Group Key Datakey Group Page 39 11 9 8 9 Segments

Home , Axel Springer, Computer Bild, Gmund am Tegernsee

nei eotEndof August 2000 29thJune2000 Interim report Dividend payment 28thJune2000 30thMay 2000 General meetingofshareholders statements annual financial Press conferenceonthe calendar Financial Share detailsShare lobr SPR SPRG.F 725.090 40.25 Bloomberg 24.63 Reuters code Security identification ratio Price-earnings Average shareprice Lowest shareprice Highest shareprice 12.00 at endofyear 40.00 Share price 28.00 11.14 37.14 (excluding taxcredit) DM 26.00 DM DVFA/SG profit DM (including taxcredit) Dividend Tax credit Dividend € € € € € 90 29.44 29.07 981999 1998 7 988 730 674 1,210 465 1,185 828 716 100 % recycledpaper.% 100 on printed is report This http://www.asv.de Internet: the Springer VerlagAxelavailable on are on information other and Report Annual The [email protected] 89 42 2 47- 3 / 40 (0) 49 ++ E-mail: 23 35 2 47- 3 / 40 (0) 49 ++ Fax: Phone.: Hamburg D-20350 Axel-Springer-Platz1 ControllingCorporate Accounting/ and Finance Springer VerlagAxel AG contact please Report, Annual this about information further requireyou If

AXEL SPRINGER VERLAG ANNUAL REPORT 1999 ANNUAL REPORT 1999 Number of employees of Number Share sheet Balance 1995 Profit Sales million DM in **Adjusted for comparative purposes to the modified guidelinesforthecalculationofDVFA/SG**Adjusted forcomparative tothemodified purposes profit. *Adjusted for comparative purposes to the change in the consolidated group inthefollowing*Adjusted forcomparative tothechangeinconsolidatedgroup year. purposes nulaeae1,7* 1,4 2151,5 12,504 12,052 12,346 12,195 12,878* Annual average ec.rtie rft)646772931,057 943 792 697 654 (excl. retainedprofits) Shareholders' funds Profit asperDVFA/SGProfit e hr D)*3.83.45.25.657.58 28.00 4.00 56.86 26.00 59.12 20.00 35.54 20.00 3.00 31.68 14.00 Year-end shareprice( Bonus pershare(DM) Dividend pershare(DM) per share(DM)** ahfo 1 6 4 3 492 193 530 241 476 448 177 225 283 361 557 174 395 178 418 715 246 240 1,578 245 686 298 1,367 3,134 218 686 1,319 2,984 353 Cash flow 1,195 632 2,712 Depreciation 196 295 Capital expenditure 1,235 2,571 liabilities Long-term 201193 276 2,506 211 121 Liquid assets Fixed assets 164 108 Balance sheettotal 142 asperDVFA/SG** Profit fortheyear Net profit qiyrto()2. 712. 1633.7 31.6 29.2 67.0 27.1 69.0 26.1 60.1 5.7 8.3 58.3 5.7 4.6 53.0 Equity ratio(%) 4.6 4.1 3.7 Fixed assetcover (%) 3.8 3.4 4.7 onsales(%) Return Change (%) aia % 282. 833. 29.5 31.8 28.3 24.3 22.8 capital (%) Return onaverageReturn equity € 9.0480 4.0760 1,185.00 716.00 644.00 468.00 493.00 ) ,5*4404594815,211 4,811 4,599 4,420 4,256* 9619 981999 1998 1997 1996 Group Key DataKey Group Page 39 11 9 8 9 Segments

Publishers Electronic Media Electronic Media Distribution Other Investments

AKTUELL Presse-Fern- Buch- u. Zeitschriftenverlags- Ullstein Ges.mbH, 4) 88.5829% sehen GmbH & Co. KG, CompuTel VVDG Verlags- und 1) 2) beteiligungsgesellschaft mbH 0.15% "Overbruck" Spedition GmbH, Vienna/Austria Hamburg Telefonservice GmbH, Industrieversicherungs- 100% & Co. KG, Innsbruck/Austria 100% 100% Hamburg 100% 99.85% Cap.: ATS 327.511 million via 2) Hamburg dienste GmbH, Berlin Cap.: ATS 35.0 million 10.0815% Cap.: DM 3.0 million Cap.: DM 100.36 million Cap.: DM 0.1 million Cap.: DM 0.15 million Pages 18-23 Newspapers Breakdown of sales Pages 32-35 Electronic media Breakdown of sales Alpenländische Medienver- SAT.1 SatellitenFernsehen Z. Z.- Verlagsservice Other countries Moser Holding AG, AS ADAMO GmbH, 1) 4) TourVers Touristik- 4) Germany Other countries Germany waltungsgesellschaft mbH & 20% GmbH, Mainz und Berlin Eichberg GmbH & Co. KG, in DM million 1998 1999 8% 92% in DM million 1998 1999 6% 65% 65% Innsbruck/Austria 100% Hamburg Versicherungs-Service GmbH, 94% Co. KG, Innsbruck/Austria 21% Cap.: DM 200.0 million 100% Mörfelden-Walldorf 100% Cap.: ATS 11.5 million Cap.: DM 0.05 million Munich Cap.: ATS 50.0 million Cap.: DM 0.05 million Cap.: DM 0.1 million Sales 2,776 2,915 Sales 85 164 KG Hamburg 1 Fernsehen Schlüsselwerbung J.S. Axel Springer Verlag TT-Medienholding Ges.mbH, Beteiligungs GmbH & Co., ASV Direktmarketing GmbH, 1) Result 231 240 Result 19 27 Moser Ges.mbH, 11.3% AutoEuro GmbH & 4) Vertriebsgesellschaft mbH, 65% Innsbruck/Austria 100% Hamburg 70% 100% Berlin Innsbruck/Austria Co. KG, Hamburg Hamburg 100% Cap.: ATS 0.5 million Cap.: DM 10.0 million Cap.: DM 0.05 million Cap.: ATS 0.5 million Cap.: DM 0.1 million Cap.: DM 0.262 million Depreciation 83 80 Depreciation 1 6

Capital expenditure 97 97 Capital expenditure 54 56 Schlüsselwerbung Moser TT-Verlags- und Manage- AS TV-Produktions- Buch- und Presse- Booxtra GmbH & Co. KG, Kieler Zeitung GmbH & Co. Ges.mbH & Co. OHG, ment Ges.mbH, und Vertriebsgesellschaft Großvertrieb Hamburg 65% 100% 100% 25% Augsburg 58.25% 24.5% Offsetdruck KG, Kiel Innsbruck/Austria Innsbruck/Austria mbH, Hamburg GmbH & Co. KG, Hamburg Cap.: EUR 0.1 million Cap.: DM 5.0 million Employees (no.) 5,958 6,047 Employees (no.) 143 339 Cap.: ATS 1.0 million Cap.: ATS 0.5 million Cap.: DM 0.1 million Cap.: DM 0.75 million

EMAP France / Tiroler Wochenzeitung V.V. Vertriebs-Vereinigung ISPR Internationale Sport- WSI Webseek Infoservice AXEL SPRINGER (EMAS) Verlagsges. mbH, GmbH & Co. KG, Berliner Zeitungs- u. Zeit- GMZ Druckerei GmbH & Co., 50% S.E.N.C., Paris/France 100% Innsbruck/Austria rechte-Verwertungsgesell- 25% 48.5% schriften Grossisten GmbH 74.9% Berlin 50% schaft mbH, Munich Hamburg Cap.: FRF 1.0 million Cap.: ATS 0.8 million Cap.: DM 0.1 million & Co. KG, Berlin Cap.: DM 6.0 million Cap.: DM 1.0 million Cap.: DM 0.2 million Pages 24-29 Magazines Breakdown of sales Pages 36-37 Printing Breakdown of sales Schlüsselverlag J.S. Moser Medical Tribune 1) Ges.mbH, Innsbruck/ Axel Springer TV 1) Presse-Vertrieb Pfalz Other countries International GmbH, 99.9% SPORT1 GmbH & Co. KG, PPS Presse-Programm-Service Germany Other countries Germany 100% Austria Productions GmbH, 32% GmbH & Co. KG, in DM million 1998 1999 in DM million 1998 1999 Hamburg 100% 25.5% Hamburg 90% GmbH, Berlin 21% 79% 8% 92% via TT-Medienholding Hamburg Frankenthal Cap.: DM 4.0 million 0.1% Cap.: EUR 0.1 million Cap.: DM 0.05 million Cap.: ATS 33.0 million Cap.: DM 0.25 million Cap.: DM 0.5 million Sales 1,271 1,337 Sales 1,282 1,232

Medical Tribune 1) Intergraphik Ges.mbH, Axel Springer 1) 4) dsb Abo-Betreuung GmbH, Stilke Buch- und Verlagsgesellschaft mbH, 51% Innsbruck/Austria Result 34 44 Result 0 0 TV NEWS 47.52% Neckarsulm Zeitschriftenhandels- 100% Wiesbaden 49% via TT-Medienholding 100% Investments in 7 radio stations 24% GmbH, Hamburg Cap.: DM 0.25 million gesellschaft mbH, Hamburg Cap.: DM 2.0 million Cap.: ATS 0.5 million Cap.: EUR 0.025 million Cap.: DM 7.5 million Depreciation 35 47 Depreciation 38 54

Schwartzkopff TV 4) Capital expenditure 33 170 Capital expenditure 79 143 Axel Springer Japan Medienagentur West ZZ-Kurier Gesellschaft für 1) Productions GmbH, Publishing Inc., (MA-West) Ges.mbH, 100% Zeitungs- u. Zeitschriften- 100% 90.2% Hamburg Tokyo/Japan 100% Innsbruck/Austria vertrieb mbH, Hamburg Cap.: DM 0.05 million Employees (no.) 2,065 2,200 Employees (no.) 3,270 3,025 Cap.: JPY 50.0 million Cap.: ATS 0.5 million Cap.: DM 0.05 million Consolidated group: Commerz-Film Multimedia "Medical Tribune"-AG, Mediengesellschaft mbH, Investments in 8 wholesalers Produktions Ges.mbH, 100% Basle/Switzerland 100% Hamburg in Eastern Germany 100% Innsbruck/Austria Cap.: CHF 1.0 million Cap.: DM 0.2 million (9% in each case) Fully consolidated Cap.: ATS 0.5 million

Pages 30-31 Books Breakdown of sales Group Breakdown of sales Consolidated on a pro rata basis Axel Springer TV 3) 4) Other countries Germany Medical Beteiligungs 1) International Limited, Other countries Germany 100% GmbH, Wiesbaden 85% in DM million 1998 1999 11% 89% in DM million 1998 1999 15% 85% London/United Kingdom 1) Cap.: DM 0.05 million Cap.: GBP 0.1 million Profit and loss transfer agreement with the parent company. Sales 92 151 Sales 4,811 5,211 2) Via 'Axel Springer Verlag' GRB Entertainment, Inc., Beteiligungsgesellschaft mbH, Berlin. Result – 10 – 17 Result 276 295 51% Studio City/USA 3) Cap.: USD 0.003 million Via Axel Springer International Group Limited, London/United Kingdom. Depreciation 4 2 Depreciation 241 193 4) Consolidated for the first time. Position as of December 1999 Capital expenditure 5 3 Capital expenditure 283 476

Employees (no.) 164 256 Employees (no.) 12,052 12,504

73 74 www.asv.de • [email protected] Glossary

• Audiotex Automatic handling of voice and fax value- added services in fix ed-line and mobile networ k s . • Broadcast Dissemination of news and information to any number of viewers/listeners, e.g. radio and TV. • Business-to-Business Relationships and transactions between business enterprises. • Classified business Small ads in daily and weekly newspapers ar- ranged according to specific categories (e.g. jobs, houses, cars). • Content management Management of the content transported via the electronic media. • Contract printing Printing contracts that occur at irregular inter- vals, e.g. catalogues. • Customer magazine Magazine-style advertising publications which are distributed free of charge by companies, retailers, etc.. • E-Commerce Electronic trading with business and/or private customers via the ➟ Internet. • Free advertiser Periodical publication which is funded exclusively out of advertising revenues. • Internet Decentralized worldwide computer network • Intranet Internal network comparable to the ➟ Internet, but which is accessible only to company personnel. • IVW Circulation auditing bureau. • Media analysis Empirical investigation of media usage. Phone: ++ 49 (0) 40 / 3 47 - 2 35 23 Fax: ++ 49 (0) 40 / 3 47 - 2 42 89 Glossary

• Newsstand paper Newspaper which in contrast to a ➟ subscription newspaper is distributed via retail outlets. • Offset printing Printing technique which operates on the principle that oil and water do not mix. The printing plate roller is treated with an oil-based substance which repels water but attracts printing ink. The design is transferred to the paper via a secondary (offset) roller. • Online To be linked directly to a computer or database. This term is now generally used in combination with the ➟ Internet. • Page impressions Important criterion when assessing the ➟ reach of online media. Page impressions are an accurate measure of how often the individual web pages are viewed by ➟ Internet users. • Reach Percentage of a target audience who are exposed at least once to an advertising medium or a combination of advertising media. • Reader loyalty Loyalty to a newspaper/magazine displayed by an average reader in terms of duration of purchase and his or her assessment of the medium's editorial credibility. • Resale price In Germany books are subject to resale price maintenance maintenance. The retail price is determined by the publisher as opposed to the bookseller. This means that books are sold at the same price throughout the country. • Rotary press Printing press with revolving cylinders. Used for large circulation newspapers and magazines. • Rotogravure Technique in which the cylinder is covered with an array of tiny recesses that constitute the im- ages to be printed. • Search engine A device for locating specific sets of data on the ➟Internet. • Subscription Newspaper which in contrast to ➟ newsstand newspaper paper is distributed primarily on a subscription basis. • Teletext Non-interactive service which distributes texts and graphics via television. • Value-added voice Services provided via the telephone, e.g. service promotions, market research surveys, mailbox services. • Visit Important criterion when analyzing the coverage of online media. A visit is defined as a coherent browse through the pages of a web site and is used to measure media contacts. • Web site Online presence on the ➟ Internet. The Company

Founded by the Hamburg publisher Axel Springer in 1946, Axel Springer Verlag has since developed into Europe´s largest newspaper publishing company, with administrative headquarters located in Hamburg and Berlin. The company´s core business is the dissemination of the printed word. In addition to publishing a broad spectrum of newspapers, magazines, specialist titles and free advertisers (both in Germany and abroad), Axel Springer Verlag owns a number of book publishers and operates its own printing plants and distribution organizations. The company is also actively involved in the electronic media (teletext, audiotex, online services, Internet and TV production) and holds participating interests in TV and radio stations. Contents

Preliminary Remarks of the Chairman of the Board of Management 2 Executive Bodies of the Company 4 Group Management Report and Report on Axel Springer Verlag AG 5 Business Environment 5 The Company 7 Risk Management 14 Outlook 15 Concluding Statement pursuant to Section 312, Para. 3, of the German Companies Law ("AktG") 15 The Divisions 16 Newspapers 18 Magazines 24 Books 30 Electronic Media 32 Printing 36 Personnel and Training 38 Environmental Protection 42 Consolidated Financial Statements and Financial Statements of Axel Springer Verlag AG 44 Report of the Supervisory Board 70 List of Subsidiaries and Affiliated Companies 72 Preliminary Remarks

The 1999 Annual Report once again testifies to the successful outcome of our business activities. For the first time the Axel Springer Verlag has broken through the DM 5 billion sales barrier. The marked increase in sales and the growth in profits will give us the necessary momentum for the highly interesting perspectives in the new century. The Internet has opened up a new media dimension. It is revolutionizing the communication process and the entire media industry. This offers excellent opportunities for the Axel Springer Verlag AG. The Internet exists on the basis of content. Our traditional strengths lie in the presentation and skilful editing of information. Quality and speed are of the essence – regardless of whether information is printed on paper or is distributed via wideband cable, satellite, phone line, PC or mobile phone. We deploy the most modern technology in order to secure the million-fold distribution of our journalistic products. This highly successful strategy equips us ideally for the future. We will continue to invest in the most modern printing technology for our newspapers and magazines and at the same time devote top priority to the digital communication technology. A key goal will be to reinforce our strong newspaper and magazine brands and to enhance the market positions of both the offline and online versions.

Our quality paper DIE WELT is an outstanding example which shows how a newspaper and the Internet complement and mutually benefit each other, and how the electronic media can be used to generate a young target audience for a print title. Today, DIE WELT ranks as Germany's most modern national newspaper. We will continue the rapid expansion of our successful online services and e- commerce activities. In terms of subject matter the new Internet era is ideally suited to innovative newspaper and magazine concepts. Examples include our successful EURO AM SONNTAG, and our new title AKTIENRESEARCH in the growing business press segment. We will continue our efforts aimed at transforming our German publishing house into an international media company. Via our investments in major TV production companies and our own formats we have established ourselves as one of Germany's leading TV producers.

