Quarterly Financial Report. January 1 to March 31, 2008

Transcription

1 08 Quarterly Financial Report January 1 to March 31, 2008

2 Group Key Figures Quarterly Financial Report January March 2008 Axel Springer AG Group Key Figures in millions Q IFRS Q IFRS Change yoy Revenues % Adjusted for consolidation effects % International revenues % EBITDA 1) % EBITDA margin 1) 12.3 % 17.9 % EBITA 1) % EBITA margin 1) 9.9 % 15.3 % EBIT 1) % Consolidated net income > 100 % Total assets 2) 3, , % Equity 2) 1, , % Equity ratio 2) 38.1 % 31.7 % Capital expenditures 3) % Cash flow from operating activities % Net debt 2) Earnings per share (diluted, in ) > 100 % Closing price 2) (in ) % Employees (average number) 10,604 10, % 1) Adjusted for non-recurring effects and effects of purchase price allocations. 2) As of March 31, 2008 and December 31, 2007, respectively. 3) Thereof capital expenditures on intangible assets, property, plant and equipment and investment property in Q1 2008: 10.3 million (PY: 9.5 million). 1

3 Quarterly Financial Report January March 2008 Axel Springer Group Overview In the first quarter of 2008, Axel Springer pressed forward with its strategic transformation into an optimally integrated, pan-european multimedia enterprise. In the German market, Axel Springer successfully asserted its uncontested position as the biggest newspaper publisher and third-biggest magazine publisher. Thanks to the innovative concepts employed, many of the company s titles managed to buck the trend of decreasing circulation numbers. On the international side, the success of the company s growth initiatives in recent years, coupled with the newly acquired print and online business ventures, bolstered Axel Springer s presence in the other countries of Europe. Once again, the company s online portals demonstrated extraordinarily strong growth. These information offerings, some of which registered triple-digit gains in page visits, have already established a powerful platform from which Axel Springer can capture a disproportionately large share of the dynamically expanding online advertising market. Axel Springer has likewise established the organizational prerequisites that will enable the company to successfully pursue a brand-driven multimedia strategy entailing the further convergence of print and digital media. Having purchased the remaining 37 % of the equity in Bild.de, Axel Springer is now at liberty to manage the BILD family of brands on a complete multimedia basis. In support of this goal, the editorial staffs of BILD und BILD am SONNTAG were relocated to Berlin, where an integrated newsroom for print and online media has been created for the BILD Group. The advertising marketing departments of BILD Group, the magazines and digital formats have been consolidated under the roof of a new, cross-media marketing unit known as Axel Springer Media Impact. From the moment it was created, this new entity was instantly the biggest convergent media marketer in Germany. The crossmedia strategy of the Axel Springer Group was further bolstered by the reorganization of Management Board divisions in the first quarter. Due in particular to consolidation effects related to last year s acquisitions of the online marketer zanox.de and the women s portal aufeminin.com, Axel Springer s first quarter revenues of million were 8.5 % higher than the corresponding yearago figure. At 78.7 million, the EBITDA (adjusted for nonrecurring effects) was lower than the corresponding year-ago figure of million. This decrease was largely caused by the relocation of BILD staff, by the reduced investment income from Dogan TV as a result of foreign exchange effects and by the lower print advertising revenues. The net income for the first quarter, which at million was many times higher than the year-ago figure of 44.0 million, contains the profit on the sale of shares in ProSiebenSat.1 Media AG. The Management Board is reaffirming its forecast issued on the occasion of the annual financial statements press conference, that the company s EBITDA (adjusted for the income from the Kirch insolvency and the dividend on the investment in ProSiebenSat.1 Media AG, which has since been sold) and total revenues for the full year 2008 will both be higher than the corresponding year-ago figures. 2

