
Other changes 4 4 11 15
Balance as of 6/30/2020 1,000 2,345 7,200 (188) 10 - - 10,367 1,708 12,075

Segment Information

RTL GroupPenguin
Random House
Gruner + JahrBMGArvatoBertelsmann
Printing Group
Bertelsmann
Education Group
Bertelsmann
Investments2)
Total
divisions
CorporateConsolidationGroup total
in € millionsH1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020H1 2021H1 2020
Revenues from external customers2,9642,6171,8031,6275325082952802,4022,064552584136158348,6877,842468,6917,848
Intersegment revenues5035116161234317266-11741511716(191)(167)
Divisional revenues3,0142,6521,8041,6275485242962822,4362,095624650136158358,8617,9932122(191)(167)8,6917,848
 
Operating EBITDA5833673242095728504940030526194440(6)(3)1,4781,014(61)(16)-(4)1,417994
 
EBITDA margin1)19.4%13.8%18.0%12.8%10.4%5.4%16.9%17.3%16.4%14.6%4.1%2.9%32.1%24.9%(191.0)%(71.0)%16.7%12.7%n/an/an/an/a16.3%12.7%
 
Impairment (-)/reversals (+) on intangible
assets, property, plant and equipment
and right-of-use assets
12--(2)(7)-(6)-(6)-
 
Results from investments accounted for
using the equity method
14132(1)6-458103427-(1)3426
Impairment (-)/reversals (+) on investments accounted for using the equity method-(65)---------------(65)-----(65)


Reconciliation to Operating EBITDA

in € millionsH1 2021H1 2020
EBIT1,929805
Special items
– adjustment to carrying amounts on assets held for sale4-
– Impairment (+)/reversals (-) on other financial assets at amortized cost11
– Impairment (+)/reversals (-) on investments accounted for using the equity method-65
– results from disposals of investments(794)(341)
– fair value measurement of investments(197)(60)
– restructuring and other special items5988
Amortization/depreciation, impairment and reversals on intangible assets, property, plant and
equipment and right-of-use assets
424438
Adjustments on amortization/depreciation, impairment and reversals on intangible assets, property,
plant and equipment and right-of-use assets included in special items
(9)(2)
Operating EBITDA1,417994

Selected Explanatory Notes

Accounting Principles

The Bertelsmann SE & Co. KGaA Interim Report has been prepared according to Section 115 of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and has been subject to a limited review by the Group’s auditor. It complies with International Financial Reporting Standards (IFRS) and the related interpretations (IFRIC) of the IFRS Interpretations Committee (IFRS IC) applicable in the European Union (EU-IFRS) and contains Condensed Interim Consolidated Financial Statements prepared in accordance with IAS 34 Interim Financial Reporting, including selected explanatory notes. The Condensed Interim Consolidated Financial Statements do not include all the information required for full Consolidated Financial Statements and should be read in conjunction with the Bertelsmann Consolidated Financial Statements as of December 31, 2020. The Condensed Interim Consolidated Financial Statements were prepared – with the exception of the financial reporting standards and interpretations applied for the first time in the current financial year – using fundamentally the same accounting and measurement policies as in the Consolidated Financial Statements of December 31, 2020. A detailed description of these policies is presented in the notes to the Consolidated Financial Statements in the 2020 Annual Report. The first-time application of new financial reporting standards had no material impact on the Bertelsmann Group. The Bertelsmann Group has not opted for early adoption of any standards, interpretations or amendments that have been issued but are not yet effective. Likewise, the expected impact from the issued financial reporting requirements that are not yet effective is not material to the Bertelsmann Group.

Effects of Coronavirus Pandemic on the Condensed Interim Consolidated Financial Statements

The operating and accounting effects resulting from the coronavirus pandemic on the Condensed Interim Consolidated Financial Statements of Bertelsmann SE & Co. KGaA no longer show a strong impact in the Media, Services, Education and Investments divisions. As shown by the first six months of 2021, the broad positioning of the Bertelsmann Group continues to contribute to positive business performance. Revenue and profit levels are higher than the pre-pandemic levels achieved in the first half of 2019 and significantly higher than in the same period last year.

