Financial Statements of Axel Springer AG. for the period ending December 31, 2009

Transcription

1 09 Financial Statements of Axel Springer AG for the period ending December 31, 2009

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3 3 Contents Annual Financial Statements 4 Balance Sheet 4 Income Statement 5 Notes to the financial statements 6 Notes to the balance sheet 8 Notes to the income statement 12 Other disclosures 14 Auditor s Report 19 General information 6 Accounting policies 6 The combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group is published in the Axel Springer Group's 2009 annual report.

4 4 Annual Financial Statements of Axel Springer AG Annual Financial Statements Balance Sheet ASSETS in thousands Note 12/31/ /31/2008 Fixed assets (6) 1,723,033 1,625,260 Intangible assets 34,384 35,592 Property, plant and equipment 218, ,383 Non-current financial assets 1,469,993 1,351,285 Current assets 894, ,856 Inventories (7) 26,001 34,374 Receivables and other assets (8) 589, ,336 Treasury shares (9) 196, ,450 Cash and cash equivalents 83,198 68,696 Prepaid expenses 2,955 2,924 2,620,704 2,422,040 EQUITY AND LIABILITIES in thousands Note 12/31/ /31/2008 Equity (10) 1,105, ,075 Subscribed capital 98,940 98,940 Additional paid-in capital 3,060 3,060 Retained earnings 858, ,963 Distributable profit 145, ,112 Provisions (11) 483, ,634 Liabilities (12) 975,557 1,008,871 Deferred income 55,746 48,460 2,620,704 2,422,040

5 Annual Financial Statements of Axel Springer AG 5 Income Statement in thousands Note Revenues (17) 1,588,323 1,673,253 Change in inventories Other own work capitalized 1,044 3,032 Other operating income (18) 416, ,014 Purchased goods and services (19) 458, ,813 Personnel expenses (20) 482, ,353 Amortization, depreciation and impairments of intangible assets and property, plant and equipment 39,992 45,290 Other operating expenses 530, ,562 Income from non-current financial assets (21) 45,216 76,910 Expenses from transfer of losses 66,117 49,724 Impairments of non-current financial assets and current securities 38,266 50,396 Net interest income (22) 33,574 18,533 Profit from ordinary activities 400, ,927 Taxes (23) 77,690 88,574 Net income 323, ,353 Transfer to/from reserve for treasury shares 26,551 37,844 Transfer to other retained earnings 151,425 89,085 Distributable profit 145, ,112

6 6 Annual Financial Statements of Axel Springer AG Notes to the financial statements General information The annual financial statements of Axel Springer Aktiengesellschaft ("Axel Springer AG" or "Company") were prepared in accordance with the provisions of the German Commercial Code (Handelsgesetzbuch HGB) and the German Stock Corporation Act (Aktiengesetz AktG). The balance sheet and income statement correspond to the classification requirements of the HGB; the income statement was prepared using the total cost (nature of expense) method. The annual financial statements were prepared in euros ( ); all amounts are reported in thousands unless otherwise indicated. To improve clarity and legibility, individual line items were aggregated in the balance sheet and income statement and then presented separately and explained in the notes to the financial statements. The annual financial statements and the combined management report of the Company and Axel Springer Group will be filed with the operator of the Electronic Federal Gazette (Bundesanzeiger Verlagsgesellschaft mbh, Cologne) and published in the Electronic Federal Gazette. Axel Springer AG is registered in the commercial register of the local court of Berlin-Charlottenburg under number 4998 section B. Accounting policies With the exception of change in reporting described below, the same accounting policies were applied in fiscal year 2009 as in the previous year. Since 2009, the interest portion associated with additions to provisions for pensions and similar obligations is reported under net interest income. The interest portion for the reporting year amounted to 25,522 thousand (PY: 8,474 thousand). (1) Fixed assets Acquired intangible fixed assets are recognized at purchase cost less amortization and impairment losses where necessary. Amortization is applied on a straightline basis over the expected useful life: in years Useful life Software 5 Licenses 3-5 Supply rights 3 Internet platform 3 Purchased titels and publishing rigths 15 Tangible fixed assets are recognized at acquisition or production cost less depreciation and impairment losses where necessary. Depreciation is applied over the expected useful life: in years Useful life Buildings Leasehold improvements 3-10 Plant and machinery 3-25 Other operational and business equipment 3-15 In accordance with tax provisions, depreciable tangible fixed assets are first depreciated according to the declining method before transitioning to the straight-line method; additions in the 2008 fiscal year are depreciated according to the straight-line method. Assets with an acquisition or production cost up to 150 are fully depreciated in the year of acquisition. If the acquisition or production cost is between 150 and 1,000, a collective item is recognized and depreciated according to the straight-line method over five years. Non-current financial assets are recognized at acquisition cost or at the lower fair value on the balance sheet date if an impairment is expected to be permanent.