4 Organizational Structure and Segments Organizational Structure Effective January 1, 2008, Axel Springer conducted a cross-segmentary reorganization of its Management Board divisions and thereby created new areas of responsibility on the highest management level. As part of this process, the BILD Group was reassigned to the Magazines division, which was accordingly renamed the BILD Group & Magazines division. The Newspapers division (excluding BILD Group) was expanded by the addition of the international business and accordingly renamed the WELT Group/Regional Newspapers & International Business division. Within the newly created BILD Group & Magazines division, the newspapers BILD and BILD am SONNTAG and all the magazines were consolidated within a total of four publishing groups as well as an advertising sales and marketing unit. The management of the brand-derived online business ventures is closely coordinated with this division. As of January 2008, the new unit Axel Springer Media Impact has assumed responsibility for marketing the print titles and the related digital media within this division. It markets the entire portfolio of brands in all types of media. With a gross coverage of more than 66 million readers and users, it is Germany s biggest convergent media marketer. Effective February 1, 2008, Axel Springer consolidated all its women s, youth and music magazines, as well as the corresponding online offerings, within the new publishing group Women & Lifestyle, which encompasses numerous operating sites. Another new publishing group, Computer, Auto, Sports, was created on May 1, The reorganization also entailed the earlier creation of the publishing groups BILD and BILD am SONNTAG and Program Media and the new sales and marketing unit. Segmentation With regard to the segmentation of its operating activities, Axel Springer has elected to apply the new international accounting standard IFRS 8 Operating Segments ahead of time, beginning in the first quarter of In accordance with the so-called management approach, Axel Springer has created a wider range of operating segments, principally based on its internal management and reporting structures. The prior-year comparison figures were adjusted accordingly. The key elements of Axel Springer s business strategy market leadership in the German-language core business, internationalization and digitization can now be presented without overlaps and with the greatest possible transparency. Important changes are represented by the fact that the digital media, including the brand-derived online activities, are now consolidated within a single segment and the fact that the German and international print media are now presented separately. The segment Newspapers National encompasses all the German newspapers and advertising supplements, the segment Magazines National all the magazines distributed in Germany. All the newspapers and magazines published outside Germany have been consolidated within the new segment Print International. The Digital Media segment encompasses all the online activities in Germany and abroad, also including, for example, the portals of the BILD Group and the WELT Group, as well as the activities and investments in the TV/radio sector. The former Printing segment (consisting mainly of the company s own newspaper printing plants) was integrated into the Services/Holding segment. Because several of the online companies acquired in fiscal year 2007 were not yet included in the full-year consolidated financial statements, Axel Springer is presenting unaudited pro-forma digital media revenues in addition to the revenues of the Digital Media segment. The revenues of the company zanox.de are included at the rate of 60 %, corresponding to the structure intended by the shareholders at the time of the acquisition. General Economic Conditions State of the Economy According to the preliminary estimates of economic research institutions, the global economy expanded at a somewhat slower pace in the first quarter of 2008, as compared with the year-ago quarter. Although the countries of Eastern Europe and the emerging markets of Asia continued to experience dynamic growth, the Western industrialized nations saw their economic growth rates slow down in the first quarter. This slowdown was much 3

5 more pronounced in the United States than in Western Europe. The ongoing housing and financial crisis and the rising cost of energy and food pose serious risks to economic growth. Adjusted for inflation, the gross domestic product of Germany expanded at a rate of 1.8 % in the first quarter of 2008, that being much slower than the growth rate in the first quarter of 2007 (3.4 %). Thus far, however, the German economy has proved to be resilient in the face of the recessionary tendencies emanating from the United States. As in earlier years, the main growth drivers were exports and business investment. The business investment in the first quarter of 2008 was higher than the corresponding figures both for the fourth quarter of 2007 and the year-ago quarter. Hampered by the appreciably higher energy and food prices, consumer spending increased by only a small amount. Also, the consumer sentiment index published by economic research institution Gesellschaft für Konsumforschung (GfK) remained cautious. The inflation rate rose to 2.9 % in the first quarter of 2008 (PY: 1.8 %). Industry Environment The trend observed last year in the German press distribution market continued in 2008, as the total paid circulation of newspapers and magazines fell 3.6 % from the first quarter of 2007 and 0.1 % from the fourth quarter of Thanks to last year s price increases, the circulation revenues were only 2.4 % lower than the corresponding year-ago figure. In view of the economic uncertainties and subdued domestic demand, advertising customers held back on their spending in the first quarter of The total gross advertising market, including traditional online advertising (except search term marketing and affiliates) and excluding media advertising, amounted to 4.25 billion, indicative of a 2.0 % increase over the year-ago figure. This increase was mainly due to the higher gross advertising revenues in the German online market. By contrast, the gross advertising revenues of the print media (excluding classified ads, advertising supplements and media advertising) decreased 2.9 % to reach 1.66 billion. Due to the growing pressures on advertising rates, the situation of net revenues was considerably less favorable in all media categories. Advertising market figures for the other countries of Europe are not available on a quarterly basis. The 375 daily and Sunday newspapers tracked by IVW attained a total paid circulation of million copies per issue, 2.1 % less than the corresponding figure for the first quarter of As compared with subscription newspapers, single-unit sales sustained a much deeper loss of 4.8 %. The total paid circulation of weekly newspapers was slightly higher in the first quarter of Within the press distribution market, the overall demand for newspapers, weighted to account for the different publication frequencies, declined by 2.5 %. The gross advertising revenues of newspapers (excluding classified ads, advertising supplements and media advertising) declined 4.2 % to million. The spending behavior of advertising customers in the automotive and financial sectors, as well as telecommunications, clothing and entertainment electronics, was especially restrained. Including classified ads, which represent a key source of revenues for subscription newspapers, the advertising expenditures in the first quarter of 2008 were 5.8 % lower than the corresponding year-ago figure. On a comparable basis, the paid circulation of generalinterest magazines was 3.8 % lower than the corresponding figure for the first quarter of As in the case of newspapers, single-unit sales of magazines exhibited the greatest decline. The demand for general-interest magazines declined 6.9 %, after weighting to account for the different publication frequencies. The gross advertising revenues (excluding media advertising) came to million in the first quarter of 2008, 1.5 % lower than the corresponding year-ago figure. The magazine categories that sustained the greatest circulation losses were glossy current-interest magazines, TV listings and financial/business titles. On the other hand, the biweekly and monthly women s magazines, as well as lifestyle magazines, saw their circulation increase over the year-ago period. In the German online market (traditional online advertising, excluding search term marketing and affiliates), the trend of strong growth of gross advertising revenues continued in the first quarter of According to Nielsen Media Research, the gross advertising revenues in this market (excluding media advertising) amounted to million, indicative of a 42.9 % increase over the year-ago figure. The gross advertising revenues of advertising TV (excluding media advertising) increased 4.3 % to 1.92 billion in the first quarter of 2008, while radio advertising revenues sustained a substantial decrease of 10.1 % from the corresponding year-ago figure. 4

