SIMPLIFIED CORPORATE STRUCTURE As of December 31, 2011

Transcription

1 Annual Report 211

2 SIMPLIFIED CORPORATE STRUCTURE As of December 31, 211 Major subsidiaries of Constantin Medien AG 1% 1% 1% 1% 47.3% Major subsidiaries of Highlight Communications AG 1% 1% 1% 1% 56.95%

3 KEY FIGURES IN EUR MILLION Non-current assets Film assets Other intangible assets Balance sheet total Subscribed capital Equity Equity ratio (in percent) Non-current financial liabilities Current financial liabilities 12/31/ % /31/ % Sales Sports Film Sports- and Event-Marketing Other Business Activities 1/1 to 12/31/ /1 to* 12/31/ Earnings before interest, taxes, depreciation and amortization (EBITDA) Amortization, depreciation and impairment Profit from operations (EBIT) Earnings before taxes (EBT) Net loss attributable to shareholders Cash flow from operating activities Cash flow for investing activities Cash flow for financing activities Outstanding shares in million Share price in Euro Market capitalization (based on outstanding shares) 12/31/ /31/ Average number of outstanding shares (basic) in million Earnings per share from continuing operations (basic) in EUR Earnings per share from continuing operations (diluted) in EUR 1/1 to 12/31/ /1 to 12/31/ Employees (at closing) * The prior year figures have been adjusted (see details in Note 2.1, Changes in accounting and valuation principles ) 1,47 1,52

4 THE YEAR JANUARY 211 SPORT1 acquires extensive rights to the IHF Men s and Women s Handball World Championships 211 and 213, as well as the EHF Women s Handball European Championships 212 and 214 for broadcasting on the TV stations SPORT1, SPORT1+ and the sports portal SPORT1.de. Highlight Communications AG announces the continuation of the successful marketing co-operation between TEAM and the European Broadcasting Union (EBU) until 215. vincent will meer is honored with the Audience Award at the 21 Bavarian Film Awards. The prize in the Screenplay category goes to leading actor and screenwriter Florian David Fitz. The Bavarian Film Award for best children s film 21 is awarded to Animals United. On January 24, 211, the producer and filmmaker Bernd Eichinger suffers a fatal heart attack entirely unexpected. In him, the Group losses a friend and companion, who, for more than 3 years significantly influenced the Constantin Film group as well as the image of the German film, both in Germany and abroad. APRIL 211 At the 61 st German Film Awards vincent will meer is awarded the Golden Lola for best film of the year 21. Florian David Fitz also receives the German Film Award for Best Male Actor. MAY 211 Creditors of the convertible bond 26/213 exercise an early repayment option on May 8, 211. Following repayment of the corresponding financial liabilities, only.4 million units of the convertible bond are still outstanding. SPORT1 concludes agreements with the cable network operators UPC Austria and upc cablecom in Switzerland for the distribution of the pay-tv channel SPORT1+ as from May 3, 211 in Austria and Switzerland, respectively. On the occasion of the Annual General Meeting of Highlight Communications AG, held on May 27, 211, Mr Bernhard Burgener is elected new Chairman of the Board of Directors of the Swiss media company as successor to Mr Werner E. Klatten. Since then, Mr Burgener has been acting as both Chairman and Delegate of the Board of Directors. JUNE 211 PLAZAMEDIA GmbH TV- und Film-Produktion announces the renewal for a further four years of its co-operation with The Walt Disney Company (Germany) GmbH being in place since In early June 211, the German Federal Film Board (Filmförderungsanstalt, FFA) gives the 21 Golden FFA Industry Tiger award to the Constantin Film group, which took first place in the Production and Distribution categories for the seventh time already. TEAM announces its new management structure on June 6, 211. Also on June 6, 211, TEAM informs that the UEFA has decided to take over certain responsibilities in match organization for the UEFA Champions League, the UEFA Europa League and the UEFA Super Cup starting with the 212/213 season. JULY 211 Highlight Communications AG acquires a share of 5.5 percent in Escor Casinos & Entertainment SA. The interest of Highlight Communications AG in the Escor share capital consequently increases to 3.2 percent. Due to de facto control, Escor is fully consolidated in the consolidated financial statements of Highlight Communications AG. SPORT1 launches its own social gaming platform SPORT1 Poker. The new fun poker platform flanks existing offers including, in addition to the online portal SPORT1.de, the online gaming platform SPORT1GAMES.de and the SPORT1 YouTube-Channel. On July 14, 211, media entrepreneur Dr Leo Kirch dies. In him, the national and international media industry loses one of its leading business personalities and the Constantin Medien Group loses a longstanding companion and reliable business friend. The Annual General Meeting of Constantin Medien AG approves all items on the agenda on July 19, 211, by a majority of between 9 and 99.5 percent. Supervisory Board Members Dr Erwin Conradi, Dr Dieter Hahn, Mr Werner E. Klatten and Dr Bernd Kuhn are confirmed. In July 211, Constantin Medien AG files an action for damages with the London High Court of Justice against, among others, Bernard Ecclestone, responsible person of Formula 1. SEPTEMBER 211 Highlight Communications AG announces a public tender offer for all Escor bearer shares publicly-held and admitted for official trading at the SIX Swiss Exchange. OCTOBER 211 SPORT1 announces the extension of the existing MotoGP agreement with Dorna Sports S.L. Media up to and including the 214 season. The comprehensive rights package comprises the exclusive broadcasting rights to the MotoGP on free-tv and pay-tv as well as on the online and mobile platforms of SPORT1. NOVEMBER 211 Escor divests its 1 percent holding in Casino Promotion Montenegro d.o.o, Bar/Montenegro, thus completing its already planned exit from the casino business. DECEMBER 211 Following the completion of the public tender offer including the 387,554 Escor shares already held by Highlight Communications AG and persons acting in concert with Highlight Communications AG before the offer, Highlight Communications AG s interest in Escor increases to percent.

