Axel Springer AG Annual Report 2008

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FY2008 Annual Report · Axel Springer AG

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Annual Report

Group Key Figures

in € millions

Revenues

Adjusted for consolidation effects1)

International revenues

Pro forma revenues Digital Media

EBITDA2)

EBITDA margin2)

EBITDA w/o contribution ProSiebenSat.1/Kirch2) 3)

EBITDA margin w/o contribution ProSiebenSat.1/Kirch2) 3)

EBITA2)

EBIT2)

Consolidated net profit/loss

Total assets

Equity

Equity ratio

Cash flow from continuing operations

Net debt/liquidity

Earnings per share (in €)4)

Dividend5) (in €)

Year-end share price (in €)

2004

2005

2006

2007

2008

yoy

Change

2,402.0

2,391.5

2,375.9

2,577.9

2,728.5

2,555.4

2,585.1

5.8 %

1.2 %

373.6

383.7

383.2

537.2

307.4

596.8

11.1 %

383.1

24.6 %

432.8

413.6

433.9

470.0

486.2

3.4 %

18.0 %

17.3 %

18.3 %

18.2 %

17.8 %

433.9

480.0

10.6 %

16.8 %

17.6 %

335.8

315.5

147.5

338.3

330.4

231.4

375.0

374.0

421.7

422.1

0.1 %

420.0

– 0.4 %

290.8

– 288.4

571.1

2,392.4

2,612.0

3,124.0

3,826.9

2,812.6

– 26.5 %

873.4

1,185.0

1,795.1

1,211.8

1,060.3

– 12.5 %

36.5 %

45.4 %

57.5 %

31.7 %

37.7 %

253.5

283.1

265.1

– 6.3 %

477.4

– 743.1

– 369.5

9.13

3.50

– 9.70

18.54

4.00

98.00

4.40

10.0 %

51.39

– 47.6 %

86.00

108.00

136.45

305.0

173.0

4.65

1.45

223.7

327.2

7.33

1.70

Average number of employees

10,700

10,166

9,733

10,348

10,666

3.1 %

1) Adjusted for the effects of changes in the consolidation group.
2) Adjusted for non-recurring effects and effects from purchase price allocations.
3) Adjusted for the ProSiebenSat.1 Media AG dividend collected in the previous year in the amount of € 23.1 million and for payments under the Kirch

insolvency in the amount of € 6.2 million (PY: € 13.0 million).

4) Diluted.
5) Dividend proposal for fiscal year 2008.

Contents

Journalismus heute crossmedia@work

Foreword

Management Board

Axel Springer: Multimedia journalism

Highlights

Management Report of the Group and
22
Management Report of Axel Springer AG
Business activities and operating environment 23
30
Strategy and success monitoring
34
Employees
36
Sustainability report
38
Business development and performance
57
Financial situation and balance sheet
59
Economic position of Axel Springer AG
62
The Axel Springer share
66
Risk and opportunities report
69
Events after the balance sheet date
70
Outlook

Disclosures pursuant to Sections 289 (4),
315 (4) HGB and explanatory report
pursuant to Section 120 (3) (2) AktG
Corporate governance

Report of the Supervisory Board

ullstein bild: 20 years fall of the wall

Consolidated Financial Statements
110
Auditor’s Report
111
Consolidated Balance Sheet
112
Consolidated Income Statement
114
115
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity 116
117
Notes to the Financial Statements

Boards

Glossary

Index

168

170

174

Annual Report 2008 Axel Springer AG

5.8% Increase in Revenues

in € millions

Record EBITDA

in € millions

Circulation

Advertising

Other

EBITDA return in %

Record Net Profit

in € millions

194.2

1,193.2

1,190.6

264.7

1,248.1

1,215.8

18.2 %
470.0

17.8 %
486.2

571.1

2,577.9

2007 2008

2,728.5

2007 2008

2007

2008

– 288.4

Journalismus heute crossmedia@work

The core of our business is not producing printed
paper, but excellent journalism. Every medium,
whether print, moving image or online content,
is subject to different playing rules, but content
quality is always paramount. Our business has
always been and will always be about news, opini-
ons and well-told stories. We are linking the
different worlds together by building networks and
transcending media boundaries. Our goal is clear:
to be the best-integrated and most customer-
friendly media company in Europe.

Annual Report 2008 Axel Springer AG

Foreword

“Never in its history did
Axel Springer earn so
much money in one year.”

Dr. Mathias Döpfner
Chairman and Chief Executive Officer

Foreword

Sometimes it is more difficult to perform well in bad times
than it is to perform better in good times. In 2008, the
year of the financial crisis, our employees were at their
best in bad times:

– Revenues + 5.8 % to € 2,728.5 million
– Record EBITDA of € 486.2 million
– Record consolidated net profit of € 571.1 million
– Record dividend of € 4.40

Those who read these figures may find themselves
rubbing their eyes in disbelief. Is it possible that Axel
Springer AG generates record results during a financial
crisis and a media crisis: at a time when competitors are
issuing one profit warning after another, when advertis-
ing revenues are plummeting, when once-proud U.S.
newspapers are going belly up, when some believe that
the death-knell is tolling for the print media? Yes, it is. We
are celebrating these results together with our employees
and shareholders without being pretentious or frivolous.
When you take a closer look at our key performance
indicators, you will understand why we are so proud.

Let us begin with the most important facts: Axel Springer
AG generated an EBITDA of € 486.2 million in the 2008
financial year, the highest earnings in company history.
We not only surpassed the previous year’s figure of € 434
million, adjusted for the non-recurring effects associated
with Kirch and ProSiebenSat.1, as predicted, we also
exceeded by 3.4 % the previous year’s unadjusted figure
of € 470 million. And we did it despite the extremely slow
economy during the second half of 2008.

€ 234.6 million to € 254.5 million. This is also indicative of
how strong our business is.

The 5.8 % revenue growth achieved last year also
reflects a positive trend that rarely occurs under such cir-
cumstances. The Group’s revenues rose from € 2,577.9
million in 2007 to € 2,728.5 million in 2008, thanks in part
to the effects of the company’s acquisitions of growth
businesses, but also in part to the positive performance
of existing businesses. Axel Springer grew 1.2 % organi-
cally in 2008. This is another strong, anticyclical achieve-
ment in times of declining media revenues.

The earnings per share improved significantly from
€ – 9.70 in 2007 to € 18.54 in 2008. The equity ratio
rose from 31.7 % to 37.7 %. The company’s net debt
(excluding pension obligations) declined from € 743.1
million to € 369.5 million. Axel Springer’s gearing of 0.8 is
extremely low for a media company today.

The evidence is clear. Axel Springer AG gained significant
economic strength during difficult economic times. And
we have met or even surpassed our earnings forecast
for seven straight years. In order to share this extraordi-
nary success with our shareholders and uphold our fine
tradition of paying high dividends, the Management and
Supervisory Boards will propose a dividend of € 4.40 per
share at the annual shareholders’ meeting. This dividend
is 10 % higher than the previous year’s dividend and
equates to a dividend yield of 8.6 %, based on the clos-
ing share price at the end of the year. It is the highest
dividend Axel Springer has ever paid.

The same is true for Axel Springer’s consolidated net
profit of € 571.1 million, a convincing improvement over
the previous year’s consolidated net loss of € 288.4
million, which was due to the recognition of impairment
losses. This was also a record result for Axel Springer
in absolute terms. Never in company history has Axel
Springer earned so much money in one year. When
adjusted for the sale proceeds and dividends from the
ProSiebenSat.1 deal and other significant non-operating
items, such as the effects of purchase price allocations,
amortization of goodwill, the valuation changes of the
H&F options, the income from the Kirch insolvency, and
tax effects, the consolidated net profit improved from

Significant revenue growth, debt reduction even as the
company’s debt load is quite low, record EBITDA, record
consolidated net profit, record dividend: How did we
manage to accomplish all of this in the current environ-
ment?

We are naturally quite pleased with the extremely suc-
cessful sale of our stake in ProSiebenSat.1 Media AG.
At the time, many said the sale price was too low. But in
view of the general economic outlook, the capital market
cycle, and the structural development of the free-TV busi-
ness, we thought it was a good time to sell. We sold our
stake for € 509.4 million in January 2008.

Annual Report 2008 Axel Springer AG

At the end of 2008 the value of that stake as quoted on
stock exchange would have been worth only € 63 million.
The deal thus secured a value of € 446.4 million for Axel
Springer. Nonetheless, this gain was partly offset by the
exceptional charges for impairment losses in the company’s
investment in PRINOVIS, and in the title rights to our Ger-
man magazines amid the current economic environment.

It is important to remember, however, that non-recurring
factors were not the main reason. The company’s
revenues and earnings were higher on both an adjusted
and an unadjusted basis. We worked hard, successfully
implemented copy-price increases, centralized our adver-
tising sales in the German market, thereby increasing our
focus on the customer, initiated cost reduction measures
at an early stage to counteract the substantial decline
in print advertising revenues, and further optimized our
internal processes.

But other companies also take similar steps. What then
sets us apart from the rest? Aside from our focus on
timely, disciplined cost management and the success-
ful implementation of copy-price increases, I believe that
three factors are especially important:

1. The comparatively lower dependence on the advertis-
ing market.
2. The timely and resolute digitization of our business
operations.
3. Our strong brands.

Whereas U.S., English, and German newspaper compa-
nies generate anywhere from 55 % to 80 % of their total
revenues through advertising, Axel Springer’s advertis-
ing revenues account for only 45.7 % of the total. In
particular, the classified advertising business, which has
been deeply impacted by structural shifts, is much less
important for Axel Springer. While our competitors gener-
ate about 56% of their total advertising revenues from
classified ads, at Axel Springer AG they represent only
18 % of advertising revenues and only 8 % of total rev-
enues. Consequently, we are less affected by the cyclical
trends of the advertising market, and more importantly,
we have much more to gain and less to lose from the
digitization of these business models due to our low
dependence on classified advertising revenues.

This leads to the very determined transfer of our business
models to digital distribution channels, which is a critical
success factor for media companies. We sought to take
advantage of online opportunities at a very early stage
and then proceeded to invest in these opportunities
resolutely and without fear of cannibalizing our exist-
ing businesses. Our motto has always been: it is better
to cannibalize our own business than to let others do it
for us. And there is much to be gained, because overall
growth and growth in earnings in the digital business can
be greater than the decline thereof in the analog busi-
ness. To be successful in this endeavor, the complete
integration of print and online processes, from content
production to the now centralized cross-media market-
ing, is vitally important. This philosophy is paying off
today. Seven of our profitable online businesses achieved
EBITDA margins of more than 20 % in 2008. And the two
highest earnings margins across the entire group are now
being generated by online activities. Online business is
thus not simply an abstract future vision. It has already
become a lucrative reality.

Thirdly, we clearly profit from our strong brands when
the economic going gets tough. In times when marketing
budgets are being scaled back, our high-reach BILD
family (which generated record profits for the sixth year
in a row in 2008) is the big winner in the crisis. Because
advertisers want to place their ads where the (sales)
impact is greatest. The same is true on the regional level
for HAMBURGER ABENDBLATT, BERLINER MORGEN-
POST, and Berlin’s highest-circulation newspaper, B.Z.
And, in perhaps the nicest development of all, last year
WELT Group also managed to transform the crisis into an
opportunity. In last year’s Annual Report I reported that
our premium newspaper group had earned a profit for
the first time in its history. Now, I am proud to report that
WELT Group generated an even higher profit in 2008.
The same group that posted a double-digit loss only
four years ago generated a double-digit profit last year
despite the financial crisis and despite substantial invest-
ments made in WELT KOMPAKT and online business
activities (which saw their reach grow by 121.6 %).

All of this does not mean that we have become com-
placent or have deluded ourselves into thinking that our
business is totally immune to the effects of financial and

Foreword

who, while being interviewed in 1959, was confronted
with the following statement: “Sometimes one gets the
impression that your newspapers, especially Bild-Zeitung,
are trying to give the Germans hope that will ultimately
dissolve into disappointment.”

To which Axel Springer replied:

“Including the Bild-Zeitung, we have not talked the Germans into
having hope, but we have perhaps shown them goals. The reunifica-
tion of Germany is enshrined in the preamble to the Basic Law,
which is the law of the land, after all. It is written there that every
German is duty-bound to bring about the unity and freedom of
Germany through free self-determination. That is the mission we
have set for ourselves. Whether it can be achieved today, is another
question.

I am regarded by many as one of the driving forces for the reunifica-
tion of Germany. In that respect, I find myself in agreement with
many of my social democratic friends, who have been that way to
the present day. I believe we cannot afford to lose sight of this goal,
but I will formulate it quite courageously: Reunification means self-
determination more than anything else. Self-determination for the
Germans, freedom for all Germans, not only for us. I believe we are
simply not permitted to let the others waste away in bondage on the
other side. We are simply not permitted to do that, especially consid-
ering the fact that we owe a special debt by virtue of our history.”

We have many reasons to be happy today.

Sincerely

Mathias Döpfner

structural crises. In 2009, we must be prepared to cope
with an extremely slow advertising market and the effects
of recessionary tendencies. It would be irresponsible to
release a precise forecast in this extremely volatile envi-
ronment. We will, of course, be unable to again generate
record results in this economic environment as we did
this past year.

Our task will be to further expand our advantage over
our competitors and to invest in the strength of our
brands and in digitization. We want to offer newspapers,
magazines and websites after the crisis which continue
to delight our readers with journalistic excellence. We are
therefore convinced that Axel Springer will gain additional
market share and emerge from this crisis strategically
stronger.

There are three reasons why we are so firmly convinced
of all of this:

1. We are entering the crisis in an extremely strong eco-
nomic position. We have substantial cash holdings, low
debt, and a very advantageous line of credit.
2. As market leader, these advantages will allow us to
further bolster the relative power of our strong brands
through cross-media activities, especially with regard to
digital distribution channels.
3. These advantages also make it possible for us to
capitalize on unique opportunities, namely to acquire at-
tractive assets at very favorable prices. This will expedite
the development of our company and help us achieve
our objective of becoming a leading European integrated
multimedia group.

Also helpful in this regard are clearly formulated corporate
values and transparent sociopolitical beliefs. This will be
seen very clearly in 2009 when the Federal Republic of
Germany celebrates the sixtieth anniversary of its founding
and the twentieth anniversary of the fall of the Berlin Wall.

We are in Berlin. It is here that our corporate headquar-
ters and our main current and national titles are located,
including BILD since 2008. From our offices we are glad
to look out on the reunified capital of Germany – on an
area where the Wall once stood close to our building.
And from here we reflect on our founder, Axel Springer,

Annual Report 2008 Axel Springer AG

Management Board

Dr. Mathias Döpfner
Chairman and Chief Executive Officer
Subscription Newspapers
and International

Rudolf Knepper
Vice Chairman
Printing and Logistics

Born 1963, journalist.
Career milestones:
Frankfurter Allgemeine Zeitung,
Gruner+Jahr
Chief Editor Wochenpost,
Hamburger Morgenpost
and DIE WELT.
Member of the
Management Board since 2000,
Chairman since 2002.

Born 1945, master’s degree in
engineering and master’s degree
in business and engineering.
Career milestones
(since 1973 with Axel Springer):
Head of Corporate Planning
Office for Printing;
Manager of the
Hamburg Printing Plant;
Head of Production
Newspaper Printing;
Member of the
Management Board since 1994,
Vice Chairman since 2002.

Management Board

Steffen Naumann
Chief Operating Officer and
Chief Financial Officer

Born 1966, master’s degree
in business administration and
master’s degree in economics.
Career milestones:
McKinsey & Company;
Member of the
Management Board of
Bertelsmann Buch AG;
Executive Vice President and Chief
Financial Officer of
Random House, New York.
Member of the
Management Board
since 2001.

Dr. Andreas Wiele
BILD Group and Magazines

Born 1962, lawyer.
Career milestones:
Editor, Hamburger Morgenpost;
Head of Publishing Capital and
Geo, Gruner+Jahr, Paris/France.
Executive Vice President and Chief
Operating Officer of Gruner+Jahr
USA Publishing, New York.
Member of the Management Board
since 2000.

Annual Report 2008 Axel Springer AG

Discover the diversity of the journalistic offerings
of our newspapers, magazines, and online portals:
www.axelspringer.com/ourmedia

Axel Springer: multimedia journalism

Axel Springer:
multimedia journalism

Our passion for excellent journalism has, for a
long time, included digital media: We transfer
print brands and content to digital distribution
channels and supplement our portfolio with
online portals. Examples from our brand port-
folio demonstrate: This is how multimedia is
already experienced at Axel Springer.

Annual Report 2008 Axel Springer AG

Systematic linkage

It is after midnight. Tuesday, 00.04 a.m.: copy dead-
line at WELT KOMPAKT, one of the most up-to-date
national daily newspapers in Germany. The new edition
is ready for printing. One main subject is the new US
President Barack Obama’s move into the White House.
Parallel to the print version in its compact tabloid for-
mat, WELT KOMPAKT also provides access to things
worth knowing and seeing on the subjects of the day
through various digital media. Readers expect a lot
more about something like the Obama family’s move
than condensed reports, commentaries, or photos in
their newspaper. For example, they can download the
president’s inaugural speech on their mobile phone
as a video by decoding the printed “QR Code” (quick
response code). Several times a day, according to the
situation and attractiveness of the offering, the journal-
ists decide what newspaper content is to be supple-
mented with digitized additional information through the
QR Code.

With the QR Code, WELT KOMPAKT employs an
innovative opportunity for the link between newspaper
production and online service. The interested rea-
der simply photographs the square bar code, which
can contain a web address, for example, with his/her
(Internet-enabled) cell phone, which is equipped with a
free software application for this purpose. The software
translates the code, and the connection to the offered
web page is automatically established.

WELT KOMPAKT is in addition one of the first daily
newspaper to systematically offer in-depth informa tion
on current events-streaming videos on the Internet,
which are also to go. Impressive proof for the claim
of incorporating attractive innovations from the media
world – “Twitter,” “YouTube,” “Facebook,” and “My-
Space” are also examples of this – into the multimedia
strategy of the quality newspaper to delight even more
young and ageless readers.

The newsroom, the heart of the editorial office: Here, ideas
are developed and journalistic content is prepared both for the
newspaper as well as for various digital media

The latest news from WELT TV: Melanie Müller and her team
prepare moving image reports of topical issues and thus keep
WELT ONLINE users up to date through videos

WELT KOMPAKT offers real added value with
additional digital information on the Internet: Access
is via a printed code, the QR Code, which the reader
photographs with their cell phone and which is then
transformed into a web address by special software

Geschäftsbericht 2008 Axel Springer AG

“Philipp, what did it come down to?” BILD editor
Kai Traemann interviews Philipp Lahm about the
Bayern Munich match, in private surroundings. The
inter national player speaks spontaneously into the
reporter’s mini camera. Using special software, the
material is sent directly to the BILD editorial office

Freshly showered, friendly, professional:
Even after a defeat, Philipp Lahm doesn’t
try to gloss over anything. In the video on
BILD.de he explains to the fans what the
team must do better in the next match

–

00:47 / 02:30

Axel Springer: multimedia journalism

11.30 p.m. BILD Munich starts printing. Two pages
on the match. Large banner: “You can see the
exclusive video online.” Anyone can click in, look, enjoy:
www.BILD.de.

BILD is not print, not online. BILD is exclusive, emotional,
and the market leader. The biggest newspaper in Europe
with far more than eleven million readers daily. Online with
one billion clicks and 80 million visits per month. Mobile
front runner with more than 17 million page views. The
BILD brand stands for innovation in the media market.
Ten of thousands of photos from the “1414” reader
report ers. Nearly 30,000 BILD video cameras sold with
direct upload capability to the editorial department’s
server. “4242” – via picture recognition technology videos
arrive directly on cell phones. Own cell phone tariff with
flat rate surfing on the BILD mobil portal. Moving image
pioneer. BILD, that means: 800 reporters, all channels.

11.31 p.m. – only one question remains: And what are
we going to do tomorrow?

Perfect teamwork

The Sunday fixture of the Bundesliga, the national soccer
league. The Munich Allianz Arena, 6.48 p.m.: final whis
tle, defeat for Bayern Munich, match report, headlines.
And then? Then BILD shows you what multimedia
means.

8.53 p.m. Munich’s BILD sports reporters right up close:
Analysis, discussion, and outlook. A postmatch inter
view with Philipp Lahm in his private surroundings. No
pencil, no paper – the international player speaks into a
small camera held by the reporter: The material is sent
directly into the BILD editorial office during the recording
using special software.

It is still 8.53 p.m. The BILD WebTV team gets the first
pictures. Editing, sound recording, graphics. Parallel to
the newspaper page, the video emerges. Can BILD TV
also sell it tomorrow to a television station as well? “Of
course – by then we have long broadcast it already.”

9.56 p.m. The video goes online on BILD.de. And the
story and the photos? “Have been in the sports channel
for three hours already.” What else do we still need as
supplementary material? Did the reader reporters send
something on the game? Photos, videos? The Lahm
interview has also been on BILDmobil for a long time
already!

–

00:47 / 02:30

All the threads converge in BILD’s production room.
The information and materials are viewed and edited
here for the readers of the BILD newspaper as well as
the users of BILD.de

In the editorial office, the newspaper pages of every
edition are laid out on the computer by media designers and
continually updated according to the events of the day

Annual Report 2008 Axel Springer AG

Use of multimedia: Martin Spieler (r.), editor-in-chief of
Axel Springer Switzerland’s HANDELSZEITUNG, appears
several times each week on the radio and in his own program
“standpoints” on television. He explains the development
of the economy and stock exchange to viewers on all channels.
Here, for example, with Philippe Gaydoul, managing director
of a leading Swiss groceries discounter

Well informed in the office: Like many other Swiss businessmen,
this reader of the HANDELSZEITUNG also uses the morning train
journey for an intensive read of the newspaper

Switzerland trusts in this

A new day at the stock exchange in Zurich. 7.35 a.m.:
The first firms announce their results and key data in
advance. Live in the radio studio at the best broad-
casting time: Martin Spieler, editor-in-chief of the Axel
Springer Switzerland trade newspaper HANDELS-
ZEITUNG, comments on the events on the stock
exchange. A quarter of a million people in the financial
center of the country can listen to his analysis.

The editorial team of the HANDELSZEITUNG, the
largest business newspaper in Switzerland, reacts to
events in a media-compatible way in every situation
– be it in the weekly newspaper on Wednesday, on
TV programs on Wednesday and Friday, as well as
daily on the radio and on the Internet. Particularly in
the global financial and economic crisis, journalism
committed to research, analysis, and commentary is
highly rated.

In the conference at 8.30 a.m. on this morning, the
editorial board determines the major topics for the
newspaper and the television broadcasts. Stock ex-

Axel Springer: multimedia journalism

Switzerland trusts in this

change analyses and picture galleries are prepared for
the Internet. Point 12 on the radio and on the Internet:
“Straight from the HANDELSZEITUNG Editorial Office
Martina Wacker:” The editorial team comments on the
stock exchange events worldwide for the radio and
for the Internet three times per day – at 7 a.m., 12 noon
and 5 p.m. In addition to its newspaper and online
activities, the HANDELSZEITUNG Editorial Office pub-
lishes 100 specialist supplements and guides annually.
In addition, it produces three different economics pro-
grams that run on the Swiss television channel SF1 as
well as the two largest private regional TV stations.

At 2 p.m., the online editorial team discusses the day’s
and the week’s topics. Additional texts, links, and
pictures are looked for, rewritten, and prepared for the
Internet. At 4.30 p.m., it is time for the telerecording:
Personalities from industry are critically interviewed.
Loyal to the creed of the HANDELSZEITUNG, always
to hear news and information first hand, to examine it
and to place it into a larger context.

A pro in the radio studio as well: Every day editor-in-chief
Martin Spieler analyzes and comments for the listeners on the
current developments on the financial markets

She doesn’t miss a word: HANDELSZEITUNG editor Martina
Wacker edits a radio appearance by the editor-in-chief on the
computer and cuts a podcast from it, a radio program that is
then available for download on the Internet

Annual Report 2008 Axel Springer AG

Only television is more beautiful: TV DIGITAL’s
website is as informative as it is entertaining
at www.tvdigital.de

A photo that radiates the whole dynamic and expertise of TV
DIGITAL in the field of sport: Marvin Compper, soccer interna-
tional and defender at TSG 1899 Hoffenheim, in a shirt display-
ing the TV DIGITAL logo – the brand is the club’s main sponsor

With seven individual split editions, TV DIGITAL
is responsive to viewers’ different entertainment
needs. In every edition, TV DIGITAL informs about
the offerings from up to 108 digital stations

From viewer to program director

Had a good sleep! 11.45 on Sunday morning, a group
of young people are drawn to breakfast. At the table
with them is the subject of television. The topic of
conversation is provided by TV DIGITAL. Germany’s
biggest TV magazine and defining medium for digital
entertainment offers exciting and current information
on films and television, as well as all around sport every
two weeks. Providing interesting facts from the world
of consumer electronics, the technophile younger
gene r ations, which use new media with the greatest
of ease, are brought up to date by TV DIGITAL, which
spans the whole range of electronic entertainment
media and new flat-screen TVs, as well as mobile
entertainment through video players, navigation with
cell phones, right up to digital cameras. Above all, the
magazine gives an optimal overview of the growing
range of TV services on offer. The TV DIGITAL reader
selects their ideal program among other things, from
the large Entertainment Guide section, which – for
complete user value – reports on new films on TV, at
movie theaters, and on DVD and Blu-ray Discs.

On the Internet at www.tvdigital.de it is called the “full
program.” An extensive channel database with short
profiles of at least 400 TV channels is also accessible
at all times.

If you are drawn towards communication platforms on
the Internet, the TV DIGITAL Entertainment Community
is waiting for you. Here, new trends are discussed and
current feature films, music, and offerings from the
web are evaluated. Whether videos from linear TV or
moving images from the web: According to interest,
content can be downloaded to mobile end devices, a
PC, or directly to a home hard disk recorder. A further
innovation is “My personal TV DIGITAL:” Thanks to
intelligent and “self-learning” technology, the spectator
can set up his personal TV stations on the hard disk re-
corder in only a few moves. The result is individual TV
enjoyment just like, above all, the younger, multimedia-
oriented generations wish for.

Through its electronic program guide, TV DIGITAL
provides viewers with simple and comfortable
navigation, selection, and programming of
TV content. It applies also in the respect that
Germany’s defining medium for digital entertain-
ment is equipped for the future

Not only a fascinating spectacle live: Women who are interested can find out more about
the highpoints of major fashion events, such as here the Fashion Week in Berlin, on the
Internet at goFeminin.de, the German-language website from auFeminin.com

auFeminin.com – with portals in nine countries –
is Europe’s leading online platform for the female
target group. Every user can expect to find a wide
spectrum of information, services, and communities
on subjects such as trends and fashion, beauty,
fitness, and psychology on the Internet

Axel Springer: multimedia journalism

Straight from the catwalk

The fashion world is feverishly awaiting this evening.
A Friday in Berlin, 8 p.m.: On the catwalk, international
models present the creations for the coming autumn. The
fashionconscious woman is just as good as there via the
Internet, thanks to goFeminin.de, the Germanlanguage
website from auFeminin.com, Europe’s leading online
platform for women. Within a very short time, the most
important trends can be appraised on the web. The
editorial team of auFeminin.com has made it all possible;
the fashion experts research the innovations beforehand,
comment on the highlights, and provide background
reports. Thanks to their professional competence, they
also, in this case, provide the women with orientation and
the nice feeling of being in vogue this season.

Women in nine countries rely on this guidance in the
meantime. And they can do it with absolute confidence:
In France, Belgium, Switzerland, Spain, and Germany,
the respective country portal of auFeminin.com is already
the market leader. In Great Britain, the portal even ranks
in the top trio of women’s websites in the “general
interest” category.

auFeminin.com supplements Axel Springer’s successful
women’s magazines ideally and stands for the consistent
digital expansion of the spectrum of multimedia products
on offer. “Health” is another one of these cornerstones.
Through the acquisition of the health portal Onmeda.de,
Germany’s leading supplier of health information in the
premium online segment, auFeminin.com has optimally
rounded off its core competence. Consequently the users
of auFeminin.com are not only uptodate in fash ion, but
also have an adviser for their allround wellbeing, that is
all one can wish for.

Annual Report 2008 Axel Springer AG

Highlights

The year 2008 was yet another
successful year in the business
development of Axel Springer. You
can find a selection of important
milestones here.

BILD pushes
cross-mediality
Axel Springer presses ahead
with cross-media integration
at BILD. The foundations for
this were the buyback of the
remaining shares in BILD.de
from T-Online and the conso-
lidation of the editorial offices
in Berlin. Since then, the on-
line and print editorial teams
have been working together
in the joint production room
and in interlinked depart-
ments, in order to tell every
story with multimedia as text,
photos, video, and graphics.
Their motto: “Not every editor
must be able to do every-
thing; the editorial team must
be able to do everything.”
Cross-media success stories:
BILD launches the 4242 ser-
vice for downloading videos
via BILDmobil and introduces
the reader reporter video
camera.
www.bild.de

Acquisition of 33.3 %
of StepStone ASA
Clear positioning in the in-
ternational online job mar-
ket: Axel Springer acquires
about 33.3 % of the shares
of StepStone ASA, Oslo, a
worldwide leading supplier of
talent management software
and services. The focal points
of business activity are online
job fairs and talent manage-
ment software. Previously
Axel Springer already held
around 49.9 % of StepStone
Germany AG. Through its
investment in the parent com-
pany, Axel Springer has now
also positioned itself on the
attractive European market of
the online job fair.
www.stepstone.com

Participation in
Dogan Yayin
The existing partnership be-
tween the Dogan Group and
Axel Springer is strengthened
by a participation in the lead-
ing Turkish media group
Dogan Yayin Holding. The
group has an excellent po-
sition in an attractive growth
market and an outstanding
portfolio suitable to Axel
Springer with the newspapers
Hürriyet, Milliyet, and Posta,
as well as Dogan TV.
www.doganholding.com.tr

Acquisitions strengthen
digital offensive
onmeda.de, partyguide.ch,
usgang.ch, transfermarkt.de,
or gamigo.de, these strong
brands on the Internet all
belong to Axel Springer’s
digital media offerings. With
onmeda.de Axel Springer ex-
panded its offering providing
premium information on the
subject of health in 2008. The
leisure-time range and life-
style portals PartyGuide and
usgang are winners due to
their high penetration. trans-
fermarkt is the number one
among the soccer communi-
ties in the German-speaking
Internet and gamigo is one
of the leading online game
suppliers.
www.axelspringer.com/
ourmedia

Highlights

WELT Group heading
for a record
Leading in cross-media
quality journalism: The daily
newspaper DIE WELT, with its
tabloid WELT KOMPAKT and
its news portal WELT ONLINE,
reach new record highs in
2008. DIE WELT never sold
so many copies before as in
the second quarter of 2008,
with more than 280,000
copies. WELT ONLINE, by far
Germany’s fastest-growing
digital news portal, positioned
itself at the peak of the online
offerings by the German qual-
ity newspapers on the web in
December 2008, with 173.6
million page impressions.
www.welt.de

Launch of “FAKT” in the
UK and Ireland
Premiere for Axel Springer:
With the first editions of FAKT
for Polish citizens living in the
United Kingdom and Ireland,
an international subsidiary of
the group introduced a print
product in a third country for
the first time. At the same
time, it is at present also the
first pillar of Axel Springer in
the British Isles. The two edi-
tions provide the week’s most
important information from
the Polish homeland as well
as from the United Kingdom
and Ireland.
www.efakt.pl

Top quality seal for
sustainability reporting
Responsibility lived success-
fully: As the first media
enter prise worldwide, Axel
Springer is awarded the high-
est mark of “Level A+” by the
Global Reporting Initiative for
its Sustainability Report. The
group reports voluntarily on a
total of 121 ecological, social,
and economic performance
criteria. The entrepreneurial
responsibility of Axel Sprin-
ger extends far beyond its
core business. Example: “Ein
Herz für Kinder” (A Heart For
Children): During the TV Gala
on the occasion of the 30th
anniversary of the BILD aid
organization in December
2008 alone, € 15.1 million
were collected – a new contri-
bution record.
www.axelspringer.com/
sustainability

A partner for all
media: Axel Springer
Media Impact
Always an eye on the custom-
ers’ needs: Following this
guiding principle, Axel Sprin-
ger AG has consistently put
the marketing of its na tional
newspapers, magazines,
and digital media into the
hands of a unit. Through the
cross-media concentration of
its advertising business, Axel
Springer Media Impact offers
one of the strongest media
penetration rates on the
German media market – and
links print and online media,
forming individual and innova-
tive communication solutions.
www.axelspringer.com/asmi

22 Annual Report 2008 Axel Springer AG

Management Report of the Group
and Management Report of Axel
Springer AG

2008 at a glance

Outlook for 2009

At the beginning of 2009, Axel Springer sold its
minority interests in regional newspapers, thereby
freeing up funds for investments in the company’s
own newspapers, for the multimedia expansion of its
brands, and for the acquisition of new online growth
businesses. At the same time, Axel Springer (like every
other company today) is faced with the challenge of
dealing with an extraordinary economic downturn.
In consideration of this exceptional situation and the
associated forecast uncertainties, the Management
Board has opted not to announce revenue and
EBITDA targets for the year 2009.

Introductory remarks

The following combined management report for the
Group and the parent company Axel Springer AG contains
statements about the development of the Axel Springer
Group. With the exception of those effects that are de-
scribed separately, these statements are also largely
applicable to the development of Axel Springer AG.

For the sake of enhanced comparability, the operating
earnings indicators EBITDA, EBITA, and EBIT have been
adjusted for non-recurring effects and for the effects of
purchase-price allocations.

Starting at the beginning of 2008, more detailed criteria
were applied for the purpose of classifying revenues as
“advertising revenues” and “other revenues” in the Digital
Media segment. This change affected the prior-year
figures from the third quarter onward. As a result, the
“advertising revenues” for the second half of 2007 were
€ 14.3 million less than the figure published in the Annual
Report for 2007, and the “other revenues” were higher
by the same amount.

Amid the difficult operating environment of the 2008
fiscal year, Axel Springer AG surpassed the forecast
targets announced at the beginning of 2008 and
posted the highest profit in the company’s history.

The 5.8 % increase in Group-wide revenues was
driven in part by the revenue contributions of new
activities, but also in part by the heightened circula-
tion revenues of the company’s print titles, due to
the copy price increases implemented by some of the
newspapers and magazines. These factors more than
offset the decline in advertising revenues in the core
business of German-language media caused by the
economic situation.

Thanks to the positive revenue development and the
continuing practice of strict cost discipline, the
earnings before interest, taxes, depreciation, and am-
ortization (EBITDA) came to € 486.2 million, 3.4 %
higher than the corresponding prior-year figure
(€ 470.0 million). Adjusted for the dividend of
ProSiebenSat.1 Media AG and the income from the
Kirch insolvency, the EBITDA of € 480.0 million was
well above the forecast target of at least € 434 million.
At 17.8 %, the EBITDA margin for 2008 remained
on a high level (PY: 18.2 %). The EBITA of € 422.1
million was likewise higher than the prior-year figure
of € 421.7 million.

The consolidated net profit of the Group reached a
new all-time record of € 571.1 million (PY: consoli-
dated net loss of € 288.4 million). Even adjusted for
significant non-operating items, including the gains
on disposal in 2008 and the negative results of dis-
continued operations in 2007, the consolidated net
profit rose from € 234.6 million to € 254.5 million.
The diluted earnings per share came to € 18.54
(PY: € – 9.70); adjusted for significant non-operating
items, it rose from € 7.77 to € 8.43. In view of the
positive profit performance, the Management Board
and Supervisory Board will propose distributing a
dividend of € 4.40 (PY: € 4.00) per qualifying share
at the annual shareholders’ meeting to be held on
April 23, 2009.

Management Report of the Group and Management Report of Axel Springer AG 23

Business activities and operating environment

Business activities

Founded in 1946 by the publisher of the same name,
Axel Springer today is the biggest newspaper publisher
and the third-biggest magazine publisher in Germany. It
is also one of Europe’s leading media companies. The
core competence of Axel Springer is excellent journalism
– up-to-date, informative, and entertaining – in newspa-
pers, magazines, and digital media. Moreover, Axel
Springer’s information and entertainment services pro-
vide attractive, cross-media advertising spaces. Another
core competence consists in the creation of market-
places and classified ad markets as supplementary in-
formation and business platforms.

Axel Springer is active in a wide spectrum of media, from
newspapers and magazines to web portals based on the
company’s print brands, online classfied ad markets and
marketplaces and independent of those brands, as well
as online classfied ad markets and marketplaces and TV
and radio broadcast companies. Thus, Axel Springer’s
media portfolio covers the information needs of a diverse
group of consumers in a total of 35 countries to date.
The portfolio includes successfully established multime-
dia brand families such as the BILD Group and the
WELT Group. Axel Springer reaches 55.9 % of Germans
through its 65 newspapers and magazines. With refer-
ence to all the titles tracked by the German circulation
research institution IVW, Axel Springer holds 20.3 % of
the German market. Outside Germany, Axel Springer
publishes more than 140 international titles. On top of
that, the company operates more than 60 online offer-
ings and holds investments in TV and radio broadcast
companies in Germany and abroad.

The company’s core values are creativity, entrepreneur-
ship, and integrity. These values represent the basis of
Axel Springer’s corporate culture. They provide guidance
to the company’s highly motivated and highly qualified

employees as they pursue the company’s business
strategy. The strategic priorities are to extend the com-
pany’s leadership position in the national print market
and advance the internationalization and digitization of
the core business of print media. By this means, Axel
Springer intends to become the best-integrated multi-
media company in Europe.

Business locations, equity holdings

The company’s headquarters is located in Berlin. Pub-
lishing sites are located in Hamburg and Munich, as well
as at other locations and in other countries. The consoli-
dated shareholdings of the Group are listed in Section 46
of the notes to the financial statements.

Segments

Axel Springer applied the new accounting standard
IFRS 8 Operating Segments in its segment reporting for
the first time in 2008. In accordance with this standard,
the external segment reporting is generally based on the
company’s internal management and reporting struc-
tures. An important change in the segment reporting of
Axel Springer involves the assignment of all the brand-
related online activities of the newspapers and maga-
zines (such as Bild.de, for example) in Germany and
abroad to the Digital Media segment. The prior-year
figures were adjusted accordingly. As a result of this
change, the principal elements of the company’s busi-
ness strategy (those being market leadership in the core
business of German-language media, internationalization,
and digitization) are presented without overlaps, in the
most transparent way possible.

Currently, Axel Springer’s business activities are as-
signed to one of the following five segments: Newspa-
pers National, Magazines National, Print International,
Digital Media, and Services/Holding.

24 Annual Report 2008 Axel Springer AG

Newspapers National
Axel Springer is Germany’s biggest newspaper publish-
ing house. The German newspapers (and German adver-
tising supplements) are consolidated within the Newspa-
pers National segment. Traditionally the biggest revenue
generator of all the segments, Newspapers National
contributed 46.8 % of the Group’s consolidated reve-
nues in 2008.

Axel Springer’s newspaper BILD is Europe’s biggest
tabloid-format newspaper. In the category of newsstand
papers, BILD (together with the Berlin tabloid B.Z.) is the
market leader, with a market share of 80.7 %, based on
paid circulation.

With a market share of 17.3 %, the daily newspaper DIE
WELT (including the tabloid-format WELT KOMPAKT) is
Germany’s third-biggest premium newspaper, as meas-
ured by the paid circulation.

The regional subscription newspapers HAMBURGER
ABENDBLATT and BERLINER MORGENPOST are the
leading regional newspapers in their respective metro-
politan areas, with market shares of 58.5 % (Hamburg)
and 24.6 % (Berlin) (Hügel Statistik, measured by gross
advertising sales). Together with B.Z., these newspapers
are representative of Axel Springer’s strong command of
regional markets.

In the group of national Sunday newspapers, Axel
Springer’s BILD am SONNTAG and WELT am
SONNTAG are the clear leaders, with a market share
of 86.4 %.

In particular three awards substantiate the excellent
journalistic quality of Axel Springer AG’s media offerings.
The premium newspaper DIE WELT was honored with
the Ludwig-Erhard-Preis for economic journalism. The
HAMBURGER ABENDBLATT received the Deutsche
Lokaljournalistenpreis (German Local Journalist Prize)
from the Konrad-Adenauer-Stiftung for the overall per-
formance of the editorial staff and also the Theodor-
Wolff-Prize 2008 in the category “local”.

Magazines National
With a portfolio comprising more than 50 titles, Axel
Springer is the third-biggest magazine publisher in Ger-
many. The company holds leading market positions in
the categories of TV listings, women’s magazines, youth
magazines, music magazines, computer magazines,
auto magazines, sports magazines, and business publi-
cations. The Magazines National segment contributed
about 20.7 % of the Group’s total revenues in 2008.

Auto The publications of the AUTO BILD brand of auto-
mobile magazines are the preferred choice of car lovers
and other interested persons. Axel Springer also pub-
lishes numerous specialty titles under the AUTO BILD
brand, including AUTO BILD SPORTSCARS, for example.

Sport Axel Springer is represented in the market of
sports magazines with SPORT BILD.

Women, youth, music In the category of women’s
magazines, Axel Springer publishes major titles such as
BILD der FRAU, JOLIE and FRAU von HEUTE. It also
publishes youth magazines such as POPCORN and
MÄDCHEN and music magazines such as ROLLING
STONE and MUSIKEXPRESS.

TV listings HÖRZU is the No. 1 weekly TV listings guide
in Germany. Axel Springer also publishes TV DIGITAL,
the first-ever TV listings guide for digital TV, as well as
titles such as FUNK UHR, BILDWOCHE, TV NEU, and
TV GUIDE.

Computer and entertainment electronics The com-
pany’s most important brands in the market for com-
puter and entertainment electronics magazines are
COMPUTER BILD, COMPUTER BILD SPIELE, and
AUDIO VIDEO FOTO BILD.

Business and finance The German publications EURO,
EURO am SONNTAG, and MARKT und MITTELSTAND
published by Axel Springer Financial Media (known
as Axel Springer Finanzen Verlag until December 2008)
provide timely, trustworthy reports on current develop-
ments, accompanied by extensive background information.

Management Report of the Group and Management Report of Axel Springer AG 25

Print International
Internationally, Axel Springer publishes more than 140
newspapers and magazines in a total of 35 countries
outside Germany, through its own subsidiaries and
through licensing arrangements. These activities are
focused on the fast-growing markets of Eastern Europe,
in particular. In Western Europe, the company’s publish-
ing activities are focused on the countries of Switzerland,
Spain, and France. AUTO BILD is the biggest interna-
tional brand family. In 2008, the Print International seg-
ment accounted for 15.0 % of the Group’s total revenues.

Axel Springer is represented in Poland with twelve
magazines and four newspapers. The most important of
these are FAKT, Poland’s leading tabloid (including, as of
September 2008, the international issues “FAKT for
Great Britain” and “FAKT for Ireland”), as well as the
premium newspaper DZIENNIK and the sports newspa-
per PRZEGLAD SPORTOWY. As for magazines, Axel
Springer boasts publications such as NEWSWEEK
and FORBES in Poland. With a market share approach-
ing 45 % of national daily newspapers based on paid
circulation, AS Polska is the biggest newspaper pub-
lisher in Poland.

In Hungary, Axel Springer publishes more than 30 maga-
zines and ten daily newspapers. Measured by print adver-
tising revenue, Axel Springer is the biggest publishing
house in Hungary, with a market share of 19 %. Axel
Springer is also the market leader in the categories of TV
listings, women’s magazines, auto magazines, and
cooking magazines.

In Switzerland, Axel Springer publishes the business
newspaper HANDELSZEITUNG and 13 magazines. It is
the market leader in the categories of business and
finance magazines and TV listings. The newspaper

HANDELSZEITUNG and the business magazine BILANZ
are among the most-read business publications in Swit-
zerland. Through its publication BEOBACHTER, Axel
Springer is very well positioned in the category of con-
sumer advice magazines, and holds an excellent position
in the TV listings category with its publications TV STAR
and TELE.

In France, Axel Springer publishes four magazines of its
own and one magazine through a joint venture. These
publications fall within the categories of TV listings,
women’s and lifestyle magazines, and auto magazines,
including the cooking magazine VIE PRATIQUE GOUR-
MAND and the TV listings magazine TELEMAGAZINE.

In Spain, where the company publishes 16 magazines,
Axel Springer is the market leader in the categories of
video game and computer magazines. Furthermore,
AUTO BILD ESPANA and AUTO BILD 4x4 are the lead-
ing publications in the category of auto magazines.

In Russia, Axel Springer publishes four magazines,
including the business magazine FORBES and the com-
puter magazine COMPUTER BILD.

