Axel Springer AG Annual Report 2010

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FY2010 Annual Report · Axel Springer AG

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10Annual Report

Contents

3 Foreword

94 Report of the Supervisory Board

6 Management Board

100 ullstein bild

8 Highlights

116 Consolidated Financial Statements

117 Responsibility Statement

118 Auditor’s Report

119 Consolidated Statement of Financial Position

120 Consolidated Statement of Comprehensive

Income

121 Consolidated Statement of Cash Flows

122 Consolidated Statement of Changes in Equity

124 Notes to the Consolidated Financial Statements

168 Boards

170 Glossary

22 The Axel Springer share

25 Employees

28 Social responsibility

30 Combined Management Report

of the Group and of Axel Springer AG

31 Business and framework conditions

45 Financial performance, liquidity,

and financial position

63 Economic position of Axel Springer AG

66 Events after the reporting date

67 Report on risks and opportunities

74 Forecast report

78 Disclosures pursuant to Sections 289 (4),

315 (4) HGB and Explanatory Report pursuant

to Section 176 (1) (1) AktG

82 Statement on governance pursuant
to Section 289a HGB and Corporate

Governance Report

Group Key Figures
Group Key Figures

in € millions

Group

Total revenues

Change yoy

2010

2009

2008

2007

10.8 %

2,893.9

2,611.6

2,728.5

2,577.9

Digital Media revenues as percent of total revenues (pro forma)

24.4 %

21.2 %

International revenues as percent of total revenues

28.1 %

21.0 %

21.9 %

20.8 %

Circulation revenues

Advertising revenues

Other revenues

EBITDA1)

EBITDA margin1)

Consolidated net income

Consolidated net income, adjusted2)

Segments

Revenues

Newspapers National

Magazines National

Print International

Digital Media

Services/Holding

EBITDA1)

Newspapers National

Magazines National

Print International

Digital Media

Services/Holding

Liquidity and financial position

Free cash flow3)

Capex4)

Total assets

Equity ratio

Net liquidity/debt

Share related key figures

Earnings per share5)

Earnings per share, adjusted2)5)6)

Dividend7)

Year-end share price

– 0.2 %

1,174.3

1,176.2

1,215.8

1,190.6

21.6 %

1,384.8

1,138.5

1,248.1

1,207.5

12.8 %

53.0 %

334.8

510.6

296.9

333.7

264.7

486.2

179.8

470.0

17.6 %

12.8 %

17.8 %

18.2 %

– 12.7 %

85.5 %

274.1

283.2

313.8

152.6

571.1

– 288.4

254.6

234.6

– 1.6 %

1,194.2

1,213.7

1,277.6

1,290.3

– 6.1 %

28.6 %

51.3 %

2.8 %

21.4 %

83.7 %

> 100 %

98.7 %

64.7 %

486.1

400.9

711.8

100.8

296.0

101.0

61.5

85.8

517.8

311.7

470.4

98.1

564.1

409.8

378.2

99.0

587.8

408.3

208.1

83.4

243.8

348.9

363.9

55.0

12.3

43.2

88.8

27.8

20.9

– 0.2

73.9

10.6

36.7

– 15.1

– 33.7

– 20.5

29.4 %

299.3

– 59.2

231.3

– 38.9

219.7

– 46.7

238.7

– 58.8

22.8 %

3,603.2

2,934.3

2,809.1

3,826.9

49.2 %

40.8 %

38.0 %

31.7 %

79.6

– 193.0

– 369.5

– 743.1

– 19.6 %

82.6 %

9.1 %

8.19

8.27

4.80

10.19

18.54

– 9.70

4.53

4.40

7.79

4.40

7.18

4.00

62.6 %

122.00

75.05

51.39

98.00

Market capitalization as of December 318)

78.8 %

3,999.2

2,236.5

1,525.4

2,998.8

Free float

40.8 %

23.5 %

23.1 %

26.2 %

Average number of employees

7.7 %

11,563

10,740

10,666

10,348

1) Adjusted for non-recurring effects and effects of purchase price allocation.
2) Adjusted for significant, non-operating items (see page 47).
3) Cash flow from operating activities, plus capital expenditures, minus cash inflows from disposals of intangible assets and property, plant and equipment.
4) Capital expenditures on intangible assets, property, plant and equipment, and investment property.
5) Diluted.
6) The adjusted diluted earnings per share for all the years indicated in the table were calculated on the basis of weighted average shares outstanding (diluted) in 2010.
7) Dividend proposal for the financial year 2010.
8) Based on shares outstanding at the year-end closing price, excluding treasury shares.

2010:
76 % Print
24 % Digital 1)

2004:
98 % Print
2 % Digital

1) Pro forma for acquisitions.

Axel Springer is a leading integrated multimedia

company in Europe, offering a considerable number

of print and digital media. For the future, we have set

for our company the ambitious goal of generating

half our total revenues from digital media channels,

and the other half from print media channels.

2010:

76 % Print

24 % Digital 1)

Our Goal:
50 % Print
50 % Digital

Dear
Axel Springer
shareholders,

write the first sentence about the
spring is that it really is a hypothe-
sis, thought up. Literature, if you
will. Fiction. I am meant to write
about the first whiff of spring, about
something that has not happened
yet, but that we yearn for.

It tends to rain in the spring.
People living on the Mosel and
Elbe will see all their worldly
possessions, the very foundations of
their lives, swept away in the murky
floodwaters.

Now two hours have passed
and I still haven’t found the right
sentence, one as beautiful as a
poem and as true as a philosophical
maxim.

Why hasn’t Springer thrown me

out?

I think it is because Springer is
like a film. It employs battalions of
storytellers, set designers, costume
designers, directors, technicians,
and actors. It is a group compa-
ny, composed of managers and
dreamers.

Charlie Chaplin founded United

Artists in America almost a 100
years ago. He was an independent
artist.

You can be that at Springer: You
can be somebody who spends two
hours writing about the spring.

Warmest regards,

For profitability reasons alone, it
makes no sense for Springer to em-
ploy somebody like me. It takes me
one or two hours just to write one
single sentence. That is inexcusable,
practically indecent behavior.

Please fire me!
While information flies around

on the Internet in a matter of
seconds, I get paid to twiddle my
thumbs at Springer. The Manage-
ment Board must be crazy or
romantic.

Recently somebody in the chief
editorial office of BILD caught an
early whiff of spring. That would
be a harmless letter, one that I could
deliver in time for the 6:00 p.m.
deadline.

I didn’t make the deadline.
If I were a gardener, it would be
a simple letter about budding trees
in the first rays of spring sunlight.
Because I am not a gardener, I be-
gin to think about the humanization
of nature.

Seeds, pregnant bellies …
Suddenly I write “amid the whirl
ing mass of lethargic winter flies, a
ray of sunlight revives the spirits.”
I delete the sentence immediate

ly, because it’s nonsense. That
would mean in winter we are dead
spirits, or maybe only dormant
spirits.

An hour goes by on that.
During this hour, machinery is
rattling, airplanes are taking off,
people are making decisions.

The reason why it is so hard to

Franz Josef Wagner was a war
reporter, series author, and
senior editor at Axel Springer.
Readers of BILD have been
receiving “Mail from Wagner”
since 2001: This is the column
in which he has been writing
letters five times a week, since
January 3, 2001, to people
prominent in current affairs, or
simply to “God and the world.”

Foreword 3

The most important success factor
of all has always been, and still is,
content. Without irresistibly good
content we would have no business
model; without excellent journalists
we would have no profit.

In our regular meetings with investors, especially in New

company. That is just a truism, of course. An automobile

York, London, or Frankfurt, I am always asked why Axel

manufacturer, for example, will always say that making

Springer AG is so successful, despite the media crisis,

good cars is the most important success factor. But in

and what we are doing to ensure that we continue to be

the media industry, which is frequently roiled by new

that successful in the future. In response, I tell them that

distribution channels, unconventional business models,

strict cost discipline is an important prerequisite. And of

revolutionary technologies, and entirely new forms of

course, we are helped very much by our strong, market-

journalistic presentation, this simple truth is sometimes

leading brands. And the distribution expertise we have

forgotten.

built up over decades is very important, as is the best

possible marketing. But certainly, one of the most im-

The primacy of content: What does that mean, exactly?

portant factors contributing to the success of our busi-

Good journalists and excellent authors who can write

ness is the decision we made many years ago to ener-

really well are the most important members of a publish-

getically pursue a policy of systematic digital

ing organization, even if they may sometimes be difficult.

transformation, which is closely tied to the internationali-

Without people who write such great work that readers

zation of our business. And we have made good pro-

are irresistibly drawn to, the sales force of a publishing

gress in that endeavor, as evidenced by the fact that our

house would have nothing to sell, the marketers would

digital activities contribute 24.3 % of our total revenues

have nothing to market, and the managers would have

and generate an average EBITDA margin of 12.0 %. In

nothing to manage. That holds true in the analog world

the last year alone, the proportion of our total revenues

and most certainly in the digital world. To put it simply,

contributed by international activities has risen from

without irresistibly good content we would have no busi-

21.0 % to 28.1 %.

ness model; without excellent journalists we would have

no profit. Or once again, for analysts: No EBITDA without

And then I almost always conclude by saying that the

authors who can make readers addicted to their work.

most important success factor has always been, and

still is, content. Many investors are surprised by that

I remember having dinner with Franz Josef Wagner on a

statement, or take it as a politically correct afterthought.

summer evening in 2001. The purpose of that meeting

But that it is not! Content and journalism – and espe-

was to convince him to give up his position as editor-in-

cially the passionate focus on those aspects – are still

chief of B.Z. and write a daily column for BILD instead.

the crucial prerequisite for the success of any publishing

He was not excited by the proposition. I countered that

Annual Report 2010 Axel Springer AG

he really is an author at heart and that writing is more

A good publishing house is sometimes like a “house of

suited to him than the managerial tasks of being an

fools,” fool being understood in the original sense of a

editor-in-chief. But he was almost insulted by that. I told

court jester, who was the only member of the court who

him that great authors are harder to find and are even

had the privilege of speaking the truth to the king. Thus,

more important to our Company than editors-in-chief.

he needed to be courageous, an outstanding observer,

But he would not believe me. I swore to him that he

an incorruptible analyst, a virtuoso of language, and a

would make a greater impact as a daily columnist for

good entertainer: just like a good journalist, whose high-

BILD than as the editor-in-chief of a mass-circulation

est art is to present the truth to the sovereign (that being

daily in Berlin. He still did not believe me, but began to

the citizen) in an entertaining way. Laughter is the best

waiver. And then I told him that I understood Axel

way to keep your readers coming back.

Springer to be a family of individualists, each with a

different temperament and character, who enjoy maxi-

Sometimes, what is apparently irrational proves to be the

mum personal and professional freedom on the basis of

most prudent course of action. The spirit of “United Artists”

shared fundamental values and journalistic excellence,

is paying handsome dividends. In 2010, dear share-

rather like a federation of “United Artists.” And then he

holders, the operating result (EBITDA) of your Company

finally consented.

reached a new record level of € 510.6 million. In relation

to consolidated revenues, which rose by 10.8 % (or ad-

At our latest meeting, ten years and 2,087 columns later,

justed for consolidation effects, by 3.5 %) to € 2.9 billion,

I asked Franz Josef Wagner to write a letter to our share-

that corresponds to an EBITDA margin of 17.6 %.

holders in the Company’s annual report, as a way of

conveying a first-hand impression of what constitutes

And this performance is certainly not an isolated occur-

the basis of our business. But pay no attention when

rence. When Axel Springer AG went public in 1985, it

Wagner says he ought to be fired for profitability rea-

had an EBITDA margin of 6.2 %; in 2001, it was 6.7 %.

sons; he only writes that to keep you reading!

A new management team took over in 2002. Since

2004, the EBITDA margin has been higher than 17 % in

Authors are difficult. Authors are expensive. Authors

almost in every year. And since 2002, the market capi-

cause problems with advertising customers and even

talization of Axel Springer AG has risen by 151 %, from

with production, if their work is late. Nonetheless, the

€ 1.6 billion to € 4.0 billion. That increase, coupled with

success of our publishing Company is critically depen-

the considerably improved liquidity of the Company’s

dent on the professional satisfaction of the good authors

share, was also a major factor leading to Axel Springer’s

who work for us. Take Hans Zippert, the world record

elevation to the MDAX in early September 2010.

holder in satirical columns. He has written a column for

the front page of WELT every day since January 1999,

The Management Board and Supervisory Board of Axel

that makes 3,566 columns by the time this annual re-

Springer AG propose that the Company distributes a

port goes to print. And “Zippert zappt” never missed a

dividend of € 4.80 per share for the financial year 2010;

single day for vacation or illness. (No matter what he

our Company has never paid a higher dividend. Assum-

gets paid, the man is underpaid, no doubt about it.) Or

ing the proposal is accepted, the dividend pay-outs for

take Benjamin von Stuckrad-Barre, the flesh-eating

the years 2002–2010 will add up to € 804 million, that

plant in the greenhouse of literary reporting. Or Hendrik

being € 89 million a year on average. Adding together

M. Broder, who writes online stories faster than Lucky

the capital appreciation and dividend payments, you –

Luke can draw his colt (and shoots at least as accu-

the shareholders – enjoyed an average return of 11.1 %

rately and courageously). And many, many others.

per year over the period from 2002 to 2010.

Foreword

To ensure the continuation of that success, we will

sources of revenue. Worldwide, more than two billion

faithfully adhere to our strategy, which we have em-

mobile Internet connections are expected to exist by the

phatically pursued for nearly ten years now, and will

year 2014. If that is not good news, what is?

continue to pursue in the coming years as well, though

with the necessary sensitivity to new and unforeseeable

As the last and most important success factor, we must

developments. Sound strategies are usually simple,

not allow our past success to instill even the smallest

even tedious. We still understand our mission to be the

whiff of complacency. Happiness and pride over what

company for brand-based content. We will continue to

we have achieved, yes; but satisfaction, never.

pursue our overriding goal of profitable growth, primarily

by means of strengthening our core business of Ger-

Sincerely yours,

man-language media, and internationalization, and

digitization. And we will continue to pursue the goal of

generating 50 % of our total revenues in the fast-

growing digital business; we want to achieve that goal

as quickly as possible, but at the latest in seven years.

As in the past, we still believe that the best way of

achieving that goal is to remain true to the competen-

cies that have made our Company strong for 60 years,

also in the analog world.

1. We know how to create strong brands with good

content. In the digital world, that means: We establish or

acquire market-leading content portals (like Bild.de and

aufeminin.com).

Mathias Döpfner

PS: We were immensely relieved to learn that our two

reporters, who were imprisoned in Iran for 132 days,

have been set free. We expressly wish to thank everyone

who worked quietly behind the scenes or vociferously in

public to achieve that outcome, for their support and

solidarity. The freedom of research and expression is a

2. We know how to establish lucrative classified ad

valuable, dangerous, and endangered prize.

marketplaces with these reach platforms. Digitally that

means: We establish or acquire market-leading real-

estate portals, job exchanges, or classified ad portals

for automobiles (like StepStone, immonet, and SeLoger,

assuming that goes through).

3. We know how to market brands and reach values to

advertising customers. Digitally that means: We estab-

lish or acquire market-leading online marketers, espe-

cially performance-based marketing companies (like

zanox and Digital Window).

Far from being a threat, digitization is actually a huge

opportunity for our industry. The new generation of

smart phones and tablets, in particular, gives us the

chance to deliver the brands and content created by our

authors to whole new groups of readers and tap new

6 Management Board

Dr. Mathias Döpfner

Chairman and Chief Executive
Officer Subscription News
papers and International

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.

Rudolf Knepper

Vice Chairman
Printing, Logistics, and HR

Born 1945, master’s degree
in engineering and Master’s
degrees in engineering and in
business/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

Lothar Lanz

Chief Operating Officer and
Chief Financial Officer

Born 1948, master’s degree
in commerce.
Career milestones:
Bayerische Hypotheken und
Wechselbank AG; Member of
the Executive Board at HSB
HYPO ServiceBank AG;
Member of the Executive Board
at Nassauische Sparkasse;
Member of the Executive Board
and Chief Financial Officer at
ProSiebenSat.1 Media AG.
Member of the Management
Board since 2009.

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.

8 Highlights

Axel Springer was extremely successfully
in the implementation of its business
strategy in 2010. The core elements of
that strategy are to extend the Group’s
market leadership position in the
German-language core business and
to advance the process of international-
ization and digitization. The following
examples are brief highlights of our
innovations and successes in the past year,
which have only bolstered our resolve to
press forward with our chosen strategy.

Highlights

Axel Springer encompasses a wide variety of media, brands, and

minds. Whether they are engaged in writing or marketing, whether

they work in print, online, mobile, or web TV, the people presented

on the following pages have one thing in common: They all want

to actively shape the future of the media industry, with passion

and creativity. And they are certainly representative of their 11,557

other colleagues.

“Beyond tremendously increasing the reach of the aufeminin
portal, which obviously helps me when meeting my advertising
customers, we created many new content offerings and other
features in 2010. Among them, aufeminin.tv is certainly the
most spectacular: With Europe’s first web TV channel for women,
we can offer our advertising customers completely new ways of
presenting and staging their brands and products.”

Agnès Alazard-Rool, Managing Director Sales, aufeminin.com, Paris

aufeminin.com

aufeminin.com is the leading women’s portal in Europe.

The company, in which Axel Springer holds a majority

interest, has its headquarters in Paris and offers a broad

range of information, services, and communities on topics

such as trends and fashion, beauty, health, and psycho-

logy, in eleven countries: France, Germany, Spain, Italy,

Great Britain, Belgium, Poland, and Switzerland in Europe,

and also in Canada, Morocco, and Vietnam.

“We spent several months working on the iPad version for BILD.
The team was composed of onliners, print folks, programmers, and
product managers. We want to surprise our readers every day, all over
again, with a style of journalism they haven’t experienced yet. With
stories that can be told in a more intensive, better, and urgent way
than ever before. With stories that can be grasped with your hands.”

Michael Paustian, Deputy Editor-in-Chief of BILD, Berlin

BILD HD

Strong, cross-media brand families form the basis for the success of Axel

Springer. Whether printed as a newspaper, or presented online at Bild.de,

or on applications for Internet-capable TV sets, or mobile on smart phones

with BILDmobil, or on tablet computers with BILD HD (since 2010): Wherever

they happen to be, BILD gives its readers an information edge and frames the

issues of the day with a diverse array of exclusive reports. BILD is concise,

with a sharply defined profile. And the BILD app for the iPhone, which we

introduced as part of our premium initiative, had been enjoyed by more than

450,000 buyers and subscribers by the end of 2010, proving the point that

users are also willing to pay for digital content. Having generated a record

profit in 2010, BILD is more profitable than ever.

“Working with others to build a new company from the ground up
is one of the most exciting challenges a person can face. For the eastern
Europe joint venture with Ringier, we mastered that challenge in record
time. The process began in March 2010; we commenced operations
in early July; licenses were purchased to expand our portfolio further
in mid-July; and we made our first major digital media acquisition
in December 2010.”

Mark Dekan, CFO Ringier Axel Springer Media AG, Zurich

Ringier Axel Springer Media AG

Over the last few decades, both Ringier and Axel Springer have continually ex-

panded their activities in the media markets of central and eastern Europe. Toge-

ther, they publish more than 100 print titles, including numerous market-leading,

widely-circulated tabloid dailies and magazines, and operate more than 70 online

portals. The two companies complement each other ideally in central and eastern

Europe, with regard to both content expertise and strategic interests. United in the

joint venture Ringier Axel Springer Media AG, they will now proceed to exploit the

digital growth opportunities associated with the digital transformation.

“Ringier Axel Springer Serbia already publishes the country’s biggest
mass-circulation daily, BLIC; and in association with the other
national subsidiaries of the joint venture, we can achieve much more,
while remaining completely free in our entrepreneurial and journalistic
decisions. That structure is vital to our economic success.”

Jelena Drakulic-Petrovic, General Manager Ringier Axel Springer Serbia, Belgrade

Ringier Axel Springer Serbia d.o.o.

Since 2010, Ringier Axel Springer Serbia has been part of a dynamic

association of independent enterprises, Ringier Axel Springer

Media AG. Thus, Serbian BLIC has been joined by other successful

mass-circulation dailies like FAKT, BLESK, and NOVÝ CAS. Its broad

portfolio, coupled with its clear focus on growth and digitization, make

Ringier Axel Springer Media AG the market leader in the segment

of mass-circulation tabloid dailies, and one of the biggest publishers

of magazines in Poland, Serbia, Slovakia, and the Czech Republic, as

well as Hungary, pending the approval of the joint venture by the

relevant anti-trust authorities.

“We implemented numerous innovative projects in 2010, especially
in the digital realm. Towards the end of this extraordinarily successful
year, we consciously refocused our attention on our strong print titles
by modernizing the optical presentation and expanding the content of
WELT and WELT am SONNTAG. Those measures will permanently
strengthen our ambitious journalistic program.”

Jan-Eric Peters, Editor-in-Chief of all WELT titles, Berlin

WELT Group

The integrated newsroom of the WELT Group is busy around

the clock processing news and stories for seven different media

channels, including print, online, and mobile devices. Having

introduced three iPad apps, the WELT Group was one of the first

publishing companies to be represented on the iPad, which was

launched in 2010. We launched the iKiosk app to coincide with

the market introduction of the iPad in the United States, followed

shortly thereafter by The ICONIST and finally by WELT HD, which

was named “iPad App of the Year” in Germany, by the editorial

staff of Apple’s iTunes store in December 2010. By the end of

2010, WELT HD was the most frequently downloaded and sold

iPad app of any daily newspaper in Germany.

“At first, HÖRZU HEIMAT was only an idea that was kicking
around in my head. A magazine that reveals the beauty of Germany,
its nature, people, crafts, and regions. From the development phase
to the first issue, the HÖRZU editorial team worked very hard, with
tremendous creativity, passion, and joy, to produce a magazine that
combines tradition with modernity. A magazine filled with 124
printed pages to delight its readers.”

Caren Schütt, Editor of HÖRZU HEIMAT, Hamburg

HÖRZU HEIMAT

HÖRZU is the biggest weekly TV program guide in Europe,

with detailed TV listings and high-quality journalism. HÖRZU

broadened its editorial core competence and its topic range

by introducing two independent new magazines, HÖRZU

WISSEN and HÖRZU HEIMAT. HÖRZU HEIMAT reveals the

most beautiful facets of Germany, with well-written and

photographed stories about Germany’s land and people,

traditions and customs, art and culture, and cuisine.

22 Annual Report 2010 Axel Springer AG

The Axel Springer share

Strong performance of the Axel Springer
share

The Axel Springer share outperformed the relevant com-
parison indexes by a wide margin in 2010. Having
started the year on January 1 at € 75.05, it fell to its low
for the year of € 73.31 on January 26, 2010. Over the
rest of the year, the share price rose on a nearly continu-
ous basis, reaching its high for the year of € 122.35 on
December 28, 2010, before closing at € 122.00. Calcu-
lating in the dividend payment in May 2010, our share-
holders received a total return of 68.4 %.

The Axel Springer share was very successful in 2010:
It was elevated to the MDAX, the share price rose by
62.6 % and the share’s market liquidity increased con-
siderably compared to the preceding year, after the
proportion of widely held shares was increased.

Turbulent stock markets in 2010

After a phase of considerable volatility in the first half of
the year, which was caused by financial instability in the
euro zone and media reports on the high level of gov-
ernment debt of some European countries, among other
factors, international stock markets registered substantial
growth, especially in the final quarter of 2010. For the full
year 2010, the DAX gained 12.5 %, the MDAX gained
32.7 % and the SDAX gained an impressive 42.9 %. The
German sector index Prime Media likewise exhibited an
impressive gain of 60.2 % in 2010. By contrast, the DJ
EuroStoxx Media Index, which includes the most impor-
tant European media shares, experienced a rather mod-
erate gain of 4.3 %.

Elevated to the MDAX

The Axel Springer share has fulfilled the main criteria for
inclusion in the MDAX, those being market capitalization
and trading volume, already since the end of 2009. On
September 20, 2010, 25 years after it was first listed on
the stock exchange, the stock of Axel Springer AG was
elevated to the MDAX. In a reflection of growing investor
interest in our share, it rose steadily from 102nd place to
39th place in the trading volume rankings of Deutsche
Börse AG in the years from 2007 to the end of 2010. At
year-end 2010, the market capitalization of Axel Springer’s
widely held shares totaled about € 1.6 billion, putting it in
20th place in the MDAX.

As of November 30, 2010, the Axel Springer share is
also represented in the MSCI index Germany Mid Cap,
which is part of several MSCI indexes.

The Axel Springer share 23

Share placement increases proportion of
widely held shares

On September 24, 2010, 2.7 million treasury shares
(representing approximately 8.3 % of the company’s
share capital) and an additional 2.8 million Axel Springer
shares from the holdings of Deutsche Bank Luxembourg
S.A. (likewise representing approximately 8.3 % of the
company’s share capital) were placed with investors by
way of an accelerated book-building procedure.

Another record dividend

Our shareholders will receive a record dividend for the
second year in a row. Following the proposal of the
Management Board and Supervisory Board, the annual
shareholders’ meeting resolved, on April 23, 2010, to
pay a dividend of € 4.40 per share (PY: € 4.40). Thus,
€ 131.2 million was paid from the total unappropriated net
profit of € 145.1 million, and the remaining € 13.9 million
was appropriated to the other retained earnings.

A total of about 330 shareholders, or 82.7 % of voting
capital, were present or represented at the annual
shareholders’ meeting. The proposed resolutions of the
management were adopted with majorities of at least
96.1 % in every case.

Axel Springer portfolio shows positive
performance

A portfolio invested in the shares of Axel Springer has
performed very well in the last five years. Any share-
holder who had purchased Axel Springer shares in the
amount of € 10 thousand on December 30, 2005 and
held the shares for five years, reinvesting the dividends
received during that time, would have seen the value of
his portfolio rise by 41.4 % to more than € 14 thousand
by the end of 2010. Thus, a portfolio composed of Axel
Springer shares appreciated by an average of 7.2 % per
year, even as the DAX Price Index rose by an average of
only 1.7 % per year in the last five years.

Intensified investor relations

We intensified our IR activities still further in 2010. We
presented the company and strategy of Axel Springer to
investors at 28 (PY: 20) conferences and road shows in
important international financial centers, chief among
them Germany, Great Britain, the USA, France, Switzer-
land, Austria, and Spain.

Thanks to the strong interest shown by investors, the
placement price was € 92.00, just slightly below the
stock market price at that time. Axel Springer raised
about € 250 million on the placement, and the propor-
tion of widely held shares increased by 16.6 percentage
points to 40.8 %. Furthermore, the daily trading volume
increased substantially, which had been one of the prin-
cipal goals of the share placement. Whereas the average
daily value of shares traded had been roughly € 1.3 million
before the placement, our average daily trading volume
rose to about € 7.9 million after the placement.

24 Annual Report 2010 Axel Springer AG

Share Information

in €

2010

2009 Change

Earnings per share (diluted)

8.19

10.19

– 19.6 %

Earnings per share (adjusted, diluted)

Dividend1)

8.27

4.80

4.53

82.6 %

4.40

9.1 %

Total dividend payout, in € millions

157.3

131.2

19.9 %

Year-end share price

122.00

75.05

62.6 %

Highest price

Lowest price

122.35

78.00

56.9 %

73.31

46.94

56.2 %

Market capitalization in € millions2)3)

3,999.2 2,236.5

78.8 %

Daily traded volume (Ø, in € millions)

3.3

0.6 > 100 %

Dividend yield1)3)

3.9 %

5.9 %

Total yield per share per year4)

68.4 %

54.6 %

1) Dividend proposal for financial year 2010.
2) Calculated on the basis of the year-end closing price.
3) Based on shares outstanding, excluding treasury shares.
4) Share price development plus dividend payment.

Information on Listing

Share type

Registered share with
restricted transferability

Stock exchange

Frankfurt (official market)

Stock exchange segment

Security Identification Number

Prime Standard

550135, 575423

ISIN

Thomson Reuters

Bloomberg

DE0005501357, DE0005754238

SPRGn.DE

SPR GY

On December 10, 2010, moreover, we hosted our third
annual Capital Markets Day for stock analysts, institu-
tional investors, and bank representatives at our com-
pany headquarters in Berlin. We also held numerous
meetings and telephone conferences with investors on
the occasion of the publication of our financial reports.
The telephone conferences were broadcast as live
streams on the Internet; they were also recorded and
posted on our website for later consideration.

Besides institutional investors and stock analysts, we are
always glad to speak with individual investors as well –
whether in person at our annual shareholders’ meeting,
by telephone, or via e-mail. Our contact information is
printed on the last page of this annual report, where you
will also find our financial calendar with important IR
dates. Up-to-date information on the latest develop-
ments can always be found on the Investor Relations
section of our website at www.axelspringer.de. That is
where you can also order our print publications and
download special investor presentations.

As part of the German Investor Relations Awards (Extel
Survey), Axel Springer received first place among SDAX
companies. This award is given by the German Investor
Relations Association DIRK and Thomson Reuters,
based on the evaluations of investment fund managers
and stock analysts.

Growing analyst coverage

At year-end 2010, the Axel Springer share was covered
by ten stock analysts. In addition to Commerzbank,
Deutsche Bank, DZ Bank, Goldman Sachs, J.P. Morgan,
LBBW, and Société Générale were joined in their cover-
age by Berenberg, Close Brothers Seydler, and equinet
in 2010. And by the end of February 2011, five other
institutions, namely Bankhaus Lampe, Hammer Partners,
HSBC, Silvia Quandt, and Warburg began covering our
share as well.

25 Employees

Employees 25

Axel Springer’s personnel policies are guided by the
management principles of creativity, entrepreneurship,
and integrity. We reward both the willingness to strive for
outstanding performance and the creative potential of
our 11,563 employees, on average during the past year
(PY: 10,740).

Specialized vocational training and
continuing education

In order to meet the growing challenges of its business, a
comprehensive vocational training and continuing educa-
tion program has been made a key aspect of Axel
Springer’s personnel policy.

With a total of 214 vocational trainees at year-end 2010,
Axel Springer is clearly living up to its responsibility as a
provider of vocational training. We offer vocational train-
ing for the occupations of Digital and Print Media Man-
agers, Marketing Managers, Office Communication Man-
agers, and Specialists in Media and Information Services,
among others. We also offer a dual work-study track
leading to a Bachelor of Science degree in business
administration.

Whether print or online, the success of media offerings
hinges on their quality and credibility. Therefore, the
provision of high-quality education to young journalists is
extremely important to us. In 2007, the Axel Springer
Academy emerged from the Axel Springer School of
Journalism, which had been founded in 1986. It is widely
considered to be Germany’s most modern journalism
school, by reason of its cross-media approach. As an
idea factory for the Axel Springer Group, the Axel Springer
Academy has already developed many interesting media
projects, some of which have received prestigious
awards. In 2010, for example, a team from the Axel
Springer Academy won the Grimme Online Award for an
Internet documentary on the 20th anniversary of the fall
of the Berlin Wall. The academy’s reputation as a highly
innovative institution is grounded also in the combination
of traditional journalism instruction with a modern, cross-
media approach. A good example of that approach was
the December 2010 “Power Plant D” project, the world’s
first iPad app developed and produced by a journalism
school. Traditionally, the Academy collaborates closely
with WELT KOMPAKT; in 2009, moreover, it entered into
a cooperation agreement with the renowned Columbia
School of Journalism in New York.

Axel Springer offers all its employees an extensive con-
tinuing education program, including seminars for man-
agers and employees, work-accompanying continuing
education courses, mentoring programs, networking
meetings, foreign-language courses, tours, and presen-
tations on topics of current interest. The purpose of all
these measures is to enable our employees to meet the
challenges arising in connection with the strategic devel-
opment of our company. In addition to its standardized
offering of seminars, our Personnel Development De-
partment also supports the operating departments and
their teams in matters of necessary departmental training.

The purpose of our “Development Dialog,” a structured
meeting between the employee and the supervising
manager that we have been introducing throughout the
company since 2008, is to help employees further de-
velop on a personalized, needs-oriented basis. About
3,900 employees from 39 departments of Axel Springer
AG and eight subsidiaries participated in these meetings
in 2010.

26 Annual Report 2010 Axel Springer AG

Promoting young talent

Systematic successor management

In 2010, we launched a Group-wide general manage-
ment program known as the Top Talent Program to
prepare 20 of our young managers for new management
responsibilities. This program, conducted in collaboration
with various business schools, runs for 18 months at a
time and starts anew every two years. Designed specifi-
cally for Axel Springer, this modular program covers
topics such as strategy, media law, finance, leadership,
and project management.

We launched a systematic successor management
program in 2010 with the goal of identifying potential
successors for key positions and providing targeted
development assistance at an early stage to prepare
them for their future roles, so that we can fill key mana-
gerial positions from within our own ranks at all times.
This program has enabled Axel Springer to conduct
long-term, cross-disciplinary successor management for
the first time.

Outstanding young talent is the future of any company.
And for that reason, we participated in more than 50
university job fairs and cooperation arrangements with
selected universities and student initiatives in 2010; more
than twice as many as in 2009. Not only did senior man-
agers of Axel Springer participate in these events, we
also developed real-life media case studies for university
marketing. As a result of these efforts, both the quantity
and quality of applications for our young talent develop-
ment programs have increased substantially.

We made our trainee program available to even more
participants in 2010. This program helps top university
graduates start their careers in the media business by
providing theoretical and methodological instruction,
promoting personal networking within the company, and
giving them the opportunity to “learn by doing” in our
operating departments. Axel Springer also develops
young talents internally; for example, it provides a college
scholarship to especially well-qualified vocational trainees.

Leadership in times of change

Creativity, entrepreneurship, integrity: These three cor-
porate values have increasingly been applied as the
basis of our management culture since the introduction
of our management principles in 2008. In 2010, we
successfully completed a workshop series entitled
“Charting the Course to a New Management Culture.”
More than 600 managers participated in more than 70
workshops to instill the new management principles
within our organization.

We also completed a leadership program entitled “Lead-
ership in Times of Change” at the beginning of 2010. The
goals of this program were to strengthen the culture of
leadership at Axel Springer, to intensify an active exami-
nation of the management conduct of every manager, to
upgrade their management capabilities, and to promote
teamwork, reflection, and feedback.

Idea management program

Our idea management program employs targeted bonus
incentives to fully exploit the idea-generating potential of
all employees, in order to make the company even more
innovative and profitable. In 2010, we paid a total of
€ 259 thousand to our employees (PY: € 264 thousand)
as a reward for the many improvement suggestions they
submitted.

Employees 27

Pension plan

By participating in the VarioRente program, a forward-
looking company pension plan based on deferred com-
pensation, our employees can accumulate an additional
pension benefit for themselves. In June 2009, the Man-
agement Board and Central Works Council of Axel
Springer AG agreed not only to extend the voluntary
pension agreement with the Central Works Council, but
also to make the terms even more attractive. The 6 %
interest paid on contributions will continue for another
three years. In addition, Axel Springer will continue to pay
an annual subsidy for another five years. The pension
plan offer was very well received again in 2010, evi-
denced by the average participation rate rising to 38 %
(PY: 35 %).

In April 2010, we launched a new, Group-wide project
entitled “Opportunities:Equal!” to increase the percentage
of women in management positions, so as to achieve a
better balance of women and men in the company’s
management. The specific goal to be pursued under this
program was defined in June: that is, to increase the
percentage of women in all management levels of the
company to more than 30 %, as a company-wide aver-
age, in the next five to eight years. Instead of a uniform
quota, we adopted individual targets for each department
of the company. At December 31, 2010, the percentage
of women in management positions at Axel Springer and
some of its subsidiaries in Germany was 19.4 %. In rec-
ognition of its exemplary personnel policies geared to
equal opportunity, Axel Springer AG was honored with the
TOTAL E-QUALITY Seal in 2010, for the third year in a row.

Equal opportunity and diversity

Compatibility of work and family

Axel Springer promotes the development of all its em-
ployees. To facilitate the implementation of suitable per-
sonnel measures and ensure equal opportunity for men
and women in the company, a special working group,
composed equally of employer and employee representa-
tives, was established in 1997. In 1999, Axel Springer
was the first media company to join the “Women in Busi-
ness” forum; and in 2008, we signed the Diversity Charter.

We improved our day care program for the children of
employees further in 2010. In June 2010, Axel Springer
AG opened up a new day care center close to its offices
in Hamburg. We also increased the number of available
spots in the day care center in Berlin, which we opened
already in April of 2008.

In the interest of helping its employees balance work and
family, Axel Springer AG entered into a master agreement
with pme Familienservice, a specialized services provider,
to provide independent advice and referrals for child care,
emergency child care, and caring for family members in
need of nursing care. Starting in 2011, this offer will be
extended to all company locations in Germany.

28 Annual Report 2010 Axel Springer AG

Social responsibility

To remain successful over time, a company must oper-
ate on a sustainable basis. At Axel Springer, our activities
are guided by the International Social Policy, which ap-
plies to all our companies worldwide, and by our Envi-
ronmental Protection Guideline. Furthermore, Axel
Springer voluntarily submits to regular EC Eco-Audits of
our printing facilities in Germany, which are conducted
by an independent appraiser to verify compliance with
our Environmental Protection Guidelines.

Since 2005, which is much sooner than most other
German companies, Axel Springer has been voluntarily
publishing a Sustainability Report every second year. The
Sustainability Report meets the more than 120 economic,
social, and ecological performance criteria of the Global
Reporting Initiative (GRI) and is also audited by an inde-
pendent institution. The latest 2009 Sustainability Report
was published in the middle of 2010. Like the one before
it, GRI gave this report its highest seal of completeness,
“Level A+.” Our current Sustainability Report can be
found at www.axelspringer.com/sustainability.

On our website www.medienarchiv68.de, launched in
early 2010, we examine another chapter in Germany’s
history: the student movement in the years from 1966 to
1968, as well as Axel Springer’s coverage of events in
those times. There, interested persons will find original
documents, including some 5,900 articles, editorials,
letters from readers, caricatures, reports, commentaries,
and interviews from those years. By that means, we seek
to examine self-critically the role of our publishing house
and newspapers during those years and encourage a
candid, differentiated debate.

In the reporting year, the WELT Group supported World
Press Freedom Day 2010 by publishing the May 3, 2010
issues of WELT and WELT KOMPAKT with empty cover
pages. The World Press Freedom Day, which was first
proclaimed by the United Nations in 1991, purports to
remind the world that free, pluralistic, and independent
media are an important element of every democratic
society, and that censorship is a violation of human
rights.

Societal engagement

Social engagement

Axel Springer is the only media company to have its own
corporate constitution. Dating back to 1967, this docu-
ment proclaims the company’s unconditional support of
liberty and the rule of law in Germany, the social market
economy, the unification of Europe, and the alliance with
the United States of America, based on shared values.
We also advocate reconciliation between Germans and
Jews, and support the vital rights of the Israeli people.

For decades, the Axel Springer publishing company also
advocated for the reunification of Germany. On the oc-
casion of the 20th anniversary of the German reunifica-
tion, we honored the “Fathers of Unity” with a memorial
installation by the French sculptor Serge Mangin, depict-
ing Helmut Kohl, George Bush (senior), and Mikhail Gor-
bachev, which was officially unveiled by Helmut Schmidt
in late September. The installation also features a plaque
quoting the words of Axel Springer: “Unity in freedom –
that is our mission.”

Axel Springer conducted numerous activities and pro-
jects in support of other socially and politically relevant
issues in 2010, including donation campaigns and the
support and recognition of volunteerism.

Donations
Haiti was struck by a powerful earthquake in January
2010, leading to the deaths of approximately 300 thou-
sand people and making another 1.2 million homeless.
To help the earthquake victims in this Caribbean country,
which is one of the poorest in the world, BILD and ZDF
jointly hosted a fundraising gala. Donations totaling
roughly € 24.0 million were collected as a result of that
broadcast.

Furthermore, the association “BILD hilft e.V.” raised a
record amount of donations, € 15.4 million, in the fund-
raising gala “A Heart for Children” in December 2010. “A
Heart for Children” has been helping children in need in
Germany and around the world for 32 years.

Social responsibility 29

Inspired by “A Heart for Children,” the Czech newspaper
BLESK, published by the joint venture Ringier Axel
Springer Media, organized its first-ever “Magic Night for
Children,” raising donations of about € 220 thousand.

Furthermore, all our locations and companies are bound
by the company’s Environmental Protection Guideline to
minimize the burden on the environment and to use
resources as efficiently as possible.

Volunteerism
The B.Z. campaign “Berlin Heroes” was very successful
again in 2010. More than 2,000 Berliners and numerous
companies volunteered more than 13 thousand “hero
hours” to work on various projects. This B.Z. campaign
also received the “Honorary Needle” of the Berlin Chari-
ties Association. And in December, it won the German
Engagement Award in the Business category, in recogni-
tion of the fact that the “Berlin Heroes” are truly unique in
the German media world.

In November 2010, the business competitiveness initia-
tive “Germany – Land of Ideas” presented the “Berliners
Help Others” initiative with the award “Selected Location
in the Land of Ideas.” This charitable association was
founded by BERLINER MORGENPOST ten years ago to
support worthy associations, institutions, and projects
devoted to helping young and old people who, through
no fault of their own, have fallen on hard times. The
award honored the exemplary nature of the social en-
gagement of the “Berliners Help Others” program. The
business competitiveness initiative “Germany – Land of
Ideas” is an innovation contest organized jointly by the
German federal government and the German business
community to honor outstanding social projects.

In Poland, the FAKT Foundation was created in 2010.
Through this foundation, the Polish mass-circulation daily
FAKT, a subsidiary of the joint venture Ringier Axel Springer
Media, helps people in need; especially poor families
with many children, single parents, older people, and
victims of natural disasters.

Sustainable business practices

Axel Springer has been documenting resource efficiency
indicators for energy, CO2, water, and waste at its print-
ing plants and office buildings already since 1998.

Environmental Indicators of the Printing Plants

per million m2 of printed paper

2010 Change yoy

Waste water (in m3)

Solid waste (in t)

Energy consumption (in MWh)

Greenhouse gas emissions (in t)

4.4

2.0

7.6

2.6

– 3.7 %

3.2 %

5.1 %

1.4 %

Compared to the prior year, we reduced the overall
volume of wastewater per square meter of printed paper
in 2010. The other environmental performance indicators
of our printing plants in Germany and Hungary were
slightly higher than the corresponding figures for 2009. A
heightened proportion of unsellable output (printer’s
waste) resulting from an increased number of shorter
print runs led to an increase in the solid waste generated
per square meter of printed paper, especially in Essen-
Kettwig. The summer of 2010 was very hot and the
month of December was unusually cold. These extreme
weather conditions also affected the electricity, natural
gas, and water consumption of our printing plants in
2010, leading to higher energy consumption and green-
house gas emissions per square meter of printed paper.

Sustainability management of our suppliers
We also expect our suppliers (especially along the wood,
paper, and recycling chain) to engage in sustainable
business practices. More specifically, we expect them to
extract raw materials in the most environmentally com-
patible way possible and produce their products in a
socially responsible manner. The corresponding ecologi-
cal and social criteria are set out in our Environmental
Protection Guideline and the International Social Policy.

30 Annual Report 2010 Axel Springer AG

Combined Management
Report of the Group
and of Axel Springer AG

General assessment of the Group’s
business performance and operating
results in 2010

At the annual shareholders’ meeting to be held on April 14,
2011, the Management Board and Supervisory Board
will propose that the company distribute a dividend of
€ 4.80 (PY: € 4.40) per qualifying share.

The Group’s business performance in 2010 exceeded
our expectations considerably. We upgraded our original
forecast, issued in March of last year, twice during the
later course of the year.

The 10.8 % increase in consolidated revenues to
€ 2,893.9 million mainly reflects the success of our inter-
nationalization and digitization strategy. The revenue
growth was further accelerated by consolidation effects
in the international and digital business. But the Group’s
total revenues also increased organically over the pre-
ceding year; adjusted for consolidation effects, revenues
were 3.5 % higher in 2010 than in 2009.

In the German print market, Axel Springer generated
outstanding results, both in the Newspapers National
segment and the Magazines National segment, on
slightly lower revenues. The development of the interna-
tional print business was heavily influenced by the first-
time consolidation of the Ringier joint venture in the sec-
ond half of the year. Revenues increased substantially
and profits rose by an even wider margin. The Digital
Media segment, which has now become the Group’s
second-biggest revenue source, continued to generate
strong growth and nearly doubled its profit.

The Group’s EBITDA (earnings before interest, taxes,
depreciation, and amortization) increased at a much
faster rate than revenues. In 2010, Axel Springer gener-
ated net income of € 510.6 million, indicative of a 53.0 %
increase over the prior-year figure and marking a new
record. The EBITDA margin rose from 12.8 % to 17.6 %.
This outstanding result attests to the operational strength
of our company. The consolidated net income after taxes
amounted to € 274.1 million (PY: € 313.8 million). Ad-
justed for non-operating effects, however, consolidated
net income amounted to € 283.2 million and was there-
fore substantially higher than the corresponding prior-
year figure (PY: € 152.6 million). The earnings per share
amounted to € 8.19 (PY: € 10.19); the adjusted earnings
per share was € 8.27 (PY: € 4.53).

Outlook for 2011

In 2011, Axel Springer will continue to pursue the three-
fold strategy of expanding its market leadership position
in the German-language core business, and advancing
the process of internationalization and digitization.

For the full year 2011, we anticipate a single-digit in-
crease in Group’s total revenues, to which all revenue
categories (circulation revenues, advertising revenues,
and other revenues) are expected to contribute. This is
without any further acquisitions. We expect that slightly
lower revenues in the national print business will be more
than offset by higher revenues in the international print
business and in the digital media business.

Again, without any further acquisitions, we expect that
EBITDA for the full year 2011 will be slightly higher than
the corresponding figure for 2010. Specifically, we ex-
pect that a slight decrease in EBITDA generated in the
national print business resulting primarily from higher
paper costs, due to rising prices, will be more than offset
by substantially higher EBITDA contributions in the inter-
national and digital business segments.

Introductory remarks

The present combined management report for Axel
Springer AG and the Group contains statements about the
economic situation and business performance of the Axel
Springer Group. These statements are also largely appli-
cable to the parent company Axel Springer AG. Additional
information on the economic situation of Axel Springer AG
is provided in a separate chapter on page 63ff.

In the interest of enhanced comparability, the operating
earnings indicator EBITDA has been adjusted for non-
recurring effects and for the effects of purchase price
allocations (see Section 31 of the notes to the financial
statements).

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

Business and framework conditions

Corporate structure and business activities

Legal structure of the Group, business locations
Axel Springer AG is an exchange-listed stock corporation
with its registered head office in Berlin. The company
maintains one other German location in Hamburg. In
addition, the Axel Springer Group comprises numerous
companies in other countries of Europe, such as in Budapest
(Hungary), Prague (Czech Republic), Warsaw (Poland),
Bratislava (Slovakia), Belgrade (Serbia), Moscow (Russia),
Zurich (Switzerland), Paris (France), and Madrid (Spain).
Through its subsidiaries, joint ventures, and licenses, we
are represented in a total of 35 countries. At December 31,
2010, the Axel Springer Group comprised 119 fully
consolidated companies, including 64 outside of Germany.
The consolidated shareholdings of the Group are listed in
Section 42 of the notes to the financial statements.

Segments and organizational structure
The business activities of Axel Springer are divided into a
total of five segments: Newspapers National, Magazines
National, Print International, Digital Media, and Ser-
vices/Holding. We employ a cross-media approach to
link these segments, both strategically and economically,
in order to make optimal use of synergies and identify all
possible ways of generating value, ideally.

Newspapers National
This segment comprises the newspaper and advertising
supplements published in Germany, which are sub-divided
into newsstand newspapers and subscription newspa-
pers, as well as regional and national newspapers.

BILD is Europe’s biggest daily newspaper. Among
newsstand newspapers, it is the market leader in
Germany by a wide margin. Together with the Berlin
newspaper B.Z., it commands a market share of 80.4 %,
based on the paid circulation of German newsstand
newspapers. B.Z. is also the market leader in the Berlin
newspaper market.

Among subscription newspapers, DIE WELT is
Germany’s third-biggest premium daily newspaper, with
a market share of 16.8 % (including the tabloid-format
WELT KOMPAKT, based on paid circulation). The big-
gest subscription newspaper in Hamburg and the sur-
rounding area is our regional newspaper HAMBURGER
ABENDBLATT, with a market share of 37.0 %, and
BERLINER MORGENPOST is the second-biggest sub-
scription newspaper of the German capital city. As for
national newspapers, our Sunday newspapers BILD am
SONNTAG and WELT am SONNTAG are the clear leaders,
commanding an 85.0 % share of the circulation market.

32 Annual Report 2010 Axel Springer AG

Magazines National
Axel Springer is the third-biggest German magazine
publisher, with leading market positions in all the main
segments.

circulation newspapers segment, Axel Springer is cur-
rently the market leader in four countries of eastern
Europe (to become five countries, once the joint venture
with Ringier is approved by the Hungarian cartel authority).
In western Europe, Axel Springer’s activities are focused
on the countries of Switzerland, France, and Spain.

In the category of TV program guides and women’s
media, the biweekly TV DIGITAL is the highest-circulation
TV program guide in the high-price segment, while HÖRZU
occupies the leading position in the category of premium
weekly TV program guides. The market leader in the
category of women’s magazines is BILD der FRAU, with
a circulation market share of 19.9 %.

Nearly all the Group’s automotive, computer, and
sports media are derived from the BILD family of
brands. AUTO BILD, COMPUTER BILD, and SPORT
BILD are each leaders in Europe in their respective cate-
gories. The Group’s specialty titles also occupy top
positions in their respective market segments.

The market segment of music magazines comprises
ROLLING STONE, MUSIKEXPRESS, and METAL HAMMER.

Print International
Outside Germany, Axel Springer publishes more than
170 newspapers and magazines through its own sub-
sidiaries and joint ventures, and by way of licensing. The
Group’s international activities are focused mainly on
eastern Europe, where Axel Springer has further ex-
tended both its presence and its portfolio through the
joint venture Ringier Axel Springer Media. In the mass-

Eastern European markets
In Hungary, Axel Springer publishes more than 30
magazines and ten daily newspapers, and is that coun-
try’s second-biggest publishing company, with a market
share of 21.4 %, based on paid circulation. Axel Springer
is the leading publisher of TV program guides, regional
and business newspapers, home as well as garden
magazines, automotive magazines, cooking magazines,
and puzzle magazines.