5 THE COMPANY

6 THE COMPANY CONTENT CONTENT THE COMPANY COMBINED GROUP MANAGEMENT AND MANAGEMENT REPORT 4 Foreword by the Chairman of the Management Board 6 Boards 7 Report of the Supervisory Board 1 Declaration of Corporate Governance pursuant to 289a HGB 14 Constantin Medien AG Share 2 1. Business and general conditions Result of operations, financial and net assets positions of Constantin Medien Group 5 3. Result of operations, financial and net assets positions of Constantin Medien AG Employees Addendum report Disclosures in accordance with 289 para. 4 and 315 para. 4 of German Commercial Code (HGB) Risk report Opportunities report Outlook Forward-looking statements This Annual Report contains statements relating to future events that are based on management s assessments of future developments. A series of factors beyond the control of the company, such as changes in the general economic and business environment and the incidence of individual risks or occurrence of uncertain events, can result in the actual results differing substantially from those forecast. Constantin Medien AG does not intend to continually update the forward-looking statements contained in the Annual Report. Important notice This document is a free translation into English of the original German text. It is not a binding document. In the event of a conflict in interpretation, reference should be made to the German version, which is the authentic text. 2

7 CONSOLIDATED FINANCIAL STATEMENTS INDIVIDUAL FINANCIAL STATEMENTS 74 Consolidated balance sheet 76 Consolidated income statement 77 Consolidated statement of comprehensive income/loss 78 Consolidated statement of cash flows 8 Consolidated statement of changes in equity 82 Notes to the consolidated financial statements General information Accounting policies Scope of consolidation Accounting and valuation principles Notes to selected line items in the consolidated balance sheet Notes to selected line items in the consolidated income statement Disclosures regarding financial risk management Segment reporting Accounting estimates and assumptions Financial commitments, contingent liabilities, other financial commitments and contingent assets Relationships with related companies and persons Subsequent events after the balance sheet date Other information and disclosures 154 Balance sheet (HGB) 156 Income statement (HGB) THE COMPANY 157 Finance Calendar Imprint 152 Responsibility statement 153 Auditor s report 3

8 THE COMPANY FOREWORD BY THE CHAIRMAN OF THE MANAGEMENT BOARD FOREWORD BY THE CHAIRMAN OF THE MANAGEMENT BOARD Dear Shareholders, The 211 financial year was one of consolidation for Constantin Medien AG. On the way to stable and sustainable profits, we exceeded our earnings-related targets in the reporting year. Group earnings attributable to shareholders reached EUR -2.6 million; thus turning out considerably better than the target range of EUR -6 million to EUR -7 million expected at the beginning of the year. At EUR million, Group sales slightly remained below the prior year s level and also below the guidance of EUR 47 million. The development of our operating Segments differed. The Sports Segment experienced a very gratifying development, showing a positive segment result of EUR 4. million for 211 with almost stable sales, thus achieving earnings turnaround. At SPORT1, the expansion of the multimedia platforms had priority during the reporting year, so as to market our comprehensive and attractive editorial content in the TV and online sectors even better. The new SPORT1-Channel on YouTube, the social gaming platform SPORT1 Poker or the start of the online presence SPORT1.ch in Switzerland are good examples of how we can develop new income streams under the strong umbrella brand of SPORT1. The pay-tv channel SPORT1+, which was launched in the fall of 21, has developed successfully. Thus, by the end of 211, we were able to gain no less than 1.25 million subscribers who make use of the premium pay-tv station s program offer. Since recently, SPORT1+ has also been available as a mobile livestream for iphone and ipad. Our online platform SPORT1.de achieved 373 million visits and more than 3.1 billion page impressions in 211, the strongest year in its existence in terms of coverage. We rate the considerable growth compared to the previous year as confirmation that SPORT1.de is successful in presenting and producing sports content efficiently and in an attrac tive way for users with added value in the highly competitive online market. New offers such as SPORT1-Livestream, mobile apps and the platform s increasingly heavily used video segment contribute to this. Last year, the production service provider PLAZAMEDIA profited from the increasing demand for HD and 3D productions as well as for interactive and mobile content. Numerous new orders during the reporting year document the fact that PLAZA - MEDIA is one of the leading providers in these new technolo gies as well. The Film Segment, with sales of EUR million, was slightly below the prior year in terms of revenue performance (-1.9 percent). The result was almost at the prior year s level. As expected, lower sales in the theatrical distribution and license trading sectors had a dampening effect. At the box office, the year was a challenging one for Constantin Film: In a German theatrical market which was growing slightly but was still affected by the nice autumn weather, 15 Constantin film titles, including 9 in-house or co-productions, were released at cinemas with two productions attracting an audience of more than one million. The clear number 1 with 1.7 million viewers by the end of 211 was Wickie auf großer Fahrt, not least because of the great response to the 3D screenings. The TV service production area was, as before, characterized by a high degree of cost awareness by the TV-stations, but remained stable overall. This makes close, long-term business relations with the major TV networks all the more important in this environment, as is demonstrated by the Constantin Film subsidiaries. The Home Entertainment area, based on a very attrac - tive program line-up and second utilizations generating good sales, slightly expanded its market shares in the German rental and sell-through market in 211. The Sports- and Event-Marketing Segment, with slightly higher revenues, achieved a segment result of EUR 2.3 million. The clear drop in comparison to the prior year s value of EUR 7.2 million is largely attributable to the value increase of the Swiss Franc against the Euro, which led to a considerable cost increase in the segment as well as one-off effects. In the operating business, the performance of the Highlight Communications subsidiary TEAM remained positive. The marketing of the TV and sponsorship rights for the new contract cycle of the UEFA for the 212/213 to 214/215 seasons showed very positive results. Altogether, more than 1 deals for TV broadcasting of the UEFA Champions League and the UEFA Europa League were signed. The marketing results for the Vienna Philharmonic Orchestra and the Eurovision Song Contest are also pleasing. The final of the biggest European music contest in Düsseldorf before an audience of around 36,, and watched 4

