Financial Statements of Axel Springer AG. for the period ending December 31, 2010

Transcription

1 10 Financial Statements of Axel Springer AG for the period ending December 31, 2010

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3 3 Contents Annual Financial Statements 4 Balance Sheet 4 Income Statement 5 Notes to the Annual Financial Statements 6 Notes to the balance sheet 8 Notes to the income statement 12 Other disclosures 14 Auditor s Report 20 General information 6 Accounting policies 6 The combined management report of Axel Springer Aktiengesellschaft and Axel Springer Group is published in the Axel Springer Group s 2010 annual report.

4 4 Annual Financial Statements of Axel Springer AG Annual Financial Statements Balance Sheet ASSETS in thousands Note 12/31/ /31/2009 Fixed assets (1) 2,245,927 1,723,033 Intangible assets 34,881 34,384 Property, plant and equipment 210, ,656 Non-current financial assets 2,000,269 1,469,993 Current assets 798, ,715 Inventories (2) 17,552 26,001 Receivables and other assets (3) 555, ,516 Cash and cash equivalents 225,753 83,198 Prepaid expenses 1,595 2,955 3,046,517 2,424,703 EQUITY AND LIABILITIES in thousands Note 12/31/ /31/2009 Equity (4) 1,206, ,945 Issued capital 98,340 89,401 Subscribed capital 98,940 98,940 Treasury shares 600 9,539 Additional paid-in capital 84,627 3,060 Retained earnings 865, ,372 Distributable profit 158, ,112 Provisions (5) 512, ,455 Liabilities (6) 1,275, ,557 Deferred income 51,574 55,746 3,046,517 2,424,703

5 Annual Financial Statements of Axel Springer AG 5 Income Statement in thousands Note Revenues (12) 1,576,554 1,588,323 Change in inventories 1, Other own work capitalized 1,037 1,044 Other operating income (13) 137, ,274 Purchased goods and services (14) 408, ,081 Personnel expenses (15) 433, ,078 Amortization, depreciation and impairments of intangible assets and property, plant and equipment 35,132 39,992 Other operating expenses 550, ,865 Net income from non-current financial assets (16) 6,253 59,167 Net interest income (17) 23,383 22,402 Profit from ordinary activities 271, ,778 Taxes (18) 110,280 77,690 Net income 161, ,088 Transfer to reserve for treasury shares - 26,551 Transfer to other retained earnings 3, ,425 Distributable profit 158, ,112

6 6 Annual Financial Statements of Axel Springer AG Notes to the Annual Financial Statements General information The annual financial statements of Axel Springer Aktiengesellschaft ("Axel Springer AG" or "Company") were prepared in accordance with the provisions of the German Commercial Code (Handelsgesetzbuch HGB) and the German Stock Corporation Act (Aktiengesetz AktG). The balance sheet and income statement correspond to the classification requirements of the HGB; the income statement was prepared using the total cost (nature of expense) method. The annual financial statements were prepared in euros ( ); all amounts are reported in thousands unless otherwise indicated. To improve clarity and legibility, individual line items were aggregated in the balance sheet and income statement and then presented separately and explained in the notes to the annual financial statements. The annual financial statements and the combined management report of the Company and Axel Springer Group will be published in the Electronic Federal Gazette. Accounting policies The accounting regulation reforms under the Act to Modernise Accounting Law (Bilanzrechtsmodernisierungsgesetz BilMoG) were fully implemented in the reporting period. The resulting effects on the recognition, measurement, and presentation of individual line items of the financial statements have been noted in the following presentation of accounting policies. Fixed assets Intangible assets and tangible fixed assets that have been purchased are recognized at cost. Finite-lived assets are depreciated systematically using the straightline method over the expected useful life. The carrying amounts of additions to depreciable tangible fixed assets in the prior year are initially reduced using accelerated depreciation and later transitioned to the straight-line method. Additional write-downs to the lower fair value on the balance sheet date are charged if the impairment is expected to be permanent. Systematic depreciation and amortization was based on the following typical useful lives: in years Intangible assets Useful life Software 5 Licenses 3-5 Supply rights 3 Internet platforms 3 Purchased titels and publishing rigths 15 Property, plant and equipment Buildings Leasehold improvements 3-10 Technical equipment and machinery 3-25 Other operational and business equipment 3-15 Non-current financial assets are recognized at acquisition cost or at the lower fair value on the balance sheet date if an impairment is expected to be permanent. Current assets Raw materials and supplies as well as merchandise are measured at acquisition cost or the lower fair value on the balance sheet date; semi-finished and finished goods are measured at production cost. In addition to direct material and labor costs, production cost includes an appropriate share of the necessary indirect material and labor costs, including depreciation to the extent they are related to production. Inventory risks associated with the storage period or reduced utility are accounted for through appropriate allowances. Receivables and other assets are recognized at nominal value or acquisition cost or the lower fair value on the balance sheet date. Individual risks are accounted for through adequate allowances. Cash and cash equivalents include cash on hand, cash in banks as well as checks and are recognized at nominal value or the lower fair value on the balance sheet date.