In the Czech Republic, the company publishes seven
magazines, including the titles SVET MOTORU and
AUTO TIP, making Axel Springer the market leader in the
category of auto magazines. In Romania, Axel Springer
holds a 40 % interest in Edipresse AS Romania and pub-
lishes a total of 13 magazines.

26 Annual Report 2008 Axel Springer AG

Digital Media
The Digital Media segment comprises the company’s
online activities in Germany and abroad, as well as the
activities and investments in the TV and radio sector. In
the last few years, Axel Springer has built up this media
portfolio by means of organic growth projects and acqui-
sitions. In this segment, Axel Springer is pursuing three
paths of expansion. First, the company is leveraging its
brand management and content expertise by transferring
its existing print brands and content to digital distribution
paths and also by acquiring strong online brands. Sec-
ond, Axel Springer is stepping up its activities in the area
of traditional and success-based online marketing. And
third, the company is strengthening its competitive posi-
tion in the area of online classified ad markets and online
marketplaces by expanding its own portals and investing
in third-party portals. As a result of all these initiatives,
Axel Springer has increased its overall reach dramatically
in the last few years, up to an average of 19.3 million
unique visitors per month (gross reach, ComScore).
Thus, Axel Springer now holds a dominant competitive
position in the market of digital offerings. The company’s
online properties occupy dominant positions in their
respective categories as well. The Digital Media segment
accounted for approximately 13.9 % of the Group’s
total revenues in 2008.

Brands and content
Bild.de received an average of 3.6 million unique visitors.
With 62.9 million monthly visits and 747.4 million
page impressions, Bild.de is the most-visited information
and entertainment portal in the German web. With
16.7 million page impressions (December 2008), BILD-
mobil advanced to the status of Germany’s biggest
mobile information portal. The video portal of Bild.de,
which went online in 2008, quickly became one of the
leading moving image platforms in Germany. With
3.1 million unique visitors, WELT ONLINE, the news
portal of the WELT Group, is Germany’s fastest-growing
digital news portal by far and leads the group of German
premium newspaper websites. In addition to those men-
tioned above, Axel Springer also operates websites

linked to its magazines, such as computerbild.de, auto-
bild.de and sportbild.de. Finally, the company’s regional
newspapers were successfully transposed to the digital
realm with the websites of abendblatt.de, morgen-
post.de, and bz-berlin.de.

The online and mobile presence of our strong print
brands is supplemented by many new digital brands. For
example, the website of auFeminin.com, which is repre-
sented in Germany by goFeminin.de, is the preferred
choice for online information on the subject of fashion,
beauty, and lifestyle. This offering is complemented by
the health portal ONMEDA. The websites partyguide.ch,
and usgang.ch provide useful information about leisure
and party activities in Switzerland. And the student por-
tals students.ch in Switzerland and students.pl in Poland
provide all kinds of useful information for college stu-
dents. In the sports category, transfermarkt.de is a lead-
ing platform for the soccer community. Through its web-
sites finanzen.net and wallstreet: online, Axel Springer
provides timely information on securities, real estate, and
insurance products, as well as useful service tools. The
website hamburg.de is the regional portal for the city of
Hamburg. Through the online games provider Gamigo,
moreover, Axel Springer is also active in the highly at-
tractive, fast-growing online gaming market.

Marketing
In addition to traditional reach-based marketing, which
like the marketing of print publications is conducted via
Axel Springer Media Impact, Axel Springer is also active
in the area of performance marketing through its majority
interest in ZANOX.de AG, one of the leading providers of
success-based online marketing services. The zanox
subsidiary eprofessional helps companies optimize their
online advertising campaigns by exploiting all available
instruments.

Management Report of the Group and Management Report of Axel Springer AG 27

Online classfied ad markets and marketplaces
In the online real estate market, Axel Springer is very
well positioned with immonet.de, the No. 2 real estate
exchange in Germany and the leading provider of cross-
media real estate marketing services.

Through its investments in the parent company
StepStone ASA, Oslo, and the German subsidiary
StepStone Deutschland, Axel Springer holds stakes in
one of the leading providers of online job exchanges and
talent management software in Europe and in one of the
leading online job exchanges in Germany.

Axel Springer holds a majority interest in idealo.de,
one of the leading websites for price and product com-
parisons. Axel Springer also holds an investment in
buecher.de, the online dealer of books, music, and movies.

Axel Springer’s activities in the TV and radio sector are
focused on highly promising markets. For example, Axel
Springer holds a minority interest in Turkey’s biggest TV
˘
and radio company, the Dogan TV Group. This TV station
is the market leader in Turkey, in terms of both viewer
market shares and advertising market shares. Further-
more, Axel Springer owns Schwartzkopff TV, a success-
ful production company for TV entertainment formats.
The company also holds investments in regional TV
stations in the key markets of Hamburg and Berlin, as
well as minority interests in some of Germany’s most
successful radio stations.

Services/Holding
The Services/Holding segment comprises the com-
pany’s own newspaper printing plants, the investment
in the rotogravure printing company PRINOVIS and the
internal departments of Logistics, Distribution, Services
and Holding Company. In 2008, the former Printing
segment (consisting mainly of the company’s own news-
paper printing plants) was merged into the Services/
Holding segment. The Services/Holding segment con-
tributed about 3.6 % of the Group’s total revenues
in 2008.

Processes

Axel Springer produces and distributes high-quality in-
formation and entertainment through different media
outlets. Furthermore, the company is tapping new mar-
kets and target groups with its strong multimedia brands.

Content
Axel Springer is active in every stage of the value chain
for the production and cross-media exploitation of edito-
rial content. In the first step, the company’s reporters
and editors research the news and write the articles. The
most important news items are immediately posted
online. In the print media, moreover, the news stories are
enriched with background material. In the online media,
the articles are supplemented with other content such as
moving images. In order to optimize the production of
journalistic content for the various media, Axel Springer
has created integrated newsrooms for the print, online,
and moving image media of the BILD Group and the
WELT Group/BERLINER MORGENPOST. All journalistic
content for the various print and online media is pro-
duced on a consolidated basis in these editorial centers
of competence. In some cases, content production is
consolidated in the company’s international operations
as well. In Hungary, for example, the regional newspa-
pers are supported by a central staff of reporters and
editors.

28 Annual Report 2008 Axel Springer AG

Marketing
The business model of media companies relies on circu-
lation revenues from single-unit sales and subscription
sales, as well as advertising revenues. To this end, jour-
nalistic content is produced with the aim of reaching the
demographic groups of interest to advertising customers,
so as to offer them attractive ad placements. In the print
titles, reach-based marketing essentially consists of
placing advertisements of different formats alongside
editorial content, in advertising supplements and in clas-
sified ads. In the digital media, a wide variety of advertis-
ing formats is available, including banners, layer ads,
wallpaper, video and mobile formats. The marketing
value chain is structured by brand and market seg-
ments.The brand-oriented departments prepare the
standardized print and online content, as well as the
cross-media content designed for specific customers,
and the regional offices of the market-oriented depart-
ments market these products to customers and their
agencies. In 2008, Axel Springer reorganized the market-
ing of its domestic newspapers, magazines, and brand-
related digital media to make it even more customer-
friendly. The newly created entity Axel Springer Media
Impact is responsible for centrally marketing all the com-
pany’s newspapers (BILD, BILD am SONNTAG, WELT
Group and regional newspapers), as well as magazines
and related digital media, in Germany. Axel Springer
Media Impact is the leading marketer of print content
and the biggest integrated marketing company in the
German market, with a gross reach of about 78 million
readers and Internet users. Compared with all media
marketing companies in Germany, it currently ranks third,
behind the two biggest TV marketing companies.

Printing
The newspaper production process is sub divided into
the phases of plate production, printing, and post-press.
The plate production department receives the data for

the newspaper pages produced in the editorial depart-
ments and transfers it directly to the printing plates. In
the newspaper rotation, the paper webs are printed and
folded and then forwarded to the post-press department,
where various product inputs and supplements are
added and the newspapers are packed. From there,
they are sent to the delivery logistics department. Axel
Springer’s German newspapers are produced in the
company’s three offset printing plants in Hamburg-
Ahrensburg, Essen-Kettwig and Berlin-Spandau, among
those in other locations.

Delivery
Axel Springer employs a sophisticated logistical and
transport system to deliver the printed newspapers and
magazines to approximately 121 thousand retail sales
outlets, including newsstands, magazine shops, and
discount stores. The company’s print products are also
distributed via wholesale press companies and press
import companies in Eastern Europe. The digital media
content is delivered to users by way of various electronic
channels such as PCs, laptops, and cell phones.

Organization, management and
supervision

Axel Springer AG is managed by a Management Board
consisting of four members. In accordance with the dual
management and control structure prescribed by law in
Germany, the Management Board is appointed, super-
vised, and regularly advised by the Supervisory Board.
The Supervisory Board of Axel Springer AG consists of
nine members elected by the shareholders at the annual
shareholders’ meeting. The term of office of Supervisory
Board members is five years; they can be re-elected at
the end of their terms. The Chairman of the Supervisory
Board is elected by its members. To enhance the effi-

Management Report of the Group and Management Report of Axel Springer AG 29

ciency of its work, the Supervisory Board has constituted
four committees: the Executive Committee, the Person-
nel Committee, the Nominating Committee, and the
Audit Committee.

printing plants, logistics and services, and the com-
pany’s investment in the rotogravure joint venture
PRINOVIS. In addition, he oversees Corporate Purchas-
ing and Personnel.

In 2008, Axel Springer restructured its Management
Board organization to better implement the company’s
multimedia strategy and to exploit market opportunities
even more successfully in the future.

The former Management Board division for “Newspa-
pers” was expanded to include the company’s interna-
tional business and renamed “Subscription Newspapers
and International.” This new division is responsible for the
newspapers, websites, and mobile offerings of the WELT
Group and the cross-media offerings of our regional
newspapers, as well as the multimedia brands in fast-
growing international markets. The new Management
Board division “BILD Group and Magazines” is responsi-
ble for the cross-media offerings of the BILD family of
brands and the company’s magazines. This portfolio was
further subdivided into four publishing groups: “BILD and
BILD am SONNTAG,” “Computer, Auto, and Sports,”
“Women and Lifestyle,” and “TV Listings.” As part of the
restructuring, the subsidiary Axel Springer Verlag Ver-
triebsgesellschaft mbH was assigned to the Manage-
ment Board division “BILD Group and Magazines.”

Chairman Dr. Mathias Döpfner is responsible for the
Management Board division “Subscription Newspapers
and International” and for the corporate staff functions
Information & Public Relations, Controlling, Merg-
ers & Acquisitions, and Legal, as well as the staff de-
partments Management Personnel, Security, Public
Affairs, Axel Springer Customer Loyalty Reinforcement,
and the Axel Springer Academy. Vice Chairman Rudolf
Knepper is responsible for the Management Board divi-
sion “Printing and Logistics,” which covers the offset

The Management Board division “BILD Group and
Magazines” headed by Dr. Andreas Wiele covers the
print publications and online activities of the BILD Group
and the German-language magazines portfolio in the
topic areas of “Auto,” “Sports,” “Women, Youth, and
Music,” “Computer and Entertainment Electronics,”
“Business and Finance” and, “TV listings.” The Manage-
ment Board division “Finance and Services” headed by
Steffen Naumann is responsible for the corporate staff
and service functions of Corporate Finance, Internal
Audit, Axel Springer Services & Immobilien GmbH, IT,
Insurance Sales, and Customer Service. As company-
wide functions, the Corporate Organization & Develop-
ment department and the Electronic Media management
group report directly to the full Management Board. The
division represented by Axel Springer Media Impact
reports directly to the two Management Board members
in charge of “Subscription Newspapers and Interna-
tional” and “BILD Group and Magazines.”

Compensation of the Management
Board and Supervisory Board

The compensation of the members of the Management
Board and Supervisory Board of Axel Springer and the
basic principles of the compensation system are de-
scribed in detail in the Compensation Report on pages
82 f. The compensation report is an integral part of both
the management report and the corporate governance
report.

30 Annual Report 2008 Axel Springer AG

Strategy and success monitoring

Corporate values

Guidelines of Journalistic Independence

Axel Springer’s ongoing strategic and operational devel-
opment is guided by its corporate values. These values
represent the basis of our corporate culture and are
applicable to every employee of the company. The three
corporate values are:

– Creativity, as the indispensable prerequisite for success
in journalism and business;

– Entrepreneurialism, as expressed by the ingenuity,
individual responsibility, and goal-directed actions of the
company’s employees and managers;

– Integrity, in all dealings with the company, its readers,
customers, employees, business partners, and share-
holders.

Axel Springer’s management principles are likewise
derived from these corporate values. These principles
concretize our values so they can be applied in our
day-to-day activities.

Corporate Preamble

Axel Springer is the only media company to have a cor-
porate constitution, known as the Corporate Preamble,
which dates back to 1967. In accordance with the terms
of this constitutive document, which are also anchored in
the company’s Articles of Incorporation, Axel Springer is
bound by the following principles:

1. The unconditional support of liberty and the rule of
law in Germany, as a member of the western community
of nations, and of the efforts to unify the peoples of
Europe;

2. Reconciliation between Jews and Germans; this also
includes supporting the vital rights of the Israeli people;

3. Support of the trans-Atlantic alliance and solidarity
with the United States of America and the values it
shares with free nations;

4. Rejection of all forms of political totalitarianism;

5. Defense of a free social market economy.

These guidelines concretize and broaden the scope of
the journalistic principles set forth in the Code of Con-
duct of the German Press Council. The observance of
these principles by the company’s reporters and editors
in their journalistic endeavors forms the basis for inde-
pendent, critical journalism. The editors-in-chief are
responsible for observing and implementing the guide-
lines in the company’s day-to-day activities. The guide-
lines delineate the boundaries between advertising and
editorial copy and between the editors’ and reporters’
private and business interests. They also preclude ac-
tions in pursuit of personal advantages and define the
company’s position with respect to the treatment of
news sources.

The complete Preambles, the Guidelines of Journalistic
Independence and the International Social Policy are
available at the company’s website at
www.axelspringer.de.

For more information on the activities undertaken in 2008
in relation to the International Social Policy, please refer
to the sustainability report on page 36.

Key elements of strategy and
implementation

Axel Springer has set itself the goal of becoming
Europe’s best-integrated multimedia company. The
company pursues a strategy that is based on three key
elements: extending Axel Springer’s market leadership
position in the core business of German-language media,
internationalization and digitization.

Axel Springer seeks to extend its market leadership
position in the core business of German-language
media by implementing creative journalistic products and
introducing them successfully to the market.

The company also seeks to tap additional revenue po-
tential by moving quickly to establish new multimedia
offerings in the market, especially by further enhancing
the company’s cross-media capabilities. The BILD
Group and the WELT Group produce their journalistic
content in integrated newsrooms encompassing the print,

Management Report of the Group and Management Report of Axel Springer AG 31

online, and moving image media. The cross-media ap-
proaches taken in the production of editorial content and
in sales and marketing give birth to media brands. As the
logical next step of this process, Axel Springer consoli-
dated the advertising business of all its national media
properties within the central marketing entity Axel
Springer Media Impact in 2008.

In its efforts to digitize its core business, Axel Springer
focuses on its three core competencies of brands and
brand content, marketing, and classified ads and mar-
ketplaces. To this end, Axel Springer transposes its
existing print brands and content to digital distribution
channels and also acquires successful brands and inno-
vative business models.

The company’s internationalization efforts are focused
in particular on the fast-growing markets of Eastern
Europe. Depending on the situation in every regional
market, Axel Springer either launches new titles, or
acquires existing titles and either purchases or sells
licenses in the core business of newspapers and maga-
zines. In 2008, the company granted a total of seven
licenses of the AUTO BILD Group in foreign countries. In
the Czech Republic, the world’s first licensed edition of
AUTO BILD SPORTSCARS appeared in 2008, while
licensed editions of AUTO BILD were launched in Geor-
gia and Mexico. The magazine AUTO BILD 4x4 was
published for the first time in the markets of Bulgaria,
Serbia and Montenegro. In India, Axel Springer formed
a joint venture with the India Today Group, one of the
biggest publishing houses in the Indian sub-continent,
to publish AUTO BILD for the Indian market. Edipresse
AS Romania, the joint venture of Edipresse and Axel
Springer, published the first-ever AUTO BILD edition for
the Romanian market. In China, AUTO BILD published
its first online edition (autobild.com.cn).

In addition, Axel Springer seeks to transfer its existing
brands and concepts to the international markets. For
example, two foreign editions of the Polish tabloid news-
paper FAKT were launched in 2008: “FAKT for Great
Britain” and “FAKT for Ireland.” These publications are
aimed at the Polish nationals living in those countries. In
Poland, moreover, Axel Springer acquired the regional
sports daily SPORT and launched the news and opinion
portal redakcja.pl, thereby strengthening its online cre-
dentials in that country. In 2008, international revenues
accounted for 21.9 % (PY: 20.8 %) of the Group’s total
revenues.

Axel Springer acquired several companies and equity
stakes in 2008. Having purchased the remaining 37 %
of the equity in Bild.T-Online.de AG & Co. KG that had
formerly been held by Deutsche Telekom AG, Axel
Springer was able to systematically advance the imple-
mentation of the cross-media growth strategy for the
BILD family of brands. All BILD content is now produced
in a single, integrated newsroom. The company intro-
duced a new 4242 service to successfully link the BILD
print edition with the mobile information portal BILDmobil,
thereby realizing an integrated, cross-media journalistic
concept.

Also in 2008, the auFeminin.com subsidiary goFem-
inin.de GmbH upgraded its healthcare offering signifi-
cantly by purchasing Germany’s leading independent
healthcare portal ONMEDA. As a result of this acquisition,
goFeminin.de has become one of the leading providers
of premium online healthcare information in Germany.

Axel Springer further expanded its line-up of online as-
sets by purchasing additional companies and equity
stakes. For example, Axel Springer acquired a majority
interest in transfermarkt.de, the leading soccer portal in
the German-language Internet, as well as a majority
interest in gamigo.de, the online games providers and
operator. In Switzerland, Axel Springer extended its
digital presence by acquiring partyguide.ch and us-
gang.ch, the leading leisure portals in that country, and
consolidating them within the Amiado Group, along with
the web portal students.ch. As a result, Axel Springer
has risen to the status of online market leader in the age
group of 18–34 year-olds in Switzerland.

32 Annual Report 2008 Axel Springer AG

By acquiring a 33.3 % interest in the international online
job exchange StepStone ASA, Oslo, Axel Springer suc-
cessfully established a European-level presence in the
attractive market of online job exchanges and secured
an equity stake in one of the leading international provid-
ers of human capital management software and services.

At the end of 2008, finally, Axel Springer entered into a
share purchase agreement with Dogan Yayin Holding
A.S., one of the leading media companies in Turkey.
Among other holdings, this company holds majority
interests in the newspapers Hürriyet, Milliyet, and Posta,
and in the Dogan TV Group, of which Axel Springer is
also a direct shareholder.

Market research and new developments

Axel Springer continually refines its concepts for the
presentation of information and entertainment. In this
regard, the company pursues the goal of introducing
new media products to the market or improving its exist-
ing media products. To assess the market potential of
such new products, Axel Springer conducts intensive
market research. Acting on the basis of this analysis, the
company upgraded and overhauled the media properties
comprised within its portfolio last year.

As a natural consequence of the company’s digitization
and growth strategy, the importance of information tech-
nology is constantly growing, especially when it comes
to establishing new business models or expanding the
company’s existing business models. With this in mind,
Axel Springer continually launches new innovation pro-
jects with the goal of recognizing and taking full advan-
tage of relevant technology trends at an early stage.
Most particularly in the Digital Media segment, research
and development is an integral part of the operating
business. These activities are aimed at systematically
further developing the company’s media products and
applications and adapting the company’s offerings and
the underlying technologies to reflect the new techno-
logical trends and new business models arising as a
result of these trends.

Value-driven management

The business strategy of Axel Springer and the three
core elements of that strategy serve the overriding goal
of ensuring profitable, long-term growth and permanently
increasing the company’s value. The company’s control-
ling system has been designed on the basis of these
goals. By tracking the development of financial and non-
financial performance indicators, Axel Springer closely
monitors the implementation of the Group’s business
strategy.

Non-financial performance indicators
The non-financial performance indicators make it possi-
ble to measure the success of Axel Springer’s work in
the areas of customers, offerings, processes, employees,
and sustainability. Though not reflected in the company’s
income statement, these indicators are nonetheless key
drivers of Axel Springer’s value-driven development.
They provide an early indication of whether strategic
measures are producing the desired effects, making it
possible to quickly initiate appropriate countermeasures
when necessary. Furthermore, the non-financial per-
formance indicators are seen as a kind of leading indica-
tor for the development of the financial performance
indicators, as the former will eventually be reflected in
the latter.

In the category of non-financial performance indicators
pertaining to customers, markets, and products, the
following are particularly important:

– Paid circulation and reach – meaning the number of
readers reached – of print media and the corresponding
competitive position;

– Unique visitors, visits, and page impressions for online
media and the market positions measured herewith;

– The reach of the company’s media in the advertising
market and indicators of brand and advertisement famili-
arity generated through market research.

Management Report of the Group and Management Report of Axel Springer AG 33

Axel Springer AG has also set itself the goal of becoming
Europe’s most customer-friendly media company by the
year 2010. To this end, the company launched an exten-
sive company-wide program in 2006 to improve cus-
tomer retention. In 2007, a differentiated measurement
and evaluation system, known as the customer retention
index, was developed for this purpose. All areas of the
company, from circulation and advertising to printing and
business administration, as well as editorial functions, are
covered by this process. In the subsequent months, the
measures adopted on the basis of the first measurement
were implemented in all areas of the company. The fol-
low-up measurement conducted at the end of 2007/
beginning of 2008 showed a significant increase of two
index points. The data is collected and analyzed by TNS-
Infratest. Based on these results, action plans and
measures were developed and implemented in all par-
ticipating areas again in 2008.

Axel Springer employs the same techniques to measure
the quality of internal cooperation and service orientation,
with the goal of identifying and promoting efficient pro-
cedures in the company. The results of this analysis
reveal new ways of improving the company’s internal
service quality. These results are aggregated to form an
internal customer retention index. By measuring the
external and internal customer retention and the effec-
tiveness of the measures taken to those ends every year,
Axel Springer has established a continuous improvement
process, as a valuable contribution to the long-term
enhancement of the company’s profitability.

Axel Springer also counts ecological and social perform-
ance indicators among its non-financial indicators. For
this purpose, the company relies on the sustainability
criteria of the Global Reporting Initiative (GRI). The eco-
logical efficiency indicators tracked by Axel Springer
include the quantity of wastewater, solid waste, climate-
affecting emissions, and energy consumption, among
other things. Axel Springer improved many of these
ecological indicators in 2008, in some cases quite sub-
stantially.

Financial performance indicators
The key performance indicators used by Axel Springer
on the level of the overall company and the individual
segments are:

– Revenues, as the sum of circulation, advertising, and
other revenues;

– Earnings before interest, taxes, depreciation, and
amortization of goodwill (EBITDA), and the correspond-
ing EBITDA margin;

– Earnings before interest, taxes, and amortization of
goodwill (EBITA), and the corresponding EBITA margin.

These indicators are anchored in the companywide
planning and controlling system and form the basis for
the performance-oriented compensation of the Man-
agement Board, the Supervisory Board and managers,
as well as the profit-sharing program for all permanent
employees of the company (see page 34). Since the
beginning of 2008, the company has principally applied
EBITDA as the relevant performance indicator for the
capital markets.

A capitalized value method based on weighted capital
costs is employed to assess the profitability of capital
investments in new or existing business lines. The
weighted average capital costs are determined on the
basis of a target capital structure. The risk of a capital
investment project is generally represented by means of
a capital markets equilibrium model, applying a beta
factor (for the business-specific, systemic risk) and a
market premium (for the country-specific, non-systemic
market risk). As a basic rule, it is assumed that the com-
pany’s systemic risk is equivalent, on average, to that of
comparable companies. This peer group consists of
European media companies. In addition, specific risks
are reflected in the weighted average capital costs,
which are updated every year.

34 Annual Report 2008 Axel Springer AG

Employees

Axel Springer AG understands that creative, skilled, and
dedicated employees are an essential prerequisite for
success in business. For this reason, an active and re-
sponsible personnel development policy, with a strong
emphasis on training and continuing education, is under-
stood to be a necessary investment in the company’s
future success.

Excluding apprentices and journalism students / interns,
Axel Springer had an average of 10,666 employees in
2008 (PY: 10,348). The total workforce increased over
the previous year primarily as a result of the new digital
media acquisitions and start-ups in Germany and abroad.

Of the company’s total workforce, 8,214 employees
worked in the market-oriented departments (PY: 7,783),
1,277 in the service departments (PY: 1,335), and 1,175
in technical areas (PY: 1,230). The number of reporters
and editors increased by 37 over the previous year to
3,566, mainly in connection with the activities in Switzer-
land and Poland, while the number of salaried employees
increased by a total of 341 to 6,112, due to the acquisi-
tions and expanded activities in the Digital Media seg-
ment. At December 31, 2008, the average length of
service with Axel Springer was 12.3 years (PY: 12.5);
and 47.0 % (PY: 48,1) of the total workforce have been
working with the company for more than ten years. The
average yearly percentage of the total workforce repre-
sented by severely disabled employees in the German
companies in 2008 was 4.34 % (PY: 4.61 %). Thus, the
relevant requirements of the Severely Disabled Persons
Act in Germany were mainly fulfilled again in 2008.

At € 722.5 million, the personnel expenses for 2008
were 2.9 % higher than the corresponding figure for the
previous year (PY: € 701.9 million). This increase mainly
reflected the higher number of employees resulting from
acquisitions and investments. The linear collective pay
increases for 2008 ranged from 1.8 % to 2.4 %, depend-
ing on the group of employees, and took effect as of
July 1 / August 1, or October 1, 2008. With respect to
the newspaper and magazine reporters and editors,
three so-called “nil months” were agreed, coupled with
a one-time payment in December. Also, the collective
wage agreements for the reporters and editors were
concluded for a term of 24 months (August 1, 2008 to
July 31, 2010). These agreements stipulate an additional
linear wage increase of 1.6 % as of October 1, 2009.

Continuing education

In 2008, the continuing education program featured
courses related to digitization, internationalization, and
communication. In the training courses related to digiti-
zation, particular emphasis was given to “cross-media”
qualifications. The “on-boarding” program, which pro-
vides orientation to new employees of Axel Springer, was
continued in 2008. Furthermore, employees were given
the chance to participate in a work-concurrent continu-
ing education program culminating in the certification of
“online marketing specialist.” The continuing education
courses related to internationalization were focused on
language courses and intercultural skills. Also, Axel
Springer continued to support the employee wellness
program in 2008, as an integral part of the company’s
personnel policy. The program for 2008 featured a
variety of activities related to nutrition and exercise,
and was accompanied by the motto “On your marks …
get set … get fit!”

Recruiting and promoting key talents

As in the preceding year, Axel Springer further intensified
its activities related to college graduate marketing, accord-
ing to the slogan “The best go to Axel Springer!” The
trainee program for young talented individuals was de-
voted to building not only the necessary professional and
methodological skills, but also their people skills and
networking abilities, especially in the journalistic depart-
ments. At Axel Springer, the promotion of young talent

Management Report of the Group and Management Report of Axel Springer AG 35

begins with the internship programs for college students.
Top interns are retained by way of follow-up internships
and master’s degree thesis projects and then invited
to join the trainee program upon graduation. In addition,
Axel Springer AG supports highly talented young appren-
tices with stipends for college study. An important ac-
complishment in 2008 was the comprehensive relaunch
of the career page of the company’s website
www.axelspringer.de. Moreover, Axel Springer continued
to participate in university job fairs in 2008. For example,
we supported student initiatives and cooperated with
universities and professorships such as the European
School of Management and Technology in Berlin, the
Hamburg Media School, and other universities.

Manager development programs

In its personnel policy activities, the company focused on
the development of experts and managers in 2008. In
August 2008, Axel Springer adopted a set of manage-
ment principles (www.axelspringer.de). As a concretiza-
tion of the company’s three corporate values, the ma-
nagement principles clearly specify the requirements and
expectations according to which managers will be
judged. To firmly instill these management principles in
every manager, numerous mandatory seminars were
added to the continuing education and coaching pro-
gram. Furthermore, a new general concept of manage-
ment training was developed around these principles.
The three-tiered program, which is organized according
to experience and skills, is meant for talented young
newcomers and experienced managers alike.

In 2008, Axel Springer instituted an employee develop-
ment process known as the “development dialog.” This
management instrument is designed to develop the
company’s employees in a targeted manner, according
to their specific needs, in the context of the strategic
goals of the company and its divisions. The development
dialog is a structured, personalized meeting that takes
place every year between employees and their manager.
Based on the results of this meeting, concrete develop-
ment measures are formulated for the employee in ques-
tion.

Equal opportunity

In addition to the emergency day care services and
elderly care support it was already providing, Axel
Springer opened a day care center for its employees in
Berlin in April 2008. Located in close proximity to the
workplace, the “Wolkenzwerge” day care facility provides
ample space for fun and games and creative learning.
By means of this program, Axel Springer actively sup-
ports the goal of helping parents balance work and family.

Performance incentives

All permanent employees of Axel Springer benefit directly
from the company’s profitability, in that they receive a
profit-sharing bonus of € 200 for every percentage point
by which EBITA exceeds 10 % of revenues. The financial
performance incentives offered to managers are likewise
tied to the company’s success, as well as the achieve-
ment of individually agreed goals. Under the company’s
idea management program, moreover, employees who
develop proposals to enhance profitability, work safety,
environmental protection, and technical progress are
rewarded with prizes. The number of such proposals
jumped from 994 in 2007 to 1,632 in 2008; of this num-
ber, 671 (PY: 444) were implemented in 2008, resulting
in cost savings of € 1.0 million (PY: € 0.9 million). In ex-
change, Axel Springer paid out bonuses of € 277 thou-
sand (PY: 155 thousand) to the corresponding employees.

Company pension plan

Axel Springer’s employees are entitled to participate in
the forward-looking company pension plan known as the
“VarioRente,” which is based on income conversion. By
this means, Axel Springer is facilitating the transition from
a pay-as-you-go pension system to a fully funded pen-
sion system. The VarioRente program has been very well
received by employees: The average participation rate in
2008 was 36 %, the same as in 2007.

36 Annual Report 2008 Axel Springer AG

Sustainability report

Axel Springer firmly believes in being committed to social
responsibility. That commitment extends to sustainable
business practices, compliance with social and ecologi-
cal standards, corporate responsibility, and an interna-
tional social policy. To implement these principles, the
company maintains an active sustainability management
program. A key element of this program involves the
periodic EC eco-audits of the company’s printing plants.
Axel Springer voluntarily undergoes external audits of its
organizational environmental protection measures.

Another key element of the company’s active sustainabil-
ity management program is transparent reporting. In
2008, Axel Springer was the world’s first media company
to publish a Sustainability Report that meets the “LEVEL
A+” requirements of the Global Reporting Initiative (GRI).
This report is based on the internationally recognized
guidelines for voluntary reporting on the basis of eco-
nomic, social, and ecological performance criteria. To
meet these requirements, the reporting entity must make
voluntary disclosures regarding a total of 121 perform-
ance criteria and have that information certified by an
independent auditor. The fact that Axel Springer’s report
meets the highest “LEVEL A+” quality standards under-
scores the company’s commitment to sustainability and
corporate responsibility.

Axel Springer also received the “German Sustainability
Award 2008.” In particular, the company was singled out
for the high sustainability standards of its purchasing
operations, as evidenced by the high percentage of
certified raw materials sources and the local auditing of
suppliers. In the international sustainability rankings of
oekom research, moreover, Axel Springer achieved third
place behind the British TV station ITV and the British
scientific publisher Reed Elsevier. In this study, the cor-
porate responsibility of the participating companies was
evaluated with reference to the activities of the world’s
24 biggest media companies.

Axel Springer improved the specific environmental per-
formance indicators of its printing plants in Germany and

Hungary in 2008, with the exception of wastewater. The
volume of wastewater per square meter of printed paper
that was released into the public drainage system was
1.1 % higher than in the year 2007. This increase can be
attributed in part to changes in the officially prescribed
measurement methods (Essen-Kettwig), and also in part
to the heightened cooling needs in the hot summer
months (Berlin-Spandau). The careful use of resources
led to a 2.2 % reduction in the solid waste produced per
square meter of printed paper. This positive result was
achieved in part by the improved recycling of used clean-
ing agents (Essen-Kettwig). The 3.0 % reduction in the
energy consumption per square meter of printed paper
in the printing plants since 2007 was caused in part by
the use of a new generation of single-drive printing
presses, and by the introduction of an energy manage-
ment program for all kinds of energy, to optimize the
company’s processes.

The printing plants lowered the direct and indirect green-
house gas emissions per square meter of printed paper
by means of a 0.8 % reduction in the energy consump-
tion per square meter of printed paper. The direct, cli-
mate-affecting greenhouse gas emissions result from the

Management Report of the Group and Management Report of Axel Springer AG 37

International Social Policy

As a consequence of the company’s growing interna-
tional presence, Axel Springer has developed a code of
social standards. These standards define the company’s
position on matters of human rights, the legal enforce-
ability of contracts, the protection of children and young
people, the treatment of employees, health, and safety
and the compatibility of work and family, among other
things. These standards are binding on all the com-
pany’s activities everywhere in the world. To implement
the standards, Axel Springer focused initially on ex-
changing information with and raising the awareness of
business partners in non-OECD countries. To this end,
the company again paid visits to forestry enterprises in
Russia and to suppliers of promotional materials in China
in 2008.

Initiatives

Again in 2008, the newspapers and magazines of Axel
Springer continued their support for sustainable deve-
lopment causes by engaging in numerous initiatives
aimed at providing information about, and raising aware-
ness for, social and ecological problems. In time for its
30th anniversary, the aid organization “Ein Herz für
Kinder” (“A Heart for Children”) raised donations of
€ 15.1 million, a new record. Since it was founded, the
aid organization has raised more than € 100 million to
assist needy children in Germany and around the world.
Every cent donated goes directly to needy children,
without any deductions.

combustion of natural gas in the company’s printing
plants and the indirect CO2 emissions result from the
generation and delivery of purchased electricity and the
externally purchased district heating for the operating
locations of Axel Springer.

As a natural consequence of Axel Springer’s international
business growth, the international subsidiaries were
more closely integrated into the Group-wide sustainabil-
ity management program in 2008. A Sustainability Officer
was appointed in Poland and greater emphasis was
placed on the optimization of sustainability performance
indicators at Axel Springer’s printing plants in Hungary.

Axel Springer selects its paper suppliers according to the
criteria of product quality, reliability of supply, and appro-
priate prices. The program aimed at optimizing social
and ecological standards throughout the wood and
paper chain was further developed in 2008. In this regard,
particular emphasis was placed on the planning and
preparations for new products that will be concretized
in 2009. About half of the printing paper used by Axel
Springer contains recycled paper. In 2008, the Axel
Springer Group purchased about 500 thousand tons of
printing paper from roughly 50 papermaking factories in
about 15 countries.

In 2008, Axel Springer supplied data about its own
greenhouse gas emissions (CO2 equivalents) to be used
in the German report of the Carbon Disclosure Project
(CDP). The Carbon Disclosure Project is the world’s
largest joint project of institutional investors devoted to
measuring the economic impact of climate change.
Furthermore, Axel Springer joined the “Business & Bio-
diversity” initiative, which was founded in 2008. In a joint
statement, the member companies from a wide range of
industries around the world undertook, among other
things, to analyze the impact of their activities on biologi-
cal diversity and adapt their environmental management
programs accordingly.

38 Annual Report 2008 Axel Springer AG

Business development and performance

General economic conditions

Overall, the economic environment developed unfavora-
bly in 2008. The economic development in our primary
sales markets was impacted by the effects of the finan-
cial market crisis, in particular in the second half of the
year. As a result of the worsened economic perspectives,
the willingness of companies to invest in advertising
decreased. This led to overall declining advertising reve-
nues with respect to print titles and a significant slow-
down in the growth of online advertising.

engine of growth for the first time in years. Only the do-
mestic economy provided growth impulses that can be
attributed above all to capital expenditures and govern-
ment spending. Despite the slowing momentum of price
increases in the second half of the year, the rate of infla-
tion rose by 2.6 %, essentially driven by higher energy
and food prices. Disposable income increased year-on-
year by 2.5 % in light of the sustained job market recov-
ery and wage increases. Nevertheless, the consumer
climate cooled in the fourth quarter according to informa-
tion from the Gesellschaft für Konsumforschung (GfK).

General economic environment
In 2008, the international financial market crisis – limited
to the subprime segment of the US real estate market in
2007 – expanded to the entire capital market. The con-
sequence was serious price losses, above all on stock
markets, so that banks had to recognize sizeable im-
pairments on their portfolios.

The fundamental remeasurement of the costs of liquidity
and risk on the part of banks and continuing deep mis-
trust in the capital markets have significantly worsened
the financing conditions for companies and increased the
cost of loans.

The financial market crisis also jumped over to the global
economy quicker than expected owing to the worsened
conditions for financing for companies and private house-
holds. In the United States, the collapse of private con-
sumer spending precipitated a considerable weakening
of the economy in the second half of the year. Expendi-
tures for durable consumer goods were severely limited
and companies scaled back their capital expenditures.
The cooling of the global economic climate affected not
only the major economic regions in North America,
Western Europe, and Asia, but also Central and Eastern
Europe, Russia, and Latin America.

In Germany, the economy moved toward a recession in
2008. Average annual gross domestic product (GDP)
adjusted for prices in 2008 grew by 1.3 % according to
calculations by the Federal Statistical Office of Germany,
but the economy was already shrinking in the fourth
quarter. As a result of sharply declining exports, net
exports were negative (– 0.3 %) and broke down as an

In the foreign markets in which Axel Springer operates,
economic growth in 2008 was carried mainly by domes-
tic demand. The economy grew in the Eastern European
member states of the EU on average by 4.6 % in real
terms. The Polish economy generated real economic
growth of 5.4 %, above all thanks to a significant revitali-
zation of consumer spending. The economy of the
Czech Republic grew by 4.4 % adjusted for inflation. In
Russia, the rate of growth was 6.3 %. In contrast, Hun-
gary lagged considerably behind the otherwise dynami-
cally growing Eastern European economies with a real
growth rate of 1.5 %.

In Western Europe, the real economic effects of the
financial market crisis were felt in widely varying degrees.
The economic growth in Switzerland reached a high plus
of 1.9 % compared to other industrial nations. In contrast,
Spain, with a growth rate of 1.3 %, was confronted with
a considerably weakened economic dynamic. Economic
development in France was even weaker with a growth
rate of 0.9 %.

Industry environment
In the German press distribution market, it was possi-
ble to slightly stabilize demand at the end of 2008, but
the sales figures declined further overall for the year. The
total paid circulation of newspapers and magazines fell
year-on-year by 3.3 %. However, owing to the price
increases realized in 2008, the circulation revenues were
only down 1.6 % year-on-year.

Management Report of the Group and Management Report of Axel Springer AG 39

the grocery discounters who once again considerably
increased their advertising expenditures. In contrast, the
advertising expenditures of the finance, telecommunica-
tions, textiles and clothing, automobile, photography and
optics, and computer industries, among others, were
sharply reduced. In 2008, the net ad volumes of the
regional subscription newspapers, including classified
ads, were – 3.5 % lower year-on-year. The development
within the classified ads was mostly declining. Only the
family ads show a slightly positive trend, while the real
estate, job, auto, travel, and event ads were lower year-
on-year.

Development in the category of general-interest maga-
zines was impacted by the increasing irregularity of
purchasing patterns. Sales-promoting measures such as
including CDs or DVDs led mostly only to very short-term
increases in circulation. Overall, with an average total
sales of 116.2 million copies per issue, including the
membership and club magazines, the sales were down –
2.2 % year-on-year. In particular, subscriptions (– 3.7 %)
and single-unit sales (– 2.9 %) suffered losses in circula-
tion. Weighted by the respective frequency of publication,
demand in the general-interest magazines category fell
by 5.5 %.

At € 3.1 billion, gross ad revenues (excluding media
advertising) with respect to magazines were 2.0 %
lower year-on-year. In particular, business magazines
(– 12.0 %), lifestyle magazines (– 11.2 %), IT/telecommuni-
cations magazines (– 5.9 %), TV listings (– 5.7 %), auto
magazines (– 5.1 %), and illustrated current interest
magazines (– 4.6 %) were affected by the declines in
advertising revenues. In contrast, sports magazines
(+ 2.3 %), weekly women’s magazines (+ 9.6 %), and
monthly women’s magazines (+ 8.0 %) generated growth
in revenues.

The development of net advertising expenditures on the
newspapers and magazines (including classifieds) in the
international markets in which Axel Springer is repre-
sented with its own print activities varied widely accord-
ing to the forecast by ZenithOptimedia in 2008. In Poland
(excluding classifieds), advertising revenues of newspa-
pers declined slightly by 0.2 %, whereas those of maga-
zines rose by 3.4 %. In Hungary, the advertising reve-

The total advertising market (excluding media advertis-
ing; including classic online advertising excluding search
term marketing and affiliates) increased by 2.9 % to
€ 19.0 billion (Nielsen Media Research). Gross ad reve-
nues of the print media (excluding classified ads, sup-
plements, and media advertising) decreased by 1.0 % to
€ 7.3 billion. The economically crucial development of
net revenues continued to be unfavorable owing to un-
abated pressure on the net terms.

Overall, from the 375 daily and Sunday newspapers
tracked by the IVW (Informationsgemeinschaft zur Fest-
stellung der Verbreitung von Werbeträgern e.V.) in 2008,
about 23.7 million copies were sold per issue – a de-
crease of 2.3 %. Single-unit sales (– 5.4 %) declined
considerably more than subscriptions (– 1.8 %). Demand
in the daily and Sunday newspaper segment with the
press distribution market fell, weighted according to the
respective frequency of publication, by 2.7 % Gross ad
revenues (excluding classified ads, supplements, and
media advertising) of the daily and Sunday newspapers
declined slightly by 0.1 % to € 3.8 billion.

In particular, the industries trade and shipping, services,
beverages, tourism, and personal care products were
responsible for the growth in gross advertising invest-
ments in the newspapers. Growth drivers were above all

40 Annual Report 2008 Axel Springer AG

nues increased 4.7 % year-on-year for newspapers and
5.0 % for magazines. In Switzerland, it was possible to
maintain advertising revenues at the previous year’s level,
while magazines lost 1.9 % of the advertising expendi-
tures. In Spain, the economic crisis was highly apparent;
advertising revenues for magazines fell by 8.8 %. In
France, the decline in advertising revenues for magazines
was less extreme at 4.3 %. In contrast, advertising reve-
nues for print media increased significantly by 18.6 % in
Russia. In the Czech Republic, magazines recorded an
increase of 1.2 % in advertising revenues.

In the online market in Germany (classic banner adver-
tising excluding search term marketing and affiliates) and,
gross advertising revenues (excluding media advertising)
increased by 28.2 % to € 1.4 billion according to Nielsen
Media Research. The classic online banner formats were
used primarily by the service, financial, telecommunica-
tions, trade, and shipping as well as automotive indus-
tries. Despite the still high rate of growth, the dynamic of
online advertising slowed compared to previous years.
This trend was clearly evidenced by the net advertising
expenditures (including search term marketing, which
experienced growth of 5.2 % in 2008, according to the
estimate of ZenithOptimedia).

Advertising-financed television in Germany recorded an
increase in gross revenues of 3.5 % to 8.5 billion (exclud-
ing media advertising) according to information provided
by Nielsen Media Research. Private sector TV programs
were able to expand their gross advertising revenues by
3.6 % to € 8.1 billion, while public sector TV stations
expanded theirs by 1.4 % to € 381.4 million. The net
advertising volume in the Turkish TV advertising market
increased by 2.6 % to TRY 1.7 billion (calculations of
Dogan Yayin Holding).

In the German radio market, gross advertising revenues
(excluding media advertising) fell by 1.4 % to € 1.1 billion.
Whereas the public sector radio stations achieved an
increase of 2.1 % in gross advertising expenditures, the
advertising revenues of private programs declined by 2.5 %.

Business development and performance -
Group

Business development
The increasing digital and international orientation of Axel
Springer’s business model had a positive effect in 2008
– amid an increasingly difficult market environment.
Thanks to strong growth in the international business
and in digital media, consolidated revenues were up
5.8 % – as a result of acquisitions, among other things.
It was possible to more than compensate market-related
decreases in revenues with respect to domestic news-
papers and magazines.

The sharp economic downturn impacted above all the
advertising revenues of print media. With respect to the
circulation revenues, overall declining paid circulation as
a result of price increases at various media was over-
compensated.

In 2008, Axel Springer once again made important pro-
gress in its goal of becoming Europe’s best-integrated
multimedia company. We have consistently pursued our
strategy with the three cornerstones of market leadership
in the German core business, internationalization, and
digitalization in the difficult market environment.

