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ABCE Springer Science+Business Media

Annual Report 2007

2007ANNUAL

REPORT

springer.com �

Springer Science+Business Media – Annual Report �007

Table of Contents

Company profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Company values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Overview of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Performance highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

CEO’s statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Business review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Our strategy, aims and objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Our performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Corporate responsibility (CR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Our People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Our Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Corporate governance report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

– Future development of undertakings included in consolidated accounts . . . . . . . . . . . . . . . . . . . . 16

– Events after the balance sheet date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

– Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

– Consolidated Income Statement IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

– Consolidated Balance Sheet IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

– Consolidated Cash Flow Statement IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Springer Science+Business Media – Annual Report �007

springer.comSpringer Science+Business Media – Annual Report �007 �

Company profileThe two main companies that form Springer Science+Business Media (Springer) today, Springer Verlag and Kluwer Academic Publishers (KAP) were founded in the 19th Century and saw their first significant international expansion in the 1960s. Since the acquisition of Springer Verlag and KAP by Cinven and Candover in 2003, the company has gone through an intense and successful integration process which was completed in 2006. The investment in products and acquisitions has increased significantly in this time, and Springer has seen the birth of formidable new ideas and developments. Today, Springer Science+Business Media is a respected, innovative and cre-ative leader in the market.

Springer is one of the world’s leading suppliers of scientific and professional content. It is the second-largest publisher of journals in the science, technology, and medicine (STM) sector, the largest publisher of STM books and the largest business-to-business publisher in the German-language area. The group publishes over 1,700 journals and more than 5,500 new books a year, and offers the largest STM eBook Collection worldwide. Springer has operations in about 20 countries in Europe, the USA, and Asia, and some 5,000 employees. In 2007, it generated annual sales of around EUR 907 million.

CandoverSince Candover‘s first deal in 1980, private equity has transformed from a niche investment to a mainstream asset class, and Candover has been at the centre of that transformation.

Over nearly 28 years, Candover has raised nine funds with total capital commitments of more than € 8.7 billion and has approximately 100 investors from across the world. The 2005 Fund attracted 24% of its funds from Europe, 25% from the UK, 45% from the US and 6% from Rest of World investors. These include pension funds, endowments, banks, insurance groups, family offices and government funds, many of them repeat investors. The 2005 Fund, which closed at € 3.5 billion in November 2005, is actively seeking oppor-tunities across Europe and has so far made ten investments.

Candover has offices in London, Madrid, Milan and Paris.

CinvenCinven is a pioneer and leader in the European large buyout market. Since Cinven was founded in 1977, it has invested in more large, complex European buyouts than any other private equity firm.

7 In July 2006, we announced the closing of our fourth fund at € 6.5 billion, making it one of the largest funds dedicated solely to large European buyouts.

7 Cinven has a strong and consistent investment track record. In aggregate, we have completed transactions in excess of € 60 billion.

7 By the end of 2006, we had executed 23 buyouts in excess of € 1 billion.

Cinven has offices in London, Paris, Frankfurt and Milan, and is thereby positioned at the centre of the European buyout market.

Company profile

Candover

Cinven


Brief overview of the company strategy

Springer’s strategy is to continue to build a global, market-leading STM publishing house and to operate as a leading player in local professional and business-to-business (B2B) markets. Fur-thermore, we are building Springer’s market share through the launch of new products and by leveraging technological developments, thus providing a broader and deeper service to our customers. Springer is also further penetrating existing and new markets through enhanced sales and marketing, geographic expansion and add-on acquisitions. Finally, the company is continu-ing to upgrade systems and processes in order to operate a market-leading publishing platform in terms of quality and efficiency for our customers while simultaneously minimizing costs through a structured combination of “insourcing”, outsourcing and off-shoring.

Company values Springer’s values are mirrored in its Mission Statement:

7 Our business is publishing. Throughout the world, we provide scientific and professional com-munities with superior specialist information – produced by authors and colleagues across cul-tures in a nurtured collegial atmosphere of which we are justifiably proud.

7 We foster communication among our customers – researchers, students and professionals – en-abling them to work more efficiently, thereby advancing knowledge and learning. Our dynamic growth allows us to invest continually all over the world.

7 We think ahead, move fast and promote change: creative business models, inventive products, and mutually beneficial international partnerships have established us as a trusted supplier and pioneer in the information age.

Overview of the yearSpringer sold its business-to-business (B2B) Construction information division in April 2007, allowing the company to invest further in the core STM business as well as the Professional/B2B activities in medical and business information. In addition, Springer announced the sale of its Austrian B2B operation, Springer Business Media Austria, in early 2008. Extensive development efforts were also focused on the preparation of the launch (in January 2008) of an exciting new product for researchers, Springer Protocols.

In February 2007, Springer acquired 29 journals from Transaction Publishers in an asset deal, including the flagship journal Society, thereby strengthening it position in the social sciences.

In March 2007, Bohn Stafleu van Loghum (BSL), a renowned publisher in the Dutch healthcare publishing market was acquired, thus strengthening Springer Uitgeverij, our local operations in the Netherlands.

