INTERIM

REPORT

2000

1st January, 2000 until 30th June, 2000

Group Key Data

DM million

Sales Change (%)

1st half 2000

1st half 1999

2,734 9.5

2,496 8.0

158 5.8 249

144 5.8 232

3,321 1,597 73.2 713

3,112 1,451 70.2 762

1,169 35.2 207

1,019 32.7 186

213 104

133 84

1,210

970

12,909

12,382

Results Net profit Return on sales (%) Consolidated operating profit

Balance sheet Balance sheet total Fixed assets Fixed asset cover (%) Liquid assets Shareholders’ equity (excl. retained profits) Equity ratio (%) Long-term liabilities Capital expenditure Depreciation

Share Share price on 30th June (€ )

Employees Average no. of employees

Interim report Group and Axel Springer Verlag AG

Axel Springer Verlag performed very successfully in the first half of 2000. The consolidated net profit increased by almost ten per cent compared with the previous year and totalled DM 158 million. In spite of the comprehensive start that has been made on expanding the Internet operations and the initial costs associated with these activities, the Board of Management expects the net profit for the year to reach the same level as in the previous year.

Business Environment The economic upswing in Germany continued in the first half of 2000. The GDP increased by 3.0 %. Growth of 2.8 % is anticipated for the year as a whole. This positive development was attributable to a very large extent to strong export demand. The competitive position of German suppliers outside Euroland improved thanks to the devaluation of the euro. The gradual increase in employment strengthened private consumption too. Consumer spending only increased slightly, however, due to moderate collectively agreed pay increases and higher energy costs.

The German advertising industry recorded substantial growth again in the first half of 2000. Gross advertising revenues increased by 13.2 % to DM 17.4 billion in the first six months of the year. Print media advertising (excluding classified ads) grew by 12.2 % to DM 8.4 billion. Television channels generated 14.5 % higher advertising revenues, while radio stations also reported double-digit growth rates (+ 13.2 %).

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In the period under review, DM 3.9 billion (+ 12.3 %) were spent on newspaper advertising (excluding classified ads). Advertising business was particularly successful at national newspapers (+ 24.6 %) and newsstand papers (+ 15.0 %). Considerable growth was recorded in sales of classified advertising as well, particularly with job advertisements. The gross advertising revenues of general-interest magazines increased to DM 4.0 billion (+ 12.9 %). The principal beneficiaries here were the business press (+ 38.8 %), computer and online magazines (+ 34.1 %), current affairs magazines (+ 15.4 %) and TV guides (+ 10.8 %). The retail press market did not benefit from the economic upswing in Germany. Compared with the first half of 1999, newspaper and magazine sales volume fell by another two per cent. Total sales revenues stagnated.

2

Total sales of daily and Sunday newspapers dropped by 1.9 %. There was a disproportionately large decrease of 3.1 % in newsstand sales due to lower demand for both subscription and non-subscription newspapers. The trend towards budget-price newcomers continued with the highcirculation TV guides and women's weeklies in the general-interest magazine segment. Overall demand for the increasingly large number of magazines was sluggish. Computer and business magazines, on the other hand, defied the general market trend once again.

The Company Axel Springer Verlag continued to develop successfully in the first half of 2000. Sales revenues rose considerably, primarily because of the excellent advertising business. Cost increases were kept relatively low in spite of the impact of German legislation on jobs paying less than DM 630 per month and on fictitious self-employment. Measures to consolidate and improve the position of existing titles were continued in the print media field. The introduction and development of new publications in fast-growing segments such as computer and business magazines led to additional success. Important decisions were taken in the electronic media field. The crucial activities here involve the reorganisation and strategic reorientation of the Internet operations. The objectives of the “two-leg strategy” are on the one hand to safeguard and develop existing newspaper and magazine brands and on the

other hand to develop new multimedia business models. Investment of a triple-digit DM million amount and the creation of up to 300 new jobs in the next two to three years are planned in order to implement this strategy systematically and offensively. In the television operations a decision was taken in June 2000 to establish a family of different channels, consisting of ProSieben, Kabel 1, N24 and SAT.1. Axel Springer Verlag holds an interest of about 11.5 % in this channel family. The competitive position is being optimised by this co-operation between channels that have been independent up to now. Axel Springer Verlag and KirchMedia have at the same time decided to grant each other an option to transfer the shares held by Axel Springer Verlag to KirchMedia at a later date.