The cross-media orientation of the BILD family by com-
bining the editorial departments of BILD and BILD am
SONNTAG, as well as the online media, in an integrated
newsroom for print, online, mobile, and moving image
content in Berlin was an important measure in the Ger-
man core business. The Management Board divisions
restructured on the publishing side (see page 28) sup-
port the implementation of the cross-medial strategy as
well as the creation of a central cross-media marketing
unit for domestic print and online offers (see page 30 f).

In the segments Print International and Digital Media, the
focus was on consolidating the portfolio after the sub-
stantial acquisitions in the previous year. The acquired
operations and equity investments were successfully
linked with Axel Springer’s media and further developed

Management Report of the Group and Management Report of Axel Springer AG 41

strategically. These include in particular the Swiss pub-
lisher Jean Frey AG (now Axel Springer Schweiz AG) as
well as the service provider for the success-based online
marketer zanox.de and the European Internet portal for
women, auFeminin.com, in which Axel Springer is the
controlling shareholder.

We have conducted a series of smaller acquisitions as
targeted supplements to the Digital Media segment
portfolio. We acquired the remaining shares in Bild.de
already at the beginning of the year. We strengthened
the market position of goFeminin, the German auFeminin
subsidiary, with the acquisition of the health portal ON-
MEDA. Furthermore, we took over the Swiss leisure and
party portals, partyguide.ch and usgang.ch, combining
both portals together with the Swiss student portal,
students.ch, under the umbrella of the Amiado Group.
With the online offerings of the Amiado Group, Axel
Springer immediately became the market leader in the
age group 18- to 34-year-old users in Switzerland and
created a strong, purely digital pillar in the Swiss market
in addition to the print portfolio. Axel Springer topped off
the share in the online gaming portal, gamigo.de, in-
vested in the soccer community portal, transfermarkt.de,
and contractually initiated the acquisition of an approxi-
mately 10 % equity interest in Dogan Yayin Holding. The
Turkish media holding company commands an excellent
position in an attractive growth market. We made a
roughly 33.3 % investment in StepStone ASA in Oslo,
one of the leading international providers of talent man-
agement software and services, thereby gaining access
to the attractive European market of online job markets.
In January 2008, Axel Springer AG sold the direct in-
vestment in ProSiebenSat.1 Media AG to Lavena Hold-
ing 5 GmbH, Munich, in accordance with the share pur-
chase agreement dated December 2007.

On January 25, 2008, insolvency proceedings were
opened on the assets of the parent company of the PIN
Group. At this point in time, the assets and liabilities
reported in the previous year’s financial statements as
available for sale were deconsolidated in equity without
affecting income.

Financial performance
Axel Springer increased revenues in the 2008 fiscal year
by 5.8 % to € 2,728.5 million (PY: € 2,577.9 million).
The companies acquired in 2007, among them zanox.de
and auFeminin.com, made important contributions
to revenues. Adjusted for consolidation effects, reve-
nues increased from € 2,555.4 million by 1.2 % to
€ 2,585.1 million.

At € 1,215.8 million, circulation revenues were up by
2.1 % (PY: € 1,190.6 million) and thus contributed
44.6 % (PY: 46.2 %) to total revenues. In particular, copy
price increases contributed to the increase in circulation
revenues, thereby more than overcompensating reve-
nues lost as a result of overall declining circulation. The
circulation revenues of the newspapers published in
Germany, as well as the print titles published internation-
ally, exceeded those of the previous year, while a slight
decrease was recorded by magazines nationally. Adjusted
for consolidation effects, circulation revenues increased
1.8 % to € 1201.0 million (PY: € 1,179.3 million).

The advertising revenues of all Axel Springer media
exceeded the previous year’s amount (€ 1,193.2 million)
by 4.6 % and totaled € 1,248.1 million, thereby achiev-
ing a 45.7 % share of total revenues (PY: 46.3 %). In
contrast to the significant decreases at domestic news-
papers and magazines, advertising revenues in the Print
International segment increased slightly. The Digital Me-
dia segment increased revenues significantly. Adjusted

42 Annual Report 2008 Axel Springer AG

for consolidation effects, advertising revenues declined
by 2.6 % to € 1,153.4 million (PY: € 1,183.6 million).

The other revenues increased considerably by 36.3 %
to € 264.7 million after € 194.2 million in 2007, and
thus contributed significantly to the increase in consoli-
dated revenues. The most important catalyst was the
inclusion of eprofessional.de, a subsidiary of zanox.de,
for the entire year. Organic growth was also significant;
adjusted for consolidation effects, it increased 19.8 %
to € 230.6 million (PY: € 192.5 million).

International revenues grew mainly by including the cor-
responding share of revenues of zanox.de and auFem-
inin.com, as well as through consolidation effects in Swit-
zerland by 11.1 % to € 596.8 million (PY: € 537.2 million).
Thus, Axel Springer generated 21.9 % (PY: 20.8 %) of
consolidated revenues internationally.

Revenues in the Newspapers National and Magazines
National segments fell short of the previous year’s
amounts. Nevertheless, the publications published in
Germany, with a share of 67.5 % (PY: 72.9 %), remained
by far the most important revenue drivers in the Group.
We achieved stable revenue development with the inter-
national print titles. Digital Media segment revenues
climbed by more than 81.7 % and contributed signifi-
cantly to the Group’s revenue growth. Its share in con-
solidated revenues increased from 8.1 % to 13.9 %;
adjusted for consolidation effects, it grew by 26.1 %.
The Digital Media segments pro forma revenues repre-
sented a 14.0 % share of consolidated revenues.

The total expenses included in earnings before interest,
taxes, depreciation, and amortization (EBITDA) increased
by 4.2 % to € 2,365.2 million (PY: € 2,269.1 million)
mainly as a result of the acquired operations and the
business growth in the Digital Media segment.

Management Report of the Group and Management Report of Axel Springer AG 43

Above all because zanox.de, whose success-based
business model entails high material intensity, was in-
cluded for the entire year, the cost of purchased goods
and services at € 945.4 million rose 7.1 % year-on-year
(PY: € 882.8 million).

Personnel expenses amounted to € 722.5 million
(PY: € 701.9 million). The increase can be attributed to
the business acquisitions and the growth initiatives in the
existing business that resulted overall in an increase in
the average number of employees from 10,348 to
10,666 (see page 34).

At € 112.1 million, depreciation, amortization, and
impairments were considerably higher than in 2007
(€ 74.2 million). The crucial factor for the increase was
above all the effects of purchase price allocations, which
included € 25.7 million in impairments to intangible as-
sets (rights to titles) were recognized over the course of
2008 in the Magazines National segment.

The other operating expenses in the amount of € 697.3
million exceeded the amount in 2007 (€ 684.4 million) by
1.9 %, mainly because of the newly acquired operations
and the growth initiatives in the online segment.

Net investment income increased year-on-year to
€ 407.8 million (PY: 76.3 million) mainly owing to the
€ 438.3 million gain from the sale of the shares in
ProSiebenSat.1 Media AG. This was offset by a
€ 60.0 million impairment recognized on shares in the
rotogravure company PRINOVIS. Adjusted for these
non-recurring effects, net investment income amounted
to € 29.5 million (PY: € 76.3 million). This decrease in
the net investment income resulted from the non-
recurrence of the dividend from the investment in
ProSiebenSat.1 Media AG, which has since been sold
(€ 23.1 million), and from exchange rate differences of
€ – 21.9 million in the investment income of Dogan TV.
Net investment income for 2008 includes pro rata
restructuring expenses attributable to the rotogravure
company PRINOVIS amounting to € 5.1 million
(PY: € 4.8 million) to shut down the printing plant in
Darmstadt at the end of 2008.

The reduction in net financial income/expenses to
€ – 61.5 million (PY: € – 46.4 million) can be attributed
above all to an expense in the amount of € 27.8 million
(PY: € 16.0 million) arising from the fair value measure-
ment of call options on the acquisition of shares in Axel
Springer AG granted to shareholders H&F Rose Partners,
L.P. and H&F International Rose Partners, L.P. In addi-
tion, we drew down a greater than average amount of
our credit line in the reporting period as a result of signifi-
cant acquisitions of new operations in the middle of 2007.

Axel Springer’s income tax expense was € 117.2 million
(PY: 90.3 million). The previous year’s amount included a
one-time only amount of € 43.1 million arising from the
adjustment of deferred tax liabilities related to the busi-
ness tax reform 2008. The reduction in corporate taxes
in Germany from around 40 % to around 30 % reduced
our tax expense.

Axel Springer generated earnings before interest, taxes,
depreciation, and amortization (EBITDA) adjusted for
non-recurring effects and the effects of purchase price
allocation in the amount of € 486.2 million. The EBITDA
increased year-on-year by 3.4 % (2007: € 470.0 million),
despite the declining advertising revenues in the domes-
tic printing business as a result of the earnings contribu-
tions of the newly acquired businesses, lower start-up
costs for the new operations, and our cost-cutting disci-
pline in the core business. Thus, it also significantly ex-
ceeded the forecast for 2008 that the EBITDA 2007,
adjusted for payments arising from the Kirch insolvency
(€ 13.0 million in 2007, € 6.2 million in 2008) and the

44 Annual Report 2008 Axel Springer AG

dividends from ProSiebenSat.1 Media AG (€ 23.1 million),
which has been sold in the meantime, would be ex-
ceeded.

Business development and performance -
Segments

Earnings before taxes, interest, and amortization on
goodwill (EBITA), adjusted for non-recurring effects and
effects from purchase price allocations, increased slightly
to € 422.1 million. The amount in 2007 (€ 421.7 million)
included a non-recurring effect arising from a restructur-
ing-related reversal of impairment on real estate in the
amount of € 15.8 million. Income from continuing
operations doubled as a result of the gain from the sale
of shares in ProSiebenSat.1 Media AG to € 571.1 million
(PY: € 284.0 million).

Newspapers National
In 2008, the newspapers published by Axel Springer
asserted themselves well in a difficult market. We as-
serted our position as Germany’s leading newspaper
publisher with the BILD and WELT Groups, as well as
with regional newspapers with the largest circulations.
Owing to various copy price increases, it was possible to
slightly increase circulation revenues in the segment. In
contrast, the incipient recession led to declining advertis-
ing revenues.

The consolidated net profit for the 2008 fiscal year in
the amount of € 571.1 million and the consolidated net
loss of the previous year in the amount of € 288.4 million
were both affected by significant factors that do not
relate to the current operating business: the gains and
losses in connection with ProSiebenSat.1 Media AG
(2008: € 438.3 million; PY: € 23.1 million) and PIN AG
(2007: € – 572.4 million), other non-recurring effects
(2008: – 62.0 million; PY: € 12.4 million), the income
from the Kirch insolvency (2008: € 6.2 million; PY:
€ 13.0 million), the effects of purchase price allocations
and amortization of goodwill (2008: € – 48.6 million;
PY: € – 13.4 million), the fair value measurement of
H&F options (2008: € – 27.8 million; PY: € – 16.0 million),
and the corresponding taxes (2008: € 10.5 million;
PY: € – 3.8 million). It should also be remembered that
the tax reform in Germany entailed a considerable change
in the tax rates, giving rise to a one-time remeasurement
of deferred taxes in 2007 (PY: 43.1 million). Also, the
current taxes would have been lower in Germany in
2007 if the 2008 tax rates had been applied (PY:
€ – 9.0 million). Adjusted for these effects, there is a
rise in the consolidated net profit from € 234.6 million
to € 254.5 million.

Diluted earnings per share calculated from the consoli-
dated profit amounts to € 18.54 (PY: € – 9.70). Based
on the weighted average shares outstanding in 2008, the
adjusted diluted earnings per share rose from € 7.77 to
€ 8.43.

Circulation Newspapers National

Average paid circulation, IVW data

2008 Change yoy

BILD

3,339,975

– 4.5 %

BILD am SONNTAG

1,719,408

– 4.8 %

DIE WELT/ WELT KOMPAKT

275,308

0.6%

WELT am SONNTAG

402,064

– 0.7%

HAMBURGER ABENDBLATT

249,161

– 1.8%

BERLINER MORGENPOST

B.Z./B.Z. am SONNTAG

147,213

197,945

– 1.0%

– 3.2%

In 2008, BILD, Europe’s most widely read and circulated
daily newspaper, generated the greatest profit since it
was established. Thanks to the copy price increases of
West German issues, as well as copy price increases of
€ 0.60 for issues in Berlin-Brandenburg and € 0.50 in
Chemnitz, we were able to more than compensate the
decline in circulation of 4.5 % compared to 2007, to an
average of 3.3 million copies (all information on paid
circulation of domestic newspapers according to IVW).
Thus, BILD reached an average of 11.6 million readers
daily (all information on the reach of domestic newspa-
pers according to ma 2009 Pressemedien I; status:
January 2009) and therefore more people than reached
by the largest television show in Germany, “Wetten,

Management Report of the Group and Management Report of Axel Springer AG 45

dass... ?” with an average of 10.02 million viewers in
2008. In 2008, BILD once again considerably increased
the involvement of readers. 9,603 pictures made by
readers have already been published in the newspaper
since July 2006 (status: February 2009), 956 of which
have even been placed on the cover. Readers send
pictures that they have taken with their cell phones to the
newspaper via the abbreviated number 1414. In addition,
BILD improved the reader-paper bond with 30 thousand
BILD video cameras acquired by customers in retail
stores. As with the 1414 pictures, the videos made with
the BILD camera can also be easily sent to the editorial
department. The reader advisory committee called to life
in 2007 has moved on to the next phase as a result of its
great success.

The precise dovetailing of BILD’s various media offerings
also contributed to its success, for which relocating the
editorial staff from BILD and BILD am SONNTAG from
Hamburg to Berlin into an integrated newsroom for print,
online, mobile, and moving image content was an impor-
tant prerequisite. The tabloid has demonstrated its inno-
vation numerous times; for instance, with the new 4242
service: readers of the print edition can photograph
designated articles with a cell phone and send the pic-
ture to 4242 in order to promptly receive direct access to
multimedia background information via the BILDmobil
portal. With more than 11.0 million readers (– 0.3 million),
BILD am SONNTAG remained by far the most widely
circulated weekly newspaper. With an average of
1.7 million copies sold, the circulation was 4.8 % below
the previous year’s level, but at the same time, the sales
price was raised in May from € 1.40 to € 1.50.

DIE WELT/WELT KOMPAKT succeeded in slightly in-
creasing its circulation year-on-year against the overall
market trend. The readers (including those of the tabloid
format WELT KOMPAKT) purchased on average 275.3
thousand copies (+ 0.6 %). In the second quarter, DIE
WELT/WELT KOMPAKT achieved a new record circula-
tion of 280.4 thousand copies, despite the higher copy
price. The premium newspaper continued to reach
0.7 million readers with each issue. In September, the
job ads from DIE WELT were expanded by the supple-
ment KarriereWELT in tabloid format. The job ads are
also included in the Monday edition of WELT KOMPAKT,

which is geared towards younger readers. WELT am
SONNTAG also succeeded in maintaining its lead over
the competition by mixing current, pointedly opinionated,
and entertaining journalism. The Sunday newspaper’s
paid circulation developed almost stably with 402.1 thou-
sand copies (– 0.7 %), despite a copy price increase
implemented in the second quarter.

The circulation of the large regional newspapers, HAM-
BURGER ABENDBLATT, BERLINER MORGENPOST,
and B.Z., declined moderately by comparison in 2008 –
despite the difficult market environment. The HAM-
BURGER ABENDBLATT sold an average of 249.2 thou-
sand copies (– 1.8 %), despite increasing both its sub-
scription and single-unit sales prices. The most widely
read daily newspaper in metro Hamburg brought two
additional regional issues to the market. With a decrease
of 1.0 % to 147.2 thousand copies, BERLINER
MORGENPOST’s paid circulation developed better than
average for Berlin premium newspapers. The traditional
B.Z./B.Z. am SONNTAG remained Berlin’s largest news-
paper with an average of 197.9 thousand copies sold
(– 3.2 %), despite the price increase in October.

Key Figures Newspapers National

in € millions

2008

2007

Change

External revenues

1,277.6

1,290.3

– 1.0%

Share in cons. revenues

46.8 %

50.1 %

Circulation revenues

Advertising revenues

Other revenues

625.8

623.4

28.3

600.7

667.0

22.7

4.2 %

– 6.5 %

24.9 %

EBITDA

348.9

363.9

– 4.1 %

EBITDA margin

27.3 %

28.2 %

The newspapers published domestically by Axel Springer
generated € 1,277.6 million in revenues in 2008
(PY: € 1,290.3 million). The copy price increases con-
tributed significantly to the increase in circulation reve-
nues by 4.2% to € 625.8 million (PY: € 600.7 million).
The increasing reluctance to incur advertising expenses

46 Annual Report 2008 Axel Springer AG

as a consequence of the worsening economic environ-
ment caused advertising revenues to decline overall by
6.5 % to € 623.4 million (PY: € 667.0 million). With
46.8 % (PY: 50.1 %), the Newspapers National seg-
ment made the greatest contribution to consolidated
revenues.

Considering the slightly decreasing development of reve-
nues, rising costs from negotiated labor contracts, and
the expense of relocating BILD, earnings before taxes,
interest, depreciation, and amortization (EBITDA) totaling
€ 348.9 million remained below the previous year’s level
(€ 363.9 million) by 4.1 %. Not even record earnings on
the part of BILD and the WELT Group/BERLINER
MORGENPOST could compensate the HAMBURGER
ABENDBLATT’s decreasing revenues from the classified
ad business and investment income that was lower than
the corresponding prior-year figure.

Magazines National
Despite the difficult market environment, with advertising
and circulation revenues below the respective prior-year
figures, the earnings generated by the Magazines Na-
tional segment were among the highest in the com-
pany’s history. In particular, the magazines of the BILD
family of brands increased their market shares in total.

In the TV listings segment, TV DIGITAL sold on average
more than 2.0 million copies on a biweekly basis – an
increase of 8.2 % compared to 2007 (all information on
the paid circulation of domestic magazines principally
according to IVW, unless otherwise indicated). Thus,
Germany’s largest magazine for digital television was the
only publication in its market segment to increase its
circulation year-on-year. TV DIGITAL’s market share rose
from 19.8 % to 21.7 % (all information on market shares
measured on the weighted paid circulation, unless oth-
erwise indicated); the reach increased from 2.2 million to
2.7 million readers (all information on the reach of do-
mestic magazines according to ma Pressemedien I;
status: January 2009). Already in its fourth year, TV DIGI-
TAL is one of the top-selling magazines in Germany.
With around 1.5 million copies sold, HÖRZU is still the
number one among weekly TV magazines in Germany,
despite a 4.0 % decrease in circulation. The unwavering
trend towards monthly TV listings caused the circulation
of most weekly TV titles on the German market to fall.

Circulation Magazines National

Average paid circulation, IVW data

TV DIGITAL

HÖRZU

FUNK UHR

BILDWOCHE

TV NEU

BILD der FRAU

JOLIE

FRAU von HEUTE

2008

Change
yoy

2,036,937

8.2 %

1,450,772

– 4.0 %

676,805

– 6.2 %

199,523

– 13.2 %

147,647

– 14.0 %

1,021,276

– 5.8 %

282,825

– 14.6 %

241,485

– 31.6 %

COMPUTER BILD

721,036

1.6 %

COMPUTER BILD SPIELE

279,973

– 21.8 %

AUDIO VIDEO FOTO BILD

200,275

– 25.8 %

AUTO BILD

AUTO TESTS

AUTO BILD ALLRAD

AUTO BILD SPORTSCARS

616,078

– 4.3 %

216,452

27.8 %

65,879

– 1.7 %

64,723

– 5.9 %

AUTO BILD MOTORSPORT

55,386

– 9.1 %

SPORT BILD

480,951

– 3.9 %

EURO

EURO am SONNTAG

POPCORN

MÄDCHEN

ROLLING STONE

MUSIKEXPRESS

METAL HAMMER

174,193

111,485

1.7 %

0.6 %

193,026

– 9.5 %

158,277

0.3 %

53,246

– 3.3 %

51,025

– 7.3 %

45,750

– 0.1 %

In the women’s and lifestyle magazines segment, BILD
der FRAU succeeded in expanding its circulation market
share to 29.6 % (PY: 27.5 %), despite the stiff crowding
out competition. With more than 1.0 million copies, on
average 5.8 % less was sold than in 2007. Nevertheless,

Management Report of the Group and Management Report of Axel Springer AG 47

the largest weekly women’s magazine BILD der FRAU
increased the number of readers by 0.2 million to
5.9 million. The reach of the monthly pocket magazine
JOLIE declined slightly in the hotly contested market and
the paid circulation decreased by 14.6 % to 282.8 thou-
sand. The lifestyle title MÄDCHEN defended its good
market position with 158.3 thousand copies sold
(+ 0.3 %) and was able to increase its market share in
the youth segment by two percentage points. ROLLING
STONE achieved a circulation of 53.2 thousand copies
(– 3.3 %). In the course of bundling the women’s, youth,
and music magazines, as well as their online offerings, in
the newly created publishing group “Women’s and Life-
style Media”, Axel Springer had already sold the men’s
lifestyle title MAXIM in the first quarter of 2008. Axel
Springer’s reorganization goal is the cross-medial ex-
pansion of the women’s brands as well as the youth and
music magazines. Since January 2009, only the online
issue of the youth magazine YAM! is being continued
and further developed.

Overall in 2008, the circulation of the BILD Group’s
computer, auto, and sport magazines developed bet-
ter than the market almost across the board. Thus,
Europe’s largest computer magazine, COMPUTER BILD,
succeeded in increasing its circulation by 1.6 % to an
average of 721.0 thousand copies, thereby remaining
the unchallenged market leader in its segment. Despite
losing circulation, COMPUTER BILD SPIELE and AUDIO
VIDEO FOTO BILD defended their top positions in their
respective hotly contested market segments.

The publications of the AUTO BILD Group developed
more stably than the overall market, thus enabling them
to expand their leading positions. Overall, Axel Springer
expanded its market share in the automotive title seg-
ment year-on-year by 0.6 percentage points to 54.7 %.
Europe’s largest automobile magazine AUTO BILD ex-
panded its reach from 2.8 million to 2.9 million readers.
Good progress was also made in 2008 in the interna-
tionalization of the automobile magazine with an addi-
tional seven licensed editions, so that we were able to
further expand our position as the world’s largest auto-
mobile media brand. In contrast, AUTO BILD’s paid
circulation declined by 4.3 % to an average of 616.1 thou-
sand copies. Under the monthly special titles, AUTO

TESTS developed excellently with an average of 216.5
thousand copies sold (+ 27.8 %).

SPORT BILD increased its advertising market share
under the relevant sports magazines to 67.7 % (PY:
67.4 %). Europe’s largest sports magazine increased its
reach considerably by 0.4 million to 4.2 million readers.
In total in 2008, an average of 481.0 thousand copies
(– 3.9 %) were sold and we increased the market share
by 1.1 percentage point to 48.6 %.

In the challenging market for financial publications, the
titles of Axel Springer Financial Media (Axel Springer
Finanzen Verlag until the end of 2008) mostly succeeded
in increasing their circulations. With 174.2 thousand cop-
ies, the monthly magazine EURO sold an average of 1.7 %
more than in 2007. The weekly EURO am SONNTAG
increased its paid circulation by 0.6 % to 111.5 thousand.
However, both publications had to accept considerable
reductions in advertising revenues owing to the negative
development of the capital market. The paid circulation of
the entrepreneur’s magazine MARKT und MITTELSTAND
declined by 2.0 % to 53.7 thousand copies.

Key Figures Magazines National

in € millions

External revenues

2008

564.1

2007

587.8

Change

– 4.0 %

Share in cons. revenues

20.7 %

22.8%

Circulation revenues

Advertising revenues

Other revenues

373.6

176.0

14.5

381.6

192.2

14.1

– 2.1 %

– 8.4 %

2.8 %

EBITDA

88.8

73.9

20.2 %

EBITDA margin

15.7 %

12.6%

The revenues of domestic magazines fell in 2008 by
4.0 % to € 564.1 million (PY: € 587.8 million). Publica-
tions contributed 20.7 % (PY: 22.8 %) to consolidated
revenues. The decrease in circulation revenues by 2.1 %
to € 373.6 million (PY: € 381.6 million) can be attributed

48 Annual Report 2008 Axel Springer AG

primarily to women’s, youth, and music magazines,
whereby the discontinuance of MAXIM and reduced
circulation on the part of YAM! played a role. Positive,
partially price-related increases in circulation revenues
with respect to TV listings – above all TV DIGITAL – as
well as the auto and sports media, could not fully com-
pensate these effects. Advertising revenues declined by
8.4 % to € 176.0 million (PY: € 192.2 million), which can
also be attributed to the discontinuance of MAXIM.

Despite the declining revenues, the Magazines National
segment achieved new records with an EBITDA of
€ 88.8 million (PY: € 73.9 million) and an EBITDA margin
of 15.7 % (PY: 12.6 %). This increase in income can in
particular be attributed to an optimization of the title
portfolio, disciplined cost management, and a reduction
in development and start-up costs.

Print International
Internationally, our newspaper and magazine business
developed well in 2008 under difficult conditions. How-
ever, in some cases, considerably fewer newspapers
and magazines were sold on the markets than in the
previous year. Axel Springer introduced new publications
to the market and integrated the operations acquired in
2007 quickly and successfully.

Circulation Poland (Selection)

Average paid circulation, ZKDP
data

FAKT

DZIENNIK

NEWSWEEK1)

2008 Change yoy

495,063

– 3.8 %

154,728

– 18.5 %

123,342

– 10.6 %

1) Source: ZKDP, January to November 2008 vs. January to November 2007.

In Poland, Axel Springer remains the leader in the na-
tional daily newspaper segment. With the tabloid FAKT,
the premium newspaper DZIENNIK, and the sports

newspaper PRZEGLAD SPORTOWY, the company
increased its market share to 44.3 % (PY: 45.2 %). FAKT
succeeded once again in maintaining its lead over the
competition with an average of 495.1 thousand copies
sold (following information according to ZKDP) – despite
a decrease in circulation of – 3.8 % year-on-year. In
September, Poland’s largest daily newspaper started
“FAKT for Great Britain” and “FAKT for Ireland” with a
weekly circulation of 30 thousand copies for the Poles
living in the British Isles.

The development in the market segment for premium
newspapers continued to be very difficult. The decrease
in the paid circulation of DZIENNIK to 154.8 thousand
(– 18.5 %) was consciously accepted in the decision to
reduce supplements such as CDs or DVDs, etc. Among
the weekly news magazines, NEWSWEEK generated not
only the highest growth rates with respect to advertising
revenues, but also the absolutely highest advertising
volume. Readers purchased an average of 123.3 thou-
sand copies and thus 10.6 % less than in 2007 (Janu-
ary – November). With an average paid circulation of
40.4 thousand (– 3.8 %; January – November), the
monthly magazine FORBES continued to be the highest-
selling business magazine in Poland. In the weekly
automobile magazine segment, AUTO SWIAT asserted
its top position with 110.9 thousand (January – Novem-
ber) copies sold, despite a decrease in circulation of
6.8 %. KOMPUTER SWIAT was the only computer
magazine in Poland to increase its circulation by 3.2 %
to 89.6 thousand (January – November).

Circulation Hungary (Selection)

Average paid circulation,
MATESZ data

TVR-HET

KISKEGYED

GLAMOUR

2008 Change yoy

213,393

– 4.0 %

201,295

57,215

0.9 %

2.3 %

Management Report of the Group and Management Report of Axel Springer AG 49

Axel Springer is Hungary’s largest publisher, with ten
newspapers, more than 30 magazines, and a compre-
hensive online portfolio. In terms of average paid circula-
tion, we have achieved a market share of over 22 %
(PY: 22 %, company information) with our range of prod-
ucts. We reinforced our top position in TV listings by
introducing a sixth TV listings title appearing biweekly in
the budget price segment. In addition to the successful
new magazine supplement VALUE in the leading busi-
ness newspaper VILÁGGAZDASÁG, the two licensed
titles “Manager Magazine” and “Harvard Business Re-
view” contributed significantly to the growth in income. In
the highly competitive women’s segment, the successful
brands KISKEGYED and GLAMOUR improved their
market positions. Whereas KISKEGYED succeeded in
maintaining the stability of its circulation with an average
of 201.3 thousand (PY: 201.4 thousand) copies sold
GLAMOUR even recorded an increase of 2.3 % to 57.2
thousand.

WEMF); the business magazine BILANZ sold 5.7 % more
with 40.9 thousand copies; the investor magazine
STOCKS even increased its circulation year-on-year by
15.4 % with 23.9 thousand copies. The consumer ad-
vice magazine BEOBACHTER held its circulation almost
stable (– 0.6 %) with an annual average of 310.2 thou-
sand copies sold. In order to offer advertising customers
attractive combination offers with a high reach, advertis-
ing sales departments of the segments TV listings and
the BEOBACHTER Group were bundled together. The
largest Swiss weekly TV title TELE appeared in 2008 for
the first time with a completely revised program section:
With TELEdigital, TELE delivers the first weekly program
supplement for digital TV service in Switzerland. The
integration of Jean Frey AG and the TV listings of Ringier,
acquired in 2007, was successfully concluded in 2008.
Both operations generated greater net income than
before the integration.

Circulation Switzerland (Selection)

Circulation France (Selection)

Average paid circulation, WEMF
data

BEOBACHTER

TV STAR

HANDELSZEITUNG

2008

Change yoy

310,173

169,761

45,190

– 0.6 %

– 0.4 %

46.4 %

Average paid circulation,
company data

TELE MAGAZINE

VIE PRATIQUE GOURMAND

VIE PRATIQUE SANTE

2008

Change yoy

360,000

185,000

100,000

– 3.6 %

1.3 %

– 6.9 %

In Switzerland, Axel Springer generated very good net
income in the large segments business magazines, BE-
OBACHTER Group, and TV listings. The business titles
HANDELSZEITUNG, BILANZ, and STOCKS once again
reached their high advertising revenues generated in the
previous year, contrary to the trend. The financial publi-
cations impressively increased their circulation figures by
taking over the subscriber base of the business newspa-
per “Cash”: The HANDELSZEITUNG recorded a very
high increase in circulation of 46.4 % to 45.2 thousand
(information based on official circulation statistics from

In France, the biweekly cooking magazine VIE PRATIQUE
GOURMAND generated the highest percentage growth
with readers of all French magazines, 76.1 % to 833 thou-
sand readers, and continues to be the most sold cooking
magazine. The TV magazine TELEMAGAZINE succeeded
in increasing its readership by 3.1 % to 1.1 million in its
weekly TV magazine segment.

50 Annual Report 2008 Axel Springer AG

Circulation Spain (Selection)

Circulation Czech Republic (Selection)

Average paid circulation, OJD
data

20081) Change yoy

Average paid circulation, ABC
data

COMPUTER HOY

HOBBY CONSOLAS

PERSONAL COMPUTER

91,534

78,387

76,578

– 8.2 %

– 8.9 %

– 5.4 %

TOP DIVKY

SVET MOTORU

AUTO TIP

2008 Change yoy

36,490

– 19.8 %

34,287

23,454

– 5.8 %

– 4.2 %

1) Source: OJD, July 2007 to June 2008 vs. July 2006 to June 2007.

In Spain, Axel Springer defended its position as the
market leader in the magazine segments of computer
magazines, with a market share of 78.9 % (– 0.5 %) and
video and computer games, with a market share of
86.3 % (– 0.3 %). In the segment of weekly auto maga-
zines, AUTO BILD ESPANA likewise held on to the mar-
ket leadership position,with a market share of 30.6 %
(– 1.5 %). Even AUTO BILD 4x4, which first appeared in
2008, asserted its position as the most widely circulated
medium all about four-wheel-drive vehicles. In addition,
the children’s magazine Juan y Tolola, which also ap-
peared for the first time in 2008 – a licensed title from
BBC – also succeeded in placing itself in the market.

Circulation Russia (Selection)

Average paid circulation,
company data

FORBES

COMPUTER BILD

2008 Change yoy

86,689

74,476

– 3.9 %

29.8 %

In Russia, FORBES, the market leader in the business
magazine segment, expanded its position in the advertis-
ing market. The cooperation agreement between Forbes
Inc. and Axel Springer Russia was extended. The circula-
tion of the biweekly Russian issue of COMPUTER BILD
grew especially dynamically with a plus of 29.8 % to an
average of 74.5 thousand copies sold (according to the
company itself).

In the Czech Republic, Axel Springer underpinned its
dominant position in the automobile magazine segment
compared to its main competitors with the titles SVET
MOTORU and AUTO TIP. The publications unite 65.2 %
(PY: 65.0 %) of the market for Axel Springer – based on
paid circulation. As a result of the great success with the
readers, AUTO TIP SPORTSCARS, which first started
in June as a licensed edition of the corresponding spe-
cial title AUTO BILD, will no longer appear semi-annually,
but rather every quarter. In addition, the magazine for
four-wheel-drive vehicles AUTO BILD ALLRAD Czech
Republic was brought to the market as AUTO TIP 4x4
in November.

Axel Springer has also operated in India since June 2008.
The company published the first issue of AUTO BILD
India in June together with the India Today Group, one of
the leading publishing houses on the Asian subcontinent.

Axel Springer also successfully implemented its interna-
tionalization strategy in additional countries by awarding
a number of licensed editions. AUTO BILD has also
been circulated since May 2008 in Georgia. The special
interest magazine AUTO BILD ALLRAD appears as
AUTO BILD 4x4 in Bulgaria, Serbia and Montenegro,
and the first licensed edition of AUTO BILD in Central
America started in Mexico. Thus, AUTO BILD appears
in 35 countries.

Management Report of the Group and Management Report of Axel Springer AG 51

Key Figures Print International

in € millions

External revenues

2008

409.8

2007

408.3

Change

0.4 %

Share in cons. revenues

15.0 %

15.8 %

Circulation revenues

Advertising revenues

Other revenues

216.4

177.4

16.0

208.4

173.2

26.7

3.8 %

2.4 %

– 40.2 %

EBITDA

27.8

10.6

> 100 %

EBITDA margin

6.8 %

2.6 %

In 2008, the Print International segment generated reve-
nues of € 409.8 million compared to € 408.3 million in
2007. Above all on the Swiss market, Axel Springer was
able to considerably increase its revenues. The newspa-
pers and magazines published internationally contributed
15.0 % (PY: 15.8 %) of consolidated revenues. Circula-
tion revenues increased by 3.8 % to € 216.4 million
(PY: € 208.4 million) – in particular as a result of growth
in the newly acquired operations in Switzerland. The
increase in advertising revenues of 2.4 % to € 177.4
million (PY: € 173.2 million), were somewhat lower.
The Swiss and Russian publications succeeded in in-
creasing their advertising revenues most significantly.
In 2008, it was not possible to repeat the profit gener-
ated in 2007, in particular in the Polish market through
the sale of spin-off products, so that the other revenues
decreased by 40.1 % to € 16.0 million.

Axel Springer succeeded in more than doubling earnings
before taxes, interest, depreciation, and amortization
(EBITDA) with respect to the titles published internationally
from € 10.6 million to € 27.8 million. Net income in 2007
was strongly characterized by the costs for the discontinu-
ance of development activities for a tabloid in France
(€ 13.7 million). Above all, the successful integration of the

acquisitions in Switzerland and the methodical develop-
ment of operations in Russia were able to increase net
income very satisfactorily. At 6.8 %, the EBITDA margin
considerably exceeded the previous year’s level (PY:
2.6 %).

Digital Media
Online activities
Axel Springer further promoted its digitalization offensive
with the further development of its existing operations
and with targeted purchases. Thus, the digital offerings
recorded considerable growth overall with respect to
reach and usage figures and were able to increase reve-
nues significantly.

Unique Visitors/Visits of Editorial Online-
Offerings (Selection)

in thousands

Bild.de

welt.de

Unique
Visitors
20081)

Change
yoy

Visits
20082)

Change
yoy

3,566.0

13.0 %

62,942.0

36.8 %

3,107.6

121.6 %

19,725.4

139.2 %

goFeminin.de

1,932.1

– 0.1 %

5,802.6

13.2 %

computerbild.de3)

transfermarkt.de4)

1,665.3

99.6 %

8,931.6

275.9 %

1,003.7

60.0 %

10,465.8

66.1 %

abendblatt.de

735.5

– 10.0 %

3,762.3

14.9 %

autobild.de

hamburg.de5)

659.1

– 3.8 %

4,347.6

15.1 %

520.2

– 13.7 %

2,170.6

– 11.9 %

morgenpost.de

473.7

27.9 %

2,272.1

56.0 %

onmeda.de

sportbild.de6)

jolie.de7)

465.9

– 9.6 %

1,647.5

20.5 %

250.5

– 0.4 %

2,494.9

66.2 %

217.2

267.5 %

508.7

306.8 %

finanzen.net

190.0

46.6 %

4,042.4

128.8 %

1) Source: ComScore.
2) Source: IVW.
3) Visits: Company data for Q1–2/2007, IVW-data as of Q3/2007.
4) Visits: Company data for 2007, IVW-data for 2008.
5) Visits: Company data for until October 2007, IVW-data as of November 2007.
6) Visits: Company data for Q1/2007, IVW-data as of Q2/2008.
7) Visits: Company data for Q1–2/2007, IVW-data as of Q3/2008.

52 Annual Report 2008 Axel Springer AG

In 2008 in the area of print brands and content-linked
online and mobile portals, Bild.de succeeded in reinforc-
ing its position as the most viewed news and entertain-
ment webpages in Germany by far. With respect to the
reach, the online portal from BILD set a new record with
an average of 3.6 million (PY: 3.2 million) unique visitors
(unique visitor information principally according to com-
Score, unless otherwise indicated). Even the page im-
pressions increased considerably by 38.5 % year-on-
year to an average of 747.4 million; visits were increased
by 36.8 % to 62.9 million (visits and page impression
information principally according to IVW, unless other-
wise indicated). After the takeover of the remaining
shares in Bild.de by Deutschen Telekom AG in January
2008, it was possible to consistently promote the further
development of the BILD family. That could be seen, for
instance, in the orientation of an integrated newsroom, in
which the BILD family’s content for the print, online, and
moving image formats are created. The portal expanded
its offerings in August by making moving image content
available on all games in the German Bundesliga. The
Bundesliga videos reached more than 400 thousand
viewers monthly. The portal developed into one of the
most-used moving image platforms online in Germany.
BILDmobil advanced to the largest mobile information
and entertainment portal in Germany with 17.6 million
page impressions (December 2008; December 2007:
7.8 million). Axel Springer strengthened its sports infor-
mation offerings by acquiring the majority in transfer-
markt.de, the leading German-language online soccer
community.

The news portal WELT ONLINE reached an average of
3.1 million unique visitors monthly, up 121.6 % year-on-
year. The number of pages viewed each month in-
creased by 139.1 % to 148.8 million; the number of visits
increased by 139.2 % to 19.7 million. Therefore, WELT
Group’s Internet offering is Germany’s third-largest news
portal and took over the top position among the online
offerings of premium newspapers in Germany. The traffic
of WELT MOBIL’s mobile portal grew by an annual aver-
age of 12 %. The expanded online offering of BERLINER
MORGENPOST, the leading portal for local news in
Berlin, recorded a constant increase in traffic, as well
as a record number of page impressions in October
(24.9 million pages viewed). Print and online were also

more closely integrated at the HAMBURGER ABEND-
BLATT. Whereas the reach declined by – 10 % to 0.7
million unique visitors, the number of pages viewed in-
creased by 14.8 % to an average of 21.1 million monthly.

hamburg.de, the official city portal of the Hanseatic City
of Hamburg, expanded its offering considerably. Thus,
among other things, the video portal video.hamburg.de
was started. The reach sank by 13.7 % to an average of
0.5 million unique visitors, but the number of page im-
pressions increased by 12.7 % to 16.4 million.

autobild.de expanded its position as the leading supplier
of editorial content on the topic of automobiles. The
introduction of AUTO BILD MOBIL also contributed by
providing users with information via cell phone.

computerbild.de pushed itself from third to second place
among the most important German technical webpages
by consistent further development of its editorial content.
The computer portal also started with a webpage (mo-
bil.computerbild.de) for mobile users.

Axel Springer increased its investment in the online
game provider Gamigo from 47.4 % to 94.8 %. In 2008,
gamigo.de was able to offer numerous new games and
considerably increased the number of new registrations
to 1.1 million. Gamigo already has a portfolio of 15 titles
in four languages.

In a cooperation started in 2008, Axel Springer Digital TV
Guide combined its experience in program guides and
editorial-supported navigation with the APRICO’s recom-
mendation technology from Philips Technologies. The
software product MY PERSONAL TV DIGITAL, which
can be implemented on various devices, enables con-
sumers to prepare completely personalized TV channels
– and offers advertisers an excellent, high-performance
platform for target group-oriented and interactive adver-
tising.

The women’s portals also performed well. Both websites
for young female readers, jolie.de and maedchen.de,
increased the frequency with which their pages were
viewed. The competency in moving image content im-

Management Report of the Group and Management Report of Axel Springer AG 53

proved the MÄDCHEN’s portal with the internally pro-
duced TV format Mädchen.tv.

In 2008, Europe’s leading women’s portal, auFem-
inin.com, underpinned its excellent competitive position.
Its reach increased to an average of 22.5 million unique
visitors per month (according to the company). auFem-
inin achieved an average of 519.4 million page impres-
sions each month (according to the company). Total
revenues of the listed company grew by 10 % to
€ 24.7 million. International revenues recorded consider-
able growth of 74 %, while Smart Adserver revenues
grew by 43 %. The earnings before interest and taxes
(EBIT) of € 9.5 million disclosed in the consolidated
financial statements of the auFeminin Group was less
than the € 13.1 million reported in 2007, owing to the
planned expenses for the expansion of the auFeminin
Group. Highlights in 2008 included the relaunch of
auFeminin.com and goFeminin.de, as well as the launch
of the luxury website Joyce. goFeminin.de also acquired
the health portal ONMEDA, one of Germany’s leading
independent portals for premium health information,
thereby reinforcing the health area. goFeminin.de is
auFeminin.com’s German-language website. Axel
Springer holds 82.4 % of shares in auFeminin.

With 0.3 million unique visitors, Germany’s largest finance
community, wallstreet:online, succeeded in reaching
6.6 % more users than in 2007. The financial portal is the
only product in this segment whose reach is growing. In
November, Axel Springer increased its share in wall-
street:online from 50.1 % to 71.5 %. However, wall-
street:online did not develop satisfactorily overall. The
international financial market crisis led to a decline in the
investor relations business close to the capital market. In
the course of the implemented restructuring and cost-
reducing program, the company separated itself from
projects and investments unrelated to its core business.
This is also why wallstreet:online’s revenues disclosed
in its annual financial statements declined year-on-year
by € 3.9 million to € 4.5 million and the EBITDA by
€ 0.4 million to € 0.3 million.

In 2008, finanzen.net improved its competitive position,
for example by expanding its moving-image content
offerings and is now the second-largest financial portal in

Germany. Page impressions grew considerably in 2008
by 104.7 % to an average of 26.1 million. Smarthouse
Media continues to be one of the worldwide leading
providers in the area of web-based financial applications
for derivatives issuers. In November 2008, Axel Springer
expanded its share in Smarthouse Media from 76.0 %
to 88.0 %.

Axel Springer also implemented its digitalization strategy
consistently and across multiple independent websites.
In Poland, the company expanded its product portfolio
by the news and opinion portal redakcja.pl. The editorial
departments of DZIENNIK, FAKT, PRZEGLAD SPOR-
TOWY, NEWSWEEK, and FORBES provide the portal
with journalistic content. In addition, the student portal,
students.pl, went online. The portal also cooperated with
print media from AS Polska in this endeavor. The daily
newspaper DZIENNIK and the news magazine NEWS-
WEEK supply editorial content regarding the areas of
culture, entertainment, and economy. Accordingly, traffic
increased considerably.

Even the number of visitors to and pages viewed from
the online offering of Axel Springer in Hungary rose sub-
stantially – above all, the redesigned and aggressively
marketed eight regional news portals. The new start of
three online portals in the women’s segment as a com-
pliement to the corresponding print media KISKEGYED,
GLAMOUR, and the decoration title LAKÁSKULTÚRA
contributed to the total growth of page impressions and
visits in the Hungarian market.

In Switzerland, the acquired leisure portals, party-
guide.ch and usgang.ch, developed very well: With an
average of 360 thousand unique visitors each month,
partyguide.ch is the farthest-reaching offer among Swiss
party and leisure portals, while usgang.ch, with its 200
thousand unique visitors, is the most frequently visited
premium lifestyle and nightlife medium online. The stu-
dent portal students.ch doubled its monthly unique visi-
tors within one year and recorded an average of 130
thousand visitors (WEMF). Together, the portals of the
Amiado Group reach around 36 % of the Swiss popula-
tion between 16 and 34 (according to the company).