In July 2007, Springer also acquired both Spektrum Akademischer Verlag (Spektrum), a German scientific publisher with a program of over 700 books and three journals and FMC, the leading commercial publisher for dental professionals in the UK.

In the summer of 2007, a reorganization of Springer’s global scientific, technical and medical (STM) publishing division took place which has lead to a robust management structure that will guide the company over the next years of its development.

Brief overview

of the company strategy

Company values

Overview of the year


Performance highlightsSpringer achieved sales of € 907 m in fiscal year (FY) 2007 against sales of € 920 m in FY 2006 with corresponding EBITDA of € 271 m in FY 2007 and € 277 m in FY 2006. If adjustments are made for the impact of acquisitions and divestments and also for the impact of movements in currency exchange rates on Springer’s reported financials, the group would show normal industry growth rates.

FY 2007 performance was driven by both Springer’s STM and its Professionl / B2B segment. STM reached sales of € 639 m in FY 2007, registering an organic growth of 4% over FY 2006. Adjusted EBITDA for FY 2007 reached € 235 m keeping operating margin at prior years’ level.

Springer’s Professional / B2B segment grew aggregate revenues to € 243 m in FY 2007. This is growth of around 17% when compared to FY 2006 which is for the largest part attributable to the impact of acquisitions (e.g. BSL, a medical publisher in the Netherlands). FY 2007 adjusted EBITDA in this segment is € 49 m which is up from € 39 m in FY 2006 with the increase also fully related to the BSL acquisition.

CEO’s statementThe year 2007 has been an important one for Springer, primarily in the area of product devel-opment. Our most recently launched product (January 2008) was Springer Protocols, a proto-col database of more than 18,000 searchable online protocols in life sciences and biomedicine. Springer’s award-winning eBook Collection, launched in the summer of 2006, concurrently with a donation of over US$ 1 million worth of eBooks to the main university libraries in New Orleans that were partially or totally destroyed during Hurricane Katrina, has found wide acceptance worldwide in large as well as small-sized institutions. Sales of eBook Collections in 2007 signifi-cantly surpassed our expectations.

Springer eBooks also contribute to the considerable content growth on our online platform SpringerLink – currently (early 2008) there are more than 3.8 million documents. Usage of our online platform SpringerLink increased massively in 2006 and 2007, and continues to do so. In 2007, we reached the milestone of 100 million full text downloads and had the highest growth in usage figures in the market. Full text indexing by search engines and book search programs – par-ticularly our cooperation with Google – is a key driver behind increasing usage.

It is Springer’s policy that almost all newly published books, and a great number of backlist titles, participate in the Google Book Search program. Users are thus able to preview a limited number of pages to determine whether they have found what they are looking for.

Currently, close to 35,000 books are included in Google Book Search, allowing users to easily dis-cover and purchase these titles from local booksellers, online retailers or from Springer directly. The program ensures an enormous visibility of each book by providing product information and a preview without jeopardizing its sales potential or giving it away for free. Google has proven to be a powerful marketing tool and our experience shows that the availability of such a preview does indeed support book sales.

Also in 2007, Springer has refined its book production workflows in a way as to allow print on demand technology to be applied to a larger share of Springer’s overall frontlist book title program. Through cooperation with a leading specialist printing group, Springer will be able to globally implement print-to-order technology for the majority of all Springer’s book frontlist titles in FY 2008 and thereby reduce the cost of overprints and ordering /shipping delays substantially. Springer also continues to invest in systems that enhance the workflows between authors, publisher and end users.

Specifically, Springer participates in CrossRef and many other initiatives in this area.

Performance highlights

CEO’s statement


Business reviewIntroductionWe operate in the global markets for the supply of academic and scientific information. Scien-tific, technical and medical, or STM, publications are the principal method of disseminating new research results and knowledge to the scientific community.

Our markets and business environment

Scientific, Technical and Medical (STM) publishing

STM academic and research publications provide specialized scientific, technical and medical information to a broad international readership. They are “must have” publications for academic and other institutional libraries, which means that the STM academic and research publications market has traditionally been characterized by stable, recurring demand that is less susceptible to fluctuations in the economic cycle.

STM academic and research publications can be divided primarily into two categories: STM journals and academic books.

STM journals

STM journals are publications, issued as a series, which address specialized scientific subjects and contain articles in which researchers present and discuss their latest findings. According to SIMBA, a market analyst, the market for STM journals is estimated at $ 5.5 billion. It is estimated that there are approx. 23,000 scholarly peer-reviewed journals, collectively publishing about 1.4 million articles a year. Looking at ISI data, Springer has a 9% market share by number of articles published.

STM journals differ significantly from magazines in that a journal’s content is supplied for free to the publisher, not commissioned by the journal, and advertising is not a significant source of its revenue. Most STM journals are reviewed by a voluntary editorial board of experts through a double-blind “peer-review” process, whereby a scientist’s results are subjected to the scrutiny of peers who review the research for quality and accuracy. The perceived quality of a journal’s content and the reputation of its editorial board are the main factors that influence purchasing decisions. The leading journal in a field is generally an indispensable tool for a researcher in that field and therefore an important addition to the library affiliated with that researcher.