As the coronavirus pandemic continues, balance sheet effects are still being evaluated for the particularly relevant issues. These issues are the impairment of goodwill and individual assets, leasing, royalties, program rights, inventories, trade receivables, government grants, deferred tax assets, losses from onerous contracts and revenues. As the economic situation in 2021 appears to be significantly more stable overall and is expected to remain so, and due to a continuing recovery of the relevant markets, there was no requirement to recognize an impairment loss on goodwill, even in light of the ongoing coronavirus pandemic. Furthermore, no material negative effects are anticipated on the assets, liabilities and financial performance of the Bertelsmann Group in any of the other accounting areas deemed to be vulnerable to the coronavirus pandemic.

Economic uncertainties arising from the coronavirus pandemic continue to require extended discretionary judgments, estimates and assumptions. The assessment of the extent to which current and future customers will be able to fulfill their payment obligations resulting from customer contracts in the future is still subject to uncertainties in the current macroeconomic situation; therefore, Bertelsmann focuses on examining this criterion before and at the time of satisfying performance obligations as part of revenue recognition. In addition, the estimation of the variable consideration based on capacity utilization and the determination of transaction prices are subject to uncertainty.

Scope of Consolidation

The Condensed Interim Consolidated Financial Statements as of June 30, 2021, include Bertelsmann SE & Co. KGaA and all material subsidiaries over which Bertelsmann SE & Co. KGaA is able to exercise control in accordance with IFRS 10. Joint ventures and associates are accounted for using the equity method in accordance with IAS 28. As of June 30, 2021, the scope of consolidation including Bertelsmann SE & Co. KGaA consists of 873 (December 31, 2020: 894) companies with 12 additions and 33 disposals in the first half of 2021. This includes 816 (December 31, 2020: 830) consolidated companies. In addition, investments in 17 (December  31, 2020: 21) joint ventures and 40 (December 31, 2020: 43) associates are accounted for using the equity method in the Consolidated Financial Statements. A total of 167 (December  31, 2020: 170) companies were excluded from the scope of consolidation. These consist of the associates in the portfolio of the Bertelsmann Investments division and entities without significant business operations and of negligible importance for the financial position and financial performance of the Bertelsmann Group.

Acquisitions and Disposals

The Bertelsmann Group made several acquisitions in the first half of 2021, none of which was material on a stand-alone basis. In total, the impact of these acquisitions on the Group’s financial position and financial performance was also minor. The cash flow from acquisition activities totaled €-124 million, of which €7 million related to new acquisitions during the first half of the year less cash and cash equivalents acquired, €-7 million to payments in connection with acquisitions made in previous years, and €-124 million to an advance payment on the acquisition of the remaining 50 percent of the shares in Super RTL (further details are presented in the section “Other Information”).

The consideration transferred in accordance with IFRS 3 amounted to €29 million. In addition, put options in the amount of €38 million were accounted for in relation to the acquisitions made by the RTL Group division. The other acquisitions resulted in goodwill totaling €36 million, which reflects synergy potential. The goodwill is not tax deductible and relates mainly to the RTL Group division. Transaction-related costs were immaterial in the first half of 2021 and have been recognized in profit or loss.

The purchase price allocations consider all the facts and circumstances prevailing as of the respective dates of acquisition that were known prior to preparation of the Consolidated Financial Statements. In accordance with IFRS 3, should further facts and circumstances become known within the 12-month measurement period, the purchase price allocation will be adjusted accordingly.

The following table shows the fair values of the assets and liabilities of the acquisitions on their dates of initial consolidation based on the currently still preliminary purchase price allocations:

Effects of Acquisitions

in € millionsTotal
Non-current assets
Other intangible assets25
Property, plant and equipment and right-of-use assets3
Current assets 
Inventories37
Trade and other receivables8
Cash and cash equivalents15
  
Liabilities 
Financial debt-6
Lease liabilities-1
Other financial and non-financial liabilities-56
  
Net assets acquired25
  
Goodwill36
Non-controlling interests-11
Fair value of pre-existing interests-21
  
Consideration transferred according to IFRS 329
  
Less fair value of contributed assets-21
Consideration paid in cash8
  
Cash and cash equivalents acquired-15
Cash outflow from acquisitions in accordance with IFRS 3-7
  
Payments on prior year’s acquisitions7
Advance payment on acquisition of shares in Super RTL124
Total cash flow from acquisition activities124

Since initial consolidation, all new acquisitions in accordance with IFRS 3 in the first half of 2021 have contributed €23 million to revenue and €2 million to Group profit or loss.