Axel Springer and Ringier will contribute their Hungarian
activities to the joint venture Ringier Axel Springer Media
following the approval by the cartel authority. One of the
publications to be contributed by Ringier is Blikk, which
is the biggest mass-circulation newspaper in Hungary,
based on paid circulation.

In Poland, Ringier Axel Springer Media publishes three
newspapers and 14 magazines. These includes Poland’s
leading newsstand newspaper FAKT and the country’s
only sports daily PRZEGLAD SPORTOWY and give us a
market share of 39.7 % in the national daily newspapers
segment, based on paid circulation, making Ringier Axel
Springer Media the biggest newspaper publisher in Poland.

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

Business and framework conditions

In the Czech Republic, our joint venture with Ringier is
the biggest publishing house, with six newspapers and
eleven magazines. Besides the leading mass-circulation
newspaper BLESK, Axel Springer is also the market
leader in the category of automotive magazines. And
BLESK PRO ZENY is the widest-reach women’s maga-
zine in that country.

Axel Springer’s market leadership position in Slovakia is
largely based on the NOVY CAS family of brands, con-
sisting of two newspapers and four magazines. The
eponymous mass-circulation newspaper is the country’s
biggest newspaper, with a market share of 44.1 %. In
total, Ringier Axel Springer Media publishes two news-
papers and nine magazines in Slovakia.

In Serbia, Ringier Axel Springer Media publishes four
newspapers and four magazines, and is the publisher
with the highest total circulation and the widest reach in
that country. With BLIC the joint venture also publishes
the biggest newspaper in Serbia.

Thanks to the G+J portfolio, which was acquired in 2009,
we now publish seven titles in Russia: the business
magazine FORBES, COMPUTER BILD, OK!, GEO, GALA
BIOGRAFIA, GEO TRAVELLER, and GEOLENOK.

Through our 40 % investment in Edipresse AS Romania,
Axel Springer publishes a total of 13 magazines in Romania.

Western European markets
In Switzerland, Axel Springer publishes HANDELSZEITUNG,
as well as 14 magazines. It is the market leader in the
segments of business and finance magazines and TV
program guides. The business magazine BILANZ and
the business newspaper HANDELSZEITUNG are the
most-read publications in the business segment. In the
category of general-interest magazines, Axel Springer
publishes the country’s biggest subscription magazine,
BEOBACHTER; in the category of TV program guides,
the Group is likewise the market leader, through its pub-
lications TELE and TV STAR.

In France, we publish a total of nine titles, including TV
program guides, women’s magazines, cooking maga-
zines, and automotive magazines. Four of those titles are

published in a joint venture with the Mondadori Group.
The most important titles are the TV program guide TELE
MAGAZINE, the cooking magazine VIE PRATIQUE
GOURMAND, and the automotive magazine AUTO PLUS.

Axel Springer publishes twelve magazines in Spain. We
are the No. 1 publisher in the category of video game
and computer magazines; in the automotive magazine
segment, we publish the market leaders AUTO BILD
ESPAÑA and AUTO BILD 4x4.

Digital Media
The Digital Media segment comprises our German online
offerings, as well as our digital activities in foreign countries,
and our portfolio of radio and television investments.

Content portals
Bild.de is the widest-reach German-language information
and entertainment portal, as well as one of the leading
moving-image platforms on the German Internet thanks
to its video portals.

With an average of more than 14.9 million visits per
month, BILDmobil is the biggest German information
portal for mobile terminal devices, while WELT ONLINE
occupies the leadership position among the websites of
German premium newspapers.

Axel Springer’s portfolio in this segment is supplemented by
the online portals of the Group’s German regional news-
papers and magazines, and its foreign print media. Axel
Springer also operates the women’s portal aufeminin.com,
the European market leader among websites for fashion,
beauty, and lifestyle, as well as a large number of special-
interest portals, such as the finance portal finanzen.net

34 Annual Report 2010 Axel Springer AG

and the online games provider gamigo.de, for example. In
addition, we operate a soccer community, transfermarkt.de.

rotogravure joint venture PRINOVIS, as well as the inter-
nal departments of Logistics and Distribution, and vari-
ous service and holding company functions.

Marketplaces
Whether they are looking for jobs, real estate, or cars,
our online marketplaces help Internet users find the right
products, amid the sheer abundance of available offerings.
StepStone is one of the leading online job exchanges in
Europe; idealo.de is one of the biggest German search
engines for price and product comparisons; and immonet.de
is likewise one of the leading German online portals for
real estate marketing. Axel Springer also holds invest-
ments in autohaus24.de, a multi-brand new car portal
(19.9 %), and in buecher.de (33.3 %), an online shop for
books, music, and movies. Furthermore, Axel Springer
holds a 12.4 % equity interest in SeLoger.com, the lead-
ing French real estate portal; in addition, we have issued
a public takeover bid for that company (see page 43). In
India, Axel Springer is invested in Carwale.com, the
market leader in the online segment of new and used car
brokerage, and in BagItToday.com, a marketplace for
lifestyle products.

Marketing
Through the zanox Group (including Digital Window and
buy.at), Axel Springer is the European market leader and
one of the world’s leading service providers in the seg-
ment of performance-based online marketing. As an
independent service provider, we help advertisers con-
duct and optimize their online advertising campaigns.

TV/radio activities
In the TV/radio sector, the Group holds a non-controlling
interest in Turkey’s biggest private-sector TV and radio
company, the Do⁄an TV Group. This TV Group is the
market leader, both in terms of audience shares and
advertising market shares. Schwartzkopff TV is a suc-
cessful production company specializing in TV enter-
tainment formats. Axel Springer also holds investments
in regional TV stations in the key markets of Hamburg
and Berlin, and non-controlling interests in Germany’s
most successful radio stations.

Services/Holding
The Services/Holding segment comprises the Group’s
own newspaper printing plants and its investment in the

Management and supervision

Management principles
Axel Springer’s management principles are aligned with
our core values of creativity, entrepreneurship, and integ-
rity, as well as the five principles enshrined in Axel
Springer’s own corporate constitution. For more informa-
tion on our internal guidelines, please refer to the state-
ments on corporate governance on page 84 of this an-
nual report.

Management Board divisions
Our Management Board is composed of four members;
their work is supervised and supported by a Supervisory
Board composed of nine members.

Every one of our clearly defined corporate divisions is
firmly assigned to one of the four Management Board
members as described below.

Management Board Chairman Dr. Mathias Döpfner
heads up the Management Board division Subscription
Newspapers and International, which comprises the
newspapers, and the online and mobile portfolios of the
WELT Group, and the cross-media offerings of our re-
gional newspapers. He is also responsible for our multi-
media brands in the fast-growing international markets.
This Management Board division also covers the corpo-
rate staff functions of Information and Public Relations,
Executive Personnel, Security, Public Affairs, Customer
Loyalty Reinforcement, and the Axel Springer Academy.

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

Business and framework conditions

The Vice Chairman of the Management Board, Rudolf
Knepper, heads up the Management Board division
Printing, Logistics, and HR, which comprises the
offset printing plants, logistics and services, and the
investment in the rotogravure joint venture PRINOVIS.
This Management Board division also covers Corporate
Purchasing and Human Resources.

Lothar Lanz is the Management Board member in
charge of Finance and Services. This division com-
prises the financial staff and service functions, such as
Corporate Accounting, Corporate Controlling/ Corporate
Development, Corporate Finance, Mergers & Acquisi-
tions, Legal, Taxation, Governance, Risk, & Compliance,
IT, and Investor Relations.

Dr. Andreas Wiele heads up the Management Board
division BILD Group and Magazines, which comprises
the cross-media offerings of the BILD family of brands
and the corresponding magazines, sub-divided into the
publishing groups BILD and BILD am SONNTAG; auto-
motive, computer, and sports media; TV program guides,
and women’s media.

As a company-wide function, the “Electronic Media” man-
agement division reports directly to the full Management
Board. The Axel Springer Media Impact division reports
to the two Management Board members in charge of the
market-oriented divisions “Subscription Newspapers and
International” and “BILD Group and Magazines.”

Basic principles of the compensation system
We compensate our employees, all the way up to the
top management level, on the basis of their performance
and success. Axel Springer introduced a variable com-
pensation system based on target agreements in 2007.
The targets are agreed every year anew; they include
both corporate targets and individual division targets. In
2010, moreover, we paid a voluntary, profit-sharing
bonus of € 500 to qualifying employees.

The compensation of the Management Board is likewise
determined on the basis of their performance and suc-
cess. Their compensation includes a remuneration as
well as variable components, some of which are geared
to the achievement of Group and individual targets, while

others are geared to the long-term increase in the com-
pany’s value (as measured by the performance of the
Axel Springer share). A detailed description of Manage-
ment Board compensation can be found in the “Com-
pensation Report” section of the “Corporate Govern-
ance” chapter (starting on page 91). There, you will also
find information on the compensation of our Supervisory
Board members (starting on page 93).

Important products, services, and business processes
The revenues of the Axel Springer Group are mainly com-
posed of circulation and advertising revenues. Circulation
revenues are generated on the sales of our newspapers,
magazines, and digital information and entertainment
offerings, while advertising revenues are generated by
marketing the reach of our print and online media.

Our value chain is designed on a cross-media basis. It
comprises all the important processes of a media com-
pany, from conception to editorial process and produc-
tion, distribution, and marketing.

Cross-media concept
We constantly strive to enhance the presentation of our
information and entertainment offerings, for example by
improving existing formats with new editorial and graphic
concepts or by introducing new products. In that respect,
we place an especially strong emphasis on our digital
media portfolio, the further development of which is
crucial to the success of our operating business. For that
reason, we also employ market research and pilot pro-
jects to identify highly promising trends and technologies
at an early stage and to participate in their progression.
At the same time, we always apply a cross-media ap-
proach, so that we can make optimal use of synergies,
expertise, and reach.

Editorial content
Producing journalistic content in a creative and efficient
way, and exploiting that content on a cross-media basis,
is one of our core competencies. All journalistic content
is gathered in our newsrooms and processed there in
accordance with the demands of our print and online
media. We operate such integrated newsrooms for the

36 Annual Report 2010 Axel Springer AG

print, online, and moving-image media of the BILD and
WELT Groups, as well as BERLINER MORGENPOST,
B.Z., and HAMBURGER ABENDBLATT, for example,
and also for some of our international editorial teams.

Production
We produce our German newspapers in the Group’s
own three offset printing plants in Hamburg-Ahrensburg,
Essen-Kettwig, and Berlin-Spandau, among other places.
We perform all the necessary steps ourselves, from plate
production to shipping logistics. The production process
for our digital media usually involves the processing and
aggregation of information in databases and the posting
of that information on our websites or other digital re-
sources. For that purpose, we employ hardware in the
form of server capacities and the appropriate software,
and take the necessary steps to assure the right flow of
data and information among the different components.

Distribution
Our newspapers and magazines are distributed in more
than 120 thousand retail sales outlets, which are sup-
plied in a fast, reliable manner, employing a sophisticated
logistics and transport system. We also distribute our
media worldwide, via press wholesalers and press im-
port companies.

We distribute our digital media through a variety of chan-
nels, including the Internet, mobile terminal devices, and
download platforms like Apple’s App Store. In 2010, we
developed a new distribution channel, the kiosk app
“iKiosk,” featuring more than 30 newspapers and maga-
zines, and the associated Internet platform ikiosk.de.

Marketing
Another important revenue source for Axel Springer,
besides the traditional circulation revenues generated on
sales of our print titles, are advertising revenues. In that
respect, our journalistic content serves the purpose of
reaching the target groups that are relevant to advertis-
ers, so as to generate the reach that can be marketed in
the form of ad space.

Aside from the transaction-driven marketing models
employed by companies such as idealo.de, for example,
Axel Springer also offers a wide range of other online

advertising, such as banners, layer ads, and wallpaper,
as well as video formats, all of which are used for tradi-
tional reach marketing. We also seek to harness the
potential of the growing online market by expanding our
own online marketing activities. As the leading platform
in Europe for performance-based online marketing, the
zanox Group brings advertisers and publishers together
on the Internet, so as to generate new sales and market-
ing possibilities for them on an international level. Adver-
tisers use our platforms to make their products and services
available so that publishers can advertise those products
and services by means of text links, ad banners, and online
videos. While the publishers receive a commission from
the advertisers for every successfully completed online
transaction, our platform operates as an independent
service provider, recording data flows and transactions,
providing the necessary infrastructure, and offering spe-
cial services, including the payment of commissions.

Axel Springer’s newspapers and magazines, and its brand-
derived digital media, are centrally marketed in Germany
by Axel Springer Media Impact, the country’s leading
cross-media marketer (based on gross market shares).

Strategy and success monitoring

The goal of our corporate strategy, which comprises the
three main tenets of market leadership in the German-
speaking world, internationalization, and digitization, is to
sustainably increase the company value of Axel Springer
by means of profitable growth.

Strategy
In view of the constantly growing use of digital media,
we instigated the transformation from a mostly print-
dominated publishing house to an integrated cross-
media provider at an early stage. The long-term goal of
our efforts to further develop our offerings in Germany
and abroad and expand our digital activities is to be-
come Europe’s leading multimedia company, with strong
brands and revenues and profits derived to an equal
share from our print and digital activities. We are pursu-
ing this goal intensively by means of extending our lead-
ing market position in the German-language core busi-
ness, and by driving internationalization and digitization.

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

Business and framework conditions

Market leadership in the German-language core business
Axel Springer is the market leader in the German-language
print business. Based on paid circulation, we are the No. 1
publisher of newspapers and the No. 3 publisher of maga-
zines. We strive to secure and solidify our market leader-
ship position by continually developing and implementing
creative new journalism concepts, and by improving our
existing print media or adapting them to suit changing
reader preferences, in matters of conception, journalistic
quality, and/or layout. We also conduct targeted market-
ing campaigns and other activities to reinforce the brand
loyalty of our readers. Most of all, we focus on continually
improving our strong brands in combination with innova-
tive cross-media advertising formats, in order to allow for
optimal exploitation of the wide reach of our print and
online media.

Internationalization
Axel Springer’s internationalization strategy is focused
primarily on eastern Europe, where we launch or pur-
chase new titles and also act as licensors and licensees
for magazines or newspapers. Appropriate investments
are chosen on the basis of business strategies that fit in
well with those of the Axel Springer Group, as well as the
professionalism of their management, and the monetization
potential of their digital business models.

The joint venture with Ringier is an important milestone in
our internationalization strategy. With five market-leading
mass-circulation newspapers in attractive growth markets
(pending the approval of the competent cartel authority
in Hungary), this partnership provides an outstanding
basis for the further expansion of our core business of
journalism; it also creates ideal conditions for the further
expansion of our digital media business.

Digitization
In its digital business, Axel Springer focuses on its three
main areas of competence: content portals, online mar-
ketplaces, and online marketing. We develop our busi-
ness by means of organic growth and acquisitions.

in a targeted manner. Thanks to the continuous im-
provement of editorial content and intensive networking
with virtual networks and online communities, the target
groups, and consequently also the reach values of our
content portals, are growing as well. In our content por-
tals, we are increasingly moving also in the direction of
paid premium content and offerings, putting to good use
the experiences we have gathered from the formats
introduced during the course of the past year. By that
means, we are exploiting new potential revenue sources.

Our online marketplaces like StepStone, idealo.de,
and immonet.de are attractive platforms for online shop-
ping and online classified ads. We are constantly improv-
ing these marketplaces, while also taking advantage of
the synergies resulting from the combination with our
content portals and print titles.

We are also exploiting the potential of the growing online
market by expanding our own online marketing activi-
ties. In line with our strategy, we are seeking to further
expand the offerings of the zanox Group and the online
marketing activities of our marketer Axel Springer Media
Impact.

Internal management system
We have designed our internal management system and
have designed suitable control parameters on the basis
of our corporate strategy. We use both financial and
non-financial performance indicators to measure the
success of our strategy.

Detailed monthly reports are an important element of our
internal management and control system. Those reports
contain the monthly results of our most important publi-
cations, along with a consolidated statement of financial
position, income statement and cash flow statement. We
use these reports to compare actual values with budget
values; in case of deviations, we conduct further analy-
ses or initiate suitable corrective measures.

We strive to transfer those attributes that make our print
media so outstanding – journalistic quality and strong
brands – to our national and international content portals

These reports are supplemented by periodic forecasts of
anticipated advertising revenues in the next few weeks
and months and forecasts of the probable development
of our financial performance.

38 Annual Report 2010 Axel Springer AG

Financial performance indicators and control parameters
Our central focus is to sustainably increase both the profit-
ability and value of our company. The most important target
and control parameters for the company’s financial per-
formance are revenues and earnings (measured by EBITDA).
Those parameters also form the basis for the performance-
based remuneration of our Management Board and other
top executives (please refer to page 91 for more informa-
tion on our compensation system). Both these indicators
and the EBITDA margin derived from them are anchored in
our internal planning and controlling system.

We employ various relative indicators to monitor the
successful implementation of our strategy, including the
proportion of consolidated revenues represented by
international revenues, for the purpose of analyzing the
progress we are making towards the goal of internation-
alization, and the revenues of the “Digital Media” seg-
ment as a benchmark for our progress on digitization.

We employ a capitalized value method based on weighted
capital costs to assess the economic efficiency of invest-
ments in new or existing business lines. The weighted
capital cost rate is calculated on the basis of an ideal
capital structure.

The risk of a capital investment project is generally repre-
sented by using a capital markets equilibrium model, apply-
ing a beta factor (for the business-specific, systematic risk),
and a market premium (for the country-specific, non-
systematic market risk). As a general rule, it is assumed
that the company’s systematic risk is equivalent, on aver-
age, to that of comparable companies in our peer group of
European media companies. Other specific risks are addi-
tionally reflected in the updated, weighted capital costs.

Financial Performance Indicators

Selected financial performance indicators
on the Group level, in € millions

Consolidated revenues

2010

2009

2,893.9

2,611.6

Proportion of international revenues

28.1 %

21.0 %

Proportion of digital media1)

EBITDA

EBITDA margin

24.4 %

21.2 %

510.6

333.7

17.6 %

12.8 %

1) Basis: Pro forma revenues in the Digital Media segment and pro forma revenues total.

Non-financial performance indicators and control parameters
Besides financial performance indicators, we also em-
ploy non-financial performance indicators to measure our
success relative to the further development of our com-
pany, the implementation of our strategies, and the en-
hancement of our company value. Although the non-
financial performance indicators are not reflected in our
income statement, they are nonetheless key drivers of
Axel Springer’s value-driven development. They serve as
early indicators, both of changes in financial performance
indicators and of the success of strategic measures, and
therefore they enable us to quickly initiate corrective
measures when necessary.

The following non-financial performance indicators are
significant for monitoring the company’s performance
relative to customers, markets, and products offered:

(cid:132) Average paid circulation of all significant newspapers

and magazines;

(cid:132) Average monthly unique visitors/visits, and other

business model-specific indicators of our online media,
and the resulting market position;

(cid:132) Reach values of our media in the advertising market
and indicators of brand and advertisement familiarity.

Axel Springer has also set itself the goal of being Europe’s
most customer-friendly media company. To that end, since
2007 we have developed an elaborate measurement and
evaluation system to measure our annual customer
retention index, in collaboration with the institution TNS
Infratest. This index is the most important indicator of
satisfaction and loyalty of our readers and advertising
customers. It is composed of numerous factors, includ-
ing the perceived quality of our publications, the brand
loyalty of our customers, repeat purchase rates, and the
respective competitive advantage. The customer reten-
tion initiative has triggered a cultural transformation in our
company and further bolstered our commitment to cus-
tomers over the last four years. And thanks to the multi-
faceted measures aimed at delivering added value to all
our customer groups, it makes a strategic contribution to
the long-term business success of our Group.

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

Business and framework conditions

In order to identify and promote efficient processes
within our company as well, we measure the quality of
our internal cooperation and service orientation in a
similar manner and aggregate the results to form an
internal customer retention index. Together with the
external customer retention index, this indicator forms
the basis for a continuous improvement process that
contributes to the long-term enhancement of the com-
pany’s profitability.

In addition to the above-mentioned control parameters,
Axel Springer also counts social and ecological factors
among its non-financial performance indicators. For their
observation, we rely on the sustainability criteria of the
Global Reporting Initiative (GRI). Our main ecological
efficiency indicators are wastewater volumes, solid waste
quantities, climate-affecting emissions, and energy con-
sumption. For more information on the subject of sus-
tainability, please refer to page 29 of this annual report or
to our sustainability report.

Research and development

Axel Springer does not have a traditional research and
development department of the kind that can be found in
industrial enterprises; nonetheless, throughout the com-
pany, we constantly strive to optimize our offerings and
to establish innovative products in the market. Above all,
we continuously introduce new print, online, or mobile
formats, develop our editorial content, and uphold our
journalistic excellence. In that regard, we pay especially
close attention to identifying changing media usage
habits as early as possible.

In our print business, we developed and tested innova-
tive new formats last year, including 3-D versions of BILD
and BILD am SONNTAG. We also introduced HÖRZU
HEIMAT as a stand-alone magazine format.

In our digital business, we expanded our paid-content
offerings for mobile terminal devices. Concurrently with
the market introduction of the iPad in the United States,
we launched the iKiosk, an app featuring an extensive
selection of our newspapers and magazines. In May,
moreover, we launched the first digital magazine devel-
oped specifically for the iPad, “THE ICONIST,” a lifestyle

app that combines the pleasure of reading print titles
with the considerable added benefits of digital formats.
Another premiere was the first iPad app for car lovers,
which our French automotive magazine SPORT AUTO
introduced to the market in 2010. All in all, we expanded
our offering of iPhone and iPad apps substantially in
2010. In May, for example, we introduced the iPad app
WELT HD to coincide with the launch of our iKiosk in
Germany, followed in December by another iPad app,
BILD HD, both of which underscored the innovation
strength of Axel Springer.

Our classified ad marketplaces also came out with inno-
vative new apps last year. For example, StepStone intro-
duced its job market app for the iPhone and immonet.de
developed the first app for mobile real estate research,
featuring innovative augmented-reality technology (see
page 58).

An important innovation in the TV sector is watchmi. This
service, launched at the beginning of last year, combines
TV program data from the TV DIGITAL editorial team with
a self-learning software program that automatically re-
cords TV shows according to the user’s individual pref-
erences, so that they can be watched at any time.

Overview of business developments

General economic environment
The recovery of the global economy continued in 2010.

However, the strength of the worldwide economic re-
covery varied widely. Emerging-market countries, and
especially China, had already put the economic crisis
behind them in the summer of 2010; in the meantime,
they have actually undertaken restrictive monetary and
fiscal policy measures to counter rising inflationary pres-
sures. The industrialized nations, on the other hand, have
not yet returned to their former economic strength. Per-
sistent structural problems in the financial and real estate
sectors and strong budget consolidation pressures to
address the high levels of private and public debt ham-
pered the economic recovery, especially in the United
States and in the peripheral euro zone countries of Por-
tugal, Ireland, Greece, and Spain (Ifo Institute 2010;
OECD 2010).

40 Annual Report 2010 Axel Springer AG

The German economy, by contrast, experienced
strong growth in 2010 and recovered from the economic
crisis more quickly than neighboring countries. Accord-
ing to calculations of the German Federal Statistical
Office, German gross domestic product expanded at an
inflation-adjusted rate of 3.6 %. Once again, foreign trade
was an important driver of economic growth: Exports
increased at a real rate of 14.2 %, imports at a some-
what slower rate of 13.0 %. But domestic demand pro-
vided an even stronger boost to the German economy.
Investment spending was especially important, having
increased at an inflation-adjusted rate of 5.5 %, while
consumer spending rose at a rate of 0.5 % (German
Federal Statistical Office).

According to the German Federal Statistical Office, the
inflation rate was 1.1 % in 2010, that being significantly
higher than the inflation rate in 2009 (+ 0.4 %). Food and
energy prices were the main culprits. According to sur-
veys conducted by the market research company GfK
Group, consumer sentiment improved markedly during
the course of 2010, with income expectations and pur-
chasing propensity rising to high levels, especially in the
final quarter of the year.

The jobs market benefited substantially from the economic
recovery. The number of unemployed job-seekers fell by
5.2 % to an average of 3.2 million in 2010. At the same
time, the imposition of shortened work hours declined
considerably (German Federal Employment Agency).

Internationally, the countries of central and eastern
Europe mostly recovered in 2010 from the serious eco-
nomic downturn, helped in particular by substantially
higher exports.

Anticipated Economic Development (Selection)

Change in gross domestic product
compared to prior year (real)

Germany

Switzerland

France

Spain

Hungary

Poland

Czech Republic

Slovakia

Serbia1)

Russia1)

2010

3.6 %

2.6 %

1.6 %

– 0.2 %

1.1 %

3.5 %

2.4 %

4.1 %

1.5 %

4.0 %

Forecast values, with the exception of Germany. Source: Eurostat.
1) Source: IWF.

Industry environment
Press distribution market
Continuing the trend of prior years, the German press
distribution market contracted slightly in 2010.The total
paid circulation of the newspapers and magazines
tracked by the German circulation research institution
IVW, weighted for their respective publication frequen-
cies, was 2.9 % lower than the corresponding figure for
the prior-year period. Thanks to the price increases
implemented over the last four quarters, however, circula-
tion revenues were only 1.3 % less than the corre-
sponding prior-year figure.

All together, the 369 daily and Sunday newspapers
tracked by IVW generated total sales of 22.6 million units
per issue, indicative of a 2.7 % decrease compared to the
prior-year period. With a decline of 5.0 %, newsstand sales
suffered a much steeper drop than subscription sales
(– 1.7 %); thus, the trend observed in the prior year contin-
ued in 2010. Within the press distribution market, the
demand for daily and Sunday newspapers (weighted for
their respective publication frequencies) declined by 2.8 %.

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

Business and framework conditions

At 112.9 million units per issue, total sales of general-
interest magazines (including membership and club
magazines) declined by 2.1 % from the prior year. Having
managed a slight gain of 0.2 %, newsstand sales fared
better than subscription sales (– 2.2 %). The demand for
general-interest magazines, weighted for their respective
publication frequencies, declined by 3.4 % in 2010.

Whereas print media circulation numbers declined again,
the popularity of online media increased further in 2010.
According to the study entitled “internet facts 2010-III”
published by the online research association Arbeitsge-
meinschaft Online Forschung (AGOF), 50.7 million people
in Germany already use the Internet (users during the last
three months). That corresponds to 71.9 % of German
residents aged 14 and older. As the Internet has become
established in all segments of the population, the demo-
graphic structure of Internet users has drawn increasingly
closer to that of the overall population. Of the 50.7 million
people who use the Internet on a regular basis, 65.4 %
use it to obtain news about world events and 57.9 % use
it for regional or local news. Thus, news is one of the main
reasons for using the Internet, besides e-mail, online
research, and weather information. Jobs and real estate
listings were also two of the 20 most-used online categories.

Based on IVW data, the content portals of the German
print media were visited much more frequently in 2010 than
in 2009. Thus, the 20 most-visited portals of German daily
newspapers registered an average 35.5 % increase, those
of magazines a 17.6 % increase in the number of visits.

Advertising market
The German advertising market experienced an appre-
ciable recovery in 2010. According to Nielsen Media
Research, the total gross advertising market in-
creased by 11.8 % to reach € 21.2 billion. This gain
resulted mainly from increases in online media and televi-
sion. The gross advertising revenues (excluding media
advertising) surveyed by Nielsen Media Research refer
only to ads for branded products and services and for
large retail chains, and do not include classified ads and
advertising supplements; therefore, those figures do not
fully reflect the actual, total business performance. In
addition, gross advertising revenues are based on offi-
cially listed standard advertising rates, while net advertis-

ing revenues take into consideration discounts allowed
and free ad space. The latter figure, therefore, is a more
transparent indicator of actual advertising revenues. Thus,
the Association of the German Advertising Industry (ZAW)
estimates that net advertising revenues increased
by 1.9 % across all types of media. At € 6.7 billion, the
gross advertising revenues of the print media (excluding
classified ads and advertising supplements and exclud-
ing media advertising) were 1.1 % higher than the corre-
sponding prior-year figure.

According to Nielsen Media Research, the volume of
display ads in newspapers (excluding classified ads and
media advertising) declined slightly by 1.8 % in 2010.
The higher volume of advertising expenditures in certain
sectors (including services, finance, home and garden
equipment, and construction, among others) was not
enough to offset the lower volume of advertising expen-
ditures in numerous other industries (especially retail,
automotive, tourism, energy, health, and pharmaceuti-
cals). The decrease in the retail sector resulted mainly
from the reduced advertising print volume of discount
stores. According to ZMG statistics (Zeitungs Marketing
Gesellschaft), regional subscription newspapers (includ-
ing classified ads) also suffered declines, with a 5.4 %
decrease in net ad volumes in 2010. With the exception
of job ads, all other classified ads, and especially those
for real estate, travel, and cars, were lower in 2010.
Thanks to the improved situation of the employment
market, by contrast, the volume of job ads exhibited a
clearly positive development (+ 11.2 %). The ad volumes
of national newspapers (including classified ads) declined
by an average of 1.3 % in 2010 (S+H Medienstatistik).

According to Nielsen Media Research, the gross adver-
tising revenues of general-interest magazines (exclud-
ing media advertising) increased by 5.2 % in 2010 to
reach € 2.7 billion. The categories that benefited most
from this increase were illustrated current-interest maga-
zines (+ 8.7 %), automotive magazines (+ 10.1 %), home
and garden magazines (+ 12.7 %), monthly women’s
magazines (+ 4.6 %), and weekly women’s magazines
(+ 4.7 %). The categories that sustained revenue declines
in 2010 were primarily IT/telecommunications magazines
(– 7.8 %), and biweekly women’s magazines (– 2.0 %).

42 Annual Report 2010 Axel Springer AG

Also in the case of general-interest magazines, the de-
velopment of net advertising revenues was unfavorable.

Print Advertising Demand 2010 (Selection)

According to Nielsen Media Research, gross advertising
revenues (excluding media advertising) in the German
online market (conventional banner advertising, exclud-
ing search term marketing and affiliates) rose by 36.2 %
to € 2.3 billion in 2010. The revenue increase in conven-
tional online banner formats occurred mainly in the sec-
tors of services, finance, automotive, personal care
products, retail, food, and telecommunications. Also in
the online market, the development of gross advertising
revenues does not adequately reflect the real trend. On a
net basis, ZenithOptimedia estimates that the German
online advertising market (including search term market-
ing and affiliates) increased by 18.2 % in 2010.

According to Nielsen Media Research, the gross adver-
tising revenues of advertising-financed TV in Germany
(excluding media advertising) were also substantially
higher in 2010, having risen by 16.3 % to € 10.2 billion.
Whereas the gross advertising revenues of private-sector
TV stations increased by 16.6 % to € 9.8 billion, the
advertising revenues of state-owned TV stations rose by
10.3 % to € 376.7 million.

In the German radio market, gross advertising revenues
(excluding media advertising) increased by 5.3 % to
€ 1.2 billion. The gross advertising revenues of state-
owned radio stations were 12.4 % higher and those of
private-sector radio stations were 2.6 % higher than the
respective prior-year figures.

Also in the case of TV and radio advertising revenues,
gross advertising revenues do not truly reflect the actual
development.

Change in net ad revenues
compared to prior year (nominal)

Newspapers Magazines

Germany

France1)

Spain1)

Hungary

Poland1)

Russia2)

Switzerland3)

Czech Republic3)

Slovakia3)

Serbia3)

– 2.2 %

– 2.9 %

– 5.7 %

– 5.2 %

– 8.9 %

1.6 %

35.2 %

– 3.0 %

8.5 %

– 1.9 %

0.5 %

– 5.0 %

– 6.7 %

– 8.2 %

11.8 %

10.8 %

6.4 %

– 5.1 %

6.6 %

Source: ZenithOptimedia, Advertising Expenditure Forecast (December) 2010.

1) Excluding classified ads.
2) Print media in total.
3) Gross advertising revenues, excluding classified ads. Gross advertising revenues do
not adequately reflect the actual development of advertising revenues; that is par-
ticularly true of the Czech Republic, due to non-recurring effects.

Acquisitions, divestitures, and strategic partnerships
In 2010, the business performance of the Axel Springer
Group was heavily influenced by the expansion of inter-
national operations. Specifically, we acquired new com-
panies, entered into strategic partnerships, and generally
broadened our portfolio even more.

Of particular importance is the joint venture Ringier Axel
Springer Media AG, which is headquartered in Zurich. The
Swiss publisher Ringier AG and Axel Springer AG contrib-
uted their eastern European media activities in a total of
five countries (50 % interest in all cases; cartel approval for
the Hungarian activities is still pending) to this joint
venture, which was formed on July 1, 2010. Axel Springer
also made a cash capital contribution of approximately
€ 39 million to the joint venture and a compensation pay-
ment of approximately € 125 million to Ringier.

As a result of this combination of the partners’ business
activities in Hungary, the Czech Republic, Poland, Slovakia,
and Serbia, the joint venture is one of the leading multi-
media companies in eastern Europe. Thanks to its strong,
successful brands, its wide-ranging portfolio, and the
clear focus on growth and digitization, moreover, Ringier
Axel Springer Media AG is the market leader in the seg-
ment of mass-circulation newspapers and one of the

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

Business and framework conditions

biggest magazine publishers in every one of the coun-
tries named above. Thus, the formation of the joint ven-
ture had a major influence on the performance of Axel
Springer’s international print activities in 2010. The activi-
ties of Ringier Axel Springer Media AG have been fully
consolidated in the consolidated financial statements of
Axel Springer AG since July 1, 2010.

The joint venture Ringier Axel Springer Media has
boosted our international print business in several impor-
tant ways. For example, we have tapped new markets
like Serbia and Slovakia and expanded our activities in
the Czech Republic. Furthermore, we acquired the licens-
ing rights to publish the magazine GEO in the Czech
Republic, Slovakia, and Hungary.

Axel Springer Russia had already purchased all the equity
in G+J Russia in the fourth quarter of 2009. The acquisition
was completed in March 2010, when the cartel authority
issued its approval; since then, Axel Springer has pub-
lished GEO, GALA BIOGRAFIA, GEO TRAVELLER, and
GEOLENOK, as well as various online products, in Russia.

In the national print business, we focused even more on
our highest-circulation and widest-reach German titles and
streamlined our portfolio of newspapers and magazines in
a targeted manner. In the first quarter of 2010, for example,
we implemented the sale of our investment in Westfalen-
Blatt, which had been agreed in the prior year. In the
second quarter, we sold the business and financial maga-
zines Euro and Euro am Sonntag, which had belonged to
Axel Springer Financial Media, and our investment in
CORA Verlag, a publisher of entertainment literature.

In Axel Springer’s digital business, we focused on ex-
panding our range of performance-based online market-
ing services in 2010, among other things. In early March
2010, the Digital Window network of affiliates was
strengthened by the acquisition of Perfiliate Ltd., which
operates under the name buy.at in Great Britain and the
United States. Jointly with PubliGroupe, we then contri-
buted our shares in Digital Window to the zanox Group,
making it one of the leading European companies in the
business of performance-based online marketing.

In April 2010, immonet.de acquired the company
Umzugsauktion GmbH & Co. KG, which offers price
comparisons among moving companies and connects

potential customers with vendors on its web portal
umzugsauktion.de.

We also accelerated the international expansion of our
online classified ad markets. Having completed the sale
of the Solutions division of StepStone in the second
quarter of 2010, we have been able to sharpen even
more our focus on further developing the company’s
online job exchanges.

In the second quarter of 2010, we sold our investments
in wallstreet:online AG, Zertifikate-Journal AG, and the
business operations of our Financial Media division. We
also sold wallstreet:online Capital AG in the third quarter.

In September 2010, Axel Springer purchased a 12.4%
equity interest in SeLoger.com, the leading real estate
portal in France, for a price of € 34.00 per share (corre-
sponding to a total amount of approximately € 70 million)
and then made a voluntary public tender offer to the
remaining shareholders for all the outstanding shares for
the same price. The offer price valued the entire share
capital of SeLoger.com at € 566.4 million. However, this
offer was not supported by the company’s supervisory
board and SeLoger.com took various defensive meas-
ures. In order to increase the offer’s chances for success,
Axel Springer raised the offer price to € 38.05 per share
in January 2011. In that connection, the offer was made
subject to the condition of a minimum acceptance
threshold. Thus, the transaction will be effected only if
Axel Springer holds at least 50.01 % of the company’s
share capital upon completion of the process. The ad-
justed offer, which values the company at € 633.4 million,
now enjoys the unconditional support of SeLoger.com.
The French securities market regulatory authority is ex-
pected to announce the achieved acceptance ratio in
early March 2011.

In India, one of the world’s biggest media markets, we
acquired a 52.1 % interest in the leading classified ad portal
for automobiles, Carwale.com, and a 19.1 % interest in the
lifestyle marketplace BagItToday.com in November 2010.

In December 2010, Ringier Axel Springer Media attained
an outstanding position in the Slovakian online market by
purchasing a 70 % interest in the leading Slovakian online
portal azet.sk.

44 Annual Report 2010 Axel Springer AG

In January 2010, Do⁄an TV Holding (DTVH) carried out a
capital increase of approximately € 196.4 million on the
basis of an agreement reached in November 2009. Based
on the same agreement, an additional capital increase for
approximately € 188.0 million was implemented on April 30,
2010. These two measures reduced DTVH’s debt substan-
tially; furthermore, our interest in DTVH was lowered from
25.0 % to 19.9 %, as planned.

Based on a tax audit conducted in September 2009, the
Turkish tax authorities imposed various subsequent tax
claims and incidental costs in the total amount of
TRY 3.9 billion (approximately € 1.9 billion), plus interest,
against our associate DTVH and three subsidiaries of
DTVH. The affected companies filed lawsuits against the
respective assessments. Based on the information avail-
able to us, first-instance judicial decisions were issued in
nearly all these proceedings in 2010. As for the outcomes,
proceedings involving an amount of approximately
TRY 1.4 billion (approximately € 0.7 billion) were decided
in favor of DTVH and its subsidiaries, and proceedings
involving an amount of TRY 2.5 billion (approximately
€ 1.2 billion) were decided against DTVH and its subsidiar-
ies (excluding interest on the assessed amounts). Based on
the information available to us, appeals against judicial
decisions involving a total amount of approximately
TRY 3.1 billion (approximately € 1.5 billion) have been filed
with the Supreme Court by the affected companies and
by the tax authorities. Furthermore, DTVH and its subsidi-
aries successfully petitioned the Supreme Court for a
temporary stay of execution. According to the information
provided by Do⁄an Yayin Holding, the Supreme Court
issued rulings totaling TRY 2.4 billion (approximately
€ 1.2 billion) in favor of DTVH and its subsidiaries in January
and February of 2011; based on our information, however,
these rulings can still be appealed.

Awards
The innovation strength and excellent journalistic quality
of our media were again confirmed by numerous awards
in 2010.

BILD received a total of six awards in connection with
the European Newspaper Award in 2010, including an
award in recognition of its reader council concept and
another award for the 3-D issue of August 28, 2010.

Under the same awards program, HAMBURGER
ABENDBLATT received a total of twelve awards in the
categories of front page, section front page, local page,
visualization, illustration, supplements, and typography.
Furthermore, the Art Directors Club gave an award in
recognition of the successful BILD “Confessor” advertis-
ing campaign in 2010.

WELT am SONNTAG was honored with the title of “In-
ternational Newspaper of the Year.” And in April, the
Sunday paper received the “British Newspaper Award”
2010 in London.

The journalistic quality of our apps was reaffirmed by our
WELT app, which Apple selected as Germany’s “iPad-
App of the Year.” In addition, the WELT HD app was
named “Best App” in the “news” category. And the BILD
iPhone app received the first-ever Kress Award in the
category of “Paid Content” in 2010. In June 2010, the
Axel Springer Academy was the first journalism school to
receive the Grimme Online Award in the category of
“Knowledge and Education” for its Internet special “little-
berlin.de.” This award is widely regarded as the most
important distinction for the journalistic quality of Ger-
man-language websites.

As for Axel Springer’s international media, the Czech
people magazine REFLEX has twice been awarded first
prize in the contest “Czech Press Photo 2010.” And in
February, the Confederation of Distributors of Print Prod-
ucts (ARPP) both awarded prizes to the Russian edition of
COMPUTER BILD and the business magazine FORBES
as “Press Leaders 2009” in their respective segments.

Performance of the company’s share price
The Axel Springer share closed the year at € 122.00, for
a substantial gain of 62.6 %. A detailed description of the
performance of the Axel Springer share in 2010 can be
found on page 22.

Comparison of actual business performance with
the forecast business performance
In view of the positive business performance in the first
two quarters, we considerably raised our profit forecast in
2010, first in May and then in August. The actual EBITDA
of € 510.6 million even surpassed the upgraded forecast.

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

Financial performance, liquidity, and financial position

Financial performance, liquidity, and
financial position

Financial performance of the Group

At € 2,893.9 million, the revenues generated in 2010
were 10.8 % higher than the corresponding prior-year
figure (PY: € 2,611.6 million). The increased revenues
were contributed by the Digital Media and Print Interna-
tional segments, mainly as a result of consolidation ef-
fects related to StepStone and Digital Window (including
buy.at), as well as, starting in the third quarter of 2010,
the companies contributed to the joint venture Ringier
Axel Springer Media by Ringier. Adjusted for consolida-
tion effects, Axel Springer increased its revenues by
3.5 % in 2010. Another key factor contributing to this
increase, besides the organic growth of the Digital Media
segment, was the recovery of the Group’s international
print media, which was driven by positive foreign ex-
change effects. Adjusted for consolidation and currency
effects, the Group’s total revenues in 2010 were 2.7 %
higher than in 2009.

At € 1,384.8 million, the Group’s advertising revenues
were 21.6 % higher than the corresponding prior-year
figure (PY: € 1,138.5 million). This increase resulted
mainly from the substantial growth of the Digital Media
segment and from the consolidation of the joint venture
with Ringier in the second half of the year. The advertis-
ing revenues of the national print media were slightly
lower than the corresponding prior-year figure. All to-
gether, advertising revenues accounted for 47.9 % (PY:
43.6 %) of the Group’s total revenues.

At € 334.8 million, the Group’s other revenues were
12.8 % higher than the prior-year figure (PY: € 296.9 million)
and accounted for 11.6 % (PY: 11.4 %) of total revenues.
Also in this case, most of the increase resulted from the
growth of digital media and from consolidation effects
related to the joint venture in eastern Europe.

At € 1,174.3 million, the circulation revenues were
nearly on the level of the prior year (PY: € 1,176.2 million)
and accounted for 40.6 % (PY: 45.0 %) of the Group’s
total revenues. Lower revenues at most of the German
print media and deconsolidation effects (especially re-
lated to German magazines) were partially offset by the
addition of newly consolidated companies in the Print
International segment.

A comparison of segment revenues shows the uneven
development of print and digital media. Whereas the
revenues of the national print media were slightly lower,
the revenues of the Group’s international print media and
its digital media were significantly higher in 2010, com-
pared to 2009. The total revenues of newspapers were
1.6 % lower, those of magazines 6.1 % lower, than the
respective prior-year figures, mainly as a result of decon-
solidation effects. The total revenues of the Print Interna-
tional segment in 2010 were 28.6 % higher than the

46 Annual Report 2010 Axel Springer AG

prior-year figure, especially as a result of the first-time
consolidation of the companies contributed by Ringier in
the second half of 2010. The total revenues of the Digital
Media segment were 51.3 % higher than the prior-year
figure, due in part to consolidation effects, but also as a
result of strong organic growth.

In a reflection of their heightened importance for the Axel
Springer Group, international revenues accounted for
28.1% (PY: 21.0 %) of total revenues in 2010. This in-
crease resulted from the expansion of the eastern Euro-
pean print business and from the international acquisi-
tions of our digital media.

At € 2,630.9 million, total expenses were 6.3 %
higher than the corresponding prior-year figure (PY:
€ 2,475.8 million), mainly as a result of consolidation
effects. Restructuring expenses amounted to
€ 24.2 million in 2010 (PY: € 74.9 million).

At € 950.6 million, purchased goods and services were
7.2 % higher than the prior-year figure (PY: € 886.4 million),
mainly as a result of consolidation effects in the Digital
Media and Print International segments. Countervailing
effects included reduced paper costs and lower prices for
raw materials. The ratio of purchased goods and services
to revenues narrowed to 32.8 % (PY: 33.9 %).

At € 792.9 million, the Group’s personnel expenses
were little changed from the prior-year figure (PY:
€ 791.9 million), despite the 7.7 % increase in the aver-
age workforce that resulted mainly from the consolida-
tion of new subsidiaries. This was due in particular to the
substantially lower restructuring expenses.

At € 113.5 million, the depreciation, amortization, and
impairments were 22.9 % higher than the corresponding
prior-year figure of € 92.4 million. This increase resulted
particularly from higher purchase price allocation effects.

The pro-forma revenues of the Digital Media segment
rose to € 703.0 million (PY: € 574.5 million), indicating
organic growth of 22.4 %. Accordingly, their share of
total pro-forma revenues rose from 21.2 % to 24.4 %.
The pro-forma revenues include the companies acquired
during the course of 2009 and 2010, chief among them
StepStone, Digital Window, and buy.at, on the basis of
unaudited financial information. The revenues of business
operations and companies that were sold during that
period were deducted from this figure.

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

Financial performance, liquidity, and financial position

The increase in the other operating income to
€ 150.1 million (PY: € 70.7 million) was mainly caused by
the profit on the sale of the Solutions division of StepStone.
The other operating expenses of € 773.9 million were
also higher, by 9.8 %, than the corresponding prior-year
figure (PY: € 705.1 million), mainly due to the first-time
consolidation of purchased companies and the losses
incurred on the sale of significant activities of Axel Springer
Financial Media.

The net investment expenses of € 8.2 million were heav-
ily influenced by the impairment losses of € 21.4 million
recognized in investments. Furthermore, the accumulated
foreign exchange losses of Do⁄an TV Holding A.S., which
had previously been recognized in equity, must now be
recognized as net investment income or expenses, due to
the reduction in the Group’s shareholding percentage.
These effects were largely offset by income from sales of
shareholdings and ongoing investment income. The prior-
year net investment income of € 212.1 million was heavily
influenced by the profits on the sale of the Group’s in-
vestments in regional newspapers. The operating net
investment income presented in EBITDA amounted to
€ 17.0 million (PY: € 23.0 million).

The Group’s net financial expenses amounted to
€ 31.2 million (PY: € 25.0 million). Adjusted for the
measurement and settlement effects of the call options
on shares of Axel Springer AG granted by H&F Rose
Partners L.P. and H&F International Rose Partners, L.P.,
the net financial expenses amounted to € 33.8 million
(PY: € 34.4 million).

The income taxes for 2010 amounted to € – 103.6 million
(PY: € – 83.8 million). Thus, the tax rate was 27.4 % (PY:
21.1 %). In both 2010 and 2009, the tax rates were affected
by the mostly tax-exempt gains on shareholding sales.

At € 510.6 million, the earnings before interest, taxes,
depreciation, and amortization (EBITDA) were 53.0 %
higher than the prior-year figure, and represented a new
record high. The EBITDA margin was 17.6 % (PY: 12.8 %).

This outstanding result underscores the operational
strength of our company. Non-recurring effects such as,
for example, gains or losses on sales of companies and
investments and purchase price allocation effects are not
included in the EBITDA.

The consolidated net income amounted to
€ 274.1 million (PY: € 313.8 million). Adjusted for
non-operating effects, the consolidated net income
amounted to € 283.2 million (PY: € 152.6 million).

Consolidated Net Income

in € millions

Consolidated net income

Gains or losses on the sale of business
operations and equity investments

Effects of purchase price allocations

Impairment losses in non-current investmens

Other non-operating effects

Taxes attributable to non-operating effects

2010

2009

274.1

313.8

– 58.0

– 208.0

33.6

21.4

19.5

– 7.3

26.7

20.5

– 9.9

9.5

Consolidated net income, adjusted

283.2

152.6

48 Annual Report 2010 Axel Springer AG

The diluted earnings per share amounted to € 8.19
(PY: € 10.19). The adjusted diluted earnings per share,
calculated on the basis of the weighted average shares
outstanding in 2010 and attributable to the shareholders
of Axel Springer AG, amounted to € 8.27 (PY: € 4.53).

The adjusted consolidated net income and the adjusted
diluted earnings per share are not defined under Interna-
tional Financial Reporting Standards, and should there-
fore be regarded as supplementary information to the
consolidated financial statements.

Business developments and financial
performance of the segments

Newspapers National
As Europe’s biggest daily newspaper, BILD reached
approximately 12.5 million readers on average in 2010
and therefore retained its position as Germany’s highest-
circulation and widest-reach daily newspaper by a wide
margin. (The reach numbers for the German print media
are taken from ma 2011 Pressemedien I and the paid
circulation numbers are taken from IVW, unless other-
wise noted). BILD also solidified its leading position
among print media in the German advertising market,
thanks in particular to the stronger focus on the segment
of fast-moving consumer goods (FMCG).

In August of last year, BILD made a name for itself when
it published a 3-D issue, complete with free 3-D glasses.
In that issue, the first of its kind by a German daily news-
paper, all photographs, illustrations, and ads featured
three-dimensional effects. Besides marking an editorial
milestone, the 3-D BILD issue was also exceptional with
respect to ad marketing.

BILD am SONNTAG successfully defended its position
as the leading German Sunday newspaper in 2010,
based on reach. BILD am SONNTAG used its wide
reach of 10.4 million readers to develop new advertising
concepts in 2010, including the BILD am SONNTAG
“family product.”

Circulation and Reach Newspapers National

in thousands

Bild

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy2)

3,031.9

– 4.6 % 12,532.9

0.0 %

Bild am Sonntag

1,585.2

– 4.2 % 10,388.3

0.6 %

Die Welt/Welt Kompakt

255.0

– 4.2 %

710.5

– 0.1 %

Welt am Sonntag

401.8

– 0.2 %

1,189.1

13.5 %

Hamburger Abendblatt

226.1

– 5.2 %

700.0

0.0 %

Berliner Morgenpost

130.0

– 9.9 %

359.7

– 0.1 %

B.Z./B.Z. am Sonntag

180.9

– 4.2 %

752.0

– 2.7 %

1) Source: IVW, average paid circulation.
2) Source: ma 2011 Pressemedien I, ma 2010 Pressemedien II.