9 by more than 7 million viewers around the world, was surely one of the TV highlights of last year. In 211, for the first time, Constantin Medien shows the Segment Other Business Activities. In this segment we want to capture the strong growing market of social gaming business models, in which players are part of a virtual internet community. By acquiring a majority holding in the Cologne full- service agency Pokermania GmbH we have secured the necessary know-how to develop this business, for which we see great potential and which is still in the start-up phase, over the coming years. Of course, it remains to be seen to what extent the economic downturn expected for 212 in Europe and the continued sovereign debt crisis in the Eurozone will negatively affect our business, for example in the TV advertising market. If, how - ever, the overall economic parameters do not deteriorate funda - mentally, we expect to achieve consolidated sales for the current year in a range of between EUR 46 million and EUR 48 million. Our target for the earnings side is to close all operating segments, except the Segment Other Business Activities currently under development, with a positive result. At Group level, we want to reach the breakeven point in terms of earnings attributable to shareholders, thus continuing the upward trend of recent years. Dear Shareholders, In the current financial year, we want to expand the growth initiatives we began or developed in the Constantin Media Group in 211. SPORT1 will accelerate its multimedia strategy with a view to digital distribution channels and platforms. In addition, securing important program rights will be a focus of our free-tv channel. PLAZAMEDIA will further strengthen its competency in important technological areas such as HD, 3Dproductions or interactive services, thus focusing on the current drivers in the production market. In the Film Segment, Constantin Film will continue the proven strategy of supplementing first-rate in-house and co-productions with commercially interesting licensed films. Around a dozen cinema starts are planned for 212, including the licensed film Step Up 4 and the sequel to the very successful in-house production Resident Evil Retribution both shot in 3D. In the TV service productions area, the companies of the Constantin Entertainment group will focus special atten - tion on the targeted expansion of the international business in order to further reduce dependence on the German market. Last year the media industry lost two of its most successful and visionary minds in Dr Leo Kirch and Bernd Eichinger. Dr Kirch made great contributions to the German and international movie and TV industry during his long career. Constantin Medien AG, too, has much to thank him for, since he always closely accompanied and supported our company. Bernd Eichinger was the heart of Constantin Film for over 3 years and left his mark on the movie industry nationally as well as internationally. In him we have lost a friend, companion and business partner. I would like to thank all of our employees in the Constantin Medien Group for your performance in the past year. Your know-how and commitment are and remain key to our business success. I would like to express my sincere thanks to you, the shareholders, for the trust you place in our company. With best regards, In the Sports- and Event-Marketing Segment, the current marketing cycle for the UEFA Champions League and the UEFA Europa League will be finished in the summer of 212. With a view to markets, sponsors and the deals already concluded, we are confident that we can again achieve optimal results for our long-term partner UEFA and thus also for TEAM. Bernhard Burgener Chairman of the Management Board 5

10 THE COMPANY BOARDS BOARDS Management Board Supervisory Board As of December 31, 211, the Management Board of Constantin Medien AG was structured as follows: As of December 31, 211, the Supervisory Board of Constantin Medien AG was structured as follows*: Bernhard Burgener, Chairman of the Management Board/CEO Bernhard Burgener has been CEO of Constantin Medien AG since September 1, 28. He is responsible for the strategic development of the entire Group, the support of major stockholders, M&A activities and Communications as well as company and stock corporation law and Compliance. Since July 1, 29, Bernhard Burgener has also been responsible for the entire operations of the Sports Segment. In addition, he is also responsible through the affiliated company, Highlight Communications AG, where he is Chairman and Delegate of the Board of Directors, for the Film Segment comprising the Highlight Communications subsidiary, Constantin Film AG, where he has held the position of CEO since January 1, 29; and for the Sports- and Event-Marketing Segment, which comprises the Highlight Communications subsidiary TEAM. At TEAM, Mr Burgener is the Chairman of the Board of Directors. At Escor Casinos & Entertainment SA, also a subsidiary of Highlight Communications AG, in which the activities of the new Segment Other Business Activities are bundled, Mr Burgener is a Member of the Board of Directors. Fred Kogel, Chairman Werner E. Klatten, Deputy Chairman Dr Erwin Conradi, Member Dr Dieter Hahn, Member Dr Bernd Kuhn, Member Jan P. Weidner, Member *For information regarding the Management and Supervisory Boards positions during the year, please refer to the details in the Report of the Supervisory Board (page 7), in the Declaration of Corporate Governance (page 1) and the Combined Group Management and Management Report (page 2) as well as in the Notes to the Consolidated Financial Statements, Note 13 Other Information and Disclosures (page 148). Antonio Arrigoni, Chief Financial Officer/CFO Antonio Arrigoni has been a Member of the Management Board of Constantin Medien AG since April 1, 28. He is respon - sible for the areas of Finance, Investor Relations, Accounting, Controlling, Human Resources and Administration, Legal as well as IT and Process Management. Mr Arrigoni is also a Member of the Board of Directors of Highlight Communications AG. 6