7 Annual Financial Statements of Axel Springer AG 7 Equity Since January 1, 2010, the acquisition cost of treasury shares is deducted from subscribed capital in the amount of the calculated share of the capital stock; the remaining amount is offset against other retained earnings. In order to increase comparability, the previous year's amounts were adjusted accordingly: the treasury shares recognized as of December 31, 2009 (EUR 196,001 thousand), were deducted in the amount of EUR 9,539 thousand from subscribed capital and EUR 186,462 thousand was offset against retained earnings. Provisions and liabilities Provisions for pensions and similar obligations are measured on the basis of actuarial calculations according to the projected unit credit method and reflect future compensation and pension adjustments. Tax provisions and other provisions are recognized based on prudent business judgment for contingent liabilities and expected losses from executory contracts in the necessary settlement amount. From fiscal year 2010 on, price and cost increases are taken into account when measuring provisions, and obligations with a remaining term of more than one year are discounted at the average matching market interest rate of the past seven fiscal years. Accordingly, other provisions recognized as of December 31, 2009, were reduced by EUR 387 thousand by means of transfer directly to other retained earnings as of January 1, The prior year amounts were adjusted accordingly for increased comparability. Starting in fiscal year 2010, only the portion of interest from the compounding of provisions attributable to the reporting period is presented under net interest income. Income and expenses resulting from changes in the discount rate are recorded under other operating income, personnel expenses, or other operating expenses. The prior year figures were adjusted accordingly for increased comparability and EUR 11,172 thousand was reclassified from interest and similar expenses to personnel expenses. Liabilities are recognized at the settlement amount. Deferred taxes Deferred taxes are calculated for temporary differences between the tax bases of assets and liabilities and the carrying amounts of those assets and liabilities in the separate financial statements as well as for interest and losses carried forward. Dependent enterprises in the fiscal unit for income tax purposes and partnerships in which Axel Springer AG is invested are also included in the calculation. Deferred tax assets and liabilities are netted; any resulting net deferred tax assets are not recognized. Currency translation As a rule, receivables, cash and cash equivalents, liabilities to banks and other assets and liabilities denominated in foreign currency are translated at the mean spot exchange rate prevailing on the balance sheet date. Financial derivatives Financial derivatives are employed to hedge interest rate and currency risks. The risk of changing interest rates is countered by employing interest rate derivatives, in particular interest rate swaps and collars. The objective and method of hedging interest rate risks is determined by internal financial guidelines. Exchange rate risks arise in particular from investments, financing measures, and operating activities. They are hedged by employing currency forwards. Financial derivatives are generally grouped together with the underlying transactions in valuation units if the requirements for hedge accounting have been met; otherwise, they are measured mark-tomarket. Unrealized losses as of the balance sheet date are recognized in profit or loss.

8 8 Annual Financial Statements of Axel Springer AG Notes to the balance sheet (1) Fixed assets in thousands Acquisition or production cost Accumulated Carrying amounts 01/01/2010 Additions Transfers Disposals 12/31/2010 depreciation, amortization, and impairments 12/31/ /31/2009 Depreciation, amortization and impairments 2010 Rights and licences 86,150 9,967 6,528 5,180 97,465 65,931 31,534 24,637 9,273 Advanced payments 9,747 2,574 6,404 1,302 4,615 1,268 3,347 9,747 1,268 Intangible assets 95,897 12, , ,080 67,199 34,881 34,384 10,541 Land, similar rights and buildings including buildings on non-owned land 500,616 3, , , , ,862 8,503 Technical equipment and machinery 529,256 3,606 1,085 26, , ,853 19,567 25,128 10,236 Other equipment, operational and office equipment 109,646 5, , ,505 91,837 18,668 18,386 5,719 Advanced payments and construction in progress 2,280 4,656 2, , ,225 2, Property, plant and equipment 1,141,798 17, ,375 1,126, , , ,656 24,591 Shares in affiliated companies 1,292, , ,305 1,871,892 76,393 1,795,499 1,223,392 9,106 Loans to affiliated companies 216,668 6, , ,951 23, , ,550 0 Other investments 111,624 1, , ,723 87,992 19,731 51,613 33,154 Loans to other investments Other loans 1, , ,046 1,438 0 Non-current financial assets 1,621, , ,948 2,187, ,503 2,000,269 1,469,993 42,260 Fixed assets 2,859,652 1,029, ,805 3,416,602 1,170,675 2,245,927 1,723,033 77,392 In the reporting period, impairment losses totaling EUR 3,447 thousand (PY: EUR 992 thousand) were recognized on intangible assets and on property, plant and equipment and impairment losses totaling EUR 42,260 thousand (PY: EUR 38,266 thousand) were recognized on non-current financial assets. Additions to non-current financial assets were mainly related to additional contributions to subsidiaries' additional paid-in capital, in part in the form of contributions of shares of other investments. (2) Inventories in thousands 12/31/ /31/2009 Raw materials and supplies 13,898 24,184 Semi-finished goods 2,486 1,450 Finished goods and merchandise 1, Inventories 17,552 26,001