2 Our newspaper and magazine companies in Hungary, Poland and Spain launched several new titles in the course of 1999. Further acquisitions were carried out in Switzerland, Austria and Romania. The new century offers many opportunities for the media. The Axel Springer Verlag will exploit these opportunities. I would like to thank all our employees for their outstanding efforts and contributions in 1999. We will continue to work together to implement the corporate strategy of the Axel Springer Verlag on the basis of innovative ideas and solid economic foundations.

August A. Fischer Chairman of the Board of Management & CEO

3 Executive Bodies of the Company*

Supervisory Board Board of Management

Prof. Dr. Bernhard Servatius, August A. Fischer, Lawyer, Hamburg Verlagskaufmann Chairman Chairman AWD Holding AG Claus Larass, Friede Springer, Journalist Businesswoman, Berlin Deputy Chairman, Newspapers Deputy Chairperson (as from 1st July 1999) Systematics AG Bankgesellschaft Berlin AG (until 26th May 1999) Christian Delbrück, Diplomvolkswirt Ernst Cramer, Magazines Journalist, Berlin Deputy Chairman Falk Ettwein, (until 30th June 1999) Diplomkaufmann Finance Peter Boenisch, Publicist, Gmund am Tegernsee Rudolf Knepper, (as from 1st July 1999) Diplomingenieur and Diplomwirtschaftsingenieur Printing Dr. Gerd Freihalter, Lawyer, Tax Consultant and Dr. Ralf Kogeler, Certified Public Accountant, Augsburg Diplomkaufmann Electronic Media Dr. Leo Kirch, (as from 1st June 1999) Businessman, Munich

Klaus Krone, Businessman, Berlin (as from 1st July 1999) GAIFAR German-American For Aids Research GmbH, ICG Interconnect AG, IMT Institut für Management und Technologie GmbH, Lobster Technology Holding AG

Dr. Michael Otto, Chairman of the Board of Otto Versand (GmbH & Co), Hamburg Deutsche Bank AG, Gerling-Konzern Versicherungs-Beteiligungs-AG, Schwab Versand GmbH

Prof. Dr. Johannes Semler, Lawyer, Kronberg (until 30th June 1999) Advanta Management AG, Hauck & Aufhäuser Privatbankiers KGaA, Hugo Boss AG

Wolfgang Steinriede, Spokesman of the Board of Management (retd.) of Bankgesellschaft Berlin AG, Berlin Allbank Allgemeine Privatkundenbank AG, BerlinHyp AG, Messe Berlin AG, MKB Mittelrheinische Bank GmbH

Dr. Joachim Theye, Lawyer and Notary, Bremen Artificial Life Deutschland AG, Deutsche Babcock AG, Gerling-Konzern Versicherungs-Beteiligungs-AG, Gerling-Konzern Globale Rückversicherungs-AG Gerling-Konzern Rheinische Versicherungsgruppe AG, Metro AG

*including membership of other legally constituted supervisory boards. 4 Group Management Report and Report on Axel Springer Verlag AG

Axel Springer Verlag can look back on a successful financial year in 1999. Sales and profits rose, while cash flow remained at a high level. The Board of Management expects the positive trend to continue in the financial year 2000.

Business Environment By comparison with the previous year, total sales of daily and Sunday newspapers fell by 1.3% to 28.9 Upturn in business activity towards the end of million copies per day of publication. Newsstand the year sales (down by 2.6%) were affected to a greater extent than subscription sales (- 0.9%). The newsstand Overall economic growth in the Federal Republic of circulation of daily newspapers declined by 3.0%. Germany was moderate, especially in the first half of By contrast, national subscription newspapers achiev- the year. The gross domestic product rose by only ed a 2.3% growth in circulation. The total number of 1.5% during the year under review, clearly below the newspaper titles registered with the auditing circu- previous year's figure of 2.2%. lation bureau IVW fell by 4 to 394. Business activity gained momentum in the second The IVW reported a further rise in the number of gen- half of the year. A further sharp rise in exports helped eral interest magazine titles (up by 50 to 823). How- to bolster economic growth. The weakness of the euro ever, sales per issue rose by a mere 0.9 million to enhanced the competitiveness of German companies 127.3 million copies. This points to a further decline abroad. On the domestic front growth was supported in the number of sales per individual magazine title. by stable consumer spending (+ 2.0%) and a perceptible surge in expenditure on plant and equipment TV guides and women's weekly magazines felt the (+ 5.1%). However, the upswing was restricted pri- effects of price pressure caused by the increased marily to the western part of Germany, whereas the range of titles coming onto the market. Computer economy in eastern Germany showed hardly any signs magazines and business magazines reported strong of a recovery. growth. The situation on the jobs market remained critical in 1999. Unemployment fell by around 4%, largely as Retail press market a result of demographic factors. The labour market expanded only very slightly. Unemployment in the Total market (IVW). Index: 1995 = 100 western German states declined more rapidly than in 9596 97 98 99 the eastern part of the country. The national unemployment rate (measured as a percentage of the total 120 civilian population of working age) averaged 10.5% over the year as a whole (1998: 11.1%). 115

Stagnating demand in the retail press market 110 Despite the stable level of consumer spending, sales of newspapers and general interest magazines fell by 105 2.0%. An identical decline had been recorded in the previous year. Aided by price rises, however, the pub- 100 lishing industry achieved a 1.0% increase in sales revenues. 95

Newspaper circulation Total number of magazine titles Magazine circulation Total number of newspaper titles

5 Management Report

Renewed growth in the advertising market In 1999 Germany's newspapers recorded a 6.2% rise in their advertising revenues (excluding classified The positive trend in the German advertising market ads). The national dailies performed particularly well. continued in 1999. Compared with the previous year, Their advertising revenues expanded by 25.6% the revenues of the classical advertising media rose by compared with the previous year. DM 1.8 billion (+ 6.0%). Media spending by branded goods manufacturers, service providers and the major Classified business developed unevenly in 1999. The retailers totalled DM 31.7 billion. largest gains were in the area of job recruitment (+ 22.2%), national classified ads (+ 7.4%) and motor The liberalization of the power supply and telecom- vehicles (+ 4.7%). Local ads, property, events and munications markets had a positive impact on the travel generated lower revenues than in the previous advertising industry. During the year under review the year. power supply companies spent almost DM 400 million on media advertising (a three-fold increase on 1998). The advertising revenues of general interest magazines Telecommunications companies raised their spending rose by 4.9% in 1999. The main beneficiaries were by 61.2%, bringing the total to DM 2.5 billion. There computer and online magazines (+ 26.8%) and busi- was also a significant upsurge in the advertising ness publications (+ 18.5%). The top two revenue expenditure of financial service providers and earners - current affairs magazines and women's investment consultants (+ 30.9%). magazines - boosted their already high level of advertising revenues by 4.0% and 5.7% respectively. Compared with 1998 the advertising revenues of the print media (excluding classified ads) expanded by 5.3%. Private TV stations reported significantly higher revenue growth than did their public-service counterparts (+ 6.6% as opposed to + 0.9%). Radio stations achieved double-digit growth (+ 13.6%). The revenues of private radio stations grew by 17.8%, while the public-service stations achieved a 6.5% increase.

Advertising revenues in the classical media Gross advertising expenditure in DM million

9596 97 98 99

13,500

12,000

10,500

9,000

7,500

6,000

4,500

3,000

1,500

Posters Radio General interest magazines Specialist magazines Newspapers (excl. classified ads) TV Source: ACNielsen Werbeforschung.

6 The Company With the aim of streamlining its investment portfolio Axel Springer Verlag disposed of its 10% share in Expansion strategy maintained AOL Bertelsmann Online GmbH & Co. KG in 1999. The Medical Tribune publishing group was sold off Axel Springer Verlag reported pleasing sales growth with effect from 1st January 2000. Axel Springer in 1999. Profits were also up on the previous year. Verlag has now disposed of its specialist publications In the year under review the emphasis was placed on and can thus concentrate on core growth segments of new activities as well as maintaining the market the magazine market. position of existing publications. The modernization Further extension of international activities of DIE WELT continued successfully. EURO AM SONNTAG established itself in the business press Axel Springer Verlag maintained its strategy of segment. A new magazine entitled COMPUTER BILD internationalization in 1999. SPIELE was launched in the computer games segment. The foreign publishing companies belonging to the To combat competition by a free newspaper distrib- Axel Springer Group launched a wide variety of new uted in Cologne, Axel Springer Verlag established its titles during the year under review. Various magazines own free daily publication called KÖLN EXTRA in as well as a free advertising publication were introduc- December 1999. ed in Hungary. Three computer games magazines went To provide its subscribers, readers and advertisers on sale in Spain, plus a monthly magazine in the with round-the-clock service support Axel Springer interior design segment. 1999 also saw the launch of Verlag set up a new customer service centre – a Romanian offshoot of the highly successful Polish ASDIREKT – for the cities of Hamburg and Berlin. magazine OLIVIA. Axel Springer Polska broadened its portfolio by acquiring the traditional Polish magazine A further priority was to expand the online activities AUTO SUKCES. of Axel Springer Verlag. Joint ventures were initiated with the Internet bookseller BOOXTRA, the search In February 1999 Axel Springer Verlag acquired a engine INFOSEEK, the Internet services SPORT1 and controlling interest (approx. 88%) in Handelszeitung AUTOEURO as well as the Internet platform GO-ON. und Finanzrundschau AG, Zurich. In addition to the weekly HANDELSZEITUNG this company publishes ten The Company also purchased a stake in the Munich- other business and trade journals in the German and based Yukom Verlag, via which it has gained access to French-speaking areas of Switzerland. the rapidly expanding customer magazine market. Axel Springer and Yukom have teamed up to produce Axel Springer Verlag also stepped up its magazine the monthly business magazine MARKT UND MITTEL- publishing activities in Eastern European by acquiring STAND. a controlling interest in the Romanian publishing house LvB Invest International, which was subse- Axel Springer Verlag acquired a 25% share in the quently renamed "AXEL SPRINGER EDITURA" ProFilm Group (Studio Hamburg Produktion für Film SRL. This company's publications number among und Fernsehen GmbH), one of Germany's top TV and Romania's top-selling magazines in their respective cinema production companies. This enabled the com- segments (women's magazines and entertainment pany to significantly expand its activities in the tele- titles). vision segment. In addition, Axel Springer Verlag and Studio Hamburg agreed to set up a joint venture In October 1999 Axel Springer Verlag acquired a 51% which will operate under the name Studio Berlin share in Sportmagazin Verlag GmbH, Vienna, one of Metropol Film und Fernseh GmbH. Austria's largest magazine publishers. In addition to the weekly SPORTMAGAZIN, this company publishes a The restructuring of the book publishing group was range of monthly and customer magazines. completed in 1999. The previously separate publishers in Munich and Berlin were merged to form the new book publishing group Econ Ullstein List.

7 Management Report

Axel Springer TV International Ltd., London, took Net profit and return on sales over 51% of the shares in the American GRB in DM million Entertainment, Inc., Studio City, Calif., which specializes in reality TV documentaries. 9596 97 98 99 300 With effect from 1st January 2000, Axel Springer 6 Verlag took over all the youth and music magazines belonging to the Marquard publishing group. In so 250 5 doing Axel Springer Verlag expanded its national and

international magazine portfolio. Various titles also 200 4 appear in Poland, Hungary, the Czech Republic, Romania and Spain. 150 3 Sustained profit growth

Axel Springer Verlag built on the strong performance 100 2 of the previous year and posted a further improvement

in profits. The consolidated net profit rose by DM 50 1 18.3 million to DM 294.7 million. Axel Springer Verlag AG alone reported a net profit of DM 244.3 0 0 million (1998: DM 159.5 million). This sharp rise was due in part to the writing back of provisions set Consolidated net profit up in 1998 in respect of loans of the Medical Tribune Percentage return on sales (after tax) Group. These provisions were written back in connection with the sale of the Medical Tribune Group in the year 2000. At 5.7%, the Group's return on sales was on a par with the previous year. The average The profit according to DVFA/SG totalled DM 195.8 return on equity was 29.5% (1998: 31.8%). million (1998: 193.3 million). Excluding tax credits, this equates to a profit per share (DVFA/SG) of DM 57.58 (1998: DM 56.86). The new guidelines for calculating the DVFA/SG profit were applied. The previous year's figure was adjusted accordingly. The Group’s performance trend was attributable primarily to the following factors: although sales revenues grew by 8.3% to DM 5,210.5 million, the Group's operating result was down on the previous year. A key factor here was the extensive investment in existing publications and new activities. Further burdens resulted from new social security and labour legislation (e.g. the treatment of jobs paying less than DM 630 per month), as well as anticipatory write- downs on trade investments held in the Czech Repub- lic and Slovakia. Thanks to the reduced operating result, the cut in tax rates and the utilization of loss carry-overs, significantly lower taxes were incurred on corporate income and profits.

8 In 1999 reconstruction work continued at the Essen- Increased sales in all segments Kettwig printing plant, which had been heavily dam- In 1999, total sales rose by DM 399.4 million (+ 8.3%) aged by a fire in July 1998. Printing work which had to DM 5,210.5 million. The figures for 1998 were not been transferred to other plants as a result of the fire adjusted for the changes in the consolidated group, as is once again being carried out at Essen-Kettwig. this would have no perceptible effect on comparability. Reconstruction work is scheduled for completion in Due to the extension of international activities, foreign August 2000. sales increased by DM 172.2 million (+ 27.4%) to DM The physical damage and interruption to business 800.6 million. Foreign sales thus accounted for 15.4% were adequately covered by insurance, thus ruling of the total sales revenues of Axel Springer Verlag. out any negative impact on results. Advertising business was the driving force behind In view of the trend in profits the Board of Manage- overall sales growth. Compared with the previous ment proposes the distribution of a dividend of DM year, advertising revenues rose by DM 204.6 million 28.00 per share (1998: DM 26.00). The tax credit (+ 10.0%) to DM 2,259.7 million. Roughly one third remains unchanged. It is planned to transfer the of this increase was attributable to newspapers, and remainder of the consolidated net profit amounting one third to magazines. Advertising accounted for to DM 192.8 million (1998: DM 179.2 million) to 43.4% of total sales. reserves. In 1999 retail revenues increased by DM 4.4 million The Axel Springer share performed outstandingly well (+ 0.2%) to DM 1,982.1 million. The newspapers were in 1999. Throughout the year the share outperformed the major growth factor here. By contrast, the retail the comparative index MDAX. The share price rose revenues of the magazines stagnated. by 65.5%. Miscellaneous sales rose by a substantial DM 190.4 million (+ 24.5%) to DM 968.7 million. Two factors played a role here. Firstly, the sales revenues generated Share price by the book publishers acquired in 1998 were included Index: 4th January 1999 = 100 for the first time on a full-year basis. Book publishing 200 revenues jumped from DM 58.2 million to DM 150.5 million. Secondly, the electronic media increased their sales revenues by DM 78.0 million (+ 92.4%). This 150 rise was due principally to the new equity investment in Schwartzkopff TV-Productions GmbH. Contract printing revenues rose by DM 5.2 million (+ 1.8%) to 100 DM 295.7 million. Transport revenues grew by DM 17.9 million (+ 9.1%). 80

January 1999 March 2000

Axel Springer Verlag AG MDAX

9 Management Report

Sales by segment Upward trend in magazine sales in DM million The magazines of Axel Springer Verlag generated 95*96 97** 98 99 over one quarter of total consolidated sales in 1999. 5,000 Compared with the previous year, magazine sales rose by DM 68.8 million (+ 5.4%) to DM 1,336.2 million. The trend in advertising business was positive. 4,000 Advertising revenues increased by DM 69.3 million (+ 13.6%) to DM 580.9 million. COMPUTER BILD,

3,000 SPORT BILD, HÖRZU and the women's magazines played a significant role in this respect. At DM 755.3 million, the retail revenues generated by 2,000 the magazines were DM 0.5 million (- 0.1%) down on the previous year. COMPUTER BILD reported revenue 1,000 gains as did the magazines published outside Germany.

0 Sales by division 4,256 4,420 4,599 4,811 5,211 in DM million

95*96 97** 98 99 Miscellaneous Advertisements 5,000 Retail *Adjusted to take account of the changes in the consolidated group. 4,000 **Adjusted to take account of changes in statement of book sales in the following year.

