Annual Report Aktiengesellschaft

Transcription

1 Annual Report 2005 Aktiengesellschaft

2 Key Figures 2005 Subscribers Change Change (absolute) (in %) Subscribers (opening balance) 3,247,172 2,907, , Net Increase 319, ,281 (19,999) (5.9) Subscribers (closing balance) 3,566,454 3,247, , Average numbers of subscribers 3,406,813 3,077, , Churn rate (in %) 1) (0.1) ARPU 2) (in EUR) Consolidated statement of operations (in EUR million) Revenues 1,074,5 984,8 89,7 9.1 Core business revenues 1,004,9 880,0 124, Program subscriptions 917,7 816,9 100, Pay-per-view 27,9 29,1 (1,3) (4.3) Advertising 59,4 34,0 25, Hardware 3) 53,3 77,3 (24,1) (31.1) Other revenues 16,3 27,5 (11,2) (40.7) Operating expenses 4) 937,0 905,5 31,5 3.5 EBITDA 5) 137,5 79,3 58, Depreciation and amortization 33,3 33,7 (0,4) (1.1) EBITA 6) 104,2 45,6 58,6 >100 Amortization of subscriber base 48,3 48,3 0,0 0.0 EBIT 7) 55,9 (2,7) 58,6 >100 Income taxes 14,7 (5,6) 20,3 >100 Financial result (22,0) (72,3) 50, Profit/loss for the year 48,7 (80,6) 129,3 >100 Earnings per share (in EUR) 0,61 (1,53) 2,14 >100 Consolidated balance sheet as of 12/31 (in EUR million) Total assets 1,369,6 1,298,8 70,8 5.5 Shareholders equity 798,1 418,9 379, Equity ratio (in %) 8) Net debt 9) 105,8 370,2 (264,4) (71.4) Employees as of 12/31 Full-time employees 1,147 1,595 (448) (28.1) The annual financial statements of the Premiere Group are drawn up on the basis of International Financial Reporting Standards (IFRS), with due regard to the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). Due to the totaling of individual terms, the table may contain rounding differences. 1) This reflects the total number of subscriptions cancelled within the last 12 months, divided by the average number of subscribers ((Opening + Closing Subs)/2) for the same period. 2) Annualized average revenue per user from Program subscriptions, Pay-per-view and Advertising (in EUR/Year) 3) Revenue from the sale and rental of STBs 4) Excluding Depreciation 5) Earnings before Tax, Interest and Depreciation and Amortization 6) Earnings before Tax, Interest and Amortization 7) Earnings before Tax and Interest 8) Equity to total assets as % 9) Financial debt less cash

3 Content Management board and Supervisory board Letter to shareholders Review and Monitoring report by the Supervisory board First-class television Fascinating TV Exclusivity and variety Convenience Service Innovation Share Corporate Governance Premiere AG Group Management Report The Company Economic and political environment Economic position Premiere AG Programming Advertising Marketing and sales Research and development Employees Corporate responsibility Risk report Subsequent events Outlook Closing statement in accordance with 312 (3) German Stock Corporation Act (AktG) Premiere AG Group Consolidated balance sheet Consolidated statement of operations Statement of changes in equity Statement of cash flows Premiere AG Notes to the consolidated financial statements 1 General information and basis of preparation 2 Notes to the balance sheet 3 Notes to the statement of operation 4 Other explanatory comments Auditor s Report for the business year 2005 Further information Imprint Financial calendar

4 2 Premiere AG Annual Report 2005 Highlights million subscribers at year end 2005 Total revenue rises to EUR 1,074.5 million Revenues from core business grow by 14.2 percent EBITDA up 73.5 percent to EUR 137,5 million Net income jumps to EUR 48.7 million Successful IPO of Premiere AG on March 9, 2005 Launch of theme channels DISCOVERY GESCHICHTE and FOCUS GESUNDHEIT Entering the betting business with PREMIERE WIN Comprehensive broadcasting rights for 2010 soccer World Cup and UEFA Champions League secured Launch of innovative Video-on-Demand-Service PREMIERE DIREKT+ Start into a new era of TV with PREMIERE HD

