FAQ
How can the Bertelsmann Profit Participation Certificate 2001 be purchased?
The purchase of the Bertelsmann PPC is possible through your bank by placing an order for the amount in Euro that you want by giving the identification number (ISIN DE0005229942). The desired amount has to be in even 10-Euro steps, e.g., 4,870 Euro since the par value of each certificate is 10 Euro. Your bank forwards the buy order to the market. Please note that the price of the PPCs is determined as a percentage value listing related to the par value. For example, for a buy order for 1,000 Euro par value and a market price of 200%, the purchase price will be 2,000 Euro. For the execution of buy and sell orders and the administration of a depository account (for depositing the PPCs) additional fees will be due; please ask your bank beforehand.
Is it also possible for foreign investors to buy the Bertelsmann PPC 2001?
The Bertelsmann PPC is traded on the German stock exchanges (Frankfurt). Of course foreign investors have the opportunity to buy the PPCs on the German stock exchanges at any time. Compared to the acquisition of PPCs for a domestic custody account, bank charges and brokerage fees could be higher.
Is there a minimum investment amount for the acquisition of Bertelsmann PPC 2001?
There is no specific minimum investment amount for the Bertelsmann PPC. Theoretically, a single PPC for the par value amount of 10 Euro can be acquired through the stock exchange. Since there usually are minimum banking and broker fees charged for buy and sell orders, we recommend that you place orders for several PPCs, at least.
How does the profit distribution on Bertelsmann PPC 2001 work?
The profit distribution of the Bertelsmann PPC is 15% of the par value. Achieving the profit distribution is contingent upon generating sufficient consolidated annual group net income and sufficient annual net income of Bertelsmann SE & Co. KGaA.
How do the price and the profit distribution on Bertelsmann PPC 2001 work?
The Bertelsmann PPC has a par value of 10 Euro. The listing on the stock exchange is effected as a percentage value listing. At a price of, for example, 150%, a value of 15 Euro results for each PPC at a par value of 10 Euro. The profit distribution is also represented as a percentage of the par value, i.e., in case of a profit share of 15% the amount of 1.50 Euro is paid on every Bertelsmann PPC with a par value of 10 Euro.
When does the annual group net income suffice for a profit share of 15% of the par value for Bertelsmann PPC 2001?
A sufficient consolidated annual net income exists if the consolidated annual net income minus the minority interest and adjusted for impairments of goodwill suffices for the profit shares of 15%. With a profit participation capital of, for example, 500 million Euro par value, the consolidated annual net income minus the minority interest and after adjustments for impairments of goodwill should be at least 75 million Euro (15% of 500 million Euro). Please refer to § 4 of the Terms and Conditions of Issuance of PPCs for the complete profit distribution regulations.
What happens if the annual group net income falls short of the required amount?
In this case, the profit share is determined proportionally based on the consolidated annual net income minus the minority interest and after adjustments for impairments of goodwill: if, for example – given a profit participation capital of 500 million Euro – the consolidated annual net income after deduction of the minority interest and adjusted for impairments of goodwill is 50 million Euro, the profit share will be 50/500 or 10% of par value. Please refer to § 4 of the Terms and Conditions of Issuance of PPCs for the complete profit distribution regulations.
Why does the profit distribution on the PPC 2001 also depend on the amount of the annual net income of Bertelsmann SE & Co. KGaA?
The consolidated annual net income determines the amount of the profit share. For the distribution of the profit share to be made, there has to be also sufficient annual net income on the level of Bertelsmann SE & Co. KGaA, the corporation that has issued the PPCs and is the legal entity that distributes the profit distribution. Therefore, it is necessary to examine whether its modified annual net income – modified as explained in the Terms and Conditions if Issuance – is sufficient. Should the annual net income of Bertelsmann SE & Co. KGaA, not suffice to pay the profit share, the payment would be reduced accordingly. The unpaid part of the profit share, however, would be paid in the future, presuming sufficient results.
What are minority interests?