9 Annual Financial Statements of Axel Springer AG 9 (3) Receivables and other assets in thousands 12/31/ /31/2009 Trade receivables 157, ,715 (of which remaining term longer than one year) (6) (11) Receivables from affiliated companies 152, ,682 Receivables from companies in which investments are held 7,842 7,094 Other assets 237, ,025 (of which remaining term longer than one year) (155,598) (185,502) Receivables and other assets 555, ,516 Receivables from affiliated companies mainly included trade receivables and financial receivables from the group-wide cash management. (4) Equity The subscribed capital in the amount of EUR 98,940 thousand has been fully paid-in. It is divided into 32,980,000 registered shares with limited transferability with a notional value of EUR 3.00 per share. As of the balance sheet date, Axel Springer AG held 200,000 treasury shares. The portfolio has changed as follows: Share of subscribed Treasury capital shares in thousands 000 % Balance at 01/01/2010 3,180 9, % Placement of treasury shares 2,731 8, % 249,200 stock options were exercised in the reporting period as part of the management participation plan established in 2004 and settled using the same number of treasury shares. The proceeds from the issued shares amounted to EUR 15,114 thousand. The amount of EUR 1,109 thousand in excess of amortized cost was added to additional paid-in capital directly in equity. The treasury shares held as of December 31, 2010, were part of the share purchase in July At the time, the acquisition served the possibility of using the shares in connection with acquisitions, to compensate management or employees, or to sell or retire them. As a consequence of the issues of treasury shares presented above, additional paid-in capital increased by EUR 81,567 thousand to EUR 84,627 thousand. Retained earnings developed as follows in the reporting period: in thousands Statutory reserve Other retained earnings Retained earnings Balance at 01/01/ , , ,372 Transfer according to shareholders' resolution ,933 13,933 Issue of treasury shares 175, ,821 Transfer from net income ,022 3,022 Balance at 12/31/ , , ,148 Management Participation Plan % Balance at 12/31/ % In September 2010, 2,730,572 treasury shares were placed with institutional investors. Proceeds from the sale amounted to EUR 251,213 thousand. The amount of EUR 80,458 thousand in excess of amortized cost was deposited in additional paid-in capital directly in equity.

10 10 Annual Financial Statements of Axel Springer AG (5) Provisions in thousands 12/31/ /31/2009 Provisions for pensions and similar obligations 282, ,648 Provisions for taxes 47,191 21,415 Other provisions 182, ,392 Provisions 512, ,455 Provisions for pensions and similar obligations were recognized to account for obligations arising from vested pension rights and current benefits of former and active employees of Axel Springer AG and their survivors, based on individual contracts and labor-management agreements. In addition, since the 2004 fiscal year, employees have been given the option to make contributions to a company pension plan by way of salary con- version (Axel Springer Vario Rente). The calculation of provisions was based on an actuarial interest rate of 5.2 % p.a. (PY: 5.3 % p.a.) as well as a pension and salary trend of 1.75 % p.a. (PY: 2.0 % p.a.). The life expectancy was taken from Dr. Klaus Heubeck's Mortality Tables 2005 G. Other provisions included in particular provisions for structural measures (EUR 30,388 thousand; PY: EUR 46,842 thousand), obligations from partial retirement agreements (EUR 30,033 thousand; PY: EUR 30,291 thousand), performance-dependent compensation (EUR 36,773 thousand; PY: EUR 31,383 thousand) and outstanding supplier invoices (EUR 26,087 thousand; PY: EUR 22,342 thousand). (6) Liabilities in thousands 12/31/2010 up to 1 year longer than 1 year, up to 5 years Remaining term longer than 5 years 12/31/2009 up to 1 year longer than 1 year, up to 5 years Remaining term Liabilities due to banks 286, , ,233 1, ,797 0 Advance payments ,063 1, Trade payables 46,917 46, ,057 60, Liabilities to affiliated companies 882, , , , longer than 5 years Liabilities to companies in which investments are held 8,091 8, ,677 8, Other liabilities 51,251 45,061 5, ,787 63,797 10, Liabilities 1,275, , , , , , As of the balance sheet date, liabilities due to banks were secured by mortgages in the amount of EUR 11,797 thousand (PY: EUR 13,233 thousand). Liabilities to affiliated companies mainly included trade payables and financial liabilities from the group-wide cash management. Other liabilities included tax liabilities in the amount of EUR 9,318 thousand (PY: EUR 22,801 thousand) and social security liabilities in the amount of EUR 962 thousand (PY: EUR 956 thousand).