5 3 Management board Letter to shareholders Dear Shareholders, 2005 was a successful year for Premiere. Our core business grew strongly and, for the first time in the history of the company, we achieved a net profit for a full business year. Dr. Georg Kofler CEO With a rise in revenues of 9.1 percent, Premiere grew faster than the previous year. With this result, Premiere, once again, clearly outpaced the German media industry average. In the core business of program subscriptions, pay-per-view and advertising, Premiere achieved 14.2 percent growth in revenues. The trend in subscriber numbers was satisfactory with 3.57 million subscribers at year end, representing a 9.8 percent increase. The successful course of the business year is also reflected in earnings: EBITDA climbed 73.5 percent to EUR million. Following a net loss of EUR 80.6 million last year, Premiere posted a net profit of EUR 48.7 million in 2005 an improvement of EUR million. With 61 euro cents, Premiere showed positive earnings per share for the first time. Over the past year, Premiere made significant progress in developing the business. With the IPO on 9 March 2005, we left the past behind for good. We have laid a solid foundation for Premiere s future with a robust and healthy financial structure. We also set the course strategically and structurally by consistently pursuing the strategy commenced in 2002 of focusing on programming and marketing activities. Business units which were not part of our core business were outsourced to selected partners, thereby further increasing Premiere s operational flexibility. Our focus on core competences is clearly shown in the development of the revenue mix: in 2003 Premiere generated 78 percent of total revenues in core business, in 2004 this increased to 89 percent, rising further to 94 percent in was a year of TV innovations that furthered Premiere's aim of entering new growth markets and enabling an enhanced and even more convenient television viewing experience for its subscribers. With the Premiere sports portal, which was launched in June 2005, fans now have a complete overview of the whole Premiere sports programming. Since then we have been able to provide parallel coverage of up to 15 sports events a new record in German television. Premiere also pioneered the innovative video-on-demand service PREMIERE DIREKT+. Premiere s home video shop meets the growing demand for greater individualization in television viewing: Premiere subscribers can choose from a selection of up to 30 top films that can be viewed at any time and are available 24 hours a day. The new HDTV service also shows great potential. Since January 2006, PREMIERE HD has been marketed in Germany and Austria. We are convinced that the new high definition television format is one of the most important TV innovations since the switch to color television. Premiere also set new trends in programming last year and further consolidated its position as the leading TV brand for premium entertainment. Exclusive contracts with all Hollywood majors and key independent studios ensure that Premiere broadcasts the German TV premieres of over 300 films per year. With series, we are now setting the same standard for which Premiere has been renowned for many years with films, showing hit series such as Desperate Housewives. As part of our new strategy for series, Premiere co-financed

6 4 Premiere AG Annual Report 2005 an international production, Rome, for the first time. Unique TV events such as Rome focus the profile of our brand in series and create sustained TV experiences that have a very positive impact on customer loyalty. Premiere also secured important sports rights. In 2006 and 2010 Premiere will be the only German TV broadcaster to show all 64 games of the soccer World Cup live and, additionally, in HDTV. Starting September 2006, we will be broadcasting the next three seasons of the top European soccer league with more exclusivity than ever before: in Germany, the top UEFA Champions League matches will continue to be shown exclusively on Premiere including the match summaries following the live broadcasts. Since February 2006, we have also been broadcasting more prime international soccer with the top matches from England, Italy, Spain, France, Portugal, the Netherlands and Austria. Exclusive programming rights are the foundation for successful pay-tv why else should viewers pay extra for television? Based on this premise, Premiere took part in the bidding process for the German soccer Bundesliga TV rights. We were prepared to pay a substantially higher price for more exclusivity. However, in contrast to how the UEFA allocated the Champions League rights, the German Football Association, DFL, opted for an exploitation model that does not increase exclusivity for pay-tv operators. Premiere would have had to pay some 40 to 50 percent more for an offer similar to the previous exploitation model, which was an unjustifiable increase in costs. It would have entailed spending over half of the entire programming budget on the Bundesliga alone over the next three years for practically the same level of exclusivity. Indeed, compared to the status quo, the exclusivity of the German Bundesliga TV product has even been diluted: for the first time the DFL awarded the live rights twice, with a separate tender for the Internet television rights of all 1st and 2nd Bundesliga games. Premiere has therefore adjusted to the new, non-exclusive scenario. We are in talks with the new rights holders to enable us to broadcast the upcoming Bundesliga seasons in the usual Premiere quality on terms which are reasonable for both subscribers and shareholders. Not only for this reason will 2006 be an important year for Premiere. We face challenges in preparing Premiere for future developments in the media market. It is already apparent that new groupings of operators and platforms will emerge in the next few years. New technologies will enable new business models such as interactive television and advertising formats, and broadband Internet will become established as a third distribution channel alongside cable and satellite. Premiere is in a good position to meet these challenges: we are an innovative TV company with a strong brand, proven programming and marketing competence and over 3.5 million direct subscriber relationships to build on. The management board and staff of Premiere will continue to work for the success of Premiere with great commitment, passion and many new ideas. We thank you for your trust and invite you to continue travelling with Premiere on the path to the future. Sincerely, Dr. Georg Kofler Chief Executive Officer