Together with the tabloid format WELT KOMPAKT, DIE
WELT successfully defended its position as Germany’s
third-biggest premium newspaper in 2010 (based on
circulation and number of readers). As the most-read
premium Sunday newspaper, WELT am SONNTAG in-
creased its reach substantially by 13.5 %. According to
“Verbraucheranalyse 2010-II,” the WELT Group, including
its online media, reached more than 3.6 million people.
Consequently, it achieved a higher cross-media reach
than any other national premium newspaper in 2010.

In 2010, the WELT Group continued the innovation cam-
paign launched in the prior year to enhance its appeal for
younger target groups. And that campaign has been
successful, as evidenced by the lower average age of
readers of DIE WELT and WELT am SONNTAG in 2010.
As part of this campaign, we not only redesigned the logo
and layout of our WELT titles, but also revised their con-
tent and adapted their structure to suit modern media
usage habits. Since the beginning of 2010, the compact
WELT AKTUELL has been distributed free of charge on
domestic Lufthansa flights and in the first-class com-
partments and lounges of the Germany railway system
Deutsche Bahn. According to market studies, WELT
AKTUELL reaches an unusually large number of execu-
tives and generates a very high average reading duration.

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

Financial performance, liquidity, and financial position

Segment EBITDA improved by 21.4 % to € 296.0 million
(PY: € 243.8 million). That corresponds to an EBITDA
margin of 24.8 % (PY: 20.1 %). The total expenses of the
Newspapers National segment were substantially less than
the corresponding prior-year figure, due in particular to the
significantly lower restructuring expenses of € 16.4 million
in 2010 (PY: € 50.4 million). In addition, paper costs were
substantially lower than the prior-year figure. BILD, BILD
am SONNTAG, and HAMBURGER ABENDBLATT were
the biggest contributors to the higher EBITDA.

Magazines National
Amid a fiercely contested market, Axel Springer’s TV
program guides and women’s magazines performed
very well in 2010. Reaching 4.6 million readers, HÖRZU
solidified its market position as Germany’s biggest weekly
TV program guide. Thanks, in part, to the supplement
HÖRZU DIGITAL, HÖRZU’s circulation remained stable in
2010. Having been launched in October 2009, HÖRZU
WISSEN was already the second-best-selling knowledge
magazine in 2010, based on store sales. Another new
addition to the HÖRZU family of brands in 2010 was
HÖRZU HEIMAT. TV DIGITAL, the highest-circulation TV
program guide for digital TV in the high-price segment,
achieved a reach of 3.6 million readers in 2010.

BILD der FRAU reaffirmed its pole position among
women’s magazines in 2010. With 6.4 million readers
and a circulation of nearly 1 million copies, it was again
the clear market leader among weekly women’s maga-
zines and also the biggest women’s medium in Germany.
FRAU von HEUTE continued to benefit from the merger
of its editorial team with that of BILD der FRAU in 2009;
since the last survey, it increased its reach by 2.2 %.

Axel Springer also made investments in the quality of its
major regional newspapers HAMBURGER ABENDBLATT
and BERLINER MORGENPOST and revised their edito-
rial and graphic concepts in 2010. Among other changes,
HAMBURGER ABENDBLATT expanded its opinion and
analysis section, added a new culture section, and intro-
duced a new layout. By that means, it sharpened its
profile as the major newspaper for politics, culture, and
business in Hamburg and northern Germany. BERLINER
MORGENPOST also introduced a new layout, expanded
its regional section, and intensified its local reporting, in
particular.

With a paid circulation of more than 180 thousand units
per issue, B.Z. continued to be Berlin’s biggest newspa-
per in 2010. It was also the widest-reach daily newspa-
per in the entire circulation area. B.Z. reached more
readers, and especially young readers, in 2010.

Key Figures Newspapers National

in € millions

2010

2009

Change

External revenues

1,194.2

1,213.7

– 1.6 %

Share in cons. revenues

41.3 %

46.5 %

Circulation revenues

Advertising revenues

Other revenues

616.7

544.7

32.8

631.8

548.0

33.9

– 2.4 %

– 0.6 %

– 3.2 %

EBITDA

296.0

243.8

21.4 %

EBITDA margin

24.8 %

20.1 %

At € 1,194.2 million, the total revenues of the Newspa-
pers National segment were slightly less than the corre-
sponding prior-year figure (PY: € 1,213.7 million). Circu-
lation revenues fell by 2.4 % to € 616.7 million (PY:
€ 631,8 million), while advertising revenues exhibited a
more stable development, declining by only 0.6 % from
the 2009 comparison figure (PY: € 548.0 million) to
€ 544.7 million. In that regard, higher advertising reve-
nues at BILD am SONNTAG, WELT am SONNTAG, and
the newly launched WELT AKTUELL nearly made up for
the declines at the Group’s regional newspapers.

50 Annual Report 2010 Axel Springer AG

Circulation and Reach Magazines National

gories and series to its editorial content, AUTO BILD also
published its first-ever special issue for used cars in 2010.

in thousands

Hörzu

TV Digital

Funk Uhr

Bildwoche

TV Neu

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy2)

1,401.4

– 2.1 %

4,646.8

1.3 %

1,716.4

– 2.5 %

3,637.1

6.9 %

588.8

– 7.0 %

1,731.7

– 1.8 %

163.4

– 8.8 %

778.3

– 5.8 %

112.2 – 13.0 %

526.3 – 10.4 %

Bild der Frau

990.0

– 2.7 %

6,401.1

– 0.5 %

Frau von Heute

187.6

– 3.6 %

778.1

2.2 %

Auto Bild

Auto Test

585.2

– 5.2 %

2,943.3

0.6 %

208.6

– 4.2 %

520.1

5.0 %

Auto Bild Klassik

122.4

Auto Bild Sportscars

66.4

1.2 %

303.9

9.5 %

Auto Bild Allrad

71.1

10.8 %

292.4

2.9 %

Computer Bild

613.6 – 10.2 %

4,136.4

3.1 %

Computer Bild Spiele

235.6

– 9.6 %

1,987.4

– 2.6 %

Audio Video Foto Bild

168.7

– 0.2 %

654.5

10.4 %

Sport Bild

450.8

– 4.9 %

4,409.9

2.1 %

Rolling Stone

Musikexpress

Metal Hammer

61.3

8.7 %

52.5

– 2.0 %

42.1 – 10.3 %

1) Source: IVW, average paid circulation.
2) Source: ma 2011 Pressemedien I, ma 2010 Pressemedien II.

Axel Springer’s automotive, computer, and sports
titles successfully defended their market-leading posi-
tions in 2010.

The circulation numbers of Axel Springer’s specialty
automotive titles exhibited an especially successful de-
velopment in 2010. Benefiting from the switch to a bi-
monthly publication frequency, AUTO BILD KLASSIK has
been included in IVW’s circulation reports since 2010.
AUTO BILD ALLRAD (56.3 % market share) and AUTO
BILD SPORTSCARS (54.8 % market share) extended
their market leadership positions in their respective seg-
ments in 2010. AUTO BILD KLASSIK was so successful
in 2010 that it has switched its publication frequency to
once a month, starting in January 2011.

With a reach of 4.1 million readers, COMPUTER BILD
not only successfully defended its market leadership
position in the segment of computer magazines, but
actually extended it somewhat, with an average market
share of 32.3 % in 2010. As a special highlight, the De-
cember 2010 issue of COMPUTER BILD came with a
free piece of computer hardware, a card scanner for the
newly introduced personal ID card.

Thanks to a new visual design and revised concept,
COMPUTER BILD SPIELE strengthened our market
leadership position in this specialty segment and in-
creased its market share by 2.3 percentage points, to
49.5 %, in 2010. Benefiting from a relaunch conducted
at the end of 2009, AUDIO VIDEO FOTO BILD kept its
circulation steady in 2010, bucking the general market
trend, and occupied the top position in its segment.

According to the latest survey, SPORT BILD reaches
12.1 % of the total male German-speaking population,
more than any other sports magazine in the country.
With a market share of 48.9 %, this title successfully
defended its market leadership position among sports
magazines.

AUTO BILD achieved a circulation of 585.2 thousand
units, a reach of 2.9 million readers and a market share
of 57.3 % in 2010. Thus, the magazine asserted its mar-
ket leadership position in the segment of weekly automo-
tive magazines. Besides adding new classified ad cate-

As for Axel Springer’s music magazines, ROLLING
STONE achieved a major milestone with the exclusive
publication of Prince’s new CD in July 2010, making it
the first music magazine to enter into a sales cooperation
arrangement with that artist.

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

Financial performance, liquidity, and financial position

Key Figures Magazines National

in € millions

External revenues

2010

486.1

2009

517.8

Change

– 6.1 %

Share in cons. revenues

16.8 %

19.8 %

Circulation revenues

Advertising revenues

Other revenues

325.7

134.1

26.3

358.8

140.2

18.8

– 9.2 %

– 4.4 %

40.1 %

EBITDA

101.0

55.0

83.7 %

EBITDA margin

20.8 %

10.6 %

At € 486.1 million, total revenues were 6.1 % less than
the prior-year figure, mainly due to the sale of the Group’s
investment in Cora Verlag, as well as the women’s and
youth magazines of Axel Springer Mediahouse München
and the Group’s business and financial media. Adjusted
for consolidation effects, total revenues held steady on
the level of the prior year (– 0.2 %). At € 325.7 million, circu-
lation revenues were 9.2 % less than the prior-year figure;
adjusted for consolidation effects, the decrease was only
3.4 %. The advertising revenues of € 134.1 million were
4.4 % less than the prior-year figure; adjusted for consoli-
dation effects, they were higher than the prior-year figure
(+ 1.2 %), particularly as a result of the substantially higher
advertising revenues of the Group’s automotive and
sports magazines.

EBITDA of the Magazines National segment reached an
all-time high of € 101.0 million, indicative of an 83.7 %
increase over the prior-year figure (PY: € 55.0 million).
Accordingly, the EBITDA margin nearly doubled from
10.6 % to 20.8 %. At € 3.2 million, restructuring ex-
penses were substantially less than the corresponding
prior-year figure (PY: € 16.9 million). Another factor con-
tributing to the reduction in total expenses was the lower
paper costs. Aside from the strong EBITDA gains of
nearly all the magazine groups, the concentration of the
portfolio also made a significant contribution to the sub-
stantially improved EBITDA margin.

Print International
By means of the joint venture Ringier Axel Springer Media
and the associated contribution of the eastern European
activities of Ringier AG, Axel Springer expanded its inter-
national presence considerably in 2010. While the ap-
proval of the cartel authority for the joint venture in Hungary
is still pending, Axel Springer has already tapped new
markets such as Serbia and Slovakia and expanded its
portfolio in the Czech Republic as a result of the joint
venture. Thus, Axel Springer broadened its line-up of
international media considerably since the middle of 2010.

Eastern European markets
Our publications in Hungary achieved a combined reach
increase of 2.0 % in 2010; in that respect, they fared
better than other market participants, whose combined
reach stagnated last year. Having increased both its
circulation and its reach in 2010, our women’s magazine
KISKEGYED extended its reach leadership position
further in the segment of weekly women’s magazines.
The Sunday newspaper VASÁRNAP REGGEL, which is
published in cooperation with three other regional pub-
lishing houses, also extended its reach to 517.5 thousand
readers in 2010, 7.1 % more than the corresponding
prior-year figure, and retained its position as the coun-
try’s widest-reach premium Sunday newspaper. And
despite having raised its copy price, the style magazine
GLAMOUR increased its circulation in 2010. In the seg-
ment of automotive magazines, AUTO BILD increased its
circulation, especially due to higher subscription num-
bers, and secured its market leadership position in this
segment. In another highlight of 2010, Axel Springer
successfully transposed an established online format to a
print medium, with the food title MINDMEGETTE. The
integration of Ringier’s and Axel Springer’s Hungarian
titles into the joint venture is still pending, subject to
approval by the cartel authority. Those titles include Blikk,
which is that country’s biggest mass-circulation daily,
based on paid circulation. Axel Springer Hungary pur-
chased a new licensing right to publish the commentary
magazine GEO in 2010. As soon as the cartel authority
approves the merger with Ringier, GEO will be trans-
ferred to Ringier Axel Springer Media.

52 Annual Report 2010 Axel Springer AG

Circulation and Reach Hungary (Selection)

in thousands

Kiskegyed

TVR-Hét

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy

200.4

0.7 %

1,013.6

14.3 %

164.3 – 10.0 %

471.6

– 2.5 %

Vasárnap Reggel

144.1

– 8.8 %

517.5

7.1 %

1) Source: Matesz audit 2009/2010, average paid circulation.
2) Source: Ipsos/GfK Hungária: MédiaNavigátor Q3/2009 to Q3/2010.

In Poland, the newspapers and magazines we publish
through the joint venture Ringier Axel Springer Media
asserted their strong, and in some cases leading, posi-
tions, within a shrinking market. With an average circula-
tion of 440.4 thousand units, FAKT kept its market share
stable and is still Poland’s best-selling daily newspaper,
despite a decrease of 5.8 % from the prior year. The
Polish magazines published by Axel Springer were like-
wise successful: NEWSWEEK POLSKA increased its
circulation by 12.1 % over the prior-year figure; with more
than 120 thousand copies sold, it is the No. 2 title
among Poland’s opinion-shaping magazines. And with
1.4 million readers, it was also still the widest-reach
magazine in its segment in 2010. With more than
1.0 million readers each, AUTO SWIAT, and KOMPUTER
SWIAT were likewise the widest-reach magazines in their
respective segments.

The joint venture in Poland stepped up its activities par-
ticularly in the area of custom publishing. For example, it
entered into a cooperation agreement with Poland‘s
biggest TV operator Cyfrowy Polsat. Under this agree-
ment, Axel Springer is mainly responsible for editorial
content of the biweekly TV program guide tv2TYGODNIK.

Circulation and Reach Poland (Selection)

in thousands

Fakt

Newsweek

Auto Swiat

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy

440.4

– 5.8 %

4,255.0

– 3.3 %

120.5

12.1 %

1,366.0

– 4.3 %

101.3

– 5.5 %

1,176.0 – 16.2 %

1) Source: ZKDP, January to October 2010 vs. January to October 2009, average

paid circulation.

2) Source: PBC General, January to November 2010 vs. January to November 2009.

Ringier Axel Springer Media is the leading publisher in
the Czech Republic. With an average paid circulation of
388.0 thousand units and a reach of 1.4 million readers,
the mass-circulation daily BLESK reaffirmed its leader-
ship position among Czech daily newspapers in 2010.
Following the lead of BILD, BLESK came out with a 3-D
issue in 2010. The country’s leading women’s magazine
BLESK PRO ZENY is not only the best-selling women’s
magazine in the Czech Republic, it also has the widest
reach. Its circulation of 193.4 thousand units and its
reach of 649 thousand readers were only slightly less
than the respective prior-year figures. And the Czech
Axel Springer titles SVET MOTORU and AUTO TIP as-
serted their respective positions as the leading automo-
tive magazines in the Czech Republic. We also ex-
panded our portfolio of magazines in the Czech Republic
by purchasing a license to publish GEO magazine and by
introducing the monthly cooking magazine BLESK VASE
RECEPTY in 2010.

Circulation and Reach Czech Republic (Selection)

in thousands

Blesk

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy

388.0

– 6.2 %

1,426.0

– 1.1 %

Nedelni Blesk

229.0

– 6.6 %

732.0

4.3 %

Blesk pro Zeny

193.4

– 0.9 %

649.0

– 3.7 %

1) Source: ABC CR, January to November 2010 vs. January to November 2009,

average paid circulation.

2) Source: Media Projekt, GfK Praha, Q2 to Q3 2010 vs. Q2 to Q3 2009.

Through the joint venture with Ringier, Axel Springer has
been also active in Slovakia since 2010. The newspa-
pers and magazines of Ringier Axel Springer Slovakia
occupy leading positions in all relevant segments. The
most important title is the mass-circulation daily NOVY
CAS (market share: 44.1 %). With approximately 1.0 million
readers, it reaches nearly 23 % of the Slovakian popula-
tion. Furthermore, it was the first newspaper in eastern
Europe to come out with a 3-D issue in 2010. The exist-
ing print portfolio was expanded in 2010 through the
addition of the women’s magazine MADAM EVA and the
purchase of licensing rights for the monthly magazine GEO.

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

Financial performance, liquidity, and financial position

Circulation and Reach Slovakia (Selection)

in thousands

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy

Novy Cas Vikend

209.2

– 4.9 %

602.0 – 12.5 %

Novy Cas pre zeny

163.3 – 16.7 %

381.4

– 5.9 %

Novy Cas

143.5

– 4.8 % 1,021.6

– 7.0 %

1) Source: ABC SR January to November 2010 vs. January to November 2009,

average paid circulation.

2) Source: MML-TGI, Median SK, March to September 2010 vs. March to September

2009.

Also in Serbia, Ringier Axel Springer Media is the pub-
lishing house with the biggest total circulation and widest
reach; and the mass-circulation dailies BLIC and ALO!
make it the market leader as well. Although the circula-
tion of the biggest newsstand newspaper BLIC declined
somewhat in 2010, it is still the most-read newspaper in
that country, with 902.1 thousand readers. Also in its
new layout, BLIC ZENA is still the most popular women’s
magazine in Serbia. The mass-circulation daily ALO!
boosted its sales further in 2010. In fact, it was the fast-
est-growing newsstand newspaper in Serbia, with the
second-highest circulation of all Serbian dailies. And the
newly introduced Sunday newspaper SUNDAY ALO!
successfully established itself in the market in 2010. After
a complete relaunch, the circulation numbers of our
news magazine NIN began to rise again. Since Novem-
ber 2010, some of our Serbian print and online media,
including BLIC, 24 SATA, BLIC ONLINE, 24 SATA
ONLINE, and ZENA ONLINE, have established an inte-
grated newsroom linking all the reporters and editors.

Circulation and Reach Serbia (Selection)

in thousands

Blic Zena

Blic

Alo!

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy

199.1

– 2.5 %

865.0

2.6 %

146.5

– 3.7 %

902.1

15.1 %

113.4

43.7 %

456.6

66.0 %

1) Source: ABC Serbia, average paid circulation. Blic Zena: Dezember 2009 to

November 2010 vs. Dezember 2008 to November 2010.

2) Source: Ipsos Strategic Marketing.

In Russia (not part of the joint venture with Ringier), Axel
Springer successfully integrated the titles purchased
from G+J into its portfolio, but also discontinued publica-
tion of the Russian edition of NEWSWEEK for business
reasons.

Most of the Group’s titles performed well in 2010. FORBES,
the most-quoted business magazine in Russia, increased its
readership by 37.7 % and the Russian COMPUTER BILD
increased its readership by 31.4 % over the respective prior-
year figures. The magazine GEO increased its reach by
11.9 % over the prior year, while GALA BIOGRAFIA’s reach
retreated somewhat (– 1.7 %), with an average paid cir-
culation of 164.6 thousand units in 2010. The celebrity
magazine OK! increased its reach by 25.3 % and for the first
time claimed the market leadership position in its segment.

Circulation and Reach Russia (Selection)

in thousands

Gala Biografia

Forbes

Circu-
lation
20101)

164.6

Change
yoy

Reach
20102)

Change
yoy

818.2

– 1.7 %

77.0

– 0.3 %

1,129.5

37.7 %

Computer Bild

68.5

– 6.6 %

379.9

31.4 %

1) Source: in-house data; Forbes and Computer Bild January to November 2010; Gala

Biografia April to October 2010, average paid circulation.

2) Source: TNS Gallup, May to October 2010 vs. May to October 2009.

Western European markets
In Switzerland, our magazine BEOBACHTER and the
TV program guide TELE both increased their respective
reach values by 2.9 %, while the circulation of the busi-
ness magazine BILANZ was stable. HANDELSZEITUNG
increased its advertising business in 2010. The most suc-
cessful new magazine in Switzerland in the last few years
has been our title BEOBACHTER NATUR, a nature and
environmental magazine. We also introduced the premium-
quality lifestyle supplement FIRST for HANDELSZEITUNG,
BILANZ, and PME MAGAZINE, which attracted great inter-
est among readers and advertising customers alike in 2010.

54 Annual Report 2010 Axel Springer AG

Circulation and Reach Switzerland (Selection)

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy

in thousands

Beobachter

Tele

145.0

0.6 %

534.0

2.9 %

Handelszeitung

40.8

– 7.1 %

134.0

– 8.8 %

1) Source: WEMF: Auflagebulletin July 2009 to June 2010 vs. July 2008 to June 2009,

average paid circulation.

2) Source: WEMF: MACH Basic April 2009 to March 2010 vs. April 2008 to March

2009.

Axel Springer’s publications outperformed the market in
France as well last year. Although readership numbers
declined there in 2010, some of our titles actually man-
aged to increase their reach values. For example, the TV
magazine TELE MAGAZINE increased its reach by 8.6 %
and the biweekly cooking magazine VIE PRATIQUE
GOURMAND is not only the best-selling title in its seg-
ment, it also achieved the second-highest reach increase
(29.8 %) of all French magazines. Our automotive maga-
zine AUTO PLUS, part of the joint venture Mondadori
Axel Springer (EMAS) of which Axel Springer France
holds 50 % of the shares, increased its subscription
numbers and thus stabilised its position in the circulation
market. And AUTO JOURNAL was the only general-
interest magazine in the French automotive segment to
increase its sales numbers in 2010, by a moderate
amount, despite an adverse market environment.

Circulation and Reach France (Selection)

306.5

– 0.6 %

960.0

2.9 %

Circulation and Reach Spain (Selection)

trends; however, the Group’s weekly automotive, com-
puter, and video game magazines successfully defended
their leadership positions in the respective segments.

in thousands

Computer Hoy

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy

61.4

– 19.1 %

325.0 – 13.3 %

Hobby Consolas

57.6

– 14.1 %

332.0

– 7.0 %

Personal Computer

55.7

– 11.2 %

279.0

36.1 %

1) Source: OJD, April 2009 to March 2010 vs. April 2008 to March 2009, average paid

circulation.

2) Source: AIMC EGM February to November 2010 vs. February to November 2009.

Key Figures Print International

in € millions

External revenues

2010

400.9

2009

311.7

Change

28.6 %

Share in cons. revenues

13.9 %

11.9 %

Circulation revenues

Advertising revenues

Other revenues

231.9

147.0

22.1

185.7

113.5

12.5

24.9 %

29.5 %

76.7 %

EBITDA

61.5

12.3

> 100 %

EBITDA margin

15.3 %

3.9 %

in thousands

Tele Magazine

Auto Plus3)

Circu-
lation
20101)

Change
yoy

Reach
20102)

Change
yoy

337.0

– 5.0 %

1,137.0

8.6 %

289.5

– 2.6 %

2,410.0

– 2.3 %

The financial performance of the Print International seg-
ment was heavily influenced in particular by the first-time
consolidation of the companies contributed by Ringier to
the joint venture Ringier Axel Springer Media, with effect
as of July 1, 2010.

Vie Pratique Gourmand

197.5

3.7 %

1,308.0

29.8 %

1) Source: OJD, July 2009 to June 2010 vs. July 2008 to June 2009, average paid

circulation.

2) Source: AEPM, July 2009 to June 2010 vs. July 2008 to June 2009.
3) EMAS: joint venture with Mondadori.

The circulation and advertising markets in Spain re-
mained persistently difficult in 2010. The performance of
Axel Springer’s titles was mostly in line with market

At € 400.9 million, external revenues were higher than
the corresponding prior-year figure by € 89.3 million or
28.6 %. This increase resulted mainly from the revenue
contributions of the newly consolidated companies of the
joint venture with Ringier. Adjusted for consolidation
effects, external revenues were 3.5 % higher than the
adjusted prior-year figure. Additionally adjusted for cur-
rency effects, the revenues of the Print International

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

Financial performance, liquidity, and financial position

segment were 2.6 % less than the corresponding prior-
year figure.

At € 231.9 million, circulation revenues were 24.9 %
higher than the prior-year figure (PY: € 185.7 million).
This increase resulted primarily from the newly consoli-
dated newspapers and magazines in the Czech Republic,
Slovakia, and Serbia, and from the expanded portfolio in
Russia. Adjusted for currency and consolidation effects,
circulation revenues were 2.0 % less than the adjusted
prior-year figure. The above-mentioned international
activities also made a significant contribution to the
29.5 % increase in advertising revenues, which amounted
to € 147.0 million in 2010 (PY: € 113.5 million). Adjusted
for currency and consolidation effects, advertising reve-
nues were 4.8 % less than the adjusted prior-year figure.

Segment EBITDA rose from € 12.3 million in the prior
year to € 61.5 million in 2010. Besides the first-time
consolidation of the companies comprised within the
joint venture with Ringier, other factors contributing to
this substantial increase in EBITDA were the systematic
cost reduction and portfolio optimization measures of our
international subsidiaries. At 15.3 % (PY: 3,9 %), the
EBITDA margin reached its highest level since the Print
International segment was formed.

Digital Media
Content portals
The user numbers of Germany’s biggest news and
entertainment portal Bild.de rose sharply again in 2010.
Thus, Bild.de extended its market leadership position
further. Thanks in particular to its wide reach, Bild.de is
a coveted platform for advertisers; the start page was
nearly always completely booked out in the last twelve
months. We also opened up additional revenue sources,
including the newly introduced advertising-financed
movie portal BILD Kino, among other measures. By
expanding its cooperation with the pay-TV broadcast
company Sky, Bild.de expanded its offering of soccer
videos in 2010. Coinciding with the start of the new
season, users can now also watch highlights of the
most important European soccer competitions (Cham-
pions League, Europe League, and the British Premier
League) online, in addition to German national soccer
league matches.

BILD’s mobile portal BILDmobil also broadened its prod-
uct range in 2010. In addition to flat-rate data plans for
PCs, tablets, and mobile telephones, BILDmobil now
also offers a paid premium service under which sub-
scribers also gain access to content of the regional BILD
edition. This new product was enthusiastically received
by users: BILDmobil received an average of 14.9 million
visits (PY: 5.3 million) per month in 2010, making it big-
ger than many stationary Internet news portals.

The online offerings of WELT ONLINE were likewise
successful in 2010. The portal welt.de increased its
reach substantially, especially after the extensive over-
haul in late May. Thus, WELT ONLINE reinforced its
position as the most successful website of any premium
newspaper in 2010.

The regional portals of HAMBURGER ABENDBLATT and
BERLINER MORGENPOST were also very successful in
2010, boosting their visitor numbers despite the fact that
some of the content has only been available on a paid
subscription basis, since 2010. And B.Z.’s online portal
posted substantial gains, both in reach and in visits.

Traffic Figures of Editorial Online Offerings (Selection)

in millions
(monthly average)

Bild.de

computerbild.de

welt.de

gofeminin.de

onmeda.de

transfermarkt.de

abendblatt.de

autobild.de

Unique
Visitors
20101)

9.0

4.7

4.5

1.6

1.5

1.4

1.2

Change
yoy

Visits
20102)

Change
yoy

54.9 %

145.8

46.3 %

38.6 %

36.2 %

50.4 %

76.1 %

21.9

29.2

11.3

43.0 %

32.3 %

26.1 %

3.4

32.2 %

2.4 %

18.8

13.6 %

43.8 %

49.2 %

6.9

5.6

32.5 %

11.3 %

1) Source: comScore (in some cases, heightened growth rates resulted from the

expansion of the basic population, from the end of 2009 onward).

2) Source: IVW.

The online portals of our German magazines also in-
creased their reach values. Thanks, in part, to the ex-
panded range of information and an optimized search
function, autobild.de reached 49.2 % more users than in

56 Annual Report 2010 Axel Springer AG

the prior year and therefore it successfully defended its
market leadership position in the segment of automotive
websites with editorial content. The portal computerbild.de
continued to expand its consumer advisory services in
2010, which contributed to the 43.0 % increase in the
number of visits. Consequently, the online portal retained
its No. 2 position among German technology sites for
computers, telecommunications, and consumer elec-
tronics in 2010. Since the beginning of 2010, the website
bildderfrau.de has been operated and marketed by
gofeminin.de, making it possible to exploit synergies in
marketing, editorial content, and technology.

We advanced our digitization strategy in 2010 interna-
tionally as well. Above all, our joint venture Ringier Axel
Springer Media opened up new markets. The websites in
the joint venture countries increased their reach values
significantly and reinforced their positions, some of which
are market-leading.

Our online media in Switzerland showed a consistently
positive development and generated substantial growth.
The leading online business media bilanz.ch and handels-
zeitung.ch increased their traffic by 44.4 % and 27.2 %,
respectively; and the news portal beobachter.ch was
visited by 39.0 % more users in 2010.

Europe’s biggest women’s portal, aufeminin.com, in-
creased its reach considerably. A particular highlight of
2010 was the introduction of aufeminin.TV, Europe’s
first-ever web-TV channel for women. And in France, the
transposition of the market-leading cooking website
marmiton.org to the print publication MARMITON in
2010 allowed for an exemplary use of synergies between
print and online media.

Our sports portal transfermarkt.de was also successful in
2010, increasing its visits by 13.6 % over the prior year to
reach 18.8 million. The online portal also published its
second soccer season edition for the German national
soccer league and a special publication on the Soccer
World Cup in 2010. Furthermore, Axel Springer not only
extended the concept of Germany’s largest soccer
community to the Italian and Turkish markets, but also
adapted it for women’s soccer (soccerdonna.de).

The games portal gamigo.de was again one of the lead-
ing providers of online games in 2010. In fact, it is one of
the top 5 providers in the European market for “mas-
sively multiplayer online games.” Nine new games were
added to the portfolio in 2010; alltogether, gamigo.de
attracted approximately 3.5 million new players.

Smarthouse Media, one of the world’s leading providers
of complex web-based finance applications for banks,
online brokers, and financial services providers, in-
creased the number of long-term client mandates in
2010 and registered stronger demand in the B2B seg-
ment. By means of the technical implementation of the
finanzen.net app, the company supported the first stock
market application in the German Windows Marketplace
for Mobile. The finance portal finanzen.net, which had
formerly been operated by Smarthouse Media, was
repositioned in the market as an independent online
company in 2010, with the goal of extending Germany’s
widest-reach online finance portal and making optimal
use of future development and growth opportunities.

Apps for the iPhone and iPad
Axel Springer launched a paid-content initiative for mo-
bile terminal devices already in late 2009. The introduc-
tion of paid-content offerings began to yield positive
results in 2010, when Axel Springer’s various apps and
paid-content offerings for the iPhone and iPad were sold
more than 500 thousand times and downloaded more
than 800 thousand times.

In these endeavors, Axel Springer demonstrated exem-
plary innovation capacity and speed. For example, B.Z.’s
iPhone app was the first paid-content app of any Ger-
man daily newspaper. Furthermore, Axel Springer
launched the iKiosk app to coincide with market intro-
duction of the iPad in the United States. Consequently,
Axel Springer was the first German publisher to offer a
selection of its media products (WELT, WELT KOMPAKT,
and WELT am SONNTAG) for the iPad right from the
time it was introduced. During the further course of the
year, we added a national issue and various regional
issues of BILD and BILD am SONNTAG, as well as our
regional newspapers, to the iKiosk app. Since Septem-
ber, moreover, users have been able to access the digi-
tal issues of many Axel Springer’s magazines via the

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

Financial performance, liquidity, and financial position

The implementation of Axel Springer’s premium initiative
for paid digital content was generally successful in 2010.
Pleased with our flexible subscription models, many users
opted to subscribe to our e-papers on a permanent basis
after the no-cost introductory phase. In addition to our
iPhone and iPad apps, we expanded our other paid-
content offerings as well, including the premium content
sections of our online media, such as regional and sports
reporting on abendblatt.de, for example.

Marketplaces
Axel Springer’s digital marketplaces and classified ad
markets performed very well again in 2010.

Based on its high level of customer satisfaction and
service quality, StepStone emerged as the winner of two
sector comparison studies and was selected as Ger-
many’s most popular career website for the third year in
a row in 2010. Based on its reach, StepStone is the No.
2 job exchange in Europe. Benefitting from the economic
recovery of the euro zone, StepStone registered a grow-
ing volume of job ads overall on its European portals in
2010. That increase was helped by the acquisition of key
customers and the launch of specialized job portals for
different cooperation partners.

Having registered a 30 % increase in the number of re-
ferred search inquiries, idealo, which is one of the leading
German search portals for product and price compari-
sons, outperformed the market growth rate in 2010. The
positive development can be attributed in part to the
open-ended search function introduced in the prior year
and the more than 100 newly added product categories.

iKiosk app. We also transposed this concept to the
stationary Internet by creating a new portal for our news-
papers and magazines, iKiosk.de. At this portal, users
can subscribe to a considerable number of print titles as
“e-papers,” which they can access immediately after the
printing deadline and thus well in advance of the print
products being shipped.

We also introduced stand-alone iPad apps like
WELT HD and BILD HD to the market in 2010. In addi-
tion to the WELT Group and the BILD Group, BERLINER
MORGENPOST also launched both iPhone apps and
iPad apps in 2010. HAMBURGER ABENDBLATT intro-
duced an iPhone app in 2010, and have an iPad app
followed in early 2011.

Also in 2010, Axel Springer launched THE ICONIST, a
magazine developed specifically for the iPad that covers
style, culture and society. It has already become one of
the leading apps in the luxury brand segment. This exclu-
sive lifestyle magazine, which is available in both German
and English versions, combines the intuitive experience
of reading printed paper with the added benefits of a
digital medium.

Already since October of 2010, readers of AUTO BILD
have been able to experience a multimedia edition of
Europe’s biggest automotive magazine on the iPad.
Besides the complete content of the print edition, the
iPad version also features videos, picture galleries,
enlargeable photos, and numerous interactive elements.

Internationally, NEWSWEEK POLSKA was the first opin-
ion-shaping magazine in Poland to come out with an
iPad version, in October 2010. Towards the end of 2010,
the Swiss magazine BILANZ launched an iPad app, and
various mobile apps were successfully launched in
France as well, including the first automotive-themed
app by SPORT AUTO. And the mobile brand iGourmand
was expanded further and introduced as an app not only
in France, but also in Great Britain, the United States,
and Germany.

58 Annual Report 2010 Axel Springer AG

As one of the leading real estate portals in Germany,
immonet.de was also the first real estate portal to intro-
duce an iPhone app featuring an innovative augmented-
reality search function. While users walk around in their
preferred residential neighborhood, the app displays all
the available residential units on their iPhone in real time.
To date, more than 175 thousand users have
downloaded this free app. Furthermore, immonet.de
broadened its offering of services for home-seekers
further by acquiring umzugsauktion.de, the market-
leading moving services exchange platform, in 2010.
Also, immonet.de started a series of events and semi-
nars known as immonet.works in 2010.

Axel Springer’s regional newspapers HAMBURGER
ABENDBLATT and BERLINER MORGENPOST expanded
their online automotive marketplaces further in 2010 by
introducing extensive new classified ad markets for
automobiles, which are made available by autobild.de.
More than 100 thousand automobiles have been adver-
tised nationwide on abendblatt.de and morgenpost.de.

Marketing
The zanox Group is the European market leader in the
business of performance based online marketing in
Europe. We successfully bundled our marketing activities
in 2010 by integrating the British affiliates network Digital
Window into the zanox Group, in which Axel Springer
holds a majority interest. As a result, we will be able to
address the European markets more intensively, while
also taking advantage of synergy effects. Digital Window
had acquired the affiliate network buy.at, which operates
in Great Britain and the United States, in February 2010.

TV/radio activities
Our production company for TV entertainment formats,
Schwartzkopff TV, entered into an exclusive cooperation
agreement with Talpa Media Holding in 2010, under
which it acquired co-production rights to various suc-
cessful international TV formats for German TV broadcast
companies. After a subdued start, the radio advertising
market recovered over the further course of the year. The
radio stations in which Axel Springer holds investments
were successful amid this market environment.

Key Figures Digital Media

in € millions

External revenues

2010

711.8

2009

470.4

Change

51.3 %

Share in cons. revenues

24.6 %

18.0 %

Advertising revenues

Other revenues

559.0

152.9

336.7

133.7

66.0 %

14.4 %

EBITDA

85.8

43.2

98.7 %

EBITDA margin

12.1 %

9.2 %

The total segment revenues of € 711.8 million were
51.3 % higher than the prior-year figure (PY: € 470.4 million).
Most of that increase resulted from the consolidation of
StepStone and Digital Window (including buy.at). At
€ 559.0 million, advertising revenues were 66.0 % higher
than the prior-year figure (PY: € 336.7 million). Aside
from consolidation effects, most of the Group’s digital
activities achieved double-digit growth. The other reve-
nues of € 152.9 million were 14.4 % higher than the
prior-year figure (PY: € 133.7 million).

The pro-forma revenues of the Digital Media segment
rose to € 703.0 million (PY: € 574.5 million), indicative of
22.4 % organic growth. Accordingly, the proportion of
total pro-forma revenues represented by the pro-forma
revenues of the Digital Media segment rose from 21.2 %
in 2009 to 24.4 % in 2010.

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

Financial performance, liquidity, and financial position

At € 85.8 million, EBITDA of the Digital Media segment
was almost twice as high as the prior-year figure (PY:
€ 43.2 million). Even adjusted for consolidation effects,
segment EBITDA was 72.9 % higher than the adjusted
prior-year figure. This substantial increase was due pri-
marily to the higher EBITDA contributions of content
portals and online marketplaces.

Services/Holding
The Services/Holding segment comprises the three
Group-owned newspaper printing plants, as well as the
net investment income/expenses of the rotogravure joint
venture PRINOVIS, the internal departments of Sales and
Logistics, and various other service and holding com-
pany functions.

Key Figures Services/Holding

in € millions

External revenues

2010

100.8

2009

98.1

Change

2.8 %

Share in cons. revenues

3.5 %

3.8 %

EBITDA

– 33.7

– 20.5

At € 100.8 million, the external revenues of the Services/
Holding segment were slightly higher than the corre-
sponding prior-year figure (PY: € 98.1 million). The in-
crease resulted from higher revenues both in the service
area and in the printing plants.

EBITDA of € – 33.7 million was less than the prior-year
figure (PY: € – 20.5 million), mainly as a result of higher
non-operating expenses compared to the prior year,
including the expenses of forming increased provisions
for the stock option program, higher expenses in connec-
tion with the company’s healthcare plan, and higher provi-
sions for taxes recognized directly in income. Furthermore,
the various positive effects that influenced the prior-year
figure, such as income from the Kirch insolvency (2010:
€ 0.7 million, PY: € 7.6 million) and income from the rever-
sal of litigation provisions, did not recur in 2010.

Liquidity

Financial management
As a general rule, Axel Springer AG provides all financing
for the Axel Springer Group. This arrangement ensures
that the Group companies have sufficient liquidity at all
times. The overriding goal of financial management is to
provide cost-effective liquidity by means of structurally
appropriate financing. Also, we seek to earn an appro-
priate return by investing surplus cash. The Axel Springer
Group does not engage in off-balance sheet financing
measures.

Net Liquidity/Debt

in € millions

Cash and cash equivalents

Financial liabilities

Net liquidity/-debt

2010

2009

435.9

356.2

197.3

390.3

79.6

– 193.0

At December 31, 2010, Axel Springer showed net
liquidity in the amount of € 79.6 million (PY: net debt of
€ 193.0 million). The cash and cash equivalents increased
by € 238.6 million, mainly as a result of the operating
cash flow earned and the placement of treasury shares
in September 2010. Financial liabilities were reduced by
€ 39.2 million. Axel Springer has access to various credit
facilities, including a credit line in the total amount of
€ 1.5 billion, which can be used both for general busi-
ness purposes and for financing acquisitions. Of this
credit line, an amount of € 0.5 billion will fall due in 2012
and an amount of € 1.0 billion in 2013. An amount of
€ 275.0 million was drawn down under this credit line at
December 31, 2010. The total amount of available, un-
drawn short- and long-term credit facilities at December
31, 2010 was € 1,245.0 million (December 31, 2009:
€ 1,220 million).

60 Annual Report 2010 Axel Springer AG

The cash flow from financing activities amounted to
€ 76.1 million (PY: € – 345.5 million). Aside from the divi-
dend for financial year 2009, this figure also contained
cash inflows from the sale of treasury shares in the
amount of € 261.9 million, especially from the placement
of treasury shares effected in September 2010. In addi-
tion, financial liabilities were repaid in the amount of
€ 39.2 million. The prior-year figure had been influenced
by the comparatively higher repayments of financial liabili-
ties and by the payments made to increase the Group’s
investment in StepStone from 52.77 % to 100 %.

The net balance of cash flows from operating, investing,
and financing activities was € 233.6 million in 2010 (PY:
€ 41.2 million). At December 31, 2010, cash and cash
equivalents amounted to € 435.9 million (PY:
€ 197.3 million).

Financial position

Consolidated Balance Sheet (Condensed)

in € millions

Non-current assets

Current assets

Assets

Equity

Non-current liabilities

Current liabilities

12/31/2010 12/31/2009

2,569.7

1,874.6

1,033.5

1,059.7

3,603.2

2,934.3

1,772.6

1,196.8

1,003.5

827.2

966.1

771.4

Equity and liabilities

3,603.2

2,934.3

Cash flows and capital expenditures

Consolidated Cash Flow Statement (Condensed)

in € millions

Cash flow from continuing operations

Cash flow from investing activities

2010

358.1

– 200.6

20091)

270.0

116.7

Cash flow from financing activities

76.1

– 345.5

Change in cash and cash equivalents

233.6

41.2

Cash and cash equivalents at December 31

435.9

197.3

1) Prior-year values were adjusted to account for the reclassification of effects resulting
from the acquisition or sale of non-controlling interests (see Note (29) in the notes to
the consolidated financial statements).

The cash flow from operating activities rose to
€ 358.1 million (PY: € 270.0 million), mainly as a result
of the improved operating performance. The dispropor-
tionately low increase compared to the increase in the
Group’s EBITDA can be attributed in part to the higher
amount of cash outflows for restructuring measures and
the higher level of receivables. Furthermore, the increase
in EBITDA resulted in particular from the lower appropria-
tions to provisions, compared to the prior year. In addi-
tion, the dividends of companies accounted for by the
equity method were lower in 2010.

The cash flow from investing activities amounted to
€ – 200.6 million (PY: € 116.7 million). The decrease from
the prior-year figure resulted mainly from the payments
made in connection with the formation of the joint venture
Ringier Axel Springer Media and for the acquisition of an
approximate 12.4 % equity interest in SeLoger.com.
Countervailing effects included receipts from the sale of
StepStone’s Solutions division and from the sale of other
investments. The positive prior-year figure resulted
mainly from the sale of the Group’s investments in re-
gional newspapers.

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

Financial performance, liquidity, and financial position

At December 31, 2010, the total assets presented in the
consolidated statement of financial position amounted to
€ 3,603.2 million, indicative of an increase of
€ 668.9 million or 22.8 % over the corresponding figure
at year-end 2009 (PY: € 2,934.3 million). This increase
was influenced mainly by the placement of treasury
shares in September 2010 and by the first-time consoli-
dation of newly acquired companies, including in particu-
lar the companies contributed by Ringier to the joint
venture Ringier Axel Springer Media. Furthermore, the
Solutions division of StepStone and other investments
were sold in 2010.

Following the reduction of the Group’s shareholding
percentage in Do⁄an TV Holding A.S., that investment
was reclassified from assets held for sale to investments.
The acquisition of an approximate 12.4 % equity interest
in SeLoger.com also contributed to the increase in the
line item of investments.

The percentage of office space leased to third parties
increased in 2010. Consequently, an amount of
€ 26.4 million was reclassified as investment property.

The € 84.0 million increase in trade receivables resulted
mainly from the granting of longer payment terms and
from the first-time consolidation of newly acquired com-
panies. The purchase price receivable from the sale of
regional newspaper investments, which had previously
been presented as a non-current asset, was reclassified
as other current assets in the amount of € 25.0 million,
that being equal to the installment payments that will fall
due in 2011. The increase in cash and cash equivalents
resulted mainly from the placement of treasury shares in
September 2010 and from the sale of StepStone’s
Solutions division.

At € 1,772.6 million, the Group’s equity was € 575.8 million
(48.1%) higher than the corresponding figure at the end
of 2009 (PY: € 1,196.8 million). The equity ratio rose to
49.2 % (PY: 40.8 %). The increase in equity attributable
to shareholders of Axel Springer AG resulted from the
net income earned in 2010 and from the placement of
treasury shares. The increase in non-controlling interests
resulted mainly from the first-time consolidation of
Ringier Axel Springer Media AG, in which the Axel
Springer Group holds a 50 % interest.

At € 1,003.5 million, the non-current provisions and
liabilities were € 37.4 million or 3.9 % higher than the
corresponding prior-year figure. This development re-
sulted mainly from an increase in pension obligations,
which was itself caused by an adjustment made to re-
flect current interest rate developments. Another reason
for this development was the first-time recognition or
restatement of conditional purchase price liabilities re-
lated to company acquisitions. These developments
were partially offset by the repayment of loan liabilities.

At € 827.2 million, the current provisions and liabilities
were € 55.8 million or 7.2 % higher than the correspond-
ing prior-year figure. This development was likewise
influenced by new acquisitions, as well as a € 38.9 million
increase in trade payables. In addition, loan liabilities in
the amount of € 15.6 million were reclassified from non-
current liabilities to current liabilities for the first time
because they will fall due in that amount in 2011.

62 Annual Report 2010 Axel Springer AG

Employees
Excluding vocational trainees, journalism students, and
interns, Axel Springer had an average of 11,563 (PY:
10,740) employees in 2010. The 7.7 % increase over the
prior year resulted mainly from the joint venture Ringier
Axel Springer Media, which was formed on July 1, 2010,
and from the fact that the companies StepStone and
Digital Window were consolidated for only part of the
prior year. Internationally, Axel Springer had an average
of 3,990 employees (PY: 3,163), representing 34.5 % (PY:
29.5 %) of the Group’s total workforce. The Axel Springer
Group had an average of 4,856 female employees and
6,707 male employees. The number of reporters and
editors increased by 76 to reach 3,454 in 2010. The total
number of salaried employees, on the other hand, rose
by a total of 808 to 7,244, mainly due to the expansion
of business activities and the acquisition of new invest-
ments in the Digital Media and Print International segments.

Employees by Segments

Average number per year

Newspapers National

Magazines National

Print International

Digital Media

Services/Holding

2010

2,613

1,041

3,054

2,426

2,429

2009

Change

2,640

– 1.0 %

1,225

– 15.0 %

2,729

11.9 %

1,607

51.0 %

2,539

– 4.3 %

Group

11,563

10,740

7.7 %

Whereas the number of employees working in the Print
International and Digital Media segments increased the
number of those working in the national print business
decreased in 2010. The smaller workforce in the Maga-
zines National segment was mainly the result of decon-
solidation effects.

Length of service and age structure
As of December 31, 2010, the average employee of Axel
Springer’s German subsidiaries has been with the com-
pany for 12.2 (PY: 12.5) years; and 54.0 % (PY: 52.0 %)
of the workforce have been with the company for longer
than ten years. More than half of all employees are be-
tween the ages of 30 and 49. In the German companies,
3.8 % of the average workforce in 2010 were gravely
handicapped persons (PY: 4.3 %).

Overall assessment of the Group’s
economic situation by the Management

Having generated a new record level of EBITDA and
increased its revenues by 10.8 %, Axel Springer looks
back on a very successful year 2010. Besides expanding
our digital portfolio substantially, we also extended our
international presence considerably, especially as a result
of the joint venture Ringier Axel Springer Media.

The recovery of the economy in general and of the ad-
vertising industry in particular are likewise reflected in our
operating results. The EBITDA margin of 17.6 % can be
seen as an impressive demonstration of our company’s
profitability.

Based on the company’s continued strong cash flow,
solid balance sheet structure, and the available credit
facility, Axel Springer is well equipped to finance the
future growth of its business, both organically and
through acquisitions.

All in all, we consider our strategy to be the right way to
address changing framework conditions and to assure
the future viability of Axel Springer. In the coming years,
therefore, we will continue to pursue our main objectives
of internationalization, digitization, and defending or
further extending our leading market position in the
German-speaking world.

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

Economic position of Axel Springer AG

Key Figures of Axel Springer AG

in € millions

Revenues

Net income

Transfer to other retained earnings1)

Total dividends1)

Dividend per share (in €)1)

2010

2009

2008

2007

2006

1,576.6

1,588.3

1,673.3

1,669.1

1,710.1

161.3

4.0

157.3

4.80

323.1

165.4

131.2

4.40

196.4

103.6

130.6

4.40

147.8

25.3

122.4

4.00

245.9

138.5

107.3

3.50

1) The amount of the dividend for 2010 and the appropriation to the other retained earnings (after deduction of an advance appropriation of € 3.0 million) are subject to the condi-

tion of approval by the annual shareholders’ meeting.

Introductory remarks

The management report of the parent company Axel
Springer AG is combined with the management report
of the Axel Springer Group. The following statements
are based on the separate financial statements of Axel
Springer AG, which were prepared in accordance with
the regulations of the German Commercial Code and
the German Stock Corporations Act. The separate
financial statements of Axel Springer AG and the pre-
sent management report will be announced in the Elec-
tronic Federal Gazette and published on the website of
Axel Springer AG.

Business activity

Axel Springer AG, which has its registered head office
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 major print publications, such as the titles of
the BILD Group, the WELT Group, HAMBURGER
ABENDBLATT, TV DIGITAL, and HÖRZU, as well as
other newspaper and magazine titles, are editorially
produced and distributed by Axel Springer AG. The
newspapers are printed by the company’s own printing
plants in Ahrensburg, Berlin, and Essen, and by outside
printing companies.

In addition, Axel Springer AG maintains extensive sup-
plier and service relationships with subsidiaries and other
related parties. Purchased services mainly include print-
ing services, administrative services, property manage-
ment, direct marketing, editorial services, circulation, and
insurance services. Services rendered include the supply
of published products and paper and the provision of
general administrative and IT services.

As a general rule, Axel Springer AG provides financing
to the Group companies, as part of its Group-wide
liquidity management program. Profit/loss transfer
agreements are in effect with a number of German
Group companies.