11 Annual Financial Statements of Axel Springer AG 11 (7) Contingent liabilities As of December 31, 2010, there were contingent liabilities from warranties in the amount of (EUR 27,950 thousand; PY: EUR 29,464 thousand) as well as from guarantees (EUR 16,445 thousand; PY: EUR 32,285 thousand). The contingent liabilities from warranty agreements were related to pension obligations in connection with the integration of rotogravure activities of PRINOVIS Ltd. & Co. KG, Hamburg, in fiscal year 2005 (PY: EUR 29,464 thousand). The claims from the cited contingent liabilities are not expected to be asserted based on the beneficiaries previous payment practices and considering the knowledge acquired leading up to the preparation date. (8) Transactions not included in the balance sheet For partial areas at the property located in Hamburg, three real estate funds were granted ground leases to construct and lease an office building used by the Company, and building leases over an initial term of 20 years were concluded, starting in 1991, 1992 and 1993 respectively. The future financial commitments from the leases as of the balance sheet date were EUR 79,407 thousand (PY: EUR 91,124 thousand). (9) Other financial commitments Other financial commitments as of the balance sheet date amounted to 471,361 thousand (PY: 343,870 thousand). The commitments were mainly the result of long-term paper purchasing agreements. (10) Financial derivatives In order to hedge interest rate risks from long-term liabilities, interest rate derivatives in the form of swaps and collars were employed in the reporting period. With respect to term and notional amount, the interest rate derivatives were each concluded in analogy to corresponding tranches of the variable interest rate loans (underlying transactions). As of the balance sheet date, the interest rate derivatives had a remaining term to maturity until August The interest rate derivatives and underlying transactions were qualified as valuation unit. As of December 31, 2010, a nominal loan volume of EUR 275,000 (PY: EUR 305,000 thousand) was secured. The mark-to-market measurement of the interest rate derivatives resulted in negative fair values of EUR 18,856 thousand (PY: EUR 20,641 thousand) as of the balance sheet date. Exchange rate risks were countered with currency forwards. As of the balance sheet date, there were executory contracts with a volume of CHF 42.0 million and USD 0.2 million (PY: CHF 29.0 million) with a fair value of EUR 2,348 thousand (PY: EUR 334 thousand). In fiscal year 2004, H&F Rose Partners, L.P., and H&F International Rose Partners, L.P., (hereinafter referred to as "H&F") granted Axel Springer AG 560,700 call options for the acquisition of shares of Axel Springer AG. Axel Springer AG waived 62,300 options in exchange for cash compensation in an agreement dated June The fair value of the remaining 498,400 options as of December 31, 2009, was EUR 10,835 thousand. H&F also settled these options through the payment EUR 13,437 thousand in the reporting period. The cash compensation was recognized in other operating income. (11) Deferred taxes As a rule, deferred taxes are calculated based on a combined income tax rate of % (PY: %). As in the previous year, the calculation of taxes as of December 31, 2010, resulted in net deferred tax assets. This was mainly the result of the higher measurement of non-current financial assets and lower measurement of provisions for pensions and similar obligations for tax purposes.

12 12 Annual Financial Statements of Axel Springer AG Notes to the income statement (12) Revenues (14) Purchased goods and services in thousands Circulation revenues 870, ,310 Advertising revenues 573, ,408 Printing revenues 73,130 76,740 in thousands Raw materials, supplies and merchandise 156, ,618 Purchased services 252, ,463 Purchased goods and services 408, ,081 Other revenues 59,612 51,865 Revenues 1,576,554 1,588,323 (15) Personnel expenses The revenues can be attributed to the following segments: in thousands Newspapers National 1,020,378 1,035,192 Magazines National 443, ,898 Digital Media 26,210 21,358 Other 86,169 84,875 Revenues 1,576,554 1,588,323 in thousands Wages and salaries 377, ,011 Social security, pension and other benefit expenses 55,424 67,067 Personnel expenses 433, ,078 The cost of old age pensions in the reporting period amounted to EUR 3,486 thousand (PY: EUR 17,352 thousand). The revenues were realized almost entirely in Germany. (13) Other operating income Other operating income included income related to other periods from the sale of fixed assets in the amount of EUR 7,298 thousand (PY: EUR 252,001 thousand), last year s figure included in particular gains from the sale of investments in regional newspapers (EUR 251,945 thousand). In addition, income was realized from the release of provisions (EUR 11,355 thousand; PY: EUR 13,529 thousand) and from receivables written off in connection with the insolvency of KirchMedia GmbH & Co. KGaA i.l. (EUR 618 thousand; PY: EUR 7,286 thousand). The average number of employees during the year was: Salaried employees 2,276 2,393 Editors 1,554 1,556 Wage-earning employees Total employees 4,652 4,827