If consolidated as of January 1, 2021, these would have contributed €57 million to revenue and €4 million to Group profit or loss.

In April 2021, RTL Group sold its interests held in its subsidiary SpotX to the US ad-tech company Magnite for €965 million. The purchase price was settled by the transfer of 12.4 million shares of Magnite stock, for a total of €380 million after considering the lock-up adjustment measured at fair value through profit or loss (level 3), and a cash payment of €585 million after considering closing adjustments in accordance with the sales and purchase agreement. Net of disposed net assets and transactionrelated costs, the transactions resulted in an overall gain of €745 million recognized in the item “Results from disposals of investments.”

In May 2021, Gruner + Jahr sold its interests held in Prisma Media for €169 million. Net of transaction-related costs, the sale resulted in a gain of €49 million recognized in the item “Results from disposals of investments.”

After considering the cash and cash equivalents disposed of, the Bertelsmann Group recorded cash flows in the amount of €680 million from all disposals in the first half of 2021. The disposals led to a gain from deconsolidation of €797 million, which is recognized in the item “Results from disposals of investments.” The following table shows their impact on the Bertelsmann Group’s assets and liabilities at the time of deconsolidation:

Effects of Disposals

in € millionsSpotXPrisma MediaOtherTotal
Non-current assets    
Goodwill1091295124
Other intangible assets221941
Property, plant and equipment and right-of-use assets103545
Other non-current assets167
Current assets    
nventories99
Other current assets170671238
Cash and cash equivalents68977
     
Liabilities    
Provisions for pensions and similar obligations1515
Provisions for pensions and similar obligations42933
Other financial and non-financial liabilities1741081283

Assets Held for Sale and Liabilities Related to Assets Held for Sale

The carrying amounts of the assets classified as held for sale and related liabilities are presented in the following table:

Assets Held for Sale and Related Liabilities

in € millionsBalance as of 6/30/2021Balance as of 12/31/2020
Assets
Non-current assets
Goodwill32237
Other intangible assets233
Property, plant and equipment and right-of-use assets3743
Investments accounted for using the equity method2
Other non-current assets1
Deferred tax assets65
Current assets 
Inventories319
Trade and other receivables54286
Other current assets78
Cash and cash equivalents872
 
Impairment on assets held for sale-4
   
Assets held for sale173696
  
Equity and liabilities 
Non-current liabilities 
Provisions for pensions and similar obligations2214
Deferred tax liabilities3
Lease liabilities2527
Lease liabilities21
Current liabilities 
Other provisions6
Lease liabilities410
Trade and other payables41254
Other current liabilities2158
 
Liabilities related to assets held for sale115373

As of June 30, 2021, the carrying amounts of the assets classified as held for sale and related liabilities are almost completely attributable to the RTL Group division. In June 2021, RTL Group announced that it had signed a definitive agreement for the sale of RTL Belgium. The transaction – with an expected consideration of €215 million and after a dividend distribution of €35 million – is subject to regulatory approvals and is expected to close in the fourth quarter of 2021. An immaterial portion of the carrying amounts of the assets classified as held for sale and related liabilities is attributable to the Majorel Stralsund disposal group within the Arvato division as of June 30, 2021.