6 Business Developments and Operating Results Group Business Developments Despite the largely difficult market conditions in the first quarter, Axel Springer successfully pursued its threefold strategy of market leadership in the German-language core business, internationalization and digitization. The systematic cross-media orientation of the BILD family of brands was an important step in this direction. Effective January 3, 2008, Axel Springer AG purchased the remaining 37 % of the shares in Bild.T-Online.de AG & Co. KG that had formerly been held by Deutsche Telekom AG. The company, which now goes by the name BILD digital GmbH & Co. KG, is an important element of the crossmedia growth strategy of Axel Springer. The consolidation of the BILD brand family with the magazines in a single Management Board division and the convergent marketing pursued by Axel Springer Media Impact likewise support the convergence of print and online media and facilitate the implementation of joint editorial concepts and marketing strategies. Moreover, particular attention was given in the first quarter to the integration and strategic development of the companies acquired in the previous year, including Jean Frey AG (known today as Axel Springer Schweiz AG) in Switzerland, the 60 % investment in ZANOX.de AG, a leading international provider of success-based online marketing services, and the majority interest (68.2 %) in the leading European web portal for women, aufeminin.com. The sale of the indirect investment in ProSiebenSat.1 Media AG by Axel Springer AG to Lavena Holding 5 GmbH, Munich, according to the terms of the share purchase agreement of December 2007, was formally completed on January 15, Based on the profit contribution statement, the preliminary sale proceeds amounted to million. The preliminary pre-tax profit on the sale of these shares and on the disposal of the shares in SAT.1 Beteiligungs GmbH, Munich, totaled million. The parent company of the PIN Group filed for insolvency on January 25, At this time, the assets and liabilities held for sale were deconsolidated and the effects were recognized directly in equity. Operating Results The Group s total revenues increased 8.5 % to million (PY: million). A significant portion of this increase resulted from the companies acquired in the previous year, including ZANOX.de AG and aufeminin.com S.A., in particular. Adjusted for these consolidation effects, the first-quarter 2008 revenues of million were slightly less than the corresponding year-ago figure of million. In pursuing the threefold strategy of market leadership in the German-language core business, internationalization and digitization, Axel Springer places a high priority on customer orientation. In this regard, Axel Springer has set itself the goal of becoming Europe s most customerfriendly media company by the year Thanks to the far-ranging measures and actions that have already been implemented, the customer loyalty index, a differentiated measurement and evaluation system developed last year that measures the customer loyalty of readers, users and advertising customers, showed significant improvement in the first follow-up measurement conducted towards the end of 2007/beginning of The data are collected and analyzed by TNS-Infratest. 5

7 The decreased revenues in the segments Newspapers National and Magazines National were offset by increased revenues in the international business and in digital media. Nonetheless, the print media published in the German market are still the biggest revenue contributor by far, accounting for 68.2 % (PY: 78.0 %) of the total revenues of the Axel Springer Group. At million, the circulation revenues were approximately equal to the corresponding year-ago figure of million. The advertising revenues increased 11.2 % over the year-ago quarter to reach million in the first quarter of 2008, mainly due to the positive development of the international and digital business lines. The category of other revenues increased substantially from 38.3 million to 58.5 million, mainly as a result of the newly acquired companies. The international revenues rose 29.0 % to million, mainly as a result of the first-time consolidation of the revenues of zanox.de and aufeminin.com as well as consolidation effects in Switzerland. At million, the total expenses contained in the EBITDA for the first quarter of 2008 were 13.8 % higher than the year-ago figure of million. This increase resulted mainly from the newly acquired companies and from the organic growth initiatives. As well, this figure contains heightened expenses of 7.5 million for the relocation of the editorial staffs of BILD and BILD am SONNTAG from Hamburg to Berlin. These expenses are distributed among several different items of the income statement. At million, the purchased goods and services were substantially higher, by 18.2 %, than the corresponding year-ago figure. The principal reason for this increase was the first-time consolidation of ZANOX.de AG, with its success-based business model. The personnel expenses amounted to million (PY: million). Most of the increase over the yearago figure can be attributed to the higher number of emplo-yees resulting from the organic growth initiatives and the acquisitions effected in the meantime. At 19.5 million, the depreciation, amortization and impairments were likewise higher than the corresponding year-ago figure of 16.2 million. The main reason for this increase was the higher level of scheduled depreciation from purchase price allocations in the total amount of 4.3 million (PY: 0.7 million), most of which was related to the acquisition of equity interests in the Digital Media segment. The 9.8 % increase in the other operating expenses, bringing that figure to million (PY: million), was mainly due to the newly consolidated companies and the organic growth initiatives in the online sector. The income from investments in the amount of million (PY: 8.8 million) was substantially affected by the million gain on the sale of shares in ProSieben- Sat.1 Media AG. Adjusted for this non-recurring effect, the income from investments decreased from 4.1 million in the year-ago quarter to the negative figure of 7.2 million in the first quarter of 2008, due in particular to the lower income from the associated companies accounted for by the equity method. This decrease was caused, in turn, by an expense of 9.2 million in the result from Dogan TV Holding A.S., due to unfavorable exchange rate developments. The net financial expenses of 18.0 million (PY net financial expenses: 10.0 million) reflect the heightened level of drawdowns under the credit facility extended to the company, as compared with the year-ago quarter. The increased borrowing resulted from the loans taken out to finance a part of the acquisition of new business activities. Following the sale of the company s investment in ProSiebenSat.1 Media AG, Axel Springer reduced its financial liabilities substantially from the corresponding level at December 31, 2007 (see page 15). Another contributing factor was the lower fair value of the call options on shares in Axel Springer AG granted by the shareholders H&F Rose Partners, L.P. und H&F International Rose Partners, L.P. The fair value of these call options varies in proportion to the price of the Axel Springer shares, which declined in the first quarter of

