Bastei Lübbe AG amends scope of consolidation for the 2015/2016 accounts

Press Release

Bastei Lübbe AG amends scope of consolidation for the 2015/2016 accounts

Cologne, 23 August 2016. In consultation with the audit firm KPMG, Bastei Lübbe AG, which is listed in the Prime Standard of the Frankfurt Stock Exchange (ISIN DE000A1X3YY0), will amend the scope of consolidation for its consolidated financial statements and retroactively fully consolidate the British Blue Sky Tech Ventures and the investments pooled thereunder. For this purpose, both the consolidated financial statements for the 2015/2016 financial year according to IFRS and the 2015/2016 separate financial statements according HGB will be adjusted accordingly.

The adjustments are based on a changed assessment on the part of the auditor KPMG with regard to the investments "Daedalic Entertainment GmbH" and "oolipo AG" and the relationship with the British Blue Sky Tech Ventures. KPMG has now reassessed the relationship with Blue Sky, which acquired 55 % of the shares in oolipo AG (formerly Beam AG) with effect as of 31 March 2015 and 3 % of the shares in Daedalic Entertainment GmbH (with an option for a further 5 %) with effect as of 17 September 2015. Due to various rights arising from the purchase agreement between Bastei Lübbe and Blue Sky, Bastei Lübbe AG reportedly has economic control over Blue Sky as defined by IFRS 10. After examining the purchase agreement again, therefore, the audit firm suddenly altered its assessment, which it had independently attested in two consecutive audits of the corresponding consolidated financial statements.

Specifically, KPMG justifies its reassessment on the basis of the complexity of the accounting rules: "The transactions have an array of features that make an accounting assessment difficult. The relevant accounting standards are very complex." KPMG has now concluded that Bastei Lübbe has economic "control over Blue Sky" - namely from the date of the sale of the oolipo shares, i.e. since 31 March 2015. As Bastei Lübbe controls Blue Sky, it must fully consolidate this investment and the investments held by Blue Sky. There is now no basis for measuring oolipo and Daedalic at fair value in connection with the sales of shares to Blue Sky.

KPMG has asked Bastei Lübbe AG to accept this altered perspective and to amend the 2015/2016 consolidated financial statements appropriately. "Although we still do not understand why the auditor has now come to a different conclusion than in the two previous audits, ultimately we must trust the experts when it comes to international accounting rules. We feel that this reassessment by KPMG requires us to alter our accounting accordingly, even if this results in considerable administrative expense and changes our earnings situation in the 2015/2016 financial year," explains Thomas Schierack, CEO of Bastei Lübbe AG.

Due to the re-consolidation of the investments, the valuations recognised for the two entities for the last two financial years must be switched back from the fair-value approach to the historical cost principle. As a result, this will have the following effects on the financial statements according to initial internal calculations: Earnings for the affected 2014/2015 and 2015/2016 financial years are likely to be around EUR 13-15 million lower in total. Specifically, EBITDA of an estimated EUR 10-11 million remains for the 2014/2015 financial year (instead of EUR 17.7 million before) and of EUR 7-9 million for 2015/2016 (instead of EUR 14.9 million). Bastei Lübbe AG thus has clearly positive earnings in both cases despite the changes in the scope of consolidation.

Bastei Lübbe AG's new financial statements will now be prepared promptly, KPMG will be engaged to audit them and then the Management and Supervisory Boards will endorse them.

Due to the change in Bastei Lübbe AG's consolidated financial statements, the Annual General Meeting cannot take place as scheduled. The Management Board will cancel the Annual General Meeting called for 15 September 2016 and call a new Annual General Meeting for 30 November 2016 in compliance with legal forms and deadlines.

About Bastei Lübbe AG:
Bastei Lübbe AG is an international media group based in Cologne. Its business operations focus on developing and licensing content distributed worldwide physically and digitally. The company's core business includes the traditional publishing business and the periodical puzzle magazines and novel booklets in the "Book" segment. With its twelve publishers and imprints, the group of companies currently offers approximately 3,600 titles in fiction, non-fiction and books for children and young adults. In the growing segment of hardcover fiction, the company has been the market leader in Germany for many years. At the same time, Bastei Lübbe is driving innovation in the field of digital media. As well as the production of thousands of audio and e-books, the "Digital" segment also includes holdings in the self-publishing platform "BookRix" and the renowned games publisher "Daedalic Entertainment". Bastei Lübbe AG's value chain is completed by the investment in the online shop "beam-ebooks.de" and the new and internationally unique streaming platform "oolipo".
With currently 334 employees and an annual turnover of roughly EUR 102.5 million (financial year 2015/2016), Bastei Lübbe AG is the largest medium-sized family company in the German publishing industry. Since 2013, the company's shares have been listed in the Prime Standard of the Frankfurt Stock Exchange (WKN A1X3YY, ISIN DE000A1X3YY0). Further information is available at www.luebbe.de.

Contact Bastei Lübbe AG:
Barbara Fischer
Director / Vice President
Public Relations
Tel.: +49 (0) 221 / 82 00 28 50
E-mail: barbara.fischer@luebbe.de