11 REPORT OF THE SUPERVISORY BOARD THE COMPANY REPORT OF THE SUPERVISORY BOARD Fred Kogel, Chairman of the Supervisory Board In the financial year 211, the Supervisory Board of Constantin Medien AG ( Supervisory Board ) met its obligations in accordance with the law and the Company's Articles of Association, duly advising the Management Board of the Company, as well as monitoring its activities. Based on verbal and written reports, the Supervisory Board paid detailed attention to the business performance of Constantin Medien AG ("Company ) and the Constantin Medien Group, as well as all significant business issues. The Supervisory Board consists of six members, who are elec - ted by the Shareholders' Meeting in accordance with 5 Number 1 of the Company s Articles of Association. In the 211 financial year, there were no changes in the composition of the Company s Supervisory Board. The nominated Members of the Supervisory Board Dr Erwin Conradi, Dr Dieter Hahn, Mr Werner E. Klatten and Dr Bernd Kuhn were confirmed by the Annual General Meeting on July 19, 211 in Munich. The Supervisory Board currently comprises of the following three committees: The Personnel and Nominations Committee, which convened three times in the 211 financial year, is responsible inter alia for the preparation and negotiation of employment contracts with Management Board Members and for the preparation of nominations for the election of Supervisory Board Members at the Annual General Meeting. It consists of three members: Mr Fred Kogel (Chairman), Dr Dieter Hahn (Deputy Chairman) and Dr Erwin Conradi. The Audit Committee, which convened four times in the 211 financial year, deals in particular with matters of accounting, internal control systems, risk management, the selec tion and monitoring of the auditor, and compliance within its area of responsibility. It consists of three members: Mr Jan P. Weidner (Chairman), Dr Dieter Hahn (Deputy Chairman) and Mr Werner E. Klatten. The Legal and Compliance Committee, which convened four times in the 211 financial year, is responsible for monitoring and advising the Management Board in complying with statutory laws and internal corporate guidelines. It consists of three members: Dr Bernd Kuhn (Chairman), Mr Fred Kogel (Deputy Chairman) and Mr Werner E. Klatten. The Supervisory Board held six ordinary and two extraordinary meetings in the 211 financial year. All Members of the Super - visory Board participated in six of the meetings; in two of the ordinary meetings there was an excused absence of one member at each meeting. With the exception of one extraordinary meeting of the Supervisory Board, as has been common practice in previous years, both Members of the Management Board participated in the meetings of the Supervisory Board in 211 in order to report to the Supervisory Board and to answer its questions. Furthermore, as in previous years, the Supervisory Board called on the advice of the auditors appointed by the Annual General Meeting of the Company for the respective financial year. The Management Board and the Members of the Supervisory Board kept in regular contact between the meetings and so the Supervisory Board was kept informed about the business situation of Constantin Medien AG and the Constantin Medien Group at all times. This applies in particular to the Chairmen of the Management Board and Supervisory Board. As is standard practice, the Supervisory Board also made resolutions by way of circulation between the meetings on the basis of detailed documentary information. During 211, the Supervisory Board focused primarily on the following matters: Business situation and performance: The Supervisory Board informed itself with the business situation of the Company and the Constantin Medien Group during all meetings. In doing so, the business situation in the Constantin Medien Group and in the Segments as well as the liquidity situation and liquidity planning were discussed in detail. The Management Board reported on the current business performance, potential deviations from what was planned and on changes to the strategic environment. An important issue was the assessment of the legal and commercial framework conditions for sports betting in connection with the new State Gambling Treaty signed by the prime ministers of the Federal States (apart from Schleswig-Holstein) 7

12 THE COMPANY REPORT OF THE SUPERVISORY BOARD on December 15, 211, which is currently undergoing EU Commission notification proceedings, and the possible impact of this law reform on the market. Strategic development, investment and divestment activities: The Supervisory Board, in several of its meetings, dealt with matters relating to the strategic prospects and further development of the Constantin Medien Group. In this context, the Management Board reported on opportunities to strengthen current activities in the Sports Segment and reduce dependencies on individual customers. Securing an attractive portfolio of exploi tation rights for top sports events for SPORT1 was also an important issue in the consultations. The Management Board also explained the setup of Social- Gaming business models which took place at Highlight Communications Group level and which are presented in the new Group Segment Other Business Activities. In this context, the Highlight Communications affiliate Escor Casinos & Entertainment SA acquired interests of 5.4 percent in Pokermania GmbH in Cologne, which as a full-service agency specializes in social gaming. Matters of Corporate Governance: The Supervisory Board s plenum or the Personnel and Nominations Committee in charge of these matters dealt with matters of Corporate Gover - nance based on current regulations and recommendations of the German Corporate Governance Code in the reporting year. They focused on the criteria for the appropriate composition of the Supervisory Board, in particular appointment of women, appropriateness of compensation for Members of the Management Board of Constantin Medien AG, and the introduction of an age limit for executive Board Members of the Company. The Declaration of Compliance adopted by the Management Board and Supervisory Board in December 211 in accordance with 161 German Stock Corporation Act does not provide for an age limit for Members of the Management Board. series, Bernard Ecclestone. This action is based on the sale of the shares in Speed Ltd. (a parent company of Formula 1) origi nally held by the legal predecessor of the Company through the Bayerische Landesbank. Statements concerning disclosures contained within the Management Report and the Group Management Report of the Company in accordance with 315 para. 4 HGB The Company disclosed information in the Group Management Report for the 211 financial year in accordance with 315 para. 4 HGB. The disclosures meet the requirements prescribed in Directive 24/25 EC of the European Parliament and the Council dated April 21, 24 in respect of takeover bids. The obligation to issue this information falls on companies whose voting shares are listed on an organized market in accordance with 2 para. 7 of the Securities Acquisition and Takeover Act (WpÜG). This is irrespective of whether a takeover bid has been made or is expected to be made. The information serves to enable potential bidders to make a comprehensive assessment of the Company and of potential takeover impediments. The Supervisory Board has examined the relevant information contained within the Combined Group Management Report and Management Report. Specific details in respect of these matters can be found in the Combined Group Management Report and Management Report (section 6). Audit and adoption of the annual financial statements The individual financial statements of the Company, the consolidated financial statements and the Combined Group Management Report and Management Report as of December 31, 211 have been audited by the assigned auditor, PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft, and have been issued with an unqualified Auditor's Certificate. The individual financial statements, consolidated financial statements and the Com -bined Group Management Report and Management Report were submitted in a timely manner to all Members of the Supervisory Board along with the audit reports, enabling a detailed examination to be made of the documents. Legal issues: The plenum of the Supervisory Board and, in particular, the responsible Legal and Compliance Committee discussed various pending legal disputes of the Company. This includes the action for damages filed at the High Court of Justice in London against the man in charge of the F1 racing In its meeting held on March 21, 212, the auditors reported on the key findings of their audit to the Supervisory Board. The Supervisory Board examined in detail the individual financial statements of the Company and the Constantin Medien Group s consolidated financial statements as well as the Combined 8

