SIMPLIFIED CORPORATE STRUCTURE

Transcription

1 Annual Report 29

2 SIMPLIFIED CORPORATE STRUCTURE As of December 31, 29 1% 1% 1% 1% 47.3% Major subsidiaries of the Highlight Communications AG 8% 1% 1% 1%

3 KEY FIGURES IN EURO MILLION 12/31/29 12/31/28 Non-current assets Film assets Intangible assets Total assets Subscribed capital Equity Equity ratio (in percent) Non-current financial liabilities Current financial liabilities % % Sales Sports Film Sports- and Event-Marketing Others 1/1 to 12/31/ /1 to 12/31/ Earnings before interest, taxes, depreciation and amortization (EBITDA) Amortization, depreciation and impairment Earnings before interest and taxes (EBIT) Earnings before taxes (EBT) Shareholders interests Cash flow from operating activities Cash flow for/from investing activities Cash flow for/from 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 Euro Earnings per share from continuing operations (diluted) in Euro 1/1 to 12/31/ /1 to 12/31/ Employees at closing 1,351 1,725

4 THE YEAR JANUARY, 29 The extraordinary General Meeting of EM.Sport Media AG held on January 28 votes in favor of the new company name Constantin Medien AG. The shareholders also agree to a cash capital increase of about 7.2 million shares. Dr Dieter Hahn is elected to the Supervisory Board. MARCH, 29 With 1.4 million viewers, the Constantin Film in-house production Männersache with Mario Barth in the leading role is the most visited motion picture in the first quarter. APRIL, 29 The Company is trading as Constantin Medien AG since April 6 covering the entire service spectrum of the media group and its segments. On April 23, Deutsche Telekom AG sublicenses its IPTV and Mobile broadcasting rights to the 1 st and 2 nd German Soccer Bundesliga for the seasons from 29/1 until 212/13 to the Constantin Medien Group. Through its subsidiary, Constantin Sport Medien, the Bundesliga live broadcaster LIGA total! is aired since the season kick-off in August and exclusively broadcast via Entertain, the IPTV offer of Deutsche Telekom and via MobileTV platforms from T-Mobile. The Annual General Meeting of Constantin Film AG held on April 21 votes in favor of transferring all shares held by the minority shareholders of Constantin Film AG to Highlight Communications AG (squeeze-out). MAY, 29 The cash capital increase passed in January is successfully executed, with the new shares being placed in the full amount, Constantin Medien AG receives about 14.4 million Euro (before transaction costs). JUNE, 29 On June 3, Constantin Medien AG announces significant budget divergences in the Sports Segment for the entire 29 business year and simultaneously pronounces a potential offset to this shortfall from extraordinary proceeds due to a partial settlement with one of the D&O insurers for claims raised against former company Board Members. At the same time, the Group unveils a new structuring of the Sports Segment streamlining the Segment's management structure, reducing the Group's Management Board and promoting cost-savings. Mr Rainer Hüther, COO Sports, resigns from Constantin Medien AG. Mr Bernhard Burgener, CEO, assumes the responsibilities for the entire operating business of the Group. DSF signs a four-year contract with the TOYOTA Handball Bundesliga including an option to extend for another two seasons. The contract encompasses the TV broadcasting rights, sublicenses and Internet rights as well as national and international distribution. JULY, 29 On July 1, the Annual General Meeting of Constantin Medien AG elects Mr Fred Kogel and Mr Jan P. Weidner to the Supervisory Board. Mr Kogel becomes the Chairman of the Board. On July 3, the PLAZAMEDIA subsidiary, Creation Club (CC) GmbH, is sold to the Premiere group (today: Sky Deutschland group). AUGUST, 29 With the season kick-off on August 7, LIGA total! launches its operations with the live broadcasting of all the 1 st and 2 nd Bundesliga soccer matches and the conference feed. Constantin Medien AG signs a settlement agreement regarding the dircectors liability suits with the D&O primary insurer, CHUBB, on August 27/28 for a gross payment of 3 million Euro to Constantin Medien. SEPTEMBER, 29 Michael Bully Herbig's comedy "Wickie und die starken Männer" hits the theatres, fascinating audiences with 1.2 million viewers on the opening weekend; with the audience growing to nearly 4.9 million by the end of the year. DSF secures broadcasting rights to the BEKO Basketball Bundesliga until 212. The contract starts with the 29/1 season and consists of national and international audiovisual exploitation rights. OCTOBER, 29 The squeeze-out resolution is entered in the Commercial Register on October 7. The minority shareholders' shares are transferred to Highlight Communications AG. Constantin Film AG is delisted; admission to the official trading ends. NOVEMBER, 29 On November 4, Constantin Medien AG signs a final agreement with the D&O insurer, ACE, for a gross payment of 27.5 million Euro to the Company. On November 11, the Group announces the implementation of the new umbrella brand SPORT1 presenting the TV station DSF and the online portal Sport1 in the future. DECEMBER, 29 Constantin Medien AG announces the new centralized marketer; managed by Thomas Deissenberger. At the extraordinary General Meeting of Constantin Medien AG on December 15, the shareholders vote in favor of both settlement agreements with the D&O insurers, CHUBB and ACE, thereby drawing a final line under the actions for damages raised against former board members.