54 Annual Report 2008 Axel Springer AG

Axel Springer Praha is the leading provider of automotive
portals online. With 15.9 million page impressions and
1.8 million visits, Auto.cz has become the most impor-
tant website for advertising customers in the automotive
segment (www.netmonitor.cz). In France in 2008, the
automotive portal autoplus.fr succeeded in generating
more than one million unique visitors (Nielsen, OJD).

ZANOX.de AG, one of the worldwide leading suppliers of
success-based online marketing, was able to increase its
revenues and net income for the umpteenth time and
further expand its market position compared to the
competition. zanox continued its profitable growth path
and strengthened its international business, among other
ways, by opening additional offices in various countries
and thus created the basis for more intensive contact to
international advertising customers. zanox took greater
advantage of the Axel Springer Group’s cross-selling
potential. Furthermore, the company began a quality
offensive with the disclosure of its Code of Conduct.
With this detailed code of conduct, zanox created trans-
parent quality standards for the participants in the Affili-
ate Network. In addition, zanox received the European
Seal of E-Excellence by the European Multimedia Forum
for the third time in a row.

In the segment for the online classified ads market and
marketplaces, immonet.de also reinforced its market
position as the number two among German real estate
portals. The property portfolio on immonet.de was in-
creased by 18.8 % to the record high of 950 thousand,
while the page impressions increased by 27.9 % to
400.2 million (according to the company). In addition,
Immonet was distinguished as the cross-media market
leader in the Ludwig Maximilian University of Munich’s
Immostudie 2008, and won first place in the audience
award “Website of the Year” in the category of real es-
tate portals. Owing to its strong market position, the
portal was able to assert a price adjustment in Septem-
ber that had a very positive effect on the development of
revenues.

With the acquisition of around 33.3 % of shares in Step-
Stone ASA in Oslo, we succeeded in gaining access to
the quickly growing European market for online job ex-
changes. StepStone is one of the leading operators of

online job exchanges in Europe and providers of talent
management software and services. The German online
job market on stepstone.de in which Axel Springer has
owned 49.9 % since 2004, increased the number of
registered users who regularly inquire about new job
offers to more than 700 thousand (+14 %). The number
two among German job exchanges attracted numerous
new large customers. In addition, stepstone.de entered
into an online cooperation with the personnel manage-
ment portal HRM.de.

idealo.de consistently expanded its offer portfolio in 2008
and underpinned its position as one of the leading Ger-
man search engines for price and product comparisons.
The portal expanded to Great Britain, France, and Aus-
tria. It’s offerings in Spain, Italy, and the Netherlands
were augmented by the topic of travel. In Germany,
users have been able to fall back on price comparisons
between electricity suppliers since the third quarter.
idealo.de was able to increase the total number of bro-
kered trader contacts by 23.7 % compared to 2007,
whereby clicks for travel price comparisons even dou-
bled.

TV/radio operations
In November 2008, Axel Springer entered into contracts
for the acquisition of an equity interest amounting to at
least 9.1 % of Dogan Yayin Holding for a purchase price
of € 47 million. The contracts are subject to regulatory
approval and have not yet been finalized. The Turkish
media holding company commands an excellent position
in an attractive growth market. The Dogan Yayin Hold-
ing’s portfolio complements Axel Springer’s printed and
digital media offerings excellently and includes, among
other things, controlling interests in the newspapers
Hürriyet, Milliyet, and Posta, as well as an investment in
˘
the magazine company Dogan-Burda, and controlling
interests in Dogan TV and the listed company Trader
Media East. With this move Axel Springer will expand
and deepen the existing long-standing strategic partner-
ship with the Dogan Group. In connection with this
transaction, Axel Springer AG sold 5.1 percentage points
of its previous 25 % equity interest in the Dogan TV
Group for a purchase price of € 77 million to the parent
company of Dogan Yayin Holding. The basis for the
purchase price was the historical measurement at which

Management Report of the Group and Management Report of Axel Springer AG 55

Axel Springer had acquired the investment at the start of
2007. Dogan TV is the largest private TV and radio com-
pany in Turkey. As a result of a planned capital increase
on the part of Dogan TV, in which Axel Springer AG is
not participating, the indirect investment in Dogan TV will
be further reduced to 18.6 %.

˘
In the TV segment, the Dogan TV Group asserted its
market leadership as well as its viewer and advertising
market shares. In the most important regional print mar-
kets for Axel Springer – Hamburg and Berlin – the Group
has invested in local TV stations. Both metropolitan area
stations Hamburg 1 and TV.Berlin developed positively
once again. Schwartzkopff TV was once again one of the
leading producers of entertainment and talkshow for-
mats, in particular as a result of the successful new
business in the area of docutainment and the solid exist-
ing business.

The radio portfolio with its six direct and many indirect
investments in radio stations developed very well in a
difficult market environment.

Key Figures Digital Media

in € millions

External revenues

2008

378.2

Share in cons. revenues

13.9 %

Advertising revenues1)

Other revenues1)

271.2

107.0

2007

208.1

8.1 %

160.8

47.3

Change

81.7 %

68.6 %

> 100 %

EBITDA

20.9

36.7

– 43.0 %

EBITDA margin

5.5 %

17.6 %

EBITDA excl. net
investment income2)

20.0

– 1.1

EBITDA margin

5.3 %

– 0.5 %

1) Previous year’s figures adjusted due to change of presentation method, see the

note on page 22.

2) This figure does not include a net investment income of € 0.9 million (PY: € 37.8

million).

In 2008, the Digital Media segment generated a robust
increase in revenues of 81.7 % to € 378.2 million (PY:
€ 208.1 million). The greatest contribution to revenues
was provided by zanox.de, an equity investment ac-
quired in 2007 that has been included in the basis of
consolidation since the third quarter of 2007. With
€ 271.2 million, advertising revenues were up 68.6 %
year-on-year (2007: € 160.8 million), despite the increas-
ingly difficult market environment. The other revenues
increased considerably from € 47.3 million to € 107.0
million. The most important catalyst for this was the
inclusion of eprofessional.de, a subsidiary of zanox.de,
for the entire year.

The pro forma revenues of the Digital Media segment
increased by 24.6 % to € 383.1 million (PY: € 307.4
million) and included the companies acquired since 2006
on the basis of unaudited financial information. zanox.de
is included at the rate of 100 % (formerly: pro rata at
60 %) because the planned target structure was no
longer regarded as feasible at the balance sheet date.

Adjusted for the dividends collected from ProSieben-
Sat.1 Media AG (€ 23.1 million) in 2007, the Digital Me-
dia segment’s EBITDA increased from € 12.6 million
(EBITDA reported in 2007, including dividends from
ProSiebenSat.1 Media AG: € 36.7 million) to € 20.9
million in 2008. Excluding the change in Dogan TV Hold-
ing A.S.’s net investment income of € – 21.9 million
resulting from exchange rate effects, the increase in net
profit or loss would have been significantly higher.

Services/Holding
The Services/Holding segment includes Axel Springer’s
own newspaper printers, the 25.1 % equity interest in
the joint rotogravure venture PRINOVIS, as well as the
Logistic & Services and Holding divisions.

The Logistic & Services division, to which the company’s
logistical activities, the package delivery business, the
market analysis activities, customer management, the
cooperation with retail partners, its holdings in wholesale

56 Annual Report 2008 Axel Springer AG

press distribution companies and import companies in
Eastern Europe, and the 55 %-subsidiary ims belong,
has been in place since the beginning of 2008. ims is
one of the largest service providers specializing in the
procurement of media (newspapers, magazines, books,
etc.) in Germany. In 2008, Axel Springer succeeded in
expanding its press distribution network by taking over
supplying the discount chain store Aldi Nord with an
assortment of newspapers and magazines. Overall, the
number of sales points in Germany offering print titles
from Axel Springer increased slightly to 121 thousand
(PY: 120 thousand).

In 2008, excess capacities and falling prices also re-
sulted in an intensely competitive market environment for
printing companies. Measured on paper throughput, we
succeeded in increasing contract printing orders by
3.6 %, which generated a share of 19.7 % (PY: 18.4 %)
of total printing company revenues. The paper through-
put in the newspaper printing companies in 2008
amounted to almost 200 thousand (PY: 203 thousand)
tons.

We were able to successfully conclude the negotiations
with all works councils at the newspaper printing com-
panies in Ahrensburg, Berlin-Spandau, and Essen-
Kettwig to reduce the number of personnel required for
the rotary presses. Thus, the profitability of these plants
improved and the costs for printing our own newspapers
decreased. In connection with the printing companies’
high technical standards with their maximum of quality
and flexibility, the negotiated agreements also increase
the competitiveness of Axel Springer printing companies
in the area of contract printing and thus contribute sig-
nificantly to safeguarding the locations and employment.

The joint rotogravure venture PRINOVIS closed the print-
ing company in Darmstadt at the end of 2008. The roto-
gravure market was characterized by excess capacities
and significant downward price pressure in 2008. In
addition, expenses increased – in particular for paper
and energy consumption. As a result of closing the print-
ing company in Darmstadt, PRINOVIS achieved a more
efficient cost structure.

Key Figures Services/Holding

in € millions

External revenues

Share in cons. revenues

Internal revenues

Segment revenues

2008

99.0

3.6 %

319.4

418.4

2007

83.4

3.2 %

324.2

407.6

Change

18.6%

– 1.5 %

2.6 %

EBITDA1)

– 0.2

– 15.1

1) This figures contains investment income of € 2.7 million (PY.: € – 0.3 million).

With € 99.0 million, the segment’s external revenues
considerably exceeded those of the previous year
(PY: € 83.4 million) by 18.6 %, mainly because of the
subscription business recently contributed to the sub-
sidiary ims by PVG Pressevertriebs-Gesellschaft KG.
Axel Springer’s newspaper printing companies gener-
ated slightly increased contract order revenues year-on-
year in the business with external customers.

The Services/Holding segment’s EBITDA improved sig-
nificantly to € – 0.2 million (PY: € – 15.1), driven by lower
expenses for transactions, processes, and restructuring
measures, which overcompensated the decreases in net
profit of loss from income attributable to the Kirch insol-
vency (2008: € 6.2 million; PY: 3.0 million). Net invest-
ment income of the rotogravure printing company PRI-
NOVIS was impacted as in 2007 by restructuring ex-
penses.

With € – 45.7 million (€ – 45.5 million), the EBITA was
nearly unchanged. The EBITA 2007 included a non-
recurring positive effect from a restructuring-related
reversal of impairment on real estate in the amount of
€ 15.8 million.

Management Report of the Group and Management Report of Axel Springer AG 57

Financial situation and balance sheet

Financial situation

Financial management
The financing of the Axel Springer Group is provided
centrally to ensure that all companies of the Group have
adequate liquidity at all times. As a rule, Axel Springer
AG provides all financing for the Group companies. The
overriding goal of financial management is to provide
cost-effective liquidity by means of structurally appropri-
ate financing. Liquid assets are invested with the aim of
earning an appropriate return.

Net liquidity

in € millions

Cash and cash equivalents

Financial liabilities

Net liquidity

2008

154.5

524.0

2007

198.1

941.1

– 369.5

– 743.1

As of December 31, 2008, Axel Springer had a net debt
of € 369.5 million (PY: € 743.1 million). The cash and
cash equivalents decreased by € 43.5 million, while
the financial liabilities decreased by € 417.1 million to
€ 524.0 million. The financial liabilities were reduced
mainly by receipt of the purchase price from the sale of
shares in ProSiebenSat.1 Media AG. The high level
of 2007 was the result of increased financing require-
ments for acquisitions. Furthermore, there were short
and long-term credit facilities at the end of 2008 totaling
€ 1,095.0 million (PY: 685.0 million) that were not drawn
down. The credit facilities can be used both for general
operating purposes as well as for the financing of acqui-
sitions.

Cash flow development and investments
In the 2008 fiscal year, the cash flow resulting from on-
going operations amounted to € 265.1 million compared
to € 283.1 million in the 2007 fiscal year. With an

EBITDA which increased by € 16.2 million, this decline
can be attributed mainly to the negative development of
the working capital. In particular, trade payables de-
creased as a result of rescheduled payment runs and
fewer purchased services. Payments from the Kirch
insolvency decreased by € 20.6 million, offset by positive
effects recorded from income tax paid (€ 26.9 million).

Consolidated Cash Flow Statement (Condensed)

in € millions

Cash flow from continuing operations

2008

265.1

2007

283.1

Cash flow from investing activities

300.6

– 1,392.4

Cash flow from financing activities

– 612.2

747.1

Change in cash and cash equivalents

– 46.4

– 362.2

Cash and cash equivalents at December 31

154.5

198.1

The cash flow from investing activities amounted to
€ 300.6 million (PY: € – 1,392.4 million). The high cash
outflow in 2007 was mainly the result of payments for the
acquisition of shares in the PIN Group AG, ZANOX.de
AG, Axel Springer Schweiz AG (formerly Jean Frey AG),
auFeminin.com S.A., as well as the 25 % equity interest
in Dogan TV Holding A.S. In 2008, the cash inflow result-
ing from the receipt of the purchase price for the shares
in ProSiebenSat.1 Media AG sold was offset by the
payments for the acquisition of minority interests in BILD
digital GmbH & Co. KG (formerly: T-Online.de AG & Co.
KG), auFeminin.com S.A., and for the acquisition of
around 33.3 % of shares in StepStone ASA,
Oslo/Norway.

The cash flow from financing activities amounted to
€ – 612.2 million (PY: € – 747.1 million). The main rea-
sons for the decrease are the repayment of liabilities to

58 Annual Report 2008 Axel Springer AG

banks after receiving the purchase price for shares in
ProSiebenSat.1 Media AG sold, the payment of higher
dividends for 2007 than for 2006, as well as the pur-
chase of treasury shares. In 2007, the positive cash flow
resulted from the drawdown of credit lines to finance
acquisitions.

The net balance of cash flows from operating, investing
and financing activities amounted to € – 46.4 million
(PY: € – 362.2 million). Cash and cash equivalents (liquid
assets and marketable securities carried as current as-
sets) amounted to € 154.5 million (PY: € 198.1 million)
as of December 31, 2008. The Axel Springer Group
does not engage in off-balance sheet financing activities.

Balance sheet

Consolidated Balance Sheet (Condensed)

in € millions

Non-current assets

Current assets

Assets

Equity

Non-current liabilities

Current liabilities

Equity and liabilities

12/31/2008 12/31/2007

1,719.3

2,247.0

1,093.3

1,580.0

2,812.6

3,826.9

1,060.3

1,211.8

1,052.9

1,509.7

699.5

1,105.4

2,812.6

3,826.9

Consolidated balance sheet total as of December 31,
2008, decreased year-on-year (PY: € 3,826.9 million) by
€ 1,014.3 million or 26.5 % to € 2,812.6 million.

The decrease in non-current assets of € 531.6 million
(– 24.3 %) to € 1,655.2 million was mainly the result of
the sale of the 5.1 % equity interest in Dogan TV Holding
A.S. as well as a series of investments in regional news-
papers and the associated reclassification of financial
investments totaling € 474.5 million to available-for-sale
assets. The remaining investment in Dogan TV will again
be presented under financial investments after comple-
tion of the transaction. Furthermore, impairments totaling
€ 94.4 million were recognized in particular relating to

the investment in PRINOVIS (€ 60.0 million) and the rights
to titles (€ 26.0 million).

These were offset by the € 33.3 million increase in intan-
gible assets, based above all on business acquisitions in
2008, and the € 34.8 million acquisition of around
33.3 % of shares in StepStone ASA, Oslo/Norway.

Current assets decreased by € 486.6 million (– 30.8 %)
to € 1,093.3 million, affected in particular by the sale of
shares in ProSiebenSat.1 Media AG and the deconsoli-
dation of the PIN Group. The resulting decrease in avail-
able-for-sale assets was partially offset by the reclassifi-
cation to available-for-sale assets. Furthermore, current
tax claims decreased as a consequence of tax refunds
for 2007 and the payment of the first installment of cor-
porate income tax credits. The decrease in other finan-
cial assets was mainly the result of the write-down re-
cognized on the carrying amount of call options granted
by H&F Rose Partners, L.P. and H&F International Rose
Partners, L.P. in 2008.

Equity amounted to € 1,060.3 million at the balance
sheet date and thus was down € 151.5 million (– 12.5 %)
year-on-year. The equity ratio increased to 37.7 % (PY:
31.7 %) The decrease in equity was the result mostly of
the payout of dividends for 2007, the purchase of treas-
ury shares, and the equity offsets not affecting profit or
loss related to the purchase of non-controlling interests.

Non-current provisions and liabilities decrease by
€ 456.8 million (– 30.3 %) to € 1,052.9 million in particu-
lar as a result of the repayment of liabilities to banks after
receiving the purchase price for shares in ProSieben-
Sat.1 Media AG sold.

The current provisions and liabilities decreased by
€ 405.9 million (– 36.7 %) to € 699.5 million, mainly as
a result of the deconsolidation of the PIN Group. The
decrease in other provisions was mainly the result of
reduced provisions for structural measures, taxes, and
litigation risks. Rescheduled payment runs and fewer
purchased services led to a decrease in trade payables.
In addition, tax liabilities related to previous years were
paid.

Management Report of the Group and Management Report of Axel Springer AG 59

Economic position of Axel Springer AG

Key Figures for Axel Springer AG

in € millions

Revenues

Net profit for the year

Transfer to retained earnings1)

Total dividends

Dividend per share (in €)1)

2008

1,673

196

104

131

4.40

2007

1,669

148

122

4.00

2006

1,710

246

139

107

3.50

2005

1,697

143

2004

1,804

121

1.70

1.45

1) The amount of the dividend for 2008 and the appropriation to the other retained earnings reserves (after deduction of the advance appropriation of € 89.1 million) are subject

to the condition of approval by the annual shareholders’ meeting.

Overview

Axel Springer AG, based in Berlin, is the parent company
of the Axel Springer Group. The Management Board
of Axel Springer AG is also the managing body of the
Group.

The Group’s essential print publications such as the
BILD Group, the WELT Group, the HAMBURGER
ABENDBLATT, TV DIGITAL, and HÖRZU, as well as
other titles in the newspapers and magazines division,
are edited and circulated by Axel Springer AG. Newspa-
pers are produced in Axel Springer’s own printing com-
panies at the locations Ahrensburg, Berlin, and Essen, as
well as in external printing companies.

In addition, Axel Springer AG maintains numerous sup-
plier and service relationships with subsidiaries and as-
sociates. Purchased services mainly include printing
services, administrative services, property management,
direct marketing, editorial services, and circulation and
insurance services. Services rendered include the supply
of publishing products, paper deliveries, as well as gen-
eral administrative and IT services.

As a rule, Axel Springer AG provides all financing for the
Group companies.

A series of German Group companies have concluded
profit transfer agreements with Axel Springer AG, where-
by their profits are promptly collected by Axel Springer AG.

The following disclosures are related to the annual finan-
cial statements of Axel Springer AG, which – as opposed
to the consolidated financial statements based on IFRSs
– were prepared in accordance with German Commer-
cial Law (HGB).

Financial performance

In the 2008 fiscal year, Axel Springer AG generated
revenues of € 1,673.3 million which were nearly un-
changed year-on-year. It was possible to compensate
decreasing advertising revenues by increased circulation
revenues. Gross profit decreased considerably by
€ 477.9 million to € 1,366.9 million. The main reason
for this decline was a non-recurring gain totaling
€ 470.0 million earned in 2007 from the sale of shares
in SAT.1 Beteiligungs GmbH to a subsidiary. In contrast,
net profits increased by € 48.6 million to € 196.4 million.
In the 2007 fiscal year, net profit or loss was significantly
impacted by the impairments to the carrying amounts of
investments in PIN Group AG as well as by loans that
were granted to PIN Group AG. These effects totaled
€ 548.8 million. The 2008 annual financial statements
include an expense amounting to € 37.8 million from the
fair value measurement of treasury shares.

60 Annual Report 2008 Axel Springer AG

Income Statement of Axel Springer AG (Condensed)

Balance sheet

in € millions

Revenues

12/31/2008

12/31/2007

1,673.3

1,669.1

Other internal costs capitalized

Other operating income

3.0

176.0

3.5

684.8

Purchased goods and services

– 485.4

– 512.5

Gross profit

1,366.9

1,844.8

Personnel expenses

– 452.4

– 455.6

Amortization, depreciation, and
impairments

Other operating expenses

Net investment income

Net interest income/expenses

Income from ordinary activities

Taxes

Net profit/loss for the year

Asset reduction due to retirement of
shares

Withdrawals from the reserve for
treasury shares

Income from the capital reduction

Appropriation to additional paid-in
capital as per regulations applicable
to simplified capital reduction

Appropriation to other retained
earnings

Unappropriated net profit

– 45.3

– 542.6

– 25.7

– 16.1

284.9

– 88.6

196.4

– 54.3

– 596.5

– 514.0

– 8.6

215.8

– 68.0

147.8

0.0

– 55.4

37.8

0.0

55.4

3.1

0.0

– 3.1

– 89.1

145.1

– 15.9

131.9

Equity increased by € 74.0 million to € 913.1 and thus
amounted to 56.2 % of the carrying amount of non-
current assets (PY: 57.5 %). Non-current assets in-
creased by € 165.1 million to € 1,625.3 million as a
result of the acquisition of additional shares in subsidiar-
ies as well as shares in StepStone ASA. Current assets
decreased by € 464.5 million to € 796.8 million, the
reason being the receipt of payment from the sale of
shares in SAT.1 Beteiligungs GmbH and the subsequent
repayment of financial liabilities. The decrease in provi-
sions of € 55.4 million to € 451.6 million was mainly the
result of reduced provisions for structural measures,
partial retirement, outstanding invoices, taxes, and litiga-
tion risks. Liabilities (including deferred income) de-
creased by € 318.0 million to € 1,057.3 million mainly as
a result of the € 413.6 million repayment of financial
liabilities. In contrast, liabilities to associates increased by
€ 164.6 million to € 424.1 million as a result of cash
investments by subsidiaries in connection with cash
pooling.

Financial situation

Net debt – liabilities to banks less liquid assets – de-
creased by € 371.3 million to € 378.0 million. In addition,
at the end of 2008 there were short and long-term credit
facilities totaling € 1,095.0 million (PY: 685.0 million) that
were not drawn down. The credit facilities can be used
both for general company purposes as well as for the
financing of acquisitions.

Management Report of the Group and Management Report of Axel Springer AG 61

Balance Sheet of Axel Springer AG (Condensed)

in € millions

12/31/2008

12/31/2007

Intangible assets

Property, plant, and equipment

Non-current financial assets

Non-current assets

Inventories

Receivables and other assets and
prepaid expenses

Treasury shares and securities

Cash and cash equivalents

Current assets

Total assets

Equity

Provisions

Liabilities and deferrals

Total equity and liabilities

35.6

238.4

1,351.3

1,625.3

34.4

524.3

169.5

68.7

796.8

2,422.0

913.1

451.6

1,057.3

2,422.0

30.2

265.7

1,164.3

1,460.2

29.9

966.5

153.8

111.1

1,261.3

2,721.4

839.1

507.0

1,375.3

2,721.4

Proposed utilization of unappropriated
net profit

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 an unappropriated net profit of
€ 145,112,000 (PY: € 131,920,000) for the fiscal year
2008.

The Management Board, with the approval of the Super-
visory Board from the annual shareholders’ meeting on
April 23, 2009, proposes a dividend distribution of
€ 4.40 (PY: € 4.00) for each qualifying share. This corre-
sponds to a distribution of € 130,603,700 from the fiscal
year unappropriated net profit. The remaining amount of
€ 14,508,300 will be transferred to other retained earn-
ings reserves. The Company’s treasury shares do not
qualify to receive dividends. The number of shares that
qualify to receive dividends can change before the an-
nual shareholders’ meeting. In this case, an appropriately
adjusted proposal for the utilization of the unappropri-
ated net profit will be submitted to the annual sharehold-
ers’ meeting, without changing the proposed distribution
of € 4.40 per qualifying share.

62 Annual Report 2008 Axel Springer AG

The Axel Springer share

Share price performance

The Axel Springer share was not immune to the very
difficult stock market environment in 2008. The banking
crisis and the global economic slowdown provoked
substantial share price losses in the international stock
markets. The main index of the German stock market,
the DAX, lost 40.4 % of its value, while the MDAX and
SDAX indexes, which comprise the shares of smaller and
mid-sized companies, lost 43.2 % and 46.1 % of their
values, respectively, during the course of 2008. Media
stocks also sustained share price losses. The emerging
recession caused the advertising market to weaken as
well. The DJ EuroStoxx Media Index, which tracks the
share prices of European media companies, posted a
34.5 % decrease, and the Prime Media Index of
Deutsche Börse AG, which is geared to the German
market, a 60.6 % decrease in 2008.

company’s market capitalization (based on the 2008
closing price) was € 1.7 billion, making it the third-
biggest stock in the SDAX.

Share buy-back program

Taking advantage of the company’s low indebtedness
and favorable share price in 2008, Axel Springer con-
ducted a share buy-back program in the period from
June 25 to July 25. The offer price reflected a premium
of 17.7 % over the average closing price of the three
trading days preceding the announcement of the offer.
A total of 3,553,698 shares were offered to the company
for sale.

Of the offered shares, a total of 917,341 were purchased,
corresponding to 2.78 % of the capital stock and voting
rights (excluding the treasury shares already held). In
accordance with the offering conditions, the preferential
acceptance letters for up to 50 shares each were hon-
ored in full, while the other acceptance letters were hon-

The Axel Springer share lost 47.5 % of its value in 2008.
After reaching its high for the year of € 91.00 in January,
it fell as low as € 42.10 at times later in the year. The
Axel Springer share closed the year at € 51.39. The

Management Report of the Group and Management Report of Axel Springer AG 63

ored at an allotment rate of 24.17 %. Upon the comple-
tion of the buy-back offer, Axel Springer AG held a total
of 3,297,341 treasury shares, corresponding to nearly
10.0 % of the company’s capital stock and voting rights.
Because the treasury shares do not carry voting rights in
favor of the company, the total number of voting shares
was reduced to 29,682,659 as a result of the share buy-
back program. The Management Board and Supervisory
Board of Axel Springer AG did not participate in this
program.

Shareholder structure

The company’s shareholder structure underwent a
change in 2008 (see the diagram). Following the execu-
tion of the share buy-back program, Axel Springer AG
held treasury shares equal to nearly 10.0 % of the com-
pany’s capital stock at December 31, 2008 (PY: 7.2 %).
Dr. h. c. Friede Springer increased her shareholding to
7.0 % (PY: 5.2 %). On December 15, the U.S. financial
investor Hellman & Friedman reduced its holding from
about 9.9 % to about 1.6 %. On December 15,
Deutsche Bank purchased a share of about 8.3 % of
Axel Springer AG. About 23.1 % (PY: 26.2 %) of the
company’s shares were widely held at the end of 2008.

Investor relations

Axel Springer’s goal is to continually provide compre-
hensive, timely, and consistent information on all signifi-
cant events and developments relevant to an evaluation
of the company’s current and future business perform-
ance to all interested stock analysts, individual investors,
and institutional investors. To achieve this goal, the com-
pany intensified its investor relations activities in 2008
and enhanced their transparency. To provide even better
information to investors about the economic perform-
ance of the individual business units, the company pre-
sented the core elements of its business strategy (market
leadership in the core business of German-language
media, internationalization, and digitization) for the first
time without overlaps in a reformatted segment report. In
this regard, Axel Springer has applied the new account-
ing standard IFRS 8 Operating Segments in its segment
reporting since the first quarter of 2008. In the Digital
Media segment, the classification of advertising revenues
and other revenues was revised on the basis of more
detailed criteria in 2008.

The Management Board presented the business per-
formance and strategy of Axel Springer in numerous
one-on-one meetings, at 14 road shows and nine inves-
tor conferences in Germany and abroad. Axel Springer
organized a Capital Markets Day again in 2008, which
was very well received. More than 30 capital market
participants from Germany and abroad attended this full-
day event in Berlin. Also, Axel Springer broadcast the
event on the Internet for the first time. In September, the
Axel Springer share was discussed and evaluated for the
first time in a study conducted by stock analysts of the
U.S. investment bank Goldman Sachs. In October, the
share was covered by Sal. Oppenheim for the first time
and the research team of JPMorgan resumed its cover-
age. At the end of 2008, the Axel Springer share was
covered by Deutsche Bank, Dresdner Kleinwort,
DZ Bank, Goldman Sachs, JPMorgan, Main First,
Société Générale, and Sal. Oppenheim.

64 Annual Report 2008 Axel Springer AG

The latest roadshow presentation was always posted in
the Investor Relations section of the company’s website
so that all interested investors could access the same
information. Again in 2008, Axel Springer conducted
numerous conference calls, audio recordings of which
were posted on the company’s website. Since the third
quarter of last year, moreover, Axel Springer has made
such information available to interested parties on its
website on a real-time basis. In connection with the
relaunch of the company website www.axelspringer.de,
we completely revised the content and structure of the
Investor Relations section to make it easier for investors
to use it.

Share information

in €

Earnings per share (basic)

Earnings per share (diluted)

Dividends1)

2008

18.58

18.54

4.40

2007 Change

– 9.78

– 9.70

4.00

10.0%

Year-end share price

51.39

98.00

– 47.6%

Highest price

Lowest price

Average price

94.73

145.00

– 34.7%

42.50

96.50

– 56.0%

68.03

126.08

– 46.0%

1) Dividend proposal for fiscal year 2008.

Information on listing

Share type

Registered share with restricted
transferability

Stock exchange

Frankfurt (official market)

Stock exchange segment

Security Identification Number

Prime Standard

550 135, 575 423

ISIN

Reuters

Bloomberg

DE0005501357, DE0005754238

SPRGn.F

SPR GY

Annual shareholders’ meeting

The annual shareholders’ meeting of Axel Springer AG
was held in Berlin on April 24, 2008, and was attended
by 262 shareholders. All the management proposals,
including the proposed utilization of the unappropriated
net profit, were approved with majorities of 99.79 % to
99.99 % of the shareholders present and represented at
the meeting, who represented 80.32 % of the com-
pany’s capital stock. A dividend of € 4.00 (PY: € 3.50)
per qualifying share was paid for the 2007 fiscal year.
Thus, the total dividend pay-out amounted to € 122.4
million. The treasury shares held by the company do not
qualify for dividends.

Ongoing recissory actions / action
seeking disclosure

On May 24, 2006, Dr. Oliver Krauß filed an action to
nullify the resolutions of the annual shareholders’ meeting
of April 27, 2006 relating to Agenda Item 3 (Ratification
of the actions of the Management Board), Agenda Item 4
(Ratification of the actions of the Supervisory Board), and
Agenda Item 6 (Authorization to purchase and use the
company’s own shares according to Section 71 (1) (8)
AktG). Pomoschnik Rabotajet GmbH joined the action
before the Berlin Regional Court (Case No. 93 O 86/06)
on the side of the plaintiff. Following the oral proceedings
of April 26, 2007, the Berlin Regional Court dismissed
the action and assigned the costs to the plaintiff. On
June 12, 2007, the plaintiff filed an appeal with the Berlin
Appellate Court against this judgment of the Berlin Re-
gional Court (Case No. 23 U 88/07.). The appeal was
denied and the costs were assigned to the appellant by
the judgment of May 26, 2008. The appeal against this
denial of appeal was allowed only to a limited extent,
with regard to Agenda Item 4 (Ratification of the actions
of the Supervisory Board). Thereupon, the plaintiff filed
an appeal with the Federal Supreme Court against the
judgment of the Berlin Appellate Court (Case No. II ZR
174/08) and, to the extent that the appeal was not al-
lowed, the appellant also filed an appeal against denial of
leave to appeal.

Management Report of the Group and Management Report of Axel Springer AG 65

On May 18, 2007, Dr. Oliver Krauß filed an action to
nullify the resolutions of the annual shareholders’ meeting
of April 19, 2007 relating to Agenda Item 3 (Ratification
of the actions of the Management Board), Item 4 (Ratifi-
cation of the actions of the Supervisory Board), and Item 8
(Special authorization to purchase and use the com-
pany’s own shares according to Section 71 (1) (8) AktG
in connection with the Management Participation Pro-
gram). Mr. Frank Scheunert joined this action pending
before the Berlin Regional Court (Case No. 95 O 51/07)
on the side of the defendant. By judgment of November 1,
2007, the action was dismissed and the costs were as-
signed to the plaintiff. Dr. Krauß filed an appeal with the
Berlin Appellate Court against the judgment of dismissal
(Case No. 23 U 188/07). The appeal was denied and the
costs were assigned to the appellant in the oral proceed-
ings of July 7, 2008. An appeal against the denial of
appeal was not allowed. Also in this matter, the plaintiff
filed an appeal against denial of leave to appeal with the
Federal Supreme Court (Case No. II ZR 223/08).

By way of an action for information according to Section
132 AktG of May 8, 2008, Dr. Oliver Krauß filed a motion
to place the Management Board under the obligation to
provide information about his questions that were allegedly
not answered at the 2008 annual shareholders’ meeting.
The oral proceeding before the Berlin Regional Court
(Case No. 90 O 40/08) took place on October 27, 2008.
In a partial ruling of the same date, the competent division
for commercial matters of the Berlin Regional Court found
the action for information to be partially resolved in the

main issue and dismissed the action for information with
respect to the majority of the questions in dispute. In its
final ruling of December 22, 2008, the Berlin Regional
Court dismissed the action for information also with re-
spect to the remaining questions in dispute. The plaintiff
filed an appeal with the Berlin Appellate Court against the
partial judgment dated October 27, 2008 (and against the
final ruling dated December 22, 2008) (Case No. 23 W
69/08 and 23 W 7/09).

On May 20, 2008, Dr. Oliver Krauß filed another action to
nullify the resolutions of the annual shareholders’ meeting
of April 24, 2008 relating to Agenda Item 2 (Utilization of
the unappropriated net profit), Agenda Item 3 (Ratifica-
tion of the actions of the Management Board), and
Agenda Item 4 (Ratification of the actions of the Supervi-
sory Board), and Agenda Item 7 (Special authorization to
purchase and use the company’s own shares according
to Section 71 (1) (8) AktG in connection with the Ma-
nagement Participation Program). On May 26, 2008,
moreover, the shareholder Klaus Zapf filed an action to
nullify, or failing that, to annul the resolution of the annual
shareholders’ meeting of April 24, 2008 relating to the
Agenda Item 3 (Ratification of the actions of the Ma-
nagement Board). The Berlin Regional Court combined
the two actions into one (Case No. 98 O 49/08). The
shareholders Oliver Wiederhold, Gastro Beteiligungs AG,
and SCI AG joined the action on the side of the defen-
dant. The oral proceedings took place before the Berlin
Regional Court on February 24, 2009. The date of an-
nouncement of the decision has been set for March 17,
2009.

66 Annual Report 2008 Axel Springer AG

Risk and opportunities report

Risk assessment

The fundamental risk policy principles of the Axel
Springer Group dictate that risks may only be incurred if
they enable the company to take advantage of additional
income opportunities and thereby increase its business
value. Appropriate measures are taken to reduce every
risk to an acceptable level or transfer it to third parties if
economically feasible. Axel Springer’s risk policy princi-
ples are set forth in a corporate directive that applies to
all entities of the Group.

Risks are monitored and managed with the aid of various
interlocking systems, as described below. As part of the
overall management process, general market and reve-
nue risks are identified and managed in connection with
the monitoring of revenue, quantities, and costs in the
budget and forecast process, as well as the reporting
system. Risks related to capital expenditures, projects,
and acquisitions are identified and assessed in advance
as part of investment planning; thereafter, they are tra-
cked in the reporting system. In addition, Axel Springer
has implemented a risk management program within the
meaning of section 91 (2) of the German Stock Corpora-
tion Act (AktG) that identifies all other risks.

The overall responsibility for risk management lies with
the Management Board, whereas the respective divi-
sions or Group companies are responsible for the oper-
ating processes of early detection, assessment, man-
agement, and documentation of risks, as well as the
adoption and execution of suitable countermeasures and
the communication thereof. Furthermore, a central risk
manager coordinates all risk management activities,
aggregates the risks at the Group level, reviews the
plausibility and completeness of the reported risks, and
assumes responsibility for continuously improving the
risk management system. In addition, the Internal Audit
Department and the independent auditor (in the context
of annual audits) serve as independent control instances
to ensure the completeness and compliance of the risk
management system.

A comprehensive survey of risks is conducted once a
year, at which time the risk inventory is updated. In addi-
tion, risks to the company as a going concern as well as

risks identified as significant or worthy of monitoring and
the corresponding countermeasures are reviewed during
the course of the year in connection with ad hoc risk
surveys, and their assessment is adjusted to the current
risk situation. Any potential risks to the company as a
going concern are reviewed by Axel Springer AG and the
individual subsidiaries applying the criterion of net loss
and its effect on the Group’s financial position and cash
flow. Risks are classified as significant, worthy of moni-
toring, or as other risks based on the criterion of net
expected loss, whereby the effect of risk-mitigating
countermeasures on the potential loss and the risk-
related expected value are taken into account.

The following risks could pose a threat to the company
as a going concern or significantly influence the com-
pany’s financial position and performance as well as its
cash flow:

Terrorism risks
Risks to Axel Springer AG as a going concern include
the risk of the complete destruction of its corporate
headquarters and the printing plants as a result of terror-
ist attacks. For this reason, a corresponding insurance
policy was concluded in 2004. Nevertheless, there is still
a residual risk that could represent a threat to the com-
pany as a going concern in an extreme case. To improve
the security situation with respect to the publishing
house headquarters and printing plants, appropriate
steps were taken in the form of access controls, video
surveillance, contingency plans, and other measures.

Market risks and competition risks
Although Germany’s economy still appeared to be ro-
bust in the first half of 2008, the economic situation
worsened considerably afterwards in the course of the
global financial market crisis. The ifo Institute expects this
development to continue to worsen in the coming year.
As a worst case scenario, the institute is assuming a
drastic economic downturn and a deep recession. Con-
sequently, there is the risk of a significant worsening of
the revenue situation, in particular in the form of sinking
advertising revenues. As a result of this forecast, the
outlook for private consumption, which significantly af-
fects the company’s net profits, also cannot be positively
estimated for 2009. At best, the press distribution mar-

Management Report of the Group and Management Report of Axel Springer AG 67

ket can only be expected to develop modestly. Modest
development can also be expected for the important
classified ad business, owing to the forecast of negative
development on the labor market. Furthermore, the
general market situation will continue to be characterized
by intense competitive pressure.

As a result of new competitive titles and formats entering
the market, in particular in the form of complementary
newspapers and magazines, there is also the risk of the
loss of revenues and market share in the circulation and
advertising business. Changing consumption and read-
ing habits, above all related to demographic shifts, ag-
gravate this risk even further. In addition, there are uncer-
tainties resulting from the increased competition of clas-
sic print media with other types of media. For example,
the continuing expansion of the Internet can result in a
further shift in customer preferences as well as in further
structural shifts in the advertising market. This could lead to
further reductions in newspaper and magazine revenues.

In this context, the high share of overall Group revenues
on the part of BILD and the BILD family also poses a risk.
BILD’s paid circulation has been declining overall in recent
years. Furthermore, a significant portion of Axel Springer
AG’s high revenue newspaper and magazine titles are
supported by the strong recognition and brand familiarity
of the BILD family. It cannot be ruled out that the success
of the BILD titles could be permanently impacted by ex-
ternal factors, which would also impact the financial posi-
tion, financial performance, and cash flow.

These general market risks are monitored and managed
above all in connection with the operational management
of the company. In order to counter these market risks in
2008, Axel Springer AG continued to pursue its strategy
of market leadership in the core business of German-
language print media as well as its strategy of interna-
tionalization and digitalization, and will continue to con-
sistently pursue these strategies in 2009. In this regard,
Axel Springer continues to place a high priority on expand-
ing its existing activities in Germany in a targeted manner,
adapting its business to suit changing customer demands,
and developing innovative new activities. In addition, the
company engages continually in various price incentives
and/or product campaigns to ensure that its products

remain attractive for existing and potential customers.
Such measures include, for example, sales-promoting
give aways and special inserts offered at an extra cost,
such as CD-ROMs, audiobooks, DVDs, etc.

To further reduce the market risks, Axel Springer contin-
ues to consistently pursue its strategies of internationali-
zation and digitalization (please also refer to the com-
ments regarding the Print International segment on pa-
ges 48 f. and regarding the Digital Media segment on
pages 51 f. Axel Springer is responding to the changes
in the media world by making significant investments in
acquisitions and business start-ups and by expanding its
existing web portals, thereby improving the cross-media
connectivity and integration of the various print and
online offerings of the Group.

Political and legal risks
The political and legal risks facing the company mainly
consist of the advertising restrictions and prohibitions
enacted by the European Union. Now that the Tobacco
Advertising Directive has been introduced into German
law on the initiative of the EU Commission, the risk of
further restrictions continues to exist. It has to be taken
into account that the advertising prohibition against
tobacco products in print media, radio, television, and
the internet could be extended to cover other products
as well (alcohol, fast food, etc.). Also, the possibility that
EU regulations would be introduced to restrict the design
of automobile ads cannot be ruled out. Such advertising
prohibitions in print media and the internet would cause
advertising revenues to decline.

Risks related to the implementation of the
International Social Policy
In view of the Group’s growing international presence,
the Axel Springer Group has adopted a catalog of social
standards, known as the International Social Policy, as a
binding guideline for social integrity, applicable to all of
the Group’s activities throughout the world. Inadequate
compliance with the International Social Policy, whether
in connection with the procurement of advertisements,
product supplements, merchandising, or the sale of title
licenses, could potentially cause great harm to the com-
pany’s reputation.

68 Annual Report 2008 Axel Springer AG

Strategic and other risks
Strategic risks arise primarily from the possibility that the
Group would invest concepts and companies that prove
to be unsuccessful in the long term, which would impact
net financial income and impair the Group’s intangible
assets. In this context, in particular, equity investment
risks must be taken into consideration. If the develop-
ment of revenues and net income from equity invest-
ments – in particular as a result of the financial market
and economic crisis – were to develop significantly
worse than planned, it could become necessary to re-
cognize impairments in connection with the impairment
test. In the most extreme theoretical case, the complete
write-off of all of a subsidiary or associate’s assets could
pose a risk to Axel Springer as a going concern. In par-
ticular, the active management and permanent monitor-
ing of equity investments serves to minimize such risk.
Furthermore, risks can arise from ongoing court pro-
ceedings. To account for such risks, the company rec-
ognizes provisions for litigation costs. Also, the loss of
major customers could likewise have an adverse impact
on the Group’s net profits and business activities. Vari-
ous customer loyalty measures, among other things, are
conducted as a means of avoiding this risk. Additionally,
violations of confidentiality agreements or insider trading
regulations could possibly entail financial and legal con-
sequences and/or damage the reputation of the Group
or its properties. Inspection mechanisms and coordina-
tion rules, among other things, represent risk-minimizing
measures in this regard.

Financial risks
The financial risks that are relevant to the Axel Springer
Group include, in particular, interest rate risk and cur-
rency risk. Interest rate risk can arise from financial liabili-
ties with variable interest rates and capital investments
bonds. Currency risks arise in connection with revenues
and net investment income in foreign currencies. To limit
its exposure to interest rate risk, the Group has estab-
lished principles that serve to regulate and ensure com-
pliance with loss limits on its capital investments. In addi-
tion, these risks are hedged by employing various kinds
of interest rate derivatives.

Significant financing risks as a result of the global finan-
cial crisis are not evident for the Axel Springer Group,

because the credit line totaling € 1.5 billion granted in
connection with the safeguarding of liquidity has been
approved for the long-term by the participating banks
and does not include unilateral termination rights. Cur-
rently, the Axel Springer Group is not exposed to any
price change or default risks, nor risks arising from fluc-
tuations in cash flow.

Overall risk assessment
Terrorism risks and the risk of a complete write-off of all
investment-related assets – as described above – have
been identified as theoretical risks to the company as a
going concern. Both risks exhibit a very low probability of
occurrence. In addition, no further risks that could en-
danger Axel Springer as a going concern are foreseeable.
Currently, no risk concentrations or interdependencies
that could have a significant influence on the company’s
financial position, financial performance, and cash flow
are evident – with the exception of the threat of further
drastic worsening of the financial market and economic
crisis in the global economy. Therefore, the Axel Springer
Group’s risk assessment has not changed significantly
compared to the previous year.

Assessment of opportunities

Market opportunities
If the economy were to perform better than currently
forecasted, this would have a positive effect on the Axel
Springer Group’s circulation and advertising revenue
situation. An overall negative development presents the
possibility of competitors withdrawing from the market in
connection with a market adjustment, thereby improving
the market position of our properties and operations in
the long term. Furthermore, there is the possibility of
acquiring companies at lower fair value measurements.
Additional circulation and advertising revenues can rise in
particular, from the major events of 2009 – especially in
sport-related media: the Track and Field World Champi-
onships in Berlin and the Confederations Cup in South
Africa. Events such as the 20th anniversary of the Fall of
the Berlin Wall and the 60th anniversary of the Federal
Republic of Germany also offer additional potential for
revenues.

