Financial debt includes all of the Bertelsmann Group’s interest-bearing liabilities to banks and capital markets as of the end of the reporting period. Carrying amounts are calculated as follows:
|Remaining term in years|
|in € millions||12/31/2017||12/31/2016||1 to 5 years||> 5 years||12/31/2017||12/31/2016|
|Liabilities to banks||314||91||10||–||10||12|
|Other financial debt||144||136||16||4||20||24|
The Bertelsmann Group has access to floating-rate and fixed-rate funds through various contractual arrangements. Financial debt is generally unsecured.
In May 2017, Bertelsmann placed a publicly listed bond of €500 million with a term of four years. In private placements, Bertelsmann also issued a bond in the amount of €50 million with a term of seven years in July 2017 and a promissory note in the amount of €150 million with a term of a year and a half in August 2017. At the end of the reporting period, the Group had bonds, private placements and promissory notes outstanding with a nominal volume of €4,410 million (previous year: €3,710 million). To finance a short-term funding requirement, a loan of US$250 million was taken out with a major internationally operating bank in the financial year 2017. This mainly caused the increase of short-term liabilities to banks.
The differences in carrying amount versus nominal amount in the table that follows result from transaction costs, premiums and discounts.
|in € millions|
|Carrying amount||Fair value|
|Interest rate; emission; maturity; fixed interest||Nominal amount||31/12/2017||31/12/2016||31/12/2017||31/12/2016|
|0.090%; 2016; 2018; fixed interest promissory note||200||200||200||200||200|
|0.110%; 2017; 2019; fixed interest promissory note||150||150||–||150||–|
|4.207%; 2012; 2019; fixed interest promissory note||60||60||60||63||66|
|3-Mon.-EURIBOR + 40 Bp.; 2014; 2019; floating rate note||100||100||100||100||100|
|0.774%; 2015; 2020; fixed interest promissory note||100||100||100||102||102|
|0.250%; 2017; 2021; fixed interest bond1)||500||497||–||502||–|
|2.625%; 2012; 2022; fixed interest bond1)||750||745||744||829||845|
|1.500%; 2017; 2024; fixed interest bond||50||50||–||52||–|
|1.750%; 2014; 2024; fixed interest bond1)||500||497||497||536||541|
|1.787%; 2015; 2025; fixed interest promissory note||150||149||149||157||160|
|1.125%; 2016; 2026; fixed interest bond1)||500||494||494||509||507|
|3.700%; 2012; 2032; fixed interest bond||100||99||98||125||128|
|3.000%; 2015; 2075; fixed interest hybrid bond1)||650||647||646||687||654|
|3.500%; 2015; 2075; fixed interest hybrid bond1)||600||596||596||632||574|
The documentation of the bonds from Bertelsmann SE & Co. KGaA in 2012, 2014 and 2017 is within the framework of a base documentation for debt issuance programs. The hybrid bonds and promissory notes as well as the unlisted bond of the financial year 2017 were issued on the basis of separate documentation. The bonds mainly have aof “Baa1” (Moody’s) and “BBB+” (Standard & Poor’s). The debt issuance program was updated in April 2017. The framework documentation allows Bertelsmann SE & Co. KGaA to place bonds with a total volume of up to €4 billion on the capital market. Transaction costs and agreed discounts or premiums are taken into account in the interest result over the term, impacting the carrying amount of the bonds and promissory notes. These led to a difference to the nominal volume of €26 million (previous year: €26 million) at the end of the year.
As a rule, the quoted prices at the end of the reporting period are used to determine the fair value of the bonds issued. On December 31, 2017, the cumulative fair value of the listed bonds totaled €3,695 million (previous year: €3,121 million) with a nominal volume of €3,500 million (previous year: €3,000 million) and a carrying amount of €3,476 million (previous year: €2,977 million). The stock market prices are based on level 1 of the fair value hierarchy.
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 -0.30 percent to 1.88 percent. The fair values of the private placements and promissory notes are based on level 2 of the fair value hierarchy.
The Bertelsmann Group has access to a syndicated loan agreement entered into with major international banks in the amount of €1,200 million (previous year: €1,200 million). Bertelsmann SE & Co. KGaA can draw down this credit facility using floating-rate loans in euros, US dollars and pounds sterling based on EURIBOR or LIBOR on a revolving basis. In addition, Bertelsmann has access to further syndicated and bilateral credit facilities in the amount of €470 million, which can also be drawn down using floating rate loans based on EURIBOR on a revolving basis. As of December 31, 2017, the credit facilities were taken out in the amount of €10 million.
Finance leases exist for the following assets:
|in € millions||Acquisition costs||Net carrying amount||Acquisition costs||Net carrying amount|
|Land, rights equivalent to land and buildings||89||36||89||39|
|Technical equipment and machinery||5||1||6||2|
|Other equipment, fixtures, furniture and office equipment||12||4||13||3|
The Group’s finance lease activities primarily relate to longterm agreements for office space. The Group generally has the option to acquire such properties at the end of the lease term. Finance leases for buildings are generally subject to noncancelable minimum lease terms of approximately 20 years.
The minimum lease payments for finance leases are presented in the following table:
|in € millions||Nominal amount of lease|
|Present value||Nominal amount of lease|
|Up to 1 year||10||–||10||8||–||8|
|1 to 5 years||41||4||37||48||6||42|
|Over 5 years||–||–||–||1||–||1|
As in the previous year, no subleases were in place as part of finance lease agreements as of the end of the reporting period.