3,000

Newspapers generate continued growth 2,000 Newspapers were once again the main revenue earner of Axel Springer Verlag and generated 55.8% of total 1,000 sales. In 1999, newspaper sales totalled DM 2,905.6 million, an increase of DM 140.2 million (+ 5.1%) on the previous year's figure. To a large extent this 0 growth was attributable to advertising business (up by DM 135.3 million = 8.8%). Major contributors 4,256 4,420 4,599 4,811 5,211 in this respect were BILD and HAMBURGER ABEND- BLATT, as well as DIE WELT, WELT AM SONNTAG and Other revenues Magazines BERLINER MORGENPOST. Total advertising revenues Contract printing Newspapers in 1999 amounted to DM 1,678.8 million. *Adjusted to take account of the changes in the consolidated group. **Adjusted to take account of changes in statement of book sales Retail newspaper revenues rose by DM 4.9 million in the following year. (+ 0.4%). DIE WELT, WELT AM SONNTAG and EURO AM SONNTAG were the main contributors in this respect.

10 Slight decrease in value added Equity ratio raised to 33.7% Compared with 1998, the total output of Axel Springer During the year under review the consolidated bal- Verlag increased by DM 261.3 million to DM 5,595.0 ance sheet total increased by DM 150.0 million million (+ 4.9%). After deducting DM 3,461.8 million (+ 5.0%) to DM 3,134.3 million. for input costs (materials, depreciation and other oper- Fixed assets rose by DM 211.1 million (+ 15.4%) to ating expenses) the net value added amounted to DM DM 1,578.3 million due to the expansion in capital 2,133.2 million. Compared with 1998 this represents expenditure. This was set against a marginal decline a decrease of DM 3.8 million (- 0.2%). As a pro- in current assets. portion of total output, value added fell slightly by 2.0 percentage points to 38.1%. Equity capital (excluding retained earnings) increased by DM 114.3 million to DM 1,057.0 million, due The major portion of value added (74.7%) was passed principally to the transfer of funds to the revenue on to employees. 10.7% was remitted to the State in reserves. As a result the equity ratio rose to 33.7%. the form of taxes, 7.8% transferred to the company's Fixed asset cover – i.e. the ratio of equity to fixed reserves and the remaining 6.8% assigned to capital – fell to 67.0%. shareholders and lenders. Long and medium-term loan capital increased by DM 18.1 million during the year under review. Short-term Total output and value added loan capital rose slightly by DM 17.6 million.

Value addedŁ Retained by Ł 38.1% company 7.8% Balance sheet structure Other Ł Shareholders 5.7% in DM million operating Ł expenditureŁ 9596 97 98 99 26.5% 3,500

Employees 74.7% 3,000

DepreciationŁ 2,500 3.5% 1.1% Lenders 2,000 State 10.7% Cost of materialsŁ 1,500 31.9% 1,000

500

2,506 2,571 2,712 2,984 3,134

Fixed assets Equity Current assets Long and medium-term loan capital Short-term loan capital

11 Management Report

Sharp rise in capital expenditure The negative balance on operating, investment and financing activity (DM 158.1 million) was withdrawn In 1999 Axel Springer Verlag invested a total of DM from the company's liquidity funds. At the end of the 476.0 million, DM 192.7 million more than in 1998. financial year 1999 these funds amounted to DM Compared with 1998, investments in intangible fixed 557.2 million. This sum is set against long-term assets rose by DM 114.0 million to DM 144.4 liabilities amounting to DM 176.7 million. In arith- million. Expenditure centred on the acquisition of metical terms Axel Springer Verlag is debt-free. rights to the youth and music magazines of the Marquard publishing group. Investments in tangible fixed assets totalled DM Capital expenditure, depreciation 248.2 million, DM 80.2 million up on the previous and cash flow in DM million

year's figure. The bulk of these investments related 9596 97 98 99 to the reconstruction of the Essen-Kettwig printing 600 plant, as well as replacement investments at the

Darmstadt printing plant. 500 Axel Springer Verlag channelled DM 83.3 million into financial assets (1998: DM 84.8 million).Two 400 major items were the acquisition of GRB Entertain- ment and Yukom Verlag respectively. At DM 192.8 300 million, total fixed asset depreciation was DM 48.5 million lower than in 1998. This was due to the trans- 200 fer of hidden reserves in 1998 arising from property sales pursuant to Section 6b of the Income Tax Law 100 ("EStG"). Capital expenditure was financed entirely out of cash flow, which amounted to DM 491.5 0 million. Cash flow remains at a high level 218 240 395 283 476

The following statement ("Source and application of Cash flow Investments in tangible funds") classifies the movements of funds within the Depreciation and intangible fixed assets Financial assets company according to operating, investment and financing activity. The company's liquidity funds comprise marketable securities and liquid assets. At DM 491.5 million, cash flow remained at a high level. The reduction compared with the previous year was attributable to the lower level of depreciation. Due to the increase in net current assets and the decrease in short-term provisions, especially as a result of tax payments, the inflow of funds from ordinary activities fell by DM 70.9 million to DM 389.4 million. This amount was insufficient to cover the high volume of capital expenditure and the outflow of funds for financing activity. Long-term and medium- term liabilities increased by DM 2.8 million.

12 Source and application of funds

in DM '000 1999 1998

Net profit for the year 294,657 276,380 Depreciation/writing-up of fixed assets 192,558 241,105 Change in pension provisions 12,326 21,130 Change in special reserves with an equity portion – 8,015* – 8,544* Cash flow 491,526 530,071

Change in accounts receivable and other assets – 107,137 – 42,643 Change in inventories 9,199 – 86,236 Change in short-term liabilities 38,486 86,845 Change in deferred income 32,387 6,029 Change in prepaid expenses – 9,163 – 1,024 Change in net current assets – 36,228 – 37,029

Change in other provisions 75,563 – 33,259 Change in taxation provisions – 141,425 561 Change in short-term provisions – 65,862 – 32,698

Inflow of funds from ordinary activity 389,436 460,344

Capital expenditure – 476,001 – 283,333 Balance of fixed asset disposals and additions to consolidated group 22,503 – 32,436 Outflow of funds for investment activity – 453,498 – 315,769

Change in long and medium-term liabilities 2,762 – 23,369 Dividend payment for previous year – 88,400 – 81,600 Distribution of profit to minority shareholders – 8,422 – 10,748 Outflow of funds for financing activity – 94,060 – 115,717

Change in liquidity – 158,122 28,858

Development of liquidity 1999 1998 Change Securities 333,651 110,425 223,226 Liquid assets 223,525 604,873 – 381,348 Total 557,176 715,298 – 158,122

*Does not take account of insurance compensation for fire damage at the Essen-Kettwig printing plant (pursuant to Rule 35 of the Income Tax Regulations).

13 Management Report

Risk Management Operational risks Under the terms of the Law on Control and Transpar- The individual links in the value-added chain provide ency in the Corporate Sector ("KonTraG") enacted on the foundations for the sustained profitability of a net- 1st May 1998 the Board of Management is obliged to worked media corporation. The failure of the smallest set up a risk management system and to make corre- component in the production process can have serious sponding reports to the Supervisory Board and the consequences. Detailed planning, a monthly reporting shareholders. system as well as various in-company information systems permit the identification of such risks at an Independent of this new legislation, Axel Springer early stage, and the deployment of corresponding Verlag has for many years been operating a compre- corrective measures. hensive system of risk identification, control and Financial risks monitoring. The existing planning, reporting and controlling system provides a basis for detecting In the conduct of its business operations Axel Springer any divergence from planning targets at an early Verlag is exposed to a wide range of different finan- stage and for implementing corrective measures. cial risks. A set of rules has been established govern- The Supervisory Board is directly involved in this ing the general financial management framework as process via quarterly reports. well as the deployment of derivative financial instru- In addition to this, an extensive inventory was carried ments in order to minimize interest and exchange rate out in 1999 with the aim of identifying and systematiz- risks. Strictly formalized control systems ensure ing existing risks. The relevant procedures and results compliance with these financial management rules. have been documented in a Risk Management Risks arising from the general business Manual. environment The risk management system is being continuously The business environment in which a media corpora- monitored and improved. The efficiency and reliabil- tion operates is influenced by legislative, social and ity of the system are verified by the internal audit political factors. Major issues for media corporations department and by the company's external auditors. are the potential ban on cigarette and alcohol advertis- The risk management system of Axel Springer Verlag ing and – to a different extent – new legislation affect- complies in all respects with the relevant legal ing the status of self-employed persons. Axel Springer requirements. Verlag works intensively with the relevant industry Five major risk categories have been defined, each associations and constantly monitors the legislative of which requires its own special set of management and political situation, thus ensuring appropriate instruments. reaction times in the event of changes. Market-related and strategic risks Operational risks in connection with the value- added process/general risks In its role as an international media corporation Axel Springer Verlag operates in a wide range of different The business success of Axel Springer Verlag depends market segments. The company's strategic goal is to on a complex array of production and distribution extend and internationalize its core business and to processes. Alternative distribution channels, emergen- enter into new areas of the media market. However, cy operating procedures in the printing plants, the the media market is characterized by strong com- continuous improvement of the production process petition and dynamic change. This increases the risk and well-trained personnel ensure that our products of occupying the wrong business segments. Axel reach our customers on a daily basis in the accus- Springer Verlag minimizes this risk by means of tomed high quality. intensive market research and sophisticated strategic planning tools.

14 Outlook To the extent that Axel Springer Verlag does not have to implement unforeseen defensive measures in the The upturn in economic activity, which began in mid- market-place and does not incur additional start-up 1999, is likely to accelerate in the year 2000. Ger- costs in connection with new activities, the operating many's gross domestic product is expected to expand result in the year 2000 will be comparable with that by 2.7% in the current year. Both domestic and achieved in 1999. foreign markets will generate growth stimuli. Dispos- able incomes are rising, which provides a favourable Concluding Statement climate for increased private consumption. Capital pursuant to Section 312, Para. 3, spending on plant and equipment is forecast to rise by of the German Companies Law approximately 5%. The planned reform of corporate ("AktG") taxation will engender an increased propensity to invest. The positive effects of the weak euro will In the financial year 1999 Axel Springer Verlag AG decline. The euro exchange rate is expected to rise as was dependent on Axel Springer Gesellschaft für the year progresses. Due to the second stage of the Publizistik GmbH & Co, Berlin, under the terms of ecological tax reform, average consumer price infla- Section 17 of the Companies Law ("AktG"). As no tion will be 1.2 percentage points higher than the pre- controlling agreement had been concluded with the vious year's figure. The improved economic climate latter company pursuant to Section 291 of the and a further contraction in the labour market will Companies Law, the Board of Management of Axel result in lower unemployment rates in 2000. Springer Verlag AG was obliged to submit a report on the relationships with affiliated companies persuant to Despite the upturn in the economy, the retail press Section 312 of the Companies Law. In compliance market is not expected to revive to any significant with Section 312, Para. 3, of the Companies Law the extent. The sustained flood of new magazine titles Board of Management hereby issues the following and the continued attacks on the Sunday and tabloid declaration: "Under the circumstances known to it at markets – as evidenced in the distribution of free the time Axel Springer Verlag AG received a fair and publications – will seriously restrict growth and the adequate consideration for each and every transaction scope for raising prices. conducted with an affiliated company. During the By contrast, strong growth is forecast for the advertis- period under review Axel Springer Verlag neither ing market. Gross spending on classical media adver- undertook any actions nor refrained from undertaking tising is likely to expand at a higher rate than the any actions at the behest of or in the interests of the economy as a whole. The advertising market is controlling company or one of its affiliates." expected to grow by 4% to 6% in the year 2000. Taking into account the positive trend in advertising and new media revenues and the moderate growth forecast in retail business, Axel Springer Verlag has planned for sales growth of 3% to 5% in the year 2000. Several projects initiated in the second half of 1999 will put pressure on results in the year 2000 in the form of start-up losses, increased personnel requirements and development costs. However, thanks to strict cost management, continued rationalization efforts and the positive benefits of recent restructuring measures, this will have only a limited impact on overall expenditure.

15 Axel Springer Passage, Hamburg

Over 12,000 people work for Axel Springer Verlag – round the clock, worldwide. They work in a media market which is changing at a breathtaking pace. If we want to maintain and improve our leading market position in the future we must adapt continuously and flexibly to new demands. Decades of experience provide a sound basis for creating an international media corporation. 8:30

»Find out more about our company and its media portfolio on the following pages.«

16 The Divisions

Newspapers Magazines Books Electronic Media Printing

17 10:15

Clarissa Schmarje, trainee at the The Newspaper Division includes daily and Sunday newspapers, national and Axel Springer School of Journalism, Berlin/Hamburg regional subscription newspapers, free advertising publications, the magazines BILDWOCHE,COMPUTER BILD and COMPUTER BILD SPIELE, as well as the Internet platform She is currently undergoing prac- GO-ON. This division is also responsible for the various investments held in tical training in the Political Affairs newspaper publishers in Germany and abroad. Department of Bild, Europe's biggest daily newspaper. Newspapers reinforce their strong market position »Every day we receive more than In the year under review the Newspaper Division 4,000 items from the major news further reinforced the market position of its national and regional titles. Wide-ranging activities paved agencies, plus the material produc- the way for a positive trend in readership levels and ed by our own editorial staff. Every advertising revenues. Efforts and investments centred on developing the editorial content of the newspapers morning the Bild editorial team and upgrading their online versions. The service offerings of the online publications were consistently sifts through the incoming news enhanced. items, decides which topics need Bild group asserts its leading market position to be researched and chooses the The BILD group – comprising BILD, BILD AM SONNTAG, BILDWOCHE,COMPUTER BILD and COMPUTER BILD stories which will appear in the SPIELE – asserted its commanding market position. next issue.«

18 Newspapers

BILD, Europe's largest daily newspaper, continued to In Cologne, Axel Springer Verlag faced competition reach 11.3 million readers per day and is thus ideally from the free newspaper »20 Minuten Köln« launched positioned in its market segment (which contracted by the Norwegian publishing company Schibsted. Axel further in the year under review). BILD sold an average Springer Verlag responded by launching its own free of 4.4 million copies per day in 1999. The distinctive morning paper KÖLN EXTRA. The distribution of »20 design features and functions of BILD provided the Minuten Köln« was halted in December following the basis for pleasing growth in national and regional imposition of a temporary injunction on competition advertising revenues. The editorial team has continu- grounds. KÖLN EXTRA was discontinued with immedi- ously revised selected parts of the newspaper in keep- ate effect. Both newspapers went back into circulation ing with the changes in reading habits. This is partic- in February 2000 following the lifting of this ularly evident in the sports section. The layout of BILD injunction. has become more generous and modern. Free newspapers and advertising publications also had BILD demonstrated its journalistic capabilities in a an impact on the Sunday market. Nevertheless, BILD special series entitled "50 years of Germany". This AM SONNTAG defended its position as Europe's most series was accompanied by an exhibition which toured popular Sunday newspaper with a paid circulation of the cities of Hamburg, Leipzig, Düsseldorf, Frankfurt 2.5 million and 10.5 million readers per issue. BILD AM am Main and Munich and evoked a strong echo in the SONNTAG has been continuously revised in response to media and among the general public. the changing market environment for Sunday newspapers. The layout has been updated and the founda- Now published in 31 separate daily editions, BILD tions laid for extending the paper's editorial scope. enhanced its already strong regional content. Regional These measures will be completed in the course of advertising revenues grew sharply following the 2000. Axel Springer Verlag is confident that this will streamlining of the Ruhr and Düsseldorf editions and boost advertising business. Advertising revenues in the stepping-up of activities in the Rhine-Main region. 1999 were on a par with the previous year's figure. Independent editorial teams maintain the regional orientation of BILD.

19 Newspapers

Compared with its competitors in the retail press In only a short space of time COMPUTER BILD has market, the illustrated TV guide BILDWOCHE success- created a strong brand identity. This contributed to the fully warded off the challenge from new low-price successful launch of COMPUTER BILD SPIELE at the publications. Circulation averaged out at over 530,000 beginning of November. From the outset this computer purchasers per issue, which testifies to the convincing games magazine with CD-ROM established itself as editorial concept of BILDWOCHE . A new marketing the market leader. The first regularly priced issue sold concept was implemented in 1999. Since then over 700,000 copies. In terms of advertisement market- BILDWOCHE has served as a medium for several major ing, this new magazine has followed the successful advertising campaigns. pattern established by COMPUTER BILD.

COMPUTER BILD chalked up unprecedented circulation Die Welt – Europe's most attractive daily gains in the computer magazine segment. The maga- newspaper zine has now broken through the one million barrier. The relaunch of the national quality newspaper With up to 400 pages per issue, COMPUTER BILD DIE WELT, which had begun in 1998, was continued appeals equally to private individuals and profession- in the year under review. The fortnightly supplement als, to beginners and advanced users. 2.5 million WEBWELT made its debut in the spring of 1999. In readers make COMPUTER BILD a highly attractive the autumn this was followed by the introduction of medium for advertisers. To an increasing extent these a basic 36-page format with separate financial and advertisers come from the branded goods and services arts sections. segments. In its third year of existence COMPUTER BILD carried a record 3,000 pages of advertising. In November DIE WELT received the European News- paper Award 1999 in the national dailies category in recognition of its attractive design features. The out- Newspaper sales in Germany standing success of DIE WELT also manifests itself in Net paid circulation the form of rising circulation figures and advertising IVW, annual average per issue in 1999 revenues.