There are three main types of organizations that publish STM journals: commercial publishers, academic society publishers and institutional publishers, such as universities and research centers. Journals published by commercial publishers are either owned by the publishing house, “proprie-tary journals,” or published in co-operation with academic societies. Where a journal is published in co-operation with an academic society, the relationship between the publisher and the society can have different forms, i.e. the journal may be owned by the publisher or by the society, and the publisher may share journal revenue with the society or it may be paid a royalty by the society.

Although new STM journals appear frequently, it is very difficult for a new STM journal to become established quickly due to the importance of having a long-standing track record and a reputation for quality. However, once an STM journal has become established, it usually only risks losing submissions and eventually subscriptions to a rival journal if it allows its quality to decline over time. STM journal publishers and libraries use “citation counts,” the number of references other journals make to a published work, and ISI “impact factors,” the number of citations the average article receives in a year, to compare the influence of journal titles. In order to maximize citation counts and impact factors, publishers compete to attract articles from leading scientists. Similarly, scientists compete to publish in leading journals. They must “publish or perish,” since publishing in a leading journal is often a deciding factor in securing funding for their research.

Business review

Introduction

Our markets and

business environment

Scientific, Technical

and Medical (STM) publishing

STM journals

springer.comSpringer Science+Business Media – Annual Report �007 7

Academic books

Academic books, like STM journals, are primarily aimed at highly specialized academic research-ers within the scientific community. Springer is the largest STM book publisher (by title output), and has an unparalleled STM book program both by width and depth. Furthermore, Springer is the market leader in the “core” STM book market, i.e. the market for research-level books which is aimed at academic, corporate and government research library markets, and is the market leader in German-language STM books.

Unlike contributors to STM journals, whose primary aim is to influence current research, book authors focus primarily on consolidating knowledge on a specific research topic. In the hard sci-ences, such as biology, chemistry or physics, publishing a book reinforces an author’s reputation as an authority in that field, but is of lesser importance in winning the author.

Our strategy, aims and objectives Springer group targets organic sales growth of more than 5% in FY 2008. Based on this sales devel-opment Springer will be able to further expand operating profitability and margin in FY 2008.

Springer’s STM business in the past has proven to be resilient towards the short-term economic cycle. Fundamental trends in academic STM publishing such as global research funding volumes, article contribution and content usage continue to show stable growth and are not expected to reverse in the mid or long-term. Key strategic objectives for Springer’s STM business in FY 2008 therefore include:

7 Achieve revenue growth through: – Increased volume in content output (titles, issues, articles – Continue and expand market penetration and installed base of eBook Collection product

for institutional customers – Drive creation and release of high value products such as handbooks, manuals and

reference works and database products (i.e. protocols) – Create sales force specifically focused on Springer’s electronic product range – Substantially expand general presence and sales organization in the Asian/Pacific region.

7 Drive usage of Springer’s content through improved availability, enhanced online features and focus on developing and selectively acquiring high quality and strongly used journal and book content.

7 Revisit non-core publishing segments and non-English-language programs.

7 Further improve overall profitability by integrating local academic publishing units (Austria, Switzerland, Italy, France and others) into the global STM organization (particularly in the areas of production, distribution and finance).

7 Continue investment in the medical online agency business in Germany and other markets to compensate for the negative trends in traditional pharmaceutical marketing spending.

7 Springer’s business-to-business segment has its main activities in Germany (Springer Business Media) and in the Netherlands (Springer Uitgeverij). Key strategic objectives for Springer’s Professional / B2B segment in FY 2008 are:

7 Expand market share in the business / engineering segments by leveraging Springer’s existing strong and well established brands in these markets to enter new publishing segments and by creation of integrated electronic content offerings.

7 Diversify revenue streams through investments in the growth of new business models and the expansion of the seminar / conference businesses.

7 Complete back office integration across Professional / B2B business units in Germany and the Netherlands and further exploit outsourcing opportunities (production).

Academic books

Our strategy,

aims and objectives


Our performance Organic growth is measured by:

7 The growth of the content base that we provide to our customers, i.e. the number of journal articles and books that we publish.

7 The growth of usage of our content (electronic downloads, etc).

7 The increase in market penetration.

Publishing quality is measured not only by manuscript flow (i.e. how many article and book man-uscripts that are submitted to us), but also by the number of citations that our published articles receive in other publications.

Profitability is measured by EBITDA growth and margin as well as cash generation levels.

Innovation is measured by how much market share our new products receive following their launch.

Possible risks relating to our industry and our businessSince we operate in a highly competitive environment that is subject to rapid change, we must continue to invest and adapt to remain competitive. If, for example, changes to the academic publish-

ing business model are widely adopted in that market, we could be exposed to risk.

Changes in government grants, private funding or tuition fees used to finance universities or academic

institutions may adversely affect demand for scientific publications, and the strengthened bargain-

ing power of library consortia could limit our profitability and growth.

Furthermore publishing businesses could be adversely affected by general economic downturns or

disruptions in industries to which we provide information and a continued demand for our prod-ucts and services could be endangered.

Our intellectual property rights may not be adequately protected under current laws in some juris-dictions, which may adversely affect our results and our ability to grow and changes in the tax, legal

or political environment of our business may adversely affect our profitability.

