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HY 2010_engl

HY 2010_engl

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09/04/2010

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Press Release

Bertelsmann raises its forecast for 2010 after first-half leap in profits
• • • • • Group turnover rises to €7.4 billion Operating EBIT soars to record €755 million Group result improved by more than half-billion Euros 2010 Revenues and Operating EBIT expected to rise above previous year Group result for the full year to exceed € 500 million

Gütersloh, August 31, 2010 – The international media group Bertelsmann reports a surge in profits during the first six months of the year 2010. Against the backdrop of an upturn in Europe’s advertising markets and the long-view cost-cutting measures of the previous year, operating EBIT from continued operations rose to €755 million for the period from January to June (H1 2009: €497 million), a new record. The Group improved its result by more than halfbillion Euros, for a net profit of €246 million (H1 2009: €-333 million). Group turnover, now adjusted for the British TV channel Five which has since been sold, amounted to €7.4 billion for the first six months of the year (H1 2009: 7.1 billion €); Return on Sales increased to 10.3 percent (H1 2009: 7.0 percent). “I am very pleased that business is going so remarkably well in the year of our 175th anniversary. Our operating result has achieved a record high. The economy and especially the advertising markets are friendlier. We now are profiting from having expanded our marketleading positions, while also having lastingly improved our cost structures. This makes us confident for the rest of the year, and that is why we are raising our profit forecast,” declared Bertelsmann’s Chairman & CEO Hartmut Ostrowski. “We are well equipped for the future and will systematically continue to develop our many different businesses. The entire field of digitization will play an increasingly important role.” Growth was mainly fueled by the advertising-driven divisions, RTL Group and Gruner + Jahr, and by Random House where the U.S. business and digital activities have shown particularly positive development. At RTL Group, all units played a part in boosting profits, and especially Mediengruppe RTL Deutschland, Groupe M6 in France, and RTL Nederland. Gruner + Jahr benefited from an improved advertising environment and has gained market share. Arvato did well, as its services business thrived and the print sector made a recovery, while Direct Group continued to adjust its portfolio during the period under review. The savings from the previous year's costs program contributed significantly to the positive performance across all of Bertelsmann's companies and divisions.

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The first half of the year also saw strong operating free cash flow from operations. Debt was further reduced: at the reporting date of June 30, 2010, net financial debt was €2.78 billion (December 31, 2009: €2.79 billion). Bertelsmann has significantly reduced its debt by more than €800 million in the past twelve months. At 2.8, the Leverage Factor remains below the mark of 3.0. In relation to net financial debt, the factor was 1.2. “Bertelsmann is financially solid. After the measures taken during the previous year, there was no need for adjustments to the first-half balance sheet,” explained Bertelsmann’s CFO Thomas Rabe. “We are raising our forecast for the full year. Instead of the stable revenue and operating EBIT performance predicted at the Annual Press Conference in March, we now expect to see a year-on-year increase in both, and a Return on Sales of around 10 percent. We are increasing the predicted Group result corridor of between €400 and €500 million to over € 500 million. Nonetheless, visibility for the important fourth quarter still remains low in the advertising markets.” On June 30, 2010, Bertelsmann had 100,151 employees worldwide (December 31, 2009: 102,704).

Corporate divisions: RTL Group Highlights • RTL Group’s operating EBIT and return on sales reach record levels for a first half year • All RTL Group profit centers report higher earnings • RTL Group’s online platforms generate over 715 million video downloads in six months – an increase of 50 percent In the first half of 2010, Europe’s leading entertainment network benefited from powerful growth in the TV advertising markets in Western Europe and comprehensive cost-cutting measures introduced in the previous year. Both revenues and operating EBIT increased significantly. All units of RTL Group contributed to the increase in earnings, but in particular Mediengruppe RTL Deutschland, which outperformed the overall market, the French Groupe M6 and RTL Nederland. RTL Group maintained its leading positions in audience markets in key countries, even though almost all of the World Cup matches with the highest ratings were broadcast by competitors. The German family of channels achieved a record 34.8 percent audience share in the main target group. In France the digital free TV channel W9 continued its strong growth, and the main channel M6 also significantly increased its revenues and operating EBIT in the first half year. Fremantle Media, the production arm of RTL Group, also saw higher revenues and operating EBIT, thanks to many successful international formats.

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Random House Highlights • Random House increases sales and profitability, especially in U.S. • Rapid growth in e-book sales and digital publishing programs • Pulitzer Prizes for three Random House titles The world’s largest trade book publishing group, despite difficult market conditions, significantly increased its first-half 2010 sales and operating EBIT, driven by major increases in revenues and profits from its U.S. division and rapidly rising digital sales. Random House placed 138 titles on the “New York Times” bestseller lists, including the Stieg Larsson Millennium trilogy, which sold 6.5 million print and e-books in the U.S. and Germany during the half year. Random House UK contributed one quarter of the “Sunday Times” bestsellers. Verlagsgruppe Random House grew its market share in a flat overall market. Random House U.S. ebook sales surged 300 percent in the first six months, and comparably in Germany and UK. The company’s e-book program in these countries cumulatively expanded to 20,000 titles. The UK Group’s Nigella Lawson digital cooking app became an immediate global bestseller. Random House announced the discontinuation of its publishing operations in Japan and Korea.