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Internationalisation of the company was also continued systematically. Axel Springer Verlag acquired a majority interest in the French publishing company Media Mag SA in May. This company publishes four magazines, the most important of which is the weekly TV guide TÉLÉ MAGAZINE with a net paid circulation of about 513,000 copies. With effect from 1st January 2000, Axel Springer Verlag took over the youth and music magazines MÄDCHEN, POPCORN, HAMMER and MUSIKEXPRESS /SOUNDS as well as the quarterly magazine MISS BEAUTY @ND MORE via its subsidiary Axel Springer Young Mediahouse in Munich. Some of these publications appear in Poland, the Czech Republic, Hungary and Romania as well. In Portugal Axel Springer Verlag started a joint venture with the Portuguese publishing company SVD (Sociedade Vicra Desportiva Lda). The plan is to co-operate on publishing new generalinterest magazines on the Portuguese market. A Portuguese edition of AUTO BILD with the name AUTOFOCO was

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launched as the first joint project on 30th March 2000. This increases the number of versions of AUTO BILD that are published in Europe outside Germany to a total of twelve. The German newspaper and magazine operations were strengthened again too. BILD appeared on a national public holiday in Germany for the first time when EXPO 2000 opened. The exhibition “paper, people, press” opened in the AXEL SPRINGER PASSAGE in Hamburg when the EXPO started on 1st June 2000 as well. This exhibition is registered as one of eight EXPO 2000 “Worldwide Projects” in Hamburg and will be informing the public about the environmental life cycle of a newspaper until 31st October 2000. Since February 2000, Axel Springer Verlag has been distributing the newspaper KÖLN EXTRA free of charge in a counter-attack intended to combat competition from free daily newspapers.

The monthly magazine COMPUTER BILD SPIELE that was launched in November 1999 maintained its position as market leader for game magazines in the first half of 2000 too. DIE WELT introduced the new weekly supplement WEBWELT in mid-April. It provides information about Internet developments and trends in the new economy. WELT AM SONNTAG is preparing to expand its regional coverage. A separate regional edition for Munich is to be launched this year in addition to the existing Hamburg, Berlin and North Rhine-Westphalia editions.

Net paid circulation, IVW, six-monthly average 2000

BILD BILD AM SONNTAG COMPUTER BILD COMPUTER BILD SPIELE BILDWOCHE

4,319,065 2,493,947 1,046,775 635,501 495,525

DIE WELT WELT AM SONNTAG EURO AM SONNTAG FINANZEN

245,963 444,004 189,648 142,292

HAMBURGER ABENDBLATT

299,685

BERLINER MORGENPOST B.Z. B.Z. AM SONNTAG

171,975 262,729 150,871

The development of the Axel Springer Verlag business publications was particularly encouraging. The net paid circulation of EURO AM SONNTAG amounted to 189,648 copies, an increase of 127 % over the first half of 1999. One of the reasons for the success of EURO AM SONNTAG is its up-to-the-minute news: it is the only business newspaper appearing at the weekend that gives its readers the end-of-the-week share prices at stock exchanges around the world.

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FINANZEN, the monthly business magazine for investors, is also developing successfully. The net paid circulation increased by 70% over the first half of the previous year and now totals 142,292 copies. The most recent business publication launched by Axel Springer Verlag is AKTIENRESEARCH, the weekly magazine for investors. “Professional analyses for private investors” is the motto of the magazine, which appeared for the first time on 13th April 2000. Followers of the stock market can, for example, obtain the latest share news and professional analyses from AKTIENRESEARCH ONLINE. The Jahr Verlag publishing company in Hamburg and "top special" – a subsidiary of Axel Springer Verlag – agreed to set up a 50 : 50 joint venture with effect from 1st October 2000. This will help to consolidate and strengthen their joint activities on the fiercely competitive market for special-interest magazines.