Minority interests exist in subsidiaries that are not wholly owned by Bertelsmann SE & Co. KGaA (directly or via intermediate companies) but fully figure in the group statement. The other shareholders have a right to a share of the profits of the appropriate companies. Bertelsmann SE & Co. KGaA only has a claim to "its share" of the profits of these companies. Therefore, the profit owed to the other shareholders is deducted in the determination of the profit share of the PPCs.
When can profit distributions on Bertelsmann PPCs 2001 and 1992 be normally expected?
Profit distributions are normally made in spring of the following year.
Why do the profit share mechanism for the PPCs 2001 and 1992 differ?
The PPCs provide for different profit share criteria. The distribution on PPC 1992 is based on the return on total assets of Bertelsmann Group. Precondition for a profit share of 15% on the nominal amount is the achievement of a return on total assets of minimum 12%. In case the return total assets is lower than 12% or higher than 16 %, the dividend distributed will generally be one percentage point higher than the respective return on total assets. Since 2001 Bertelsmann Group has applied different performance indicators and issued the PPC 2001. The profit distribution criteria of the PPC 2001 reflect this change. The profit share of a PPC 2001 for each full fiscal year of the Bertelsmann group amounts to 15% of its par value provided that the consolidated annual net income is sufficient.
Why do the prices for PPC 2001 and PPC 1992 differ?
The prices can differ due to the different profit distribution formulas. The PPC 2001 pays 15% on the par value, when consolidated annual group net income and annual net income of Bertelsmann SE & Co. KGaA are sufficient. The profit distribution of the PPC 1992 however depends on return on total assets. Another factor that could influence the PPC’s price is the difference in trading volume.
On some financial portals, the PPC price is represented as an absolute three-digit Euro amount – isn't this representation false?
Unfortunately, the prices of PPCs listed on the stock exchange are represented in a misleading way by some finance portals on the Internet. The price of the Bertelsmann PPC is often represented as an absolute price, although it is a percentage listing. The reason for the false representation is the standardization of the information transfer of some information suppliers. In the case of a non-standardized security like the PPC, which has characteristics of stocks as well as of fixed-interest securities, this leads to problems.
How is the loss participation regulated?
If instead of a positive annual group net income a group loss should occur, the percentage of the negative return on total assets will be determined in relation to the arithmetic average of the assets at the beginning and end of the fiscal year. This percentage, related to the par value of the PPCs, then results in a share in loss. In the future it would first have to be offset against profit shares before another profit distribution could be made. Please refer to §5 of the Terms and Conditions of Issuance of PPCs for the full loss participation regulation.
What are the consequences of the change in legal form from Bertelsmann AG into Bertelsmann SE & Co. KGaA for the owners of profit participation certificates?
The change in legal form had no effect on the Company's identity, which continues to exist as such in a different legal form as Bertelsmann SE & Co. KGaA. For the owners of profit participation certificates nothing changes. Please note that no adjustments in the conditions of issue are made.
For further questions or suggestions
News
Bertelsmann is considering reducing its shareholding in RTL Group while retaining a qualified majority
Bertelsmann announces preliminary figures for 2012
Bertelsmann reports increased revenue and profit in first nine months of 2012
Revenues increase to €11.4 billion Operating EBIT improves to €1.1 billionGroup profit rises to €528 million
Bertelsmann and Pearson to Combine Book Businesses
Thomas Rabe implements new Bertelsmann strategy in the book publishing businessBertelsmann to hold 53 percent of new publishing group, Pearson 47 percentMarkus Dohle (Random House) appointed as CEO,...
Bertelsmann completes change of legal form to SE & Co. KGaA
Bertelsmann, the international media company, will from now on do business as Bertelsmann SE & Co. KGaA. The change of legal form from Aktiengesellschaft (stock corporation) to Kommanditgesellschaft...
Bertelsmann successfully places Benchmark bond
Bertelsmann AG has taken advantage of the favorable market conditions and successfully placed a €750 million benchmark bond. The bond, listed in Luxembourg, has a ten-year maturity and a fixed...