A significant portion of our revenue is derived from advertising, and spending by companies on advertising and other marketing activities has historically been cyclical.

Increased printing and paper prices may have a material adverse effect on our cost of printing

services and profitability. Also, economic, political and other risks associated with the international nature of our operations could adversely affect our net sales and results of operations, and fluctua-tions in exchange rates may affect our reported results.

Our performance

Possible risks relating to

our industry and our business


Corporate responsibility (CR)IntroductionSpringer’s corporate responsibility (CR) activities take a two pronged-approach:

7 The support to educational organizations, primarily in developing countries.

7 The support of local charitable organizations in the communities in which Springer employees live and work.

In addition, as part of the international scientific community, we face the challenge of dynamic global markets on a daily basis. Since we must constantly invest in the development of high qual-ity products to meet the needs of the scientific research community and our professional custom-ers, we strive to attract and retain the best talent and have a number of activities geared towards our people which are included at the end of this section.

Our approach

EducationThe bulk of Springer’s CR activities are designed to provide support to educational organizations (in the widest sense) that seek to promote access to and provide material or financial support for institutions of learning.

The largest and most visible of these activities is Springer’s ongoing participation in a number of developing country initiatives, all of which seek to enable or facilitate access to the scientific infor-mation we publish. As a global scientific, technical and medical publisher, we are aware of the role we play in the distribution of scientific information and access to knowledge and research. We make a concerted effort to ensure that the knowledge we manage is also accessible in those parts of the world that are still developing. Springer participates, often in leading roles, in many efforts and initiatives which facilitate access to scientific information, or to disseminate this information further and wider.

These initiatives, in partnership with other publishers, are designed to be “help for self-help” for developing countries.

The three main programs, referred to as the “Research4Life” programs, are:

HINARI

The Health InterNetwork Access to Research Initiative (HINARI) was developed within the framework of the Health InterNetwork, introduced by the UN Secretary General Kofi Annan at the Millennium Summit in 2000.

HINARI provides free or very low cost online access to major journals in biomedical and related social sciences to local, not-for-profit institutions in developing countries. HINARI was launched in January 2002, in conjunction with the World Health Organization (WHO) following the prin-ciples of a Statement of Intent signed by six major publishers, including Springer, which was a founding publishing partner. These publishers put a total of 1,500 journals at the disposal of the program.

AGORA

The AGORA program, set up in October 2003 by the Food and Agriculture Organization of the UN (FAO) and major publishers, including Springer, enables developing countries to access an outstanding digital library collection in the fields of food, agriculture, environmental science and related social sciences. AGORA provides a collection of about 850 journals to almost 600 institu-tions in 69 countries and gives access to high-quality, relevant and timely agricultural information via the Internet to researchers, policy-makers, educators, students, technical workers and exten-sion specialists.

The program’s ultimate goal is to improve food security by increasing the quality and effectiveness of agricultural research, education and training in low-income countries.

Corporate responsibility (CR)

Introduction

Our approach

Education

HINARI

AGORA


OARE

Online Access to Research in the Environment (OARE) is a digital library which enables devel-oping countries to build their own higher education programs in the environmental sciences, educate their own leaders, conduct their own research, publish their own scientific findings and disseminate information to policy makers and the public. Literature in environmental chemistry, economics, law and policy, and other environmental subjects such as botany, conservation biol-ogy, ecology and zoology will be available through a portal presented in several world languages, including Arabic, English, French, Portuguese and Spanish.

The project developing OARE is a partnership between Yale University, the United Nations Envi-ronment Program (UNEP), the World Health Organization (WHO), the Food and Agriculture Organization (FAO), Cornell University, the International Association of Scientific, Technical and Medical Publishers (STM), and leading scientific publishers around the world.

In July 2007, Springer and other STM publishers announced the extension of their cooperation with the HINARI, AGORA and OARE programs until 2015. This brings Springer’s commitment into line with the United Nations’ Millennium Development Goals.

Springer is also involved in a number of other developing country programs. For further infor-mation, please visit Springer Developing Countries Initiatives.

In 2007, Springer also supported a variety of educational programs and projects, including:

Stichting Lezen & Schrijven – Netherlands

Stichting Lezen & Schrijven (The Reading & Writing Foundation) is an initiative of H.R.H. Prin-cess Laurentien of the Netherlands. The Foundation was launched on 27 May 2004, its objective being to devote attention to the 1.5 million members of the Dutch population who, due to literacy related problems, are unable to participate fully within society. Stichting Lezen & Schrijven aims to stimulate discussion about this problem and to contribute to its alleviation.

Samsara Foundation – Thailand

Springer supported the Samsara Foundation to help with the renovation of a school in the remote mountain areas of Thailand, northeast of Chiang Mai.

With Springer’s support, the Samsara Foundation, in coordination with the local Department of Education Office in Mae Sariang, purchased supplies and services for the Huay Dua School. The districts of Mae Sariang, Sop Moei and Mae Lanoi in Mae Hong Son Province have 178 schools for 25,000 students and 1,100 teachers and administrators. Supplies include four sets of tables and benches for children to do their homework at, a toilet and shower hut, water pipes, parts for the repair of solar panels and a water purification unit and PVC water tank.

