14Annual Report Contents

4 Foreword 78 Report of the Supervisory Board

6 Executive Board 86 Consolidated Financial Statements 87 Responsibility Statement 8 The Axel Springer share 88 Auditor’s Report 89 Consolidated Statement of Financial Position 10 Combined Management Report 91 Consolidated Statement of 12 Fundamentals of the Axel Springer Group Comprehensive Income 22 Economic report 92 Consolidated Statement of Cash Flows 41 Economic position of Axel Springer SE 93 Consolidated Statement of Changes in Equity 44 Events after the reporting date 94 Consolidated Segment Report 45 Report on risks and opportunities 95 Notes to the Consolidated 56 Forecast report Financial Statements 61 Disclosures and explanatory report of the Executive Board pursuant to takeover law 158 Boards 65 Corporate Governance Report

Group Key Figures

Continuing operations in € millions Change yoy 2014 2013 2012 Group

Total revenues 8.4 % 3,037.9 2,801.4 2,737.3

Digital media revenues share 53.2 % 47.5 % 42.4 %

1) EBITDA 11.6 % 507.1 454.3 498.8

1) EBITDA margin 16.7 % 16.2 % 18.2 %

2) Digital media EBITDA share 72.1 % 62.0 % 49.4 %

3) EBIT 9.7 % 394.6 359.7 413.6

Consolidated net income 31.9 % 235.7 178.6 190.7

3) Consolidated net income, adjusted 9.3 % 251.2 229.8 258.6

Segments

Revenues

Paid Models 2.6 % 1,561.4 1,521.5 1,582.9

Marketing Models 10.8 % 794.1 716.5 662.8

Classified Ad Models 27.2 % 512.0 402.6 330.2

Services/Holding 6.1 % 170.5 160.8 161.4

EBITDA1)

Paid Models – 2.4 % 244.2 250.1 301.8

Marketing Models 6.0 % 109.7 103.4 98.1

Classified Ad Models 35.2 % 221.4 163.8 133.6

Services/Holding − – 68.2 – 63.0 – 34.8

Liquidity and financial position

4) Free cash flow – 0.8 % 244.1 246.1 297.3

5) Capex − – 95.9 – 94.5 – 77.3

6) Total assets 16.4 % 5,557.7 4,773.8 4,808.2

6) Equity ratio 42.4 % 47.0 % 46.9 %

6) Net liquidity/debt − – 667.8 – 471.3 – 449.6

Share-related key figures7)

3) 8) Earnings per share, adjusted (in €) 11.2 % 2.01 1.81 2.20

Earnings per share (in €) 27.1 % 1.71 1.34 1.64

Earnings per share (in €), discontinued >100 % 6.37 0.65 0.78

9) Dividend (in €) 0.0 % 1.80 1.80 1.70

Year-end share price (in €) 7.2 % 50.08 46.70 32.29

10) Market capitalization as of December 31 7.2 % 4,954.9 4,620.5 3,189.9

Average number of employees 8.4 % 13,917 12,843 12,080

1) Adjusted for non-recurring effects. 2) EBITDA of Services/Holding segment not allocated to digital media. 3) Adjusted for non-recurring effects and amortization and impairments from purchase price allocations. 4) Cash flow from operating activities minus capital expenditures, plus cash inflows from disposals of intangible assets and property, plant, and equipment. 5) Capital expenditures on intangible assets, property, plant, and equipment, and investment property. 6) As of December 31, 2014 and December 31, 2014, respectively. 7) Quotations based on XETRA closing prices. 8) The earnings per share (basic/diluted) adjusted for non-recurring effects and amortization and impairments from purchase price allocations were calculated on the basis of average weighted shares outstanding in the reporting period (98.9 million). 9) Dividend proposal for the financial year 2014. 10) Based on outstanding shares at the closing price, excluding treasury shares.

Annual Report 2014 Foreword Foreword Axel Springer SE

When I look back to the 2014 financial year, I initially think The employees within our digital business, previously a - and I ask our shareholders to excuse me for a moment - peripheral part of our company, have become a core of our Christmas celebrations. It was a rather exuberant part of the company now in both an economic and cul- party for all company employees who work in Berlin and tural sense. Axel Springer is now truly a digital publisher. Hamburg. Almost 5,000 people were present. Bands and DJs from Berlin, New York, and Detroit were present. The 53.2 percent of total revenues in the year 2014 was gen- last guests were asked to go home at about 6:30 am. erated from the digital sector. 72.1 percent of our EBITDA The evening was fruitful for two reasons in particular: we was generated online. And 74.5 percent of advertising were able to thank our employees for their contribution to revenue came from marketing digital products. Our objec- an extremely successful and eventful financial year in a tive is clear: we will strive to become the leading digital way they certainly would never forget. It also became publisher. That means to become number one in all mar- clear to us once again how Axel Springer has become a kets in which we are active. This will be done via paid rather different company in a relatively short period of models, marketing models, and classified ad models, as time and just how far-reaching the structural and cultural was the case earlier when as an analog publisher and changes have been. Something is different. This was not leading provider of journalism, this success was monetized just because there were so many new colleagues - two- due to paying readers, advertisers and classified ad cus- thirds of employees had never been to an Axel Springer tomers. That is our business model, that is our strategy. Christmas party. Nor was it just because the average age has fallen dramatically. One could sense something elec- The year began with a turning point for the company and trifying, a different atmosphere. the employees who were affected by it. The sale of our regional newspapers, women's magazines and TV program guides to FUNKE Mediengruppe for € 920 million was completed, which corresponds to an EBITDA factor of 9.7 before tax. The first two-thirds of the purchase

Annual Report 2014 Foreword Axel Springer SE

price were transferred in accordance with the agreement. share package was immediately purchased in cash. Axel The resulting restructuring of central and service sectors Springer has a purchase option for the other half. If the was shaping the whole year, which will last into the 2015 option is exercised for granting shares, the result is that financial year. General Atlantic converts its remaining shares in the Classified Ads segment into Axel Springer shares and we At the same time we are also fully concentrating on will again gain 100 percent of profits from this fast- investments in our future growth businesses. growing, highly profitable and strategically exceptionally well-positioned business. The transaction also has a Implementation of successful, digital Paid Models was a beneficial side-effect: It shows that an extremely growth matter of high priority within the Paid Models segment in and value-oriented financial investor wishes to participate 2014. Our core brands BILD and WELT already achieved with a large investment in Axel Springer due to having over 310,000 digital subscribers in December (253,471 greater belief in their appreciation potential in synergy digital subscribers for BILD and 57,736 digital subscrib- compared to the Classified Ads model which is extreme- ers for DIE WELT). This development means that in the ly successful in its own right. face of the ever-expanding reach of both offers and the ever-increasing number of paid offers within the publish- Secondly: the start of preparations for converting the ing sector we are extremely confident. company into a KGaA (partnership limited by shares) was a further item of good news at the end of the year. The complete integration of the WELT Group and N24 Exchange-listed companies such as Merck, Henkel, or into a new multimedia news company for quality journal- Fresenius converted to this legal form years ago with ism is in full swing. great success for their shareholders, and the prerequi- sites should be de facto created so that Axel Springer We have announced that we will invest in English- remains a family business whilst being able to fully profit language journalism portals. With an equity stake in the from the ability to raise capital that is available to ex- US-American online magazine OZY, Axel Springer has change-listed companies. We intend to be able to grow added to its existing early stage investments in Silicon quicker and also be able to potentially carry out large, Valley. Along with POLITICO we are developing a new transformative acquisitions. European media portal for political journalism. It should therefore be possible to understand why we - Within the Marketing Models segment kaufDa has suc- regardless of inherent caution in our culture - look to the ceeded with a promising foray into the US market with future with great confidence - and that during our Retale.com. The Classified Ads portfolio was also en- Christmas celebrations even the Executive Board went hanced with a series of acquisitions including the pur- home in the early hours of the morning. chase of Jobsite, a successful job portal in Great Britain, the takeover of Yad2, the largest classified ads portal in Thank you kindly for the trust and confidence you have Israel, as well as takeovers of LaCentrale, the French placed in our company. classified ad portal for automobiles and @Leisure, the online broker for holiday real estate.

Two further strategic courses for the future took place at the end of the year.

Firstly: the announcement of the planned reacquisition of Sincerely yours, the 30 percent equity share in our very successful Classi- Mathias Döpfner fied Ads business held by General Atlantic. Half of the

Executive Board

Dr. Mathias Döpfner Jan Bayer Ralph Büchi

Chairman President BILD and WELT Group President International Division until April 2014 Born 1963, journalist. Born 1970, Master’s degree in Career milestones: media studies. Career milestones: Born 1957, business economist. Frankfurter Allgemeine Zeitung, Süddeutsche Zeitung; Publisher Career milestones: Editor Gruner+Jahr; Chief Editor Wochen- Volksstimme, Magdeburg; Publisher Handelszeitung; Chairman of post, Hamburger Morgenpost, Süddeutsche Zeitung; Chairman of the Executive Board of the and DIE WELT. Member of the the Executive Board of the WELT Handelszeitung publishing group; Executive Board since 2000, Group. Member of the Executive CEO Axel Springer Schweiz AG; Chairman since 2002. Board from 2012. President of Axel Springer International. 2012–2014 in the Executive Board. Since April 2014 President International of the Axel Springer SE.

6 Executive Board

Dr. Julian Deutz Lothar Lanz Dr. Andreas Wiele

Chief Financial Officer Chief Financial Officer and President Marketing and Chief Operating Officer Classified Ad Models Born 1968, Master’s degree in until April 2014 business administration. Career Born 1962, lawyer. milestones: OC&C Strategy Born 1948, Master’s degree Career milestones: Editor, Consultants; head of M&A/Investor in commerce. Career milestones: Hamburger Morgenpost; Head Relations Pixelpark AG; CFO Bayerische Hypotheken- und of Publishing Capital and Geo, Venturepark AG; CFO Steilmann- Wechselbank AG; member of Gruner+Jahr, Paris/France; Gruppe; Axel Springer International; the Executive Board at HSB Executive Vice President and Chief Head of Group Controlling/Corporate HYPO Service-Bank AG; Operating Officer of Gruner+Jahr Development Axel Springer SE. member of the Executive Board USA Publishing, New York. Since January 2014 member of the at Nassauische Sparkasse; Member of the Executive Board Executive Board. Since April 2014 member of the Executive Board since 2000. Chief Financial Officer. and Chief Financial Officer at ProSiebenSat.1 Media AG. 2009–2014 in the Executive Board. Since April 2014 member of the Supervisory Board of the Axel Springer SE.

Annual Report 2014 The Axel Springer share The Axel Springer share Axel Springer SE

Turbulent year on the Stock Exchange in reached on October 29, 2014 with a price of € 41.17. 2014 Market capitalization was almost € 5.0 billion at the end of 2014. The stock market has seen a turbulent year: the conflict in Ukraine, the ECB interest rates policy, and the falling Analyst coverage oil price are just some of the factors which contributed to considerable volatility on the financial markets. The Ger- The number of analysts publishing assessments of our man leading share index, the DAX, showed considerable shares rose from 18 to 21 during financial year 2014. fluctuations during the year of 2014, but finished the year Currently, seven brokers are expressing a “buy” recom- almost unchanged compared to its previous year-end mendation, twelve recommend “hold/neutral” and two analyst firms recommend “sell/underweight”. You can price (– 0.1 %), and also achieved an all-time high during December. The MDAX, in which also the Axel Springer find the latest recommendations and share price targets share is listed, faced similar developments to the DAX in the Investor Relations section of our website at and also finished the year at about the prior-year figure www.axelspringer.de.

(+ 0.1 %). With growth of 7.4 % the DJ EuroStoxx Media, which tracks the most important European media stocks, Investor relations showed greater development and reached a new five- year high at the end of December 2014. The company’s Management and Investor Relations team presented the company and its strategy at investor conferences and road shows in Europe and the United Performance Axel Springer Share States on a total of 21 days in 2014. In addition, we Axel Springer DAX 1)MDAX 1) DJ EuroStoxx Media 1) maintained an ongoing dialog with investors, analysts, and other capital market players in numerous discus- Closing price: € 50.08 sions and telephone conferences throughout the year.

50 As usual, the telephone conferences held in connection with the publication of our financial reports were broadcast live on the Internet as audio webcasts, after which they remained available to users of our website. The 45 seventh annual Capital Markets Day for analysts, institu- tional investors, and bank representatives was held at our company headquarters in Berlin on December 10, 40 2014. This event was broadcast live as a video webcast 01/01/14 12/31/14 and is available as a download from our website, togeth- 1) Indexed on the year-end share price of Axel Springer SE as of December 31, 2013. er with the presentations shown at the event. Finally, we inform you regularly of current events in the Investor Axel Springer share reaches a new all- Relations section of our website at www.axelspringer.de. time high

The Axel Springer share largely developed in line with the market during financial year 2014, but at the end of the year it was able to outperform the German benchmark indices. The price was € 50.08 at the end of the year, which represented a 7.2 % increase compared to the start of the year. Our share reached an all-time high of € 51.27 on February 21, 2014. The annual low was

Annual Report 2014 The Axel Springer share Axel Springer SE

Share Information or 100 % of their profit-sharing bonus or performance- dependent compensation into shares of Axel Springer SE. € 2014 2013 Change To those employees who opted to convert half their prof- Earnings per share1) 1.71 1.34 27.1 % it-sharing bonus or performance-dependent compensa-

Earnings per share (adjusted)1) 2) 2.01 1.81 11.2 % tion, Axel Springer contributed an additional 20 %, and to those employees who opted to convert the full amount, Dividend3) 1.80 1.80 0.0 % the company contributed an additional 30 %. The re- Total dividend payout (€ millions) 178.1 178.1 0.0 % quired holding period is four years, both for employees Year-end share price 50.08 46.70 7.2 % eligible for a profit-sharing bonus and for those with target Highest price 51.27 46.99 9.1 % agreements. The Axel Springer shares used in this case Lowest price 41.17 30.92 33.2 % were purchased on the stock market in advance. Market capitalization (€ millions)4) 5) 4,954.9 4,620.5 7.2 % Shareholder Structure Daily traded volume (Ø, € thousands) 6,574.4 6,981.3 – 5.8 %

Dividend yield3) 5) 3.6 % 3.9 % - Axel Springer Gesellschaft für Publizistik 6) Total yield per share per year 11.1 % 49.9 % - Dr. h. c. Friede Springer Dr. Mathias Döpfner 1) Continuing operations. 2) Adjusted for non-recurring effects and amortization and impairments from pur- Other shareholdings chase price allocations; on the basis of average weighted shares outstanding in the reporting period (98.9 million). 3) Dividend proposal for financial year 2014. 4) Calculated on the basis of the year-end closing price. 5) Based on shares outstanding, excluding treasury shares. 6) Share price development plus dividend payment.

40.2 % 51.5 % Annual shareholders’ meeting

The annual shareholders' meeting of Axel Springer SE took place in Berlin on April 16, 2014. Approximately 430 3.1 % shareholders or 79.8 % of capital carrying voting rights 5.2 % Status: December 31, 2014 participated. All resolutions proposed by the Manage- ment – including the proposal to pay a dividend of € 1.80 per qualifying share (PY: € 1.70) were approved by major- ities of at least 87.0 %. Based on the closing price of the company’s share at year-end 2013, the dividend yield Information on Listing came to 3.9 %. The total dividend pay-out was Share type Registered share with restricted transferability € 178.1 million. Stock exchange Germany (Prime Standard) Share ownership program Security Identification Number 550135, 575423 ISIN DE0005501357, DE0005754238

Our employees have the opportunity to benefit directly Thomson Reuters SPRGn.DE from the appreciation of the company’s value by partici- Bloomberg SPR GY pating in our share ownership program. Under this program, all employees of Axel Springer SE and its domestic subsidiaries who were eligible for a profit-sharing bonus for 2013, or who had entered into a target agreement, were given the chance in May 2014 to convert 50 %

Combined Management Report

12 Fundamentals of the Axel Springer Group

22 Economic report

41 Economic position of Axel Springer SE

44 Events after the reporting date

45 Report on risks and opportunities

56 Forecast report

61 Disclosures and explanatory report of the Executive Board pursuant to takeover law

65 Corporate Governance Report

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

Summary of business performance and advertising revenues will more than compensate for the operating results in 2014 fall in circulation revenues and other revenues.

The following statements refer exclusively to continuing We expect a rise in EBITDA in the high single-digit per- operations (see page 27). centage range. In this case a rise in EBITDA in the Clas- sified Ads Models and Services/Holding segments is Axel Springer has had a successful conclusion to the 2014 expected, whilst the EBITDA of Paid Models should finish financial year. The forecast targets published in March below the level of the prior year due to planned invest- 2014 were essentially attained (see page 58). ments in product quality and also in digitization. For the Marketing Models segment we also, amongst other During the financial year, the total revenues generated, things, expect EBITDA to be below the level of the prior year due to planned structural adjustments within per- worth € 3,037.9 million, were significantly higher (8.4 %) than the prior-year figure of (€ 2,801.4 million). All operat- formance marketing, planned expenditure for increasing ing segments contributed to this revenue growth. Adjust- competitiveness, and internationalization of digital busi- ed for consolidation and currency effects, total revenues ness models within the field of reach marketing. were above the level of the prior-year figure (+ 2.8 %). For EBIT we expect developments to be similar to those The pro-forma revenues of digital media activities for EBITDA. increased to € 1,705.8 million (PY: € 1,568.6 million), For the adjusted earnings per share we expect, due reflecting an organic growth rate of 8.7 %. to a lower proportion of adjusted consolidated net income that is due for minorities, an increase in the low EBITDA rose, compared to the previous year, by 11.6 % to € 507.1 million (PY: € 454.3 million). Furthermore, the double-digit percentage range compared to the prior- year figure. EBITDA margin also improved to 16.7 % (PY: 16.2 %). The growth of earnings in our Classified Ads and Market- ing Models are contrasted with falls in the case of Paid Introductory remarks Models and also in the Services/Holding segment. The The current combined management report for Axel Spring- EBITDA of digital activities rose by 29.9 % from € 281.6 million to € 365.8 million. er SE and the Group contains statements concerning the economic situation and business performance of the Axel The adjusted earnings per share for continuing opera- Springer Group. These statements are also largely applications of € 2.01 was above the prior-year figure of € 1.81. ble to the Axel Springer SE. Additional information on the economic situation of the parent company Axel Springer The Executive Board and Supervisory Board will propose SE is provided in a separate chapter on page 41. a dividend of € 1.80 (PY: € 1.80) per qualifying share at the annual shareholders’ meeting to be held on April 14, For the sake of better comparability, the operating earn- 2015. ings indicators EBITDA and EBIT have been adjusted for non-recurring effects and amortization and impairments Outlook for 2015 from purchase price allocations (see Section (31) of the notes to the financial statements). We anticipate in the Group that total revenues will be higher for the 2015 financial year than the prior-year figure by an amount in the low to mid single-digit percentage range. We assume that the planned increase in

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

Fundamentals of the Axel Springer Group

Segments

Axel Springer Group

Paid Marketing Classified Services/ Models Models Ad Models Holding

Business model the Executive Board and Supervisory Board after the as yet ongoing tax and legal audits are completed. As soon Axel Springer is a leading publishing company in Europe. as the audits are complete with the desired results and Journalism is the foundation of the business model. The the necessary preparatory work then the Executive Board broad-based media portfolio includes successfully estab- and Supervisory Board intend to put the conversion to lished brand families such as the BILD Group and the the vote at the annual shareholders' meeting. A decision WELT Group. Journalistic content is delivered to Internet is yet to be made regarding the exact point in time. users, readers, viewers, and advertising customers via digital, print, and TV channels. The portfolio is divided Segments of the Axel Springer Group into Paid Models which are generally used by paying readers, into Marketing Models where revenues are Axel Springer’s business activities are organized into primarily generated by advertising customers and into three operating segments: Paid Models, Marketing Classified Ad Models where revenues are primarily gen- Models, and Classified Ad Models. In addition, there erated by job ads, real estate and car ads. The focus is is the Services/Holding segment. on the digital transformation of the business. Building on its competencies in journalism, technology, and business The segment structure reflects the different customer administration, Axel Springer strives to become the lead- groups and revenue types of an increasingly digital ing digital publisher. publisher.

Legal structure, business locations Paid Models Axel Springer SE, as the flagship company of the Axel The Paid Models segment encompasses all business Springer Group, is an exchange-listed stock corporation models that are primarily used by paying readers. with its registered head office in Berlin. The Group also maintains offices at other locations in Germany. In addi- Portfolio and market position tion, the Group comprises numerous companies in other Paid Models are sub-divided into national and interna- countries. The consolidated shareholdings of the Group tional offerings. The principal activities are summarized in are listed in Section (42) in the notes to the consolidated the graph below. financial statements.

The Executive Board and Supervisory Board decided in December 2014 to prepare to change Axel Springer SE into a partnership limited by shares (KGaA) (see page 25). A final decision regarding the conversion will be made by

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

Portfolio Paid Models The WELT Group comprises the digital media offerings and the newspapers and magazines of the WELT family National International of brands. DIE WELT ONLINE is one of the most suc- BILD Group Switzerland Russia cessful online/mobile sites in the segment of German WELT Group France Spain premium newspapers. The offering is also available on Austria Belgium PC tablets, smartphones and e-readers, and also as a Ringier Axel Springer Media digital subscription model. The DIE WELT iPad app has Poland Slovakia the strongest turnover of any news app in the German Hungary Serbia app store. DIE WELT am SONNTAG is the undisputed

No.1 title in the nationwide premium newspaper sector. DIE WELT (including WELT KOMPAKT) is the third- National Paid Models are mainly offered by the BILD biggest premium newspaper in Germany, with a share %, based on paid circulation. Group and the WELT Group. of 18.5

DIE WELT Group, together with N24 satisfied the neces- The BILD Group comprises the digital media offerings and sary conditions in 2014 for merging both companies into the newspapers and magazines of the BILD family of a multimedia news company under the auspices of the brands and B.Z. Bild.de is Germany's largest news and new WeltN24 company as of January 1, 2015. In the entertainment portal with the widest reach in the country future this will be the basis for the development of the with a digital subscription model. Bild.de is also distributed Group to become the leading multi-media news organiza- via mobile channels, with apps for nearly all kinds of tion for quality journalism in German-speaking countries. smartphones, tablet PCs, and smart TVs, not to mention the mobile portal, once again Germany’s most-visited Since July 2014 the Gründerszene portal, with its focus mobile media brand in 2014 (“mobile facts 2014-III” of on start-ups, the digital economy, and venture capital, the Working Group for Online Research (AGOF). Bild.de has been part of the WELT Group. also offers the products stylebook.de, travelbook.de, BUNDESLIGA bei BILD, and BILD Shop. Autobild.de is Our music magazines ROLLING STONE, MUSIKEX- the clear leader among automotive portals featuring edito- PRESS and METAL HAMMER were also assigned to the rial content in Germany. BILD is Europe’s biggest daily Paid Models National segment. newspaper with the widest reach, as well as the unchal- lenged number one in Germany, with a share of 75.6 % by newsstand sales. (All figures for the German newspapers International Paid Models comprise Axel Springer’s and magazines are based on paid circulation as per IVW digital and print activities in western and eastern Europe. as of December 31, 2014). BILD am SONNTAG is Ger- In eastern Europe, the joint venture Ringier Axel Springer many’s best-selling nationwide Sunday newspaper, with a Media is the leader in the segment of mass-circulation dailies in the countries of Poland, Hungary, Slovakia, and share of 61.7 %. B.Z. is Berlin’s biggest newspaper. The automotive, computer, and sports media of the BILD Serbia. Our Hungarian activities were combined with the brand family make up a magazine and online portfolio built Hungarian activities of Ringier in the joint venture Ringier on the core brands of AUTO BILD, COMPUTER BILD, and Axel Springer Media on November 1, 2014. The media offering currently comprises more than 160 digital and SPORT BILD. With a share of 55.3 % AUTO BILD continues to be Germany’s biggest automotive magazine. It is printed products. also the No. 1 automotive magazine in Europe. Further- % of Internet users in Poland through the more, the magazines COMPUTER BILD and SPORT BILD We reach 70.6 leading Polish online group Onet. With FAKT as the largest occupy leading European market positions in their respec- newsstand newspaper and PRZEGLAD SPORTOWY as tive segments. Based on paid circulation, their German the country’s only national sports daily, the joint venture shares are 40.3 % and 48.2 % respectively.

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

controls 46.7 % of the market for national dailies (based on Serbia’s biggest mass-circulation dailies, ALO! and BLIC, paid circulation), making it the biggest newspaper publish- together with their high-reach online portals. er in Poland. Measured in the number of Internet users, the strongest growth was seen in 2014 by our news portal In Switzerland, Axel Springer publishes HANDELS- fakt.pl. Onet also owns 80.0 % of shares in Skapiec.pl, the ZEITUNG and twelve magazines. Based on paid circula- second-largest shopping comparison portal in Poland, tion, it holds the leadership position in the segments of and has taken over Opineo.pl, the leading website for business magazines, consumer advice magazines, and TV product comparisons in Poland. An agreement regarding program guides. HANDELSZEITUNG and the business the acquisition of nk.pl has also been signed. The online magazine BILANZ are among the country’s biggest publi- platform nk.pl, which was founded in 2006, is one of the cations in the business press segment. In the segment of leading gaming platforms in Poland and is also one of consumer advice magazines, Axel Springer publishes the most popular social networks in the country. In Janu- BEOBACHTER, which is the biggest subscription maga- ary 2014 Media Impact Polska, the joint marketing organi- zine in Switzerland, and the TV program guides TELE and zation for Ringier Axel Springer Poland and Onet, was also TV STAR, which are likewise leaders in their segment. The founded. Media Impact Polska is the largest marketing portfolio also includes brand-derived online portals and the organization in the Polish market. The range consists of web portals students.ch, usgang.ch and partyguide.ch. strong brands and offers clients innovative, integrated advertising solutions. In December 2014, Ringier and Axel Springer announced plans for establishment of a further joint venture in Switzer- Above all, Ringier Axel Springer Media's portfolio in Hun- land where both companies would have an equal equity gary will comprise titles with a strong market position in stake. On the one hand, all Swiss-German and West their respective sectors and with excellent potential for Swiss newspaper titles from Ringier including their associ- digitization, which predominantly include mass- ated online portals as well as the West Swiss broadsheet circulation dailies, including the leader BLIKK, and wom- Le Temps should be included, but on the other hand Axel en’s magazines. Ringier Axel Springer Media AG has Springer Switzerland, which combines all business in also signed an agreement regarding the acquisition of Switzerland, should also be included. Any transaction Profession.hu, the Hungarian job portal. Profession.hu is would be subject to the approval of the Supervisory the leading job portal with the highest levels of online Boards of both companies and the relevant competition traffic of all job portals in the country. Finalization of the authorities. transaction should take place in the first quarter of 2015 after approval from the Hungarian cartel authorities. In Russia, we publish a total of six print titles and three online portals. Besides the business magazine FORBES The majority-owned azet.sk is the leading Internet portal in and the website of the same name, and the magazines

Slovakia, reaching 83.2 % of Internet users in that country. GALA BIOGRAFIA and OK!, the portfolio also includes The leadership position in the print business is mainly three magazines of the GEO brand family. based on the NOVY CAS family of brands, consisting of two newspapers and four magazines. The mass- Axel Springer is represented in Spain by seven magazines circulation daily of the same name is the country’s biggest and three online portals. In particular, we occupy leading newspaper, with a share of 45.2 %. In total, Ringier Axel positions in the video game and computer magazines Springer Media publishes nine magazines in Slovakia. segments and also in automotive magazines.

In Serbia, Ringier Axel Springer Media is the publisher We are represented in France in a joint venture with the with the biggest total circulation and reach, with three Mondadori Group with three automotive magazines and newspapers and seven magazines and the correspond- associated online portals. ing web portals. Furthermore, our joint venture publishes

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

In September 2014 an agreement was set up to create a owned by Apple and Google. The print media are dis- joint venture (50:50) between Axel Springer and POLITICO, tributed nationally and internationally mainly via wholesale the leading media brand for political journalism in Wash- press distribution companies, train station bookstores, ington D.C. The objective of the new media company, and press import companies. In Germany there are headquartered in Brussels, is to develop and market the about 109 thousand retail outlets where our newspapers European business of POLITICO in the form of a website, and magazines are sold. newspaper, digital newsletter and conferences from early 2015. European business should be established together Paid Models are centrally marketed in Germany by Axel with EUROPEAN VOICE and the Development Institute Springer Media Impact (ASMI), one of the leading cross- International (DII), France's leading event agency in the media marketers based on gross market shares. The digi- public affairs sector, which were both acquired in January tal marketing portfolio also includes content produced by 2015 by the new joint venture company. other companies.

Business model and key factors The business performance of this segment is, amongst The revenues generated in the Paid Models segment other things, strongly influenced by the growing use of consist mainly of circulation revenues and advertising digital content. A key growth driver is the mobile Internet, revenues. Circulation revenues are generated on sales via smartphones and tablets, which are mostly used in of newspapers and magazines and digital subscriptions addition to stationary Internet connections (source: models. Advertising revenues are generated by market- AGOF mobile facts 2014-III). Other key factors besides ing the reach of our online and print media. The value online usage behavior are the willingness of consumers chain, which spans all media comprises all essential to pay for online content and the development of the processes involved in the production of information, market for paid content. Digital content is also driving the entertainment, and video content, from conception to growth of the advertising market, while print media ad- editorial work and production, and from there to sales vertising revenues are declining across the board. and marketing. The cross-media approach is conducive to the optimal realization of synergies, competencies, Regardless of media types, this segment is influenced by and reach values. the political situation in the relevant markets, as well as the economic environment and performance of advertis- All journalism content is collected in integrated news- ing markets, in particular. Aside from the general market rooms, some of which are used for more than one publi- cyclicity, seasonal aspects and non-recurring effects also cation, and processed there in accordance with the play a role. demands of our print and online media. The production process for digital paid content involves the production Marketing Models of editorial content, which we then post on our websites The Marketing Models segment comprises all business or other digital resources such as smartphones, PC models that generate revenues predominantly through tablets, and smart TVs, or the processing and aggrega- sales to advertising customers of reach-based or suc- tion of information in databases. Our newspapers are cess-based marketing services. produced, amongst other things, in the three offset printing plants in Hamburg-Ahrensburg, Essen-Kettwig, and Portfolio and market position Berlin-Spandau, which were changed into independent The Marketing Models segment is sub-divided into subsidiaries on January 1, 2015. We therefore carry out reach-based and performance-based services. The all steps in the value chain ourselves, from production to principal activities are summarized in the graph below. monitoring dispatch logistics. Distribution of digital products takes place predominantly via our own Internet pages or download platforms such as the app stores

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

Portfolio Marketing Models Smarthouse Media is a leading European provider of complex, web-based financial applications for banks, Reach Based Marketing Performance Marketing online brokers, and other providers of financial services. Idealo zanox aufeminin Digital Window Bonial eprofessional Within the TV and Radio sector Axel Springer, with its Smarthouse majority shareholding in Talpa Germany (49.9 % of the finanzen.net company, initially formed as Schwartzkopff TV, was sold

to the Dutch Talpa Group in the final quarter of 2014), has one of the leading independent TV production com-

panies, which mainly produces TV shows in the enter- Axel Springer’s Reach Based Marketing portfolio in- tainment segment for private and public TV channels. cludes idealo.de, Germany’s leading portal with the With direct and indirect investments in leading private- widest reach for product searches and price compari- sector radio stations, Axel Springer holds one of the sons. Idealo searches more than 1.8 million products biggest radio portfolios in Germany. Axel Springer contin- and more than 170 million offers of online dealers (as of ues to hold a minority interest in Turkey’s biggest private- year-end 2014). Furthermore, its success is increasingly sector TV and radio company, the Do⁄an TV Group. international. The ladenzeile.de product comparison portal is also part of the Idealo Group. Axel Springer’s Performance Marketing activities are bundled within the zanox Group. The leading provider of aufeminin is the largest women's portal worldwide and is success-based online marketing in Europe brings adver- active in 15 countries with its articles on fashion, beauty, tisers and publishers together, giving advertisers an and lifestyle. The onmeda health portals in Germany and efficient way to market their products and services on Spain, the marmiton cooking Internet site, the netmums the Internet. The corporate group comprises the compa- online portal and the My Little Paris recommendations nies ZANOX AG, including Digital Window, and the per- portal, acquired at the beginning of 2014 belong, formance marketing agency eprofessional. amongst others, to the Group also.

Business model and key factors kaufDA.de and MeinProspekt.de, which was acquired in In our Reach Based Marketing activities, ad space is 2014 as Germany's leading consumer information portals marketed to advertising customers and charged on the regarding local shopping, operate under the auspices of basis of the reach generated by the given media offerings the Bonial International Group. The company distributes (number of users or listeners) or the interaction generated digitized advertising retail leaflets predominantly via mobile by the reach. Attractive content generates high reach Internet at a regional level. These services are also offered values and topic-specific environments enable advertisers in France (Bonial France), Spain (Ofertia), Russia (Lokata), to precisely reach the desired target groups. South America, including Brazil (Guiato), and the United States (Retale). Due to the rising use of online media, reach marketing on the Internet is a major business. Besides display ads like Germany’s widest-reach finance portal finanzen.net banners, layer ads, and wallpaper, videos are also in- provides up-to-date financial markets data on every creasingly being used as online advertising formats. In business day. In line with its internationalization strategy, addition, advertisers are increasingly turning to marketing this portal also operates in Switzerland, Russia, and cooperation ventures and advertising forms such as Austria, among other places. native advertising, sponsoring, and marketing via YouTube channels. The growing prevalence of mobile terminal devices, in addition to stationary Internet usage, represents additional potential for reach marketing.

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

Performance Marketing gives advertisers the chance Jobs comprises StepStone, the leader among private- to advertise their products on websites and publishers’ sector job exchanges in Germany and Belgium, and one offerings via text links, banners, and online videos. Ad- of the leading providers in Europe. The StepStone Group, vertisers only pay for successfully completed actions, with its portals specializing in technical and managerial and publishers receive a portion of this compensation personnel, has the greatest coverage in Germany and in the form of a commission. Our platforms provide the has the largest online recruiting portal in Great Britain infrastructure for this efficient form of marketing, record with the Totaljobs Group. In addition, the major job ex- the data flows and transactions, and allow for a variety change Jobsite was also acquired in 2014 in Great Britain, of services for advertisers and publishers. which also includes the specialist portals CityJobs.com and eMedcareers.com. The Saongroup, which was ac- This segment benefits from the growth of stationary and quired by StepStone Group at the end of 2013, operates mobile Internet usage and the increasing tendency of con- job portals in 16 countries and is the leader in Ireland, sumers to make purchases. Through performance market- Northern Ireland, and South Africa. The specialty provider ing, Axel Springer benefits from the increasing demand of YourCareerGroup, which was likewise acquired at the advertising companies for success-based advertising and end of 2013, is the leading niche portal in the German- marketing models. speaking countries for online ads for hotel and restaurant jobs. StepStone took over ictjob SPRL, the leading IT job Classified Ad Models portal in Belgium and Luxembourg, at the beginning of All Business models which predominantly generate reve- 2015. nues in online classified advertising are summarized in the Classified Ad Models segment. In Real Estate, Axel Springer is the leader in France (with SeLoger) and Belgium (with Immoweb). SeLoger’s portfo- Portfolio and market position lio also includes some niche portals such as vacanc- Axel Springer has established a portfolio of leading online es.com and a-Gites.com for vacation home rentals, and classified ad portals over the last few years. To acceler- belles-demeures.com for luxury properties. The Classified ate growth through acquisitions, a strategic partnership Ad Models segment also contains Immonet, one of the with American growth investor General Atlantic was leading real estate portals in Germany. agreed upon in April 2012; they still hold a 15 % share of Axel Springer Digital Classifieds at the end of this Since July Axel Springer has also held a majority share- financial year (see page 25). The main portals are holding (51 %) of Car & Boat Media SAS, headquartered bundled into jobs, real estate, automobile, and general in Paris, which belongs to General/Other (see page 24). classified ads under the auspices of the company This company operates LaCentrale, the leading specialist classified ads portal for used cars in France, as well as The principal activities of the Classified Ad Models segment other portals related to cars and boats. Yad2, a portal are summarized in the graph below. which was likewise acquired in 2014, is the leading general classified ad portal in Israel for real estate, automo- Portfolio Classified Ad Models bile and classified ads. The German regional portal meinestadt.de consists of marketplaces for jobs, auto- General/ mobiles, real estate and classified ads. In addition, city Jobs Real Estate Other information, classified directories, and event calendars StepStone SeLoger LaCentrale Totaljobs Immonet @Leisure are also provided, amongst others. Axel Springer has an Saongroup Immoweb meinestadt.de equity stake in CarWale in India. Furthermore, since the YourCareerGroup Yad2 Jobsite CarWale beginning of 2015 this includes the majority (51 %) of shares in @Leisure, a leading operator of online brokerage portals for vacation home rentals in the Classified Ad

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

Models segment. The company is headquartered in Services/Holding Amsterdam and also operates, amongst others, the Service and holding functions are combined under the portals belvilla and casamundo (see page 25). Services/Holding segment. This segment also comprises our centralized marketing unit Axel Springer Media Business model and key factors Impact as well as all activities related to the production The Classified Ad Models segment generates revenues and distribution of the BILD Group and the company’s mainly from sales of classified ads. In addition, it also magazines, including the Group’s three printing plants generates revenues by marketing online ad space, and the management of all logistical activities for Axel through cooperation arrangements, and by providing Springer. software functions to clients. Business developments are significantly determined by the economic environment in Discontinued operations the respective market segments, the market position in The regional newspapers, the program guides, and the respective market segment, and online usage behav- women’s magazines, which were sold to FUNKE ior of advertisers and seekers. Long-term growth drivers Mediengruppe in a deal concluded on April 30, 2014 are the continuing shift of classified ads to the Internet, (see page 26) are again listed separately in the previous the rising number of Internet users, and the monetization year as discontinued operations in the 2014 consoli- of supplementary products. dated financial statements.

Within Jobs, ads are sold to job advertisers, and online Activities listed as discontinued operations include the resume databases which belong to the respective portals regional newspapers BERLINER MORGENPOST and are marketed in which the job advertisers can actively HAMBURGER ABENDBLATT, the advertising supple- search for suitable candidates. ments in Berlin and Hamburg, and the five TV program guides and two women’s magazines of Axel Springer Real Estate portals generate revenues by selling adver- (HÖRZU, TV DIGITAL, FUNK UHR, BILDWOCHE, TV tising and display space to brokers, project developers, NEU, BILD der FRAU, FRAU von HEUTE), including the housing agencies, or private individuals. corresponding digital brands.

Within General/Other, revenues are based on the focus Also presented under discontinued operations are the of the relevant portal. Alongside the above consumer business activities and equity investments of groups, commercial automobile sales and renters of Ringier Axel Springer Media in the Czech Republic, holiday homes are the main target groups. including the leading mass-circulation daily BLESK and the leading news magazine REFLEX, as well as the automotive and women’s magazines in that country. The portfolio of newspapers, magazines, and brand-derived online activities were also sold to two Czech entrepreneurs on April 30, 2014 (see page 26).

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

Management and supervision Jan Bayer is the President of the BILD and WELT Group. IT and domestic printing plants are also assigned to this Executive Board divisions sector alongside national brands within the Paid Models The Executive Board of Axel Springer SE currently com- segment. These also include Customer Services and the prises four members, whose work is supported and Sales Impact sales company. supervised by a Supervisory Board composed of nine members. Dr. Andreas Wiele is the President of Marketing and Classified Ad Models and is responsible for the corre- Axel Springer Executive Board Divisions sponding segments including the associated direct and indirect investments as well as the marketing unit Axel Chairman and Chief Executive Officer Springer Media Impact. Dr. Mathias Döpfner

Ralph Büchi, member of the Executive Board until Chief Financial Officer April 2014, in addition to his previous functions as CEO of Dr. Julian Deutz (Member of the Executive Executive Board since January 2014, with this Axel Springer Switzerland and Chairman of the Board of Board responsibility since April 2014) Divisions Directors of Ringier Axel Springer Media AG, also exercis- BILD and WELT Group es responsibility for the international Paid Models of Axel Jan Bayer Springer as President International.

Marketing and Classified Ad Models Lothar Lanz, Chief Financial Officer of Axel Springer SE Dr. Andreas Wiele until April 2014, has moved to the Supervisory Board following agreement in the annual shareholders’ meeting International Division Ralph Büchi (until April 2014) in April 2014.

Corporate governance principles Chief Financial Officer and Chief Operating Officer Axel Springer’s corporate governance principles are Lothar Lanz (until April 2014) aligned with our core values of creativity, entrepreneur-

ship, and integrity, as well as the five principles enshrined in Axel Springer’s own corporate constitution. For more Executive Board responsibilities are divided as follows: information on our internal guidelines, please refer to the corporate governance statement pursuant to Sec- Dr. Mathias Döpfner is Chairman and Chief Executive tion 289a HGB contained in the section entitled “Signifi- Officer of Axel Springer SE. All editors-in-chief and the cant corporate governance practices” on page 66 of the corporate staff functions of corporate communications, present Annual Report. public affairs, M&A and strategy, as well as the Axel Springer International division report to him. Furthermore Basic principles of the compensation system the Executive Personnel, Axel Springer Academy, and The compensation of our employees, all the way up to Customer Loyalty sectors are also part of his responsibilities. senior management level, consists of a fixed component and for qualifying employees, a variable component as Dr. Julian Deutz was appointed to the Executive Board in well. Variable compensation is determined on the basis January 2014 and since April 2014 has been in charge of of individual performance and the company’s success. Finance and Personnel. The department covers com- To this end, individual target agreements encompassing mercial sectors, internal auditing, and the Governance, both company-wide targets and division targets are Risk & Compliance, Law, and Group Purchasing sectors. adopted every year anew. The part of variable compensation that reflects the attainment of company-wide

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

targets in 2014 is determined mainly with reference to rivaled only by the big TV marketing firms. As one of the the financial indicator EBITDA. A detailed description of leading cross-media marketers (based on gross market Executive Board compensation can be found in the shares), ASMI will continue to expand its external market- “Compensation Report” section of the “Corporate Gov- ing portfolio in the print and digital segments. ernance” chapter (starting on page 74). There, you will also find information on the compensation of our Super- The strategy of profitable growth in the Marketing visory Board members (starting on page 76). Models segment is followed both in Reach Based Mar- keting and Performance Based Marketing. In the area of Goals and strategy Reach Based Marketing, the strategy is focused on expanding the reach and usage of products, increasing the Axel Springer pursues a strategy of profitable growth, ad space utilization rate, and developing new advertising with the overarching goal of becoming the leading digital and pricing models. The continued internationalization of publisher. This goal will be attained when the Group is services is also a growth driver. Furthermore, innovative the No.1 player in every one of the market segments and products and business models are promoted and devel- countries in which it operates. Furthermore, journalism is oped via investments in early-stage activities. In the Per- and always will be the foundation of our business model. formance Marketing sector, the integration of the Group and expansion of services and the publisher network are Segment strategies of utmost importance. In the Paid Models segment, Axel Springer will strive to realize the full potential of its strong brands BILD, WELT, In the Classified Ad Models segment, Axel Springer and N24, as well as its established international media. will strive to further extend its position as a leading international player. Both organic growth and comple- By means of linking its print, online, and mobile offerings mentary acquisitions will contribute to the growth of ever more closely, the BILD Group achieves a higher this business. Furthermore, internal synergies will be level of reading time and usage time than its competitors, realized systematically. expanding share among young and high-income readers in particular. Through the digital brand subscription Organic and acquisitions-driven growth BILDplus, Axel Springer is building and expanding a base Generally speaking, the organic growth measures of the of paying online readers. different segments pursue the same goal of expanding the market shares of the current portfolio and increasing Together with N24, the WELT Group will strive to be- the revenues and profits per reader/user on the basis of come the leading multimedia provider of news-based attractive product design and pricing. These measures quality journalism across the platforms of digital, print, will be accompanied by acquisitions-driven growth. video, and live TV. The two companies will contribute their respective strengths to this endeavor. Thus, the In all segments, Axel Springer seizes opportunities to WELT Group can make good use of the video inventory expand the business model by acquiring companies with of N24 in its media offerings, and the quality TV news innovative business ideas, which are still in an early station can exploit its full online potential in cooperation phase of their development. For this purpose in 2013 with the WELT Group. Furthermore, the WELT Group will Axel Springer started the Axel Springer Plug & Play ac- use its digital subscription model to further expand the celerator program in conjunction with the Silicon Valley- base of paying readers on the Internet. based accelerator Plug & Play, and is also involved in the Project A Ventures early stage fund. The Group’s centralized marketing company Axel Spring- er Media Impact (ASMI) offers an attractive, cross-media platform for advertising campaigns – with a reach that is

Annual Report 2014 Combined Management Report Axel Springer SE Fundamentals of the Axel Springer Group

When the opportunity arises, Axel Springer will also Financial performance indicators acquire companies that are well established in the mar- Our central focus is to sustainably increase both the ket. Suitable acquisition targets are chosen on the basis profitability and the value of our company. The most of complementary business strategies, as well as the important target and control parameters for the compa- quality of management, and the profitability and scalabil- ny’s financial performance are revenues, EBITDA, and ity of the business model. EBIT. EBITDA (and from financial year 2015, EBIT) also forms the basis for the performance-based compensation We employ a capitalized earnings approach based on of management (please refer to page 74 for more infor- weighted capital costs to assess the economic efficiency mation on the compensation system). These indicators of investments in new or existing business segments. and the EBITDA margin are anchored in our internal plan- The weighted capital costs are determined with refer- ning and controlling system. ence to a target capital structure.

Financial Control Parameters1 In general, we employ a capital markets equilibrium method, using beta for the business-specific, systematic Selected financial control risk, and a market premium for the country-specific, parameters on the Group level, € millions 2014 2013 2012 unsystematic market risk, to assess the risks of an in- Consolidated revenues 3,037.9 2,801.4 2,737.3 vestment opportunity. Essentially, we assume that the EBITDA2) 507.1 454.3 498.8 systematic risk of our company is the same, on average, 2) as that of our peer group, meaning other European EBITDA margin 16.7 % 16.2 % 18.2 % media companies. EBIT2) 394.6 359.7 413.6

1) Continuing operations. Internal management system 2) Adjusted for non-recurring effects and amortization and impairments from purchase price allocations. We have designed our internal management system and Non-financial performance indicators defined suitable control parameters in alignment with our In addition to the financial performance indicators, the group strategy. We use both financial and non-financial following non-financial performance indicators are rele- performance indicators to measure the success of our vant to an evaluation of our performance with respect to strategy. customers, the market, and offerings, although they are not employed as the basis for managing the company: Detailed monthly reports are an important element of our internal management and control system. These reports  Unique users/visitors and other business model- contain the monthly results of our most important activi- specific indicators of our online media, and the result- ties, along with a consolidated statement of financial ing market positions position, income statement, and cash flow statement. We use these reports to compare actual values with  Average paid circulation of all principal newspapers budget values. When variances arise, we investigate and magazines further or initiate suitable corrective measures.

 Reach values of our media in the advertising market These reports are supplemented by periodic forecasts of and indicators of brand and advertisement familiarity anticipated advertising revenues in the following weeks and by months and by forecasts of the probable devel-  Digital subscriptions opment of our financial performance.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Economic report

General economic conditions and business developments

General economic conditions According to calculations from the ifo Institute, the economic recovery in central and eastern European member According to estimates from the International Monetary EU states has slowed down since the middle of 2014. Fund in January 2015 the world economy is currently The main reason was reduced demand from the euro barely profiting from low oil prices. The global economy zone. Domestic demand remained robust in almost all has picked up slightly during the second half of 2014, countries. with the result that the world economy has grown in total by 3.3 % in real terms. On the other hand, the Interna- Anticipated Economic Development1) (Selection) tional Monetary Fund has observed continued underin- vestment in many industrial and emerging countries. Change in gross domestic product Stagnation and low inflation remain, as ever, a cause for compared to prior year (real) 2014 worry for the IMF within Japan and the euro zone. On the Germany 1.5 % other hand, economic recovery in the USA has proven to United Kingdom 3.0 % be better than expected. France 0.4 %

Poland 3.2 %

The German economy has generally shown itself to be 2) Switzerland 1.3 % robust during 2014 according to calculations from the Hungary 3.3 % German Federal Statistical Office. Gross Domestic Prod- Belgium 0.9 % uct was 1.5 % higher in real terms compared to the prior year. Consumption showed itself to be the most im- Slovakia 2.4 % portant growth motor for the German economy once Netherlands 0.7 % 2) again. Private consumer spending rose by 1.1 % in real Serbia – 0.5 % terms. Capital expenditures also increased: in real terms Austria 0.5 % business and the government have increased expendi- Ireland 5.2 % ture in equipment by 3.7 % compared to the prior-year Italy – 0.3 % figure. Construction investments also generated a sizable Spain 1.3 % return of 3.4 % in real terms. Despite an ongoing de- manding external economic environment, German for- USA 2.3 % eign trade improved slightly on average during 2014: in Russia 0.8 % 2) real terms Germany exported 3.7 % more than in 2013. Israel 2.5 %

2) Imports rose almost as quickly, by 3.3%. Brazil 0.3 %

China 7.4 % In 2014 the number of unemployed fell to an average of 1) Source: ifo Institut. December 2014. 3.0 million, a fall of 1.8 % compared to the prior-year 2) Source: IMF. October 2014. figure, the rate of unemployment was 6.7 %. The consumer research organization Gesellschaft für Konsum- forschung (GfK) established that the consumer climate Industry environment has rebounded in 2014. As a consequence, the recovery Press distribution market of the German economy has also gathered pace in the Continuing the trend of prior periods, the German press opinion of German consumers. According to calcula- distribution market contracted somewhat further. The tions from the German Federal Statistical Office con- total paid circulation of newspapers and magazines was sumer prices rose by 0.9 % during 2014. The continued 4.5 % below the corresponding prior-year figure. Thanks fall in the rate of inflation was characterized considerably to the price increases implemented in the past four quarters, by the fall in energy prices. however, circulation revenues declined by only 2.7 %.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

The 359 IVW registered daily and Sunday newspapers Advertising market achieved total sales of 19.6 million copies per publication According to the latest advertising market forecast of day. Compared to the prior-year figure, this corresponds to ZenithOptimedia (“Advertising Expenditure Forecast”, a fall of 4.1 %. As in the prior-year period, newsstand sales December 2014), the total volume of the German adver- suffered a much greater decline (– 8.3 %) than subscription tising market in 2014 was slightly above the prior-year sales (– 2.7 %). Within the press distribution market, the figure. demand for daily and Sunday newspapers (weighted for their respective publication frequencies) declined by 4.1 %. According to these surveys, total net advertising revenues (including classified ads and advertising sup- Overall sales of general-interest magazines including plements, less discounts granted and agency commis- membership and club magazines was 102.3 million cop- sions, and excluding production costs) amounted to ies per publication day. Compared to the prior-year figure, € 18.5 billion, in the reporting period, reflecting a nominal this corresponds to a fall of 3.9 %. IVW tracked a total of increase of 1.5 % from the prior-year figure.

822 titles (– 3.1 % from the prior-year figure). Weighted for their respective publication frequencies, the demand for In the German online advertising sector (display ads, general-interest magazines declined by 5.7 %. search term marketing, and affiliates), net advertising

revenues rose by 8.5 % to € 4.5 billion in 2014. Whereas the circulation volumes of print media declined again in 2014, online media continued the growth trend In the category of print media, the net advertising reve- of prior years. According to the study “internet facts nues of newspapers (newspapers, advertising supple- 2014-11” by the Working Group for Online Research ments, and newspaper supplements) amounted to € 4.9

(AGOF), 55.6 million people in Germany use the Internet billion in 2014, reflecting a 4.0 % decrease from the prior- today (Internet users within the last three months). That year figure. The net advertising revenues of magazines number represents 75.7 % of German residents aged 10 (general-interest and trade magazines, directory media) and older. Of the total regular Internet users 72.5 % go declined by 2.2 % to € 3.1 billion. online to obtain information about world events, and

64.6 % use the Internet for regional or local news. Thus, In 2014, television advertising in Germany rose by 3.3 % getting the news is one of the main reasons for using the to € 4.3 billion, and net advertising revenues in radio

Internet, besides e-mail, online searches, online shop- advertising rose by 1.7 % to € 759 million. The net ad- ping, and weather forecasts. Job listings are also one of vertising revenues of outdoor advertising rose by 4.1 % the 20 most-used online categories. Alongside the wired to € 928 million in 2014. Internet, the mobile Internet is unchanged in gaining in importance according to the study “mobile facts 2014-III”. In the third quarter of 2014, 34.3 million people were mobile online (48.7 %) of the German-speaking residen- tial population of Germany over 14 years of age). In most cases (63.2 %), mobile Internet use was predominantly in addition to desktop use. According to IVW, content portals of German print media were visited somewhat more frequently in 2014 compared to the previous year. The 20 most popular portals of German daily newspapers increased the number of visits by an average of

12.4 %, whilst the visits to portals belonging to magazines rose by 19.1 %.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

ZenithOptimedia expects the following advertising reve- both companies into a multimedia news company under nue forecasts for selected countries in 2014: the auspices of the new WeltN24 company on January 1, 2015. In the future this will be the basis for the develop-

Anticipated Advertising Activity 2014 (Selection) ment of the Group to become the leading multi-media news organization for quality journalism in German- Change in net ad revenues compared to prior year (nominal) Online Print speaking countries.