An impairment of €4 million was recognized in the first half of 2021 for the Majorel Stralsund disposal group, which was measured at fair value less costs to sell. The fair values are based on level 3 of the hierarchy of non-recurring fair values. Valuations for level 3 are based on information from contract negotiations

Currency Translation

The following euro exchange rates were used for currency translation purposes for the most significant foreign currencies for the Bertelsmann Group:

  Average ratesClosing rates
Foreign currency unit per €1 H1 2021H1 20206/30/202112/31/20206/30/2020
Australian dollarAUD1.56261.67461.58531.58961.6344
Canadian dollarCAD1.50311.50361.47221.56331.5324
Chinese renminbiCNY7.79727.75007.67428.02257.9219
British poundGBP0.86790.87400.85810.89900.9124
US dollarUSD1.20531.10201.18841.22711.1198

Additional Disclosures on Revenues

In the first half of 2021, Group revenues of €8,533 million were generated from contracts with customers in accordance with IFRS 15 (H1 2020: €7,713 million). The other revenues amounting to €158 million (H1 2020: €135 million) not in the scope of IFRS 15 resulted almost entirely from financial services in the Arvato division. The following table shows the revenues from contracts with customers in accordance with IFRS 15 by division and broken down by revenue source, geographical area and timing of revenue recognition. The categorization of revenue sources and geographical areas shown corresponds to that used in segment reporting. By contrast, the revenues reported reflect exclusively the revenues in accordance with IFRS 15 and consequently differ in amount from the breakdown of revenues in segment reporting.

Revenue from Contracts with Customers

H1 2021

in € millionsRTL GroupPenguin
Random
House
Gruner +
Jahr
BMGArvatoBertels-
mann
Printing
Group
Bertels-
mann
Education
Group
Total
divisions1)
Revenue Sources
Own products and merchandise231,7252142430112,027
Services151521582,2145311363,242
Advertising1,611151101,772
Rights and licenses1,1792692711,485
2,9641,8035322952,2445521368,526
 
Geographical Areas
Germany9061143351980934712,531
France6383991121724992
United Kingdom102183204517745-572
Other European countries7181544034670641,680
United States5151,07611160179671312,139
Other countries85273272619254612
 2,9641,8035322952,2445521368,526
 
Timing
Point in time9411,7503076564203,114
Over time2,023532252302,2135321365,412
2,9641,8035322952,2445521368,526

H1 2020

in € millionsRTL GroupPenguin
Random
House
Gruner +
Jahr
BMGArvatoBertels-
mann
Printing
Group
Bertels-
mann
Education
Group
Total
divisions1)
Revenue Sources        
Own products and merchandise521,561243153791,917
Services164441171,8925651582,940
Advertising1,343141101,494
Rights and licenses1,0582272651,352
2,6171,6275082801,9295841587,703
 
Geographical Areas
Germany7911143473975637912,427
France54121031719922884
United Kingdom103182133397571486
Other European countries6081272929555721,420
United States5199907139143491532,000
Other countries5521292317953486
 2,6171,6275082801,9295841587,703
 
Timing
Point in time8961,582337606422-2,961
Over time1,721451712201,8655621584,742
2,6171,6275082801,9295841587,703

Additional Disclosures on Financial Instruments

The principles and methods used for the fair value measurement remain unchanged compared to those used in the previous year. Only disclosures on financial instruments that are significant to an understanding of the changes in financial position and financial performance since the end of the last annual reporting period are explained below. These explanations relate in particular to the disclosure of financial instruments measured at fair value depending on the different levels of the fair value hierarchy. The reconciliation of the carrying amounts of the financial instruments to the measurement categories is not disclosed, as the composition of the financial instruments has not changed significantly compared with December 31, 2020. In addition, no fair values are disclosed for financial instruments not measured at fair value whose carrying amount is a reasonable approximation of fair value.

The following hierarchy is used to determine the fair value of financial instruments.

Level 1:
The fair value of the listed financial instruments is determined on the basis of stock exchange listings at the end of the reporting period.

Level 2:
For measuring the fair value of unlisted derivatives, Bertelsmann uses various financial methods reflecting the prevailing market conditions and risks at the respective balance sheet dates. Irrespective of the type of financial instrument, future cash flows are discounted at the end of the reporting period based on the respective market interest rates and yield curves at the end of the reporting period. The fair value of forward exchange transactions is calculated using the average spot prices at the end of the reporting period and taking into account forward markdowns and markups for the remaining term of the transactions. The fair value of interest rate derivatives is calculated on the basis of the respective market rates and yield curves at the end of the reporting period. The fair value of forward commodity transactions is derived from the stock exchange listings published at the end of the reporting period. Any mismatches to the standardized stock exchange contracts are reflected through interpolation or additions.