7 5 Dr. Georg Kofler (born 1957) CEO is Chief Executive Officer of Premiere since February Dr. Georg Kofler is Premiere s largest individual shareholder holding a 13.9 percent share. Before joining Premiere he was chairman of the board at the ProSieben Media AG as well as CEO and shareholder of the HOT Networks AG. Michael Börnicke (born 1960) CFO is Premiere s Chief Financial Officer and responsible for Finance, Human Resources and Investor Relations. He has held this position at a predecessor company of Premiere since Markus Schmid (born 1965) Marketing & Sales has been in charge of Marketing and Sales since April 2003 and a member of the management board since October He is responsible for all activities relating to subscriber acquisition, customer service and consumer technology. Hans Seger (born 1956) Fiction & Special Interest joined Premiere in November 2000 and is responsible as a member of the management board for the Fiction & Special Interest division. In this role, he manages the acquisition of license rights for movies and theme channels as well as the pay-per-view, video-on-demand and HDTV businesses. Carsten Schmidt (born 1963) Sports & New Business has been appointed to the Premiere management board from March 1, 2006 with responsibility for the presentation and production of sports programming, sports rights purchasing, sports betting and gaming as well as interactive business and advertising sales.

8 6 Premiere AG Annual Report 2005 Review and Monitoring report by the Supervisory board of Premiere AG for the business year 2005 Dear Shareholders, As you are aware, Premiere AG, whose registered office is in Unterföhring in the administrative district of Munich, which is entered in the Commercial Register at the Munich Municipal Court under HRB (hereinafter also referred to as the Company ), had its initial public offering on March 9 last year and has since then been quoted in the Frankfurt Stock Exchange s official market (Prime Standard). This is thus the first review and monitoring report by the supervisory board since the Company s IPO. We should therefore first of all like to introduce the supervisory board to you briefly, and will then go on to discuss the supervisory board committees, the monitoring of the management of the company and, finally, following a brief excursion on the subject of Corporate Governance, we will report on the review of the 2005 financial statements and consolidated financial statements and the dependency report. Composition of the Supervisory board and meetings held Composition of the Supervisory board According to the Company s statutes, the supervisory board has three members. In 2005, the members of the supervisory board were initially Mr. Rainer Großkopf, chairman, Mr. Richard Roy, deputy chairman, and Ms. Séverine Michel. At an extraordinary general meeting of the Company s shareholders on February 14, 2005, Ms. Séverine Michel s appointment was recinded with effect from the close of business on March 8, 2005, as proposed by the supervisory board, and Dr. Stefan Jentzsch was elected in her place with effect from the start of business on March 9, 2005 as a new member of the supervisory board for the remainder of her period of office. Also on February 14, 2005, Mr. Kurt Sibold, a management consultant, who was born on July 13, 1949, was elected as the first substitute member for Dr. Jentzsch. The members of the supervisory board since the Company s IPO on March 9, 2005 have therefore been: Mr. Rainer Großkopf, born on November 7, 1943, chairman; Mr. Richard Roy, born on March 5, 1955, deputy chairman; Dr. Stefan Jentzsch, born on December 12, Mr. Großkopf served for many years on the management board of Tchibo GmbH, and brings to the supervisory board exceptional experience in the fields of sales, customer loyalty and marketing, while Dr. Jentzsch, as a former member of the management board of Bayerische Hypound Vereinsbank AG and the current head of the Corporate & Investment Banking Division as well as member of the management board of Dresdner Bank, is well suited, thanks to his special expertise in the financial area, to monitor these aspects of the management of the company by the management board. Finally, Mr. Roy, as the former head of Microsoft Germany, contributes to the supervisory board an understanding for and control of companies in the innovative consumer technologies field. The period of office for the above-mentioned supervisory board members will terminate at the end of the ordinary general meeting of the shareholders in 2009.