Local initiativesIn our larger locations, we support local charities, selected by our employees once a year, with financial donations. This is a tradition begun by employees using a flea market to sell items, the proceeds of which go to the charities. The monies collected are matched by the company, and are then again matched by the Springer Science+Business Media Hilfsfonds e.V. (an independent charity set up by the company that supports employees and their dependents who are in need of support).

In 2007, several charities were supported, including a child protection center, a humanitarian organization that looks after refugees, a center for chronically ill children and the national Foun-dation for Handicapped Children.


OARE

Stichting Lezen & Schrijven

Netherlands

Samsara Foundation

Thailand

Local initiatives


Our PeopleAs a key partner to the international science community, the dissemination of information and the freedom of thought in the widest sense are of great importance to us. Since we essentially bring people closer together through the exchange of ideas in the form of research, we aim to have the broadest possible view and the widest possible inclusion of ideas from all over the world. We also apply this to our own employees. This means that, naturally, we do not discriminate on the basis of race/ethnic origin, gender, religious / humanistic beliefs, disability / handicap, age or sexual ori-entation, or any other group protected by any national laws. We are committed to achieving the most appropriate level of diversity.

As mentioned in our Mission Statement, Springer is justifiably proud of the collegial atmosphere that is nurtured at our locations. This has also been reflected in the results of our last worldwide employee survey (February 2006), which was sent to all employees, and in which 74% partici-pated. Ninety percent of respondents said that they liked working with their colleagues, 78% were satisfied with their job, 85% were happy to tell people that they worked for the company, 80% were convinced that Springer was highly regarded and 78% were happy with their direct supervisor.

Since we face the challenge of dynamic global markets on a daily basis we invest considerable ener-gies in developing high quality products to meet the needs of the scientific research community and our professional customers. To achieve this, we strive to attract and retain the best talent.

The working environment at Springer allows our employees to apply their talents and skills and contribute directly to the success of the company. We offer challenging opportunities for people who are prepared to make a commitment to excellence.

We have a strong belief in our leadership philosophy:

7 Management is a creative and not an administrative process7 The acceptance of continual change and organizational flexibility is key in a rapidly changing

environment7 Entrepreneurial spirit should be fostered7 Good managers are results-driven and focused7 Character and team spirit are important elements in management teams7 Managers at all levels should treat their staff the way they would like to be treated

We also actively promote training and career advancement at Springer, and are successful in fill-ing the large majority of open positions with internal candidates. In 2007, we launched an internal human resources development e-learning platform, Sproodle, which offers all employees online courses using Web 2.0 technology which are taught by in-house professionals in a wide variety of areas.

We have developed several extensive traineeship programs at Springer which are a potential source of competent, motivated internally-trained and talented employees.

Our two-year International STM Trainee Program seeks to attract the most talented graduates with an international background in order to develop them for successful mid-level-management roles at Springer. In 2007, over 400 high-profile graduates applied for four open positions. The trainees are assigned to members of the Senior Management Team and receive specific training and are highly project-oriented.

Our Cross-Cultural Internship Program at our subsidiary Crest Premedia Services in Pune, India offers eight to twelve trainees the opportunity to gain work experience in premedia services. The trainees are selected from German and Dutch-speaking applicants who then spend on average six months in India. The program not only offers foreign work experience, but also provides insights into Indian society and has a charitable element in which the trainees assist the Doorstep School, a charity that educates the children of day laborers using a converted bus functioning as a mobile school, which Springer sponsors.


Our people

springer.comSpringer Science+Business Media – Annual Report �007 1�

Our General Intern Program allows potential future employees the opportunity to gain experience in various areas (publishing, corporate communications, finance, controlling, human resources, production, etc) for six to twelve months. Over the past two years (in Germany) Springer has hired an average of 84% of its former trainees as permanent employees.

Our employees are dedicated to developing and providing the best products and services regard-less of whether they are publishers, journalists, sales or marketing professionals or part of our corporate services team.

GovernanceIntroductionSpringer Science+Business Media S.A. (Luxembourg) directly and indirectly holds all participa-tions of Springer Group. Combined funds managed by Cinven and Candover hold more than 75% of the outstanding shares of Springer. Springer’s Supervisory Board is chaired by Non-Execu-tive Chairman Arno Mahlert and Caf van Kempen as Non-Executive Vice Chairman. Cinven and Candover each have three representatives on Springer’s Board. Springer’s Board is completed by Springer’s Executive Management, Derk Haank (CEO), Martin Mos (COO) and Ulrich Vest (CFO) and Non-Executive Member Gérard Becquer.

Our Board Supervisory Board

Chairman

Dr. Arno MahlertChairman of the Management Board, Maxingvest AG

Arno studied economics at the University of Münster and the University of the Saar in Germany. In 1970, he became an assistant lecturer at the University of the Saar and in 1974, he joined Saba GmbH as the head of the corporate strategy and budget department. In 1978, he joined Bertels-mann AG, and spent ten years with the firm, most recently as the head of corporate develop-ment and CFO for the Electronic Media Division. In 1988, he joined the Georg von Holtzbrinck Media Group as a Director and CFO. In 2003, he became Chairman of the Supervisory Board of Springer Science+Business Media. From 2004 he joined the Management Board of Tchibo Hold-ing AG as CFO and becoming CEO in 2007 (in the meantime Tchibo Holding changed its name to maxingvest ag).