Management Report of the Group and Management Report of Axel Springer AG 69

Events after the
balance sheet date

On February 4, 2009, the sale of a series of equity inter-
ests in the regional newspaper publishing companies
Madsack and Lübecker Nachrichten was contractually
agreed. With the sale of these minority interests, the Axel
Springer Group is focusing consistently on the business
with the Group’s own newspapers, the multimedial ex-
pansion of its core markets, and the acquisition of online
growth businesses. The purchase price amounts to a
total of € 310.0 million. Around half of the purchase price
has been deferred and will fall due successively in the
period between 2011 and 2016. The validity of the pur-
chase is subject to the approval of the anti-trust authori-
ties.

On November 27, 2008, Commerz-Film GmbH, Berlin, a
subsidiary of Axel Springer AG, entered into a purchase
agreement with Dogan Sirketler Grubu Holding A.S. for
the purchase of 78 million shares of Dogan Yayin Hold-
ing A.S. at a price of € 47 million. The share purchase
agreement has not yet been finalized. Based on a tax
audit of Dogan Yayin Holding A.S. for the years from
2003 to 2006, the Turkish tax authorities assessed vari-
ous subsequent tax payments and ancillary tax costs in
the total amount of TRY 826 million on February 17,
2009. The financial effects on the Axel Springer Group
could not yet be determined at the time of preparing the
financial statements for the 2008 fiscal year.

Political opportunities
Changes in the regulatory environment, such as changes
in media concentration laws and an amendment of anti-
trust regulation via reformation of the Gesetz gegen
Wettbewerbsbeschränkungen (GWB) (Law Against Re-
straints on Competition), can present Axel Springer with
additional opportunities to generate revenues.

Strategic opportunities
The successful internationalization of Axel Springer
through the development and expansion of its presence
in robustly growing foreign markets offers opportunities
to increase revenues and net profits. Above all, the capi-
tal expenditures in Turkey and Poland are to be regarded
in this light. In implementing its internationalization stra-
tegy, the company has the crucial advantage over its
competitors of having already attained strong market
positions in many countries – even leading positions in
numerous segments. The digitalization strategy offers
particularly great opportunities of generating additional
revenues via the dynamic development of revenues in
the online advertising market. Axel Springer takes advan-
tage of this market development through the swift and
consistent combination of print and online offerings, the
acquisition of equity investments, by entering into coop-
eration agreements, and by continually expanding and
modernized existing and newly acquired portals.

Opportunities arising from marketing
The central marketing unit, Axel Springer Media Impact,
is one of the farthest-reaching cross-media marketers in
Europe, whereby Axel Springer is in a good starting
position in the competition for the largest TV advertising
budget.

Financial opportunities
In the event of falling interest rates in the capital markets,
interest expense for the portion of drawn-down credit
not hedged against interest rate risk could decrease
even further.

70 Annual Report 2008 Axel Springer AG

Outlook

General economic environment

According to forecasts, the global economy will worsen
considerably in 2009. The financial market crisis has
jumped over to the real economy. The earnings outlook
and the financing conditions have worsened considera-
bly for companies, which have responded by scaling
back capital expenditures. Consumer spending propen-
sity on the part of private households is expected to be
slowed by unemployment, which is once again rising. In
contrast, the relaxation of crude oil prices and low inter-
est rates will likely provide some relief for the global
economy. The International Monetary Fund (IMF) expects
a global recession. The gross domestic product (GDP) of
industrial nations is expected to shrink by 2.0 %. Ac-
cording to the IMF’s forecast, global GDP will only grow
by 0.5 %, compared to 3.4 % in 2008. However, the IMF
believes that a sharper decline will be prevented by the
3.3 % increase in economic performance on the part of
emerging and developing countries.

It is rather unlikely that Germany’s economy will be able
to avoid the downward spiral of the global economy,
owing to its dependency on exports. The ifo Institute is
forecasting a 2.2 % decrease in real GDP, mainly as a
result of the 5.7 % decrease in exports. With an increase
of only 0.6 %, private consumption can also not be ex-
pected to act as a catalyst for the economy as growth in
real wages will be offset by a projected increase in the
unemployment rate from 7.5 % to 8.0 % owing to mar-
ket conditions. According to the ifo Institute, companies
will scale back their capital expenditures by 4.9 % as a
result of decreasing utilization of capacities, the sharply
worsening earnings outlook, and the restrictive financing
conditions. It is predicted that the development of infla-
tion will burden the global economy less in 2009 than it
did in 2008. As a result of lower crude oil prices and
slower rising food prices, the rate of inflation is expected
to be around 0.9 %.

On the international markets in which Axel Springer is
represented with its own operations, the perspectives
have also worsened. The gross domestic product of
most Western European countries is expected to con-
tract in 2009. The anticipated – 0.3 % contraction of the
Swiss economy will be comparatively mild. In Spain,
economic output is likely to decrease by 1.3 % in real
terms, mainly due to the downturn in the real estate
market. Also in France, inflation-adjusted GDP is ex-
pected to decrease considerably, by 1.0 %, according to
forecasts. Most of the Eastern European economies will
continue to grow in 2009, according to forecasts, how-
ever, they will do so at a slower rate than in 2008. Falling
export rates are the main reason for the contraction in
Eastern Europe, too. However, in contrast to Western
European countries, domestic demand is not expected
to decline due to the significantly decreasing inflation rate.
Whereas the ifo Institute predicts a – 1.0 % decrease in
real GDP for Hungary, the economy in Poland is ex-
pected to increase by 2.0 %, in the Czech Republic by
1.7 %, and in Russia by 2.0 %.

Industry environment

According to ZenithOptimedia’s forecast (“Advertising
Expenditure Forecast” study from December 2008), the
global advertising market in 2009 will only shrink slightly
by 0.2 %, despite the economic collapse. However, the
media agency group is not ruling out that sustained
consumer insecurity owing to the recession and the
enduring crisis in the financial markets will lead to an-
other adjustment in the advertising market forecast.

For Germany, ZenithOptimedia is expecting a decrease
in the overall market of 4.6 %, whereby the net advertis-
ing revenues for newspapers (– 6.1 %) and magazines
(– 6.0 %) will decline by almost the same amount. The

Management Report of the Group and Management Report of Axel Springer AG 71

Zentralverband der deutschen Werbewirtschaft (ZAW)
(Central Association of the German Advertising Industry)
predicted in November 2008 that companies will spend
1 % to 2 % less on advertising than in 2007. In addition
to the classic media, this development also includes
advertising media such as direct advertising and online
advertising. In contrast, a considerably sharper decrease
in advertising expenditures is expected in industry circles
as well as by advertisers and agencies. The estimates
range between – 6 % and – 10 % at newspapers and
between – 8 % and – 12 % at magazines.

According to ZenithOptimedia, the growth of net adver-
tising expenditures (including search term marketing) in
the online market may be expected to weaken further,
but they will still grow by 1.2 %. Industry circles expect a
rate of increase ranging between 1 % and 10 %.

According to predictions, the financial market crisis, the
worsening business climate, and weak private consump-
tion will, however, not only lead to losses in display ads,
but also to significant losses in the classified ad business
(job, real estate, and automobile ads). Budget cuts at
multinational companies will likely also exert additional
pressure on the conditions in the German advertising
market. According to expectations, ever increasing direct
marketing budgets will migrate to the digital channel.
Overall, ZenithOptimedia expects that the mobile and
(from a user perspective) conventional Internet will con-
tinue to merge.

For most of the international markets in which Axel
Springer is present with its own operations, ZenithOp-
timedia is forecasting (status: December 2008) a de-
crease in net advertising revenues at newspapers and
magazines. For Russia, the media agency group ex-
pects net advertising revenues of print media to fall
0.7 % year-on-year. In Hungary, advertising revenues at
newspapers are expected to fall 3.6 % short year-on-
year, and 2.9 % short at magazines. In Switzerland,
advertising revenues at both newspapers (– 2.0 %) and
magazines (– 2.1 %) are expected to fall. Net advertising
revenues in Spain are expected to decline by 11.7 % at
newspapers and 5.5 % at magazines. Also in France,

newspaper advertising revenues are expected to de-
crease substantially, by 4.4 %, from the level of 2008,
while magazine advertising revenues are expected to fall
by 6.0 % from the level of 2008. In Poland, the media
agency predicts that the advertising revenues of maga-
zines will fall by 1.3 %, while those of newspapers will
increase slightly, by 0.1 %. In the Czech Republic, both
the advertising revenues of newspapers (+ 2.2 %) and
those of magazines (+ 2.0 %) are expected to grow, in
contrast to the general trend. It must be noted that Zeni-
thOptimedia’s forecast was prepared before the latest
forecasts of the actual extent of the economic crisis had
been prepared by economic researchers.

According to ZenithOptimedia’s forecast, net advertising
revenues in the online market in Western Europe in
2009 will increase by 11.9 % to US$ 16.7 billion, assum-
ing exchange rates remain the same. In Switzerland, net
advertising revenues are expected to increase robustly
by 16.1 %. In France, net advertising revenues will likely
also increase considerably by 12.5 %. According to the
forecast of the media agency group, the online advertis-
ing markets in Eastern Europe will grow considerably
more robustly than the economy in 2009. Net online
advertising revenues will increase substantially by 23.7 %
in Poland and by 17.2 % in the Czech Republic.

The media agency expects a 3.5 % decrease in net
advertising revenues for the TV market in Germany.
According to industry estimates, the loss in the TV ad-
vertising market may be as much as 5 %.

For radio, ZenithOptimedia is expecting net advertising
revenues to be down 6.8 % year-on-year.

Group

As will all companies, Axel Springer is facing the chal-
lenge of overcoming an extraordinary economic down-
turn. In light of this exceptional situation and the associ-
ated forecast uncertainties, the Management Board is
refraining from publishing a forecast for revenues and
EBITDA for 2009.

72 Annual Report 2008 Axel Springer AG

Disclosures pursuant to Sections 289 (4),
315 (4) HGB and explanatory report
pursuant to Section 120 (3) (2) AktG

Composition of subscribed capital
The company’s subscribed capital amounts to
€ 98,940,000 and is divided into 32,980,000 registered
shares, each representing an imputed share of the capi-
tal stock equivalent to € 3.00. The shares can be trans-
ferred only with the company’s consent (registered
shares of restricted transferability, see below). The com-
pany has only one class of shares.

All shares carry the same rights and obligations. Each
share grants the right to cast one vote in the annual
shareholders’ meeting and represents the basis for de-
termining the shareholder’s entitlement to the company’s
net profit. By way of exception, the treasury shares do
not confer any rights to the company (cf. Section 71b
AktG). The rights and obligations of the shareholders
follow from the provisions of the German Stock Corpora-
tions Act, including, in particular, Sections 12, 53a ff.,
118 ff. and 186 AktG.

Restrictions on voting rights or transfer of shares
By virtue of Article 5 para. 3 of the company’s Articles of
Incorporation, shares of Axel Springer AG and subscrip-
tion rights can be transferred only with the company’s
consent. Such consent must be granted by the Man-
agement Board, although internally, it is the Supervisory
Board that adopts the resolution to grant such consent.
According to the company’s Articles of Incorporation,
such consent can be refused without indication of rea-
sons. However, the company will not arbitrarily refuse its
consent to the transfer of company shares.

The share transfer restriction agreements described
below, which the company has concluded with various
shareholders for the purpose of upholding the restric-
tions on the transfer of shares set forth in the Articles of
Incorporation, even in the case of indirect share transfers,
give rise to transfer restrictions based on the German law
of obligations (Schuldrecht). In exchange, the company
has, in most cases, agreed to pledge the shares in ques-
tion to the financing banks.

– In connection with the acquisition of company shares
by Hellman & Friedman in October 2003, the company
entered into a share transfer restriction agreement with
Hellman & Friedman (and with the purchasing companies
affiliated with Hellman & Friedman and with Deutsche
Bank Aktiengesellschaft and Deutsche Bank Luxem-
bourg S.A.) on October 8, 2003. In this agreement,
Hellman & Friedman expressly recognized the restrictions
on the transfer of shares according to the company’s
Articles of Incorporation as binding upon it and its affili-
ated companies. In exchange, the company promised to
support a widely distributed sale of the shares held by
Hellman & Friedman on the stock exchange or by means
of a secondary placement (subject to the condition that
no more than 4 % of the company’s capital stock would
be transferred to a single investor) and to take all the
necessary steps to obtain a stock exchange listing for
the shares of Axel Springer AG on the Frankfurt Stock
Exchange. It is expressly stated in the share transfer
restriction agreement that the corresponding support
obligations of the company will have no bearing on the
share transfer restrictions according to the company’s
Articles of Incorporation. A secondary placement has
been effected in the meantime, through the partial sale
of the shares held by Hellman & Friedman in the 2006
fiscal year (representing 9.8 % of the company’s capital
stock at that time).

– In connection with the purchase of company shares
from Dr. h. c. Friede Springer by Good Media Investment
Holdings S.A.R.L., the company entered into another
share transfer restriction agreement with Michael Lewis,
Nova Trust Ltd. in its capacity as the trustee of Michael
Lewis Capital Discretionary Settlements, and other so
called ML investors held directly and indirectly by Nova
Trust Ltd., alone, or as a majority owner (Hague Holdings
Ltd., Colmar Investment Holdings Ltd., and Media In-
vestment Holdings S.A.R.L.), and the Governor and
Company of the Bank of Scotland, by the date of Febru-
ary 16, 2006. In this share transfer restriction agreement,

Management Report of the Group and Management Report of Axel Springer AG 73

the companies participating on the side of Michael Lewis
promised to observe the share transfer restrictions set
forth in the company’s Articles of Incorporation in re-
spect of all indirect and direct purchases, disposals and
encumbrances of the company’s shares. Under the
supplementary agreement of July 31 / September 11,
2006, the company granted its prior consent to the
acquisition of up to 340,000 additional shares (repre-
senting 1 % of the existing capital stock) by Good Media
Investment Holdings S.A.R.L., and the parties agreed to
apply the obligations under the share transfer restriction
agreement of February 16, 2006 to the shares to be
purchased in the future as well. In the confirmation
agreement of May 2, 2007, the parties specified that
the above-mentioned agreements will also apply to any
loan increase and to the existing subordinated pledge
right that had again been stipulated for the shares by
way of precaution.

– Finally, a share transfer restriction agreement was
concluded between Dr. Mathias Döpfner, the company
Brilliant 310. GmbH, Axel Springer AG, and M.M. War-
burg & Co. KGaA dated July 31 / August 4, 2006. Under
this share transfer restriction agreement, the direct and
indirect purchase of, and the direct and indirect disposal
over the shares of, Axel Springer AG by Brilliant 310.
GmbH or Dr. Mathias Döpfner were made contingent
on the prior consent of Axel Springer AG according to
the company’s Articles of Incorporation.

Furthermore, transfer restrictions based on the German
law of obligations applied to the members of the Man-
agement Board in connection with the Company Partici-
pation Program resolved by the shareholders at the
annual shareholders’ meeting of Axel Springer AG in
2004. According to the terms of this resolution, the par-
ticipation in the Company Participation Program was
made contingent on the purchase from the company of
shares in Axel Springer AG by the members of the Man-
agement Board. For every share of Axel Springer AG
purchased, the members of the Management Board
were awarded eight options to purchase additional

shares of Axel Springer AG. As a rule, the holding period
for the shares purchased in connection with the Com-
pany Participation Program was set at five years. In
accordance with the terms of the Company Participa-
tion Program, however, the five-year holding period
was shortened by the fact that the financial investor
Hellman & Friedman sold most of its shareholding in
Axel Springer AG by way of a secondary placement in
December 2006. For this reason, 50 % of the shares
can already be sold one year after the sale by Hellman &
Friedman in December 2006 and the other 50 % can be
sold after one additional year, that being two years after
the sale by Hellman & Friedman. As a consequence, the
shares purchased by the Management Board members
are not subject to any sales restrictions.

The company is not aware of any restrictions on voting
rights.

Shareholdings that represent more than 10 % of
the company’s voting rights
At the end of the 2008 fiscal year, Axel Springer Gesell-
schaft für Publizistik GmbH & Co. KG held around
51.5 % of the company’s capital. This investment is
attributable to AS Publizistik GmbH (in its function as
general partner of Axel Springer Gesellschaft für Pub-
lizistik GmbH & Co. KG), Friede Springer GmbH & Co.
KG, Friede Springer Verwaltungs GmbH (in its function
as general partner of Friede Springer GmbH & Co. KG),
and Dr. h. c. Friede Springer, herself. At the end of the
2008 fiscal year, Dr. h. c. Friede Springer directly held an
additional holding equal to about 7.0 % of the com-
pany’s capital stock. Thus, the total shareholding con-
trolled by Dr. h. c. Friede Springer amounted to around
58.5 %.

Shares endowed with special rights that confer
powers of control
There are no shares endowed with special rights that
would confer powers of control.

74 Annual Report 2008 Axel Springer AG

Manner of exercising voting rights when
employees hold shares in the company’s capital
and do not directly exercise their rights of control
Axel Springer AG does not have an employee stock
program.

The Supervisory Board is authorized to resolve amend-
ments to the Articles of Incorporation that only involve
changes to the wording (Article 13 of the Articles of
Incorporation).

Statutory provisions and provisions of the Articles
of Incorporation relative to the appointment and
dismissal of Management Board members and
amendments to the Articles of Incorporation
The company’s Articles of Incorporation provide that the
Management Board of Axel Springer AG must be com-
posed of at least two members. The Supervisory Board
decides on the number of Management Board members
and on the appointment and dismissal of Management
Board members. The term of office is, at the most, five
years and can be re-established or renewed for no more
than five years thereafter (cf. Section 84 (1) (1) to (4) AktG).
If more than one person has been appointed to the
Management Board, the Supervisory Board is authorized
to appoint one of those members as the Chairman (Sec-
tion 84 (2) AktG). If a required Management Board mem-
ber would be lacking, the court is authorized, in urgent
cases, to appoint the necessary member at the request
of one involved party (Section 85 (1) (1) AktG). The Su-
pervisory Board is authorized to revoke the appointment
of a Management Board member and the Management
Board Chairman for important cause (cf. Section 84 (3)
(1) and (2) AktG).

Amendments to the company’s Articles of Incorporation
require a resolution of the annual shareholders’ meeting,
carried not only by a simple majority of the votes cast,
but also by at least three quarters of the capital present
and represented at the time of voting on the resolution
(cf. Section 179 (2) (1) AktG in conjunction with Article
21 para. 2 of the company’s Articles of Incorporation).
An amendment of the management principles set forth
in Article 3 of the Articles of Incorporation requires a
majority equal to at least four fifths of the capital present
and represented at the time of voting on the resolution
(cf. Article 21 para. 3 of the company’s Articles of Incor-
poration).

Authority of the Management Board to issue or
repurchase shares
Axel Springer AG has established no authorized or con-
ditional capital that would authorize the Management
Board to issue new shares.

By resolution of the annual shareholders’ meeting of April
24, 2008 (Agenda Item 6), the Management Board is
authorized, with the consent of the Supervisory Board, to
purchase the company’s own shares up to an amount
equivalent to 10 % of the current capital stock in the time
until October 23, 2009. Such purchases can be effected
on the stock exchange or by means of a public offer to
all shareholders, or a public invitation to submit an offer.

In addition, the company is authorized to purchase the
company’s own shares in connection with the Company
Participation Program for the Management Board that
was resolved at the annual shareholders’ meeting of April
14, 2004, in the time until October 23, 2009 (Agenda
Item 7 of the annual shareholders’ meeting of April 24,
2008).

Along with the shares held by the company or attribut-
able to the company in accordance with Sections 71 a ff.
AktG, the shares purchased by virtue of the foregoing
authorizations may not at any time exceed 10 % of the
company’s capital stock. Details concerning these two
authorizations are provided in the invitation to the annual
shareholders’ meeting of April 24, 2008, which is avail-
able on the website of Axel Springer AG. (See Agenda
Items 6 and 7 and the Management Board’s report on
this subject).

At the end of 2008, the company held 3,297,341 of its
own shares (representing nearly 10.0 % of the capital
stock).

Management Report of the Group and Management Report of Axel Springer AG 75

Final Declaration
as per Section 312 (3) AktG

“According to the circumstances known to the manage-
ment at the time of each transaction with an affiliated
company, Axel Springer AG received adequate consid-
eration for every such transaction and did not take, or fail
to take, any actions in the reporting period, either at the
behest or in the interest of the controlling company or a
company affiliated with the controlling company.”

Significant agreements of the company subject to
the condition of a change of control resulting from
a takeover offer
With the exception of the € 1,500,000,000 credit facility,
the company has not entered into any significant agree-
ments that would be subject to a change of control
resulting from a takeover offer. The € 1,500,000,000
credit facility extended to the company by a bank syndi-
cate by the date of August 14, 2006 is subject to the
condition of a change of control insofar as the bank
syndicate is entitled in such a case to terminate the
credit facility with advance notice of 30 days in the event
of a change of control. Aside from specific exceptions
that relate to the shareholders that currently control Axel
Springer AG, a change of control is understood to mean,
in the context of the credit facility, the acquisition of
shares of Axel Springer AG representing more than 50 %
of the capital stock and/or voting rights by one or more
parties acting together.

Indemnification agreements of the company with
Management Board members or employees in the
event of a change of control
The members of the Management Board are entitled to
cancel their employment contracts in response to a
change of control. In such a case, they will be entitled to
payment of their base salary for the remaining term of
their contract, according to the most recent agreement,
but at least to payment of one year’s salary. Furthermore,
the company will pay, at the contractually agreed time,
the pro-rated percentage of the success-based com-
pensation for the period of time served in the year of
resignation. The employment contracts of the Manage-
ment Board members do not provide for any other com-
pensation in the event of the termination of the employ-
ment contract in response to a change of control.

There are no such indemnification agreements with em-
ployees of the company.

76 Annual Report 2008 Axel Springer AG

Corporate governance

Basic understanding

At Axel Springer, good corporate governance is consid-
ered to be a crucial element of responsible management
and control, and is therefore an essential basis for the
company’s lasting success. In this regard, we are guided
by the German principles of sound corporate manage-
ment known as the German Corporate Governance
Code.

We have taken appropriate measures to implement and
ensure compliance with the principles of corporate gov-
ernance. The Corporate Governance Officer is the Ma-
nagement Board member in charge of “Finance and
Services.” The implementation of, and adherence to, the
recommendations of the German Corporate Governance
Code are generally reviewed on a quarterly basis. The
Chairmen of the Management Board and the Supervi-
sory Board are informed of the results of this review on a
regular basis. The amendments to the Code adopted by
the Government Commission for the German Corporate
Governance Code on June 6, 2008, were discussed by
the Management Board at its meeting of December
2008, and by the Supervisory Board at its meeting of
December 2008, both of which dealt with the Declaration
of Conformity for 2008.

At its meeting of June 6, 2008, the Government Com-
mission adopted four amendments to the Code. These
amendments pertained to the:

– Appropriateness of Management Board compensa-
tion (amended version of Section 4.2.2 (1)): “At the
proposal of the committee dealing with Management
Board contracts, the full Supervisory Board shall resolve
and regularly review the Management Board compensa-
tion system, including the main contract elements.”

– Strengthening of the severance payment cap rule for
payments to members of the Management Board who
step down from the Board before their term has ended
by changing the status from that of a “suggestion” to
that of a “recommendation” to be disclosed by the com-
pany (amended version of Section 4.2.3 (4) and (5)).

– Active role of the Supervisory Board with regard to
interim financial reports (insertion under Section 7.1.2):
“Half-year and any quarterly financial reports shall be
discussed with the Management Board by the Supervi-
sory Board or its Audit Committee prior to publication.”

– Scheduling of elections of Supervisory Board mem-
bers (Section 5.4.6). The suggestion to elect Supervi-
sory Board members at different dates and for differing
terms of office was deleted (deletion under Section
5.4.6).

With the exception of Section 4.2.2, Axel Springer ap-
plied every new recommendation adopted in June 2008.
The company’s non-adherence to the recommendation
of Section 4.2.2 is justified with reference to the fact that
an appropriate and reasonable decision is assured by
virtue of the fact that the decision is made by the Per-
sonnel Committee that regularly deals with Management
Board questions.

Declaration of Conformity

In accordance with Section 161 of the German Stock
Corporations Act (“AktG”), the Management Board and
Supervisory Board of Axel Springer AG make in amend-
ment of the Declaration of Conformity published in De-
cember 2008 the following declaration:

“The company fulfills the “German Corporate Govern-
ance Code” (the “Code”) in the version of June 6, 2008,
as published by the German Federal Ministry of Justice in
the official announcements section of the Electronic
Federal Gazette of August 8, 2008, with the following
exceptions:

1. The list published by the company of third-party com-
panies in which the company holds an equity interest
that is not insignificant for the company contains the
information required by law (Section 7.1.4 Para. 3 of the
Code).

Management Report of the Group and Management Report of Axel Springer AG 77

To the extent that information concerning the compa-
nies’ equity and profit/loss can be omitted, such informa-
tion has been omitted in order to avoid any disadvan-
tages for the individuals involved. Furthermore, the com-
pany makes full use of the opportunity to present some
of the required information in the list of shareholdings
instead of in the notes to the (consolidated) financial
statements.

2. As before, the Personnel Committee of the com-
pany’s Supervisory Board adopts resolutions concerning
the compensation system for the Management Board,
including the significant contractual elements (Section
4.2.2. Para. 1 of the Code).

By assigning such decisions to the Personnel Committee,
which deliberates regularly on matters pertaining to the
Management Board, the company ensures that the
decisions made in such matters are objective and ap-
propriate.

3. The management participation program approved by
the annual shareholders’ meeting of April 14, 2004 does
not include any possibility of limitation (“cap”) for extraor-
dinary, unforeseeable developments (Section 4.2.3 Para.
8 of the Code).

The management participation plan imposes virtually no
economic burden on the company. Under the terms of
an option agreement with the shareholders H & F Rose
Partners, L.P. and H & F International Rose Partners, L.P.,
Axel Springer Aktiengesellschaft is entitled to buy back,
at a comparable price, the same number of shares that
were sold to the members of the Management Board in
connection with the management participation program.
Alternatively, the company can opt to receive a cash
settlement. As a result of this financial protection af-
forded to the company, no share price-related restric-
tions were imposed in connection with the management
participation program.

4. The remuneration granted to the members of the Su-
pervisory Board and the payments made to the members

of the Supervisory Board for services provided personally
are not individually itemized in the Corporate Governance
Report (Section 5.4.6 Paras. 6 and 7 of the Code).

The information is not individually itemized because the
competitors of Axel Springer AG also do not publish any
such information.

Since the company’s last Declaration of Conformity in
December 2007, the company has likewise fulfilled the
“German Corporate Governance Code” in the version of
June 14, 2007, as published by the German Federal
Ministry of Justice in the official announcements section
of the Electronic Federal Gazette of July 20, 2007, with
the exceptions noted above under 1, 3 and 4 and the
following exception:

The Quarterly Financial Report as of March 31, 2008 was
published later than within 45 days after the end of the
reporting period, namely on May 29, 2008 instead of
May 15, 2008 (Section 7.1.2 Para. 4 of the Code).

Because of the introduction of the new segmentation
(introduction of accounting standard IFRS 8-business
segments) the 45-days-period was slightly exceeded.”

Berlin, February 2009

Axel Springer AG

The Supervisory Board The Management Board

Axel Springer AG published the Declaration of Conformity
pursuant to Section 161 AktG in December 2008 and
explained therein the reasons for deviating from the Code
regulations. Reference is made thereto in this corporate
governance report. The Declaration of Conformity repro-
duced above is a version of the Declaration of Conformity
of December 2008 that was corrected in February 2009.
Both versions of the Declaration of Conformity have been
published on the company’s website in the section ->
Investor Relations -> Corporate Governance.

78 Annual Report 2008 Axel Springer AG

Shareholders and annual shareholders’
meeting

Cooperation between the Management
Board and the Supervisory Board

The annual shareholders’ meeting of Axel Springer AG is
the central governing authority in which the shareholders
exercise their rights and cast their votes. Every share
confers the right to cast one vote in the annual share-
holders’ meeting. Those shareholders who are registered
in the share register and have registered for the meeting
in time are entitled to vote. The Chairman of the Supervi-
sory Board also chairs the shareholders’ meeting. To
make it easier for shareholders to exercise their preroga-
tives at the annual shareholders’ meeting, their votes can
be cast by authorized proxies. In addition, Axel Springer
AG designates a voting proxy whom shareholders can
elect to execute their voting rights according to their
instructions.

The annual shareholders’ meeting resolves specifically
on the utilization of the unappropriated net profit, the
ratification of the actions of the Management Board and
Supervisory Board, the election of the Supervisory Board,
the selection of the independent auditor, and other mat-
ters legally assigned to them, such as corporate actions
and other amendments to the Articles of Incorporation.
The resolutions of the annual shareholders’ meeting
require a simple majority of the votes cast, unless an-
other majority is prescribed by law or by the company’s
Articles of Incorporation. The Articles of Incorporation
can be inspected on the company’s website at
www.axelspringer.de.

The annual shareholders’ meeting of Axel Springer AG
held in Berlin on April 24, 2008 was attended by 262
shareholders representing 80.32 % of the company’s
capital stock. The shareholders present and represented
at the meeting approved all the management proposals
with majorities of 99.79 % to 99.99 %. All required re-
ports and documents were made available to the share-
holders in advance, also on the company’s website.

The Management Board manages the company in its
own responsibility. The Supervisory Board appoints the
members of the Management Board and monitors and
advises the latter in the conduct of the business. The two
Boards work closely together, in an atmosphere of trust
and confidence, to enhance the company’s value. The
Management Board provides comprehensive and timely
information to the Supervisory Board on all relevant
matters of strategy, planning, business developments,
risks, and risk management. The Management Board
manages the company under its own responsibility. The
Supervisory Board appoints the members of the Ma-
nagement Board and supervises and advises the Ma-
nagement Board on the management of the company’s
business. Important decisions of the Management Board
require the approval of the Supervisory Board. Such
decisions include, in particular, the creation or discon-
tinuation of business divisions, the acquisition or sale of
significant equity investments, and the adoption of the
company’s annual budget and financial plan.

The Management Board currently consists of four
members:

– Dr. Mathias Döpfner (Chairman, “Subscription News-
papers and International”),

– Rudolf Knepper (Vice Chairman, “Printing and Logis-
tics”),

– Steffen Naumann (Chief Operating Officer and Chief
Financial Officer),

– Dr. Andreas Wiele (“BILD Group and Magazines”).

Management Report of the Group and Management Report of Axel Springer AG 79

The Supervisory Board consists of nine members, who
are elected by the annual shareholders’ meeting. The
term of office of Supervisory Board members is five years;
they are eligible for re-election at the end of their terms.
The Supervisory Board elects its Chairman from among
its own ranks; the term of office of the Supervisory Board
Chairman is coincident with that of the Supervisory
Board. The Supervisory Board normally meets five times
a year. In case of necessity, it meets without the Ma-
nagement Board in attendance. Meetings may be held
and resolutions adopted also by way of written corre-
spondence, telephone calls, telexes, or other forms of
telecommunication. The Supervisory Board discusses
the company’s business developments, planning, stra-
tegy, and significant capital expenditures at regular inter-
vals of time. The Supervisory Board adopts the separate
financial statements of Axel Springer AG and approves
the consolidated financial statements of the Group.

The members of the Supervisory Board are:

– Dr. Giuseppe Vita (Chairman),
– Dr. h. c. Friede Springer (Vice Chairwoman),
– Dr. Gerhard Cromme,
– Oliver Heine,
– Klaus Krone,
– Prof. Dr. Wolf Lepenies,
– Michael Lewis,
– Dr. Michael Otto,
– Brian M. Powers.

The term of office of all Supervisory Board members ends
upon termination of the ordinary annual shareholders’
meeting 2009. Currently, the Supervisory Board has four
committees: the Executive Committee, Personnel Com-
mittee, Nominating Committee, and Audit Committee.

Executive Committee

Responsibilities

Members in 2008

(cid:74) Publishing and journalistic
affairs

(cid:74) Dr. Giuseppe Vita (Chairman)

(cid:74) Dr. h. c. Friede Springer

(cid:74) Strategy, financial planning

(Vice Chairwoman)

(cid:74) Dr. Gerhard Cromme

(cid:74) Klaus Krone

(cid:74) Capital expenditures, financing

(cid:74) Preparation of organizational
decisions for the Management
Board

(cid:74) Approval of the sale of
registered shares of Axel
Springer AG and of subscription
rights for such registered shares

(cid:74) Approval of management -
measures requiring approval

Personnel Committee

Responsibilities

Members in 2008

(cid:74) Preparation of decisions
regarding the appointment and
dismissal of Management Board
members

(cid:74) Dr. Giuseppe Vita (Chairman)

(cid:74) Dr. h. c. Friede Springer

(Vice Chairwoman)

(cid:74) Dr. Gerhard Cromme

(cid:74) Resolutions on the conclusion,
amendment, and termination of
employment contracts with
Management Board members

(cid:74) Resolutions on the extension of
loans within the meaning of
Sections 89, 115 AktG

(cid:74) Approval of contracts with
Supervisory Board members
as per Section 114 AktG

(cid:74) Representation of the company
in legal transactions with
Management Board members

(cid:74) Approval of management -
measures requiring approval

80 Annual Report 2008 Axel Springer AG

Nominating Committee

Conflicts of interest

Responsibilities

Members in 2008

(cid:74) Dr. Giuseppe Vita (Chairman)

(cid:74) Dr. h. c. Friede Springer

(Vice Chairwoman)

(cid:74) Dr. Michael Otto

(cid:74) Preparation of proposals for
the election of Supervisory
Board members

(cid:74) Formulation and review of
the required qualifications
that the company expects
of Supervisory Board members

(cid:74) Observation of the national
and international environment
in order to identify suitable
candidates

Audit Committee

Responsibilities

Members in 2008

(cid:74) Preparation of decisions for the
adoption of the separate financial
statements and the approval of the
consolidated financial
statements

(cid:74) Dr. Giuseppe Vita (Chairman)

(cid:74) Dr. h. c. Friede Springer

(Vice Chairwoman)

(cid:74) Klaus Krone

(cid:74) Preliminary review of the annual
financial statements, dependency
report, consolidated financial
statements, management report,
and consolidated management
report

(cid:74) Review of the proposal for the
utilization of net profit

(cid:74) Review of the interim financial
statements and interim reports

(cid:74) Review of the risk management
system

(cid:74) Discussion of the audit report
and the report on the auditor’s
review of interim financial
statements with the independent
auditor

(cid:74) Preparation of the proposal for
the election of the independent
auditor for the annual
shareholders’ meeting

(cid:74) Issuance of the audit engagement
or the separate financial
statements and the consolidated
financial statements, and the
adoption of audit priorities

The members of the Management Board and Supervi-
sory Board are bound to promote the interests of the
company. No member of either Board may, through their
decisions, pursue personal interests or take advantage of
business opportunities that should be the province of the
company. Management Board members may not de-
mand or accept gifts or other benefits or grant unjustified
benefits to third parties in connection with their activities,
either for their own benefit or that of others. Any sideline
activities of the Management Board members require the
consent of the Supervisory Board. The Management
Board members are subject to a comprehensive anti-
competition clause during the period of their activity for
Axel Springer. Every Management Board member must
inform the Supervisory Board of any conflict of interest
without delay. In the same manner, every Supervisory
Board member must inform the Supervisory Board of
any such conflicts without delay. The Supervisory Board
reports any conflicts of interest and the manner of han-
dling them to the annual shareholders’ meeting.

In 2008, no members of the Management Board or
Supervisory Board were involved in any conflicts of inter-
est that would have to be reported to the Supervisory
Board and/or the annual shareholders’ meeting. A sum-
mary of the seats held by the Management Board and
Supervisory Board members of Axel Springer AG on
other legally prescribed Supervisory Boards or compara-
ble boards in Germany and abroad can be found in the
notes to the financial statements, on page 168 f.

Transparency

Axel Springer is committed to always providing compre-
hensive, timely, and consistent information on the signifi-
cant events and developments relevant to an evaluation
of the company’s present and future business perform-
ance to all capital market participants. The company

Management Report of the Group and Management Report of Axel Springer AG 81

reports on its business situation and results in its annual
report, at its annual financial statements press confer-
ence, and in its quarterly reports. For this purpose, the
company also uses Internet communication channels
whenever possible. To the extent required by law, the
company also provides information in the form of ad-hoc
announcements and press releases, and on the com-
pany’s website.

To ensure the equal treatment of all capital market par-
ticipants, information relevant to the capital markets is
published at the same time in the German and English
languages on the company’s website. The financial
reporting dates are published in the financial calendar
with sufficient advance notice. The Management Board
also promptly publishes information on the company’s
website regarding any changes in the composition of the
shareholder structure that are subject to the reporting
obligation according to Section 26 of the German Securi-
ties Trading Act (WpHG), and on the purchase and sale
of shares by persons who exercise management duties
at Axel Springer (directors’ dealings), in accordance with
Section 15 a WpHG.

The Management Board members of the company di-
rectly or indirectly held 531,249 shares of Axel Springer
AG at the balance sheet date of December 31, 2008. Of
this number, 468,949 shares were held indirectly by
Dr. Mathias Döpfner via the company Brilliant 310. GmbH.
The remaining 62,300 shares are held directly by the
Management Board members (including Dr. Mathias
Döpfner) on the basis of the Management Participation
Program. Based on the Management Participation Pro-
gram and subject to its terms, the Management Board
members also hold options to purchase up to 498,400
additional shares of Axel Springer AG.

The Supervisory Board members directly or indirectly
held a total of 20,473,601 shares of Axel Springer AG at
the balance sheet date. Dr. h. c. Friede Springer held
17,000,010 shares indirectly via the companies Friede
Springer GmbH & Co. KG and Axel Springer Gesellschaft
für Publizistik GmbH & Co., and 2,308,980 shares di-
rectly. Michael Lewis held another 1,152,611 shares
indirectly via the companies Good Media Investment
Holdings and TriAlpha Oceana Concentrated Opportuni-
ties Fund Ltd. Another 10,000 shares were attributable to
Dr. Giuseppe Vita and 2,000 shares to Mr. Oliver Heine.

Preparation and auditing of the
financial statements

The consolidated financial statements and interim finan-
cial statements are prepared in accordance with Interna-
tional Financial Reporting Standards (IFRS), as they are
to be applied in the European Union. The consolidated
financial statements also contain the disclosures pre-
scribed by Section 315a (1) HGB.

The Management Board of Axel Springer AG is respon-
sible for preparing the consolidated financial statements.
The independent auditor audits the consolidated financial
statements. The consolidated financial statements are
officially adopted when they are approved by the Super-
visory Board. Axel Springer publishes the consolidated
financial statements within 90 days and the quarterly
reports within 45 days of the respective period ending
dates.

The company makes full use of the allowed options to
present some of the required disclosures in a list of
equity holdings, rather than in the notes to the financial
statements and the notes to the consolidated financial

82 Annual Report 2008 Axel Springer AG

statements. The list of equity holdings contains the le-
gally prescribed disclosures. To the extent that it is pos-
sible to omit the disclosure of equity and profit-or-loss
information, such disclosures are omitted. In this respect,
Axel Springer does not follow the corresponding recom-
mendation of the German Corporate Governance Code
(Section 7.1.4 (3)), in order to avoid disadvantages for
the private individuals concerned.

The consolidated financial statements also contain in-
formation on the company’s relationships with share-
holders who are to be classified as related parties ac-
cording to the definitions of the applicable accounting
regulations.

The independent auditor of the 2008 financial statements
is Ernst & Young AG Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft, Stuttgart, Berlin Office. In
accordance with the Corporate Governance Code, it
was agreed with the independent auditor again for the
2008 fiscal year that the latter will inform the Chairman of
the Supervisory Board or the Audit Committee without
delay of any circumstances arising during the course of
the audit that would constitute grounds for disqualifica-
tion or partiality. It was also agreed that the independent
auditor will immediately report any matters and events
arising during the course of the audit that fall within the
purview of the Supervisory Board. It was further agreed
that the independent auditor will inform the Chairman of
the Audit Committee or make an observation in the audit
report if the independent auditor would discover, during
the course of the audit, any facts that contradict the
Declaration of Conformity by the Management Board
and Supervisory Board according to Section 161 AktG.

Compensation report

The following compensation report is a component of
both the consolidated financial statements as well as the
2008 corporate governance report.

Axel Springer’s compensation policy follows the principle
of performance-oriented compensation for the work of
the Management Board and Supervisory Board, consist-
ing of fixed and variable performance-dependent com-
ponents.

Management Board
Total compensation for the Management Board in 2008
was € 13.1 million (PY: € 15.0 million). The compensa-
tion of members of the Management Board includes
both fixed and variable components. The fixed salaries in
2008 amounted to around € 8.2 million (PY: € 9.4 million).
Total compensation for 2007 included non-recurring
amounts for security measures totaling € 1.0 million. The
variable compensation of the Management Board a-
mounted to a total of € 4.9 million (PY: € 5.7 million) in
2008. The variable compensation was comprised of a
cash component and a stock component. The cash
component has an upper limit and is oriented on indivi-
dual performance as well as on the success of the Group.
This success is measured using EBITA. The Chairman of
the Supervisory Board and the respective member of the
Management Board determine the agreed target to-
gether, as well as whether it has been reached with
respect to the cash component.

With the adoption of the Management Participation Pro-
gram by the annual shareholders’ meeting on April 14,

Management Report of the Group and Management Report of Axel Springer AG 83

2004, a long-term-oriented variable compensation com-
ponent was created for all members of the Management
Board. On this basis, the members of the Management
Board participate entrepreneurially in the company with
their own funds; the shares acquired were originally
subject to a multiple-year holding period, which, however,
has since expired. In connection with this entrepreneurial
participation, the members of the Management Board
have received stock options. The number of options that
can be exercised depends on the financial performance
of the Group and on the length of cooperation of the
Management Board since the program was initiated. The
value of the options amounted to € 16,018 million at the
time when they were granted in the year 2004. The im-
puted compensation components for 2008 amounted to
€ 406 thousand (PY: € 969 thousand). For more infor-
mation on the Management Participation Program,
please refer to the disclosures in the notes to the annual
financial statements under note 14 f. The company bears
almost no financial burden arising from the Management
Participation Plan. On the basis of an agreement con-
cluded with companies managed by the shareholder
Hellman & Friedman, Axel Springer AG is authorized to
repurchase the number of shares previously sold to
members of the Management Board at a comparable
price. As an alternative, the company shall receive cash
compensation. As a result of this financial security for the
company, the plan does not include a share price-
dependent limitation – in derogation of the recommenda-
tion made in Section 4.2.3 sentence 8 of the Code. A
detailed description of the Management Participation
Plan can be found under www.axelspringer.de -> Inves-
tor Relations -> IR Events -> Shareholders’ Meeting ->
2004.

The members of the Management Board have the right
to terminate their service contracts in the event of a
change in control. In such a case, they have the right to
receive payment of their base salary for the most recently
negotiated remaining contractual term, not to be less
than one year’s base salary. In addition, the company will
pay the performance-oriented bonus pro rata temporis at
the contractually negotiated date for the period of time
served in the year of resignation. The service contracts of
the members of the Management Board do not provide
for any other compensation if the service relationship is
terminated as a result of a change in control. The mem-
bers of the Management Board were granted pension
rights, for which purpose € 897 thousand was added to
the pension provisions (PY: € 360 thousand reduction in
the pension provisions). The members of the Manage-
ment Board did not receive any supplementary benefits.

We choose not to disclose the total compensation of
each named member of the Management Board, be-
cause the insofar relevant Section 4.2.4 of the German
Corporate Governance Code expressly states that such
itemized disclosure is not required if a qualified majority
of the annual shareholders’ meeting resolves to withhold
disclosure. The annual shareholders’ meeting of Axel
Springer AG held on April 27, 2006, passed such a
corresponding resolution with the requisite majority. In
addition, Axel Springer AG’s competitors also do not
disclose individual compensation.

84 Annual Report 2008 Axel Springer AG

Supervisory Board
For the 2008 fiscal year, the Supervisory Board received
compensation totaling € 2.7 million (PY: € 2.0 million) on
the basis of the dividend recommended by the Ma-
nagement Board and Supervisory Board. The compen-
sation is determined by the annual shareholders’ meeting
and regulated in article 16 of Axel Springer AG’s Articles
of Incorporation. Accordingly, the compensation is com-
prised of fixed and variable components. The Supervi-
sory Board receives a fixed annual salary of € 2.0 million.
In addition, the Supervisory Board receives an additional
compensation of € 1,000 for every cent (€ 0.01) by
which the dividend per share distributed to the share-
holders exceeds € 0.15, but at least 4.0 % of the share
capital in relation to one share.The Supervisory Board
also receives compensation in the amount of € 300 thou-
sand if the basic earnings per share for the fiscal year
(based on the share of the company’s shareholders in
net consolidated profits) exceeds the basic earnings per
share of the third previous fiscal year calculated in the
same manner by 15 % or more.