9 7 Meetings held The supervisory board was convened in 2005 for altogether four ordinary meetings and one extraordinary meeting. The ordinary meetings were scheduled quarterly, on February 4, 2005 (1st ordinary meeting of the supervisory board financial statements meeting), May 9, 2005 (2nd ordinary meeting of the supervisory board), August 5, 2005 (3rd ordinary meeting of the supervisory board), November 24, 2005 (4th ordinary meeting of the supervisory board). The meeting on August 5, 2005 was embedded in a joint closed session with the management board on August 4/5, 2005 at Tegernsee. At the closed session on August 4, 2005, the management board and the supervisory board discussed in advance of the meeting of the supervisory board that was to take place on August 5, 2005 the company s strategic aims and fields of growth until the financial year 2008 under the aspect of improvement of exclusivity. The matters discussed included the strategic challenges of a successful pay-tv business against the background of increasing digitalisation, the role of advertising-financed private television and the providers of technical infrastructure who aim to take their share in the content market. In addition, the basic principles for the subsequent behaviour as bidder in the tendering process for the Bundesliga rights for the years 2006 to 2009 were defined during the closed session. The extraordinary meeting on November 11, 2005 was convened to consider the tendering process for the Bundesliga rights for the years 2006 to All the members of the supervisory board attended four of the meetings personally, while one supervisory board member voted in writing at one of the meetings. Composition of the committees and meetings held Composition and tasks The supervisory board already at the end of 2005 elected an audit committee and a presidential committee in accordance with the terms of the rules of procedure for Premiere AG s supervisory board. Audit committee Through the establishment of an audit committee, the supervisory board is taking into account the ever increasing demands on the audit and advisory functions in connection with accounting questions, the control of the management board s risk management and the relationship with the external auditors. In this sense, the tasks of the audit committee are a preparatory review of the company s annual financial statements, management report, consolidated financial statements and group management report together with the auditors; an investigation of the risk management performed by the management board; an investigation of the necessary independence of the external auditors, the issuance of audit instructions to the external auditors, the definition of the main focuses of the audit and the conclusion of a fee agreement with the external auditors.

10 8 Premiere AG Annual Report 2005 The audit committee has three members. In the financial year these were initially Mr. Richard Roy, as chairman of the audit committee, Mr. Rainer Großkopf, as deputy chairman, and Ms. Séverine Michel. On the appointment of Dr. Stefan Jentzsch to the Company s supervisory board, Ms. Séverine Michel resigned from the audit committee and was replaced by Dr. Jentzsch. The members of the audit committee since the Company s IPO on March 9, 2005 have therefore been: Mr. Richard Roy, chairman; Mr. Rainer Großkopf, deputy chairman; Dr. Stefan Jentzsch. Presidential committee In addition, the supervisory board has established a so-called presidential committee, whose tasks are to prepare the meetings of the supervisory board; to monitor the implementation of the resolutions passed by the supervisory board or its committees; to define the terms and representation in the conclusion, amendment and termination of service agreements with the members of the management board. The members of the presidential committee since the Company s IPO on March 9, 2005 have therefore been: Mr. Rainer Großkopf, chairman; Mr. Richard Roy, deputy chairman; Dr. Stefan Jentzsch. Number of meetings The supervisory board s audit committee met twice during 2005, namely in a first meeting on February 4, 2005, in a second meeting on November 24, At the meeting on February 4, 2005, which was attended by the external auditors, the audit committee reviewed and discussed with the external auditors the annual financial statements and management report of Premiere AG and the consolidated financial statements and the group management report of the Premiere Group for 2004, in particular in a preparatory capacity. At the second meeting on November 24, 2005, the audit committee obtained explanations from the management board, among other things, on the timetable for the preparation, audit, adoption and main audit focuses for the Company s annual financial statements and the consolidated financial statements of the Premiere Group as of December 31, The presidential committee was continuously involved in 2005 in preparing and following up meetings of the supervisory board. In addition, it was convened in connection with the change in the management board (resignation of Dr. Friedrich-Carl Wachs and appointment of Mr. Hans Mahr).