Level 3:
If no observable market data is available, fair value measurement is based primarily on cash flow-based valuation techniques. As a rule, so-called qualified financing rounds are used for minority stakes in the Bertelsmann Investments division. Listed financial instruments with contractual lockups are also based on level 3.

The measurement of financial assets and financial liabilities according to level 2 and level 3 requires management to make certain assumptions about the model inputs, including cash flows, discount rate and credit risk, as well as the life and development cycle of start-up investments.

The measurement category “fair value through profit or loss” mainly includes the minority stakes in start-ups and fund investments purchased by the Bertelsmann Investments division, and shares of Magnite stock from the disposal of SpotX. The fair value of its listed investments is measured on the basis of their market values and the fair value of its unlisted investments, if possible, on the basis of observable prices obtained as part of the most recently implemented qualified financing rounds which meet the minimum requirements for volume and participants, taking into account life and development cycles of the entity. The item also includes so-called fund-of-fund investments, which are also measured at fair value through profit or loss. The measurement of their fair values is based on the valuations of the external management as presented in regular reporting and taking into account a fungibility discount. The gains and losses resulting from changes in the fair value are recognized as other operating income in the item “Fair value measurement of investments.”

The market value of the 2001 profit participation certificates with a closing rate of 347.20 percent on the last day of trading in the first half of 2021 on the Frankfurt Stock Exchange was €987 million (December 31, 2020: €908 million with a rate of 319.51 percent) and, correspondingly, €31 million for the 1992 profit participation certificates with a rate of 184.12 percent (December 31, 2020: €31 million with a rate of 180.00 percent). The market values are based on level 1 of the fair value hierarchy.

In January 2021, Bertelsmann terminated a floating-rate promissory note of €100 million due in April 2023. The promissory note was repaid ahead of schedule in April 2021. In addition, a €500 million bond due in May 2021 was terminated early in March 2021. Repayment took place in April 2021, one month before the original maturity date.

In addition, early repayments of parts of the bonds due in August 2022, October 2024 and September 2025 totaling a nominal €428 million were made in May 2021 as part of a public repurchase offer.

In June 2021, the revolving syndicated credit facility was extended for a further year, until 2026.

On June 30, 2021, the cumulative market value of the listed bonds totaled €5,158 million (December 31, 2020: €6,146 million) with a nominal volume of €4,822 million (December 31, 2020: €5,750 million) and a carrying amount of €4,796 million (December 31, 2020: €5,719 million). The stock market prices are based on level 1 of the fair value hierarchy. On June 30, 2021, the total carrying amount of the private placements and promissory notes totaled €573 million (December 31, 2020: €673 million), and the total market value amounted to €638 million (December 31, 2020: €753 million). The fair values of private placements and promissory notes are determined using actuarial methods based on yield curves adjusted for the Group’s credit margin. This credit margin results from the market price for credit default swaps at the end of the respective reporting periods. Fair value is measured on the basis of discount rates ranging from -0.50 percent to 0.78 percent. The fair values of the private placements and promissory notes are based on level 2 of the fair value hierarchy.

Financial Assets Measured at Fair Value Categorized Using the Fair Value Measurement Hierarchy

in € millionsLevel 1:
Quoted prices
in active
markets
Level 2:
Observable
market
data
Level 3:
Unobservable
market
data
Balance as of 6/30/2021
Financial assets recognized at fair value158101,6531,821
Primary and derivative financial assets held for trading3737
Derivatives with hedge relation1313
158601,6531,871


Financial Assets Measured at Fair Value Based on Level 3

in € millionsFinancial
assets
recognized
at fair value
Primary and
derivative
financial assets
held for trading
Total
Balance as of 1/1/20211,0671,067
Total gain (+) or loss (-)196196
– in profit or loss186186
– in other comprehensive income1010
Purchases525525
Sales/settlements(134)(134)
Transfers out of/into level 3(1)(1)
Balance as of 6/30/20211,6531,653
Gain (+) or loss (-) for assets still held at the end of the reporting period162162

The purchases relate in the amount of €380 million to the Magnite shares RTL Group received as a part of the noncash consideration from the sale of SpotX. The effect from remeasurement of these shares amounted to €-33 million and is disclosed in the item “in profit or loss.” Additionally, the item “Purchases” includes various new and follow-on investments by the Bertelsmann Investments division, none of which was material on a stand-alone basis.