Germany 8.5 % – 3.4 % At the start of May 2014, Axel Springer Digital Classifieds United Kingdom 18.3 % – 7.5 %

1) (ASDC), the strategic partnership between Axel Springer France 3.3 % – 8.0 % and General Atlantic in the online classified ads market, 1) Poland 12.2 % – 16.9 % acquired 100 % of the shares in Coral-Tell Ltd., which 2) Switzerland 11.4 % 0.2 % operates the leading classified ad portal Yad2 in Israel.

Hungary 7.0 % – 2.2 % The purchase price was approximately € 170 million.

2) Belgium 8.1 % 1.2 %

1) Slovakia 3.4 % – 2.4 % Likewise in May 2014, StepStone entered into a purchase agreement to acquire Evenbase Recruitment Ltd. Netherlands 6.6 % – 5.5 %

1) (Jobsite) in order to expand its activities in the United Serbia 20.0 % 17.0 % Kingdom. StepStone is part of the ASDC Group and is 1) Austria 16.9 % – 5.5 % represented in the UK by, among others, its subsidiary Ireland 16.6 % – 9.0 % Totaljobs. Evenbase Recruitment Ltd. has its registered 1) Italy 5.8 % – 9.7 % head office in Havant and operates the job website 1) Spain 5.0 % – 3.6 % jobsite.co.uk along with brands such as CityJobs.com

USA 18.3 % – 5.0 % and eMedcareers.com. The purchase price was about € 114 million. After approval was granted by the British Russia 15.0 % – 16.4 % cartel authorities, the transaction was completed at the Israel 2.8 % – 8.1 % end of October 2014. Brazil 5.0 % – 7.3 %

Source: ZenithOptimedia, Advertising Expenditure Forecast (December) 2014 At the end of July 2014, ASDC also acquired the majority 1) Excluding classified ads. share (51 %) in Car & Boat Media SAS with its registered 2) Gross advertising revenues (excluding classified ads). Gross advertising revenues do not adequately reflect the true development of advertising revenues. head office in Paris. This company operates LaCentrale, the leading specialist classified ads portal for used cars in France, as well as other portals related to cars and Business performance boats. The purchase price was about € 73 million.

In the first quarter of 2014, we sold about 2.6 % of our At the end of July 2014 we sold the minority interest equity stake in Do⁄an TV Holding A.S., Istanbul, Turkey. (17.2 %) in SeLoger held iProperty, an operator of real The revenues from this transaction amounted to € 62.5 estate portals in the South East Asian market for € 74.3 million. million. The gain of disposal, totaling € 55.1 million (before tax of € 2.2 million) was recorded as income from At the end of February 2014, after approval by anti-trust investments, listed as a non-recurring effect in the Clas- and media law bodies the purchase agreement signed in sified Ad Models segment, and 30 % of the interest was

December 2013 to acquire 100 % of the shares in N24 assigned to other shareholders. Media GmbH was finalized. N24 is the leading German news channel. DIE WELT Group, together with N24, At the end of August 2014, Ringier Axel Springer Media satisfied the necessary conditions in 2014 for merging AG, a joint venture between Axel Springer and Ringier,

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

concluded an agreement to acquire the leading job por- In December 2014, Axel Springer SE increased its share of tal in Hungary, namely profession.hu. The Hungarian Axel Springer Digital Classifieds GmbH from 70 % to cartel authorities approved the transaction in October. 85 % for a cash payment of € 446 million, and finalized a Completion of the profession.hu transaction is expected binding agreement with General Atlantic for a purchase to be in the first quarter of 2015. After approval by the option for the remaining 15 %. As far as it is possible and Hungarian cartel and media authorities and the success- allowed, General Atlantic shall receive Axel Springer shares ful partial sale of the Ringier AG and Axel Springer SE in return if the option is exercised. The number of shares to Hungarian portfolio, both companies have combined be granted is calculated from the companies’ valuation their activities within Hungary and combined them into determined in accordance with the IDW S1 valuation Ringier Axel Springer Media AG as of November 1, 2014. standard. Authorized capital should be established at the In particular, the portfolio consists of the leading mass- next annual shareholders’ meeting, which could be used circulation brands Blikk, successful women's magazines for satisfying all requirements if the option is exercised. In and additional licensed titles. Incorporation of the portfo- case no Axel Springer shares can or must be granted, Axel lio was already agreed in 2010 during the course of Springer can acquire the remaining 15 % equity stake for a founding the joint venture between Ringier AG and Axel purchase price of an additional € 446 million plus interest. If Springer SE. Axel Springer does not exercise this option, then General Atlantic has the right to sell its remaining equity stake from At the beginning of September 2014 an agreement was January 1, 2018 onwards or to demand that Axel Springer set up to create a joint venture (50:50) between Axel Digital Classifieds GmbH enters the stock exchange from Springer and POLITICO, a leading media brand for polit- January 1, 2020. Alongside the context of agreement with ical journalism in Washington D.C. The objective of the these transactions, the Executive Board and Supervisory new media company, with headquarters in Brussels, is to Board agreed in December to prepare to change Axel develop and market the European business of POLITICO. Springer SE into a partnership limited by shares In January 2015 the joint venture took over EUROPEAN (KGaA). A final decision regarding the conversion will be VOICE (EV), which is also headquartered in Brussels, as made by the Executive Board and by the Supervisory well as the Development Institute International (DII), Board after the as yet ongoing tax and legal audits are France's leading event agency in the public affairs sector, completed. As soon as the audits are complete with the headquartered in Paris. From early 2015, a website, desired results and the necessary preparatory work then newspaper, digital newsletter and conferences will be the Executive Board and Supervisory Board intend to put published and be managed under the POLITICO brand. the conversion to the vote at the annual shareholders' meeting. A decision is yet to be made regarding the At the beginning of October 2014, Axel Springer signifi- exact point in time. cantly extended its partnership entered into in the first quarter with OZY, an English-language online magazine In December Ringier and Axel Springer also announced for news and culture from the Silicon Valley founded in the plans for establishment of a further joint venture in 2013, increasing its share to about 17 % with an invest- Switzerland where both companies would have an equal ment of US$ 20 million. equity stake. All Swiss-German and West Swiss newspaper titles from Ringier including their associated online In November 2014 an agreement was finalized regarding portals as well as the West Swiss broadsheet Le Temps acquisition of the majority (51 %) of @Leisure, a leading should be included, with Axel Springer Switzerland, which European operator of online brokerage portals for vaca- combines all business in Switzerland. Any transaction is tion home rentals. The company is headquartered in subject to the approval of the Supervisory Boards of both Amsterdam and also operates the portals belvilla.com companies and the relevant competition authorities. and casamundo.com. Finalization of the transaction took place at the beginning of January 2015.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Discontinued operations and cartel authorities; the foundation of the joint venture The sale of the Group’s German regional newspa- was registered with the German Federal Cartel Office for pers, TV program guides, and women’s magazines marketing in January 2015. Axel Springer and FUNKE to FUNKE Mediengruppe, which was contractually Mediengruppe have already been cooperating in these agreed in December 2013, was finalized on April 30, areas since the finalization of the purchase agreement. 2014, with economic effect as of January 1, 2014. The purchase price agreed before the contractually stipulated In addition, Ringier Axel Springer Media AG completed a purchase price adjustment was € 920 million. A prelimi- contractual agreement on April 30, 2014 which was nary purchase price of € 874.8 million was established initially made in December 2013 to sell their business upon finalizing the purchase agreement. The purchase activities and equity investments in the Czech Re- price adjustment reflected the circumstance, among public to two Czech entrepreneurs. These activities others, that the buyer assumed net liabilities as part of the include the leading mass-circulation daily BLESK and the transaction. Of the provisional purchase price, an amount leading news magazine REFLEX, as well as automotive of € 634.1 million was paid in cash; for the balance, magazines and women’s magazines. The purchase price FUNKE Mediengruppe assumed a multi-year, subordinat- of € 196.5 million, which is based on a company value of ed loan obligation vis-à-vis Axel Springer SE in the € 170 million, additionally reflects the net liquidity trans- amount of € 240.7 million. The tax payable in connection ferred to the buyer, in particular. with the sale is expected to be € 248.3 million. Overall statement of the Executive In order to fulfill a proviso imposed in connection with Board on the course of business and merger control law, FUNKE Mediengruppe sold some of the TV program guides acquired under the transaction, economic environment as well as some of its own TV program guides, to a The economic environment for media companies is company of Klambt Mediengruppe. To assist in the strongly characterized by the trend towards digitization. financing of this acquisition, Axel Springer SE guaranteed Segments within the Axel Springer Group have therefore a bank loan taken out by this company of Klambt Me- developed accordingly. The strongest increase in reve- diengruppe, up to an amount of € 51.0 million. (consist- nues was recorded with the two segments that have ing of € 43.1 million until December 31, 2014) been fully digitized, namely Classified Ads and Marketing Models. The increase in revenues for Paid Models was In connection with the conclusion of the purchase somewhat lower in comparison due to the higher propor- agreement, the parties also agreed to form joint ventures, tion of print business which declined due to structural for the marketing of print and digital offerings, and for changes. The course of business was also characterized retail distribution, to bundle the partners’ activities, re- by active portfolio management and the acquisition of sources, and knowledge in these areas. Axel Springer digital business models. This development confirms our will exercise managerial control over, and hold the ma- strategy for rigorously digitizing the company. jority of shares in, both these companies. Foundation of the joint venture requires approval by the relevant merger

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Financial performance, liquidity, and financial position

Financial performance of the Group Total Revenues

(continuing operations) € millions

The following presentation of the Group’s financial per- Advertising Circulation Other formance refers exclusively to continuing operations. 487.5 404.5 At € 3,037.9 million, the total revenues generated in 735.3 financial year 2014 were considerably higher (8.4 %) than 759.1 the prior-year figure (€ 2,801.4 million). All operating segments contributed to this revenue growth. Adjusted 1,815.1 for consolidation and currency effects, total revenues 1,637.8 were above the level of the prior-year figure (+ 2.8 %).

The pro-forma revenues of digital media activities increased to € 1,705.8 million (PY: € 1,568.6 million), reflecting organic growth of 8.7 %. Thus, the digital media 2,801.42013 2014 3,037.9 share of the Group’s pro-forma total revenues rose from

51.6 % in 2013 to 54.5 % in 2014. For the operative segments organic growth was 7.2 % for Paid Models, 8.9 % The increase in advertising revenues of 10.8 % to for Marketing Models, and 9.4 % for Classified Ads. The pro-forma revenues take into account the development of € 1,815.1 million (PY: € 1,637.8 million) was predomi- companies, which currently belong to the Axel Springer nantly based on growth in the classified ads and market- Group and hence also the companies acquired in 2013 ing models, whilst advertising revenues from paid models and 2014 on the basis of unaudited financial data. only increased slightly. The share of total revenues represented by advertising revenues was 59.7 % (PY: 58.5 %). At € 1,309.3 million, international revenues rose from About three quarters (74.5 %) of total advertising revenues were generated in the Group’s digital activities. 1,164.4 million with 12.4 % compared to the prior-year figure and accounted for 43.1 % (PY: 41.6 %) of Axel Springer’s total revenues. The increase resulted from the At € 735.3 million, the circulation revenues were 3.1 % growing internationalization of the digital business. less than the prior-year figure (€ 759.1 million). Primarily, consolidation effects had an impact. Adjusted for these effects, circulation revenues were only slightly less, by

1.3 %, than the prior-year comparison figure. Circulation

revenues accounted for 24.2 % (PY: 27.1 %) of total revenues.

The other revenues of € 487.5 million were 20.5 % higher than the prior-year figure (PY: 404.5 € million), due to higher revenues in the Paid Models and Marketing Models segments. Consolidation effects have the major effect in this case. When adjusted for such effects the

increase was 5.1 %. Thus, they accounted for 16.0 %

(PY: 14.4 %) of total revenues.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Segment Revenues Depreciation amounted to € 255.6 million, which was considerably higher than the prior-year value of € 155.1 Paid Models million. This resulted, alongside higher depreciation on Marketing Models purchase price allocations, in particular from exceptional Classified Ad Models depreciation of € 33.0 million carried out as part of the Services/Holding evaluation of real estate held for sale and from exceptional depreciation on goodwill in the Marketing Models segment.

5.6 % The € 19.4 million increase in other operating income to € 164.7 million (PY: € 145.3 million) resulted mainly 16.9 % from the recognition of income related to the Kirch insolvency, and from the revaluation of contingent purchase 51.4 % price liabilities. The other operating expenses of € 757.2 million which mainly arose as a consequence 26.1 % of consolidating newly acquired subsidiaries were above the prior-year figure of (PY: € 697.7 million). This figure

also contains income and expenses from the settlement of intra-Group payments between continuing and discon- The comparison of segment revenues reveals substan- tinued operations. tial growth in the Classified Ad Models and Marketing Models, and lower growth in Paid Models. Net investment income of € 81.4 million (PY: € 25.7 million during the reporting period was particularly Total expenses rose compared to the prior-year figure impacted by the profit realized on the sale of our minority by 10.3 % to € 2,977.3 million (PY: € 2,700.2 million). shareholding in iProperty (€ 55.1 million). In addition, as in the prior year, the profit realized on the sale of 2.6 % of

The total of purchased goods and services rose by 6.9 % our equity stake in Do⁄an TV was recorded. The operat- compared to the prior-year figure to € 990.0 million (PY: ing net investment income included in the calculation of € 925.8 million). In particular, consolidation of N24 and My EBITDA amounted to € 10.7 million (PY: € 12.1 million). Little Paris and increases within performance-based marketing models are contrasted with circulation-related falls The Group's financial result improved, in particular due in our printing activities. The ratio of purchased goods and to the interest income generated from loans granted in the services to total revenues rose slightly to 32.6 % (PY: context of the sale of the domestic print activities, to

33.0 %). € – 21.1 million (PY: € – 23.1 million). Increased expenses of contingent considerations had a partially compensating The rise in personnel expenses from € 52.8 million or effect.

5.7 % to € 974.4 million (PY: € 921.6 million) resulted, above all, from the consolidation of newly acquired sub- Income taxes amounted to € – 78.9 million (PY: sidiaries and increase in the number of employees within € – 88.1 million). The low tax rate for the reporting period digital business models, which rose on average by 8.4 % of 25.1 % (PY: 33.0 %), in particular, resulted from largely on average during the year. At the same time, reduced tax-neutral income from the disposal of investments. expenses due to restructuring and revaluation of virtual stock option programs also had an effect.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

The earnings before interest, taxes, depreciation and Consolidated Net Income (continuing operations) amortization (EBITDA) increased, compared to the previous year, by 11.6 % to € 507.1 million (PY: € millions 2014 2013 € 454.3 million). The EBITDA margin therefore improved Consolidated net income slightly to 16.7 % (PY: 16.2 %). The EBITDA of digital (continuing operations) 235.7 178.6

activities rose by 29.9% from € 281.6 million to Non-recurring effects – 45.0 10.4 € 365.8 million. This meant that the share of digital busi- Depreciation from purchase price ness of EBITDA rose from 62.0 % to 72.1 %. As a result of allocations 103.9 59.4 the increase in depreciation the earnings before interest Taxes attributable to these effects – 43.4 – 18.7 and taxes (EBIT) only rose, compared to the previous Consolidated net income, adjusted year, by 9.7 % to € 394.6 million (PY: € 359.7 million). (from continuing operations) 251.2 229.8

Non-recurring effects such as e. g. gains or losses on the Attributable to non-controlling interest, sale of business divisions and investments are not included adjusted 52.3 50.9 in EBITDA and EBIT; furthermore write-downs from pur- Adjusted consolidated net income from chase price allocations and write-downs linked with the continuing operations attributable to shareholders of Axel Springer SE 198.8 178.8 sale of real estate are not included in EBIT.

EBITDA Earnings per share from continuing operations (basic =

€ millions diluted) amounted to € 1.71 (PY: € 1.34). Based on average weighted shares outstanding in 2014 (98.9 million), EBITDA margin in % adjusted earnings per share from continuing operations (basic = diluted) rose from € 1.81 to € 2.01. 16.7 % 16.2 % 507.1 The adjusted consolidated net income and the adjusted 454.3 diluted earnings per share are not defined under Interna- tional Financial Reporting Standards and should therefore be regarded as supplementary information to the consolidated financial statements.

2013 2014

Consolidated net income from continuing operations amounted to € 235.7 million (PY: € 178.6 million). Ad- justed consolidated net income from continuing operations rose markedly to € 251.2 million (PY: € 229.8 million).

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Financial performance of the operating The circulation numbers of the print media in the segment segments (continuing operations) Paid Models declined in financial year 2014, due to market trends, while the reach values increased in some cases. Paid Models The Paid Models segment comprises all business mod- Circulation, Digital Subscriptions, and Reach els that are predominantly used by paying readers. This segment is subdivided into national and international Circu- lation/ paid-content models. Digital Change Thousands Subs1) yoy Reach2) Change3)

Paid Models National Bild/B.Z. 2,384.0 – 7.7 % 11,321.1 0.0 %

The net reach values of selected portals are presented in Bild am Sonntag 1,158.9 – 7.5 % 8,818.7 – 4.6 % 4) the table below. Because Internet usage via mobile de- Bild digital 232.1 - 16,892.0 20.7 % vices is particularly important for some of our digital activities, mobile reach values are presented in addition Die Welt/ to stationary Internet usage. Welt Kompakt 206.4 – 8.7 % 698.3 0.2 % Welt am Sonntag/ Welt am Sonntag Kompakt 400.9 – 0.1 % 902.3 – 8.8 % Unique Users 4) Welt digital 55.1 - 9,424.0 4.2 %

Millions Unique Unique (monthly Users Change Users Change average) stationary1) yoy mobile2) yoy3) Auto Bild 476.9 – 7.9 % 2,835.3 1.8 %

Bild.de 16.9 20.7 % 5.8 - Sport Bild 377.2 – 6.8 % 4,152.5 – 1.7 %

welt.de 9.4 4.2 % 3.3 - Computer Bild 357.1 – 23.6 % 3,085.5 – 9.0 %

4) computerbild.de 4.9 20.2 % 1.4 - 1) Source: IVW, average paid circulation 2014; For BILD digital and WELT digital: IVW, digital subscriptions (paid content), monthly average 2014 (May–Dec.). autobild.de 4.4 46.1 % 0.7 - 2) Source: ma 2015 Pressemedien I; Für BILD digital and WELT digital: unique users, N24.de 3.3 -3) 1.9 - AGOF internet facts 2014-11, monthly average 2014 (Sep.–Nov.). 3) Compared to ma 2014 Pressemedien II. 4) transfermarkt.de 1.5 – 6.7 % 1.8 - Comparison to prior-year figures not applicable.

travelbook.de 1.4 -3) - - During the reporting period BILD published two special stylebook.de 1.1 – 3.4 % - - editions, which each had a circulation of approximately bz-berlin.de 1.1 – 7.5 % 0.4 - 42 million and were distributed, free of charge, to almost 1) Source: AGOF internet facts 2014-11, monthly average 2014 (Sep.–Nov.). all households in Germany. One issue was published on 2) Source: AGOF mobile facts 2014-III, monthly average 2014 (Jul.–Sep.). 3) Comparison to prior-year figures not applicable. June 6, 2014, due to the World Cup, and the second 4) Source: AGOF internet facts 2014-11, Nov. 2014. issue was published on November 8, 2014, commemo- rating the 25th anniversary of the fall of the Berlin Wall. The focus of the national digital Paid Models remained to Both issues were successfully marketed to advertising sign up paying subscribers, also in the area of stationary customers. Internet. For this purpose, marketing campaigns with exclusive events were carried out, amongst others, particularly for subscribers of digital paid models from BILD- plus and WELT. Both BILDplus and the corresponding offerings from WELT showed a clear increase in the number of subscribers to digital offers.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Paid Models International Key Figures Paid Models The net reach values of selected portals are presented in the table below. € millions 2014 2013 Change

External revenues 1,561.4 1,521.5 2.6 %

Unique Visitors Advertising revenues 671.0 664.0 1.1 %

Circulation revenues 735.3 759.1 – 3.1 % Unique Millions Visitors Change Other revenues 155.0 98.5 57.5 % (monthly average) 20141) yoy

onet.pl 16,463.6 – 1.8 % National 1,172.7 1,115.3 5.1 % fakt.pl 3,624.4 12.5 % Advertising revenues 497.7 480.5 3.6 % forbes.ru 2,961.9 41.1 % Circulation revenues 576.9 577.5 – 0.1 % blic.rs 2,894.1 63.3 % Other revenues 98.1 57.3 71.1 % azet.sk 2,218.6 0.0 %

cas.sk 1,567.5 10.2 % International 388.7 406.2 – 4.3 %

1) Source: comScore Europa, monthly average 2014 (Jan.–Dec.). Advertising revenues 173.4 183.5 – 5.5 %

Circulation revenues 158.3 181.6 – 12.8 % The circulation and reach figures for the leading mass- Other revenues 57.0 41.1 38.5 % circulation dailies within the countries of our joint venture Ringier Axel Springer Media are presented in the table below. EBITDA 244.2 250.1 – 2.4 %

National 190.9 195.9 – 2.6 %

Circulation and Reach International 53.3 54.1 – 1.6 %

Circulation Change Reach Change EBITDA margin 15.6 % 16.4 % Thousands 2014 yoy 2014 yoy

1) National 16.3 % 17.6 % Fakt 324.7 – 4.2 % 1,783.5 7.6 %

2) International 13.7 % 13.3 % Blic 106.6 – 8.6 % 813.2 0.2 %

3) Novy Cas 101.2 – 8.0 % 747.6 – 8.4 % 2) Alo! 91.4 – 17.4 % 446.6 – 10.4 % The total revenues of the segment Paid Models rose

1) Poland. Circulation: ZKDP; Reach: PBC General. by 2.6 % to € 1,561.4 million (PY: € 1,521.5 million). 2) Serbia. Circulation: ABC; Reach: Ipsos Strategic Marketing. Adjusted for consolidation effects, total revenues were 3) Slovakia. Circulation: ABC; Reach: Median. 1.4 % less than the prior-year figure. Total advertising

revenues of the segment Paid Models rose by 1.1 % to The circulation numbers of our international newspapers € 671.0 million (PY: € 664.0 million). Adjusted for con- and magazines declined, in line with market trends. solidation effects, this meant a fall of 3.4 %. The consolidation effects predominantly affected the national advertising revenues. Adjusted for such effects, this

meant a fall of 3.1 % here. The circulation revenues fell

by 3.1 % to € 735.3 million (PY: € 759.1 million). In Germany, circulation revenues were nearly unchanged

(– 0.1 %). This development was influenced by the effects of price increases as well as higher digital circulation

revenues. The 12.8 % drop in the international sector

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

resulted mainly from consolidation effects related to the Unique Users sale of the Group’s women’s magazines and TV program guides in France in the middle of last year. When Millions Unique Unique (monthly Users Change Users Change adjusted for consolidation effects, the drop was 4.1 %. average) stationary1) yoy mobile2) yoy3)

The considerable increase of other revenues in the Paid 4) aufeminin.com 38.4 – 16.6 % - - Models segment of 57.5 % to € 155.0 million (PY: 5) idealo.de 9.6 – 7.2 % - - € 98.5 million) was primarily due to consolidation. When adjusted for these effects, the other revenues kaufDA.de 3.4 – 13.8 % 2.8 - rose by 8.4 % in the national segment and 16.4 % in finanzen.net 2.7 16.5 % 0.3 - the international segment. hamburg.de 1.4 4.6 % 0.4 -

1) Source: AGOF internet facts 2014-11, monthly average 2014 (Sep.–Nov.). At € 244.2 million, the EBITDA figure was 2.4 % lower than 2) Source: AGOF mobile facts 2014-III, monthly average 2014 (Jul.–Sep.). 3) the prior-year figure (€ 250.1 million). The decline of the Comparison to prior-year figures not applicable. 4) Source: comScore World, monthly average 2014 (Jan.–Dec.). higher margin advertising and circulation revenues for the 5) Source: AGOF internet facts 2014-11, Nov. 2014. print titles could only be partly offset by the newly acquired business (N24) and growth in the other revenues. Restruc- Under the local brand name retale.com kaufDA success- turing expenses (€ 26.4 million, PY: € 37.4 million) and fully continued its entry into the US-American market the launch costs for establishing new business models which started at the end of 2013, and has gained addi- (€ 17.2 million as compared to PY: € 26.7 million) were tional advertising clients. below prior-year figures. The margin on the segment fell from 16.4 % in the previous year to 15.6 % in the current Key Figures Marketing Models financial year.

€ millions 2014 2013 Change

EBIT in the Paid Models segment fell by 7.5 % from External revenues 794.1 716.5 10.8 % € 225.2 million to € 208.2 million. This was due to higher Advertising revenues 651.3 592.0 10.0 % write-downs of 44.2 %, which, during the financial year, Other revenues 142.7 124.5 14.6 % amounted to € 35.9 million (PY: € 24.9 million).

Marketing Models Reach Based Marketing 279.3 239.9 16.5 % The segment Marketing Models comprises all business Performance Marketing 514.7 476.7 8.0 % models that generate revenues predominantly through

1) sales to advertising customers of reach-based or perfor- EBITDA 109.7 103.4 6.0 % mance-based marketing services. Reach Based Marketing 90.8 87.2 4.1 %

Performance Marketing 23.7 20.1 17.9 % Internet usage via mobile devices is particularly important for some of our digital activities. Accordingly, the mobile 1) net reach values of selected portals (to the extent they EBITDA margin 13.8 % 14.4 % are available) are presented in addition to stationary Reach Based Marketing 32.5 % 36.3 %

Internet usage, in the table below. Performance Marketing 4.6 % 4.2 %

1) Total EBITDA includes costs of € 4.8 million in 2014 and € 3.9 million in 2013, not allocated to the two pillars.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

The total revenues of the Marketing Models segment Key Figures Classified Ad Models were 10.8 % higher compared to prior-year figures at

€ 794.1 million (PY: € 716.5 million). When adjusted for € millions 2014 2013 Change

consolidation effects, revenues rose markedly by 7.8 %. External revenues 512.0 402.6 27.2 %

Most of the revenue growth resulted from the 10.0 % in Advertising revenues 492.7 381.9 29.0 % advertising revenues to € 651.3 million (PY: € 592.0 million). Other revenues 19.3 20.8 – 7.0 % This increase was mainly attributable to zanox Group in the area of Performance Marketing. Growth of other Jobs 256.4 198.9 28.9 % revenues by 14.6 % to € 142.7 million (PY: € 124.5 million) was predominantly due to consolidation of My Real Estate 193.5 181.3 6.7 %

Little Paris within the reach marketing segment; when General/Other 62.1 22.4 >100 % adjusted for consolidation effects this increase was 1.5 %.

EBITDA 221.4 163.8 35.2 % EBITDA in the segment rose by 6.0 % to € 109.7 million Jobs 117.7 81.6 44.3 % (PY: € 103.4 million). The lower increase in earnings compared to the rise in revenue is, on the one hand, Real Estate 92.4 82.3 12.3 % linked to lower margins in high-turnover Performance General/Other 14.9 2.8 >100 % marketing and also to higher expenses for establishing new business models (€ 12.8 million, compared to PY: EBITDA margin 43.2 % 40.7 % € 7.1 million) as well as restructuring expenses to a Jobs 45.9 % 41.0 % lesser extent (€ 1.3 million, compared to PY: € 0.0 million). Real Estate 47.8 % 45.4 % The EBITDA margin fell slightly from 14.4 % to 13.8 %. General/Other 23.9 % 12.6 %

1) EBIT in the Marketing Models segment fell slightly by 1.1 % Total EBITDA includes costs of € 3.5 million in 2014 and € 2.9 million in 2013, not from € 93.9 million to € 92.8 million. This was due to higher allocated to the three pillars. write-downs of 76.5 %, which, during the financial year, amounted to € 16.9 million (PY: € 9.6 million). The segment Classified Ad Models registered the biggest revenue growth during the financial year with revenues of Classified Ad Models € 512.0 million and growth of 27.2 % compared to the All Business models which predominantly generate reve- previous year (€ 402.6 million). Alongside an improve- nues in online classified advertising are summarized in ment in operative results, consolidation effects due to the the Classified Ad Models segment. acquisitions of Saongroup, YourCareerGroup and of Jobsite within Jobs sector and of Yad2 and LaCentrale The segment is sub-divided into jobs, real estate, and in the general/other ads sectors, amongst others, were general/other. also noted during the financial year. Adjusted for these effects, revenue growth came to 10.7 %. Similarly, the increase in advertising revenues by 29.0 % to € 492.7 million (PY: € 381.9 million) was largely attributable to consolidation effects. Adjusted for these effects, the increase came to 12.7 %.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Segment EBITDA rose considerably by 35.2 % to Financial performance of discontinued € 221.4 million (PY: € 163.8 million). As in the case of operations revenues, some of this increase can be attributed to consolidation effects. Adjusted for these effects, the Discontinued operations include the German regional increase came to 18.3 %. The margin increased from newspapers, TV program guides, and women’s maga- 40.7 % to 43.2 %. zine that were purchased by FUNKE Mediengruppe as of April 30, 2014, as well as the business activities and EBIT in the Classified Ad Models segment rose by 35.3 % equity investments of Ringier Axel Springer Media in the from € 149.6 million to € 202.3 million. This was due to Czech Republic that were sold to two Czech entrepre- higher write-downs of 34.3 %, which, during the financial neurs (see page 26). Discontinued operations also in- year, amounted to € 19.1 million (PY: € 14.2 million). clude the current results realized in the period from Jan- uary 1 to April 30, 2014, and gains on disposal. Services/Holding Service and holding functions are combined under the Discontinued Operations Services/Holding segment. This segment also comprises our centralized marketing unit Axel Springer Media Im- Jan.–Apr. pact as well as all activities related to the production and € millions 2014 2013 distribution of the BILD Group and the company’s mag- External revenues 181.3 572.6 azines, including the Group’s own three printing plants and the management of all logistical activities for Axel EBITDA 29.3 116.6 Springer.

EBITDA margin 16.2 % 20.4 % Key Figures Services/Holding

€ millions 2014 2013 Change Given the non-comparability of the periods covered in External revenues 170.5 160.8 6.1 % the present report, no commentary is offered on the year-on-year development of revenues and EBITDA from

EBITDA – 68.2 – 63.0 discontinued operations.

Consolidated net income from discontinued opera- External revenues in the Services/Holding segment were tions amounted to € 668.3 million (PY: € 65.1 million); € 170.5 million, 6.1 % above the prior-year figure of this figure included the gains on disposal of the Group’s (€ 160.8 million). German and international print activities as of April 30, 2014, in the amount of € 649.2 million (after taxes). EBITDA was at € – 68.2 million, and as a consequence Adjusted for non-recurring effects and amortization and of lower reversals of provisions it was lower than the impairments from purchase price allocations, consolidat- prior-year figure (€ – 63.0 million). Restructuring expens- ed net income from discontinued operations amounted es were € 20.2 million, slightly below the prior-year figure to € 19.7 million (PY: € 80.6 million). of (€ 21.3 million). Earnings per share from discontinued operations The EBIT in the Services/Holding segment remained almost (basic/diluted) amounted to € 6.37 (PY: € 0.65). Based unchanged at € – 108.8 million (PY: € – 108.9 million). This on the average weighted shares outstanding in the re- was a result of depreciation being lower by 11.7 %, which porting period (98.9 million), adjusted earnings per stood at € – 40.6 million during the reporting period (PY: share from discontinued operations (basic/diluted) de- € 46.0 million). creased by € 0.73 to € 0.17.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Adjusted consolidated net income and adjusted earnings value of € 56.5 million), up to April 2018 (nominal value per share are not defined under International Financial of € 112.0 million), up to October 2018 (nominal value of Reporting Standards, and should therefore be regarded € 220.0 million) and up to October 2020 (nominal value as supplementary information to the consolidated finan- of € 248.5 million). Alongside the Schuldschein there is a cial statements. credit facility of € 900.0 million, the repayment of which is due in September 2017. Both the Schuldschein and Liquidity the credit facility may be used either for general business purposes and/or for financing acquisitions. Financial management As a general rule, Axel Springer SE provides all financing As of December 31, 2014 € 409.0 million of the existing for the Axel Springer Group. This arrangement ensures credit facility has been used (December 31, 2013: that the Group companies have sufficient liquidity at all € 150.0 million). The total available amount of unutilized times. The overriding goal of financial management is to short-term and long-term credit facilities was € 511.0 provide cost-effective liquidity in the form of maturity- million (December 31, 2013: € 770.0 million). matched financing. Cash flows

Net Liquidity/Debt The following presentation of cash flows also includes discontinued operations.

€ millions 2014 2013 Cash and cash equivalents 383.1 248.6 Consolidated Cash Flow Statement (Condensed)

Financial liabilities 1,050.9 719.8 € millions 2014 2013 Net liquidity/debt – 667.8 – 471.3 Cash flow from continuing operations 360.8 423.4

Cash flow from investing activities 92.7 – 178.8

The increase in the net debt presented as of December 31, Cash flow from financing activities – 343.8 – 210.9 2014, in the amount of € 667.8 million (PY: € 471.3 million) Change in cash and cash equivalents 109.6 33.7 resulted predominantly from cash outflows from finalized Cash and cash equivalents at December 31 383.1 248.6 company acquisitions and increasing our holding in Axel Springer Digital Classifieds as part of our digitization and internationalization strategy. This was only partially offset The cash flow from operating activities amounted to by payments from the sale of domestic and international € 360.8 million (PY: € 423.4 million). The decrease re- print activities, our 17.2 % non-controlling interests in sulted mainly from the fact that the current figure only iProperty and of 2.6 % of our share in Do⁄an TV. includes discontinued operations up until April 30, 2014. This figure included continuing operations in the amount Up until September 30, 2014, there was a Schuldschein of € 339.2 million (PY: € 338.9 million). This slightly posi- (promissory note) with a nominal value of € 500.0 million and tive development resulted from the improved set of op- terms up to April 2016 (nominal value of € 269.5 million) erating results, which were affected by higher restructur- and up to April 2018 (nominal value of € 230.5 million). ing expenses in the previous year; during the reporting In order to optimize our financing conditions, in October period they had a negative effect on cash flow due to the 2014, we improved the average rate of interest, increased increased outgoings on structural measures. the financing volume by € 137.0 million and extended the average term around two years through the partial termination, transformation and subscription of new Schuldschein volumes. From now on, new tranches of the Schuldschein have terms up to April 2016 (nominal

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

The cash flow from investing activities amounted to Financial position

€ 92.7 million (PY: € – 178.8 million). This figure included discontinued operations in the amount of € 533.5 million The following presentation also includes the separately

(PY: € – 3.9 million); this largely comprises the receipt of presented assets and liabilities attributable to discontin- the purchase price (less cash and cash equivalents ued operations. given up) from the finalized sale of our print activities of

€ 792.4 million less tax prepayments of € 254.1 million. Consolidated Balance Sheet (Condensed) The cash flow from investing activities from continued activities in the amount of € – 440.8 million (PY: € millions 12/31/2014 12/31/2013 € – 174.9 million) was mainly characterized by payments Non-current assets 4,315.8 3,680.2

(less cash equivalents acquired) from the acquisition of Current assets 1,241.9 1,093.6 subsidiaries and financial investments of € 572.5 million Assets 5,557.7 4,773.8 in total, which particularly included the acquisitions of N24, My Little Paris, Yad2, LaCentrale, Jobsite, Project A Equity 2,354.9 2,244.0 and OZY. Furthermore, alongside ongoing investments in Non-current liabilities 2,169.6 1,601.7 intangible assets, and property, plant, and equipment, Current liabilities 1,033.2 928.1 full repayment of the purchase price claim from the sales Equity and liabilities 5,557.7 4,773.8 of our regional newspaper investments in 2009 (€ 75.0 million; PY: € 25.0 million), payments from the sale of our 17.2 % non-controlling interest in iProperty At € 5,557.7 million, the total assets presented in the

(€ 74.3 million) and the sale of our 2.6 % share in Do⁄an consolidated statement of financial position were consid- TV (€ 62.5 million; PY: € 61.6 million). The cash outflow erably higher than the corresponding figure at year-end of € – 181.7 million in the prior year was mainly influenced 2013 (PY: € 4,773.8 million). This increase resulted by the acquisitions of Saongroup and YourCareerGroup. mainly from the sale of national and international print activities, which was completed in late April. A profit on The cash flow from financing activities during the report- disposal (before taxes) of € 897.4 million was recognized, ing period amounted to € – 343.8 million (PY: € – 210.9 and purchase price proceeds (less cash and cash equiv- million). It was solely included within continuing opera- alents transferred to the buyer, and tax prepayments) of tions and was, in particular, characterized by the acquisi- € 538.3 million were recognized in connection with this tion of a 15 % equity stake in Axel Springer Digital Classi- transaction. fieds from General Atlantic (€ 446.0 million) as well as new loans as financial liabilities. Furthermore, the current Development of the long-term financial position resulted figure included payment of dividends to shareholders of predominantly from the increase in intangible assets, Axel Springer SE and a special distribution of funds of which amounted to € 652.0 million after initial consolida- € 90.7 million in connection with the completed sale of tion of My Little Paris, N24, Yad2, LaCentrale, and our print activities in the Czech Republic. Jobsite took place. Furthermore, financial investments increased from € 433.9 million to € 633.2 million, which was primarily due to the long-term loan granted as part of the sale of our domestic print activities which was not paid in cash (€ 240.7 million) and the acquisition of Project A and OZY, and at the same time the sale of our

17.2 % equity investment in iProperty and the sale of 2.6 % of our holding in Do⁄an TV offset this.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

In contrast, in connection with a planned sale of property company acquisitions, and by restructuring and subscrip- that was previously held under property and equipment tion of our Schuldschein (promissory note). The increase and also as an investment in assets held separately for in other liabilities was primarily due to initial consolidation sale at fair value less planned sales costs of € 95.9 mil- of acquired companies and in particular due to recogni- lion. In addition, the other long-term assets were reduced tion of liabilities from option rights granted for acquisition due to the premature and full repayment of the purchase of remaining non-controlling interests. price claim from the sale of our regional newspaper investments, which took place in 2009. Current liabilities rose mainly due to consolidation-related increases of trade payables and other liabilities. In addi- The increase in current assets from € 1,093.6 million to tion, we have also identified a long-term finance lease € 1,241.9 million predominantly resulted from an in- liability of € 62.0 million as being kept for sale as it con- crease in the existing cash and cash equivalents, from sists of part of a building which was an asset held for the reclassification of long-term assets kept for sale sale as part of a finance lease as of December 31, 2014. (€ 95.9 million), and the increase in trade receivables. In In contrast, finalization of the sale of domestic and for- addition, the other short-term assets increased, mainly eign print activities resulted in de-recognition of the liabili- due to initial consolidation of acquired companies, and ties that were held for sale. granting a loan for immediate payment of a special distribution of funds in connection with the completed sale Non-financial performance indicators of print activities in the Czech Republic. By contrast, finalization of the sale of our domestic and international Employees print activities allowed the assets held for sale from the Axel Springer had an average of 13,917 (PY: 12,843) previous year to be written off. employees (excluding vocational trainees and journalism

students/interns) in the reporting period. The 8.4 % in- Equity amounted to € 2,354.9 million and was, despite crease over the prior-year figure resulted primarily from the consolidated net income generated, only slightly newly consolidated companies. Outside of Germany, above that of the end of 2013 (PY: € 2,244.0 million). Axel Springer had an average of 5,727 employees (PY:

Alongside the payments of dividends to the shareholders 5,281); this accounted for 41.2 % (PY: 41.1 %) of the of Axel Springer SE and to minority partners, this could workforce. On average, 5,847 of the Group’s total work- be traced back to the acquisition of 15 % of shares in force were women and 8,070 were men. The number of

Axel Springer Digital Classifieds, within the context of editors fell during the reporting period by 0.9 % to 2,771, which the difference between the purchase price and the however the number of employees - largely due to ex- holdings of other partners was recorded within equity pansion of digital business activities and new equity without affecting net income. The equity ratio fell to 42.4 % stakes - rose by a total of 14.1 % to 10,457 employees.

(PY: 47.0 %).

Employees by Segments (continuing operations) The increase in long-term outside capital was largely due to an increase in pension provisions, financial liabilities Average number per year 2014 2013 Change and other liabilities. The increase in pension provisions Paid Models 5,951 5,882 1.2 % results from the current market level following adjustment Marketing Models 2,220 1,882 18.0 % of the discounting rate to 1.9 % (as of December 31, Classified Ad Models 2,580 1,826 41.3 % 2013: 3.6 %). Financial liabilities rose, in particular, due to Services/Holding 3,166 3,253 – 2.7 % utilization of our credit facility in connection with completed Group 13,917 12,843 8.4 %

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

The small increase in the Paid Models segment was pri- The “move” personnel development started in January marily due to initial consolidation of the N24 Group. In the 2014, which is an initiative which represents change and Marketing Models segment, the increase resulted from the movement, and should drive and support the transfor- growth of reach-based marketing activities. The strongest mation process in the company. A variety of unconvention- growth occurred in the Classified Ad Models segment, al formats, measures and offers are part of "move"; these mainly due to acquisitions, but also to organic growth. deal with future topics in the digital world and emphasize the networking aspect whilst simultaneously providing Length of service and age structure knowledge transfer. Around 70 “move” events took place As of December 31, 2014, the average length of service during the year. The initiative won several awards. with the Axel Springer Group was 10.5 (PY: 10.4) years;

42.5 % (PY: 46.3 %) of employees have worked for the Research and development company for longer than ten years. More than half of all Axel Springer does not have a traditional research and employees are between 30 and 49 years of age. The development department of the kind that industrial en- proportion of severely disabled employees in German terprises maintain. All areas of the company constantly companies was, on average over the year, 3.8 % (PY: strive to optimize their existing products and introduce

3.7 %). innovative new products to the market. Above all, we seek to continuously expand our portfolio with innova- Equal opportunity and diversity tions in the digital sector, as well as new print formats, Axel Springer promotes the development of all its em- besides continuously improving our editorial content and ployees equally. Thus in 2010, Axel Springer launched a upgrading our journalistic excellence. In that regard, we new, Group-wide project entitled “Chancen:gleich!” to pay especially close attention to identifying changing increase the percentage of women in senior manage- media usage habits as early as possible. ment positions, so as to achieve a better balance between women and men in the company’s management. Technology platform for paid content offerings The objective of this program is to increase the percent- The existing platforms for paid content were also sys- age of women on all management levels to more than tematically expanded during the financial year. Improve-

30 %, as a company-wide average. Instead of a uniform ments in the registration process (“Single Sign On”), quota, we adopted individual targets for each area of the integration of additional sales agreements and further company. As of December 31, 2014, women held 27.8 % developments in the area of content management sys- of management positions at Axel Springer’s companies tems were implemented on our platforms. in Germany. Further development of marketing services Personnel development In the Marketing Models, existing online offers were The training and continuing education activities of Per- continuously developed and supplemented by new ones. sonnel Development have been closely aligned with the Development of innovative product functionalities and requirements of the digitization movement in prior years. marketing technologies for increasing reach and use of More than one third of the continuing education program offers as well as monetization is a key priority for our in 2014 consisted of newly developed training courses investments. In addition, we also invest in new compa- that cover various aspects of the digital transformation. nies in an early stage of development, which develop Together with the formats and seminars that have already new business models and technologies. This is either as been successfully established, the new personnel devel- a direct investment, or indirectly via investment compa- opment activities are clearly focused on digital content. nies such as the Project A-Ventures, where Axel Springer and the Otto Group are both involved, or Axel Springer Plug & Play Accelerator GmbH, a joint venture with Plug & Play Tech Center in Silicon Valley.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

Further development of classified portals Since the mid-1990s Axel Springer has published envi- The development of the forefront activities also applies to ronmental reports, and sustainability reports have been the Classified Ad Models segment. published since 2000. Since 2005 we have published a sustainability report on a biannual basis, which follows the For this reason, the StepStone Group also invested in its full list of indicators of the Global Reporting Initiative (GRI), mobile offerings during 2014. A new Totaljobs app was the internationally relevant format for sustainability report- launched in Great Britain, and a new app for recruiters ing. The current sustainability report in "GRI+" format is was introduced in Germany which enables direct search- also documented in the "Media Sector Supplement" ing for candidates to be carried out on the move. (GRI+). This section provides additional indicators that are reflective of the specific issues encountered by journalism In the real estate models, Immonet has brought out an companies. At the same time, the report focuses on app for Android Wear, the smart watch operating system, aspects of digitization which are relevant from a sustaina- which should make searching in real-time for real estate bility perspective. Axel Springer’s sustainability reports are easier. audited by independent auditors. The current sustainability report appeared in the middle of 2014 and can be Sustainability and social responsibility found at www.sustainability.axelspringer.com. The next For Axel Springer, sustainability is the nexus between sustainability report will appear in the middle of 2016. economic success and conduct that is both environmen- tally responsible and socially fair. These three criteria are firmly anchored in the company’s business strategy. Therefore, sustainability is an integral part of all the company’s business processes. The Sustainability Depart- ment supports all the company’s activities in this area, ranging from resource efficiency measures to social responsibility initiatives. This department reports directly to the Executive Board Chairman. Through our sustainability strategy, we exercise responsibility for current and future generations and establish the foundation for long- term business success.

Annual Report 2014 Combined Management Report Axel Springer SE Economic report

General assessment of the company’s Financial performance, liquidity, and financial position financial performance, liquidity, and (continuing operations) financial position by the Executive Group Key Figures Board (Selection, in € millions) 2014 2013 2012 Total revenues 3,037.9 2,801.4 2,737.3

Axel Springer has systematically continued to follow the EBITDA1) 507.1 454.3 498.8 strategy of digital transformation in financial year 2014. We EBITDA margin1) 16.7 % 16.2 % 18.2 % have driven digitization organically as well as via acquisi- EBIT2) 394.6 359.7 413.6 tions. The most meaningful step in this context was the agreement with growth investor General Atlantic finalized Tax rate 25.1 % 33.0 % 32.8 % Consolidated net income 235.7 178.6 190.7 at the end of 2014 regarding the acquisition of their 30 % equity share in our digital classified advertising business. Consolidated net income, adjusted2) 251.2 229.8 258.6 Already during the first half of the year, the sale of domes- Earnings per share, adjusted tic regional newspapers and the TV program guides and 2) 3) (in €) 2.01 1.81 2.20 women’s magazines to FUNKE Mediengruppe was suc- Dividend per share (in €)4) 1.80 1.80 1.70 cessfully finalized. EBITDA, EBIT, and the adjusted earn- 4) ings per share from continuing operations were all consid- Total dividends 178.1 178.1 167.9 erably higher than in the previous year. Considering the Net debt/liquidity – 667.8 – 471.3 – 449.6 strong cash flow, the still exceedingly solid balance sheet Free cash flow5) 244.1 246.1 297.3 structure, and the cost-effective financing options available 1) Adjusted for non-recurring effects. to the company, Axel Springer finds itself in an excellent 2) Adjusted for non-recurring effects and amortization and impairments from purchase price allocations. position to generate future growth, both through organic 3) For all years indicated herein, the adjusted basic/diluted earnings per share were growth and through acquisitions. calculated on the basis of weighted average shares outstanding in the given financial year (98.9 million). 4) Dividend proposal for financial year 2014. We continue to believe that the path of systematic digiti- 5) Cash flow from operating activities, less capital expenditures, plus cash inflows on disposal of intangible assets and property, plant, and equipment. zation is the right strategy for assuring and further improving the company’s profitability in the future.

Annual Report 2014 Combined Management Report Axel Springer SE Economic position of Axel Springer SE

Economic position of Axel Springer SE

€ millions 2014 2013 2012 2011 2010 Revenues 1,174.6 1,442.8 1,507.1 1,551.2 1,576.6

Net income 590.8 186.4 371.9 260.2 161.3

Transfers to retained earnings1) 412.7 8.3 204.0 92.6 4.0

Total dividends1) 178.1 178.1 167.9 167.6 157.3

Dividend per share (in €)1) 2) 1.80 1.80 1.70 1.70 1.60

1) The amount of the dividend for 2014 and the appropriation to retained earnings (after deduction of an advance appropriation of € 295.4 million) are subject to the condition of approval by the annual shareholders’ meeting. 2) The dividend per share for the year 2010 was adjusted to account for the share split conducted in 2011.

Introductory remarks posal due to Axel Springer SE amounted to € 797.8 million, and was recorded as extraordinary profit. As the The management report of the parent company Axel income and expenses relating to the sold activities were Springer SE, Berlin, is combined with the management no longer included from May 2014 onwards as a conse- report of the Axel Springer Group. The following state- quence of the sale, considerable falls were noted, partic- ments are based on the separate financial statements of ularly in revenues and also in purchased goods and Axel Springer SE, which were prepared in accordance services and personnel expenses. with the regulations of the German Commercial Code and the German Stock Corporations Act. The separate Income Statement (Condensed) financial statements and the management report will be announced in the Electronic Federal Gazette and pub- € millions 2014 2013 lished on the website of Axel Springer SE. Revenues 1,174.6 1,442.8

Other operating income 125.3 133.4 Business activity Purchased goods and services – 290.4 – 368.3

Personnel expenses – 382.1 – 481.3 Axel Springer SE is operationally active in the Paid Models segment and mainly publishes nationwide daily Amortization, depreciation, and impairments of intangible assets and property, plant and and weekly newspapers as well as automobile, comput- equipment – 45.7 – 34.0 er, and sports magazines. Furthermore, Axel Springer SE, Other operating expenses – 532.1 – 550.5 in its role as a parent company of the Axel Springer Net income from non-current financial assets 52.3 111.9 Group also exercises holding functions, monitors Group- Net interest income – 32.2 – 24.5 wide liquidity management and performs other services Profit from ordinary activities 69.7 229.5 to Group companies. The general economic conditions of Axel Springer SE correspond essentially to those of Extraordinary profit 797.8 0.0 the Group and are described in the economic report (see Taxes – 276.7 – 43.1 page 22 et seq). Net income 590.8 186.4

Financial performance Revenues fell by € 268.2 million or 18.6 %. There was The financial performance of Axel Springer SE in the also a fall in circulation and advertising revenues of financial year 2014 was characterized by the sale of € 197.8 million and € 78.9 million, respectively. In con- regional newspapers as well as TV program guides and trast, other revenues were 5.9 % above prior-year figures women's magazines to FUNKE Mediengruppe, which at € 153.7 million. was finalized at the end of April 2014. The profit on dis-

Annual Report 2014 Combined Management Report Axel Springer SE Economic position of Axel Springer SE

The cost of purchased goods and services was less than conversion of existing tranches as well as subscription the the prior-year figure, due to the lower expenses for paper, average rate of interest was improved, the financing vol- printing services, and fees, falling by € 77.9 million to ume was increased by € 137.0 million to € 637.0 million

€ 290.4 million. At roughly 25 %, the ratio of purchased and the average term was extended by two years (further goods and services to total revenues was little changed details can be seen in Group Liquidity, page 35). from the prior year. Alongside the promissory note there is a credit facility of The personnel expenses of € 382.1 million remained € 900.0 million, the repayment of which is due in Septem-

20.6 % lower than the prior-year figure. The cause of this ber 2017. Both the promissory note and the credit facility was the lower number of employees in particular. The may be used either for general business purposes average number of employees declined by 21.4 %, from and/or for financing acquisitions. 4,282 in the prior year to 3,364 in financial year 2014. Net debt (liabilities due to banks and promissory note less Amortization, depreciation, and impairments of intangible cash and cash equivalents) on December 31, 2014 assets and property, plant and equipment increased by amounted to € 946.1 million (PY: € 587.4 million). As of € 11.7 million to € 45.7 million, mainly due to an impair- the reporting date unutilized short-term and long-term ment of one item of property. credit facilities amounted to € 511.0 million. (PY: € 770.0 million). Net income from non-current financial assets amounted to € 52.3 million. The fall of € 59.6 million resulted largely Financial position from a lower income from participating interests (€ 19.3 million; PY: € 105.2 million), which contained additional Balance Sheet (Condensed) dividend payments in preparation for the sale of newspaper and magazine activities in the previous year. At the € millions 12/31/2014 12/31/2013 same time, profit and loss transfers as well as earnings Intangible assets, and property, plant, and from loans rose by € 8.6 million and € 9.1 million, respec- equipment 220.9 245.8 tively. Also, lower impairments of € 8.6 million of financial Non-current financial assets 4,284.7 3,231.9 investments were recorded during the reporting period. Trade receivables 39.4 136.9

Receivables from affiliated companies 71.8 42.7 Net interest income (€ – 32.2 million) fell by € 7.7 million. Cash and cash equivalents 99.9 62.6 The reasons for this were mainly higher interest expendi- Other assets 102.6 166.4 ture as part of Group-wide liquidity management and prepayments penalty in connection with the restructuring Total assets 4,819.3 3,886.3 of the existing Schuldschein (promissory note). Equity 1,965.1 1,552.4 Provisions 383.2 375.8

Profit from ordinary activities amounted to € 69.7 million Liabilities due to banks and promissory in financial year 2014 (PY: € 229.5 million). After taking note bonds 1,046.0 650.0 the extraordinary profit into consideration and tax ex- Liabilities to affiliated companies 1,328.7 1,160.1 penditures there was an annual surplus of Other liabilities 96.3 148.0 € 590.8 million (PY: € 186.4 million). Total equity and liabilities 4,819.3 3,886.3

Liquidity Total assets rose by € 933.0 million to € 4,819.3 million Axel Springer SE restructured the existing Schuldschein during the financial year. Non-current assets amounted during the financial year. Due to partial cancellation and to € 4,505.6 million (PY: € 3,477.7 million) and account-

Annual Report 2014 Combined Management Report Axel Springer SE Economic position of Axel Springer SE

ed for 93.5 % (PY: 89.5 %) of total assets. 43.6 % (PY: Profit utilization proposal

44.6 % was covered by equity. The Supervisory Board and Executive Board propose Non-current financial assets increased during the financial that the company apply an amount of € 178.1 million year by € 1,052.8 million to € 4,284.7 million. The in- (PY: € 178.1 million) from the distributable profit of crease mainly resulted from additional payments to capital € 295.4 million (PY: € 178.1 million) to pay a dividend reserves by subsidiaries for financing acquisitions as well of € 1.80 (PY: € 1.80) per qualifying share for financial as vendor loans granted to the amount of € 240.7 million year 2014, and to appropriate the remaining amount of as part of the sale of the German regional newspapers, TV €117.3 million (PY: € 0.0 million) to the other retained program guides, and women’s magazines. earnings.

