Bastei Lübbe AG: Reduction in forecast despite strong core business

Bastei Lübbe AG: Reduction in forecast despite strong core business

- Core business book publishers: 14.9% growth in print, digital publishing 19.8% year-on-year

- Balance sheet adjustments with negative impact on earnings between EUR 11 - 12 million

- Comprehensive efficiency enhancement program launched

Cologne, February 1, 2018. Bastei Lübbe AG (ISIN DE000A1X3YY0) reports good core business, carries out a major balance sheet adjustment, reduces the forecast and launches a comprehensive efficiency enhancement program.

The core business with book publishers, print and digital, showed a clearly positive development in the first nine months of the financial year 2017/2018 compared to the previous year. Revenues increased by 14.9% in the print segment and 19.8% in the digital segment. This positive development can be attributed in particular to the bestsellers Dan Brown and Ken Follett, who ranked first and second in the annual sales ranking of the German book market. Volume 12 of the serial hero Greg by US author Jeff Kinney took first place in the annual bestseller ranking of the children's and youth book segment in just ten weeks. "This is a great development, even though we have not quite met our ambitious plans. Against this successful backdrop, the extraordinary impact on earnings from a necessary balance sheet adjustment totaling EUR 11 - 12 million is very painful," explains Carel Halff, CEO of Bastei Lübbe AG.

Firstly, unscheduled write-downs of a total of EUR 7 million were undertaken retroactively to the third quarter for the associated and subsidiary companies BuchPartner GmbH, Bastei Media, BookRix and Beam Shop. This step is the result of an impairment test, which was carried out due to the current business developments and further expectations for unscheduled, non-cash write-downs.

As part of the adjustment of balance sheet risks, the Management Board also considers it necessary to reassess the impairment of capitalized author fees. This will also result in an additional non-cash write-down of around EUR 4 - 5 million in the third quarter. The impairment of prepaid royalties has so far been assessed title-individually by those responsible. In future, the assessment will be carried out schematically and in a much more restrictive manner using a method developed jointly with the auditor. The impact on earnings in this quarter is a one-off effect from the transition. Thus, the transition is complete.

Overall, Bastei Lübbe AG's consolidated revenues in the period from April 1 to December 31, 2017, fell short its own expectations and totaled at around EUR 113 million according to preliminary calculations, compared with EUR 116 million in the previous year.

Apart from an overall too ambitious planning, another reason for falling short in revenue expectations is the missed recovery in the business situation at BuchPartner GmbH. According to preliminary calculations, the BuchPartner revenues reported in the "Retail" segment amounted to around EUR 26 million in the first nine months of the current financial year, compared with EUR 32.5 million in the previous year.

The Bastei Lübbe Group's key earnings figures are below planning due to the necessary write-downs mentioned above. According to initial preliminary calculations, earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to around EUR 5 million in the period under review, compared with EUR 9.3 million in the previous year. According to preliminary calculations, consolidated earnings before interest and taxes (EBIT) for the nine-month declined to around EUR -9 million, compared with EUR 5.7 million in the previous year.

Taking into account the additional write-downs including impairment losses in the area of capitalized royalties for authors and on the basis of the 9-month figures below expectations, particularly in the Retail segment, the Management Board assumes that the originally envisaged revenue and earnings targets for the 2017/2018 financial year cannot be achieved. Based on the current state of knowledge, the Management Board now expects revenues of around EUR 140 million (previously: around EUR 160 million), EBITDA of around EUR 5 million (previously: at least EUR 14 million) and negative EBIT of around EUR 11 million for the current financial year.

In order to sustainably increase the core business, the Management Board launched a comprehensive efficiency enhancement program at the end of January. In the next nine months, the publishing programs, marketing, sales, and processes will be comprehensively reviewed. "Bastei Lübbe is a great brand with a strong core business. We have fantastic products and employees who are imaginative and creative. But we must work on our efficiency. Here, we are currently giving away far too much potential and are not achieving the returns we have imagined and which the capital market can expect from us. We want to change that. For this reason, we have launched a multi-stage efficiency program this week with which we want to identify and eliminate weaknesses across all areas and hierarchies and, on the other hand, to leverage the many hidden potentials," explains Carel Halff, CEO of Bastei Lübbe AG.

The full interim announcement for the third quarter of 2017/2018 will be available on February 21, 2018, at https://www.luebbe.com/en/investor-relations/financial-reports.

About Bastei Lübbe AG:

Bastei Lübbe AG is an internationally active media group with headquarters in Cologne. Its business activities primarily focus on the development and licencing of contents which are sold worldwide in physical and digital formats. The core business of the company in the book segment covers classic publishing and periodically published puzzle magazines and novels. With its total of twelve publishing houses and imprints, the company group currently offers around 3,600 titles in the areas of fiction, non-fiction as well as books for children and young adults. In the growing segment of hardcover fiction books, the company has been the market leader in Germany for many years. At the same time, Bastei Lübbe is an engine for innovation in the area of digital media. Apart from the production of thousands of audio and ebooks, the "digital" business unit also maintains participations in the self-publishing platform "BookRix" and the renowned game publisher "Daedalic Entertainment". The digital value-added chain of Bastei Lübbe AG is rounded off through its participation in the online shop "beam-ebooks.de" as well as the new and unique international entertainment platform "oolipo".

With annual sales of approx. 146.3 million euros (financial year 2016/2017), Bastei Lübbe AG is the largest medium-sized family-run publishing business in Germany. The shares of the company have been listed in the Prime Standard segment on the Frankfurt stock exchange (GSIN A1X3YY, ISIN DE000A1X3YY0) since 2013. Further information is available at www.luebbe.de.

Contact Bastei Lübbe AG:
Barbara Fischer
Head of Press and Public Relations
Tel.: 0221 / 82 00 28 50
E-Mail: barbara.fischer@luebbe.de