Since July 1999, WELT ONLINE has featured a new BILD 4,434,806 layout and a revised editorial content. The goal here BILD AM SONNTAG 2,525,962 was to arrive at a closer linkage between the printed COMPUTER BILD 1,053,373 BILDWOCHE 533,197 and electronic versions of the newspaper. In 1999 WELT ONLINE once again ranked among the most DIE WELT 233,959 heavily frequented German newspaper web sites. WELT AM SONNTAG 428,174 EURO AM SONNTAG 91,726 WELT AM SONNTAG strengthened its position in the FINANZEN 90,156 Sunday market in the face of growing competition from free newspapers. With an average 428,000 copies HAMBURGER ABENDBLATT 304,908 per issue, WELT AM SONNTAG recorded the highest circulation in its entire history. This success was BERLINER MORGENPOST 173,400 B.Z. 272,749 founded on the consistent enhancement of the paper's B.Z. AM SONNTAG 150,745 editorial content.

20 Enhanced expertise in the business publications Berlin newspapers assert themselves in a tough segment market environment Axel Springer Verlag has continuously developed its Competition in the Berlin newspaper market remained expertise in the area of business publications. Via its very intense. Extensive editorial measures were carried controlling interest in the Handelszeitung publishing out in order to optimize the market position and reader group, Zurich, the company has gained a strong foot- appeal of BERLINER MORGENPOST. These entailed a new hold in the Swiss market. The weekly HANDELSZEITUNG layout, a clearer structure, and a new weekend journal is one of Switzerland's leading business publications. called "ttt" (Tipps, Tricks, Trends).

The monthly magazine FINANZEN and the weekly To enhance its local content BERLINER MORGENPOST finance and investment newspaper EURO AM SONNTAG launched further regional editions, bringing the total (launched in October 1998) continued to performed to six. Intensive marketing efforts were carried out in well. In both cases circulation growth and advertising order to reinforce reader loyalty and boost advertising business were ahead of expectations. revenues. BERLINER MORGENPOST succeeded in warding off aggressively priced competitors in the The new weekly magazine AKTIENRESEARCH com- classified ads segment. mences publication in the spring of 2000 and will extend the portfolio of business journals published by B.Z. and B.Z. AM SONNTAG continued to develop their Axel Springer Verlag. editorial concepts. B.Z. introduced a new advertising campaign, which met with a very favourable response After acquiring a stake in the Munich-based publishing in Berlin. In future, the advertising business of B.Z. company Yukom, Axel Springer Verlag has gained ac- will be handled by a separate sales organization. cess to the rapidly expanding customer magazine market, in particular in the business-to-business segment. The online versions of BERLINER MORGENPOST and Founded in 1995, Yukom publishes 26 German- B.Z. attracted an increasing numbers of users. These language and international customer magazines. It also web sites will be successively extended. produces the monthly business magazine MARKT UND MITTELSTAND within the framework of a joint venture.

21 Newspapers

Newspaper sales outside Germany Hamburger Abendblatt reports a further Net paid circulation, annual average increase in readership per issue in 1999, Publishers' statistics HAMBURGER ABENDBLATT reinforced its position as a Austria regional quality newspaper. The paper's exceptionally high reader loyalty is founded on journalistic quality, TIROLER TAGESZEITUNG 89,289 1) as well as wide-ranging service and marketing activities. Various media analyses carried out over the past Switzerland two years confirm that HAMBURGER ABENDBLATT has positioned itself successfully versus new and estab- HANDELSZEITUNG 36,596 2) lished competitors. In 1998 HAMBURGER ABENDBLATT Hungary 1,000 copies attracted 51,000 new readers. A further 19,000 were added in 1999. Regional newspapers Advertising revenues were boosted by the positive

BARANYA 51 trend in the job recruitment segment and the publicity KECSKEMÉT 44 campaigns carried out by telecommunications SOMOGY 39 companies. SZOLNOK 34 BÉKÉSCSABA 31 The online edition of HAMBURGER ABENDBLATT extend- HEVES 26 ed its position as one of the top regional addresses on KOMÁROM 22 the Internet, with 1.2 million page impressions every TOLNA 22 month. The broad thematic content and wide-ranging Sunday newspaper service functions of this web site have obviously been very well-received in the marketplace. VASÁRNAP REGGEL 122 1) ÖAK statistics. 2) WEMF statistics.

22 Positive trend at the affiliated newspaper The Austrian newspaper TIROLER TAGESZEITUNG, in companies which Axel Springer Verlag holds a controlling interest, performed strongly in 1999. The market leader in The regional newspapers belonging to the Axel Sprin- its region reported a rise in circulation and profited ger Verlag investment portfolio (LÜBECKER NACHRICH- from the healthy trend in job advertisement business. TEN, KIELER NACHRICHTEN, OSTSEE-ZEITUNG and LEIPZIGER VOLKSZEITUNG) once again numbered among Axel Springer Hungary (ASM Zeitungen) posted the successful and firmly established publications in pleasing results in 1999. A new advertising publication their respective regions. Thanks to their strong regional was launched, bringing the total to eight. Axel Springer orientation, all these newspapers operate on a sound also publishes eight regional newspapers in Hungary, economic basis. plus a national Sunday newspaper. The free advertising titles developed well in the year New Internet platform Go-On under review. Activities centre on the cities of Ham- In December 1999, the wholly owned subsidiary AS burg, Berlin and Dresden. ADAMO GmbH launched a new platform called GO-ON which offers Internet auctions and shopping. From the outset the commercial content has been provided by well-known specialists. Axel Springer Verlag will combine its other online activities in order to create a large market-place on the Internet.

23 12:23

Sven-Erik Hauschildt, The Magazine Division comprises TV guides, women's magazines, men's art director, Hamburg magazines, family and youth magazines, as well as a variety of high-quality Every week he and his team create specialist titles. The portfolio also includes magazine investments in a new issue of Hörzu, Germany's Germany and abroad. leading weekly TV guide.

Good performance in all core segments »For every issue we have several The Magazine Division achieved a further clear im- thousand pictures at our disposal. provement in results in 1999. Strict cost management The decision which pictures appears procedures were successfully maintained, and precisely targeted investments were made in the various maga- on which page and on the front zine titles. The magazines upheld and in some cases enhanced their positions in the market-place. Axel cover is often arrived at spontan- Springer Verlag stepped up its activities on foreign eously – by me or by the editorial markets. This took the form of equity investments, acquisitions and the launch of new titles. An important team.« strategic success in 1999 was the purchase of the youth magazines of the Marquard publishing group. TV guides maintain their stable market position TV guides are purchased by nearly 100% of German households. Nineteen weekly, fortnightly and monthly titles now compete for a total readership which has been stagnating for many years. In 1999, Axel Sprin- ger Verlag reinforced its position of leadership. Its weekly TV guides HÖRZU,FUNK UHR and TVNEU all remained stable in this highly competitive segment of the press market.

24 Magazines

HÖRZU extended its leadership of the high-price Magazine sales in Germany weekly TV guide segment and posted much-improved Net paid circulation, profits. The strict quality-minded approach adopted by IVW, annual average per issue in 1999 HÖRZU paved the way for collaborative marketing ventures with several well-known partners (e.g. Sony, HÖRZU 2,166,608 Lufthansa, Expo, Premiere World, etc.). The HÖRZU FUNK UHR 1,227,356 readership – predominantly well-educated adults with TVNEU 655,923 above-average incomes – once again proved attractive AUTO BILD 819,528 to advertisers. The professional targeting of this so- SPORT BILD 549,085 called "winning generation" resulted in an outstandingly high level of advertising revenues. In addition, BILD DER FRAU 1,787,095 JOURNAL FÜR DIE FRAU 437,749 HÖRZU extended its capabilities as a high-quality TV ALLEGRA 222,387 guide to the Internet. Via HÖRZU ONLINE users can put together their own customized line-up of TV programs. FAMILIE&CO 244,302 FUNK UHR – the TV guide designed especially for RUTE & ROLLE 80,090 women readers – increased its lead on other competing RALLYE RACING 75,375 publications. FOTOMAGAZIN 73,624 TENNIS MAGAZIN 72,003 TVNEU in particular was affected by the appearance of FLIEGERMAGAZIN 42,856 new, aggressively priced fortnightly television guides. SAVOIR VIVRE 33,746 In the interests of optimized resource utilization the AERO INTERNATIONAL 32,003 editorial teams of FUNK UHR and TVNEU were merged GOLF DIGEST 29,422 at the end of the year. The aim of this restructuring FLY AND GLIDE 21,940 measure was to secure long-term earnings potential of these two magazines and safeguard their market position. Both magazines are still published separately.

25 Magazines

Women's magazines with a clear identity and a ALLEGRA broke new ground in the women's magazine strong market position market by introducing a biannual jobs supplement called WOMEN & WORK. With an average of more than With more than 50 titles in circulation, women's four million page impressions per month, PLANET magazines constitute the largest single segment of the ALLEGRA more than doubled its audience and remains general-interest magazine market. The three titles the most heavily frequented web site of any women's produced by Axel Springer Verlag – BILD DER FRAU, magazine. JOURNAL FÜR DIE FRAU and ALLEGRA – successfully averted growing predatory competition from new Men's magazines gain market shares publications in their respective market segments. The relaunch of AUTO BILD in 1998 met with broad Profits were up on the previous year. acceptance and culminated in the best ever results in With more than four million readers every week, the magazine's entire history. BILD DER FRAU is by far the most popular women's Already Germany's top-selling car magazine, magazine in Germany. Although its circulation AUTO BILD boosted its market share and maintained declined slightly, BILD DER FRAU gained market shares advertising revenues. The Internet car exchange at the expense of its immediate competitors. The AUTOEURO got off to a successful start. This new magazine recorded its best ever return on sales, due service will help to reinforce the ties between not least to an outstandingly high volume of adver- AUTO BILD and its readers as well as its advertising tising business. Every two months BILD DER FRAU is customers in the automotive sector. augmented by a special cookery supplement entitled GUT KOCHEN UND BACKEN, which has become firmly The flood of sports coverage on television led to a established in the mass-circulation cookery magazine further fall in the circulation of sports magazines. In segment. response to this adverse trend SPORT BILD was revamp- ed in terms of content and layout at the beginning of The "classical" fortnightly women's magazines com- the year and is now published in a magazine format. peted with each other for a share of the market. This relaunch evoked a positive echo among readers JOURNAL FÜR DIE FRAU responded to the increased and advertisers and resulted in extremely good perfor- competitive pressure by selectively upgrading its mance on the advertising front. Despite the difficult editorial content. This move was very well received market environment, SPORT BILD reported the best by readers. results since it was launched. ALLEGRA reasserted itself as the leading image title At the end of 1999 SPORT BILD teamed up with the TV among Germany's high-quality monthly women's stations SAT.1 and DSF to create SPORT1, Germany's magazines. Profits rose by comparison with 1998. The largest Internet-based sports information service. topics covered by ALLEGRA – and their sophisticated journalistic presentation – appeal to the tastes of young, well-educated women with high incomes. With this attractive target audience in the background, ALLEGRA recorded a further sharp increase in advertising revenue.

26 Familie&Co with a new concept Activities on foreign markets stepped up

Three years after it was first launched, FAMILIE&CO With effect from 1st January 1999 Axel Springer sustained the strong upward performance trend. This Verlag acquired 90% of the shares in the Romanian family magazine reported a growth in circulation and publishing house LvB Invest International, which advertising revenues. Key factors here were the grad- was subsequently renamed "AXEL SPRINGER ual updating of the magazine concept, the publication EDITURA" SRL. This company publishes five of special issues devoted to computers and radio plays, women's titles and holds a significant share of the and focused marketing activities. retail magazine market. The goal is to raise this share "top special" successfully integrates new titles significantly in the coming years. In November 1999 "AXEL SPRINGER EDITURA" SRL launched its The publishing house "top special" successfully integrat- first new title: a Romanian version of the top-selling ed the new titles SAVOIR VIVRE and PHOTO TECHNIK Polish magazine OLIVIA. Also called OLIVIA, this INTERNATIONAL into its existing portfolio. SKI MAGAZIN magazine immediately occupied a top position in the was sold to the Brinkmann publishing house and a Romanian market. joint distribution company was set up with the publish- Likewise with effect from 1st January 1999, Axel ing company Jahr. As a result "top special" was able to Springer Verlag purchased a 51% stake in Sport- exploit potential cost savings and streamline its range magazin Verlag, Vienna. In recent years this publish- of titles. ing company has successfully launched numerous New venture in the youth magazine market specialist titles in the Austrian market. With its acquisition of the youth and music titles MÄDCHEN, POPCORN, MUSIKEXPRESS/SOUNDS,HAMMER and MISS BEAUTY from the Marquard publishing group Axel Springer Verlag has managed to secure long-term readership potential. With effect from 1st January 2000, these titles will be managed by a subsidiary. This will provide the basis for the active extension of business in the youth magazine market. In addition, this acquisition will permit Axel Springer Verlag to develop its activities on foreign markets as the majority of these titles are also published in Poland, the Czech Republic, Hungary, Romania and Spain.

27 Magazines

Magazine sales in Spain Extended business operations in Spain Net paid circulation, annual average The computer magazine publisher HOBBY PRESS per issue in 1999, Publishers' statistics added three new titles targeted at the burgeoning Interior design magazines 1,000 copies computer games market. Established at the end of 1998, COMPUTER HOY has outstripped all expectations in terms of sales and advertising revenues. MICASA 193 CHALET DECO 120 The interior design titles NUEVO ESTILO and MICASA NUEVO ESTILO 119 performed steadily in the face of tough competition. LA QUINTA 20 CHALET DECO, a new high-class monthy title, was Computer magazines successfully introduced and bolstered the market leadership of GRUPO AXEL SPRINGER in the COMPUTER HOY 128 important interior design magazine segment. PC MANÍA 36 In the year under review GRUPO AXEL SPRINGER PC games magazines and HOBBY PRESS were amalgamated in geograph- ical and organizational terms. PLAY MANÍA 90 HOBBY CONSOLAS 89 Market positions reinforced in Poland and MICROMANÍA 48 Hungary NINTENDO 48 JUEGOS Y CIA 40 Axel Springer Polska further strengthened its position DREAMCAST 25 in the Polish market. In the face of strong competition Bridal fashions magazine the company's magazine titles sustained their circulation figures at a high level and in some cases reported NOVIAS 18 circulation gains. The women's weekly PANI DOMU confirmed its leadership of the retail and advertising markets. With sales in excess of 600,000 copies per issue, OLIVIA performed ahead of expectations. The established title AUTO SUKCES was added to the company's portfolio, where it now augments the high- circulation weekly AUTO SWIAT. This enabled Axel Springer Polska to secure its leadership of the Polish car magazine market.

28 AXEL SPRINGER-BUDAPEST introduced a total of Magazine sales in Hungary nine magazine titles, thus extending its strong presence Net paid circulation, annual average in the Hungarian press market. These new start-ups per issue in 1999, Publishers' statistics include two TV magazines plus a variety of women's and entertainment titles. TV guides 1,000 copies In keeping with its strategic focus on core growth TVR-HÉT 491 segments Axel Springer Verlag sold the Medical TVR-ÚJSÁG 156 Tribune publishing group to the Süddeutsche Verlag TV KÉTHETES 52 with effect from 1st January 2000. SZÍNES KÉTHETES 29

Women's magazines

KISKEGYED 301 HÖLGY 90 Magazine sales in Poland GYÖNGY 72 Net paid circulation, annual average per issue in 1999, Publishers' statistics Puzzle magazines

Women's magazines 1,000 copies ÜGYES 122 KÓPÉ 46 JÓ VICC 24 OLIVIA 630 PANI DOMU 534 True story magazine PANI DOMU POLECA 282

Illustrated magazines CSÓK ES KÖNNY 85

Interior design magazine NA ZYWO 385

True story magazines LAKÁSKULTÚRA 82

Cookery magazines CIENIE I BLASKI 255 SEKRETY SERCA 153 RECEPT-TÁR 48 Computer magazine KISK. KONYHÁJA 47

KOMPUTER SWIAT 181

Car magazines

AUTO SWIAT 179 AUTO SUKCES 98 AUTO SWIAT KATALOG 85

29 14:33

Eva-Maria von Hippel, editor, The Book Division consists of sixteen publishers which sold a total Munich of 12.3 million copies in 1999. The spectrum encompasses literature, She is responsible for the entire non-fiction, service titles, paperbacks, and illustrated books. portfolio of paperbacks published by Econ Ullstein List.