For fiscal years in which positive consolidated profits
cannot be applied as a reference benchmark, an amount
of € 3.00 per share shall apply as the reference bench-
mark for calculating the increase in annual profits. For

fiscal years with a net consolidated loss, the fixed com-
pensation will only amount to € 2.0 million. The Supervi-
sory Board decides how the aforementioned amounts
are distributed among its members, with adequate con-
sideration of its members’ activities as the Chairman and
in the committees.

For the 2008 fiscal year, the Supervisory Board received
variable compensation of € 725 thousand (PY: € 0) on
the basis of the dividend recommended by the Man-
agement Board and Supervisory Board. In addition, the
company reimburses all members of the Supervisory
Board for the value added taxes payable on their ex-
penses and on their compensation. The company pays
the premium for the liability insurance for pecuniary dam-
ages (D & O insurance) taken out for members of the
Supervisory Board. A member of the Supervisory Board is
paid an annual salary of € 125 thousand for his services
as an author.

Contrary to Section 5.4.6 sentences 6 and 7 of the Code,
the compensation paid to individual members of the
Supervisory Board, as well as the compensation paid by
the company to them for services rendered personally, is
not presented in the corporate governance report, since
Axel Springer AG’s competitors also do not disclose
such information.

Report of the Supervisory Board

The Supervisory Board supervised the management of
the company in fiscal year 2008 in accordance with the
applicable laws and the company’s Articles of Incorpora-
tion. In its meetings and the meetings of its committees,
as well as by means of additional written and oral reports
by the Management Board, the Supervisory Board ob-
tained detailed information about the company’s situation
and development, important business transactions, and
the risk management program on a regular basis. The
Management Board also kept the Supervisory Board
informed of significant events in the time between its
meetings. In addition, the Supervisory Board Chairman
and the Management Board Chairman held informational
and consultational meetings on a regular basis.

The Supervisory Board discussed with the Manage-
ment Board all matters of particular importance for the
company, including the company’s business plan, busi-
ness strategy, larger capital expenditure projects, and
personnel matters. Furthermore, the Supervisory Board
discussed important specific transactions of importance
to the company’s future development and adopted
resolutions on those legal transactions and measures for
which the input of the Supervisory Board is required by
law, by the company’s Articles of Incorporation, or by the
Management Board’s internal rules of procedure. This
applies in particular to the company’s budget planning
process.

The Supervisory Board held a total of five meetings in
2008, including three meetings in the first half and two
meetings in the second half of the calendar year. No
member of the Supervisory Board attended fewer than
half the meetings of the Supervisory Board. No conflicts
of interest arose on the part of Supervisory Board mem-
bers in fiscal year 2008.

In addition, the Supervisory Board deliberated on the par-
ent company’s financial statements and on the consoli-
dated financial statements of the Group at December 31,
2007, the agenda for the annual shareholders’ meeting
held in 2008, and the budget and capital expenditure
plan for fiscal year 2009. Furthermore, the Supervisory
Board reviewed the efficiency of its own work by means
of a self-evaluation and found its work to be suitable and
efficient.

Corporate governance

In December 2008, the Management Board and Super-
visory Board issued their joint Declaration of Conformity
according to Section 161 German Stock Corporation Act
(AktG) and made that declaration permanently available
on the company’s website. The Declaration of Confor-
mity was modified slightly in early February 2009. Axel
Springer AG adheres to nearly all the recommendations.
The Declaration of Conformity is reproduced on page 80
of the Annual Report.

Additional information on corporate governance in the
Axel Springer Group may be found in the joint Corporate
governance report of the Management Board and Super-
visory Board, which appears on page 79 of this Annual
Report.

Committees of the Supervisory Board

The Supervisory Board has formed an Executive Com-
mittee, a Personnel Committee, an Audit Committee, and
a Nominating Committee. The Chairman of the Super-
visory Board is the Chairman of the Executive Commit-
tee, the Personnel Committee, Audit Committee, and
Nominating Committee.

The deliberations of the Supervisory Board in 2008 were
focused in particular on the following topics: assuring the
company’s profitability and competitiveness by means of
systematic customer orientation, the bundling of market-
ing resources and the organizational consolidation of the
regional newspapers and subscription newspapers, secur-
ing the company’s future by strengthening its core business,
and optimizing and extending the company’s investments in
Germany and abroad, especially in the online market.

The Executive Committee, which is responsible for
publishing and journalistic affairs as well as for matters
of strategy, business planning, capital expenditures, and
financing, among other matters, notwithstanding the
general responsibility of the full Supervisory Board, held
six meetings in 2008. Aside from personnel-related and
organizational matters, the deliberations and resolutions
of this committee were devoted in particular to the
decisions concerning the acquisition of companies or

86 Annual Report 2008 Axel Springer AG

investments in companies, including PartyGuide AG,
Avivum AG, Transfermarkt.de, the purchase of additional
equity in the companies auFeminin.com SA, Smarthouse
Media GmbH, and StepStone ASA, and on the restruc-
turing of the investment in Doğan TV. The Executive
Committee also dealt with the share buy-back by way of
public offer and the approval of the 2009 financing plan.

The Personnel Committee, which is responsible for the
conclusion, amendment, and termination of the employ-
ment contracts with the members of the Management
Board, among other matters, held two meetings in 2008.

The Audit Committee prepared the decisions of the
Supervisory Board regarding the adoption of the parent
company’s financial statements and the approval of the
consolidated financial statements, reviewed the interim
financial statements and interim reports, discussed mat-
ters pertaining to the independent auditor, and obtained
information regarding the risk management program,
compliance-related issues, and the company’s internal
auditing activities. The Audit Committee held five meet-
ings in 2008.

The Nominating Committee, which is responsible for pre-
paring the proposal to the annual shareholders’ meeting
concerning the election of members to the Supervisory
Board, did not hold meetings in 2008 as there was no
reason to do so.

Separate financial statements of the
parent company and financial statements
of the Group, management report of the
parent company, and management report
of the Group

Ernst & Young AG Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft, Stuttgart, Berlin Office,
audited the annual financial statements of the parent
company, and the consolidated financial statements of
the Group, as well as the management report for the par-
ent company and the consolidated management report
for the Group, all of which were prepared by the Manage-
ment Board for fiscal year 2008, and provided them with
an unqualified audit opinion in each case. In connection
with the audit, the independent auditor also noted in

summary that the Management Board has implemented
a risk management system that fulfills the statutory
requirements and that this system is basically suitable
for the early detection of any developments that could
endanger the company’s continued existence.

The aforementioned documents and the proposal of the
Management Board for the utilization of the unappropri-
ated net profit, as well as the audit report of Ernst &
Young AG Wirtschaftsprüfungsgesellschaft Steuerbera-
tungsgesellschaft, Stuttgart, Berlin Office, were provided
to all members of the Supervisory Board in a timely
manner.

The documents were discussed extensively in the pres-
ence of the auditors in the meetings of the Audit Commit-
tee of February 25, 2009 and March 10, 2009. At these
meetings, the auditors reported on the principal findings
of their audit. The Audit Committee, in turn, reported the
results of its examination to the full Supervisory Board.
At its meeting of March 10, 2009, the Supervisory Board
reviewed the documents in question, having noted and
duly considered this report of its committee and the
report of Ernst & Young AG Wirtschaftsprüfungsgesell-
schaft Steuerberatungsgesellschaft, Stuttgart, Berlin
Office, and having discussed them with the auditors who
were in attendance.

The Supervisory Board acknowledged and approved the
audit results. Based on the results of its own review, the
Supervisory Board had no objections to raise. The Su-
pervisory Board approved the annual financial statements
of the parent company and the consolidated financial
statements of the Group that were prepared by the Man-
agement Board. As a result, the 2008 Axel Springer AG
annual financial statements were officially adopted.

The Supervisory Board also reviewed the proposal of the
Management Board concerning the utilization of the un-
appropriated net profit and concurred with that proposal,
in consideration of the company’s fiscal year net profit,
liquidity, and financing plan.

The Management Board also submitted its report on
the company’s dealings with related parties pursuant to
Section 312 AktG to the Supervisory Board.

Report of the Supervisory Board

Supervisory Board

Dr. Giuseppe Vita
Chairman

Dr. h. c. Friede Springer
Vice Chairwoman

Dr. Gerhard Cromme
Chairman of the Supervisory Board
of ThyssenKrupp AG

Oliver Heine
Attorney at law and partner in the
law firm Oliver Heine & Partner

Klaus Krone
Member of the Supervisory Board Axel Springer AG

Prof. Dr. Wolf Lepenies
University Professor

Micha el Lewis
Investment Manager

Dr. Micha el Otto
Chairman of the Supervisory Board of
Otto (GmbH & Co KG)

Brian M. Powers
Chief Executive Officer of the investment group Hellman
& Friedman LLC

The Supervisory Board was also in receipt of the
corresponding audit report by Ernst & Young AG
Wirtschaftsprüfungsgesellschaft Steuerberatungsgesell-
schaft, Stuttgart, Berlin Office. Both reports were also
provided to each member of the Supervisory Board. The
audit opinion of the independent auditor reads as follows:

“Based on the audit and evaluation conducted in ac-
cordance with our professional duties, we hereby confirm
that

1. the factual information contained in the report is cor-
rect; and
2. the consideration provided by the company in respect
of the legal transactions mentioned in the report was not
inappropriately high.”

The Supervisory Board also reviewed this report of the
Management Report and the corresponding report of the
independent auditor. At the Supervisory Board meet-
ing of March 10, 2009, the auditors also reported orally
on the principal findings of their audit. The Supervisory
Board acknowledged and approved the report of the
independent auditor. Based on the final results of its own
review, the Supervisory Board had no objections to raise
with respect to the Declaration of the Management Board
according to Section 312 (3) AktG.

Berlin, March 10, 2009

The Supervisory Board

Dr. Giuseppe Vita
Chairman

Annual Report 2008 Axel Springer AG

ullstein bild

When Axel Springer laid the foundation of his
Berlin publishing house complex 50 years ago,
on May 25, 1959, no one could have imagined
that it would be possible to divide a city such
as Berlin with a wall. Yet this is exactly what
happened on August 13, 1961. For 28 years,
2 months, and 25 days. It was not until Novem-
ber 9, 1989 that Axel Springer’s dream of
reunification came true. That is now 20 years
ago. German history, documented here in
dramatic photos by ullstein bild.

ullstein bild

The wall has fallen
“It’s done! The wall is open,” cried the BILD newspaper
headlines on the night of November 9, 1989. The B.Z. rejoiced
“Berlin is Berlin again.” All the papers published special
editions on this happy day. In order to understand the inde
scribable joy of the people at that time, one must visualize
the inhumanity of the German division.

The lie
At a press conference on June 15, 1961, Walter Ulbricht,
the Chairman of the State Council of the GDR announced:
“No one has any intention of building a wall.” At the same
time, the preparations for exactly that were running at full
speed. The innercity sector boundary and the zone boundary
between the two parts of Germany were closed on Sunday,
August 13, 1961. At the Brandenburg Gate, armed operational
brigade groups were deployed.

Everything is cordoned off
What kind of feeling must it be to have to
wall yourself in? The 19yearold National
People’s Army soldier Conrad Schumann did
not want to know. On August 15, 1961, he
took the opportunity during guard duty at the
crossing of Ruppiner Strasse and Bernauer
Strasse to make his later universally known
“leap into freedom.” Meanwhile the West
was warned by the wall builders: “Whoever
attacks us will be destroyed.” The BERLINER
MORGENPOST reported “live” from the focal
points of interest.

Helplessness
Nine days after the barriers were erected,
on August 22, 1961, the Federal Chancellor
Konrad Adenauer visited the scene of the
events. Two months later, on October 28, Soviet
and American tanks stood facing each other
at Checkpoint Charlie in Friedrich strasse. The
cold war became alarmingly hot. In Bernauer
Strasse, people fled from their houses, which
were located in the eastern sector; the sidewalk
belonged to the western part of the city. Yet
this escape route was also hermetically sealed
shortly afterwards.

How cold it was
Human dramas were the order of the day at that time. Be
cause the bride’s mother accidentally lived in the “wrong”
half of the city, she was not able to attend her daughter’s
wedding. A wave had to suffice. Initially even close relatives
were not able to visit each other. That didn’t seem to bother
many a border guard. The agonizing death of the 18yearold
wall escapee Peter Fechter certainly left no one unmoved. His
body was taken away on August 17, 1962, after he had been
left to bleed to death for an hour in Zimmerstrasse.

In the shadow of the Wall
Axel Springer. In the middle of the cold war, he fought for
German unity with a fiery heart. Initially it was common
sense, but the publisher continued to believe in the re
unification even when he was ridiculed for this. His house
was simply too close to this boundary for him to have been
able to remain indifferent to it …
Unfortunately, he was no longer able to see how everyday
life in the shadow of the Wall found its end. Springer died
in 1985, four years before the collapse of the GDR.

The turning point
The year 1989 was a year of political upheaval for all of the
states in Europe’s Eastern Block. What was symbolic for this
was the cutting of the border fence between Hungary and
Austria on June 27, 1989 by the foreign ministers of both
countries, Gyula Horn (r.) and Alois Mock (l.). Another symbol
was also the enormous Monday demonstrations in Leipzig
and elsewhere, where the citizens of the GDR showed their
government that they were no longer afraid of repressive
measures.

November 9
Where the building of the Wall began, as it were, with a lie
at a press conference, its end also began during a press
conference: Günter Schabowski, a member of the SED
Politburo, announced new liberalized travel regulations for
the GDR in front of the press. Responding to a question from
the Italian journalist Riccardo Ehrmann, as to when these
regulations would come into force, Schabowski replied while
looking through his documents for an answer: “As far as I am
aware … they come into force at once, immediately.” From
now on there was no holding back the East Germans. They
stormed the border that very night.

The night of November 9
The GDR border guards were very uncertain about these
events. They were taken completely by surprise. They had
received no orders telling them how they had to behave. They
had learned how to deal with an individual escapee at the
border. But what do you do when there are suddenly tens of
thousands of people sitting on the Wall? Offer them a hand?
There was something that had to be done that night for many
“Ossis” (East Germans): once to the Kudamm – and back.
The fact that no one lost their head among all this chaos, that
not one single shot was fired, is the “Miracle of Berlin.”

We are one people!
On November 12, 1989, the Wall was opened at Bernauer
Strasse, and thousands of East Berliners immediately took the
opportunity of using the new route into their old neighboring
district of Wedding. For many people, the welcome payments
of 100 deutschmarks made in the West may have been the
rea son – for the majority, it was surely the appeal of long with
held freedom. The socalled “Mauerspechte” (wall peckers)
finally ensured that the erstwhile “antifascist protective wall”
ended up in small pieces on the flea market stalls of history.

Axel Springer wanted his Berlin company headquarters
to be located in the center of the capital of a peacefully
reunited Germany. For more than 28 years, however,
the site was only a “lighthouse” at the edge of the western
half-city. Yet 20 years ago, the publisher’s dream
became reality.

110 Annual Report 2008 Axel Springer AG

Consolidated Financial Statements

112 Consolidated Balance

Sheet

114 Consolidated Income

Statement

115 Consolidated Cash

Flow Statement

116 Consolidated Statement

of Changes in Equity

Notes to the Financial
Statements

117 Segment report

118 General information

133 Notes to the consolidated

balance sheet

149 Notes to the consolidated
income statement

156 Notes to the consolidated
cash flow statement

156 Notes to the segment

report

158 Other disclosures

Auditor’s Report

Auditor’s Report 111

We have audited the consolidated financial state-
ments prepared by the Axel Springer Aktiengesell-
schaft, Berlin, comprising the balance sheet, the
income statement, the statement of changes in eq-
uity, the cash flow statement and the notes to the
consolidated financial statements, together with the
combined management report of the Axel Springer
Group and of Axel Springer AG for the fiscal year
from January 1 to December 31, 2008. The prepara-
tion of the consolidated financial statements and the
combined management report of the Axel Springer
Group and of Axel Springer AG in accordance with
IFRSs as adopted by the EU, and the additional
requirements of German commercial law pursuant to
Sec. 315a (1) HGB [“Handelsgesetzbuch”: “German
Commercial Code”] are the responsibility of the par-
ent company’s management. Our responsibility is
to express an opinion on the consolidated financial
statements and on the combined management report
of the Axel Springer Group and of Axel Springer AG
based on our audit.

We conducted our audit of the consolidated financial
statements in accordance with Sec. 317 HGB and
German generally accepted standards for the audit of
financial statements promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Ger-
many] (IDW). Those standards require that we plan
and perform the audit such that misstatements mate-
rially affecting the presentation of the net assets,
financial position and results of operations in the
consolidated financial statements in accordance with
the applicable financial reporting framework and in
the combined management report of the Axel
Springer Group and of Axel Springer AG are de-
tected with reasonable assurance. Knowledge of the
business activities and the economic and legal envi-
ronment of the Group and expectations as to possi-
ble 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 con-
solidated financial statements and the combined
management report of the Axel Springer Group and
of Axel Springer AG are examined primarily on a test

basis within the framework of the audit. The audit
includes assessing the annual financial statements of
those entities included in consolidation, the determi-
nation of entities to be included in consolidation, the
accounting and consolidation principles used and
significant estimates made by management, as well
as evaluating the overall presentation of the consoli-
dated financial statements and the combined man-
agement report of the Axel Springer Group and of
Axel Springer AG. 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
consolidated financial statements comply with IFRSs
as adopted by the EU, the additional requirements of
German commercial law pursuant to Sec. 315a (1)
HGB and give a true and fair view of the net assets,
financial position and results of operations of the
Group in accordance with these requirements. The
combined management report of the Axel Springer
Group and of Axel Springer AG is consistent with the
consolidated financial statements and as a whole
provides a suitable view of the Group’s position and
suitably presents the opportunities and risks of future
development.

Berlin, February 26, 2009

Ernst & Young AG
Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft

Plett
Wirtschaftsprüfer
[German Public Auditor]

Glöckner
Wirtschaftsprüfer
[German Public Auditor]

112 Annual Report 2008 Axel Springer AG

Consolidated Balance Sheet

Consolidated Balance Sheet at December 31, 2008

€ thousands

ASSETS

Non-current assets

Fixed assets

Intangible assets

Property, plant, and equipment

Investment property

Non-current financial assets

Investments accounted for using the equity method

Other non-current financial assets

Receivables from income taxes

Other assets

Deferred tax assets

Current assets

Inventories

Trade receivables

Receivables due from related parties

Receivables from income taxes

Other assets

Cash and cash equivalents

Assets held for sale

Total assets

Note

12/31/2008

12/31/2007

1,719,294

2,246,986

1,655,185

2,186,787

737,964

704,707

722,249

756,789

29,663

27,369

165,309

697,922

129,993

639,371

35,316

44,457

3,050

16,602

58,551

46,511

3,066

10,622

1,093,341

1,579,953

44,225

37,990

264,875

269,221

55,582

37,586

62,001

63,417

70,292

110,281

154,529

198,056

474,543

830,696

2,812,635

3,826,939

(4)

(5)

(6)

(7)

(11)

(12)

(30)

(8)

(9)

(10)

(11)

(12)

(33)

(13)

Consolidated Balance Sheet 113

Note

12/31/2008

12/31/2007

(14)

1,060,284

1,211,828

1,017,718

1,130,733

42,566

81,095

1,052,859

1,509,684

306,968

299,838

14,062

20,936

512,432

930,149

1,743

519

2,925

51,377

78,552

166,257

176,765

699,492

1,105,427

47,943

47,971

155,642

192,417

11,596

10,988

183,246

234,525

24,498

46,843

229,724

39,860

83,597

237,522

258,547

2,812,635

3,826,939

(15)

(16)

(17)

(18)

(20)

(30)

(15)

(16)

(17)

(18)

(19)

(20)

(13)

Consolidated Balance Sheet at December 31, 2008

€ thousands

EQUITY AND LIABILITIES

Equity

Shareholders of Axel Springer AG

Minority interests

Non-current provisions and liabilities

Provisions for pensions

Other provisions

Financial liabilities

Trade payables

Liabilities due to related parties

Other liabilities

Deferred tax liabilities

Current provisions and liabilities

Provisions for pensions

Other provisions

Financial liabilities

Trade payables

Liabilities due to related parties

Liabilities from income taxes

Other liabilities

Liabilities related to assets held for sale

Total equity and liabilities

114 Annual Report 2008 Axel Springer AG

Consolidated Income Statement

Consolidated Income Statement 2008

€ thousands

Revenues

Other operating income

Change in inventories and internal costs capitalized

Purchased goods and services

Personnel expenses

Depreciation, amortization, and impairments

Other operating expenses

Income from investments

Result from investments accounted for using the equity method

Other investment income

Financial result

Income taxes

Income from continuing operations

Income from discontinued operations

Net income

Net income attributable to shareholders of Axel Springer AG

Net income attributable to minority interests

Basic earnings per share from continuing operations (in €)

Diluted earnings per share from continuing operations (in €)

Basic earnings per share (in €)

Diluted earnings per share (in €)

Note

(22)

(23)

(24)

(25)

(26)

(27)

(28)

(29)

(30)

(31)

(32)

2008

2007

2,728,538

2,577,933

85,521

105,224

5,241

4,533

– 945,374

– 882,761

– 722,457

– 701,877

– 112,088

– 74,239

– 697,335

– 684,430

407,755

– 55,449

463,204

76,286

26,316

49,970

– 61,547

– 46,362

– 117,187

– 90,280

571,067

284,027

– 572,458

571,067

– 288,431

560,050

– 299,619

11,017

11,188

18.58

18.54

18.58

18.54

8.91

8.83

– 9.78

– 9.70

Consolidated Cash Flow Statement

Consolidated Cash Flow Statement 115

Consolidated Cash Flow Statement 2008

€ thousands

Income from continuing operations

Income from discontinued operations

Net income

Reconciliation of net income to the cash flow of operating activities

Depreciation, amortization, impairments and write-ups of fixed assets

Result from investments accounted for using the equity method

Dividends received from investments accounted for using the equity method

Result from derecognition of fixed assets

Changes in non-current provisions

Changes in deferred taxes

Other non-cash income and expenses

Changes in trade receivables

Changes in trade payables

Changes in other assets and liabilities

Cash flow from operating activities

Proceeds from disposals of intangible assets, property, plant and equipment

Proceeds from disposals of consolidated subsidiaries, less cash given up in the exchange

Proceeds from disposals of other non-current financial assets

Purchases of intangible assets, property, plant, equipment and investment property

Purchases of shares in consolidated subsidiaries and other business units less cash
and cash equivalents acquired

Purchases of investments in other non-current financial assets

Cash flow from investing activities

Dividends paid to shareholders of Axel Springer AG

Dividends paid to other shareholders

Equity contributions

Purchase of treasury shares

Repayments of liabilities under finance leases

Proceeds from borrowings of other financial liabilities

Repayments of other financial liabilities

Cash flow from financing activities

Cash flow-related changes in cash and cash equivalents

Changes in cash and cash equivalents due to exchange rates

Changes in cash and cash equivalents due to changes in consolidation group

Cash and cash equivalents at beginning of period

Reclassification from held-for-sale assets

Cash and cash equivalents at end of period

Cash inflows and payments contained in the cash flow from operating activities:

€ thousands

Income taxes paid

Income taxes received

Interest paid

Interest received

Investment income received (without dividends from investments accounted for using the equity method)

Note

2008

2007

571,067

284,027

– 572,458

571,067

– 288,431

(34)

114,818

55,449

32,166

– 438,565

– 17,475

20,793

4,802

– 50,453

– 27,548

265,115

4,266

5,960

542,330

– 46,722

579,547

– 26,316

21,505

– 12,637

– 13,863

– 41,759

45,380

– 17,582

21,838

15,384

283,066

11,092

2,610

25,819

– 58,787

– 162,740

– 42,457

– 964,499

– 408,651

(34)

300,637

– 1,392,416

– 122,400

– 107,318

– 6,053

6,900

– 73,532

– 193

– 4,687

– 7,935

– 304

151,579

1,012,482

– 568,493

– 145,093

– 612,192

747,145

– 46,440

– 362,205

779

319

198,056

1,815

154,529

– 51

– 921

588,709

– 27,476

198,056

(33)

2008

2007

– 150,051

– 132,563

48,971

– 27,096

19,049

44,216

4,566

– 23,532

8,112

53,762

116 Annual Report 2008 Axel Springer AG

Statement of Changes in Equity

Consolidated Statement of Changes in Equity 2008

€ thousands

Accumulated other comprehensive
income

Number of
shares
outstanding
(shares)

Sub-
scribed
capital

Additio-
nal paid-
in capital

Accu-
mulated
retained
earnings

Treasury
shares

Currency
translation
adjustments

Changes in
fair value
of financial
instruments

Other

Share-
holders of
Axel
Springer
AG

Minority
interests

Equity

Balance at 01/01/2007 1)

Currency translation
differences

Changes in fair value of
financial instruments after
taxes

Other changes not
recognized in income

Net income

30,662,300

102,000

35,231 1,227,234 – 181,203

2,096

592,758

490

1,778,606

16,472

1,795,078

– 952

575

– 377

– 158,393

– 259

– 158,652

1,072

– 299,619

– 8,056

– 6,984

724

– 6,260

– 299,619

11,188

– 288,431

Comprehensive income

0 – 298,547

– 952

– 158,393

– 8,056

– 465,948

12,228 – 453,720

Dividends paid

Purchase of treasury
shares

Capital reduction

Change in consolidation
group

Purchase of minority
interests

Other changes
Balance at 12/31/2007 1)

Currency translation
differences

Changes in fair value of
financial instruments after
taxes

Other changes not
recognized in income

Net income

– 107,318

– 4,687

– 112,005

– 62,300

– 3,060

3,060

– 55,376

– 7,935

55,376

– 67,383

711

– 7,935

57,082

– 67,383

711

– 67,383

711

30,600,000

98,940

39,002

698,610 – 133,762

1,144

434,365

– 7,566

1,130,733

81,095

1,211,828

10,235

182

10,417

– 445,347

– 157

– 445,504

560,050

– 12,318

– 78

– 12,396

560,050

11,017

571,067

Comprehensive income

560,050

10,235

– 445,347

– 12,318

112,620

10,964

123,584

Dividends paid

Purchase of treasury
shares

Change in consolidation
group

Purchase of minority
interests

Other changes

– 122,400

– 6,053

– 128,453

– 917,341

– 73,532

– 30,997

1,277

– 2,792

– 16,037

– 30,997

– 27,403

– 58,400

2,809

1,294

Balance at 12/31/2008

29,682,659

98,940

40,279 1,102,471 – 207,294

11,379

– 10,982

– 17,075

1,017,718

42,566

1,060,284

1) Adjusted, see explanations at (3a).

Notes to the Financial Statements 117

Notes to the Financial Statements
Segment Report

Segment Report: Operative Segments

€ thousands

Newspapers National Magazines National Print International

Digital Media

Services/Holding

Consolidated totals

2008

2007

2008

2007

2008

2007

2008

2007

2008

2007

2008

2007

External revenues

1,277,584 1,290,305

564,068

587,847

409,750

408,270

378,181

208,098

98,955

83,413

2,728,538

2,577,933

Internal revenues

16,967

14,770

6,940

5,466

10,101

7,704

32,186

13,156

319,418

324,226

Segment revenues

1,294,551 1,305,075

571,008

593,313

419,851

415,974

410,367

221,254

418,373

407,639

EBITDA 1)

Thereof income from
investments

Thereof accounted for
using the equity
method

Depreciation,
amortization, and
impairments (except
from purchase price
allocations)

Write-ups

EBITA 1)

Impairment losses in
goodwill

EBIT 1)

Effects of purchase
price allocations

348,895

363,880

88,817

73,864

27,756

10,602

20,931

36,719

– 223

– 15,064

486,175

470,001

19,894

23,899

457

1,304

7,830

6,692

903

37,811

2,685

– 296

31,769

69,409

14,636

19,320

790

1,480

4,866

4,268

– 8,860

6,437

– 6,604

– 5,189

4,828

26,316

– 3,213

– 3,868

– 3,925

– 3,859

– 6,427

– 6,551

– 5,012

– 3,610

– 45,632

– 46,287

– 64,209

– 64,174

142

15,835

152

15,835

345,682

360,012

84,892

70,005

21,329

4,051

15,929

33,110

– 45,713

– 45,516

422,118

421,662

– 2,107

345,682

360,012

82,785

70,005

21,329

4,051

15,929

33,110

– 45,713

– 45,516

– 2,107

420,011

421,662

– 27,028

– 172

– 4,172

– 5,679

– 15,201

– 7,551

– 72

– 18

– 46,473

– 13,420

Non-recurring effects

– 1,616

5,362

106

5,323

437,393

– 59,514

1,637

376,263

12,428

Segment earnings
before interest and
taxes

Financial result

Income taxes

Income from
continuing
operations

Income from
discontinued
operations

Net income

344,066

365,374

55,757

69,939

17,157

3,695

438,121

25,559

– 105,299

– 43,897

749,801

– 61,547

– 117,187

420,669

– 46,362

– 90,280

571,067

284,027

– 572,458

571,067

– 288,431

Capital expenditures

5,065

9,655

5,312

10,956

15,080

145,857

32,243

390,302

16,911

16,926

74,611

573,696

Segment assets

254,596

259,362

89,398

132,052

287,617

281,126

994,944

1,473,426

879,555

999,047

2,506,110

3,145,013

thereof investments
accounted for using
the equity method

106,944

5,898

5,514

4,930

4,345

58,266

398,001

60,899

124,567

129,993

639,371

Segment liabilities

236,176

309,235

116,673

133,104

98,587

102,481

146,411

196,020

369,781

375,726

967,628

1,116,566

1) Adjusted for non-recurring effects and effects of purchase price allocations.

Segment Report: Geographical Information

€ thousands

Germany

Other countries

Consolidated totals

External revenues

Non-current segment assets

2008

2007

2008

2007

2008

2007

2,131,690

2,040,695

596,848

537,238

2,728,538

2,577,933

1,280,454

1,286,887

209,422

201,977

1,489,876

1,488,864

118 Annual Report 2008 Axel Springer AG

General information

(1) Accounting principles

The Axel Springer Aktiengesellschaft (“Axel Springer AG”)
is an exchange-listed stock corporation with its regis-
tered head office in Berlin/Germany. The principal activi-
ties of Axel Springer AG and its subsidiaries (“Axel
Springer Group” or the “Group”) are described in note
(35b).

On February 24, 2009, the Management Board of Axel
Springer AG authorized the consolidated financial state-
ments for fiscal year 2008 and presented them to the
Supervisory Board for approval. The consolidated finan-
cial statements were prepared by application of Section
315a HGB in accordance with the International Financial
Reporting Standards (IFRS) of the International Account-
ing Standards Board (IASB) and the interpretations of the
International Financial Reporting Interpretations Commit-
tee (IFRIC) approved by the IASB, in effect and recog-
nized by the European Union (EU) at the balance sheet
date. The reporting currency is the Euro (€); unless other-
wise indicated, all figures are stated in Euro thousands
(€ thousands).

The consolidated financial statements and consolidated
management report will be filed with the Electronic Fed-
eral Gazette in Germany. Axel Springer AG is kept on file
with the Commercial Register of the Berlin-Charlotten-
burg Local Court under the No. 4998.

(2) Consolidation

(a) Consolidation principles
All subsidiaries in which Axel Springer AG is able to con-
trol, directly or indirectly, the financial and operating
policies of the company are included in the consolidated
financial statements of the Axel Springer Group; please
refer to the list of companies included in the consolidated
financial statements (cf. note (46)).

The equity consolidation was performed by application of
the purchase method as at the date of acquisition. Under
the purchase method, the acquired proportion of the fair
value of the purchased assets and liabilities of the sub-

sidiary at the date of acquisition are deducted from the
cost of acquisition of the interest in the subsidiary. Any
remaining positive difference is capitalized as goodwill.
Negative goodwill arising on the consolidation of equity
at the date of acquisition is recognized immediately as
income. The date of acquisition is the date when the
ability to control the net assets and the financial and
operating activities of the acquired company passes to
the Axel Springer Group. Transactions with minority
shareholders are accounted for in the same way as
transactions with company shareholders. Differences
resulting from the sales and purchases of minority inter-
ests are recognized within equity.

Expenses and income as well as receivables and pay-
ables between consolidated companies are eliminated.
Intra-group profits are eliminated, if they are material.

Associated companies are included in the consolidated
financial statements by application of the equity method
(cf. note (46)). Associated companies are defined as
companies in which the Axel Springer Group can exert
significant influence over the financial and operating
policies of the company. With regard to calculating the
goodwill and the proportional fair value of the assets and
liabilities, the principles applied to full consolidation apply
here as well. The IFRS financial statements of these
companies as at the Group’s balance sheet date serve
as the basis for consolidation by the equity method.
Losses from associated companies that exceed the
carrying amount of the investment or any other long-term
receivables related to the financing of these companies
are not recognized, unless the Axel Springer Group is
bound by additional contribution requirements. Intra-
group profits are not eliminated when they are immaterial.
Applying the equity method, the investment is subject to
an impairment test, and if an impairment loss has been
found to exist, the carrying amount of the investment is
written down to the lower realizable value.

The separate financial statements of Axel Springer AG
and its subsidiaries and associates included in the con-
solidated financial statements have been drawn up on
the basis of uniform accounting and valuation methods.

Notes to the Financial Statements 119

(b) Companies included in the consolidated

financial statements

Companies included in the consolidated financial state-
ments (consolidation group) broke down as follows:

Fully consolidated companies

Germany

Other countries

Fully consolidated special-purpose
entities

Germany

Investments accounted for using the
equity method

Germany

Other countries

12/31/2008 12/31/2007

127

Consolidated companies are listed in note (46). Pursuant
to Section 313 (4) HGB, the list of shareholdings of Axel
Springer AG and the Group is to be filed with the elec-
tronic Federal Gazette.

The following changes in particular occurred in fiscal year
2008:

In the group of fully consolidated subsidiaries, PIN Group
AG, Leudelingen/Luxembourg, and its 83 domestic
subsidiaries were deconsolidated due to insolvency.
Another deconsolidation resulted from the sale of the
shares held in SAT.1 Beteiligungs GmbH, Munich. Fur-
thermore, the special-purpose entity BayernInvest AS
Invest Plus-Fonds, Munich, was deconsolidated as well.

In Germany, the additions to the consolidation group
comprised the new business start-ups B.Z. Media
GmbH, Berlin, Gofeminin.de GmbH, Berlin, a subsidiary
of auFeminin.com S.A., Paris/France, and the newly
consolidated companies comparado GmbH, Lüneburg,
Cleopatra Produktions GmbH, Hamburg, Axel Springer
TV NEWS GmbH, Hamburg, WBV Direktzustell-GmbH,
Hamburg, gamigo AG, Hamburg, Transfermarkt GmbH
& Co. KG, Hamburg, and Axel Springer Services & Im-
mobilien GmbH, Berlin (formerly Gildeverlag GmbH,
Hamburg).

Outside Germany, the companies Verlag Sport Wochen-
zeitung AG, Zurich/Switzerland, Avivum AG, Zurich/
Switzerland, usgang.ch GmbH, Zurich/Switzerland, and
PartyGuide.ch AG, Hünenberg/Switzerland, were fully
consolidated for the first time.

The shares in the companies Kieler Zeitung GmbH & Co.
Offsetdruck KG, Kiel, Kieler Zeitung Verlags- und Dru-
ckerei KG-GmbH & Co., Kiel, Kieler Zeitung Verwaltungs
GmbH & Co. Beteiligungs KG, Kiel, Leipziger Verlags
und Druckereigesellschaft mbH & Co. KG, Leipzig, Lübe-
cker Nachrichten GmbH, Lübeck, Ostsee-Zeitung GmbH
˘
& Co. KG, Rostock, and Dogan TV Holding A.S., Istan-
bul/Turkey, which were formerly accounted for by using
the equity method, were classified as held for sale at the
balance sheet date (cf. note (13)).

StepStone ASA, Oslo/Norway, was included for the first
time in the consolidated financial statements by applica-
tion of the equity method.

(c) Acquisitions and divestitures
The limited partnership interest and share purchase
agreement for the acquisition of the minority interests in
BILD digital GmbH & Co. KG (formerly Bild.T-Online.de
AG & Co. KG), Berlin, and BILD digital Verwaltungs
GmbH (formerly Bild.T-Online.de Verwaltungs AG),
Berlin, which was concluded between Axel Springer AG
and Deutsche Telekom AG, Bonn, in November of the
prior year, was finalized on January 3, 2008. The pur-
chase price was € 55,000 thousand.

The sale of the indirect investment in ProSiebenSat.1
Media AG, Unterföhring, by Axel Springer AG to Lavena
Holding 5 GmbH, Munich, by virtue of the share pur-
chase agreement of December 2007, was finalized in
January 2008. The sale gave rise to preliminary sale
proceeds of € 515,285 thousand. The pretax gain on
the sale of these shares and on the disposal of the
shares in SAT.1 Beteiligungs GmbH, Munich, totaled
€ 438,250 thousand.

In connection with the purchase of shares in auFem-
inin.com S.A., Paris/France, in fiscal year 2007, put
options were granted to the minority shareholders of
AS Online Beteiligungs GmbH, Berlin, enabling them to

On September 23, 2008, BILD digital GmbH & Co. KG,
Berlin, a subsidiary of Axel Springer AG, purchased 51 %
of the shares in Transfermarkt GmbH & Co. KG, Ham-
burg. This company operates Germany’s biggest soccer
community on the Internet.

On September 22, 2008, Verlag Sport Wochenzeitung
AG, Zurich/Switzerland, an indirect subsidiary of Axel
Springer AG, purchased all the equity of Avivum AG,
Zurich/Switzerland, and PartyGuide.ch AG, Hünen-
berg/Switzerland. Avivum AG is a holding company that
owns 100 % of the equity in usgang.ch GmbH, Zurich/
Switzerland. The companies PartyGuide.ch AG and
usgang.ch GmbH operate leisure and lifestyle portals in
Switzerland.

120 Annual Report 2008 Axel Springer AG

sell their shares. The minority shareholders exercised
their put options on March 3, 2008. The strike price of
the options, which corresponds to the purchase price
payable by Axel Springer AG, amounted to € 40,988 thou-
sand. Since that time, Axel Springer AG is the sole share-
holder of AS Online Beteiligungs GmbH. As a result of
further purchases of minority shares in 2008, the propor-
tion of equity held in auFeminin.com S.A. rose from
68.2 % to 82.4 % at December 31, 2008.

By purchase and assignment agreement on October 2,
2008, Axel Springer Group increased its equity holding in
Smarthouse Media GmbH, Karlsruhe, by 12 % to 88 %.
In addition, the company increased its equity holding
in wallstreet: online AG, Berlin, from 50.1 % to 71.9 %.
The purchase price for both transactions amounted to
€ 12,729 thousand.

In December 2008, Axel Springer Group acquired
33.3 % of the equity in StepStone ASA, Oslo/Norway, for
acquisition costs of € 34,845 thousand.

In addition, the following business combinations were
completed in the time until December 31, 2008:

On April 1, 2008, WBV Direktzustell-GmbH, Hamburg,
an indirect subsidiary of Axel Springer AG, acquired the
“Unaddressed Deliveries” division of PIN Mail GmbH,
Hamburg, which is under insolvency proceedings. The
business activities of this company consist mainly of
delivery services for companies of the Axel Springer
Group.

On June 30, 2008, Gofeminin.de GmbH, Berlin, a sub-
sidiary of auFeminin.com S.A., Paris/France, acquired
the health portal onmeda.de from OnVista Media GmbH,
Cologne. The health portal onmeda.de offers extensive
information on all subjects related to health.

By purchase agreement of August 26, 2008, AS Venture
GmbH, Berlin, a subsidiary of Axel Springer AG, pur-
chased 47.4 % of the equity in the online games provider
Anbieter gamigo AG, Hamburg, and increased its equity
stake in that company to 94.8 %.

Notes to the Financial Statements 121

Based on preliminary purchase price allocations, the
preliminary acquisition costs of these business combina-
tions, most of which was paid in cash, could be allocated
to the purchased assets and liabilities at the acquisition
date as follows:

Business combinations in the prior year

In fiscal year 2007, Axel Springer AG directly or indirectly
purchased equity shares in the following subsidiaries,
which were included in the consolidated financial
statements:

Adjustment
amount

Carrying
amount after
acquisition

9,488

13,044

9,756

13,044

Shares representing 99.5 % of the equity in Axel
Springer Schweiz AG (formerly Jean Frey AG), Zurich/
Switzerland. The acquisition cost, which was paid in
cash, amounted to € 98,272 thousand, including trans-
action costs.

€ thousands

Other intangible assets

Goodwill

Property, plant, and
equipment

Non-current financial
assets

Current assets

Cash and cash
equivalents

Deferred tax assets

Carrying
amount
before
acquisition

268

445

1,250

1,205

187

Provisions and liabilities

1,483

445

1,250

1,205

187

1,483

1,168

Deferred tax liabilities

1,168

Net assets

1,881

21,364

23,245

Minority interests

105

732

Acquisition Cost

837

22,408

Of the other intangible assets acquired, intangible assets
with carrying amounts of € 4,624 thousand have indefinite
useful lives. The goodwill arising on these transactions can
be credited mainly to the positive expectations for the
future business performance of the respective companies.

Since the respective dates of initial consolidation, these
companies together have contributed € 7,096 thousand
to the revenues and € 327 thousand to the net income.
If these business combinations had been completed
already on January 1, 2008, the revenues would have
been higher by € 12,787 thousand and the net income
by € 425 thousand. The contribution to the net income
was influenced by the effects of purchase price alloca-
tions conducted in accordance with IFRS 3.

Shares representing 60 % of the equity in ZANOX.de
AG, Berlin. The acquisition cost for the purchase of 60 %
of the equity in ZANOX.de AG amounted to € 160,857
thousand. Besides the purchase price paid in cash, this
amount also contains success-contingent components
of € 24,984 thousand and transaction costs of € 1,305
thousand.

Shares representing 41.4 % of the equity in auFem-
inin.com S.A., Paris/France. The acquisition cost
amounted to € 134,139 thousand. Besides the purchase
price paid in cash, this amount also contained contingent
purchase price liabilities under put options in the amount
of € 39,582 thousand and transaction costs of € 1,290
thousand. As a result of this share purchase, Axel
Springer Group exercised de facto control over the busi-
ness policies of auFeminin.com S.A.

Acquisition of additional shares in PIN Group AG, Leu-
delingen/Luxembourg, bringing the company’s equity
stake to 71.6 %, and conclusion of an agreement on a
put and call option for the purchase of additional shares.
The total acquisition cost of Axel Springer AG for the
acquisition of the majority interest, including the contin-
gent purchase price liabilities under put options, the
carrying amount of the shares held in associated com-
panies and the transaction costs came to € 514,949
thousand. In the time since the acquisition date, PIN
Group AG and its subsidiaries completed 11 business
combinations, reducing the equity stake held by Axel
Springer AG to 63.7 % at December 31, 2007. The
acquisition costs of PIN Group AG and its subsidiaries
for these business combinations amounted to € 135,056

122 Annual Report 2008 Axel Springer AG

thousand. Of this amount, € 94,146 thousand was paid
in the form of in-kind capital contributions.

€ thousands

Increase to 95 % of the equity in T+M-Verlagsgruppe,
50.1 % of the equity in wallstreet:online AG, Berlin,
75.1 % of the equity in wallstreet:online capital AG,
Berlin, 100 % of the equity in Amiado AG, Zurich/
Switzerland, the German-language TV listings maga-
zines TELE, TV4, and TV2, and 74.9 % of the equity in
Anima Publishers s.r.o., Zlin/Czech Republic. The
cumulative acquisition costs of these other acquisitions
amounted to € 63,386 thousand. The total amount of
purchase prices paid in cash amounted to € 56,248
thousand. This figure also included transaction costs of
€ 220 thousand. An amount of € 2,456 thousand related
to the issuance of equity shares. Provisions of € 4,462
thousand were recognized for the put options and earn-
out agreements assumed, representing the present value
of the amounts expected to settle the corresponding
obligations.