5 THE COMPANY

6 THE COMPANY CONTENT CONTENT THE COMPANY 4 Foreword by the Chairman of the Management Board 7 Boards 8 Report of the Supervisory Board 12 Declaration of Corporate Governance pursuant to 289a HGB new version 16 Constantin Medien AG Share COMBINED GROUP MANAGEMENT AND MANAGEMENT REPORT Business and General Conditions Result of Operations, Financial and Net Asset Positions Employees 5 4. Addendum Report 5 5. Disclosures in the Group Management Report in Accordance with 289 and 315 para. 4 HGB Material Transactions with Related Companies and Related Persons in the Reporting Period Risk Report Opportunities Report 6 9. 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 (HGB) 66 Consolidated Balance Sheet 68 Consolidated Profit and Loss Account 69 Consolidated Statement of Comprehensive Income/Loss 7 Consolidated Cash Flow Statements 72 Changes in Consolidated Equity 74 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 Profit and Loss Account Disclosures regarding Financial Risk Management Segment Reporting Accounting Estimates and Assumptions Financial Commitments, Contingent Liabilities and Other Financial Commitments Relationships with Related Companies and Persons Subsequent Events after the Balance Sheet Date Other Information and Disclosures THE 148 AG-Balance Sheet (HGB) 15 AG-Profit and Loss Account (HGB) COMPANY 151 Finance Calendar Imprint 146 Responsibility Statement 147 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, 29 marked the first business year illustrating the Constantin Medien Group in its new dimension. With the consolidation of the 47.3 percent investment in Highlight Communications AG, our Group presented itself for the first time in a new magnitude with sales of some 5 million Euro. Given the challenging macroeconomic environment, we repositioned the Sports Segment and have set the strategic target at a crossmedia future. In retrospect, we can see that based on the steps taken in the past year, Constantin Medien is on the right track to deliver sustainably solid results in all corporate areas this is our declared aim. Without a doubt, the pleasing business performances delivered by the Film as well as the Sports- and Event-Marketing Segment count among our operating successes. In the Film Segment, the Highlight Communications subsidiary Constantin Film AG once again demonstrated its position as the leading independent German producer and distributor of theatrical, DVD and television films. In a very successful year for the cinema industry, five productions of Constantin Film AG were among the top 1 most successful German films. Our multiple award-winning co-production Wickie und die starken Männer, the latest film from Michael Bully Herbig, was by far the most successful German film with an audience of nearly 4.9 million viewers and ranked third among all films released in Germany. But also the international co-production Pope Joan, the political satire Horst Schlämmer Isch kandidiere! starring Hape Kerkeling or the comedy Maria Ihm schmeckt s nicht! counted among the public's favorites. Thanks to the high quality of our programming library, the business field license trading/tv exploitation delivered satisfactory results despite the intensified cost-savings efforts of the TV stations. Highlight Communications AG's subsidiary TEAM successfully sold the commercial rights regarding the UEFA Champions League and the new UEFA Europa League for the 29/1, 21/11 and 211/12 seasons. Despite the economic and financial crisis, TEAM managed to surpass the high benchmark of the three-year period from 26/7 to 28/9, again generating a significant increase in revenues by about 4 percent for the UEFA. The successful marketing of the world's most important club soccer competitions reflects TEAM's long-standing market expertise on the basis of the established and trustful partnership with the European football association UEFA. Much more difficult was the business performance given by the Sports Segment. The economic downswing and financial crisis together with the consequences of the significant downturn on the advertising market all led to substantial drop in sales at DSF. This was further affected by the permanent structural changes in the sports media market, such as the ever-growing regulations being placed on media contents, which adversely impacted the broadcaster's diversification revenues. The market for production services also felt the economyinduced higher cost awareness by customers. PLAZAMEDIA group being the largest sports production service provider in Germany as well, was hit by this. Nonetheless, the company was able to expand both, the customer base and the spectrum of services especially through the collaboration with Deutsche Telekom regarding the project LIGA total!. The considerable budget divergences and plan deviations in the Sports Segment in the first half of the year necessitated swift and decisive counteractions. This resulted in the comprehensive restructuring and realignment of the Sports business, the streamlining and partial replacement of key management positions as well as extensive cost-reducing efforts. To meet changing market needs, we combined DSF, the leading free-tv sports platform, and Sport1, one of the leading online sports platforms, under one roof. The heart of the realignment is manifested in the creation of a new umbrella brand SPORT1, which will bundle the TV, online and Mobile activities starting April 11, 21. Content networking, the combining of skills, but also greater efficiency and additional revenue opportunities are all advantages of this repositioning. A major success in the Sports Segment in 29 was the acquisition of the sublicensing rights to the 1 st and 2 nd German Soccer Bundesliga from Deutsche Telekom. Within a few months 4