Book publishers restructured »Every year we publish more than With effect from 1st June 1999 the previously separate 600 new paperbacks, half of which book publishers in Munich and Berlin were amalga- are literature titles. My job begins mated to form the new book publishing group Econ Ullstein List. This served to reinforce the position of eighteen months prior to this, with the Axel Springer book publishers in a rapidly changing market environment (the advent of Internet book- the selection of suitable novels. selling, the uncertain future of resale price mainte- Every day I receive around 20 offers nance, and the process of market concentration and globalization). from literary agents and German Now under uniform management, the hardcover pub- hardcover publishers, plus several lishers will be in a better position to coordinate their programs. At the same time the newly restructured manuscripts submitted by young paperback specialists Econ, Ullstein and List will have greater scope for exploiting publishing rights. The authors.« concentration of all distribution and administrative activities in Munich will pave the way for efficiency gains and cost reductions. A stronger presence was established in Berlin with the revival of Ullstein Berlin. This publisher will concentrate on German and European literature and non-fiction and uphold the long-standing Jewish tradition of the Ullstein publishing house.

30 Books

Compared with 1998, the book publishers achieved a outstanding successes included a report on Lene pleasing 10% rise in their total sales. On the one hand, Gammelgaard's Mount Everest expedition (DIE LETZTE this was insufficient to offset the considerable invest- HERAUSFORDERUNG), Barbara Dimmick's DIE PFERDE- ments and costs necessitated by the strategic reorien- ZAUBERIN, Dale Carnegie's FREU DICH DES LEBENS,DIE tation of the book publishing group. On the other ALDI-DIÄT, the newly launched series LOTOS and hand, the foundations have now been laid for above- GRANDE, as well as the BILD paperbacks. average growth rates in the coming years. In the Service titles and illustrated books general-interest segment top priority will be given to recruiting established authors, promoting newly dis- The publishing houses Südwest, Ludwig, Ansata, covered talents and identifying commercially lucrative Integral, Bucher, Cormoran, Verlag Gesundheit and subject matter. The consumer guide publishers will Sportverlag reported total sales of DM 66 million. maintain their innovative approach. An active sales They are market leaders in the areas of health, life- strategy will be adopted, above all in the paperback style, sports and esoterics. Major successes included segment. The basis for this will be the close working HUNDERT JAHRE DEUTSCHER FUSSBALLBUND, the first relationship with our customers in the book trade as books in a series entitled TRAUMSTRASSEN DER WELT, well as our licensing partners in Germany and abroad. the lunar calendars published by Ludwig, the titles Literature and non-fiction publishers OPER Á LA CARTE and DIE WELT DES WEINS, as well as Benita Cantieni's new book DAS RÜCKENPROGRAMM. Econ, Ullstein, List, Claasen, Marion von Schröder An outstanding performer was the illustrated book and Propyläen achieved sales of DM 47 million in the AFRIKA – RITUALE UND KULTUREN, which sold over literature and non-fiction segments. Guido Knopp's six thousand copies within only a few weeks at a DIE BILDER DES JAHRHUNDERTS und Oskar Lafontaine's price of DM 298. DAS HERZ SCHLÄGT LINKS each sold in excess of 300,000 copies.

Malika Oufkir's DIE GEFANGENE, Michael Degen's NICHT ALLE WAREN MÖRDER, Wally Lamb's FRÜH AM MORGEN BEGINNT DIE NACHT, Christian Graf von Krockow's ÜBER DIE DEUTSCHEN, Kjell Johansson's DER GESCHICHTENMACHER, and Denise Zintgraff's DIE FRAU AUS TAUSENDUNDEINER NACHT all occupied top positions in the bestseller lists. Numerous other titles attracted extensive media coverage, including DER KRIEG DER GENERALE, DAS SCHWARZBUCH DES KGB and a collection of poems by Manfred Krug. Paperbacks The paperback publishers Econ, Ullstein and List were grouped together and repositioned: List as a literary imprint, Econ as a specialist for non-fiction, econom- ics and politics, and Ullstein as a mass market label. All three companies will play an outstanding role within the Axel Springer Verlag book publishing group and in the market-place. With Waris Dirie's DIE WÜSTENBLU- ME Ullstein chalked up a number-one bestseller. Other

31 Tina Siebs, online marketing specialist, Hamburg

She liases with the regional sales offices of interactive media, one of Germany's biggest online marketing companies. The company's portfolio includes more than 30 web sites, including Sport1.

»interactive media looks after the web pages of its customers and The Electronic Media Division is active in the area of radio, television, inserts advertising messages – so- Internet, teletext and audiotex. The division has interests in TV and radio called banners. This takes place stations as well as TV production companies. The spectrum has been automatically with the help of extended to include joint ventures and Internet companies. Axel Springer sophisticated technology. We also Verlag aims at capitalizing on its journalistic expertise and exploiting the analyze the campaigns to see if they specific opportunities offered by the new media. can be improved.«

18:37

32 Electronic Media

Broadcast registers improved performance Since April 1999 Axel Springer TV NEWS GmbH has presented its own weekly news format on SAT.1. How- The profits of the seven radio stations rose sharply by ever, this program will not be continued when the comparison with the previous year. Important factors current contract runs out. January 2000 saw the start were the expansion in radio audiences and the in- of a new third-party production entitled "24-Stunden- creased volume of advertising. All told, Germany's Reportage". private radio stations reported a 17.8% rise in advertising revenues. Since the beginning of 2000, GRB Entertainment, Inc. of Studio City California has been supplying content The metropolitan television station HAMBURG 1 TV for the SAT.1 reality TV production "Echt Wahr". A once again enhanced its position in the local market. majority interest in GRB Entertainment had been In future HAMBURG 1 TV will collaborate more closely acquired in 1999. with the local broadcasters TV.Berlin and tv.münchen and thereby exploit potential synergies. Improved results at SAT.1 and ISPR Increased involvement in TV production The full-schedule TV station SAT.1 reported a further improvement in profits. After acquiring the rights to The TV production group MULTIMEDIA, which several highly attractive feature film packages SAT.1 makes television documentaries and series, performed is now in an even better position to target younger well in the face of strong competition. During the audiences. Despite the extensive football coverage financial year 1999 Axel Springer Verlag acquired available on free TV (Champions League, UEFA Cup), shares in the Hamburg-based Pro-Film group (one of SAT.1 successfully exploited its rights to the German Germany's major TV production companies) and in Football League via various program formats. Studio Berlin Metropol Film und Fernseh GmbH. Axel Springer Verlag thus stepped up its involvement in the ISPR continued to exploit its rights to the German TV fiction segment. Football League and – via a new affiliate SPORT1 – extended its activities to the Internet. ISPR's results Schwartzkopff TV-Productions GmbH, in which Axel improved in 1999, although it invested in an increasing Springer Verlag has a controlling interest, consolidated range of collaborative projects with first and second its position in the hard-fought daily talkshow segment. division football clubs. Schwartzkopff leads the markets with its three programs SONJA, PILAWA and TÜRCK.

33 Electronic Media

The principal online activities of Axel Springer Verlag

newspapers Address

BILD ONLINE www.bild.de BERLINER MORGENPOST ONLINE www.berliner-morgenpost.de B.Z. AUF DRAHT www.bz-berlin.de HAMBURGER ABENDBLATT ONLINE www.abendblatt.de WELT ONLINE www.welt.de

magazines

AUTO BILD ONLINE www.autobild.de COMPUTER BILD ONLINE www.computerbild.de FAMILIE&CO ONLINE www.familie.de FINANZEN ONLINE www.finanzenonline.de HÖRZU ONLINE www.hoerzu.de PLANET ALLEGRA www.allegra.de

Services

Online car market AUTOEURO www.autoeuro.de Internet platform GO-ON www.go-on.de Online news service www.ticker.de Online travel service www.verreisen.de

Participating interests

Internet bookseller BOOXTRA www.booxtra.de Search engine INFOSEEK www.infoseek.de Internet service SPORT1 www.sport1.de

34 Extended range of Internet activities CompuTel defends position as market leader

The search engine INFOSEEK got off to a pleasing start In 1999 CompuTel asserted itself in the stagnating at the beginning of 1999. Axel Springer Verlag went market for automated telephone and fax services on to make further investments in the booming Internet (audiotex). Profits remained stable. Among the reput- market. In the summer of 1999 the online bookseller able providers of audiotex services CompuTel has a Booxtra commenced operations and successfully commanding 26% market share. positioned itself against several established competitors. CompuTel has responded to the changing demand AUTOEURO, in which Axel Springer Verlag holds a patterns by extending its services/dialogue marketing controlling interest, made its debut at the German portfolio and sector-specific applications. Priority has Motor Show (IAA) in September 1999. AUTOEURO is also been given to developing the company's mobile the first vendor-independent e-commerce platform in value-added voice services, coupled with a strengthen- the German-language sections of the Internet. ing of content management.

In the autumn of 1999 SPORT1 – a joint venture with DSF and SAT.1 – was redesigned. From the outset SPORT1 established itself as the leading German- language sports site on the Internet. Further Internet platforms are under development and will enhance the position of Axel Springer Verlag in this promising growth market. During the year under review the company interactive media developed into one of the leading marketing specialists in the German Internet industry. Under the brand name INTERACTIVE MEDIA this company markets the online offerings of Axel Springer Verlag, as well as numerous external web sites.

In the teletext segment SAT.1 TEXT built on its position of market leadership. In particular this is reflected in the high daily reach ratings. Since the beginning of the year 2000 Axel Springer Verlag has been responsible for marketing the teletext service of Germany's national TV channel ZDF.

35 22:20

Marco Schaefflein, printer, For the production of the company's own publications Axel Springer Ahrensburg Verlag operates five printing plants in Germany under the umbrella of Just 20 minutes after the copy its Printing Division. This ensures maximum of independence, flexibility deadline for HAMBURGER ABENDBLATT and quality. Spare capacity is utilized for contract printing work. Mario Schaefflein sets the printing presses in motion at the Ahrensburg In 1999 the offset printing plants for newspaper produc- offset plant. tion in Ahrensburg, Berlin-Spandau and Essen-Kettwig had a total of 1,727 staff members. The volume of paper consumed amounted to approximately 220,000 tonnes. »In just four hours we print 350,000 The rotogravure plants in Ahrensburg and Darmstadt copies at speeds of up to 35 kilome- employed a workforce of 1,278. A total of 284,000 tonnes of paper were used for the production of the tres an hour. To do so, we need twelve company's own magazine titles as well as contract rolls of newsprint with a total length printing work. New printing plant in Essen-Kettwig of 200 kilometres. The finished news- On 14th July 1998 major parts of the printing plant in papers have to reach the newsstands Essen-Kettwig were destroyed by fire. Following the and readers' letterboxes punctually demolition of the damaged buildings and the dismantl- ing of the existing machinery, construction work began and in top quality.« immediately on a new printing plant at the same site. When completed, it will house three 64-sheet rotary presses. The first of these presses, plus the relevant post-print handling facilities, started operations in January 2000; the second went on stream in April 2000.

36 Printing

When the third press is installed in August 2000, Expansion in contract printing sales Essen-Kettwig will be restored to the same capacity as In addition to producing the company's own publica- prior to the fire. tions, the printing works of Axel Springer Verlag also The new Essen-Kettwig printing plant fulfils all the perform contract work for third parties. criteria of modern newspaper production. The total The rotogravure plants consolidated their position in investment volume amounts to DM 147 million. The the European market. Despite the growing capacities bulk of the print runs outsourced as a result of the fire available at competing plants, contract printing sales have now been retransferred to Essen-Kettwig. showed further growth in 1999. New periodical print- Ahrensburg and Berlin at full capacity ing contracts will secure capacity utilization in the current year. This will be augmented by long-term Due to the increased scope of the newspapers, the total contracts with newspaper publishers and catalogue production volume was 7% up on 1998. The news- producers. paper printing works in Ahrensburg and Berlin both operated at full capacity. Another factor was the The contract printing sales of the newspaper printing increasing use of colour. Compared with 1998, the plants rose by 1.8%. Major factors here were the print number of pages printed in two or more colours volumes attributable to »Die Zeit«, and the production increased by 30%. Approximately 40% of the news- of »Süddeutsche Zeitung« in Berlin and Essen-Kettwig. paper pages now feature colour printing. Contract printing revenues are secured on the basis of New generation of printing presses in long-term agreements. The contract with »Die Zeit« Darmstadt was extended until 2004. In addition, a ten-year agreement was signed with the Handelsblatt publishing The installation of 3.6 metre wide rotogravure presses group, under which Axel Springer Verlag will produce in Darmstadt was successfully completed during the part of the »Handelsblatt« print volume at its Spandau year under review. The first press entered service as printing works as from 2001. planned on 1st June 1999; the second went on stream in December 1999. This new generation of presses offers considerably improved productivity. In future the Darmstadt printing plant will handle approximately 110,000 tonnes of paper – 30% more than at the outset of this major investment project. The investments in Darmstadt have been accompanied by a new shift plan. This provides for a full 6-day week and new manning arrangements for the printing presses. Personnel reductions effected without redundancies The higher production volume was accomplished with a considerably lower input of manpower. The conver- sion to digital pre-print technology has led to significant rationalization effects. Once again, it was possible to avoid redundancies. The new lower staffing levels were achieved by natural wastage or by mutual agreement with the employees concerned. To an increasing extent, older employees are taking advantage of the options available for part- time working.

37 Thorsten Stelzer, computer specialist, Hamburg

His job is to ensure the smooth flow of data through the intranet of Axel Springer Verlag.

»Every night we update the 10,000 pages in our SpringerNet. The follow- The motivation and skills of its workforce are an important factor in ing morning my colleagues can read realizing the strategic goals of Axel Springer Verlag – i.e. the extension the latest news on their computers of existing activities and the development of new market opportunities. and use this data in the course of Alongside the recruitment of new employees top priority is accorded to their daily work.« unlocking the potential of the company's existing human resources.

1:30

38 Personnel and Training

More employees on the payroll due to additions One third of the workforce have joined the company to the consolidated group within the last five years. In 1999 the average length of service was 12.8 years; 47.3% of the employees In the year under review Axel Springer Verlag had an have been with Axel Springer Verlag for more than average of 12,504 employees (excluding trainees and ten years. apprentices), 452 more than in 1998. This increase was attributable to the additions to the consolidated group. The number of disabled staff members averaged 4.9% Without these additions, the total number of employees over the year (ASV AG: 5.7%). The statutory quotas would have fallen once again. for the employment of disabled persons were thus largely met. A total of 7,741 persons were employed in the market- oriented sectors (publishing, electronic media and Personnel costs marketing). 1,295 were employed in the service sectors, In 1999 personnel costs rose by 3.6% to DM 1,594.1 and 3,468 in the technical sectors. million. However, the ratio of personnel costs to total As a result of the addition of new titles to the portfolio output fell by 0.4 percentage points to 28.5%. and the expansion and enhancement of the editorial Wages and salaries accounted for 58.6% of personnel content of the company's existing publications, the costs. The remaining 41.4% were attributable to sup- number of editorial staff averaged 3,033, an increase plementary wage costs, which included employer's of 263 on the previous year. The number of salaried social security contributions, retirement pensions and and industrial employees also rose by 189. financial support, payments for non-productive time (including annual holidays, public holidays, illness, etc.) and other payments and bonuses (Christmas Breakdown of workforce bonus, holiday pay, long-service bonus, anniversary bonus and capital-forming payments). 9596 97 98 99 14,000

12,000

Breakdown of personnel costs 10,000

Retirement pensions Ł 8,000 and financial support Ł Social security Ł 2.9% contributionsŁ 6,000 12.8%

4,000 Ancillary benefitsŁ 9.6% 2,000 Wages and salaries 58.6%

0 Non-productive timeŁ 16.1% 12,878 12,346 12,195 12,052 12,504

Editorial staff Salaried employees Industrial employees

39 Personnel and Training

Number of internal training courses Pensions

9596 97 98 99 In 1999 expenditure on retirement pensions and finan- 800 cial support amounted to DM 46.9 million. Pensions accounted for DM 39.9 million of this figure. The sum 700 of DM 12.8 million was allocated to pension reserves. 600 In the course of the year an average of 6,288 former

500 employees or their dependants received regular payments totalling DM 26.0 million. On the balance sheet 400 date the company had pension obligations in respect of 1,630 retired employees with non-forfeitable pension 300 expectancies. 200 Increased utilization of existing potential 100 In pursuit of its strategic goals – i.e. the extension of

0 existing business fields and the exploitation of new market opportunities – Axel Springer Verlag needs to 419 437 518 554 792 recruit suitable new staff and make the best possible use of its existing human resources. The company therefore offers its employees the chance to develop their potential. In the year under review an increasing number of employees acquired the skills necessary for new and challenging assignments. Training initiative continued Within the framework of its training initiative Axel Springer Verlag organizes a wide range of seminars and training courses. The participants are assigned to these courses by the various corporate divisions. In addition, many other members of staff take part on a voluntary basis.The number of participants in these in- house training measures increased significantly in the year under review.