Based on the purchase price allocations, the cumulative
acquisition costs of the business combinations can be
allocated to the purchased cumulative assets and liabili-
ties at the acquisition date as follows:

Carrying
amount
before
acquisition

Adjustment
amount

Carrying
amount after
acquisition

Other intangible assets

41,616

Goodwill

Property, plant, and
equipment

Other non-current
assets

Assets held for sale

31,440

20,318

10,594

Other current assets

109,238

Cash and cash
equivalents

Deferred tax assets

79,708

9,777

271,361

937,174

42,100

312,977

937,174

31,440

20,318

52,694

109,238

79,708

9,875

Provisions and liabilities

312,155

– 2,880

309,275

Liabilities related to
assets held for sale

Deferred tax liabilities

6,058

84,522

6,058

84,601

Net assets

– 15,601

1,169,091

1,153,490

Minority interests

Acquisition cost

46,831

1,106,659

Of the other intangible assets acquired, intangible assets
with carrying amounts of € 168,612 thousand have
indefinite useful lives. The goodwill arising on these
transactions can be credited mainly to the positive ex-
pectations for the future business performance of the
respective companies.

Since the respective dates of initial consolidation, these
companies together contributed 284,978 thousand to
the revenues and € – 68,733 thousand to the net in-
come in fiscal year 2007. If these business combinations
had been completed already on January 1, 2007, the
revenues would have been higher by € 548,921 thou-
sand and the net income lower by € 101,542 thousand.
The contribution to the net income was influenced by the
effects of purchase price allocations.

Notes to the Financial Statements 123

(d) Translation of separate financial statements

denominated in foreign currency

The assets and liabilities of subsidiaries for which the
functional currency is not the euro have been translated
at the exchange rate in effect on the balance sheet date.
The goodwill and fair value adjustments of assets and
liabilities related to the acquisition of companies outside
the European Monetary Union are treated as assets and
liabilities of the acquired company and accordingly trans-
lated at the exchange rate in effect on the balance sheet
date. Items of the income statement have been trans-
lated at the weighted average exchange rate for the year.
Equity components of the subsidiaries have been trans-
lated at the historical exchange rate at the date of origi-
nation. The foreign exchange differences resulting from
the translation have been recognized as currency trans-
lation adjustments within accumulated other compre-
hensive income and/or minority interests.

The exchange rates to the euro of foreign currencies
that are significant for Axel Springer Group underwent
the following changes in the past year:

Unit of
foreign
currency per
one euro

Polish zloty

Average exchange rate

Exchange rate on
balance sheet date

2008

3.523

2007 12/31/2008 12/31/2007

3.783

4.174

3.594

Russian ruble

36.896

35.018

41.372

36.108

Swiss franc

1.585

1.643

1.489

1.657

Czech koruna

25.078

27.766

26.660

26.589

Hungarian
forint

250.118

251.350

265.640

253.333

(3) Explanation of significant accounting and

valuation methods

(a) Basic principles
The accounting and valuation principles applied in fiscal
year 2008 are basically the same as those applied in the
prior year. In a departure from the principles applied in
fiscal year 2007, equity changes from shareholder trans-
actions, which are not recognized in the income state-
ment were presented not in accumulated other compre-

hensive income, but in accumulated retained earnings in
2008. This change is meant to allow for a clearer presen-
tation of the effects in accumulated other comprehensive
income. In the balances carried forward at January 1, 2007
and January 1, 2008, the accumulated other compre-
hensive income was increased by € 44,614 thousand
and by € 111,997 thousand, respectively, and the re-
tained earnings balances were decreased by the same
amounts.

For information on the changes in accounting and valua-
tion methods resulting from new or revised IFRSs and
IFRIC Interpretations, please refer to note (3r).

(b) Recognition of income and expenses
The Axel Springer Group generates mainly circulation
revenues from sales of newspapers and magazines and
advertising revenues. The advertising revenues encom-
pass revenues from sales of advertising spaces in the
published newspapers and magazines and the revenues
generated in the categories of display, affiliate marketing,
and search in the Digital Media segment. Revenues are
recognized at the time when the significant risks of own-
ership have passed to the buyer, provided that the
amount of revenue can be reliably measured and it is
probable that economic benefits will flow to the enter-
prise. Revenues are stated net of any discounts allowed.

For publishing products, revenue is not recognized for
that portion of products sold, which can be expected, on
the basis of historical experience, to be returned.

If significant risks and rewards of business activities do
not lie with the Axel Springer Group or the income is
collected in the interest of third parties, only the corre-
sponding commission income or proportion of revenue
accruing to the Axel Springer Group are recognized as
revenues.

If the fair value of the consideration received under barter
transactions cannot be measured reliably, the fair value is
determined on the basis of the performance rendered.

124 Annual Report 2008 Axel Springer AG

Other income is recognized when the future inflow of
economic benefits from the transaction can be meas-
ured reliably and was received by the company during
the reporting period.

Operating expenses are recognized either when the
corresponding goods or services are sold or rendered,
or at the time of their origination.

Interest expenses and income are recognized on an
accrual basis in the period of their occurrence. Interest
expenses incurred in connection with the acquisition and
production of certain assets are not capitalized as assets
in the financial statements of the Axel Springer Group.
Income or expenses from profit/loss transfer agreements
are recognized at the end of the fiscal year. They are
measured as the profit or loss determined in accordance
with the accounting rules of German commercial law.
Dividend income is recognized at the date of distribution;
the distribution period is normally the period in which a
legal entitlement is constituted.

Intangible assets

(c)
Internally generated intangible assets are measured as
the sum of costs incurred in the development phase
from the time when the technical and economic feasibil-
ity has been demonstrated until the time when the intan-
gible asset has been completed. The capitalized produc-
tion costs include all costs that are directly or indirectly
allocable to the development phase. Purchased intangi-
ble assets are measured at cost. Internally generated
and purchased intangible assets that have a determin-
able useful life are amortized over their expected useful
lives using the straight-line method, starting from the
time when they become available for use by the enter-
prise, as follows:

Software

Licenses

Supply rights

Internet platform

Customer relationships

Useful life
in years

3 – 8

3 – 5

3 – 16

Intangible assets with an indefinite useful life, which in the
Axel Springer Group include goodwill, title rights, and
brand rights, are not amortized. At present, the use of
these assets by the company is not limited by any eco-
nomic or legal restrictions. The carrying amounts of
these intangible assets are subjected to an impairment
test at least once a year. For the purpose of periodically
testing these assets for possible impairment losses, Axel
Springer AG defines cash-generating units to which
these assets can be allocated.

(d) Property, plant, and equipment
Property, plant, and equipment are measured at cost
and depreciated over their expected useful lives using
the straight-line method. Any gains or losses on the
disposal of property, plant, and equipment are recog-
nized as other operating income or expenses.

Leased assets over which a company of the Axel
Springer Group retains beneficial ownership are recog-
nized as fixed assets and measured at the present value
of the minimum future lease payments or the lower fair
value of the leased asset and depreciated by the
straight-line method. The present value of the payment
obligations associated with the minimum future lease
payments is recognized as a liability.

Notes to the Financial Statements 125

For depreciation purposes, the following useful lives are
applied:

Buildings

Leasehold improvements

Printing machines

Editing systems

Other operational and business equipment

Useful life
in years

30 – 50

5 – 15

15 – 20

3 – 6

3 – 14

When it is reasonably certain that ownership of the as-
sets leased under finance lease will pass to a company
of the Axel Springer Group at the end of the lease period,
such assets are depreciated over their useful lives.

Capital investment subsidies and bonuses granted by
the government are recognized when it is reasonably
certain that the subsidies will be granted and that the
Group will fulfill the related terms and conditions. The
bonuses and subsidies granted for the acquisition or
construction of long-term assets are recognized as de-
ferred income and presented among other liabilities. In
subsequent periods, the deferred income item is re-
leased and recognized as income over the useful life of
the corresponding assets.

Investment property

(e)
Investment property that the Axel Springer Group intends
to lease out to third parties is measured at amortized
cost. Such property is depreciated over a useful life of
50 years using the straight-line method.

(f) Recognition of impairment losses in intangible

assets and in property, plant, and equipment
Impairment losses are recognized in intangible assets,
including goodwill, and in property, plant, and equipment,
when as a result of certain events or changed circum-
stances the carrying amount of the asset exceeds its
recoverable amount (fair value less the costs to sell or
the value in use). If it is not possible to determine the
recoverable amount of an individual asset, the cash flow
for the next-higher group of assets for which such a cash
flow can be determined is applied.

For purposes of conducting the impairment test, good-
will as well as title rights and brand rights are allocated to
the internal cash-generating units (“reporting units”). In
general, these reporting units correspond to specific
titles and digital media, of the Axel Springer Group, con-
sidering, in particular, the dependent separate titles,
digital media and subsidiaries within a single group. The
impairment test is conducted on the basis of the value in
use, determined as the sum of the discounted estimated
future cash flows, which are derived from the company’s
Medium-Term Plan. The planning horizon for the detailed
Medium-Term Plan approved by the Management Board
is five years. The cash flows to be received after this five-
year period are extrapolated on the assumption of a
growth rate of 1.5 % (PY: 1.5 %), which does not exceed
the assumed average market or industry growth rate of
the respective reporting units. The discount rates are
calculated on the basis of the weighted average capital
costs of the Group, taking country-specific considera-
tions into account. The discount rates range from 6.2 %
to 12.8 % (PY: from 6.0 % to 11.8 %) after taxes and
from 7.9 % to 16.0 % (PY: from 7.6 % to 14.6 %) before
taxes.

The following assumptions applied in calculating the
value-in-use amounts of the reporting units are fraught
with estimation uncertainties:

Gross profit margins: The gross profit margins were
determined on the basis of past historical values. They
were extrapolated to the detailed Medium-Term Plan
depending on the medium on which the business model
of the given reporting unit is based (print, digital, etc.). It
was assumed that gross profit margins in the electronic
media sector will usually exhibit higher growth rates than
in the print sector.

Discount rates: The discount rates reflect the current
market estimates of the country-specific risks attributable
to each reporting unit. The discount rate was estimated
on the basis of the average weighted capital costs of the
sector in question.

Estimates of growth rates: The growth rates were deter-
mined on the basis of published market research reports
for the sectors in question. In estimating the long-term

126 Annual Report 2008 Axel Springer AG

growth rates, due consideration was given to the com-
pensatory effects between the different business lines,
based on the adopted strategy of the Group.

power of control were transferred. A financial liability is
derecognized when the obligation underlying the liability
is settled, annulled, or expires.

Impairment tests of the goodwill resulting from prelimi-
nary purchase price allocations are conducted only when
certain events have occurred.

Impairment losses are reversed when the recoverable
amount exceeds the carrying amount of the asset. The
reversal is limited to the amount which would have re-
sulted if previous impairment losses had not been recog-
nized. A recognized impairment loss in goodwill is never
reversed.

(g) Financial instruments
Financial instruments are contracts that give rise to a
financial asset for one company and a financial liability or
equity instrument for the other company. Financial assets
are mainly composed of cash and cash equivalents,
trade receivables and receivables due from related par-
ties, loans, investments in companies that fall under the
scope of IAS 39, and derivative financial instruments with
positive market values. Financial liabilities are mainly
composed of trade payables and liabilities due to related
parties, liabilities due to banks, liabilities under finance
leases, and derivative financial instruments with negative
market values.

The initial recognition and derecognition of financial in-
struments coincide with the settlement dates of custom-
ary market purchases and sales.

If reliably measurable, fair values of financial instruments
are determined on the basis of appropriate market prices
or valuation methods. If valuation methods are applied,
the fair values are determined as the sum of the dis-
counted expected cash flows based on reference inter-
est rates in effect on the balance sheet date.

A financial asset is derecognized when the contractual
rights to the cash flows from the financial asset expire or
when the Group transfers the contractual rights to re-
ceive the cash flows to third parties or assumes a con-
tractual obligation to pay the cash flows immediately to a
third party, under which the risks and rewards or the

Financial assets

Non-current financial assets and securities
Investments in subsidiaries and associates that have not
been consolidated or accounted for using the equity
method in the consolidated financial statements (other
non-current investments) are measured at fair value if it
can be determined reliably on the basis of stock ex-
change or market prices and generally accepted valua-
tion methods, respectively. Otherwise, they are meas-
ured at amortized cost. The valuation methods employed
include especially the discounted cash flow method (DCF
method) based on the expected investment income.
However, the income is considered to be not reliably
measurable in those cases when sufficiently detailed
information is not available, when the fungibility/com-
parability of the investments in such companies are
highly restricted, when the Axel Springer Group has no
influence on the dividend policies by virtue of its status
as a minority shareholder or when the dividend payments
do not regularly occur in the same or subsequent fiscal
year. Any unrealized gains or losses resulting from the
changes in fair value of the financial instruments, consid-
ering resulting tax effects, are recognized in accumulated
other comprehensive income. Changes in fair value are
not recognized in income until the corresponding non-
current financial assets are sold or an impairment loss is
recognized.

Options on shares in unlisted investments are measured
at amortized cost because it is not possible to determine
the fair values of these derivatives reliably.

The carrying amounts of non-current financial assets and
securities are reviewed at every balance sheet date to
determine whether there are objective indications of an
impairment. If an impairment is found to exist, an im-
pairment loss is recognized and charged to income.

Notes to the Financial Statements 127

Loans, receivables, and other financial assets
Upon initial recognition, loans, receivables, and other
financial assets are measured at fair value plus transac-
tion costs. In subsequent periods, they are measured at
amortized cost, after deduction of any write-downs,
using the effective interest method. A write-down is
taken when objective indications suggest that the receiv-
able may not be fully collectible. Such an indication might
be the insolvency or other considerable financial prob-
lems of the debtor, for example. The amount of the
write-down is measured as the difference between the
carrying amount of the receivable and the present value
of the estimated future cash flows from this receivable,
discounted by application of the effective interest rate.
Write-downs are charged against income both in the
form of an account for allowances on doubtful accounts
and by means of direct write-downs. The account for
allowances on doubtful accounts is used, in particular,
for allowances on doubtful trade receivables and receiv-
ables due from related parties. If in subsequent periods
the fair value has objectively risen, the write-downs are
reversed and recognized in income in the appropriate
amounts.

Cash and cash equivalents
The cash and cash equivalents consist of cash (cash in
banks, cash on hand, and checks) and marketable secu-
rities. These items are measured at amortized cost.

Financial liabilities

Upon initial recognition, financial liabilities are measured
at fair value, including the transaction costs. In subse-
quent periods, these items are measured at amortized
cost by application of the effective interest method.

The acquisition costs related to options and earn-out
agreements in connection with company transactions in
which the Axel Springer Group acquires control over the
companies in question are recognized as conditional
purchase price liabilities and measured at their present
value, provided that the acquisition costs are probable
and can be measured reliably. The discount rates are
determined on the basis of the interest rates charged on
the Group’s borrowings.

Derivative financial instruments

Derivative financial instruments are utilized in the Axel
Springer Group exclusively to hedge against currency
and interest rate risks that have an influence on future
cash flows. Insofar as the conditions for the application
of hedge accounting are met, the effective portion of the
fair value changes, including the tax effects, is recog-
nized directly in equity as accumulated other compre-
hensive income. Any ineffective portions are recognized
immediately in income. The amounts recognized in ac-
cumulated other comprehensive income are recycled
when the underlying transaction is recognized on the
balance sheet or income statement. The changes in the
fair value of derivatives that do not meet the conditions
for the application of hedge accounting, despite their
economic hedging effect, are measured at fair value
through profit and loss.

Inventories

(h)
Inventories are measured at cost. Purchase costs are
determined on the basis of a weighted average value.
Production costs include all costs directly related to the
units of production and production-related overhead
costs. Inventories are measured at the balance sheet
date at the lower of the purchase or production cost and
the net realizable value. The net realizable value is the
estimated selling price less estimated costs to be in-
curred until the sale. The net realizable value of goods
and services in progress is calculated as the net realiz-
able value of finished goods and services less remaining
costs of completion. Original values are reinstated when-
ever the reasons justifying an earlier write-down no
longer exist.

(i) Assets held for sale and discontinued

operations

Assets are categorized as held-for-sale when their carry-
ing amounts will be recovered primarily through the sale,
rather than through continued use in operations. Any
division that is supposed to be sold, represents a signifi-
cant geographical or operational business, is part of a
specifically coordinated plan to sell a significant business,
or is a subsidiary acquired exclusively with the intention
of reselling it, is classified as discontinued operations.

128 Annual Report 2008 Axel Springer AG

The non-current assets held for sale are measured as
the lower of the carrying amount or the fair value less
costs to sell.

(j) Pension provisions
The provisions for pension obligations under defined
benefit plans are calculated using the projected unit
credit method under which future changes in compen-
sation and benefits are taken into account. The following
parameters were applied in the 2008 and 2007 fiscal
years:

Information in %

Discount rate

2008

2007

3.0 / 5.8

3.0 / 5.4

Expected return on plan assets

3.25 – 3.5

Salary trend

Pension trend

1.5 – 2.5

1.5 – 2.0

0.25 – 2.25

0.25 – 2.0

The expected life spans are determined with reference to
the country-specific recognized actuarial tables. The
present value of the defined benefit obligation is deter-
mined by discounting the estimated future cash outflows.
The discount rate applied for this purpose is determined
with reference to high-quality corporate bonds that
match the underlying pension obligations with respect to
currency and maturity.

If and when the actuarial gains and losses resulting from
changes in actuarial parameters exceed 10 % of the
higher of pension obligations or plan assets at the begin-
ning of the fiscal year, the amount exceeding the 10 %
limit is recognized in income over the remaining service
years of the employees entitled to the benefits (corridor
method).

(k) Other provisions
Other provisions have been formed to account for all
discernible legal and constructive obligations of the Axel
Springer Group to third parties, provided that the settle-
ment of the obligation is probable and the amount of the
obligation can be reliably estimated. The amount of each
provision corresponds to the expected settlement
amount. In the case of long-term provisions, the ex-
pected settlement amount is discounted to the present
value at the balance sheet date by application of appro-
priate market rates of interest. Provisions are recognized
for restructuring expenses only when the intended
measures have been sufficiently concretized and an-
nounced on or before the balance sheet date.

(l) Deferred taxes
Deferred taxes are recognized to account for the future
tax effects of temporary differences between the tax
bases of assets and liabilities and their carrying amounts
in the IFRS financial statements, and for interest and loss
carry-forwards. Deferred taxes are measured on the
basis of the tax laws already enacted for those fiscal
years in which it is probable that the differences will
reverse or the tax losses can be utilized. Deferred tax
assets are recognized for temporary differences or inter-
est and tax losses only when the ability to utilize them in
the near future appears to be reasonably certain. De-
ferred taxes are recognized for temporary differences
resulting from the fair value measurement of assets and
liabilities obtained through business combinations. De-
ferred taxes are recognized for temporary differences
relating to goodwill only when the goodwill can be util-
ized for tax purposes. Deferred tax assets and liabilities
of tax groups are netted if they are based on the same
kind of income taxes; otherwise, they are netted only if
the deferred taxes are based on the income taxes im-
posed by the same tax authority and only when current
taxes can be netted as well.

(m) Treasury Shares
Treasury shares are measured at cost and are charged
to equity, not income. The treasury shares are presented
in a separate line item of the Statement of Changes in
Equity.

Notes to the Financial Statements 129

(n) Share-based payment programs
As part of performance-based remuneration Axel
Springer Group grants equity-settled share-based option
programs. The compensation components to be recog-
nized as expenses over the vesting period are measured
as the fair value of the options granted at the time when
they were granted. The fair values are determined on the
basis of the Black-Scholes model. The additional paid-in
capital is increased by the same amount.

(o) Liabilities related to assets held for sale
The liabilities and provisions of discontinued operations
and other disposal groups are summarized under this
balance sheet item.

(r) New accounting standards
The IFRSs and IFRIC Interpretations mentioned below
were applied for the first time in 2008:

IAS 39 “Financial Instruments: Recognition and Meas-
urement” and IFRS “7 Financial Instruments: Disclo-
sures”: In October 2008, the IASB published amend-
ments to IAS 39 and IFRS 7, which can be applied as of
July 1, 2008. In consideration of the financial markets
crisis, these changes allow for the possibility of reclassi-
fying certain financial assets as “held to maturity” and
“available-for-sale” financial assets in accordance with
IAS 39. The Group does not hold any financial assets to
which these rules would be applicable.

(p) Transactions in foreign currencies
Purchases and sales in foreign currencies are translated
at the exchange rate on the date of the transaction.
Assets and liabilities in foreign currencies are translated
into the functional currency at the exchange rate on the
balance sheet date. Any foreign exchange gains or losses
resulting from such translations are recognized in income.

IFRS 8 “Operating Segments”: The IASB published
IFRS 8 in November 2006. From its effective date,
IFRS 8 superseded IAS 14 “Segment Reporting.” The
Group applied these changes ahead of time with effect
from January 1, 2008. The disclosures prescribed by
IFRS 8 and the adjusted comparison figures are pre-
sented in note (35) ff.

(q) Use of estimates
The preparation of the IFRS consolidated financial
statements requires estimates and assumptions that
have an influence on the presentation of assets and
liabilities, the disclosure of contingent liabilities at the
balance sheet date, and the presentation of income and
expenses. Significant estimates and assumptions relate
in particular to the definition of uniform, Group-wide
useful lives for depreciation purposes, the rates used in
determining allowances for doubtful receivables, the
actuarial parameters used to measure pension provisions,
the valuation parameters used to measure the fair value
of share-based payment programs, the definition of
product return rates, the estimated cash flows, interest
rates and valuation parameters for goodwill and condi-
tional purchase price liabilities for options and earn-out
agreements in connection with business combinations,
and the ability to utilize deferred tax assets in the future.
Information concerning the carrying amounts determined
with the use of estimates can be found in the comments
on the specific line items.

IFRIC 11 “IFRS 2 – Group and Treasury Share Transac-
tions”: Under this Interpretation, agreements by which
employees are granted rights to the equity instruments
of an enterprise must also be accounted for as share-
based payments to be settled by equity instruments if
the enterprise buys the instruments from a third party or
if the shareholders provide the required equity instru-
ments. This Interpretation had no effects on the net assets,
financial position, and operating results of the Group.

IFRIC 14 “IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements, and their Interaction”:
This Interpretation provides guidance for determining the
maximum amount of the surplus under a defined benefit
plan that can be recognized as an asset in accordance
with IAS 19 “Employee Benefits.” This Interpretation had
no effects on the net assets, financial position, and oper-
ating results of the Group.

The IFRSs and Interpretations by the IFRIC mentioned
below have already been published, but not yet applied.

130 Annual Report 2008 Axel Springer AG

IFRS 1 “First-time Adoption of International Financial
Reporting Standards” and IAS 27 “Consolidated and
Separate Financial Statements”: The IASB published
amendments to both these Standards in May 2008.
These changes must be applied for the first time in fiscal
years that begin on or after January 1, 2009. The
changes made to IFRS 1 enable first-time adopters of
IFRS to measure the cost of an investment in their sepa-
rate financial statements either at the fair value or at the
carrying amounts under the previously applied national
accounting rules. This rule applies to investments held in
jointly controlled entities, associates, and subsidiaries.
The change to IAS 27 requires that all dividends received
from subsidiaries, jointly controlled entities, or associates
be recognized as income in the separate financial state-
ments. The new requirements will have no effects on the
consolidated financial statements of Axel Springer AG.

IFRS 2 “Share-based Payment”: In January 2008, the
IASB published an amendment to IFRS 2, which clarifies
the vesting conditions and the accounting treatment of
validly cancelled plans. This amendment is not expected
to have any significant effects on the net assets, financial
position, and operating results of the Group.

IFRS 3 “Business Combinations” and IAS 27 “Consoli-
dated and Separate Financial Statements”: The IASB
published revised versions of the IFRS 3 and IAS 27 in
January 2008. These revisions have not yet been incor-
porated into European law. The new rules must be ap-
plied for the first time in fiscal years that begin on or after
July 1, 2009. They entail changes in the accounting
treatment of business combinations occurring after this
date, which will affect the recognized amount of goodwill,
the results of the reporting period in which a business
combination occurred, and future results. The changes
to IAS 27 require that a change in the amount of equity
held in a subsidiary (without loss of control) be accounted
for as an equity transaction. Therefore, no goodwill and
no gain or loss can be recognized in connection with
such a transaction. Also, the rules applicable to the
distribution of losses between the parent company and
the non-controlling interests were changed, as were the
rules applicable to the accounting treatment of transac-
tions that lead to a loss of control. Consequential
changes were made to IAS 7 “Cash Flow Statements,”

IAS 12 “Income Taxes,” IAS 21 “Effects of Changes in
Foreign Exchange Rates,” IAS 28 “Investments in Asso-
ciates,” and IAS 31 “Interests in Joint Ventures.” These
changes will have effects on future acquisitions, transac-
tions leading to a loss of control, and transactions with
minority interests.

IAS 1 “Presentation of Financial Statements”: The IASB
published a revised version of IAS 1 in September 2007.
The Standard must be applied for the first time in fiscal
years that begin on or after January 1, 2009. The revised
Standard requires that changes in equity resulting from
transactions with owners in their capacity as equity pro-
viders be presented separately from other equity
changes. The statement of changes in equity must pre-
sent all details concerning transactions with owners,
while all other equity changes must be presented in a
single line item. Furthermore, the revised Standard re-
quires that all components of income be presented either
in a separate statement or in two related statements.
Because these changes affect the presentation of the
consolidated financial statements, they will not have any
significant effects on the net assets, financial position
and operating results of the Group.

IAS 23 “Borrowing Costs”: The IASB published a revised
version of IAS 23 in April 2007. The new rules must be
applied for the first time in fiscal years that begin on or
after January 1, 2009. The revised Standard requires the
capitalization of borrowing costs that are directly related
to the acquisition, construction, or production of a quali-
fying asset. To date, the Group has recognized borrow-
ing costs as expenses in the period in which they were
incurred. The revised Standard is to be applied prospec-
tively. We do not anticipate any significant effects on
the net assets, financial position, and operating results
of the Group.

IAS 32 “Financial Instruments: Presentation” and IAS 1
“Presentation of Financial Statements”: The IASB pub-
lished amendments to IAS 32 and IAS 1 in February
2008. The new rules, which must be applied for the first
time in fiscal years that begin on or after January 1, 2009,
allow for limited exceptions under which puttable instru-
ments and obligations arising on liquidation can be clas-
sified as equity, provided that they meet certain condi-

Notes to the Financial Statements 131

tions. The additions to these Standards will not have
significant effects on the net assets, financial position,
and operating results of the Group.

IAS 39 “Financial Instruments: Recognition and Meas-
urement”: The IASB published amendments to IAS 39 in
July 2008. These amendments have not yet been incor-
porated into European law. The new rules must be ap-
plied for the first time in fiscal years that begin on or after
July 1, 2009. They clarify how the hedge accounting
principles set forth in IAS 39 are to be applied to the
designation of a one-sided risk in a hedged item and to
the designation of inflation risks in a hedged item. The
amendment clarifies that it is permissible to designate
only a portion of the fair value changes or cash flow
changes of a financial instrument as the hedged item.
Because the Group has not entered into any such trans-
actions to date, the amendments are not expected to
have any significant effects on the net assets, financial
position, and operating results.

IAS 39 “Financial Instruments: Recognition and Meas-
urement”: The IASB published amendments to IAS 39 in
November 2008. These amendments have not yet been
incorporated into European law. The amended version
clarifies the effective date of the amendments to IAS 39
that were published in October 2008 (see above).

Different Standards: In May 2008, the IASB published
the first-ever umbrella standard to amend different IFRSs.
The principal objective of the umbrella standard is to
resolve inconsistencies and clarify formulations. Each
Standard has its own transitional rules. We do not antici-
pate any significant effects to result from the first-time
application.

IFRIC 12 “Service Concession Arrangements”: This In-
terpretation was published in November 2006, but has
not yet been incorporated into European law by the EU.
IFRIC 12 was to be applied for the first time in fiscal
years that begin on or after January 1, 2008. The Inter-
pretation governs the accounting treatment of the obliga-
tions undertaken and the rights received by service con-
cession operators under service concession arrange-
ments. Because no company of the Group is a service

concession operator within the meaning of IFRIC 12, this
Interpretation will have no effects on the Group.

IFRIC 13 “Customer Loyalty Programs”: Published in
June 2007, IFRIC 13 must be applied for the first time in
fiscal years that begin on or after July 1, 2008. Under this
Interpretation, the loyalty award credits granted to cus-
tomers must be treated as a separate component of the
revenues to which they relate. A portion of the fair value
of the consideration received must be allocated to the
loyalty award credits and recognized as deferred income
in the balance sheet. This portion will be recognized as
income in the period in which the loyalty award credits
are redeemed. The new results are not expected to have
significant effects on the net assets, financial position,
and operating results of the Group.

IFRIC 15 “Agreements for the Construction of Real Es-
tate”: This Interpretation was published in July 2008 and
has not yet been incorporated into European law. IFRIC
15 must be applied retroactively for the first time in fiscal
years that begin on or after January 1, 2009. It clarifies
when and how to account for the income and the corre-
sponding expenses from the sale of real estate in cases
when a property developer and a buyer have entered
into an agreement prior to completion of the real estate.
This Interpretation also provides guidance for determin-
ing whether an agreement falls under the scope of IAS
11 or under the scope of IAS 18. IFRIC 15 will not have
any effects on the consolidated financial statements
because the Group does not engage in such business
activities.

IFRIC 16 “Hedges of a Net Investment in a Foreign Op-
eration”: IFRIC 16 was published in July 2008 and has
not yet been incorporated into European law. The Inter-
pretation must be applied for the first time in fiscal years
that begin on or after October 1, 2008. IFRIC 16 clarifies
what risks can qualify as a hedged risk in the hedge of a
net investment in a foreign operation and where, within
the group, the hedging instrument can be held to qualify
for hedge accounting. This Interpretation is not expected
to have any significant effects on the net assets, financial
position, and operating results of the Group.

132 Annual Report 2008 Axel Springer AG

IFRIC 17 “Distributions of Non-cash Assets to Owners”:
This Interpretation was published in November 2008 and
has not yet been incorporated into European law. IFRIC
17 must be applied for the first time in fiscal years that
begin on or after July 1, 2009. This Interpretation gov-
erns the measurement of non-cash assets distributed to
owners as a dividend. IFRIC 17 is not expected to have
any significant effects on the net assets, financial position,
and operating results of the Group.

IFRIC 18 “Transfers of Assets from Customers”: IFRIC 18
was published in January 2009 and has not yet been
incorporated into European law. This Interpretation must
be applied for the first time to transfers of assets from
customers that occur on or after July 1, 2009. The Inter-
pretation provides additional guidance on the accounting
treatment of transfers of assets from customers and is
especially relevant to the energy sector. It clarifies the
IFRS requirements for agreements under which an en-
terprise receives an item of property, plant, or equipment
from a customer that the enterprise must then use to
either connect the customer to a network or to provide
the customer with ongoing access to a supply of goods
or services. It also addresses those cases in which an
enterprise receives cash that must be used only to ac-
quire or construct such an item of property, plant, and
equipment. This Interpretation is not expected to have
any significant effects on the net assets, financial position,
and operating results of the Group.

Notes to the Financial Statements 133

Notes to the consolidated balance sheet

(4)

Intangible assets

The changes to the individual items of intangible assets
are presented in the following table:

€ thousands

Acquisition or production cost
Balance at January 1, 2007
Initial consolidation
Deconsolidation
Currency effects
Additions
Disposals
Transfers
Balance at December 31, 2007
Initial consolidation
Currency effects
Additions
Disposals
Transfers
Balance at December 31, 2008

Depreciation, amortization, and impairments
Balance at January 1, 2007
Initial consolidation
Deconsolidation
Currency effects
Additions
Disposals
Transfers
Balance at December 31, 2007
Initial consolidation
Currency effects
Additions
Disposals
Write-ups
Balance at December 31, 2008

Carrying amounts
As of December 31, 2008
As of December 31, 2007

Purchased
rights and
licenses

Internally
generated
rights

Goodwill

Total

158,330
245,113
– 817
– 1,039
33,284
– 5,236
7,281
436,916
6,315
8,802
31,243
– 14,098
514
469,692

93,788
1,995
– 778
48
19,404
– 2,657
– 19
111,781
403
698
55,746
– 1,776
– 285
166,567

23,921
8,434
0
– 13
942
– 216
– 7,915
25,153
667
31
1,041
0
0
26,892

6,493
0
0
– 8
3,159
– 216
– 27
9,401
0
– 6
4,081
0
0
13,476

156,748
257,753
– 2,357
– 48
0
0
0
412,096
4,324
5,867
7,416
0
42,103
471,806

48,276
0
0
0
0
0
0
48,276
0
0
2,107
0
0
50,383

338,999
511,300
– 3,174
– 1,100
34,226
– 5,452
– 634
874,165
11,306
14,700
39,700
– 14,098
42,617
968,390

148,557
1,995
– 778
40
22,563
– 2,873
– 46
169,458
403
692
61,934
– 1,776
– 285
230,426

303,125
325,135

13,416
15,752

421,423
363,820

737,964
704,707

The internally generated intangible assets consisted of
software solutions and websites, in particular.

Furthermore, impairment losses of € 2,107 thousand
(PY: € 0 thousand) were recognized in goodwill of con-
tinuing operations in fiscal year 2008.

As a result of the annual impairment tests of the intangi-
ble assets recognized in connection with purchase price
allocations (mainly title rights), impairment losses of
€ 28,731 thousand (PY: € 414 thousand) were recog-
nized in fiscal year 2008.

134 Annual Report 2008 Axel Springer AG

The intangible assets with indefinite useful lives and
goodwill that have been assigned to the individual report-
ing units were distributed among the operating segments
as follows:

€ thousands

Segment Newspapers National

2008

1,500

2007

1,500

Segment Magazines National

6,552

31,540

Segment Print International

Segment Digital Media

51,109

52,215

95,317

89,011

Intangible assets with indefinite useful
lives

154,478

174,266

Segment Newspapers National

1,636

1,172

Segment Magazines National

15,768

17,719

Segment Print International

84,195

76,449

Segment Digital Media

318,010

266,866

Segment Services/Holding

1,814

1,614

Goodwill

421,423

363,820

Notes to the Financial Statements 135

(5) Property, plant, and equipment

The changes in property, plant, and equipment are pre-
sented in the table below.

€ thousands

Carrying amounts
As of December 31, 2008
As of December 31, 2007

Land and buildings,
including buildings
on non-owned land

Technical
equipment
and
machinery

Other
equipment,
operational
and office
equipment

Construction
in progress

550,062
1,647
0
– 88
2,468
– 5,473
29,123
577,739
0
268
1,933
– 2,520
– 2,715
574,705

139,268
0
0
– 15
11,461
– 2,042
1,676
150,348
0
53
11,604
– 328
– 193
0
161,484

533,635
14
0
6
3,497
– 2,291
819
535,680
79
24
3,179
– 3,179
2,879
538,662

240,246
0
0
– 31
24,406
– 1,989
– 3
262,629
79
– 15
23,582
– 3,133
132
0
283,274

152,910
6,383
– 645
604
15,146
– 9,435
228
165,191
1,032
– 1,231
15,071
– 8,959
1,707
172,811

104,292
3,520
– 542
87
15,217
– 8,447
49
114,176
710
– 223
14,312
– 7,664
74
– 133
121,252

2,124
0
0
1
4,431
– 186
– 416
5,954
0
– 15
1,751
– 1,442
– 4,166
2,082

622
0
0
0
0
0
0
622
0
0
0
– 622
0
0
0

Total

1,238,731
8,044
– 645
523
25,542
– 17,385
29,754
1,284,564
1,111
– 954
21,934
– 16,100
– 2,295
1,288,260

484,428
3,520
– 542
41
51,084
– 12,478
1,722
527,775
789
– 185
49,498
– 11,747
13
– 133
566,010

413,221
427,391

255,388
273,051

51,558
51,015

2,082
5,332

722,249
756,789

136 Annual Report 2008 Axel Springer AG

The assets leased under finance leases in the category
of “technical equipment and machinery” were completely
depreciated in fiscal year 2008. In the prior year, the
residual carrying amounts of IT servers amounted to
€ 116 thousand.

At December 31, 2008, fully depreciated items of prop-
erty, plant, and equipment with acquisition or production
costs of € 145,981 thousand (PY: € 135,289 thousand)
were in use.

(6)

Investment property

The changes in investment property are presented in the
following table:

The fair value of the investment property at December 31,
2008 amounted to € 29,663 thousand (PY: € 27,369
thousand). The rededication of space resulted in a write-
up of € 142 thousand (PY: € 15,834 thousand). The fair
value was determined by application of the discounted
cash flow method, with reference to the estimated cash
flows from the rental of the property. In calculating this
value, a discount rate of 8.0 % and a perpetuity capitali-
zation rate of 7.0 % were applied.

Rental revenues of € 2,807 thousand (PY: € 2,716 thou-
sand) were generated, and rental expenses of € 930
thousand (PY: € 1,165 thousand) were incurred in fiscal
year 2008. Directly allocable expenses of € 96 thousand
(PY: € 326 thousand) were incurred for the space that
had not yet been rented.

€ thousands

Acquisition or production cost
Balance at January 1, 2007
Additions
Transfers
Balance at December 31, 2007
Additions
Transfers
Balance at December 31, 2008

Depreciation, amortization, and impairments
Balance at January 1, 2007
Additions
Transfers
Write-ups
Balance at December 31, 2007
Additions
Transfers
Write-ups
Balance at December 31, 2008

Carrying amounts
As of December 31, 2008
As of December 31, 2007

Investment
property

(7) Non-current financial assets

78,339
99
– 29,120
49,318
560
2,440
52,318

38,867
592
– 1,676
– 15,834
21,949
656
193
– 142
22,655

29,663
27,369

The investments accounted for using the equity method
showed the following development:

€ thousands

2008

2007

Carrying amount at January 1

639,371

269,332

Attributable net income

Dividends

Changes recognized in other
comprehensive income

Impairment losses PRINOVIS Ltd. & Co.
KG, Hamburg

Acquisitions

4,432

18,120

– 32,166

– 21,505

– 836

– 4,482

– 60,000

34,845

386,705

Reclassified as held-for-sale assets

– 456,049

Other changes

396

– 8,799

Carrying amount at December 31

129,993

639,371

Some of the space in the new building in Berlin that was
completed in 2004 is not being used by Group compa-
nies, but serves the purpose of generating rental income
over the long term. The rededication of building space
increased the percentage of space intended for rental to
third parties in 2008. The occupancy rate at December 31,
2008 was about 91 %.

The acquisitions in 2008 related to the purchase of a
33.3 % equity interest in StepStone ASA, Oslo/Norway.

The financial data for the investments accounted for
using the equity method in 2008 is summarized in the
table below:

Notes to the Financial Statements 137

(9) Trade receivables

The trade receivables broke down as follows:

€ thousands

12/31/2008 12/31/2007

Trade receivables, nominal

274,147

278,193

Allowances for doubtful trade receivables

– 9,272

– 8,972

Trade receivables

264,875

269,221

The changes in the allowances for doubtful trade
receivables are presented in the table below:

€ thousands

Balance at January 1

Addition due to initial consolidation

Consumption

Reversals

Disposal due to deconsolidation

Additions

Other changes

2008

8,972

104

2007

9,506

1,283

– 5,889

– 6,648

– 784

6,805

– 558

– 218

4,961

646

Balance at December 31

9,272

8,972

At December 31, 2008, receivables in the amount of
€ 166,481 thousand (PY: € 167,166 thousand) were
neither past due nor subject of valuation allowances.
With regard to these receivables, there were no indica-
tions at the balance sheet date that would suggest that
the customers would not fulfill their payment obligations.

The past-due trade receivables at the balance sheet date
for which no valuation allowances have been charged
are presented in the table below, aggregated by the
number of days past due:

€ thousands

Net income

Revenues

Assets

Liabilities

12/31/2008 12/31/2007

– 14,029

– 3,516

858,372

837,717

956,967

899,219

668,178

687,388

The financial data for the associated companies classi-
fied as held for sale (cf. notes (2b) and (13)) is summa-
rized in the table below:

€ thousands

Net income

Revenues

Assets

Liabilities

12/31/2008 12/31/2007

– 15,433

59,273

633,474

583,015

1,115,870

1,070,607

732,569

617,955

Based on the publicly listed market prices, the fair values
at December 31, 2008 of the Group’s investments in the
associated companies StepStone ASA, Oslo/Norway
and ZertifikateJournal AG, Veitshöchheim, amounted to
€ 19,284 thousand and € 1,748 thousand (PY: € 6,270
thousands), respectively.

(8)

Inventories

The inventories broke down as follows:

€ thousands

12/31/2008 12/31/2007

Raw materials and supplies

38,995

32,556

Semi-finished goods

Finished goods and merchandise

Inventories

2,471

2,759

2,994

2,440

44,225

37,990

Inventories of € 10,460 thousand (PY: € 9,128 thousand)
were measured at their net realizable value. At December
31, 2008, the valuation allowance for these inventories
amounted to € 1,943 thousand (PY: € 2,450 thousand),
of which € 1,686 thousand (PY: € 1,224 thousand) was
recognized in income in 2008.

138 Annual Report 2008 Axel Springer AG

€ thousands

up to 30 days

31 to 90 days

91 to 180 days

181 to 360 days

361 days and longer

12/31/2008 12/31/2007

€ thousands

43,188

50,691

Balance at January 1 1)

35,054

18,828

Addition due to initial consolidation

3,420

11,675

1,806

5,802

6,785

5,528

Reversals

Additions

Other changes

2008

2007

18,529

17,352

– 250

1,001

– 21

402

– 58

833

Balance at December 31

19,259

18,529

1) Prior-year figures adjusted.

At December 31, 2008, receivables in the amount of
€ 49,895 thousand (PY: € 59,479 thousand) were nei-
ther past due nor subject of valuation allowances. With
regard to these receivables, there were no indications at
the balance sheet date that would suggest that the re-
lated parties would not fulfill their payment obligations.
For more information on this subject, please refer to
note (41).

(11) Receivables from income taxes

The decrease in the receivables from income taxes re-
sulted mainly from tax refunds for the prior year and from
the payment of the first installment of the corporate
income tax credit. At December 31, 2008, the corporate
income tax credit was € 51,768 thousand (PY: € 53,548
thousand), including a non-current portion of € 44,457
thousand (PY: € 46,511 thousand).

These amounts resulted mainly from barter transactions.
In the Digital Media segment, some trade receivables
must be classified as being due as soon as they are
constituted.

(10) Receivables due from related parties

The receivables due from related parties broke down as
follows:

€ thousands

12/31/2008 12/31/2007

Receivables due from associated
companies

35,520

50,524

Receivables due from other related parties

20,062

12,893

Receivables due from related parties

55,582

63,417

The receivables due from associated companies included
a reimbursement right for pension obligations in the
amount of € 29,754 thousand (PY: € 30,684 thousand)
(cf. note (15)).

The changes in the valuation allowances for receivables
due from related parties are presented in the following
table:

Notes to the Financial Statements 139

An additional down payment of € 6,175 thousand (PY:
€ 13,000 thousand) is expected in 2009 on a receivable
due from KirchMedia GmbH & Co KGaA i.L., which has
been written down to a reminder value. The receivables
that have been accepted in the table of claims by the
insolvency administrator originally totaled € 325,000
thousand.

The securities with a term of more than three months
that had been held in 2007 were completely sold in fiscal
year 2008.

The miscellaneous financial assets include loans and
receivables due from other investee companies and
security deposits, among other items.

(12) Other assets

The other assets broke down as follows:

€ thousands

Advance payments

12/31/2008 12/31/2007

15,649

12,422

Credit balances in accounts payable

Receivables from Kirch insolvency

Receivables from other taxes

H&F Call Option

Receivables due from employees

Securities with a term of more than three
months

Other

Other assets

7,382

6,175

5,833

1,840

1,483

4,249

13,000

8,758

29,646

1,949

20,242

26,690

23,081

65,051

113,347

(13) Assets held for sale and liabilities related to

held-for-sale assets

The sale of a 5.1 % interest in the equity in Dogan TV Hold-
ing A.S. (“Dogan TV”) was initiated in the fourth quarter of
2008 and contractually finalized on November 27, 2008.
The validity of the sale is dependent on various condi-
tions precedent. The 25 % equity stake in Dogan TV was
classified as held-for-sale (€ 352,016 thousand). The
expenses recognized in accumulated other comprehen-
sive income in connection with this sale amounted to
€ 16,710 thousand. Once the transaction is completed,
the remaining investment in Dogan TV will be presented
within the other non-current financial assets. The invest-
ment is assigned to the Digital Media segment. The
assessment of the recoverability considers the existing
agreement regarding the value retention mechanism.

By agreement of April 8, 2004, the shareholders H&F
Rose Partners, L.P. and H&F International Rose Partners,
L.P. (collectively referred to as “H&F” in the following)
granted to Axel Springer AG call options for the purchase
of Axel Springer AG shares. Thus, Axel Springer AG is
entitled to purchase one share from H&F for each share
issued to a member of the Management Board under the
Management Participation Program. In the event that
H&F would no longer have a sufficient number of Axel
Springer AG shares to settle the call options because it
would have sold the shares, Axel Springer AG will be
entitled to a cash settlement in the amount of the differ-
ence between the sale price attained by H&F on the sale
of its shares and the exercise price of the call option. The
call options are recognized as financial assets and meas-
ured at fair value on the respective balance sheet date by
application of an option pricing model. At the time when
H&F granted the options to Axel Springer AG, the fair
value of the options was € 19,800 thousand. Because
the granting of options by H&F is categorized as a share-
holder transaction, the additional paid-in capital was
increased by the amount of the fair value. Changes in fair
value of the options are recognized in the financial result.
The decrease in fiscal year 2008 resulted mainly from the
lower underlying stock exchange price.