11 9 Monitoring of the management of the company in 2005 The supervisory board complied with the tasks imposed on it by law, the statutes, the rules of procedure and the Corporate Governance Code during the past financial year 2005 and monitored the management of the company by the management board carefully and on a regular basis. In addition, the supervisory board accompanied the Company s strategic development and all major individual measures in a consultative capacity. In order to monitor management, the supervisory board referred to the annual budget that had been approved for 2005; received reports from the management board in particular on corporate policy, the business planning, profitability, business trends and significant individual measures carried out by the Company; requested the submission of Company documents for inspection; reviewed transactions which, according to the management board s rules of procedure, had to be approved before they were carried out. We should now like to inform you in greater detail about the frequency, subject and methods of the monitoring and review procedures that were performed. Monitoring through reports from the Management board In order to ensure adequate monitoring of the management of the company by the management board, the supervisory board obtained reports at regular intervals during 2005 from the management board, in and outside meetings, about business trends, revenues and the general situation of the Company. This enabled the supervisory board to ensure that it was adequately informed at all times in 2005 about the Company s development and situation. Thus, the supervisory board was informed verbally and in the form of written presentations at all the ordinary meetings of the supervisory board in 2005, i.e. on February 4, May 9, August 5 and November 24, 2005, about the status of the Company s development in general and specifically with regard to the Company s operative business. Reports on the status of the development of the Company in general were provided in this connection by the CEO, Dr. Georg Kofler. The reports on the operative business were rendered by the management board members responsible for their individual areas. Mr. Michael Börnicke informed the supervisory board about the current financial situation (actual compared with prior year and budget, variances between actual and prior year and explanation of the reasons for these variances), including the status of the corporate structure of the Premiere Group, while Mr. Hans Seger elucidated to the supervisory board the development of the programming area (new contracts, highlights), Mr. Markus Schmid, the status and the development of the marketing and sales area (subscriber reports incl. gains and losses, churn rate, marketing measures) and finally Dr. Friedrich-Carl Wachs and later Mr. Hans Mahr, the current situation in the Sports & New Business area. The above-mentioned periodical reporting was supported by the presentation of quarterly reports, which had to be prepared because the Company is quoted in the official market (Prime Standard) of the Frankfurt Stock Exchange. In this way, the supervisory board also succeeded during 2005 in obtaining a meaningful picture of the results of operations, net assets and financial position of the Company on a regular basis.