13 Group Management Report and Management Report and duly noted their approval of the findings of the auditors. Following the completion of its examination on March 21, 212, the Supervisory Board raised no objections to the financial statements and the consolidated financial statements. The Supervisory Board approved the financial statements and the consolidated financial statements of the Company in the form presented by the Management Board. The annual financial statements are thereby adopted. The Constantin Medien Group approximately performed as it had expected in the 211 financial year, in an environment where the overall economic and industrial parameters continue to be challenging. The Supervisory Board rates the financial year as a year of transition on the path the Management Board is pursuing to stable and positive results. It sincerely thanks the Management Board and all employees in the Constantin Medien Group for the work they have performed and the great commitment they have shown to the welfare of the Company. March 212 Supervisory Board of Constantin Medien AG Fred Kogel Chairman 9

14 THE COMPANY DECLARATION OF CORPORATE GOVERNANCE PURSUANT TO 289a HGB DECLARATION OF CORPORATE GOVERNANCE PURSUANT TO 289a HGB Declaration of compliance with the German Corporate Governance Code (DCGK) The Management and Supervisory Boards provide their report on the corporate governance of Constantin Medien AG pursuant to 3.1 of the German Corporate Governance Code ( DCGK ). Objectives for the composition of the Supervisory Board Based on the recommendation in DCGK, the Supervisory Board of Constantin Medien AG in its meeting on December 19, 211 decided on the following objectives regarding its composition: The Management and Supervisory Boards of Constantin Medien AG hereby confirm that the recommendations of the German Corporate Governance Code (DCGK) in the version dated May 26, 21, have been duly observed, with the exceptions stated in the Declaration of Conformity dated December 21, and that the recommendations of the Code in the version dated May 26, 21, have been duly observed, with the following exceptions: A fixed age limit for Members of the Management Board has not been specified ( of the Code). 1. Competence Professional qualifications and personal competence are the primary prerequisites for the appointment to the Supervisory Board. The Supervisory Board will at all times focus particularly on these prerequisites, which are essential for observing its legal obligations, when making proposals for appointments to the Supervisory Board. The Supervisory Board must include at least one member who is independent within the meaning of 1 (5) AktG and who is an expert in the areas of accounting and auditing. Given the age of the two Management Board Members of the Company, the specification of a fixed age limit does not appear to be necessary at the present. In addition, the Company deems that a fixed age limit is a very rigid instrument that unnecessarily restricts the flexibility of the Supervisory Board in appoin - ting Members to the Management Board; the Supervisory Board will in any case take into account the age of the Manage ment Board Members in their new or reappointed terms. The time limit for the submission of Quarterly Reports (Interim Financial Reports) has not yet been reduced to 45 days following the end of the reporting period ( of the Code). It is planned to comply with this recommendation of the German Corporate Governance Code (submission of Quarterly Reports within 45 days) as early as is feasible. Given the accounting complexity of our Company and its shareholdings, this time limit is, however, not to be complied with until internal processes are optimized to ensure that this can be done with the required sustainability and reliability. The most recent version of the Declaration of Conformity with the German Corporate Governance Code, as well as previous versions, can be found on the homepage 2. Diversity Overall, it is the Supervisory Board's objective to optimally perform its monitoring and advisory function through the diverse skills and personalities of its members. This diversity includes international expertise and a variety of experiences and personal backgrounds, as well as representation by women. When preparing suggestions for individual nominations, the extent to which mutually complementary profesional pro -files, and professional and life experience as well as an adequate representation of both genders can be beneficial to the work of the Supervisory Board has to be considered. 3. Knowledge of the industry The Supervisory Board shall have at least two members with in- depth knowledge and experience of business areas, that are important for the Company, particularly the media industry. 4. Management experience The Supervisory Board shall have at least two members with experience of management or supervision in a medium-sized or large company within the meaning of 267 HGB (German Commer cial Code in its current version) irrespective of its legal form. 1