9 we managed, with LIGA total!, to conceptualize and set-up an entirely new premium station in IPTV in terms of both editorial and production technology and launched it successfully on the market. Of considerable economic importance in 29 was the signing of the settlements with two D&O insurers regarding the claims for damages asserted against former Management and Supervisory Board members of our legal predecessor, EM.TV & Merchandising AG, in connection with business transactions conducted in the years 1999 until 21. The extraordinary General Meeting on December 15, 29 voted by almost 1 percent in favor of both settlement agreements, and led to a gross income of 57.5 million Euro in the first quarter 21. This closes an important chapter in wrapping-up of the Company's past. Alongside the Sports Segment's realignment, there were also a number of other important activities and courses of action undertaken by the Group: At the beginning of the reporting year, the extraordinary General Meeting approved by a very large majority the Company's name change to Constantin Medien AG. The new name was well-received by the public. The Holding's structure was streamlined and the Management Board of Constantin Medien AG was reduced from three to two persons. In this context, regrettably, this required the downsizing of nearly 1 percent of the entire workforce in the Sports Segment and in the Holding. An important task in 29 was the strengthening and reorganization of our financing base. This included the cash capital increase executed in the second quarter with cash inflows of some 14 million Euro and the successful refinancing of bank borrowings. In the reporting year, we detached ourselves from the creative agency Creation Club and from other smaller investments. New arrivals to the scope of consolidation included Constantin Sport Medien GmbH, the program operator of the Bundesliga live channel LIGA total! and the creative agency Brandsome GmbH. Dear Shareholders, With sales of 511 million Euro, the Constantin Medien Group slightly surpassed the most recently announced target of about 5 million Euro. Substantial losses suffered in the Sports Segment, whose sales fell almost 23 percent short of the prior year, were compensated through the pleasing performances delivered in the Segment of Film as well as the Sports- and Event-Marketing Segment. This demonstrates that our Group possesses a sound internal risk diversification on the basis of its broad operating activities. On the earnings side, the one-off proceeds from the two settlement agreements more than offset the losses of the Sports Segment. As a consequence, the earnings per share of 12 Euro cents are even above the original target range set at 4 to 6 Euro cents. We are cautiously optimistic for the current financial year 21. In the Film Segment, Constantin Film AG possesses a well-stocked lineup of attractive titles in the business areas of theatrical distribution and theatrical production. In the business field of TV service productions, the conditions are likely to remain difficult. In the Sports- and Event-Marketing Segment, we expect the continuation of the solid business development of previous years. The Sports Segment will profit from the new one-brand strategy and the efficiency improvements undertaken in all areas. An upswing and the recovery of the advertising market is not yet in sight, so that we will act cautiously. Cost-awareness and the permanent optimization of structures and processes will still continue to play an important role within the Group. Concerning operational activities, we will uphold our proven principle of decentralization: We rely on the skills, know-how and the commitment of the Management and the employees across all individual segments and subsidiaries. 5