13 Annual Financial Statements of Axel Springer AG 13 (16) Net income from non-current financial assets (18) Taxes in thousands Income from investments 26,995 34,368 (of which from affiliated companies) (12,257) (14,785) Income from profit transfer agreements 27,080 10,045 in thousands Income taxes 105,182 71,413 Other taxes 5,098 6,277 Taxes 110,280 77,690 Expenses from transfer of losses 8,770 66,117 Impairments of non-current financial assets 42,260 38,266 Net income from investments 3,045 59,970 Income from loans 3, (of which from affiliated companies) (3,086) (658) Net income from non-current financial assets 6,253 59,167 (17) Net interest income in thousands Other interest and similar income 10,987 15,239 (of which from affiliated companies) (1,881) (6,200) Interest and similar expenses 34,370 37,641 (of which to affiliated companies) ( 3,206) ( 4,405) (of which from the compounding of provisions) ( 15,525) ( 16,886) Net interest income 23,383 22,402

14 14 Annual Financial Statements of Axel Springer AG Other disclosures (19) Supervisory Board Dr. Giuseppe Vita Chairman of the Supervisory Board of Axel Springer AG Seats on other legally mandated Supervisory Boards: 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) Dr. h. c. Friede Springer Vice Chairwoman of the Supervisory Board of Axel Springer AG Seats on other legally mandated Supervisory Boards: Alba Berlin AG Deutsche Bank AG (Advisory Board, until December 2010) Dr. Gerhard Cromme Chairman of the Supervisory Board of ThyssenKrupp AG Seats on other legally mandated Supervisory Boards: 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 YooApplications AG, Switzerland (Board of Directors, since Dezember 2010) 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 Seats on other legally mandated Supervisory Boards: 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 Cheyne Capital Management Limited, UK (Non-Executive) Foschini Limited, South Africa (Non-Executive) OIC 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 Seats on other legally mandated Supervisory Boards: Otto GmbH & Co. KG (Chairman) FORUM Grundstücksgesellschaft mbh (Advisory Board) Robert Bosch Industrie und Treuhand KG (Partner) Brian M. Powers (until May 2010) CEO of investment group Hellman & Friedman LLC Getty Images, Inc., USA (Board of Directors) Internet Brands, Inc., USA (Board of Directors, since December 2010)

15 Annual Financial Statements of Axel Springer AG 15 (20) Management Board Dr. Mathias Döpfner Chairman and Chief Executive Officer Head of Subscription Newspapers and International Journalist 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) Rudolf Knepper Vice Chairman Head of Printing and Logistics, and HR Master s degree in engineering and in business/engineering PRINOVIS Ltd., Great Britain (Board of Directors) Lothar Lanz Chief Operating Officer and Chief Financial Officer Master s degree in business administration 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) Dr. Andreas Wiele Head of BILD Division and Magazines Lawyer Seats on legally mandated Supervisory Boards: ZANOX.de AG 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 AS, Norway (Supervisory Board, until July 2010) (21) Compensation of Supervisory Board and Management Board The compensation of members of the Supervisory Board in the reporting period amounted to EUR 2,765 thousand (PY: EUR 2,425 thousand). The compensation of the members of the Management Board of Axel Springer AG in the reporting period amounted to EUR 17,889 thousand (PY: EUR 17,687 thousand). In addition, the compensation in the previous year included a total of 375,000 virtual stock options with a fair value of EUR 4,743 thousand at the grant date. Moreover, in December 2009, members of the Management Board waived their right to exercise 214,312 options on shares of Axel Springer AG granted as part of the management participation plan in the 2004 fiscal year in exchange for a cash settlement totaling EUR 2,572 thousand. The settlement was EUR 4,329 thousand less than the fair value attributable to these options at the grant date. The compensation paid to former members of the Management Board and their surviving dependents in the reporting period amounted to EUR 2,186 thousand (PY: EUR 3,856 thousand); provisions for pension commitments were recognized in the amount of EUR 26,943 thousand (PY: EUR 26,082 thousand).