7 Annual Financial Statements of Axel Springer AG 7 (2) Current assets Raw materials and supplies as well as merchandise are measured at acquisition cost or the lower fair value on the balance sheet date; semi-finished and finished goods are measured at production cost. In addition to direct material and labor costs, production cost includes an appropriate share of the necessary indirect material and labor costs, including depreciation to the extent they are related to production. Inventory risks associated with the storage period or reduced utility are accounted for through appropriate allowances. Receivables and other assets are recognized at nominal value or acquisition cost or the lower fair value on the balance sheet date. Individual risks are accounted for through adequate allowances. (5) Financial derivatives Financial derivatives are employed to hedge interest rate and currency risks. The risk of changing interest rates is countered through the use of interest rate swaps, collars and interest rate futures. The objective and method of hedging interest rate risks is determined by internal financial guidelines. Exchange rate risks arise in particular from investments, financing measures, and operating activities. They are hedged by employing forward exchange transactions. Financial derivatives are generally grouped together with the underlying transactions in valuation units if the requirements for hedge accounting have been met; otherwise, they are measured at market prices. Unrealized losses as of the balance sheet date are recognized in profit or loss. Treasury shares are measured at acquistion cost or at the lower quoted price on the balance sheet date. Cash and cash equivalents include cash on hand, cash in banks as well as checks and are recognized at nominal value or the lower fair value on the balance sheet date. (3) Provisions and liabilities Provisions for pensions and similar obligations are measured on the basis of actuarial calculations according to the projected unit credit method and reflect future compensation and pension adjustments. Tax provisions and other provisions are calculated according to the principles of prudent business judgment and adequately reflect all foreseeable risks. Liabilities are recognized at the nominal amount or the higher repayment amount. (4) Currency translation Receivables, cash and cash equivalents, and liabilities to banks as well as other assets and liabilities denominated in foreign currency are measured at the mean rate of exchange prevailing on the balance sheet date.

8 8 Annual Financial Statements of Axel Springer AG Notes to the balance sheet (6) Fixed assets in thousands Acquisition or production cost Accumulated Carrying amounts depreciation, amortization and impairments 01/01/2009 Additions Transfers Disposals 12/31/ /31/ /31/2008 Depreciation, amortization and impairments 2009 Rights and licences 78,506 3,133 9,516 5,005 86,150 61,513 24,637 22,338 9,969 Advanced payments 13,254 5,974 9, , ,747 13,254 0 Intangible assets 91,760 9, ,025 95,897 61,513 34,384 35,592 9,969 Land, similar rights and buildings including buildings on non-owned land 498,340 2, , , , ,712 8,260 Technical equipment and machinery 529,593 2, , , ,128 25,128 38,489 15,967 Other equipment, operational and office equipment 111,101 4, , ,646 91,260 18,386 19,414 5,796 Advanced payments and construction in progress 1,768 1,853 1, , ,280 1,768 0 Property, plant and equipment 1,140,802 10, ,516 1,141, , , ,383 30,023 Shares in affiliated companies 1,125, ,357 38, ,292,227 68,835 1,223,392 1,063,642 6,975 Loans to affiliated companies 178,442 11,527 29,439 2, ,668 23, , , Participating interests 142,048 8,720 38, ,624 60,011 51, ,000 30,963 Other loans 1, , ,438 1,484 0 Non-current financial assets 1,447, ,725 29,439 3,697 1,621, ,964 1,469,993 1,351,285 38,266 Fixed assets 2,680, ,399 29,439 18,238 2,859,652 1,136,619 1,723,033 1,625,260 78,258 In year under review, impairment losses totaling 992 thousand (PY: 340 thousand) were recognized on intangible assets and impairment losses totaling 38,266 thousand (PY: 12,552 thousand) were recognized on non-current financial assets. Loans to affiliated companies totaling (nominal) 29,439 thousand were reclassified from receivables to loans after adjusting the contractual terms. In prior fiscal years impairment losses totaling 17,835 thousand were recognized on these loans. The list of shareholdings of Axel Springer AG and the Axel Springer Group is to be filed with the Electronic Federal Gazette. (7) Inventories in thousands 12/31/ /31/2008 Raw materials and supplies 24,184 32,489 Semi-finished goods 1,450 1,531 Finished goods and merchandise Inventories 26,001 34,374