Vice Chairman

Caf van KempenManaging Director, Know Limits

After obtaining his law degree from the University of Utrecht in the Netherlands, Caf joined Wolt-ers Kluwer as a project manager for its legal database project. In 1976, he became managing direc-tor of the company’s legal and tax business in Germany, and then returned to the Netherlands as the managing director of Wolters Kluwer’s law and tax division in 1980. Caf then spent three years on an acquisition integration in Italy, and upon his return, was appointed to the Executive Board in 1993, becoming CEO of Wolters Kluwer in 1999.

In 2000, Caf became a business consultant in the media sector, and since 2003, he has been the Vice Chairman of Springer Science+Business Media. Caf is also a non-executive director of sev-eral media companies.

Governance

Introduction

Our Board

Supervisory Board


Board Members

Derk HaankCEO, Springer Science+Business Media

After obtaining a degree in economics and business administration and spending a few years as a researcher at the Vrije Universiteit Amsterdam, Derk began his career in publishing in 1986 at Elsevier Science, where he held various management positions, spending part of this time based in the UK. He was appointed CEO of Misset, Elsevier’s business-to-business division, in 1991. From 1998 to 2004, Derk was CEO of Elsevier Science and was also an Executive Board member at Reed Elsevier. Since 2004, he has been CEO of Springer Science+Business Media.

Martin MosCOO, Springer Science+Business Media

Martin received his MA in Economics and Accounting from the University of Groningen in the Netherlands. He began his career in 1986 at Ernst & Young as part of the auditing department. In 1989 he joined the internal auditing department of Elsevier International and, in 1992, moved to Elsevier Business Information, where he held various management positions. In 1999, he was appointed CFO of Elsevier Science, and in 2004, he became COO of Springer Science+Business Media.

Dr. Ulrich VestCFO, Springer Science+Business Media

Ulrich has a degree in business administration and engineering and studied in Darmstadt, Germany and Lyon, France. He began his career at Procter & Gamble in 1990 as Controlling Manager. In 1991, he returned to academia and completed his PhD in Finance in 1996, when he joined Bertelsmann AG’s central controlling/reporting department. He remained at Bertelsmann until 2003 in various management functions, the last position being CFO of BertelsmannSpringer. In 2004, he became CFO of Springer Science+Business Media.

Nils BennemannInvestment Manager, Candover

Nils joined Candover in 2006, having worked in the leveraged finance group of CIBC World Mar-kets. Before that, he worked at Lehman Brothers, where he focused on M&A and capital raising for companies in the media and communications industry.

Nils is a German national and holds a degree in Philosophy and Economics from the London School of Economics and an MBA from Harvard Business School.

Simon LeefeManaging Director, Candover

Simon Leefe joined Candover in 1992. He is a managing director and a member of Candover’s executive committee. Simon qualified with Arthur Andersen, where he gained experience in a number of areas including corporate recovery.

He has worked on the buy-outs of Druid Group, Detica, Regional Independent Media, Acertec and Earls Court & Olympia. Simon was responsible for the two acquisitions that created Springer. Most recently he led the buy-out of ALcontrol.

Our Board

Board Members


Eric-Joost ErnstDirector, Candover

Eric-Joost Ernst joined Candover in 2000 after three years with Arthur D. Little in Rotterdam, working as a business analyst in the corporate finance practice. He is a Dutch national and holds a Masters degree from Delft Technical University and an MBA with distinction from INSEAD.

He worked on Springer and the buy-outs of Thule, ALcontrol and Hilding Anders and most recently, he led Candover’s delisting of Stork. He has country responsibility for Benelux and the Nordic region.

Gérard BecquerPartner, Alter Domus

Gérard Becquer has been a partner of Alter Domus, a specialized domiciliation and payroll ser-vice provider in Luxembourg since 2001. From 1998 to 2001, he was a partner at Pricewaterhouse Coopers Experts Comptables et Fiscaux in Luxembourg. From 1980 to 1998, he held several posi-tions at Coopers & Lybrand, having been appointed director of the business services department there in 1988.

Peter GangstedPartner, Cinven

Peter joined Cinven in 2001. Since then he has been involved in several transactions including CBR, Klöckner Pentaplast and Springer.

Previously he was a Managing Director at Allianz Capital Partners in Munich. Prior to this, Peter spent 15 years with Unilever with a wide range of responsibilities within key subsidiaries.

Peter is a fellow of the Chartered Institute of Management Accountants and a Business Adminis-tration graduate from Bath University.

Brian LindenPartner, Cinven

Brian joined Cinven in 1985. The transactions he has been involved in include Truvo, Springer, Aprovia, MediMedia, Dynacast, IPC, Gardner Merchant and Dutch Cable. He is a member of the TMT sector team.

Before joining Cinven, Brian worked at Deloitte & Touche. Brian is a Business Finance graduate.

Tobias KnechtlePrincipal, Cinven

Tobias joined Cinven in 2005 and is a member of the Industrials sector team.