16 16 Annual Financial Statements of Axel Springer AG (22) List of investments Significant investments as of December 31, 2010 are listed below: No. Company Shareholding in % indirect via Equity 000 Net income 000 No. Company Shareholding in % indirect via Equity 000 Net income AS Online Beteiligungs GmbH, Berlin , ) 2 AS Osteuropa GmbH, Berlin , ) 3 aufeminin.com S.A., Paris/France ,306 4,266 1) 28 Gofeminin.de GmbH, Cologne ,482 1,732 1) 29 Idealo Internet GmbH, Berlin ,882 12,922 1) 30 Immonet GmbH, Hamburg ,803 4,844 1) 4 Axel Springer - Budapest Kiadói Kft, Budapest/Hungary ,441 4,608 1) 31 Les Publications Grand Public S.A.S., Levallois-Perret/France , ) 5 Axel Springer - Magyarország Kft, Tatabánya/Hungary ,245 1,619 1) 32 Perfiliate HoldCo Limited, London/ Great Britain , ) 6 Axel Springer Asia GmbH, Hamburg ,156 7,026 1) Axel Springer Editions SAS, Levallois- Perret/France Axel Springer España S.A., Madrid/ Spain Axel Springer France S.A.S., Levallois- Perret/France Axel Springer Russland Holding GmbH, Berlin Axel Springer Schweiz AG, Zurich/ Switzerland , ) , ) ,676 3,835 1) , ) ,873 9,276 1) 12 Axel Springer TV NEWS GmbH, Hamburg , ) 33 Perfiliate Limited, London/Great Britain , ) 34 PRINOVIS Ltd. & Co. KG, Hamburg ,689 10, Ringier Axel Springer CZ a.s., Prague/ Czech Republic Ringier Axel Springer d.o.o., Belgrade/ Serbia Ringier Axel Springer Media AG, Zurich/ Switzerland Ringier Axel Springer Polska Sp. z o.o., Warsaw/Poland Ringier Axel Springer Print CZ a.s., Prague/Czech Republic ,246 8,746 1) ,169 1,913 1) ,388 2,078 1) ,358 14,579 1) ,291 2,882 1) 1) 3) 13 Axel Springer TV Productions GmbH, Hamburg ,182 1,058 1) 40 Ringier Axel Springer Slovakia a.s., Bratislava/Slovakia ,211 4,544 1) 14 Axel Springer Venture GmbH, Berlin ,098 8,542 1) 41 Seloger.com SA, Paris/France 'Axel Springer Verlag' Beteiligungsgesellschaft mbh, Berlin Axel Springer Verlag Vertriebsgesellschaft mbh, Hamburg ,224 8,824 1) , ) 42 SmartAdServer SAS, Paris/France ,293 2,085 1) 43 Smarthouse Media GmbH, Karlsruhe ,528 5,269 1) 44 StepStone AS, Oslo/Norway , ,337 1) 17 B.Z. Ullstein GmbH, Berlin ,424 1,978 1) 45 StepStone B.V., Leiden/Netherlands , ) 18 Bergedorfer Buchdruckerei von Ed. Wagner (GmbH & Co.), Hamburg , ) 46 StepStone Deutschland GmbH, Dusseldorf ,995 15,450 1) 19 BERLINER WOCHENBLATT Verlag GmbH, Berlin ,624 1) 20 BILD digital GmbH & Co. KG, Berlin ,992 8,029 1) 21 Commerz-Film GmbH, Berlin ,618 1,487 1) 47 StepStone GmbH, Berlin ,385 1,853 1) 48 Ullstein GmbH, Berlin , ) 49 Viviana Investments Sp. z o.o., Warsaw/Poland , ) 22 Digital Window Limited, London/ Great Britain ,712 4,792 1) 50 WBV Wochenblatt Verlag GmbH, Hamburg ,764 2,130 1) 23 Doğan TV Holding A.S., Istanbul/Turkey Dreizehnte "Media" Vermögensverwaltungsges. mbh, Hamburg Editions Mondadori Axel Springer (EMAS) S.E.N.C., Paris/France , ) ,809 7,761 1) 26 eprofessional GmbH, Hamburg , ) 27 Finanzen Corporate Publishing GmbH, Berlin , ) 51 zanox SAS, Paris/France ,974 1,801 1) 52 ZANOX.de AG, Berlin ,537 4,973 1) 53 ZZ-Kurier Gesellschaft für Zeitungs- und Zeitschriftenvertrieb mbh, Hamburg ,227 1) 1) Equity and net income in accordance with International Financial Reporting Standards for including in the consolidated financial statements of Axel Springer AG as of December 31, ) Equity and net income as of December 31, ) Equity and net income according to company s consolidated financial statements.