9 Annual Financial Statements of Axel Springer AG 9 (8) Receivables and other assets in thousands 12/31/ /31/2008 Trade receivables 132, ,981 Receivables from affiliated companies 175, ,572 Receivables from companies in which the Company has a participating interest 7,094 12,057 Other assets 274, ,726 Receivables and other assets 589, ,336 Trade receivables in the amount of 11 thousand (PY: 19 thousand) had a remaining term to maturity of more than one year. Receivables from affiliated companies mainly include trade receivables and financial receivables associated with group cash management. Other assets in the amount of 185,502 thousand (PY: 39,676 thousand) had a remaining term to maturity of more than one year. (9) Treasury shares In the reporting period, 82,669 treasury shares ( 248 thousand or 0.3 % of the subscribed capital) were issued at a fair value of 5,912 thousand to employees of the Axel Springer Group based on voluntary and nonrecurring bonus share and share participation programs. The income from the disposal of treasure shares amounted to 1,663 thousand. 34,888 stock options were exercised in the reporting year as part of the management participation plan established in 2004 and settled using the same number of treasury shares ( 105 thousand or 0.1 % of the subscribed capital). Proceeds from the shares issued amounted to 2,082 thousand and resulted in income of 289 thousand. Acquisition date Share of subscribed capital Acquired shares thousands % July ,341 2, % July to October , % November ,200,143 6, % Treasury shares 3,179,784 9, % The acquisitions served the possibility of using the shares as part of acquisitions, for management or employee compensation, or retiring the stock. As a result of the positive price performance of the Axel Springer AG share, a write-up of 32,592 thousand was recognized on treasury shares as of December 31, (10) Equity The subscribed capital in the amount of 98,940 thousand has been fully paid-in. It is divided into 32,980,000 registered shares with each share representing an imputed value of 3.00 of subscribed capital. The shares may only be transferred with the permission of the Company. The retained earnings developed as follows: Reserve for treasury shares Other retained Retained earnings earnings Statutory in thousands reserve Balance at 01/01/ , , , ,963 Transfer according to shareholders' resolution ,508 14,508 Transfer from net income , , ,976 Balance at 12/31/ , , , ,447 As of December 31, 2009, Axel Springer AG held 3,179,784 treasury shares ( 9,539 thousand or 9.6 % of the subscribed capital). The number of shares was based on the following acquisitions:

10 10 Annual Financial Statements of Axel Springer AG (11) Provisions in thousands 12/31/ /31/2008 Provisions for pensions and similar obligations 281, ,696 Provisions for taxes 21,415 30,511 Other provisions 180, ,427 Provisions 483, ,634 tions to a company pension plan by way of salary conversion (Axel Springer Vario Rente). The provision was calculated based on an actuarial interest rate of 5.3 % p.a. (PY: 5.8 % p.a.) as well as a pension trend of 2.0 % p.a. (PY: 2.25 % p.a.). The life expectancy was taken from Dr. Klaus Heubeck's Mortality Tables 2005 G. Provisions for pensions and similar obligations were recognized to account for obligations arising from vested pension rights and current benefits of former and active employees of Axel Springer AG and their survivors, based on individual contracts and labor-management agreements. In addition, since the 2004 fiscal year, employees have been given the option to make contribu- The other provisions include in particular provisions for structural measures ( 46,842 thousand; PY: 17,341 thousand), commitments from partial retirement agreements ( 30,291 thousand; PY: 30,894 thousand), performance-dependent remuneration ( 31,383 thousand; PY: 27,650 thousand) and outstanding supplier invoices ( 22,342 thousand; PY: 14,094 thousand). (12) Liabilities in thousands 12/31/2009 up to 1 year longer than 1 year, up to 5 years Remaining term Remaining term longer than 5 years 12/31/2008 up to 1 year longer than 1 year, up to 5 years Liabilities due to banks 318,233 1, , ,742 3, ,233 0 Advance payments 1,063 1, ,219 2, Trade payables 60,057 60, ,997 59, Liabilities to affiliated companies 512, , , , longer than 5 years Liabilities to companies in which the Company has a participating interest 8,677 8, ,732 6, Other liabilities 74,787 63,797 10, ,090 55,370 12,284 1,436 Liabilities 975, , , ,008, , ,717 1,436 Liabilities to banks were secured by mortgages in the amount of 13,233 thousand (PY: 16,742 thousand) as of the balance sheet date. Other liabilities include tax liabilities of 22,801 thousand (PY: 20,269 thousand) and social security liabilities of 956 thousand (PY: 192 thousand). Liabilities to affiliated companies mainly include trade payables and financial liabilities associated with group cash management.