15 5. Internationality The Supervisory Board shall have at least one member whose professional experience provides him/her with international expertise in the Company's area of business. The Supervisory Board regularly checks all objectives referred to. It publishes its objectives and the progress of their implementation annually as part of providing corporate governance information in the Declaration of Corporate Governance. 6. Female Supervisory Board Members The Supervisory Board of Constantin Medien AG currently includes no female members. During nominations for appoint ments to the Supervisory Board, the Supervisory Board will examine whether suitable female candidates can be appointed to the committee. The aim is to have at least one female Member on the Supervisory Board. 7. No material conflicts of interest The Supervisory Board shall not include individuals with a conflict of interest, that can be expected to not simply be of a temporary nature. As a result, individuals shall not be suggested for appointment to the Supervisory Board if at the same time they have a position on an executive board of an important competitor of the Company or act as an advisor to such a body if they could potentially suffer a conflict of interest due to another activity, e.g. an advisory role for an important contractual partner of the Company. Moreover, the Supervisory Board shall include no more than two former Members of the Company's Management Board. Additionally, the Supervisor Board complies with the provisions of the German Corporate Governance Code regarding conflicts of interest. 8. Age limit Candidates shall generally only be proposed for appointment to the Supervisory Board if they have not reached the age of 75. The Supervisory Board currently complies with these objec - tives, with the exception of No. 6. The above-mentioned objective No. 6 is to be achieved by the time of the Annual General Meeting in 214 by complying with legal requirements in the context of by-elections or new elections as well as any replacement appointments that may be required by the courts. At the latest before the convocation of this General Meeting, the Supervisory Board shall review this objective again in the light of the results achieved. Information regarding corporate governance practices Principles The Management and Supervisory Boards work together in good faith for the benefit of the Company and are committed to the principle of sustainable growth in Company value. It is the aim of Constantin Medien AG to consistently justify the trust of its shareholders, customers and employees and to fulfill its corporate responsibilities. The principles of good respon - sible corporate governance determine the actions of the management and control bodies of the Company in this process. Integrity, credibility, reliability and dependability in its dealings with its employees, business partners and customers, shareholders, investors and the general public, form the basic principles of conduct. The Constantin Medien Group is committed to providing regular, transparent and timely communication. In its Annual, Halfyear and Quarterly Reports, Constantin Medien AG regularly issues information concerning the development of its business. In addition, information is published by means of press relea - ses and ad hoc announcements. All reports, notices and presentations as well as other detailed information about Constantin Medien AG are made available by the Company on its homepage Shareholders and Annual General Meeting The shareholders of Constantin Medien AG are entitled to exercise their rights at the Annual General Meeting, where they may cast their votes. Each shareholder is entitled to parti cipate in the Annual General Meeting, to voice their opinion on the individual agenda items, to ask questions and to propose motions. Constantin Medien AG simplifies the process by which shareholders may exercise their voting rights through the appointment of a proxy bound by the instructions of the shareholder. 11

16 THE COMPANY DECLARATION OF CORPORATE GOVERNANCE PURSUANT TO 289a HGB Accounting and year-end audit Constantin Medien AG prepares its consolidated financial statements and consolidated interim financial statements in conformity with the International Financial Reporting Standards (IFRS), as adopted by the European Union. The individual financial statements of the Company are prepared according to the German Commercial Code (HGB). The preparation of the consolidated and individual financial statements is the responsibility of the Management Board. Following their preparation, the consolidated and individual financial statements are then audited by the inde pendent auditor appointed by the Annual General Meeting and approved and adopted, respectively, by the Supervisory Board. It has been agreed with the auditor that he immediately notifies the Chairman of the Supervisory Board and the Chairman of the Audit Committee of any reasons of exclusion or conflicts of interests as well as any material findings and events discovered during the audit procedure. Controlling system and control indicators The Management Board of Constantin Medien AG is respon - sible for the strategic course and control of the Group. Operational responsibility of the subsidiaries of the Sports Segment lies with the particular managing director of each subsidiary. Highlight Communications AG, Team Holding AG as well as Escor Casinos & Entertainment SA are autonomously managed by the Board of Directors. Constantin Film AG is autonomously managed by the Management Board. Authoritative control indi - cators consist of financial performance indicators (such as sales and earnings ratios) and non-financial performance indicators (based on the respective business models of the individual Segments). Detailed information about the controlling system and performance indicators can be found in the Combined Group Management and Management Report under section 1.6 Controlling system and performance indicators (page 25). The internal control system of the Constantin Medien Group encompasses all principles, procedures and measures undertaken to ensure the effectiveness, profitability and appropriate - ness of the internal and external accounting system and contributes to compliance with the relevant legislation. A detailed description of the elements of the internal control system in place within the Group, which also incorporates the risk mana - gement system throughout the Group, can be found in the Combined Group Management and Management Report under section 7.2 (page 56). Collaboration between the Management and Supervisory Boards As a German stock corporation, the Group parent company Constantin Medien AG has a dual management and control system ( Two-Tier System ), i.e. the Management and Super visory Boards are separate bodies with strictly separate members and duties. From July 1, 29, to February 29, 212, the Management Board of Constantin Medien AG consisted of two members, Mr Bernhard Burgener (CEO) and Mr Antonio Arrigoni (CFO). On March 1, 212, the Management Board division of Sports was added, falling within the area of responsibility of the new Management Board Member, Mr Thilo Proff. The Management Board is responsible for directing Constantin Medien AG and for representing the Company in third party dealings. The principle tasks of the Management Board include the determination of corporate strategy, Group management and the moni toring of risk management. The Management Board works closely with the Supervisory Board. It informs the Supervisory Board on a regular, timely and comprehensive basis of all Company and Group related issues associated with planning, business development, risk status and risk management. The Management Board agrees with the Supervisory Board on the corporate strategy and discusses its strategic implementation at regular intervals. Documents requiring decisions, in particular the Constantin Medien AG individual financial statements, consolidated financial statements and audit report are forwarded to the members of the Supervisory Board in advance of the particular meeting. The internal by-laws governing the Management Board incorporate veto rights on the part of the Supervisory Board for business transactions of fundamental and particular economic importance. The Supervisory Board of Constantin Medien AG consists of six members. The Supervisory Board advises and monitors the Management Board in its management of the Company. In addi tion, its responsibilities also include the appointment of Management Board Members. As part of its internal by-laws, the Supervisory Board has created a Personnel and Nominations 12