8 Due primarily to the gain on the sale of shares in ProSiebenSat.1 Media AG, the income from continuing operations for the first quarter of 2008 reached the very high level of million (PY: 45.2 million). Adjusted for this gain on the sale of shares and for the effects of the purchase price allocation, Axel Springer generated earnings before interest, taxes and amortization of goodwill (EBITA) of 63.5 million (PY: 90.6 million). The adjusted EBITDA came to 78.7 million (PY: million). Circulation Newspapers National Average paid circulation, IVW data Q Change yoy BILD 3,326, % BILD am SONNTAG 1,680, % DIE WELT/ WELT KOMPAKT 278, % WELT am SONNTAG 404, % HAMBURGER ABENDBLATT 254, % BERLINER MORGENPOST 148, % B.Z./B.Z. am SONNTAG 203, % Our flagship title BILD achieved a circulation of 3.33 million copies ( 3.4 %). With 11.6 million readers, BILD is still the widest-circulated, most-read newspaper in Europe by a wide margin. After finding that last year s 0.10 price increase to 0.60 per copy in the selected cities of Frankfurt, Hamburg und Stuttgart was well received by readers, BILD raised the copy price to 0.60 in all the states of western Germany, effective May 5, On May 18, 2008, the copy price of BILD am SONNTAG was raised by 0.10 to 1.50 throughout Germany. As the widest-coverage weekly newspaper in Germany, BILD am SONNTAG achieved an average circulation of 1.68 million in the first three months of 2008 (down 4.2 % from the corresponding year-ago period). Due to the substantial increase in the consolidated net income for the period, the earnings per share came to (PY: 1.35). This figure reflects the dilution effect of the stock options acquired in connection with the Management Participation Program. Business Developments and Operating Results Segments Newspapers National Considering the difficult market conditions, the German newspapers of the Axel Springer Group performed very well on the whole. An important event for both newspapers was the relocation of the editorial staffs from Hamburg to Berlin in March of In Berlin, the reporters and editors are now closer to the national political scene and to the culture and arts of the capital city. The staffs of BILD and BILD am SONNTAG have not been only spatially combined, the biggest integrated newsroom for print, online and moving image content was also created. BILD demonstrated its innovation capacity and blurred the boundaries between print and online media with the introduction of its 4242 service. Readers who want to learn more about a specifically designated article need only photograph the article with their mobile phone camera and upload the photo to the number 4242, whereupon they will receive immediate, direct access to supplementary multimedia content via the BILDmobil portal. 7

9 Bucking the general market trend, the circulation of DIE WELT (including the tabloid format WELT KOMPAKT) reached a new all-time high, selling 4.2 % more copies on average than it did in the first quarter of last year. Also, the average sales of WELT am SONNTAG increased 0.4 % over the year-ago period. Confirming its role as the leading innovation driver in the business, WELT KOMPAKT set a new milestone with the first nationwide making-of video blog. The average circulation figures of B.Z., as Berlin s biggest newspaper, as well as those of HAMBURGER ABEND- BLATT and BERLINER MORGENPOST, were basically unchanged in the first quarter of BERLINER MORGENPOST began the year on a high note by winning a total of ten awards. Among other things, BERLINER MORGENPOST was recognized for its front page, for its series of articles and for its especially good newspaper pages. In line with the market trend, B.Z. s circulation declined from the year-ago period, but improved significantly from the fourth quarter of This increase reflects the success of the systematically implemented value-added strategy, which has been well received by readers. To accompany a series of articles on tax issues, for example, a CD was provided so that readers can perform their own calculations. Key Figures Newspapers National in millions Q Q Change External revenues % Share of cons. revenues 46.2 % 53.2 % Circulation revenues % Advertising revenues % Other revenues % EBITDA % EBITDA margin 23.1 % 30.0 % The newspaper revenues declined 5.6 % to million (PY: million), mainly due to the lower advertising revenues of the BILD Group, which resulted, in turn, from the reorganization and relocation of the advertising marketing staff, among other factors. Newspapers were the Group s biggest revenue contributor, accounting for 46.2 % (PY: 53.2 %) of total revenues. At million, the circulation revenues were only slightly lower than the corresponding year-ago figure of million. The revenues of WELT Group and BERLINER MORGENPOST, in particular, were higher than the respective year-ago figures. The first-quarter advertising revenues were lower across the board, including at the BILD Group, the WELT Group and the regional newspapers. The total advertising revenues for the first quarter of 2008 were million (PY: million). Due in part to the lower advertising revenues and in part to the expenses related to the relocation of BILD and BILD am SONNTAG to Berlin, the EBITDA of 68.6 million was 27.3 % lower than the corresponding year-ago figure of 94.3 million. With an EBITDA margin of 23.1 % (PY: 30.0 %), the segment Newspapers National was the most profitable of all the Group s operating segments. Magazines National The magazines published by Axel Springer in Germany exhibited a mostly positive performance. The average circulation of the women s and youth magazines declined from the corresponding year-ago period, but many titles managed to stabilize their circulation numbers and some of them posted strong gains as compared with the fourth quarter of In the hotly contested market for TV listings, the declining sales of traditional formats were more than made up by the strong circulation gains of TV DIGITAL, Europe s biggest digital TV listing. The magazines of the BILD family of brands performed exceptionally well, achieving an increase in their overall circulation numbers. EBITA % EBITA margin 22.9 % 29.7 % 8