A major factor in the reduction of trade receivables by The company does not currently hold any treasury € 97.5 million to € 39.4 million was the contribution of shares, so that all the company’s shares qualify for divi- marketing and distribution activities into independent dends. However, the number of shares qualifying for service companies. This resulted in contrary effects, espe- dividends may be reduced in the time remaining before cially in receivables from affiliated companies, which rose the annual shareholders’ meeting. In that case, an ad- by € 29.1 million to € 71.8 million. justed profit utilization proposal will be submitted to the annual shareholders’ meeting, without changing the In other assets, the payment of the deferred purchase target dividend of € 1.80 per qualifying share. price for the sale of regional newspaper investments finalized in the 2009 financial year amounted to € 75.0 million. Dependency Report

Equity increased by € 412.7 million to € 1,965.1 million. The Executive Board of Axel Springer SE submitted

The equity ratio increased to 40.8 % (PY: 39.9 %). the Dependency Report prescribed by Section 312 of the German Stock Corporations Act (AktG) to the Super- Provisions increased by € 7.4 million to € 383.2 million visory Board and made the following concluding state- compared to the same time last year. The main reasons ment: for the increase were provisions for guarantees granted in connection with the sold newspaper and magazine activi- “According to the circumstances known to the manage- ties. Contrary effects arose from lower tax provisions. ment at the time of each transaction with an affiliated company, Axel Springer SE received adequate consider- In particular, lower subscription prepayments as a result of ation for every such transaction and did not take, or fail the sale of the German regional newspapers, TV program to take, any actions in the reporting period, either at the guides, and women’s magazines led to a reduction of behest or in the interest of the controlling company or a other liabilities. company affiliated with the controlling company.”

Annual Report 2014 Combined Management Report Axel Springer SE Events after the reporting date

Events after the reporting date

On February 11, 2015 we finalized an agreement with approximately € 131 million as purchase price payments the shareholders of the real estate portal Immowelt re- to the previous partners of Immowelt in connection with garding combining the Immowelt Group and the Immo- creating the new structure. The combining of both por- net Group, belonging to Axel Springer Digital Classifieds. tals makes it possible to sustainably improve the com- After finalization of various purchase and contribution petitive position within the German market segment for agreements both real estate portals will be brought un- real estate portals. The transaction is still awaiting ap- der the auspices of the new Immowelt Holding AG com- proval from the relevant cartel authorities. pany, where we will have a majority shareholding of 55 % via Axel Springer Digital Classifieds. The remaining 45 % At the beginning of January 2015 the acquisition of 51 % is kept by the current shareholders of Immowelt AG, and of shares in @Leisure Holding B.V., Amsterdam, the they have various options available for selling their hold- Netherlands, was completed (see page 25). ing. The transaction was based on a valuation of both companies totaling € 420 million. We will pay a total of

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

Report on risks and opportunities

Risk policy principles and risk strategy integrates the risk management process into the internal control system. The use of this holistic, integrated ap- At Axel Springer, we define risks as the possibility of proach should ensure that countermeasures and moni- negative deviations of actual business performance from toring activities are systematically focused upon the the planned targets or objectives, while opportunities strategic, operative, reporting-related and compliance- represent the possibility of positive deviations. The risk related objectives of Axel Springer and their risks. policy principles and risk strategy of Axel Springer are closely aligned and coordinated with the business strat- To ensure close interaction of individual subsystems in egy and business objectives. We do not seek to avoid the long term which results in an appropriate, effective risks at all costs, but to carefully weigh the opportunities monitoring system for Axel Springer, group-wide coordi- and risks associated with our decisions and our business nation of systems and centralized reporting by means of activities, from a well-informed perspective. Accordingly, risk management, compliance management and the opportunities should be systematically exploited and internal control system by the Governance, Risk & Com- risks should be assumed only if they remain within ap- pliance central sector. propriate limits that are acceptable to the company as well as create additional opportunities to sustainably The risk management system at Axel Springer is focused generate income or increase the company’s value. Thus, on recognizing and evaluating all significant and existen- risks should be limited to a level deemed acceptable by tial risks as well as essential changes in the risk situation the company’s management by taking appropriate as promptly as possible. It should therefore be assured measures, be transferred to third parties in full or in part, in accordance with risk policy principles and risk strategy or, in those cases where risk mitigation is not considered that corresponding control and countermeasures can be advisable, be avoided or monitored closely. All employ- used in time to react to such risks. This approach gives ees are duty-bound to handle risks responsibly within us the necessary maneuvering room and allows for the their own area of responsibility. controlled and responsible management of risks.

Group-wide risk management system The risks at Axel Springer are divided into strategic, operative, reporting-relevant, and compliance-relevant In accordance with national and international require- risks based on COSO (risk categories). The compliance- ments, we also continued the process of establishing the relevant risks arise from potential infringement of external individual components of our internal monitoring system and internal regulations and guidelines. Insofar it is sen- during the financial year (risk management, compliance sible and applicable, risks are assessed quantitatively management, internal control system, and internal audit), with reference to the parameters “loss amount” and and adapted them to reflect the changed corporate “probability of occurrence”. To achieve focus on the environment as well as the ever-changing Group. An relevant issues, essential contents, a materiality limit is important focus lay on continued development and op- established based on EBITDA which is risk-oriented at a timization of existing processes and structures, the inte- Group level, and further threshold values are determined gration of acquisitions into the existing risk management from this. Currently, the materiality limit is € 10 million. system, and continuous improvement of quality of risk inventory and corresponding countermeasures. A theoretical threat to the company’s survival as a going concern is assessed with reference to the possible gross The general form of structures and processes in the risk loss amount and the resulting effect on the financial management system are based on the internationally position and liquidity (excessive debts and insolvency) recognized "Enterprise Risk Management Framework", a of the Group. Based on the classification scheme de- framework developed by the Committee of Sponsoring scribed above, risks are assigned to one of the following Organizations of Treadway Commission (COSO). This

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

risks classes: existential risks, significant risks, risks to be systematic process for risk assessment and evaluation monitored, and other risks. carried out annually and the updates carried out on a semi-annual basis, they are expected to observe their Risk Matrix of Axel Springer SE division or their company for any changes in the risk situation. Significant changes in the risk situation must be Critical Risks Significant Risks reported immediately to the Corporate Office of Govern- Risks to be Monitored Other Risks ance, Risk & Compliance.

This decentralized risk inventory process is supplement- very high ed by a centralized risk inventory, which is conducted by 50 % means of a systematic procedure involving top managers, high under the direction of the Group-wide Risk Manager. The

25 % goal of this procedure is to identify and assess risks that medium are not specific to operating divisions or processes, and so fill in any gaps in the risk inventory, by employing a 10% low specialized methodology.

5% of Occurrence Probability very The Corporate Risk Manager is assigned to the Corpo- low rate Office of Governance, Risk & Compliance. He su- Extent of Damage (€ millions) pervises all necessary risk management activities, aggre- very very low low medium high high gates the risks on the Group level, judges the plausibility, 0.5 2.5 510 and verifies the completeness of reported risks. He is also responsible for the constant optimization of the risk management system and the web-based data process To ensure the greatest possible transparency in the solution employed on a Group-wide basis. The semi- presentation of Axel Springer’s risk situation, and also for annual and ad-hoc risk reports submitted to the Execu- assessing existing weaknesses in monitoring and control tive Board and Supervisory Board are focused primarily if necessary, all identified risks are assessed both prior to on existential risks and significant risks, along with the the implementation of risk management measures (gross countermeasures adopted in every case, and suitable risk assessment - inherent risk), and after the corre- early warning indicators, to the extent they are available. sponding measures are taken (net risk assessment - residual risk). The risk management system, including the responsibilities for the various activities, is documented in a Corpo- While overall responsibility for risk management lies with rate Guideline, which is reviewed at least once a year the whole Executive Board, the various divisions and and adjusted when necessary by the Corporate Office of affiliated companies of the Group are primarily responsi- Governance, Risk & Compliance. ble for the management of individual risks, including the early detection, identification, assessment, management, At present, we do not intend to survey and document and documentation of risks, as well as the adoption and entrepreneurial opportunities systematically in the con- implementation of countermeasures and appropriate text of our risk management system. Instead, business communications. opportunities are taken up and documented as part of the strategy and budgeting process. The senior managers of Axel Springer and the Group companies bear the responsibility for the content of the risk management system implemented within their division or company and the respective risks Alongside the

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

Internal audit system ness and economic efficiency of the Group’s business activities, as well as the completeness and reliability of its Group Auditing within Axel Springer SE is organized as a financial reporting. The (consolidated) financial reporting- process-independent staff department, which is under related risk management system and internal control the control of the full Executive Board in functional terms, system comprise all organizational regulations and and under the Executive Board member in charge of measures aimed at the detection and management of Personnel and Finance in disciplinary terms. It provides risks related to financial reporting. With a view to the consulting and investigations in all Group companies and (consolidated) financial reporting process, the internal divisions in a risk-oriented manner and aligns its activities control system is meant to ensure that the Group’s fi- with relevant national and international professional nancial reports convey a true and fair view of the financial standards. position, liquidity, and financial performance of Axel Springer SE and the Axel Springer Group, in compliance In particular, Group Auditing has the task of inspecting with all relevant laws, regulations, and standards. How- the effectiveness of the internal risk management and ever, even an effective, and therefore adequate and well- control system as well as the compliance management functioning internal control system cannot guarantee the system based on a risk-oriented inspection plan and to prevention or detection of all irregularities or inaccurate derive measures for eradicating weaknesses. Implemen- disclosures. tation of improvement measures is followed up based on a systematic process. We consider the following elements of the risk management system and internal control system to be significant The results of individual audit or consultancy mandates with respect to the (consolidated) financial reporting are typically reported to the Executive Board and period- process: ically summarized to the Audit Committee of the Super- visory Board.  Processes for identifying, assessing, and document- ing all significant financial reporting-related processes To ensure the effectiveness of the internal audit system, and risk areas, including the corresponding key con- a quality assurance and improvement process is set up, trols. Such processes include financial and account- which provides for external quality assessments amongst ing processes, as well as administrative and opera- other things in accordance with professional guidelines. tional business processes that generate important information used in the preparation of the separate Report on the financial reporting-related and consolidated financial statements, including the risk management system and internal management reports of the parent company and the control system pursuant to Section 289 Group. (5) and Section 315 (2) (5) HGB  Process-integrated controls (computer-aided controls and access restrictions, dual control principle, separa- The (consolidated) financial reporting-related risk man- tion of functions, analytical controls). agement system and the connected internal control system are important elements of the internal manage-  Standardized financial accounting processes, through ment system of Axel Springer SE, which is also based on the use of an internal, Group-wide Shared Services the internationally recognized framework of the Commit- Center for most of the consolidated German compa- tee of Sponsoring Organizations of the Treadway Com- nies of the Group. mission (COSO). As emphasized in the concept, the effective interplay of the risk management system and internal control system is meant to ensure the effective-

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

 Group-wide accounting directives in the form of ac- divisional basis, thereby enhancing the effectiveness and counting guidelines, charts of accounts, and reporting economic efficiency of the entire system. procedures. Risk areas  Quarterly communication of information to all consolidated Group companies on current developments re- If not stated elsewhere, all risks will be mentioned in the lated to accounting and the process of preparing the following which have a considerable negative effect on financial statements, as well as the reporting dead- reaching our company-wide targets. Within the risk areas lines to be observed. described below, risks are presented in the order of their priority for Axel Springer.  Assuring the requisite expertise of employees involved in the financial reporting process by means of appro- Provided that these are not strategic risks, then the risks priate selection procedures and training. are generally pertaining to the 2015 forecasting period.

 Centralized preparation of the consolidated financial Market and competition risks statements, employing manual and computer-system Whilst economic growth is forecast for Germany despite controls in respect of financial reporting-specific con- geopolitical tensions, the euro zone in its entirety is re- nections and dependencies. covering only slowly. The fact that individual countries are currently not able to correct their deficits and that the  Protection of financial reporting-related IT systems required structural reforms are only being implemented against unauthorized access, by means of access re- slowly is causing a growing economic chasm between strictions. euro zone countries. There is also considerable uncertainty pertaining to the future development of emerging  Monthly internal reports (complete income statement, countries such as Russia and China, as economic pow- statement of financial position, cash flow statement) ers that still hold considerable importance for the global and monthly reports on all cost units of the Group, in- economy. A renewed economic downturn within EU cluding analysis and reporting of significant develop- member states and therefore our key markets could ments and budget/actual variances. have a negative impact on economic growth generally and could lead to a significant deterioration of the reve- The effectiveness of the (consolidated) financial reporting- nue situation of our customers, and result in slower related risk management system and internal control growth of the online market. In such a scenario, a more system is systematically reviewed and assessed by severe decline than expected of Axel Springer's print means of periodic control tests; a Group-wide reporting advertising revenues cannot be ruled out. Besides re- system ensures that up-to-date information is provided ducing advertising revenues in Germany, a negative on a regular basis to the division heads, Executive Board, development of the general market environment could and Supervisory Board. also reduce the Group’s advertising revenues in central and eastern Europe, and it therefore represents a risk for Both the risk management system and the internal con- all the segments of Axel Springer SE. trol system are continuously refined. For example, the financial reporting-related control system is being inte- Furthermore, the general market situation is still charac- grated, extending beyond the area of accounting, on a terized by intense competition pressure. The entry of step-by-step basis into a comprehensive system of new competing titles and formats into the market ex- internal corporate monitoring. By that means, we syn- poses the Axel Springer Group to the risk of lost reve- chronize and optimize our control elements on a cross- nues and market shares in the online and print business. The loss of major advertising customers due to switching

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

over to other advertising media such as TV, radio, and ing this risk, we are currently conducting a joint information online or mobile advertising, could considerably reduce campaign with our advertising partners, to raise aware- our print advertising revenues. Our print advertising reve- ness of this problem within the advertising industry. We nues could also be reduced by the loss of major com- are also exploring legal and technological options for ef- mercial customers, who are increasingly shifting their fectively addressing the problem of ad blockers. advertising budgets to radio and TV. Digital markets are subject to dynamic markets and com- The above-mentioned market risks are exacerbated by petition with short innovation cycles. Our digital portals are changing consumption and reading habits, primarily due therefore exposed to the risk that new portals and com- to demographic change. Another source of persistent petitors aiming to break into the market, alongside chang- uncertainty pertains to the intensified competition be- es in usage behavior, could jeopardize the existing market tween traditional print media and the increased use of position in the long run. Increasing competition is a threat online and mobile media. not only on the part of the world's leading Internet companies aiming to penetrate into new market segments, but The above-mentioned general market risks are moni- also for new companies with innovative business concepts. tored and minimized primarily through management on Intensive observation of current happenings on the market, the operational level and through continuous observation and continuous and adapted further developments of our of the market and the competition. At the same time, the portals are our counters to the stated risks. digitization of our products will be driven, our product portfolio will be expanded both nationally and interna- Many of our digital offers are additionally confronted with tionally, and our journalistic and technological compe- the risk arising from the dominant position of major Inter- tences will be enhanced and optimized. Adjustments to net search engines. If, for example, these search engines evolving consumer and reader requirements also occurs change their search algorithms or expand their business via technical and product-specific innovations. This will models that compete with our business sectors, this can be accompanied with pricing and product policy have noticeable effects on the future revenue situation, measures. especially with regards to our Marketing Models. Even small changes in visibility or in position on the results In addition, there is a risk of increasing price erosion within pages could lead to significant losses in turnover with the online marketing sector, e.g. display advertising due to certain business models. increased competition by global players with developed targeting products and a high number of users. We coun- We counter this risk by means of targeted ad place- ter this risk by, amongst other things, consolidating and ments on search engine pages/results pages, search continuously building on our position in the competitive engine optimization and management as well as the arena as well as innovative, target group-oriented market- further expansion of the Group’s activities in target-group ing products. relevant social media channels. Simultaneously, we are focusing on adequate measures to reinforce the brands The spread of ad blockers presents a risk for advertising and offerings of Axel Springer SE so that their usage will revenues which must be taken seriously in the digital not be as dependent on services provided by third par- advertising sector. Specially pre-configured browsers and ties, particularly the visibility on search engines and social browser add-ons prevent ads from being displayed on media networks. Through the constant further develop- visited web pages and the effects of said ads depending ment and expansion of our apps for mobile use, we are on how the add-ons were installed by the user. The con- continuously increasing the degree of digitization and tinued spread of ad blockers could lead to substantial implementing our strategy of becoming the leading digi- declines in advertising revenues, especially in our perfor- tal publisher. By means of acquisitions, new company mance-oriented business models. As a means of minimiz- start-ups, and the expansion of existing digital media, we

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

will strive to adapt to changes in the media world and vertising and customer-retention possibilities associated further promote the cross-media networking and integra- with these technologies could result in substantial reve- tion of our brands. (For more information on this subject, nue losses for mobile and web-page-based business please refer to the report on the operating segments, models. beginning on page 12, and the report on the financial performance of the segments, starting on page 30). The growing Internet activities of public-sector broad- casters currently pose another risk to our business. ARD Political and legal risks in particular has intruded into the business sphere of the The already pronounced concerns of the public, politi- private-sector press and distorted the competition envi- cians, and consumer protection organizations in matters ronment with a text-oriented news app for Tagesschau of data protection have become even more prominent. financed by license fees. Faced with competition from this This development has been caused by two factors, the cleverly designed “free offer”, it is naturally hard for pub- first being the public debate regarding the use of the lishing companies to successfully offer paid apps. personal data of German citizens by foreign intelligence services, and the second being the practice of social After conducting fruitless negotiations with ARD and NDR, networks, search engines, and other online platforms to Axel Springer SE and seven other publishing companies, collect the data entered by users and use it for their own with the full support of the newspaper publishers’ associ- commercial purposes. Even where such actions fall ation BDZV, filed a lawsuit against ARD and NDR in the within legally admissible limits, parts of the public and Competition Division of the Cologne Regional Court. In certain interest groups (including consumer protection September 2012, the court granted the claim in most organizations, among others) have successfully argued respects. The defendants appealed this ruling and pre- that consumers’ right to privacy should always take vailed in the appellate instance before the Cologne Higher precedence over commercial interests. For this reason, Regional Court. The plaintiffs have lodged an appeal among others, consumer protection and data privacy against this ruling before the Federal Supreme Court. proposals have gained significance in the legislative and executive bodies of the German states and the German Concurrently with the court proceeding, the publishing Federal Government, and at European level as well. This companies are conducting settlement negotiations with trend is particularly worrisome for digital business models, ARD, with the aim of establishing fundamental playing because they are almost entirely reliant upon the use of rules for the Internet. If no agreement can be reached data. This uncertainty has been exacerbated particularly and the publishing companies lose the case in the high- by the as yet incomplete legislative process on the sub- est instance, it will be much more difficult for Axel ject of a fundamental data privacy regulation at EU level. Springer to successfully offer paid journalism content in Specifically, such a regulation would affect the use of so- the fast-growing mobile market. called "cookies" and similar technologies, the permissibil- ity of generating user profiles (profiling and tracking), and Our business will continue to be exposed to the compe- other measures that necessitate the use of personal data tition-distorting effects of state-owned media and the without prior consent. Furthermore, recent regulatory regulatory pressure of legislators on all relevant levels of proposals are potentially more advantageous for the government, despite the countermeasures we have providers of registration-required online services than for taken. advertising-financed online services and advertising networks that do not maintain direct contacts with end Breaches of confidentiality agreements and violations of customers, because the popular, registration-required insider trading regulations, as well as the incorrect publi- online services already possess a large, personalized cation of data or the non-observance of data privacy subscriber base, making it much easier for them to ob- laws, could lead to economic or legal consequences for tain permission from their users. Restrictions of the ad- Axel Springer. Moreover, the reputation of Axel Springer

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

or its brands could be damaged by negative reporting or centers, firewalls, use of encryption, identity & access social media campaigns on this subject, even if no laws management, and hardening of systems are used to have been broken. reduce risk. The stated measures are continuously ana- lyzed and expanded or improved where necessary. To minimize such risks, Axel Springer has adopted various control mechanisms and consultation rules and Reputation risks initiated extensive training programs, among other As an internationally active and expanding enterprise, measures. The company intends to intensify such Axel Springer has adopted a catalog of social standards activities in the future. known as the International Social Policy, as a binding guideline for social integrity, applicable to all our compa- IT risks nies throughout the world. Non-observance of the Inter- For Axel Springer, a Group with an increasingly high national Social Policy, especially in connection with the degree of digitization, there are numerous important risks procurement of advertisements and product giveaways, for the Group regarding the availability of IT systems used, as well as merchandising or the sale of title licenses, as well as the confidentiality and integrity of information. could potentially cause serious damage to the company’s reputation. Due to the high degree of integration of information technology within business processes, Axel Springer is One step that Axel Springer has taken to mitigate such reliant on high availability of IT components. Failure of IT risks has been to integrate the International Social Policy infrastructure components can have considerable influ- into the Group-wide Code of Conduct. In addition, all ence on the availability of a business process as well as relevant corporate guidelines, particularly those applica- the applications that are driven by said processes. Pos- ble to procurement activities, contain a binding reference sible causes of such impairments are internal factors to the procurement-relevant standards of the Interna- such as increasing complexity of systems and infrastruc- tional Social Policy. The Axel Springer Group has institut- ture which has grown over a prolonged period of time, ed a sustainability management program that meets but also include external factors such as, for example, international standards. The overly late detection of pos- computer criminality via DDoS attacks. At worst, these sible ecological or social conflicts relative to the pro- could cause interruptions in business activities along with curement of resources along the value chain of wood, far-reaching consequences regarding revenues and pulp, paper, and recycled materials could harm the reputation. Group’s reputation. To minimize this risk effectively, we work closely together with experts in the wood, pulp, Additional IT risks are classified as important if the confi- and paper industry and with environmental protection dentiality of information and data integrity is compro- organizations. We also conduct monitoring measures mised as a consequence. In consideration of the grow- across the value chain. Our internal and external coming importance of paid content offerings and services munications on this subject are characterized by open- requiring authentication, and the related collection and ness and transparency. storage of personal data, as well as the steadily growing threat of computer criminality, the careful handling and Strategic and other risks protection of the above-mentioned customer data are of Strategic risks arise primarily from the possibility that the great importance. Group would invest in new business models and segments that would unexpectedly prove not to be success- For this reason targeted measures have been undertak- ful on a sustainable basis or would be forced out of the en to avoid or to limit the effects of criminal activities and market by newer Internet business models, or that future the failure of IT components as far as is possible. profits could be sharply reduced by rising customer Measures such as back-up systems, emergency data retention costs. This could lead to negative financial

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

results, possibly resulting in the insolvency of a subsidi- By virtue of the high degree of internationalization of Ringier ary in the worst case. The consequence of this could be Axel Springer Media AG, the relevant market risks are unscheduled impairment losses when permanent im- distributed over various countries, although that also gives pairment is expected in the context of the impairment rise to heightened foreign exchange risks (EUR, CHF, test which is to be carried out. This risk could materialize eastern European currencies). When required these foreign in our activities in the Marketing Models, Classified Ad exchange risks have been countered by means of appro- Models, and Paid Models operating segments. priate hedging activities.

In general, the business segments and models of our With regard to our investment in Do⁄an TV Holding A.S., interests are, however, extremely heterogeneous, such the potential risk of financial loss – associated with the that cluster risks are limited by means of diversification. risk of depreciation of the investment – arising from the Such risks are further diversified by means of preventa- existing contractual agreement regarding the sale, are tive measures such as the clear investment criteria, in fully hedged by bank guarantees. accordance with which we check new investments as part of our M&A activities, as well as active portfolio and In the previous reporting year Axel Springer has issued investment management, the recruitment and retention loans to business partners as part of the transaction with of highly qualified managers, and the continuous moni- FUNKE Mediengruppe. The risk of default on loan claims toring of business and market developments. is countered by gathering information on the economic and financial situation of the business partner, along with Furthermore, we try to counter the stated strategic risks corresponding analysis and preparation of such data. We by constant innovation. Despite the partial use of paid are able to quickly recognize default risks using this meth- content, the reach of BILD.de could generally be main- od. In addition, these business partners have granted us tained at an extremely high level. Besides generating secondary security to their assets. advertising and circulation revenues, paid content models support the strategy of building a sustainable sub- The loss of major clients, especially in the advertising scriber base for paid digital journalism. In addition, Axel sector, and the dependency of economic changes within Springer continues to rigorously pursue a strategy of the retail sector could have a negative impact on the profitable growth, primarily in the area of digital business business success of the Group and its activities. Howev- models. The online classified advertising business, and er, this risk is countered by customer retention measures Ringier Axel Springer Media AG, founded as a joint ven- as well as wide-ranging discussions with our clients and ture with Ringier AG, form a key component in digitiza- agency partners. tion and also internationalization. In the area of distribution, the sale of our women’s mag- Ringier Axel Springer Media and its subsidiaries are mainly azines, TV program guides, and regional titles to FUNKE exposed to market and financial risks. Declining circulation Mediengruppe (see page 26), and the associated drop in numbers, which in return reduce circulation revenues and sales volumes and various economies of scale, entail the potentially also advertising revenues in the medium term, risk of cost increases. Since May 2014, there is a circula- represent a significant market risk. Above all, the advertis- tion cooperation with FUNKE Mediengruppe to handle ing market in eastern Europe is exposed to significant distribution activities, which is meant to counter these market risks related to the structural shift from print to cost increases in the area of retail sales. online. We rigorously manage market risks by marketing the combined and expanded product portfolio, with the A loss or termination of existing business partnerships of objective of being able to offer even better, tailored solu- strategic importance, especially in the reach-based sector, tions to customers in the market. would have considerable losses in revenue as a conse-

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

quence. This risk is countered by active support of key Financial risks and risks associated with the use of customers. financial instruments The financial risks especially relevant to the Axel Springer The marked increase in the threat of terrorism is coun- Group are interest rate risks and currency risks. Interest tered, amongst other things, with enhanced security rate risks arise primarily from financial assets or liabilities standards, more stringent access regulations and con- with variable interest rates. Currency risks arise from trols, and comprehensive education and training of all expenses, revenues, investment income and expenses, security representatives. and receivables and liabilities denominated in foreign currencies (transaction risk). Natural hazards such as fires, for example, still represent significant risks for Axel Springer. We counter these risks The risk of changing interest rates inherent in variable- in two ways: First, we take structural and organizational interest assets or liabilities is minimized through the use measures to raise the Group’s security standards even of interest rate derivatives. Interest rate risks were coun- further, and second, we have maintained insurance to tered by the agreement of fixed interest tranches for mitigate all financial consequences of terrorism. promissory note proceeds in 2012 as well as the partial cancellation, conversion, and subscription of the existing Personnel risks Schuldschein (promissory notes) in 2014. The individual skills, professional competence, and commitment of our employees contribute greatly to the The risk of value changes arising from exchange rate success of the Axel Springer Group. As a consequence, fluctuations are avoided primarily in that operating costs the loss of specialist staff and management is a signifi- are incurred in the same countries in which we sell our cant risk which we actively look to counter. A primary products and services. Residual currency risks arising focus of human resource management is the targeted, from cash flows denominated in foreign currencies are progressive development of employees and motivation immaterial because we generate most of our earnings in with the aid of focused and continuous training, attrac- the euro zone. Currency risks inherent in receivables and tive bonus schemes, flexible working time models and a liabilities denominated in foreign currencies (excluding better work/life balance. Age-related employee turnover contingent purchase price liabilities) with net exposures is also acted upon at an early stage with systematic of € 5 million or more per foreign currency are usually succession planning, ensuring that the transfer of valua- hedged by means of maturity-matched forward ex- ble knowledge and experience takes place. change deals.

In addition, the increasingly difficult situation regarding Local-currency cash flows generated in non-euro zone the recruitment of possible junior staff also represents an countries are either reinvested to expand local business ever-increasing risk. It is increasingly difficult to recruit operations, or invested with Axel Springer SE and qualified staff, and this is a result of demographic change, hedged by means of forward exchange deals or distrib- and also a matter of increasing competition on the hu- uted in the form of dividends. Therefore, the liquidity risk man resources market. This risk, which is monitored arising from exchange rate changes affecting cash flows from a Group standpoint, is countered with an employer denominated in foreign currencies is limited. marketing campaign which was started in 2011 and revised in 2014. The initiative aims to differentiate signifi- Currency effects arising from the translation of financial cantly from other companies, and portrays Axel Springer statements denominated in foreign currencies (currency as an innovative, modern employer. translation risk) are recognized directly in the equity item of other comprehensive income. Therefore, Axel Springer does not hedge such currency effects.

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

Significant financing risks resulting from the uncertain concentrations are being incrementally reduced by outlook for the financial sector are not evident for the means of increasing diversification, internationalization, Axel Springer Group at the present time because the optimization of the brand and product portfolio, and credit line in the amount of € 0.9 billion (through 2017) digitization. The overall risk position has increased com- obtained for liquidity assurance purposes has been pared to the prior year due to, amongst other things, the committed by the participating banks with binding effect. additional acquisitions within the digital business models The credit facility is contingent upon the observance of segment carried out in the course of the year, as well as covenants that are based primarily on a certain ratio of the loans issued in connection with the transformation of net debt to the earnings indicators of the Axel Springer the company. Group. Even if the credit facility were to be drawn down in full, we do not expect to breach any of the agreed cove- Opportunities nants and therefore we consider the risk of acceleration of borrowed amounts to be minor. Based on our continu- Market opportunities ous observation of the money markets, capital markets, If the economy within our markets - as is currently fore- and credit markets, we have concluded that companies cast by leading economic institutes despite geopolitical with outstanding creditworthiness and strong reputations tensions - continues to stabilize, then this could have a can always raise funding at favorable conditions. Fur- positive effect on our revenue development. Even a thermore, Axel Springer can generate liquidity reliably, negative development of the overall economy could thanks to its broadly diversified customer base and the create opportunities. For example, competitors could pull absence of significant payment delays and defaults. out of the market, thereby strengthening our own market position on a long-term basis. Furthermore, there may be Surplus cash not needed for operations is invested on the option of acquiring companies at low valuations, then the basis of criteria set out in a corporate guideline, subsequently expanding their market share in existing which sets loss limits that may not be exceeded, as a markets and investing in new markets with growth po- means (among others) of limiting risks. tential.

The risks arising from financial instruments and hedging Political opportunities activities are discussed in detail in Section (34) of the The ancillary copyright for news publishers that took notes to the consolidated financial statements. effect on August 2013 can be expected to strengthen the protection of intellectual property rights in Germany. Overall risk assessment In the preceding sections, we reported on significant Strategic opportunities individual risks. In a constantly changing environment we continue to develop our company so that we are able to face global The overall risk situation of the Axel Springer Group is challenges in the future with innovative solutions. composed of the individual risks in all risk categories of the consolidated subsidiaries and corporate divisions. In The digitization strategy offers especially promising oppor- consideration of the interdependency of individual risks, tunities for generating additional revenues via the positive no individual risks that could endanger the continued development of revenues in the online advertising market. operation of the Axel Springer Group or significantly Axel Springer is taking advantage of this market trend influence the Group’s financial position, financial perfor- through the swift and consistent combination of diverse mance, and liquidity can be discerned, unless the econ- media channels (print, TV, and online offerings), by invest- omy within our markets were to worsen dramatically, ing in companies, entering into cooperation agreements leading to a significant deterioration of the Group’s mar- and partnerships, and continually expanding its existing ket position and financial performance. Furthermore, risk and newly acquired activities. N24 plays a major role in

Annual Report 2014 Combined Management Report Axel Springer SE Report on risks and opportunities

linking print, TV, and online offerings by means of: a joint sified due to spatial proximity in the planned Axel Springer editorial team will deliver the most comprehensive multi- Campus. media coverage in the German media landscape, span- ning digital, print, video, and live TV, with an emphasis on On the one hand, acquisition of equity stakes in attractive quality journalism as the hallmark in all media channels. By companies with digital business models in early stage and this means, we will continuously draw closer to the goal of growth phases in their lifecycle provides us with the option becoming the leading digital publisher. of establishing contacts within the industry and to other founders and investors, and also grants access to new In addition, the Group invested heavily in expanding Paid ideas and business models. On the other hand, we also Models in the Internet and expanded its digital portfolio obtain access to co-investments, which could remain through additional acquisitions of Marketing and Classi- open, if necessary, for subsequent acquisition of a majority fied Ad Models. stake. In the event of substantial development of the associate companies, we can also profit from a significant All divisions and companies work on continuous improve- appreciation in value. ment of technologies and processes in order to maintain and expand their market position in the face of competi- We also see opportunities in the internationalization of tion. This also includes an intensive, Group-wide exchange successful business models. For example, introduction of and transfer of business models, technologies, and pro- the kaufDA business model into the USA offers consider- cesses. It is assumed that this exchange at the company able potential. We have an advantage over our competi- headquarters in Berlin will be made simpler and also inten- tors in that we have already attained strong market positions in many countries, and, indeed, leading positions.

Annual Report 2014 Combined Management Report Axel Springer SE Forecast report

Forecast report

Anticipated economic environment The ifo Institute expects the upward trend of prices to weaken further. According to the forecast, consumer

General economic environment prices should rise in 2015 only by 0.8 % overall. The Despite the momentum caused by the low oil price, the working population will increase by an average of International Monetary Fund (IMF) lowered its growth 190,000 people. The unemployment rate should fall forecast for the world economy in January 2015. The slightly to 6.6 %. reason for this is the weak outlook for China, Russia, Japan and the euro zone. The ifo Institute anticipates a slight deceleration in economic growth for central and eastern Europe. Eco- According to the forecast, the world economy will ex- nomic weakness in the euro zone puts a strain on the pand in 2015 by 3.5 % in real terms. The IMF expects exports sector. The fall in unemployment and low infla- growth of 3.6 % for the USA in real terms. Lower energy tion rates should also continue to support the purchasing costs are expected to lead to a considerable increase in power of consumers. Furthermore, an easing of the consumer spending here. The IMF has slightly lowered government's austerity drive is expected. its expectations for China and expects the Chinese economy to increase by 6.8 % in real terms during 2015. Anticipated Economic Development1) (Selection) The IMF expects an increase in Gross Domestic Product of only 1.2 % for the euro area in real terms during 2015. Change in gross domestic product compared to prior year (real) 2015 Clearance of the Swiss franc exchange rate is not as- Germany 1.5 % sessed by the IMF. The major Swiss bank UBS has United Kingdom 2.6 % already altered its growth forecast for 2015 from 1.8 % to France 0.4 %

0.5 %. Poland 3.0 %

Switzerland2) 1.6 % According to a forecast from the ifo Institute, the German Hungary 2.5 % economy will gradually become more dynamic after a period of stagnation in the summer half-year of 2014. Belgium 0.8 % Slovakia 2.0 % Gross Domestic Product is expected to increase by 1.5 % in real terms during 2015. Netherlands 1.1 % Serbia2) 1.0 %

The recovery is mainly driven by the domestic economy, Austria 0.9 % which has profited from the drop in crude oil prices. In Ireland 2.5 % 2015, capital expenditures in new systems must grow by Italy – 0.2 % 2.0 % in real terms, as the increasing load on production capacity means that investments in new capacity are Spain 2.0 % USA 3.3 % necessary. Construction investments will also rise by 1.7 % in real terms. With increasing real income, private con- Russia 0.0 % 2) sumption is also expected to expand by 1.7 %. According Israel 2.8 % to the ifo Institute exports will increase by 5.2 % as the Brazil2) 1.4 % world economy is growing and price competitiveness of China 7.1 % the German export economy to third markets increased due to the euro's fall against the US dollar. In conjunction 1) Source: ifo Institut, December 2014. 2) Source: IMF, October 2014. with the expected improvement of the domestic economy, imports should rise even faster, by 5.8 %.

Annual Report 2014 Combined Management Report Axel Springer SE Forecast report

Industry environment ZenithOptimedia’s forecast (as of December 2014) for According to the current advertising market forecast by the international markets in which Axel Springer con-

ZenithOptimedia an increase of 4.9 % is expected for ducts business through its own subsidiaries paints a 2015 worldwide (nominally). ZenithOptimedia therefore mixed picture. corrected its forecast of + 5.3 % from September 2014 downwards. According to the forecast by ZenithOptimedia in 2015, the net advertising volume on the online market in west-

Currently available forecasts for the German advertising ern Europe will increase by 11.4 % to US-$ 34.9 billion, industry predict mixed developments for the different based on the assumption of consistent exchange rates. types of media. ZenithOptimedia expects net advertising The growth rates in eastern European markets are signif- market revenue in Germany to increase by 1.3 % during icantly higher in some cases. 2015 (nominal). Thus, the total advertising market will not grow as fast as the general economy, which is expected Anticipated Advertising Activity 2015 (Selection) to expand at a nominal rate of 2.8 % (+ 1.5 % in real Change in net ad revenues compared terms). This growth will be driven by digital (+ 7.1 %) and to prior year (nominal) Online Print TV advertising (+ 2.8 %), outdoor advertising (+ 2.5 %) Germany 7.1 % – 3.0 % and radio advertising (+ 1.6 %). ZenithOptimedia is pre- United Kingdom 16.8 % – 5.8 % dicting a drop in net advertising revenues for newspa- 1) France 3.8 % – 6.4 % pers (– 4.1 %) and magazines (– 1.1 %). 1) Poland 11.8 % – 16.7 %

2) The forecast data also reflects the structural shift of Switzerland 14.2 % – 5.2 % advertising expenditures in favor of digital platforms. The Hungary 7.0 % 1.0 %

2) proportion of total advertising expenditures targeted to Belgium 15.0 % 1.4 %

1) online and mobile platforms will rise further. Slovakia 33.3 % – 4.4 %

Netherlands 7.0 % – 3.5 %

According to ZenithOptimedia, social media and mobile 1) Serbia 16.5 % – 2.6 % devices are current drivers of the advertising market. Due 1) to the continued spread of mobile devices, improvements Austria 15.3 % – 4.9 % in advertising forms and variety, and technical innovations Ireland 14.9 % – 5.0 % 1) in controlling multi-device campaigns, considerable growth Italy 7.0 % – 3.9 % 1) in advertising expenditure is expected. Spain 10.0 % 0.0 %

USA 18.2 % – 5.2 % The German Advertising Association (ZAW) assumes in Russia 10.0 % – 10.0 % its forecast for 2015 that the advertising industry can Israel 3.3 % – 0.7 % generally pick up momentum with the outlook of an increase of real consumer spending by consumers. Brazil 25.0 % – 1.2 %

"Stable at least, with opportunities for more" was the Source: ZenithOptimedia, Advertising Expenditure Forecast (December) 2014 1) summary of the industry by ZAW when looking at the Excluding classified ads 2) Gross advertising revenues (excluding classified ads). Gross advertising revenues 2015 advertising year. do not adequately reflect the true development of advertising revenues.

Annual Report 2014 Combined Management Report Axel Springer SE Forecast report

Group For the Paid Models and Classified Ad Models segments an update of the forecast has been carried out during the Strategic and organizational orientation year. In the case of Classified Ad Models growth expec- The highest strategic priority for Axel Springer is to pursue tations were adjusted upwards in August with the publi- the consistent digitization of our business. We aim to cation of the semi-annual report due to acquisition ef- attain the goal of becoming the leading digital publisher by fects and slightly stronger organic growth. We expect a further developing our digital offerings in Germany and fall in EDITDA in the low double-digit percentage range abroad, and by making targeted acquisitions. due to planned investments into product quality and also into digitization. From then on a noticeable increase in Comparison of forecast with actual performance revenues and EBITDA has been expected. Within the The forecast targets published in March 2014 were Paid Models segment the forecast was adjusted follow- essentially attained. ing the publication of the nine-month report in November for the development of advertising revenues from an

Group increase to stable development over the course of the year. Accordingly, and also due to higher than expected Forecast 2014 restructuring expenses, the EBITDA of paid models has Revenues mid single-digit percentage been expected to show a decline in the low to mid single- increase 8.4 % digit range. EBITDA of Marketing Models has developed EBITDA low double-digit percentage increase 11.6 % slightly better than expected. In the Services/Holding

Earnings per share, low double-digit percentage segment revenue development has been better than adjusted increase 11.2 % expected, whilst EBITDA remained below expectations mainly due to restructuring expenses being higher than

expected.

Segments Anticipated business developments and financial Forecast 2014 performance of the Group Revenues We anticipate in the Group that total revenues will be higher for the 2015 financial year than the prior-year Paid Models low single-digit percentage increase 2.6 % figure by an amount in the low to mid single-digit per- Marketing Models low double-digit percentage centage range. We assume that the planned increase in increase 10.8 % advertising revenues will more than compensate for the Classified Ad Models low double-digit percentage decline in circulation revenues and other revenues. increase 27.2 %

Services/Holding mid single-digit percentage We expect EBITDA to rise by an amount in the high decline 6.1 % single-digit percentage range. In this case, a rise in EBITDA EBITDA within the Classified Ad Models and Ser- Paid Models low to mid single-digit vices/Holding is expected, whilst the Paid Models and percentage increase – 2.4 % the Marketing Models should achieve an EBITDA that is

Marketing Models stable 6.0 % below that of the level of the previous year. Classified Ad Models low double-digit percentage increase 35.2 % For EBIT we expect developments to be similar to those for EBITDA. Services/Holding significant improvement – 8.3 %

Annual Report 2014 Combined Management Report Axel Springer SE Forecast report

For the adjusted earnings per share we expect, due Anticipated liquidity and financial position to a lower proportion of the adjusted consolidated net Based on the capital expenditure projects planned to income that is due for minorities, an increase in the low date, investments in property, plant, and equipment, and double-digit percentage range compared to the prior- intangible assets are likely to be higher than the corre- year figure. sponding prior-year figure with regards to the liquidity and financial position. Financing will be provided by Anticipated business developments and financial operating cash flow. performance of the segments In the Paid Models segment we expect a decline in total Dividend policy revenues in the low single-digit percentage range for the Subject to the condition of sound financial performance 2015 financial year. Due to structural shifts in the national in the future, Axel Springer will pursue a dividend policy and international print business we expect declining of stable or slightly increased dividend distribution, while advertising and circulation revenues. We expect an in- also allowing for the financing of growth. crease in other revenues. We expect a decline in EDITDA in the low double-digit percentage range due to planned Anticipated development of the workforce investments into product quality and also into digitization. The average full-year number of employees in 2015 will be higher than in 2014, mainly due to organic growth We expect the total revenues of the Marketing Models and acquisitions in connection with the digital transfor- segment to increase by an amount in the low to mid mation of the Group’s business. single-digit percentage range, mainly based on the anticipated growth of other revenues. We also expect EBITDA Planning assumptions to fall below the level of the previous year in a mid to high We plan the future development of the financial perfor- single-digit percentage range due to, amongst other mance, liquidity, and financial position on the basis of things, planned structural adjustments within perfor- assumptions that are plausible and sufficiently probable mance marketing, planned expenditure for increasing from today’s perspective. However, actual developments competitiveness, and internationalization of digital busi- could possibly be much different from the assumptions ness models within the field of reach marketing. applied and thus from the business plans and trend forecasts prepared on the basis of those assumptions. The revenues of the Classified Ad Models segment are expected to rise considerably due to organic growth and The forecasts for EBITDA, EBIT, and the adjusted earn- consolidation effects. A marked increase is also ex- ings per share do not reflect any possible effects result- pected for EBITDA. ing from possible future acquisitions, divestitures, and capital measures as well as from unplanned restructur- Due to falling print revenues and lower revenues from ing expenses. Possible effects from the planned combi- services in connection with the sale of activities to FUNKE nation of the Immonet and Immowelt real estate portals Mediengruppe we expect a considerable fall in revenues into a joint venture have not been taken into account in for the Services/Holding segment, which should result the forecast in considerably improved EBITDA figures due to lower expenses for structural adjustments and positive special EBITDA, EBIT, and the adjusted earnings per share do items such as further payments as a result of the insol- not contain any non-recurring effects, any write-downs vency proceedings against the Kirch Group. from purchase price allocations, nor any associated tax effects. Non-recurring effects are defined as effects For EBIT we expect developments to be similar to those resulting from the acquisition and sale of subsidiaries, for EBITDA. divisions, and equity investments, as well as write-downs and write-ups of equity investments, effects resulting

Annual Report 2014 Combined Management Report Axel Springer SE Forecast report

from the sale of real estate, impairments, and write-ups tional profitability of Axel Springer, because these indica- of real estate used for operational purposes. Purchase tors ignore effects that do not reflect the fundamental price allocation write-downs include the expenses of business performance of Axel Springer. amortization, depreciation, and impairments of intangible assets, and property, plant, and equipment acquired in EBITDA, EBIT, and adjusted earnings per share are not connection with the acquisition of companies and defined under International Financial Reporting Stand- business divisions. ards and should therefore be regarded as supplementary information. We consider EBITDA, EBIT, and adjusted earnings per share to be suitable indicators for measuring the opera-

Annual Report 2014 Combined Management Report Axel Springer SE Disclosures and explanatory report of the Executive Board pursuant to takeover law Disclosures and explanatory report of the Executive Board pursuant to takeover law

This section contains the disclosures pursuant to Sec- July 31 / August 4, 2006. Under this share transfer tions 289 (4), 315 (4) HGB, along with the explanatory restriction agreement, the direct and indirect purchase report of the Executive Board pursuant to Section 176 (1) or disposal of the shares of Axel Springer AG by Brilliant (1) AktG. 310. GmbH or Dr. Mathias Döpfner are made contingent on the prior consent of Axel Springer SE, in ac- Composition of subscribed capital cordance with the company’s Articles of Incorporation.

The company’s subscribed capital amounts to  By virtue of a declaration dated August 14, 2012, € 98,940,000. It is divided into 98,940,000 registered Dr. Mathias Döpfner acceded to a pool agreement shares. The shares can only be transferred with the (“pool agreement”) concluded between Dr. h. c. Friede company’s consent (registered shares of restricted Springer and Friede Springer GmbH & Co. KG, in re- transferability, see below). The company has only one spect of the 1,978,800 shares of Axel Springer SE class of shares. that were given to him as a present by Dr. h. c. Friede Springer on the same date. In total, the pool agree- All shares carry the same rights and obligations. Each ment covers 52,826,967 voting shares of Axel share grants the right to cast one vote in the annual Springer SE (“pool-bound shares”). Under the terms shareholders’ meeting and represents the basis for de- of the pool agreement, a pool member who wishes to termining the shareholder’s entitlement to the company’s transfer his pool-bound shares to a third party must net profit. By way of exception, treasury shares do not first offer these shares for purchase by the other pool confer any rights to the company (cf. Section 71b AktG). members (purchase right). The purchase right expires (Please refer to page 64 for information on the company’s two weeks after the purchase offer. The purchase treasury shares.) right does not apply in the case of transfers to certain persons who are related to the pool member. Restrictions on voting rights or the transfer of shares Other transfer restrictions based on the German law of obligations exist in connection with the share ownership Transfer restrictions programs conducted in the 2012 and 2013 financial By virtue of Article 5 para. 3 of the company’s Articles of years, as well as the current financial year, for the em- Incorporation, shares of Axel Springer SE and subscrip- ployees of the Axel Springer Group. In general the shares tion rights can be transferred only with the company’s acquired as part of the share ownership program in 2012, consent. Such consent must be granted by the Executive 2013, and 2014 are subject to a minimum holding period Board, although internally, it is the Supervisory Board that of four years (i.e. until May 31, 2016, May 31, 2017, and adopts the resolution to grant such consent. According to May 31, 2018). During the minimum holding period, the company’s Articles of Incorporation, such consent employee shares are held in a blocked account with can be refused without indication of reasons. However, Deutsche Bank AG. The above-mentioned holding peri- the company will not arbitrarily refuse its consent to the ods for the Share Ownership Programs 2012 and 2013 transfer of company shares. have been waived for those employees who have been transferred to FUNKE Mediengruppe when the sale of To the company’s knowledge, transfer restrictions based Axel Springer’s regional newspapers, TV program guides, on the German law of obligations (Schuldrecht) exist by and women’s magazines to that company was finalized. virtue of the following agreements: The employees that were transferred to FUNKE Medien- gruppe no longer took part in the 2014 share ownership  A share transfer restriction agreement was concluded program as on the relevant reporting date, May 16, 2014, between Dr. Mathias Döpfner, Brilliant 310. GmbH, the transfer was already finalized and therefore the con- Axel Springer SE, and M.M. Warburg & Co. KGaA on ditions for participation were not satisfied.

Annual Report 2014 Combined Management Report Axel Springer SE Disclosures and explanatory report of the Executive Board pursuant to takeover law

The minimum holding periods for shares issued under Shareholdings that represent more than share ownership programs in earlier years have already 10 % of voting rights expired. At the end of financial year 2014, the following direct and In connection with the Virtual Stock Option Plan 2011 indirect shareholdings in the equity of Axel Springer SE and 2014 for senior executives, the beneficiaries are represented more than 10 % of voting rights in the com- required to personally invest in shares of Axel Springer pany: Axel Springer Gesellschaft für Publizistik GmbH & SE. These shares are not subject to any restrictions on Co, Berlin, Germany (direct), AS Publizistik GmbH, Berlin, disposal, but any disposition of these shares would Germany (indirect), Friede Springer GmbH & Co. KG, cause the corresponding virtual stock option rights to Berlin, Germany (indirect), Friede Springer Verwaltungs- lapse without replacement or compensation (see page GmbH, Berlin, Germany (indirect), Dr. h. c. Friede 76 for information on the virtual stock option plan 2011 Springer, Berlin, Germany (indirect), and Dr. Mathias and 2014 for senior executives). Döpfner, Potsdam, Germany (indirect).

The same applies to the virtual stock option plans 2009, Information on the amounts of the above-mentioned 2012, and 2014 for members of the Executive Board shareholdings may be found in the disclosures pertain- (see page 74 for information on the virtual stock option ing to voting rights notifications in the notes to the plans 2009, 2012, and 2014 for Executive Board members). 2014 financial statements of Axel Springer SE, www.axelspringer.com/financialpublications, and in the Voting right restrictions section entitled “Voting rights notifications” of the com- Under the above-mentioned pool agreement between pany’s website at www.axelspringer.com/votingrights. Dr. Mathias Döpfner, Dr. h. c. Friede Springer, and Friede Springer GmbH & Co. KG, the voting rights and other Shares endowed with special rights that rights attached to the pool-bound shares are to be exercised in the annual shareholders’ meeting of Axel Springer confer powers of control SE in accordance with the corresponding resolutions of There are no shares endowed with special rights that the pool members, regardless of whether and how the confer powers of control. respective pool member voted on the resolution of the pool. The voting rights of pool members in the meeting of pool members are based on their voting rights in the an- Manner of exercising voting rights when nual shareholders’ meeting of Axel Springer SE, depend- employees hold shares in the company’s ing on the number of pool-bound voting shares held. To capital and do not directly exercise their the extent that Friede Springer GmbH & Co. KG indirectly rights of control holds shares in Axel Springer SE, its voting rights are based on the imputed number of pool-bound voting In connection with the bonus share and share ownership shares indirectly held by Friede Springer GmbH & Co. KG. program for employees conducted in 2009 and the share ownership programs for the years 2011, 2012, 2013, and 2014, Deutsche Bank AG was initially entered into the share register as the third-party holder of the shares transferred to the employees. However, each employee is free to be registered personally as a shareholder in the share register.