64 Annual Report 2010 Axel Springer AG

Financial performance

Income Statement (Condensed)

in € millions

Revenues

Other operating income

2010

2009

1,576.6

1,588.3

140.1

417.0

Purchased goods and services

– 408.6

– 458.1

Personnel expenses1)

– 433.3

– 494.1

Amortization, depreciation and
impairments of intangible assets and
property, plant and equipment

– 35.1

– 40.0

Other operating expenses

– 550.8

– 530.9

Net income from non-current financial
assets

Net interest income1)

Profit from ordinary activities

Taxes

Net income

Transfer to retained earnings

Distributable profit

6.3

– 23.4

271.6

– 59.2

– 22.4

400.8

– 110.3

– 77.7

161.3

323.1

– 3.0

– 178.0

158.3

145.1

1) Prior-year values have been adjusted to fulfill the new commercial law requirements

resulting from the German Accounting Law Modernization Act, for the sake of
improved comparability.

The revenues of € 1,576.6 million were slightly less than
the corresponding prior-year figure. The 2.4 % decrease in
advertising revenues, which amounted to € 870.2 million,
was only partially offset by the moderate increase in
advertising revenues, which amounted to € 573.6 million,
and by the higher amount of other revenues.

The other operating income of € 140.1 million was less
than the corresponding prior-year figure of € 277.0 million,
which had been particularly influenced, however, by the
profit on the sale of regional newspaper investments, in
the amount of € 251.9 million, and by income from the
restatement of treasury shares, in the amount of
€ 32.6 million.

At € 408.6 million, purchased goods and services were
substantially lower, by € 49.5 million (10.8 %), than the
prior-year figure, due in particular to lower paper prices.

The personnel expenses of € 433.3 million were also
lower than the prior-year figure, by € 60.7 million, due to
lower restructuring expenses and the lower number of
employees, which declined by 3.6 % from an average
workforce of 4,827 in 2009 to 4,652 in 2010.

The depreciation, amortization, and impairments of
€ 35.1 million were lower than the prior-year figure (PY:
€ 40.0 million), mainly as a result of the lower amount of
scheduled depreciation of property, plant, and equipment.

At € 550.8 million, the other operating expenses were
€ 20.0 million (3.8 %) higher than the prior-year figure.
This increase resulted from the higher level of intercom-
pany deliveries, in part, but also from the hedging of
currency risks, which gave rise to both other operating
income and other operating expenses.

The net investment income of € 18.3 million was
€ 65.4 million higher than the prior-year figure (PY: net
investment expenses of € 56.1 million), due in particular
to higher profit transfers from subsidiaries.

The profit from ordinary activities amounted to
€ 271.6 million in 2010 (PY: € 400.8 million). After
taxes, the net income for financial year 2010 came to
€ 161.3 million (PY: € 323.1 million).

Liquidity

The net debt (liabilities to banks minus cash and cash
equivalents) was reduced by € 173.8 million to € 61.0 million
in 2010. At December 31, 2010, Axel Springer had access
to unutilized short-term and long-term credit facilities in the
amount of € 1,245.0 million (PY: € 1,220.0 million). The
credit facilities can be used for both general business
purposes and for financing acquisitions.

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

Economic position of Axel Springer AG

Financial position

Balance Sheet (Condensed)

in € millions

Intangible assets

Property, plant and equipment

12/31/2010 12/31/2009

34.9

210.8

34.4

218.7

Non-current financial assets

2,000.3

1,470.0

Fixed assets

Inventories

Receivables and other assets and prepaid
expenses

Cash and cash equivalents

Current assets1)

Total assets

Equity1)

Provisions

2,245.9

1,723.0

17.6

26.0

557.3

225.8

592.5

83.2

800.6

701.7

3,046.5

2,424.7

1,206.4

512.6

909.9

483.5

Liabilities and deferred income

1,327.5

1,031.3

Total equity and liabilities

3,046.5

2,424.7

1) Prior-year values have been adjusted to fulfill the new commercial law requirements
resulting from the German Accounting Law Modernization Act, for improved com-
parability.

At € 3,046.5 million, the balance sheet total in 2010 was
25.6 % (€ 621.8 million) higher than the prior-year figure.
The percentage of total assets represented by fixed
assets rose to 73.7 % (PY: 71.1 %). Fixed assets were
backed by equity at the rate of 53.7 %; that ratio was
almost unchanged from the prior year.

At € 2,000.3 million, non-current financial assets were
€ 530.3 million higher than the corresponding prior-year
figure, mainly as a result of the further contributions
made to the additional paid-in capital reserves of sub-
sidiaries, which were made to finance acquisitions and in
connection with Group-wide reorganization measures.

At € 800.6 million, current assets were € 98.9 million
higher than the prior-year figure. Most of this increase
occurred in the cash and cash equivalents, which were
€ 142.6 million higher than the corresponding prior-year
figure due to the proceeds from the share placement
(€ 251.4 million).

Also as a result of the share placement, the company’s
equity rose by € 296.5 million to € 1,206.4 million in
2010. The equity ratio was 39.6 % at the reporting date
(PY: 37.5 %).

The provisions were € 29.2 million higher than the corre-
sponding figure at the prior-year reporting date. The
increase resulted in particular from higher income tax
provisions; a countervailing effect related to the provi-
sions for structural measures.

At € 1,327.5 million, the liabilities and deferred income
were € 296.2 million higher than the corresponding
prior-year figure. Whereas liabilities to banks were further
reduced by € 31.4 million in 2010, the liabilities to affili-
ated companies rose by € 369.7 million, mainly in con-
nection with the Group’s centralized liquidity manage-
ment program.

Profit utilization proposal

The separate financial statements of Axel Springer AG for
2010, which were prepared in accordance with the prin-
ciples of German commercial law and the German Stock
Corporations Act, show a distributable profit of
€ 158.3 million (PY: € 145.1 million).

The Management Board and the Supervisory Board, will
propose to the annual shareholders’ meeting to be held
on April 14, 2011 that the company distribute a dividend
of € 4.80 (PY: € 4.40) per qualifying share. That amount
corresponds to a profit distribution of € 157.3 million
from the distributable profit. According to the proposal of
the Management Board, the remaining amount of
€ 1.0 million will be appropriated to the other retained
earnings. The treasury shares held by the company do
not qualify for dividends. The number of shares qualifying
for dividends can change in the time remaining until the
annual shareholders’ meeting. In that case, an appropri-
ately adjusted profit utilization proposal will be made to
the annual shareholders’ meeting, while retaining the
proposal to distribute € 4.80 per qualifying share.

66 Annual Report 2010 Axel Springer AG

Events after the reporting date

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

Report on risks and opportunities

Risk policy principles and risk strategy

At Axel Springer, we define risks as the possibility of
negative deviations of actual business performance from
the planned performance or from our objectives, while
opportunities represent the possibility of positive devia-
tions. The risk policy principles and risk strategy of Axel
Springer are closely tied to the adopted business strat-
egy. We do not seek primarily to avoid risks at all costs,
but to carefully weigh the opportunities and risks associ-
ated with our business activities. Accordingly, opportuni-
ties should be systematically exploited and risks should
be assumed only when that would enable us to take
advantage of additional income opportunities and in-
crease the value of our company. Appropriate measures
are taken to minimize risks to an acceptable level or, if
economically feasible, transfer them to third parties. All
employees are obliged to handle risks responsibly within
their own work areas.

Refined risk management system

In consideration of the heightened national and interna-
tional requirements, we began the process of systemati-
cally refining our internal monitoring system (risk manage-
ment, compliance management, internal control system,
and internal auditing) in 2010. To ensure the close coordi-
nation of the various sub-systems, we have established
the new department of Governance, Risk, & Compliance
to coordinate risk management, compliance management,
and the internal control system in the future.

Axel Springer’s risk management system is designed to
identify all significant risks at the earliest possible stage,
so that we can immediately take appropriate counter-
measures and monitor the further progression of all risks
and the corresponding risk management measures. This
approach gives us the necessary maneuvering room and
allows for the controlled handling of risks. The risk man-
agement system is designed to meet the demands of
currently applicable laws and regulations, as well as
nationally and internationally recognized standards, and
is documented in a corresponding corporate directive.

Whereas the overall responsibility for risk management
lies with the Management Board, the management of
individual risks, which entails the early detection, assess-
ment, management, and documentation of risks, as well
as the adoption and implementation of appropriate
countermeasures and the associated reporting require-
ments, lies primarily with the corresponding corporate
divisions or Group companies.

The division heads bear content-related responsibility for
the risk management conducted within their respective
divisions. Besides conducting a structured risk inventory
every year, they are also obliged to monitor their divisions
on a continuous basis in order to identify any changes in
the risk situation. Significant changes in the division-
specific risk situation must be reported promptly to the
Governance, Risk, & Compliance Department or the
Management Board.

In addition to the decentralized risk identification process
described above, a centralized risk identification process
is conducted under the coordination of the Group-wide
Risk Manager, who is a member of the senior manage-
ment. The purpose of that process is to apply special-
ized methodology with the goal of identifying and as-
sessing cross-divisional and process-transcending risks,
so as to complete the risk inventory.

Risks are assessed on the basis of the probability of
occurrence and the possible loss in case of occurrence.
Risks are classified as “existentially threatening,” “mate-
rial”, or “to be monitored.” In order to present Axel
Springer’s risk situation as transparently as possible,
risks are assessed by means of a procedure that entails
both a gross assessment (before risk management
measures) and a net assessment (after risk management
measures). Uniform, Group-wide materiality limits are
applied for that purpose.

A theoretically existential risk is classified as such on the
basis of the possible gross loss and the effect of such a
loss on the Group’s financial position and liquidity.

68 Annual Report 2010 Axel Springer AG

The Corporate Risk Manager is assigned to the new
department of Governance, Risk, & Compliance. He
monitors all risk management activities, aggregates the
risks at the Group level, and assesses the plausibility and
completeness of reported risks.

control system is meant to ensure that the Group’s finan-
cial reports convey a true and fair view of the financial
position, liquidity, and financial performance of Axel
Springer AG and the Axel Springer Group, in compliance
with all relevant laws, regulations, and standards.

He is also responsible for continuously refining the risk
management system and the Group-wide, web-based
reporting tool.

The risk reports prepared for the Management Board
and Supervisory Board focus primarily on the existentially
threatening risks and material risks, including the corre-
sponding risk management measures and suitable early
warning indicators, if any. For that purpose, we distin-
guish mainly between strategic and operational risks,
financial reporting risks and risks related to compliance
with internal and external regulations.

Internal audit system

Axel Springer AG has a Corporate Internal Audit Depart-
ment that conducts its work independently of instructions
and processes, on the basis of internal rules of procedure
adopted by the Management Board. The Corporate Internal
Audit Department is designed to fulfill the relevant national
and international professional standards.

Based on an underlying, risk-oriented audit plan, the
Corporate Internal Audit Department continuously re-
views the adequacy and functional effectiveness of the
risk management system and internal control system,
among other matters.

Report on the financial reporting-related
risk management and internal control
system pursuant to Section 289 (5) and
Section 315 (2) (5) HGB

The financial reporting-related risk management system,
which comprises all organizational regulations and
measures aimed at the detection and management of
risks related to financial reporting, is a part of our com-
prehensive risk management system. With a view to the
(consolidated) financial reporting process, the internal

As in the case of the overall risk management system,
the Management Board also bears overall responsibility
for the financial reporting-related risk management sys-
tem. All consolidated companies are covered by means
of a uniform management and reporting organization.

We consider the following elements of the risk management
system and internal control system to be significant with
respect to the (consolidated) financial reporting process:

(cid:132) Processes for identifying, assessing, and documenting
all significant financial reporting-related processes and
risk areas, including the corresponding key controls.
Such processes include financial and accounting
processes, as well as administrative and operational
business processes that generate important informa-
tion used in the preparation of the separate and con-
solidated financial statements, including the manage-
ment reports of the parent company and the Group.

(cid:132) Process-integrated controls (computer-aided controls
and access restrictions, dual control principle, separa-
tion of functions, analytical controls).

(cid:132) Standardized financial accounting processes, through
the use of an internal, Group-wide Shared Services
Center for most of the consolidated German compa-
nies of the Group.

(cid:132) Assurance of uniform accounting practices by means of

Group-wide guidelines, procedures, and training courses.

(cid:132) Monthly internal reports (complete income statement,
statement of financial position, cash flow statement)
and monthly reports on all cost units of the Group, in-
cluding analysis and reporting of significant develop-
ments and budget/actual deviations.

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

Report on risks and opportunities

The effectiveness of the (consolidated) financial report-
ing-related risk management system and internal control
system is systematically reviewed and assessed by
means of periodic control tests; a Group-wide reporting
system ensures that up-to-date information is provided
on a regular basis to the division heads, Management
Board, and Supervisory Board.

We are continuously refining our risk management system;
the financial reporting-related control system is being
integrated with the broader system on a step-by-step
basis to create a comprehensive system of internal cor-
porate monitoring. By that means, we are synchronizing
and optimizing our control elements on a cross-divisional
basis and thereby enhancing the effectiveness and eco-
nomic efficiency of the entire internal monitoring system.

Risk areas

The risks described below could have material effects on
the business activity of Axel Springer and therefore also
on whether and when we achieve our business objectives.
Within the risk categories described below, risks are
presented in the order of their priority for Axel Springer.

Market and competition risks
The currently positive economic development of German
markets is threatened by numerous European government
crises resulting from the substantial over-indebtedness of
individual countries. Another element of uncertainty re-
lates to the further development of China as an eco-
nomic power, which will have a crucial and lasting im-
pact on the world economy. A renewed collapse of
financial markets and the ensuing economic downturn
would hamper economic growth, among other conse-
quences. Therefore, a significant deterioration of the
revenue performance of our advertising customers and
the resulting decrease in our advertising revenues that
would occur under such a scenario cannot be ruled out.
An adverse development of the general market environ-
ment could lead to lower advertising revenues in Germany
and also reduce our advertising revenues in the countries
of eastern Europe.

Furthermore, the general market situation is still charac-
terized by intense competition pressure. The possible
entry of new competing titles and formats into the mar-
ket, especially in the form of free newspapers and maga-
zines, exposes the Axel Springer Group to the risk of lost
revenues and market shares in the circulation and adver-
tising business. Changing consumption and reading
habits (especially as a result of demographic changes)
exacerbate this risk further.

Another source of uncertainty relates to the growing
competition with traditional print media posed by other
kinds of media. Above all, the growing importance and
use of the Internet could have the effect of reducing the
revenues of print publications.

In that context, the high proportion of total Group-wide
revenues contributed by BILD and the entire family of
BILD brands poses a particular risk. Overall, the paid
circulation of BILD and BILD am SONNTAG has been
declining in the last few years. Furthermore, a significant
proportion of the Group’s high-revenue magazine titles
are supported by the strong recognition and brand fa-
miliarity of the BILD family of brands. The possibility that
the success of our BILD titles could be adversely af-
fected by external factors on a lasting basis, which would
consequently have a negative impact on the Group’s
financial position, liquidity, and financial performance,
cannot be ruled out.

In the segment of digital media, the dominant position of
major Internet search engines could pose a market risk.
If, for example, the search engines were to alter their
search algorithms or use their own websites to broaden
their offerings and so compete with our own business
activities or those of our affiliated companies, that could
have a serious impact on the future revenue performance
of certain business activities of Axel Springer.

70 Annual Report 2010 Axel Springer AG

The above-mentioned general market risks are moni-
tored and minimized primarily by the operational manag-
ers. To counter these risks successfully, Axel Springer
continued in 2010, and will continue in the future, to
pursue the threefold strategy of market leadership in the
German-language core business, internationalization,
and digitization. Therefore, the targeted expansion of
existing activities in Germany is still vitally important to
our company. Furthermore, changing customer needs
can be accommodated by means of product innovations,
accompanied by incentives and other product-related
measures, such as sales-promoting give-aways and
special inserts offered at an extra cost, including DVDs,
CDs, and audio books, for example.

The constant further development and expansion of our
iPhone and iPad apps underscores our determination to
continually increase the degree of digitization of Axel
Springer’s media. By means of acquisitions, new com-
pany start-ups, and the expansion of existing digital
media, we will strive to adapt to changes in the media
world and further promote the cross-media networking
and integration of our brands. (For more information on
that subject, please refer to the report on the business
developments and financial performance of our seg-
ments from page 55.)

Political and legal risks
Various new statutory initiatives that will have an impact
on some of our business models in the digital media
segment are expected at the present time. The Cookie
Regulation Directive that has already been enacted on
the European level will be transposed into German law in
2011. Although online offerings based on user accounts
are largely unaffected by this new regulation, it could
have a major influence on conventional online offerings.
The user data stored by means of cookies, including the
number of visits to a given website or the number of
clicks on online ads, for example, are an important basis
for generating revenues in the Internet. Advertisers use
the data supplied by cookies to measure the success of
advertisements and the popularity of websites, and the
website operators use the data for setting advertising
rates. At the present time, concrete implementation of
this regulation and the ensuing impact on the revenue

performance of Axel Springer and the company’s strate-
gic orientation remain to be seen.

The three-stage test introduced as a regulatory require-
ment in 2009 needs to be defined more precisely be-
cause the broadcast councils have not yet given ade-
quate consideration to the effects of their expansion
course on the Internet market. The fact that state-owned
TV stations provide electronic news free of charge
makes it harder for private-sector enterprises like Axel
Springer to monetize their portfolios in the mobile Inter-
net. Furthermore, the possibility that state-owned TV
stations will extend their no-cost offerings to the strategi-
cally important Apple App Store cannot be ruled out.
Such a development would hinder the acceptance of
paid-content offerings, despite our efforts to the contrary,
and could therefore have an adverse effect on our reve-
nue performance in the corresponding segment.

Furthermore, our business is still exposed to the compe-
tition-distorting effects of state-owned media and the
regulatory pressure of legislators on all relevant levels of
government.

Breaches of confidentiality agreements and violations of
insider trading regulations, as well as the incorrect publi-
cation of data or the non-observance of data protection
laws and regulations, could lead to economic or legal
consequences for Axel Springer. In such cases, the
possibility of damage to the reputation of the Group or its
brands cannot be ruled out.

To minimize such risks, Axel Springer has adopted vari-
ous control mechanisms and consultation rules, ex-
panded its data protection organization, and initiated
extensive training programs, among other measures. The
company intends to intensify such activities in the future.

The implementation of the European Payment Directive
SEPA (Single Euro Payments Area) poses a risk that is
difficult to appraise at the present time. It is still unclear when
it will be implemented and how our subscribers will react.

Internationally, a legal risk exists in Hungary, which en-
acted a new press law in 2010, the effects of which on
freedom of the press in that country remain to be seen.

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

Report on risks and opportunities

Reputation risks
In view of its growing international presence, Axel
Springer has adopted a catalog of social standards
known as the International Social Policy, as a binding
guideline for social integrity, applicable to all our compa-
nies throughout the world. Non-observance of the Inter-
national Social Policy, especially in connection with the
procurement of advertisements and product give-aways,
as well as merchandising or the sale of title licenses,
could potentially cause serious damage to the com-
pany’s reputation.

The Axel Springer Group has instituted a sustainability
management program that meets international standards.
The overly late detection of possible ecological or social
conflicts relative to the procurement of resources along
the value chain of wood, pulp, paper, and recycled ma-
terials could harm the Group’s reputation. To minimize
this risk as much as possible, we work closely together
with experts in the wood, pulp, and paper industry and
with numerous environmental protection organizations.
We also conduct monitoring measures across the entire
value chain, as well as eco-audits. Axel Springer’s inter-
nal and external communications on this subject are
generally characterized by a high level of openness and
transparency.

IT risks
As a company with a high level of digitization, Axel
Springer is exposed to considerable risks related to the
possible failure of IT systems, data centers, editing sys-
tems, or databases. Particular attention is given to IT
risks that could lead to data losses or, in the worst case,
business interruptions.

Besides those IT risks that affect Axel Springer directly,
there are others that have a considerable impact on the
company’s business activities. In consideration of the
growing importance of paid-content offerings and the
related handling of personal data, and the steadily grow-
ing threat of computer criminality, the careful handling
and protection of the above-mentioned customer data
are becoming increasingly important.

By reason of its many online-based business models,
Axel Springer is also dependent on the constant avail-
ability of the websites. The possibility of hacker attacks
and the consequent downtimes entails risks that could
potentially have an adverse effect on the Group’s reve-
nue performance and reputation.

Consequently, Axel Springer undertakes targeted measures
to guard against criminal acts and protect its strategic
business model. To avoid or mitigate such risks, the
company employs extensive IT security measures (such
as back-up systems, firewalls, and back-up data cen-
ters), which are continuously upgraded and improved.

Strategic and other risks
Strategic risks arise from the possibility, among others,
that the Group would invest in concepts and companies
that prove not to be sustainably successful, leading to
financial losses. Such investment risks arise primarily
from the possibility of bankruptcy. If the revenue and
profit performance of the companies in which we hold an
investment would be worse than planned, due to a re-
newed worsening of the financial markets and economic
crisis, it could become necessary to recognize impair-
ment losses. Generally speaking, however, the business
models of our subsidiaries and associates are very het-
erogeneous. Furthermore, we employ internal assurance
measures, including the rigorous investment criteria
applied in connection with our M&A activities.

In the digital media business, Axel Springer is additionally
exposed to a heightened risk that a given business
model would prove not to be successful on a sustainable
basis, and that newer Internet business models could
force older ones out of the market. Another significant
factor is the growing popularity of paid-content offers in
the online business, leading not only to higher revenues,
but also increased competition. Therefore, it is entirely
possible that the revenues generated from this business
in the future could be offset by higher costs to win and
retain customers.

To minimize such risks, Axel Springer employs an active
investment management program, takes the necessary
steps to recruit and retain qualified managers, and con-
stantly monitors the relevant business and market devel-

72 Annual Report 2010 Axel Springer AG

opments. By means of such measures, Axel Springer
minimizes the risk of possible impairment losses in
goodwill and losses on loans to companies in which it
holds an investment.

Distribution-related risks, including the risk of liquidity
problems on the part of distribution partners, for example,
are countered by means of clearly stipulated payment
terms and firm payment modalities.

The threat of terrorism poses an elementary risk to Axel
Springer. We counter terrorism risks in two ways. First,
we take structural and organizational measures to further
raise the Group’s security standards; second, we took
out a new insurance policy in 2009 to mitigate the finan-
cial consequences of terrorism.

Financial risks and risks associated with the use of
financial instruments
The financial risks especially relevant to the Axel Springer
Group are interest rate risk and currency risk. Interest
rate risks arise primarily from financial liabilities with vari-
able interest rates. Currency risks arise in connection
with revenues and net investment income or expenses
denominated in foreign currencies.

To limit its exposure to interest rate risk, the Group has
adopted principles and guidelines that serve to ensure
compliance with loss limits on its capital investments. In
addition, such risks are hedged by means of various
kinds of interest rate derivatives. Significant financing
risks resulting from the uncertain outlook for the financial
sector are not evident for the Axel Springer Group at the
present time because the credit line totaling € 1.5 billion
granted for liquidity assurance purposes has been com-
mitted by the participating banks through 2012/2013
and does not provide for a unilateral right of cancellation.
Furthermore, we do not anticipate any price risks or
default risks, nor any cash flow risks, at the present time.

Furthermore, Axel Springer continues to pursue its strat-
egy of internationalization and digitization in a focused
manner. The joint venture with Ringier represents a deci-
sive step in the direction of internationalization. From a
risk standpoint, the main risks to which Ringier Axel
Springer Media AG is exposed are market and financial
risks. The market risks refer in particular to the declining
print business, which tends to reduce circulation reve-
nues, though not advertising sales. By virtue of the high
degree of internationalization of Ringier Axel Springer
Media AG, the relevant market risks are distributed over
various countries, although that fact does entail a height-
ened foreign exchange risk (EUR, CHF, eastern Euro-
pean currencies), which the company counters by
means of hedging activities.

Furthermore, the loss of major customers could have an
adverse effect on the business success and activities of
the Group. To avoid this risk, we employ a variety of
customer retention measures, among other measures.

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

Report on risks and opportunities

Overall risk assessment
Currently, no risk concentrations or interdependencies
that could have a significant influence on the Group’s
financial position, liquidity, and financial performance are
discernible, with the exception of the possibility that the
global economy would experience another drastic dete-
rioration. Therefore, any threat to Axel Springer’s survival
as a going concern or any decisive effect on the Group’s
financial position, financial performance, and liquidity
situation can be ruled out.

Compared to the prior year, moreover, the risk position of
the Axel Springer Group has improved because the Group’s
financial strength, and consequently its capacity to absorb
risk, has increased in the last twelve months. Furthermore,
the Group is more broadly diversified than before.

Opportunities

Market opportunities
If the economy continues to stabilize, as currently pre-
dicted by the leading economic research institutions, that
will have a positive effect on our circulation and advertis-
ing revenues. But even a negative development of the
overall economy could create opportunities for Axel
Springer. For example, competitors could pull out of the
market, thereby strengthening our own market position
on a long-term basis. In such a scenario, moreover, it
may be possible to acquire companies at lower valuations.

Political opportunities
The strengthening of intellectual property rights that
would result from the introduction of a publisher’s
ancillary copyright could have a positive effect on the
company’s business in Germany. Such a law would
considerably improve the legal position of publishers in
copyright disputes. However, the publication of a first,
more detailed draft law is not expected before the first
half of 2011.

Strategic opportunities
By means of the joint venture Ringier Axel Springer
Media AG, we have taken a decisive step in the direction
of internationalization. Opportunities can arise from the
licensing of titles in the countries in which Axel Springer AG
maintains a presence and from the strategic establishment
of strong competitive positions in eastern Europe.

In implementing our internationalization strategy, we have
the decisive advantage over our competitors that we
have already attained strong market positions in many
countries, including leading market positions in numer-
ous segments.

The digitization strategy offers especially promising op-
portunities for generating additional revenues via the
dynamic development of revenues in the online advertis-
ing market. Axel Springer is taking advantage of this
market trend through the swift and consistent combina-
tion of print and online offerings, and by investing in
companies, entering into cooperation agreements, and
continually expanding its existing and newly acquired
activities. Opportunities are seen especially in the area of
paid content. Furthermore, the expansion of digital offer-
ings in the form of apps for the iPhone and HD apps for
the iPad creates tremendous strategic opportunities for
Axel Springer.

Marketing opportunities
The Group’s marketing unit, Axel Springer Media Impact,
has established a strong position in the market and is one
of the widest-reach cross-media marketers in Europe.
Thanks to its cross-media business model and its strong
competitive position, Axel Springer is an attractive adver-
tising platform beyond the realm of TV advertising.

74 Annual Report 2010 Axel Springer AG

Forecast report

Anticipated economic environment

General economic environment
For 2011, the ifo Institute for Economic Research ex-
pects the pace of economic growth to weaken, both in
the industrialized nations and in the emerging-market
countries. The growth rate of global economic output is
expected to slow from 4.7 % to 3.6 %. In those countries
that have experienced a faster recovery to date, no fur-
ther economic policy stimulus can be expected. In those
countries with structural problems, the adjustment proc-
esses that have been initiated will dampen the pace of
economic growth. A renewed phase of weakness can be
expected particularly in the United States and Japan,
due to the high debt levels of both governments and
private households. That expectation applies even more
to the peripheral euro zone countries (ifo Institute).

According to the forecast of the ifo Institute, the German
economy will expand at a price-adjusted rate of 2.4 % in
2011. Due to weakening worldwide industrial demand,
the Ifo Institute expects that the growth rate of imports
and exports will fall to 7.4 %. On the other hand, domestic
demand will increasingly play a greater role in supporting
the German economy. Improved conditions in the job
market make consumers more confident, which has a
positive effect on their propensity to spend. Although
government budget consolidation efforts will place a
burden on private households, consumer spending is still
expected to increase at an average real rate of 1.4 % in
2011. The low interest rates can be expected to stimu-
late residential construction, in particular.

The inflation rate is expected to rise to 1.7 % in 2011,
primarily as a result of rising energy costs and higher
charges for municipal services. Under the positive influ-
ence of favorable economic conditions, the number of
employed persons is expected to rise to a new record
level of almost 41 million. At the same time, the ifo Insti-
tute expects that the number of unemployed job seekers
will fall to 2.9 million. In that case, the unemployment rate
would be around 7.0 %.

Internationally, the ifo Institute expects the economic
stabilization trend to continue in the countries of central
and eastern Europe in 2011, according to its Autumn
2010 forecast.

Anticipated Economic Development (Selection)

Change in gross domestic product
compared to prior year (real)

Germany

Switzerland1)

France

Spain

Hungary

Poland

Czech Republic

Slovakia

Serbia1)

Russia

Source: ifo Institute.
1) Source: IWF.

2011

2.4 %

1.7 %

1.4 %

0.6 %

2.4 %

4.0 %

2.3 %

3.2 %

3.0 %

4.3 %

Industry environment
Following the sharpest decline in worldwide advertising
expenditures in decades, the global advertising market
appears to be stabilizing further. According to the latest
advertising market forecast of ZenithOptimedia (Advertis-
ing Expenditure Forecast of December 2010), a world-
wide increase of 4.6 % is expected in 2011, assuming
that the economic recovery trend continues.

According to all the forecasts issued in the current year,
the overall advertising market of Germany is also ex-
pected to grow in 2011. That assumption is supported
primarily by the high level of employment, favorable ex-
port prospects, the positive situation of orders, and the
recovery of consumer spending. ZenithOptimedia ex-
pects the net total advertising market to expand at a rate
of 2.8 %, and ZAW expects it to expand at a rate of 2.5 %,
in 2011. ZenithOptimedia anticipates slight decreases of
1.0 % and 0.9 % in the net advertising revenues of
newspapers and magazines, respectively.

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

Forecast report

The online market should continue to experience a
very positive development in 2011, with net advertising
expenditures (including search term marketing and affili-
ate advertising) increasing at a rate of 14.0 %.

In the television market in Germany, ZenithOptimedia
expects net advertising revenues to increase by 3.9 % in
2011; in the radio market, it expects them to decrease
by 1.5 %.

The advertising industry continues to see growth oppor-
tunities in new marketing formats, networked advertising
concepts, the establishment of new business lines, and
product innovations. In the online market, mobile com-
munications via smart phones and tablets are on the
brink of making the leap to a mass market.

For the international markets in which Axel Springer
conducts its own business activities, ZenithOptimedia
predicts an uneven development of the net advertising
revenues of newspapers, magazines, and online media
(as of December 2010).

Anticipated Print Advertising Demand 2011 (Selection)

According to ZenithOptimedia’s forecast, the net adver-
tising revenues of the online market in western Europe
will increase by 10.9 % to US$ 19.9 billion in 2011, as-
suming constant exchange rates. The growth rates of
some eastern European markets will be significantly
higher.

Anticipated Advertising Demand for

Online Media (Selection)

Change in net ad revenues
compared to prior year (nominal)

Germany

Hungary

France

Spain

Poland

Russia

India

Switzerland1)

Czech Republic1)

Slovakia1)

Serbia1)

2011

14.0 %

8.0 %

20.0 %

18.5 %

29.6 %

29.9 %

16.1 %

11.0 %

24.0 %

37.5 %

Change in net ad revenues
compared to prior year (nominal)

Newspapers Magazines

Source: ZenithOptimedia, Advertising Expenditure Forecast (December) 2010.
1) Gross advertising revenues. Gross advertising revenues do not adequately reflect

the actual development of advertising revenues.

Germany

France1)

Spain1)

Hungary

Poland1)

Russia2)

Switzerland3)

Czech Republic3)

Slovakia3)

Serbia3)

– 1.0 %

– 2.0 %

– 2.8 %

– 2.0 %

– 2.7 %

2.4 %

3.0 %

– 1.6 %

9.1 %

– 0.9 %

– 2.8 %

– 2.0 %

– 2.4 %

0.4 %

4.1 %

3.9 %

7.2 %

9.2 %

9.6 %

Source: ZenithOptimedia, Advertising Expenditure Forecast (December) 2010.

1) Excluding classified ads.
2) Print media in total.
3) Gross advertising revenues, excluding classified ads. Gross advertising revenues do

not adequately reflect the actual development of advertising revenues.

Group

Strategic and organizational orientation
In 2011 and beyond, Axel Springer will continue to pursue
the strategy based on the core elements of expanding
the market leadership position in the German-language
core business, internationalization, and digitization.

The market leadership position in the German-language
core business will be expanded by continually building
on our strong brands and by developing and establishing
innovative cross-media advertising formats. By this
means, the extraordinarily high reach of our print media
and content portals can be put to optimal use.

76 Annual Report 2010 Axel Springer AG

We will continue to systematically pursue our internation-
alization strategy. In addition to strong, established print
brands that appeal to a broad base of readers, we will
also focus on the digitization of our activities. Important
criteria for making investments in companies include the
right strategic fit, the professionalism of the management,
and the monetization potential of digital business models.
Geographically, we will focus mainly on the countries of
central and eastern Europe.

The digitization strategy is geared to expanding the
Group’s content portals, marketplaces, and marketing
activities. With regard to the content portals, one focus
will be on the continued development of paid content
and offers. In that endeavor, we can make use of the
experiences gathered in connection with the popular
formats that have already been introduced. In the
segment of marketplaces, the Group’s portfolio has
been expanded significantly through the acquisition of
StepStone. In the marketing segment, we intend to
pursue further international growth following the integra-
tion of Digital Window’s affiliate network, into the zanox
Group. We are not planning to make significant adjust-
ments to the Group’s organization at the present time.

Anticipated business developments and financial
performance
For the full year 2011, we anticipate a single-digit in-
crease in Group’s total revenues, to which all revenue
categories (circulation revenues, advertising revenues,
and other revenues) are expected to contribute. This is
without any further acquisitions. We expect that slightly
lower revenues in the national print business will be more
than offset by higher revenues in the international print
business and in the digital media business.

Assuming that the economic recovery trend continues,
we anticipate further, moderate increases in revenues
and EBITDA for the financial year 2012. These in-
creases will be driven in large part by the continuous
expansion of the international and digital business.

As for the segments, we consider it possible to generate
medium-term EBITDA margins on the order of 25 % in
the Newspapers National segment, 20 % in the Magazines
National segment, 15 % in the Print International segment,
and 20 % in the Digital Media segment, subject to the
condition of a positive economic environment and the
absence of adverse developments or events.

Also for the segments, we expect that the total reve-
nues of the Newspapers National segment in financial
year 2011 will be on the level of the prior year. We ex-
pect also that a slight increase in advertising revenues
will make up for a slight decrease in circulation revenues
and a decrease in other revenues. EBITDA of the
Newspapers National segment is expected to be slightly
less than the prior-year figure, mainly due to increased
paper costs, as a result of higher prices.

The Group’s national magazines continue to operate
within a challenging competitive environment. We expect
total revenues in 2011 to be less than those in 2010. We
expect also circulation revenues to decrease as a result
of lower circulation numbers, an effect that will be exag-
gerated in the first half of the year by consolidation ef-
fects related to the sale of financial media in the prior
year. Advertising revenues are expected to be slightly
less than the prior-year figure; adjusted for consolidation
effects, they should be on the level of the prior year. Due,
in particular, to lower circulation revenues and increased
paper costs, as a result of higher prices, we expect that
EBITDA of the Magazines National segment in 2011 will
be less than the prior-year EBITDA.

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

Forecast report

For the Print International segment, we anticipate substan-
tial increases in advertising revenues, circulation revenues,
and other revenues, as well as significantly higher EBITDA
than in 2010. The increase in revenues will mainly be the
result of the full-year consolidation of Ringier Axel Springer
Media. The substantial increase in EBITDA will also result
to a large extent from the additional earnings contributions
of the companies provided by Ringier. Nonetheless, we
also expect our other international subsidiaries to increase
their earnings contributions.

The anticipated substantial revenue gains in the Digital
Media segment will be driven by organic growth,
strengthened by consolidation effects. Advertising reve-
nues are expected to make a greater contribution to the
substantial increase than the other revenues. In view of
our plan to step up investments in bolstering the market
positions of our digital media, we expect an dispropor-
tionately smaller increase in the segment EBITDA.

For the Services/Holding segment, we expect that reve-
nues will be on the level of the prior year and EBITDA will
be slightly higher than the prior-year figure, due to lower
expenses.

Anticipated development of liquidity and financial
position
According to the current planning status, the Group’s
liquidity, and financial position will not change signifi-
cantly in 2011. Axel Springer has extensive short-term
and long-term credit facilities, which can also be used for
acquisitions. Based on the capital expenditures projects
planned to date, investments in property, plant and
equipment and intangible assets will likely be higher than
the corresponding prior-year figure, due in part to the
further development of the Group’s web-based systems
and IT infrastructure, among other things. The financing
will be provided by the cash flow from operations.

Dividend policy
Subject to the condition of solid financial performance in
the future, Axel Springer will strive to maintain its divi-
dend policy, which provides for high payouts to share-
holders while simultaneously enabling the financing of
further growth.

Anticipated workforce development
The average annual Group-wide number of employees
will be higher in 2011 than in 2010, mainly as a result of
the integration of the companies contributed by Ringier
to the joint venture Ringier Axel Springer Media with the
Axel Springer Group. Organic growth in the digital media
business will also lead to increased personnel.

Planning assumptions
We plan the future development of the financial performance,
liquidity, and financial position on the basis of assumptions
that are plausible and sufficiently probable from today’s
perspective; nonetheless, such assumptions are fraught
with great uncertainties in the current economic envi-
ronment. The actual development, therefore, could pos-
sibly be much different from the assumptions applied
and the resulting business plans and trend forecasts.

The possible consequential effects of the planned acquisi-
tion of a majority interest in the French real estate portal
SeLoger.com on the financial performance, liquidity, and
financial position have not been taken into consideration
for the purpose of the overall forecast, because the an-
nouncement of the achieved acceptance ratio of the Axel
Springer public takeover bid by the French securities mar-
ket regulatory authority is expected in early March 2011.

78 Annual Report 2010 Axel Springer AG

Disclosures pursuant to Sections 289 (4), 315
(4) HGB and Explanatory Report pursuant
to Section 176 (1) (1) AktG

Composition of subscribed capital

The company’s subscribed capital amounts to
€ 98,940,000. It 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
company 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).

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, or have given rise, to transfer restrictions based
on the German law of obligations (Schuldrecht). In ex-
change, the company has, in regular intervals, agreed to
pledge the shares in question to the financing banks.

(cid:132) In connection with the acquisition of company shares
by Hellman & Friedman in October 2003, the com-
pany had 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 Luxembourg S.A.) on October 8,
2003. In this agreement, Hellman & Friedman had ex-
pressly recognized the restrictions on the transfer of
shares according to the company’s Articles of Incor-
poration as binding upon it and its affiliated compa-
nies. In exchange, the company had 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 con-
dition 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 listing for the
shares of Axel Springer AG on the Frankfurt Stock
Exchange. It was expressly stated in the share trans-
fer restriction agreement that the corresponding sup-
port 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 financial year (representing
9.8 % of the company’s capital stock at that time). By
August 2010, Hellman & Friedman sold all of the re-
maining shares it held until that time in Axel Springer
AG. Since Deutsche Bank Luxembourg S.A. also sold
all of the shares that it held in Axel Springer AG in the
course of placing the shares of the company in Sep-
tember 2010 (see page 23), this share transfer restric-
tion agreement has been completed in the meantime.

(cid:132) In connection with the purchase of company shares
from Dr. h. c. Friede Springer by Good Media Invest-
ment Holdings S.A.R.L., the company entered into a
share transfer restriction agreement with Michael
Lewis, Nova Trust Ltd., in its capacity as the trustee
of The Michael Lewis Capital Discretionary Settlements,
and other so called ML investors held directly and in-
directly by Nova Trust Ltd., alone, or as a majority
owner (Hague Holdings Ltd., Colmar Investment Hold-
ings Ltd., and Media Investment Holdings S.A.R.L.), and
the Governor and Company of the Bank of Scotland,
by the date of February 16, 2006. In this share trans-
fer restriction agreement, 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 respect of all indirect and

Disclosures pursuant to Sections 289 (4), 315 (4) HGB and Explanatory Report pursuant to Section 176 (1) (1)
AktG

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

direct purchases, disposals and encumbrances of the
company’s shares. Under the supplementary agree-
ment of July 31 / September 11, 2006, the company
granted its prior consent to the acquisition of up to
340,000 additional shares (or 1 % of the existing capi-
tal 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 21,
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.

In connection with the placement of, first, treasury shares
belonging to Axel Springer AG, and second, shares in
Axel Springer AG that were held by Deutsche Bank
Luxembourg S.A., which occurred in September 2010,
Axel Springer used a customary market protection
clause to promise the placing banks that it would, in
principle, not otherwise sell its own shares that were not
an object of this share placement for a period of six
months after the placement was effected, or dispose of
them in any other way. This excludes shares that were
issued or transferred under the Company Participation
Program for Management Board members from 2004 or
the ongoing free share and stock participation program
for employees.

(cid:132) Finally, a share transfer restriction agreement was

concluded between Dr. Mathias Döpfner, Brilliant 310.
GmbH, Axel Springer AG, and M.M. Warburg & Co.
KGaA dated July 31 / August 4, 2006. Under this
share transfer restriction agreement, the direct and
indirect purchase of, as well as the direct and indirect
disposal over the shares of, Axel Springer AG by Brilliant
310. GmbH or Dr. Mathias Döpfner are made contin-
gent on the prior consent of Axel Springer AG accord-
ing to the company’s Articles of Incorporation.

Furthermore, transfer restrictions based on the German
law of obligations exist in connection with the free share
and stock participation program for the employees of the
Axel Springer Group, which was conducted in 2009. The
holding period was one year for the free share program
and two years for the stock participation program. Cur-
rent members of the Management Board are required to
personally invest in shares of Axel Springer AG in the
context of the virtual stock option plan for these mem-
bers. These shares are not subject to any restrictions on
disposal, but any disposition of the shares in this per-
sonal investment leads to the lapse of virtual stock op-
tion rights without replacement or compensation (see
page 92 on the virtual stock option plan).

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 2010 financial year, Axel Springer
Gesellschaft für Publizistik GmbH & Co. held around
51.5 % of the company’s capital. This investment is at-
tributable to AS Publizistik GmbH (in its function as gen-
eral partner of Axel Springer Gesellschaft für Publizistik
GmbH & Co.), 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. In addition, Dr. h. c. Friede Springer
directly held an additional holding equal to about 7.0 % of
the company’s capital stock at the end of the reporting
year. Thus, the total shareholding controlled 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.

80 Annual Report 2010 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

In the context of the two free share and stock participa-
tion programs for employees of the company that were
implemented in 2009, initially Deutsche Bank AG was
entered in the stock register with externally owned
shares in connection with the shares transferred to the
employees. However, each employee is free to be regis-
tered personally as a stockholder in the stock register.

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 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 (Section 84 (2) AktG).
If a required Management Board member would be lack-
ing, 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 Supervisory Board is author-
ized to revoke the appointment of a Management Board
member and the Management Board Chairman for impor-
tant 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 major-
ity 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 Incorporation).

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).

Authority of the Management Board to
issue or buy back 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
23, 2010 (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 capital stock existing at the
time the resolution was passed, in the time until April 22,
2015. Such purchases can be effected on the stock
exchange or by means of a public offer to all sharehold-
ers, or a public invitation to submit an offer.

In addition, the company was 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 April 22, 2015 (Agenda Item 7
of the annual shareholders’ meeting of April 23, 2010).
Accordingly, on the basis of an option agreement made
with Hellman & Friedman on April 8, 2004 (and subse-
quently amended multiple times), the company would
have been authorized to acquire shares held by Hellman
& Friedman in Axel Springer AG. This authorization was
not exercised by the company and has become irrele-
vant in the meantime because Hellman & Friedman sold
its last shares held in Axel Springer AG during the report-
ing year 2010 (see also page 78).

Disclosures pursuant to Sections 289 (4), 315 (4) HGB and Explanatory Report pursuant to Section 176 (1) (1)
AktG

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

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 23, 2010, 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 financial year 2010, the company held
200,000 own shares, which corresponds to about
0.61 % of the share capital (see page 79 on the market
protection clause in connection with the share placement
that occurred in September 2010).

Significant agreements of the company
subject to the condition of a change of
control resulting from a takeover offer

With the exception of a credit facility of € 1,500,000,000,
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

A majority of the members of the Management Board
has the right to terminate their service contracts in the
event of a change in control. A change in control within
the meaning of these contracts exists when the majority
shareholder Dr. h. c. Friede Springer would no longer
hold or control the majority of shares, indirectly or directly.
In such a case, the affected Management Board mem-
bers have the right to receive payment of their base
salary for the most recently negotiated remaining con-
tractual term, not to be less than payment of one year’s
base salary. Furthermore, the company will pay the pro-
rated percentage of the success-based compensation
for the period of time served in the year of resignation.
The service contracts of the members of the Manage-
ment Board do not provide for any other compensation if
the service relationship is terminated as a result of a
change in control.

There are no such indemnification agreements with
employees of the company.

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.”

82 Annual Report 2010 Axel Springer AG

Statement on governance pursuant to Section
298a HGB and Corporate Governance Report

The statement on governance pursuant to Section 289a of
the German Commercial Code (HGB) comprises the
Declaration of Conformity pursuant to Section 161 AktG,
relevant information on corporate governance practices,
and a description of the procedures of the Management
Board and the Supervisory Board along with the composi-
tion and procedures of their committees. In accordance
with the recommendation found in No. 3.10 of the German
Corporate Governance Code, the Management Board also
reports for the Supervisory Board, on the company’s
corporate governance (Corporate Governance Report).

Responsible corporate governance

Good corporate governance as a guiding principle
At Axel Springer, good corporate governance is considered
to be a crucial element of responsible management and
control, and is therefore an essential basis for the com-
pany’s lasting success. In this regard, we are guided by
the German principles of sound corporate management,
particularly the German Corporate Governance Code.

We have taken appropriate measures to implement and
ensure compliance with the principles of corporate govern-
ance. The Corporate Governance Officer is the Manage-
ment Board member in charge of “Finance and Services.”
The implementation of, and adherence to, the recom-
mendations of the German Corporate Governance Code
are reviewed continually.

Declaration of Conformity pursuant to
Section 161 AktG

“The Management Board and Supervisory Board of Axel
Spring AG declare the following pursuant to Section 161
of the German Stock Corporation Act (AktG):

I. Forward-looking section
The company fulfills the German Corporate Governance
Code (DCGK) in the version of May 26, 2010, as pub-
lished by the German Federal Ministry of Justice in the
official announcements section of the electronic Federal
Gazette of July 2, 2010, with the exception of the follow-
ing listed and justified deviations:

Individualized disclosure of the Supervisory Board
remuneration (No. 5.4.6 (6) and (7) DCGK)

The remuneration granted to the members of the Super-
visory 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 DCGK).

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

II. Historical section
Since the company’s last Declaration of Conformity in
December 2009, until publication of the new version of
the Code on July 2, 2010, the company has fulfilled:

(cid:132) The DCGK in the version of June 18, 2009, as pub-

lished by the German Federal Ministry of Justice in the
official announcements section of the electronic Fed-
eral Gazette of August 5, 2009, and

since publication of the new version of the Code on
July 2, 2010:

(cid:132) The DCGK in the version of May 26, 2010, as pub-

lished by the German Federal Ministry of Justice in the
official announcements section of the electronic Fed-
eral Gazette of July 2, 2010,

each with the exception listed and justified under No. I
above, and the following listed and justified exceptions:

1. Deductible in D&O insurance for the Supervisory
Board (No. 3.8 (5) DCGK):
A deductible has been agreed upon in the D&O insurance
for the members of the Supervisory Board–corresponding
to the legal situation applicable to the members of the
Management Board–corresponding to the requirements
of No. 3.8 (5) DCGK, not commencing until July 1, 2010.

Pursuant to Section 23 (1) of the Implementation Act to
the Stock Corporation Act (Einführungsgesetz zum Akti-
engesetz, EGAktG), the increased minimum deductible
applicable to Management Board members (Section 93
(2) (3) AktG) only was required to be agreed upon start-
ing July 1, 2010, for D&O insurance policies purchased
prior to August 5, 2009. For reasons of uniformity and
efficiency, the corresponding increase in the minimum
deductible for the members of the Supervisory Board
likewise did not occur until July 1, 2010.

Statement on governance pursuant to Section 298a HGB and Corporate Governance Report

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

2. List of significant investments (No. 7.1.4 DCGK):
The list published by the company of third-party compa-
nies in which the company holds an equity interest that is
not insignificant for the company (the investment hold-
ings list) contains the information required by law.

Insofar as the statement of equity and the result recom-
mended in No. 7.1.4 (3) DCGK can accordingly be omit-
ted, the company previously had exercised the right to
omit these statements in order to avoid disadvantages to
affected natural persons. The investment holdings list
published in March 2010, with the legal information con-
tained therein, simultaneously complied with the recom-
mendations of the DCGK.

Berlin, November 8, 2010

Axel Springer AG

The Supervisory Board

The Management Board”

This Declaration of Conformity pursuant to Section 161
of the German Stock Corporations Act (AktG) was pub-
lished on November 8, 2010. On March 1, 2011, the
Management Board and Supervisory Board published
the following updated version of the Declaration of Con-
formity of November 8, 2010:

“The Management Board and Supervisory Board of Axel
Springer AG hereby make the following declaration pur-
suant to Section 161 AktG:

I. Section related to the future
Axel Springer will adhere to the recommendations of the
German Corporate Governance Code (DCGK) in the
version of May 26, 2010, published by the Federal Minis-
try of Justice in the official announcements section of the
electronic Federal Gazette on July 2, 2010, with the
following exception, which is justified below:

Itemized disclosure of Supervisory Board compen-
sation (No. 5.4.6 (6) and (7) DCGK)
The compensation of Supervisory Board members and the
fees paid by the company to the members of the Supervi-
sory Board for the services provided personally by them
are not individually itemized in the Corporate Governance
Report (No. 5.4.6 (6) and (7) DCGK).