11 Annual Financial Statements of Axel Springer AG 11 (13) Contingent liabilities As of December 31, 2009, there were contingent liabilities from warranties in the amount of ( 29,464 thousand; PY: 32,853 thousand) as well as from guarantees ( 32,285 thousand; PY: 20,746 thousand). The contingent liabilities from warranty agreements related to pension obligations in connection with the integration of rotogravure activities of PRINOVIS Ltd. & Co. KG, Hamburg, in fiscal year 2005 (PY: 29,754 thousand). (14) Transactions not included in the balance sheet For partial areas at the property located in Hamburg, three real estate funds were granted ground leases to construct and lease an office building used by the Company, and building leases over an initial term of 20 years were concluded, starting in 1991, 1992 and 1993 respectively. The future financial commitments from the leases as of the balance sheet date were 91,124 thousand (PJ: 102,842 thousand). (15) Other financial commitments Other financial commitments as of the balance sheet date amounted to 343,870 thousand (PY: 385,384 thousand). The commitments were mainly the result of long-term paper purchasing agreements. Exchange rate risks were countered by forward exchange transactions. As of the balance sheet date, there were pending contracts totaling 29.0 million Swiss francs with a fair value of 334 thousand. In the 2004 fiscal year, the shareholders H&F Rose Partners, L.P. and H&F International Rose Partners, L.P. (hereinafter collectively "H&F") granted Axel Springer AG 560,700 call options on the purchase of shares of Axel Springer AG. Axel Springer AG waived 62,300 options in exchange for cash compensation in an agreement dated June The exercise of the remaining 498,400 options depended on members of the Management Board exercising options granted as part of the Management Participation Plan in Parallel to an agreement with members of the Management Board on the settlement of 214,312 stock options granted to them, an arrangement was made with H&F in December 2009 according to which Axel Springer AG continues to be entitled to exercise the same number of options independent of the settlement agreement with H&F. These options can only be exercised in June 2010; however, they expire if and to the extent that H&F sells shares of Axel Springer AG and compensates the Company in cash. The remaining 284,088 options can be exercised according to the original H&F agreement. As of the balance sheet date, the fair value of the call options, which is calculated on the basis of an option price model, amounted to 10,835 thousand (PY: 1,840 thousand). (16) Financial derivatives In order to hedge interest rate risk from long-term liabilities, interest rate derivatives in the form of swaps and collars were employed in the reporting year. With respect to term and notional amount, the interest rate derivatives were each concluded in analogy to corresponding tranches of the variable interest rate loans taken on (underlying transactions). As of December 31, 2009, loans totaling 305,000 thousand (PY: 305,000 thousand) nominally were hedged. There were negative fair values from the measurement of interest rate derivatives as of the balance sheet date in the amount of 20,641 thousand (PY: positive fair value of 18 thousand and negative fair value of 14,182 thousand).