Annual Report 2014 Combined Management Report Axel Springer SE Disclosures and explanatory report of the Executive Board pursuant to takeover law

Statutory provisions and provisions of by a majority of the votes cast, or provided that at least the Articles of Incorporation pertaining one half of the company’s share capital is represented, by a majority (see Article 21 para. 2 sub-para. 2 of the to the appointment and dismissal of company’s Articles of Incorporation in conjunction with Executive Board members and Section 51 (1) of the European Company Implementing amendments to the Articles of Act (SEAG), Article 59 para. 1 and 2 SE-VO); the latter Incorporation does not apply to an amendment changing the business object and purpose of the company, or to a resolution regarding the relocation of the registered head office of The company’s Articles of Incorporation provide that the the SE to another member state pursuant to Article 8 Executive Board of Axel Springer SE must be composed para. 6 SE-VO (see Section 51 (1) SEAG, Article 59 of at least two persons. The Supervisory Board decides para. 1 and 2 SE-VO). An amendment of the corporate on the number of Executive Board members, and on the governance principles set forth in Article 3 of the compa- appointment and dismissal of Executive Board members. ny’s Articles of Incorporation requires a majority equal to According to Article 46 para. 1 of the EU Regulation on at least four fifths of the votes cast represented in the European Companies (SE-VO), the maximum term of adoption of the resolution (see Article 21 para. 3 of the office for members of the Executive Board of a European Articles of Incorporation). company (Societas Europaea, SE) is six years; in the present instance, this maximum term is shortened to five The Supervisory Board is authorized to resolve amend- years by virtue of Article 8 para. 2 sub-para. 1 of the ments to the Articles of Incorporation that only involve Articles of Incorporation of Axel Springer SE – corre- changes to the wording (Article 13 of the Articles of sponding to the previous maximum term pursuant to Incorporation). Section 84 (1) (1) of the German Stock Corporations Act (AktG). The term of office can be renewed or extended for a period of no more than five years thereafter (for Authority of the Executive Board to issue details, see Article 8 para. 2 of the company’s Articles of or buy back shares Incorporation; Article 46 para. 1 and para. 2 SE-VO). If more than one person has been appointed to the Execu- Axel Springer SE has neither established authorized tive Board, the Supervisory Board is authorized to ap- capital that would authorize the Executive Board to issue point one of those members as the Chairman (Article 8 new shares, nor conditional capital. para. 3 sub-para. 2 of the Articles of Incorporation of Axel Springer SE). If a required Executive Board member By way of a resolution at the annual shareholders' meet- is lacking, the court is authorized, in urgent cases, to ing on April 14, 2011 (Agenda Item 7) the Executive appoint the necessary member at the request of one Board was authorized with approval of the Supervisory involved party (Article 9 para. 1 letter c). ii) SE-VO in Board until April 13, 2016 to acquire treasury shares of conjunction with Section 85 (1) (1) AktG). The Superviso- the company up to 10 % of the existing share capital on ry Board is authorized to revoke the appointment of an adoption of the resolution. In the context of the company Executive Board member and the Executive Board being converted into an SE with effect of December 2, Chairman for an important reason (for details, see Article 2013, as a precautionary measure in case non- 39 para. 2 sub-para. 1, Article 9 para. 1 letter c). ii) SE- registrable resolutions would be held to not remain valid VO, Section 84 (3) (1) and (2) AktG). after the conversion, it was resolved at the annual shareholders’ meeting of 16 April 2014 to authorize the Com- Insofar as obligatory laws or provisions of the Articles of pany again to acquire and use treasury shares, with a Incorporation do not require a greater majority, amend- prolonged term until April 15, 2019, whilst revoking the ments to the company’s Articles of Incorporation require previous authorization. Acquisition must only take place a resolution of the annual shareholders’ meeting carried on the stock exchange or via a public offer directed at all

Annual Report 2014 Combined Management Report Axel Springer SE Disclosures and explanatory report of the Executive Board pursuant to takeover law

shareholders or a public invitation to submit an offer to of € 900,000,000 (“credit facility 2012”); also in this case, buy. the lender is entitled to call in the credit facility within a notice period of 30 days, in the event of a change of Along with the shares held by the company or attribut- control. able to the company in accordance with Article 5 SE-VO in conjunction with Sections 71a ff. AktG, the shares Aside from specific exceptions that relate to the share- purchased by virtue of the foregoing authorization may holders that currently control Axel Springer SE, a change not at any time exceed 10 % of the company’s capital of control is understood to mean, in the context of the stock. Details concerning this authorization are provided credit facility 2012 and the promissory note loan, the in the invitation to the annual shareholders’ meeting of acquisition of shares of Axel Springer SE representing

April 16, 2014, which is available on the website of Axel more than 50 % of the capital stock and/or voting rights Springer SE (see Agenda Item 8 and the Executive by one or more parties acting together. Board’s report on this subject). Indemnification agreements between the At the end of financial year 2014, the company held no company and Executive Board members treasury shares. or employees in the event of a change of Significant agreements of the company control subject to the condition of a change of Some Executive Board members have the right to termi- control resulting from a takeover offer nate their employment contracts in the event of a change in control. A change in control within the meaning of With the exception of regulations in the credit facility and these contracts would exist if the majority shareholder the Schuldschein stated in the following, as well as con- Dr. h. c. Friede Springer would cease to hold or control tractually entitled cancellation rights for part of Executive the majority of shares, indirectly or directly. In such a Board members in case of a change of control (for more case, they will have the right to receive payment of information see page 64 (right-hand column) and page their base salary for the most recently negotiated remain- 75 of this Annual Report, the company has not made ing contractual term, while some of the eligible Executive any major agreements that would take effect in the event Board members will have the right to receive payment of of a change of control due to a takeover. an amount equal to at least one year’s base salary. Fur- thermore, the company will pay the pro-rated percent- The company placed a Schuldschein with a nominal age of the success-based compensation for the period volume of € 500,000,000 on the capital market in of time served in the year of resignation. The employ- April 2012; the financing volume was increased by ment contracts of the members of the Executive Board € 137,000,000 for optimizing financing terms in October do not provide for any other compensation if the em- 2014 by partial cancellation, conversion, and subscrip- ployment relationship is terminated as a result of a tion of the existing promissory note. The lender can change in control. demand, in the event of a change of control, that the receivables held can be partially or fully paid back early There are no such indemnification agreements with other within a 90 day period. In September 2012, moreover, employees of the company. the company took out a new credit facility in the amount

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

Corporate Governance Report

There follows a report by the Executive Board – also on I. Future-related Section behalf of the Supervisory Board – on corporate govern- The Company fulfills the recommendations of the “Ger- ance at Axel Springer, in conformity with the recommen- man Corporate Governance Code” (the “Code”) in the dation set out in Section 3.10 of the German Corporate version of June 24, 2014, as published by the German Governance Code (GCGC). This section also contains the Federal Ministry of Justice and for Consumer Protection management declaration pursuant to Section 289a of the in the official announcements section of the Federal German Commercial Code (HGB) and the Compensation Gazette of September 30, 2014, subject to the devia- Report. tions set out and reasoned below:

Good corporate governance as a guiding 1. Disclosure of the individual Executive Board compen- principle sation in tabular form as part of the remuneration report (Item 4.2.5 sentences 5 und 6 of the Code)) At Axel Springer, sound corporate governance is considered to be a crucial element of responsible management The disclosure of the Executive Board compensation is and supervision geared to increasing the company’s made in accordance with legal requirements taking into value on a sustainable basis. It promotes the trust and account the so-called “opt-out” resolution of the Share- confidence of our national and international investors, holders' Meeting on April 16, 2014. Based on this reso- customers, employees, and the public in the manage- lution and in accordance with Section 286 para. 5 sen- ment and supervision of the company and is therefore an tence 1 and Section 314 para. 2 sentence 2 of the essential basis for the company’s long-term success. German Commercial Code, no disclosure of the individual compensation of the members of the Executive In this respect, we are guided by the German Corporate Board is made in the Company's annual financial and Governance Code (GCGC). We have taken appropriate annual consolidated financial statements for the fiscal measures to implement and ensure compliance with the years 2014 through 2018 (included). As long as a re- recommendations of GCGC. The Corporate Governance spective “opt-out” resolution of the Shareholders' Meet- Officer is the Executive Board member in charge of Fi- ing is effective, the Company will not include in its remu- nance and Personnel. The implementation of and adher- neration report the individual information recommended ence to the recommendations of GCGC are reviewed by Item 4.2.5 sentences 5 and 6 of the Code. continually. 2. Chairman of the Audit Committee (Item 5.3.2 sentence Management declaration pursuant to 3 of the Code)

Section 289a HGB The Audit Committee of the Supervisory Board is chaired by Mr Lothar Lanz, who is a former member of the Exec- Declaration of Conformity pursuant to Section 161 utive Board of the Company whose appointment ended AktG less than two years ago. The Executive Board and Supervisory Board published the following Declaration of Conformity on Monday, The Supervisory Board is convinced that Mr Lanz’ long- November 10, 2014: standing experience as CFO, his specialist knowledge and his personality make him an exceptionally suitable “In accordance with Section 161 of the German Stock Chairman of the Audit Committee. Therefore, the Super- Corporation Act ("AktG") the Executive Board and the visory Board is of the opinion that Mr Lanz should chair Supervisory Board of Axel Springer SE declare the the Audit Committee. following:

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

3. Disclosure in election recommendations of relations of of June 10, 2013 subject to the deviations set out and candidates for the Supervisory Board with the company, reasoned above under I. 2, I. 3. and I. 4.1 its corporate bodies and with shareholders holding a material interest in the company (Item 5.4.1 sentences 6 Period since publication of the new version of the Code to 8 of the Code) on September 30, 2014:

In its election recommendations to the Shareholders' The Company has fulfilled the Code in the version of June Meeting, the Supervisory Board will provide all statutory 24, 2014, as published by the German Federal Ministry of information with respect to the members of the Supervi- Justice and for Consumer Protection in the official an- sory Board and, where possible, will introduce the candi- nouncements section of the Federal Gazette of Septem- dates in the Shareholders' Meeting. Further, during the ber 30, 2014, in the period since the publication of the Shareholders' Meeting, shareholders are able to ask new version of the Code subject to the deviations set out questions with respect to the candidates. The Superviso- and reasoned above under I. 2, I. 3. and I. 4.1 ry Board is of the opinion that this constitutes a solid and sufficient basis of information for the shareholders’ as- Berlin, November 10, 2014 sessment of the recommendations regarding Supervisory Board candidates. Axel Springer SE The Supervisory Board The Executive Board" 4. Individualized disclosure of the remuneration of the 1) members of the Supervisory Board (Item 5.4.6 sentences A past-related deviation from the recommendation of the Code mentioned under I. 1 above does not need to be declared because the corresponding recommen- 5 and 6 of the Code) dation applies only to remuneration reports for financial years starting after December 31, 2013. The remuneration granted to the members of the Super- visory Board as well as the payments made by the Com- pany to members of the Supervisory Board for personally The Declaration of Conformity for 2013 from November 5, provided services are not disclosed in the notes or the 2013, was previously updated on April 17, 2014. The management report in an individualized manner (Item update became necessary as a result of election of the 5.4.6 sentences 5 and 6 of the Code). new Supervisory Board in the annual shareholders' meeting and the concomitant changes in the composi- The information is not individualized because competitors tion of the Supervisory Board and its committees. of Axel Springer SE do not publish such remuneration either. The Declaration of Conformity from November 10, 2014 can, just like previous versions, also be seen along with II. Past-related Section the update of the 2013 Declaration of Conformity from Period between the last declaration of conformity on April April 2014 via the link www.axelspringer.com/- 17, 2014, and the publication of the new version of the declarationofconformity. Code on September 30, 2014:

During the period between the last declaration of con- Important management practices Axel Springer is the only independent media company formity on April 17, 2014, and the publication of the new that has provided itself with a corporate constitution. This version of the Code on September 30, 2014, the Com- is anchored in Article 3 (“Principles of Corporate Govern- pany has fulfilled the Code in the version of May 13, 2013, ance”) of the company’s Articles of Incorporation and is as published by the German Federal Ministry of Justice in thus a guiding principle for all employees. The five princi- the official announcements section of the Federal Gazette ples formulated therein form the basis for the company’s journalistic practices. They express fundamental convic-

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

tions of corporate social policy, but do not dictate per- Furthermore, the company has issued an Environmental sonal opinions. Guideline comprising four points, which serves as a practical guide to the many environmental protection Axel Springer has also defined corporate values as the measures conducted at Axel Springer. foundation of its corporate culture, to guide the work of every employee. They are: creativity as the crucial pre- The management principles and guidelines of Axel requisite for success in journalism and business; entre- Springer can be found at www.axelspringer.com/- preneurship in the sense of being courageously inventive, corporateprinciples. self-reliant and results-oriented, qualities that are expected of all managers and employees; integrity in all In addition, Axel Springer maintains a Corporate Govern- dealings with the company, readers, customers, em- ance, Risk & Compliance department. In this case, this ployees, business partners, and shareholders. The man- supports subsidiaries and central divisions in responsibly agement principles, which are built on company values, handling risks via approaches and requirements, should give management a concrete framework that amongst other things, for a comprehensive risk man- creates transparency regarding the requirements and agement system, an internal control system, and a com- expectations of management roles. pliance management system. The division operates, amongst others, risk management, the internal control In addition, Axel Springer had already introduced guide- system and the compliance management system. As lines for ensuring journalistic independence back in 2003. described in the Risk Report (see page 45), risk man- These guidelines substantiate and expand on the profes- agement and the internal control system seek to identify, sional ethics of the press as set out by the German Press analyze, and report on risks at Axel Springer and to Council in conjunction with the press associations in the systematically monitor the measures taken to minimize publishing principles (Press Code), and which Axel risks. At Axel Springer, compliance means the fulfillment Springer voluntarily commits with regard to printed com- of all laws, regulations, and guidelines, as well as the plaints (see Section 16 of the Press Code). They specifi- commitments undertaken voluntarily. Based on the fore- cally delineate the boundaries between advertising and going, the goal of compliance management is to institute editorial copy, and between the editors’ and reporters’ structures and processes to ensure that all directors and private and business interests. They also preclude actions employees, and especially senior executives, conduct in pursuit of personal advantages and define the compa- themselves in accordance with applicable laws and ny’s position with respect to the treatment of news regulations. Another goal of compliance management is sources. The guidelines thus represent the framework for to prevent harm to the company’s reputation and finan- independent and critical journalism in the editorial de- cial condition that could result from violations of laws and partments of all media belonging to the Group. The edi- regulations. tors-in-chief are responsible for observing and implementing the guidelines in the company’s day-to-day activities. As a further step for reinforcing good corporate governance and establishing a sensible compliance management In addition, Axel Springer has developed a catalog of system, Axel Springer published a Code of Conduct dur- social standards applicable to all the company’s activities. ing the 2011 financial year. This summarizes existing cor- Known as the International Social Policy, it states the porate principles and values as well as essential Axel company’s positions on matters of human rights, adher- Springer regulations and guidelines, and also specifies ence to the rule of law, equal opportunities, the protec- ethical, moral, and legal requirements which should be tion of children and young people, the treatment of em- adhered to by all employees. The Code of Conduct can ployees, health and safety, and the compatibility of work be found at www.axelspringer.de/coc_en. and family, and other matters.

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

Procedures of the Executive Board and Supervisory business transactions in their business divisions. Not- Board, and composition of the committees of the withstanding the general responsibility of all Executive Supervisory Board Board members, each member of the Executive Board Cooperation between the Executive Board and manages the business division assigned to him, under Supervisory Board his own responsibility, with the exception of those deci- Even after the change of form into a European company sions that are incumbent on the full Executive Board. (Societas Europaea, SE), which took effect upon being entered in the Commercial Register on December 2, 2013, The Executive Board meets regularly in the form of Ex- management and supervision of the company – as was ecutive Board meetings, which are convened and the case with Axel Springer AG – are effected by means of chaired by the Executive Board Chairman, as a general a dual board system. The Executive Board manages the rule. Furthermore, every Executive Board member and company under its own responsibility. The Supervisory the Chairman of the Supervisory Board are entitled to Board appoints the members of the Executive Board, and convene a meeting. As a general rule, the full Executive monitors and advises the latter in the conduct of the busi- Board adopts resolutions by a simple majority of the ness. The two boards work closely together in an atmos- votes cast; in the case of resolutions adopted by a sim- phere of trust and confidence to sustainably enhance the ple majority, the Chairman casts the deciding vote. A company’s value. The two boards are strictly separated in resolution adopted in spite of being opposed by the terms of personnel and their areas of authority. Executive Board Chairman is deemed to be invalid, also subject to the limits of the applicable laws. Procedures of the Executive Board In its executive function, the Executive Board is obligated The internal rules of procedure adopted by the Supervi- to pursue the interests of the company and dedicated to sory Board for the Executive Board provide more precise sustainable company development. It develops the stra- rules, including the following: tegic orientation of the company and is responsible for its implementation in coordination with the Supervisory  The obligation to observe and comply with the corpo- Board. The Executive Board manages the company’s rate constitution and to anchor it throughout the Group affairs in compliance with the relevant laws, the Articles of Incorporation, and its rules of procedure.  The executive organization chart and the decisions to be made by the full Executive Board It provides regular, timely, and comprehensive information to the Supervisory Board on all relevant matters  The duties of the Chairman of the Executive Board of strategy, planning, business development, risk management including the risk situation, and the internal  Transactions that require the approval of the Super- control system and compliance management system. In visory Board accordance with the internal rules of procedure adopted by the Supervisory Board, important decisions of the  Rules concerning the regular, timely, and comprehen- Executive Board require the approval of the Supervisory sive provision of information to the Supervisory Board Board. Such decisions include, above all, the creation or discontinuation of business divisions, the acquisition or  Rules concerning meetings and the adoption of sale of significant equity investments, and the adoption resolutions of the company’s annual business and financial plan.  Obligation to disclose conflicts of interest The members of the Executive Board are jointly responsible for the management, work together collegially, and keep each other informed of important measures and

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

With the appointment on January 1, 2014 of Dr. Julian tional information on the specific activities of the Supervi- Deutz to the Executive Board, the departure of Mr. Lo- sory Board in financial year 2014. thar Lanz as Chief Financial and Chief Operating Officer on April 16, 2014, and the departure of Mr. Ralph Büchi The internal rules of procedure of the Supervisory Board as President International which also took place in April, comply with the requirements of the German Corporate the Executive Board currently consists of four members: Governance Code and contain rules covering the following topics, among others:  Dr. Mathias Döpfner, Chairman and Chief Executive Officer  Election and duties of the Chairman and Vice Chair- man of the Supervisory Board  Jan Bayer, President BILD and WELT Group  Calling of meetings  Dr. Julian Deutz, Chief Financial Officer.  Adoption of resolutions at meetings or by voting by  Dr. Andreas Wiele, President Marketing and Classified way of written correspondence, telephone calls, fax, Ad Models or electronic media

Procedures of the Supervisory Board  Supervisory Board committees, including their com- As per the company’s Articles of Incorporation, the Su- position, organization, and duties pervisory Board of Axel Springer SE is composed of nine members, who are elected by the annual shareholders’  Obligation to disclose conflicts of interest meeting. The regular term of office of Supervisory Board members is five years; they are eligible for re-election at After the end of the annual shareholders' meeting, which the end of their terms. The Supervisory Board elects its took place on April 16, 2014, the Supervisory Board Chairman from among its own ranks; the term of office of consists of nine members. The members of the Super- the Supervisory Board Chairman is coincident with that visory Board are: of the Supervisory Board. The Supervisory Board advises the Executive Board and monitors the work of the Ex-  Dr. Giuseppe Vita, Chairman ecutive Board. It holds at least four meetings a year. In case of necessity, it meets without the Executive Board  Dr. h. c. Friede Springer, Vice Chairwoman in attendance. Meetings may be held and resolutions adopted also by way of written correspondence, tele-  Oliver Heine phone calls, faxes, or electronic media. As a general rule, the Supervisory Board adopts resolutions by a simple  Rudolf Knepper (since April 16, 2014) majority of the members voting on the resolution; in case of a tie, the Chairman casts the deciding vote. The Su-  Lothar Lanz (since April 16, 2014) pervisory Board deliberates on the company’s business developments, planning, strategy, and significant capital  Dr. Nicola Leibinger-Kammüller expenditures at regular intervals. The Supervisory Board adopts the separate financial statements of Axel Springer  Prof. Dr. Wolf Lepenies SE and approves the consolidated financial statements of the Group. It regularly assesses the efficiency of its  Prof. Dr.-Ing. Wolfgang Reitzle (since April 16, 2014) work by means of a questionnaire. Please refer to the report of the Supervisory Board (see page 79) for addi-  Martin Varsavsky (since April 16, 2014)

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

The term of office of all current Supervisory Board mem- holders' meeting in 2014. He satisfies the requirements bers ends at the end of the annual shareholders' meeting of expert knowledge and independence within the mean- in 2019. Long-term Supervisory Board members Dr. ing of Article 9 para 1 letter c) ii) SE-VO in conjunction Gerhard Cromme, Klaus Krone, and Dr. Michael Otto with Section 107 paras 4, 100 para 5 AktG (financial have stepped down from the Supervisory Board after the expert), and the requirements of the recommendations in end of the 2014 annual shareholders' meeting. Section 5.3.2 paras 2 and 3 GCGC. In the constituent meeting on April 16, 2014 of the newly-elected Supervi- The requirements for expert knowledge and independ- sory Board which was elected by the annual sharehold- ence as defined by Article 100 para 5 AktG (financial ers' meeting, Mr. Lothar Lanz was elected as Chairman expert) are satisfied amongst others by Dr. Giuseppe Vita, of the Audit Committee by way of exception to the rec- Chairman of the Supervisory Board, who was also ommendation set out in Section 5.3.2 para 3 sub-para 2 Chairman of the Audit Committee until the end of the GCGC (see the stated exception in the Declaration of 2014 annual shareholders meeting, and Lothar Lanz, Conformity of November 5, 2013, which was updated on who has succeeded Dr. Vita as Chairman of the Audit April 17, 2014 as well as in the Declaration of Conformity Committee as of April 16, 2014. from November 10, 2014, see page 65). He satisfies the requirements of expert knowledge and independence in Composition and procedures of committees the sense of Article 9 para 1 letter c) ii) SE-VO in conjunction The Executive Board has not formed committees. with Section 107 paras 4, 100 para 5 AktG (financial expert), and the requirements of the recommendations In accordance with its internal rules of procedure, the in Section 5.3.2 paras 2 and 3 sub-para 1 GCGC. Supervisory Board has formed four committees to support the work of the full board: the Executive Committee, Further information on corporate the Personnel Committee, the Nominating Committee, governance and the Audit Committee. In those matters stipulated in the internal rules of procedure of the Supervisory Board, Goals for the composition of the Supervisory Board the committees prepare the resolutions to be adopted The Supervisory Board of Axel Springer SE has decided and other matters to be addressed by the full board. on the following objectives for its composition with re- Within the limits of applicable laws, the committees also spect to Section 5.4.1 GCGC. adopt resolutions in lieu of the full board in those matters stipulated in the internal rules of procedure of the Super-  The Supervisory Board of Axel Springer SE should be visory Board. The internal rules of procedure of the Su- composed in such a way that its members generally pervisory Board stipulate the procedures for meetings possess all knowledge, abilities, and professional ex- and resolutions adopted by the committees and define perience necessary to properly perform the duties of their areas of responsibility. the Supervisory Board.

Please refer to the Report of the Supervisory Board (see  With due consideration given to the company’s busi- page 79) for information on the areas of responsibility ness object and purpose set forth in the Articles of In- and composition of the committees. corporation, the size of the company, and the relative importance of its international activities, the Supervi- By way of exception to the recommendation set out in sory Board will also strive, as a goal for the upcoming Section 5.2 para 2 GCGC, the Chairman of the Supervi- regular elections, to bring about a composition of its sory Board, Dr. Giuseppe Vita, is also the Chairman of members that is appropriate in view of the following the Audit Committee of the Supervisory Board (see the considerations, in particular: stated exception in the Declaration of Conformity of November 5, 2013) until the end of the annual share-

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

 At least two seats on the Supervisory Board should should strive in particular to give appropriate consid- be held by persons who fulfill the criterion of interna- eration to women. tionality to a particular degree (for example, by reason of relevant experience in international business).  The Supervisory Board should work together with the Executive Board to assure long-term succession  Supervisory Board members should not hold any planning. position on a board or perform any consulting work for important competitors of the company.  At the time of being (re-)appointed to the Executive Board, no member should be older than 62, as a gen-  The Supervisory Board should have an adequate eral rule; the Supervisory Board can approve excep- proportion of women. Currently, two of the nine tions to this rule.

members (22.2 %) are women; the Supervisory Board considers this adequate in any event. In appointing the new Executive Board member Dr. Julian Deutz as of January 1, 2014, the Supervisory  In making nominations, due consideration should be Board gave due consideration to the principles men- given to the general rule that Supervisory Board tioned above and appointed the most qualified candidate, members should not be older than 72 years; the Su- in its opinion. pervisory Board can approve exceptions to this policy. Furthermore, the Supervisory Board should ob- Goals concerning the staffing of key functions serve the principle that as few members as possible In view of the recommendation set out in Section 4.1.5 should be subject to a potential conflict of interest, as GCGC, reference is made to the description of personnel in connection with an advisory role or board seat with policies designed to assure equal opportunity and diver- significant customers, suppliers, creditors, or other sity on page 38 of the present Annual Report. significant business partners of Axel Springer. Fur- thermore, the Supervisory Board should give due Shareholders and annual shareholders’ meeting consideration to the principle that its composition The annual shareholders' meeting is the central organ via should meet the criterion of diversity. which Axel Springer SE shareholders can exercise their rights and their voting rights. Every share confers the  With respect to its composition, the Supervisory right to cast one vote in the annual shareholders’ meet- Board adopted the goal that at least two of its mem- ing. Those shareholders who are registered in the share bers will be independent according to the definition of register and have registered for the meeting in time are the GCGC. entitled to vote. The Chairman of the Supervisory Board generally chairs the shareholders’ meeting. To make it The foregoing principles have already been completely easier for shareholders to exercise their prerogatives at implemented with the current composition of the Super- the annual shareholders’ meeting, their votes can be visory Board of Axel Springer SE. cast by authorized proxies. Axel Springer SE also desig- nates a voting proxy whom shareholders can elect to Goals for the composition of the Executive Board execute their voting rights according to their instructions. The Supervisory Board has decided on the following All required reports and documents are made available objectives for the composition of the Executive Board of to the shareholders in advance, also on the company’s Axel Springer SE with respect to Section 5.1.2 GCGC. Internet page.

 In making decisions concerning the composition of The annual shareholders’ meeting resolves specifically the Executive Board, the Supervisory Board should on the utilization of the distributable profit, the ratification give due consideration to the principle of diversity and of the actions of the Executive Board and Supervisory

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

Board, the election of the Supervisory Board, the elec- Transparency tion of the independent auditor, and other matters legally Axel Springer is committed to always providing compre- assigned to them, such as corporate actions and other hensive and consistent information in a timely and simul- amendments to the Articles of Incorporation. The resolu- taneous manner on the significant events and develop- tions of the annual shareholders’ meeting require a sim- ments relevant to an evaluation of the company’s ple majority of the votes cast, unless another majority is present and future business performance to all capital prescribed by law or by the company’s Articles of Incor- market participants. Reporting on the business situation poration. The Articles of Incorporation can be inspected and Group results is presented in its annual report, at its on the company’s website at www.axelspringer.com/- annual financial statements press conference, and in its articlesofassociation. semi-annual financial report and quarterly financial reports. For this purpose, the company also uses Internet Conflicts of interest communication channels whenever possible. Axel The members of the Executive Board and Supervisory Springer also regularly participates in conferences and Board are bound to promote the interests of the company. roadshows in key international financial centers; addi- No member of either board may, through their decisions, tional information on this subject can be found on page 8 pursue personal interests or take advantage of business of the present Annual Report. To the extent required by opportunities that should be the province of the company. law, the company also provides information in the form of ad-hoc announcements and press releases, and on Executive Board members may not demand or accept the company’s website. gifts or other benefits from, or grant unjustified benefits to, third parties in connection with their activities, either In order to ensure equal treatment of all capital market for their own benefit or for that of others. Sideline activi- participants, Axel Springer also publishes information ties of the Executive Board require the consent of the relevant to the capital markets simultaneously in German Supervisory Board. Executive Board members are sub- and English on the company’s website. Financial report- ject to a comprehensive anti-competition clause during ing dates are published in the financial calendar with the period of their activity for Axel Springer. Every Execu- sufficient advance notice. Immediately upon receiving the tive Board member must inform the Supervisory Board corresponding notices, the company publishes changes of any conflict of interest without delay. No conflicts of in the composition of the shareholder structure that are interest arose within the Executive Board in the financial subject to the reporting obligation according to Section year. 26 of the German Securities Trading Act (Wertpapier- handelsgesetz, WpHG), and on the purchase and sale of Also, every member of the Supervisory Board must shares by persons who exercise management duties at inform the Supervisory Board immediately of any con- Axel Springer (directors’ dealings), in accordance with flicts of interest that may arise. In the annual sharehold- Section 15a WpHG. ers' meeting, the Supervisory Board reports on all conflicts of interest and how to treat them. No conflicts of Shareholdings interest arose in the Supervisory Board either, see the The Executive Board members in office at the reporting Report of the Supervisory Board, see page 79). date directly or indirectly held 3,148,581 shares of Axel Springer SE at the reporting date of December 31, 2014. Memberships on other supervisory bodies Of that number, 3,024,495 shares were held directly A summary of the seats held by the Executive Board and by the Chairman of the Executive Board, Dr. Mathias Supervisory Board members of Axel Springer SE on other Döpfner, and indirectly. legally prescribed supervisory boards or comparable boards in Germany and abroad can be found on page 158.

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

At the reporting date, the Supervisory Board members Ongoing actions for nullification directly or indirectly held a total of 56,179,621 shares The current state of ongoing legal actions is as follows: of Axel Springer SE. Dr. h. c. Friede Springer held 51,000,030 shares indirectly via Friede Springer GmbH & On May 21, 2009, the shareholder Dr. Oliver Kraus filed Co. KG and Axel Springer Gesellschaft für Publizistik an action to nullify the resolution of the annual share- GmbH & Co, and 5,104,341 shares directly. holders’ meeting of April 23, 2009 relating to Agenda Item 7 (Special authorization to purchase and use the Preparation and audit of the financial statements company’s own shares according to Section 71 (1) (8) The consolidated financial statements and interim finan- AktG in connection with the Management Participation cial statements are prepared in accordance with Interna- Program) and contested the election of Dr. h. c. Friede tional Financial Reporting Standards (IFRS), as they are Springer and Brian Powers to the Supervisory Board of to be applied in the European Union. The consolidated the company (Agenda Item 8). Moreover, Dr. Oliver financial statements also contain the disclosures pre- Kraus petitioned for a finding that the company is obli- scribed by Section 315a (1) HGB. gated to provide him, in his capacity as a shareholder, with a transcript of those portions of the “stenographic The consolidated financial statements are prepared by minutes from its question recording and question an- the Executive Board of Axel Springer SE and audited by swering system” that cover his questions and comments, the independent auditor. Axel Springer publishes the as well as the information provided by the company in consolidated financial statements within 90 days and the response. The shareholders SCI AG and Oliver Wieder- quarterly financial reports within 45 days of the respec- hold joined the action on the side of the defendant. The tive period ending dates. Berlin Regional Court rejected the suit in its entirety by judgment dated June 10, 2010 (Case No. 95 O 52/09), The notes to the consolidated financial statements also that is, both with regard to the action to nullify, as well as contain information on the company’s relationships with the petition for a finding. Dr. Oliver Kraus filed an appeal shareholders who are to be classified as related parties against this decision before the Berlin Appellate Court; according to the definitions of the applicable accounting the appeal proceeding is being conducted under Case regulations. No. 23 U 125/10.

In accordance with the German Corporate Governance On May 21, 2010, Dr. Oliver Kraus filed an additional Code, it is agreed with the independent auditor in each action to nullify the resolutions of the annual sharehold- financial year that the latter will inform the Chairman of ers’ meeting of April 23, 2010 relating to the ratification the Supervisory Board or the Audit Committee without of the actions of the Executive Board and the Superviso- delay of any circumstances arising during the course of ry Board for financial year 2009 (Agenda Items 3 and 4), the audit that would constitute grounds for disqualifica- as well as the general authorization to purchase and use tion or partiality. It is also agreed that the independent the company’s own shares according to Section 71 (1) auditor will immediately report any material issues, mat- (8) AktG and to exclude the preemptive right, and the ters, and events arising during the course of the audit special authorization, to purchase and use the compa- that fall within the purview of the Supervisory Board. It is ny’s own shares according to Section 71 (1) (8) AktG in further agreed that the independent auditor will inform connection with the Management Participation Program the Supervisory Board or make an observation in the and to exclude the right to tender and preemptive right audit report if the independent auditor were to discover, (Agenda Items 6 and 7). The shareholders Frank Scheu- during the course of the audit, any facts that contradict nert and Gastro Beteiligungs AG joined this action on the the Declaration of Conformity by the Executive Board side of the defendant. In its ruling of March 7, 2012 and Supervisory Board according to Section 161 AktG. (Case No. 105 O 53/10), the Berlin Regional Court partially granted the claim and nullified the resolutions of the

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

annual shareholders’ meeting adopted under Agenda performance with regards to individual objectives (relating Items 4, 6, and 7. The company has filed an appeal to the quantitative divisional objectives and qualitative against this ruling with the Berlin Appellate Court. The individual objectives, amongst others, based on the strat- appeal is pending under Case No. 23 U 92/12. egy of Axel Springer SE) as well as Group objectives; it is

limited to double the sum payable for 100 % achievement Compensation report of objectives. Group objective in the 2014 financial year was Group EBITDA (PY: Group EBITDA and EBITDA in Axel Springer’s compensation policy follows the principle the Digital Media segment). Individual objectives for of granting compensation to the Executive Board and measuring performance of individuals and Group objec- Supervisory Board that is based on their performance in tives are decided upon by the Supervisory Board. Part of the interest of sustainable corporate development. This the variable cash component is based on achievement of compensation consists of fixed and variable perfor- Group objectives established for an assessment period of mance-dependent components. three years. Achievement of objectives is initially established by the Supervisory Board members and chairman Executive Board with the relevant Executive Board member and then In accordance with the requirements of the German finalized by the Supervisory Board. Stock Corporation Act and the recommendations of GCGC, the compensation of the Executive Board mem- In addition, there is a long-term variable compensa- bers consists of fixed and variable components. The tion component in the form of virtual stock option plans, variable compensation is composed of a cash compo- the parameters of which are shown in the following: nent paid in the form of an annual bonus and a long-term, stock-based component. All components of compensa- Executive Board Program tion are appropriate, both individually and as a whole. The criteria used to determine appropriateness are the 2009 2012 2014 I 2014 II tasks of the individual Executive Board member, his Grant date 07/01/2009 01/01/2012 01/01/2014 09/01/2014 personal performance, as well as the economic situation, Term in years 6 6 6 6 profit, and the future prospects of Axel Springer. Vesting period in years 4 4 4 4 Due consideration is also given to the industry environ- Stock options granted 1,125,0001) 450,000 205,313 675,000 ment. The Supervisory Board did not consult with out- Underlying (€) 20.291) 30.53 44.06 44.56 side compensation experts during the financial year. Maximum payment (€) 40.571) 61.06 88.12 89.12 The fixed compensation corresponds to the annual Value at grant fixed salary; in addition, the Executive Board members date (€) 4.221) 5.26 6.69 6.26 receive a company car or company car allowance and Total value at security expenses as fringe benefits. The annual fixed grant date (€ millions) 4.7 2.4 1.4 4.2 salary is established for the entire term of an employment agreement and is disbursed in 12 monthly installments. It 1) Adjusted to account for the share split conducted in 2011. is set on the basis of the duties of the individual Executive Board member, the current economic situation, the profit, If the Executive Board service agreement or the ap- and the future prospects of the Group, among other pointment to the Executive Board exists for at least the considerations. end of the four year waiting period, then all virtual stock options may become vested to the member of the Exec- The variable compensation is in the form of an annual utive Board. If the working relationship or the appoint- bonus as a cash component, and depends on individual ment of the authorized member of the Executive Board

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

finishes before the end of the waiting period, but is at his employment with the company. Payments are also least one year after the grant date, then the stock op- made in case of a complete reduction in earning capacity. tions become vested pro rata temporis relating to the waiting period. Some Executive Board members have the right to termi- nate their employment contracts in the event of a change A further condition for vesting to take place is that either in control. They will then have the right to receive pay- the volume-weighted average price of the Axel Springer ment of their base salary for the most recently negotiated share is at least 30 % over the base value or that the remaining contractual term, while some of the eligible percentage increase of this average price exceeds that Executive Board members will have the right to receive of the base value of the development of the DAX over a payment of an amount equal to at least one year’s base period of 90 calendar days within a time period of a year salary. Furthermore, the company will pay the pro-rated before the end of the waiting period. percentage of the success-based compensation for the period of time served in the year of resignation. The Exercising stock options is only possible if the volume- employment contracts of the members of the Executive weighted average price of the Axel Springer share 90 Board do not provide for any other compensation if the calendar days before exercising such options is at least employment relationship is terminated as a result of a

30 % over the base value and that the percentage in- change in control. crease exceeds that of the DAX index. Each option grants a payment claim in the amount of the growth in In the 2014 financial year the total compensation paid value of the Axel Springer share, restricted to a maxi- to the Executive Board was € 17.8 million. (PY: mum of 200 % of the base value, which corresponds to € 20.1 million), plus € 5.6 million (PY: € 0.0 million) in the the difference between the volume-weighted average form of a long-term stock-based compensation compo- price during the last 90 calendar days prior to exercise nent (virtual stock option plans 2014 I and 2014 II). The and the base value. fixed components totaled € 8.9 million (PY: € 9.4 million); also containing the contributions for fringe benefits Executive Board members are obligated to hold one Axel (company car or company car allowance and security Springer share for every ten stock options as a personal expenses). The variable cash component came to a total investment. Disposing of these shares prior to exercising of € 8.9 million (PY: € 10.7 million). According to this, the the options would result in the stock options being for- fixed compensation including fringe benefits in the finan- feited at the same rate. cial year amounts to a proportion of 38 % of total compensation (including long-term stock-based compensation

The 2009 Executive Board Program was completed in components) (PY: 47 %). 2013 as the remaining options were exercised. With regards to the Executive Board Programs that are grant- Guaranteed pension payments to members of the Exec- ed, see the information in the notes to the consolidated utive Board resulted in a personnel expense of € 0.5 financial statements under Section (12). million in fiscal year 2014 (PY: € 0.5 million). The cash value of the guaranteed pension payments in pension Executive Board members have received contractually- provisions totaled € 11.4 million (PY: € 7.0 million). Cred- agreed pension provisions. Payment of pension applies its or advance payments were not granted to members when reaching the age of 62, provided that the Executive of the Executive Board in the 2014 financial year. In the Board member is no longer at their post at this point. In case of guaranteed pension payments to Executive case of premature departure the Executive Board member Board members, which became effective with the rele- has - after the end of five years since the pension com- vant recommendation in Section 4.2.3 sentence 10 mitment or since earlier entry into the company - a vested GCGC on June 10, 2013, the Supervisory Board estab- claim to a pension payment proportional to the length of lished the pension level desired in compliance with the

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

previously stated Code recommendation and considered Supervisory Board is paid an annual salary of € 0.1 mil- the annual and long-term expense for the company lion for his services as an author. derived from this. Contrary to Section 5.4.6 sentences 5 and 6 of the Ger- Axel Springer SE does not disclose the total compensa- man Corporate Governance Code, the compensation tion of individual Executive Board members by name, paid to members of the Supervisory Board, as well as given that Sections 314 (2) and 286 (5) HGB expressly the compensation paid by the company to them for place the disclosure of Executive Board compensation by services rendered personally, are not presented in the name under the reservation of a differing resolution of the Corporate Governance Report, since Axel Springer SE’s annual shareholders’ meeting with a qualified majority of competitors do not disclose such information either. the share capital represented upon the adoption of the resolution. The annual shareholders’ meeting of Axel Share-based compensation of senior executives Springer SE held on April 16, 2014, adopted such a Axel Springer has issued virtual stock option plans for resolution with the requisite majority. The reason for this is selected senior executives, the main parameters of which that Axel Springer SE’s competitors do not disclose item- are shown in the following: ized compensation either. Senior Executive Program Supervisory Board The compensation of the Supervisory Board is set by the 2011 I 2011 II 2014 annual shareholders’ meeting. Grant date 10/01/2011 10/01/2011 03/01/2014 Term in years 4 6 5 The compensation of the Supervisory Board of Axel Vesting period in years 2 4 3 Springer SE is regulated by Article 16 of the Articles of Stock options granted 472,500 472,500 60,000

Incorporation of Axel Springer SE. According to this, the Underlying (€) 30.00 35.00 46.80 Supervisory Board receives fixed compensation of € 3.0 Maximum payment (€) 60.00 70.00 93.60 million annually. The Supervisory Board decides how the Value at grant date (€) 2.74 2.31 8.14 aforementioned amount is distributed among its mem- Total value at grant date bers, with appropriate consideration given to their activi- (€ millions) 1.3 1.1 0.5 ties as chairman and in the committees. If the member does not serve on the Supervisory Board or exercise a higher-paying function of a Supervisory Board member Provided that the beneficiary is employed by the compa- for the full year, such member will receive a pro-rated ny at least until the expiration of the respective vesting share of the full-year compensation. Only full months of period, all virtual stock options granted to the relevant activity are taken into account for this purpose. The senior executive may become vested. If the authorized compensation is payable after the close of the given senior executive is not employed by the company before financial year. the end of the vesting period, but is at least one year after the grant date, the stock options are vested up to For financial year 2014, the Supervisory Board will one half (Senior Executive Programs 2011 I and 2014) or receive total compensation of € 3.0 million (PY: € 3.0 to one quarter per elapsed year of the vesting period million). In addition, the company reimburses all mem- (Senior Executive Program 2011 II). bers of the Supervisory Board for their expenses and for the value-added tax payable on their compensation and A further condition for vesting to take place is that either on the reimbursement of their expenses. The company the volume-weighted average price of the Axel Springer pays the premium for the D&O insurance taken out for share is at least 30 % over the base value or that the members of the Supervisory Board. One member of the percentage increase of this average price exceeds that

Annual Report 2014 Combined Management Report Axel Springer SE Corporate Governance Report

of the base value of the development of the DAX over a Beneficiaries are obligated to hold one Axel Springer period of three calendar months within a time period of a share for every ten stock options as a personal invest- year before the end of the waiting period. ment. Disposing of these shares prior to exercising the options would result in the stock options being forfeited Exercising stock options is only possible if the volume- at the same rate. weighted average price of the Axel Springer share during the three calendar months before exercising such options The Senior Executive Program 2011 I was completed is at least 30 % over the base value and that the percent- during the financial year as the stock options were exer- age increase exceeds that of the DAX index. Each option cised or forfeited. With regards to the executive programs grants a payment claim in the amount of the growth in that are granted, see the information in the notes to the value of the Axel Springer share, restricted to a maximum consolidated financial statements under Section (12). of 200 % of the base value, which corresponds to the difference between the volume-weighted average price during the last three calendar months prior to exercise and the base value.

Report of the Supervisory Board

Dr. Giuseppe Vita Chairman

Dr. h. c. Friede Springer Prof. Dr.-Ing. Wolfgang Reitzle (since April 16, 2014) Vice Chairwoman Entrepreneur

Oliver Heine Martin Varsavsky (since April 16, 2014) Attorney at law and partner in the CEO, Fon Wireless Limited law firm Heine & Partner

Rudolf Knepper (since April 16, 2014) Dr. Gerhard Cromme (until April 16, 2014) Entrepreneur Chairman of the Supervisory Board of Siemens AG Lothar Lanz (from April 16, 2014) Member of various Supervisory Boards Klaus Krone (until April 16, 2014) Entrepreneur Dr. Nicola Leibinger-Kammüller President and Chairwoman of the Executive Board Dr. Michael Otto (until April 16, 2014) of TRUMPF GmbH + Co. KG Chairman of the Supervisory Board of Otto GmbH & Co KG Prof. Dr. Wolf Lepenies University Professor (emer.) FU Berlin; Permanent Fellow (emer.) at Wissenschaftskolleg zu Berlin

Annual Report 2014 Report of the Supervisory Board Axel Springer SE

In financial year 2014, the Supervisory Board performed all Composition of the Supervisory Board the duties incumbent upon it by virtue of applicable laws, the company’s Articles of Incorporation, and internal rules The Supervisory Board of Axel Springer SE was newly of procedure. The Supervisory Board worked closely and elected, as scheduled, at the annual shareholders' meet- trustfully with the Executive Board in an advisory role and ing on April 16, 2014. Former members of the Supervi- supervised the management of the company. sory Board Dr. Gerhard Cromme, Klaus Krone, and Dr. Michael Otto were no longer available for election; Dr.

By means of written and oral reports, the Executive Board Giuseppe Vita, Dr. h. c. Friede Springer, Oliver Heine, Dr. informed the Supervisory Board in detail, regularly, and Nicola Leibinger-Kammüller, and Prof. Dr. Wolf Lepenies promptly about all relevant matters of strategy, planning, were re-elected as members of the Supervisory Board. business performance, and the risk situation of the compa- In addition, Rudolf Knepper, Lothar Lanz, Prof. Dr.-Ing ny, as well as the risk management system, the Internal Wolfgang Reitzle, and Martin Varsavsky were elected as Control System (ICS), and matters pertaining to compli- new members of the Supervisory Board. The regular ance. The Executive Board informed the Supervisory Board term of all members of the Supervisory Board will end of matters of particular importance between meetings, after the end of the annual shareholders' meeting for the whilst Supervisory Board members and Executive Board 2019 financial year. members frequently consulted and exchanged information with each other. The Supervisory Board examined the The Supervisory Board thanks long-term members Dr. relevant planning documents and financial statements Michael Otto, Klaus Krone, and Dr. Gerhard Cromme for presented to it and assured itself that they were correct their successful work in the Supervisory Board as they left and appropriate. It reviewed and discussed all submitted during the 2014 financial year. reports and documents to an appropriate extent. It was not necessary in financial year 2013 for the Supervisory Board Dr. Michael Otto has been a member of the Supervisory to inspect company books and documents beyond those Board of our company since listing on the stock exchange presented during the normal course of reporting by the in 1985, and has been a member of the Nominating Com- Executive Board. mittee of the Supervisory Board since its foundation in 2007; during almost 30 years with the company he has The Supervisory Board discussed with the Executive Board played an essential part in our company thanks to his all matters of crucial importance for the company, especial- exceptional entrepreneurial experience and competence, ly the company’s business plan, business strategy, major his instinct for economic developments, and his insight into investment and disinvestment plans, and personnel mat- human nature. ters. Furthermore, the Supervisory Board discussed specific transactions of importance to the company’s future Klaus Krone has been member of the Supervisory Board development. It adopted resolutions on those transactions and the Executive Committee since 1999 as well as of the and measures for which the participation of the Supervisory Audit Committee since 2007; we are extremely grateful for Board is required by law, by the company’s Articles of his technical and entrepreneurial know-how and creative Incorporation, or by the Executive Board’s internal rules of drive as well as his interest in technology-based innovation. procedure. After in-depth review, the Supervisory Board approved all matters presented to it by the Executive Board Dr. Gerhard Cromme was appointed to the Supervisory for resolution or approval. Board in 2002; since then he has become a member of

Annual Report 2014 Report of the Supervisory Board Axel Springer SE

the Executive Committee and from 2004 he has been a functions: Ralph Büchi, as President International of Axel member of the Personnel Committee. His advice was Springer SE, is responsible for all international business built on his strategic vision, his cosmopolitan character, and Lothar Lanz is responsible as a member of the Su- and above all, on his expertise in national and interna- pervisory Board and as Chairman of its Audit Committee. tional corporate governance questions gathered from his In connection with the appointment of Dr. Deutz to the time as Chairman of the Government Commission of the Executive Board and the departure of Mr. Lanz and Mr. German Corporate Governance Code from 2002 to Büchi, the Supervisory Board has agreed on an updated 2008 was of crucial importance for our company. executive organization chart for the Executive Board.

Immediately after the 2014 annual shareholders’ meeting, Important matters addressed by the Dr. Vita was re-elected to the position of Chairman of the Supervisory Board Supervisory Board and Dr. h. c. Springer was elected to Vice Chairwoman in the constituent meeting. In its meeting of Monday, February 10, 2014, the Supervi- sory Board discussed and approved the financial plan for The Supervisory Board of Axel Springer AG held a total of 2014 submitted by the Executive Board. The Executive seven meetings in the reporting period, four of which Board informed the Supervisory Board of preliminary fig- were in the first half and three in the second half of the ures in the 2013 business year and reported on, amongst calendar year. With the exception of the extraordinary other things, the current state of the pending antitrust meeting of the full board on December 8, 2014, at which proceedings with the sale of regional newspapers and two members of the Supervisory Board were excused as magazines to FUNKE Mediengruppe, and other transaction they were unable to take part personally, but were able to plans for Axel Springer SE. The Supervisory Board also submit votes in writing, all incumbent members of the devoted its attention to granting virtual stock option pro- Supervisory Board took part during all meetings of the grams to selected senior executives in the company. Supervisory Board in the 2014 financial year. When necessary, Supervisory Board resolutions were adopted by In its meeting of March 3, 2014, the Supervisory Board way of written circulation. The work of the committees devoted its attention primarily to the separate financial and the resolutions passed by the committees was re- statements of the parent company and the consolidated ported in the meetings of the full board. financial statements of the Group as of December 31, 2013 (including, in each case, the combined manage- Changes in the Executive Board ment report and Group management report), as well as the report on the company’s dealings with affiliated companies On January 1, 2014, the Supervisory Board of Axel (Dependency Report), the Executive Board’s profit utiliza- Springer SE appointed Dr. Julian Deutz as a new mem- tion proposal for financial year 2013, and the Corporate ber of the Executive Board. With the departure of Lothar Governance Report issued jointly with the Executive Board. Lanz from the Executive Board at the end of the 2014 It also focused on the proposals for selection of the inde- annual shareholders’ meeting on April 16, 2014, he has pendent auditor for the 2014 financial year which was taken over the responsibility for Finance and Personnel. submitted at the annual shareholders' meeting. Further- As of April 30, 2014, Ralph Büchi, President International, more, the Supervisory Board dealt with the agenda for the also left the Executive Board of the company. The Su- 2014 annual shareholders’ meeting; this covered the pro- pervisory Board would like to thank Mr. Büchi and Mr. posed resolutions for the annual shareholders' meeting Lanz for their successful work in the Executive Board of including the proposed resolutions for the required out- the company. Both men have provided considerable sourcing measures as part of the sale of regional newspa- momentum during a phase of digital Group restructuring, pers and magazines to FUNKE Mediengruppe, and the and have also played a part in creating and sustaining Supervisory Board's election proposals at the annual this. They also remain with Axel Springer SE in new shareholders' meeting for the appointments to the Supervi-

Annual Report 2014 Report of the Supervisory Board Axel Springer SE

sory Board based on the corresponding recommendations state of the transaction with FUNKE Mediengruppe, and from the Nomination Committee. In addition, the Supervi- current acquisition projects. sory Board adopted a resolution regarding its report for the 2013 financial year which was submitted at the annual In the meeting of August 27, 2014, the required closing shareholders' meeting. Furthermore, the Supervisory Board balance sheets for Axel Springer SE in accordance with agreed to the share ownership program set up during the the German Transformation Act were approved and 2014 financial year for employees with a target agreement therefore adopted. The Executive Board then reported on or who were eligible for a profit-sharing bonus, and, in this business developments as of July 2014; directly after- context, acquisition of (own) shares as part of the 2014 wards the Supervisory Board discussed current devel- share ownership program, and the (re)sale of unused own opments in the media industry with the Executive Board. shares as part of the share ownership program. The Su- The Supervisory Board was also informed of the status of pervisory Board also adopted a resolution regarding exten- various projects. The Supervisory Board also adopted a sion of the term of a member of the Executive Board resolution regarding granting virtual stock option pro- alongside the associated extension of the employment grams for Executive Board members within the company. contract as a member of the Executive Board. Finally, the Supervisory Board adopted a resolution regarding the In its meeting of November 4, 2014, the Supervisory status of the investment of the company in Do⁄an TV. Board focused on and discussed the corporate strategy of Axel Springer based on a wide-ranging presentation by At its meeting of April 16, 2014, the Supervisory Board the Executive Board with particular emphasis on further again primarily dealt with the preparations for the up- action with regards to the equity stake held by General coming shareholders’ meeting. In addition, the Executive Atlantic in Axel Springer Digital Classifieds GmbH. In this Board reported to the Supervisory Board regarding the context advice was given about potentially changing Axel current state of acquisition projects. Springer SE into a partnership limited by shares (KGaA). The Supervisory Board also adopted a resolution regard- Directly after the annual shareholders’ meeting the Super- ing the 2014 Declaration of Conformity. The Supervisory visory Board of Axel Springer SE, newly elected at the Board also carried out a questionnaire-based self- annual shareholders' meeting, met on April 16, 2014 for evaluation and after discussions based upon this rated its constituent meeting and elected Dr. Giuseppe Vita as its work as efficient. Furthermore, the Executive Board

Chairman and Dr. h. c. Friede Springer as Vice Chair- informed the Supervisory Board regarding the economic woman of the Supervisory Board. The Supervisory Board development as of September 30, 2014, and the current then decided upon a change in its internal rules of proce- transaction plans of the company, with particular regard dure regarding the composition of the Supervisory Board's to the planned acquisition of an equity stake in @Leisure committees. The Supervisory Board's committees were Holding B.V. The execution of common training activities reconstituted. The Supervisory Board also adopted a for Supervisory Board members supported by the com- resolution to update the Declaration of Conformity, which pany was also discussed. was necessary due to the recent appointments to the Supervisory Board and its committees. Also, Ernst & In an extraordinary meeting of the full board of the Su- Young GmbH Wirtschaftsprüfungsgesellschaft was pervisory Board on December 8, 2014, the Supervisory commissioned with auditing the required closing balance Board agreed upon the acquisition of 15 % of shares in sheets in accordance with the German Transformation Axel Springer Digital Classifieds GmbH held by General Act in conjunction with the divestitures for selling regional Atlantic, and agreement on call options with regards to newspapers and magazines. Finally, the Executive Board the remaining 15 % of shares held by General Atlantic. reported on the state of various projects, in particular The Executive Board and Supervisory Board also decid- those regarding new building projects at Lindenfeld, the ed together to prepare to change Axel Springer SE into a partnership limited by shares (KGaA).