17 Annual Financial Statements of Axel Springer AG 17 (23) Declaration of Conformity with the German Corporate Governance Code Axel Springer AG has made the Declaration of Conformity with the German Corporate Governance Code issued by the Management Board and Supervisory Board in accordance with section 161 of the German Stock Corporation Act (Aktiengesetz AktG) permanently available on the Company's website under Investor Relations Corporate Governance. The declaration of conformity is also published in the Company's 2010 annual report. (24) Disclosures concerning securities transactions or investments Deutsche Bank AG, Frankfurt am Main, notified us in December 2010 in accordance with section 21 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG) that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on September 28, 2010, and amounts to 0 %. In addition, it notified us in October 2010 in accordance with sections 21 (1) and 24 WpHG that the share of Axel Springer AG s voting rights attributable to Deutsche Bank Luxembourg SA, Luxembourg, had fallen below the threshold amounts of 5 % and 3 % on September 28, 2010, and amounts to 0 %. H&F Rose Partners L.P., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.29 %. These voting rights are all held directly by H&F Rose Partner L.P. H&F Rose Investors Ltd., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.29 %. These voting rights are all attributable to H&F Rose Investors Ltd. in accordance with section 22 (1) no. 1 WpHG. H&F Rose Investors Ltd. is the personally liable shareholder of H&F Rose Partners L.P. HFCP IV (Bermuda) L.P., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.29 %. These voting rights are all attributable to HFCP IV (Bermuda) L.P. in accordance with section 22 (1) no. 1 WpHG. HFCP IV (Bermuda) L.P. holds 100 % of the shares in H&F Rose Investors Ltd. H&F Investors IV (Bermuda) L.P., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.6 %. These voting rights are all attributable to H&F Investors IV (Bermuda) L.P. in accordance with section 22 (1) no. 1 WpHG. H&F Investors IV (Bermuda) L.P. is the personally liable shareholder of HFCP IV (Bermuda) L.P. H&F Corporate Investors IV (Bermuda) Ltd., Hamilton, Bermuda, informed us in December 2008 in accordance with section 21 (1) WpHG that its share of Axel Springer AG's voting rights had fallen below the threshold amounts of 5 % and 3 % on December 15, 2008, and amounts to 1.6 %. These voting rights are all attributable to H&F Corporate Investors IV (Bermuda) Ltd. in accordance with section 22 (1) no. 1 WpHG. H&F Corporate Investors IV (Bermuda) Ltd. is the personally liable shareholder of HFCP IV (Bermuda) L.P. Friede Springer GmbH & Co. KG, Berlin, informed us in January 2006 in accordance with sections 21 ff. WpHG that at midnight on December 31, 2005/January 1, 2006, 12 a.m. its share of Axel Springer AG's voting rights had exceeded the threshold of 50 % and simultaneously also the thresholds of 5 %, 10 %, and 25 % and amounts to around % (this corresponded to 20,337,710 shares with voting rights with respect to Axel Springer AG s share capital totaling 34,000,000 shares with voting rights). Friede Springer GmbH & Co. KG holds voting rights totaling % as a result of the attribution of voting rights held directly by Axel Springer Gesellschaft für Publizistik GmbH & Co. (corresponds to 17,000,010 shares with voting rights) in accordance with section 22 (1) sentence 1 no. 1 WpHG, and the attribution of voting