10 Circulation Magazines National Average paid circulation, IVW data Q Change yoy TV DIGITAL 2,064, % HÖRZU 1,472, % FUNK UHR 699, % BILDWOCHE 212, % TV NEU 157, % BILD der FRAU 1,058, % FRAU von HEUTE 262, % JOLIE 276, % COMPUTER BILD 758, % COMPUTER BILD SPIELE 334, % AUDIO VIDEO FOTO BILD 235, % AUTO BILD 642, % AUTOMOBIL TESTS 212, % AUTO BILD ALLRAD 61, % AUTO BILD MOTORSPORT 69, % AUTO BILD SPORTSCARS 68, % SPORT BILD 484, % EURO 172, % EURO am SONNTAG 111, % POPCORN 188, % MÄDCHEN 158, % MUSIKEXPRESS 52, % ROLLING STONE 55, % METAL HAMMER 47, % In the group of TV listings, the circulation of the biweekly TV DIGITAL surpassed 2 million copies per issue for the first time in the first quarter of 2008, confirming its status as one of the most successful new magazines introduced in the last few years. Compared with the first quarter of 2007, the average paid circulation increased 10.2 % to 2.06 million copies, which was also higher than the corresponding figure for the fourth quarter of TV DIGITAL registered gains in its single-unit sales, in particular. The circulation of TV GUIDE, which is not tracked by IVW, was relatively unchanged from the first quarter of In the group of weekly TV listings, HÖRZU maintained its No. 1 position in Germany, with an average circulation of 1.47 million copies ( 2.3 %). In line with the trend towards biweekly TV listings, the circulation numbers of FUNK UHR, TV NEU and BILDWOCHE declined in the first quarter of The total average circulation of the TV listings tracked by IVW was 1.6 % higher than the corresponding year-ago figure. In the group of women s magazines, BILD der FRAU successfully defended its strong position in a tough market environment characterized by predatory competition. Compared with the fourth quarter of 2007, BILD der FRAU increased its average paid circulation to 1.1 million copies in the first quarter of With currently 5.2 million readers, BILD der FRAU is the clear market leader in the segment of women s magazines. Although its circulation was down from the year-ago period, the monthly pocket-format periodical JOLIE reversed the downward trend in the first quarter of 2008 by increasing its average circulation over the fourth quarter of According to Media-Analyse 2008/I, JOLIE s coverage increased by around 80,000 readers. In the group of youth magazines, both MÄDCHEN and POPCORN achieved significant circulation gains over the fourth quarter of 2007 and recaptured some of the circulation losses sustained during the course of Starting in May 2008, YAM! will appear on a monthly basis with a new concept. As a consequence of the strategic reorientation of the company s women s, youth and music magazines, which have been consolidated within the new publishing group Women & Lifestyle, Axel Springer sold the men s lifestyle magazine MAXIM. The computer, automotive and sports magazines of the BILD Group performed very well in the first quarter of COMPUTER BILD improved its average paid circulation 3.6 % over the first quarter of 2007 and also achieved a significant gain over the fourth quarter of Both the subscription sales and the single-unit sales of Germany s biggest computer magazine exceeded the respective year-ago figures. With a current circulation of 9