12 12 Annual Financial Statements of Axel Springer AG Notes to the income statement (17) Revenues (20) Personnel expenses in thousands Circulation revenues 891, ,377 Advertising revenues 568, ,615 Printing revenues 76,740 81,731 Other revenues 51,865 39,530 Revenues 1,588,323 1,673,253 The revenues can be attributed to the following segments: in thousands Newspapers National 1,035,192 1,087,130 Magazines National 446, ,958 Digital Media 21,358 23,494 Other 84,875 81,671 Revenues 1,588,323 1,673,253 in thousands Wages and salaries 426, ,072 Social security, pension and other benefit expenses 56,696 71,281 Personnel expenses 482, ,353 The cost of old age pensions in the reporting year amounted to 6,981 thousand (PY: 18,139 thousand). The average number of employees during the year was: Salaried employees 2,393 2,447 Editors 1,556 1,545 Wage-earning employees Total employees 4,827 4,922 The revenues were realized almost entirely in Germany. (18) Other operating income Other operating income included income from the sale of investments in regional newspapers ( 251,945 thousand), income from the release of provisions ( 13,529 thousand; PY: 32,562 thousand) and income from receivables written off in connection with the insolvency of KirchMedia GmbH & Co. KGaA i.l. ( 7,286 thousand; PY: 5,875 thousand). (21) Income from non-current financial assets in thousands Income from participating interests 34,368 55,846 (of which from affiliated companies) (14.785) (16.281) Income from profit transfer agreements 10,045 18,617 Income from other non-current securities and loans 803 2,447 (of which from affiliated companies) (658) (2.348) Income from non-current financial assets 45,216 76,910 (19) Purchased goods and services in thousands Raw materials, supplies and merchandise 182, ,417 Purchased services 275, ,396 Purchased goods and services 458, ,813

13 Annual Financial Statements of Axel Springer AG 13 (22) Net interest income (23) Taxes in thousands Other interest and similar income 15,239 36,852 (of which from affiliated companies) (6.200) (15.295) Interest and similar expenses 48,813 55,385 in thousands Income taxes 71,413 85,369 Other taxes 6,277 3,205 Taxes 77,690 88,574 (of which to affiliated companies) ( 4,405) ( 17,179) Net interest income 33,574 18,533

14 14 Annual Financial Statements of Axel Springer AG Other disclosures (24) Supervisory Board Name, regular occupation Dr. Giuseppe Vita Chairman of the Supervisory Board Axel Springer AG Dr. h. c. Friede Springer Vice Chairwoman of the Supervisory Board Axel Springer AG Dr. Gerhard Cromme Chairman of the Supervisory Board ThyssenKrupp AG Seats on other legally mandated Supervisory Boards Deutz AG (Chairman, until July 2009) Dussmann Verwaltungs AG (since April 2009) Medical Park AG (since February 2009) Alba Berlin AG Allianz SE Siemens AG (Chairman) ThyssenKrupp AG (Chairman) Seats on comparable boards in Germany and abroad Allianz S.p.A., Italy (Vice Chairman of the Board of Directors) Humanitas S.p.A., Italy (Board of Directors) Barilla S.p.A., Italy (Board of Directors) Gruppo Banca Leonardo, Italy (Chairman of the Board of Directors) Deutsche Bank AG (Advisory Board) Compagnie de Saint Gobain, France (Board of Directors) Oliver Heine Attorney at law and partner in the law firm Oliver Heine & Partner Klaus Krone Member of the Supervisory Board Axel Springer AG borawind AG, Switzerland (Chairman of the Board of Directors until July 2009) Prof. Dr. Wolf Lepenies University Professor Michael Lewis Investment Manager Dr. Michael Otto Chairman of the Supervisory Board Otto GmbH & Co. KG Brian M. Powers CEO of investment group Hellman & Friedman LLC Otto GmbH & Co. KG (Chairman) OIC Limited, Great Britain (Executive) Oceana Investment Corporation Limited, Great Britain (Chief Executive) Oceana Concentrated Opportunities Fund Limited, Great Britain (Non-Executive) Oceana Fund Managers (Jersey) Limited, Great Britain (Non- Executive) Oceana Capital Partners LLP, Great Britain (Executive, since October 2008) Oceana Investment Partners LLP, Great Britain (Executive, since February 2009) United Trust Bank Limited, Great Britain (Non-Executive) UTB Partners Limited, Great Britain (Non-Executive) Cheyne Capital Management Limited, Great Britain (Non- Executive) Foschini Limited, South Africa (Non-Executive) Strandbags Group (Pty) Limited, Australia (Executive) Strandbags Holdings (Pty) Limited, Australia (Executive) ProChon Biotech Limited, Israel (Non-Executive) Peltours Limited, Israel (since September 2009, registration pending) FORUM Grundstücksgesellschaft mbh (Advisory Board) Robert Bosch Industrie und Treuhand KG (Partner) Artisan Partners Limited Partnership, USA (Advisory Board) Getty Images, Inc., USA (Board of Directors) The compensation of members of the Supervisory Board in the reporting year amounted to 2,425 thousand (PY: 2,725 thousand). The variable portion amounted to 425 thousand (PY: 725 thousand).