12 10 Premiere AG Annual Report 2005 At the financial statements meeting of the supervisory board on February 4, 2005, in connection with the discussion of the annual financial statements and with a view to the then imminently pending IPO, the supervisory board obtained explanations from the management board about the Company s annual financial statements and the consolidated financial statements of the Premiere Group as of December 31, 2004 that were to be approved, and a report on the Company s profitability and particularly its equity. During 2005, the supervisory board considered the proposed corporate policies and business planning at the meeting on November 24, The report rendered in this connection by the management board included the financial, capital expenditure and personnel planning of the Company and its affiliated companies, especially Premiere Fernsehen GmbH & Co. KG, for the financial year 2006, and the longer term business planning of the Premiere Group for the financial years 2006 to Also at this meeting, the supervisory board approved the 2006 budget. Review of transactions subject to approval and inspection of documents Not only in order to ensure that the management board reports to the supervisory board at all times about matters and business transactions of the Company and its affiliated companies that have or could have a material impact on the situation, profitability or liquidity of the Company and so that the supervisory board can comply with its obligations as a controlling body for the Company, the supervisory board issued rules of procedure for the management board in advance of the IPO, under which certain kinds of transactions have to be approved in advance by the supervisory board. The rules of procedure also define the management board s informatory and reporting obligations. The rules of procedure were updated once again at the supervisory board meeting on May 9, 2005 and amended in line with the situation following the IPO. Eight major transactions were submitted to the supervisory board in 2005 for review and approval on the basis of the rules of procedure for Premiere AG s management board. At its meeting on May 9, 2005, the supervisory board reviewed the question of the operation of the new Primus Sport GmbH & Co. KG (an agency for sport rights and sport marketing) as a new business activity of the Premiere Group. In addition, the supervisory board called a telephone conference on each occasion to discuss the details of the tendering procedures and the issuance of an offer by the Company for the purchase of the total rights package for the 2010 FIFA World Cup in South Africa (free and pay TV rights etc.) as well as with the acquisition of the media rights for UEFA Champions League for the 2006/ /2009 seasons. The supervisory board furthermore reviewed the outsourcing of the information technology to ATOS Origin GmbH, the sale of the Hamburg and Lübeck Call Centers to walter TeleMedien Holding GmbH, the sale of BLUE MOVIE to erotic media ag and the sale of Creation Club GmbH to PLAZAMEDIA GmbH. Finally, the supervisory board considered at a special meeting on November 11, 2005 and in telephone conferences on December 15/19 and 21, 2005 the management board s bidding strategy in the tendering process for the New Bundesliga contract for the years 2006 to 2009.

13 11 In connection with all subjects submitted to it for resolution, the supervisory board obtained detailed information from the management board through verbal and written reports on the motives, risk, aims and consequences, and on the impact on the Company s results of operations, net assets and financial position. Documents relevant for the decisions relating to transactions requiring approval were made available to the supervisory board by the management board in good time before the resolution was due to be passed. As a result of the submissions and explanations of the management board in the respective meeting or telephone conference, the supervisory board was informed in all cases in sufficient detail so that it was able to reach a well-balanced decision. Thus, the supervisory board for instance at the meeting on November 11, 2005 obtained detailed explanations from the management board on the packages being tendered and the differences between them, as well as their respective impact on the Company s results of operations, net assets and financial position. The supervisory board was not only provided with a presentation on the subject, but also with a market research survey commissioned by the management board from Sport + Markt AG on Soccer on TV an analysis of the core European markets and a market research survey by IFM Medien Analysen GmbH on The soccer Bundesliga: media-analytical forecasts of a new first and second rights situation. If the supervisory board took the view that further data was still required on transactions that were subject to approval, the supervisory board obtained these by making further enquiries. In the review and consideration on the resolution submissions, each member of the supervisory board was able to contribute his own personal knowledge and experience, such as Mr. Großkopf from the sales and marketing field, Mr. Roy from the technical field and Dr. Jentzsch from the financial area. No conflicts of interest arose in 2005 within the supervisory board. Change in composition of the management board The supervisory board used its influence to bring about a change in the composition of the management board in This had the consequence that the appointment of the management board member, Dr. Friedrich-Carl Wachs, was terminated with effect from June 30, 2005 and that Mr. Hans Mahr was appointed as a further member of the Company s management board with effect from September 1, 2005 for a period of four years until August 30, Corporate governance The management board and the supervisory board have issued a separate report on corporate governance, which is also printed in the annual report, to which reference is made here. Review of the 2005 annual and consolidated financial statements and the dependency report The general meeting of the shareholders held on February 4, 2005 elected Pricewaterhouse- Coopers GmbH Wirtschaftsprüfungsgesellschaft, Elsenheimerstraße 31, Munich, as external auditors for Following the merger of PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft under a merger agreement dated March 15, 2005 into Pricewaterhouse- Coopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft Munich Office with registered