11 about 758,000 copies, COMPUTER BILD reaches more than 4.1 million readers. Although their circulation numbers were down from the year-ago quarter, COMPUTER BILD SPIELE and AUDIO VIDEO FOTO BILD maintained their market leadership positions in their respective segments. Their circulation numbers were largely unchanged from the fourth quarter of Although its total sales were 2.5 % lower than the corresponding year-ago figure, AUTO BILD achieved significant circulation gains over the fourth quarter of According to Media-Analyse 2008/I, Europe s biggest auto magazine reached about 2.8 million readers. Thus, AUTO BILD managed to further extend its comfortable lead over the next-biggest competitor. In the group of biweekly and monthly special issues of AUTO BILD, AUTO TESTS achieved the greatest circulation increase ( %) over the year-ago period. Also positive were the circulation trends of AUTO BILD MOTORSPORT (+ 2.8 %) and AUTO BILD SPORTSCARS ( %). The first issue of the quarterly AUTO BILD KLASSIK sold more than 100,000 copies in March alone. SPORT BILD s circulation was higher than the year-ago figure by more than 30,000 copies. Both subscription sales and single-unit sales contributed to this 6.9 % increase. Packed with all kinds of editorial highlights and supported by numerous marketing actions, the 20th anniversary issue of SPORT BILD was a genuine sales hit. In the group of business magazines, the periodicals EURO and EURO am SONNTAG, both of which are published by Axel Springer Finanzen Verlag, experienced little change in their paid circulation numbers. Both magazines revamped their content and layout in the first quarter, to offer even more analysis, opinions and useful financial information. Key Figures Magazines National in millions Q Q Change External revenues % Share of cons. revenues 22.0 % 24.9 % Circulation revenues % Advertising revenues % Other revenues % EBITDA % EBITDA margin 17.6 % 13.5 % EBITA % EBITA margin 17.0 % 12.8 % The magazines published in Germany generated revenues of million, that being 3.9 % less than the corresponding year-ago figure of million. This decrease resulted from a number of factors, including the lower advertising revenues associated with the market situation, but also the sale of MAXIM, the discontinuation of STAR- FLASH and the conversion of YAM! from a weekly to a monthly periodical. The circulation revenues of this segment, at 94.0 million, were only slightly changed from the corresponding yearago figure of 95.7 million. The lower revenues from the women s, youth and music magazines were offset by higher revenues from the computer, auto and sports magazines. Moreover, the circulation revenues of the TV listings were slightly higher than the corresponding figure for the first quarter of last year. In total, the advertising revenues of the segment Magazines National amounted to 43.6 million (PY: 47.2 million). The positive performance of TV DIGITAL and BILD der FRAU, in particular, was not enough to completely offset the revenue declines sustained by the computer magazines, among others. Despite the lower revenues of this segment, the segment EBITDA rose 26.0 % over the corresponding year-ago figure to reach 24.9 million, thanks to strict cost man- 10

12 agement and the lower level of start-up losses and development costs for new titles. The women s magazines in particular achieved significant earnings improvements. Print International Axel Springer s newspapers and magazines in the other countries of Europe besides Germany continued on a course of growth in the first quarter of Both the circulation revenues and the advertising revenues of these publications were significantly higher than the respective year-ago figures. The titles in Poland and Switzerland reported especially strong gains. In Poland, Axel Springer Polska further extended its leading market position in the segment of national daily newspapers. Based on paid circulation, the tabloid FAKT, the premium newspaper DZIENNIK and the sports newspaper PRZEGLAD SPORTOWY together achieved a market share of 44.9 %. Towards the end of the first quarter, Axel Springer acquired the regional daily sports magazine SPORT from the Polish publisher KTK Sport. In Hungary, the paid circulation numbers of the Sunday and business newspaper and the eight regional newspapers were largely unchanged from the year-ago period. Axel Springer continues to be the leading publisher of TV listings and auto magazines in this country. The advertising business of the magazines exhibited a positive trend. For example, the TV listing TVR-HÉT increased its advertising revenues substantially after revamping its content and layout. In Switzerland, Axel Springer successfully completed the integration of Jean Frey AG and the Ringier TV listings, which had been acquired in Both these companies are highly profitable, delivering earnings contributions in excess of the original assumptions at the time of the respective acquisitions. Axel Springer Switzerland also managed to expand its business through organic growth. The most important single measure was the relaunch of the biweekly investor magazine STOCKS with a new layout, revamped design and expanded share price tables. The weekly business magazine HANDELSZEITUNG continued to benefit from the discontinuation of the competing title Cash, which ceased publication last year. The conversion of the subscriber base of the weekly business magazine Cash is proceeding according to plan. Most of the former Cash subscribers have decided for HAN- DELSZEITUNG. HANDELSZEITUNG also experienced a significant increase in its advertising revenues in the first quarter of In Spain, the Spanish version of AUTO BILD further extended its lead over competing titles to solidify its status as the market leader in that country. Also, AUTO BILD 4x4 asserted its position as the best-selling magazine in the specialty segment of four-wheel drive automobiles. Starting in the first quarter of 2008, COMPUTER HOY has been offered in two versions, with or without an accompanying CD. This feature has had an appreciably positive impact on the total paid circulation of this magazine. In the segment of computer game magazines, Axel Springer maintained its position as the unchallenged No. 1 magazine of its kind. In Russia, COMPUTER BILD continued the positive sales trend by increasing its average circulation by around 25 % over the year-ago figure, despite the higher copy price. According to a recent Gallup readership analysis (March 2008), the Russian licensed edition of OK! extended its leadership position in the segment of weekly people magazines by further extending its lead over its next direct competitor. Key Figures Print International in millions Q Q Change External revenues % Share of cons. revenues 15.3 % 15.7 % Circulation revenues % Advertising revenues % Other revenues % EBITDA EBITDA margin 0.7 % - EBITA EBITA margin