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

II. Section related to the past
Since the issuance of the last Declaration of Conformity of
November 8, 2010, the company adhered to the recom-
mendations of the German Corporate Governance Code
(DCGK) in the version of May 26, 2010, published by the
Federal Ministry of Justice in the official announcements
section of the electronic Federal Gazette on July 2, 2010,
with the following exception, which is justified below:

Severance cap in the event of premature termina-
tion without cause of a Management Board em-
ployment contract or in connection with a change
of control (No. 4.2.3 (11), (12) and (13) DCGK)
In connection with the renewal of the employment con-
tract of a long-serving Management Board member, no
so-called severance cap was stipulated in the event of
premature termination without cause of the Management
Board employment contract (No. 4.2.3 (11) and (12)
DCGK) and for payments promised in connection with
the premature termination of the Management Board
employment contract subsequent to a change of control
(No. 4.2.3 (13) DCGK).

The Supervisory Board opted not to stipulate such a
severance cap because the Management Board em-
ployment contract that is currently in effect with the af-
fected Management Board member, which was con-
cluded prior to the introduction of the corresponding
recommendations of the DCGK in the version of June 6,
2008, also does not stipulate such a severance cap.
Therefore, the agreement in effect between the company
and the Management Board member was merely upheld.
The Supervisory Board deems it appropriate to refrain
from stipulating a severance cap in the interest of retain-
ing the Management Board member in question.

Berlin, March 1, 2011

Axel Springer AG

The Supervisory Board

The Management Board“

Both the Declaration of Conformity of November 8, 2010
and the updated version of the Declaration of Conformity
dated March 1, 2011, as well as the older versions, are
available at the link www.axelspringer.com/declaration
ofconformity.

84 Annual Report 2010 Axel Springer AG

Relevant standards and practices of
corporate governance

Axel Springer is the only German media company that has
provided itself with a corporate constitution. This is an-
chored in Article 3 (Principles of Corporate Governance) of
the company’s Articles of Association and is thus a guiding
principle for all employees. The corporate constitution can
be examined and downloaded at www.axelspringer.com/
corporateprinciples. Its key elements are presented in the
“Social Responsibility” chapter on page 28.

A guideline for executives specifies the requirements im-
posed on the management of the Axel Springer Group
that are based on the Corporate Preamble. Moreover,
Axel Springer has established guidelines for journalistic
independence. These guidelines concretize and broaden
the scope of the journalistic principles set forth in the Code
of Conduct of the German Press Council (Grundsätze des
Pressekodex des Deutschen Presserat). They delineate in
detail the boundaries between advertising and editorial
copy, and between the editors’ and reporters’ private and
business interests. They also preclude actions in pursuit of
personal advantages and define the company’s position
with respect to the treatment of news sources. The guide-
lines thus represent the framework for independent and
critical journalism in the editorial departments of all media
belonging to the Group. The editors-in-chief are responsi-
ble for observing and implementing the guidelines in the
company’s day-to-day activities. The environmental guide-
line, comprising four points, is a practical orientation for
the company’s many and various environmental protection
measures. The complete guidelines can be accessed at
www.axelspringer.com/guidelines.

Finally, Axel Springer has developed a catalog of social
standards. This International Social Policy explains the
company’s position on matters of human rights, adher-
ence to the rule of law, the protection of children and
young people, the treatment of employees, health, safety,
and the compatibility of work and family, among other
things. The International Social Policy is available for
download at www.axelspringer.com/socialpolicy_en. In
financial year 2010, Axel Springer established a separate
division of Governance, Risk, and Compliance. This
division is run by the Chief Risk & Compliance Officer.
Along with the merger of the individual elements of the

Internal Monitoring System already described in the Risk
Report, particularly in the area of compliance management,
the goal is to create structures and processes that guar-
antee that the behavior of members of company bodies,
first and foremost executives and employees, is in compli-
ance with laws and regulations. This includes compliance
with all laws, regulations, and guidelines, as well as con-
tractual obligations and voluntarily accepted commitments.

Procedures of the Management Board
and Supervisory Board, and procedures of
the committees of the Supervisory Board

Cooperation between the Management Board and
Supervisory Board
In compliance with legal requirements, management and
control at Axel Springer are carried out using a dual
management system. 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 sustainably en-
hance the company’s value. The two boards are strictly
separated in terms of personnel and their areas of authority.

Management by the Management Board
In its executive function, the Management Board is obli-
gated to pursue the interests of the company and dedi-
cated to sustainable company development. It develops
the strategic orientation of the company and is responsi-
ble for its implementation in coordination with the Super-
visory Board. The Management Board manages the
company’s affairs in compliance with the relevant laws,
the Articles of Association, and its rules of procedure.

It provides regular, timely, and comprehensive informa-
tion to the Supervisory Board on all relevant matters of
strategy, planning, business development, risk situation,
and risk management. Important decisions of the Man-
agement Board require the approval of the Supervisory
Board. Such decisions include, above all, the creation or
discontinuation of business divisions, the acquisition or
sale of significant equity investments, and the adoption
of the company’s annual budget and financial plan.

The rules of procedure for the Management Board pro-
vide more detailed regulations.

Statement on governance pursuant to Section 298a HGB and Corporate Governance Report

Combined Management Report of the Group and of Axel Springer AG 85

The rules of procedure contain, among other things:

(cid:132) The obligation to adhere to and comply with the cor-

porate constitution and to anchor it across the Group
(cid:132) The executive organization chart and the decisions to

be made by the Management Board as a whole

(cid:132) The duties of the Chairman of the Management Board
(cid:132) Transactions that require the approval of the Supervi-

sory Board

(cid:132) Provisions regarding the Supervisory Board’s regular,

timely, and comprehensive information

(cid:132) Regulations on meetings and procedure for adopting

resolutions

(cid:132) The obligation to disclose conflicts of interest.

approves the consolidated financial statements of the
Group. It regularly audits the efficiency of its work. Please
see the report of the Supervisory Board (page 94ff.) for
specifics on the activities of the Supervisory Board in the
2010 reporting year.

The rules of procedure of the Supervisory Board comply
with the requirements of the German Corporate Govern-
ance Code and contain regulations covering the follow-
ing, among other things:

(cid:132) The election and duties of the Chairman of the Super-

visory Board and his deputy

(cid:132) Calling meetings
(cid:132) Adoption of resolutions during meetings or using

Management Board currently consists of four members:

written or telephonic voting

(cid:132) Dr. Mathias Döpfner (Chairman and Chief Executive
Officer, Subscription Newspapers and International)
(cid:132) Rudolf Knepper (Vice Chairman, Printing, Logistics,

and Human Resources)

(cid:132) Lothar Lanz (Chief Financial Officer and Chief Operating

Officer)

(cid:132) Dr. Andreas Wiele (BILD Group and Magazines).

The members of the Management Board are jointly re-
sponsible for the management, work together collegially,
and keep each other informed of important measures
and business transactions in their business divisions.

Monitoring and consulting by the Supervisory Board
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 advises the Management
Board and monitors the work of the Management Board.
It holds at least four meetings a year. In case of necessity,
it meets without the Management Board in attendance.
Meetings may be held and resolutions adopted also by
way of written correspondence, telephone calls, telexes,
or other forms of telecommunication. The Supervisory
Board discusses the company’s business developments,
planning, strategy, and significant capital expenditures at
regular intervals. The Supervisory Board adopts the
separate financial statements of Axel Springer AG and

(cid:132) The obligation to disclose conflicts of interest.

The members of the Supervisory Board are:

(cid:132) Dr. Giuseppe Vita (Chairman)
(cid:132) Dr. h. c. Friede Springer (Vice Chairwoman)
(cid:132) Dr. Gerhard Cromme
(cid:132) Oliver Heine
(cid:132) Klaus Krone
(cid:132) Dr. Nicola Leibinger-Kammüller
(cid:132) Prof. Dr. Wolf Lepenies
(cid:132) Michael Lewis
(cid:132) Dr. Michael Otto

The Chairman of the Supervisory Board, Dr. Giuseppe
Vita, who is simultaneously the Chairman of the Audit
Committee, also satisfies the requirements of expert
knowledge and independence within the meaning of
Section 100 (5) AktG.

After Brian Powers resigned from office with immediate
effect on May 20, 2010, Dr. Nicola Leibinger-Kammüller
was appointed as a member of the Supervisory Board by
decree of the Charlottenburg Local Court dated July 13,
2010, with a limited term of office until the next regular
annual shareholders’ meeting, which will occur on April
14, 2011. The terms of office of the other current mem-
bers of the Supervisory Board will end at the conclusion
of the regular annual shareholders’ meeting in 2014.

Composition and procedures of committees
The Management Board has not appointed any sub-
committees.

86 Annual Report 2010 Axel Springer AG

The Supervisory Board currently has formed the follow-
ing four subcommittees: Executive Committee, Person-
nel Committee, Nominating Committee, and Audit
Committee. The committees have the responsibilities
and members listed below:

Executive Committee

Responsibilities

Members in financial year 2010

(cid:74) Publishing and journalistic

affairs

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

(cid:74) Strategy, financial planning

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

(cid:74) Capital expenditures, financing

(Vice Chairwoman)

(cid:74) Preparation of decisions

(cid:74) Dr. Gerhard Cromme

regarding the organization of the
Management Board

(cid:74) Klaus Krone

(cid:74) Approval of the sale of

registered shares of Axel
Springer AG and of subscription
rights to such registered shares

(cid:74) Approval of management

measures requiring the approval
of the Supervisory Board, which
have been delegated to the
Executive Committee

Personnel Committee

Responsibilities

Members in financial year 2010

(cid:74) Preparation of decisions

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

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

(Vice Chairwoman)

(cid:74) Dr. Gerhard Cromme

regarding the appointment and
dismissal of Management Board
members

(cid:74) Resolutions on the conclusion,
amendment, and termination of
employment contracts with
Management Board members
(excluding the setting or
modification of their
compensation)

(cid:74) Resolution 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 transactions with
Management Board members

(cid:74) Approval of management

measures requiring the approval
of the Supervisory Board, which
have been delegated to the
Personnel Committee

Nominating Committee

Responsibilities

Members in financial year 2010

(cid:74) Preparation of proposals for the
election of Supervisory Board
members, also in consideration
of the diversity criteria adopted
by the Supervisory Board

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

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

(Vice Chairwoman)

(cid:74) Formulation and review of

(cid:74) Dr. Michael Otto

required qualifications, which
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 financial year 2010

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

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

(Vice Chairwoman)

(cid:74) Klaus Krone

(cid:74) Oliver Heine

(cid:74) Preparation of resolutions to
adopt the separate financial
statements and approve the
consolidated financial statements

(cid:74) Preliminary review of the

separate financial statements of
the parent company,
dependency report,
consolidated financial
statements of the Group,
separate parent company
management report, and Group
management report

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

(cid:74) Review of interim financial

statements and interim reports

(cid:74) Review of the risk management

systems

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

(cid:74) Preparation of the proposal to

the annual shareholders’
meeting for the election of the
independent auditor

(cid:74) Issuance of the audit

engagement for the separate
financial statements and
consolidated financial
statements, adoption of audit
priorities

Statement on governance pursuant to Section 298a HGB and Corporate Governance Report

Combined Management Report of the Group and of Axel Springer AG 87

The Chairman of the Audit Committee satisfies the re-
quirements for expert knowledge and independence
within the meaning of Section 107 (4) in conjunction with
Section 100 (5) AktG, as well as the requirements set
forth in the recommendation in No. 5.3.2 (2) DCGK.

Conflicts of interest
The members of the Management Board and Supervisory
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 demand or ac-
cept gifts or other benefits from or grant unjustified bene-
fits to third parties in connection with their activities,
either for their own benefit or that of others. Sideline
activities of the Management Board require the consent
of the Supervisory Board. 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.

Likewise, each member of the Supervisory Board must
disclose such conflicts to the Supervisory Board imme-
diately; the Supervisory Board reports to the annual
shareholders’ meeting on any conflicts of interest and
how they are handled (see the report of the Supervisory
Board, page 96, for the conflicts of interest occurring in
the reporting year, as well as the following Corporate
Governance Report).

Memberships held by members of the boards in
other supervisory boards
A summary 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 on
page 168.

Corporate Governance Report 2010

Enhancement of corporate governance
The new version of the German Corporate Governance
Code (DCGK) entered into force on July 2, 2010. Among
other things, it provides specifics on some of the
changes already made in June 2009, which relate to,
inter alia, diversity and particularly to the appropriate
recognition of women in the composition of the boards,
and the staffing of executive positions:

(cid:132) The Supervisory Board is to set goals for its composi-
tion (No. 5.4.1 (2) DCGK) that factor in the interna-
tional activity of the company as well as potential con-
flicts of interest, an age limit to be set for Supervisory
Board members, and diversity, while taking the com-
pany’s specific situation into account. These goals
should particularly provide for adequate participation
of women. The goals set by the Supervisory Board,
and the status of their implementation, are to be pub-
lished in the Corporate Governance Report.

(cid:132) Adequate representation of women should also be a
goal when staffing the Management Board, No. 5.1.2
(2) DCGK.

(cid:132) According to the newly added No. 4.1.5 DCGK, the

Management Board is now also expected to factor in
diversity when staffing executive positions, and par-
ticularly to appoint women in adequate numbers.

In addition to the changes relating to diversity both within
the boards as well as in executive positions, the Code
contains changes relating to the professionalization of
the Supervisory Board members. According to No. 5.4.1.
(6) and (7) DCGK, the Supervisory Board members are to
participate independently in the education and training
necessary to perform their duties. They should be ap-
propriately supported by the company in doing so. Ac-
cordingly, the company offered and ran a continuing
education event for the Supervisory Board members in
February 2011 entitled “Legal Bases of Supervisory
Board Activity.” According to No. 5.4.5 (2) DCGK, per-
sons belonging to the Management Board of a listed
company should not hold a total of more than three
seats on supervisory boards in non-group listed compa-
nies or in supervisory bodies of companies with similar
requirements. In addition, adjustments were made based

88 Annual Report 2010 Axel Springer AG

on the Act on the Implementation of the Shareholder
Rights Directive (No. 2.3 DCGK–absentee voting).

Axel Springer complies with the new legal requirements
and, with a few exceptions, with the Code recommenda-
tions. With respect to the specific exceptions to the
recommendations of the Code, reference is made to the
Declaration of Conformity of November 8, 2010 and the
updated version of March 1, 2011.

Goals of the Supervisory Board regarding its
composition, state of implementation
At its meeting of October 14, 2010, the Supervisory
Board adopted the following goals for its composition or
confirmed them in accordance with its prior practice:

(cid:132) The Supervisory Board of Axel Springer AG shall be

composed in such a way that its members as a whole
have the knowledge, abilities, and professional ex-
perience necessary to properly carry out its duties.

(cid:132) In addition, while taking into account the statutory

object and purpose of the company, the size of the
company, and the proportion of its international busi-
ness activity, the Supervisory Board strives to achieve
the goal of a composition for each upcoming regular
term of office that particularly factors in the following
elements:

(cid:132) At least two seats on the Supervisory Board should
be held by persons who embody the criteria of in-
ternationality to a particular degree (e.g., due to
relevant experience with the business activities of
companies abroad)

(cid:132) Supervisory Board members should not hold any

position on a board or perform any consulting task
at material competitors of the company

(cid:132) The Supervisory Board should have adequate

participation of women. Currently, two of the nine
members (22.2 %) are women; the Supervisory
Board considers this adequate in any event.

(cid:132) Nominations should take the fact into account that

Supervisory Board members generally should not be
older than age 72; the Supervisory Board can ap-
prove exceptions to this policy. Furthermore, the Su-
pervisory Board should factor in the principle that the

fewest number of its members possible should be
subject to a potential conflict of interest, for instance
due to an advisory function or board membership at
significant customers, suppliers, creditors, or other
significant business partners of Axel Springer. In addi-
tion, the Supervisory Board should take into account
in its composition that it should correspond to the cri-
terion of diversity.

The foregoing principles have already been completely
implemented with the current composition of the Super-
visory Board of Axel Springer AG.

Conflicts of interest
During the reporting year, no Management Board mem-
ber had a conflict of interest.

Shareholders and annual shareholders’ meeting
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 generally chairs the shareholders’ meeting.
To make it easier for shareholders to exercise their pre-
rogatives at the annual shareholders’ meeting, their votes
can be cast by authorized proxies. Axel Springer AG also
designates a voting proxy whom shareholders can elect
to execute their voting rights according to their instruc-
tions. All required reports and documents are made
available to the shareholders in advance, also on the
company’s Internet page.

The annual shareholders’ meeting resolves specifically
on the utilization of the distributable profit, the ratification
of the actions of the Management Board and Super-
visory Board, the election of the Supervisory Board, the
selection of the independent auditor, and other matters
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 another major-
ity is prescribed by law or by the company’s Articles of

Statement on governance pursuant to Section 298a HGB and Corporate Governance Report

Combined Management Report of the Group and of Axel Springer AG 89

Incorporation. The Articles of Incorporation can be
inspected on the company’s website at
www.axelspringer.de/articlesofassociation.

Transparency
Axel Springer is committed to always providing compre-
hensive, timely, and simultaneously, and consistent in-
formation on the significant events and developments
relevant to an evaluation of the company’s present and
future business performance to all capital market partici-
pants. Reporting on the business situation and Group
results is presented in its annual report, at its annual
financial statements press conference, and in its quar-
terly reports. For this purpose, the company also uses
Internet communication channels if possible. To the
extent required by law, the company also provides in-
formation in the form of ad-hoc announcements and
press releases, and on the company’s website.

In order to ensure equal treatment of all capital market
participants, Axel Springer also publishes information
relevant to the capital markets simultaneously in the
German and English languages on the company’s Inter-
net page. Financial reporting dates are published in the
financial calendar with sufficient advance notice. Any
changes in the composition of the shareholder structure
that are subject to the reporting obligation according to
Section 26 of the German Securities Trading Act (Wert-
papierhandelsgesetz, WpHG), and on the purchase and
sale of shares by persons who exercise management
duties at Axel Springer (directors’ dealings), are likewise
immediately published upon receipt of corresponding
notices in accordance with Section 15 a WpHG.

Shareholding
The Management Board members of the company di-
rectly or indirectly held 476,656 shares of Axel Springer
AG at the balance sheet date of December 31, 2010. Of
this number, 415,564 shares were held directly by the
Chairman of the Management Board, Dr. Mathias
Döpfner, respectively indirectly via Brilliant 310. GmbH.

The Supervisory Board members directly or indirectly
held a total of 20,516,940 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 indirectly held an additional
1,194,950 shares through Good Media Investment Hold-
ings S.à.r.l. and through Oceana Concentrated Opportu-
nities Fund Ltd. (formerly TriAlpha Oceana Concentrated
Opportunities Fund Ltd.).

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 consolidated financial statements are prepared by
the Management Board of Axel Springer AG and audited
by the independent auditor. Axel Springer publishes the
consolidated financial statements within 90 days and the
quarterly reports within 45 days of the respective period
ending dates.

The notes to the consolidated financial statements also
contain information on the company’s relationships with
shareholders who are to be classified as related parties
according to the definitions of the applicable accounting
regulations.

In accordance with the Corporate Governance Code, it is
agreed with the independent auditor in each financial
year that the latter will inform the Chairman of the Super-
visory Board or the Audit Committee without delay of any
circumstances arising during the course of the audit that
would constitute grounds for disqualification or partiality.
It was also agreed that the independent auditor will im-
mediately report any matters and events arising during
the course of the audit that fall within the purview of the
Supervisory Board. It is further agreed that the inde-
pendent auditor will inform the Supervisory Board or
make an observation in the audit report if the independ-
ent auditor would discover, during the course of the
audit, any facts that contradict the Declaration of Con-
formity by the Management Board and Supervisory
Board according to Section 161 AktG.

90 Annual Report 2010 Axel Springer AG

Actions for nullification and disclosure,
both ongoing and ended in the reporting
period

In the years 2005 to 2007, the shareholder Dr. Oliver
Krauß contested various resolutions adopted by the
respective annual shareholders’ meetings of the company.
All of the suits were unsuccessful with the exception of
the action to nullify the resolutions ratifying the actions of
the Management Board at the regular annual sharehold-
ers’ meeting of 2006, which were then repeated by the
regular annual shareholders’ meeting of 2010. The follow-
ing proceedings are currently to be reported:

On May 20, 2008, Dr. Oliver Krauß filed an action to
nullify the resolutions of the annual shareholders’ meeting
of April 24, 2008 relating to Agenda Item 2 (Utilization of
the retained earnings), Agenda Item 3 (Ratification of the
actions of the Management Board), and Agenda Item 4
(Ratification of the actions of the Supervisory Board), as
well as 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 Management Par-
ticipation 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 Management 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 defendant. On March 17,
2009, the Berlin Regional Court rejected both suits in
their entirety. The plaintiff Dr. Oliver Krauß filed an appeal
of this ruling with the Berlin Appellate Court (Case No. 23
U 63/09), which for its part was denied in its entirety by a
ruling dated May 3, 2010. Thereupon, the plaintiff filed an
appeal against the judgment of the Berlin Appellate
Court and an appeal against denial of leave to appeal
with the Federal Supreme Court, where the proceeding
is pending under Case No. II ZR 122/10.

By way of an action for information according to Section
132 AktG of May 6, 2009, Dr. Oliver Krauß filed a motion
to place the Management Board under the obligation to

provide information about his questions that were alleg-
edly not answered at the 2009 annual shareholders’
meeting. The proceeding was pending before the Berlin
Regional Court (Case No. 93 O 46/09), which denied the
action seeking disclosure by a ruling dated January 5,
2010, without oral arguments, and did not permit imme-
diate appeal. The denial of the action seeking disclosure
is thus legally valid and enforceable.

On May 21, 2009, Dr. Oliver Krauß filed an action to
nullify the resolution of the annual shareholders’ meeting
of April 23, 2009 relating to Agenda Item 7 (Special au-
thorization to purchase and use the company’s own
shares according to Section 71 (1) (8) AktG in connection
with the Management Participation Program) and con-
tested the election of Dr. h. c. Friede Springer and Brian
Powers to the Supervisory Board of the company
(Agenda Item 8). Moreover, Dr. Oliver Krauß petitioned
for a finding that the company is obligated to provide him,
in his capacity as a shareholder, a transcript of those
portions of the “stenographic minutes from its question
recording and question answering system” that cover his
questions and comments, as well as the information
provided by the company in response. The shareholders
SCI AG and Oliver Wiederhold joined the action on the
side of the defendant. The Berlin Regional Court rejected
the suit in its entirety by judgment dated June 10, 2010
(Case No. 95 O 52/09), that is, both with regard to the
action to nullify, as well as the petition for a finding.
Dr. Oliver Krauß filed an appeal against this decision
before the Berlin Appellate Court; the appeal proceeding
is being conducted under Case No. 23 U 125/10.

On May 21, 2010, Dr. Oliver Krauß filed an additional
action to nullify the resolutions of the annual sharehold-
ers’ meeting of April 23, 2010 relating to ratification of
the actions of the Management Board and the Supervi-
sory Board for financial year 2009 (Agenda Items 3 and
4), as well as the general authorization to purchase and
use the company’s own shares according to Section 71
(1) (8) AktG and to exclude the preemptive right, and the
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 and to exclude the right to tender and preemptive
right (Agenda Items 6 and 7). This action is pending

Statement on governance pursuant to Section 298a HGB and Corporate Governance Report

Combined Management Report of the Group and of Axel Springer AG 91

before the Berlin Regional Court under Case No. 105 O
53/10; a date for oral arguments was originally set for
December 1, 2010, but it was moved to April 6, 2011 for
business reasons. The shareholder Frank Scheunert
joined this action on the side of the defendant.

Compensation Report

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

Management Board
The compensation system for the Management Board,
including the material contract components, was re-
viewed during the reporting year by the full Supervisory
Board; the review showed that the Management Board
compensation system continues to be adequate and
appropriate, which corresponds to a recommendation of
the Personnel Committee with the same wording. In
accordance with the requirements of the German Stock
Corporation Act and the recommendations of the DCGK,
the compensation of the Management Board members
consists of fixed and variable components. The variable
compensation was comprised of a cash component and
long-term, stock-based components. All components of
compensation are appropriate, both individually and as a
whole. The criteria used to determine appropriateness
are the tasks of the individual Management Board mem-
ber, his personal performance, as well as the economic
situation, profit, and the future prospects of Axel Springer.

The industry environment of the company is also fac-
tored in. No external compensation experts were con-
sulted in this reporting year.

The fixed compensation corresponds to the annual
fixed salary; in addition, the Management Board mem-
bers receive a company car and security expenses as
fringe benefits. The annual fixed salary is established for
the entire term of an employment agreement and is
disbursed in 12 monthly installments. It is set based on,
inter alia, the duties of the individual Management Board
member, the current economic situation, the profit, and
the future prospects of the Group.

The variable compensation share in the form of a
cash component is limited in its maximum amount and is
set according to the performance of the individual in the
context of individual goals, as well as corporate goals.
The corporate goals are Group EBITDA, the index of
Group customer satisfaction, the revenues in the Digital
Media segment, and EBITDA in the Digital Media seg-
ment. The Supervisory Board adopts the Group goals for
each financial year. The Chairman of the Supervisory
Board agrees upon individual goals for measuring per-
formance with the respective Management Board mem-
ber; the Chairman also determines goal achievement for
the cash component together with the Management
Board member.

Previously, a long-term variable compensation
component existed in the form of a stock-based man-
agement participation program set up in 2004, which
was terminated in 2010 by exercise of the last options
still outstanding. Currently, there is a long-term variable
compensation component consisting of a virtual stock
option plan set up in 2009.

Management participation program: In 2004, the Man-
agement Board members invested in the company by
acquiring a total of 62,300 shares of Axel Springer AG.
The shares acquired were subject to a multiple-year
holding period, which expired on December 18, 2007, for
50 % of the shares acquired, and on December 18, 2008,
for 50 % of the shares acquired. In connection with this
personal investment, the members of the Management
Board received stock options for the acquisition of what
was originally up to 498,400 shares. The number of exer-
cisable options was dependent on achieving or exceed-
ing certain EBITA targets in financial years 2005 and 2006.
These targets were exceeded. The value of the options at
the time of granting in 2004 was € 16.018 million. After a
total of 34,888 options were exercised in 2009 and the
entitled Management Board members waived exercise of
a total of 214,312 options in exchange for a settlement
payment amounting to € 12.00 per option, there were still
249,200 stock options outstanding at December 31,
2009. In 2010, they were exercised in their entirety. On
December 31, 2010, there were thus no longer any op-
tions existing from the Management Participation Pro-
gram. The weighted average market price at the exercise

92 Annual Report 2010 Axel Springer AG

to the disclosures in the notes to the consolidated finan-
cial statements under Note (12f).

A majority of the Management Board members has re-
ceived contractual pension commitments. Payment of the
pension commences upon reaching age 62 if the Man-
agement Board member is no longer in office at this time.
In case of premature departure, a Management Board
member who has been employed with the company for
five years has a vested claim to a pension payment pro-
portional to the length of his employment with the com-
pany. Payments are also provided for in case of a com-
plete reduction in earning capacity for an unlimited period.

A majority of the Management Board members has the
right to terminate their service contracts due to a change
in control. They then have the right to receive payment of
their base salary for the most recently negotiated remain-
ing contractual term, not to be less than one year’s base
salary. Furthermore, the company will pay the pro-rated
percentage of the success-based compensation 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.

In the financial year 2010, the total compensation for
the Management Board was € 17.9 million (PY:
€ 17.7 million). The fixed payments amounted to
€ 8.7 million (PY: € 8.9 million); that figure also includes
the equivalent amounts of ancillary benefits (company
car and security expenses). The variable compensation
amounted to a total of € 9.2 million (PY: € 8.8 million).

No long-term variable compensation components were
granted in the form of stock-based compensation in
reporting year 2010 (PY: € 4.7 million).

times was € 93.05. The weighted average exercise price
was about € 60.65 per option, so that the exercising
Management Board members expended a total amount
of € 15.1 million for exercising the options. For informa-
tion on the Management Participation Program, see also
the information in the notes to the consolidated financial
statements under Note (12f) and the detailed description
of the Management Participation Program at
www.axelspringer.de/managementshareprogram.

Virtual stock option plan: Effective July 1, 2009, 375,000
virtual stock options were issued to the members of the
Management Board. The virtual warrants have a term of
six years, that is, until June 30, 2015, and cannot be
exercised until at least four years have passed, that is, no
sooner than on July 1, 2013. If the Management Board
Employment Contract or the appointment to the Man-
agement Board continues to exist until June 30, 2013,
then all of the virtual stock options granted to the Man-
agement Board member can become vested. If a Man-
agement Board member leaves after June 30, 2010, but
before July 1, 2013, then the virtual stock options
granted to him merely vest pro rata temporis in propor-
tion to the four-year waiting period. Additional require-
ments for vesting to occur are performance and outper-
formance hurdles with regard to the price development
of the Axel Springer share. Exercise of the warrants is
only possible if the average share price of Axel Springer
AG in the 90 calendar days prior to exercise is at least
30 % over the base value of € 60.86 and the percentage
price increase of the Axel Springer share exceeds the
development of the DAX price index in the corresponding
period. Each warrant grants a payment claim in the
amount of the growth in value of the Axel Springer share,
restricted to a maximum of € 121.72; this corresponds
to the difference between the volume-weighted average
price during the last 90 calendar days prior to exercise
and the base value. The Management Board members
are obligated to hold one share of Axel Springer AG as
their own investment for each ten warrants. Disposal of
these shares prior to exercise of the options leads to a

lapse of the warrants in the proportion of one share for
each ten warrants. The value of the virtual stock options
at the time of granting was € 4.743 million. For more
information on the virtual stock option plan, please refer

Statement on governance pursuant to Section 298a HGB and Corporate Governance Report

Combined Management Report of the Group and of Axel Springer AG 93

Due to pension commitments, the pension provisions
were increased by an amount of € 1.183 million in finan-
cial year 2010 (PY: € 736 thousand). No loans or ad-
vances were granted to members of the Management
Board in financial year 2010.

Axel Springer AG does not disclose the total compensa-
tion of each Management Board member by name, since
Sections 314 (2) and 286 (5) HGB expressly place the
disclosure of Management Board compensation by
name under the reservation of a differing resolution of the
annual shareholders’ meeting with a supermajority of the
share capital represented at the adoption of the resolu-
tion. The annual shareholders’ meeting of Axel Springer
AG held on April 23, 2010, passed such a corresponding
resolution with the requisite majority. The context is that
Axel Springer AG’s competitors also do not disclose
individual compensation.

Supervisory Board
The compensation of the Supervisory Board is set by the
annual shareholders’ meeting; it is regulated in Article 16
of the Articles of Incorporation of Axel Springer AG.
Accordingly, the compensation is comprised of fixed and
variable components. The Supervisory Board receives a
fixed annual salary of € 2.0 million. In addition, the Su-
pervisory Board receives an additional compensation of
€ 1 thousand for every cent (€ 0.01) by which the divi-
dend per share distributed to the shareholders exceeds
€ 0.15, but at least 4.0 % of the share capital in relation
to one share. The Supervisory Board also receives com-
pensation in the amount of € 300 thousand if the basic
earnings per share for the financial year (based on the
share of the company’s shareholders in consolidated net
income) exceeds the basic earnings per share of the
third previous financial year, calculated in the same man-
ner, by 15 % or more. For financial years in which posi-
tive consolidated profits cannot be applied as a refer-
ence benchmark, an amount of € 3.00 per share shall

apply as the reference benchmark for calculating the
increase in annual profits. For financial years with a net
consolidated loss, only the fixed compensation of
€ 2.0 million will be paid. The Supervisory Board decides
how the aforementioned amounts are distributed among
its members, with adequate consideration of their activi-
ties as Chairman and in the committees.

For the financial year 2010, the Supervisory Board
received total compensation of approximately
€ 2.8 million (PY: € 2.4 million). The variable compensa-
tion in the amount of € 765 thousand (PY: € 425 thou-
sand) is composed of an amount of € 465 thousand (PY:
€ 425 thousand), based on the dividend recommenda-
tion of the Management Board and Supervisory Board
and is thus subject to the condition that a corresponding
decision is adopted by the annual shareholders’ meeting,
and an amount of € 300 thousand (PY: € 0 thousand),
because the basic earnings per share in reporting year
2010 had exceeded the basic earnings per share of the
third previous financial year calculated in the same man-
ner by 15 % or more.

In addition, the company reimburses all members of the
Supervisory Board for the value added taxes payable on
their expenses and on their compensation. The company
pays the premium for the D&O insurance taken out for
members of the Supervisory Board. One 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 members of the Supervisory
Board, as well as the compensation paid by the com-
pany to them for services rendered personally, are not
presented in the Corporate Governance Report, since
Axel Springer AG’s competitors also do not disclose
such information.

94 Annual Report 2010 Axel Springer AG

94 Report of the

Supervisory Board

In financial year 2010 the Supervisory Board carried out
all duties that it is obliged to in accordance with applica-
ble laws, the company’s Articles of Association, and
rules of procedure. In the spirit of good corporate gov-
ernance the Supervisory Board worked closely and trust-
fully with the Management Board in an advisory role and
supervised the management of the company. The Man-
agement Board informed the Supervisory Board in detail,
regularly and promptly, both in writing and orally, about
the company’s situation and development, important
business transactions, as well as about the risk man-
agement program, the Internal control system (IKS), and
compliance management. The Management Board also
kept the Supervisory Board informed of significant events
in the time between its meetings. In addition, the Super-
visory Board Chairman and the Management Board
Chairman held information and consultation meetings on
a regular basis. Supervisory Board access to company
files and documents over and above those presented
during the normal course of reporting by the Manage-
ment Board was not required in financial year 2010.

The Supervisory Board discussed with the Management
Board all matters of crucial importance for the company,
especially the company’s business plan, the implementa-
tion of company strategy, large capital expenditure pro-
jects, and personnel matters. Furthermore, the Supervi-
sory Board discussed important specific transactions of
significance 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.

The Supervisory Board held a total of five meetings in
2010. All members of the Supervisory Board attended at
least three of these meetings. If necessary, Supervisory
Board resolutions were adopted by means of circulation
procedures.

Changes in the Supervisory Board

Brian Powers resigned as a member of the Supervisory
Board on May 20, 2010 with immediate effect. Accord-
ing to the resolution dated July 13, 2010, the district
court of Charlottenburg appointed Dr. Nicola Leibinger-
Kammüller as a member of the Supervisory Board as
successor to Brian Powers until the company’s next
annual shareholders’ meeting. The Supervisory Board
intends proposing to the shareholders’ meeting on April 14,
2011 the election of Dr. Nicola Leibinger-Kammüller to
the Supervisory Board.

Matters dealt with by the Supervisory
Board

In the meeting held on February 3, 2010, the Supervisory
Board discussed and agreed the financial plan for 2010
tabled by the Management Board. Furthermore, the
Supervisory Board deliberated on the various ways of
implementing the examination of the efficiency of its work
as recommended by the German Corporate Governance
Code. As in prior years, the Supervisory Board opted for an
internal evaluation, which was carried out in October 2010.

In the meeting on March 9, 2010, the Supervisory Board
discussed, among other items, the parent company and
consolidated financial statements of the Group for the
financial year 2009, the proposal of the Management
Board for the utilization of the unappropriated net profit for
the financial year 2009, the corporate governance report
submitted together with the Management Board, as well
as the agenda for the annual shareholders’ meeting 2010.
In addition, the Management Board reported to the Super-
visory Board, as in each individual case in the February
meeting as well, on the proposed sale of StepStone
ASA’s Solutions business area, on the proposed bun-
dling of the company’s eastern European operations with
those of the Swiss publishing group Ringier, as well as on
the status of the investment in Do⁄an TV Holding A.S.

Report of the Supervisory Board 95

In the meeting held on April 23, 2010, immediately be-
fore the annual shareholders’ meeting 2010, the Super-
visory Board adopted the decision to amend the pro-
posal for the utilization of the unappropriated net profit to
the annual shareholders’ meeting. This necessity had
arisen as the number of treasury shares held by the
company had been reduced following publication of the
original proposal for the utilization of the unappropriated
net profit. Furthermore, the Management Board ex-
plained to the Supervisory Board the company’s plan to
place its own treasury shares, which the Supervisory
Board acknowledged and approved in principle. In view
of this, the Supervisory Board approved by circular reso-
lution a concrete plan to place the company’s treasury
shares in May 2010 and updated this approval in Sep-
tember 2010 again by circular resolution shortly before
the actual implementation of the placement.

In the meeting on June 18, 2010, the Supervisory Board
approved the submission of an application for Dr. Nicola
Leibinger-Kammüller to be appointed as a member of
the Supervisory Board by court in agreement with an
appropriate recommendation given by its Nominating
Committee. In this context, the Supervisory Board has
determined that the Chairman of the Supervisory Board,
Dr. Giuseppe Vita, who, at the same time, is also Chair-
man of the Audit Committee, satisfies the requirements
for independence and expert knowledge in the fields of
accounting and auditing as declared in Sec. 100 para. 5
of the Stock Corporation Act. The Supervisory Board
adopted a revised version of its internal rules of proce-
dure for the purpose of enhancing flexibility with respect
to the holding of meetings and the adoption of resolu-
tions. In addition, the Supervisory Board gave its ap-
proval to an agreement to amend an option contract
concluded between Axel Springer AG and H&F Rose
Partners L.P. and H&F International Rose Partners L.P.
(jointly “H&F”). The subject matter of this option contract
was call options to purchase an original number of
560,700 shares of Axel Springer AG, which the latter
company was entitled to in connection with the man-
agement participation program 2004 vis-à-vis H&F. The
option contract was concluded on April 8, 2004 and
amended by two agreements in 2009. The further
amendment agreement concluded in financial year 2010
referred to the call options with H&F still in place at that

time to purchase up to 284,088 Axel Springer AG shares.
According to this agreement, the exercising of all
284,088 call options still in existence was postponed. It
was agreed that these call options can be exercised by
members of the Management Board independently of
options exercised within the terms of the Management
Participation Program, and the number of these call
options is reduced, if and when Axel Springer AG treas-
ury shares are sold by H&F to third parties and the
agreed cash settlement is paid to Axel Springer. In the
financial year 2010, H&F sold all the relevant Axel
Springer AG shares and paid the agreed cash settlement
for the transaction to Axel Springer AG so that all the
company’s call options vis-à-vis H&F resulting from the
call option agreement dated April 8, 2004 expired.

In the meeting on October 14, 2010, the Supervisory
Board addressed primarily the corporate strategy of Axel
Springer AG on the basis of an extensive Management
Board presentation, with specific attention being devoted
to the further expansion of digital operations as well as
multimedia growth, especially on the basis of monetiza-
tion strategies within the terms of the company’s core
competencies. Furthermore, the Management Board
reported to the Supervisory Board on the development
of major acquisitions since 2006. The Supervisory Board
also adopted a resolution on the Declaration of Confor-
mity 2010. In doing so, the Supervisory Board deliber-
ated on the recommendations defined in greater detail in
the German Corporate Governance Code on diversity,
which came into force on July 2, 2010, with a particular
focus on a higher percentage of women and international
representatives on the Supervisory Board. In this regard
the Supervisory Board set out concrete objectives for the
constitution of the Supervisory Board, which are repro-
duced on page 85 of the annual report. The Supervisory
Board also carried out a questionnaire-based self-
evaluation and rated its work on this basis to be efficient
and appropriate. Moreover, the Supervisory Board car-
ried out a review of the Management Board remunera-
tion system. The result of this showed that the Manage-
ment Board remuneration system continues to be
appropriate and reasonable. In addition, a report was
made to the Supervisory Board on the progress of the
takeover of the French online portal SeLoger.com S.A.,
among other items.

96 Annual Report 2010 Axel Springer AG

Conflicts of interest

Committees of the Supervisory Board

The following potential conflict of interest occurred on
the Supervisory Board in the financial year 2010: In May
2010, the Supervisory Board dealt with the placement of
treasury shares of Axel Springer AG by means of a circu-
lated document. A placement of this kind occurred in
September 2010 in such a way that treasury shares of
Axel Springer AG were placed together with the place-
ment of shares in the company held by Deutsche Bank
Luxembourg S.A. and bought by institutional investors.
Starting in May, there were deliberations (which, however,
were not implemented under the terms of the placement
eventually completed) on possibly including shares in the
company held by Hellman & Friedman in the placement.
In the light of this, the member of the Supervisory Board
at the time, Brian Powers, did not participate in the vot-
ing procedures on the possible placement of shares in
May to avoid any potential conflict of interest.

Corporate Governance

The Management Board and Supervisory Board issued their
joint Declaration of Conformity pursuant to Sec. 161 AktG at
the beginning of November 2010; the Management Board
and Supervisory Board published an updated version of
that Declaration of Conformity at the beginning of March
2011. Both declarations have been made permanently
accessible on the company’s website. Axel Springer AG
adheres to nearly all the recommendations of the Ger-
man Corporate Governance Code. The Declaration of
Conformity of November 2010 and the updated version
of March 2011 containing justifications of the few excep-
tions to the corresponding recommendations are pre-
sented on page 82 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 Su-
pervisory Board, which is reproduced on page 87 of the
annual report as part of the Declaration on Corporate
Governance.

In the interest of performing its duties in an efficient man-
ner, the Supervisory Board has formed an Executive
Committee, a Personnel Committee, an Audit Committee,
and a Nominating Committee. The constitution is ex-
plained in the section “Statement on corporate govern-
ance pursuant to Section 289a of the German Commer-
cial Code (HGB) and Corporate Governance Report” on
page 85 f. of the annual report. The Chairman of the
Supervisory Board is the Chairman of the committees
mentioned. He reports to the Supervisory Board in the
next respective meeting on the work of the committees.
The Executive Committee, which is responsible for fun-
damental matters related to publishing and for matters of
strategy, business planning, capital expenditures, and
financing, among other matters, notwithstanding the
general responsibility of the full Supervisory Board, held
seven meetings in 2010. The subject of the consultations
and resolutions were in particular the bundling of the
company’s international operations and those of Ringier
in Ringier Axel Springer Media AG, Zürich, the submis-
sion of a takeover offer directed towards the acquisition
of shares of SeLoger.com S.A., Paris, as well as the
investment acquisition of the Indian classified ad portals
for automobiles Carwale.com (Automotive Exchange
Private Ltd.) and the Indian e-commerce portal BagItToday
(Merchandising Private Ltd.).

Additionally, further decisions were taken by the Execu-
tive Committee on the disposal of the Solutions business
area (Talent Management Software Solutions) of Step-
Stone ASA as well as the acquisition of investments in
the Internet portal Umzugsauktion GmbH & Co. KG and
the Slovenian Internet portal Azet.sk, A.S. Furthermore,
the committee deliberated on the placement of treasury
shares of Axel Springer AG executed in September 2010
and approved in this context the transfer of shares of
Axel Springer AG to various investors. Further resolutions
were passed by the Executive Committee in connection
with decisions on granting approval to transfer shares of
Axel Springer AG pursuant to Sec. 5 para. 3 of the com-
pany’s Articles of Incorporation.

Report of the Supervisory Board 97

The Personnel Committee is responsible in particular for
the preparation of decisions on the appointment and
dismissal of members of the Management Board. The
preparation of decisions by the Supervisory Board on the
determination of the total remuneration of individual
members of the Management Board also fall within its
authority; the Personnel Committee approves resolutions
in all other employment matters instead of the Supervi-
sory Board. The Personnel Committee held three meet-
ings in financial year 2010. The committee dealt with the
preparation of the review of the Management Board
compensation system by the Supervisory Board, among
other matters.

The Audit Committee held five meetings in 2010. It kept
itself informed of the status, scope, execution, and re-
sults of the audit of the separate financial statements of
the parent company and the consolidated financial state-
ments of the Group for 2009, prepared the decisions of
the Supervisory Board on the adoption of the separate
financial statements and the approval of the consolidated
financial statements, and reviewed the interim financial
statements and interim reports for the year 2010. In
addition, the Audit Committee dealt with the preparation
of the plenum’s resolution regarding the proposal to the
annual shareholders’ meeting for the reappointment of
the auditor of the year 2009 for the year 2010. In this
regard the Supervisory Board was in possession of a
written confirmation from Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft on their independence.
In addition, the Audit Committee dealt with the auditor’s
main topics in the reporting year. Furthermore, the Audit
Committee dealt in greater detail with risk management
and the internal control system (IKS), as well as compli-
ance management, and kept itself informed on the work of
the internal audit, including their audit program for 2010.

The Nominating Committee met once in advance of the
application for the judicial appointment of Dr. Nicola
Leibinger-Kammüller as a member of the Supervisory
Board. It submitted a recommendation to the Supervi-
sory Board in favor of the judicial appointment of Dr.
Nicola Leibinger-Kammüller and – in view of the pro-
posed reappointment of Dr. Nicola Leibinger-Kammüller
by the 2011 annual shareholders’ meeting of the com-
pany – as well the corresponding nomination for the
shareholders’ meeting.

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

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
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
parent company and the consolidated management
report for the Group, all of which were prepared by the
Management Board for the financial year 2010, 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 survival as a going concern.

98 Annual Report 2010 Axel Springer AG

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 GmbH Wirtschaftsprüfungsgesellschaft, were
provided to all members of the Supervisory Board in a
timely manner. The documents were discussed exten-
sively in the presence of the independent auditor in the
meetings of the Audit Committee of February 22, 2011
and March 1, 2011. At these meetings, the independent
auditor reported on the principal findings of his audit. No
deficiencies in the internal control and risk management
system, as it relates to the financial accounting process,
were noted. No circumstances that would cast doubt on
the impartiality of the independent auditor arose. The
independent auditor explained further the scope, main
emphases and costs of the audit. The independent audi-
tor rendered services (including affiliate companies)
amounting to a volume of € 523.6 thousand other than
the audit of financial services.

The Audit Committee reported on the results of its ex-
amination to the full Supervisory Board. At its meeting of
March 1, 2011, the Supervisory Board reviewed the
documents in question, having noted and duly consid-
ered this report of its committee and the reports of Ernst
& Young GmbH Wirtschaftsprüfungsgesellschaft, and
having discussed them with the independent auditor,
who was 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
Supervisory Board approved the annual financial state-
ments of the parent company and the consolidated
financial statements of the Group, as well as the man-
agement report for the parent company and the consoli-
dated management report for the Group, which were all
prepared by the Management Board. As a result, the
2010 annual financial statements of Axel Springer AG
were officially adopted.

The Supervisory Board also reviewed the proposal of the
Management Board concerning the utilization of the
unappropriated net profit and concurred with that pro-
posal, in consideration of the company’s financial year
net income, liquidity, and financing plan.

The Management Board also submitted its report on the
company’s dealings with related parties pursuant to Sec.
312 of the German Stock Corporation Act (AktG) to the
Supervisory Board. The Supervisory Board was also in
receipt of the corresponding audit report by Ernst &
Young GmbH Wirtschaftsprüfungsgesellschaft. Both
reports were also provided in advance to each member
of the Supervisory Board. The audit opinion of the inde-
pendent auditor reads as follows:

“Based on the audit and evaluation conducted in accor-
dance 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 the report of the
Management Board on the dealings with related parties
pursuant to Sec. 312 AktG and the independent auditor's
report on this subject. At the Supervisory Board meeting
of March 1, 2011, the independent auditor also reported
orally on the principal findings of his audit. The Supervi-
sory 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 results of the audit report of the
independent auditor or the Management Board’s decla-
ration on the report pursuant to Sec. 312 (3) AktG.

Report of the Supervisory Board 99

Thanks to the members of the
Management Board and all employees

Supervisory Board

In closing, the Supervisory Board wishes to thank the
members of the Management Board and all employees
for their outstanding work in the past financial year.

Berlin, March 1, 2011

The Supervisory Board

Dr. Giuseppe Vita

Chairman

Dr. Giuseppe Vita
Chairman

Dr. h. c. Friede Springer
Vice Chairwoman

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

Oliver Heine
Lawyer and partner in the law firm Oliver Heine & Partner

Klaus Krone
Member of the Supervisory Board of Axel Springer AG

Dr. Nicola Leibinger-Kammüller
President and Chairwoman of the Managing Board of
TRUMPF GmbH + Co. KG

Prof. Dr. Wolf Lepenies
University Professor (emer.) FU Berlin;
Permanent Fellow (emer.) of the Wissenschaftskolleg
zu Berlin

Michael Lewis
Investment Manager

Dr. Michael Otto
Chairman of the Supervisory Board of Otto GmbH & Co. KG

10 0 ullstein bild

ullstein bild is the picture agency of Axel Springer AG.

Its archive contains more than twelve million prints,

negatives, slides, and ever-expanding databases of digitized

images – from the beginnings of photography to the present

day. In addition, it can also access picture material from

a worldwide network of partner agencies.

ullstein bild 101

Do we need a women’s quota for the top echelons of the business

world? This is a hotly debated question, which the Axel Springer

media have also picked up with intensity. Not for the first time,

by the way, as can be seen on the following pages. But what are

things like at Axel Springer itself? Do women have opportunities to

reach managerial positions? And how can these opportunities be

improved even more in the future?

The Company started to tackle the subject back in 1982. And, from

1999, Axel Springer AG was the first media company to be a mem-

ber of the “Women in Business” forum, in which advocates of equal

opportunities and diversity from 20 well-known large German com-

panies came together. In 2010, Axel Springer was given the “Total

E-Quality” award – a great incentive to continue energetically along

the pathway it had chosen. Because despite all the achievements,

there is still much to do.

The approach is not based on the implementation of rigid quota

regulations, but rather on achieving a more balanced ratio between

men and women in managerial positions. The aims: to reflect the

market more precisely in the workforce, to make better use of the

existing potential of well-qualified women, and to ensure that they

play a larger part in shaping the corporate culture.

The first name of Madame Decourcelle has been forgotten over

the last hundred years. But, thanks to the Neurdein brothers,

we still know what she looked like, and also that she was the first

woman, in Paris in 1908, to acquire not only a license to drive a

horse-and-carriage but also an omnibus driver’s license. In Berlin,

much more time was needed to make this kind of progress. The

Berlin Transport Services (BVG) have only allowed women to drive

their busses since 1973.

B.Z. am MITTAG, May 21, 1920
“Two airplanes over the ocean
Do X and Mrs. Earhart started”

Amelia Earhart, born in Kansas in 1897, only ever wanted to fly.
She worked in 28 different jobs just to be able to pay for flying
lessons. She wanted to fly – and to prove that women could
achieve just as much as men “except physically.” Countless
records and first-time flights, such as the first solo transconti-
nental flight by a woman in 1932, confirm that she was right.
This expressive portrait from the Roger Viollet agency was taken

in 1935. Two years later, Earhart disappeared on a flight over

the Pacific.