17 Committee, an Audit Committee and a Legal and Compliance Committee. The Personnel and Nominations Committee is responsible in particular for preparing and negotiating contracts with Management Board Members and for nominations for the election of the Supervisory Board Members by the Annual General Meeting. It also works out proposals to be made to the Supervisory Board plenum concerning Management Board remuneration. The Audit Committee assists the Supervisory Board in its oversight role, in particular in the areas of accounting, internal control systems, risk management, the selection and monitoring of the auditor, and compliance within its area of responsibility. The Chairman of the Audit Committee, Mr Jan P. Weidner, is an independent financial expert and has special knowledge and experience from his professional prac - tice regarding the application of accounting principles and internal control procedures. The Legal and Compliance Committee is responsible for the oversight and advising of the Management Board in observing statutory requirements and the internal corporate guidelines. In the financial year 211, the Supervisory Board convened at a total of six ordinary Board meetings and two extraordinary Board meetings. The Audit Committee, according to schedule, met on four occasions, the Personnel and Nominations Committee on three and the Legal and Compliance Committee met four times. The Chairman of the Supervisory Board explains the activities of the Supervisory Board and its committees in its report presented each year to the shareholders in the respective Annual Report of the Company. Management Board contractual terms Mr Bernhard Burgener has been a Member of the Management Board of Constantin Medien AG since September 1, 28, and has since then acted as Chairman of the Management Board. He had a contract term until August 31, 211. On November 17, 21, Mr Burgener was appointed as the Chairman of the Management Board for a term extending beyond August 31, 211 until August 31, 213. His contract was accordingly amended. Effective April 1, 28, Mr Antonio Arrigoni assumed the position of Chief Financial Officer of Constantin Medien AG. His contractual term was until March 31, 211. On August 18, 21, Mr Arrigoni was appointed as Management Board Member for a term extending beyond March 31, 211 until June 3, 214. His contract was amended accordingly. On March 1, 212, Mr Thilo Proff took over the newly created Management Board division of Sports at Constantin Medien AG. As Member of the Management Board, he is responsible for the activities bundled by Constantin Medien AG in this Segment. His contractual term runs until February 28, 215. Report on Management Board Remuneration In compliance with the German Corporate Governance Code, the monetary remuneration for each Management Board Member consist of both fixed and variable components. The variable remuneration components are in part specified by the Supervisory Board in its obligatory discretion on an annual basis and in part on a multi-year assessment base, which, among others, is geared to the performance of the share price and the earnings of the Group in this period. The variable remuneration components are contractually limited to a maximum of 1 percent of the annual fixed remuneration. The contracts of the Management Board Members also contain a so-called severance payment cap in the event that the contract is prematurely terminated without good cause. The Management Board Members are reimbursed for all out-ofpocket expenses and other costs incurred in performing tasks for the Company and they are also provided with a company car for business and personal use. Moreover, the Company has taken out a Directors' & Officers (D&O) liability insurance policy for Members of the Management Board, which contains a deduc tible in accordance with the legal requirements, and an accident/disability insurance policy. There are no payment guarantees to Members of the Management Board in the event of a change in control relating to the Company. Report on Supervisory Board Remuneration The remuneration of the Supervisory Board Members is regulated in 12 of the Articles of Association of Constantin Medien AG. In addition to reimbursement of expenditures incurred, Members of the Supervisory Board also receive fixed 13

18 THE COMPANY CONSTANTIN MEDIEN AG SHARE and variable annual remuneration. The fixed remuneration for a Supervisory Board Member is EUR 2,, EUR 3, for the Deputy Chairman of the Supervisory Board and EUR 6, for the Chairman of the Supervisory Board. Supervisory Board Members also each receive fixed remuneration for membership (EUR 5,) and chairing (EUR 1,) of Com mittees. The variable remuneration is based partly on the shortterm and partly on the long-term success of the Company. Remuneration is paid on a pro rata basis if the member steps down from or joins the Supervisory Board during the year. Further information on the Management and Supervisory Boards can be found within the Note Boards (page 6), in the Combined Group Management and Management Report (page 2) and within Note 13 Other Information and Disclosures of the Notes to the Consolidated Financial Statements (page 146). CONSTANTIN MEDIEN AG SHARE Performance of the capital markets Constantin Medien share performance The general upward trend on the German stock market and inter national capital markets initially continued during the first half of 211. This trend was disrupted only briefly towards the end of the first quarter due to the natural disaster in Japan. From the third quarter of 211, the market development was however significantly affected by the intensification of the financial and debt crisis particularly in some Euro countries and the clouding of the expected global economic development. However, political shifts also increased the uncer tainty, partially resulting in some cases in rapid sell-off and recordhigh volatilities. The Eurozone crisis led to extensive political and economic support measures, resulting in a stabilization of the equity markets and a recovery trend particularly towards the end of the year. Nonetheless, risk factors such as government debt, economic growth and the stability of the financial systems continue to be in the spotlight. The volatile performance during the period under review resulted in a listing by the leading indices at year-end at a level well below the share prices at the beginning of the year. For instance, the German leading share index DAX lost approx percent of its value in 211, closing at 5,898 points on December 31. The German small cap and media stocks also showed negative performance. The small cap index SDAX, for example, which includes the Constantin Medien share, suffered a markdown of 14.5 percent and closed at 4,421 points. The German media index (DAXsector Media) closed at a significantly lower 125 points at the end of December 211 after a loss of 13.2 percent throughout the year. In the financial year 211, the Constantin Medien share's performance was marked on the whole by a volatile downward movement. At the start of the year, the share price developed in line with the overall sharp upward trend of the market. From the second quarter of 211, however, its performance suffered from a continuous downward movement, much more than offsetting for the initial gains. The Constantin Medien AG share was also unable to elude the macroeconomic influences and intensification of the financial and debt crisis in the third quarter. However, it did not benefit from the recovery trend at the end of the year, thus moving against the general market trend. The Constantin Medien share closed at EUR 1.28 at the end of the year. As of December 31, 211, the 52-week high stood at EUR 2.43 (April 4, 211), with the 52-week low coming in at EUR 1.21 (December 29, 211). Thus, at a markdown of 26.9 percent in 211, the Constantin Medien share price substantially underperformed the comparative German small cap index SDAX (-14.5 percent) and the German media index DAXsector Media (-13.2 percent). In the remaining period after the balance sheet date, the Constantin Medien AG's share price trended upwards, closing at EUR 1.48 on February 29, 212. Apart from the financial figures, the primary news published by the Company in 211 concerned the early (partial) redemption of the convertible bond 26/213, the expansion of digital distribution and the online area of SPORT1, the launch of the social gaming platform SPORT1 Poker and the renewal of the co-operation between PLAZAMEDIA and Disney. Moreover, Constantin Medien AG asserted a damages claim based on the 14