40 More than 6,000 employees took part. This represents Axel Springer Verlag also organized numerous special an increase of over 30%. The line-up included special projects for schoolchildren and students, open days, training sessions relating to the German spelling scholarship programs and diploma training courses. reform, as well as English courses and Internet For the first time the company had its own stand at the courses. The proportion of female participants more German Graduates Congress in Cologne. than doubled in the period under review. Axel Springer A vote of thanks to all members of staff Verlag received the "Total E-quality" award in recognition of its commitment to equal opportunities. The Board of Management wishes to record its thanks Interesting career opportunities in the media to all members of staff for their hard work and dedi- industry cation during the year under review. Our deceased colleagues are remembered with gratitude and affection. Alongside its in-house training activities Axel Springer Verlag also offers young people wide-ranging career openings in the media industry. Apart from the 90 training places available at the Axel Springer School of Journalism, the company provided 291 commercial and technical apprenticeships. The company's trainee program (25 places) prepared suitable university graduates for technical and man- agerial assignments. A further 28 practical training places were on offer in the consolidated companies.

41 8:02

Xhavit Ajvazi, warehouse For many years now Axel Springer Verlag has deployed a strict system of employee, Ahrensburg environmental management. In 1999 this led to the more efficient utilization of An employee of the recycling com- natural resources and reduced emissions at the company's various operational pany Melosch (a subsidiary of Axel locations and printing plants. Springer Verlag), Xhavit Ajvazi loads trucks with bales of waste paper New environmental report published weighing up to 400 kilograms each. In July 1999 Axel Springer Verlag published its third environmental report "Ecological Insights", this time »Waste paper is an important raw covering the period 1997/1998. The report confirms that ecological efficiency has been enhanced in virtually material for newspapers and maga- all areas. With the aid of a special environmental information system it is now possible to measure efficiency zines. Every year we recycle 500,000 gains on the basis of specific indices. The indices tonnes of waste paper. This is roughly (input of material per square metre of printed paper) for printing ink, water, paper and environmental equivalent to the annual volume of emissions all showed a marked improvement. paper printed by Axel Springer Axel Springer Verlag was one of the first companies in Germany to have its environmental report audited by Verlag.« an independent agency (PwC Umweltberatung GmbH). The Chamber of Certified Public Accountants has rated the report as the most detailed and innovative presentation of environmental management by any German company and will present the "German Environmental Reporting Award" to Axel Springer Verlag.

42 Environmental Protection

Reduced-weight paper Stronger environmental awareness among employees Following technical advances in terms of tear resist- ance and print reproduction quality it is now possible All the printing plants of Axel Springer Verlag have to deploy paper with a lighter specific weight (42.5 already been certified under the terms of the EC Eco grams as opposed to 45 grams per square metre). Audit and are currently undergoing renewed valida- tion. The company's commitment to environmental As a result, the printed surface area (+ 2.3%) grew protection is widely accepted among staff – as evidenc- more rapidly than paper consumption (+ 0.6%). This ed in the number of suggested improvements. During means that 11 additional pages can be printed per an environmental action week at the Berlin-Spandau kilogram of paper (195 pages compared with 206). printing plant no fewer than 76 suggestions were More efficient deployment of printing ink received from employees. Although the total printed surface area increased by Further environmental protection measures 2.3% overall, the consumption of rotogravure and planned offset inks increased by only 1.9%. Thanks to opti- Further objectives will be to extend the range of mized printing technology in the magazine segment environmental protection seminars for staff, to (rotogravure), the consumption of ink per square metre implement wood certification initiatives, to upgrade declined by 2.9%. Ink consumption in the newspaper the company's environmental report into a full-scale segment (offset) rose by 1.4% as a result of the "sustainability report", and to put into practice the increased amount of colour printing. EC Eco Audit programs at all the company's locations. Effective emission-reduction measures EXPO 2000 in the AXEL SPRINGER PASSAGE in Emissions of toluene (NMVOC), a solvent used in Hamburg magazine inks, fell by 23% per square metre of printed From June to October 2000 a special exhibition en- paper. The positive trend in this emission index is titled "paper, people, press" will present to an inter- largely attributable to the efforts undertaken at the national audience all the various stages in a news- rotogravure plants in Ahrensburg and Darmstadt. paper's life-cycle – from modern forest utilization Optimized paper supply chain to paper recycling. Within the framework of a project involving the mail The exhibition is the outcome of a study entitled order company Otto Versand, the paper manufacturer "Evaluation of the ecological life-cycles of newspapers Norske Skog and 8,900 Norwegian forest owners, Axel and magazines" conducted by Axel Springer Verlag in Springer Verlag monitored and ecologically enhanced cooperation with the Swedish paper manufacturer the entire production process from the tree harvest to StoraEnso and the Canadian cellulose producer Canfor. the final printing. The magazine FAMILIE&CO and a special Otto mail order catalogue served as models. Particular attention was given to tracking the progress of the wood fibres, as well as the ecological standards applied during the harvesting process.

43 44 Financial Statements Consolidated Financial Statements and Financial Statements of Axel Springer Verlag AG

Contents Consolidated Balance Sheet 46

Consolidated Income Statement 47

Balance Sheet of Axel Springer Verlag AG 48

Income Statement of Axel Springer Verlag AG 49

Movement of Fixed Assets – Group 50

Movement of Fixed Assets – Axel Springer Verlag AG 52

Notes to the Consolidated Financial Statements and Financial Statements of Axel Springer Verlag AG 54

Recommendation for the Appropriation of Profits 68

Audit Certificate 69

45 Consolidated Balance Sheet

ASSETS 31.12.1999 31.12.1998 Note no. DM DM '000

A. Fixed Assets 6 I. Intangible fixed assets 7 483,271,998 322,077 II. Tangible fixed assets 688,861,279 628,906 III. Financial assets 8 406,153,953 416,209 1,578,287,230 1,367,192

B. Current assets I. Inventories 9 200,616,198 209,815 II. Accounts receivable and other assets 10 781,621,000 684,518 III. Securities 11 333,651,331 110,425 IV. Liquid assets 12 223,524,972 604,873 1,539,413,501 1,609,631

C. Prepaid expenses 13 16,616,203 7,453 3,134,316,934 2,984,276

EQUITY AND LIABILITIES 31.12.1999 31.12.1998 Note no. DM DM '000

A. Equity capital I. Subscribed capital 14 170,000,000 170,000 II. Revenue reserves 15 865,788,593 752,288 III. Consolidated unappropriated net profit 122,143,266 88,400 IV. Minority interests 16 21,208,010 20,461 1,179,139,869 1,031,149

B. Special reserves with an equity portion 17 49,620,282 67,669

C. Provisions 18 977,054,694 1,030,591

D. Liabilities 19 811,594,283 770,346

E. Deferred income 20 116,907,806 84,521 3,134,316,934 2,984,276

46 Consolidated Statement of Income

1999 1998 Note no. DM DM '000

1. Sales 23 5,210,546,431 4,811,132 2. Movement in inventories of finished goods and work in process – 8,242,369 12,267 3. Other operating income 24 278,985,445 396,031 4. Cost of materials 25 – 1,784,352,496 – 1,607,072 5. Gross profit 3,696,937,011 3,612,358

6. Personnel costs 26 – 1,594,120,881 – 1,539,408 7. Depreciation of intangible and tangible fixed assets 28 – 170,327,019 – 237,145 8. Other operating expenses 29 – 1,480,863,332 – 1,348,369 9. Income from investments 30 86,721,113 79,908 10. Net interest income 31 11,007,716 12,973 11. Depreciation of financial assets and current-asset securities 28 – 26,248,521 – 4,190 12. Losses taken over – 517,964 – 1,151 13. Profit from ordinary operations 522,588,123 574,976

14. Taxes 32 – 227,931,201 – 298,596 15. Consolidated net earnings 294,656,922 276,380

16. Transfer to reserves – 165,824,519 – 179,187 17. Profit attributable to minority shareholders – 6,689,137 – 8,793 18. Consolidated unappropriated net profit 122,143,266 88,400

47 Balance Sheet Axel Springer Verlag AG

ASSETS 31.12.1999 31.12.1998 Note no. DM DM '000

A. Fixed Assets 6 I. Intangible fixed assets 7 30,044,011 29,662 II. Tangible fixed assets 545,301,936 508,093 III. Financial assets 8 741,574,497 613,037 1,316,920,444 1,150,792

B. Current assets I. Inventories 9 87,211,904 119,144 II. Accounts receivable and other assets 10 716,937,148 564,640 III. Securities 11 312,179,171 96,212 IV. Liquid assets 12 175,522,494 547,236 1,291,850,717 1,327,232

C. Prepaid expenses 13 7,357,319 3,767 2,616,128,480 2,481,791

EQUITY AND LIABILITIES 31.12.1999 31.12.1998 Note no. DM DM '000

A. Equity capital I. Subscribed capital 14 170,000,000 170,000 II. Revenue reserves 15 585,792,221 463,649 III. Consolidated unappropriated net profit 122,143,266 88,400 877,935,487 722,049

B. Special reserves with an equity portion 17 47,651,327 65,484

C. Provisions 18 791,391,000 861,821

D. Liabilities 19 817,323,176 774,838

E. Deferred income 20 81,827,490 57,599 2,616,128,480 2,481,791

48 Income Statement Axel Springer Verlag AG

1999 1998 Note no. DM DM '000

1. Sales 23 3,581,009,411 3,459,963 2. Movement in inventories of finished goods and work in process 265,386 – 893 3. Other operating income 24 294,327,045 434,507 4. Cost of materials 25 – 1,169,188,683 – 1,128,028 5. Gross profit 2,706,413,159 2,765,549

6. Personnel costs 26 – 1,133,451,822 – 1,154,698 7. Depreciation of intangible and tangible fixed assets 28 – 125,651,122 – 185,345 8. Other operating expenses 29 – 1,074,075,802 – 1,018,311 9. Income from investments 30 110,775,783 97,584 10. Net interest income 31 12,670,357 12,422 11. Depreciation of financial assets and current-asset securities 28 – 33,286,484 – 81,654 12. Losses taken over – 37,034,678 – 22,822 13. Profit from ordinary operations 426,359,391 412,725

14. Taxes 32 – 182,072,859 – 253,269 15. Net earnings 244,286,532 159,456

16. Transfer to reserves – 122,143,266 – 71,056 17. Unappropriated net profit 122,143,266 88,400

49 Movement of Fixed Assets – Group

Historical or production costs

Changes in the 1.1.1999 consolid. group Additions Disposals DM DM DM DM

Rights and licenses 289,286,858 – 902,479 19,186,074 15,838,392 Goodwill 298,991,120 102,064,444 0 52,926,089 Advance payments 10,047,783 0 125,259,271 991,814 Intangible assets 598,325,761 101,161,965 144,445,345 69,756,295

Land, leasehold rights and buildings, including buildings on land owned by third parties 830,613,131 6,897,873 37,075,568 3,185,109 Machinery and equipment 1,483,940,100 25,230 76,448,203 54,089,980 Other fixtures, furniture and office equipment 352,551,027 7,402,655 60,063,243 42,932,810 Advance payments and fixed assets under construction 133,438,431 0 74,654,169 52,736,364 Tangible fixed assets 2,800,542,689 14,325,758 248,241,183 152,944,263

Shares in affiliated companies 94,807,855 – 10,187,122 30,611,650 9,451,026 Loans to affiliated companies 7,342,625 0 19,342,981 291,149 Investments 342,890,163 70,306 21,348,500 22,297,221 Loans to other associated companies 16,457,993 0 6,465,465 2,192,048 Fixed-asset securities 3,708,663 0 119,114 0 Other loans 16,826,113 0 5,427,074 2,627,049 Financial assets 482,033,412 – 10,116,816 83,314,784 36,858,493 Fixed assets – Group 3,880,901,862 105,370,907 476,001,312 259,559,051

50 Depreciation Book value

In the financial Reclassifications Write-ups Total year 1999 31.12.1999 31.12.1998 DM DM DM DM DM DM '000

3,620,988 0 223,515,280 26,455,272 71,837,769 78,987 0 0 66,914,399 1,199,512 281,215,076 233,042 – 4,095,697 0 390 390 130,219,153 10,048 – 474,709 0 290,430,069 27,655,174 483,271,998 322,077

26,743,942 59,255 556,702,929 27,301,832 341,442,476 308,170 24,965,625 0 1,382,782,678 63,925,991 148,506,500 112,517

670,585 10,763 282,293,190 51,444,022 95,461,510 83,972

– 51,905,443 3,681 0 0 103,450,793 124,247 474,709 73,699 2,221,778,797 142,671,845 688,861,279 628,906

4,825,000 62,878 39,220,187 2,876,521 71,386,170 89,605 0 0 4,920,000 0 21,474,457 2,423 – 2,903,064 104,847 45,314,867 6,314,358 293,793,817 296,625 5,033,516 0 21,895,123 13,171,252 3,869,803 7,734 0 0 573,326 121,800 3,254,451 3,264 – 6,955,452 12,025 295,431 0 12,375,255 16,558 0 179,750 112,218,934 22,483,931 406,153,953 416,209 0 253,449 2,624,427,800 192,810,950 1,578,287,230 1,367,192

51 Movement of Fixed Assets Axel Springer Verlag AG

Historical or production costs

1.1.1999 Additions Disposals Reclassifications DM DM DM DM

Rights and licenses 85,510,997 10,618,485 8,299,068 1,695,971 Advance payments 8,195,694 4,503,857 961,375 – 2,294,221 Intangible assets 93,706,691 15,122,342 9,260,443 – 598,250

Land, leasehold rights and buildings, including buildings on land owned by third parties 696,271,949 26,590,357 1,015,150 3,310,088 Machinery and equipment 1,287,238,886 70,309,198 50,319,858 24,381,147 Other fixtures, furniture and office equipment 249,716,646 35,453,833 27,553,646 90,444 Advance payments and fixed assets under construction 108,661,504 72,541,643 52,690,393 – 27,183,429 Tangible fixed assets 2,341,888,985 204,895,031 131,579,047 598,250

Shares in affiliated companies 467,263,989 130,628,250 15,134,213 4,775,000 Loans to affiliated companies 166,811,453 13,248,200 21,600,000 0 Investments 221,637,569 18,742,472 216,562 – 4,775,000 Other Loans 5,982,853 4,325,388 2,143,837 0 Financial assets 861,695,864 166,944,310 39,094,612 0 Fixed assets – Axel Springer Verlag AG 3,297,291,540 386,961,683 179,934,102 0

52 Depreciation Book value

In the financial Write-ups Total year 1999 31.12.1999 31.12.1998 DM DM DM DM DM '000

0 68,926,329 12,898,564 20,600,056 21,466 0 0 0 9,443,955 8,196 0 68,926,329 12,898,564 30,044,011 29,662

0 466,852,268 21,678,441 258,304,976 250,667 0 1,206,516,263 55,927,015 125,093,110 87,273 0 197,132,752 35,147,102 60,574,525 61,491

0 0 0 101,329,325 108,662 0 1,870,501,283 112,752,558 545,301,936 508,093

4,535,380 187,007,164 28,452,096 400,525,862 303,086 0 35,740,453 0 122,719,200 109,471 0 25,175,467 1,558,374 210,213,012 194,557 11,638 47,981 0 8,116,423 5,923 4,547,018 247,971,065 30,010,470 741,574,497 613,037

4,547,018 2,187,398,677 155,661,592 1,316,920,444 1,150,792

53 Notes to the consolidated financial Statements and financial Statements of Axel Springer Verlag AG

General information

1. Preliminary remarks To simplify reporting procedures and avoid repetitions the notes relating to the Group and to Axel Springer Verlag AG have been combined. Unless indicated otherwise, the notes refer to both sets of financial statements. In the interests of clarity individual items in the Balance Sheet and the Statement of Income have been combined and presented separately in the notes. As in the previous years, the Statement of Income was drawn up using the total cost method. Where applicable, all amounts have been rounded to the nearest thousand.

2. Consolidated group In 1999 the consolidated group comprised Axel Springer Verlag AG and 66 subsidiaries (1998: 56 subsidiaries). As was the case in the previous year, three joint ventures were consolidated on a pro rata basis. Hamburger Abendblatt • Die Welt Reisebüro GmbH and Ullstein Medical Verlagsgesellschaft mbH & Co. KG were deconsolidated with effect from 1st January 1999. The consolidated group is shown in the List of Subsidiaries and Affiliated Companies on page 72 ff. The changes in the consolidated group did not materially affect the comparability with the previous year's financial statements. The other associated companies were not included in the consolidated group as they play only a minor role (both collectively and individually) in presenting a true and fair view of the Group's net worth, financial position and earnings situation.