13 The segment Print International generated revenues of 97.9 million in the first quarter of 2008, that being 5.2 % higher than the corresponding year-ago figure of 93.1 million. The percentage of the Group s total revenues contributed by the segment Print International declined slightly from 15.7 % to 15.3 %. At 54.1 million, the circulation revenues of the segment Print International were 8.0 % higher than the year-ago figure of 50.1 million, mainly as a result of the expanded business of Axel Springer Switzerland, which acquired three TV listings (TELE, TV4 und TV2) in mid-2007, the revenues from which are not included in the prior-year comparison figure. The circulation revenues generated in the Russian market were likewise higher than the corresponding year-ago figure. The circulation revenues generated by Axel Springer s activities in Poland and Hungary were basically unchanged from the respective year-ago figures, while those in the Spanish and French markets were slightly lower. The substantial 13.8 % increase in the advertising revenues of the segment Print International, which amounted to 39.3 million in the first quarter of 2008 (PY: 34.5 million), was driven by strong gains at FAKT and DZIENNIK in Poland and by the higher revenues in Switzerland and Russia. The category of other revenues was impacted by the planned non-continuation of sales promotions in Poland. Due to the higher revenues, and despite the continued high level of start-up losses, the EBITDA of the segment Print International improved slightly from 2.0 million to 0.7 million in the first quarter of Digital Media Strategic expansion of the portfolio, dramatic increase in visitor numbers, page impressions and advertising revenues, closer linkage of online offerings with the company s print media: These and other developments in the first quarter of 2008 demonstrate that Axel Springer s online initiative is in full swing and is already yielding measurable successes. The online initiative is based on the company s three core competencies. Axel Springer is seeking to transfer its existing print brands and content to digital distribution channels and to open up new distribution channels by acquiring additional online brands. Furthermore, Axel Springer is expanding its activities in the area of online marketing and strengthening its competitive position in the market for online classified ads and market places by expanding its own portals and related portfolio investments. Visits Digital Media Offerings (selection) in thousands Q ) Change yoy 56, % 18, % 2) 14, % 2) 7, % 3) 7,520 1,059 % 4) 5, % 2) 4, % 4,500 9 % 4,402 9 % 3, % 2, % 2, % 1) Source: IVW data, monthly average. 2) Company data. 3) Company data for Q1 2007, IVW data for Q ) PIs of aufeminin worldwide network 500 million (source: Smart Adserver, March 2008). The user numbers of the online and mobile portals of the newspapers and magazines increased significantly in the first quarter of In connection with the acquisition of all the shares in the digital offering of the BILD family of brands, Axel Springer directly bolstered its market position by means of a comprehensive relaunch, which was continued in the first quarter of Its monthly visits having increased 31 % to 56.2 million and its page impressions 8 % to million, Bild.de has become a leading information and entertainment portal in the German Internet. The new video portal has been especially successful. In March 2008, Bild.de had more than 14.5 million video hits, instantly making it one of the leading moving image platforms in the Internet. Furthermore, the major regional editions of Bild.de in Hamburg and Berlin have launched their own websites offering a wealth of information and services about life in these cities. With about 10 million page impressions in a month s time, BILDmobil has 12

14 advanced to the status of Germany s largest mobile information portal in the shortest period of time. The new 4242-Service (see page 7), which links the print edition with BILDmobil, demonstrates that integrated crossmedia journalism models are being very well accepted by customers. WELT ONLINE, the news portal of the WELT Group, is by far the fastest-growing of all the German premium newspaper portals. The monthly visits in the first quarter of 2008 jumped 162 % from the year-ago figure to reach the new record level of 18.4 million and the page impressions more than tripled over the same period. Consequently, WELT ONLINE is now the leading premium newspaper portal in the German Internet. The mobile portal WELT MOBIL revamped its user interface and broadened its information offering. Thanks to new technology, the page loading times have been substantially reduced. abendblatt.de, the online portal of HAMBURGER ABEND- BLATT, scored big points with its users by offering a realtime election market to accompany the Hamburg city council election and by redesigning its travel channel. The online sites of the German-language magazines also experienced significant growth. In the first quarter of 2008, computerbild.de set new records with regard to visits and page impressions. Compared with the fourth quarter of 2007, it is the fast-growing portal among its competitors. The number of registered users increased substantially. Having acquired the DSL Speedtest with the domain name wieistmeineip.de, computerbild.de now operates the leading, editorially prepared DSL service environment in the German Internet. With an average of 4.4 million visits, autobild.de maintained its status as the leading online provider of editorial content on the subject of automobiles. One especially interesting product is the video podcast of autobild.tv, which can be downloaded free of charge from the Apple itunes Store. The appeal of this leading auto exchange was further bolstered by means of a cooperation arrangement with the online auction platform autorola.de. In cooperation with nugg.ad, autobild.de improved the precision and effectiveness of its advertising for the benefit of its advertising customers. Also, Axel Springer pursued the further digitization of its women s media. Following their extensive relaunches, the portals bildderfrau.de and frauvonheute.de saw their page impressions increase substantially. The site cora.de introduced a new user interface to enhance the user-friendliness of this shop, which specializes in romance novels. Following its relaunch in August 2007, jolie.de attained the fastest growth of all the women s portals in Germany, rising to the rank of fourth place in that group. Its page impressions rose to nearly 9 million in March aufeminin.com, the biggest European general-interest portal for women, reached an average of 21.4 million unique users per month in the first quarter of 2008, indicative of a 13.6 % increase over the corresponding year-ago figure. The gross advertising and service revenues of the aufeminin Group rose 8 % to 5.0 million in the first quarter of The decrease in France was offset by strong gains in other European countries, partially as a result of new activities in Germany and the United Kingdom. Due to the costs of further bolstering the company s international structures, the operating income of this exchange-listed company decreased from 2.8 million in the strong first quarter of 2007 to 1.9 million in the first quarter of The company invested additional resources in content development and hired new employees. Within its worldwide network, aufeminin generates more than 500 million page impressions per month, giving it a powerful competitive edge (source: Smart Adserver, March 2008). The core competencies of aufeminin include the interactive presentation of specific women s issues and its experience in online marketing. The goal at present is to further pursue the European growth strategy. Having increased both its coverage and the number of postings on its site, idealo.de reinforced its position as one of the leading product and price search engines in Germany. And the number of properties listed on the real estate exchange immonet.de increased by nearly a third over the year-ago figure. In cooperation with prestigious partners, the online jobs portal stepstone.de introduced an executive channel targeting highly qualified professionals in the first quarter. Launched in October 2007, the e-commerce platform myby.de doubled its monthly visits over its first month in business and expanded its offering by adding new features, among them mybytv. 13