14 12 Premiere AG Annual Report 2005 office in Munich (Munich Municipal Court, HRB ), PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft Munich Office, as the transferee legal successor, audited the annual financial statements of Premiere AG, the consolidated financial statements of the Premiere Group, together with the bookkeeping system and the respective management report, and the report of the management board on relationships with affiliated companies during the period from January 1 to March 8, 2005 ( Dependency report ). The audit did not result in any reservations. The external auditors have rendered unqualified auditors reports in each case on the annual financial statements and the consolidated financial statements. Draft copies of the consolidated financial statements as of December 31, 2005 in accordance with IFRS and of the group management report for 2005 and the annual financial statements of Premiere AG as of December 31, 2005 and of the management report for 2005 were issued to the supervisory board at its meeting on February 7, 2006 and explained to it by the management board in a telephone conference on February 10, The final documents that were to be reviewed (annual financial statements, consolidated financial statements, the management reports, the dependency report and the report of the external auditors on the audit of the dependency report) were sent to the members of the supervisory board by courier on February 14, 2006 and were received by them on February 15, 2006 (Mr. Großkopf and Dr. Jentzsch) and February 16, 2006 (Mr. Roy). The audit report by the external auditors was issued to the members of the supervisory board by being dispatched on February 17, The financial statements meeting of the supervisory board that had originally been called for March 3, 2006 had to be cancelled due to weather conditions and had to be postponed until March 19, 2006, so that Premiere AG s management board has extended the supervisory board s deadline for submission of its review report until March 31, At the financial statements meeting on March 19, 2006, which covered in particular the review of the annual and consolidated financial statements, the supervisory board then considered the documents that had to be reviewed, just as did the audit committee of the supervisory board in its preparatory meeting that also took place on March 19, The external auditors participated in both meetings, namely the meeting of the audit committee to review the annual financial statements and the consolidated financial statements and the meeting of the supervisory board that followed this, and reported on the main findings of their audit. In addition, the external auditors provided detailed explanations at the financial statements meeting on the audit reports and provided exhaustive answers to the questions of the supervisory board. The supervisory board has taken affirmative note of the reports of the external auditors. It has no reservations with regard to the independence of the external auditors. The supervisory board concurs entirely with the results of the provisional review by the audit committee and that of the external auditors. The supervisory board sees no reason, following an exhaustive review, to raise any objections to the management of the Company and to the annual financial statements and consolidated financial statements prepared by the management board. The supervisory board therefore approved the annual financial statements of Premiere AG and the consolidated financial statements of the Premiere Group at its meeting on March 19, The annual financial statements of Premiere AG were therefore adopted.

15 13 The management board furthermore prepared a report on relationships with affiliated companies during the period from January 1 to March 8, 2005 in accordance with 312 Stock Companies Act (AktG). The external auditors have audited this report and reported to the supervisory board in writing and verbally to the supervisory board meeting on March 19, 2006 on the results of their audit, and rendered the following unqualified auditors report: Based on our audit performed in accordance with professional care and our assessment, we confirm that 1. the factual information in the report is correct, 2. the consideration of the Company for the legal transactions listed in the report was not unreasonably high. The supervisory board has reviewed the report with regard to its completeness and correctness, and has considered the conclusions of the external auditors. The review did not provide any indications for exceptions. The supervisory board has therefore no reservations with regard to the closing statement by the management board in its report in accordance with 312 AktG and therefore also concurs with the results of the external auditors. Unterföhring March 19, 2006 The Supervisory board Rainer Großkopf (Chairman)

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17 Simply more is not enough. 15

18 16 Premiere AG Annual Report 2005 There s always more. More of this, more of that, but it s always just more of the same. But isn t fascination all about the exceptional? So shouldn t everyone have the opportunity to experience something special, and see the very finest programs exactly when they want? Unforgettable moments only happen when you allow them to. And particularly when it s about something special. Just like on Premiere. Simply more is not enough. We offer an exclusive and varied range of programming. We offer real choice at flexible times. That is the real guarantee of a unique TV experience that gives everyone the freedom to schedule their TV viewing when they want, but without ever missing their favorite programs. Welcome to first-class television.

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20 18 Premiere AG Annual Report 2005 Desperate Housewives screened on PREMIERE FILM in May. Touchstone Television We ll show you something special.