Annual Report 2014 Report of the Supervisory Board Axel Springer SE

Conflicts of interest tion of the Executive Board, the approval of sales of company shares and subscription rights for such shares, Conflicts of interest have not occurred amongst Super- and for approving certain management actions that visory Board members during the financial year. require the approval of the Supervisory Board, which have been delegated to the Executive Committee. Until Corporate governance the end of the annual shareholders' meeting on April 16, 2014, the members of the Executive Committee were Dr.

The Executive Board and Supervisory Board issued their Giuseppe Vita, Chairman, Dr. h. c. Friede Springer, Vice common Declaration of Conformity (pursuant to Section Chairwoman, Dr. Gerhard Cromme and Klaus Krone; at 161 of the German Stock Corporations Act (AktG)) on the constituent meeting of the newly-elected Supervisory November 10, 2014. This explanation with information Board on April 16, 2014 Dr. Giuseppe Vita was re- on exceptions to the recommendations made in the elected as Chairman, Dr. h. c. Friede Springer was re- GCGC are made permanently available on the compa- elected as Vice Chairwoman, and Lothar Lanz and Prof. ny's website. It is presented on page 65 of the present Dr.-Ing. Wolfgang Reitzle were elected as further mem- Annual Report. The 2013 Declaration of Conformity of bers of the Executive Committee. November 5, 2013 issued on April 17, 2014 became necessary as a result of election of the new Supervisory The Executive Committee held seven meetings during Board in the 2014 annual shareholders' meeting and the the reporting period, of which two were extraordinary concomitant changes in the composition of the Supervi- meetings; members of the Executive Board also took sory Board and its committees. part frequently at these meetings. The Executive Commit- tee agreed, amongst other things, with the following acqui-

Additional information on corporate governance in the sitions: the acquisition of 100 % of shares in Coral-Tell Axel Springer Group may be found in the joint Corporate Ltd., Israel by Axel Springer Digital Classifieds GmbH,

Governance Report of the Executive Board and Supervi- the acquisition of 100 % of shares in Evenbase Recruit- sory Board (see page 65). ment Ltd., Great Britain by the StepStone Group, exercising a call option regarding founder shares in Bonial Work of the committees of the Supervisory International GmbH by Axel Springer SE, the acquisition Board of 51 % of shares in Car & Boat Media SAS, France, by Axel Springer Digital Classifieds GmbH, the acquisition of In the interest of performing its duties in an efficient man- 100 % of shares in MeinProspekt GmbH by Bonial Inter- ner, the Supervisory Board has formed an Executive national GmbH, the acquisition of a further 19.99 % of Committee, an Audit Committee, a Personnel Commit- shares in finanzen.net GmbH from co-shareholders by tee, and a Nominating Committee as permanent com- Axel Springer Digital Ventures GmbH, the acquisition of mittees. The Chairman of the Audit Committee is Mr. the Hungarian job portal profession.hu by Ringier Axel Lanz, and in the other committees Chairman of the Su- Springer Media AG, the acquisition of approximately 17 % pervisory Board, Dr. Giuseppe Vita fulfills that role. The of shares in OZY Media, Inc., USA , and the acquisition of Committee Chairmen report on the work of the commit- 51 % of shares in @Leisure Holding B.V. by Axel Springer tees in the subsequent meeting of the Supervisory Board. Digital GmbH. The deliberations and adopted resolutions also affected agreement on the sale of the 17.2 % equity Notwithstanding the general responsibility of the full stake in iProperty Group Limited by SeLoger.com SAS, Supervisory Board, the Executive Committee is re- agreement on exercising a second put option against sponsible for fundamental matters related to publishing Do⁄an TV and regarding further actions concerning the and journalism and for matters of strategy, financial plan- equity stake in Do⁄an TV, agreement for the partial sale ning, investments, and the financing of investments. It is of the Axel Springer portfolio in Hungary whilst incorpo- also responsible for preparing decisions on the organiza- rating the rest of the Hungarian portfolio into the Ringier

Annual Report 2014 Report of the Supervisory Board Axel Springer SE

Axel Springer joint venture as well as agreement for of a member of the Executive Board alongside the associ- selling 49.9 % of shares in Schwartzkopff TV-Productions ated extension of the employment contract as a member GmbH & Co. KG and Schwartzkopff TV-Productions of the Executive Board, and the issue of virtual stock Verwaltungsgesellschaft mbH to Talpa Germany Holding option programs for Executive Board members and senior B.V. Amongst other things, it was decided that the executives of the company. It also dealt with the individual Schuldschein should be increased up to € 150 million goals and corporate goals for the cash component of the by authorization from the whole of the Board. Another variable compensation of the Executive Board. object was also gaining advice and adopting a resolution for finalizing a controlling and profit and loss transfer The Audit Committee, notwithstanding the responsibility agreement between StepStone GmbH and YourCareer- of the full Supervisory Board, is responsible for preparing Group GmbH as well as decisions about issuing an the decisions to be made by the Supervisory Board on agreement for transferring company shares in accord- the adoption of the separate financial statements of the ance with Section 5 para. 3 of the company's Articles of parent company and the approval of the consolidated Incorporation. financial statements of the Group, by means of conducting a preliminary review of the separate financial state- The Personnel Committee is responsible in particular for ments, the Dependency Report, and the consolidated preparing decisions on the appointment and dismissal of financial statements, as well as the management report Executive Board members. It is also responsible for pre- for the company and the management report for the paring the resolutions to be adopted by the Supervisory Group, the review of the profit utilization proposal, the Board on the compensation of individual members of the discussion of the audit report with the independent audi- Executive Board; in all other matters pertaining to em- tor, and the monitoring of the risk management system, ployment contracts, the Personnel Committee approves the effectiveness of the internal control system (ICS), the resolutions in lieu of the Supervisory Board. The Personnel compliance management system and the internal auditing Committee also adopts resolutions in lieu of the Supervi- system. It is also responsible for reviewing the interim sory Board in matters pertaining to the extension of loans financial statements and interim reports, and for discuss- within the meaning of Sections 89, 115 AktG and on the ing the report of the independent auditor on the critical approval of contracts with Supervisory Board members review of the interim financial statements. With regard to pursuant to Section 114 AktG. To the extent it bears re- the audit of the financial statements, the Audit Committee sponsibility, the Personnel Committee also represents the is responsible for preparing the proposal of the Supervi- company in transactions with individual Executive Board sory Board to the annual shareholders’ meeting on the members. Finally, the Personnel Committee decides on election of the independent auditor and the engagement the approval of the transactions requiring the approval of of the independent auditor, and for adopting audit priori- the Supervisory Board, which have been delegated to the ties, among other matters. Until the end of the annual Personnel Committee. Members of the Personnel Com- shareholders' meeting on April 16, 2014 the Audit Com- mittee were, until the end of the annual shareholders' mittee consisted of Dr. Giuseppe Vita, Chairman, Dr. h. c. meeting on April 16, 2014, Dr. Giuseppe Vita, Chairman, Friede Springer, Klaus Krone, and Oliver Heine; during

Dr. h. c. Friede Springer and Dr. Gerhard Cromme; since the constituent meeting of the newly-elected Supervisory the constituent meeting of the newly-elected Supervisory Board on April 16, 2014 Lothar Lanz was elected as Board on April 16, 2014 the Personnel Committee com- Chairman of the Audit Committee, Dr. Giuseppe Vita as prises Dr. Giuseppe Vita as Chairman and Dr. h. c. Friede Vice-Chairman, and Oliver Heine, Rudolf Knepper as well

Springer as Vice Chairwoman. as Dr. h. c. Friede Springer were elected as further members of the Audit Committee. The Personnel Committee met five times during the reporting period. It prepares, amongst other things, deci- The Audit Committee held five meetings during the sions of the full board regarding the extension of the term course of the financial year. It has been informed of the

Annual Report 2014 Report of the Supervisory Board Axel Springer SE

scope, course, and result of the 2013 annual financial ble candidates corresponding to the objectives of the statements and consolidated financial statements, the Supervisory Board after the departures of Dr. Gerhard decisions of the Supervisory Board regarding adoption of Cromme, Klaus Krone, and Dr. Michael Otto from their the financial statements, and prepared approval of the positions on the Supervisory Board, and prepared the Group consolidated statements as well as the audited proposals for the annual shareholders' meeting regarding interim financial statements and reports. Alongside this elections. the Audit Committee handled preparation of the passing of the resolution by the full board regarding the proposal Separate financial statements of the at the annual shareholders' meeting to commission the parent company and consolidated independent auditor for the 2014 financial year. To this effect, the Supervisory Board was also in receipt of writ- financial statements of the Group; ten confirmation from Ernst & Young GmbH Wirtschafts- management report for the parent prüfungsgesellschaft regarding their independence. In company and the Group addition, the Audit Committee dealt with the audit priorities of the independent auditor for the 2014 financial year Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft and issued the auditor with the audit assignment for the audited the annual financial statements of the parent 2014 financial year. The Audit Committee also dealt with company and the consolidated financial statements of the the monitoring of the risk management system, the effec- Group, as well as the combined management report of tiveness of the internal control system (ICS), of the com- the parent company and the Group, all of which were pliance management system and of the internal audit prepared by the Executive Board for financial year 2014, system, as well as additional compliance issues. and issued an unqualified audit opinion in every case. In connection with the audit, the independent auditor also The Nominating Committee prepares the proposal of the noted in summary that the Executive Board has imple- Supervisory Board to the annual shareholders’ meeting on mented a risk management system that fulfills the re- the election of Supervisory Board members; in particular, it quirements of law, and that this system is generally suita- proposes suitable candidates for the Supervisory Board, ble for the early detection of any developments that could also in consideration of the diversity and independence endanger the company’s survival as a going concern. criteria adopted by the Supervisory Board. It develops and reviews job profiles relative to the qualifications expected of The aforementioned documents and the proposal of the Supervisory Board members by the company, and contin- Executive Board for the utilization of the distributable profit, ually adapts them to suit changing requirements. Until the as well as the audit reports of Ernst & Young GmbH annual shareholders' meeting on April 16, 2014, the Nomi- Wirtschaftsprüfungsgesellschaft, were provided to all nating Committee composed of Dr. Giuseppe Vita, Chair- members of the Supervisory Board in a timely manner. man, Dr. h. c. Friede Springer, and Dr. Michael Otto. Since The documents were audited and discussed in the pres- the constituent meeting of the newly-elected Supervisory ence of the independent auditor in the meetings of the Board on April 16, 2014, the Nomination Committee is Audit Committee on February 20, 2015, and February 27, composed of Dr. Giuseppe Vita as Chairman and Dr. h. c. 2015. The independent auditor reported on the key results Friede Springer as Vice Chairwoman. of the audit and was available for additional information if required. No deficiencies in the internal control and risk The Nomination Committee met twice during the finan- management system, as it relates to the financial account- cial year and dealt with the election of the entire Supervi- ing process, were noted. The independent auditor ex- sory Board after the end of the term of office of the pre- plained further the scope, priorities, and costs of the audit. vious Supervisory Board set out in the Articles of The independent auditor also provided services for the Association at the end of the 2014 annual shareholders' company (including affiliated companies) to the value of meeting, particularly regarding the identification of suita- € 1.9 million in addition to services rendered for auditing.

Annual Report 2014 Report off the Supervisory Board Axel Springer SE

No circumstances that would cast doubt on the impartiali- Ernst & Young GmbH Wirtschaffttsprüfungsgesellschaft. ty of the independent auditor arose. The Audit Commiittee Both reports were also provided to each member of the resolved to recommend to the Supervisory Board that it Supervisory Board in advance. The audit opinion of the approve the separate financial statements of the parent independent auditor reads as follows: company and the consolidated financial statements of the Group, as well as the combined management report of “Based on the audit and evaluation conducted in accord- the parent company and the Group. ance with our professional duties, we hereby confirm that

1. the factual information containned in the report is correct; The Audit Committee reported to the Supervisory Board in the balance sheet meeting of February 27, 2015 on the 2. the consideration provided by the company in respect investigations carried out by the Committee and the results of the legal transactions mentiooned in the report was not thereof, alongside their recommendations for approval of inappropriately high.” the separate financial statements of the parent company The Supervisory Board also revieewed the report of the and consolidated financial statements of the Group, and Executive Board on the dealings with related parties the combined management report of the parent compaany pursuant to Section 312 AktG and the independent and the Group. The Supervisory Board has reviewed the auditor’s report on this subject. At the Supervisory Board documents in question, having noted and duly considered meeting of February 27, 2015, tthe independent auditor the report and recommendations of the Audit Committee also reported orally on the principal findings of the audit and the reports of Ernst & Young GmbH Wirtschafts- and provided additional informattion, as requested. The prüfungsgesellschaft, and having discussed them with the Supervisory Board acknowledged and approved the independent auditor, who was in attendance. report of the independent auditor. Based on the final results of its own review, the Supervisory Board had no The Supervisory Board acknowledged and approved the objections to raise with respect to the results of the audit audit resultss. Based on the results of its own review, thhe report of the independent auditor or the Executive Supervisory Board noted that it had no objections to raise. Board’s declaration on the repoort pursuant to Section Based on the recommendations of the Audit Committee, 312 (3) AktG. the Supervisory Board approved the annual financial statements of the parent company and the consolidated Thanks to the members of the Executive financial statements of the Group, as well as the combined management report of the parent company and the Group, Board and to all employees all of which were prepared by the Executive Board. Ac- cordingly, the annual financial statements of Axel Springer Finally, the Supervisory Board wishes to thank all members SE were offfficially adopted. of the Executive Board and all employees for their outstanding work in the past year. The Supervisory Board also reviewed the proposal of thhe Executive Board concerning the utilization of the distributa- Berlin, February 27, 2015 ble profit and concurred with that proposal, in considera- The Supervisory Board tion of the company’s financial year net income, liquidity, and financing plan.

The Executive Board also submitted its report on the company’s dealings with related parties pursuant to Section 312 of the German Stock Corporations Act (AktG) to the Supervisory Board. The Supervisory Board was also in receipt of the corresponding audit report by Dr. Giuseppe Vita Chairman

Consolidated Financial Statements

87 Responsibility Statement

88 Auditor’s Report

89 Consolidated Statement of Financial Position

91 Consolidated Statement of Comprehensive Income

92 Consolidated Statement of Cash Flows

93 Consolidated Statement of Changes in Equity

94 Consolidated Segment Report

Notes to the Consolidated Financial Statements 95 General information 114 Notes to the consolidated statement of financial position 134 Notes to the consolidated statement of comprehensive income 140 Notes to the consolidated statement of cash flows 141 Notes to the consolidated segment report 143 Other disclosures

Annual Report 2014 Consolidateed Financial Statements Axel Springer SE Responsibility Statement

Responsibility Statement

To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the financial position, liquidity, and financial performance of the Group, and the Group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal rewards and risks associateed with the expected development of the Group.

Berlin, February 17, 2015

Axel Springer SE

Dr. Mathias Döpfner Jan Bayer

Dr. Julian Deutz Dr. Andreas Wiele

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Auditor’s Report

Auditor’s Report

We have audited the consolidated financial statements ined primarily on a test basis within the framework of the prepared by Axel Springer SE, Berlin, comprising the audit. The audit includes assessing the annual financial statement of financial position, the income statement, statements of those entities included in consolidation, the statement of recognized income and expenses, the the determination of entities to be included in consolida- statement of cash flows, the statement of changes in tion, the accounting and consolidation principles used, equity, and the notes to the consolidated financial state- and significant estimates made by management, as well ments together with the combined management report as evaluating the overall presentation of the consolidated of the Axel Springer Group and Axel Springer SE for the financial statements and the report on the situation of the fiscal year from January 1 to December 31, 2014. The Axel Springer Group and Axel Springer SE. In our opinion, preparation of the consolidated financial statements and our audit provides a sufficiently sound basis for our opinion. the combined management report of the Axel Springer Group and Axel Springer SE in accordance with IFRSs Our audit has not led to any reservations. as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a para 1 In our opinion, based on the findings of our audit, the HGB [“Handelsgesetzbuch”: “German Commercial consolidated financial statements comply with IFRS as Code”] are the responsibility of the parent company’s adopted by the EU, the additional requirements of Ger- management. Our responsibility is to express an opinion man commercial law pursuant to Sec. 315a (1) HGB and on the consolidated financial statements and on the give a true and fair view of the net assets, financial posi- combined management report of the Axel Springer tion, and results of operations of the Axel Springer Group Group and Axel Springer SE based on our audit. in accordance with these requirements. The combined management report of the Axel Springer Group and Axel We conducted our audit of the consolidated financial Springer SE is consistent with the consolidated financial statements in accordance with Sec. 317 HGB and statements and as a whole provides a suitable view of German generally accepted standards for the audit of the Group’s position and suitably presents the opportu- financial statements promulgated by the Institut der nities and risks of future development. Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform Berlin, February 20, 2015 the audit such that misstatements materially affecting the presentation of the net assets, financial position, and Ernst & Young GmbH results of operations in the consolidated financial statements in accordance with the applicable financial report- Wirtschaftsprüfungsgesellschaft ing framework and in the combined management report of the Axel Springer Group and Axel Springer SE are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group 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 support- Glöckner Mielke ing the disclosures in the consolidated financial statements and the report on the situation of the company Wirtschaftsprüfer Wirtschaftsprüferin Axel Springer SE and the Axel Springer Group are exam-

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Consolidated Statement of Financial Position

Consolidated Statement of Financial Position

€ millions ASSETS Note 12/31/2014 12/31/2013 Non-current assets 4,315.8 3,680.2 Intangible assets (4) 3,018.3 2,411.5

Property, plant, and equipment (5) 523.5 640.3 Investment property (6) 31.3 55.0 Non-current financial assets (7) 633.2 433.9

Investments accounted for using the equity method 51.2 8.7 Other non-current financial assets 582.0 425.2 Receivables due from related parties (36) 30.9 25.5

Receivables from income taxes 15.6 19.8

Other assets (10) 8.5 53.1 Deferred tax assets (26) 54.4 41.2 Current assets 1,241.9 1,093.6

Inventories (8) 23.6 23.5

Trade receivables (9) 523.8 472.8

Receivables due from related parties (36) 12.7 10.4 Receivables from income taxes 46.7 40.8

Other assets (10) 156.1 81.6

Cash and cash equivalents (29) 383.1 248.6

Assets held for sale (2d), (5) 95.9 215.9 Total assets 5,557.7 4,773.8

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Consolidated Statement of Financial Position

€ millions EQUITY AND LIABILITIES Note 12/31/2014 12/31/2013 Equity (11) 2,354.9 2,244.0

Shareholders of Axel Springer SE 2,004.2 1,869.9 Non-controlling interests 350.8 374.1 Non-current provisions and liabilities 2,169.6 1,601.7

Provisions for pensions (13) 376.6 267.0

Other provisions (14) 76.7 56.0 Financial liabilities (15) 1,047.0 718.7

Trade payables 0.3 0.7 Liabilities due to related parties (36) 7.7 4.1

Other liabilities (16) 333.3 241.7 Deferred tax liabilities (26) 327.9 313.5 Current provisions and liabilities 1,033.2 928.1

Provisions for pensions (13) 23.1 20.8

Other provisions (14) 209.6 169.1

Financial liabilities (15) 3.9 1.1 Trade payables 313.2 270.7

Liabilities due to related parties (36) 9.2 11.0

Liabilities from income taxes 40.4 37.8

Other liabilities (16) 365.8 326.7 Liabilities related to assets held for sale (2d), (5) 68.0 90.8 Total equity and liabilities 5,557.7 4,773.8

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income

€ millions Consolidated Income Statement Note 2014 2013 Revenues (18) 3,037.9 2,801.4 Other operating income (19) 164.7 145.3 Change in inventories and internal costs capitalized 29.0 17.7

Purchased goods and services (20) – 990.0 – 925.8

Personnel expenses (21) – 974.4 – 921.6

Depreciation, amortization, and impairments (22) – 255.6 – 155.1

Other operating expenses (23) – 757.2 – 697.7 Income from investments (24) 81.4 25.7

Result from investments accounted for using the equity method – 2.5 1.8 Other investment income 83.9 23.9

Financial result (25) – 21.1 – 23.1

Income taxes (26) – 78.9 – 88.1 Income from continued operations 235.7 178.6 Income from discontinued operations (2d) 668.3 65.1 Net income 904.1 243.7

Net income attributable to shareholders of Axel Springer SE 799.8 197.1 Net income attributable to non-controlling interests 104.3 46.6

Basic/diluted earnings per share (in €) from continued operations (27) 1.71 1.34

Basic/diluted earnings per share (in €) from discontinued operations (27) 6.37 0.65

€ millions Consolidated Statement of Recognized Income and Expenses Note 2014 2013 Net income 904.1 243.7

Actuarial gains/losses from defined benefit pension obligations – 73.0 2.5

Items that may not be reclassified into the income statement in future periods – 73.0 2.5

Currency translation differences – 27.2 – 65.4

Changes in fair value of available-for-sale financial assets – 13.1 11.5

Changes in fair value of derivatives in cash flow hedges – 0.1 – 0.4

Other income/loss from investments accounted for using the equity method 0.4 0.0

Items that may be reclassified into the income statement in future periods if certain criteria are met – 40.0 – 54.3

Other income/loss (28) – 113.0 – 51.9

Comprehensive income 791.0 191.9

Comprehensive income attributable to shareholders of Axel Springer SE 694.7 150.7 Comprehensive income attributable to non-controlling interests 96.3 41.1

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows

€ millions Note 2014 2013 Net income 904.1 243.7 Reconciliation of net income to the cash flow from operating activities Depreciation, amortization, impairments, and write-ups 249.9 164.9 Result from investments accounted for using the equity method (7) 2.5 10.1 Dividends received from investments accounted for using the equity method (7) 3.0 5.4 Result from disposal of consolidated subsidiaries and business units and intangible assets, property, plant, and equipment, and financial assets – 746.9 – 0.7 Changes in non-current provisions 19.0 9.8

Changes in deferred taxes – 42.0 3.4 Other non-cash income and expenses 5.1 5.4

Changes in trade receivables – 18.6 6.4 Changes in trade payables 23.8 3.6

Changes in other assets and liabilities – 39.2 – 28.7 Cash flow from operating activities 1) (29) 360.8 423.4 Proceeds from disposals of intangible assets, property, plant, and equipment 0.7 1.7 Proceeds from disposals of consolidated subsidiaries and business units, less cash and cash equivalents given up 535.1 1.1 Proceeds from disposals of non-current financial assets 225.6 87.6 Proceeds from investments in short-term financial funds 0.0 10.8

Purchases of intangible assets, property, plant, equipment, and investment property – 96.2 – 98.4 Purchases of shares in consolidated subsidiaries and business units less cash and cash equivalents acquired (2c) – 507.7 – 169.8

Purchases of investments in non-current financial assets – 64.8 – 11.9 1) Cash flow from investing activities (29) 92.7 – 178.8

Dividends paid to shareholders of Axel Springer SE – 178.1 – 167.9

Dividends paid to other shareholders – 102.7 – 23.2

Purchase of non-controlling interests – 460.8 0.0 Disposal of non-controlling interests 6.0 2.2 Purchase/Issuance of treasury shares 0.0 4.9

Repayments of liabilities under finance leases – 0.9 – 0.2 Proceeds from other financial liabilities 567.0 320.3

Repayments of other financial liabilities – 170.9 – 315.0

Additions to plan assets 0.0 – 25.0

Other financial transactions – 3.5 – 7.0 1) Cash flow from financing activities (29) – 343.8 – 210.9 Cash flow-related changes in cash and cash equivalents 109.6 33.7

Changes in cash and cash equivalents due to exchange rates – 2.8 – 7.9

Changes in cash and cash equivalents due to changes in companies included in consolidation 0.1 – 3.7 Cash and cash equivalents at beginning of period 248.6 254.1

Reclassification relating to assets held for sale 27.6 – 27.6 Cash and cash equivalents at end of period (29) 383.1 248.6 1) For the portion attributable to discontinued operations see note (2d) € millions

Cash flows contained in the cash flow from operating activities 2014 2013

Income taxes paid – 401.5 – 183.1 Income taxes received 34.0 39.8

Interest paid – 30.4 – 21.7 Interest received 5.6 8.8 Dividends received 14.9 19.2

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Consolidated Statement of Changes in Equity

Consolidated Statement of Changes in Equity

Accumulated other comprehensive income

Changes in fair value Share- Ad- Accumu- Available- Deriva- holders Sub- ditional lated for-sale tives in of Axel Non- scribed paid-in retained Treasury Currency financial cash flow Other Springer controlling € millions capital capital earnings shares translation assets hedges equity SE interests Equity Balance as of 01/01/2013 98.9 44.0 1,755.9 – 2.8 53.0 1.4 – 0.2 – 62.6 1,887.5 365.6 2,253.1

Net income 197.1 197.1 46.6 243.7

Other income/loss – 56.7 8.0 – 0.1 2.3 – 46.4 – 5.5 – 51.9

Comprehensive income 197.1 – 56.7 8.0 – 0.1 2.3 150.7 41.1 191.9

Dividends paid – 167.9 – 167.9 – 23.2 – 191.1

Purchase/Issuance of treasury shares 2.1 2.8 4.9 4.9

Change in consolidated companies 0.0 2.9 2.9

Purchase and disposal of non-controlling interests – 0.1 – 0.1 2.2 2.1

Other changes 0.2 – 5.6 – 5.4 – 14.5 – 19.9

Balance as of 12/31/2013 98.9 44.2 1,781.6 0.0 – 3.7 9.4 – 0.3 – 60.3 1,869.9 374.1 2,244.0

Net income 799.8 799.8 104.3 904.1

Other income/loss – 23.3 – 9.1 – 0.1 – 72.6 – 105.1 – 7.9 – 113.0

Comprehensive income 799.8 – 23.3 – 9.1 – 0.1 – 72.6 694.7 96.3 791.0

Dividends paid – 178.1 – 178.1 – 51.2 – 229.2

Change in consolidated companies 0.0 9.5 9.5

Purchase and disposal of non-controlling interests – 383.4 – 1.4 – 384.9 – 79.3 – 464.1

Other changes 1.1 1.4 2.5 1.2 3.7

Balance as of 12/31/2014 98.9 45.3 2,021.3 0.0 – 28.5 0.3 – 0.4 – 132.9 2,004.2 350.8 2,354.9

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Consolidated Segment Report

Consolidated Segment Report

Operating segments (31)

Paid Models Marketing Models Classified Ad Models Services/Holding Consolidated totals € millions 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 External revenues 1,561.4 1,521.5 794.1 716.5 512.0 402.6 170.5 160.8 3,037.9 2,801.4

Internal revenues 7.8 16.8 11.0 9.7 0.5 1.1 205.5 211.0

Segment revenues 1,569.1 1,538.3 805.1 726.3 512.5 403.7 376.1 371.8

1) EBITDA 244.2 250.1 109.7 103.4 221.4 163.8 – 68.2 – 63.0 507.1 454.3

EBITDA margin1) 15.6% 16.4% 13.8% 14.4% 43.2% 40.7% 16.7% 16.2%

Thereof income from investments 4.2 4.6 4.2 3.5 – 1.5 0.0 3.8 4.0 10.7 12.1

Thereof accounted for using the equity method 3.6 3.4 – 3.3 – 1.6 – 1.5 0.0 0.0 0.0 – 1.2 1.8

Depreciation, amortization, impairments and write-ups (except from non-recurring effects and purchase price allocations) – 35.9 – 24.9 – 16.9 – 9.6 – 19.1 – 14.2 – 40.6 – 46.0 – 112.5 – 94.7

1) EBIT 208.2 225.2 92.8 93.9 202.3 149.6 – 108.8 – 108.9 394.6 359.7

Amortization and impairments from purchase price allocations – 19.1 – 18.5 – 47.6 – 12.0 – 37.0 – 28.9 – 0.1 – 0.1 – 103.9 – 59.4

Non-recurring effects – 1.5 8.6 37.8 – 9.0 41.6 – 12.8 – 32.9 2.8 45.0 – 10.4

Segment earnings before interest and taxes 187.6 215.3 82.9 72.9 206.9 107.9 – 141.7 – 106.2 335.7 289.8

Financial result – 21.1 – 23.1

Income taxes – 78.9 – 88.1

Income from continued operations 235.7 178.6

Income from discontinued operations 668.3 65.1

Net income 904.1 243.7

1) Adjusted for non-recurring effects (see note (31)).

Geographical information (31)

Germany Other countries Consolidated totals

€ millions 2014 2013 2014 2013 2014 2013 External revenues 1,728.7 1,637.0 1,309.3 1,164.4 3,037.9 2,801.4

Non-current segment assets 1,099.1 1,180.2 2,474.0 1,926.5 3,573.1 3,106.7

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

General information The consideration transferred in business combinations is offset against the pro-rated fair value of the acquired (1) Basic principles assets and liabilities at the acquisition date. Any remaining positive difference allocated to our interests is capital- Axel Springer SE is an exchange-listed stock corporation ized as goodwill and recognized in the amount allocated with its registered head office in Berlin, Germany. The to our shares, unless we acquire all shares in the com- principal activities of Axel Springer SE and its subsidiar- pany. Negative differences are immediately recognized ies (“Axel Springer Group”, “Axel Springer” or the as income. The acquisition date indicates the time at “Group”) are described in note (30a). which the option for gaining control of the acquired business or company was obtained. We offset differences On February 17, 2015, the Executive Board of Axel arising from disposals and purchases of non-controlling Springer SE authorized the consolidated financial state- interests in equity. ments for fiscal year 2014 and subsequently presented them to the Supervisory Board for approval. The consol- Associated companies in which the Axel Springer Group idated financial statements were prepared by application can exert significant influence over the financial and of Section 315a HGB in accordance with the Internation- operating policies, as well as joint venture companies al Financial Reporting Standards (IFRS) of the Interna- that are managed jointly by Axel Springer and one or tional Accounting Standards Board (IASB) and the inter- more other parties, are included in the consolidated pretations of the IFRS Interpretations Committee (IFRS financial statements by application of the equity method. IC) approved by the IASB, in effect and recognized by The IFRS separate and consolidated financial statements the European Union (EU) at the reporting date. The re- of these companies as at the Axel Springer Group’s porting currency is the Euro (€); unless otherwise indi- reporting date, respectively, serve as the basis for apply- cated, all figures are stated in Euro millions (€ millions). ing the equity method. Goodwill and assets and liabilities Totals and percentages have been calculated based on included in the amortized carrying amount are accounted the Euro amounts before rounding and may differ from a for using the accounting principles applied to business calculation based on the reported million Euro amounts. combinations. Losses that exceed the carrying amount of the investment, or any other long-term receivables The consolidated financial statements and consolidated related to the financing of these companies, are not management report will be published in the Federal recognized, unless the Axel Springer Group is bound by Gazette in Germany. additional contribution requirements. Intercompany profits and losses are eliminated on a pro-rated basis. The (2) Consolidation carrying amounts of investments are tested for impairment; if impairments exist, they are written down to the (a) Consolidation principle lower recoverable amount. The financial consolidated statements include Axel Springer SE and its subsidiaries over which Axel Springer SE either directly or indirectly has control, can influence variable outflows from the subsidiary, and is exposed to the variability of these outflows.

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

(b) Companies included in the consolidated In June, we acquired 88 % of the shares in Vertical Media financial statements GmbH, Berlin, and 51 % of the shares in ImmoSolve Companies included in the consolidated financial state- GmbH, Bad Bramstedt. The companies have been in- ments broke down as follows: cluded in our consolidated financial statements since the acquisition date. 12/31/2014 12/31/2013

Fully consolidated companies At the end of July 2014, we purchased 51 % of the

Germany 67 64 shares in Car&Boat Media S.A.S., Paris, France, and have fully consolidated this company as well as one Other countries 92 82 further foreign subsidiary since then. Investments accounted for using the equity method

Germany 5 4 At the beginning of August 2014, we acquired all of the shares in MeinProspekt GmbH, Munich, and have fully Other countries 5 3 consolidated the company since then.

At the end of September 2014 we acquired 65 % of the Consolidated companies are listed in note (42). Essen- shares in WEBIMM SAS, Paris, France, and have fully tially, the following changes occurred in 2014 consolidated the company since then.

At the beginning of January, we acquired 60 % of the At the beginning of October 2014 we acquired 16.8 % of shares in My Little Paris S.A.S., Paris, France, and 100 % the shares in Ozy Media, Inc., Mountain View, USA. Since of the shares in Merci Alfred S.A.S., Paris, France. As a then, we have included the company as an associate in consequence, both entities and two further foreign sub- our consolidated financial statements using the equity sidiaries have been fully consolidated since then. method.

Since the beginning of January, Project A Ventures At the end of October 2014 we acquired 100 % of the GmbH & Co. KG, Berlin, and MDB S.A.S., Evry, France, shares in Evenbase Recruitment Ltd., London, Great have been included in our consolidated financial state- Britain, and have fully consolidated the company since ments as associate companies using the equity method. then.

The acquisition of all shares in the N24 Group, Berlin, At the beginning of November 2014, the integration of was finalized at the end of February. As a consequence the Hungarian business activities of Axel Springer and of this acquisition, the N24 Group, consisting of three Ringier in Ringier Axel Springer Media AG was finalized, domestic subsidiaries after a group internal reorganiza- and Blikk Kft., Budapest, Hungary, a subsidiary contrib- tion, has been fully consolidated since then. uted by Ringier, was fully consolidated for the first time. In this context, we sold our shares in five previously fully-

At the end of May 2014, we acquired 100 % of the consolidated Hungarian companies at the end of July shares in Coral-Tell Ltd., Tel Aviv, Israel, and have fully 2014. consolidated the company since then. The acquisition of 50 % of shares in AS TYFP Media

At the end of May 2014, we purchased 80 % of the GmbH & Co. KG, Munich, was finalized in November. shares in Skapiec Sp. z.o.o., Wroclaw, Poland, and 80 % Since then, the company has been included in the con- of the shares in Opineo Sp. z.o.o., Wroclaw, Poland. The solidated financial statements using the equity method. two companies have been consolidated since then.

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

The sale of the Group’s German regional newspapers, TV Based on the purchase price allocation, the acquisition program guides, and women’s magazines to FUNKE costs were allocated to the purchased assets and liabili- Mediengruppe was finalized on April 30, 2014. As a con- ties at the acquisition date as follows: sequence, seven domestic companies were deconsolidated. Furthermore, the sale of the business activities Carrying amount and investments in the Czech Republic became effective after on April 30, 2014. As a result, two companies that were € millions acquisition previously fully consolidated and one company that was Intangible assets 16.8 formerly accounted for using the equity method were de- Property, plant, and equipment 0.1 consolidated. Non-current financial assets 0.1

Trade receivables 4.2 In the middle of December, we sold our shares in Metri- Other assets 1.4 go GmbH, Hamburg, which was previously fully consolidated. As a consequence, the company was deconsoli- Cash and cash equivalents 3.4 dated. Provisions and liabilities – 3.9

Trade payables – 1.6

(c) Acquisitions and divestitures Deferred tax liabilities – 5.8 To broaden our activities in the women’s portals sector, Net assets 14.7 we acquired 60 % of the shares in My Little Paris Acquisition cost 59.6 S.A.S., Paris, France, and 100 % of the shares in Merci Goodwill 44.9 Alfred S.A.S., Paris, France, via the aufeminin Group in January 2014. Reciprocal call and put options were agreed upon for the remaining 40 % of the shares in My Little Paris, in which the purchase price to be paid has Of the intangible assets acquired, intangible assets with not been contractually limited and will be measured by carrying amounts of € 10.1 million have indefinite useful the future corporate earnings of My Little Paris. lives. The non-tax-deductible goodwill is above all attributable to inseparable values such as employee exper- The acquisition costs amounted to € 59.6 million and tise and expected synergy effects from the integration, consisted of the purchase price paid in the reporting and was allocated to the Marketing Models segment. period in the amount of € 21.1 million, the payment of a liability assumed in the amount of € 0.6 million, and a The gross amount of the acquired trade account receiv- contingent purchase price liability in the value of ables was € 4.4 million. Corresponding valuation allow- € 37.9 million for the agreed option rights, which was ances in the amount of € 0.2 million were recorded. recorded at the acquisition date. The acquisition-related expenses recorded in other operating expenses of the Since first inclusion as of January 1, 2014, My Little Paris fiscal year amounted to € 0.2 million. and Merci Alfred contributed to consolidated revenues in the amount of € 22.7 million and to consolidated net income in the amount of € 2.9 million.

At the end of February 2014, we acquired 100 % of the shares in N24 Media GmbH, Berlin, and thus obtained control over the N24 Group. The acquisition represents an additional strategic investment towards digitalization of journalism. The news station N24 will become a centralized supplier of video for all Axel Springer brands. At

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

the same time, N24 and the WELT Group were merged amount of € 2.9 million. If N24 had already been fully in the newly-established WeltN24 as of January 1, 2015. consolidated at January 1, 2014, N24 would have contributed to consolidated revenues in the amount of The acquisition costs consisting of the paid purchase € 83.2 million and to consolidated net income in the price amounted to € 116.7 million. The acquisition- amount of € 2.5 million. related expenses recorded in other operating expenses of the fiscal year amounted to € 0.3 million. To broaden our activities in the online classifieds sector,

we have acquired 100 % of the shares in Coral-Tell Ltd., Based on the purchase price allocation, the acquisition Tel Aviv, Israel, at the end of May 2014. We thus gained costs were allocated to the purchased assets and liabili- control over the leading classified ad portal Yad2 ties at the acquisition date as follows: (yad2.co.il) in Israel. The acquisition was carried out by Axel Springer Digital Classifieds. Carrying amount after The acquisition costs amounted to € 170.1 million and € millions acquisition consisted of the purchase price paid in the reporting Intangible assets 42.1 period. The acquisition-related expenses recorded in Property, plant, and equipment 3.9 other operating expenses of the fiscal year amounted to

Non-current financial assets 4.8 € 0.4 million.

Trade receivables 7.5 Based on the purchase price allocation, the acquisition Other assets 7.1 costs were allocated to the purchased assets and liabili- Cash and cash equivalents 31.8 ties at the acquisition date as follows:

Provisions and liabilities – 25.1

Trade payables – 8.5 Carrying amount Deferred tax liabilities – 12.4 after € millions acquisition Net assets 51.4 Intangible assets 78.4 Acquisition cost 116.7 Property, plant, and equipment 0.2 Goodwill 65.3 Non-current financial assets 1.6

Trade receivables 5.2

Other assets 0.5 Of the intangible assets acquired, intangible assets with Cash and cash equivalents 6.0 carrying amounts of € 18.0 million have indefinite useful Provisions and liabilities – 8.4 lives. The non-tax-deductible goodwill is above all attributable to inseparable values such as employee expertise Trade payables – 0.5 and expected synergy effects from the integration, and Deferred tax liabilities – 21.1 was allocated to the Paid Models segment. Net assets 61.9 Acquisition cost 170.1

The gross amount of the acquired trade account receiv- Goodwill 108.2 ables was € 8.1 million. Corresponding valuation allowances in the amount of € 0.6 million were recorded.

Since first inclusion as of February 28, 2014, N24 con- Of the intangible assets acquired, intangible assets with tributed to consolidated revenues in the amount of carrying amounts of € 47.3 million have indefinite useful € 70.2 million and to consolidated net income in the lives. The non-tax-deductible goodwill is above all at-

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

tributable to inseparable values such as employee exper- Based on the purchase price allocation, the acquisition tise, expected synergy effects from the integration and costs were allocated to the purchased assets and liabili- the strategic advantages resulting from the leading mar- ties at the acquisition date as follows: ket position of the acquired company, and was allocated to the Classified Ad Models segment. Carrying amount after The gross amount of the acquired trade account receiv- € millions acquisition ables was € 5.5 million. Corresponding valuation allow- Intangible assets 81.4 ances in the amount of € 0.4 million were recorded. Property, plant, and equipment 0.7

Trade receivables 8.6 Since first inclusion, Coral-Tell contributed to consolidat- Other assets 2.5 ed revenues in the amount of € 11.2 million and to con- Cash and cash equivalents 3.2 solidated net income in the amount of € 3.4 million. If Coral-Tell had already been fully consolidated at Janu- Provisions and liabilities – 9.8 ary 1, 2014, Coral-Tell would have contributed to consol- Trade payables – 3.5 idated revenues in the amount of € 17.4 million and to Deferred tax liabilities – 26.6 consolidated net income in the amount of € 4.2 million. Net assets 56.6

Acquisition cost 153.2 To broaden our activities in the online classifieds sector, Goodwill 96.6 we have acquired 51 % of the shares in Car & Boat Media S.A.S., Paris, France, at the end of July 2014. With LaCentrale.fr the company particularly operates the leading specialized classifieds ad portal for used cars in Of the intangible assets acquired, intangible assets with France as well as other portals in the car and boat sector. carrying amounts of € 38.8 million have indefinite useful Reciprocal call and put options were agreed upon for the lives. The non-tax-deductible goodwill is above all at- remaining 49 % of the shares, in which the purchase tributable to inseparable values such as employee exper- price to be paid will be measured by the future corporate tise, expected synergy effects from the integration and earnings of Car & Boat Media and has not been contrac- the strategic advantages resulting from the leading mar- tually limited. The acquisition was carried out by Axel ket position of the acquired company, and was allocated Springer Digital Classifieds. to the Classified Ad Models segment.

The acquisition costs amounted to € 153.2 million and The gross amount of the acquired trade account receiv- consisted of the purchase price paid in the reporting ables was € 9.7 million. Corresponding valuation allow- period in the amount of € 72.9 million, and a contingent ances in the amount of € 1.1 million were recorded. purchase price liability in the value of € 80.3 million for the agreed option rights, which was recorded at the Since first inclusion, Car & Boat Media contributed to acquisition date. The acquisition-related expenses consolidated revenues in the amount of € 21.3 million recorded in other operating expenses of the fiscal year and to consolidated net income in the amount of amounted to € 0.5 million. € 4.0 million. If Car & Boat Media had already been fully consolidated at January 1, 2014, Car & Boat Media would have contributed to consolidated revenues in the amount of € 50.4 million and to consolidated net income in the amount of € 9.1 million.

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

To broaden our activities in the online classifieds sector, tributable to inseparable values such as employee exper- we have acquired 100 % of the shares in Evenbase tise, expected synergy effects from the integration and Recruitment Ltd., Havant, Great Britain, via the the strategic advantages resulting from the leading mar- StepStone Group at the end of October 2014. Evenbase ket position of the acquired company, and was allocated Recruitment Ltd. operates the job website jobsite.co.uk to the Classified Ad Models segment. along with brands such as CityJobs.com and eMed- careers.com. The gross amount of the acquired trade account receivables was € 4.4 million. Corresponding valuation allow- The preliminary acquisition costs amounted to ances in the amount of € 0.1 million were recorded. € 114.4 million and consisted of the purchase price paid in the reporting period. The acquisition-related expenses Since first inclusion, Evenbase contributed to consolidat- recorded in other operating expenses of the fiscal year ed revenues in the amount of € 6.1 million and to con- amounted to € 2.3 million. solidated net income in the amount of € 1.1 million. If Jobsite had already been fully consolidated at Janu- Based on the preliminary purchase price allocation, the ary 1, 2014, Jobsite would have contributed to consoli- preliminary acquisition costs were allocated to the pur- dated revenues in the amount of € 38.7 million and to chased assets and liabilities at the acquisition date as consolidated net income in the amount of € 7.7 million. follows: The other business combinations finalized in the year

Carrying 2014 included the acquisition of Skapiec Sp. z o.o. (80 %) amount after and Opineo Sp. z o.o. (80 %), Vertical Media GmbH € millions acquisition (88 %), ImmoSolve GmbH (51 %), MeinProspekt GmbH

Intangible assets 56.5 (100 %), WEBIMM SAS (65 %) and Blikk Kft. (100 %). Property, plant, and equipment 1.3 These acquisitions were generally carried out in the con-

Trade receivables 4.3 text of our strategy to become the leading digital publisher and individually had no major effects on the finan- Other assets 7.2 cial position, liquidity, and financial performance of the Provisions and liabilities – 4.3 Axel Springer Group during the 2014 financial year. Trade payables – 1.7

Deferred tax liabilities – 10.7 The consideration transferred for these acquisitions in Net assets 52.6 the amount of € 40.3 million contained the purchase Acquisition cost (preliminary) 114.4 prices paid in the financial year as well as contingent

Goodwill (preliminary) 61.8 consideration in the amount of € 5.7 million. The acquisition-related expenses recorded in other operating expenses amounted to € 1.5 million.

The purchase price allocation considers all knowledge The contingent consideration resulted from option rights and adjusting events about conditions that already exist- for the acquisition of the remaining shares in the compa- ed at the acquisition date, and has not yet been com- nies. They were measured on the basis of the current fair pleted, particularly due to the closeness in time to the value of the options at the acquisition date. The current reporting date. fair value predominantly depends on earnings performance of the acquired companies in the years prior to Of the intangible assets acquired, intangible assets with possible exercise dates of the options. carrying amounts of € 32.6 million have indefinite useful lives. The non-tax-deductible goodwill is above all at-

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Based on the purchase price allocations, the cumulative In December 2014, Axel Springer increased its share in acquisition costs were allocated to the purchased assets Axel Springer Digital Classifieds GmbH from 70 % to and liabilities at the respective acquisition dates as follows: 85 % via a cash payment in the amount of € 446 million. The proportion of net assets related to non-controlling Carrying interests in Axel Springer Digital Classifieds was reduced amount after by € 85.0 million. The accumulated retained earnings € millions acquisition related to shareholders of Axel Springer SE fell by Intangible assets 25.1 € 362.6 million and the other accumulated comprehen- Property, plant, and equipment 0.2 sive income increased by € 1.5 million. In addition, Axel

Non-current financial assets 0.0 Springer has agreed on a binding basis with General Atlantic regarding an option to acquire the remaining Trade receivables 2.1 15 % of the shares. As far as it is possible and allowed, Other assets 1.1 General Atlantic will receive Axel Springer shares in re- Cash and cash equivalents 4.0 turn if the option is exercised. In the event that Axel Provisions and liabilities – 3.6 Springer shares are not allowed to be granted, Axel

Deferred tax liabilities – 6.1 Springer can acquire the remaining 15 % of the shares Net assets 22.9 for a purchase price of an additional € 446 million plus

Share of non-controlling interests in net assets 5.2 interest.

Acquisition cost 40.3 Additional transactions carried out in 2014, as well as Goodwill 22.6 finalizations of purchase price allocations arising from acquisitions of companies in the prior year, had no material effects individually and collectively on the financial Of the intangible assets acquired in these acquisitions, position, liquidity, and financial performance of the Axel intangible assets with carrying amounts of € 14.8 million Springer Group. have indefinite useful lives. The non-tax-deductible goodwill is above all attributable to inseparable values In November 2014 an agreement was signed regarding such as employee expertise, expected synergy effects acquisition of 51 % of shares in @Leisure Holding B.V., from the integration and is assigned to the Paid Models Amsterdam, the Netherlands, and its subsidiaries. The (€ 8.8 million), Marketing Models (€ 8.7 million), and company is a leading European operator of online bro- Classified Ad Models (€ 5.2 million) segments. kerage portals for vacation home rentals and operates – among others – the portals belvilla.com and casamun- Since their respective initial consolidation, these compa- do.com. The transaction was finalized at the beginning of nies have contributed to 2014 consolidated revenues in January 2015. The preliminary acquisition costs amount- the amount of € 8.6 million and to 2014 consolidated net ed to € 64.8 million. The acquisition-related expenses income in the amount of € 1.5 million. If the acquisitions recorded in other operating expenses of the fiscal year had already been finalized on January 1, 2014, 2014, amounted to € 0.8 million. Because the acquisition oc- consolidated revenues would have increased by curred shortly before the publication of this Annual Re- € 13.9 million, and consolidated net income by port, audited financial information regarding the acquired € 2.8 million. net assets is not yet available.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Acquisitions and divestitures in the prior year: Of the intangible assets acquired, intangible assets with carrying amounts of € 16.0 million have indefinite useful In the context of the growth campaign in the online clas- lives. The non-tax-deductible goodwill is above all attribut- sified advertising sector, we acquired control of Saon- able to inseparable values such as employee expertise, group Ltd., Dublin, Ireland, and thus of its subsidiaries expected synergy effects from the integration and the (hereinafter collectively: Saongroup) at the beginning of strategic advantages resulting from the leading market November 2013. Saongroup is a worldwide operator of position of the acquired company and was allocated to the online job portals. Classified Ad Models segment.

The preliminary acquisition costs in the amount of the The gross amount of the acquired trade accounts re- purchase price paid in 2013 totaled € 76.1 million. The ceivable was € 2.6 million. Corresponding valuation acquisition-related expenses recorded in other operating allowances in the amount of € 0.1 million were recorded. expenses of the reporting year 2013 amounted to € 1.4 million. Since first inclusion, Saongroup contributed to 2013 consolidated revenues in the amount of € 1.8 million and Based on the preliminary purchase price allocations as to 2013 consolidated net income in the amount of of December 31, 2013, the preliminary acquisition costs € - 0.6 million. If Saongroup had already been fully con- were allocated to the purchased assets and liabilities as solidated at January 1, 2013, Saongroup would have follows: contributed to 2013 consolidated revenues in the amount of € 17.2 million and to 2013 consolidated net

Carrying income in the amount of € – 3.4 million. amount after € millions acquisition In the context of the growth campaign in the online clas- Intangible assets 40.8 sified advertising sector, we acquired control of YOUR- Property, plant, and equipment 0.3 CAREERGROUP International GmbH & Co. KG, Düssel-

Non-current financial assets 1.6 dorf, and YourCareerGroup AG, Düsseldorf, (hereinafter collectively YourCareerGroup) at the end of December Trade receivables 2.5 2013. YourCareerGroup is Germany’s leading operator Other assets 2.9 of online job portals for the hotel, gastronomy, and tour- Cash and cash equivalents 1.8 ism industries.