15 Annual Financial Statements of Axel Springer AG 15 (25) Management Board Management Board member Dr. Mathias Döpfner Chairman and Chief Executive Officer Head of Subscription Newspapers and International Journalist Rudolf Knepper Vice Chairman Head of Printing, Logistics, and HR Master s degree in engineering and in business/engineering Lothar Lanz Chief Operating Officer and Chief Financial Officer (since May 2009) Master s degree in business administration Dr. Andreas Wiele Head of BILD Division and Magazines Lawyer Seats on other legally mandated Supervisory Boards ZANOX.de AG (Supervisory Board, Chairman, until August 2009) Seats on comparable boards in Germany and abroad dpa Deutsche Presse Agentur GmbH (Supervisory Board) Leipziger Verlags- und Druckereigesellschaft mbh & Co. KG (Advisory Board, until April 2009) B.Z. Ullstein GmbH (Advisory Board) Time Warner Inc., USA (Board of Directors) RHJ International S.A., Belgium (Supervisory Board) Axel Springer Schweiz AG, Switzerland (Board of Directors) aufeminin.com S.A., France (Supervisory Board, until August 2009) PRINOVIS Ltd., Great Britain (Board of Directors) esmt European School of Management and Technology GmbH, (Supervisory Board, since July 2009) Axel Springer International Finance B.V., Netherlands (Supervisory Board, since May 2009) Independent News & Media PLC, Ireland (Board of Directors, since November 2009) Jahr Top Special Verlag GmbH & Co. KG (Advisory Board) B.Z. Ullstein GmbH (Advisory Board) dpa Deutsche Presse Agentur GmbH (Supervisory Board, since January 2010) aufeminin.com S.A., France (Supervisory Board) StepStone ASA, Norway (Supervisory Board, since October 2009) Steffen Naumann Chief Operating Officer and Chief Financial Officer (until April 2009) Master s degree in business administration and master s degree in economics Odeon Film AG (Chairman of the Supervisory Board, until March 2009) esmt European School of Management and Technology GmbH (Supervisory Board, until April 2009) Axel Springer International Finance B.V., Netherlands (Supervisory Board, until April 2009) The fixed and variable compensation of the members of the Management Board in the reporting year amounted to 17,687 thousand (PY: 13,128 thousand). Additionally, effective July 1, 2009, 375,000 stock appreciation rights were issued to members of the Management Board. The stock appreciation rights, which are linked to various conditions, have a term to maturity of six years and can be exercised at the earliest after a period of four years. The fair value of the stock appreciation rights at the grant date, which was calculated on the basis of a Black Scholes model, was 4,743 thousand. Furthermore, members of the Management Board waived their right to exercise 214,312 options on shares of Axel Springer AG granted as part of the Management Participation Program in the 2004 fiscal year in exchange for a cash settlement totaling 2,572 thousand. The settlement amount was 4,329 thousand less than the fair value of these options as of the grant date. The remuneration paid to former members of the Management Board (including special executive bodies) and their surviving dependents in the reporting year amounted to 3,856 thousand (PY: 2,140 thousand); provisions for pension commitments were recognized in the amount of 26,082 thousand (PY: 25,599 thousand).