18 18 Annual Financial Statements of Axel Springer AG rights amounting to 9.82 % held as treasury shares (corresponds to 3,337,700 shares) by Axel Springer AG in accordance with section 22 (1) sentence 1 no. 1 WpHG. Friede Springer Verwaltungs GmbH, Berlin, informed us in January 2006 in accordance with sections 21 ff. WpHG that at midnight on December 31, 2005/January 1, 2006, 12 a.m. its share of Axel Springer AG's voting rights had exceeded the threshold of 50 % and simultaneously also the thresholds of 5 %, 10 %, and 25 % and amounts to around % (this corresponds to 20,337,710 shares with voting rights with respect to Axel Springer AG s share capital totaling 34,000,000 shares with voting rights). Friede Springer Verwaltungs GmbH holds voting rights totaling % as a result of the attribution of voting rights held directly by Axel Springer Gesellschaft für Publizistik GmbH & Co. (corresponds to 17,000,010 shares with voting rights) in accordance with section 22 (1) sentence 1 no. 1 WpHG, and the attribution of voting rights amounting to 9.82 % held as treasury shares (corresponds to 3,337,700 shares) by Axel Springer AG in accordance with section 22 (1) sentence 1 no. 1 WpHG. AS Publizistik GmbH, Berlin, informed us in accordance with section 41 (2) sentence 1 WpHG in January 2006 that its share of Axel Springer AG's voting rights amounted to % on April 1, 2002 (corresponding to 17,000,010 shares with voting rights with respect to Axel Springer AG s share capital totaling 34,000,000 shares with voting rights). The voting rights are attributable to AS Publizistik GmbH in accordance with section 22 (1) sentence 1 no. 1 WpHG. Tweedy, Browne Company LLC, New York, USA, informed us in November 2003 and corrected in August 2004 that it had exceeded the voting rights threshold of 5 % on November 6, 2003, and that the share of voting rights attributable to it amounted to (rounded) 5.75 %, corresponding to 1,955,211 of a total of 34,000,000 registered shares with limited transferability and voting rights in Axel Springer AG. The voting rights are attributable to it in accordance with section 22 (1) no. 6 WpHG. threshold of 50 % on October 11, 2002, and has amounted to 60.4 % ever since % of these voting rights are attributable to her in accordance with section 22 (1) sentence 1 no. 1 WpHG. In addition, Dr. h.c. Friede Springer, Berlin, informed us in January 2003 in accordance with section 41 (2) sentence 1 WpHG that 50 % of the voting rights and 10 shares in Axel Springer AG were attributable to her on April 1, Accordingly, 50 % of the voting rights and 10 shares are attributable to her in accordance with section 22 (1) sentence 1 no. 1 WpHG. Axel Springer Gesellschaft für Publizistik GmbH & Co., Berlin, informed us in April 2002 in accordance with section 41 (2) WpHG that % (equals 50 % and 10 shares) of the voting rights in Axel Springer Verlag AG, Berlin, were attributable to it. (25) Profit utilization proposal The annual financial statements of Axel Springer AG, which were prepared in accordance with German commercial law and German laws applicable to stock corporations, show a fiscal year distributable profit of 158,304 thousand (PY: 145,112 thousand). Management Board and Supervisory Board will propose distributing a dividend of 4.80 (PY: 4.40) per qualifying share at the annual shareholder s meeting to be held on April 14, This dividend corresponds to a profit distribution of 157,344 thousand from the distributable profit. The remaining amount of 960 thousand will be allocated to other retained earnings. The treasury shares held by the Company do not qualify for dividends. The number of shares qualifying for dividends can change in the time remaining until the annual shareholder s meeting. In this case, an appropriately adjusted profit utilization proposal will be made to the annual shareholder s meeting, while retaining the proposal to distribute a dividend of 4.80 per qualifying share. Dr. h.c. Friede Springer, Berlin, informed us in January 2003 in accordance with section 21 (1) WpHG that her share of Axel Springer AG's voting rights exceeded the

19 Annual Financial Statements of Axel Springer AG 19 (26) Responsibility Statement To the best of our knowledge, and in accordance with the applicable reporting principles, the annual financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the combined management report of the Company and Axel Springer Group includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal opportunities and risks associated with the expected development of the Company. Berlin, February 16, 2011 Axel Springer Aktiengesellschaft (Dr. Mathias Döpfner) (Rudolf Knepper) (Lothar Lanz) (Dr. Andreas Wiele)

20 20 Bestätigungsvermerk des Abschlussprüfers Auditor s Report We have audited the annual financial statements, comprising the balance sheet, the income statement and the notes to the financial statements, together with the bookkeeping system, and the combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group of Axel Springer Aktiengesellschaft, Berlin, for the fiscal year from January 1 to December 31, The maintenance of the books and records and the preparation of the annual financial statements and combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group in accordance with German commercial law are the responsibility of the Company's management. Our responsibility is to express an opinion on the annual financial statements, together with the bookkeeping system, and the combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group based on our audit. We conducted our audit of the annual financial statements in accordance with Sec. 317 HGB ["Handelsgesetzbuch": "German Commercial Code"] and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the annual financial statements in accordance with German principles of proper accounting and in the combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Company and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the books and records, the annual financial statements and the combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group are examined primarily on a test basis within the framework of the audit. The audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the annual financial statements and combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the annual financial statements comply with the legal requirements and give a true and fair view of the net assets, financial position and results of operations of the Company in accordance with German principles of proper accounting. The combined management report of the Axel Springer Aktiengesellschaft and Axel Springer Group is consistent with the annual financial statements and as a whole provides a suitable view of the Company's position and suitably presents the opportunities and risks of future development. Berlin, February 22, 2011 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Plett Wirtschaftsprüfer [German Public Auditor] Glöckner Wirtschaftsprüfer [German Public Auditor]

21 .