Provisions and liabilities – 4.3

Trade payables – 1.8 The preliminary acquisition costs amounted to

Deferred tax liabilities – 8.5 € 47.5 million, comprising the purchase price of

Net assets 35.2 € 39.1 million paid in 2013, a liability of € 6.9 million for a purchase price retention, and an expected purchase Acquisition cost (preliminary) 76.1 price adjustment of € 1.5 million recognized as a liability. Goodwill (preliminary) 40.9 The acquisition-related expenses recorded in other operating expenses of the reporting year 2013 amounted to € 0.3 million.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Based on the preliminary purchase price allocations as of € 6.6 million and to 2013 consolidated net income in the of December 31, 2013, the preliminary acquisition costs amount of € 0.6 million. were allocated to the purchased assets and liabilities as follows: At the end of December 2013, Autoreflex.com SAS, Paris, France, and two related French holding companies Carrying were deconsolidated because the possibility of exercis- amount after ing the call options enabling control at any time no longer € millions acquisition exists. The loss on deconsolidation recorded in other Intangible assets 20.4 operating expenses amounted to € 14.5 million. The Property, plant, and equipment 0.1 following table shows the carrying amounts of the

Non-current financial assets 0.0 ass¬ets and liabilities disposed of:

Trade receivables 0.5 Carrying Other assets 0.3 € millions amount Cash and cash equivalents 2.3 Goodwill 9.4

Provisions and liabilities – 1.1 Other intangible assets 13.6

Trade payables 0.0 Property, plant, and equipment 0.1

Deferred tax liabilities – 5.6 Trade receivables 5.5

Net assets 16.8 Other assets 0.6

Acquisition cost (preliminary) 47.5 Cash and cash equivalents 1.0

Goodwill (preliminary) 30.7 Provisions and other liabilities – 9.7

Trade payables – 2.0

Deferred tax liabilities – 4.6

Disposal net assets 13.9 Of the intangible assets acquired, intangible assets with carrying amounts of € 10.0 million have indefinite useful Share of non-controlling interests in net assets – 0.6 lives. The amount of € 5.0 million of the resulting goodwill is Deconsolidation result – 14.5 expected to be deductible for tax purposes. The goodwill is above all attributable to inseparable values such as employee expertise, expected synergy effects from the integration and the strategic advantages resulting from the Additional transactions carried out in fiscal year 2013, as leading market position of the acquired company and was well as finalizations of purchase price allocations arising allocated to the Classified Ad Models segment. from acquisitions of companies in the prior year, had no material effects individually and collectively on the finan- The gross amount of the acquired trade accounts receiva- cial position, liquidity, and financial performance of the bles was € 0.5 million. Corresponding valuation allowances Axel Springer Group. in the amount of € 0.1 million were recorded. (d) Discontinued operations Due to the acquisition at the end of the financial year, no As in the previous year, the German regional newspapers, revenues and no operating profits from YourCareerGroup TV program guides, and women’s magazines as well as were recognized in the 2013 consolidated financial state- the business activities and investments held by Ringier ments. If YourCareerGroup had already been fully consoli- Axel Springer Media in the Czech Republic, are shown dated at January 1, 2013, YourCareerGroup would have separately as discontinued operations in the 2014 consol- contributed to 2013 consolidated revenues in the amount idated financial statements.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

The sale of the Group’s German regional newspapers, The assets and liabilities of the sold operations are TV program guides, and women’s magazines to FUNKE shown in the following table: Mediengruppe was finalized on April 30, 2014, with economic effect as of January 1, 2014. Before the con- Carrying € millions amounts tractually agreed purchase price adjustment the purchase price was € 920 million. Upon finalization of the Goodwill 41.1 purchase agreement a provisional purchase price of Other intangible assets 86.5 € 874.8 million was calculated. This calculation reflected Property, plant, and equipment 21.5 the circumstance, among others, that the buyer as- Non-current financial assets 5.9 sumed net liabilities as part of the transaction. Of the Deferred tax assets 3.2 provisional purchase price, an amount of € 634.1 million Inventories 2.5 was paid in cash; for the balance, FUNKE Mediengruppe Trade receivables 13.2 assumed a multi-year, subordinated loan obligation vis- à-vis Axel Springer SE in the amount of € 240.7 million. Other assets 15.1 The provisional purchase price was increased by Cash and cash equivalents 38.1

€ 1.9 million as of December 31, 2014. The final pur- Provisions for pensions – 17.2 chase price calculation will be carried out in the first half Other provisions – 6.4 of 2015. In connection with the disposal, a tax burden of Trade payables – 8.5 € 248.3 million is anticipated. Other liabilities – 40.5

Deferred tax liabilities – 18.0 In order to fulfill a proviso imposed in connection with merger control law, FUNKE Mediengruppe sold some of Disposal net assets 136.4 the TV program guides acquired under the transaction, Cumulative translation differences 6.6 as well as some of its own TV program guides, to a Net realizable value after deduction of contractual guarantees 1,040.4 company of Klambt Mediengruppe. To assist in the financing of this acquisition, Axel Springer SE guaranteed Gain on disposal before taxes 897.4 a bank loan taken out by this company of Klambt Me- Income taxes – 248.3 diengruppe, up to an amount of € 51.0 million (Value as Gain on disposal after taxes 649.2 of December 31, 2014: € 43.1 million).

In addition, Ringier Axel Springer Media AG has sold its business activities and investments in the Czech Repub- lic to two Czech entrepreneurs effective with approval from the Czech cartel authorities on April 30, 2014. These activities included the leading mass-circulation daily BLESK and the leading news magazine REFLEX, as well as automotive magazines and women’s magazines. The purchase price that was based on a company value of € 170 million amounted to € 196.5 million and reflected particularly the net assets transferred to the buyer

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

The results of the discontinued operations are as follows: (e) Translation of separate financial statements denominated in foreign currency € millions 2014 2013 Assets and liabilities of subsidiaries for which the func- Revenues 181.3 572.6 tional currency is not the euro have been translated at

Other operating income 2.8 8.6 the exchange rate in effect on the reporting date. The goodwill and fair value adjustments of assets and liabili- Expenses – 155.7 – 476.0 ties related to the acquisition of companies outside the Operating result from discontinued operations (before taxes) 28.4 105.1 European Monetary Union are assigned to the acquired company and accordingly translated at the exchange Income taxes – 9.1 – 28.0 rate in effect on the reporting date. Operating result from discontinued operations (after taxes) 19.3 77.2

Impairment loss due to remeasurement Items of the income statement of these subsidiaries have to fair value less costs to sell 0.0 – 12.1 been translated at the weighted average exchange rate Gain on disposal of discontinued for the year. Equity components have been translated at operations before taxes 897.4 0.0 the historical exchange rate at the date of origination. Taxes on the gain on disposal – 248.3 0.0 Foreign exchange differences resulting from the transla- Gain on disposal of discontinued tion have been recognized within accumulated other operations after taxes 649.2 0.0 comprehensive income and/or non-controlling interests. Income from discontinued operations 668.4 65.1 Thereof attributable to shareholders of The exchange rates to the euro of foreign currencies that Axel Springer SE 630.7 64.2 are significant for Axel Springer Group underwent the Thereof attributable to non-controlling following changes in the past year: interests 37.7 0.9

Exchange rate on Average price balance sheet date 1 € in foreign The following table shows the cash inflows and cash currency 2014 2013 12/31/2014 12/31/2013 outflows attributed to the discontinued operations: Polish zloty 4.18 4.20 4.32 4.15

Swiss franc 1.21 1.23 1.20 1.23 € millions 2014 2013 Hungarian Cash flow from operating activities 21.5 84.5 forint 308.60 296.72 315.31 297.02

Cash flow from investing activities 533.5 – 3.9 British pound 0.81 0.85 0.78 0.83 Cash flow from financing activities 0.0 0.0

(3) Explanation of significant accounting and valuation methods

(a) Basic Principals The accounting and valuation principles applied uniformly across the Axel Springer Group in fiscal year 2014 are basically the same as those applied in the prior year.

For information on the accounting and valuation methods resulting from new or revised IFRSs and IFRS IC Inter- pretations, please refer to note (3q).

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

(b) Recognition of income and expenses allocated the remaining remuneration in proportion to The Axel Springer Group mainly generates circulation their fair values. and advertising revenues. Revenues are recognized at the time when the significant risks of ownership have Revenues from barter transactions are recognized if the passed to the buyer/the services have been rendered, goods or services exchanged are dissimilar and the the amount of revenue can be reliably measured, and it amount of revenue can be measured reliably. Revenues is sufficiently probable that the economic benefits will are measured at the fair value of services received. If the flow to the enterprise. Revenues are stated net of any fair value of the service received under barter transac- discounts allowed. Revenues from services rendered tions cannot be measured reliably, the fair value is de- over a certain period in an indefinite number of transac- termined on the basis of the service rendered. tions are recognized on a straight-line basis over the contractual term. Other income is recognized when the future inflow of economic benefits from the transaction can be meas- Circulation revenues encompass the sales of newspa- ured reliably and was received by the company during pers and magazines to retailers, wholesalers, and sub- the reporting period. scribers. Revenue is not recognized for that portion of products sold, which can be expected, on the basis of Operating expenses are recognized either when the historical experience, to be returned. Additionally, circula- corresponding goods or services are sold or rendered, tion revenues comprise the sale of digital applications or at the time of their origination. and formats. Interest expenses and income are recognized on an The advertising revenues encompass revenues from accrual basis in the period of their occurrence. Interest sales of advertising spaces in the published newspapers expenses incurred in connection with the acquisition and and magazines and the revenues generated in the cate- production of qualified assets are capitalized as assets in gories of display, affiliate marketing, online classifieds, the financial statements. Dividend income is recognized and search. when the legal entitlement is constituted.

Where significant risks and rewards of business activities (c) Intangible assets do not lie with the Axel Springer Group or the income is Internally generated intangible assets are measured as collected in the interest of third parties, only the corre- the sum of costs incurred in the development phase sponding commission income or proportion of revenue from the time when the technical and economic feasibil- accruing to the Axel Springer Group are recognized as ity has been demonstrated until the time when the intan- revenues. gible asset has been completed. The capitalized production costs include all costs that are directly or indirectly Offers that contain multiple service components are allocable to the development phase. Costs for the self- separated for purposes of revenue recognition when the development of websites are capitalized only when the delivered components have an independent benefit and website directly serves the generation of revenues. Pur- the market values of goods not yet delivered or services chased intangible assets are measured at cost. not yet performed can be determined objectively. The total remuneration for these offers is distributed in principle among the individual service components in such a way that the service components still to be provided are allocated remuneration in the amount of their fair value, and then the service components already provided are

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Internally generated and purchased intangible assets that For depreciation purposes, the following useful lives are have a determinable useful life are amortized over their applied for property, plant, and equipment: expected useful lives using the straight-line method, starting from the time when they become available for Useful life in years use by the enterprise, as follows: Buildings 30 – 50

Useful life Leased buildings 19 – 20 in years Leasehold improvements 5 – 15 Software 3 – 8 Printing machines 12 – 20 Licenses 3 – 10 Editing systems 3 – 7 Supply rights 3 – 6 Other operational and business equipment 3 – 14 Internet platform 3 – 8

Customer relationships 3 – 17

Capital investment subsidies and bonuses granted by the government are recognized when it is reasonably Intangible assets with an indefinite useful life, which certain that the subsidies will be granted and the related include goodwill, title rights, and brand rights, are not terms and conditions will be fulfilled. Bonuses and subsi- amortized. At present, the use of these assets by the dies granted for the acquisition or construction of prop- company is not limited by any economic or legal erty, plant and equipment are recognized in a deferred restrictions. income item within other liabilities. In subsequent periods, the deferred income item is released and recognized as (d) Property, plant, and equipment income over the useful life of the corresponding assets. Property, plant, and equipment are measured at cost and depreciated over their expected useful lives using (e) Investment property the straight-line method. Any gains or losses on the Investment property intended for lease to third parties is disposal of property, plant, and equipment are recog- measured at amortized cost. Such property is depreciat- nized as other operating income or expenses. ed over a useful life of 50 years using the straight-line method. For leased assets whose economic benefits are Leased assets whose economic benefits are attributable attributable to Axel Springer, see note (3d). to Axel Springer are recognized and measured at the present value of the minimum future lease payments or (f) Recognition of impairment losses in intangible the lower fair value of the leased asset and depreciated assets, in property, plant, and equipment, and by the straight-line method over the minimum contract in investment property term, taking any existing residual value into consideration. Impairment losses are recognized in intangible assets, in When it is reasonably certain that ownership will pass to property, plant, and equipment, and in investment prop- Axel Springer at the end of the lease period, such assets erty when as a result of certain events or changed cir- are depreciated over their useful lives. The present value cumstances, the carrying amount of the asset exceeds of the payment obligations associated with the minimum its recoverable amount (fair value less the costs to sell future lease payments is recognized as a liability. or the value in use). If it is not possible to determine the recoverable amount of an individual asset, the recoverable amount for the next-higher group of assets is applied.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Goodwill and intangibles with indefinite useful lives ac- Estimation uncertainties arise in the following assump- quired in the context of business combinations are test- tions applied in calculating the value-in-use of the reported at least once annually for impairment. In order to carry ing units: out the impairment tests, these assets are assigned to those cash-generating units or those cash-generating Medium-term planning: The medium-term planning is groups (i.e. each “reporting unit”) that can be expected determined on the basis of past historical values, and to profit from the synergies of the business combinations. factors in business-segment-specific expectations about These reporting units represent the lowest level at which future market growth. Here, we assume that cash flows these assets are monitored for management purposes. in the electronic media sector will usually exhibit higher They generally correspond to individual titles and digital growth rates than in the print sector. media of the Axel Springer Group. In the case of integrated business models, individual titles and digital me- Discount rates: Based on the average weighted capital dia are summed up into a single reporting unit. costs of the sector in question, the discount rates of the reporting units also consider country-specific risks, The impairment test is conducted by determining the which reflect the current market estimates. value in use of the reporting units, determined as the sum of the discounted estimated future cash flows, Growth rates: The growth rates are determined on the which are derived from the company’s medium-term basis of published market research reports for the sec- plan. The planning horizon for the medium-term planning tors in question. In estimating the long-term growth rates, is five years. The value in use of the reporting units is due consideration was given to the compensatory ef- determined primarily by the terminal value, however. The fects between the different business lines, based on the amount of the terminal value depends on the forecasted adopted strategy of the Group. cash flow in the fifth year of medium-term planning, on the growth rate of the cash flows subsequent to the Impairment losses are reversed when the recoverable medium-term planning, and on the discount rate. The amount exceeds the carrying amount of the asset due to cash flows to be received after the five-year period are changes in the estimates upon which the measurement extrapolated on the assumption of a growth rate of 1.5 is based. The reversal is limited to the amount that would to 4.0 % (PY: 1.5 to 2.5 %) which does not exceed the have resulted if previous impairment losses had not been assumed average market or industry growth rate. recognized. A recognized impairment loss in goodwill is never reversed. In order to determine the present value, the discount rates are calculated on the basis of the weighted average capital costs of the Group, taking country-specific considerations into account. The discount rates range from

6.3 % to 11.7 % (PY: from 6.3 % to 9.9 %) after tax or from 8.2 % to 13.7 % (PY: from 8.2 % to 12.6 %) before taxes.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

(g) Financial assets and liabilities models into the respective valuation hierarchy levels is Financial assets are mainly composed of cash and cash monitored at the end of each reporting period. equivalents, deferred purchase price receivables, trade receivables, receivables due from related parties, loans, Investments and securities investments, securities, and financial derivatives with Investments that have not been consolidated or ac- positive market values. Financial liabilities are mainly counted for using the equity method in the consolidated composed of trade payables, liabilities due to related financial statements, as well as securities, are measured parties, liabilities due to banks, promissory notes, con- at fair value if it can be determined reliably on the basis of tingent consideration, and financial derivatives with nega- stock exchange or market prices and generally accepted tive market values. valuation methods, respectively. Otherwise, they are measured at amortized cost. The valuation methods The initial recognition and derecognition of financial in- employed include especially the discounted cash flow struments coincide with the settlement dates of custom- method (DCF method) based on the expected invest- ary market purchases and sales of financial assets. ment income. We assume that the fair value of investments and securities is not reliably measurable when A financial asset is derecognized when the contractual either material valuation differences appear in estimating rights to the cash flows from the financial asset have fair values based on projections and scenarios, or when expired or have been transferred to third parties, or when the likelihood of such projections and scenarios cannot the Group has assumed a contractual obligation to pay be reliably determined. Any unrealized gains or losses the cash flows to a third party, under which the risks and resulting from the changes in fair value of the financial rewards or the power of control were transferred. A finan- assets and liabilities, considering resulting tax effects, are cial liability is derecognized when the obligation underlying recognized in accumulated other comprehensive income. the liability is settled or annulled, or has expired. Changes in fair value are not recognized in income until the corresponding non-current financial assets are sold For financial assets and financial liabilities which need to or an impairment loss is recognized. be measured at fair value, we apply the following valuation hierarchy. Hereby, the input factors used in the The carrying amounts of investments and securities are valuation models are categorized into three levels: reviewed at every reporting date to determine whether there are objective indications of an impairment. If an Level 1 – in active markets for identical assets or liabilities impairment is found to exist, an impairment loss is rec- (unadjusted) quoted prices (e.g., stock market prices), ognized and charged to income.

Level 2 – input factors other than quoted prices which Loans, receivables, and other financial assets are observable for the asset or the liability, either directly Upon initial recognition, loans, receivables, and other or indirectly (e.g., interest yield curves, forward rates), financial assets are measured at fair value plus transac- and tion costs. In subsequent periods, they are measured at amortized cost, after deduction of any write-downs, Level 3 – input factors that are not observable on a mar- using the effective interest method. A write-down is ket for the asset or the liability (e.g., estimated future taken when objective indications suggest that the receiv- results) able may not be fully collectible. Such an indication might be the insolvency or other considerable financial prob- When determining fair value, the application of relevant lems of the debtor, for example. The amount of the and observable input factors is given high priority, write-down is measured as the difference between the whereas the application of non-observable input factors carrying amount of the receivable and the present value is given less priority. The classification of the valuation of the estimated future cash flows from this receivable,

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discounted by application of the effective interest rate. Contingent consideration Write-downs are charged against income both in the Options and earn-out agreements in connection with form of an account for allowances on doubtful accounts business combinations and the acquisition of non- and by means of direct write-downs. The account for controlling interests are treated as contingent considera- allowances on doubtful accounts is used, in particular, tion at fair value. To the extent it can be reliably meas- for allowances on doubtful trade receivables and receiv- ured, this value is derived from the estimated profit ables due from related parties. If in subsequent periods trends of the acquired companies in the years prior to the fair value has objectively risen, the write-downs are the possible exercise dates of the options or the pay- reversed and recognized in income in the appropriate ment dates of the earn-outs. In the subsequent periods, amounts. changes in the fair value are recognized immediately in income. The discount rates are determined on the basis Financial derivatives of the interest rates charged on the Group’s borrowings. Financial derivatives are utilized to hedge against currency and interest rate risks that have an influence on future The earnings used as a basis for measurement are gen- cash flows. They are measured at fair values based on erally EBITDA figures adjusted for material non-recurring stock exchange or market prices, or using generally effects. In case of an increase/a decrease of the relevant accepted valuation methods. If the conditions for the earnings measures by 10 %, the value of the contingent application of hedge accounting are met, changes in the consideration would also fluctuate by 10 %. fair values, including the tax effects, are recognized directly in equity as accumulated other comprehensive Other financial liabilities income. The amounts recognized in accumulated other Upon initial recognition, other non-derivative financial comprehensive income are recycled when the underlying liabilities are measured at fair value less transaction costs. transaction is recognized on the balance sheet or in- In subsequent periods, they are measured at amortized come statement. The changes in the fair value of deriva- cost using the effective interest method. tives that do not meet the conditions for the application of hedge accounting, despite their economic hedging (h) Inventories effect, are measured at fair value through profit and loss. Inventories are measured at cost. Purchase costs are Furthermore, financial derivatives are used to cover the determined on the basis of a weighted average value. risk of impairments of investments and securities. When Production costs include all costs directly related to the the underlying financial assets are recognized at amor- units of production and production-related overhead tized costs because their fair values are not reliably costs. Inventories are measured at the reporting date at measurable, the financial derivative is recognized at the lower of the purchase or production cost and the net amortized costs as well. realizable value. The net realizable value is the estimated selling price less estimated costs to be incurred until the sale. The net realizable value of goods and services in progress is calculated as the net realizable value of finished goods and services less remaining costs of completion. Impairments are reversed whenever the reasons justifying an earlier write-down no longer exist.

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(i) Assets held for sale and discontinued operations The return underlying the measurement of the plan as- Assets are classified as for sale when their disposal has sets is identical to the discount rate for defined benefit been initiated, the sale of such is likely and the asset or commitments. disposal group is available for immediate sale in its present condition. The non-current assets held for sale are Actuarial gains and losses resulting from changes in measured at the lower of the carrying amount or the fair actuarial parameters are offset against accumulated value less costs to sell. Depreciation is no longer applied other comprehensive income without affecting net income. to these assets. Liabilities that are held in connection with assets held for sale are disclosed likewise separately (k) Other provisions and accrued liabilities in the balance sheet as a current item. Other provisions have been formed to account for all discernible legal and constructive obligations to third Discontinued operations represent a material geograph- parties, provided that the settlement of the obligation is ical or operational line of business of the Group that is probable and the amount of the obligation can be reliably available for sale. estimated. The amount of each provision corresponds to the expected settlement amount. In the case of long- The results from continued operations in the reporting term provisions, the expected settlement amount is year and the prior year are shown in the income state- discounted to the present value at the reporting date by ment. The results from discontinued operations are application of appropriate market rates of interest. Provi- shown separately. Cash inflows and cash outflows from sions are recognized for restructuring expenses only discontinued operations are shown separately in the when the intended measures have been sufficiently con- notes to the consolidated financial statements. The in- cretized and announced on or before the reporting date. formation in the notes relates to the continued operations of the Group. (l) Deferred taxes Deferred taxes are recognized to account for the future (j) Pension provisions tax effects of temporary differences between the tax Pension obligations under defined benefit plans are bases of assets and liabilities and the carrying amounts determined using the projected unit credit method under of those assets and liabilities in the consolidated financial which future changes in compensation and benefits are statements, and for interest and tax loss carry-forwards. taken into account. In order to calculate the pension Deferred taxes are measured on the basis of the tax laws provisions, the present value of the obligations is netted already enacted for those fiscal years in which it is prob- against the fair value of the plan assets. able that the differences will reverse or the tax loss carry- forwards can be utilized. Deferred tax assets are recog- The expected life spans of the participants are deter- nized for temporary differences or interest and tax loss mined with reference to the country-specific recognized carry-forwards only when the ability to utilize them in the actuarial tables. The present value of the defined benefit near future appears to be reasonably certain. Deferred commitments is determined by discounting the estimat- taxes are recognized for temporary differences resulting ed future cash outflows. The discount rate applied for from the fair value measurement of assets and liabilities this purpose is determined with reference to high-quality obtained through business combinations. Deferred taxes AA-rated corporate bonds that match the underlying are recognized for temporary differences relating to pension obligations with respect to currency and maturi- goodwill only when the goodwill can be utilized for tax ty. If corporate bonds with matching terms do not exist, purposes. Deferred tax assets and liabilities of tax then the yields of these bonds at the balance sheet date groups are netted if they are based on the same kind of are adjusted along the yield curve for fixed-interest gov- income taxes; otherwise, they are netted only if the de- ernment bonds using a constant spread over the term of ferred taxes are based on the income taxes imposed by the underlying pension obligations.

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the same tax authority and only when current taxes can tion of non-controlling interests, future taxable income be netted as well. to determine the ability to utilize tax loss carry-forwards, uncertain tax positions and discount rates for the meas- (m) Treasury shares urement of pension obligations. Information concerning Treasury shares are measured at cost and are charged the carrying amounts determined with the use of esti- directly to equity. The treasury shares are presented in a mates can be found in the comments on the specific line separate line item of the consolidated statement of items. changes in equity. (q) New accounting standards (n) Share-based payment programs The following IFRSs relevant for Axel Springer were ap- As part of performance-based remuneration programs, plied for the first time in the fiscal year: Axel Springer Group grants equity-settled and cash- settled share-based payment programs. The compensa- Since January 1, 2014 we are applying IFRS 10 “Consol- tion components to be recognized as expenses over the idated Financial Statements”, IFRS 11 “Joint Arrange- vesting period are measured as the fair value of the ments”, IFRS 12 “Disclosure of Interests in Other Enti- options granted at the time when they were granted (in ties”, amendments to IAS 27 “Consolidated and case of equity-settled programs) or at the reporting date Separate Financial Statements”, and amendments to IAS (in case of cash-settled programs). The fair values are 28 "Investments in Associates”. determined on the basis of generally accepted option pricing models. The corresponding amount is recognized IFRS 10 replaces the previous regulations on consolidat- in the additional paid-in capital (in the case of equity- ed financial statements (parts of IAS 27 “Consolidated settled programs) or as provisions/liabilities (in the case and Separate Financial Statements”) and special pur- of cash-settled programs). Additions to liabilities or provi- pose entities (SIC 12 “Consolidation – Special Purpose sions are recognized in personnel expenses; reversals Entities”) and prescribes the control model as a uniform are accounted for in other operating income. principle. The standard additionally includes guidelines for assessing control in doubtful cases. The application (o) Transactions in foreign currencies of IFRS 10 had no major effects on the financial position, Purchases and sales in foreign currencies are translated liquidity, and financial performance. at the exchange rate on the date of the transaction. Assets and liabilities in foreign currencies are translated IFRS 11 replaces the previously applicable regulations for into the functional currency at the exchange rate on the recognizing shares in joint ventures (IAS 31 “Interests in reporting date. Any foreign exchange gains or losses Joint Ventures” and SIC 13 “Jointly Controlled Entities – resulting from such translations are recognized in income. Non-Monetary Contributions by Venturers”).At the same vein, IAS 28 is expanded to include regulations for rec- (p) Estimates and assumptions ognizing shares in joint ventures. It is now mandatory to The preparation of the consolidated financial statements account for shares in associated companies and joint requires estimates and assumptions that have an influ- ventures using the equity method. Application of IFRS 11 ence on the presentation of assets and liabilities, the or the newly revised IAS 28 had no major effects on the disclosure of contingent liabilities at the reporting date, financial position, liquidity, and financial performance. and the presentation of income and expenses. Estimates and assumptions that are subject to uncertainty relate in IFRS 12 is a merging of the disclosure requirements on particular to discounted cash flows for the purposes of equity shares in subsidiaries, associated companies, joint impairment testing, purchase price allocations and the agreements, and non-consolidated structured entities measurement of contingent purchase price obligations in previously set out in IAS 27, IAS 28, and IAS 31. The connection with business combinations and the acquisi-

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information to be disclosed in accordance with IFRS 12 In May 2014, IASB published IFRS 15 "Revenue from has been provided in notes (7a), (11f), (42). Contracts with Customers". The regulations and definitions in IFRS 15 replace the contents of IAS 18 "Reve- Otherwise, no material changes resulted in fiscal year nue" and also those from IAS 11 "Construction Con- 2014 for Axel Springer from IFRS standards or IFRIC tracts". Revenue in accordance with IFRS 15 can be interpretations to be applied for the first time. recognized when the customer obtains control over the agreed goods and services and can derive benefits from The following IFRSs have already been published, but these. The concept of transferring significant risks and not yet applied. rewards as provided for in IAS 18 is no longer relevant. Revenues are recognized in the amount of the consider- With the publication of the final version of IFRS 9 "Finan- ation that the company will presumably receive. Revenue cial Instruments" the IASB completed its project for re- recognition is divided into a five-step process, consisting placing IAS 39 "Financial Instruments: Recognition and of identifying the contract with the customer, identifying Valuation" in July 2014. IFRS 9 provides a standardized the separate contractual obligations, determining the approach for classification and evaluation of financial transaction price, allocating the transaction price to the assets and liabilities which is primarily based on the contractual obligations, and recognizing revenues for company's business model and the cash flows of the every contractual obligation based on the allocated financial instrument. Furthermore, IFRS 9 contains a new transaction price. IFRS 15 is to be applied to fiscal years depreciation model which also demands the recording of starting on or after January 1, 2017. Early application is expected losses in addition to incurred losses. Finally, permitted. EU Endorsement of IFRS 15 is still pending. IFRS 9 also contains new guidelines for the use of hedge We are currently evaluating the effects that the applica- accounting, targeted in particular at better illustration of tion of the new standard might have on our revenue the risk management activities of a company and the recognition accounting. IASB and IFRS IC published monitoring of non-financial risks. IFRS 9 is to be applied additional pronouncements that had or will have no to fiscal years starting on or after January 1, 2018. Early material influence on our consolidated financial statements. application is permitted. EU Endorsement of IFRS 9 is still pending. Regarding the effects of the application of the new standard, we currently do not expect any major changes in the presentation and recognition of financial assets and liabilities.

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Notes to the consolidated statement of financial position

(4) Intangible assets

The changes in intangible assets were as follows:

Purchased Internally rights and generated € millions licenses rights Goodwill Total Acquisition or production cost Balance as of January 1, 2013 1,401.7 92.4 1,369.4 2,863.5 Initial consolidation 69.0 16.3 92.5 177.8

Deconsolidation – 15.5 – 1.0 – 39.9 – 56.4

Currency effects – 16.4 – 0.5 – 5.0 – 21.9 Additions 33.0 22.0 0.0 55.0

Disposals – 3.7 – 0.1 – 3.7 – 7.4

Transfers – 113.9 1.5 – 43.1 – 155.5 Balance as of December 31, 2013 1,354.3 130.6 1,370.2 2,855.0 Initial consolidation 293.2 10.7 408.6 712.5

Deconsolidation – 2.7 – 6.2 – 4.3 – 13.2 Currency effects 0.3 1.3 2.2 3.7 Additions 36.3 23.2 0.0 59.4

Disposals – 6.8 – 0.4 0.0 – 7.1 Transfers 0.1 0.8 0.0 0.9 Balance as of December 31, 2014 1,674.7 159.9 1,776.7 3,611.3

Depreciation, amortization, and impairments Balance as of January 1, 2013 296.3 39.1 72.7 408.1 Initial consolidation 0.1 0.4 0.1 0.6

Deconsolidation – 4.1 – 0.6 – 30.4 – 35.1

Currency effects – 2.3 – 0.2 0.0 – 2.5 Additions 78.4 20.7 2.7 101.9

Disposals – 1.9 0.0 0.0 – 1.9

Transfers – 26.5 1.0 – 2.0 – 27.4 Balance as of December 31, 2013 340.0 60.5 43.0 443.6 Initial consolidation 0.4 0.0 0.0 0.4

Deconsolidation – 2.5 – 6.2 – 0.5 – 9.2

Currency effects 1.1 0.8 – 0.4 1.5 Additions 95.2 35.4 31.1 161.8

Disposals – 5.1 – 0.2 0.0 – 5.4

Transfers 6.0 – 5.4 – 0.1 0.5 Balance as of December 31, 2014 435.0 84.8 73.2 593.0

Carrying amounts Balance as of December 31, 2014 1,239.7 75.1 1,703.4 3,018.3 Balance as of December 31, 2013 1,014.2 70.1 1,327.1 2,411.5

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The purchased rights and licenses mainly comprised Material assumptions in the context of the medium- title rights, trademarks, and customer relationships. term planning of SeLoger relate to the assumption of The internally generated intangible assets mainly con- stagnation in the online real estate market in France, sisted of software solutions and websites. strengthening brand awareness in a competitive market environment, focusing marketing activities on the The reclassifications in the prior year consisted almost goal of increasing average revenue per customer, exclusively of the classification as assets held for sale improving market penetration particularly in regions (see note (2d)). outside of Paris, and accelerating growth in vertical niche portals by increasing market share. The goodwills and the purchased rights and licenses that were included in the intangible assets with With goodwill of € 106.6 million (PY: € 103.9 million) indefinite useful lives totaled € 2,514.3 million (PY: and intangible assets with indefinite useful lives of

€ 1,979.9 million). Of this amount € 554.1 million (PY: € 204.4 million (PY: € 199.4 million), about 12 % (PY:

€ 466.1 million) was allocated to the Paid Models 15 %) of the total value is assigned to the Ringier Axel segment, € 522.6 million (PY: € 484.4 million) to Springer Media reporting unit. The increase was pre- the Marketing Models, and € 1,437.1 million (PY: dominantly a result of the effects of initial consolida- € 1,029.0 million) to the Classified Ad Models segment. tion and opposite currency effects. In order to deter-

The reclassified goodwill (€ 40.7 million) of assets held mine the value in use, a discount rate of 8.4 % or 9.7 % for sale in the previous year as well as intangible assets before taxes (PY: 7.4 % or 8.4 % before taxes) and a with indefinite useful lives (€ 77.1 million) in the Paid growth rate of 2.5 % (PY: 2.5 %) is used for cash flows Models segment are disposed of in the fiscal year. after the five-year mid-term planning period has elapsed. The surplus between the value in use and With the exception of the SeLoger and StepStone the carrying amount of this reporting unit amounts reporting units assigned to the Classifieds Ad Models, to € 63.9 Mio. (PY: € 217.7 million). and the Ringier Axel Springer Media reporting unit assigned to the Paid Models segment, the total of In the medium-term planning of Ringier Axel Springer goodwill and intangible assets with indefinite useful Media, we assume that the two large revenue streams lives that have been assigned to the other individual in sales and the print advertising market will come reporting units amounted to less than 9 % (PY: 9 %) under increasing pressure in the coming years. It will of the total value. These other reporting units are be possible to compensate for the declining circulation assigned goodwill and intangible assets with indefinite figures primarily by using price increases. We assume useful lives of € 1,238.5 million (PY: € 814.2 million). that new revenue sources from additional business in the strong boulevard brands as well as strict cost With goodwill of € 465.6 million (PY: € 465.3 million) management will make it possible to largely maintain and intangible assets with indefinite useful lives of profitability. We further assume that our online busi-

€ 130.5 million (PY: € 129.7 million), about 24 % (PY: nesses will profit from the trend towards performance-

30 %) of the total value is assigned to the SeLoger based forms of advertising and will be able to partici- reporting unit. In order to determine the value in use, a pate in the structural shift of print advertisements into discount rate of 6.8 % or 9.4 % before taxes (PY: 7.1 % digital channels. or 9.9 % before taxes) and a growth rate of 1.5 % (PY:

1.5 %) is used for cash flows after the five-year mid- With goodwill of € 226.6 million (PY: € 160.4 million) term planning period has elapsed. The surplus be- and intangible assets with indefinite useful lives of tween the value in use and the carrying amount of this € 142.3 million (PY: € 107.1 million), about 15 % (PY: reporting unit amounts to € 465.3 million (PY: 14 %) of the total value is assigned to the StepStone € 265.7 million). reporting unit. The increase in goodwill resulted in

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particular from the acquisition of JobSite (€ 61.8 million) The surplus between the value in use and the carrying and from currency effects. In order to determine the amount of the reporting units would reduce to zero if value in use, a discount rate of 6.8 % or 8.7 % before the material measurement parameters would change taxes (PY: 6.9 % or 9.2 % before taxes) and a growth as follows: rate of 1.5 % (PY: 1.5 %) is used for cash flows after the five-year mid-term planning period has elapsed. Reduction of cash The surplus between the value in use and the carrying flow in the amount of this reporting unit amounts to Increase fifth year of Increase of € 1,551.6 million (PY: € 1,051.4 million). discount of medium- rate discount Reduction term (before rate (after of growth planning In the medium-term planning of the StepStone Group, 2014 taxes) to taxes) to rate to by we assume that the anticipated development of the SeLoger 15.4% 10.9% – 4.5% – 52.9% economy will have a positive impact on the labor mar- StepStone 35.4% 26.8% – 134.7% – 96.3% ket. The assumptions made include rising sales reve- Ringier Axel nues in our European and South African core markets Springer Media 10.7% 9.2% 1.4% – 15.7% and in our other markets in Africa and Latin America, as well as further strict cost management in order to maintain the high level of return of the past years. In particular, by the further development of the product Reduction of cash range and the expansion of the system landscape, the flow in the market position should be expanded and strengthened. Increase fifth year of Increase of discount of medium- rate discount Reduction term (before rate (after of growth planning 2013 taxes) to taxes) to rate to by

SeLoger 13.1% 9.3% – 1.5% – 34.7%

StepStone 30.6% 22.3% – 50.5% – 90.5%

Ringier Axel Springer Media 11.4% 9.8% – 0.8% – 40.0%

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(5) Property, plant, and equipment

The changes in property, plant, and equipment were as follows:

Other Technical equipment, equipment operational and and office Construction € millions Land and buildings machinery equipment in progress Total Acquisition or production cost Balance as of January 1, 2013 564.3 549.6 218.5 12.9 1,345.3 Initial consolidation 0.0 0.1 3.0 0.0 3.1

Deconsolidation 0.0 0.0 – 2.0 0.0 – 2.0

Currency effects – 0.8 – 2.2 – 1.3 – 0.2 – 4.5 Additions 7.8 11.7 21.1 4.2 44.8

Disposals – 9.7 – 7.9 – 16.0 – 0.1 – 33.7

Transfers – 1.1 – 20.6 – 3.9 – 12.7 – 38.3 Balance as of December 31, 2013 560.6 530.5 219.5 4.2 1,314.8 Initial consolidation 1.0 2.8 4.7 0.0 8.5

Deconsolidation – 0.6 – 0.2 – 1.9 0.3 – 2.4

Currency effects – 1.0 – 0.7 – 1.1 0.0 – 2.8 Additions 0.8 5.2 21.0 12.6 39.6

Disposals – 0.2 – 6.8 – 19.0 – 0.2 – 26.2

Transfers – 124.8 0.4 – 11.5 – 3.8 – 139.7 Balance as of December 31, 2014 435.8 531.3 211.6 13.1 1,191.8

Depreciation, amortization, and impairments

Balance as of January 1, 2013 157.3 355.2 142.2 – 0.1 654.6

Deconsolidation 0.0 0.0 – 1.2 0.0 – 1.2

Currency effects – 0.1 – 1.6 – 0.7 0.0 – 2.3 Additions 10.6 24.5 27.7 0.0 62.9

Disposals – 4.8 – 6.6 – 12.6 0.0 – 24.0

Transfers – 1.5 – 9.3 – 4.8 0.0 – 15.6

Balance as of December 31, 2013 161.6 362.2 150.8 – 0.1 674.4 Initial consolidation 0.0 0.3 0.7 0.0 0.9

Deconsolidation – 0.4 0.1 – 1.1 0.0 – 1.4

Currency effects – 0.2 – 0.4 – 0.7 0.0 – 1.2 Additions 33.7 22.6 26.8 0.0 83.0

Disposals – 0.1 – 6.8 – 18.3 – 0.1 – 25.2

Transfers – 50.4 – 0.6 – 11.5 0.0 – 62.4

Balance as of December 31, 2014 144.3 377.4 146.6 – 0.1 668.2

Carrying amounts Balance as of December 31, 2014 291.4 153.9 65.0 13.2 523.5 Balance as of December 31, 2013 399.0 168.3 68.7 4.3 640.3

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As of December 31, 2014, property, plant and equipment (6) Investment property with acquisition or production cost of € 261.5 million (PY: € 276.1 million) were in use that had already been The development of the office and retail spaces in Berlin fully depreciated. and Hamburg leased to third parties was as follows:

At the balance sheet date, property, plant, and equip- Investment € millions property ment amounting to € 21.5 million (PY: € 21.7 million) had been pledged as security for own liabilities. Acquisition or production cost Balance as of January 1, 2013 81.5 The carrying amount of property, plant, and equipment Additions 5.1 as part of finance leases was, as of December 31, 2014, Disposals – 9.3 € 2.0 million (PY: € 52.9 million). In prior year the Transfers – 1.5 amount was almost entirely attributable to properties Balance as of December 31, 2013 75.8 and buildings. Transfers – 32.9

Due to the planned sale on December 31, 2015/January Balance as of December 31, 2014 42.9 1, 2016 of an office building that is both used by the company and also by third-party companies at the Depreciation, amortization, and impairments

Hamburg site, the corresponding carrying amount of Balance as of January 1, 2013 24.5 € 68.5 million (property, plant, and equipment) and Additions 1.4 € 27.4 million (investment property) was reclassified as Disposals – 4.2 assets held for sale. Before reclassification, impairment losses in the amount of € 23.6 million or € 9.4 million Transfers 0.1 were recorded. Part of the building was recognized as Write-ups – 1.0 part of finance leases, which are to be terminated at the Balance as of December 31, 2013 20.8 planned time of sale. The proportional residual carrying Additions 10.9 amounts were € 31.8 million (property, plant, and Transfers – 13.8 equipment) and € 14.6 million (investment property), the Write-ups – 6.3 proportional impairment losses were € 11.0 million and Balance as of December 31, 2014 11.6 € 5.0 million respectively. In connection with liabilities associated with the finance lease totaling € 68.0 million, financial liabilities (€ 62.9 million) and other liabilities Carrying amounts (€ 5.1 million) were reclassified into liabilities related to As of December 31, 2014 31.3 assets held for sale. As of December 31, 2013 55.0

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For reclassifications in the assets held for sale, see (7) Non-current financial assets note (5). Furthermore, due to reduced use of office space reclassifications with carrying amounts totaling (a) Investments recognized using the equity € 8.3 million took place from property, plant, and equip- method ment to investment property. Summarized financial information regarding all companies which are accounted for using the equity method On the reporting date no carrying amounts for invest- and are not individually material are shown below: ment property were identified as part of finance leases (PY: € 11.4 million). € millions 2014 2013 Carrying amount 51.2 8.7

The fair value of investment property as of December 31, Share in income from continued 2014 totaled € 31.4 million (PY: € 55.5 million). The operations – 1.8 1.8 evaluation carried out by ourselves took place on the Share in other income 0.4 0.0 basis of forecasted net cash flows using the DCF meth- Share in comprehensive income – 1.4 1.8 od. In calculating this value, a discount rate of 6.85 % and a perpetuity capitalization rate of 5.85 % were applied, unchanged from the prior year. As a result of the change in fair value, write-ups amounting to € 6.3 million The increase in carrying amounts mainly resulted from (PY: € 1.0 million) were carried out. Recognition took new acquisitions, especially Project A Ventures GmbH place in other operating income in the Services/Holding and Ozy Media Inc. segment. The proportionate income/losses to be recognized in In the fiscal year, rental income of € 7.0 million (PY: income from investments were not recognized in the € 5.2 million) was generated, with corresponding directly reporting year in the amount of € – 18.4 million. (PY: attributable operating expenses of € 0.7 million (PY: € – 23.0 million), and cumulatively in the amount of € 0.6 million). As in the prior year, directly allocable ex- € – 68.9 million (PY: € – 50.5 million). The corresponding penses of less than € 0.1 million were incurred for non- net carrying amount of investments was already fully rented space. depreciated in 2010.

The future minimum lease payments from investment (b) Other non-current financial assets property broke down as follows: The other non-current financial assets with an amount of € 259.1 million (PY: € 305.5 million) were mainly € millions 2014 2013 attributable to our options to sell our shares in Do⁄an TV Due in up to one year 2.0 3.4 (“put options”, PY: our shares in Do⁄an TV); in the reporting period, we sold approximately 2.6% of the Due in one to five years 6.2 10.2 shares. The proceeds from this transaction amounted to Due in more than five years 2.0 4.4 € 62.5 million. The resulting profit recognized in invest- Total 10.2 18.0 ment income amounted to € 16.0 million.

In the previous year, a reliable measurement of our minority investment in Do⁄an TV was difficult due to significant fluctuations with regard to the estimation of fair values based on projections and scenarios of which the probabilities of occurrence could not be reliably determined. In the context of the merger of Do⁄an Yayin

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Holding A.S. (major shareholder of Do⁄an TV) with (8) Inventories Do⁄an Sirketler Grubu Holding A.S. carried out in the reporting period, the minority shareholders were granted The inventories broke down as follows: a takeover offer. The low valuation of Do⁄an Yayin Hold- ing A.S. presented in this takeover offer as well as the € millions 12/31/2014 12/31/2013 low market capitalization of Do⁄an Sirketler Grubu Hold- Raw materials and supplies 13.9 15.8 ing A.S., besides other influencing factors reflect the Semi-finished goods 4.5 2.4 negative income situation and the declining business Finished goods and merchandise 5.2 5.4 development of Do⁄an TV. In the reporting period, we Inventories 23.6 23.5 have furthermore signed new agreements with respect to the value-securing mechanism regarding our investment in Do⁄an TV. According to these agreements, put- option rights secured by bank guarantees with a fixed Inventories of € 9.3 million (PY: € 10.1 million) were price for the disposal of all shares in Do⁄an TV exist as valued at their net realizable value. The write-downs of the balance sheet date. The put options are exercisa- for these assets totaled as of December 31, 2014 ble unilaterally by us without any further requirements in € 3.0 million (PY: € 2.9 million), of which € 0.6 million the years 2016, 2020 as well as 2022. In connection (PY: € 0.3 million) was recognized in the profit or loss with the aforementioned objective evidence at the end statement 2014. of the reporting period, we as a minority shareholder have fully reduced the value of our investment in Do⁄an (9) Trade receivables TV and at the same time recognized the fair value of the contractually-agreed put options. In total, there was no The trade receivables broke down as follows: income effect. The valuation of the put options at the balance sheet date is based on the discounted payment € millions 12/31/2014 12/31/2013 claim deriving from the agreed option rights, minus all Trade receivables, nominal 550.2 498.2 costs to be incurred. Allowances for doubtful trade receivables – 26.4 – 25.5

Trade receivables 523.8 472.8 Non-current financial assets also include a subordinated loan with a multi-year term in the amount of € 240.9 million from the sale of regional newspapers, TV program guides, and women's magazines (see note (2d)). The changes in the allowances for doubtful trade receivables are presented below: During the reporting period we sold our minority interest

(17.2 %) held by SeLoger in the iProperty Group Ltd., € millions 2014 2013 Sydney, Australia, for € 74.3 million. The gain of disposal, Balance as of January 1 25.5 25.0 recorded within income from investments, was Additions 7.0 6.4 € 55.1 million (before a tax effect of € 2.2 million). Reversals – 2.5 – 2.0

Utilization – 1.9 – 1.0

Disposal due to deconsolidation – 0.1 – 0.9

Other changes – 1.6 – 2.1

Balance as of December 31 26.4 25.5

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

As of December 31, 2014, receivables in the amount of The current loans relate to a prepaid extraordinary dis- € 360.7 million (PY: € 333.6 million) were neither past bursement with regard to the sale of the Czech print due nor subject to valuation allowances. With regard to activities, which was not legally executed as of Decem- these receivables, there were no indications at the re- ber 31, 2014. porting date that would suggest that the customers would not fulfill their payment obligations. The miscellaneous financial assets include loans and receivables due from other investment companies, re- The past-due trade receivables at the reporting date for ceivables from insolvency proceedings against the Kirch which no valuation allowances have been charged are Group and security deposits, among other items. presented in the table below: (11) Equity € millions 12/31/2014 12/31/2013 up to 30 days 42.5 49.8 The components and changes in consolidated equity are 31 to 90 days 17.1 20.2 summarized in the consolidated statement of changes in 91 to 180 days 5.8 5.1 equity. 181 to 360 days 5.1 3.9 (a) Subscribed capital 361 days and longer 5.3 4.6 The subscribed capital of € 98.9 million is fully paid in. Based on the percentage of subscribed capital that each share represents, the shares are valued at € 1.00 (10) Other assets per share. The subscribed capital is divided into 98,940 thousand registered shares, which can be The other assets broke down as follows: transferred only with the consent of the company. At the reporting date, 98,940 thousand shares were out- € millions 12/31/2014 12/31/2013 standing (PY: 98,940 thousand shares). Current loans 53.1 0.0

Credit balances in accounts payable 2.4 6.9 (b) Additional paid-in capital The additional paid-in capital primarily resulted from a Derivatives 0.5 0.5 shareholder contribution granted in previous years and Deferral of payment for regional newspaper investments 0.0 75.0 the amount of imputed compensation for the share- based payment programs (see note (12)). Other 68.3 20.8 Other financial assets 124.4 103.3 (c) Accumulated retained earnings Advance payments 27.5 20.6 The accumulated retained earnings included the income Receivables from other taxes 12.7 10.8 of the companies included in the consolidated financial Other non-financial assets 40.2 31.4 statements, to the extent that they have not been dis-

Other assets 164.6 134.6 tributed to shareholders. Moreover, transactions with shareholders are recognized here.

In 2014, Axel Springer SE distributed an amount of The residual purchase price from the sale of investments € 178.1 million (€ 1.80 per qualifying share) for the fiscal in regional newspapers in 2009 was fully repaid in the year 2013. In 2012, the amount of € 167.9 million was course of the reporting year. distributed as dividend payments (€ 1.70 per qualifying share) for the fiscal year 2012.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

In connection with the increase of our participation in (f) Non-controlling interest Axel Springer Digital Classifieds the difference amount of The non-controlling interests mainly related to the follow- € 362.6 million resulting from the acquisition of non- ing companies: controlling interests was set off within accumulated retained earnings in the reporting year (see note (2c)). € millions 12/31/2014 12/31/2013 Ringier Axel Springer Media AG, Zurich, (d) Treasury shares Switzerland 189.6 173.7 As of December 31, 2014, as in the prior year, we did Axel Springer Digital Classifieds GmbH, Berlin 88,8 132.8 not hold any treasury shares. Other companies 72,3 67.6

In the reporting year, 116 thousand treasury shares (PY: Non-controlling interests 350.8 374.1 194 thousand shares) were issued at their fair value at the date of issue in the amount of € 43.88 (PY: € 32.70) by conversion of variable compensation tied to perfor- As of December 31, 2014 the non-controlling interests in mance of the employees of the Group. Personnel ex- Ringier Axel Springer Media amounted to 50.0 % (PY: penses of € 2.1 million (PY: € 2.6 million) were incurred 50.0 %), whilst their share in Group results amounted to by granting increases in the conversion amounts. The € 50.1 million (PY: € 17.0 million). In addition, they re- amounts have already been placed in a provision in the ceived dividends in the amount of € 91.5 million in the prior year. For this purpose, treasury shares were ac- fiscal year (PY: € 0.4 million). This primarily related to an quired previously at the fair value of € 7.7 million and extraordinary dividend with regard to the executed sale resold at a value of € 2.6 million. Acquisition, issuing and of the Czech print activities. The distribution with a partial the sale of treasury shares have no effect on the level of amount of € 53.1 million was not legally executed as of equity. During the previous year € 2.1 million was re- December 31, 2014. ceived to increase equity and recorded as a paid-in surplus within accumulated retained earnings. Summarized financial information for the Ringier Axel Springer Media subgroup will be shown in the following: (e) Accumulated other comprehensive income At the reporting date, accumulated other comprehensive € millions 2014 2013 income contained effects companies accounted for Revenues 268.5 297.1 using the equity method in the amount of € – 10.0 million Net income 177.4 33.6 (PY: € – 10.4 million), actuarial gains/losses from employer pension plans of € – 119.7 million (PY: Comprehensive income 161.5 11.3

€ – 46.8 million), as well as a revaluation reserve of Current assets 215.8 120.5

€ – 3.1 million (PY: € – 3.1 million). Non-current assets 481.6 593.7

Current liabilities 59.0 56.7 In conjunction with the sale of our minority shareholding Non-current liabilities 85.0 131.6 (17.2 %) in iProperty Group Ltd., Sydney, Australia, held Cash flows 56.5 0.5 by SeLoger, effects from the market price revaluation totaling € 44.8 million after taxes (as of December 31, 2013: € 13.1 million) included within other comprehensive income were reclassified into the income statement in the context of income recognition (see note (7)) in the reporting year.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

As of December 31, 2014 the non-controlling interests in Summarized financial information for the Axel Springer Axel Springer Digital Classifieds GmbH amounted to Digital Classifieds subgroup will be shown in the following:

15.0 % (PY: 30.0 %; for changing the non-controlling interests see note 2(c)), their share in Group results € millions 2014 2013 amounted to € 43.3 million (PY: € 13.0 million). In addi- Revenues 508.0 403.1 tion, they received a dividend in the amount of Net income 130.6 41.7

€ 0.2 million in the fiscal year (PY: € 0.2 million). Comprehensive income 126.8 49.4

Current assets 183.1 142.7

Non-current assets 1,788.6 1,351.4

Current liabilities 399.9 155.2

Non-current liabilities 922.0 804.5

Cash flows – 1.4 – 35.3

(12) Share-based payment

Members of the Executive Board and selected executives (beneficiaries) were granted various virtual stock option plans, the fundamental parameters of which are described below:

Virtual stock option plans

Executive Board Program Senior Executive Program

2009 2012 2014 I 2014 II 2011 I 2011 II 2014 Grant date 07/01/2009 01/01/2012 01/01/2014 09/01/2014 10/01/2011 10/01/2011 03/01/2014

Term in years 6 6 6 6 4 6 5

Vesting period in years 4 4 4 4 2 4 3

Stock options granted 1,125,0001) 450,000 205,313 675,000 472,500 472,500 60,000

Underlying (€) 20.291) 30.53 44.06 44.56 30.00 35.00 46.80

Maximum payment (€) 40.571) 61.06 88.12 89.12 60.00 70.00 93.60

Value at grant date (€) 4.221) 5.26 6.69 6.26 2.74 2.31 8.14

Total value at grant date (€ millions) 4.7 2.4 1.4 4.2 1.3 1.1 0.5

1) Adjusted due to the share split in June 2011.