15 ZANOX.de AG, the leading provider of success-based online marketing services, in which Axel Springer acquired a majority interest last year, successfully pursued its internationalization plans in the first quarter of The company opened new offices in New York, Warsaw and Zurich, creating the basis for even more intensive contacts with international advertising customers. As part of the further integration of zanox.de with the Axel Springer Group, various joint marketing activities were initiated, leading to the acquisition of new customers. Furthermore, the technology of zanox.de is being used increasingly within the Axel Springer Group. For its extraordinary business model based on partnerships and an innovative tracking system, zanox.de received the 2008 Innovation Award of the Mid-sized Companies Initiative and the Platinum European Seal of E-Excellence of the European Multimedia Forum in the first quarter of In May 2008, Germany s biggest finance community wallstreet:online introduced a new mobile access program, enabling users to access the portal s financial information and services from their mobile phones. A website relaunch is planned for the summer of this year. In the first quarter, however, wallstreet:online suffered from the adverse effects of the current financial markets crisis. The investor relations business, which is closely tied to the capital markets, was especially hard hit by the cautious restraint of exchangelisted stock corporations. As a result of these factors, the first-quarter revenues of wallstreet:online, at 1.4 million, were 0.9 million lower than the corresponding year-ago figure. Thanks to cost reductions, however, the company s EBITDA increased 0.1 million ( %) to 0.7 million in the first quarter of Axel Springer s digitization initiative also extended to the online portals of its international newspapers and magazines. Following the relaunch in November 2007, the Polish news portal DZIENNIK ONLINE has achieved excellent growth. Its page impressions in the first quarter of 2008 were 19 % higher and the number of unique users was substantially higher than the respective year-ago figures. In Switzerland, the online edition of HANDELSZEITUNG improved its position by means of a relaunch at the end of last year. In the first quarter of 2008, 63,300 unique users, that being 50 % more than the corresponding year-ago figure, took advantage of the considerably broadened offering. And Axel Springer s online offerings in Hungary, including the regional news portals which have since grown to the number of eight, likewise experienced strong growth in the number of users. Key Figures Digital Media in millions Q Q Change External revenues > 100 % Share of cons. revenues 12.7 % 3.3 % Advertising revenues > 100 % Other revenues > 100 % EBITDA 1) EBITDA margin - - EBITA 1) EBITA margin - - 1) Including investment income amounting to 12.2 million (PY: 1.7 million). In the first quarter of 2008, Axel Springer generated revenues of 81.5 million in its Digital Media segment, about four times as much as the corresponding year-ago figure of 19.5 million. Most of this increase resulted from the first-time consolidation of zanox.de and aufeminin.com. The pro-forma digital media revenues increased 22.8 %, from 50.3 million in the year-ago period to 61.8 million in the first quarter of The pro-forma digital media revenues, which include the companies acquired since 2006, are based on unaudited financial information. The revenues of the company zanox.de are included at the rate of 60 %, corresponding to the structure intended by the shareholders at the time of the acquisition. The EBITDA (adjusted for non-recurring effects) in the amount of 11.7 million (PY: 5.0 million) contains expenses for the company s investment in Dogan TV Holding A.S. Excluding the foreign exchange losses contained in the negative earnings contribution of Dogan ( 9.2 million), the EBITDA of the Digital Media segment was significantly higher than the corresponding year-ago figure, despite the heightened costs of new activities. Services/Holding The segment Services/Holding is comprised of the company s three own newspaper printing plants, the investment income of the rotogravure joint venture PRINOVIS 14