19 earlier sale of Formula 1 shares of a legal predecessor. In the Sports and Event-Marketing Segment, the marketing co-operation between our subsidiary TEAM and the Europäische Rundfunkunion (European Broadcasting Union) for the Eurovision Song Contest was extended. Changes in the Management of TEAM and a decision of UEFA to take over certain responsibilities in organization were also announced. In the Film Segment, the subsidiary Constantin Film AG again was awarded as the most successful producer and distributor in Germany from the German Federal Film Board (Filmförderungsanstalt, FFA). As part of a public tender offer, the subsidiary Highlight Communications AG announced the acquisition of a majority stake of shares in Escor Casinos & Entertainment SA. In the 211 business year, approximately 3.6 million Constantin Medien shares were traded on German stock exchanges (a daily average of.12 million units). Subsequently, the trading volume increased considerably by 5.4 percent compared to the previous year. Due to higher trading volumes versus the same period last year, the stock turn rate for shares outstanding over a twelve-month period increased to.39 (prior year:.28) on the closing date. The Constantin Medien share in German stock exchange rankings of all MDAX and SDAX listings was ranked number 11 as of December 31, 211 (prior year: 15) in respect of trading volumes over the last twelve months and 13 (prior year: 16) for the so- called free float market capitalization. XETRA CLOSING PRICES OF THE CONSTANTIN MEDIEN SHARE COMPARED TO SDAX AND DAXSECTOR MEDIA INDICES Comparative indices indexed to Constantin Medien's closing price as of December 31, 21 Constantin Medien AG SDAX DAXsector Media /31/1 3/31/11 6/3/11 9/3/11 12/31/11 Share capital and shareholder structure Constantin Medien AG's share capital did not change during 211, amounting to around EUR 85.1 million as of December 31, 211. As a consequence of the full consolidation of its subsidiary Highlight Communications AG, its shares in Constantin Medien AG qualify as treasury shares; and so the Company held a total of 7.4 million non-voting treasury shares (8.7 percent of share capital) via Highlight Communications AG as of December 31, 211. After deducting of these treasury shares, there were approximately 77.7 million shares outstanding as of the balance sheet date. The Company published notices on April 4 and May 3, 211, stating that KF 15 GmbH & Co. KG did not exercise its call option to buy additional 8. percent of the share capital of Constantin Medien AG so that the option expired. On the balance sheet date, the shareholding of KF 15 GmbH & Co. KG in the Company continued to be 18.7 percent of the share capital. There were no other reportable changes to the share 15

20 THE COMPANY CONSTANTIN MEDIEN AG SHARE holder structure of Constantin Medien AG in 211. The free float of the Constantin Medien share stood at 57. percent of share capital as of December 31, 211. Investor Relations department. Alongside participation in events for analysts and investors, it is our objective to support the highest possible number of analysts. SHAREHOLDER STRUCTURE AS AT DECEMBER 31, 211 Subscribed capital 85.1 million shares The Constantin Medien share is currently being actively monitored by notable research institutions. In the last 12 months, the following six different institutions published studies on Constantin Medien AG: 8.7% TREASURY SHARES 1 Close Brothers Seydler Bank Commerzbank Deutsche Bank DZ Bank Solventis Wertpapierhandelsbank WestLB 18.7% KF % 6.7% DR ERWIN CONRADI Additional capital market securities held by Constantin Medien AG 5.9% 3.% BERNHARD BURGENER DR DIETER HAHN FREE FLOAT 1 Predominantly held via the Highlight Communications AG Investor Relations activities The focus of Constantin Medien Group's investor relations activities lies in the comprehensive and timely exchange of information with all capital market participants (institutional and private investors, analysts and the financial press). It is our stated aim to achieve a fair evaluation of the Constantin Medien share using a transparent public relations approach. This is based on our regularly published Annual and Quarterly Financial Reports that give a detailed view of our Company's current performance and perspectives. Furthermore, extensive information concerning the Constantin Medien Group is provided on our website at In addition to individual talks with institutional investors, Constantin Medien AG was also available to interested parties at the German Equity Capital Forum. Moreover, numerous individual inquiries from private investors were addressed by our The price of the 5.25% convertible bond 26/213 fell by 4.8 percent in 211, closing at EUR As of February 29, 212, the bond traded at EUR Each convertible bond entitles a conversion in Constantin Medien AG shares. During the year, convertible bonds outstanding were reduced to.4 million, primarily because the bond creditors option for early redemption option of the convertible bond was exercised. Moreover, after redeeming its bonds held and accordingly reducing the multiple share document, the Constantin Medien Group itself held an additional 4.6 million bonds on December 31, 211. The shares of Highlight Communications AG performed similarly to the Constantin Medien share in 211, underperforming the comparative indices. The share price closed at EUR 3.45 on December 31, 211, a reduction in the share price of 17.7 percent compared to the start of the year. As of February 29, 212, the share price stood at EUR On October 13, 21, Constantin Medien AG issued a corporate bond with a volume of EUR 3 million in the form of a private placement with institutional investors in Germany and abroad. The bond has a term of five years and accrues interest at 9. percent p.a. The corporate bond was included as a follow-through by third parties in the open market of the Stock Exchange. 16