Values

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Report Statements Supervisory
Board
Income Statement
Statement of Comprehensive Income
Balance Sheet
Cash Flow Statement
Statement of Changes in Equity
Notes
Capital Risk Management
Th e fi nancing guidelines adopted by the Bertelsmann Group
are designed to ensure a balance between fi nancial security,
return on equity and growth. Th e Group’s net indebtedness
is based specifi cally on the requirements for a credit rating
of “BBB+/Baa1.” Bertelsmann’s manages its transactions using
quantifi ed fi nancing objectives that are a central factor
in ensuring the corporation’s independence and capacity
to act. Th ese objectives, as elements of the planning process
and regular monitoring, are part of corporate management.
Th e key performance indicator for limiting economic debt
within the Group is the leverage factor. Th e interest coverage
Interest Rate and Exchange Rate Sensitivity
For the analysis of interest rate risk, a distinction is made between
cash fl ow and present value risks. Financial debt, cash
and cash equivalents and interest rate swaps with variable interest
terms are subject to a greater degree of cash fl ow risk, as
changes in market interest rates have an eff ect on Group’s net
interest income, either immediately or with a short delay.
By contrast, medium- and long-term interest rate agreements
are subject to a greater degree of present value risk. Th e
accounting treatment of present value risks depends on the
respective fi nancial instrument or a hedging relationship documented
in conjunction with a derivative (micro-hedge).
Originated fi nancial debt is always carried at amortized
cost. Changes in fair value are limited to opportunity eff ects, as
changes in interest rates have no eff ect on the balance sheet or
the income statement. Th e recognition of originated fi nancial
debt at fair value is only permitted for transactions for which
Bertelsmann Annual Report 2009
ratio is to remain above 4. Th e equity ratio is not to fall below
25 percent of total assets. Control of these ratios is based on
IFRS guidelines, thus including both shareholders’ equity and
equity attributable to minority interests. Although minority
interests in partnerships represent equity in accordance with
the principle of substance over form, they are classifi ed as debt
for accounting purposes.
In the year under review, the equity ratio amounted to
30.9 percent (previous year: 31.0 percent), meeting the internal
target set by the Group.
a micro-hedge is documented in accordance with IAS 39 in
conjunction with the purchase of an interest rate or exchange
rate hedge involving derivatives. In this case, changes in the fair
value of the respective items are recognized in the income statement
in order to substantially balance out the off setting eff ects
of the fair value measurement of the related derivatives.
For derivative fi nancial instruments, the eff ects of changes
in interest rates are recognized in the income statement. In the
case of documented hedging relationships (cash fl ow hedges),
however, these eff ects are taken directly to equity.
Cash fl ow and present value risks at the respective balance
sheet date are examined by means of sensitivity analysis, assuming
a parallel shift in the yield curve of +/- 1 percent for
all key currencies. Th e analysis is performed on the basis of
fi nancial debt, cash and cash equivalents and derivatives at the
balance sheet date. Th e results are shown in the table below.
12/31/2009 12/31/2008
in € millions Shift +1% Shift -1% Shift +1% Shift -1%
Cash fl ow risks 13 (13) 6 (6)
Present value risks (income statement) – – (1) 1
Present value risks (equity) 6 (6) 7 (7)
141