Men can do more too! Here is an example from the garden of

a Bavarian family house in the 1960s. When the photographer

Oskar Poss took this black and white photo, which has since

been digitally colored, the activity shown there – laying the table –

was still very unusual for a man. Today, this would, we hope, only

apply for the cocktail apron.

DIE WELT, July 13, 2009
“They built Germany”

After the men had finished their war in 1945, it was the women
who cleared up the remains. Trümmerfrauen – the “rubble women.”
Emancipation from necessity, but with convincing results: Women’s
awareness that they were capable of carrying out what had hitherto
been purely “male” tasks represented a giant step forward. And the
destroyed cities became habitable once again, or at least no longer
impassable. The name of the photographer who took this picture,

subsequently colored, in Ganghoferstrasse in Berlin-Neukölln, in

1946, is unknown.

The word “suffrage” means the right vote (in an election).
And suffragettes was the name given, in the United Kingdom
for example, to the women demonstrating here, who claimed
this right for themselves from 1908 onwards. Actually, in times
of female chancellors and female ministers, it is barely con-
ceivable now that women were only granted the right to vote
in Germany less than a hundred years ago. It was introduced

here in 1919, after being granted to the English ladies in the

photo one year earlier.

BERLINER MORGENPOST, November 13, 1918
“The program of the new government”

She really had no fear of large animals. Aside from her
dressage horses, she performed with a whole herd of
elephants for almost forty years. We’re talking about Frieda
Sembach-Krone (1915–1995), the legendary director of
“Circus Krone.” For more than fifty decades, she success-
fully managed this very special medium-sized Munich-based
company with a global reputation. Thomas Timpe captured

her elegant appearance in this picture in 1969.

B.Z. am MITTAG, November 8, 1911
“Small feature.
Women and the Nobel Prize”

In 1900, a Leipzig neurologist called Paul Julius Möbius published

a book entitled “On the Physiological Feeblemindedness of Women.”

It became a bestseller, running into nine editions. Three years later,

the Polish scientist Marie Curie (1867–1934), then living in France,

was awarded the Nobel Prize for Physics. Before the Sorbonne

professor was then also able to collect the Nobel Prize for Chemistry

in Stockholm in 1911, Henri Mann photographed her in her laboratory.

BILD, October 1, 2007
“We have the best women in the world”

When the Germans had won the Soccer World Cup for

the second time in a row, it wasn’t just the team that was

ecstatic – FIFA President Josef Blatter and CFA President

Yuan Weimin applauded almost endlessly. – We’re talking

about 2007, and the Women’s World Cup Final in Shanghai

(which is why the photo is from Ullstein’s partner agency

China News Service, CNS). The men in South Africa weren’t

too bad in 2010 either. But still: The reigning German world

soccer champions are female.

HAMBURGER ABENDBLATT,
May 25, 1994
“Limbach gets top job in Karlsruhe”

The fact that Germany has caught up pretty well in recent

decades when it comes to equal opportunities can be seen
if we look at the number of women holding the highest state

offices. The President of the Federal Constitutional Court

is number 5 in the “rankings of the representatives of the

Federal Government’s constitutional bodies.” And in the years

1994 to 2002, this president was a woman, Jutta Limbach.

Winfried Rothermel captured her on film here in 2001, along-

side Berthold Sommer, pronouncing judgment.

BILD, March 26 2007
“50 years of the EU – the summit in Berlin.
Merkel is Miss Europe now”

More than just a dash of color: German Chancellor Angela Merkel,

hosting the Berlin celebrations in 2007 for the 50th anniversary

of the signature of the Treaties of Rome. Her guests, the heads

of EU states and governments, were all men, without exception.

The picture is pretty much the same at management level in

countless companies. But for how much longer?

DIE WELT, September 1, 2010
“High hopes for the sky dwarfs”

Many different things are needed to improve the opportunities
for women at work. One is the ability to combine a family
and a job. For this reason, Axel Springer established works
nurseries in Berlin in 2008, and in Hamburg in 2010, known as
the “sky dwarfs.” In November 2010, the German Minister for
Families, Kristina Schröder, visited the nursery in Hamburg.
Her exchange of views with two-year-old Lenia were obviously

particularly relaxed.

116

Consolidated
Financial Statements

117 Responsibility
Statement

118 Auditor’s Report

119 Consolidated State-

ment of Financial
Position

120 Consolidated State-
ment of Comprehen-
sive Income

121 Consolidated State-
ment of Cash Flows

122 Consolidated State-
ment of Changes in
Equity

123 Consolidated Segment

Report

Notes to the Consoli-
dated Financial State-
ments

124 General information

138 Notes to the consolidated
statement of financial po-
sition

152 Notes to the consolidated
statement of comprehen-
sive income

158 Notes to the consolidated

statement of cash flows

158 Notes to the consolidated

segment report

159 Other disclosures

Consolidated Financial Statements 117

Responsibility Statement

To the best of our knowledge, and in accordance with
the applicable reporting principles, the consolidated
financial statements give a true and fair view of the finan-
cial position, liquidity, and financial performance of the
Group, and the Group management report includes a fair
review of the development and performance of the busi-
ness and the position of the Group, together with a de-
scription of the principal opportunities and risks associ-
ated with the expected development of the Group.

Berlin, February 16, 2011

Axel Springer AG

(Dr. Mathias Döpfner)

(Rudolf Knepper)

(Lothar Lanz)

(Dr. Andreas Wiele)

118 Annual Report 2010 Axel Springer AG

Auditor’s Report

We have audited the consolidated financial statements
prepared by the Axel Springer Aktiengesellschaft, Berlin,
comprising the statement of financial position, the
income statement, the statement of recognized in-
come and expenses, the statement of cash flows,
the statement of changes in equity, and the notes to
the consolidated financial statements together with
the combined management report of the Axel Springer
Group and the Axel Springer AG for the fiscal year
from January 1 to December 31, 2010. The prepara-
tion of the consolidated financial statements and the
combined management report of the Axel Springer
Group and the Axel Springer AG in accordance with
IFRSs as adopted by the EU, and the additional re-
quirements of German commercial law pursuant to
Sec. 315a (1) HGB [“Handelsgesetzbuch”: “German
Commercial Code”] are the responsibility of the parent
company’s management. Our responsibility is to ex-
press an opinion on the consolidated financial state-
ments and on the combined management report of
the Axel Springer Group and the 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 the Axel Springer AG are detected with
reasonable assurance. Knowledge of the business
activities and the economic and legal environment of
the Axel Springer Group and the expectations as to
possible misstatements are taken into account in the
determination of audit procedures. The effectiveness
of the accounting-related internal control system and
the evidence supporting the disclosures in the con-
solidated financial statements and the combined
management report of the Axel Springer Group and
the 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 the
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 IFRS as
adopted by the EU, the additional requirements of Ger-
man 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 Axel Springer
Group in accordance with these requirements. The
combined management report of the Axel Springer Group
and the Axel Springer AG is consistent with the consoli-
dated financial statements and as a whole provides a
suitable view of the Group’s position and suitably pre-
sents the opportunities and risks of future development.

Berlin, February 22, 2011

Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft

Plett
Wirtschaftsprüfer

Glöckner
Wirtschaftsprüfer

[German Public Auditor]

Consolidated Financial Statements 119

Consolidated Statement of Financial Position

€ 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

€ thousands

EQUITY AND LIABILITIES

Equity

Shareholders of Axel Springer AG

Non-controlling 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

Total equity and liabilities

Note 12/31/2010 12/31/2009

(4)

(5)

(6)

(7)

2,569,698

1,874,600

2,373,476

1,666,249

1,115,587

835,438

686,676

704,752

54,340

516,873

40,742

476,131

34,244

31,704

94,355

59,702

34,653

39,829

(10)

(26)

(8)

(9)

131,347

152,249

30,631

16,273

1,033,546

1,059,702

27,043

31,900

385,900

301,947

(36)

48,825

40,028

95,862

43,987

55,944

70,364

435,888

197,259

358,301

3,603,244

2,934,302

(10)

(29)

(11)

Note 12/31/2010 12/31/2009

(12)

1,772,625

1,196,848

1,562,438

1,145,206

210,187

51,642

1,003,459

966,087

340,189

310,415

43,574

39,327

333,683

383,801

1,602

11,050

1,536

4,135

109,085

58,987

164,276

167,886

827,160

771,367

49,162

49,056

150,485

161,233

22,557

6,480

243,696

204,802

(13)

(14)

(15)

(36)

(16)

(26)

(13)

(14)

(15)

(36)

22,382

66,452

22,213

54,866

(16)

272,426

272,717

3,603,244

2,934,302

120 Annual Report 2010 Axel Springer AG

Consolidated Statement of Comprehensive
Income

€ thousands

Consolidated Income Statement

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

Net income

Net income attributable to shareholders of Axel Springer AG

Net income attributable to non-controlling interests

Basic earnings per share (in €)

Diluted earnings per share (in €)

€ thousands

Note

2010

2009

(18)

(19)

(20)

(21)

(22)

(23)

(24)

(25)

(26)

2,893,896

2,611,591

150,116

3,992

70,654

4,112

– 950,564

– 886,445

– 792,854

– 791,943

– 113,541

– 92,350

– 773,947

– 705,107

– 8,244

212,141

– 18,434

– 18,369

10,190

230,510

– 31,171

– 24,980

– 103,627

– 83,840

274,056

313,833

252,678

303,481

21,378

10,352

(27)

8.20

8.19

10.20

10.19

Consolidated Statement of Recognized Income and Expenses

Note

2010

2009

Net income

Actuarial gains/losses from defined benefit pension obligations

Currency translation differences

Changes in fair value of available-for-sale financial assets

Changes in fair value of derivatives in cash flow hedges

Changes in revaluation surplus

Other income/loss from investments accounted for using the equity method

Other income/loss

Comprehensive income

Comprehensive income attributable to shareholders of Axel Springer AG

Comprehensive income attributable to non-controlling interests

274,056

313,833

– 14,806

– 6,100

36,877

1,655

2,528

1,251

11,498

– 4,503

– 3,086

– 4,578

(28)

37,348

– 16,606

311,404

297,227

287,123

286,824

24,281

10,403

Consolidated Financial Statements 121

Consolidated Statement of Cash Flows

€ thousands

Net income

Reconciliation of net income to the cash flow from 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 disposal of consolidated subsidiaries, business units, and 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 and business units,
less cash given up in the exchange

Proceeds from disposals of non-current financial assets

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

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

Purchases of investments in non-current financial assets

Cash flow from investing activities

Dividends paid to shareholders of Axel Springer AG

Dividends paid to other shareholders

Purchase of non-controlling interests

Disposal of other related parties

Reissuance of treasury shares

Repayments of liabilities under finance leases

Proceeds from 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 companies included in consolidation

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Note

2010

2009*

274,056

313,833

114,409

18,434

3,930

(7)

87,759

18,369

11,728

– 66,065

– 213,857

12,802

39,653

– 37,293

– 22,848

15,027

– 6,612

– 58,691

– 12,094

24,200

57,310

12,118

41,956

(29)

358,119

270,005

386

220

103,091

8,194

16,168

170,004

– 59,196

– 38,941

– 170,498

– 4,064

– 90,554

– 18,729

(29)

– 200,603

116,684

– 131,179

– 130,604

– 10,467

– 10,913

– 5,464

– 62,146

458

261,929

501

7,993

– 74

172,436

98,076

– 211,619

– 248,359

(29)

76,094

– 345,526

233,610

41,163

5,077

– 58

– 196

1,764

197,259

154,529

(29)

435,888

197,259

*) Prior-year figures adjusted due to the reclassification of effects for purchase/disposal of non-controlling interests and changed disclosure of the result from
disposal of consolidated subsidiaries and business units ( cf. note (29)).

€ thousands

Cash flows contained in the cash flow from operating activities

Income taxes paid

Income taxes received

Interest paid

Interest received

Dividends received

2010

2009

– 154,442

– 117,393

50,203

11,941

– 18,631

– 27,470

9,680

16,980

10,548

31,959

122 Annual Report 2010 Axel Springer AG

Consolidated Statement of Changes in Equity

€ thousands

Sub-
scribed
capital

Ad-
ditional
paid-in
capital

Accumu-
lated
retained
earnings

Treasury
shares

Currency
translation

Available-
for-sale
financial
assets

Deriva-
tives in
cash flow
hedges

Share-
holders
of Axel
Springer AG

Non-
controlling
interests

Other
equity

Equity

Balance as of 01/01/2009

98,940

40,279 1,102,471

– 207,294

11,379

– 10,986

– 9,659

1,025,134

42,568 1,067,702

Accumulated other comprehensive income

Changes in fair value

Net income

Other income/loss

Comprehensive income

Dividends paid

303,481

– 130,604

Reissuance of treasury shares

1,391

6,607

Change in consolidated
companies

Purchase and disposal of non-
controlling interests

– 919

– 38,506

Other changes

2,824

– 7,545

1,618

– 4,489

– 13,790

– 16,657

– 16,606

– 4,489

– 13,790

286,824

10,403

297,227

303,481

10,352

313,833

– 130,604

– 10,914 – 141,518

7,998

– 919

36,332

35,413

– 38,506

– 26,493

– 64,999

– 4,721

– 254

– 4,975

Balance as of 12/31/2009

98,940

43,103 1,229,769

– 200,687

12,997

– 15,475

– 23,449

1,145,206

51,642 1,196,848

Net income

Other income/loss

Comprehensive income

Dividends paid

252,678

– 131,179

Reissuance of treasury shares

72,485

189,446

Change in consolidated
companies

Purchase and disposal of non-
controlling interests

Other changes

381

224

– 1,248

33,868

2,524

1,244

– 3,191

34,445

2,903

37,348

33,868

2,524

1,244

– 3,191

287,123

24,281

311,404

252,678

21,378

274,056

– 131,179

– 10,467 – 141,646

261,931

146,003

381

399

– 1,024

– 1,290

– 2,314

Balance as of 12/31/2010

98,940

43,327 1,422,886

– 11,241

46,865

2,532

– 14,231

– 26,640

1,562,438

210,187 1,772,625

Consolidated Financial Statements 123

Consolidated Segment Report

Operating segments

Newspapers National Magazines National

Print International

Digital Media

Services/Holding Consolidated totals

€ thousands

2010

2009

2010

2009

2010

2009

2010

2009

2010

2009

2010

2009

External revenues

1,194,187 1,213,683

486,079

517,793

400,944

311,665

711,845

470,378

100,840

98,071 2,893,896 2,611,591

Internal revenues

8,596

8,617

7,271

4,323

36,184

14,035

36,000

22,840

299,615

305,398

Segment revenues

1,202,784 1,222,300

493,350

522,116

437,128

325,700

747,845

493,218

400,455

403,470

EBITDA*

295,977

243,766

100,975

54,954

61,482

12,257

85,838

43,192

– 33,705

– 20,466

510,566

333,705

EBITDA margin*

24.8 %

20.1 %

20.8 %

10.6 %

15.3 %

3.9 %

12.1 %

9.2 %

17.6 %

12.8 %

Thereof income from
investments

Thereof accounted
for using the equity
method

Depreciation, amortiza-
tion, impairments and
write-ups (except from
purchase price
allocations)

1,670

4,807

– 610

1,949

5,427

2,101

6,803

10,096

3,677

4,071

16,967

23,025

– 778

1,335

5,300

1,869

536

1,987

– 2,140

– 2,785

2,918

2,406

– 4,292

– 2,775

– 1,739

– 3,541

– 9,699

– 6,667

– 12,004

– 9,262

– 54,265

– 42,514

– 82,000

– 64,760

EBIT*

291,685

240,991

99,236

51,413

51,782

5,591

73,834

33,930

– 87,971

– 62,979

428,566

268,945

Effects of purchase
price allocations

– 65

– 9,909

– 3,928

– 23,625

– 22,628

– 72

– 33,606

– 26,692

Non-recurring effects

6,165

214,357

1,588

– 6,318

– 3,461

464

30,954

– 10,750

– 21,352

– 17,353

13,894

180,400

Segment earnings
before interest and
taxes

Financial result

Income taxes

Net income

297,850

455,348

100,824

45,030

38,412

2,127

81,163

552 – 109,395

– 80,404

408,854

422,653

– 31,171

– 24,980

– 103,627

– 83,840

274,056

313,833

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

Geographical information

€ thousands

External revenues

Non-current segment assets

Germany

Other countries

Consolidated totals

2010

2009

2010

2009

2010

2009

2,081,638 2,063,975

812,258

547,616 2,893,896 2,611,591

1,124,987 1,271,669

731,616

300,225 1,856,603 1,571,894

124 Annual Report 2010 Axel Springer AG

Notes to the Consolidated Financial
Statements

General information

(1) Basic principles

Axel Springer Aktiengesellschaft (“Axel Springer AG”) is
an exchange-listed stock corporation with its registered
head office in Berlin/Germany. The principal activities
of Axel Springer AG and its subsidiaries (“Axel Springer
Group”, “Axel Springer” or the “Group”) are described
in note (30a).

On February 16, 2011, the Management Board of Axel
Springer AG authorized the consolidated financial
statements for fiscal year 2010 and subsequently
presented them to the Supervisory Board for approval.
The consolidated financial statements were prepared
by application of Section 315a HGB in accordance
with the International Financial Reporting Standards
(IFRS) of the International Accounting Standards Board
(IASB) and the interpretations of the IFRS Interpreta-
tions Committee (IFRS IC) approved by the IASB, in
effect and recognized by the European Union (EU) at
the balance sheet date. The reporting currency is the
Euro (€); unless otherwise indicated, all figures are
stated in Euro thousands (€ thousands).

The consolidated financial statements and consoli-
dated management report will be filed with the Elec-
tronic Federal Gazette in Germany.

(2) Consolidation

(a) Consolidation principles
The consolidated financial statements include Axel
Springer AG and its subsidiaries. Subsidiaries are entities
in which Axel Springer AG is able to control, directly or
indirectly, the financial and operating policies.

The consideration transferred in business combina-
tions is offset against the pro-rated fair value of the
acquired assets and liabilities at the acquisition date.
Any remaining positive difference allocated to our
interests is capitalized as goodwill. Negative differ-
ences are immediately recognized as income. The
date of acquisition is the date when the ability to con-
trol the net assets and the financial and operating
activities of the acquired entity or business passes to the

Axel Springer Group. We offset differences arising from
disposals and purchases of non-controlling interests
within equity.

Associated companies are included in the consoli-
dated financial statements by application of the equity
method. Associated companies are defined as com-
panies in which the Axel Springer Group can exert
significant influence over the financial and operating
policies of the company. Goodwill and assets and
liabilities are included in the amortized carrying amount
of the investment in the associated company and are
accounted for using the accounting principles applied
to business combinations. The IFRS financial state-
ments of these companies as at the Axel Springer
Group’s balance sheet date serve as the basis for
applying 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. Intercompany profits and
losses are eliminated. The carrying amounts of invest-
ments are tested for impairment; if impairments exist,
they are written down to the lower recoverable amount.

(b) Companies included in the consolidated

financial statements

Companies included in the consolidated financial
statements broke down as follows:

12/31/2010 12/31/2009

Fully consolidated companies

Germany

Other countries

Fully consolidated special
purpose entities

Germany

Investments accounted for using
the equity method

Germany

Other countries

The special purpose entities included are closed prop-
erty funds whose risks and rewards are economically

Consolidated Financial Statements 125

Notes to the Consolidated Financial Statements

attributable to the Group. Consolidated companies are
listed in note (42).

The following changes occurred in 2010:

Effective January 1, 2010, we included our German in-
vestments in Axel Springer Mediasales & Service GmbH,
Berlin, in Panther Holding GmbH, Berlin, and in ham-
burg.de GmbH & Co. KG, Hamburg, in our consolidated
financial statements for the first time in the course of full
consolidation.

At the end of February 2010, a 100 % interest was ac-
quired in the Perfiliate Group with registered offices in
London/Great Britain. The five entities belonging to the
Perfiliate Group have been included in the consolidated
financial statements as fully consolidated entities since
March 1, 2010.

At March 31, 2010, the acquisition of a 100 % interest in
Axel Springer Russland Holding GmbH, Hamburg (for-
merly: G+J Deutschland Medien- und Vertriebsbeteiligung
Verwaltungs GmbH), and the company in which it holds
100 % of the shares, Axel Springer RUS, Moscow/Russia
(formerly: OOO “Gruner + Jahr Magazines”), was com-
pleted. Since that time, both companies were fully con-
solidated.

The acquisition of a 51 % interest in Umzugsauktion
GmbH & Co. KG, Schallstadt, was completed in April
2010. This company had been included in the consoli-
dated financial statements since April 30, 2010.

Due to the sale of the Solutions division of the StepStone
Group at the beginning of May 2010 one German sub-
sidiary and 22 subsidiaries headquartered in foreign coun-
tries were de-consolidated effective May 1, 2010. In
addition, three foreign subsidiaries of the StepStone
Group were liquidated in the current year.

wallstreet:online AG, Berlin, as well as wallstreet:online
capital AG, Berlin, which were previously included in
the consolidated financial statements, were sold in
May and August 2010 and de-consolidated effective
May 1 and August 1, 2010, respectively.

The sales of our interests in Cora Verlag GmbH & Co.
KG, Hamburg, and ZertifikateJournal AG, Veitshöch-

heim, were completed at the beginning of April and the
beginning of May 2010, respectively. These interests
were formerly accounted for by using the equity
method.

Axel Springer Schweiz AG, Zurich/Switzerland, was
merged into Handelszeitung und Finanzrundschau AG,
Zurich/Switzerland, in June 2010. Handelszeitung und
Finanzrundschau AG was renamed Axel Springer
Schweiz AG.

Effective July 1, 2010, Ringier Axel Springer Media AG,
Zurich/Switzerland, and twelve foreign subsidiaries
brought in by Ringier, were fully consolidated in our
consolidated financial statements for the first time. In
addition, the investment in PNS a.s., Prague/Czech
Republic, brought in by Ringer, was included for the
first time using the equity method.

In July, DW-Holding GmbH, Berlin, was merged into
ZANOX.de AG, Berlin, and Sport B.Z. GmbH, Berlin,
into Ullstein GmbH, Berlin. Moreover, three German
companies and three foreign companies were de-
consolidated due to business activity having largely
been suspended.

At the end of August 2010, finanzen.net, a business
unit belonging to Smarthouse Media, was spun off into
the newly founded finanzen.net GmbH, Karlsruhe, and
included in the consolidated financial statements for
the first time in the course of full consolidation.

In November 2010, we acquired 72.6 % of the shares
in Sohomint GmbH, Hamburg, which has been fully
consolidated since November 1, 2010.

In November and December, StepStone Norge AS
was merged into StepStone AS in Oslo/Norway; Blic
Marketing d.o.o. into Ringier Axel Springer d.o.o. (for-
merly: Ringier d.o.o.) in Belgrade/Serbia; and Ringier
Print s.r.o., Ostrava, into Ringier Axel Springer CZ a.s.,
Prague (formerly: Ringier CR a.s.) in the Czech Republic.

126 Annual Report 2010 Axel Springer AG

In December, we acquired 70 % of the shares in AZET
sk a.s., Zilina/Slovakia. This company has been included
in the consolidated financial statements since December
31, 2010.

Based on the preliminary purchase price allocations,
the preliminary acquisition costs of this business com-
bination could be allocated to the purchased assets
and liabilities at the acquisition date as follows:

(c) Acquisitions and divestitures
With the goal of developing eastern European media
activities, Axel Springer AG and Ringier AG, Zu-
rich/Switzerland, merged their business activities in
Poland, the Czech Republic, Slovakia, and Serbia into
the jointly managed Ringier Axel Springer Media AG,
Zurich/Switzerland, effective July 1, 2010. In addition,
we made a cash contribution of € 38,805 thousand
and an adjustment payment to Ringier of
€ 124,845 thousand. Our 50 % interest in the joint
venture is held by AS Online Beteiligungs GmbH, Berlin,
a wholly owned subsidiary of Axel Springer AG. Due to
the agreement to a call option on the acquisition of a
further interest, we have treated the transaction as a
business combination and included the Ringier Axel
Springer Media group in the consolidated financial
statements of Axel Springer AG effective July 1, 2010.

Along with the cash contribution and the adjustment
payment, the preliminary consideration transferred
totaling € 226,047 thousand also included the carrying
amounts of the assets less liabilities brought in by us of
€ 61,197 thousand and contingent consideration of
€ 1,200 thousand. The acquisition related expenses
recorded in other operating expenses amounted to
€ 3,220 thousand.

The contingent consideration resulted from a compen-
sation obligation that was measured on the basis of
the probable income.

€ thousands

Carrying
amount
before
acquisition

Adjust-
ment
amount

Carrying
amount
after
acquisition

Other intangible assets

12,410

201,493

213,903

Property, plant, and
equipment

Non-current financial
assets

Trade receivables

Other assets

Cash and cash equivalents

64,728

Provisions and other
liabilities

Trade payables

– 24,612

– 20,819

41,708

16,415

12,727

29,142

42,844

22,681

42,844

22,681

64,728

– 24,612

– 20,819

Deferred tax liabilities

– 6,372

– 36,677

– 43,049

Net assets

148,983

177,543

326,526

Non-controlling interests

Acquisition cost (preliminary)

Goodwill (preliminary)

163,263

226,047

62,784

The carrying amount before acquisition comprised the
assets and liabilities brought in by us.

The purchase price allocation considers all knowledge
and adjusting events about conditions that existed at
the acquisition date, and has not yet been completed.
In particular, the merger of the Hungarian activities of
Axel Springer and Ringier in the joint venture has not
yet been approved by the cartel authorities, meaning
that a part of the business combination has not yet
been completed.

Consolidated Financial Statements 127

Notes to the Consolidated Financial Statements

Of the other intangible assets acquired, intangible
assets with carrying amounts of € 143,596 thousand
have indefinite useful lives. The preliminary, non-tax-
deductible goodwill is above all attributable to insepa-
rable values such as employee expertise and expected
synergy effects from the integration, and was allocated
to the Print International segment.

Since initial consolidation, the joint venture has con-
tributed to consolidated revenues in the amount of
€ 137,949 thousand and to consolidated net income
in the amount of € 25,246 thousand. Of this amount,
revenues of € 86,291 thousand and a net income of
€ 13,139 thousand were allocated to the subsidiaries
brought in by Ringier. If the formation of the joint ven-
ture had already occurred on January 1, 2010, the joint
venture had contributed to consolidated revenues in
the amount of € 277,042 thousand and to consoli-
dated net income in the amount of € 45,429 thousand.
Of this amount, revenues of € 174,200 thousand and
a net income of € 29,190 thousand were allocated to
the subsidiaries brought in by Ringier.

The other business combinations completed in the
current year related to the acquisitions of the Perfiliate
Group (100 %), Axel Springer RUS (100 %), Umzugsauk-
tion GmbH & Co. KG (51 %), Sohomint GmbH (72.6 %),
AZET sk a.s. (70 %), and the domain www.billig-flieger-
vergleich.de (see note 2 (b)). Individually, these acquisi-
tions did not have any significant effects on the finan-
cial position, liquidity, and financial performance of the
Group.

The preliminary consideration transferred for these
acquisitions, totaling € 74,948 thousand, include both
the purchase prices paid in the current year and con-
tingent consideration of € 21,929 thousand. The ac-
quisition-related expenses of the purchase recorded in
other operating expenses amounted to € 932 thousand.

The contingent consideration resulted from option
rights for the acquisition of the remaining shares in
the companies. They were measured on the basis of
the current market value of the option price at the
acquisition date. The current market value depends
significantly on the profit trends of the acquired com-
panies in the years prior to the possible exercise
dates of the options.

Based on the preliminary purchase price allocations,
the accumulated preliminary costs of these acquisi-
tions could be allocated to the purchased assets and
liabilities at the acquisition date as follows:

€ thousands

Carrying
amount
before
acquisition

Adjust-
ment
amount

Carrying
amount
after
acquisition

Other intangible assets

2,078

13,087

15,166

Property, plant, and
equipment

Non-current financial assets

Trade receivables

Other assets

901

122

17,828

960

Cash and cash equivalents

2,083

Provisions and other
liabilities

Trade payables

– 4,896

– 8,099

901

122

17,828

960

2,083

– 4,896

– 8,099

Deferred tax liabilities

– 36

– 2,049

– 2,085

Net assets

10,941

11,038

21,979

Non-controlling interests

Acquisition cost (preliminary)

Other adjustments *

Goodwill (preliminary)

*) Goodwill adjusted due to indirect acquisition.

585

74,948

– 14,443

39,111

The purchase price allocations consider all knowledge
and adjusting events about conditions that existed
already at the acquisition date, and have not yet
been completed, particularly due to the closeness in
time between individual acquisitions and the balance
sheet date.

Of the other intangible assets acquired in these acqui-
sitions, intangible assets with carrying amounts of
€ 2,605 thousand have indefinite useful lives. The
preliminary, non-tax-deductible goodwill values of each
company are above all attributable to inseparable
values such as employee expertise and expected
synergy effects from the integration, and were allocated
to the segments Digital Media (€ 36,676 thousand) and
Print International (€ 2,435 thousand).

128 Annual Report 2010 Axel Springer AG

Since initial consolidation, these companies have con-
tributed to consolidated revenues in the amount of
€ 59,533 thousand and to consolidated net income in
the amount of € 233 thousand. If the acquisitions had
already occurred on January 1, 2010, the consolidated
revenues would have increased by € 81,102 thousand,
and the consolidated net income by € 1,400 thousand.

The disposal of our subsidiaries wallstreet:online AG,
Berlin, and wallstreet:online capital AG, Berlin, oc-
curred in May and August 2010, respectively. The loss
on disposal totaled € 15,388 thousand. It was dis-
closed in other operating expenses.

The disposal of the Solutions business unit of the
StepStone Group was likewise completed in May 2010.
The gain on disposal was € 65,634 thousand. It was
disclosed in other operating income (€ 73,711 thou-
sand), other operating expenses (€ 2,907 thousand),
and personnel expenses (€ 5,170 thousand).

The disposal prices for these transactions amounted to
€ 117,248 thousand, which were collected in the
current year. The following table shows the carrying
amounts of the assets and liabilities sold:

€ thousands

Goodwill

Other intangible assets

Property, plant, and equipment

Trade receivables

Other assets

Cash and cash equivalents

Provisions and other liabilities

Trade payables

Deferred tax liabilities

Disposal net assets

Non-controlling interests

Net realizable value

Gain on disposal

Carrying
amount

14,808

47,683

3,907

14,913

12,403

11,142

– 24,163

– 2,009

– 14,419

64,265

5,340

117,248

58,323

Additional divestitures carried out in the current year
collectively had no material effects on the financial
position, liquidity, and financial performance of the Axel
Springer Group.

Acquisitions and divestitures in the prior year:

At the beginning of September 2009, Axel Springer AG
increased its share in StepStone ASA, Oslo/Norway,
from 33.3 % to 52.8 % and thus assumed control.
Costs of purchase of € 26,557 thousand were incurred
for the increase to 52.8 %, as well as incidental costs
of € 2,886 thousand. The cost of purchase for the
acquisition of 33.3 % of the shares, which occurred in
2008, amounted to € 34,886 thousand. Using the
mandatory takeover offer for remaining outstanding
shares, as well as additional share purchases and the
squeeze-out that was initiated, we increased our share
to 100.0 % by December 31, 2009, for a cost of pur-
chase of € 65,410 thousand.

The cost of purchase of the acquisition to 52.8 % was
allocated to the acquired assets and liabilities as follows:

€ thousands

Carrying
amount
before
acquisition

Adjust-
ment
amount

Carrying
amount
after
acquisition

Other intangible assets

8,514

68,138

76,652

Property, plant, and
equipment

Other non-current assets

4,429

1,641

4,429

1,641

Current assets

21,161

742

21,903

Cash and cash equivalents

31,937

Deferred tax assets

10,587

– 4,077

6,510

Provisions and liabilities

– 54,998

7,088

– 47,910

Deferred tax liabilities

– 25,048

Net assets

23,271

46,843

70,114

Non-controlling interests

Acquisition cost

Revaluation surplus

Goodwill

33,115

64,329

3,086

24,243

Consolidated Financial Statements 129

Notes to the Consolidated Financial Statements

Of the other intangible assets acquired, intangible
assets with carrying amounts of € 41,075 thousand
had indefinite useful lives at the acquisition date. The
goodwill is above all attributable to inseparable values
such as employee expertise and expected synergy
effects from the integration, and was allocated to the
Digital Media segment.

From initial consolidation to December 31, 2009, the
StepStone Group has contributed to consolidated reve-
nues in the amount of € 29,351 thousand and to consoli-
dated net income in the amount of € – 12,651 thousand.
If the acquisition had already occurred on January 1,
2009, the consolidated revenues would have changed
by € 95,923 thousand, and the consolidated net in-
come by € – 17,240 thousand in fiscal 2009; in addi-
tion, investment income of € – 2,289 thousand would
not have been collected.

DW Holding GmbH, Berlin, in which our wholly owned
subsidiary Axel Springer Venture GmbH holds 52.5 %
of the shares, acquired 50.1 % of the shares in Digital
Window Ltd., London/Great Britain, at the beginning of
October 2009. Due to the call and put options that can
be exercised in subsequent years for the remaining
49.9 % of the shares, only the interests allocable to
the non-controlling shareholder of DW-Holding GmbH
were recognized as non-controlling interests. The cost
of purchase amounted to € 21,735 thousand plus
incidental costs of € 487 thousand. This included
contingent consideration in the amount of
€ 11,586 thousand.

The cost of purchase was allocated to the acquired
assets and liabilities as follows:

€ thousands

Carrying
amount
before
acquisition

Adjust-
ment
amount

Carrying
amount
after
acquisition

Other intangible assets

10,921

10,962

Property, plant, and
equipment

Trade receivables

Other current assets

366

7,213

396

Cash and cash equivalents

6,905

Deferred tax assets

366

7,213

396

6,905

Provisions and liabilities

– 7,714

Deferred tax liabilities

– 3,058

Net assets

7,211

7,863

15,074

Non-controlling interests

Acquisition cost

Goodwill

7,160

22,222

14,308

Of the other intangible assets acquired, no assets had
indefinite useful lives at the acquisition date. The
goodwill is above all attributable to inseparable values
such as employee expertise and expected synergy
effects from the integration, and was allocated to the
Digital Media segment.

From initial consolidation to December 31, 2009, Digi-
tal Window Ltd. has contributed to consolidated reve-
nues in the amount of € 16,241 thousand and to con-
solidated net income in the amount of € 943 thousand.
If the acquisition had already occurred on January 1,
2009, the consolidated revenues would have changed
by € 47,980 thousand, and the consolidated net in-
come by € 1,021 thousand in fiscal 2009.

130 Annual Report 2010 Axel Springer AG

The sale of a number of investments in regional news-
papers and Elmshorner Nachrichten took place in
March, April, and August 2009, following approval
under anti-trust law. A total of € 173,975 thousand of
the purchase price in the amount of
€ 323,975 thousand was paid at the beginning of the
second quarter and in the third quarter of 2009. The
remainder of the purchase price will be payable in in-
stallments in the period from 2011 to 2016. The carry-
ing amounts of investments and financial receivables
assigned to the Newspapers National segment in the
amount of € 109,175 thousand were disposed of from
the assets held for sale. A gain on disposal totaling
€ 214,357 thousand was recognized. In this context,
tax expenses were incurred in the amount of
€ 21,780 thousand.

Additional acquisitions and divestitures carried out in
2009 collectively had no material effects on the finan-
cial position, liquidity, and financial performance of the
Axel Springer Group.

(d) Translation of separate financial statements

denominated in foreign currency

Assets and liabilities of subsidiaries for which the func-
tional 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 out-
side the European Monetary Union are assigned to the
acquired company and accordingly translated at the
exchange rate in effect on the balance sheet date.

Items of the income statement of these subsidiaries
have been translated at the weighted average ex-
change rate for the year. Equity components have
been translated at the historical exchange rate at the
date of origination. Foreign exchange differences re-
sulting from the translation have been recognized
within accumulated other comprehensive income
and/or non-controlling interests.

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

1 € in foreign
currency

Average exchange
rate

Exchange rate at
balance sheet date

2010

2009 12/31/2010 12/31/2009

Polish zloty

Swiss franc

4.00

1.37

4.34

1.51

3.97

1.24

4.14

1.49

Czech koruna

25.27

26.47

25.30

26.39

Hungarian forint

276.60

280.55

279.91

272.48

British pound

0.85

0.89

0.86

0.90

(3) Explanation of significant accounting and

valuation methods

(a) Basic principles
The accounting and valuation principles applied uni-
formly across the Axel Springer Group in fiscal year
2010 are basically the same as those applied in the
prior year with the exception of the following change.

We implemented the new regulations of IFRS 3
(revised 2008) “Business Combinations”, and IAS 27
(revised 2008) “Consolidated and Separate Financial
Statements” for all business combinations and transac-
tions with non-controlling shareholders effected since
January 1, 2010 (see note (3q) for the effects thereof).

For information on the changes in accounting and
valuation methods resulting from additional new or
revised IFRSs and IFRS IC Interpretations, please refer
to note (3q).

(b) Recognition of income and expenses
The Axel Springer Group mainly generates circulation
and advertising revenues. Revenues are recognized at
the time when the significant risks of ownership have
passed to the buyer/the services have been rendered,
the amount of revenue can be reliably measured, and it
is sufficiently probable that the economic benefits will
flow to the enterprise. Revenues are stated net of any
discounts allowed.

Consolidated Financial Statements 131

Notes to the Consolidated Financial Statements

Circulation revenues encompass the sales of newspa-
pers and magazines to retailers, wholesalers, and
subscribers. Revenue is not recognized for that portion
of products sold, which can be expected, on the basis
of historical experience, to be returned. Additionally,
circulation revenues comprise the sale of digital appli-
cations and formats.

The advertising revenues encompass revenues from
sales of advertising spaces in the published newspa-
pers and magazines and the revenues generated in the
categories of display, affiliate marketing, and search in
the Digital Media segment.

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

Offers that contain multiple service components are
separated for purposes of revenue recognition when
the delivered components have an independent benefit
and the market values of goods not yet delivered or
services not yet performed can be determined objec-
tively. When these criteria are satisfied and the deliver-
ies and services of outstanding components are pos-
sible and probable even in the case of return of
components already provided, then revenues are
recognized for the individual separate components
according to the relevant regulations.

Revenues from barter transactions are recognized if
the goods and services exchanged are dissimilar and
the amount of revenue can be measured reliably.
Revenues are measured at the fair value of services
received. If the fair value of the service received
under barter transactions cannot be measured relia-
bly, the fair value is determined on the basis of the
service rendered.

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 qualified assets are capitalized as
assets in the financial statements. Dividend income is
recognized when the legal entitlement is constituted.

(c) Intangible assets
Internally generated intangible assets are measured as
the sum of costs incurred in the development phase
from the time when the technical and economic feasi-
bility has been demonstrated until the time when the
intangible asset has been completed. The capitalized
production costs include all costs that are directly or
indirectly allocable to the development phase. Pur-
chased intangible assets are measured at cost. Inter-
nally generated and purchased intangible assets that
have a determinable 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 enterprise, as follow:

Software

Licenses

Supply rights

Internet platform

Customer relationships

Useful life
in years

3 – 8

3 – 10

3 – 6

3 – 8

3 – 16

Intangible assets with an indefinite useful life, which
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 economic or
legal restrictions.

132 Annual Report 2010 Axel Springer AG

(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 whose economic benefits are attributable
to Axel Springer are recognized 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 over
the minimum contract term. When it is reasonably
certain that ownership will pass to Axel Springer at the
end of the lease period, such assets are depreciated
over their useful lives. The present value of the pay-
ment obligations associated with the minimum future
lease payments is recognized as a liability.

For purposes of depreciation, 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

12 – 20

3 – 7

3 – 14

Capital investment subsidies and bonuses granted by
the government are recognized when it is reasonably
certain that the subsidies will be granted and the re-
lated terms and conditions will be fulfilled. Bonuses
and subsidies granted for the acquisition or construc-
tion of property, plant, and equipment are recognized
in a deferred income item within other liabilities. In
subsequent periods, the deferred income item is
released and recognized as income over the useful life
of the corresponding assets.

(e) Investment property
Investment property intended for lease to third parties
is measured at amortized cost. Such property is de-
preciated over a useful life of 50 years using the
straight-line method.

(f) Recognition of impairment losses in

intangible assets, in property, plant, and
equipment, and in investment property
Impairment losses are recognized in intangible assets,
in property, plant, and equipment, and in investment
property when, as a result of certain events or
changed circumstances, 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 recoverable amount for the next-higher
group of assets is applied.

Goodwill and intangibles with indefinite useful lives
acquired in the context of business combinations are
tested once annually for impairment. In order to carry
out the impairment tests, these assets are assigned to
those cash-generating units or those cash-generating
groups (i.e., each “reporting unit”) that can be ex-
pected to profit from the synergies of business combi-
nations. These reporting units represent the lowest
level at which these assets are monitored for manage-
ment purposes. They generally correspond to individ-
ual titles and digital media of the Axel Springer Group.
In the case of integrated business models, individual
titles and digital media are collected into a single re-
porting unit.

The impairment test is conducted by determining the
value in use of the reporting units, 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 medium-term plan-
ning is five years. The cash flows to be received after
this five-year period are extrapolated on the assump-
tion 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 dis-
count rates are calculated on the basis of the weighted

Consolidated Financial Statements 133

Notes to the Consolidated Financial Statements

average capital costs of the Group, taking country-
specific considerations into account. The discount
rates range from 6.4 % to 12.5 % (PY: from 6.2 % to
12.3 %) after taxes and from 8.5 % to 15.6 % (PY:
from 7.9 % to 15.40 %) before taxes.

Estimation uncertainties arise in the following assump-
tions applied in calculating the value-in-use of the
reporting units:

Medium-term planning: The medium-term planning is
determined on the basis of past historical values, and
factors in business-segment-specific expectations
about future market growth. Here, we assume that
cash flows 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 attribut-
able to each reporting unit. The discount rate was
estimated on the basis of the average weighted capital
costs of the sector in question.

Growth rates: The growth rates were determined on
the basis of published market research reports for the
sectors in question. In estimating the long-term growth
rates, due consideration was given to the compensa-
tory effects between the different business lines, based
on the adopted strategy of the Group.

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
resulted if previous impairment losses had not been
recognized. A recognized impairment loss in goodwill
is never reversed.

(g) Financial assets and liabilities
Financial assets are mainly composed of cash and
cash equivalents, deferred purchase price receivables,
trade receivables, receivables due from related parties,
loans, investments, securities, and financial derivatives
with positive market values. Financial liabilities are
mainly composed of trade payables, liabilities due to
related parties, liabilities due to banks, contingent
consideration, and financial derivatives with negative
market values.

The initial recognition and derecognition of financial
instruments coincide with the settlement dates of
customary market purchases and sales.

If reliably measurable, fair values of financial assets and
liabilities are determined on the basis of appropriate
market prices or valuation methods.

A financial asset is derecognized when the contractual
rights to the cash flows from the financial asset have
expired or have been transferred to third parties, or
when the Group has assumed a contractual obligation
to pay the cash flows immediately to a third party,
under which the risks and rewards or the power of
control were transferred. A financial liability is derecog-
nized when the obligation underlying the liability is
settled or annulled, or has expired.

Investments and securities
Investments that have not been consolidated or ac-
counted for using the equity method in the consoli-
dated financial statements, as well as securities, are
measured at fair value if it can be determined reliably
on the basis of stock exchange or market prices and
generally accepted valuation methods, respectively.
Otherwise, they are measured at amortized cost. The
valuation methods employed include especially the
discounted cash flow method (DCF method) based on
the expected investment income. However, the fair
value is not reliably measurable when material valuation

134 Annual Report 2010 Axel Springer AG

differences appear in estimating fair values based on
projections and scenarios, or when the likelihood of
projections and scenarios cannot be reliably deter-
mined. Any unrealized gains or losses resulting from
the changes in fair value, considering resulting tax
effects, are recognized in accumulated other compre-
hensive income. Changes in fair value are not recog-
nized in income until the corresponding non-current
financial assets are sold or an impairment loss is rec-
ognized.

The carrying amounts of investments and securities
are reviewed at every balance sheet date to determine
whether there are objective indications of an impair-
ment. If an impairment is found to exist, an impairment
loss is recognized and charged to income.

Loans, receivables, and other financial assets
Upon initial recognition, loans, receivables, and other
financial assets are measured at fair value plus trans-
action costs. In subsequent periods, they are mea-
sured 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 receivable may not be fully collectible. Such an
indication might be the insolvency or other consider-
able financial problems of the debtor, for example. The
amount of the write-down is measured as the differ-
ence 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 receivables 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 (short-
term available cash in banks, cash on hand, and
checks). These items are measured at amortized cost.

Financial derivatives
Financial derivatives are utilized exclusively to hedge
against currency and interest rate risks that have an
influence on future cash flows. Financial derivatives are
measured at fair values based on stock exchange or
market prices, or using generally accepted valuation
methods. If the conditions for the application of hedge
accounting are met, the effective portion of the fair
value changes, including the tax effects, is recognized
directly in equity as accumulated other comprehensive
income. Any ineffective portions are recognized imme-
diately in income. The amounts recognized in accumu-
lated 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. Furthermore, financial derivates
are used to avoid impairments of investments and
securities. In case the underlying financial asset are
recorded at amortized costs because its fair value is
not reliably measurable, the financial derivative is re-
corded at amortized costs as well.

Consolidated Financial Statements 135

Notes to the Consolidated Financial Statements

Contingent consideration
Options and earn-out agreements in connection with
business combinations in which the Axel Springer
Group acquires control over the companies in question
are treated as contingent consideration at fair value.
For transactions that were completed prior to January
1, 2010, the obligation was measured at its present
value provided that the acquisition costs was probable
and could be measured reliably. Adjustments in the
subsequent periods are recorded with no effect on
income. Options and earn-out agreements in connec-
tion with business combinations completed since
January 1, 2010, are measured at the present value of
the expected cash flows, provided that it can be
measured reliably. In the subsequent periods, changes
in the fair value are recognized immediately in income.
The discount rates are determined on the basis of the
interest rates charged on the Group’s borrowings.

Other financial liabilities
Other non-derivative financial liabilities are measured at
amortized cost by application of the effective interest
method.

(h) Inventories
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 over-
head 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 incurred until the sale. The net realizable value of
goods and services in progress is calculated as the net
realizable value of finished goods and services less
remaining costs of completion. Impairments are re-
versed whenever the reasons justifying an earlier write-
down no longer exist.

(i) Assets held for sale
Assets are classified as held-for-sale when their dis-
posal has been initiated. The non-current assets held
for sale are measured at the lower of the carrying
amount or the fair value less costs to sell. Depreciation
is no longer applied to these assets.

(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 follow-
ing parameters were applied in the 2010 and 2009
fiscal years:

Information in %

Discount rate

Expected return on plan assets

Expected return on reimbursement rights

Salary trend

Pension trend

2010

2009

2.75 – 4.75

3.0 – 5.3

3.5

4.6

3.25 – 3.5

5.3

1.5 – 1.75

1.5 – 2.0

0.25 – 1.75

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
determined 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.

Actuarial gains and losses resulting from changes in
actuarial parameters are immediately offset against
accumulated other comprehensive income without
affecting net income.

136 Annual Report 2010 Axel Springer AG

(k) Other provisions and accrued liabilities
Other provisions have been formed to account for all
discernible legal and constructive obligations to third
parties, provided that the settlement of the obligation is
probable and the amount of the obligation can be
reliably estimated. The amount of each provision cor-
responds to the expected settlement amount. In the
case of long-term provisions, the expected settlement
amount is discounted to the present value at the bal-
ance sheet date by application of appropriate market
rates of interest. Provisions are recognized for restruc-
turing expenses only when the intended measures
have been sufficiently concretized and announced 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 the carrying amounts
of those assets and liabilities in the consolidated finan-
cial statements, and for interest and tax 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 loss carry-forwards can be utilized. Deferred
tax assets are recognized for temporary differences or
interest and tax loss carry-forwards only when the
ability to utilize them in the near future appears to be
reasonably certain. Deferred taxes are recognized for
temporary differences resulting from the fair value
measurement of assets and liabilities obtained through
business combinations. Deferred taxes are recognized
for temporary differences relating to goodwill only
when the goodwill can be utilized 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 imposed 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
directly to equity. The treasury shares are presented in
a separate line item of the consolidated statement of
changes in equity.

(n) Share-based payment programs
As part of performance-based remuneration programs,
Axel Springer Group grants equity-settled and cash-
settled share-based payment programs. The compen-
sation components to be recognized as expenses over
the vesting period are measured as the fair value of the
options granted at the time when they were granted (in
case of equity-settled programs) or at the balance
sheet date (in case of cash-settled programs). The fair
values are determined on the basis of generally ac-
cepted option pricing models. The corresponding
amount is recognized in the additional paid-in capital
(in the case of equity-settled programs) or as provi-
sions/liabilities (in the case of cash-settled programs).

(o) Transactions in foreign currencies
Purchases and sales in foreign currencies are trans-
lated at the exchange rate on the date of the transac-
tion. 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.

(p) Use of estimates
The preparation of the consolidated financial state-
ments 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 ex-
penses. Significant estimates and assumptions relate
in particular to allowances for doubtful receivables, the
actuarial parameters used to measure pension provi-
sions, product return rates, medium-term planning,
discount rates and growth rates for the valuation of
goodwill and intangible assets with indefinite useful life,
contingent consideration 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 deter-
mined with the use of estimates can be found in the
comments on the specific line items.