16 16 Annual Financial Statements of Axel Springer AG (26) Declaration of Conformity with the German Corporate Governance Code Axel Springer AG has made the Declaration of Conformity with the German Corporate Governance Code issued by the Management Board and Supervisory Board in accordance with section 161 of the German Stock Corporation Act (Aktiengesetz AktG) permanently available on the Company's website under Investor Relations Corporate Governance. The declaration of conformity is also published in the Company's 2009 annual report. (27) Disclosures concerning securities transactions or investments Deutsche Bank AG, Frankfurt am Main, notified us in December 2008 in accordance with section 21 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG) that its share of Axel Springer AG's voting rights had exceeded the threshold amounts of 3 % and 5 % on December 15, 2008, and amounts to 8.35 % % of this equity interest is held directly by its wholly-owned subsidiary Deutsche Bank Luxembourg SA, Luxembourg, and is attributable to Deutsche Bank AG in accordance with section 22 (1) no. 1 WpHG. In addition, Deutsche Bank AG, Frankfurt am Main, informed us in accordance with section 21 (1) and section 24 WpHG that the share of Axel Springer AG's voting rights held by Deutsche Bank Luxembourg SA, Luxembourg, exceeded the thresholds of 3 % and 5 % on December 15, 2008, and amounts to 8.34 %. H&F Rose Partners L.P., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.29 %. These voting rights are all held directly by H&F Rose Partner L.P. H&F Rose Investors Ltd., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.29 %. These voting rights are all attributable to H&F Rose Investors Ltd. in accordance with section 22 (1) no. 1 WpHG. H&F Rose Investors Ltd. is the personally liable shareholder of H&F Rose Partners L.P. HFCP IV (Bermuda) L.P., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.29 %. These voting rights are all attributable to HFCP IV (Bermuda) L.P. in accordance with section 22 (1) no. 1 WpHG. HFCP IV (Bermuda) L.P. holds 100 % of the shares in H&F Rose Investors Ltd. H&F Investors IV (Bermuda) L.P., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.6 %. These voting rights are all attributable to H&F Investors IV (Bermuda) L.P. in accordance with section 22 (1) no. 1 WpHG. H&F Investors IV (Bermuda) L.P. is the personally liable shareholder of HFCP IV (Bermuda) L.P. H&F Corporate Investors IV (Bermuda) Ltd., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.6 %. These voting rights are all attributable to H&F Corporate Investors IV (Bermuda) Ltd. in accordance with section 22 (1) no. 1 WpHG. H&F Corporate Investors IV (Bermuda) Ltd. is the personally liable shareholder of HFCP IV (Bermuda) L.P. Friede Springer GmbH & Co. KG, Berlin, informed us in January 2006 in accordance with sections 21 ff. WpHG that at midnight on December 31, 2005/January 1, 2006, 12 a.m. its share of Axel Springer AG's voting rights had exceeded the threshold of 50 % and simultaneously also the thresholds of 5 %, 10 %, and 25 % and amounts to around % (this corresponded to 20,337,710 shares with voting rights with respect to Axel Springer AG s share capital totaling 34,000,000 shares with voting rights). Friede Springer GmbH & Co. KG holds voting rights totaling % as a result of the attribution