10 THE COMPANY FOREWORD BY THE CHAIRMAN OF THE MANAGEMENT BOARD Our top priorities still remain sustained growth, stable positive results in all segments and the shareholders' reasonable participation in the Company's success. Finally, I would like to sincerely thank our customers, employees, business partners and of course you, our valued shareholders, for your support in making difficult decisions and for the trust you have placed in us. With best regards Bernhard Burgener Chairman of the Management Board 6

11 BOARDS THE COMPANY BOARDS Management Board As of December 31, 29, the Management Board of Constantin Medien AG was structured as follows: Supervisory Board As of December 31, 29, 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 strategy development for the entire group of companies, the support of major stockholders, M&A activities and Communications as well as company and stock law and Compliance. Since July 1, 29, Bernhard Burgener has also been responsible for the entire operations of the Sports Segment as a consequence of the announced realignment of the Sports Segment and, among others, the related reduction of the Group's Management Board to two persons. In addition, he is responsible for the affiliated company, Highlight Communications AG, where he is CEO of the Board of Directors; for the Film Segment comprising the Highlight Communications subsidiary, Constantin Film AG, where he holds the position of CEO since January 1, 29; and for the Sportsand Event-Marketing Segment, which comprises the Highlight shareholding TEAM, where Mr Burgener is the President (Chairman) of the Board of Directors. Fred Kogel, Chairman of the Supervisory Board Werner E. Klatten, Deputy Chairman of the Supervisory Board Dr Erwin Conradi, Member of the Supervisory Board Dr Dieter Hahn, Member of the Supervisory Board Martin Wagner, Member of the Supervisory Board Jan P. Weidner, Member of the Supervisory Board *For further information regarding the Supervisory Board positions during the year please refer to page 8 of the Report of the Supervisory Board and Note 13 of the Notes to the Consolidated Financial Statements (page 142) Antonio Arrigoni, Member of the Management Board/CFO Antonio Arrigoni has been a Member of the Management Board of Constantin Medien AG since April 1, 28. He is responsible 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. 7