Provided that the beneficiary is employed by the compa- 2014), or to one quarter per elapsed year of the vesting ny at least until the expiration of the vesting period, all period (executive program 2011 II). virtual stock options granted to the relevant senior executive may become vested. If the authorized senior execu- A further condition for vesting to take place is that either tive's employment with the company ends before the the volume-weighted average price of the Axel Springer end of the vesting period, but is at least one year after share is at least 30 % over the base value or that the the grant date, the stock options are vested on a pro- percentage increase of this average price exceeds that rated basis of the vesting period (Executive Board pro- of the base value of the development of the DAX over a gram), up to one half (executive programs 2011 I and period of 90 calendar days (Executive Board program) or

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

three calendar months (executive program) within a time Beneficiaries are obligated to hold one Axel Springer period of a year before the end of the waiting period. share for every ten stock options as their own investment. Disposing of these shares prior to exercising the stock Exercising stock options is only possible if the volume- options would result in the stock options being forfeited weighted average price of the Axel Springer share 90 at the same rate. calendar days (Executive Board program) or three calendar months (executive program) before exercising such The value of the options was determined by application options is at least 30 % over the base value and that the of a Black-Scholes model in a Monte-Carlo simulation at percentage increase exceeds that of the DAX index. the grant date. The options will be remeasured at each Each option grants a payment claim in the amount of the reporting date and recognized proportionally in accord- growth in value of the Axel Springer share, restricted to a ance with the projected vesting. maximum of 200 % of the base value, which corresponds to the difference between the volume-weighted The development of the stock options is shown below: average price during the last 90 calendar days or three months prior to exercise and the base value. Virtual stock option plans

Executive Board Program Senior Executive Program

2009 2012 2014 I 2014 II 2011 I 2011 II 2014 01/01/2013 1,040,6251) 450,000 0 0 472,500 472,500 0

Grant 0 0 0 0 0 0 0

Exercise – 1,040,625 0 0 0 0 0 0

12/31/2013 0 450,000 0 0 472,500 472,500 0

Grant 0 0 205,313 675,000 0 0 60,000

Exercise 0 0 0 0 – 471,650 0 0

Forfeiture 0 – 56,250 0 0 – 850 0 0

12/31/2014 0 393,750 205,313 675,000 0 472,500 60,000

1) Adjusted due to the share split in June 2011.

The expenses and income in the reporting year, as well as the portfolio of liabilities and provisions at the reporting date are shown below:

Virtual stock option plans

Executive Board Program Senior Executive Program

€ millions 2009 2012 2014 I 2014 II 2011 I 2011 II 2014

Expenses/Income 2014 0.0 – 1.7 – 0.9 – 1.0 – 0.2 – 1.2 – 0.2

Expenses/Income 2013 – 11.5 – 2.7 0.0 0.0 – 6.0 – 2.1 0.0

Carrying amount as of 12/31/2014 0.0 5.8 0.9 1.0 0.0 4.6 0.2

Carrying amount as of 12/31/2013 0.0 4.1 0.0 0.0 7.6 3.4 0.0

124

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

For the stock options program for employees of the Group The development of the virtual options is shown below: see note (11d). in thousands 2014 2013 Various free share and stock option programs existed at our Option rights as of January 1 243 310 subsidiary SeLoger at the acquisition date. They provided Exercise – 51 – 67 for granting or exercise by the right holders from the years Option rights as of December 31 192 243 2009 to 2013 onwards, linked with a subsequent holding period of two years. The stock options with a weighted € millions 2014 2013 average purchase price of € 20.93 are vested in 2017 until 2019. The right holders were offered call and put options as Personnel expenses – 1.0 – 3.8 part of the acquisition of SeLoger for transferring all shares Other operating income (+) / expenses (-) – 0.1 – 0.2 from these programs (up to a maximum of 525 thousand) to Liabilities as of December 31 9.9 11.3 Axel Springer in return for a cash payment. The call and put options are not linked to any market-related or company- related or any other conditions and vest immediately after the issuance of the shares to the employees. The purchase Our subsidiary AUFEMININ SA granted its senior execu- price upon exercise amounts to € 38.05 (squeeze-out price) tives subscription rights for free shares and stock options. multiplied by the ratio of the volume-weighted 1-month- These share-based payments must be settled with aver¬age rate of the Axel Springer share on the last day shares of AUFEMININ SA. of trading prior to exercise of the options to the volume- weighted 1 month-average rate of the Axel Springer share In November 2013, 300 thousand stock options for on the last trading day before squeeze-out (€ 36.15 acquisition of one share of AUFEMININ SA, each with an when taking the share split of 2011 into account). exercise price of € 26.19, were issued to senior employees. These options vested upon expiration of the first Following the principle of substance over form, the pro- (50 %) and second (50 %) years after the grant date, grams are treated by us as virtual stock option programs insofar as the earnings target established for the individ- granting a payment claim in the amount of the difference ual tranche (EBITDA 2013 or EBITDA 2014) was between the exercise price and the purchase price. achieved. Once they have vested, the options can be Measurement at the grant date is based on the Black- exercised for a total of five (50 %) or four (50 %) years. Scholes model or the current share price, considering future dividends. The weighted average fair value at the In November 2010, 300 thousand stock options for date of exercise of the options was € 28.83 per virtual acquisition of one share of a AUFEMININ SA, each with stock option or € 15.1 million in total. The virtual options an exercise price of € 17.15, were issued to senior em- will be remeasured at each reporting date and recog- ployees. These options vested upon expiration of the first nized proportionally in accordance with the vesting that (50 %) and second (50 %) years after the grant date, has now completely occurred. insofar as the earnings target established for the individual tranche (EBITDA 2010 or EBITDA 2011) was achieved. Once they have vested, the options can be

exercised for a total of five (50 %) or four (50 %) years.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

In June 2009, 300 thousand stock options for acquisition The expected volatility was determined based on histori- of one share of AUFEMININ SA, each with an exercise cal volatility rates using a period corresponding to the price of € 8.94, were issued to senior employees. These term of the options. options vested upon expiration of the first (50 %) and second (50 %) years after the grant date, insofar as the The number of options and the weighted average exer- earnings target established for the individual tranche cise price developed as follows: (EBITDA 2009 or EBITDA 2010) was achieved. Once they have vested, the options can be exercised for a 2014 2013 total of five (50 %) or four (50 %) years. Options in Exercise Options in Exercise thousands price1) in € thousands price1) in € Ninety-nine thousand stock options granted in April 2008, Balance as of January 1 609 21.13 496 15.20 each one entitling the holder to purchase one share of AUFEMININ SA (exercise price: € 20.46) as well as the Lapse – 12 18.31 – 25 18.36 74 thousand stock options that had already been grant- Exercise – 40 15.16 – 163 12.81 ed at the date of acquisition of auFeminin.com S.A. in Issuance 0 – 300 26.19 July 2007 (exercise price: (exercise price: € 18.60 or Balance as of € 21.21), will become vested in equal annual installments December 31 557 21.62 609 21.13 over a period of four years. The option grant is not con- Thereof exercisable 407 19.93 309 16.21 ditioned on any further earnings or market conditions. These options can be exercised for the first time at 1) Weighted average exercise price. the end of the fourth year after the options were granted and for a total of four years thereafter. The weighted average stock price at the date of exercise of the stock options during the financial year was € 28.2 The fair values of the stock options granted in the previ- (PY: € 22.6 ). ous year were determined by application of the Black- Scholes model at the grant date. For this purpose, the The exercise prices for the options outstanding on the following parameters were applied: reporting date were unchanged and remained between € 8.94 and € 26.19in the prior year. The weighted Options Nov. average remaining term of these options was 3 years 2013 (PY: 4 years). Share price at the grant date in € 29.21 Exercise price in € 26.19 The compensation expenses for the share-based pay- Interest rate for risk-free investments, in % 0.14 / 0.28 ment programs of AUFEMININ SA. recorded in person-

Expected term until fully vested in years 1 / 2 nel expense amounted to € 1.1 million in the reporting year (PY: € 0.2 million). The additional paid-in capital was Expected term of the options in years 6 increased by the same amount. Expected volatility, in % 40.00

Expected dividend yield, in % 0.00

Fair value at grant date, in € 6.08 / 7.87

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

(13) Pension obligations with the requirements of the Company Pension Act. The promises to the Executive Board correspond in their Under its defined contribution pension plans, the Group design to the second pension plan and are additionally mainly contributes to public-sector pension insurance dynamic in the vesting period depending on inflation. The carriers by virtue of the applicable laws. The current third pension plan is a defined-contribution benefit in contribution payments are presented as social security which a benefit is calculated using fixed factor tables costs within personnel expenses and amount to dependent on converted compensation components. € 52.7 million (PY: € 52.1 million), of which € 7.1 million Ongoing benefits are adjusted from the beginning of

(PY: € 4.9 million) are allocated to foreign pension insur- pension payments at 1 % p.a. ance carriers. Pension commitments in other countries relate above all Provisions for pensions were created to account for the to Switzerland. The employees are insured against the obligations arising from vested pension rights and cur- risks of old age, death, and disability in various defined- rent benefits for former and active employees of the Axel benefit plans in a legally separate employee benefit fund Springer Group and their survivors. The different pension at an independent third party. The retirement benefit is plans within the Group are organized in accordance with calculated using the retirement fund balance existing at the legal, tax-related, and economic conditions of each the time of retirement applying a conversion rate. The country. The provision for defined benefit pension plans retirement fund balance earns interest and accrues using corresponds to the present value of the obligations at the age-dependent staggered savings contribution rates reporting date net of the fair value of the plan assets. The depending on the insured salary up to retirement age. Group companies are subject to various risks in connec- The risk benefits for death and disability are calculated tion with the pension plans. Along with general actuarial as a percentage of the insured salary. risks such as risks from salary and pension increases, longevity risk, and interest rate risk, these are inflation As for the plan assets existing for foreign pension com- risk and capital market and investment risk. mitments, the values of the assets essentially correspond to the individual surrender values of the reinsurer. For the Essentially, three different pension plans exist in the active insured persons, this is the retirement fund balance, German Group companies that are subject to the Ger- and for the retirees, this is the premium reserves/provisions man Company Pension Act, and thus to the statutory of the reinsurer. regulations relating in particular to vesting, compensation for inflation in the benefit phase, and insolvency protec- The measurement was based on the following parameters: tion by the Pensions Guarantee Corporation. The pension plans are partially financed by premium reserve 2014 2013 funds that are managed by Axel Springer Pensionstreu- Information Other Other hand e.V. as trustee. The two defined-benefit pension in % Germany countries Germany countries plans provide for an annual pension for entitled persons Discount rate 1.9 1.0 3.6 2.0 based on fixed amounts that depend for the first pension Salary trend 1.75 1.0 1.75 1.0 plan only on the length of service in the company, and Pension trend 1.75 0.0 1.75 0.25 for the second pension plan additionally on the position in the company, and are static in the vesting period and dynamic in the benefit payment period in accordance

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

The amount of the provision was calculated as follows:

12/31/2014 12/31/2013

Other Other € millions Germany countries Total Germany countries Total Present value of defined benefit obligations financed by fund 477.1 109.8 586.9 379.2 101.1 480.3

Fair value of plan assets – 155.7 – 91.0 – 246.7 – 149.3 – 88.4 – 237.7

Present value of defined benefit obligations not financed by fund 56.3 3.1 59.5 44.4 1.0 45.3

Provision 377.8 21.9 399.7 274.2 13.7 287.9

Reimbursement right – 30.6 0.0 – 30.6 – 27.9 0.0 – 27.9

Net obligation 347.2 21.9 369.0 246.3 13.7 260.0

The changes in the present value of the pension obligations are presented in the table below:

2014 2013

Other Other € millions Germany countries Total Germany countries Total Present value of obligations as of January 1 423.5 102.1 525.5 438.2 105.5 543.6

Change in consolidated companies 0.0 1.3 1.3 1.0 0.0 1.0

Current service cost 5.0 2.6 7.5 6.2 3.2 9.4

Interest expense 15.1 2.1 17.2 15.3 1.8 17.1

Actuarial gains/losses arising from changes in demographic assumptions – 1.0 0.0 – 0.9 0.9 0.0 0.9

Actuarial gains/losses arising from changes in financial assumptions 106.3 6.2 112.5 – 0.4 – 2.4 – 2.8

Payments by employees 3.1 2.0 5.1 3.5 2.0 5.4

Transfer of pension obligation – 0.4 0.0 – 0.4 – 1.4 0.0 – 1.4

Exchange rate change 0.0 2.0 2.0 0.0 – 1.8 – 1.8

Payments to retirees – 21.0 – 5.3 – 26.4 – 20.6 – 6.2 – 26.8

Reclassification into or from liabilities in connection with assets held for sale 3.0 0.0 3.0 – 19.3 0.0 – 19.3

Present value of obligations as of December 31 533.5 112.9 646.4 423.5 102.1 525.6

In fiscal year 2015, contributions to fund-financed defined benefit plans are expected to total € 2.4 million (PY: € 27.3 million), of which € 2.4 million (PY: € 2.3 million) are employer contributions from Swiss companies.

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

The fair value of the plan assets showed the following changes:

2014 2013

Other Other € millions Germany countries Total Germany countries Total Plan assets as of January 1 149.3 88.4 237.7 109.9 89.6 199.5

Income from plan assets 5.4 1.8 7.1 4.0 1.5 5.5

Employee contribution 0.0 2.0 2.0 0.0 2.0 2.0

Employer contribution 0.0 2.4 2.4 0.0 2.3 2.3

Benefits paid 0.0 – 5.3 – 5.3 0.0 – 6.2 – 6.2

Actuarial gains/losses arising from changes in demographic assumptions 1.0 0.0 1.0 0.1 0.0 0.1

Actuarial gains/losses arising from changes in financial assumptions 0.0 0.2 0.2 0.0 0.4 0.4

Transfer of plan assets 0.0 0.0 0.0 35.3 0.0 35.3

Exchange rate changes 0.0 1.7 1.7 0.0 – 1.2 – 1.2

Plan assets as of December 31 155.7 91.0 246.7 149.3 88.4 237.7

The carryovers from the previous year related to real transaction costs in the amount of € 0.5 million, and estate assets previously held in fully-consolidated struc- liquid funds of € 25.0 million. tured entities with fair values of € 10.8 million minus The investment portfolio broke down as follows: 12/31/2014 12/31/2013

Other Other € millions Germany countries Total Germany countries Total Shares 10.3 3.3 13.6 5.5 3.2 8.8

Bonds 53.1 68.2 121.3 41.9 66.3 108.2

Derivatives 0.0 0.0 0.0 1.4 0.0 1.4

Money market instruments 17.7 0.0 17.7 0.0 0.0 0.0

Cash and cash equivalents 7.1 0.1 7.2 32.0 0.1 32.1

Plan assets with market price quotations 88.2 71.6 159.8 80.8 69.6 150.4

Real Estate 67.5 15.3 82.8 68.5 14.8 83.3

Others 0.0 4.2 4.2 0.0 4.0 4.0

Plan assets without market price quotations 67.5 19.4 86.9 68.5 18.8 87.3

Total 155.7 91.0 246.7 149.3 88.4 237.7

The fair value of the plan assets includes real estate used by the company itself in the amount of € 46.2 million (PY: € 56.1 million).

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Axel Springer SE is entitled to reimbursement of pension The value of the reimbursement right developed as follows: obligations or pension expenses arising in connection with them in the context of the contribution of rotogra- € millions 2014 2013 vure printing operations to an affiliated company in Reimbursement right as of January 1 27.9 29.4

Germany in 2005. The reimbursement right is presented Income from reimbursement rights 1.0 1.0 as a separate asset (see note (36)), whereas in the Paid-out benefits – 2.3 – 2.4 income statement, the income from the reimbursement Actuarial gains/losses arising from is netted with the corresponding pension expenses. changes in demographic assumptions – 0.1 – 0.1

Based on the existing contractual regulations, we do not Actuarial gains/losses arising from assume a short-term settlement of the reimbursement changes in financial assumptions 4.2 0.0 claim and the corresponding pension obligations any Reimbursement right as of December 31 30.6 27.9 more, and therefore in the reporting period, we classified the asset as well as the related pension liability in an amount of € 28.3 million (PY: € 25.5 million) as long-term. The expenses for defined benefit pension plans broke down as follows:

2014 2013 Other Other € millions Germany countries Total Germany countries Total Current service cost 5.0 2.6 7.5 6.2 3.2 9.4

Interest expense 15.1 2.1 17.2 15.3 1.8 17.1

Income from plan assets – 5.4 – 1.8 – 7.1 – 4.0 – 1.5 – 5.5

Income from reimbursement rights – 1.0 0.0 – 1.0 – 1.0 0.0 – 1.0

Pension expenses 13.8 2.8 16.6 16.6 3.5 20.0

Service cost is presented within the personnel expenses. An increase or decrease in the material actuarial as- The interest portions contained in the pension expenses sumptions would have the following effects on the pre- and the income from the plan assets and interest reim- sent value of the total pension obligations as of Decem- bursements are presented as components of interest ber 31, 2014: expenses. Information Increase by 25 basis Decrease by 25 basis in % points points Other Other Germany countries Germany countries

Discount rate – 3.4 – 2.3 3.9 2.4

Salary trend 0.0 0.4 0.0 – 0.4

Pension trend 2.6 1.8 – 2.4 0.0

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

The sensitivity calculations are based on the average if life expectancy of the beneficiary increases by one year term of the pension obligations calculated as of Decem- as of December 31, 2014, pension obligations in Ger- ber 31, 2014. The calculations were carried out in isola- many would have risen by 3.7 % in Germany and 3.6 % tion for the actuarial parameters classified as material. As in the remaining countries. sensitivity analysis is based on the average term of the expected pension obligations and as a consequence, the As of December 31, 2014, the weighted average dura- expected payment dates are not taken into account, tion of the defined-benefit obligation in Germany was they only lead to approximate information or to describe 16.0 years (PY: 16.0 years), while that of the defined- tendencies. In case of changes to the mortality rates or benefit obligation in foreign countries was 10.5 years (PY: life expectancies which act as a basis, it is assumed that 9.7 years).

(14) Other provisions and accruals

The other provisions and accrued liabilities broke down as follows:

Balance as of Other Balance as of € millions 01/01/2014 Utilization Reversals Additions changes 12/31/2014

Other obligations towards employees 89.5 – 62.8 – 3.0 68.1 0.8 92.7

Structural measures 38.9 – 29.7 – 2.5 34.8 – 0.7 40.9

Partial early retirement program (Altersteilzeit) 33.7 – 11.6 – 0.1 15.6 1.4 39.1

Returns 24.0 – 22.9 – 0.2 16.8 – 0.2 17.5

Discounts and rebates 11.2 – 9.4 – 1.6 10.0 2.4 12.6

Other taxes 4.9 – 2.7 0.0 6.4 – 0.4 8.1

Dismantling obligations 4.3 – 0.1 – 0.6 0.7 2.0 6.4

Litigation expenses 3.8 – 0.2 – 0.7 4.0 – 0.9 6.1

Other 14.8 – 8.0 – 0.9 55.4 1.5 62.8

Other provisions 225.1 – 147.3 – 9.5 211.9 6.0 286.3

Other obligations towards employees primarily included The other changes result from the initial consolidation of variable compensation tied to performance. Structural acquired companies, currency translation differences, measures were mainly allocated to the newspaper and and also compounding. magazine and printing plant segments. Provisions for returns comprise the expected sales returns of pub- Non-current provisions are primarily contained in the lishing products. Other provisions were mainly allocated provisions for partial early retirement programs, compen- to guarantee obligations in the context of the takeover of sation tied to performance, and structural measures. domestic regional newspapers, TV program guides, and women's magazines by FUNKE Mediengruppe.

131

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

(15) Financial liabilities The interest rates were mainly equivalent to the effective rates of interest. In the case of fixed-interest loan tranch- The financial liabilities comprise liabilities from a promises, the interest rates were fixed until the maturity date. sory note loan in the amount of € 631.7 million (PY: € 499.1 million), other liabilities due to banks amounting Furthermore, at the reporting date additional unused to€ 417.2 million (PY: € 156.2 million) and finance leases short-term and long-term credit facilities amounted to amounting to € 2.0 million (PY: € 64.5 million). € 511.0 million (PY: € 770.0 million).

In October 2014 we restructured our promissory note On the reporting date liabilities from finance leases in the loan and decreased the average rate of interest, in- amount of € 62.9 million, which are linked with the creased the financing volume by € 137.0 million and planned sale of an office building in Hamburg, are dis- extended the average term by two years through the closed as liabilities related to assets held for sale, see partial termination, transformation and subscription of note (5). new volumes. The promissory note loan was characterized by the following utilizations, interest rates, and ma- The future minimum lease payments from finance leases turities at the reporting date. can be derived as follows as of December 2014 from their present value: 2014 € 2013 € million million Interest rate in % Maturity Minimum 177.0 0.0 1.47 10/12/2020 lease Interest Present € millions payments portion value 162.0 0.0 1.034 10/11/2018 Due in up to one year 0.8 0.1 0.7 112.0 178.5 3.06 04/11/2018 Due in one to five years 1.4 0.1 1.3 71.5 0.0 6-month EURIBOR + 0.9 10/12/2020 Total 2.2 0.2 2.0 58.0 0.0 6-month EURIBOR + 0.7 10/11/2018 56.5 143.0 2.38 04/11/2016

0.0 126.5 6-month EURIBOR + 1.0 04/11/2016 The reconciliation as of December 31, 2013 breaks 0.0 52.0 6-month EURIBOR + 1.3 04/11/2018 down as follows:

Minimum lease Interest Present The other liabilities due to banks were characterized by € millions payments portion value utilization, interest rates, and maturities set forth in the Due in up to one year 4.5 3.8 0.6 table below. All liabilities were denominated in euros. Due in one to five years 17.2 15.0 2.2 Short-term loans are not presented in the table. Due in more than five years 106.5 44.8 61.7

2014 € 2013 € Total 128.2 63.7 64.5 million million Interest rate in % Maturity

409.0 150.0 1-month Euribor + 0,575 09/18/2017

3.8 4.3 3-month EURIBOR + 0.30 10/15/2022 In the previous year we expected future payments from subleasing arrangements amounting to € 4.2 million.

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(16) Other liabilities

The other liabilities broke down as follows:

€ millions 12/31/2014 12/31/2013 Liabilities due to employees related to outstanding wage Contingent consideration 266.4 178.7 and salary payments, management bonuses, and sever- Debit balances in accounts receivable 11.5 11.7 ance award claims.

Liabilities due to employees 30.1 24.2 Accrued liabilities contain liabilities resulting from over- Liabilities from derivatives 44.6 28.9 time and unused vacation. Other 60.0 63.8

Other financial liabilities 412.6 307.4 Advance payments from customers 136.1 131.9 Liabilities from other taxes 53.7 46.4 Accrued liabilities 22.6 21.6

Advance payments 14.7 9.2

Capital investment subsidies 12.4 15.2

Liabilities due to social insurance carriers 9.6 7.9

Liabilities for duties and contributions 5.5 6.0 Other 32.0 22.6 Other non-financial liabilities 286.5 261.0 Other liabilities 699.2 568.3

(17) Maturity analysis of financial liabilities

The contractually agreed (undiscounted) payments related to financial liabilities are presented in the following table:

Undiscounted cash outflows Carrying amount as of € millions 12/31/2014 2015 2016– 2019 2020 ff. Financial liabilities 1,050.9 13.6 833.2 252.3

Contingent consideration 266.4 26.9 247.0 0.0

Other non-derivative financial liabilities 424.4 394.9 27.4 2.9

Derivative financial liabilities 44.6 0.3 44.2 0.1

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Undiscounted cash outflows Carrying amount as of € millions 12/31/2013 2014 2015– 2018 2019 ff. Financial liabilities 719.8 20.2 701.3 53.0

Contingent consideration 178.7 23.7 161.0 0.0

Other non-derivative financial liabilities 382.3 345.1 28.1 3.4

Derivative financial liabilities 28.9 0.4 28.5 0.0

Notes to the consolidated statement of comprehensive income

(18) Revenues (19) Other operating income

The revenues broke down as follows: The other operating income broke down as follows:

€ millions 2014 2013 € millions 2014 2013 Revaluation of contingent consideration 32.0 25.8 Advertising revenues 1,815.1 1,637.8

Circulation revenues 735.3 759.1 Income from reversal of provisions 9.5 14.4 Foreign exchange gains 9.7 12.4 Printing revenues 67.7 75.1

Other revenues 419.8 329.5 Write-ups 6.3 1.0

Revenues 3,037.9 2,801.4 Miscellaneous operating income 107.2 91.7 Other operating income 164.7 145.3

During the fiscal year, revenues from barter transactions amounted to € 55.2 million (PY: € 48.6 million). These The miscellaneous operating income included income revenues were generated mainly from the bartering of from providing services to discontinued operations, advertising services. income from the insolvency proceedings of the Kirch Group and a large number of circumstances with imma- The increase in operating revenues year on year resulted terial amounts. particularly from the initial consolidation of acquired companies.

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(20) Purchased goods and services The average number of employees in the Group is shown below: The purchased goods and services broke down as follows: 2014 2013 € millions 2014 2013 Salaried employees 10,457 9,167

Raw materials and supplies and Editors 2,771 2,797 purchased merchandise 196.8 189.1 Wage-earning employees 689 880 Purchased services 793.2 736.6 Total employees 13,917 12,843 Purchased goods and services 990.0 925.8

The increase in personnel figures compared to the prior Raw materials and supplies and purchased merchandise year resulted particularly from the initial consolidation of comprised paper costs amounting to € 78.2 million (PY: acquired companies and from staff increases in the € 93.3 million). strongly growing digital business units.

The cost of purchased services was predominantly (22) Depreciation, amortization, and impairments composed of purchased third-party printing services and professional fees, as well as publisher services in The depreciation, amortization, and impairments broke the context of performance-based marketing. The down as follows: purchased third-party printing services also included paper costs. € millions 2014 2013 Impairment losses in goodwill 31.1 2.7 (21) Personnel expenses Amortization of other intangible assets 111.2 90.7 The personnel expenses broke down as follows: Impairment losses in other intangible assets 19.4 1.9

Depreciation of property, plant, and € millions 2014 2013 equipment 58.2 58.4 Wages and salaries 820.3 760.9 Impairment losses in property, plant, and Social security 130.1 120.2 equipment 24.9 0.0

Pension expenses 8.5 9.8 Depreciation of investment property 1.4 1.4

Expenses for share-based payments 11.2 26.3 Impairment losses in investment property 9.4 0.0

Other benefit expenses 4.3 4.4 Depreciation, amortization, and impairments 255.6 155.1 Personnel expenses 974.4 921.6

Impairment losses in goodwill primarily affected a reporting unit in the Marketing Models segment (in the prior year in the Paid Models segment) and resulted from market-related reduced performance expectations of the reporting unit.

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The increase in the amortization of other intangible as- The following professional fees for the services rendered sets primarily resulted from increased ongoing invest- by the auditor Ernst & Young GmbH were recognized: ments as well as increased effects of purchase price allocations. € millions 2014 2013 Audits of the annual financial statements 1.0 1.0

The impairment losses on other intangible assets mainly Other certification or appraisal services 0.8 0.4 affected the Paid Models and Marketing Models segments. Tax advisory services 0.3 0.5

Other services 0.8 0.1 The impairment losses on both property, plant, and Total professional fees 2.9 2.0 equipment and investment property are linked to the planned sale of an office building in Hamburg, see note (5).

Impairment losses in non-current financial assets recog- The professional fees for the audit of financial statements nized in the reporting year are included in the income include the audit of the separate financial statements of from investments. Axel Springer SE and other German subsidiaries, and the audit of the consolidated financial statements. The other (23) Other operating expenses certification and appraisal services primarily include fees for the auditor's review of the quarterly financial state- The other operating expenses broke down as follows: ments and audits to verify compliance with contractual agreements; the increase results from additional auditing € millions 2014 2013 services in connection with the sale of our domestic print Advertising expenses 174.3 162.0 activities during the reporting year. The tax advisory fees Expenses for non-company personnel 129.5 118.7 are a result of support services regarding specific tax Mailing and postage expenses 102.7 87.9 questions. Other services consisted of due diligence Commissions and gratuities 40.6 41.1 services as part of acquisitions within the fiscal year.

Rental and leasing expenses 43.7 37.5

Maintenance and repairs 35.4 30.5 (24) Income from investments

Travel expenses 28.3 24.6 The income from investments in the reporting year Services provided by related parties 11.4 16.4 amounting to € 81.4 million (PY: € 25.7 million) was Allowances for doubtful receivables 9.8 11.9 particularly characterized by income from the disposal of Foreign exchange losses 5.9 10.4 investments. Other taxes 9.0 7.1

Miscellaneous operating expenses 166.7 149.6 At the end of July 2014, we sold our minority interest

Other operating expenses 757.2 697.7 held by SeLoger (17.2 %) in the iProperty Group Ltd., Sydney, Australia, for € 74.3 million. The profit amounted to € 55.1 million (before a tax effect of € 2.2 million). This amount was taken into account as a non-recurring effect

The miscellaneous operating expenses included addi- in the Classified Ad Models segment, with 30 % of it tions to provisions relating to legal and other risks, as being attributed to other shareholders. well as other operating expenses.

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In addition, we sold about 2.6 % of the shares in Do⁄an (26) Income taxes TV in the reporting period and recognized a profit of € 16.0 million (PY: € 15.1 million), which was recorded in The income taxes paid or owed and the deferred taxes income from investments. Please see note (7b) regarding are recognized under income taxes. The income taxes the fair value changes of the investment in Do⁄an TV consist of the trade tax, corporate income tax, and soli- recorded in the income from investments and the put darity surcharge, and the corresponding foreign income options economically related to it. taxes. The income tax expenses are broken down below:

Also included within income from investments were € millions 2014 2013 impairment losses of € 6.6 million (PY: € 3.0 million). Current taxes 121.1 89.4

Deferred taxes – 42.1 – 1.3

(25) Net financial result Income taxes from continued operations 78.9 88.1

Income taxes from discontinued operations 257.4 28.0 The net financial result broke down as follows: Income taxes 336.4 116.0

€ millions 2014 2013

Interest income from bank accounts 2.1 2.4 Interest income from loans and securities 12.3 3.4 The expected income tax expense applying the tax rate Interest income from derivatives 0.0 1.6 of Axel Springer SE is reconciled to the income tax ex- Other interest income 3.5 3.1 pense recognized in the income statement as follows:

Interest income 17.9 10.5 € millions 2014 2013 Interest expenses on liabilities due to banks and on promissory note – 13.7 – 14.2 Income before income taxes 314.7 266.7

Interest expenses on pension provisions, Tax rate of Axel Springer SE 31.00% 31.19% less reimbursements – 8.9 – 10.0 Expected tax expenses 97.5 83.2

Miscellaneous interest expenses – 21.4 – 13.3 Differing tax rates – 0.4 – 3.0

Interest and similar expenses – 44.0 – 37.5 Changes in tax rates – 3.7 0.2 Other financial result 5.1 3.8 Permanent differences 1.3 5.4

Financial result – 21.1 – 23.1 Adjustments to carrying amounts of deferred taxes – 3.0 – 0.6

Current income taxes for prior years – 3.4 – 4.8

A total of € 14.4 million (PY: € 5.9 million) of the interest Deferred income taxes for prior years – 2.1 2.1 income and € – 24.1 million (PY: € – 21.7 million) of the Non-deductible operating expenses 13.7 15.7 interest expense was allocated to financial assets and Tax-exempt income – 23.6 – 11.6 liabilities that were not measured at fair value through Trade tax additions/deductions 3.4 4.5 profit or loss. Other effects – 0.9 – 2.9 Income taxes 78.9 88.1

Companies having the legal form of a corporation resi- dent in Germany are subject to corporate income tax at

the rate of 15 % and solidarity surcharge of 5.5 % of the corporate income tax owed. In addition, the profits of

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these companies are subject to trade tax, for which the The increase in deferred tax liabilities related to intangible amount is municipality-specific. Companies having the assets mainly results from initial consolidations that took legal form of a partnership are subject to trade tax exclu- place during the fiscal year. The increase in deferred tax sively. The net income is assigned to the shareholder for liabilities related to pension provisions results from lower purposes of corporate income tax. Due to various regional discount rates for IFRS purposes. developments, the corporate tax rate of the Group fell to

31.0 % (PY: 31.19 %). The net balance of deferred tax items from January 1 to December 31, 2014 was derived as follows: The effects of different tax rates for partnerships and for foreign income taxes from the tax rate applicable to Axel € millions 2014 2013 Springer SE are explained in the reconciliation in the item Deferred tax assets as of January 1 41.2 61.2 differing tax rates. The permanent differences result mainly Deferred tax liabilities as of January 1 – 313.5 – 329.8 from impairment losses in goodwill and deconsolidation Net tax position as of January 1 – 272.4 – 268.7 effects that are not taken into account for tax purposes. Deferred tax of current year 42.1 1.4 The adjustments made to the carrying amounts of deferred taxes included € 5.8 million (PY: € 4.0 million) for Changes in deferred taxes recognized in other comprehensive income 39.0 – 6.5 the non-recognition of deferred taxes on tax loss carry- Changes in consolidation group – 66.9 – 13.8 forwards. Deferred taxes from discontinued operations 0.6 0.0 Deferred tax assets and liabilities were recognized to Reclassification into assets and liabilities account for temporary differences and tax loss carry- held for sale – 15.9 15.1 forwards, as follows: Net tax position as of December 31 – 273.5 – 272.4

Deferred tax assets as of December 31 54.4 41.2 12/31/2014 12/31/2013 Deferred tax liabilities as of December 31 – 327.9 – 313.5 Deferred Deferred Deferred Deferred tax tax tax tax € millions assets liabilities assets liabilities Intangible assets 18.0 315.6 19.0 274.0 Of the deferred tax assets, an amount of € 30.7 million Property, plant, and equipment and (PY: € 9.4 million), and of the deferred tax liabilities, an investment property 1.8 89.4 1.8 106.2 amount of € 13.6 million (PY: € 6.9 million) can be real- Non-current financial ized in the short term. assets 0.7 1.9 2.8 0.2

Inventories 1.0 0.0 0.8 0.0 The amount of deferred tax assets to be disclosed in Receivables and other accordance with IAS 12.82 was € 11.3 million (PY: assets 28.0 13.8 33.5 10.5 € 22.9 million). It is expected that this amount can be Pension provisions 30.2 0.1 8.2 11.1 realized by application against the available operating Other provisions 11.8 2.4 9.6 3.2 income. Liabilities 35.8 1.6 29.2 0.6 Temporary differences 127.2 424.9 105.0 405.8 Deferred taxes in the total amount of € 54.6 million (PY: Tax loss carry-forwards 24.3 0.0 28.5 0.0 € 15.6 million) were recognized directly in equity, as they relate to matters that were likewise recognized directly in Total 151.5 424.9 133.5 405.8 equity. Offsetting – 97.0 – 97.0 – 92.3 – 92.3

Amounts as per balance sheet 54.4 327.9 41.2 313.5

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In fiscal year 2014, no deferred tax assets were recog- (27) Earnings per share nized with respect to corporate income tax loss carry- forwards amounting to € 109.3 million (PY: € 122.4 million), The earnings per share were determined as follows: and with respect to trade tax loss carry-forwards mount- ing to € 18.6 million (PY: € 1.7 million) because it did not 2014 2013 appear probable that sufficient taxable income could be Result of continued operations attributable to shareholders of Axel € generated for these amounts in the near future. In addi- Springer SE millions 169.1 133.0 tion, there are interest carry-forwards amounting to Result of discontinued operations € 2.3 million for which no deferred tax assets were rec- attributable to shareholders of Axel € ognized. Of these tax loss carry-forwards, an amount of Springer SE millions 630.7 64.2 € 5.5 million (PY: € 11.3 million) can be carried forward Net income attributable to € shareholders of Axel Springer SE millions 799.8 197.1 for up to five years and an amount of € 3.3 million (PY: € 9.9 million) can be carried forward for six to ten years. Weighted average shares outstanding 000s 98,940 98,888 The utilization of tax loss carry-forwards or interest carry- Earnings per share from continuing operations (basic/diluted) 1.71 1.34 forwards that had not previously been recognized as Earnings per share from discontinued deferred tax assets caused a reduction in income tax operations (basic/diluted) 6.37 0.65 expenses of € 2.0 million (PY: € 5.7 million). In the past Net income attributable to fiscal year, there were corrections of recognized tax loss shareholders of Axel Springer SE carry-forwards due to tax audits or differing tax assess- per share (basic/diluted) € 8.08 1.99 ments in the amount of € 2.5 million (PY: € 0.5 million).

As a rule, deferred taxes must be recognized to account for the difference between the Group’s interest in the equity of the subsidiaries as presented in the consolidated balance sheet and the corresponding investment balance recognized in the financial statements for tax purposes. Such differences can result from the retention of earnings. Deferred tax liabilities were not recognized on differences of € 7.5 million (PY: € 28.9 million) because a realization is not planned at the present time. In the case of sale or profit distribution, the gain on disposal or the dividend, respectively, would be subject to taxa- tion at 5 % in Germany; in addition, foreign withholding taxes might be incurred.

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(28) Other income/loss

The other income/loss broke down as follows:

2014 2013 € millions Before tax Tax effect Net Before tax Tax effect Net Actuarial gains/losses from defined benefit pension obligations – 105.2 32.2 – 73.0 3.0 – 0.6 2.5

Currency translation differences – 27.2 0.0 – 27.2 – 65.4 0.0 – 65.4

Changes in fair value of available-for-sale financial assets – 20.0 6.9 – 13.1 17.4 – 5.9 11.5

Changes in fair value of derivatives in cash flow hedges 0.0 – 0.1 – 0.1 – 0.4 0.0 – 0.4

Other income/loss from investments accounted for using the equity method 0.4 0.1 0.4 0.0 0.0 0.0

Other income/loss – 152.1 39.0 – 113.0 – 45.4 – 6.5 – 51.9

Notes to the consolidated statement of € millions 2014 2013 cash flows Intangible assets 300.3 84.6 Property, plant, and equipment 6.5 0.4 (29) Other disclosures Non-current financial assets 6.5 1.7 Trade receivables 31.9 4.3

The cash and cash equivalents were composed of short- Other assets 19.8 4.0 term available cash in banks, securities, cash on hand, Cash and cash equivalents 48.4 7.7 and checks. Provisions and liabilities – 70.7 – 10.2

Asset additions of € 5.9 million (PY: € 4.9 million) were Deferred tax liabilities – 82.6 – 20.4 not reflected in cash. This related to additions in both Net assets 260.1 72.0 intangible assets and property, plant, and equipment. Acquisition cost (preliminary) 651.3 157.7

Thereof paid 523.1 130.0 The acquisition costs, cash payments, and purchased assets and liabilities for business acquisitions are presented in the following table: The amounts from the purchases of shares in consolidated subsidiaries and business units less cash and cash equivalents acquired reported in the cash flow statement, in addition to the cash payments and acquired funds listed in the table, also include payments for acquisitions of the previous years (in particular payments from contingent consideration; see note (33)).

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The following table provides details of sales proceeds, Notes to the consolidated segment report paid up amounts, and disposed assets and liabilities arising from transactions with loss of control (including (30) Basic principles of segment reporting the deconsolidation of AutoReflex in the previous year, see note (2c)): The segment reporting reflects the internal management and reporting structures. The reporting format is broken € millions 2014 2013 down into the three operating segments, those being Goodwill 4.0 9.5 Paid Models, Marketing Models, and Classifieds Ads Models. In addition, there is the Services/Holding segment. Other intangible assets 1.8 13.7

Property, plant, and equipment 0.6 0.8 Segmentation of assets, liabilities, and investments Non-current financial assets 2.2 0.1 based on the operating segments does not occur as Trade receivables 3.5 12.4 these measures do not serve as a basis for decision Other assets 4.3 5.0 making at segment level.

Cash and cash equivalents 5.1 7.3 (a) Operating segments Provisions and other liabilities – 13.6 – 22.9 The Paid Models segment comprises all business mod- Deferred tax liabilities – 2.1 – 4.6 els that are primarily used by paying readers. Paid Mod- Disposal net assets 5.8 21.2 els National is based primarily on the BILD and WELT Net realizable value 9.0 4.6 Group and comprises the digital media offers as well as

Thereof paid-up 7.1 4.6 the newspapers and computer, automotive, sport, and music magazines of the BILD, B.Z., and WELT brand family. The news station N24, which was acquired in February 2014 and will be combined with the WELT The disclosure of cash inflows from divestitures in the Group to form a multimedia news company, also be- cash flow statement is made under proceeds from dis- longs to this segment. In addition, the investments in posals of consolidated subsidiaries and business units newspaper and magazine publishers in Germany are less cash and cash equivalents given up in the previous included. Paid Models International comprises the digital year as well as under the changes in cash and cash media offers as well as the newspapers and magazines equivalents due to changes in companies included in in Western, Central, and Eastern Europe, where we are consolidation. particularly represented in Poland, Slovakia, Serbia, Hungary, Switzerland, Russia, and Spain. Onet.pl and In the previous year, we contributed both € 25.0 million azet.sk, the leading Internet portals in Poland and Slo- in cash and real estate assets with carrying amounts of vakia, also belong to this segment. € 9.8 million to our plan assets to secure and service existing pension obligations of Axel Springer (see note (13)). The Marketing Models segment collects all domestic and foreign business models whose revenues are primarily generated by advertising customers in marketing based on performance or reach. These particularly include the performance-based activities of the zanox Group and the reach-based marketing offers of Idealo, auFeminin, and Bonial. Furthermore, this segment also comprises the investment in the TV broadcast company Do⁄an TV.

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The Classified Ad Models segment comprises all busi- calculating this performance figure, non-recurring effects ness models whose revenues are primarily generated in and effects of purchase price allocations are eliminated. the online classifieds business. Our portfolio comprises Non-recurring effects include effects from the acquisition leading domestic and foreign online classifieds portals, and disposal of subsidiaries, business divisions, and with the focus areas of real estate, job, car and general investments, as well as impairment and write-ups of classified advertising. This largely covers the real estate investments, effects from the sale of real estate, and portals SeLoger, Immoweb, and Immonet, the job portals special depreciation and write-ups of real estate used by of the StepStone Group, the regional portal meinestadt.de, the company. as well as the car and general classified ad portals Yad2 and LaCentrale acquired in the year 2014. The non-recurring effects of € – 1.5 million (PY: € 8.6 million) in the Paid Models National segment relate The Services/Holding segment comprises the remaining particularly to the effects from the revaluation of contin- business activities, including services such as customer gent purchase price liabilities (€ 10.7 million; PY: service, sales, logistics, direct marketing, and office € 24.0 million), costs in connection with initiated divest- buildings, as well as purely internal departments like IT, ments (€ – 9.0 million; PY: € – 14.8 million), as well as accounting, personnel, and corporate staff departments. depreciation on financial assets (€ – 2.8 million; PY: Our three offset printing plants, and the rotogravure € – 0.5 million). The non-recurring effects of printing company PRINOVIS are likewise included in the € 37.8 million (PY: € – 9.0 million) in the Marketing Mod- Services/Holding segment. els segment are particularly based on the revaluation of contingent purchase price liabilities (€ 18.0 million; PY: (b) Geographical information € – 8.1 million) as well as profits from the sale of equity The activities of the Axel Springer Group are conducted investments (€ 21.8 million; PY: € 0.5 million). In the mainly in Germany and in other European countries. Classified Ad Models segment, non-recurring effects of € 41.6 million (PY: € – 12.8 million) were identified in For purposes of geographical segment reporting, the particular as being from the sale of investments revenues are segmented according to the location of the (€ 55.1 million; PY: € – 0.1 million), expenses in connec- customer’s registered office and the non-current assets tion with realized acquisitions (€ – 8.7 million; PY: according to the location of the legal entity. € – 5.1 million) and the revaluation of contingent purchase price liabilities (€ – 3.0 million; PY: – 7.5 million). (31) Segment information In the Services/Holding segment non-recurring effects The segment information was compiled on the basis of (€ – 32.9 million; PY: € 2.8 million) mainly resulted from the recognition and measurement methods applied in impairment losses in connection with the planned sale of the consolidated financial statements. real estate. The external revenues comprise circulation revenues The effects of purchase price allocations mainly consist- from the sale of publishing products, advertising reve- ed of amortization and depreciation on newly measured nues, and revenues from rendering services. The internal assets acquired in the context of business combinations. revenues consist of revenues from the exchange of They also contain impairment losses on goodwill during goods and services between the various segments. the reporting year in the amount of € 31.1 million as well The transfer pricing is based on cost coverage. as on other intangible assets in the amount of € 5.5 million We use the performance figure EBITDA, which illustrates in the Marketing Models segment (PY: € 2.7 million on earnings before interest, taxes, depreciation and amorti- goodwill in the Paid Models segment). zation, as well as EBIT, which is defined as earnings before interest and taxes, to measure segment results. In

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The reconciliation of the income from investments carried Other disclosures on the income statement as well as the impairments is shown below: (32) Capital management

€ millions 2014 2013 Beyond the provisions of German law applicable to stock corporations, Axel Springer SE is not subject to any Income from investments included in further obligations relating to capital preservation, wheth- EBITDA 10.7 12.1 er from its own Articles of Incorporation or from contrac- Non-recurring effects included in income tual obligations. The financial key figures we used for from investments 70.6 13.6 management purposes are primarily earnings-driven. The Income from investments 81.4 25.7 goals, methods, and processes of our capital management are subordinate to the earnings-driven financial key Depreciation, amortiza-tion, impairments figures. and write-ups (except from purchase price allocations) – 112.5 – 94.7 We can utilize the funds derived from the promissory Thereof write-ups – 6.3 – 1.0 notes placed in the prior year (€ 637.0 million) and also Non-recurring effects from depreciation – 33.0 0.0 draw down our credit line (€ 900.0 million) both for gen- Effects of purchase price allocations as far as depreciation, amortization and eral business purposes as well as to finance acquisitions. impairments are affected – 103.9 – 59.4 Depreciation, amortization, and The promissory note loan was restructured in October impairments – 255.6 – 155.1 2014. Until September 30, 2014, this had a financing volume of € 500.0 million and a maturity up to 2016

(nominal value of € 269.5 million) or up to 2018 (nominal value of € 230.5 million). The new tranches of the prom- The non-current segment assets include goodwill, intan- issory note loan have maturities up to 2016 (nominal gible assets, property, plant, and equipment as well as value of € 56.5 million), up to 2018 (nominal value of investment properties. € 332.0 million), and up to 2020 (nominal value of € 248.5 million).

In addition, we have a credit line in the amount of € 900.0 million. Drawdowns of this credit line will become due and payable in September 2017. The draw- down of the credit lines is tied to compliance with the credit terms. Since the existence of the credit lines we have fully complied with all credit terms.

For the purpose of maintaining and adjusting the capital structure, the company can adjust the dividend payments to its shareholders or purchase treasury shares

representing up to 10.0 % of the subscribed capital. Treasury shares can be used for acquisition financing, or they can be retired. At the reporting date and the prior year's reporting date we held no treasury shares.

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(33) Financial assets and liabilities

The balance sheet items comprising financial assets and liabilities can be attributed to the measurement categories according to IAS 39 as follows:

No category according Financial to IAS 39 Available- assets and and non for-sale liabilities financial Carrying Loans and Financial financial held for assets and € millions amount receivables liabilities assets trading liabilities Assets 12/31/2014 Other non-current investments and securities 34.4 34.4 Loans and advances 288.5 288.5 Derivatives 259.1 259.1 Other non-current financial assets 582.0 288.5 34.4 259.1 Trade receivables 523.8 523.8 Receivables due from related parties 43.6 13.0 30.6 Derivatives 0.5 0.5 Other 164.1 112.0 52.1 Other assets 164.6 112.0 0.5 52.1 Cash and cash equivalents 383.1 383.1 Liabilities 12/31/2014 Financial liabilities 1,050.9 1,049.0 2.0 Trade payables 313.5 313.5 Liabilities due to related parties 16.9 9.2 7.7 Derivatives designated as a hedging instrument 0.9 0.9 Derivatives not designated as a hedging instrument 43.6 43.6 Contingent consideration 266.4 266.4 Other 388.2 101.7 286.5 Other liabilities 699.2 101.7 43.6 553.8

Assets 12/31/2013 Other non-current investments and securities 384.2 384.2 Loans and advances 41.0 41.0 Other non-current financial assets 425.2 41.0 384.2 Trade receivables 472.8 472.8 Receivables due from related parties 36.0 8.0 27.9 Derivatives 0.5 0.5 Other 134.1 102.7 31.4 Other assets 134.6 102.7 0.5 31.4 Cash and cash equivalents 248.6 248.6 Liabilities 12/31/2013 Financial liabilities 719.8 655.3 64.5 Trade payables 271.4 271.4 Liabilities due to related parties 15.1 11.0 4.1 Derivatives designated as a hedging instrument 0.9 0.9 Derivatives not designated as a hedging instrument 27.9 27.9 Contingent consideration 178.7 178.7 Other 360.8 99.8 261.0 Other liabilities 568.3 99.8 27.9 440.6

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With the exception of the following financial assets and liabilities, the valuation is at amortized cost.

12/31/2014 12/31/2013 Fair value Fair value not Fair value Fair value not Fair value based on based on Fair value based on based on based on observable observable based on observable observable market price market data input factors market price market data input factors € millions (level 1) (level 2) (level 3) (level 1) (level 2) (level 3) Other non-current investments and 0.0 securities 39.3

Derivatives not designated as a 0.5 259.1 hedging instrument (positive fair value) 0.5

Derivatives designated as a hedging 0.9 instrument (negative fair value) 0.9

Derivatives not designated as a 43.6 hedging instrument (negative fair value) 27.9

Contingent consideration 266.4 178.7

The fair values of contingent considerations developed as follows:

Thereof Thereof Car&Boat Immoweb Thereof Thereof Thereof € millions 2014 Media Onet 2013 Immoweb Onet 01/01/2014 178.7 0.0 53.7 67.1 201.5 46.1 89.7

Acquisition 134.6 80.3 16.4

Divestment 0.0 – 2.2

Payment – 27.4 – 2.0 – 42.0

Revaluation not affecting net income 0.0 11.2

Revaluation affecting net income – 26.2 2.3 – 11.0 – 9.0 6.8 – 23.6

Thereof other operating income – 32.0 – 11.0 – 25.8 – 23.6

Thereof other operating expenses 5.8 2.3 16.8 6.8

Compound 6.6 1.9 1.5 1.5 2.8 0.8 1.0

12/31/2014 266.4 82.2 57.5 55.6 178.7 53.7 67.1

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Payments during the previous year related particularly to tion changes and other expenses for financial derivatives the acquisition of the remaining shares in Digital Window. assigned to this category.

With the exception of the financial liabilities presented During the reporting year, positive fair value changes of below, the carrying amounts of the financial assets and € 27.0 million (PY: € 17.3 million) before taxes were rec- liabilities were identical to their fair values. ognized directly in equity without affecting net income. Related to the sale of our investment in iProperty (see 12/31/2014 12/31/2013 note (11e)) the unrealized gains recorded in other com- Carrying Carrying prehensive income amounting to € 47.0 million before € millions amount Fair value amount Fair value taxes were reclassified into the income statement in the Liabilities 1,049.0 1,062.3 655.3 663.5 context of income recognition. Thereof promissory note 631.7 645.0 499.1 507.3 (34) Financial risk management Thereof due to banks 417.2 417.2 156.2 156.2 With respect to its financial assets and liabilities, the Axel

Springer Group is exposed to financial market risks, liquidity risks, and credit risks. The task of financial risk The fair value disclosed is determined on the basis of the management is to limit these risks by means of targeted advantage between the contractually agreed fixed inter- measures. est rate and the market interest rate (level 2 of the measurement hierarchy, see note (3g)). (a) Financial market risks Financial market risks for financial assets and liabilities The net gains and losses of financial instruments (exclud- mainly consist of interest rate risks and exchange rate ing interest and dividends) recognized in the income risks. statement are presented in the following table. In principle, the effects of these risks on the value can be € millions 2014 2013 assessed promptly and, where applicable, the loss risks Loans and receivables, financial liabilities 19.7 29.8 can be reduced.

Available-for-sale financial assets – 186.9 12.8 Selected derivative hedging instruments are used to Financial assets and liabilities held for trading 240.8 – 25.4 hedge risks. The use of financial derivatives is governed by appropriate guidelines of the Group. These guidelines define the relevant responsibilities, permissible actions, reporting requirements and business partner limit, and The net gains and losses in the categories of “loans and prescribe the strict separation of trading and back-office receivables” and “financial liabilities” consisted mainly of functions. the result from the currency translation and valuation allowances. To hedge the interest rate risk, we employ in particular interest rate derivatives such as interest rate swaps, in The net gains or losses of available-for-sale financial addition to increased use of fixed interest agreements. assets consisted mainly of the gains and losses on the The degree of hedging specified in the Axel Springer disposal of these financial assets and impairments. The finance regulations ranges between 30 % and 100 % of net gains and losses in the category of “financial assets the underlying transaction volume. The use of fixed inter- and liabilities held for trading” mostly resulted from valua- est agreements and interest rate derivatives resulted in an annual average hedging ratio regarding the gross

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indebtedness (promissory note loan and liabilities for by fixed credit lines in the amount of € 900.0 million (until banks) of 56.0 % (PY: 80.5 %). 2017) as well as by the promissory note (€ 637.0 million). Note (17) contains a maturity analysis of our financial The effects of market interest rate changes on variable- liabilities. The payment obligations for financial obliga- interest financial instruments not hedged with financial tions that have been contractually agreed but not yet derivatives are calculated using a sensitivity analysis. recorded are presented in note (39). Assuming a parallel shift in the yield curve of 50 basis points, the financial result would change by € 2.7 million (c) Credit risk (PY: € 1.6 million). Financial assets may be impaired if business partners do not adhere to payment obligations. The maximum expo- Currency risks from operations are mainly avoided sure to risk from financial assets, which are fundamental- through the occurrence of operating costs in the coun- ly subject to credit risk, correspond to their carrying tries in which we sell our products and services. Remain- amounts. ing currency risks from operations are insignificant to the Group since the majority of EBITDA is earned in the euro Significant risk items are contained in non-current finan- currency zone. In the reporting period, the share of cial assets (loans) as well as in trade receivables, receiv-

EBITDA not earned in euros was 20 % (PY: 19 %). ables due from related parties, and other assets.