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Net paid circulation, IVW, six-monthly average 2000

HÖRZU FUNK UHR TVNEU AUTO BILD SPORT BILD BILD DER FRAU JOURNAL FÜR DIE FRAU ALLEGRA FAMILIE &CO RUTE & ROLLE FOTOMAGAZIN RALLYE RACING TENNIS MAGAZIN FLIEGERMAGAZIN SAVOIR VIVRE AERO INTERNATIONAL GOLF DIGEST FLY AND GLIDE PHOTO TECHNIK INTERNATIONAL MÄDCHEN POPCORN MUSIKEXPRESS/SOUNDS HAMMER

2,113,432 1,175,504 557,730 807,892 573,218 1,755,905 406,477 206,239 254,281 77,904 72,451 71,104 67,382 46,877 37,115 32,739 27,739 22,987 8,511 320,406 195,910 74,635 56,849

The book publishing group Econ Ullstein List acquired the rights to the next books by the US bestseller author Stephen King and the successful German author Hera Lind. In June six new titles were added to the COMPUTER BILD book series that is produced in cooperation with the Ullstein paperback publishing company. This series now contains almost 50 different books about all the major computer subjects. In the electronic media field Axel Springer Verlag, DEAG Entertainment and START AMADEUS are planning a joint venture to establish an electronic marketplace for events, travel and other leisure activities. Further progress was made in developing interactive media into an Internet full-service provider. The programme is being broadened to include content brokerage (the provision of own and third-party content). Since the beginning of the year, interactive media has been marketing the Teletext programme ZDF TEXT that is produced and broadcast by the German ZDF channel. This means that interactive media's Teletext portfolio now consists of eight different marketing ranges.

Axel Springer Verlag divested two operations with backdated effect from 1st January 2000: in view of the strategic decision to concentrate on the core and high-growth segments of the magazine market, the Medical Tribune publishing group was sold to the Süddeutscher Verlag publishing house. The minority interest of 49 % in the RingierSpringer joint venture in the Czech Republic and Slovakia was sold to the majority shareholder Ringier. Axel Springer Verlag is intensifying its traditionally strong commitment to Berlin by making a major new investment there amounting in total to DM 340 million. A start was made on building an office and business complex with a total area of 64,000 m 2 on the existing main Berlin site in May. This building project is scheduled to be completed in mid-2003.

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Results

Share price Index: 3rd January 2000 = 100

The consolidated operating profit amounted to DM 249 million – an increase of DM 17 million – thanks to the successful development of the advertising business. The consolidated net profit went up DM 14 million (+ 9.9 %) to DM 158 million. In spite of the comprehensive start that has been made on expanding the Internet operations and the initial costs associated with these activities, the Board of Management expects the net profit for the year to reach the same level as in the previous year. This depends on continuation of the positive trend in advertising business. Liquid assets totalled DM 713 million on 30th June 2000. As a result of the dividends already payed in June and the high level of investment, they were DM 49 million lower than in the previous year. The long-term liabilities increased by DM 21 million to DM 207 million due to the obtainment of low-interest loans. The price of the Axel Springer share developed inconsistently: following a successful start to the new year with an initial price of EUR 1,200, the share

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140

120

100

80

January 2000

July 2000

Axel Springer Verlag AG MDAX

increased to EUR 1,535 by mid-March. At the end of June, the price was EUR 1,210, which was slightly higher than the price at the beginning of the year but lower than the MDAX index. Nine companies were included in the following consolidated figures for the first time in the last twelve months, while nine companies were eliminated. Two companies were merged as a result of restructuring exercises. The previous year's figures were not adjusted, because the changes would not have been significant.

Sales Axel Springer Verlag generated total sales of DM 2,734 million in the period under review. This corresponds to an increase of DM 238 million (+ 9.5 %) compared with the first half of 1999. Retail sales contributed DM 31 million (+ 3.1 %) of this increase and reached DM 1,008 million. Advertising revenues amounted to DM 1,213 million and were thus up DM 113 million (+ 10.3 %). Other revenues rose by DM 94 million (+ 22.5 %) to total DM 513 million. This increase is attributable primarily to higher sales in the electronic media field as well as to better transport and merchandise revenues. Total newspaper sales amounted to DM 1,520 million, an increase of DM 94 million (+ 6.6 %) over the previous year. Retail revenues (DM 604 million) were the same as in 1999. DIE WELT achieved above-average circulation growth (+ 7.5 %) and turned in the best sales figures in a second quarter for 40 years as a result of successful marketing activities. The paid circulation of WELT AM SONNTAG increased by 4.7 % and reached its highest level ever.