12 THE COMPANY REPORT OF THE SUPERVISORY BOARD REPORT OF THE SUPERVISORY BOARD Fred Kogel, Chairman of the Supervisory Board During 29, the Supervisory Board of Constantin Medien AG 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. On the basis of oral and written reports, the Supervisory Board was in detail concerned with the business development of the AG and of the Group, as well as all significant business issues. The Supervisory Board of Constantin Medien AG consits of six Members, which are elected by the Shareholders' Meeting in accordance with 5 Number 1 of the Articles of Association. The following changes occurred within the Company's Supervisory Board during the year under review: Dr Alexander Ritvay resigned from his position on the Supervisory Board with effect from the end of the extraordinary General Meeting held on January 28, 29. In his place Dr Dieter Hahn, Managing Director of KF 15 GmbH & Co. KG, was elected to the Supervisory Board. The Supervisory Board Members Dr Bernd Thiemann and Dr Hans-Holger Albrecht did not present themselves for re-election after expiry of their terms at the Annual General Meeting held on July 1, 29. In their place, the shareholders elected Mr Fred Kogel, Producer, and Mr Jan P. Weidner, Investment Banker, to the Supervisory Board. On the same day, the Supervisory Board elected Mr Kogel as the new Chairman of the Supervisory Board, thus, succeeding Dr Thiemann. The Supervisory Board currently comprises of the following three committees: The Personnel and Nominations Committee, which convened twice in 29, is responsible inter alia for the employment contracts with Management Board Members and the handling of nominations for the election of new Supervisory Board Members at the Annual General Meeting. It consists of three Members. Dr Bernd Thiemann resigned from the committee during the reporting year; Werner E. Klatten stepped down from his position. At the Supervisory Board meeting held on July 1, 29, Dr Dieter Hahn and Mr Fred Kogel were elected as new Members of the Committee, with Mr Kogel becoming the Chairman and Dr Hahn the Deputy Chairman. Furthermore, Dr Erwin Conradi is still a Member of the Personnel and Nominations Committee. The three-member Audit Committee deals with issues concerning the accounting, the effectiveness of the internal control system, the risk management system and the commissioning of the audit to the independent auditors. The Audit Committee held five meetings in 29. Dr Dieter Hahn and Jan P. Weidner were elected as new Members with effect from July 1, 29. Dr Bernd Thiemann and Dr Hans-Holger Albrecht had previously resigned from the Board. The Chairman of the Audit Committee is Mr Klatten and the Deputy Chairman is Dr Hahn. In its meeting held on July 1, 29, the Supervisory Board resolved to establish a Legal and Compliance Committee consisting of two Members. Mr Werner E. Klatten and Mr Martin Wagner (Chairman) were elected to the Committee. The Legal and Compliance Committee has been constituted on January 19, 21. The Company's Supervisory Board convened at four ordinary and four extraordinary meetings during the reporting year; two of the extraordinary meetings were conducted via telephone. All Members of the Supervisory Board participated in three of the ordinary meetings; two Members were absent with excuse at one of the meetings. All Supervisory Board Members were present at the extraordinary meetings. As in the previous years and as it is common practice, the Members of the Management Board also participated in all meetings in order to report to the Supervisory Board and to answer its questions. And also as in the past years, the Supervisory Board called on the advice of authorized experts, in particular auditors and external consultants. There was also regular contact between the Management Board and the Members of the Supervisory Board in between meetings, keeping them informed about the business situation of Constantin Medien AG and the Constantin Medien Group at all times. This especially applies to the Chairmen of the Management Board and of the Supervisory Board. As it is standard practice, the Supervisory Board also made resolutions by way of circulation between the meetings on the basis of detailed documentary information. 8