Currency risks from foreign currency claims and liabilities The majority of our business models are based on a (without contingent compensation) as well as claims and widely distributed and heterogeneous customer base. liabilities in euros in non-euro countries with net expo- We therefore estimate the risk of significant defaults to sures starting at € 5 million per foreign currency are be low. To the extent that credit risks are discernible, we hedged by means of coordinated forward exchange reduce them using active management of receivables, transactions. credit limits, and credit checks of our business partners. Appropriate allowances are formed to account for dis- Local-currency cash flows generated in non-euro zone cernible default risks. countries are either reinvested to expand local business operations, or invested with Axel Springer SE and In connection with the sale of regional newspapers, TV hedged by means of forward exchange deals or distrib- program guides, and women's magazines we granted in uted in the form of dividends. Therefore, the foreign the amount of € 240.7 million a multi-year, subordinated exchange risk from fluctuating exchange rates for foreign loan to FUNKE Mediengruppe. Currently, we do not see currency cash and cash equivalents is limited. any default risk. For collateralization purposes, our business partners granted second-tiered securities regarding Effects from the currency translation of statements pre- their assets. pared by subsidiaries in foreign currencies are recorded directly in accumulated other comprehensive income. Investments in securities are made only in instruments Therefore, Axel Springer does not hedge such currency with first-class ratings according to our finance regula- effects. tions. Investment in time deposits occurs exclusively at financial institutions that belong to the deposit protection (b) Liquidity risk fund and are classified by leading rating agencies as We continually monitor the availability of financial re- being at least of Investment Grade Status BBB- (S&P) or sources to fund the company’s operating activities and Baa3 (Moody’s)). investments by means of a Group-wide liquidity planning system and monthly cash flow analyses. Liquidity and financial flexibility of the Axel Springer Group is ensured

147

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

(35) Financial derivatives value measurement of these forward exchange transactions, as well as the opposite profits and losses from the (a) Financial derivatives designated as hedging foreign currency measurement of the hedged loan claims instruments and obligations were recognized. In the reporting period, designated hedging instruments were used in particular to hedge against the interest rate In order to secure our investment in Do⁄an TV, we con- risks of long-term liabilities. The cash flows were hedged cluded several put options for a successive sale of all through an interest rate swap. Regarding maturity and shares with the seller. With regard to the accounting of nominal amount the interest rate swap was chosen to this hedging agreement see note (7b). Beside the agreed match the corresponding tranches of the variable- fixed price secured by bank guarantees, the valuation of interest loans (hedged items). The interest rate swap was the derivatives depends in particular on the discount rate. measured at fair value. The changes in the fair value A supposed variation of 25 basis points would alter the were recognized in accumulated other comprehensive valuation recorded within the income from investments income until the hedged item was realized. by € 2.7 million.

The fair value measurement of the interest rate swap at (36) Relationships with related parties the reporting date yielded negative fair values of

€ – 0.9 million (PY: – 0.9 million). During the reporting Related parties are defined as those persons and com- period a profit of less than € 0.1 million was recorded in panies that control the Axel Springer Group, or that are other comprehensive income (PY: € 0.3 million). controlled, jointly managed, or subject to significant influence by the Axel Springer Group. Accordingly, the In addition, two designated hedging instruments were members of the Springer family, the companies con- used to hedge against currency risks from purchase price trolled, jointly managed, or subject to significant influence payments for company acquisitions. Regarding the for- by this family, as well as companies in whose manage- ward exchange transaction implemented and realized ment they hold a key position have been defined as during the year for hedging the purchase price payment related parties for the Axel Springer Group. Control of the for acquiring Jobsite an unrealized gain of € 2.8 million, Group is exercised by Axel Springer Gesellschaft für initially recorded in other comprehensive income, was Publizistik GmbH & Co. or its parent company, Friede included in the acquisition costs for acquired non-financial Springer GmbH & Co. KG, a majority of which is attribut- assets. On the reporting date the negative fair value of the able to Dr. h. c. Friede Springer. In addition, the subsidi- remaining forward exchange transactions for hedging the aries, joint ventures, and associated companies of the purchase price payment of an additional acquisition was Axel Springer Group have been defined as related com- less than € – 0.1 million. panies. In addition to the active members of the Execu- tive Board and Supervisory Board of Axel Springer SE (b) Financial derivatives not designated as (including their family members) and their majority hold- hedging instruments ings, the institutions managing the plan assets of the As of December 31, 2014 forward exchange transac- Axel Springer Group must also be considered related tions with a negative fair value of € – 43.6 million and a parties. positive fair value of € 0.5 million (PY: negative fair value of € – 27.9 million, positive fair value of € 0.5 million) were recorded; these were entered in order to secure against currency risks in loans from foreign subsidiaries or a contingent purchase price liability. The nominal value of the hedged transactions amounted to € 461.2 million (PY: € 472.3 million). The profits and losses from the fair

148

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Besides the business relationships with the consolidated subsidiaries, the following business relationships existed with related parties:

Associated Other related Associated Other related € millions Total companies parties Total companies parties

Balance sheet 12/31/2014 12/31/2013 Loans 6.3 5.5 0.8 5.0 3.2 1.8

Receivables 43.6 36.9 6.7 36.0 31.2 4.8

Thereof trade 8.4 2.9 5.4 6.6 2.9 3.7

Allowances included 24.1 2.9 21.1 25.7 2.2 23.5

Provisions 11.4 0.0 11.4 7.0 0.0 7.0

Liabilities 16.9 1.5 15.4 15.0 4.0 11.0

Thereof trade 3.6 1.5 2.1 5.2 4.0 1.2

Income statement 2014 2013 Goods and services supplied 18.6 15.3 3.2 18.0 16.0 2.0

Goods and services received 58.5 18.6 39.9 63.2 30.3 32.9

Financial result 0.9 0.9 0.0 0.6 0.5 0.1

With regard to discontinued operations, services were As of December 31, 2014, receivables in the amount of rendered amounting to € 28.3 million (PY: € 79.9 million) € 34.8 million (PY: € 31.1 million) were neither past due and services were received amounting to € 1.8 million nor subject to valuation allowances. With regard to these (PY: € 6.5 million). receivables, there were no indications at the reporting date that would suggest that the related parties would The changes in the allowances for receivables due to not fulfill their payment obligations. related parties are presented in the table below: The receivables due from associated companies in- € millions 2014 2013 cluded a reimbursement claim for pension obligations in Balance as of January 1 25.7 28.1 the amount of € 30.6 million (PY: € 27.9 million) (see

Additions 4.5 0.9 note (13)).

Utilization – 4.5 0.0 The provisions referred to pension obligations owed to Reversals – 1.5 – 3.4 members of the Executive Board. The liabilities include Other changes – 0.2 0.0 obligations from share-based remuneration owed to Balance as of December 31 24.1 25.7 members of the Executive Board in the amount of € 7.7 million (PY: € 4.1 million).

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Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

Goods and services provided to related companies were (37) Contingent liabilities mostly related to the distribution of newspapers and magazines. The services received from related compa- As of December 31, 2014, contingent liabilities from nies mainly comprised purchased publishing products guarantees existed in the amount of € 49.0 million and printing services. A master agreement for the print- (PY: € 11.6 million). In connection with the disposal to ing of magazines is in effect with PRINOVIS until Decem- FUNKE Mediengruppe, we assumed an additional guar- ber 31, 2019. Under this agreement, services in the antee (see note (2d)). amount of € 15.4 million (PY: € 17.9 million) were rendered for companies of the Axel Springer Group in 2014. (38) Contingent assets

In 2014, the fixed compensation of the members of the Contingent assets were due from KirchMedia GmbH & Executive Board of Axel Springer SE amounted to Co KGaA i.L. in the amount of € 240.5 million (PY: € 8.9 million (PY: € 9.4 million). The variable compensa- € 263.3 million). Insofar as advance payments are an- tion amounted to € 8.9 million (PY: € 10.7 million). The nounced in the context of the insolvency proceedings measurement of the share-based compensation granted against KirchMedia GmbH & Co. KGaA i.L., we recog- to the Executive Board of Axel Springer SE gave rise to nize them as receivables. The receivables accepted in personnel expenses of € 3.6 million (PY: € 14.2 million). the table of claims by the insolvency administrator origi- Guaranteed pension payments to members of the Execu- nally totaled € 325.0 million. A total of € 6.5 million (PY: tive Board resulted in a personnel expense of € 0.5 million in € 6.5 million) was paid in the reporting year. fiscal year 2014 (PY: € 0.5 million).

The compensation of the members of the Supervisory Board amounted to € 3.0 million (PY: € 3.0 million). A Supervisory Board member received a compensation of € 0.1 million for services as an author (PY: € 0.1 million).

The compensation of the members of the Executive and Supervisory Board is described in detail in the compensation report, which is part of the notes to the consolidated financial statements. The compensation report is included in the section “Corporate Governance Report”.

An amount of € 2.6 million (PY: € 2.6 million) was paid to former Executive Board members and special directors and their survivors. A total amount of € 37.2 million (PY: € 32.4 million) was allocated to the provisions for pension obligations.

For transactions with the institutions managing the plan assets of the Axel Springer Group, please find the expla- nations in note (13).

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(39) Other financial commitments (40) Events after the reporting date

The other financial commitments broke down as follows: At the beginning of January 2015 the acquisition of 51 % of shares in @Leisure Holding B.V., Amsterdam, the € millions 12/31/2014 12/31/2013 Netherlands, was completed (for further details, see Purchase commitments for note (2c)).

- intangible assets 3.0 4.9

- property, plant, and equipment 3.3 5.9 On February 11, 2015 we signed an agreement with the shareholders of the real estate portal Immowelt regarding - inventories 17.4 21.1 combining the Immowelt Group and the Immonet Group, Future payments under operating leases 158.9 106.0 belonging to Axel Springer Digital Classifieds. After finali- Future payments under finance leases 2.2 80.9 zation of various purchase and contribution agreements Long-term purchase obligations 68.0 113.4 both real estate portals will be brought under the auspi- Other financial obligations 252.9 332.2 ces of the new Immowelt Holding AG company, where

we will have a majority shareholding of 55 % via Axel

Springer Digital Classifieds. The remaining 45 % will be kept by the current shareholders of Immowelt AG, and The long-term purchase obligations resulted from paper they were granted various options available for selling supply contracts. their holding. The transaction was based on a valuation of both companies totaling € 420 million. We will pay a The finance leases for the office building, which was total of approximately € 131 million as purchase price to reclassified as assets held for sale, shall be terminated at the previous partners of Immowelt in connection with the estimated time of disposal and are not included as a creating the new structure. The combining of both por- commitment. From the total amount of € 74.5 million, tals makes it possible to sustainably improve the com- € 4.0 million are expected to be paid out in the short-term. petitive position within the German market segment for real estate portals. The transaction is still awaiting ap- The future minimum lease payments from operating proval from the relevant cartel authorities. leases at December 31, 2014 are broken down in the following table: There are no further significant events after the reporting date to be reported. € millions 2014 2013 Due in up to one year 47.1 34.5 (41) Declaration of Conformity with the German Due in one to five years 94.3 69.2 Corporate Governance Code Due in more than five years 17.5 2.3

Total 158.9 106.0 Axel Springer SE published 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 Corporations Act (AktG) on the company’s website www.axelspringer.de → Investor Relations → Corporate Governance, where it is permanently available to shareholders. The Declaration of Conformity is also printed in the Corporate Governance section of this Annual Report.

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(42) Companies included in the consolidated financial statements and share property

12/31/2014 12/31/2013 Share- Share- holding via holding via No. Company Segment in % No. in % No. 1 Axel Springer SE, Berlin (parent company) - - - - -

Fully consolidated subsidiaries

Germany

2 AS Osteuropa GmbH, Berlin Paid Models 100.0 16 100.0 16 3 AS TV-Produktions- und Vertriebsges. mbH, Hamburg Marketing Models 100.0 1 100.0 1 4 ASV Direktmarketing GmbH, Hamburg Services Holding 100.0 1 100.0 1 5) 5 Axel Springer Asia GmbH, Hamburg Paid Models, Marketing Models 100.0 16 100.0 16 6 Axel Springer Auto-Verlag GmbH, Hamburg Paid Models 100.0 1 100.0 1 5) 7 Axel Springer Digital Classifieds GmbH, Berlin Classified Ad Models 85.0 9 70.0 9 8 Axel Springer Digital Classifieds Holding GmbH, Berlin Classified Ad Models 100.0 7 100.0 7 9 Axel Springer Digital GmbH, Berlin Services/Holding 100.0 1 100.0 1 5) 10 Axel Springer Digital TV Guide GmbH, Berlin Marketing Models - - 100.0 1 11 Axel Springer Digital Ventures GmbH, Berlin Services/Holding 100.0 9 100.0 9 5) 12 Axel Springer Financial Media GmbH, Munich Paid Models 100.0 1 100.0 1 13 Axel Springer ideAS Engineering GmbH, Berlin Services/Holding 100.0 24 100.0 24 5) 14 Axel Springer ideAS Ventures GmbH, Berlin Services/Holding 100.0 24 100.0 24 5) 15 Axel Springer International GmbH, Berlin Services/Holding 100.0 1 100.0 1 5) 16 Axel Springer International Holding GmbH, Berlin Services/Holding 100.0 15 100.0 15 5) 17 Axel Springer Media Impact GmbH & Co. KG, Berlin Services/Holding 100.0 1 100.0 1 6) 18 Axel Springer Media Logistik GmbH, Berlin Services/Holding 100.0 1 100.0 1 19 Axel Springer Mediahouse Berlin GmbH, Berlin Paid Models 100.0 1 100.0 1 5) 20 Axel Springer Medien Accounting Service GmbH, Berlin Services/Holding 100.0 1 100.0 1 5) 21 Axel Springer Services & Immobilien GmbH, Berlin Services/Holding 100.0 1 100.0 1 5) 22 Axel Springer Syndication GmbH, Berlin Paid Models 100.0 24 100.0 24 5) 23 Axel Springer TV Productions GmbH, Hamburg Marketing Models 100.0 1 100.0 1 5) 24 "Axel Springer Verlag" Beteiligungsgesellschaft mbH, Berlin Services/Holding 100.0 1 100.0 1 5) 25 Axel Springer Vertriebsservice GmbH, Hamburg Paid Models, Services/Holding 100.0 1 100.0 1 5) 26 B.Z. Ullstein GmbH, Berlin Paid Models 100.0 24 100.0 24 5) 27 Bergedorfer Buchdruckerei von Ed. Wagner (GmbH & Co), Hamburg Paid Models - - 100.0 1 28 Berliner Morgenpost GmbH, Berlin Paid Models - - 100.0 24 29 BERLINER WOCHENBLATT Verlag GmbH, Berlin Paid Models - - 100.0 71 Bilanz Deutschland Wirtschaftsmagazin GmbH (previously Zweiundsiebzigste "Media" Paid Models 30 100.0 24 100.0 24 5) Vermögensverwaltungsges. mbH), Hamburg 31 BILD GmbH & Co. KG, Berlin Paid Models 100.0 1 100.0 1 6) 32 Bonial International GmbH, Berlin Marketing Models 87.4 1 74.9 1 9) 33 Buch- und Presse-Großvertrieb Hamburg GmbH & Co. KG, Hamburg Paid Models, Services/Holding 78.1 1 78.1 1 6) 34 Commerz-Film GmbH, Berlin Marketing Models 100.0 16 100.0 16 35 comparado GmbH, Lüneburg Marketing Models 100.0 43 100.0 43 36 COMPUTER BILD Digital GmbH, Hamburg Paid Models 100.0 1 100.0 1 5) 37 Content Factory TV-Produktion GmbH, Berlin Paid Models 100.0 72 - - 5) 38 eprofessional GmbH, Hamburg Marketing Models 100.0 76 100.0 76 39 finanzen.net GmbH, Karlsruhe Marketing Models 75.0 11 55.0 11 10) 40 Gofeminin.de GmbH, Cologne Marketing Models 100.0 83 100.0 83 41 hamburg.de GmbH & Co. KG, Hamburg Marketing Models 61.9 9 61.9 9 6) 42 Idealo International GmbH, Berlin Marketing Models 100.0 43 100.0 43 43 Idealo Internet GmbH, Berlin Marketing Models 74.9 9 74.9 9 44 Immonet GmbH, Hamburg Classified Ad Models 88.7 8 88.7 8

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12/31/2014 12/31/2013 Share- Share- holding via holding via No. Company Segment in % No. in % No. 45 ImmoSolve GmbH, Bad Bramstedt Classified Ad Models 51.0 44 - - 9) 46 ims Internationaler Medien Service GmbH & Co. KG, Hamburg Services/Holding 55.0 1 55.0 1 6), 9) 47 Maz&More TV-Produktion GmbH, Berlin Paid Models 100.0 72 - - 5) 48 meinestadt.de GmbH, Cologne Classified Ad Models 100.0 49 100.0 49 49 meinestadt.de Holding GmbH, Berlin Classified Ad Models 100.0 8 100.0 8 50 meinestadt.de Vertriebs-GmbH, Cologne Classified Ad Models 100.0 48 100.0 48 51 MeinProspekt GmbH, Munich Marketing Models 100.0 32 - - 52 Metrigo GmbH, Hamburg Marketing Models - - 56.1 76 53 Niendorfer Wochenblatt Verlag GmbH & Co. KG, Hamburg Paid Models - - 100.0 71 54 PACE Paparazzi Catering & Event GmbH, Berlin Services/Holding 100.0 1 100.0 1 5) 55 Panther Holding GmbH, Berlin Marketing Models 100.0 43 100.0 43 56 Room 49 GmbH, Berlin Marketing Models 100.0 14 100.0 14 5) 57 Sales Impact GmbH & Co. KG, Hamburg Services/Holding 100.0 1 100.0 1 6) 58 Shop Now GmbH, Berlin Marketing Models 90.0 14 100.0 14 59 Smarthouse Media GmbH, Karlsruhe Marketing Models 91.0 11 91.0 11 60 Sohomint GmbH i.L., Hamburg Marketing Models 72.6 1 72.6 1 61 StepStone Deutschland GmbH, Düsseldorf Classified Ad Models 100.0 62 100.0 62 62 StepStone GmbH, Berlin Classified Ad Models 100.0 8 100.0 8 Talpa Germany GmbH & Co. KG (previously Schwartzkopff TV-Productions GmbH & Co. 63 50.1 23 100.0 23 6) KG), Hamburg Marketing Models 64 thads.media vermarktungs gmbh, Berlin Paid Models 100.0 72 - - 65 Transfermarkt GmbH & Co. KG, Hamburg Paid Models 51.0 31 51.0 31 6) 66 Ullstein Ges. mit beschränkter Haftung, Berlin Paid Models 100.0 24 100.0 24 5) 67 Umzugsauktion GmbH & Co. KG, Schallstadt Classified Ad Models 100.0 44 51.0 44 6), 9) 68 Vertical Media GmbH, Berlin Paid Models 88.0 72 - - 9) 69 Visual Meta GmbH, Berlin Marketing Models 76.0 43 76.0 43 70 WBV Direktzustell-GmbH, Hamburg Paid Models - - 100.0 71 71 WBV Wochenblatt Verlag GmbH, Hamburg Paid Models - - 100.0 28 WeltN24 GmbH (previously Zweiundfünfzigste "Media" Vermögensverwaltungsges. 72 100.0 1 100.0 1 5) mbH), Berlin Paid Models 73 YOURCAREERGROUP AG, Düsseldorf Classified Ad Models - - 100.0 62 74 YOURCAREERGROUP GmbH (previously StepStone Verwaltungs GmbH), Düsseldorf Classified Ad Models 100.0 62 100.0 62 75 YOURCAREERGROUP International GmbH & Co. KG, Düsseldorf Classified Ad Models - - 100.0 62 76 ZANOX AG, Berlin Marketing Models 52.5 9 52.5 9 77 Zuio GmbH, Berlin Marketing Models 100.0 24 100.0 24 5) Other countries 78 alFemminile s.r.l., Milan, Italy Marketing Models 100.0 83 100.0 83 79 Amiado Group AG, Zurich, Switzerland Paid Models 100.0 95 100.0 95 80 Amiado Online AG, Zurich, Switzerland Paid Models 100.0 79 100.0 79 74.9 164 74.9 164 81 APM Print d.o.o., Belgrade, Serbia/Kosovo Paid Models 25.1 142 25.1 142 82 AS-NYOMDA Kft, Kecskemét, Hungary Paid Models 100.0 144 100.0 86 83 AUFEMININ SA, Paris, France Marketing Models 80.8 16 80.8 16 84 auFeminin.com Productions SARL, Paris, France Marketing Models 100.0 83 100.0 83 85 Automotive Exchange Private Limited, Maharashtra, India Classified Ad Models 91.3 5 72.8 5 86 Axel Springer - Magyarország Kft, Tatabánya, Hungary Paid Models - - 93.5 1 87 Axel Springer Digital Classifieds France SAS, Paris, France Classified Ad Models 100.0 8 100.0 8 88 Axel Springer España S.A., Madrid, Spain Paid Models 100.0 1 100.0 1 89 Axel Springer France S.A.S., Paris, France Paid Models 100.0 1 100.0 1 90 Axel Springer IdeAS Polska Sp. z o. o., Wroslaw, Poland Services/Holding 99.0 13 - -

153

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

12/31/2014 12/31/2013 Share- Share- holding via holding via No. Company Segment in % No. in % No. 1.0 1 - - Axel Springer International AG (previously Handelszeitung Medien AG), Zurich, Switzer- 91 100.0 92 100.0 95 land Paid Models 92 Axel Springer International Limited, London, Great Britain Paid Models 100.0 16 - - 93 Axel Springer Norway AS, Oslo, Norway Paid Models 100.0 92 100.0 9 94 "Axel Springer Russia" Geschlossene Aktiengesellschaft, Moscow, Russia Paid Models 100.0 2 100.0 2 95 Axel Springer Switzerland AG, Zurich, Switzerland Paid Models 100.0 1 100.0 1 96 Azet.sk a.s., Zilina, Slovakia Paid Models 70.0 149 70.0 149 97 Belles Demeures S.A.S., Paris, France Classified Ad Models 100.0 139 100.0 139 98 Blikk Kft., Budapest, Hungary Paid Models 100.0 146 - - 99 Bonial SAS, Paris, France Marketing Models 100.0 32 100.0 32 100 Candidate Manager (US) Inc, Boston, USA Classified Ad Models 100.0 101 100.0 101 101 Candidate Manager Ltd, Dublin, Ireland Classified Ad Models 100.0 151 100.0 151 102 Car&Boat Media SAS, Paris, France Classified Ad Models 51.0 8 - - 9) 103 CaribbeanJobs Ltd, George Town, Cayman Islands Classified Ad Models 100.0 151 100.0 151 104 Coral-Tell Ltd., Tel Aviv, Israel Classified Ad Models 100.0 8 - - 105 Diagorim SAS, Paris, France Classified Ad Models 82.2 152 82.2 152 106 Digital Window Inc., Wilmington, USA Marketing Models 100.0 107 100.0 107 107 Digital Window Limited, London, Great Britain Marketing Models 100.0 76 100.0 76 108 DreamLab Onet.pl sp. z o.o., Krakow, Poland Paid Models 100.0 115 100.0 115 109 enFemenino SARL, Madrid, Spain Marketing Models 100.0 83 100.0 83 110 Etoilecasting.com SAS, Paris, France Marketing Models 100.0 83 100.0 83 111 Evenbase Recruitment Ltd., London, Great Britain Classified Ad Models 100.0 162 - - 112 Gambettes Box SAS, Paris, France Marketing Models 100.0 124 - - 113 Garantie System SAS, Paris, France Classified Ad Models 100.0 102 - - 114 GoBrands Sp. z o.o., Krakow, Poland Paid Models 100.0 115 100.0 115 115 Grupa Onet.pl SA, Krakow, Poland Paid Models 100.0 132 100.0 132 116 Immoweb SA, Brussels, Belgium Classified Ad Models 80.0 87 80.0 87 9) 117 IT-Jobbank A/S, Kopenhagen, Denmark Classified Ad Models - - 100.0 62 118 Jobs LU Ltd, Dublin, Ireland Classified Ad Models 100.0 151 100.0 151 119 Jobs.ie Ltd, Dublin, Ireland Classified Ad Models 100.0 151 100.0 151 120 Marmiton SAS, Paris, France Marketing Models 100.0 83 100.0 83 50.0 147 50.0 147 121 Media Impact Polska Sp. z o.o., Warsaw, Poland Paid Models 50.0 115 50.0 115 122 Merci Alfred S.A.S., Paris, France Marketing Models 100.0 83 - - 123 My Little Campus SAS, Paris, France Marketing Models 100.0 124 - - 124 My Little Paris S.A.S., Paris, France Marketing Models 60.0 83 - - 9) 125 My Web Ltd, Ebene, Mauritius Classified Ad Models 100.0 137 100.0 137 126 MyJob Group Ltd, Sheffield, Great Britain Classified Ad Models 100.0 151 100.0 151 127 Népújság Kft, Békéscsaba, Hungary Paid Models - - 94.0 24 128 Netmums Limited, Watford, Great Britain Marketing Models 100.0 83 100.0 83 129 NIJobs.com Ltd, Belfast, Ireland Classified Ad Models 100.0 151 100.0 151 130 NIN d.o.o., Belgrade, Serbia/Kosovo Paid Models 99.7 142 99.7 142 51.0 83 51.0 83 131 ofeminin.pl Sp. z o.o., Warsaw, Poland Marketing Models 49.0 147 49.0 147 132 ONET Holding Sp. z o.o., Warsaw, Poland Paid Models 75.0 146 75.0 146 9) 133 OnetM Sp. z o.o. (previously OnetMarketing Sp. z o.o.), Krakow, Poland Paid Models 100.0 115 100.0 115 99.9 115 99.9 115 134 OnetMarketing Sp. z o.o. (previously OnetMarketing Sp. z o.o. S.K.A), Krakow, Poland Paid Models 0.1 133 0.1 133

154

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

12/31/2014 12/31/2013 Share- Share- holding via holding via No. Company Segment in % No. in % No. 135 Opineo Sp. z o.o., Wroclaw, Poland Paid Models 80.0 132 - - 136 Petöfi Lap- és Könyvkiadó Kft, Kecskemét, Hungary Paid Models - - 94.0 24 137 Pnet (Pty) Ltd, Johannesburg, South Africa Classified Ad Models 100.0 151 100.0 151 93.0 152 93.0 152 138 Poliris S.A.S., Paris, France Classified Ad Models 7.0 139 7.0 139 139 PressImmo On Line S.A.S., Paris, France Classified Ad Models 100.0 152 100.0 152 140 RAS Online d.o.o., Belgrade, Serbia/Kosovo Paid Models 100.0 142 100.0 142 141 Ringier Axel Springer CZ a.s., Prague, Czechia Paid Models - - 100.0 146 142 Ringier Axel Springer d.o.o., Belgrade, Serbia/Kosovo Paid Models 100.0 146 100.0 146 143 Ringier Axel Springer Inwestycje Sp. z o.o., Warsaw, Poland Paid Models 99.0 147 - - Ringier Axel Springer Magyarország Kft (previously Axel Springer - Budapest Kiadói Kft), 144 96.5 146 92.9 1 Budapest, Hungary Paid Models 145 Ringier Axel Springer Management AG, Zurich, Switzerland Paid Models 100.0 146 100.0 146 146 Ringier Axel Springer Media AG, Zurich, Switzerland Paid Models 50.0 92 50.0 16 3) 147 Ringier Axel Springer Polska Sp. z o.o., Warsaw, Poland Paid Models 100.0 146 100.0 146 148 Ringier Axel Springer Print CZ a.s., Prague, Czech Republic Paid Models - - 100.0 141 149 Ringier Axel Springer Slovakia a.s., Bratislava, Slovakia Paid Models 100.0 146 100.0 146 150 runtastic GmbH, Pasching, Austria Paid Models 50.1 11 50.1 11 151 Saongroup Limited, Dublin, Ireland Classified Ad Models 100.0 162 100.0 162 98.0 87 98.0 87 152 SeLoger.com SAS, Paris, France Classified Ad Models 0.5 8 0.5 8 153 Skapiec Sp. z o.o., Wroclaw, Poland Paid Models 80.0 132 - - 154 SmartAdServer SAS, Paris, France Marketing Models 100.0 83 100.0 83 155 soFeminine.co.uk Limited, London, Great Britain Marketing Models 100.0 83 100.0 83 156 StepStone A/S, Kopenhagen, Denmark Classified Ad Models - - 100.0 62 157 StepStone B.V., Leiden, Netherlands Classified Ad Models 100.0 62 100.0 62 158 StepStone France SAS, Paris, France Classified Ad Models 100.0 62 100.0 62 100.0 62 100.0 62 159 StepStone NV, Brussels, Belgium Classified Ad Models 0.0 160 0.0 160 7) 160 StepStone Austria GmbH, Vienna, Austria Classified Ad Models 100.0 61 100.0 61 161 StepStone Services Sp. z o.o., Warsaw, Poland Classified Ad Models 100.0 62 100.0 62 162 StepStone UK Holding Limited, London, Great Britain Classified Ad Models 100.0 62 100.0 62 163 Totaljobs Group Limited, London, Great Britain Classified Ad Models 100.0 162 100.0 162 164 Trans Press d.o.o., Belgrade, Serbia/Kosovo Paid Models 100.0 142 100.0 142 165 Villaweb SARL, Rennes, France Classified Ad Models 100.0 139 100.0 139 166 Viviana Investments Sp. z o.o., Warsaw, Poland Paid Models 100.0 147 100.0 147 167 WEBIMM SAS, Paris, France Classified Ad Models 65.0 152 - - YOURCAREERGROUP Switzerland GmbH (StepStone Switzerland GmbH), Kloten, 168 100.0 62 100.0 62 Switzerland Classified Ad Models 169 zanox B.V., Amsterdam, Netherlands Marketing Models 100.0 76 100.0 76 170 ZANOX Hispania SL, Madrid, Spain Marketing Models 100.0 76 100.0 76 171 zanox Reklam Hizmetleri Limited Sirketi, Istanbul, Turkey Marketing Models 100.0 76 100.0 76 172 zanox SAS, Paris, France Marketing Models 100.0 76 100.0 76 173 zanox Sp. z o.o., Warsaw, Poland Marketing Models 100.0 76 100.0 76 174 zanox SRL, Milan, Italy Marketing Models 100.0 76 100.0 76 100.0 76 100.0 76 175 ZANOX VEICULAÇÃO DE PUBLICIDADE NA INTERNET LTDA., São Paulo, Brazil Marketing Models 0.0 38 0.0 38 7) 176 zanox we create partners AB, Stockholm, Sweden Marketing Models 100.0 76 100.0 76 177 ZÖLD ÚJSÁG Tömegkommunikációs és Kiadói Zrt, Budapest, Hungary Paid Models - - 100.0 86

155

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

12/31/2014 12/31/2014 Share- Share- holding via holding via No. Company in % No. No. Company in % No. Other subsidiaries1) Zweiundsechzigste "Media" Vermögensverwaltungsges. mbH, 218 100.0 1 Berlin Germany Other countries 178 Achtundsiebzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0 1 219 African Jobs Online Ltd, Port Louis, Mauritius 100.0 151 179 Achtzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0 1 220 Alpha Real spol. s.r.o., Zilina, Slovakia 100.0 96 180 AS Buchversand GmbH, Munich 100.0 24 221 AUTOVIA, s.r.o., Bratislava, Slovakia 100.0 96 181 Axel Springer Druckhaus Spandau GmbH & Co. KG, Berlin 100.0 1 222 Axel Springer Digital Ventures Inc., Wilmington, USA 100.0 11 182 Axel Springer Media Impact Management GmbH, Berlin 100.0 1 223 Axel Springer Editions SAS, Paris, France 100.0 194 183 Axel Springer Offsetdruckerei Kettwig GmbH & Co. KG, Essen 100.0 1 224 Axel Springer Group Inc., New York, USA 100.0 17 Axel Springer Print Management GmbH (previously Neunundfünf- 184 100.0 1 zigste "Media" Vermögensverwaltungsges. mbH), Berlin 225 Axel Springer Hírszolgálat Kft, Tatabánya, Hungary 100.0 144 185 Axel Springer Security GmbH, Berlin 100.0 1 226 Axel Springer International Group Limited, London, Great Britain 100.0 1 186 BILD Multimedia Verwaltungs GmbH, Berlin 100.0 1 227 Axel Springer Media France S.A.R.L., Neuilly-sur-Seine, France 100.0 17 187 CEO Event GmbH, Berlin 100.0 68 228 Axel Springer Media Italia s.r.l., Milan, Italy 100.0 17 Axel Springer Offsetdruckerei Ahrensburg GmbH & Co. KG, 188 Dreiundsiebzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0 24 229 100.0 1 Ahrensburg 189 Dreizehnte "Media" Vermögensverwaltungsges. mbH, Hamburg 100.0 1 230 Axel Springer Publishing International Limited, London, Great Britain 100.0 226 190 Einundachtzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0 1 231 Axel Springer TV International Limited, London, Great Britain 100.0 226 191 Finanzen Corporate Publishing GmbH, Berlin 100.0 1 232 Azet.sk – katalóg s.r.o., Zilina, Slovakia 100.0 96 192 Fünfundsiebzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0 24 99.9 83 193 hamburg.de Beteiligungs GmbH, Hamburg 100.0 41 233 BEMFEMININO.COM.BR, Sao Paulo, Brazil 0.1 84 Hammerich & Lesser Zeitschriften- und Buchverlag GmbH, 194 100.0 1 Hamburg 234 Beyond the Job Ltd, Dublin, Ireland 100.0 151

195 Hauptstadtsee 809. VV GmbH, Berlin 100.0 1 235 Car Price List Yad2 Ltd., Tel Aviv, Israel 100.0 104

196 ims Verwaltungs GmbH, Hamburg 55.0 1 236 Communications Smart AdServer Canada inc., Montreal, Canada 100.0 83

197 Informationsmedien Handels GmbH, Hamburg 100.0 1 237 CompuTel Telefonservice AG, Chur, Switzerland 100.0 95

50.0 43 238 Cpress Media s.r.o., Zilina, Slovakia 100.0 96 198 kinkaa GbR, Berlin 50.0 55 100.0 266 239 Cybersearch S.A., Guatemala City, Guatemala 7) meinestadt.de Vermögensverwaltungsgesellschaft mbH (previ- 0.0 151 199 100.0 48 ously "Dating Café" Vermittlungsagentur GmbH), Hamburg 240 Digitality Tech Solutions Private Limited, Mumbai, India 100.0 85 200 myPass GmbH, Berlin 100.0 1 241 Estascontratadocom S.A., Panama City, Panama 100.0 266 201 Neunundsiebzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0 1 242 Euro Blic Press d.o.o., Banja Luka, Bosnia-Herzegovina 100.0 142 202 New Waves Entertainment GmbH, Berlin 100.0 63 243 eurobridge Inc., New York, USA 100.0 1 203 Sales Impact Management GmbH, Hamburg 100.0 1 244 Immostreet ES, Barcelona, Spain 100.0 139

50.0 43 204 Scubia GbR, Berlin 245 Jean Frey AG, Zurich, Switzerland 100.0 95 50.0 55 246 Job Navigator (Pty) Ltd, Johannesburg, South Africa 100.0 137 Sechsundsechzigste "Media" Vermögensverwaltungsges. mbH, 205 100.0 1 Berlin 247 Jobcity Ltd., Tel Aviv, Israel 100.0 104

Sechsundsiebzigste "Media" Vermögensverwaltungsges. mbH, 248 Motogo India Private Limited, Mumbai, India 55.6 85 206 100.0 24 Berlin 249 My Kenyan Network Ltd, Nairobi, Kenya 100.0 219

Siebenundsiebzigste "Media" Vermögensverwaltungsges. mbH, 207 100.0 1 250 My Little Box KK, Tokyo, Japan 100.0 124 Berlin 251 Newtopia GmbH, Königs Wusterhausen 100.0 63 208 SmartAdServer GmbH, Berlin 100.0 83 51.0 138 Talpa Germany Verwaltungsgesellschaft mbH (previously 252 Périclès Atlantique S.A.R.L, Casablanca, Marokko 209 100.0 23 Schwartzkopff TV-Productions Verwaltungsges. mbH), Hamburg 16.0 139 210 Tarif24 GmbH, Berlin 100.0 43 253 Saongroup Caribbean (Jamaica) Ltd, Kingston, Jamaica 100.0 103 Saongroup Caribbean (Trinidad) Ltd, Port of Spain, Trinidad and 90.0 35 254 100.0 103 211 TOPS Online Publications GbR, Lüneburg Tobago 10.0 43 255 Saongroup.com India Pvt Ltd, Pune, India 100.0 151 212 Transfermarkt Verwaltungs GmbH, Hamburg 51.0 31 256 SMART ADSERVER DO BRASIL LTDA., São Paulo, Brazil 100.0 83 213 TunedIn Media GmbH, Berlin 86.4 1 257 Smart AdServer Espana S.L., Madrid, Spain 100.0 83 214 Umzugsauktion Verwaltungs GmbH, Schallstadt 100.0 44 258 Smart AdServer Italia S.r.l., Milan, Italy 100.0 83 215 Vierundsiebzigste "Media" Vermögensverwaltungsges. mbH, Berlin 100.0 24 259 Smart Adserver Limited, London, Great Britain 100.0 83 216 Zanox 1 AG i.L., Berlin 100.0 76 260 Smart AdServer Polska Sp. z o.o., Krakow, Poland 100.0 83 217 Zebra Interactive UG (haftungsbeschränkt), Berlin 100.0 308

156

Annual Report 2014 Consolidated Financial Statements Axel Springer SE Notes to the Consolidated Financial Statements

12/31/2014 12/31/2014 Share- Share- holding via holding via No. Company in % No. No. Company in % No. 261 Smart AdServer USA Inc., Wilmington, USA 100.0 83 291 Dropspot GmbH, Berlin 40.0 1 262 SPORT.SK s.r.o., Zilina, Slovakia 66.7 96 292 Filmgarten GmbH, Berlin 42.0 43 100.0 266 293 Ges. für integr. Kommunikationsforschung mbH & Co. KG, Munich 25.0 1 263 Tecoloco Com S.A. de C.V. Costa Rica, San Jose, Costa Rica 0.0 151 7) Ges. für integr. Kommunikationsforschung Verwaltungs GmbH, 294 25.0 1 Munich 100.0 266 264 Tecoloco El Salvador S.A. de C.V., San Salvador, El Salvador 295 Harburger Zeitungsverwaltungsgesellschaft mbH, Hamburg 24.8 1 0.0 151 7) 296 hyvent GmbH, Berlin 49.0 1 100.0 266 265 Tecoloco Holding S.A. de C.V., San Salvador, El Salvador 297 Intermedia Standard Presse-Code GmbH, Hamburg 32.0 1 0.0 151 7) 298 InterRed GmbH, Haiger 24.0 1 266 Tecoloco International Inc, Panama City, Panama 100.0 151 299 ISPC Intermedia Standard Presse-Code GmbH & Co.KG, Hamburg 32.0 1 99.6 266 267 Tecoloco S.A. de C.V. Honduras, Tegucigalpa, Honduras 0.4 151 300 "Lühmanndruck" Harburger Zeitungsges. mbH & Co. KG, Hamburg 24.8 1

95.0 266 301 Mont Ventoux Media GmbH, Berlin 50.0 23

268 Tecoloco.com S.A. de C.V. Nicaragua, Managua, Nicaragua 3.0 264 302 Motor-Talk GmbH, Berlin 20.0 11

2.0 239 303 MSV Medien Special Vertrieb GmbH & Co. KG, Hamburg 50.0 33

269 Tecoloco.com S.A. de C.V. Panama, Panama City, Panama 100.0 266 304 Myby GmbH & Co. KG i. L., Düsseldorf 25.1 1

270 wewomen.com Inc., Wilmington, USA 100.0 83 305 Project A Management GmbH, Berlin 26.3 9

271 Yad2Pay Internet Ads Ltd., Haifa, Israel 100.0 104 306 Qivive GmbH i. L., Bad Homburg 33.3 1

272 Yad2Pay Ltd., Tel Aviv, Israel 100.0 104 307 Radio Hamburg GmbH & Co. KG, Hamburg 35.0 1

273 zanox ltd., London, Great Britain 100.0 76 308 Sparheld International GmbH, Berlin 30.0 43

274 zanox Switzerland AG, Zurich, Switzerland 100.0 76 309 TraderFox GmbH, Reutlingen 25.1 39

V.V. Vertriebs-Vereinigung Berliner Zeitungs- und Zeitschriften- Investments accounted for using the equity method 310 48.5 1 Grossisten GmbH & Co. KG, Berlin Germany 311 Verwaltungsges. MSV Medien Special Vertrieb m.b.H., Hamburg 50.0 33 275 AS TYFP Media GmbH & Co. KG, Munich 50.0 1 312 Zeitungs- und Zeitschriften Vertrieb Berlin GmbH, Berlin 35.5 1 276 Bonial Enterprises GmbH & Co. KG, Berlin 65.0 9 4) Other countries 277 Bonial Ventures GmbH, Berlin 74.9 1 4) 313 AR Technology SAS, Paris, France 86.5 317 278 PRINOVIS Ltd. & Co. KG, Hamburg 25.1 1 314 Asocijacija Privatnih Media, Belgrade, Serbia/Kosovo 20.0 142 279 Project A Ventures GmbH & Co. KG, Berlin 26.3 9 315 Autoreflex.com SAS, Paris, France 100.0 313 Other countries 316 BULGARPRESS OOD, Veliko Tarnovo, Bulgaria 25.5 1 280 Blendle B.V., Utrecht, Netherlands 21.0 11 317 EMAS Digital SAS, Montrouge Cedex, France 50.0 89 Editions Mondadori Axel Springer (EMAS) S.E.N.C., Montrouge 281 50.0 89 Cedex, France 318 HUNGAROPRESS Sajtóterjesztö Kft, Budapest, Hungary 24.0 1

282 INFOR BIZNES Sp. z o.o., Warsaw, Poland 49.0 143 319 ITAS Media Private Limited, Delhi, India 49.0 5

283 MDB SAS, EVRY CEDEX, France 49.0 87 320 Les Rencontres aufeminin.com SAS, Paris, France 50.0 83

284 Ozy Media, Inc., Mountain View CA, USA 16.8 11 8) 321 PRINOVIS Ltd., London, Great Britain 25.1 1 322 SOKOWEB TECHNOLOGIES, S.L., Barcelona, Spain 31.2 32 Other associated companies and joint ventures2) 323 Swan Insights SA / NV, Brussels, Belgium 25.1 62 Germany 324 VINA WOMAN UK LTD., London, Great Britain 30.0 83 285 Agenda Media GmbH, Hamburg 49.0 72 Other significant investments 286 autohaus24 GmbH, Pullach 50.0 6

Other countries 287 Axel Springer Plug and Play Accelerator GmbH, Berlin 50.0 11

Do an TV Holding A.S., Istanbul, Turkey 288 Berliner Pool TV Produktion Gesellschaft mbH, Berlin 50.0 72 325 ğ 14.8 34 Blitz-Tip Radio Hessen Beteiligungsges. mbH & Co. KG, Bad 289 33.3 1 Soden am Taunus 290 Bonial Enterprises Verwaltungs GmbH, Berlin 65.0 9 4) 1) No full consolidation due to immaterial impact (relation of net income and balance sheet total fo 6) The company has exercised the exemption options of Section 264b of the German Commer- the company to net income and balance sheet total of the Group). cial Code (Handelsgesetzbuch - HGB). 2) No at-equity consolidation due to immaterial impact (relation of net income of th company to 7) Shares less than 0.1%. net income of the Group). 8) Significant influence due to the representation in the supervisory board. 3) 9) Control due to existing option rights. Due to option rights in the reporting year and/or in the prior year a share of 100 % consolidated. 4) 10) No control due to the lack of contractual agreements, which exclude the power of control and Due to option rights in the reporting year and/or in the prior year a share of 89.99 % the possiblility to influence the variable outflaws. consolidated. 5) The company has exercised the exemption options of Section 264 (3) of the German Commercial Code (Handelsgesetzbuch - HGB).

157

Boards

Supervisory Board

The Supervisory Board is composed of the following persons:

Name, occupation Seats on other mandatory Seats on comparable boards supervisory boards in Germany and abroad

Dr. Giuseppe Vita UniCredit S.p.A., Italy (Chairman of the Board of Directors) Chairman of the Supervisory Board of Axel Springer SE

Dr. h. c. Friede Springer ALBA Finance plc & Co. KGaA ALBA Group plc & Co. KG (Advisory Board) Vice Chairwoman of the Supervisory Board ALBA plc & Co. KGaA of Axel Springer SE

Oliver Heine YooApplications AG, Switzerland (Board of Directors) Attorney at law and partner in the law firm Heine & Partner

Rudolf Knepper (since April 16, 2014) Entrepreneur

Lothar Lanz (since April 16, 2014) TAG Immobilien AG (Supervisory Board; Axel Springer Digital Classifieds GmbH (Chairman of the Supervisory Board until June Member of various Supervisory Boards Chairman from June until November 2014) 2014) Zalando SE (since February 2014) Axel Springer International Finance B.V., Netherlands (Supervisory Board until April 2014) Do⁄an TV Holding A.S., Turkey (Supervisory Board) Ringier Axel Springer Management AG, Switzerland (Board of Directors until May 2014) Ringier Axel Springer Media AG, Switzerland (Board of Directors until May 2014)

Dr. Nicola Leibinger-Kammüller Lufthansa AG President and Chairwoman of the Executive Siemens AG Board of TRUMPF GmbH + Co. KG Voith GmbH

Prof. Dr. Wolf Lepenies University Professor (emer.) FU Berlin; Permanent Fellow (emer.) at Wissenschaftskolleg zu Berlin

Prof. Dr.-Ing. Wolfgang Reitzle (since April Continental AG (Chairman) Holcim Limited, Switzerland (Chairman of the Board of Directors since April 16, 2014) Hawesko Holding AG (since August 2014) 2014; previously Board of Directors) Entrepreneur Medical Park AG (Chairman since June 2014; Supervisory Board since January 2014)

Martin Varsavsky (since April 16, 2014) CEO, Fon Wireless Limited

Dr. Gerhard Cromme (until April 16, 2014) Siemens AG (Chairman) Chairman of the Supervisory Board of Siemens AG

Klaus Krone (until April 16, 2014) Entrepreneur

Dr. Michael Otto (until April 16, 2014) Otto GmbH & Co KG (Chairman) FORUM Grundstücksgesellschaft m.b.H. (Chairman of the Advisory Board) Chairman of the Supervisory Board of Robert Bosch Industrietreuhand KG (Partner) Otto GmbH & Co KG

158

Annual Report 2014 Boards Axel Springer SE

Executive Board

The Executive Board is composed of the following persons:

Executive Board member Seats on mandatory Seats on comparable boards supervisory boards in Germany and abroad

Dr. Mathias Döpfner Axel Springer Schweiz AG, Switzerland (Chairman of the Board of Directors) Chairman and Chief Executive Officer B.Z. Ullstein GmbH (Advisory Board) Journalist Ozy Media Inc., USA (Board of Directors since October 2014) RHJ International SA, Belgium (Board of Directors) Time Warner Inc., USA (Board of Directors) Warner Music Group Corp., USA (Board of Directors since May 2014)

Jan Bayer meinestadt.de GmbH (Supervisory Board until June 2014) President BILD and WELT Group Media scholar

Dr. Julian Deutz (since January 1, 2014) Amiado Group AG, Switzerland (Board of Directors until March 2014) Chief Financial Officer AUFEMININ SA, France (Board of Directors until June 2014) (since April 16, 2014) Automotive Exchange Private Limited, India (Board of Directors) Master’s Degree in Business Administration Axel Springer Digital Classifieds GmbH (Supervisory Board since June 2014) Axel Springer International Finance B.V., Netherlands (Supervisory Board from April until December 2014) Axel Springer Magyarország Kft., Hungary (Supervisory Board until September 2014) Axel Springer Schweiz AG, Switzerland (Board of Directors) ITAS Media Private Limited, India (Board of Directors) Ringier Axel Springer Magyarország Kft., Hungary (Supervisory Board) Ringier Axel Springer Management AG, Switzerland (Board of Directors since May 2014) Ringier Axel Springer Media AG, Switzerland (Board of Directors since May 2014)

Dr. Andreas Wiele dpa Deutsche Presse-Agentur GmbH (until AUFEMININ SA, France (Board of Directors) President Marketing and Classified Ad June 2014) Axel Springer Digital Classifieds France SAS, France (Chairman of the Supervisory Models ZANOX AG (Chairman since August 2014; Board since June 2014) Lawyer previously Supervisory Board) Axel Springer Digital Classifieds GmbH (Chairman of the Supervisory Board since June 2014) Axel Springer Digital Classifieds Holding GmbH (Chairman of the Advisory Board) B.Z. Ullstein GmbH (Advisory Board) Car & Boat Media SAS, France (Chairman of the Supervisory Board since July 2014) Coral-Tell Ltd., Israel (Chairman of the Board of Directors since May 2014) Immoweb SA, Belgium (Chairman of the Board of Directors since June 2014) meinestadt.de GmbH (Chairman of the Supervisory Board since June 2014) PRINOVIS Limited, Great Britain (Board of Directors) SeLoger.com SAS, France (Chairman of the Supervisory Board since June 2014) StepStone GmbH (Chairman of the Supervisory Board)

Ralph Büchi (until April 30, 2014) ZANOX AG (Supervisory Board; previously Amiado Group AG, Switzerland (Chairman of the Board of Directors) President International Division Chairman of the Supervisory Board until Amiado Online AG, Switzerland (Chairman of the Board of Directors) Master’s Degree in Business Administration August 2014) AUFEMININ SA, France (Board of Directors) AR Technology SAS, France (Board of Directors) Automotive Exchange Private Limited, India (Board of Directors) AutoReflex.com SAS, France (Board of Directors) Axel Springer Digital Classifieds France SAS, France (Chairman of the Supervisory Board until June 2014) Axel Springer International AG, Switzerland (Chairman of the Board of Directors) Axel Springer Schweiz AG, Switzerland (Vice Chairman of the Board of Directors) Car & Boat Media SAS, France (Supervisory Board since July 2014) CompuTel Telefonservice AG, Switzerland (Chairman of the Board of Directors; inactive) Grupa Onet.pl S.A., Poland (Supervisory Board; Chairman of the Supervisory Board until October 2014) Immoweb SA, Belgium (Chairman of the Board of Directors until June 2014) ITAS Media Private Limited, India (Board of Directors) Ringier Axel Springer Management AG, Switzerland (Chairman of the Board of Directors) Ringier Axel Springer Media AG, Switzerland (Chairman of the Board of Directors) SeLoger.com SAS, France (Chairman of the Supervisory Board until June 2014) Today Merchandise Private Limited, India (Board of Directors until January 2014)

Lothar Lanz (until April 16, 2014) TAG Immobilien AG (Supervisory Board; Axel Springer Digital Classifieds GmbH (Chairman of the Supervisory Board until June Chief Financial Officer and Chairman from June until November 2014) 2014) Chief Operating Officer Zalando SE (since February 2014) Axel Springer International Finance B.V., Netherlands (Supervisory Board until April Master’s Degree in Business Administration 2014) Do⁄an TV Holding A.S., Turkey (Supervisory Board) Ringier Axel Springer Management AG, Switzerland (Board of Directors until May 2014) Ringier Axel Springer Media AG, Switzerland (Board of Directors until May 2014)

159

Financial Calendar

March 4, 2015 Annual Report, Annual Results Press Conference, Investor/Analyst Conference Call

April 14, 2015 Annual General Meeting

May 7, 2015 Quarterly Financial Report as of March 31, 2015

August 4, 2015 Interim Financial Report as of June 30, 2015

November 4, 2015 Quarterly Financial Report as of September 30, 2015

Imprint

Address Axel Springer SE Axel-Springer-Strasse 65 10888 Berlin Phone: +49 30 2591-0

Investor Relations [email protected] Phone: +49 30 2591-77421/-77425 Fax: +49 30 2591-77422

Corporate Communications [email protected] Phone: +49 30 2591-77660 Fax: +49 30 2591-77603

Design Axel Springer SE Corporate Communications

Photos Daniel Biskup (p. 4, p. 6) Matti Hillig (p. 6, p. 7) Sergio Rinaldi (p. 78)

The Annual Report and up-to-date information about Axel Springer are available on the Internet at www.axelspringer.com

The English translation of the Annual Report is provided for convenience only. The German original is legally binding.