140 Annual Report 2008 Axel Springer AG

Also in the fourth quarter of 2008, the sale of various
investments in regional newspapers was initiated. By
selling these minority investments, the Axel Springer
Group intends to focus more closely on its own newspa-
pers, the multimedia expansion of its core brands, and
the acquisition of online growth businesses. The sale of
a significant portion of these investments was contractu-
ally agreed on February 4, 2009. The validity of this sale
is subject to the permission of the anti-trust authority.
Due to the initiated selling activities, the investments
were classified as held-for-sale (€ 122,527 thousand).
These investments are presented in the segment News-
papers National.

The assets and related liabilities classified as held for sale
in the prior year in connection with a planned spin-off of
some of the activities of the zanox Group were reclassi-
fied to the corresponding balance sheet items in fiscal
year 2008. In view of unresolved questions regarding the
feasibility of the planned target structure, at the balance
sheet date Axel Springer Group no longer believes that
the target structure can be achieved with a high degree
of probability. This decision did not have any effect on
the operating results in fiscal year 2008, or in the prior
year. The assets and related liabilities are presented in
the Digital Media segment.

The assets and related liabilities classified as held for sale
in the prior year in connection with the PIN Group and
SAT.1 Beteiligungs GmbH were disposed of in 2008.

The carrying amounts of the assets and related liabilities
held for sale at December 31, 2007 are presented in the
table below:

€ thousands

Intangible assets

Property, plant, and equipment

Non-current financial assets

Trade receivables

Cash and cash equivalents

Other assets

Assets held for sale

Provisions

Financial liabilities

Trade payables

Other liabilities

Deferred tax liabilities

Liabilities related to assets held for sale

Net balance of assets and liabilities

(14) Equity

12/31/2007

174,724

29,229

531,652

40,656

27,476

26,959

830,696

6,080

94,390

31,664

104,713

21,700

258,547

572,149

The changes in consolidated equity are summarized in
the Statement of Changes in Equity.

(a) Subscribed capital
The subscribed capital of € 98,940,000 is fully paid in.
Based on the percentage of subscribed capital that each
share represents, the shares are valued at € 3.00 per
share. The subscribed capital is divided into 32,980,000
registered shares, which can be transferred only with the
consent of the company.

(b) Additional paid-in capital
The additional paid-in capital resulted primarily from a
shareholder contribution in the form of financial instru-
ments granted in 2004 (H&F call option, see note (12)).
The additional paid-in capital also includes the imputed
compensation component of the Management Participa-
tion Program of Axel Springer AG and the stock option
programs of auFeminin.com S.A., which was recognized
as personnel expenses (see note (14f)).

Notes to the Financial Statements 141

(c) Accumulated retained earnings
Besides the net income for the current period, the ac-
cumulated retained earnings also include the income of
past periods of the companies included in the consoli-
dated financial statements, to the extent that they
have not been distributed to shareholders. In 2008
Axel Springer AG has distributed an amount of
€ 122,400 thousands as dividend payments (€ 4.00
per qualifying share) for the fiscal year 2007.

As of 2008, equity changes resulting from owner trans-
actions are no longer recognized in accumulated other
comprehensive income, but in accumulated retained
earnings (cf. note (3a)). The acquisition of minority inter-
ests in 2008 gave rise to equity reductions of € 30,997
thousand, mainly in connection with BILD digital
GmbH & Co. KG and auFeminin.com S.A. (cf. note (2c)).

(d) Treasury shares
In 2008, Axel Springer AG extended an offer to its share-
holders, offering to buy back up to 918,000 shares
against payment of € 80.00 per share. The acceptance
period began on June 25, 2008 and ended on
July 25, 2008. A total of 917,341 shares were bought.
After the buy-back, Axel Springer AG held 3,297,341
treasury shares, corresponding to almost 10.0 % of its
capital stock. The buy-back offer was based on the
resolution of the annual shareholders’ meeting of
April 24, 2008, which authorized the company to
purchase treasury shares representing up to 10.0 %
of the company’s capital stock in the time until Octo-
ber 23, 2009.

(e) Accumulated other comprehensive income
The accumulated other comprehensive income breaks
down as follows:

€ thousands

12/31/2008 12/31/2007

Adjustment for translation of financial
statements in foreign currencies

11,379

1,144

Changes in fair value of available-for-sale
securities

434,170

Changes in fair value of derivatives in cash
flow hedges

– 10,986

195

Other changes not recognized in income in
investments accounted for using the equity
method

Other changes

– 16,996

– 4,678

– 79

– 1,744

Accumulated other comprehensive
income

– 16,678

427,943

The change in the fair values of securities categorized as
available for sale related almost exclusively to the shares
held in ProSiebenSat.1 Media AG.

(f) Share-based payment
On April 14, 2004, the shareholders at the annual meet-
ing of Axel Springer AG approved a Management Par-
ticipation Program, under which the members of the
Management Board of Axel Springer AG are entitled to
purchase shares of Axel Springer AG. Under the terms of
this plan, 62,300 shares were offered for purchase on or
after July 1, 2004. The Management Board purchased
the shares in August 2004 for a purchase price of
€ 54.00 per share (plus 2 % interest from July 1, 2004).
Under the terms of the plan, the members of the Man-
agement Board were obligated to hold the shares for at
least five years. This restriction ended when the financial
investor H&F sold the majority of the shares it held in
Axel Springer AG by way of a secondary placement in
December 2006 (“H&F majority sale”). Accordingly, the
Management Board would have been able to sell 50 %
of the shares since the first anniversary of the H&F ma-
jority sale (December 18, 2007) and the remaining 50 %
since the second anniversary of the H&F majority sale
(December 18, 2008). At the balance sheet date, how-
ever, no shares had been sold. The granting of the
shares generated expenses of € 1,602 thousand, which
was recognized in 2004.

In addition, the members of the Management Board
were granted, for each of the 62,300 shares purchased,

142 Annual Report 2008 Axel Springer AG

eight additional options to purchase shares of Axel
Springer AG. These options entitle their holders to pur-
chase up to 498,400 shares at a price of € 54.00 per
share, plus 2 % interest from July 1, 2004. The number
of exercisable options was dependent on the achieve-
ment of certain EBITA targets in fiscal years 2005 and
2006. These targets were exceeded. The vesting period
for the first 50 % of the options ended on December 18,
2007, and for the second 50 % of the options on Decem-
ber 18, 2008. All options were outstanding at Decem-
ber 31, 2008.

The fair values of the options granted were determined
by application of the Black-Scholes model at the time
when they were granted. The following parameters were
applied for this purpose:

Share price in €

Exercise price in €

Interest rate for risk-free
investments, in %

Expected life, in years

Expected volatility, in %

Expected dividend yield, in %

Fair value at grant date, in €

Shares
purchased

Options

82.00

54.13

2.07

0.33

27.50

1.67

26.18

82.00

60.97

3.70

6.00

27.50

1.67

32.14

The total compensation component of the Management
Participation Program is € 16,018 thousand. The com-
pensation component recognized as an expense was
€ 406 thousand (PY: € 969 thousand). The additional
paid-in capital was increased by the same amount.

In fiscal year 2008, the auFeminin.com S.A., Paris/France,
granted its senior executives subscription rights for free
shares and stock options. These share-based payments
must be settled with shares of auFeminin.com S.A.

The 53,000 free shares that were granted in April 2008,
as well as the 37,000 free shares that had already been
granted at the date of acquisition of auFeminin.com S.A.
in July 2007, will be transferred to the plan participants
after a period of two years after the grant date provided

that certain operating targets (particularly EBIT and reve-
nue targets), and in some cases also market goals (quo-
tas audience group), have been achieved, provided that
the participants are still employed with the company and
provided that the free shares have not expired. The
holding period after the transfer of shares is an additional
two years.

The 99,000 stock options, each one entitling the holder
to purchase one share of auFeminin.com S.A., that were
granted by the April 2008 stock option plan, as well as
the 74,000 stock options that had already been granted
at the date of acquisition of auFeminin.com S.A. in July
2007, will become vested in equal annual installments
over a period of four years. The option grant is not condi-
tioned on any further earnings or market conditions.
These options can be exercised for the first time at the
end of the fourth year after the options were granted and
for a total of four years thereafter. The stock options
entitle the holders to purchase up to 99,000 shares at a
price of € 20.46 per share.

The fair values of the rights to purchase free shares that
were granted in 2008 were determined on the basis of
the officially quoted stock exchange price of auFem-
inin.com S.A. shares at the grant date, in the amount of
€ 13.50 (PY: € 24.79, € 30.60, and € 31.82, respec-
tively). The fair values of the stock options granted in
fiscal year 2008 were determined by application of the
Black-Scholes model at the grant date. For this purpose,
the following parameters were applied:

Share price in €

Exercise price in €

Interest rate for risk-free investments, in %

Expected life, in years

Expected volatility, in %

Expected dividend yield, in %

Fair value at grant date in €

Options April
2008

13.50

20.46

3.74

4.00

25.00

0.00

1.43

At the time when auFeminin.com S.A. was acquired in
July 2007, a total of 74,000 options with a weighted

Notes to the Financial Statements 143

average purchase price of € 18.95 were outstanding. In
2008, no options expired, but 40,000 rights to purchase
free shares expired, so that a total of 173,000 stock
options with a weighted average purchase price of
€ 19.82 and 50,000 rights to obtain free shares were
outstanding at the balance sheet date. None of these
options was yet exercisable at the balance sheet date.

The compensation expenses for the share-based pay-
ment programs of auFeminin.com S.A. amounted to
€ 617 thousand in fiscal year 2008 (PY: € 393 thousand).
The additional paid-in capital was increased by the same
amount.

(g) Minority interests
The minority interests related mainly to the following
companies:

€ thousands

zanox Group

auFeminin Group

wallstreet:online AG, Berlin

Special-purpose entities

PIN Group

BILD digital GmbH & Co. KG, Berlin

Other companies

Minority interests

12/31/2008 12/31/2007

17,472

15,130

11,102

19,124

5,686

3,399

10,966

1,242

16,884

13,543

4,907

4,206

42,566

81,095

(15) Pension obligations

Provisions for pensions have been established to ac-
count for the obligations arising from vested pension
rights and current benefits for former and active employ-
ees of the Axel Springer Group and their survivors. The
different pension plans within the Group are organized in
accordance with the legal, tax-related, and economic
conditions of each country. The Axel Springer Group has
both defined benefit plans and defined contribution plans.

A defined contribution plan is a pension plan under
which the Group makes fixed payments to third parties.
Under such plans, the Group bears no legal or construc-
tive obligation to pay additional contributions if the third

party would not have sufficient assets to satisfy the pen-
sion claims of the employees in question. Under its de-
fined contribution pension plans, the Group makes con-
tributions to public-sector pension insurance carriers by
virtue of the applicable laws. The current contribution
payments are presented as social security costs within
personnel expenses (see note (25), € 39,208 thousand
in 2008 (PY: € 38,733 thousand)).

By contrast, a defined benefit plan typically defines a
certain amount of pension benefits that the employee will
receive from the company. The provision for defined
benefit plans recognized in the balance sheet corre-
sponds to the present value of these obligations at the
balance sheet date, corrected for actuarial gains or
losses (corridor method), and reduced by the fair value of
the plan assets.

Expenses of € 22,077 thousand were incurred for de-
fined benefit pension plans in 2008 (PY: € 21,596 thou-
sand). These expenses broke down as follows:

€ thousands

Current service cost

Interest expense

Employee contribution

2008

7,461

2007

8,453

20,123

17,995

– 1,381

– 1,116

Expected income from plan assets

– 2,508

– 2,154

Effects of adjustment as per IAS 19.58

– 98

Reimbursement of interest expenses

– 1,618

– 1,484

Pension expenses

22,077

21,596

Actual income from plan assets

1,574

1,753

The service cost, the employee contributions, and the
realized actuarial gains and losses are presented within
the personnel expenses. The interest portion contained
in the pension expenses, the expected income from the
plan assets and the effects of the adjustment according
to IAS 19.58 are presented as components of interest
expenses. The service cost for 2008 includes realized
actuarial losses of € 7 thousand (PY: € 8 thousand).

144 Annual Report 2008 Axel Springer AG

The amount of the provision recognized in the balance
sheet was calculated as follows:

The fair value of the plan assets, which exist only in one
non-EU country, showed the following changes:

€ thousands

12/31/2008 12/31/2007

€ thousands

Present value of defined benefit
obligations financed by fund

83,586

71,404

Fair value of plan assets

– 76,184

– 66,106

Assets from over-coverage

473

896

Plan assets at January 1

Change in consolidation group

62,630

Expected income from plan assets

Employee contribution

Present value of defined benefit
obligations financed by provision

336,122

336,245

Employer contribution

Unrealized actuarial gains and losses

10,914

5,370

Benefits paid

2008

2007

66,106

2,508

1,381

1,230

– 1,565

– 935

7,458

2,154

1,116

967

– 357

– 404

Actuarial losses/gains

Exchange rate changes

Plan assets at December 31

76,184

66,106

The plan assets consist primarily of claims under pension
liability insurance policies and the assets of an employee
pension plan. The expected income from these assets
was calculated on the basis of the prevailing expecta-
tions at this time for the market developments in the
period in which the obligations will be settled.

Provision

Reimbursement right

Net obligation

354,911

347,809

– 29,754

– 30,684

325,157

317,125

With regard to the pension obligations funded by pen-
sion plans, the excess of plan assets in one of the pen-
sion plans gave rise to an asset that was presented
within the other assets.

In connection with the contribution of the rotogravure
printing operations to PRINOVIS Ltd. & Co. KG, Hamburg,
it was also agreed in 2005 to transfer the pension obliga-
tions attributable to this division. The Commercial Regis-
ter entry, upon which the legal validity of this transfer
depends, had not yet been effected at the balance sheet
date for the current pension obligations and the vested
pension claims of former employees. By virtue of con-
tractual agreements, Axel Springer AG is entitled to
reimbursement of the pension obligations or pension
expenses arising in this respect. The reimbursement right
is presented as a separate asset (see note (10)), whereas
in the income statement, the income from the reim-
bursement is netted with the corresponding pension
expenses. In 2008, this provision amounted to € 29,754
thousand (PY: € 30,684 thousand).

Notes to the Financial Statements 145

Of the indicated pension payments, an amount of
€ 2,548 thousand (PY: € 2,564 thousand) related to the
pension obligations that have not yet been transferred to
PRINOVIS Ltd. & Co. KG, Hamburg, which are the sub-
ject of the reimbursement right.

In fiscal year 2009, contributions to fund-financed defined
benefit plans are expected to total € 1,730 thousand.

The changes in the present value of the pension obliga-
tions financed by fund and by provision are presented in
the table below:

€ thousands

Obligation at January 1

2008

2007

407,649

362,502

Change in consolidation group

67,242

Current service cost

Interest expense

Actuarial losses

Payments by employees

Transfer of pension obligation

Exchange rate changes

7,461

8,453

20,123

17,995

– 6,512

– 33,146

3,146

3,183

8,143

– 113

Payments to retirees

– 20,301

– 18,563

Obligation at December 31

419,708

407,649

The amounts of the current and the prior four reporting periods are summarized in the table below:

€ thousands

12/31/2008 12/31/2007 12/31/2006 12/31/2005 12/31/2004

Present value of defined benefit obligations financed by fund

Fair value of plan assets

83,586

71,404

76,184

66,106

Present value of defined benefit obligations financed by provision

336,122

336,245

362,502

370,151

331,216

Experience-based adjustments to plan liabilities

Experience-based adjustments to plan assets

2,820

1,848

2,926

146 Annual Report 2008 Axel Springer AG

(16) Other provisions

The other provisions broke down as follows:

€ thousands

Balance at
01/01/2008

Utilization

Reversal

Addition

Other
changes

Balance at
12/31/2008

Partial early retirement program (Altersteilzeit)

Other obligations towards employees

Returns

Litigation expenses

Structural measures

Discounts and rebates

Other taxes

Dismantling obligations

Other

Other provisions

41,125

37,317

31,441

26,855

26,229

7,565

6,949

4,647

12,951

35,432

28,579

8,353

16,680

6,752

5,661

31,225

15,792

2,087

1,334

2,862

12,386

6,608

706

1,153

1,224

5,409

10,380

35,681

28,995

6,163

12,624

6,328

2,261

453

14,081

– 59

454

2,163

– 115

132

161

180

461

36,407

36,686

31,157

12,164

15,696

6,596

2,396

4,036

24,566

213,353

130,220

33,769

116,966

3,374

169,704

(17) Financial liabilities

The financial liabilities broke down as follows:

€ thousands

12/31/2008 12/31/2007

Liabilities due to banks

524,028

940,944

Liabilities under finance leases

193

Financial liabilities

524,028

941,137

The liabilities due to banks at December 31, 2008 were
characterized by utilization, interest rates, and maturities
set forth in the table below. All liabilities are denominated
in euros. Short-term loans are not presented in the table.

The other obligations towards employees primarily in-
cluded variable compensation tied to performance and
loyalty bonuses. The provisions for litigation expenses at
December 31, 2008 were mainly composed of provi-
sions related to the sale of the Books segment in 2003,
and for legal disputes based in corporate law, cartel law,
and journalism law. In the estimation of the company,
the outcome of these disputes will not generate any
significant expenses beyond the provisions at December
31, 2008. The miscellaneous other provisions account
for anticipated losses on rental agreements, interest from
tax audits, contributions, and custody/archiving obliga-
tions, among others.

The other changes resulted primarily from currency
translation differences and compound interest in the
amount of € 1,440 thousand (PY: € 110 thousand).

Non-current provisions are contained primarily in the
provisions for partial early retirement programs
(Altersteilzeit), in the amount of € 22,738 thousand
(PY: € 27,790 thousand), dismantling obligations in
the amount of € 2,785 thousand (PY: € 3,112 thou-
sand), and structural measures in the amount of
€ 1,215 thousand (PY: € 1,215 thousand).

Notes to the Financial Statements 147

2008 €
thousands

2007 €
thousands

Interest rate in %

Maturity

The other liabilities broke down as follows:

430,000

840,000

3-month EURIBOR + 0.15 08/14/2013

(20) Other liabilities

37,320

39,524

18,376

19,649

15,242

15,875

11,649

12,179

5.64 10/31/2012

4.63 07/31/2011

€ thousands

12/31/2008 12/31/2007

5.65 06/30/2012

Prepaid subscriptions

5.09 11/30/2013

Acquisition-related liabilities

6,711

1,500

7,190

3-month EURIBOR + 0.30 10/15/2022

Advance payments

4,500

3.99 03/31/2009

Liabilities from other taxes

64,871

64,259

54,373

122,008

30,313

21,413

27,649

26,797

The interest rates were mainly equivalent to the effective
rates of interest. In the case of fixed-interest loans, the
interest rates are fixed until the maturity date.

Furthermore, at the balance sheet date additional un-
used short-term and long-term credit facilities amounted
to € 1,095 million (PY: € 685 million).

(18) Liabilities due to related parties

The liabilities due to related parties broke down as follows:

€ thousands

12/31/2008 12/31/2007

Liabilities due to associated companies

9,036

20,103

Liabilities due to other related parties

15,482

22,682

Liabilities due to related parties

24,518

42,785

Liabilities due to employees

26,171

26,899

Capital investment subsidies

Liabilities from derivatives

Debit balances in accounts receivable

Liabilities for duties and contributions

Liabilities due to social insurance carriers

Other

Other liabilities

18,932

15,236

10,718

4,373

2,789

8,968

1,578

9,792

5,030

3,112

25,676

26,218

281,101

316,074

Acquisition-related liabilities consisted of contingent
liabilities resulting from put options and earn-out agree-
ments (see note (2c)) in respect of business combina-
tions and acquisition of minority interests. The liabilities
due to employees related to outstanding wage and sal-
ary payments, management bonus and severance award
claims, as well as liabilities resulting from overtime and
unused vacation.

(19) Liabilities from income taxes

(21) Maturity analysis of financial liabilities

This item contained the taxes still to be paid for past
fiscal years and those resulting from tax audits. The
decrease resulted mainly from subsequent tax payments
for prior fiscal years.

We continually monitor the availability of financial re-
sources to fund the company’s operating activities and
finance investments by means of a Group-wide liquidity
planning system. In particular, the financial resources
raised by the Group’s credit facility have contributed to
the high degree of financial flexibility of the Axel Springer
Group.

148 Annual Report 2008 Axel Springer AG

The contractually agreed (undiscounted) payments re-
lated to non-derivative financial liabilities and derivative
financial instruments are presented in the following table:

€ thousands

Undiscounted cash outflows

Liabilities due to banks

Other non-derivative financial liabilities

Non-derivative financial liabilities

Derivative liabilities from the purchase of minority interests

Derivatives designated as a hedging instrument

Derivative financial liabilities

Derivatives designated as a hedging instrument

Derivatives not designated as a hedging instrument

Derivative financial assets

Carrying
amount at
12/31/2008

524,028

254,063

2009

2010 – 2013

2014 ff.

32,348

575,835

247,596

1,890

778,091

279,944

577,725

29,886

15,236

45,122

1,840

1,859

3,734

3,628

7,362

758

777

29,145

11,370

40,515

1,082

4,692

4,577

9,269

238

Notes to the Financial Statements 149

The income from other goods and incidental services
consisted mainly of income from cooperation agree-
ments and other transactions with media partners and
miscellaneous companies.

The miscellaneous operating income for both 2008 and
2007 contained write-ups of investment properties (see
note (6)).

(24) Purchased goods and services

The purchased goods and services broke down as follows:

Raw materials and supplies and purchased
merchandise

Purchased services

2008

2007

314,112

328,302

631,261

554,459

Purchased goods and services

945,374

882,761

The paper costs represented € 223,872 thousand
(PY: € 244,889 thousand) of the cost of purchased
raw materials and supplies.

The cost of purchased services was predominantly
composed of purchased third-party printing services
and professional fees, as well as publisher services.
The increase in these expenses resulted mainly from
the first-time full consolidation of the companies of the
zanox Group.

Notes to the consolidated income
statement

(22) Revenues

The revenues broke down as follows:

€ thousands

Circulation revenues

Advertising revenues

Printing revenues

Other revenues

Revenues

2008

2007

1,215,784

1,190,614

1,248,074

1,193,166

46,545

45,033

218,135

149,120

2,728,538

2,577,933

€ thousands

The revenues from barter transactions amounted to
€ 33,352 thousand in 2008 (PY: € 25,059 thousand).
These revenues were generated mainly from the barter-
ing of advertising services.

(23) Other operating income

The other operating income broke down as follows:

€ thousands

2008

2007

Income from other goods and incidental
services

49,521

48,215

Income from cost allocations to related
parties

Income from Kirch insolvency

Rental and leasing income

Foreign exchange gains

Income from reversal of capital investment
subsidies

Income from disposal of fixed assets

9,198

6,175

4,929

1,752

1,052

885

11,950

13,000

4,127

1,164

1,322

6,581

Miscellaneous operating income

12,009

18,865

Other operating income

85,521

105,224

For information about the income from the Kirch insol-
vency, please refer to note (12).

150 Annual Report 2008 Axel Springer AG

(25) Personnel expenses

The personnel expenses split up as follows:

The increase in the amortization of other intangible as-
sets resulted from the amortization charges deriving from
the purchase price allocations for business combinations.

For information on the impairment losses in goodwill in
the current year and the impairment losses in other in-
tangible assets, please refer to note (4).

The impairment losses in non-current financial assets are
included in the income from investments.

(27) Other operating expenses

The other operating expenses broke down as follows:

€ thousands

2008

2007

Mailing and postage expenses

170,845

160,594

Advertising expenses

152,864

163,093

Expenses for non-company personnel

91,853

87,148

Commissions and gratuities

83,630

79,487

Rental and leasing expenses

33,410

30,667

Services provided by related parties

29,663

36,433

Maintenance and repairs

Travel expenses

Other taxes

Adjustment of allowances for doubtful
receivables

Foreign exchange losses

26,886

28,069

20,127

18,098

8,722

6,131

5,362

4,465

5,569

1,812

Miscellaneous expenses

69,508

67,329

Other operating expenses

697,335

684,430

€ thousands

Wages and salaries

Social security

Expenses for share-based payments

Pension expenses

Other benefit expenses

2008

2007

626,035

610,308

82,430

79,513

1,023

8,412

4,557

969

8,453

2,634

Personnel expenses

722,457

701,877

The average number and breakdown of the Group’s
employees are presented in the table below:

Salaried employees

Editors

Wage-earning employees

2008

6,112

3,566

988

2007

5,771

3,529

1,048

Total employees

10,666

10,348

(26) Depreciation, amortization, and impairments

The depreciation, amortization, and impairments split up
as follows:

€ thousands

Impairment losses in goodwill

2008

2,107

2007

Amortization of other intangible assets

31,096

22,149

Impairment losses in other intangible
assets

Depreciation of property, plant, and
equipment

Impairment losses in property, plant, and
equipment

Depreciation of investment property

Depreciation, amortization, and
impairments

28,731

414

49,492

51,000

656

592

112,088

74,239

Notes to the Financial Statements 151

The following table presents the professional fees for the
services rendered to Axel Springer AG and consolidated
subsidiaries in the fiscal years 2008 and 2007 by the
auditor Ernst & Young AG:

(29) Financial result

The financial result broke down as follows:

€ thousands

2008

2007

Interest income from derivatives

€ thousands

Audits of the annual financial statements

Other certification or appraisal services

Tax advisory services

Other services

627

130

561

220

656

241

361

563

Total professional fees

1,538

1,821

The professional fees for the audit of financial statements
include the audit of the separate financial statements of
Axel Springer AG and other German subsidiaries, and
the audit of the consolidated financial statements. The
other certification and appraisal services include fees for
the auditor’s review of the quarterly financial statements,
the semi-annual financial statement, and the audits to
verify compliance with certain contractual agreements.
The tax advisory fees include support provided with
regard to specific tax questions.

(28) Income from investments

The income from investments was composed in particu-
lar of dividends collected by the Group. In addition, an
impairment loss of € 60,000 thousand was recognized in
the carrying amount of the investment in PRINOVIS Ltd.
& Co. KG, Hamburg.

The increase in the other investment income over the
current year resulted mainly from the gain of € 438,250
thousand on the sale of shares in ProSiebenSat.1 Media
AG, Unterföhring.

Interest income from bank accounts

Interest income from loans and securities

Other interest income

Interest income

2008

14,810

5,772

1,343

11,453

2007 1)

2,484

6,267

1,291

5,960

33,378

16,002

Interest expenses on liabilities due to
banks

– 29,278

– 23,836

Interest expenses on pension provisions
less reimbursements

– 18,034

– 16,511

Interest expenses from derivatives

– 10,815

– 4,533

Miscellaneous interest expenses

– 8,607

– 6,686

Interest and similar expenses

– 66,734

– 51,566

Other financial result

Financial result

1) Prior-year figures adjusted.

– 28,191

– 10,798

– 61,547

– 46,362

The other financial result contained expenses of
€ 27,806 thousand for the change in fair value of the
H&F options (PY: € 16,008 thousand).

The total interest income and expenses for those financial
assets and liabilities that were not measured at fair value
through profit or loss are presented in the table below:

€ thousands

Total interest income

2008

9,840

2007

10,382

Total interest expenses

– 32,427

– 29,804

152 Annual Report 2008 Axel Springer AG

(30) Income taxes

The income taxes paid or owed in every country and the
deferred taxes are recognized under income taxes. The
income taxes consist of the trade tax, corporate income
tax, and solidarity surcharge, and the corresponding
foreign income taxes. The income tax expenses are
broken down below with respect to the country of origin:

€ thousands

Current taxes – domestic

Current taxes – foreign

Current taxes

2008

2007

111,466

116,806

8,783

8,931

120,249

125,737

Deferred taxes – domestic

– 4,863

– 29,940

Deferred taxes – foreign

Deferred taxes

1,801

– 5,517

– 3,062

– 35,457

€ thousands

2008

2007

IFRS income before income taxes

688,254

– 227,225

Group tax rate

31.19 %

39.63 %

Expected tax income/expenses

214,666

– 90,049

Differing tax rates

Changes in tax rates

15,364

4,559

283

– 45,776

Corporate income tax credit, corporate
income tax increase/decrease

352

Permanent differences

33,586

182,187

Adjustments to carrying amounts and
liabilities of deferred taxes

– 3,838

29,287

Current income taxes for prior years

3,862

Deferred income taxes for prior years

169

– 3,299

Non-deductible income taxes

225

Non-deductible operating expenses

11,359

2,379

Tax-exempt income

– 160,191

– 14,631

Income taxes on continuing operations

117,187

90,280

Trade tax additions/deductions

1,264

– 1,618

Income taxes on discontinued operations

– 29,074

Income taxes

117,187

61,206

Other effects

Income taxes

643

– 2,434

117,187

61,206

In the table below, the expected income tax expenses that
would have arisen if the tax rate of the Group parent com-
pany Axel Springer AG, which is 31.19 % (PY: 39.63 %),
had been applied to the IFRS net income before taxes
and minority interests, are reconciled with the income tax
expenses appearing in the income statement:

The 2008 Corporate Income Tax Reform Act was
adopted by resolution of the Bundesrat on July 6, 2007.
Essentially, this law provides for a reduction of the tax
rates and (for counter-financing purposes) a broadening
of the tax base. Thus, the deductibility of interest ex-
penses is limited to 30 % of the EBITDA for tax purposes
and the trade tax expenses will no longer be considered
deductible expenses. In 2007, due to the excess of
liabilities over assets in the Axel Springer Group, the
application of the new, reduced tax rates for the purpose
of calculating the deferred taxes led to income of
€ 43,141 thousand.

Companies having the legal form of a corporation
resident in Germany are subject to corporate income tax
at the rate of 15 % (PY: 25 %) and the solidarity
surcharge of 5.5 % of the corporate income tax owed. In
addition, these companies are subject to trade tax, the
amount of which is determined in accordance with
assessment rates that vary from one municipality to the
next. Companies having the legal form of a partnership
are subject to trade tax exclusively. The net income is

assigned to the shareholder for purposes of corporate
income tax.

The effects of different tax rates for partnerships and for
foreign income taxes from the tax rate applicable to the
Group parent company Axel Springer AG are explained
in the reconciliation in the item differing tax rates. The
permanent differences resulted mainly from impairment
losses in goodwill, deconsolidation effects, and foreign
losses that are not taken into account for tax purposes.
The tax exemption effects resulted mainly from the sale
of shares in ProSiebenSat.1 Media AG.

The adjustments made to the carrying amounts of de-
ferred taxes included € 14,982 thousand (PY: € 29,944
thousand) for the non-recognition of deferred taxes on
tax loss carry-forwards.

Notes to the Financial Statements 153

Deferred tax assets and liabilities were recognized to
account for temporary differences and tax loss carry-
forwards, as follows:

€ thousands

12/31/2008

12/31/2007

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

Intangible assets

16,767

62,597

3,495

83,475

Non-current assets under
finance leases

Other property, plant,
and equipment

Non-current financial
assets

102 126,145

570

130,339

4,576

18,233

10,797

27,104

Inventories

915

Receivables and other
assets

1,504

8,089

3,114

8,215

Pension provisions

21,121

20,744

Other provisions

Liabilities

5,611

7,345

203

375

8,381

4,426

194

279

Temporary differences

57,941 215,642

52,442

249,640

Tax loss carry-forwards

8,046

9,360

Total

Netting

65,987 215,642

61,802

249,640

– 49,385 – 49,385 – 51,175 – 51,175

Amounts as per balance
sheet

16,602 166,257

10,627

198,465

In the prior year, an amount of € 5 thousand of the de-
ferred tax assets was related to assets held for sale and
€ 21,700 thousand of the deferred tax liabilities was
related to liabilities associated with held-for-sale assets.

154 Annual Report 2008 Axel Springer AG

The net balance of deferred tax items from January 1 to
December 31, 2008, was derived as follows:

€ thousands

2008

2007

Deferred tax assets at January 1

10,627

18,191

Deferred tax liabilities at January 1

– 198,465

– 172,565

Net tax position at January 1

– 187,838

– 154,374

Deferred tax expenses of current year

3,062

30,988

Changes in deferred taxes recognized in
other comprehensive income

2,905

9,548

Changes in consolidation group

32,216

– 74,000

Net tax position at December 31

– 149,655

– 187,838

Deferred tax assets at December 31

16,602

10,627

Deferred tax liabilities at December 31

– 166,257

– 198,465

Of the deferred tax assets, an amount of € 7,824 thou-
sand (PY: € 2,023 thousand) can be realized in the short
term; of the deferred tax liabilities, an amount of € 2,443
thousand (PY: € 17,375 thousand) can be realized in the
short term.

The amount of deferred tax assets that must be dis-
closed in accordance with IAS 12.82 was € 17,104
thousand (PY: € 8,554 thousand). It is expected that this
amount can be realized in subsequent years by applica-
tion against the available operating income and structural
measures.

Deferred taxes in the total amount of € 2,621 thousand
(PY: € – 4,622 thousand) were recognized directly in
equity, as they relate to matters that were likewise rec-
ognized directly in equity.

Under the current state of the law, the ability to carry
forward temporary differences in Germany and abroad is
not subject to any restrictions. Tax losses can be carried
forward indefinitely in Germany; in foreign countries, the
ability to carry forward the tax losses is restricted in
some cases. Deferred tax assets are recognized to ac-
count for temporary differences and tax loss carry-
forwards (from continuing operations) to the extent that
the likelihood of utilizing them in the near future is suffi-
ciently certain. In fiscal years 2008 and 2007, no de-

ferred tax assets were recognized with respect to corpo-
rate income tax for the tax loss carry-forwards (from
continuing operations) amounting to € 109,849 thou-
sand (PY: € 130,170 thousand), and no deferred tax
assets were recognized with respect to trade taxes for
the tax loss carry-forwards amounting to € 38,481 thou-
sand (PY: € 57,397 thousand) because it did not appear
probable that sufficient taxable income could be gener-
ated for these amounts in the near future. Of these tax
loss carry-forwards (from continuing operations), an
amount of € 41,833 thousand (PY: € 31,717 thousand)
can be carried forward for up to five years and an amount
of € 11,214 thousand (PY: € 11,408 thousand) can be
carried forward for six to ten years. The utilization of tax
loss carry-forwards that had not previously been recog-
nized as deferred tax assets caused a reduction in in-
come tax expenses of € 2,472 thousand (PY: € 2,334
thousand). Tax loss carry-forwards in the amount of
€ – 6,750 thousand (PY: € – 62 thousand) were corrected
as a result of tax audits or differing tax assessments.

As a rule, deferred taxes must be recognized to account
for the difference between the Group’s share of the
equity of the subsidiaries as it is presented in the con-
solidated balance sheet and the corresponding item
recognized in the financial statements for tax purposes
(outside-basis differences). Such differences can result
from the retention of income, for example. Deferred tax
liabilities were not recognized on differences of € 13,276
thousand (PY: € 14,325 thousand) because a realization
is not planned at the present time.

Notes to the Financial Statements 155

(31) Income from discontinued operations

(32) Earnings per share

In the prior year, the income from discontinued opera-
tions was exclusively related to the PIN Group (cf. note
(13)). It broke down as in the following table:

The basic and diluted earnings per share are presented
in the table below:

€ thousands

Income

Expenses

Gross profit

Net financial result

Loss on remeasurement at fair value

2007

133,512

– 187,747

– 54,235

– 2,517

– 544,780

Earnings before taxes of discontinued operations

– 601,532

Income taxes

Income taxes on measurement at fair value

397

28,677

Income from discontinued operations

– 572,458

2008

2007

Income from continuing
operations after minority interests € 000s

560,050

272,839

Income from discontinuing
operations after minority interests € 000s

– 572,458

Net income attributable
to shareholders of
Axel Springer AG

Weighted average shares
outstanding

€ 000s

560,050

– 299,619

000s

30,141

30,637

Dilution effect upon exercise of
stock options

000s

265

Weighted average diluted
shares

Earnings per share from
continuing operations

000s

30,204

30,902

The net cash flows from discontinued operations are
presented in the table below:

Basic

Diluted

€ thousands

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

Cash flow from discontinued operations

2007

– 40,889

– 61,613

32,311

– 70,191

Earnings per share from
discontinued operations

Basic

Diluted

Net income per share
attributable to shareholders of
Axel Springer AG

Basic

Diluted

€

18.58

18.54

8.91

8.83

0.00

– 18.69

– 18.51

18.58

18.54

– 9.78

– 9.70

156 Annual Report 2008 Axel Springer AG

Notes to the consolidated cash flow
statement

Notes to the segment report

(35) General information

(33) Composition of cash and cash equivalents

The cash and cash equivalents were composed of the
following elements:

€ thousands

Cash

12/31/2008 12/31/2007

154,521

198,043

Securities with a term of less than three
months

Cash and cash equivalents

154,529

198,056

Of the cash and cash equivalents presented in the con-
solidated cash flow statement, an amount of € 4,460
thousand (PY: € 4,326 thousand) was subject to restric-
tions on disposal.

(34) Other disclosures

The other non-cash income and expenses included
expenses from the fair value measurement of financial
instruments. In the prior year, this item consisted mainly
of income and expenses from deconsolidations and from
the fair value measurement of financial instruments.

Capital expenditures of € 584 thousand (PY: € 810
thousand), most of which for investments in property,
plant, and equipment, had not yet been realized as
cash payments.

The cash flows related to assets held for sale were as-
signed to the original line items in the consolidated cash
flow statement.

The segment report was prepared in accordance with
the regulations of IFRS 8. The reporting format reflects
the operating segments of the Axel Springer Group.

Change in segmentation criteria

(a)
The new standard IFRS 8 “Operating Segments,” which
must be applied in fiscal years that begin on or after
January 1, 2009, was early adopted in the fiscal year
2008. IFRS 8 supersedes IAS 14 “Segment Reporting”
and prescribes for the first time the so-called “manage-
ment approach” for identifying and measuring the results
of operating segments subject to the disclosure require-
ment. Accordingly, the external segment report should
generally reflect the internal organizational and manage-
ment structures and utilize the internal controlling and
reporting indicators of the Group.

The segment reporting format has been adapted to
reflect the internal management and reporting structures
in accordance with IFRS 8. The new reporting format is
more closely aligned to the heightened strategic impor-
tance of the digital media and the growing internationali-
zation of the Axel Springer Group.

Based on the requirements of IFRS 8, Axel Springer
Group has identified the following reporting segments:
Newspapers National, Magazines National, Print Interna-
tional, and Digital Media. By virtue of its primary role as
an internal service provider, the Printing segment, which
had formerly been presented as a separate segment in
accordance with IAS 14, was combined with the remain-
ing business activities in the Services/Holding segment.

The brand-linked online activities of the former Newspa-
pers and Magazines segments were added to the exist-
ing Digital Media segment. The new Print International
segment comprises the newspapers and magazines
published in foreign countries. These activities had for-
merly been presented in the Newspapers and Magazines
segments, which have been redefined as the Newspa-
pers National and Magazines National segments and
only comprise the respective German publications.

Notes to the Financial Statements 157

The prior-year segment report figures were adjusted.
The figures for the Digital Media segment are not fully
comparable with those of the prior year, starting with the
second quarter of 2007, due to the acquisitions since
that time.

With regard to the geographical information, changes
were made in the segmentation of assets compared to
the prior year. This information pertains to the non-
current segment assets consisting of intangible assets
and property, plant, and equipment.

(b) Operating segments
The Newspapers National segment includes daily news-
papers and Sunday newspapers, superregional and
regional subscription newspapers, and advertising sup-
plements. This segment also included investments in
German newspaper publishing companies.

The Magazines National segment includes TV listings,
women’s magazines, men’s magazines, youth maga-
zines, computer magazines, business magazines, news
magazines, family magazines, and further special-interest
magazines, as well as investments in magazine publish-
ing companies in Germany.

The newspapers and magazines published in foreign
countries are comprised within the Print International
segment.

The online and broadcasting activities are comprised
within the Digital Media segment. In particular, this seg-
ment comprises online activities derived from print
brands and the previously existing activities of ZANOX.de
AG, Idealo Internet GmbH, immonet GmbH, and auFem-
inin.com S.A., as well as the newly consolidated compa-
nies comparado GmbH, Gofeminin.de GmbH, gamigo
AG, and Transfermarkt GmbH & Co. KG, as well as their
respective subsidiaries. Among other things, this seg-
ment also comprises the investment in the TV broadcast
company Dogan TV Holding A.S.

The Services/Holding segment comprises the remaining
business activities, including services such as customer
service, sales, logistics, direct marketing, and office
buildings, as well as purely internal departments like IT,

accounting, personnel, and corporate staff departments.
In 2007, the printing activities, consisting of the com-
pany’s three offset printing plants, as well as its invest-
ments in two offset printing plants outside Germany and
in the rotogravure printing company PRINOVIS Ltd. & Co.
KG, had formerly been presented as a separate segment
in accordance with IAS 14. In 2008, however, they were
combined with the Services/Holding segment. The offset
printing plants serve the purpose of ensuring the avail-
ability of necessary printing capacities.

(c) Geographical information
The activities of the Axel Springer Group are conducted
mainly in Germany and in other European countries.

(36) Segment information

The segment information was compiled on the basis of
the recognition and measurement methods applied
in the consolidated financial statements. The external
revenues consist of circulation revenues from the sale of
publishing products, advertising revenues, and revenues
from rendering services to parties not related to the
Group. The internal revenues consist of revenues from
the exchange of goods and services between the various
segments. The transfer pricing is based on cost coverage.

The internationally used measures EBITA (earnings be-
fore interest, taxes, and amortization of goodwill) and
EBITDA (earnings before interest, taxes, depreciation of
property, plant, and equipment, and amortization of
goodwill and other intangible assets) are used to meas-
ure segment earnings. In calculating these measures,
non-recurring effects and purchase price allocation ef-
fects are eliminated.

Non-recurring effects include effects from the sale of
subsidiaries, business divisions, and investments, as well
as impairment and write-ups of investments, effects from
the sale of real estate, and special depreciation and
write-ups of real estate used by the company. The non-
recurring effects consisted of write-ups and impairment
of investments (€ – 62,473 thousand) and effects from
the sale of investments (€ 438,736 thousand). In the
prior year, the non-recurring effects included effects from
the sale of investments (€ 7,061 thousand), from the sale

158 Annual Report 2008 Axel Springer AG

of a subsidiary and the sale of a division (€ 3,501 thou-
sand), real estate sales (€ 2,050 thousand), and impair-
ments of investments (€ – 183 thousand).

The effects of purchase price allocations mainly con-
sisted of amortization and depreciation, as well as im-
pairments in intangible assets and in property, plant, and
equipment that were acquired in the context of business
combinations. In 2008, the effects of purchase price
allocations amounted to € – 46,473 thousand
(PY: € – 13,420 thousand).

Segment assets are composed of the assets required to
operate the individual segments. Goodwill is attributed to
the appropriate segments. Certain assets in the amount
of approximately € 307 million (PY: approx. € 422 million)
were not segmented. They included cash and cash
equivalents, current and deferred income tax assets,
derivatives, loans, and other financial receivables.

The segment liabilities are composed of the operating
liabilities and provisions of the individual segments. Fi-
nancial liabilities, current and deferred income tax liabili-
ties, and liabilities from derivatives in the total amount of
approximately 845 million (PY: approx. € 2,465 million)
were not segmented.

For purposes of geographical segment reporting, the
revenues are segmented according to the location of the
customer’s registered office. The segment assets were
determined with reference to the location of the corre-
sponding company.

Other disclosures

(37) Capital management

Beyond the provisions of German law applicable to
stock corporations, Axel Springer AG is not subject to
any further obligations relating to capital preservation,
whether from its own Articles of Incorporation or from
contractual obligations. The financial key figures used by
the company for management purposes are primarily
earnings-driven. The goals, methods, and processes of
capital management are subordinate to the earnings-
driven financial key figures.

For the purpose of maintaining and adjusting the capital
structure, the company can adjust the dividend pay-
ments to its shareholders or purchase treasury shares
representing up to 10 % of the subscribed capital.
Treasury shares can be used for acquisition financing
or they can be retired. At December 31, 2008, the
treasury shares represented almost 10 % of the com-
pany’s share capital.

Under the terms of its Management Participation Pro-
gram, the company is obligated to sell treasury shares
to the management. At the balance sheet date we pos-
sessed enough treasury shares to fulfill the obligations
of the program.

(38) Financial instruments

(a) Measurement of financial instruments by