13 During 29, the Supervisory Board focused primarily on the following matters : Business situation and performance: At each meeting, the Supervisory Board dealt with the current status of the Company, in particular with the business situation, business performance and liquidity situation of the AG and the Group as well as significant business transactions. To this effect, the Management Board submitted detailed written and oral statements on the business performance within the three operating segments Sports, Film as well as Sports- and Event-Marketing and beyond that the economic development of the Holding. The consultations in 29 particularly addressed the significant budget divergences in the Sports Segment. The Supervisory Board dealt extensively with the internal and external reasons for the budget divergences, the direct strategic, operative and personnel consequences and with the potential alignment of the Segment on a mediumand long-term basis. Restructuring of the Sports Segment/Reduction of the Group Management Board: In connection with the budget divergences in the Sports Segment, the Supervisory Board approved the restructuring and realignment of this Segment. Associated therewith was particularly the streamlining of management structures in the Sports companies and the reduction of the Group Management Board. In the course of this, Rainer Hüther, COO Sports, resigned by mutual agreement from the Management Board of Constantin Medien AG with effect as of the end of June 3, 29. He is, however, acting as a consultant for the Group for a period of 18 months after his resignation and is focusing on the project "LIGA total!". In the course of this change, the Management Board of Constantin Medien AG was reduced from three to two persons; it now consists of Mr Bernhard Burgener (CEO) and Mr Antonio Arrigoni (CFO). In line with the restructuring and realignment of the Segment, the Supervisory Board approved the establishment of the consistent umbrella brand "SPORT1", summarizing the television as well as the online activities. The structure streamlining which led to the downsizing of jobs, the reorganization and repositioning of the Sports companies' management also were essential from the Supervisory Board's perspective in recovering and securing the Segment's profitability in a significantly difficult market environment. In order to closely guide the restructuring, a joint steering committee was formed by the Management and Supervisory Boards, which is made up of Fred Kogel, Dr Dieter Hahn, Werner E. Klatten and Bernhard Burgener. The steering committee met on two occasions during the reporting year. Within the scope of the realignment, the Supervisory Board also dealt with the portfolio adjustment of the Sports Segment during the reporting year; such as the disposal of shares in Creation Club (CC) GmbH and in TRIDEM SPORTS AG. Group financing: Particular attention was given by the Supervisory Board in its consultations to the liquidity situation and the general financial strategy of Constantin Medien AG and the Group. The first half of the year mostly focused on realigning relations with the Company's lending banks as a result of a breach of covenant that had occurred in the meantime in the key financial indicators set forth in the credit agreements. The Supervisory Board approved the replacement of the existing syndicated credit facility in the amount of 3 million Euro with a new agreement with a private lender by way of circulation. Another issue dealt with the scope of further financing options available to Constantin Medien AG and its subsidiaries as part of the medium and long-term refinancing strategy. Directors liability suits: As in the previous years, the Supervisory Board also dealt with the current status of the claims for damages against former board members of the Company. The legal proceedings related to obligations infringements in connection with various business transactions during the years from 1999 until mid-21. The liability actions were brought to a close during the reporting year, because two settlement agreements with both of the D&O insurers involved in the liability actions, CHUBB Insurance Company of Europe SE (CHUBB) and ACE European Group Limited (ACE), were resolved. Further details regarding the settlement agreements can be found in the Combined Group Management and Management Report, Note 1.3; Important events in the 29 business year. The Supervisory Board 9