The newspapers' advertising business developed very well. The advertising revenues totalled DM 916 million, an increase of DM 95 million (+ 11.6 %). BILD, DIE WELT, WELT AM SONNTAG, BERLINER MORGENPOST and HAMBURGER ABENDBLATT each contributed double-digit growth to this increase.

Sales by division DM million

1st half 1st half 1999 2000 3,000

2,500

2,000

1,500

1,000

500

0

Total

2,496

2,734

Other revenues

Magazines

Contract printing

Newspapers

9

Sales by segment DM million

1st half 1st half 1999 2000 3,000

2,500

The magazines increased their sales revenues by DM 50 million (+ 7.6 %) to DM 701 million. Retail sales grew by DM 32 million (+ 8.6 %) to DM 404 million. This increase is due in particular to the new youth and music publications of Axel Springer Young Mediahouse, the Hungarian magazines and the Finanzen Verlag publications.

2,000

Advertising revenues generated by the magazines increased by DM 18 million (+ 6.4 %) and amounted to DM 297 million. All the Axel Springer Verlag magazines except the TV guides contributed to this increase.

1,500

1,000

500

0

Total

2,496

2,734

Miscellaneous Advertisements Retail

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The other revenues increased by DM 94 million (+ 22.5 %) and totalled DM 513 million. They include book sales of DM 75 million. Adjusted for the companies eliminated from the consolidated accounts, Econ Ullstein List thus recorded an increase of DM 12 million over the same period the previous year. Electronic media sales revenues amounted to DM 109 million, which corresponds to an increase of DM 37 million. This increase is due largely to higher sales with online marketing, Teletext and Audiotex. Contract printing sales increased by DM 12 million (+ 10.9 %) to DM 127 million.

Expenditure

Employees

Total expenditure for the first half of 2000 was DM 221 million (+ 8.8 %) higher than in the same period the previous year. The cost of materials increased by DM 84 million (+ 10.2 %). Higher expenditure for merchandise and bought-in services was one reason for this increase. Paper costs increased by DM 5 million (+ 1.6 %) to DM 296 million due to higher consumption. Personnel costs rose by DM 55 million (+ 7.3 %) to DM 805 million because of the larger number of employees.

In the first half of 2000 Axel Springer Verlag maintained an average of 12,909 employees on the payroll, 527 more than in the same period the previous year. The increase in personnel is due partly to the legislation about fictitious self-employment that came into force last year as well as to new business operations.

Employees, 1st half 2000 Industrial employees

23.5 %

Editorial staff

25.4 %

Salaried employees

51.1 %

Total 12,909

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Capital expenditure and depreciation DM million

1st half 2000

Investments In the first half of 2000 Axel Springer Verlag invested DM 213 million – DM 80 million more than in the same period the previous year.

250

Most of the investments (DM 123 million) were made in tangible and intangible fixed assets. The biggest individual projects were extensions to the printing plants in Ahrensburg and Spandau and the rebuilding of the Essen-Kettwig printing plant.

200

150

100

50

0

Capital expenditure 213 Depreciation Investments in tangible and intangible fixed assets Financial assets

Investments in financial assets amounted to DM 90 million and were thus DM 61 million higher than in the previous year, partly because of the acquisition of the French publishing company Media Mag SA. Further investments were made at existing subsidiaries. Depreciation amounted to DM 104 million (1999: DM 84 million).

Berlin, August 2000 Axel Springer Verlag AG Board of Management

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If you require further information about this Interim Report, please contact: Axel Springer Verlag AG Finance and Accounting / Corporate Controlling Axel-Springer-Platz 1 20350 Hamburg Phone: ++ 49 (0) 40 / 3 47-2 35 23 Fax: ++ 49 (0) 40 / 3 47-2 42 89 E-Mail: [email protected] The Interim Report and up-to-the-minute information on Axel Springer Verlag are available in the Internet as well: http://www.asv.de Printed on 100% recycled paper.