Financial Liabilities Measured at Fair Value Categorized Using the Fair Value Measurement Hierarchy

in € millionsLevel 1:
Quoted prices
in active
markets
Level 2:
Observable
market
data
Level 3:
Unobservable
market
data
Balance as of
6/30/2021
Financial liabilities recognized at fair value through profit or loss1414
Primary and derivative financial liabilities held for trading3333
Derivatives with hedge relation3232
651479

Financial Liabilities Measured at Fair Value Based on Level 3

in € millionsFinancial
liabilities rec-
ognized at fair
value through
profit or loss
Total
Balance as of 1/1/20211717
Total gain (-) or loss (+)11
– in profit or loss
– in other comprehensive income
Purchases11
Settlements(5)(5)
Transfers out of/into level 3
Balance as of 6/30/20211414
Gain (-) or loss (+) for liabilities still held at the end of the reporting period

The effective portion of changes in the fair value of cash flow hedges is recognized in accumulated other comprehensive income until the effects of the hedged underlying transaction affect profit or loss, or until a basis adjustment occurs.

The amount of €33 million relating to cash flow hedges (H1 2020: €-3 million) was reclassified from accumulated other comprehensive income to the income statement. These are amounts before tax.

Income Taxes

The tax expense for the first half of 2021 was calculated in accordance with IAS 34 using the average annual tax rate expected for the whole of 2021, in relation to taxable earnings before taxes, which is calculated at 30.7 percent (H1 2020: 32.6 percent), according to Bertelsmann management’s current estimation. In addition, special effects were included in earnings before taxes and in current and deferred taxes, resulting in a different tax rate in the income statement. The tax expense for the first half of 2021 was higher than in the same period of the previous year, in particular due to transactions.

Other Information

The Bertelsmann Group’s core business is subject to significant seasonal fluctuations and in the current financial year may also be impacted by the consequences of the coronavirus pandemic due to its macroeconomic effects and related uncertainty (further explanations are presented in the section “Effects of the Coronavirus Pandemic on Condensed Interim Consolidated Financial Statements”). In a financial year unaffected by influences such as the coronavirus pandemic, higher revenues and a higher operating result tend to be expected in the second half of the year compared to the first half of the year. These higher revenues are due to increasing demand during the year-end holiday season, in particular in advertising-driven businesses and in the publishing business, as well as to the customary seasonality in the music business. This seasonality for revenue in 2021 may differ from prior years given the global economic development and current economic uncertainty.

As of June 30, 2021, total assets amounted to €28.7 billion (December 31, 2020: €29.7 billion). Pension provisions decreased to €1.5 billion (December 31, 2020: €2.0 billion). In addition to a higher discount rate, the main reason for the decrease is a voluntary addition of €200 million to the plan assets managed in trust by Bertelsmann Pension Trust e. V.

Due to a triggering event, impairment tests were conducted for selected cash-generating units as of June 30, 2021. On account of the coronavirus pandemic, the assumptions for impairment testing overall continue to be subject to increased uncertainty and extended discretionary judgment in the context of cash flow forecasts.