Gruner + Jahr Highlights • Operating EBIT up sharply due to above-market performance and 2009 cost-cutting  • Corporate Publishing expands across Europe: Audi, Red Bull, Danone and other big names turn to G+J for customer communication services • G+J EMS leads coverage and quality in Germany’s mobile segment with over 650 million mobile page impressions a month Europe’s leading magazine publisher recorded stable revenues in the period under review; operating EBIT increased significantly as a result of comprehensive cost-cutting measures in the previous year and a performance that outpaced the market. G+J was able to improve its competitiveness by adapting its structures to new market conditions and further lowering its cost base. Advertising revenues rose thanks to better overall economic performance, while G+J gained additional market shares. In Germany, several new titles began regular publication following successful market tests. The online marketing activities of G+J EMS were significantly extended, while G+J EMS maintained its leading position in coverage and quality in the German mobile segment. International business performance varied: business in China continued to gain momentum, while performance in Eastern Europe, Italy and Spain was more modest in a much weaker market environment. The Corporate Publishing division successfully expanded across Europe. Meanwhile, the Prinovis and Brown print units saw a slight recovery.

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Arvato Highlights • Arvato takes over e-commerce services for the Real retail chain – from e-shops to customer service, logistics and transport • Arvato Digital Services gains new market shares and enters merchandising and electronic software distribution business segments with new customers • Arvato Infoscore awarded German innovation prize PPP (public-private partnership) in the category of administration modernization The media and communications service provider Arvato increased its revenues during the first half year; year-on-year operating EBIT was roughly unchanged. The main growth drivers were the French call center business and Digital Services division, particularly in Europe and South America. In a persistently difficult economic environment, the print business slightly recovered and achieved growth, primarily in offset. The market for print services on the Iberian Peninsula remained difficult. In the Services division, Arvato was able to win new customers by offering integrated services. Electronic software distribution grew and the value chain of the music business was extended with the addition of music merchandising. Arvato also gained market share in a number of relevant markets, including CD and DVD replication and the German print business. To offset the late cyclical consequences of the economic crisis, Arvato again focused on managing costs and optimizing processes, enhancing its competitive position while continuing the transformation to an integrated provider of comprehensive solutions.

Direct Group Highlights • Spanish club Círculo de Lectores: new momentum through joint venture with leading publishing and bookselling group Planeta • Growth in Eastern Europe: Family Leisure Club Ukraine celebrates tenth anniversary and expands • French club France Loisirs maintains record profitability The club and bookselling businesses operated by Direct Group recorded lower revenues in the first half year as a result of divestments and declining membership numbers; year-on-year operating losses were significantly curtailed thanks to ongoing cost-cutting measures. Falling member revenues affected the markets in Germany and France in particular. Direct Group continued to adjust its portfolio. The businesses in Portugal, Italy and Australia were sold in the first half of the year. In Spain, however, the club and direct marketing business are gaining new momentum through a joint venture between leading publishing and bookselling group Planeta and Círculo de Lectores that will see Círculo club corners added to some 25 Casa del Libro bookstores throughout Spain operated by Planeta. The partnership was approved by the cartel office in July. In German-speaking countries, Direct Group completed the merger of Austria’s Donauland club with Der Club Bertelsmann in Germany. Austrian club members have since been managed from Germany.

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Overview of key figures (€ million, continuing operations)
January 1, 2010 – June 30, 2010 January 1, 2009 – June 30, 2009

Consolidated revenues Operating EBIT by division Corporate/consolidation Operating EBIT Special items EBIT Financial result Earnings before taxes from continuing operations Income taxes Earnings after taxes from continuing operations Earnings after taxes from discontinued operations Group profit or loss attributable to: Earnings attributable to Bertelsmann shareholders attributable to: Earnings attributable to non-controlling interests

7,358 796 (41) 755 (30) 725 (317) 408 (109) 299 (53) 246 170 76

7,085 543 (46) 497 (290) 207 (200) 7 (135) (128) (205) (333) (368) 35

Investments

365

381

Balance as of June 30, 2010 Net financial debt Economic debt* Employees 2,782 6,016 100,151

Balance as of December 31, 2009 2,793 6,024 102,704

The corresponding figures for the previous period have been adjusted in accordance with IFRS 5. *Net financial debt plus provisions for pensions, profit-participation capital and present value of operating leases (continuing operations)

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Division*

Revenues January 1 – June 30, 2010 January 1 – June 30, 2009 2,475 734 1,217 2,243 581 7,250 (165) 7,085

Operating EBIT January 1 – June 30, 2010 533 40 130 99 (6) 796 (41) 755 January 1 – June 30, 2009 375 20 55 103 (10) 543 (46) 497

RTL Group Random House Gruner + Jahr Arvato Direct Group Total Divisions Corporate/Consolidation Total Group *Continuing operations

2,661 791 1,217 2,312 532 7,513 (155) 7,358

About Bertelsmann AG Bertelsmann is an international media company encompassing television (RTL Group), book publishing (Random House), magazine publishing (Gruner + Jahr), media services (Arvato), and media clubs (Direct Group) in more than 50 countries. Bertelsmann’s claim is to inspire people around the world with firstclass media and communications offerings – entertainment, information and services – and occupy leading positions in its respective markets. The foundation of Bertelsmann's success is a corporate culture based on partnership, entrepreneurial spirit, creativity, and corporate responsibility. The company strives to bring creative new ideas to market and create value. Bertelsmann celebrates its 175th anniversary in 2010.

For further questions, please contact: Andreas Grafemeyer Senior Vice President Media Relations Phone: +49 – 52 41 / 80 24 66 andreas.grafemeyer@bertelsmann.de

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