Consolidated Financial Statements 137

Notes to the Consolidated Financial Statements

(q) New accounting standards
The following IFRSs relevant for Axel Springer were
applied for the first time in the fiscal year:

IFRS 3 (revised 2008) “Business Combinations” and
IAS 27 (revised 2008) “Consolidated and Separate
Financial Statements” were published in January 2008
and adopted in EU law in June 2009. We report busi-
ness combinations and transactions with non-
controlling interests that were completed on or after
January 1, 2010, according to the new regulations.
Differently to the accounting policies applied as of
December 31, 2009, incidental acquisition costs are
recognized directly to income. Contingent considera-
tion is recognized at fair value provided that it can be
determined reliably; adjustments after the acquisition
date are recognized directly to income. As already in
prior years, we offset effects from acquisitions and
disposal of non-controlling interests within equity.
When shares are sold causing a loss of control, the
remaining shares must be recognized at fair value;
when shares are purchased causing a gain in control,
shares already held must be recognized at fair value.
Arising differences to the previous carrying amounts
must be recognized directly to income. We do not
exercise the option of complete disclosure of goodwill
and continue to only disclose the goodwill allocated to
our own interests. The changes have effects on how
company transactions are reflected on the balance
sheet, particularly on the results of the reporting period
in which an acquisition occurred, and on results in
future periods. Due to the changes to IAS 27, cash
flows resulting from acquisitions and disposals of non-
controlling interests must be shown
in cash flow from financing activities instead of in cash
flow from investing activities since January 1, 2010.
The prior-year figure was adjusted accordingly.

The standard “Improvements to IFRSs”, which was
published in April 2009 and adopted in EU law in
March 2010, is primarily to be applied to fiscal years
commencing on or after January 1, 2010. Due to the
changes, we refrain from disclosing segment assets,
since we do not use this key figure as a management
measure at segment level. Moreover, we only still
recognize payments for capitalized assets in cash
flow from investing activities. The changes in the
second improvement standard had no material ef-
fects relating to our financial position, liquidity, and
financial performance.

The following IFRSs have already been published, but
not yet applied.

IFRS 9 “Financial Instruments” was published by IASB
in November. In the future, financial assets must be
assigned only to the two valuation categories “at
amortized cost” and “at fair value” and measured
accordingly. The regulations for recognizing financial
liabilities were published as a supplement in October
2010 and led to changes in the application of the fair
value option. IFRS 9 is required to be applied to fiscal
years that begin on or after January 1, 2013. These
amendments have not yet been incorporated into
European law. The application of the new standard
will lead to changes in the presentation and recognition
of financial assets and liabilities.

In the current year, IASB and IFRS IC published addi-
tional pronouncements that had or will have no mate-
rial influence on our consolidated financial statements.

138 Annual Report 2010 Axel Springer AG

Notes to the consolidated statement of financial position

(4) Intangible assets

The changes in intangible assets were as follows:

€ thousands

Acquisition or production cost

Balance as of January 1, 2009

Initial consolidation

Deconsolidation

Currency effects

Additions

Disposals

Transfers

Balance as of December 31, 2009

Initial consolidation

Deconsolidation

Currency effects

Additions

Disposals

Transfers

Balance as of December 31, 2010

Depreciation and impairments

Balance as of January 1, 2009

Initial consolidation

Deconsolidation

Currency effects

Additions

Disposals

Transfers

Write-ups

Purchased
rights and
licenses

Internally
generated
rights

Goodwill

Total

469,692

77,250

– 2,745

– 502

17,387

– 62,054

143

499,171

223,683

– 56,169

27,864

27,513

– 10,082

– 231

711,749

26,892

10,557

337

2,125

– 68

– 86

471,806

36,299

– 1,878

1,364

968,390

124,106

– 4,623

1,199

19,512

– 286

– 62,408

39,757

507,305

1,046,233

936

– 4,833

1,528

1,657

– 4,064

– 446

34,535

109,334

– 15,118

11,687

339

– 30

500

333,953

– 76,120

41,079

29,509

– 14,176

– 177

614,017

1,360,301

166,567

13,476

50,383

230,426

116

– 1,622

– 447

35,463

– 55,605

337

– 261

215

4,405

– 68

– 1,878

116

– 3,500

– 232

39,868

– 286

– 55,959

337

– 261

Balance as of December 31, 2009

144,548

18,028

48,219

210,795

Initial consolidation

Deconsolidation

Currency effects

Additions

Disposals

Transfers

512

– 11,337

3,787

45,043

– 7,510

– 125

– 1,019

246

6,041

– 1,703

– 15

512

– 12,356

4,033

51,084

– 9,228

– 125

Balance as of December 31, 2010

174,917

21,593

48,204

244,714

Carrying amounts

As of December 31, 2010

As of December 31, 2009

536,832

354,623

12,942

21,729

565,813

1,115,587

459,086

835,438

Consolidated Financial Statements 139

Notes to the Consolidated Financial Statements

The purchased rights and licenses mainly comprised
title rights, trademarks, and customer relationships.
The internally generated intangible assets mainly con-
sisted of software solutions and websites.

The total of goodwill and intangible assets with indefi-
nite useful lives that have been assigned to the individ-
ual reporting units amounts to a maximum of 25 % of
the total value of all goodwill and intangible assets with
indefinite useful lives measured as of December 31,
2010, in the amount of € 895,829 thousand (PY:
€ 655,179 thousand).

The value in use of the reporting units is determined
primarily by the terminal value. The amount of the
terminal value depends on the forecasted cash flow in
the fifth year of medium-term planning, and above all
on the growth rate of the cash flows subsequent to the
medium-term planning, and on the discount rate (see
explanations in note (3f) on assumptions in the context
of the annual impairment test).

Goodwill amounting to € 344,818 thousand (PY:
€ 319,781 thousand) and intangible assets with indefi-
nite useful lives amounting to € 116,356 thousand (PY:
€ 116,259 thousand), representing approximately
50 % (PY: 70 %) of the total value, were assigned to a

total of four reporting units in the Digital Media seg-
ment. A reduction of cash flows by about 80 % (PY:
60 %) in the fifth planning year would reduce the sur-
plus between the value in use and the carrying amount
of these reporting units to zero. A reduction in the
growth rate by 0.5 percentage points would reduce
the surplus by 11.8 % (PY: 14.3 %), and an increase in
the discount rate by 0.5 percentage points would
reduce the surplus by 14.3 % (PY: 17.4 %).

Goodwill amounting to € 130,040 thousand (PY:
€ 58,039 thousand) and intangible assets with indefi-
nite useful lives amounting to € 197,758 thousand (PY:
€ 47,984 thousand), representing approximately 35 %
(PY: 15 %) of the total value, were almost completely
assigned to a total of two reporting units in the Print
International segment. A reduction of cash flows by
about 70 % (PY: 90 %) in the fifth planning year would
reduce the surplus between the value in use and the
carrying amount of these reporting units to zero. A
reduction in the growth rate by 0.5 percentage points
would reduce the surplus by 12.8 % (PY: 9.5 %), and
an increase in the discount rate by 0.5 percentage
points would reduce the surplus by 15.6 % (PY: 11.9 %).

140 Annual Report 2010 Axel Springer AG

(5) Property, plant, and equipment

The changes in property, plant, and equipment were as follows:

€ thousands

Acquisition or production cost

Balance as of January 1, 2009

Initial consolidation

Deconsolidation

Currency effects

Additions

Disposals

Transfers

Land and buildings,
including buildings
on non-owned land

Technical
equipment
and
machinery

Other
equipment,
operational
and office
equipment

Construction
in progress

Total

574,705

538,662

172,811

2,082

1,288,260

4,112

– 261

2,131

– 843

3,976

6,532

– 80

– 200

2,433

– 3,970

1,088

5,243

– 59

13,752

– 12,195

2,937

– 136

– 272

– 1,470

15,887

– 139

– 399

21,253

– 17,144

3,322

Balance as of December 31, 2009

583,820

544,465

179,330

3,425

1,311,040

Initial consolidation

Deconsolidation

Currency effects

Additions

Disposals

Transfers

6,537

642

607

26,069

– 1,133

– 729

7,321

5,944

– 5,165

2,263

18,733

– 151

– 27,455

– 15,496

– 1

– 13

6,428

– 662

– 38,386

745

1,668

– 4,459

38,569

– 6,299

2,163

33,089

– 43,764

– 40,432

Balance as of December 31, 2010

553,069

549,283

187,277

4,737

1,294,366

Depreciation and impairments

Balance as of January 1, 2009

Initial consolidation

Deconsolidation

Currency effects

Additions

Disposals

Transfers

161,484

283,274

121,252

804

– 144

11,843

– 766

360

2,866

– 82

24,207

– 3,752

369

375

– 29

15,716

– 11,128

– 372

Balance as of December 31, 2009

173,581

306,887

125,820

Initial consolidation

Deconsolidation

Currency effects

Additions

Disposals

Transfers

227

231

11,640

– 92

– 12,533

393

– 1,576

– 53

26,589

– 27,060

– 12

– 1,170

1,144

17,162

– 13,544

Balance as of December 31, 2010

173,055

305,168

129,440

133

– 105

566,010

4,045

– 24

– 220

51,766

– 15,646

357

606,288

636

– 2,746

1,322

55,524

– 40,801

– 12,533

607,691

Carrying amounts

As of December 31, 2010

As of December 31, 2009

380,014

410,239

244,116

237,578

57,837

53,510

4,709

3,425

686,676

704,752

Consolidated Financial Statements 141

Notes to the Consolidated Financial Statements

The fair value of investment property as of December 31,
2010 amounted to € 54,340 thousand (PY:
€ 31,704 thousand). The fair value calculation, which
was performed by us, was based on the application of
the discounted cash flow method, with reference to the
estimated cash flows. In calculating this value, a discount
rate of 7.0 % (PY: 7.0 %) and a perpetuity capitalization
rate of 6.0 % (PY: 6.0 %) was applied. As a result of the
change in fair value, impairment losses amounting to
€ 5,592 thousand (PY: write-ups of € 5,500 thousand)
have been recognized and allocated to the Ser-
vices/Holding segment.

Due to increased leasing of office space to third parties,
we reclassified an amount of € 26,389 thousand from
property, plant, and equipment into investment property in
the reporting year.

In 2010, rental income of € 3,289 thousand (PY:
€ 2,955 thousand) was generated, with corresponding
rental expenses of € 751 thousand (PY: € 1,436 thousand).
Directly allocable expenses of € 65 thousand (PY:
€ 108 thousand) were incurred for non-rented space.

The total future payments from operating lease contracts
are broken down as follows:

€ thousands

Due in up to one year

Due in one to five years

Due in more than five years

2010

3,578

11,132

7,643

2009

2,049

6,395

2,568

Total

22,353

11,012

As of December 31, 2010, property, plant, and
equipment with acquisition or production cost of
€ 143,710 thousand (PY: € 159,692 thousand) were
in use that had already been fully depreciated.

Property, plant, and equipment in the amount of
€ 91,940 thousand (PY: € 98,053 thousand) had been
pledged as security for own liabilities as of December 31,
2010.

(6) Investment property

The development of the investment property was as follows:

€ thousands

Acquisition or production cost

Balance as of January 1, 2009

Additions

Transfers

Balance as of December 31, 2009

Additions

Transfers

Balance as of December 31, 2010

Depreciation and impairments

Balance as of January 1, 2009

Additions

Transfers

Write-ups

Balance as of December 31, 2009

Additions

Transfers

Balance as of December 31, 2010

Carrying amounts

As of December 31, 2010

As of December 31, 2009

Investment
property

52,318

516

– 3,616

49,218

3,180

38,923

91,321

22,655

716

– 357

– 5,500

17,514

6,933

12,534

36,981

54,340

31,704

142 Annual Report 2010 Axel Springer AG

(7) Non-current financial assets

The increase in non-current financial assets particularly
resulted from the reclassification of the shares in
Do⁄an TV (€ 352,016 thousand) from the assets held for
sale (see note (11) for further details). When determining
the recoverable amount in the context of the impairment
test of our investment in Do⁄an TV, we factored in both
estimated future cash flows and a number of contractu-
ally stipulated value-securing mechanisms. Moreover, in
order to assess the recoverable amount of our invest-
ment, we carried out an estimation of the prospects of
success for suits filed by Do⁄an TV against assessed tax
claims and tax penalties. According to these estimates,
there was no need for impairment as of December 31,
2010.

In addition, we acquired about 12.4 % of the shares in
SeLoger.com SA at the beginning of September 2010,
for a purchase price of € 34.00 per share (total purchase
price of € 69,976 thousand). As of December 31, 2010,
the recognized fair value amounted to € 72,507 thousands.

Investments accounted for using the equity method
showed the following development:

€ thousands

2010

2009

Carrying amount as of January 1

59,702

129,993

Attributable net income

Dividends

Changes recognized in other
comprehensive income

Impairment losses

Acquisitions

Disposals

Other changes

3,193

1,524

– 3,930

– 11,728

– 9,485

– 3,233

– 21,602

– 20,498

14,160

14,819

– 1,272

– 51,779

– 24

604

Carrying amount as of December 31

40,742

59,702

The disposals in the fiscal year related to the sales of our
shares in Cora Verlag and ZertifikateJournal. The acquisi-
tions related to the purchase of 27.02 % of the shares in
PNS in connection with the business activities in the
Czech Republic brought into the joint venture Ringier
Axel Springer Media by Ringier.

Subsequently, the aggregated financial data for the in-
vestments accounted for using the equity method are
shown. Net income and revenue amounts correspond to
the period of inclusion under the equity method in the
reporting periods:

€ thousands

Net income

Revenues

Assets

Liabilities

2010

2009

25,427

– 92,506

886,067

719,561

692,823

622,760

595,470

524,885

The aggregated financial information for the associated
companies classified as held for sale in the previous year
was based on the financial data as of September 30, 2009.
In the current period, all assets held for sale were sold or
reclassified into other financial assets (see note (11)).

€ thousands

Net income

Revenues

Assets

Liabilities

2009

– 85,510

200,594

679,983

725,844

As of December 31, 2010, no shares existed in publicly
listed associated companies. In the prior year, based on the
publicly listed market price, the fair value of our investment
in ZertifikateJournal amounted to € 1,798 thousand.

Consolidated Financial Statements 143

Notes to the Consolidated Financial Statements

As of December 31, 2010, receivables in the amount of
€ 276,643 thousand (PY: € 183,638 thousand) were
neither past due nor subject to 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:

€ thousands

up to 30 days

31 to 90 days

91 to 180 days

181 to 360 days

361 days and longer

12/31/2010 12/31/2009

40,225

51,543

13,870

26,139

6,980

8,914

12,091

10,063

12,083

8,999

(10) Other assets

The other assets broke down as follows:

€ thousands

12/31/2010 12/31/2009

Deferral of payment for regional
newspaper investments

150,000

Creditors’ accounts with debit balances

15,143

Receivables from Kirch insolvency

Derivatives

Receivables due from employees

H&F call option

Miscellaneous

4,394

7,586

334

566

10,835

6,825

2,362

633

29,668

26,992

Other financial assets

204,631

200,707

Advance payments

12,015

16,403

Receivables from other taxes

10,563

5,503

Other non-financial assets

22,578

21,906

Other assets

227,209

222,613

(8) Inventories

The inventories broke down as follows:

€ thousands

12/31/2010 12/31/2009

Raw materials and supplies

19,486

27,171

Semi-finished goods

Finished goods and merchandise

Inventories

2,951

4,606

2,179

2,550

27,043

31,900

Inventories of € 8,664 thousand (PY: € 9,455 thousand)
were measured at their net realizable value. As of Decem-
ber 31, 2010, the valuation allowance for these inventories
amounted to € 1,693 thousand (PY: € 2,047 thousand),
of which € 1,566 thousand (PY: € 364 thousand) was
recognized affecting net income in 2010.

(9) Trade receivables

The trade receivables broke down as follows:

€ thousands

12/31/2010 12/31/2009

Trade receivables, nominal

398,859

317,257

Allowances for doubtful trade receivables

– 12,959

– 15,310

Trade receivables

385,900

301,947

The changes in the allowances for doubtful trade receiv-
ables are presented in the table below:

€ thousands

Balance as of January 1

Utilization

Reversals

Disposal due to deconsolidation

Additions

Other changes

2010

15,310

2009

9,272

– 5,279

– 6,417

– 3,021

– 2,231

– 641

8,134

13,013

Balance as of December 31

12,959

15,310

144 Annual Report 2010 Axel Springer AG

investment in Do⁄an TV from the original 25 % to
19.9 % were implemented. This interest
(€ 352,016 thousand), which formerly had been carried
as held for sale, was disposed of in the consolidated
statement of financial position. Upon disposal of the
investment, foreign exchange losses of
€ 16,710 thousand were transferred from accumulated
other comprehensive income to the consolidated income
statement. Our 19.9 % interest in Do⁄an TV, which is
assigned to the Digital Media segment, was recognized
as an addition in other financial assets.

In addition, the sale of our investment in Westfalenblatt
(€ 6,190 thousand), which was assigned to the segment
Newspapers National, was completed in January 2010.

(12) Equity

The components and changes in consolidated equity
are summarized in the consolidated 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.

At balance sheet date, 32,780,000 shares were out-
standing (PY: 29,800,216 shares).

(b) Additional paid-in capital
The additional paid-in capital primarily results from a
shareholder contribution granted in previous years. Fur-
thermore, the amount of the corresponding personnel
expenses for the share-based payment programs is
included (cf. note (12f)).

The deferred payment resulting from the sale of the
investments in regional newspapers in the previous year
is described in note (2c). The purchase price will become
due and payable successively in the period from 2011 to
2016, so that € 25,000 thousand is recognized as a
short-term obligation for the first time in the reporting
period.

By agreement of April 8, 2004, 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 560,700 call options for the purchase of
Axel Springer AG shares. Thus, Axel Springer AG was
principally entitled to purchase one share of Axel
Springer AG from H&F for each share issued to a mem-
ber of the Management Board under the Management
Participation Program. Axel Springer AG waived this right
in connection with 62,300 shares by an agreement with
H&F of June 30, 2009. In return, Axel Springer AG received
a cash settlement. According to two additional amend-
ment agreements from 2009 and 2010, the remaining
call options shall lapse if and to the extent that H&F sells
the shares in Axel Springer AG for its part and in ex-
change pays a cash settlement to Axel Springer. With
the sale of 498,400 shares of Axel Springer AG by H&F
in 2010, all remaining 498,400 call options that still ex-
isted on December 31, 2009, have lapsed. The cash
settlement paid by H&F was € 13,437 thousand.

Insofar as advance payments are announced in the
context of the insolvency proceedings against KirchMe-
dia GmbH & Co. KGaA i.L., we recognize them as re-
ceivables. The receivables accepted in the table of
claims by the insolvency administrator originally totaled
€ 325,000 thousand. The claims in excess thereof of
€ 1,411 thousand recorded in the prior year were paid
in full in the reporting period.

The miscellaneous financial assets include loans and
receivables due from other investee companies and
security deposits, among other items.

(11) Assets held for sale and liabilities related to

assets held for sale

In connection with two capital increases at Do⁄an TV
carried out by Do⁄an Yayin Holding in the first half of
2010, existing contractual agreements to reduce our

Consolidated Financial Statements 145

Notes to the Consolidated Financial Statements

(c) Accumulated retained earnings
The accumulated retained earnings include the income
of the companies included in the consolidated financial
statements, to the extent that they have not been dis-
tributed to shareholders. Moreover, transactions with
shareholders are recognized.

In 2010, Axel Springer AG distributed an amount of
€ 131,179 thousand as dividend payments (€ 4.40 per
qualifying share) for the fiscal year 2009. In 2009, Axel
Springer AG distributed an amount of € 130,604 thou-
sand as dividend payments (€ 4.40 per qualifying share)
for the fiscal year 2008.

The premium resulting from the issue of treasury shares
in the reporting period increased accumulated retained
earnings by € 72,485 thousand (cf. note (12d)).

(d) Treasury shares
In the reporting year, Axel Springer AG issued 2,979,784
treasury shares in the context of the placement of trea-
sury shares that occurred in September, and share-
based payment programs (cf. note (12f)). After this, Axel
Springer AG held 200,000 treasury shares (PY: 3,179,784
shares), corresponding to 0.6 % (PY: 9.6 %) of its capital
stock.

Due to the sale of our treasury shares, € 261,931 thou-
sand was collected, increasing equity (of which
€ 72,485 thousand are allocated to the premium recog-
nized in accumulated retained earnings).

(e) Accumulated other comprehensive income
Other equity within the accumulated other compre-
hensive income mainly contained actuarial losses from
pension provisions of € 13,400 thousand (PY: gains of
€ 1,289 thousands). Moreover, effects in the opposite
direction amounting to € 10,135 thousands (PY:
€ 21,633 thousands) were included referring to compa-
nies that are accounted for using the equity method. This
change mainly results from foreign exchange losses of
€ 16,710 thousand that were transferred from accumu-
lated other comprehensive income to consolidated net
income (cf. note (11)).

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, for a purchase price of € 54.00 per
share (plus 2 % interest from July 1, 2004), and acquired
in August 2004. These shares were originally subject to a
multiple-year holding period, which expired on December
18, 2007, for 50 % of the shares acquired, and on De-
cember 18, 2008 for 50 % of the shares acquired.

For each of the 62,300 shares purchased, the members
of the Management Board were granted eight additional
options to purchase shares of Axel Springer AG. These
options entitle their holders to purchase what was origi-
nally 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 achieving or
exceeding 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 De-
cember 18, 2008.

The 249,200 options still outstanding as of December 31,
2009 (with a weighted average exercise price of € 60.21)
were exercised in the reporting period by the participants
in the Management Participation Program granted in
2004 at a weighted average exercise price of € 60.65
per option; and thus acquired shares in Axel Springer AG
against payment of € 15,114 thousand. The weighted
average market price at the exercise dates was € 93.05.

In 2009, a total of 34,888 options were exercised at a
weighted average exercise price of € 59.67. The weighted
average market price at the exercise times was € 70.13.
On December 17, 2009, the entitled members of the
Management Board stated that they were waiving exer-
cise of 214,312 options, and in exchange received a
promise of a settlement payment of € 12.00 per option.
On December 17, 2009, the market price of a share in
Axel Springer AG was € 75.96 (XETRA closing price), and
the calculated exercise price of the options was € 59.90.
The settlement payment was made in January 2010.

(f) Share-based payment
On April 14, 2004, the shareholders at the annual meet-
ing of Axel Springer AG approved a Management Par-

Effective July 1, 2009, 375,000 stock appreciation rights
(SARs) were issued to the members of the Management
Board. The SARs are granted until June 30, 2015, and

146 Annual Report 2010 Axel Springer AG

can be exercised at the earliest from July 1, 2013. If the
Management Board Employment Contract or the ap-
pointment to the Management Board continues to exist
at least until June 30, 2013, then all of the SARs granted
to the Management Board member can become vested.
If a Management Board member leaves after June 30,
2010, but before July 1, 2013, the SARs granted vest
pro rata temporis in proportion to the four-year waiting
period. An additional requirement for vesting to occur is
that, within the period from July 1, 2012, to June 30,
2013, during a period of 90 consecutive calendar days,
either the price of the Axel Springer share is at least 30 %
higher than the base value of € 60.86, or the percentage
by which the price of the Axel Springer share is above
the base value on average exceeds the average percent-
age price development of the DAX. Exercise of the SARs
is only possible if the average share price of Axel
Springer AG in the 90 calendar days prior to exercise is
at least 30 % above the basis value and the percentage
price increase of the Axel Springer share exceeds the
development of the DAX price index in the corresponding
period. Each SAR grants a payment claim in the amount
of the growth in value of the Axel Springer share, re-
stricted to a maximum of € 121.72; this corresponds to
the difference between the volume-weighted average
price during the last 90 calendar days prior to exercise
and the base value. The Management Board members
are obligated to hold one share of Axel Springer AG as
their own investment for each ten SARs. Disposal of
these shares prior to exercise of the SARs leads to a
lapse of the SARs in the proportion of one share for each
ten SARs. The value of the SARs was determined to be
€ 12.65 (€ 4,743 thousand for all warrants) by applica-
tion of a Black-Scholes model in a Monte-Carlo simula-
tion at the grant date. The total value will be recognized
in liabilities due to related parties over the vesting period
and presented within the personnel expenses. In 2010,
€ 9,540 thousand (PY: € 1,460 thousand) were
recognized as personnel expenses. The liability was
€ 11,000 thousand (PY: € 1,460 thousand) as of De-
cember 31, 2010.

In May 2009, as part of a free share and stock participa-
tion program, 82,669 treasury shares were issued in the
form of free shares or by conversion of Group employee
bonus claims at their respective fair value at the time of
issue in the amount of € 71.51 or € 69.15. Personnel

expenses of € 3.6 million were incurred in 2009 for both
programs.

Prior to its acquisition by Axel Springer on September 2,
2009, StepStone AS (formerly StepStone ASA) had
granted stock options to acquire shares of StepStone
AS to employees and management. Due to the acquisi-
tion of all of the shares in StepStone AS by Axel Springer,
related with a deregistration of the shares of StepStone
AS commenced in December 2009, existing stock op-
tions were repurchased in December 2009 and in Janu-
ary 2010 by cash settlement. As of December 31, 2010,
no warrants still existed (PY: 6,113,807 options with a
weighted average exercise price of € 0.78). The person-
nel expenses recognized in the consolidated financial
statements of Axel Springer AG amounted to
€ 0 thousand (PY: € 2,417 thousand).

auFeminin.com S.A. granted its senior executives sub-
scription rights for free shares and stock options. These
share-based payments must be settled with shares of
auFeminin.com S.A.

In November 2010, 300,000 options for acquisition of
one share of auFeminin.com S.A. each with an exercise
price of € 17.15 were issued to senior employees. These
options vested upon expiration of the first (50 %) and
second (50 %) years after the grant date, insofar as the
earnings target established for the individual tranche
(EBITDA 2010 or EBITDA 2011) was achieved. Once
they have vested, the options can be exercised for a
total of five (50 %) or four (50 %) years.

In June 2009, 300,000 options for acquisition of one
share of auFeminin.com S.A. each with an exercise price
of € 8.94 were issued to senior employees. These op-
tions vested upon expiration of the first (50 %) and sec-
ond (50 %) years after the grant date, insofar as the
earnings target established for the individual tranche
(EBITDA 2009 or EBITDA 2010) was achieved. Once
they have vested, the options can be exercised for a
total of five (50 %) or four (50 %) years.

The 99,000 stock options, each one entitling the holder
to purchase one share of auFeminin.com S.A. (exercise
price: € 20.46), 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

Consolidated Financial Statements 147

Notes to the Consolidated Financial Statements

of auFeminin.com S.A. in July 2007 (exercise price:
€ 18.60 or € 21.21), will become vested in equal annual
installments over a period of four years. The option grant
is not conditioned 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 fair values of the stock options granted in the report-
ing period and in the prior year were determined by
application of the Black-Scholes model at the grant date.
For this purpose, the following parameters were applied:

Share price at the grant date in €

Exercise price in €

Interest rate for risk-free
investments, in %

Expected term until fully vested (in
years)

Expected total term (in years)

Expected volatility, in %

Expected dividend yield, in %

Options
Nov. 2010

Options
June 2009

16.30

17.15

9.00

8.94

0.97 resp. 1.08 0.96 resp. 1.62

1 resp. 2

45.00

0.00

40.00

0.00

Fair value at grant date, in €

2.63 resp. 3.90 1.49 resp. 2.14

The expected volatility was determined based on histori-
cal volatility rates using a period corresponding to the
term of the options.

2010

2009

Number of
options

Exercise
price* in €

Number of
options

Exercise
price* in €

Balance as of
January 1

473,000

12.92

173,000

19.82

Lapse

– 133,000

11.42

Issuance

300,000

17.15

300,000

–

8.94

Balance as of
December 31

Thereof
exercisable

640,000

15.21

473,000

12.92

158,000

13.52

–

*) weighted average exercise price

The exercise prices for the options outstanding on the
balance sheet date remained unchanged from the prior
year between € 8.94 and € 21.21. The weighted aver-
age remaining term of these options was 4.9 years (PY:
5.6 years).

53,000 rights to purchase free shares that were granted
in April 2008, as well as 37,000 rights to purchase 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 revenue targets), and in
some cases also market goals (audience group quotas),
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.

In 2010, 32,000 rights to purchase free shares were
exercised (market price at the exercise date: € 10.91). In
the prior year, 40,000 of 90,000 rights to purchase free
shares lapsed. At the balance sheet date, a total of
18,000 (PY: 50,000) rights to purchase free shares were
outstanding. The weighted average remaining term of
these rights was 0.9 years (PY: 1.6 years).

The compensation expenses for the share-based pay-
ment programs of auFeminin.com S.A. amounted to
€ 315 thousand in fiscal year 2010 (PY: € 466 thousand).
The additional paid-in capital was increased by the same
amount.

(g) Non-controlling interests
The non-controlling interests mainly related to the follow-
ing companies:

€ thousands

12/31/2010 12/31/2009

Ringier Axel Springer Media

166,278

ZANOX Group

auFeminin Group

Other companies

22,092

25,143

12,631

11,639

9,186

14,861

Non-controlling interests

210,187

51,642

148 Annual Report 2010 Axel Springer AG

The increase in the non-controlling interests by
€ 158,545 thousand in the reporting period results es-
sentially from the initial consolidation of Ringier Axel
Springer Media.

(13) Pension obligations

The changes in the present value of the pension obliga-
tions financed by fund and by provision are presented in
the table below:

€ thousands

2010

2009

Obligation as of January 1

431,537

419,708

Under its defined contribution pension plans, the Group
mainly contributes 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 and amount to
€ 41,367 thousand (PY: € 39,804 thousand)).

Provisions for pensions were recognized for the obliga-
tions arising from vested pension rights and current
benefits for former and active employees 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 provision for defined benefit plans corre-
sponds to the present value of the obligations at the
balance sheet date net of the fair value of the plan assets.

The amount of the provision was calculated as follows:

€ thousands

12/31/2010 12/31/2009

Current service cost

Interest expense

Actuarial losses

Payments by employees

Transfer of pension obligation

Exchange rate change

Payments to retirees

7,633

7,089

21,027

21,361

21,406

3,218

349

15,562

8,746

3,109

– 260

– 46

– 24,136

– 28,170

Obligation as of December 31

476,597

431,537

In fiscal year 2011, contributions to fund-financed de-
fined benefit plans are expected to total € 2,371 thou-
sand (PY: € 1,938 thousand).

The fair value of the plan assets showed the following
changes:

Present value of defined benefit
obligations financed by fund

98,662

80,212

Expected income from plan assets

€ thousands

Plan assets as of January 1

Fair value of plan assets

– 87,247

– 72,066

Employee contribution

Present value of defined benefit
obligations financed by provision

Provision

Reimbursement right

Net obligation

377,935

351,324

389,351

359,471

– 29,392

– 29,464

359,959

330,007

Employer contribution

Benefits paid

Actuarial losses

Transfer of plan assets

Exchange rate changes

2010

2009

72,066

76,184

2,920

1,646

2,013

2,433

1,400

1,684

– 5,173

– 9,107

– 753

507

14,021

– 473

– 56

Plan assets as of December 31

87,247

72,066

Consolidated Financial Statements 149

Notes to the Consolidated Financial Statements

The plan assets consisted almost entirely of claims under
insurance contracts. The investment strategy is based on
specific legal requirements, which are in line with our
investment policy. The expected long-term income from
plan assets is derived from the expected income of the
asset classes within the portfolios and is based on a
value-securing investment strategy mainly investing in
obligations of issuers with high credit ratings, and real
estate. The investment portfolio broke down as follows:

Target
portfolio
structure Actual portfolio structure

The expenses for defined benefit pension plans broke
down as follows:

€ thousands

Current service cost

Interest expense

Employee contribution

2010

7,633

2009

7,089

21,027

21,361

– 1,646

– 1,400

Expected income from plan assets

– 2,920

– 2,433

Expected income from reimbursement
rights

Pension expenses

– 1,494

– 1,658

22,600

22,958

12/31/2010 12/31/2009

Actual income from plan assets

Actual income from reimbursement rights

2,167

2,433

1,960

2,244

Service cost and employee contributions are presented
within the personnel expenses. The interest portion con-
tained in the pension expenses and the expected income
from the plan assets are presented as components of
interest expenses and interest income, respectively.

At balance sheet date, actuarial losses before factoring in
tax effects amounting to € 18,841 thousand (PY: gains
of € 2,379 thousand) were accounted for in the accumu-
lated other comprehensive income.

Bonds

71.5 %

74.9 %

73.3 %

3.0 %

1.9 %

2.2 %

Real Estate

19.0 %

17.7 %

18.9 %

Others

Total

6.5 %

5.5 %

5.6 %

100.0 %

In connection with the contribution of the rotogravure
printing operations to PRINOVIS Ltd. & Co. KG, Ham-
burg, it was also agreed in 2005 to transfer the pension
obligations attributable to this division. The Commercial
Register entry, upon which the legal validity of this trans-
fer depends, had not yet been effected at the balance
sheet. By virtue of contractual 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 (cf. note (36)), whereas in the income statement,
the income from the reimbursement is netted with the
corresponding pension expenses. In 2010, the reim-
bursement right amounted to € 29,392 thousand (PY:
€ 29,464 thousand). The changes in the reimbursement
right in the reporting period consisted of compounding
effects of € 1,494 thousand (PY: € 1,658 thousand),
actuarial gains of € 939 thousand (PY: € 586 thousand),
and reimbursement of pension payments of
€ 2,505 thousand (PY: € 2,534 thousand).

150 Annual Report 2010 Axel Springer AG

The amounts of the current and the prior four reporting
periods for the present value of the obligations, the fair
value of plan assets, and the experienced-based adjust-
ments to plan assets and liabilities are summarized in the
table below:

€ thousands

12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006

Present value of defined benefit obligations financed by fund

98,662

80,212

83,586

71,404

Fair value of plan assets

87,247

72,066

76,184

66,106

Present value of defined benefit obligations financed by provision

377,935

351,324

336,122

336,245

362,502

Experience-based adjustments to plan liabilities

– 3,072

– 3,858

2,820

1,848

2,926

Experience-based adjustments to plan assets

– 827

– 480

(14) Other provisions and accrued liabilities

The other provisions and accrued liabilities broke down as follows:

€ thousands

Other obligations towards employees

Partial early retirement program (Altersteilzeit)

Structural measures

Returns

Litigation expenses

Discounts and rebates

Other taxes

Dismantling obligations

Other

Other provisions

Balance as of
01/01/2010

Utilization

Reversals

Additions

Other
changes

Balance as of
12/31/2010

42,744

35,362

52,952

27,620

8,574

5,461

4,144

5,399

38,496

12,559

25,609

25,820

682

5,245

2,539

18,304

10,735

1,549

152

3,446

482

1,722

186

1,778

2,160

51,207

12,144

12,105

24,400

1,279

6,520

4,205

608

9,031

200,560

121,736

11,499

121,499

– 71

1,164

– 70

1,653

790

– 8

1,674

5,235

53,835

35,959

35,932

27,371

8,239

6,542

5,857

4,210

16,114

194,059

Other obligations towards employees primarily included
variable compensation tied to performance and loyalty
bonuses. Provisions for structural measures were mainly
allocated to the segments Newspapers National and
Services/Holding. Provisions for returns comprise the
expected sales returns of publishing products. The mis-
cellaneous other provisions account for anticipated
losses on rental agreements, contributions, and cus-
tody/archiving obligations, among others.

The other changes resulted from the initial consolidation
of acquired companies, currency translation differences
and compound interest.

Non-current provisions are primarily contained in the
provisions for partial early retirement programs (Altersteil-
zeit), dismantling obligations, and structural measures.
Payments are expected to occur predominantly within
the next five years.

Consolidated Financial Statements 151

Notes to the Consolidated Financial Statements

(15) Financial liabilities

(16) Other liabilities

The financial liabilities comprise almost exclusively liabili-
ties due to banks and 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.

2010 €
thousands

2009 €
thousands

Interest rate in %

Maturity

The other liabilities broke down as follows:

€ thousands

12/31/2010 12/31/2009

Contingent consideration liabilities

87,112

43,470

Debitors’ accounts with credit balances

26,385

19,827

Liabilities from derivatives

19,951

21,769

Liabilities due to employees

14,906

14,355

275,000

305,000

3-month EURIBOR + 0.15 08/14/2013

Other

32,522

34,988

15,646

17,043

11,797

13,233

10,387

11,034

5.64 10/31/2012

Other financial liabilities

4.63 07/31/2011

Prepaid subscriptions

5.65 06/30/2012

Liabilities from other taxes

5.09 11/30/2013

Accrued liabilities

5,752

6,231

3-month EURIBOR + 0.30 10/15/2022

Advance payments

18,773

27,183

167,127

126,604

80,609

73,952

29,013

22,414

22,274

21,656

19,239

23,320

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 unused
short-term and long-term credit facilities amounted to
€ 1,245 million (PY: € 1,220 million).

Capital investment subsidies

16,046

17,221

Liabilities for duties and contributions

Liabilities due to social insurance carriers

Other

8,873

4,923

6,107

3,353

33,407

37,078

Other non-financial liabilities

214,384

205,100

Other liabilities

381,511

331,704

The increase in other liabilities primarily derived from the
initial consolidation of acquired companies and the initial
recognition or revaluation of contingent consideration
from business combinations.

Contingent consideration liabilities resulted from put
options in respect of business combinations and acquisi-
tion of non-controlling interests.

Liabilities due to employees related to outstanding wage
and salary payments, management bonuses, and sever-
ance award claims.

Accrued liabilities contain liabilities resulting from overtime and
unused vacation.

152 Annual Report 2010 Axel Springer AG

(17) Maturity analysis of financial liabilities

The contractually agreed (undiscounted) payments related
to financial liabilities are presented in the following table:

€ thousands

Financial liabilities

Liabilities from the purchase of non-controlling interests

Carrying
amount
12/31/2010

356,240

87,112

Undiscounted cash outflows

2011

2012-2015

2016 ff.

33,075

4,307

337,135

3,485

78,531

15,840

Other non-derivative financial liabilities

327,791

319,593

Derivative financial liabilities designated as a hedging instrument

19,951

7,425

7,286

12,395

913

131

€ thousands

Financial liabilities

Liabilities from the purchase of non-controlling interests

Carrying
amount
12/31/2009

390,281

43,470

Other non-derivative financial liabilities

290,715

283,364

Derivative financial liabilities designated as a hedging instrument

21,769

6,660

Undiscounted cash outflows

2010

2011-2014

2015 ff.

16,611

3,585

401,771

3,948

43,580

1,826

14,952

5,525

157

Notes to the consolidated statement of
comprehensive income

(18) Revenues

The revenues broke down as follows:

These revenues were generated mainly from the barter-
ing of advertising services.

€ thousands

Advertising revenues

Circulation revenues

Printing revenues

Other revenues

Revenues

2010

2009

(19) Other operating income

1,384,796

1,138,501

The other operating income broke down as follows:

1,174,254

1,176,239

50,449

42,892

284,397

253,959

2,893,896

2,611,591

€ thousands

Foreign exchange gains

Income from cost allocations to related
parties

Income from Kirch insolvency

Income from disposal of fixed assets

2010

11,651

5,831

650

218

2009

5,829

8,466

7,586

9,086

The revenues from barter transactions amounted to
€ 52,834 thousand in 2010 (PY: € 36,922 thousand).

Miscellaneous operating income

131,766

39,687

Other operating income

150,116

70,654

Consolidated Financial Statements 153

Notes to the Consolidated Financial Statements

For information about the income from the Kirch insol-
vency, please refer to note (10).

(21) Personnel expenses

Miscellaneous other operating income mainly includes the
income on the disposal (excluding related expenses) of
the business unit Solutions of StepStone Group amount-
ing to € 73,711 thousand. In the previous year,
a reversal of a previously recorded impairment on invest-
ment property (€ 5,500 thousand) was included.

The remaining amount in miscellaneous other operating
income included a large number of circumstances with
immaterial amounts.

(20) Purchased goods and services

The purchased goods and services broke down as follows:

The personnel expenses split up as follows:

€ thousands

Wages and salaries

Social security

Expenses for share-based payments

Pension expenses

Other benefit expenses

2010

2009

681,885

691,009

90,702

83,859

9,855

7,519

2,893

4,307

7,609

5,159

Personnel expenses

792,854

791,943

The average number of employees in the Group is
shown below:

€ thousands

Raw materials and supplies and
purchased merchandise

Purchased services

2010

2009

Salaried employees

253,800

282,697

696,764

603,748

Editors

Wage-earning employees

2010

7,244

3,455

864

2009

6,436

3,378

927

Purchased goods and services

950,564

886,445

Total employees

11,563

10,740

Raw materials and supplies and purchased merchandise
comprise paper costs amounting to € 169,153 thousand
(PY: € 196,125 thousand).

The cost of purchased services was predominantly
composed of purchased third-party printing services and
professional fees, as well as publisher services. The
purchased third-party printing services also included
paper costs.

The increase year-on-year resulted from the initial con-
solidation of acquired companies.

(22) Depreciation, amortization, and impairments

The depreciation, amortization, and impairments split up
as follows:

€ thousands

2010

2009

Amortization of other intangible assets

48,857

38,217

Impairment losses in other intangible
assets

Depreciation of property, plant, and
equipment

Impairment losses in property, plant, and
equipment

Depreciation of investment property

Impairment losses in investment property

2,228

1,651

55,124

51,387

400

1,340

5,592

379

716

Depreciation, amortization, and
impairments

113,541

92,350

154 Annual Report 2010 Axel Springer AG

The increase in the amortization of other intangible as-
sets primarily resulted from additional amortization
charges deriving from the initial consolidation of acquired
companies in fiscal year 2010.

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.

Impairment losses in non-current financial assets are
included in the income from investments.

(24) Income from investments

(23) Other operating expenses

The other operating expenses broke down as follows:

€ thousands

Advertising expenses

2010

2009

160,010

151,183

Mailing and postage expenses

157,646

161,743

Expenses for non-company personnel

100,222

92,446

Commissions and gratuities

77,266

75,897

Services provided by related parties

39,336

31,843

Rental and leasing expenses

38,421

34,105

The investment income in the reporting year mainly re-
sulted from an impairment of our investment in PRINO-
VIS (€ 21,352 thousand). In addition, due to the reduc-
tion of our equity interest in Do⁄an TV (€ 16,710 thou-
sand), foreign exchange losses have been reclassified to
net income. These cumulative foreign exchange losses
had been previously recognized in accumulated other
comprehensive income. The losses were partly offset by
profits from the sale of investments in Cora Verlag
(€ 6,426 thousand) and the sale of investments in re-
gional newspapers (€ 6,175 thousand).

Maintenance and repairs

Travel expenses

Foreign exchange losses

Other taxes

Adjustment of allowances for doubtful
receivables

29,968

25,446

19,146

18,540

16,752

6,868

8,255

10,250

The investment income in the prior year resulted mainly
from the profit from the sale of investments in regional
newspapers (€ 210,971 thousand), as well as impair-
ments of the investments in PRINOVIS (€ 16,024 thou-
sand), and ZertifikateJournal (€ 4,474 thousand).

8,114

15,975

(25) Financial result

Miscellaneous operating expenses

118,811

80,811

Other operating expenses

773,947

705,107

The financial result broke down as follows:

The following professional fees for the services rendered
by the auditor Ernst & Young GmbH were recognized:

Interest income from derivatives

Interest income from bank accounts

€ thousands

2010

2009

Audits of the annual financial statements

Other certification or appraisal services

Tax advisory services

Other services

732

110

123

291

786

188

132

692

Total professional fees

1,256

1,798

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

2010

108

1,520

131

2009

526

1,757

155

12,051

10,817

13,810

13,255

– 7,945

– 12,075

Interest income from loans and securities

Other interest income

Interest income

Interest expenses on liabilities
due to banks

Interest expenses on pension provisions,
less reimbursements

– 19,533

– 19,703

Interest expenses from derivatives

– 10,329

– 8,464

Miscellaneous interest expenses

– 9,472

– 7,439

Interest and similar expenses

– 47,279

– 47,681

Other financial result

Financial result

2,298

9,446

– 31,171

– 24,980

Consolidated Financial Statements 155

Notes to the Consolidated Financial Statements

The other financial result contained income of
€ 2,602 thousand (PY: € 9,432 thousand) for the change
in fair value of the H&F options, which resulted particu-
larly from the increased share price.

The income tax expense applying the tax rate of
Axel Springer AG reconciles to the income tax expense
recognized in the income statement as follows:

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

2010

2009

Income before income taxes

377,683

397,739

Tax rate of Axel Springer AG

31.19 %

Expected tax expenses

117,799

124,055

€ thousands

Total interest income

2010

7,051

2009

5,943

Differing tax rates

Permanent differences

Total interest expenses

– 19,876

– 21,235

(26) Income taxes

The income taxes paid or owed and the deferred taxes
are recognized under income taxes. The income taxes
consist of the trade tax, corporate income tax, and soli-
darity surcharge, and the corresponding foreign income
taxes. The income tax expenses are broken down below:

€ thousands

Current taxes

Deferred taxes

Income taxes

2010

2009

142,018

99,700

– 38,391

– 15,860

103,627

83,840

The current tax expense of 2010 includes taxes for prior
years of € 15,466 thousand (PY: € 435 thousand).
These taxes are primarily due to the addition to provi-
sions for ongoing tax audits.

Adjustments to carrying amounts of
deferred taxes

Current income taxes for prior years

Deferred income taxes for prior years

Non-deductible operating expenses

– 7,586

7,253

6,643

– 5,576

– 35,975

15,466

3,356

20,085

8,653

435

4,203

8,490

Tax-exempt income

– 13,427

– 37,273

Trade tax additions/deductions

– 710

– 25,494

Other effects

Income taxes

– 2,024

– 906

103,627

83,840

Companies having the legal form of a corporation resi-
dent in Germany are subject to corporate income tax at
the rate of 15 % and solidarity surcharge of 5.5 % of the
corporate income tax owed. In addition, these compa-
nies are subject to trade tax, for which the amount is
municipality-specific. 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 Axel
Springer AG are explained in the reconciliation in the
item differing tax rates. The permanent differences re-
sulted mainly from impairment losses in goodwill, de-
consolidation effects, and foreign losses that are not
taken into account for tax purposes. The adjustments
made to the carrying amounts of deferred taxes in-
cluded € 2,838 thousand (PY: € 8,262 thousand) for the
non-recognition of deferred taxes on tax loss carry-
forwards. The adjustments made to the carrying
amounts of the current year were mainly attributable to
the use of tax loss carry-forwards that have not been
capitalized (€ – 33,638 thousand). The increase in non-

156 Annual Report 2010 Axel Springer AG

deductible operating expenses resulted primarily from
non-deductible expenses from the disposal of invest-
ments. The tax-free income in 2010 resulted mainly from
dividends as well as the sale of investments, and in 2009
from the sale of investments in regional newspapers. The
tax exemption effects in 2009 mainly resulted from the
sale of investments in partnerships in the context of the
sale of investments in regional newspapers.

Deferred tax assets and liabilities were recognized to
account for temporary differences and tax loss carry-
forwards, as follows:

The net balance of deferred tax items from January 1 to
December 31, 2010, was derived as follows:

€ thousands

2010

2009

Deferred tax assets as of January 1

16,273

13,032

Deferred tax liabilities as of January 1

– 167,886

– 166,257

Net tax position as of January 1

– 151,613

– 153,225

Deferred tax expenses of current year

38,391

15,860

Changes in deferred taxes recognized in
other comprehensive income

7,422

6,706

Changes in consolidation group

– 27,845

– 20,954

Net tax position as of December 31

– 133,645

– 151,613

12/31/2010

12/31/2009

Deferred tax assets as of December 31

30,631

16,273

€ thousands

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

Intangible assets

20,659

91,350

13,742

84,409

Property, plant, and
equipment

Non-current financial
assets

Inventories

Receivables and other
assets

156 123,649

105 124,913

1,820

1,209

555

862

3,336

1,278

2,217

7,776

1,009

6,359

Pension provisions

29,153

21,414

Other provisions

6,163

852

6,901

Liabilities

11,453

1,073

9,248

623

569

Temporary differences

72,830 225,319

54,559 220,209

Tax loss carry-forwards

18,844

14,037

Total

Offsetting

Amounts as per
balance sheet

91,674 225,319

68,596 220,209

– 61,043 – 61,043 – 52,323 – 52,323

30,631 164,276

16,273 167,886

Deferred tax liabilities as of December 31

– 164,276

– 167,886

Of the deferred tax assets, an amount of € 13,486 thou-
sand (PY: € 4,602 thousand), of the deferred tax liabili-
ties, an amount of € 7,408 thousand (PY: € 2,767 thou-
sand) can be realized in the short term.

The amount of deferred tax assets to be disclosed in
accordance with IAS 12.82 was € 17,706 thousand (PY:
€ 14,771 thousand). It is expected that this amount can
be realized by application against the available operating
income and structural measures in subsequent years.

Deferred taxes in the total amount of € 13,855 thousand
(PY: € 6,433 thousand) were recognized directly in eq-
uity, as they relate to matters that were likewise recog-
nized directly in equity.

Consolidated Financial Statements 157

Notes to the Consolidated Financial Statements

on differences of € 16,450 thousand (PY: € 10,206 thousand)
because a realization is not planned at the present time.
In the case of sale or profit distribution, the gain on dis-
posal or the dividend, respectively, would be subject to
taxation at 5 % in Germany; in addition, foreign withhold-
ing taxes might be incurred.

(27) Earnings per share

The earnings per share were determined as follows:

Net income attributable to
shareholders of Axel
Springer AG

Weighted average shares
outstanding

Dilution effect due to
stock options granted

2010

2009

€ thou-
sands

252,678

303,481

000s

30,799

29,748

000s

Weighted average shares diluted

000s

30,854

29,781

Net income attributable to
shareholders of Axel
Springer AG per share

basic

diluted

€

8.20

8.19

10.20

10.19

In fiscal year 2010, no deferred tax assets were recog-
nized with respect to corporate income tax loss carry-
forwards amounting to € 210,027 thousand (PY:
€ 389,295 thousand), and with respect to trade tax loss
carry-forwards amounting to € 21,214 thousand (PY:
€ 39,875 thousand) because it did not appear probable
that sufficient taxable income could be generated for
these amounts in the near future. Of these tax loss carry-
forwards, an amount of € 23,043 thousand (PY:
€ 64,266 thousand) can be carried forward for up to five
years and an amount of € 10,413 thousand (PY:
€ 9,718 thousand) can be carried forward for six to ten
years. The utilization of tax loss carry-forwards that had
not previously been recognized as deferred tax assets
caused a reduction in income tax expenses of
€ 33,503 thousand (PY: € 95 thousand). In the past
fiscal year, there was no correction of capitalized tax loss
carry-forwards due to tax audits or differing tax assess-
ments (PY: € 280 thousand).