Fremantle continued to recover in the first half of 2021, despite the ongoing impact of the coronavirus pandemic. Driven by the high overall market demand for content from a diversified set of potential clients (including broadcasters, platforms and streaming services) and Fremantle’s well-diversified territorial coverage (Fremantle’s network of local production and distribution companies operates in over 30 territories around the world), the exposure of Fremantle towards potentially long-lasting recessions of specific economies is limited. The streaming platforms are expected to continue to increase their content spend. Further initiatives to develop new formats, to expand Fremantle’s slate of scripted, entertainment and factual productions, and to further diversify Fremantle’s global footprint support the continued growth of the business. Based on a Discounted Cash Flow (DCF) model with revised budget assumptions, a discount rate of 8.15 percent (December 31, 2020: 8.21 percent), a long-term growth rate of 1.80 percent (December 31, 2020: 1.80 percent) and with a perpetual EBITA margin of 8 percent (December 31, 2020: 8 percent), the headroom at the level of Fremantle has increased to €306 million (December 31, 2020: €213 million).

Despite the recovery of the share price of Atresmedia, and the indicated increase of TV advertising spend for the upcoming months, the ongoing challenging economic environment in Spain due to the coronavirus pandemic combined with strong competition, changing viewing preferences and continued dependence on linear television still leads to high uncertainty in terms of forecasts. As of June 30, 2021, neither an additional impairment loss nor a reversal of impairment loss had to be recognized on the investment in Atresmedia accounted for using the equity method.

In March 2021, RTL Deutschland announced that it had signed an agreement for the acquisition of the remaining 50 percent of the shares in Super RTL (RTL Disney Fernsehen  GmbH & Co. KG) from The Walt Disney Company (Buena Vista  International Television Investments, Inc). The transaction will be accounted for as a business combination in accordance with IFRS 3. As of June 30, 2021, the purchase price payment of €124 million was already paid and is included in the cash flow statement under the item “purchase prices for consolidated investments (net of acquired cash)” in the cash flow from investing activities. In accordance with IFRS 3, the acquisition date is assumed to be July 1, 2021. At the time the Condensed Interim Consolidated Financial Statements were prepared, the purchase price allocation was at a very preliminary stage. In particular, the valuations have not yet been finalized. As a result, the fair values of identifiable assets, especially intangible assets, and liabilities acquired have only been determined provisionally and have not been recognized accordingly. The accounting for the acquisition is expected to be finalized at the end of the year, based on facts and circumstances existing at the date control was assumed.

In June 2021, Bertelsmann announced the acquisition of 25 percent of the capital shares and 46 percent of the voting rights in Afya, a leading provider of medical education and training in Brazil. By acquiring the Afya shares from Crescera Educacional II, a fund launched by Crescera  Capital in 2014 with Bertelsmann as one of the lead investors, Bertelsmann expands its involvement in Brazil’s rapidly growing education market. As of June 30, 2021, the transaction was subject to the approval of regulatory authorities. Following the granting of this approval, the transaction was closed in August 2021. Going forward, the investment in Afya will be accounted for using the equity method.

For further portfolio changes, including the merger between RTL Deutschland and Gruner + Jahr, and the planned mergers of RTL Nederland and Talpa Network in the Netherlands and of Groupe TF1 and Groupe M6 in France, please refer to the explanations in the Group Interim Management Report.

Notes on Segment Reporting

Segment reporting continues to reflect eight operating reportable segments (RTL Group, Penguin Random House, Gruner + Jahr, BMG, Arvato, Bertelsmann Printing Group, Bertelsmann Education Group and Bertelsmann Investments). For segment reporting, intercompany leases are presented as operating leases with income and expenses recognized using the straight-line method in accordance with IFRS 8, in line with internal management.

Reconciliation of Segment Information to Group Profit or Loss

in € millionsH1 2021H1 2020
Operating EBITDA1,417994
Amortization/depreciation, impairment and reversals on intangible assets, property, plant and equipment and right-of-use assets424438
Adjustments on amortization/depreciation, impairment and reversals on intangible assets, property, plant and equipment and right-of-use assets included in special items(9)(2)
Special items(927)(247)
EBIT1,929805
Financial result(155)(184)
Earnings before taxes1,774621
Income tax expense(406)(133)
Group profit or loss1,368488

Events after the Reporting Period

In August 2021, a subsidiary of RTL Group signed a definitive agreement for the sale of its investment in the mobile gaming company Ludia. The transaction – with an expected consideration in the low three-digit million range – is subject to regulatory approvals.