3. Consolidation The capital consolidation of newly consolidated companies and the increases in principles equity holdings were in accordance with the book value method, i.e. the investment amount was set off against the pro rata equity capital. The relevant cut-off date for companies consolidated for the first time is the beginning of the financial year. First-time consolidation and the increases in equity holdings gave rise to a differential amount of DM 108.2 million on the assets side and DM 4.3 million on the liabilities side. The net amount is shown under goodwill and – like the goodwill arising from capital consolidation in previous years – will be set off against the Group's revenue reserves over a period of ten years. The shares in equity capital and in the profits of subsidiaries are reported under minority interests. Receivables and liabilities between the companies included in the Consolidated Financial Statements were eliminated. The sales revenues of the consolidated companies as well as other sales and service revenues reported in the Consoli- dated Statement of Income were set off against the relevant expenses incurred.

54 4. Accounting and The same accounting and valuation methods were applied as in 1998. Due to valuation principles accounting measures as defined in Section 285, No. 5, and Section 314, Para. 1, No. 5, of the German Commercial Code ("HGB"), the net profit of Axel Springer AG changed by approximately 8% and the consolidated net profit by approximately 7%. The resultant reduction in depreciation charges will lead to an increase in income tax in subsequent years. The same classifications and valuation methods were applied to the Consolidated Financial Statements and the Financial Statements of Axel Springer Verlag AG. The uniform use of valuation options and the uniform balance sheet date of all the consolidated companies corresponding to the balance sheet date of Axel Springer Verlag AG ensure the meaningfulness of the Consolidated Financial Statements. The following notes apply to the valuation of the individual balance sheet items: Intangible fixed assets and tangible fixed assets are valued at historical cost or the cost of production. Intangible fixed assets are subject to scheduled amortisa- tion in keeping with the estimated or contractually agreed asset lifetimes. Tangible fixed assets are subject to scheduled depreciation in line with their customary useful lives. In all cases the declining-balance method of depreciation has been applied, followed by a transition to the straight-line method at a later stage. Goodwill (other than that arising from capital consolidation) is written off over a period of 15 years in keeping with the relevant tax regulations. Low-value assets are written off in full in the year of acquisition. Wherever possible, use was made of the special depreciation options permitted under tax law. Shares in affiliated companies and investments are valued at historical cost or current value (if lower). The equity valuation method was not applied to associated companies, as these have only a minor influence on the Group's net worth, financial position and earnings situation. Interest bearing loans are stated at their nominal value. Current assets are valued at historical/production cost or current value (lower of cost or market principle). Production costs include material costs and manufacturing expenses, plus an appropriate amount in respect of capitalized overheads and depreciation, as prescribed in the tax regulations. Accounts receivable – trade are stated at their nominal value after making specific provisions to take account of all discernible risks. Lump-sum provisions were set up to take account of general risks. Pension provisions were calculated on the basis of actuarial principles. Other provisions were set up to an extent required in accordance with sound commercial judgement. Liabilities are stated at their nominal redemption value.

55 Notes

5. Currency translation Assets denominated in foreign currencies were translated at the mean exchange rate on the date of acquisition. Accounts receivable and payable in foreign currencies were translated at the mean exchange rate on the date of the book- keeping entry, or else at the higher or lower exchange rate on the balance sheet date. The balance sheet items and profit and loss items of foreign subsidiaries reported in the Consolidated Financial Statements were converted from the local currency into Deutschmarks at the mean exchange rate prevailing on the balance sheet date. Translation differences were set off against the Group's revenue reserves, without any effect on net earnings.

Notes to the balance sheets

6. Fixed assets The changes in the individual fixed asset items in 1999 are shown in the fixed- asset movement schedules for the Group and Axel Springer Verlag AG respectively. Changes attributable to newly consolidated/deconsolidated companies are shown in a separate column in the Group's fixed-asset movement schedule.

7. Intangible fixed Intangible fixed assets comprise goodwill, title rights, as well as publication assets rights, supply rights, licenses and data processing software.

8. Financial assets The major subsidiaries and affiliated companies of Axel Springer Verlag AG are shown in the table on page 72 ff. Pursuant to Sections 287 and 313 (Para. 4) of the German Commercial Code ("HGB") the list of shareholdings of Axel Springer Verlag AG and the Group has been lodged with the Commercial Register at the Local Court of Berlin- Charlottenburg.

9. Inventories Group ASV AG in DM '000 1999 1998 1999 1998

Raw materials and supplies 131,060 144,505 76,839 108,958 Work in process 20,451 20,124 7,666 7,401 Finished goods and merchandise 49,105 45,186 2,707 2,785 Total 200,616 209,815 87,212 119,144

Paper stocks – the single largest item under raw materials and supplies – amounted to DM 54.8 million (Group) and DM 48.0 million (Axel Springer Verlag AG).

56 10. Accounts receivable Group ASV AG and other assets in DM '000 1999 1998 1999 1998

Accounts receivable (trade) 435,270 354,571 234,845 204,528 - due after one year or more 0 660 0 0 Due from affiliated companies 70,664 33,188 154,290 162,087 - due after one year or more 2,625 825 32,886 25,825 Due from other associated companies 136,974 111,370 115,088 95,460 - due after one year or more 57,840 57,690 57,590 57,690 Other assets 138,713 185,389 212,714 102,565 - due after one year or more 8,585 10,632 15,405 18,668 Total 781,621 684,518 716,937 564,640 - due after one year or more 69,050 69,807 105,881 102,183

Accounts receivable (trade) accruing to the Group break down as follows: retail business DM 170.1 million; advertising business DM 151.3 million; contract printing DM 39.2 million. Other assets include claims against the inland revenue authorities, and a variety of smaller items.

11. Securities This item relates exclusively to miscellaneous securities which serve as temporary deposits for part of the company's liquidity.

12. Liquid assets Group ASV AG in DM '000 1999 1998 1999 1998

Cheques 8,423 8,023 7,781 6,872 Cash in hand, Bundesbank deposits, postal bank deposits 55,095 24,425 31,072 21,947 Bank deposits 160,007 572,425 136,669 518,417 Total 223,525 604,873 175 ,522 547,236

57 Notes

13. Prepaid expenses This item includes rent payments, payments for bought-in services and motor vehicle taxes.

14. Subscribed capital The subscribed capital of DM 170 million is fully paid up and remained unchanged by comparison with the previous year. It is divided into 3,400,000 shares with a nominal value of DM 50.00 each. These shares are registered and may be transferred only with the company's consent. At the balance sheet date the following shareholders were registered as holding more than 50% and 25% of the subscribed capital: Axel Springer Gesellschaft für Publizistik GmbH & Co, Berlin (50% plus one share) and PrintBeteiligungs GmbH, Unterföhring (40.08%).

15. Revenue reserves Group ASV AG in DM '000 1999 1998 1999 1998

Legally limited revenue reserves 17,000 17,000 17,000 17,000 Other revenue reserves 848,789 735,288 568,792 446,649 Total 865,789 752,288 585,792 463,649

Other revenue reserves developed as follows:

Group ASV AG

in DM '000

Balance on 1.1.1999 735,288 446,649 Allocation of profit 165,825 122,143 Amounts set off against revenue reserves – 52,897 – Change resulting from deconsolidation – 1,762 – Currency translation difference 2,335 – Balance on 31.12.1999 848,789 568,792

58 16. Minority interests Minority interests developed as follows:

in DM '000

Balance on 1.1.1999 20,461 Changes resulting from consolidation and deconsolidation 2,496 Distribution of profit – 8,422 Shares in profits in 1999 9,360 Shares in losses in 1999 – 2,671 Currency translation difference – 16 Balance on 31.12.1999 21,208

17. Special reserves with In the case of Axel Springer Verlag AG this item contains special reserves set up an equity portion in accordance with Rule 35 of the German Income Tax Regulations ("EStR") and Section 6b of the Income Tax Law ("EStG"). The Group formed additional special reserves in respect of investment allowances under the terms of Section 10 of the Austrian Income Tax Law. Income from the writing-back of special reserves with an equity portion pursuant to Rule 35 of the German Income Tax Regulations ("EStR") was offset against expenditure of an equal amount.

18. Provisions Group ASV AG in DM million 1999 1998 1999 1998

Pensions and similar provisions 459.6 447.3 411.0 401.8 Tax provisions 114.1 255.5 83.2 223.7 Other provisions 403.4 327.8 297.2 236.3 Total 977.1 1,030.6 791.4 861.8

Pension provisions include obligations arising from direct pension commitments. An interest rate of 6% was applied when calculating the current value of the pension commitments. The new version of the actuarial tables was used. The transition to the new basis for calculation will take place over a period of four years. This has given rise to a total differential amount of DM 26.0 million (ASV AG: DM 24.0 million). Of this amount, DM 12.7 million (ASV AG: DM 12.0 million) have been transferred to the pension provisions. Tax provisions relate primarily to taxes on income. Additional provisions amounting to DM 4.9 million (ASV AG: DM 4.0 million) were set up in respect of deferred taxes.

59 Notes

The largest items under other provisions were as follows:

Group ASV AG

in DM million 1999 1998 1999 1998

Returns, discount credits and bonus credits 79.1 71.6 32.9 32.0 Structural measures 69.0 40.7 62.1 36.0 Holiday entitlements 46.7 43.2 34.5 32.8 Adjustment claims of commercial agents 41.3 39.6 31.6 31.8 Outstanding suppliers' invoices 36.8 24.6 25.4 11.7 System of part-time working for older employees 26.4 10.2 23.4 9.5

Other provisions also include amounts in respect of losses on equity investments, as well as anniversary bonuses, loyalty bonuses and anticipated losses on pending business transactions.

60 19. Liabilities Group ASV AG in DM '000 1999 1998 1999 1998

Due to banks 90,425 120,695 66,636 62,364 - due within one year 16,145 46,151 872 17,241 Advances received on orders 7,935 2,733 1,374 1,462 - due within one year 7,935 2,733 1,374 1,462 Accounts payable (trade) 369,040 302,249 200,048 166,890 - due within one year 366,057 302,249 200,048 166,890 Due to affiliated companies 32,553 25,265 320,344 309,839 - due within one year 32,534 25,228 320,344 309,839 Due to other associated companies 26,881 24,852 7,701 8,881 - due within one year 25,291 23,713 7,701 8,881 Other liabilities 284,760 294,552 221,220 225,402 - due within one year 186,889 196,291 128,472 127,182 - taxes 57,665 55,743 35,902 40,488 - social security 33,766 32,471 23,588 23,912 Total 811,594 770,346 817,323 774,838 - due within one year 634,851 596,365 658,811 631,495

Of the liabilities due to banks, DM 12,102,000 (ASV AG: DM 12,102,000) is due in excess of five years. Other liabilities include DM 4,652,000 (ASV AG: DM 4,652,000) due in five years or more. The total liabilities due in excess of five years amount to DM 16,754,000 (ASV AG: DM 16,754,000). In 1999, liabilities amounting to DM 169,789,000 (ASV AG: DM 164,840,000) were secured by mortgage. Of the liabilities due to banks, DM 70,489,000 (ASV AG: DM 66,636,000) was secured by mortgage. Other liabilities secured by mortgage amounted to DM 99,300,000 (ASV AG: DM 98,203,000).

61 Notes

20. Deferred income Deferred income relates primarily to prepaid subscriptions, insurance compensation and deferred investment grants.

21. Contingent In the year under review, contingent liabilities consisted entirely of guarantee liabilities obligations. The Group's contingent liabilities amounted to DM 162,995,000 (1998: DM 122,283,000); the contingent liabilities of ASV AG amounted to DM 100,431,000 (1998: DM 98,746,000).

22. Other financial The obligations arising from rent, lease and leasing agreements break down as obligations follows:

Group ASV AG

in DM '000

Due in 2000 63,894 40,912 Due between 2001 and 2004 203,596 152,153 Due after 2004 215,226 194,008

Obligations in connection with investment projects (e.g. order obligations) and declarations of support vis-à-vis lenders amounted to DM 131,511,000 (ASV AG: DM 138,717,000). The other financial obligations of Axel Springer Verlag AG with regard to affiliated companies totalled DM 16,151,000.

62 Notes to the Income Statements

23. Sales Classified by segment Group ASV AG in DM million 1999 1998 1999 1998

Retail 1,982.1 1,977.7 1,559.8 1,579.2 Advertisements 2,259.7 2,055.1 1,520.9 1,393.6 Miscellaneous 968.7 778.3 500.3 487.2 Total 5,210.5 4,811.1 3,581.0 3,460.0

Classified by division Group ASV AG

in DM million 1999 1998 1999 1998

Newspapers 2,905.6 2,765.4 2,092.7 2,009.2 Magazines 1,336.2 1,267.4 988.1 963.6 Contract printing 295.7 290.5 410.9 419.0 Other revenues 673.0 487.8 89.3 68.2 Total 5,210.5 4,811.1 3,581.0 3,460.0

Sales outside Germany amounted to DM 800.6 million (1998: DM 628.4 million). The foreign sales of Axel Springer Verlag AG totalled DM 208.2 million (1998: DM 175.0 million).

24. Other operating Other operating income consists of the following items: income Group ASV AG

in DM '000 1999 1998 1999 1998

Income from the disposal and writing-up of fixed assets 67,337 202,817 7,106 189,912 Income from the writing-back of provisions 19,041 21,323 15,109 18,830 Income from the writing-back of special reserves with an equity portion 21,026 8,913 19,779 8,088

Other operating income also includes insurance compensation (fire damage and interruption to business), commission income, income from canteens and ancillary undertakings, income from the writing-back of special provisions, and lease and rent income. In the case of Axel Springer Verlag AG this item includes services and tax allocations which have been charged to the group companies.

63 Notes

25. Cost of materials Group ASV AG in DM '000 1999 1998 1999 1998

Raw materials and supplies 752,598 713,388 648,727 638,783 Bought-in services 1,031,755 893,684 520,462 489,245 Total 1,784,353 1,607,072 1,169,189 1,128,028

The item raw materials and supplies consists mainly of paper and printing ink.

26. Personnel costs Group ASV AG in DM '000 1999 1998 1999 1998

Wages and salaries 1,343,862 1,280,222 954,036 957,679 Social security contributions 203,327 199,022 140,094 143,866 Retirement pensions 39,912 45,618 35,274 41,239 Financial support 7,020 14,546 4,048 11,914 Total 1,594,121 1,539,408 1,133,452 1,154,698

Broken down according to occupational category, the average numbers of employees were as follows:

Group ASV AG

1999 1998 1999 1998

Editorial staff 3,033 2,770 1,676 1,628 Salaried employees 6,410 6,015 3,506 3,574 Industrial employees 3,061 3,267 2,528 2,760 Total 12,504 12,052 7,710 7,962

An average of 750 persons were employed in joint venture companies.

64 27. Supervisory Board The members of the Supervisory Board and the Board of Management are listed and Board of on page 4 of this report. The remuneration paid to the members of the Super- Management visory Board amounted to DM 1,166,000. The remuneration paid to the Board of Management amounted to DM 12,360,000. DM 2,671,000 was paid to former members of the Board of Management and their dependants. DM 147,000 was paid to former members of special executive bodies. Pension provisions totalling DM 37,713,000 have been made in respect of former members of the Board of Management and their dependants. Pension provisions amounting to DM 1,150,000 have been made in respect of former members of special executive bodies.

28. Depreciation Depreciation pursuant to Section 6b of the Income Tax Law ("EstG") amounted to DM 252,000 (ASV AG: DM 0). Non-scheduled depreciation was carried out in respect of fixed assets (DM 22,484,000; ASV AG: DM 30,010,000) and current-asset securities (DM 3,765,000; ASV AG: DM 3,276,000) pursuant to Section 253, Para. 2 and 3, of the Commercial Code ("HGB").

29. Other operating This item consists chiefly of postal and forwarding costs, advertising costs, third- expenses party services, commissions, repairs and maintenance, rent and lease charges, as well as provisions for bad debts. In the case of Axel Springer Verlag AG this item also includes the cost of services rendered by group companies. The transfers to special reserves with an equity portion amounted to DM 2,977,000 (ASV AG: DM 1,947,000).

30. Income from This item includes income from profit and loss transfer agreements amounting investments to DM 2,609,000 (1998: DM 1,274,000) in the case of the Group, and DM 152,000 (1998: DM 81,000) in the case of Axel Springer Verlag AG. Income from affiliated companies amounted to DM 5,207,000 (1998: DM 22,720,000) for the Group and DM 5,586,000 (1998: DM 25,405,000) for Axel Springer Verlag AG.