As a rule, deferred taxes must be recognized to account
for the difference between the Group’s interest in the
equity of the subsidiaries as presented in the consoli-
dated balance sheet and the corresponding investment
balance recognized in the financial statements for tax
purposes. Such differences can result from the retention
of earnings. Deferred tax liabilities were not recognized

(28) Other income/loss

The other income/loss broke down as follows:

€ thousands

Before tax

Tax effect

Net Before tax

Tax effect

Net

Actuarial gains/losses from defined benefit pension obligations

– 21,219

6,413

– 14,806

– 8,624

2,524

– 6,100

2010

2009

Currency translation differences

Changes in fair value of available-for-sale financial assets

Changes in fair value of derivatives in cash flow hedges

Changes in revaluation surplus

36,877

2,528

1,507

– 256

36,877

1,655

2,528

1,251

1,655

– 6,524

2,021

– 4,503

– 3,086

Other income/loss from investments accounted for using the
equity method

10,234

1,264

11,498

– 6,739

2,161

– 4,578

Other income/loss

29,927

7,421

37,348

– 23,312

6,706

– 16,606

158 Annual Report 2010 Axel Springer AG

Notes to the consolidated statement of
cash flows

Notes to the consolidated segment report

(30) Basic principles of segment reporting

(29) Other disclosures

The cash and cash equivalents were composed of short-
term available cash in banks, cash on hand, and checks.

Capital expenditures of € 6,803 thousand (PY:
€ 1,737 thousand) had not yet been realized as cash
payments. This related to additions in both intangible
assets and property, plant, and equipment.

The prior-year figures for disbursements from acquisi-
tions of € 62,146 thousand and inflows from divestitures
of € 501 thousand of non-controlling interests were
reclassified from cash flow from investing activities to
cash flow from financing activities due to the changes in
IAS 27.

For clarification purposes, effects from the deconsolida-
tion of consolidated subsidiaries and business units are
no longer reported as other income and expenses not
yet realized as cash payments. These effects are now
reported within results from disposal of non-current
assets. Prior year disclosure was adjusted by € 1,208
thousand, accordingly.

In the context of the merger of our eastern European
business activities with Ringier AG, we brought in assets
and liabilities at carrying amounts of € 61,197 thousand.

The segment reporting reflects the internal management
and reporting structures.

The reporting format is structured according to the oper-
ating business areas of the Axel Springer Group and
comprises the reporting segments Newspapers National,
Magazines National, Print International, Digital Media,
and Services/Holding.

Segment assets, liabilities, and investments were not
disclosed on the basis of operating segments as these
measures are not used for decision making at segment
level.

(a) Operating segments
The Newspapers National segment includes daily news-
papers and Sunday newspapers, national and regional
subscription newspapers, and advertising supplements.
This segment also included investments in German
newspaper publishing companies.

The Magazines National segment includes TV program
guides, women’s magazines, computer, car, sports, and
music magazines, as well as investments in magazine
publishing 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
segment comprises online activities derived from print
brands and the activities of Idealo, Immonet, auFeminin,
StepStone and the ZANOX Group. Furthermore, this
segment also comprises the investment in the TV broad-
cast company Do⁄an TV.

Consolidated Financial Statements 159

Notes to the Consolidated Financial Statements

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.
Our three offset printing plants, investments in two offset
printing plants outside Germany, and the rotogravure
printing company PRINOVIS are likewise included in the
Services/Holding segment.

(b) Geographical Information
The activities of the Axel Springer Group are conducted
mainly in Germany and in other European countries.

For purposes of geographical segment reporting, the
revenues are segmented according to the location of the
customer’s registered office and the non-current assets
according to the location of the legal entity.

(31) Segment information

The segment information was compiled on the basis of
the recognition and measurement methods applied in
the consolidated financial statements. The external reve-
nues comprise circulation revenues from the sale of
publishing products, advertising revenues, and revenues
from rendering services. 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.

We use the performance figure EBITDA (earnings before
interest, taxes, depreciation and amortization) to mea-
sure segment earnings. In calculating this performance
figure, non-recurring effects and purchase price alloca-
tion effects are eliminated.

Non-recurring effects include effects from the acquisition
and disposal 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.

Disposals of investments and business were disclosed
as non-recurring effects in the Digital Media segment
at € 50,246 thousand (PY: € 0 thousand), the News-
papers National segment at € 6,165 thousand (PY:
€ 214,357 thousand), and the Magazines National
segment at € 1,588 thousand (PY: € – 6,318 thousand).
Impairment of non-current financial assets occurred in the
Services/Holding segment at € – 21,352 thousand (PY:
€ – 17,353 thousand) and in the Digital Media segment at
€ 0 thousand (PY: € – 4,474 thousand). In addition,
exchange losses in the amount of € – 18,385 thousand
(PY: € 0 thousand) were recorded as a non-recurring
effect in the Digital Media segment, specifically in con-
nection with the reduction in our interest in Do⁄an TV.
The other non-recurring effects in the segments related
to expenses in connection with company acquisitions
occurring or planned in the reporting year at
€ – 4,368 thousand (PY: € – 5,812 thousand).

The effects of purchase price allocations mainly consisted
of amortization and depreciation on intangible assets and
on property, plant, and equipment that were acquired in
the context of business combinations.

Other disclosures

(32) 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 we used
for management purposes are primarily earnings-driven.
The goals, methods, and processes of our capital man-
agement 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. As of December 31, 2010, the treas-
ury shares represented 0.6 % (PY: 9.6 %) of the com-
pany’s share capital.

160 Annual Report 2010 Axel Springer AG

(33) Financial assets and liabilities

(a) Presentation by categories
The balance sheet items comprising financial assets and liabilities can be attributed to the measurement categories
according to IAS 39 as follows:

€ thousands

Assets 12/31/2010

Other non-current investments and securities

Loans and advances

Other non-current financial assets

Trade receivables

Receivables due from related parties

Derivatives not designated as a hedging instrument

Other

Other assets

Cash and cash equivalents

Liabilities 12/31/2010

Financial liabilities

Trade payables

Liabilities due to related parties

Derivatives designated as a hedging instrument

Other

Other liabilities

Assets 12/31/2009

Other non-current investments and securities

Loans and advances

Other non-current financial assets

Trade receivables

Receivables due from related parties

Derivatives not designated as a hedging instrument

Other

Other assets

Cash and cash equivalents

Liabilities 12/31/2009

Financial liabilities

Trade payables

Liabilities due to related parties

Derivatives designated as a hedging instrument

Other

Other liabilities

Financial
liabilities
measured
at
amortized
cost

Available-
for-sale
financial
assets

Financial
assets and
liabilities
held for
trading

No
category
according
to IAS 39

Carrying
amount

Loans and
receivables

474,061

2,070

385,900

19,433

202,269

435,888

474,061

2,070

476,131

385,900

48,825

2,362

224,847

227,209

435,888

356,240

245,298

33,432

19,951

361,560

381,511

356,240

245,298

22,432

147,082

30,287

4,366

34,653

4,366

301,947

30,287

14,523

189,538

197,259

43,987

11,169

211,444

222,613

197,259

390,281

206,338

26,348

21,769

309,935

331,704

390,281

206,338

22,213

104,578

2,362

29,392

22,578

2,362

22,578

11,000

19,951

214,384

234,335

11,169

29,464

21,906

4,135

21,769

205,100

226,869

257

Consolidated Financial Statements 161

Notes to the Consolidated Financial Statements

(b) Other disclosures for financial assets and

liabilities

For financial assets and liabilities measured at fair value,
measurement was based on observable market prices or
generally accepted valuation methods using observable
market data, respectively. As of December 31, 2010, our
investment in SeLoger.com was measured at fair value
on the basis of the stock market price (see note (7)) and
our derivatives were measured on the basis of generally
accepted valuation methods using observable market
data (see note (35)).

With the exception of the financial liabilities presented in
the table below, the carrying amounts of the non-
derivative financial assets and liabilities were identical to
their fair values.

Relating to available-for-sale financial assets, positive fair
value changes of € 2,524 thousand (PY: € 4 thousand)
were recognized directly in equity. Profits of € 0 thousand
(PY: € 0 thousand) were transferred from equity to income.

(34) Financial risk management

With respect to its financial assets and liabilities, the Axel
Springer Group is exposed to financial market risks,
liquidity risks, and credit risks. The task of financial risk
management is to limit these risks by means of targeted
measures.

(a) Financial market risks
Financial market risks for financial assets and liabilities
mainly consist of interest rate risks and exchange rate risks.

€ thousands

Liabilities due to
banks

12/31/2010

12/31/2009

Carrying
amount Fair value

355,477

358,488

390,281

394,839

With regard to selected financial instruments, compliance
with prescribed loss limits is monitored on a daily basis.
In principle, the effects of these risks on the value can be
assessed promptly and, where applicable, the loss risks
can be reduced.

The net gains and losses of financial instruments (exclud-
ing interests and dividends) recognized in the income
statement are presented in the following table.

€ thousands

2010

2009

Loans and receivables, financial liabilities

– 10,149

– 16,657

Available-for-sale financial assets

6,045

12,784

Financial assets and liabilities
held for trading

2,172

1,432

The net gains and losses in the categories of “loans and
receivables” and “financial liabilities” consisted mainly of
valuation allowances and the result from the currency
translation of these financial assets and liabilities. The net
gains or losses of available-for-sale financial assets con-
sisted mainly of the gains and losses on the disposal of
these financial assets. The net gains and losses in the
category of “financial assets and liabilities held for trad-
ing” mostly resulted from valuation changes and other
expenses for financial derivatives assigned to this cate-
gory.

Selected derivative hedging instruments are used to
hedge risks. The use of financial derivatives is governed
by appropriate guidelines of the Group. These guidelines
define the relevant responsibilities, permissible actions,
and reporting requirements, and prescribe the strict
separation of trading and back-office functions.

To hedge the interest rate risk, we employ interest rate
derivatives such as interest rate swaps, collars, forward
rate agreements, and interest futures. The degree of
hedging specified in the Axel Springer finance regulations
ranges between 30 % and 100 % of the underlying
transaction volume. In the annual average, 92 % (PY:
91 %) of the liabilities to banks have been hedged. At the
balance sheet date, an amount of € 0 (PY: € 0) of the
variable-interest liabilities due to banks was not hedged.

The effects of market interest rate changes on variable-
interest financial instruments not hedged with financial
derivatives are calculated using a sensitivity analysis.
Due to nearly complete hedging of variable-interest
liabilities due to banks, an assumed change in the yield
curve of 50 basis points would have, as in the previous
year, nearly no material effect on the financial result.

162 Annual Report 2010 Axel Springer AG

Further effects of market interest rate changes in financial
derivatives designated as hedging instruments in the
context of cash flow hedges are likewise determined
using a sensitivity analysis. At the reporting date, assum-
ing a parallel shift in the yield curve of 50 basis points,
the change in the market value of financial derivatives
designated as hedging instruments would amount to
€ 3.2 million (PY: € 4.5 million). These effects would have
to be recorded in accumulated other comprehensive income.

Significant risk items are contained in trade receivables,
receivables due from related parties, other assets, and
funds.

To reduce the credit risk on trade receivables and re-
ceivables due from related parties, we conduct active
management of receivables, credit limits, and credit
checks of our business partners. Appropriate allowances
are formed to account for discernible default risks.

Risks of changes in value due to exchange rate fluctuations in
future foreign currency payments are mainly avoided in that
operating costs are incurred in the countries in which we sell
our products and services. Remaining currency risks from
operations are insignificant to the Group since the majority of
EBITDA is earned in the euro currency zone. In the reporting
period, the share of EBITDA not earned in Euros was 11 % (PY:
4 %). Currency risks from foreign currency claims and liabili-
ties (without contingent compensation) with net exposures
starting at € 5 million per foreign currency are hedged by
means of coordinated forward exchange transactions.

The effects recorded in accumulated other comprehensive
income arising from the currency translation of statements
prepared by subsidiaries in foreign currencies do not
necessarily have an effect on future cash flows. Therefore,
Axel Springer does not hedge such currency effects.

(b) Liquidity Risk
We continually monitor the availability of financial re-
sources to fund the company’s operating activities and
investments by means of a Group-wide liquidity planning
system and monthly cash flow analyses. The liquidity and
financial flexibility of the Axel Springer Group is secured
by firmly promised credit lines in the amount of € 1.5
billion. Note (17) contains an analysis of the due dates of
our financial obligations. The payment obligations for
financial obligations that have been contractually agreed
but not yet recorded are presented in note (39).

(c) Credit risk
Financial assets may be impaired if business partners do
not adhere to payment obligations. The maximum exposure
to risk from financial assets, which are fundamentally
subject to credit risk, correspond to their carrying amounts.

A deferred purchase price of € 150,000 thousand car-
ried in other assets, and related interest claims in con-
nection with the sale of investments in regional newspa-
pers are hedged by a contractual lien on the shares sold.

Investments in securities are made only in instruments
with first-class ratings according to our finance regula-
tions. Investment in time deposits occurs exclusively at
financial institutions that belong to the deposit protection
fund and are classified by leading rating agencies as
being at least of Investment Grade Status (BBB, Baa).

(35) Financial derivatives

(a) Financial derivatives designated as hedging

instruments

In 2010, designated hedging instruments were used in
particular to hedge against the interest rate risks of long-
term liabilities. The cash flows were hedged through
interest rate derivatives (interest rate swaps and collars).
The maturities and nominal amounts of the interest rate
derivatives were chosen to match the corresponding
tranches of the variable-interest loans (hedged items).
The interest rate derivatives were measured at fair value.
The changes in the fair value are recognized in accumu-
lated other comprehensive income until the hedged item
is realized. As of December 31, 2010, loans in the nomi-
nal amount of € 280,752 thousand (PY:
€ 311,231 thousand) were hedged. The fair value meas-
urement of the interest rate derivatives at the balance
sheet date yielded positive fair values of € 0 thousand
(PY: € 0 thousand) and negative fair values of
€ 19,951 thousand (PY: € 21,769 thousand). Fair value
changes in the net amount of € 14,231 thousand (PY:
€ 15,475 thousand) after taxes were recognized in ac-
cumulated other comprehensive income.

Consolidated Financial Statements 163

Notes to the Consolidated Financial Statements

(b) Financial derivatives not designated as

hedging instruments

As of December 31, 2010, currency swaps regarding
loans of foreign subsidiaries had a nominal amount of
€ 31,332 thousand (PY: € 19,220 thousand). Fair value
amounted to € 2,362 thousand (PY: € 334 thousand).

(36) Relationships with related parties

Related parties are defined as those persons and com-
panies that control or can exert a significant influence
over the Axel Springer Group, or that are controlled or
subject to significant influence by the Axel Springer
Group. In particular, the members of the Springer family,
the companies controlled or subject to significant influ-
ence by this family, the active members of the Manage-
ment Board and Supervisory Board of Axel Springer AG,
and the subsidiaries and associated companies of the
Axel Springer Group have been defined as related parties.

Besides the business relationships with the consolidated
subsidiaries, the following business relationships existed
with related parties:

€ thousands

Balance sheet

Loans

Receivables

Thereof trade

Allowances

Provisions

Liabilities

Thereof trade

Income statement

Goods and services supplied

Goods and services received

Financial result

Total

Associated
companies

Other related
parties

Total

Associated
companies

Other related
parties

12/31/2010

12/31/2009

585

48,825

18,246

24,973

6,618

33,432

19,322

2010

72,966

130,489

556

578

43,872

14,045

2,719

9,624

6,908

66,549

83,304

113

4,953

4,201

22,254

6,618

23,808

12,414

6,417

47,185

443

2,483

43,987

13,049

20,284

5,435

26,348

19,191

2009

74,804

141,635

690

446

35,249

4,738

2,694

9,051

4,469

66,423

75,717

353

2,037

8,738

8,311

17,590

5,435

17,297

14,722

8,381

65,918

337

164 Annual Report 2010 Axel Springer AG

The changes in the allowances of receivables due to
related parties are presented in the table below:

in addition to the compensation mentioned above. The
pension provisions were increased by an amount of
€ 1,183 thousand (PY: € 736 thousand).

€ thousands

Balance as of January 1

Utilization

Reversals

Additions

Other changes

2010

2009

20,284

19,259

– 51

– 66

4,806

– 6

474

557

Balance as of December 31

24,973

20,284

As of December 31, 2010, receivables in the amount of
€ 43,365 thousand (PY: € 42,841 thousand) were nei-
ther past due nor subject to valuation allowances. With
regard to these receivables, there were no indications
that would suggest that related parties would not fulfill
their payment obligations.

Moreover, a receivable of € 29,392 thousand (PY:
€ 29,464 thousand) was owed by an associated com-
pany in connection with the right to reimbursement of
pension obligations (cf. note (13)).

The compensation of the members of the Supervisory
Board amounted to € 2,765 thousand (PY:
€ 2,425 thousand). This figure included variable com-
pensation of € 765 thousand (PY: € 425 thousand). A
Supervisory Board member received a compensation of
€ 125 thousand (PY: € 125 thousand) for his services as
an author.

The compensation of the members of the Management
and Supervisory Board is described in detail in the com-
pensation report, which is part of the notes to the con-
solidated financial statements. The compensation report
is included in the section “Declaration on Corporate
Governance pursuant to Section 289a HGB and Corpo-
rate Governance Report”.

An amount of € 2,186 thousand (PY: € 3,856 thousand)
was paid to former Management Board members and
special directors and their survivors. A total amount of
€ 26,943 thousand (PY: € 26,082 thousand) was allo-
cated to the provisions for pension obligations.

The provisions refer to pension obligations owed to
members of the Management Board.

(37) Contingent liabilities

Goods and services provided to related companies were
mostly related to the distribution of newspapers and
magazines. The services received from related compa-
nies mainly comprised purchased publishing products
and printing services. A master agreement for the print-
ing of magazines is in effect with PRINOVIS until Decem-
ber 31, 2019. Under this agreement, services in the
amount of € 59 million (PY: € 63 million) were rendered
for companies of the Axel Springer Group in 2010.

In 2010, the fixed compensation of the members of the
Management Board of Axel Springer AG amounted to
€ 8,687 thousand (PY: € 8,887 thousand). The variable
compensation amounted to € 9,202 thousand (PY:
€ 8,800 thousand). The share-based compensation
granted to the Management Board of Axel Springer AG
(cf. note (12f)) gave rise to an imputed compensation
component of € 9,540 thousand (PY: € 1,460 thousand),

As of December 31, 2010, contingent liabilities from
guarantees existed in the amount of € 17,213 thousand
(PY: € 33,268 thousand). In addition, obligations from
contingent considerations existed in the amount of
€ 7,555 thousand (PY: € 2,415 thousand), but we con-
sider their occurrence unlikely.

On September 28, 2010, we issued a public offer for all
outstanding shares of SeLoger.com at an offer price of
€ 34.00 per share. In case of an increase in our invest-
ment from the current 12.4 % to 100 %, additional dis-
bursements of € 496,005 would be incurred in fiscal
2011. At the beginning of 2011, we increased our public
offer for all outstanding shares of SeLoger.com to an
offer price of € 38.05 per share - subject to the condition
of a minimum acceptance rate of 50.01 % of the shares
in SeLoger.com (including the 12.4 % we already hold). If
this acceptance rate is not achieved, the offer will lapse.

Consolidated Financial Statements 165

Notes to the Consolidated Financial Statements

If an investment of 100 % of the share capital of SeLo-
ger.com were achieved, the disbursements in 2011
would amount to € 563,423 thousand.

(38) Contingent assets

Contingent receivables were due from KirchMedia GmbH
& Co KGaA i.L. in the amount of € 273.0 million (PY:
€ 273.7 million (cf. note (10)). In addition, claims to future
tax concessions existed in relation to capital investment
grants of € 9.9 million.

(39) Other financial commitments

The other financial commitments broke down as follows:

€ thousands

12/31/2010 12/31/2009

Purchase commitments for

- intangible assets

- property, plant, and equipment

- inventories

14,332

5,010

11,468

8,359

7,565

9,921

Future payments under operating leases

88,776

71,051

Long-term purchase obligations

383,400

285,226

Other financial obligations

502,986

382,122

(40) Events after the balance sheet date

In September 2010, Axel Springer purchased a 12.4 %
equity interest in SeLoger.com, the leading real estate
portal in France, for a price of € 34.00 per share (corre-
sponding to a total amount of approximately € 70 million),
and then made a voluntary public offer to the remaining
shareholders to purchase all the outstanding shares for
the same price. The offer price valued the entire share
capital of SeLoger.com at € 566.4 million. However, this
offer was not supported by the company’s Supervisory
Board and SeLoger.com took various defensive mea-
sures. In order to increase the offer’s chances of suc-
cess, Axel Springer raised the offer price to € 38.05 per
share in January 2011. In that connection, the offer was
made subject to the condition of a minimum acceptance
ratio. Thus, the transaction will be effected only if Axel
Springer holds at least 50.01 % of the company’s share
capital upon completion of the process. The adjusted
offer, which values the company at € 633.4 million, now
enjoys the unconditional support of SeLoger.com. The
French securities market regulatory authority is expected
to announce the achieved acceptance ratio in early
March 2011. If the transaction is effected, the purchase
price of up to € 563.4 million will be financed with the
company’s own funds and by making use of available
credit lines.

The long-term purchase obligations resulted from paper
supply contracts.

Otherwise, there were no further significant events after
the balance sheet date.

The total future obligations under minimum lease pay-
ments as of December 31, 2010 are broken down in the
following table:

(41) Declaration of Conformity with the German

Corporate Governance Code

€ thousands

Due in up to one year

Due in one to five years

Due in more than five years

Total

2010

2009

30,264

51,525

6,987

24,131

44,031

2,889

88,776

71,051

Axel Springer AG published the Declaration of Confor-
mity with the German Corporate Governance Code
issued by the Management Board and Supervisory
Board in accordance with Section 161 of the German
Stock Corporations Act (AktG) on the company’s Web
site www.axelspringer.de → Investor Relations → Cor-
porate Governance, where it is permanently available to
shareholders. The Declaration of Conformity is also
printed in the Corporate Governance section of this
annual report.

166 Annual Report 2010 Axel Springer AG

(42) Companies included in the consolidated
financial statements and share property

No. Company

Axel Springer Aktiengesellschaft, Berlin (Parent company)

Share-
holding
in %

via
No.
-

No. Company

58 auFeminin.com Productions SARL, Paris/France

59 auFeminin.com S.A., Paris/France

60 Axel Springer - Budapest Kiadói Kft, Budapest/Hungary

61 Axel Springer - Magyarország Kft, Tatabánya/Hungary

Share-
holding
in %

via
No.

100.0

82.4

92.9

93.5

62 Axel Springer Editions SAS, Levallois-Perret/France

100.0

Fully consolidated companies

Germany

AS Online Beteiligungs GmbH, Berlin

AS Osteuropa GmbH, Berlin

AS TV-Produktions- und Vertriebsgesellschaft mbH, Hamburg

ASV Direktmarketing GmbH, Hamburg

Axel Springer Asia GmbH, Hamburg

Axel Springer Auto-Verlag GmbH, Hamburg

Axel Springer Digital TV Guide GmbH, Berlin

Axel Springer Financial Media GmbH, Munich

10 Axel Springer Media Logistik GmbH, Berlin

11 Axel Springer Mediahouse Berlin GmbH, Berlin

12 Axel Springer Mediasales & Service GmbH, Berlin

13 Axel Springer Medien Accounting Service GmbH, Berlin

14 Axel Springer Russland Holding GmbH, Berlin

15 Axel Springer Services & Immobilien GmbH, Berlin

100.0

16 Axel Springer TV NEWS GmbH, Hamburg

100.0

17 Axel Springer TV Productions GmbH, Hamburg

18 Axel Springer Venture GmbH, Berlin

100.0

'Axel Springer Verlag' Beteiligungsgesellschaft mbH, Berlin

100.0

20 Axel Springer Verlag Vertriebsgesellschaft mbH, Hamburg

100.0

21 B.Z. Ullstein GmbH, Berlin

Bergedorfer Buchdruckerei von Ed. Wagner (GmbH & Co.),
Hamburg

23 BERLINER WOCHENBLATT Verlag GmbH, Berlin

24 BILD digital GmbH & Co. KG, Berlin

Buch- und Presse-Großvertrieb Hamburg GmbH & Co. KG,
Hamburg

26 Commerz-Film GmbH, Berlin

27 comparado GmbH, Lüneburg

100.0

69.8

100.0

28 Computerbild Online Dienstleistungs-GmbH, Hamburg

100.0

29 eprofessional GmbH, Hamburg

finanzen.net GmbH, Karlsruhe

31 gamigo AG, Hamburg

32 Gofeminin.de GmbH, Cologne

33 hamburg.de GmbH & Co. KG, Hamburg

Idealo Internet GmbH, Berlin

Immonet GmbH, Hamburg

ims Internationaler Medien Service GmbH & Co. KG, Hamburg

37 Niendorfer Wochenblatt Verlag GmbH & Co. KG, Hamburg

38 Panther Holding GmbH, Berlin

"Sächsischer Bote" Wochenblatt Verlag GmbH, Dresden

40 Schwartzkopff TV-Productions GmbH & Co. KG, Hamburg

41 Smarthouse Media GmbH, Karlsruhe

42 Sohomint GmbH, Hamburg

43 StepStone Deutschland GmbH, Düsseldorf

44 StepStone GmbH, Berlin

45 Transfermarkt GmbH & Co. KG, Hamburg

46 Ullstein Gesellschaft mit beschränkter Haftung, Berlin

47 Umzugsauktion GmbH & Co. KG, Schallstadt

100.0

55.0

100.0

51.0

74.9

100.0

55.0

100.0

91.0

72.6

100.0

51.0

100.0

51.0

48 VVDG Verlags- und Industrieversicherungsdienste GmbH, Berlin

100.0

49 WBV Direktzustell-GmbH, Hamburg

50 WBV Wochenblatt Verlag GmbH, Hamburg

51 ZANOX.de AG, Berlin

ZZ-Kurier Gesellschaft für Zeitungs- und Zeitschriftenvertrieb mbH,
Hamburg

Other countries

53 24 sata d.o.o., Belgrade/Serbia

54 Amiado Group AG, Zurich/Switzerland

55 Anima Publishers, s.r.o., Zlin/Czech Republic

56 APM Print d.o.o., Belgrade/Serbia

57 AS-NYOMDA Kft, Kecskemét/Hungary

100.0

52.5

100.0

74.9
25.1

106
87

100.0

63 Axel Springer España S.A., Madrid/Spain

64 Axel Springer France S.A.S., Levallois-Perret/France

65 Axel Springer Praha a.s., Prague/Czech Republic

66 Axel Springer RUS, Moscow/Russia

"Axel Springer Russia" Geschlossene AG, Moscow/Russia

68 Axel Springer Schweiz AG, Zurich/Switzerland

69 Azet.sk a.s., Zilina/Slovakia

70 Blic Magazin d.o.o., Belgrade/Serbia

71 Digital Window Limited, London/Great Britain

72 GPAK Limited, London/Great Britain

IP Alo Novine d.o.o., Belgrade/Serbia

IT-Jobbank A/S, Kopenhagen/Denmark

75 Les Publications Grand Public S.A.S., Levallois-Perret/France

76 Lightstate Limited, London/Great Britain

77 Marmiton SAS, Paris/France

78 Népújság Kft, Békéscsaba/Hungary

79 NIN d.o.o., Belgrade/Serbia

80 OY StepStone AB, Helsinki/Finland

81 PartyGuide.ch AG, Zurich/Switzerland

82 Perfiliate HoldCo Limited, London/Great Britain

83 Perfiliate Limited, London/Great Britain

84 Perfiliate Technologies Limited, London/Great Britain

85 Petöfi Lap- és Könyvkiadó Kft, Kecskemét/Hungary

86 Ringier Axel Springer CZ a.s., Prague/Czech Republic

87 Ringier Axel Springer d.o.o., Belgrade/Serbia

88 Ringier Axel Springer Media AG, Zurich/Switzerland

89 Ringier Axel Springer Polska Sp. z o.o., Warsaw/Poland

90 Ringier Axel Springer Print CZ a.s., Prague/Czech Republic

91 Ringier Axel Springer Slovakia a.s., Bratislava/Slovakia

92 SmartAdServer SAS, Paris/France

soFeminine.co.uk Limited, London/Great Britain

94 StepStone (UK) Ltd., Guildford/Great Britain

95 StepStone A/S, Kopenhagen/Denmark

96 StepStone AB, Stockholm/Sweden

97 StepStone AS, Oslo/Norway

98 StepStone B.V., Leiden/Netherlands

99 StepStone France SAS, Paris/France

100 StepStone Ltd., Cork/Ireland

101 StepStone NV, Brussels/Belgium

102 StepStone Österreich GmbH, Vienna/Austria

103 StepStone Schweiz GmbH, Solothurn/Switzerland

104 StepStone Services Sp. z o.o., Warsaw/Poland

105 Students.ch AG, Zurich/Switzerland

106 Trans Press d.o.o., Belgrade/Serbia

107 usgang.ch AG, Zurich/Switzerland

108 Viviana Investments Sp. z o.o., Warsaw/Poland

109 zanox B.V., Amsterdam/Netherlands

110 ZANOX Hispania SL, Madrid/Spain

111 zanox Inc., Chicago/USA

112 zanox ltd., London/Great Britain

113 zanox SAS, Paris/France

114 zanox SRL, Milan/Italy

115 zanox we create partners AB, Stockholm/Sweden

116

ZÖLD ÚJSÁG Tömegkommunikációs és Kiadói Zrt,
Budapest/Hungary
Other subsidiaries 1)

Germany

100.0

70.0

100.0

50.1

100.0

94.0

99.7

100.0

94.0

100.0

50.0

100.0

117 Achtunddreißigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0

118 Achtundfünfzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0

119 Alster Wochenblatt Verlag GmbH, Hamburg

120 AS Buchversand GmbH, Munich

121 Axel Springer Digital TV GmbH, Berlin

122 Axel Springer Security GmbH, Berlin

123 B.Z. Media GmbH, Berlin

124 BILD digital Verwaltungs GmbH, Berlin

100.0

125 Dreiundfünfzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0

126 Dreizehnte "Media" Vermögensverwaltungsges. mbH, Hamburg

127 Druck- und Verlagshaus Bergedorf GmbH, Hamburg

128 Finanzen Corporate Publishing GmbH, Berlin

100.0

129 Fünfundfünfzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0

130 GMZ Druckerei-Verwaltungs-GmbH i.L., Berlin

74.9

131 hamburg.de Beteiligungs GmbH, Hamburg

132

Hammerich & Lesser Zeitschriften- und Buchverlag GmbH,
Hamburg

133 Hauptstadtsee 809. VV GmbH, Berlin

100.0

No. Company

134 ims Verwaltungs GmbH, Hamburg

135 Informationsmedien Handels GmbH, Hamburg

Share-
holding
in %

55.0

100.0

via
No.

No. Company

202 Intermedia Standard Presse-Code GmbH, Hamburg

203 ISPC Intermedia Standard Presse-Code GmbH & Co., Hamburg

136 Jobanova GmbH, Munich

100.0

204 Jahr Top Special Verwaltungs GmbH, Hamburg

Share-
holding
in %

via
No.

205 KG Hamburg 1 Fernsehen Beteiligungs GmbH & Co., Hamburg

Consolidated Financial Statements 167

Notes to the Consolidated Financial Statements

32.0

50.0

27.0

24.9

50.0

206 Kurt Viebranz Verlag (GmbH & Co.), Schwarzenbek

207 Lager- und Versand-Service Melosch GmbH & Co. KG, Hamburg

208 "Lühmanndruck" Harburger Zeitungsges. mbH & Co. KG, Hamburg

24.8

209 Melosch GmbH, Hamburg

210 Motor-Talk GmbH, Munich

211 MSV Medien Special Vertrieb GmbH & Co. KG, Hamburg

212 Myby Beteiligungsgesellschaft mbH i.L., Düsseldorf

213 Myby GmbH & Co. KG i.L., Düsseldorf

214 Qivive GmbH i.L., Bad Homburg

215 Radio Hamburg GmbH & Co. KG, Hamburg

50.0

20.0

50.0

25.1

33.3

35.0

216

TVB Transportvermittlungs- und Vertriebsges. in Bergedorf mbH,
Hamburg

217

V.V. Vertriebsvereinigung Berliner Zeitungs- und Zeitschriften-
grossisten GmbH & Co. KG, Berlin

20.0

48.5

218 Verlag Hans-Jürgen Böckel GmbH, Glinde

219 Verlagsgesellschaft Hanse mbH & Co., Hamburg

220 Verwaltungsgesellschaft elbe WOCHENBLATT mbH, Hamburg

221 Verwaltungsges. MSV Medien Special Vertrieb m.b.H., Hamburg

222 Viebranz Beteiligungsgesellschaft mbH, Schwarzenbek

223 Volksdorfer Verlagsgesellschaft mbH, Hamburg

224 Wochenblatt Verlag Schrader GmbH & Co. KG, Buchholz

225 Wochenblatt Verlag Verwaltungsges. mbH, Buchholz

226 WVV Werbevertrieb-Verwaltungs- und Beteiligungs-GmbH, Berlin

227 Zanox 1 AG, Berlin

228 Zeitungs- und Zeitschriften Vertrieb Berlin GmbH, Berlin

Other countries

229 Asocijacija Privatnih Media, Belgrade/Serbia

230 BULGARPRESS OOD, Veliko Tarnovo/Bulgaria

231 CZ Press s.r.o., Prague/Czech Republic

232 DISPANIA S.L., Madrid/Spain

233 Edipresse A.S. SRL, Bucharest/Romania

234 Guestlist GmbH, Zurich/Switzerland

235 HARLEQUIN MAGYARORSZÁG Kft, Budapest/Hungary

236 HUNGAROPRESS Sajtóterjesztö Kft, Budapest/Hungary

237 ITAS Media Private Limited, Delhi/India

238 PRINOVIS Ltd., London/Great Britain

239 Today Merchandise Private Limited, New Delhi/India

240 VINA WOMAN UK Ltd., London/Great Britain

Other material investments

Other countries

241 Doğan TV Holding A.S., Istanbul/Turkey

242 Seloger.com SA, Paris/France

24.8

50.0

24.8

50.0

24.8

50.0

24.8

33.3

100.0

35.5

20.0

25.5

50.0

25.3

40.0

25.0 105

45.0

24.0

49.0

25.1

19.1

30.0

19.9

12.4

1) No full consolidation due to immaterial impact (Relation of net income and balance sheet

total of the company to net income and balance sheet total of the Group).

2) No at equity consolidation due to immaterial impact (Relation of net income of the company

to net income of the Group).

3) Full consolidation due to existing option rights.
4) Control and profit transfer agreement with the parent company.
5) The company has exercised the exemption options of Section 264 Abs. 3 HGB.
6) The company has exercised the exemption options of Section 264b HGB.

137 PACE Paparazzi Catering & Event GmbH, Berlin

138 Schwartzkopff TV-Productions Verwaltungsges. mbH, Hamburg

100.0

139 Siebenunddreißigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0

140 SmartAdServer GmbH, Berlin

141 Tarif24 GmbH, Berlin

142 TOPS Online Publications GbR, Lüneburg

143 Transfermarkt Verwaltungs GmbH, Hamburg

144 Umzugsauktion Verwaltungs GmbH, Schallstadt

100.0

90.0
10.0

51.0

145 Vierundfünfzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0

146 VISION MEDIA Holding GmbH, Hamburg

100.0

147 Zweiundfünfzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0

27
34

Other countries

148 alFemminile SARL, Milan/Italy

149 Automotive Exchange Private Limited, Navi Mumbai/India

150 Axel Springer Group Inc., New York/USA

151 Axel Springer Hírszolgálat Kft, Tatabánya/Hungary

100.0

52.1

100.0

100.0 116

152 Axel Springer International Finance B.V., Amsterdam/Netherlands

100.0

153 Axel Springer International Group Limited, London/Great Britain

154 Axel Springer Media France S.A.R.L., Nanterre/France

155 Axel Springer Media Italia s.r.l., Milan/Italy

100.0

95.0

156 Axel Springer Publishing International Limited, London/Great Britain 100.0 153

157 Axel Springer TV International Limited, London/Great Britain

100.0 153

158 Azet.sk – katalóg s.r.o., Zilina/Slovakia

159 Ceskoslovensky Sport s.r.o., Prague/Czech Republic

160 CompuTel Telefonservice AG, Chur/Switzerland

161 Cpress Media s.r.o., Zilina/Slovakia

162 Digital Window Inc., Wilmington/USA

163 DSV spol. s.r.o., Bratislava/Slovakia

164 enFemenino SARL, Madrid/Spain

165 Euro Blic Press d.o.o., Banja Luka/Republika Srpska

166 eurobridge Inc., New York/USA

167 EUROPRESS POLSKA Sp. z o. o., Warsaw/Poland

168 gamigo Inc., Wilmington/USA

169 Handelszeitung Medien AG, Zurich/Switzerland

170 Jean Frey AG, Zurich/Switzerland

171 Komunikuj.sk s.r.o., Zilina/Slovakia

172 MS vydavatelstvi a.s., Prague/Czech Republic

173 ofeminin.pl Sp. z o.o., Warsaw/Poland

174 Poradca podnikatela a.s., Zilina/Slovakia

175 Shanghai Springer Advertising Company Ltd., Shanghai/China

176 Shanghai Springer Distribution Company Ltd., Shanghai/China

177 Smart Adserver Limited, London/Great Britain

178 SPORT.SK s.r.o., Zilina/Slovakia

Fully consolidated spezial purpose entities

Germany

179 Axel-Springer-Immobilien-Fonds-I Dr.Rühl & Co. KG, Düsseldorf

180

Axel-Springer-Immobilien-Fonds-II- Produktionszentrum Dr.Rühl &
Co. KG, Düsseldorf

181

Axel-Springer-Immobilien-Fonds-III- Ostflügel Dr.Rühl & Co. KG,
Düsseldorf

Investments accounted for using the equity method

Germany

182 buecher.de GmbH & Co. KG, Augsburg

183 Jahr Top Special Verlag GmbH & Co. KG, Hamburg

184 PRINOVIS Ltd. & Co. KG, Hamburg

Other countries

185 Editions Mondadori Axel Springer (EMAS) S.E.N.C., Paris/France

186 INFOR BIZNES Sp. z o.o. , Warsaw/Poland

187 PNS a.s., Prague/Czech Republic
Other associated companies 2)

Germany

188 autohaus24 GmbH, Pullach

189 Berlin 1 Fernsehen Beteiligungs GmbH & Co. KG, Berlin

190 Beteiligungsgesellschaft Radio Hamburg mbH, Hamburg

191 Blitz-Tip Medien Verwaltungs GmbH, Bad Soden

192 Blitz-Tip Medien-Beteiligungsges. mbH & Co. KG, Bad Soden

100.0

60.0

100.0

51.0
49.0

51.0

100.0

66.7

33.3

50.0

25.1

50.0

49.0

27.0

19.9

27.4

35.0

33.3

193 Blitz-Tip Radio Hessen Beteiligungsges. mbH & Co. KG, Bad Soden 33.3

194 buecher.de Verwaltungs GmbH, Augsburg

33.3

59
89

195

BZV Berliner Zustell- und Vertriebsgesellschaft für Druckerzeugnisse
mbH, Berlin

33.3

196 "Direkt" Redaktionsservice GmbH, Hamburg

197 elbe WOCHENBLATT Verlagsgesellschaft mbH & Co., Hamburg

198 Filmgarten GmbH, Berlin

199 Hamburg 1 Fernsehen Beteiligungs GmbH, Hamburg

200 Harburger Zeitungsverwaltungsgesellschaft mbH, Hamburg

201 I.S.I. TV Productions GmbH, Berlin

24.8

24.9

42.0

27.0

24.8

40.0

168

Boards

Supervisory Board

The Supervisory Board was composed of the following persons in the 2010 fiscal year:

Name, regular occupation

Dr. Giuseppe Vita
Chairman of the Supervisory Board of
Axel Springer AG

Dr. h. c. Friede Springer
Vice Chairwoman of the Supervisory Board of
Axel Springer AG

Seats on other legally mandated
Supervisory Boards

Seats on comparable boards
in Germany and abroad

Dussmann Verwaltungs AG
Medical Park AG

Allianz S.p.A., Italy (Vice Chairman of the Board of Directors)
Barilla S.p.A., Italy (Board of Directors)
Gruppo Banca Leonardo, Italy (Chairman of the Board of Directors)
Humanitas S.p.A., Italy (Board of Directors)

Alba Berlin AG

Deutsche Bank AG (Advisory Board, until December 2010)

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

Allianz SE
Siemens AG (Chairman)
ThyssenKrupp AG (Chairman)

Compagnie de Saint Gobain, France (Board of Directors)

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

Klaus Krone
Member of the Supervisory Board of
Axel Springer AG

Dr. Nicola Leibinger-Kammüller (since July 2010)
President and Chairwoman of the
Managing Board of TRUMPF GmbH + Co. KG

Lufthansa AG
Siemens AG
Voith GmbH

Prof. Dr. Wolf Lepenies
University Professor (emer.) FU Berlin;
Permanent Fellow (emer.) of the
Wissenschaftskolleg zu Berlin

Michael Lewis
Investment Manager

YooApplications AG, Switzerland (Board of Directors, since
December 2010)

Cheyne Capital Management Limited, UK (Non-Executive)
Foschini Limited, South Africa (Non-Executive)
OIC 07178 Limited, UK (Executive)
Oceana Capital Partners LLP, UK (Executive Partner)
Oceana Concentrated Opportunities Fund Limited, UK (Non-
Executive)
Oceana Fund Managers (Jersey) Limited, UK (Non-Executive)
Oceana Investment Corporation Limited, UK (Chairman)
Oceana Investment Partners LLP, UK (Executive Partner)
United Trust Bank Limited, UK (Non-Executive)
UTB Partners Limited, UK (Non-Executive)
Peltours Limited, Israel (Non-Executive)
ProChon Biotech Limited, Israel (Chairman)
Shidonni Limited, Israel (Non-Executive)
Strandbags Group Pty Limited, Australia (Non-Executive Chairman)
Strandbags Holdings Pty Limited, Australia
(Non-Executive Chairman)

Dr. Michael Otto
Chairman of the Supervisory Board of
Otto GmbH & Co. KG

Brian M. Powers (until May 2010)
CEO of investment group
Hellman & Friedman LLC

Otto GmbH & Co. KG (Chairman)

FORUM Grundstücksgesellschaft mbH (Advisory Board)
Robert Bosch Industrie und Treuhand KG (Partner)

Getty Images, Inc., USA (Board of Directors)
Internet Brands, Inc., USA (Board of Directors, since
December 2010)

Boards 169

Management Board

The following persons served on the Management Board in the 2010 fiscal year:

Seats on other legally mandated
Supervisory Boards

Seats on comparable boards
in Germany and abroad

Management Board member

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

Rudolf Knepper
Vice Chairman
Head of Printing, Logistics, and HR
Master’s degree in engineering and
master’s degree in business/engineering

Lothar Lanz
Chief Operating Officer and Chief Financial Officer
Master’s degree in business administration

Dr. Andreas Wiele
Head of BILD Division and Magazines
Lawyer

ZANOX.de AG

B.Z. Ullstein GmbH (Advisory Board)
Axel Springer Schweiz AG, Switzerland (Board of Directors)
RHJ International S.A., Belgium (Supervisory Board)
Time Warner Inc., USA (Board of Directors)

PRINOVIS Limited, UK (Board of Directors)

esmt European School of Management and Technology GmbH
(Supervisory Board)
Axel Springer International Finance B.V., Netherlands
(Supervisory Board)
Independent News & Media PLC, Ireland (Board of Directors)
Ringier Axel Springer Media AG, Switzerland (Board of Directors,
since June 2010)

B.Z. Ullstein GmbH (Advisory Board)
dpa Deutsche Presse Agentur GmbH (Supervisory Board)
Jahr Top Special Verlag GmbH & Co. KG (Advisory Board)
auFeminin.com S.A., France (Supervisory Board)
StepStone ASA, Norway (Supervisory Board, until July 2010)

170

Glossary

Affiliate Sales partner or agent that receives a commis-
sion for advertising sales.

Cash and cash equivalents Cash on hand and cash in
certain bank accounts of a company, including sight
deposits, and term deposits, which can be liquidated on
a shortterm basis.

Classified ads Small ads that generally appear in daily
newspapers and are arranged by specific categories,
such as jobs, property, and cars, for example.

Consolidation group All the companies included in the
consolidated financial statements, by way of full consoli-
dation or at equity.

Content portal Website containing editorial content, not
just advertising or navigation pages.

Contingent purchase price liabilities Liabilities arising
from future purchase price adjustments (earn-out
agreements) and from option rights for the purchase of
non-controlling interests.

Cross-media concept Content-related, creative, and
formal networking of different media channels and adver-
tising vehicles with the goal of achieving optimal advertis-
ing success by means of a multichannel approach.

Derivatives in cash flow hedges Financial instruments
used to hedge the risk of future variations in cash flows,
due to changes in interest rates or exchange rates, for
example.

Earn-out agreement Agreement under which the pay-
ments by the buyer to the seller are deferred to a later
point in time; depending on the business performance of
the purchased company.

Equity method The equity method is a method of ac-
counting for associated companies in the consolidated
financial statements under which changes the net value
of the company are added to or deducted from the
acquisition cost of the investment.

External revenues Revenues resulting from transac-
tions with companies and persons that are not part of
the consolidation group.

Fair value Amount at which an asset can be exchanged
or a liability settled between two knowledgeable, willing
parties in an arm’s length transaction. Fair value is de-
termined with reference to market prices (such as stock
market prices, for example), if available, or if not, on the
basis of reference transactions or valuation models.

Financial derivatives Financial instruments, the value of
which is derived from the value of an underlying (e.g.,
security, interest rate, currency, loan). Financial deriva-
tives are used for hedging currency and interest rate
risks, for example.

IFRS (International Financial Reporting Standards)
Accounting rules issued by the IASB (International
Accounting Standards Board).

Interest rate swap Contractually defined swap transac-
tion. In an interest rate swap, the interest payments under
a variable interest rate are exchanged with those under a
fixed interest rate, or vice versa. The party paying interest
under the fixed interest rate is protected against rising
interest rates (loan protection), while the party being paid
interest under a fixed interest rate is protected against
falling interest rates (investment protection).

IVW (Informationsgemeinschaft zur Feststellung der
Verbreitung von Werbeträgern). This German organiza-
tion tracks the reach of print media and online offerings.

Glossary 171

Layer ads Type of advertisement used in websites,
which are superimposed over the actual website content.

Reach Percentage of a target group that is reached at
least once by an advertising vehicle or combination of
advertising vehicles.

Newsroom An editorial center where all journalistic con-
tent is collected, processed, and produced for various
media channels, e.g., online, TV, print, and mobile services.

Newsstand newspapers Unlike subscription newspapers,
newsstand newspapers are generally sold in retail outlets.

Online marketing Marketing of ad space on web portals.

Online marketplaces Electronic platforms that bring
vendors and buyers together, facilitate the comparison of
products and services, and allow for the direct placement
of online orders.

Paid content Digital or mobile content that users pay for
by means of subscriptions or usage-based fees.

Performance-based online marketing Form of adver-
tising under which an Internet sales partner (publisher)
receives a share of the proceeds of every successfully
completed transaction (e.g., sale of a product or sign-up
for a newsletter), in the form of a commission.

Portal Website covering a wide range of different sub-
jects that help users to navigate the Internet. Special-in-
terest portals such as car or book portals try to cover the
complete range of their target group’s interests by way
of a common entrance platform.

Pro-forma revenues Revenues that comprise revenues
from business combinations prior to the date of initial
recognition in the consolidated financial statements.

Purchase price allocation Process in which the pur-
chase price of a business combination is allocated to the
fair values of all identifiable assets and liabilities.

Registered shares of restricted transferability
Registered shares that can be transferred only with the
consent of the respective stock corporation.

Search term marketing Type of marketing geared to
specific target groups, using search engines. The cus-
tomer of such a service defines the search terms which,
when entered by the online user, will trigger the place-
ment of the customer’s banner or advertising message
on the search engine’s web page.

Special-purpose entities Companies that are formed
for the purpose of fulfilling a specified narrowly defined
purpose. A special-purpose entity must be consolidated
if the Axel Springer Group controls the special-purpose
entity in substance or if, in substance, the majority of the
risks and rewards from the special-purpose entity’s
operations lie with Axel Springer. For this purpose, it is
not required that the Axel Springer Group holds an equity
interest in the special-purpose entity, or vice versa.

Tabloid format Small-size format for newspapers.

Unique visitors Number of persons who have visited a
website at least once during a specified period of time. It
corresponds to the net reach.

Wallpaper ads Large-format ads on websites.

Visits Connected series of usage events (visits). After an
interruption of 30 minutes, a new visit is counted. A usage
event is defined as a technically successful page load by
an Internet browser from a specific online offering.

Financial Calendar

March 2, 2011
Annual Report, annual financial statements press
conference, investor/analyst teleconference

April 14, 2011
Annual shareholders’ meeting, Berlin

May 11, 2011
Quarterly financial report at March 31, 2011

August 3, 2011
Quarterly financial report at June 30, 2011

November 7, 2011
Quarterly financial report at September 30, 2011

Impressum

Address
Axel Springer AG
AxelSpringerStraße 65
10888 Berlin
Phone: +49 (0) 30 25 910

Investor Relations
ir@axelspringer.de
Phone: +49 (0) 30 25 917 74 21/7 74 25
Fax: +49 (0) 30 25 917 74 22

Corporate Communications
information@axelspringer.de
Phone: +49 (0) 30 25 917 76 60
Fax: +49 (0) 30 25 917 76 03

Design
Axel Springer AG
Corporate Communications

Fotos
Daniel Biskup (p. 3, p. 6)
Matti Hillig (p. 7, p. 11, p. 14, p. 19, p. 21)

ullstein bild –
AP (p. 109, p. 112), ddp (p. 113), HAMBURGER
ABENDBLATT/Roland Magunia (p. 115), Roger Viollet
(p. 102, p. 103), sinopictures/CNS (p. 110), Timpe
(p. 108), ullstein bild (p. 104, p. 105, p. 106)

The Annual Report and uptodate information about
Axel Springer are also available on the Internet at
www.axelspringer.com

The English translation of the Axel Springer AG annual
report is provided for convenience only. The German
original is definitive.