Previously, Tobias spent six years at the Boston Consulting Group in Zurich and São Paolo, advis-ing clients in the consumer goods, industrial and financial services industries. Prior to this, he worked for Nestlé.

Tobias holds an MBA from the University of Berne, Switzerland.

Our Board

Board Members


Corporate governance reportSpringer’s supervisory board meets monthly for half- to full-day meetings. The agenda includes the operating and financial performance of the group, forecasts of operating and financial perfor-mance and investment decisions as standing items of reporting and discussion.

Springer’s board has formed an audit committee and a compensation committee which meet at least two times a year. The audit committee discusses and agrees guidelines, focus, scope and results of the work of Springer’s internal and external auditors.

Springer’s external auditor regularly present to the audit committee – particularly in the context of approving Springer’s annual financial statements. Springer’s internal audit team reports directly to the Chairman of the Supervisory Board.

The main tasks of Springer’s internal audit function are operational on-site business audits, the maintenance and updating of Springer’s corporate guidelines as well as internal risk and anti-fraud management.

Financial statements Springer achieved sales of € 907 m in fiscal year (FY) 2007 against sales of € 920 m in FY 2006 with corresponding EBITDA of € 271 m in FY 2007 and € 277 m in FY 2006. If adjustments are made for the impact of acquisitions and divestments and also for the impact of movements in currency exchange rates on Springer’s reported financials, the group would show normal industry growth rates.

FY 2007 performance was driven by both Springer’s STM and its Professional / B2B segments. STM reached sales of € 639 m in FY 2007, registering an organic growth of 4 % over FY 2006. Adjusted EBITDA for FY 2007 reached € 235 m keeping operating margin at prior years’ level. The main developments in the STM division in FY 2007 were:

7 The STM global (English language) academic journal segment grew realized revenues by more than 3% in FY 2007. Continued migration from print to online subscriptions (+20%) more than compensated the natural decline of journal archive sales which peaked in FY 2006.

7 The successful Springer eBook Collection (up 50% year-on-year), offered in 12 subject pack-ages, contributed significantly to the overall 5% growth in the sales of Springer’s book content. Flat print book sales, especially in the US with a consolidation of the wholesaler’s channels and generally weaker market circumstances, were more than offset by the eBook launch.

7 Electronic usage of Springer’s fully integrated STM content for the first time reached 100 mil-lion of full text downloads in FY 2007, more than 30% up on FY 2006. A steady increase over the past few years of published content in both journal and book form contributed to this promising development.

7 Non-English (local language) STM businesses improved performance in FY 2007 driven both by improved frontlist program and by cost benefits realized through continued integration into Springer’s global STM production and distribution organizations.

7 In the Asia / Pacific region, Springer’s STM business continued to grow strongly also in FY 2007 which was mainly driven by the continued expansion of Springer’s sales, marketing and pub-lishing organization in this market.

7 Springer’s India-based premedia and typesetting business continued to grow in its core seg-ment (English-language pre-press services) in FY 2007. In early FY 2007 Springer launched a new business unit in India focusing on customers in the non-English (mainly German- language) pre-press service segment.

Springer’s Professional / B2B segment grew aggregate revenues to € 243 m in FY 2007. This is growth of around 17% when compared to FY 2006 which is for the largest part attributable to the impact of acquisitions (e.g. Bohn Stafleu van Loghum (BSL), a medical publisher in the Nether-lands).

Corporate

governance report

Financial statements


FY 2007 adjusted EBITDA in this segment is € 49m which is up from € 39 m in FY 2006 with the increase also fully related to the BSL acquisition. Main developments in FY 2007 in Springer’s Professional / B2B segment were:

7 Within the Business / Technology subsegment, trade books, professional magazines and the conference business all showed healthy developments through growing sales and EBITDA in FY 2007.

7 The Transport / Road Safety units realized growth in the Education / Road Safety segment mainly driven by product innovations in the German markets that compensated for flat rev-enues in France and Austria. In the Transport / Automotive trade magazine segment, revenues were flat from FY 2006 due to a difficult advertising and special sales environment in Ger-many.

7 The performance of Springer’s Professional / B2B activities in the Netherlands was driven by the BSL acquisition that became effective on 28 February 2007 (BSL adding € 28 m in revenues and € 5 m in EBITDA in FY 2007), the strong performance of subscription based information magazines in the Finance and HR market and the further integration of the formerly separate trade magazine businesses into one operational unit.

Total Springer corporate and overhead expenses in FY 2007 (adjusted EBITDA) were € 15 m, slightly below FY 2006 corporate expenses.

Springer arranged an acquisition debt facility early in 2007 and used this to refinance past acqui-sitions that had been funded through Springer’s Revolving Credit Facility. Approximately € 68m of the € 250 m acquisition facility remained undrawn at the end of FY 2007. Including a drawing of € 70 m under Springer’s Revolving Credit Facility, Springer’s total financial debt position at the end of FY 2007 was € 2.026 m.

Future development of undertakings included in consolidated accountsSpringer group targets organic sales growth of more than 5% in FY 2008. Based on this sales devel-opment, Springer will be able to further expand operating profitability and margin in FY 2008.