31. Net interest income Group ASV AG in DM '000 1999 1998 1999 1998

Interest on financial-asset loans 2,194 2,462 11,598 11,872 - including items from affiliated companies 76 101 11,257 11,438 Other interest and similar income 32,001 41,889 41,274 44,715 - including items from affiliated companies 3,958 1,581 17,020 7,970 Interest and similar expenses – 23,187 – 31,378 – 40,202 – 44,165 - including items to affiliated companies – 1,275 – 1,794 – 24,104 – 20,570 Total 11,008 12,973 12,670 12,422

65 Notes

32. Taxes Group ASV AG in DM '000 1999 1998 1999 1998

Taxes on income and other earnings 222,777 294,140 179,411 249,721 Other taxes 5,154 4,456 2,662 3,548 Total 227,931 298,596 182,073 253,269

33. Report on segments The Newspapers segment embraces daily and Sunday newspapers, national and regional subscription newspapers, as well as free advertising publications. It also includes various trade investments in newspaper publishers in Germany and abroad. The Magazines segment embraces TV guides, women's magazines, men's magazines, family magazines, as well as a variety of specialist titles. The portfolio also includes investments in magazines in Germany and abroad. The Printing segment consists of three offset printing plants, two rotogravure plants, as well as investments in printing companies in Germany and abroad. The printing plants serve to safeguard printing capacities and operate on a cost- coverage basis. The Electronic Media segment encompasses the activities in the fields of teletext, audiotex, online media and television production, as well as investments in radio, TV, Internet and rights brokerage companies. The Books segment encompasses literature, non-fiction, service titles, paperbacks and illustrated books. It also includes investments in book publishers. The miscellaneous column comprises transport, distribution, direct marketing and insurance activities, as well as expenses and revenues which are not directly attributable to the other segments. Corresponding consolidated annual profit figures are published for each of the segments. Internal sales designate the sales between the individual segments. They are apportioned according to the cost-centre principle. Assets used by more than one segment and debts incurred by more than one segment are allocated on the basis of appropriate formulae.

66 Segment data Consolid. Elec- Mis- Financial Maga- tronic cellan- Statements in DM million Newspapers zines Printing media Books eous for 1999

External sales 2,905.6 1,336.2 295.7 162.4 150.5 360.1 5,210.5 Internal sales 9.0 0.8 936.7 1.4 0.7 154.9 Total 2,914.6 1,337.0 1,232.4 163.8 151.2 515.0

Sales within Germany 2,670.5 1,062.0 1,132.0 154.8 134.4 344.7 Sales outside Germany 244.1 275.0 100.4 9.0 16.8 170.3 Total 2,914.6 1,337.0 1,232.4 163.8 151.2 515.0

Consolidated annual profit 240.3 44.4 0.0 26.6 – 17.2 0.6 294.7 • depreciation – 80.1 – 47.3 – 54.2 – 5.7 – 1.8 • interest income 26.1 9.9 0.0 0.7 0.2 • interest paid – 13.4 – 2.0 – 5.4 – 1.4 – 8.3 • income from trade investments 30.9 13.7 1.5 35.6 0.5 • taxes on income – 192.7 – 34.6 0.0 – 14.9 14.3

Assets 1,315.0 643.7 506.3 396.2 218.8 54.3 3,134.3 • trade investments 106.4 82.5 21.3 131.2 12.6

Capital expenditure 96.5 169.5 143.0 56.2 2.5

Debt 657.3 396.6 461.3 264.0 150.3 25.7 1,955.2

Employees 6,047 2,200 3,025 339 256

34. Source and The sources and applications of funds are shown on page 13 of this annual application of funds report.

67 Recommendation for the appropriation of profits

The Financial Statements for 1999 report an unappropriated net profit of

DM 122,143,265.81

The Board of Management recommends that DM 95,200,000.00 of this amount should be distributed in the form of a dividend and that the remaining amount of DM 26,943,265.81 should be assigned to the company's revenue reserves. The dividend for the financial year 1st January to 31st December 1999 will be equivalent to DM 28.00 per share on a total subscribed capital of DM 170 million.

Berlin, 10th March, 2000

Axel Springer Verlag AG

(August A. Fischer) (Claus Larass)

(Christian Delbrück) (Falk Ettwein)

(Rudolf Knepper) (Dr. Ralf Kogeler)

68 Audit Certificate

Audit certificate We have audited the Annual Financial Statements of Axel Springer Verlag Aktiengesellschaft, Berlin, the Consolidated Financial Statements as well as the Management Report on the situation of the Company and the Group for the financial year from 1st January until 31st December 1999. The company's legally appointed representatives are responsible for compiling these documents in accordance with the provisions of German commercial law. Our task as auditors is to arrive at an assessment of the Annual Financial Statements, the Consolidated Financial Statements and the Management Report, taking the relevant accounting records into consideration. We have conducted our audit of the Annual and Consolidated Financial Statements in accordance with Section 317 of the German Commercial Code ("HGB") and the professional standards laid down by the German Institute of Auditors (IDW). Accordingly, the audit must be planned and conducted in such a way that it is possible to detect with an adequate degree of certainty any inaccu- racies and infringements which may have a negative impact on the true and fair picture of the net worth, financial position and earnings situation of the company presented in the Annual Financial Statements, the Consolidated Financial Statements and the Management Report, taking the principles of proper accounting into consideration. The auditing procedures take account of specific know- ledge of the company's business activities, the general economic and legal environment, as well as possible sources of error. The effectiveness of the internal audit system and the data contained in the accounting records, the Annual Financial Statements, the Consolidated Financial Statements and the Management Report are verified largely on the basis of spot checks. The audit also evaluates the accounting and consolidation principles, the appraisals made by the company's legally appointed representatives, as well as the overall picture presented in the Annual Financial Statements, the Consolidated Financial Statements and the Management Report. In our view the audit provides an adequately sound basis for evaluation. Our audit did not result in any objections. In our considered opinion, the Annual Financial Statements and the Consolidated Financial Statements accord with proper accounting principles and present a true and fair picture of the net worth, financial position and earnings situation of Axel Springer Verlag Aktiengesellschaft, Berlin, and the Axel Springer Verlag Group of Companies. The Management Report accurately describes the situation of the Company and the Group and accurately presents the risks inherent in future developments.

Hamburg, 31st March 2000 PwC Deutsche Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Lührig Wöhlke Auditor Auditor

69 Report of the Supervisory Board

During the year under review the Supervisory Board The other examinations carried out by the Auditor at received regular written and oral reports from the the request of the Supervisory Board confirmed the Board of Management. The Supervisory Board and its proper and diligent conduct of business. These committees met regularly in order to discuss with the examinations related to the internal financial auditing Board of Management the current situation and future system, as well as paper purchasing/paper allocation. de velopment of the Company, as well as strategic plan- The Supervisory Board and its committees (Working ning, major investments and projects, and other basic Committee and Personnel Committee) held 15 meet- aspects of corporate policy. The Board of Manage- ings in the course of the year, including six meetings ment was subject to regular supervision in accordance of the entire Supervisory Board. All the committee with the Law and the Company's Statutes. In addition, members attended the committee meetings. Two the Supervisory Board discussed important individual members of the Supervisory Board were absent on matters which are central to the further development two occasions respectively from the meetings of the of the Company and decided upon those transactions Supervisory Board. The Auditor attended the meeting and measures which require its approval under the of the Supervisory Board at which the annual finan- terms of the Law, the Company's Statutes and/or the cial statements and audit reports were discussed. All Board of Management's Rules of Procedure. This the members of the Supervisory Board had received applied in particular to the Company's finance plan. copies of the annual financial statements and audit The Chairman of the Supervisory Board was in reports three weeks prior to this meeting. The continuous contact with the Chairman of the Board of Chairman of the Board of Management and the Board Management and was kept constantly informed about Member responsible for financial affairs took part in all important transactions and the development of the the final meeting with the Auditor. The audit assign- financial indicators. ment had been issued by the Supervisory Board In the year under review the Supervisory Board pursuant to the Law on Control and Transparency in concerned itself with the following key issues: the Corporate Sector ("KonTraG"). Securing the position of existing publications by in- The Financial Statements of Axel Springer Verlag AG, vesting in their competitiveness (e.g. DIE WELT/ the Consolidated Financial Statements, the Manage- Berlin market), the establishment of new titles and the ment Report on Axel Springer Verlag AG and the development of new market segments (e.g. COMPUTER Consolidated Management Report compiled by the BILD SPIELE/EURO AM SONNTAG/business segment/ Board of Management for the financial year 1999 youth segment), the Company's response to the launch have been audited by PwC Deutsche Revision Aktien- of a new type of free daily newspaper (e.g. Cologne), gesellschaft Wir tschaftsprüfungsgesellschaft, Hamburg , the extension of activities in the multimedia segment and have received an unqualified audit certificate. (exploitation of strong print brands, entry into e-commerce markets, integration of strategic partners, The Supervisory Board has noted and approved the the involvement in the TV production sector, the results of the audit. Following its own examination restructuring of the book publishing group, acqui- the Supervisory Board approves the Annual Financial sitions in Germany and abroad and the extension of Statements, the Consolidated Financial Statements existing activities outside Germa n y, the deploym e n t of and the Management Report. The Annual Financial the latest technology and risk management. In this Statements are herewith formally adopted. latter connection the Supervisory Board commission- The Supervisory Board concurs with the Board of ed the Auditor to examine the Company's existing risk Management's proposal for the appropriation of the management system with regard to the Law on net profit. Control and Transparency in the Corporate Sector ("KonTraG"). This audit confirmed that the Compa- In addition, the Board of Management provided the ny's risk management system complies with the legal Supervisory Board with a report on the relationships requirements and functions effectively. with affiliated companies under the terms of Section 312 of the Companies Law ("AktG") as well as the

70 relevant audit report prepared by PwC Deutsche Re- The Supervisory Board agreed unanimously on the vision Aktiengesellschaft Wirtschaftsprüfungsgesell- following changes to the composition of the Board of schaft, Hamburg. This audit report reads as follows: Management and the distribution of assignments within the Board of Management: With effect from "Based on our audit and evaluation performed in 1st June 1999 Dr. Ralf Kogeler (39) was appointed to accordance with professional standards, we confirm the Board of Management. Initially he managed the that Electronic Media Division before assuming re- 1. the factual details of the report are correct; sponsibility for Finance as from 1st July 2000. He will succeed Falk Ettwein, who will retire. Dr. Mathias 2. the payments made in respect of the transactions Döpfner (37) was appointed to the Board of Manage- listed in the report were not unreasonably high." ment with effect from 1st July 2000 and will assume The Supervisory Board examined this report by the responsibility for Electronic Media/Multimedia; he Board of Management and has taken note of and will remain editor-in-chief of DIE WELT.With effect approved the relevant audit report. The Supervisory from 1st October 2000 Dr. Andreas Wiele (37) will be Board concurs with the declaration made by the appointed to the Board of Management. Initially he Board of Management pursuant to Section 312, will manage the Company's foreign interests before Para. 3, of the Companies Law ("AktG"). also taking charge of the Magazines Division as from The 1999 General Meeting of Shareholders appointed 1st January 2001, when he will succeed Christian a new Supervisory Board. Prof. Dr. h. c. Ernst Delbrück. Falk Ettwein and Christian Delbrück have Cramer and Prof. Dr. Johannes Semler did not stand been with the Company for 32 and 28 years respec- for re-election. Peter Boenisch and Klaus Krone were tively. The Supervisory Board would like to thank appointed in their place. All the other members of the both of them for their outstanding commitment and Supervisory Board were re-elected. At the following se r vices to Axel Springer Verlag. constituent meeting of the Supervisory Board Prof. Berlin, 9th May 2000 Dr. Bernhard Servatius was reappointed Chairman. Friede Springer was appointed as his deputy. The Supervisory Board reiterates its thanks to the retiring members for their outstanding services on behalf of Axel Springer Verlag. The Supervisory Board Prof. Dr. Bernhard Servatius Chairman

71 List of subsidiaries and affiliated companies

Publishers

Kieler Zeitung Verlags- u. 'Axel Springer Verlag' WBV Wochenblatt Verlag Druckerei KG-GmbH Axel Springer Polska Beteiligungsgesellschaft mbH, 100% GmbH, Hamburg 100% 24.5% & Co., Kiel 100% Sp.zo.o., Warsaw/Poland Berlin Cap.: DM 0.251 million Cap.: DM 11.26 million Cap.: DM 1.8 million Cap.: PLN 9.006 million

A. Beig Druckerei u. Berliner Wochenblatt 1) Grupa Wydawnicza Ullstein GmbH, Verlag GmbH & Co. KG, 100% Verlag GmbH, Berlin 70.25% Axel Springer Sp.zo.o., 100% Berlin 23.438% Pinneberg Cap.: DM 0.05 million 29.75% Warsaw/Poland Cap.: EUR 3.2 million Cap.: DM 0.32 million Cap.: PLN 12.104 million

''Sächsischer Bote'' 1) 4) Handelszeitung und 4) Ullstein Anzeigen 1) Lübecker Nachrichten GmbH, Wochenblatt Verlag GmbH, Finanzrundschau AG, 100% Marketing GmbH, 49% Lübeck 100% Dresden 88.36% Zurich/Switzerland Berlin Cap.: DM 3.125 million Cap.: DM 0.05 million Cap.: DM 0.05 million Cap.: CHF 0.5 million

"Lühmanndruck" Harburger Ullstein Buchverlage Punkt Direktvertriebs 4) Handelszeitung 4) Zeitungsgesellschaft Fachverlag AG, 100% GmbH & Co. KG, Berlin 24.8% GmbH, Berlin mbH & Co. KG, Hamburg 100% 100% Cap.: DM 3.0 million Cap.: DM 0.101 million Küsnacht/Switzerland Cap.: DM 1.0 million Cap.: CHF 0.2 million

Econ Ullstein List Verlag Bergedorfer Buchdruckerei Erich Lezinsky Verlag AXEL SPRINGER- GmbH & Co. KG, von Ed. Wagner und Buchdruckerei BUDAPEST GmbH, 100% 100% 100% Munich (GmbH & Co.), Hamburg GmbH, Berlin 92.93% Budapest/Hungary Cap.: EUR 5.0 million Cap.: DM 1.0 million Cap.: DM 3.125 million Cap.: HUF 30.0 million

C.J. Bucher Verlag GRUPO AXEL Weltkunst Verlag GmbH, 1) GmbH & Co. KG, SPRINGER S.L., Axel Springer-Ungarn 100% Munich 100% 60% Munich Madrid/Spain, 93.52% GmbH, Tatabánya/Hungary Cap.: DM 0.5 million Cap.: DM 0.25 million Cap.: EUR 12.0 million Cap.: HUF 281.8 million

Ostsee-Zeitung GmbH Petöfi Zeitungs- und 2) Mail Order Kaiser GmbH HOBBY PRESS S.A., & Co. KG, Buchverlag GmbH, 100% Buchversand, Munich 50% Madrid/Spain, Rostock 100% 94% Kecskemét/Hungary Cap.: DM 0.06 million Cap.: ESP 90.0 million Cap.: DM 10.0 million Cap.: HUF 65.0 million

OZ-Lokalzeitungs- 1) Dreizehnte "Media" Vermögens- Cora Verlag Verlag GmbH, verwaltungsgesellschaft mbH, Népújság GmbH, 2) 50% GmbH & Co. KG, Hamburg 100% 100% Rostock Hamburg 94% Békéscsaba/Hungary Cap.: DM 0.2 million Cap.: DM 0.05 million Cap.: DM 0.05 million Cap.: HUF 75.0 million

''top special'' 1) Leipziger Verlags- und Bous Holding B. V., Axel Springer 4) Verlag GmbH, Druckereigesellschaft 40% Amsterdam/Netherlands International Group Limited, 100% Hamburg 50% mbH & Co. KG, Leipzig 100% 60% Cap.: NLG 38.009 million London/United Kingdom Cap.: DM 0.3 million Cap.: DM 40.0 million Cap.: GBP 0.1 million

Finanzen Verlagsgesellschaft Ringier-Springer Koralle Verlag GmbH, Axel Springer Publishing 4) für Kapitalmarktinformationen publishing group in the Hamburg 74.9% 49% International Limited, 100% mbH, Munich Czech Republic and 100% Cap.: DM 0.15 million London/United Kingdom Cap.: DM 0.2 million Slovakia Cap.: GBP 0.1 million

PMS Presse Marketing Axel Springer Young 4) "AXEL SPRINGER EDITURA" Sportmagazin Verlags GmbH, Services GmbH, Media GmbH, SRL, 100% Vienna / Austria Hamburg 100% Munich 90% Bucharest/Romania 51% Cap.: ATS 0.6 million Cap.: DM 0.05 million Cap.: EUR 0.05 million Cap.: ROL 280.32 million