17 Annual Financial Statements of Axel Springer AG 17 of voting rights held directly by Axel Springer Gesellschaft für Publizistik GmbH & Co. (corresponds to 17,000,010 shares with voting rights) in accordance with section 22 (1) sentence 1 no. 1 WpHG, and the attribution of voting rights amounting to 9.82 % held as treasury shares (corresponds to 3,337,700 shares) by Axel Springer AG in accordance with section 22 (1) sentence 1 no. 1 WpHG. Friede Springer Verwaltungs GmbH, Berlin, informed us in January 2006 in accordance with sections 21 ff. WpHG that at midnight on December 31, 2005/January 1, 2006, 12 a.m. its share of Axel Springer AG's voting rights had exceeded the threshold of 50 % and simultaneously also the thresholds of 5 %, 10 %, and 25 % and amounts to around % (this corresponds to 20,337,710 shares with voting rights with respect to Axel Springer AG s share capital totaling 34,000,000 shares with voting rights). Friede Springer Verwaltungs GmbH holds voting rights totaling % as a result of the attribution of voting rights held directly by Axel Springer Gesellschaft für Publizistik GmbH & Co. (corresponds to 17,000,010 shares with voting rights) in accordance with section 22 (1) sentence 1 no. 1 WpHG, and the attribution of voting rights amounting to 9.82 % held as treasury shares (corresponds to 3,337,700 shares) by Axel Springer AG in accordance with section 22 (1) sentence 1 no. 1 WpHG. AS Publizistik GmbH, Berlin, informed us in accordance with section 41 (2) sentence 1 WpHG in January 2006 that its share of Axel Springer AG's voting rights amounted to % on April 1, 2002 (corresponding to 17,000,010 shares with voting rights with respect to Axel Springer AG s share capital totaling 34,000,000 shares with voting rights). The voting rights are attributable to AS Publizistik GmbH in accordance with section 22 (1) sentence 1 no. 1 WpHG. Tweedy, Browne Company LLC, New York, USA, informed us in November 2003 and corrected in August 2004 that it had exceeded the voting rights threshold of 5 % on November 6, 2003, and that the share of voting rights attributable to it amounted to (rounded) 5.75 %, corresponding to 1,955,211 of a total of 34,000,000 registered shares with limited transferability and voting rights in Axel Springer AG. The voting rights are attributable to it in accordance with section 22 (1) no. 6 WpHG. Dr. h.c. Friede Springer, Berlin, informed us in January 2003 in accordance with section 21 (1) WpHG that her share of Axel Springer AG's voting rights exceeded the threshold of 50 % on October 11, 2002, and has amounted to 60.4 % ever since % of these voting rights are attributable to her in accordance with section 22 (1) sentence 1 no. 1 WpHG. In addition, Dr. h.c. Friede Springer, Berlin, informed us in January 2003 in accordance with section 41 (2) sentence 1 WpHG that 50 % of the voting rights and 10 shares in Axel Springer AG were attributable to her on April 1, Accordingly, 50 % of the voting rights and 10 shares are attributable to her in accordance with section 22 (1) sentence 1 no. 1 WpHG. Axel Springer Gesellschaft für Publizistik GmbH & Co., Berlin, informed us in April 2002 in accordance with section 41 (2) WpHG that % (equals 50 % and 10 shares) of the voting rights in Axel Springer Verlag AG, Berlin, were attributable to it. (28) Profit utilization proposal The annual financial statements of Axel Springer AG, which were prepared in accordance with German commercial law and German laws applicable to stock corporations, show a fiscal year distributable profit of 145,112 thousand (PY: 145,112 thousand). With the consent of the Supervisory Board, the Management Board will propose distributing a dividend of 4.40 (PY: 4.40) per qualifying share at the annual shareholder s meeting to be held on April 23, This dividend corresponds to a profit distribution of 131,121 thousand from the distributable profit. The remaining amount of 13,991 thousand will be allocated to other retained earnings. The treasury shares held by the Company do not qualify for dividends. The number of shares qualifying for dividends can change in the time remaining until the annual shareholder s meeting. In this case, an appropriately adjusted profit utilization proposal will be made to the annual shareholder s meeting, while retaining the proposal to distribute a dividend of 4.40 per qualifying share.

18 18 Annual Financial Statements of Axel Springer AG (29) Responsibility Statement To the best of our knowledge, and in accordance with the applicable reporting principles, the annual financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the combined management report of the Company and Axel Springer Group includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal opportunities and risks associated with the expected development of the Company. Berlin, February 23, 2010 Axel Springer Aktiengesellschaft (Dr. Mathias Döpfner) (Rudolf Knepper) (Lothar Lanz) (Dr. Andreas Wiele)

19 Auditor s Report 19 Auditor s Report We have audited the annual financial statements, comprising the balance sheet, the income statement and the notes to the financial statements, together with the bookkeeping system, and the combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group of Axel Springer Aktiengesellschaft, Berlin, for the fiscal year from January 1 to December 31, The maintenance of the books and records and the preparation of the annual financial statements and combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group in accordance with German commercial law are the responsibility of the Company's management. Our responsibility is to express an opinion on the annual financial statements, together with the bookkeeping system, and the combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group based on our audit. We conducted our audit of the annual financial statements in accordance with Sec. 317 HGB ["Handelsgesetzbuch": "German Commercial Code"] and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the annual financial statements in accordance with German principles of proper accounting and in the combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Company and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the books and records, the annual financial statements and the combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group are examined primarily on a test basis within the framework of the audit. The audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the annual financial statements and combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the annual financial statements comply with the legal requirements and give a true and fair view of the net assets, financial position and results of operations of the Company in accordance with German principles of proper accounting. The combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group is consistent with the annual financial statements and as a whole provides a suitable view of the Company's position and suitably presents the opportunities and risks of future development. Berlin, February 25, 2010 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Plett Wirtschaftsprüfer [German Public Auditor] Glöckner Wirtschaftsprüfer [German Public Auditor]