Springer’s STM business in the past has proven to be resilient towards the short-term economic cycle. Fundamental trends in academic STM publishing such as global research funding volumes, article contribution and content usage continue to show stable growth and are not expected to reverse in the mid or long-term. Key strategic objectives for Springer’s STM business in FY 2008 therefore include:

7 Achieve revenue growth through: – Increased volume in content output (titles, issues, articles) – Continue and expand market penetration and installed base of eBook package product for

institutional customers – Drive creation and release of high value products such as handbooks, manuals and

reference works and database products (i.e. protocols) – Create sales force specifically focused on Springer’s electronic product range – Substantially expand general presence and sales organization in the Asian / Pacific region.

7 Drive usage of Springer’s content through improved availability, enhanced online features and focus on developing and selectively acquiring high quality and strongly used journal and book content.

7 Revisit non-core publishing segments and non-English-language programs.

7 Further improve overall profitability by integrating local academic publishing units (Austria, Switzerland, Italy, France and others) into the global STM organization (particularly in the areas of production, distribution and finance).

7 Continue investment in the medical online agency business in Germany and other markets.

Springer’s business-to-business segment has its main activities in Germany (Springer Business Media) and the Netherlands (Springer Uitgeverij). Key strategic objectives for Springer’s Profes-sional / B2B segment in FY 2008 are:


Future development

of undertakings included

in consolidated accounts


7 Expand market share in the business / engineering segments by leveraging Springer’s existing strong and well established brands in these markets to enter new publishing segments and by creation of integrated electronic content offerings.

7 Diversify revenue streams through investments in the growth of new business models and the expansion of the seminar / conference businesses .

7 Complete back office integration across Professional / B2B business units in Germany and the Netherlands and further exploit outsourcing opportunities (production).

In FY 2008, Springer expects a slight growth in corporate expenses as the delay in filling positions and completing the build-up of some corporate functions will be caught up.

Events after the balance sheet date

In February 2008 Springer has sold all shares in its Austrian business-to-business magazine pub-lishing unit (Springer Business Media Austria GmbH, Vienna). This unit contributed € 6m in rev-enues to Springer’s FY 2007 results. In March 2008, Springer has signed a letter of intent to divest its Austrian book and journal distribution business (Minerva wissenschaftliche Buchhandlung Gesellschaft m.b.H., Vienna). This entity realized € 16m in sales revenues in FY 2007.

Research and development

Relying on the identification, acquisition and edition, production and dissemination of intellec-tual properties and content as its dominant source for income, Springer is not active in areas of proprietary research that would be comparable to industrial companies. However, as a response to the steep growth in online usage and demand for electronically supported publishing prod-ucts, the Group is continuing to expand and refine its offerings in these areas. The newly created Springer eBook package and licensing product as well as the further addition of key features to the SpringerLink website in FY 2007 have led to a strong increase in online usage of Springer’s content. In FY 2007, more than 100 million full text downloads from Springer’s electronic content archives were registered. In FY 2007, Springer has developed an electronic version of biochemical laboratory experiment protocols which will be brought to the market early in FY 2008 thereby adding to Springer’s electronic database product offerings.

Also in 2007, Springer has refined its book production workflows in a way as to allow print-on-demand technology to be applied to a larger share of Springer’s overall frontlist book title program. Through cooperation with a leading specialist printing group, Springer will be able in FY 2008 to globally implement print-to-order technology for the majority of all Springer’s book frontlist titles and thereby reduce cost of overprints and ordering / shipping delays substantially. Springer also continues to invest in systems that enhance the workflows between authors, pub-lisher and end-users. Specifically, Springer participates in CrossRef and many other initiatives in this area.


Events after the

balance sheet date

Research and development


Consolidated Income Statement IFRS Financial statements

Consolidated

Income Statement IFRS


Consolidated Balance Sheet IFRS Financial statements

Consolidated

Balance Sheet IFRS

springer.comSpringer Science+Business Media – Annual Report �007 �0

Consolidated Cash Flow Statement IFRS

The cash-flow statement relates to the Group rather than to the continuing operations only and includes, therefore, the cash flow from the discontinued operation, as well.


Consolidated

Cash Flow Statement IFRS

On 1 April 2008 KPMG S.à.r.l., Luxembourg, issued an unqualified auditor‘s report in accordance with International Standards of Auditing as adopted by the Institut des Réviseurs d‘Enterprises on the Consoli-dated Financial Statements according to IFRS and the management report of Springer Science+Business Media S.A., Luxembourg, as of and for the year ended 31 December 2007.

springer.comSpringer Science+Business Media – Annual Report �007 �1

Contacts

Corporate Communications

Eric Merkel-Sobotta EVP, Corporate Communications

Springer Science+Business Media Deutschland GmbH Heidelberger Platz 3 14197 Berlin Germany

e-mail [email protected] telephone +49 30 827 87 54 34

Investor Relations

Milan Wielinga EVP, Mergers & Acquisitions / Investor Relations

Prins Hendrikstraat 17 7001 GK Doetinchem The Netherlands

e-mail [email protected] telephone +31 314 376 040

Contacts

springer.comSpringer Science+Business Media – Annual Report �007 ��

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