14 THE COMPANY REPORT OF THE SUPERVISORY BOARD unanimously agreed to the settlement with CHUBB on August 25, 29. The unanimous approval of the settlement with ACE took place on November 2, 29. The Supervisory Board, as well as the Management Board, is also convinced that the settlement agreements are in the interest of the Company. Due to them, an important chapter in coping with the past of the predecessor company of Constantin Medien AG could finally be closed. The Company is to realize a gross payment of 57.5 million Euro from the settlement, being opposed by expenditures of about 12.7 million Euro. With the inflow of funds, the negative impact that occurred in the Sports Segment's earnings during the reporting year could be more than compensated. The settlements not only save additional legal costs of a substantial scale for Constantin Medien AG, but they also set free personnel capacities in management and in dealing with other lawsuits. Statements concerning disclosures contained within the Management Report and the Group Management Report of the Company in accordance with 315 para. 4 HGB Constantin Medien AG disclosed information in the Group Management Report for the 29 financial year in accordance with 315 para. 4 HGB. The disclosures meet the requirements prescribed in the 24/25 EG guideline issued by the European Parliament and the Council of the European Union as of April 21, 24, in respect of tender offers. 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 offer 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 obstacles. The Supervisory Board has examined the relevant information contained within the Combined Group Management Report and Management Report. Specific details in respect of this matter can be found in the Combined Group Management Report and Management Report (Note 5). Audit and adoption of the annual financial statements The financial statements of Constantin Medien AG, the consolidated financial statements and the Combined Group Management Report and Management Report of Constantin Medien AG as of December 31, 29 have been examined by the assigned auditor, PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft and have been issued with an unqualified Auditor's Certificate. The financial statements, consolidated financial statements and the combined Management Report and Group Management Report were submitted in a timely manner to all Members of the Supervisory Board along with the audit reports, enabling a detailed examination of the documents. In its accounts approval meeting held on March 22, 21, the auditor reported the key findings of their audit to the Supervisory Board. The Supervisory Board examined in detail the financial statements of Constantin Medien AG and the consolidated financial statements as well as the Combined 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 24, 21, 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 in the form presented. The set of financial statements for the financial year ended 29 are thereby adopted. The Constantin Medien Group looks back on a financial year abounding with positive and negative events. While a pleasant business performance was delivered in the Film Segment as well as in the Sports- and Event-Marketing Segment despite the difficult market situation in general 29 was adversely impacted by the substantial and the, in this extent, surprising budget divergences in the Sports Segment, which necessitated a fundamental reorganization of the Sports activities. The Supervisory Board, however, is convinced that the measures implemented or initiated by the Management Board, especially for DSF, form a solid foundation for the Sports Segment to get back on a successful track in the foreseeable future especially, when the advertising markets will have succeeded in overcoming their current phase of weakness. 1

15 The Supervisory Board would like to sincerely thank the Management Board and all employees of the Group for their work given in a challenging environment in 29. Their commitment forms the basis for Constantin Medien AG to develop successfully. March 21 The Supervisory Board of Constantin Medien AG Fred Kogel Chairman 11

16 THE COMPANY DECLARATION OF CORPORATE GOVERNANCE PURSUANT TO 289a HGB new version DECLARATION OF CORPORATE GOVERNANCE PURSUANT TO 289a HGB new version Declaration of compliance with the German Corporate Governance Codex The Management and Supervisory Boards provide their report on the corporate governance of Constantin Medien AG pursuant to section 3.1 of the German Corporate Governance Code. The Management and Supervisory Boards of Constantin Medien AG herby confirm that the recommendations of the German Corporate Governance Code in the version dated June 6, 28 have been duly observed, with the exceptions stated in the Declaration of Conformity dated December 28, and that the recommendations of the Code in the version dated June 18, 29 have been duly observed, with the following exceptions: The deductible regulated in the Directors' & Officers' (D&O) liability insurance policy for Members of the Supervisory Board does not correspond to at least 1 percent of the loss up to at least the amount of one and a half times the fixed annual compensation of the Supervisory Board Member (section 3.8 para. 3 of the Code). recognized in the German Corporate Governance Code in June 28. The Management Board contracts currently in effect do not have a duration of more than two years, such that a (subsequent) implementation of the recommendation did not and does not appear to be necessary. The Supervisory Board will certainly examine the incorporation of such a clause upon any eventual contract extension or new contracts with Management Board Members. An age limit for Members of the Management Board has not been specified (section of the Code). Given the age of the two Management Board Members of the Company, the specification of an age limit does not appear to be necessary at the present. In addition, the Company deems that a fixed age limit to be a very rigid instrument that unnecessarily restricts the flexibility of the Supervisory Board in appointing Members to the Management Board; the Supervisory Board will in any case take into account the age of the Management Board Members in their new or reappointed terms. The amount of the deductible as recommended by the German Corporate Governance Code for members of the Supervisory Board as part of the D&O liability insurance policy has also been amended following statutory amendments to the German Law on the Appropriateness of Management Board Compensation. The Company has not (yet) conformed to this recommendation. In line with the implementation of the statutory provisions, the recommendation will be taken into consideration in the Company's existing D&O insurance policy in the coming months and will also be implemented after a decision-making process of the Management and Supervisory Boards, if required. Contracts concluded with Management Board Members do not prescribe a so-called severance payment cap in the event of early termination of Management Board activities without serious cause (section para. 4 and 5 of the Code). The recommendation to include such a severance payment cap of two years in the Management Board contracts was first 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 (section of the Code). It is deemed to comply with this recommendation of the German Corporate Governance Code (submission of interim reports within 45 days) as early as is feasible. In respect of the accounting complexity within the Company and additional requirements in connection with the intended business combinations of the companies Constantin Medien AG, Highlight Communications AG and Constantin Film AG, this time limit shall first be implemented when the optimization of internal processes can be assured so that the required sustainability and reliability can occur. 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 12

17 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 their corporate responsibilities. Here the principles of responsible and good corporate governance determine the actions of management and controlling bodies of the Company. Integrity in dealing with, as well as credibility, reliability and dependability to its employees, business partners and customers, shareholders, investors and the public, form the basic principles of conduct. The Constantin Medien Group is committed to regular, transparent and timely communication. In its Annual, Half-year and Quarterly Reports, Constantin Medien AG regularly issues information concerning the development of its business. In addition, information is published by means of press releases and ad hoc notifications. All reports, notices and presentations as well as comprehensive 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 participate in the Annual General Meeting, to pass comments on 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 shareholder-committed voting representative. 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 Constantin Medien AG are prepared according to the German Commercial Code (HGB). The preparation of the consolidated and separate financial statements is the responsibility of the Management Board. Following the preparation of the consolidated and separate financial statements, they are then audited by the independent auditors appointed by the Annual General Meeting and approved and adopted, respectively, by the Supervisory Board. It was agreed with the auditor that he reports without delay to the Chairman of the Supervisory Board and the Chairman of the Audit Committee about any reasons of exclusion or conflicts of interests as well as any material findings and events discovered during their audit procedures. Controlling system and control indicators The Management Board of Constantin Medien AG is responsible for the strategic course and the control of the Group. The operational responsibility of the subsidiaries of the Sports Segment underlies the particular managing director of each subsidiary. Highlight Communications AG and Constantin Film AG are autonomously managed by the Board of Directors and the Management Board, respectively. Authoritative control indicators comprise 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 1.8 Controlling system and performance indicators on page 32. The internal controlling system of the Constantin Medien Group encompasses all principles, procedures and measures undertaken to assure the effectiveness, profitability and appropriateness of the accounting system as well as to assure the observance of authoritative legal statutes. A detailed description of the elements of the internal control system in place within the Group, which also incorporates the risk management system throughout the Group, can be found in the Combined Group Management and Management Report under section 7.2 Risk Report on page

18 THE COMPANY DECLARATION OF CORPORATE GOVERNANCE PURSUANT TO 289a HGB new version Collaboration between the Management and Supervisory Boards As a German public limited company, the Group parent company Constantin Medien AG has a dual management and control system ("Two-Tier System"), i.e. the Management and Supervisory Boards are separate bodies with strictly separate Members and duties. Since July 1, 29, the Management Board of Constantin Medien AG has been consisting of two Members, Mr Bernhard Burgener (CEO) and Mr Antonio Arrigoni (CFO). 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 monitoring 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 relevant issues associated with planning, business performance, risks status and risks management. The Management Board agrees with the Supervisory Board upon the corporate strategy and discusses its strategic implementation on a regular basis. Documents requiring decisions, in particular the Constantin Medien AG separate financial statements, consolidated financial statements and the audit report are forwarded to the Members of the Supervisory Board in advance of the particular meeting. The internal bylaws governing the Management Board incorporate veto rights on the part of the Supervisory Board for business transactions of fundamental and major significance. The Supervisory Board of Constantin Medien AG consists of six Members since July 27. The Supervisory Board advises and monitors the Management Board in its management of the Company. In addition its responsibilities also include the appointment of Management Board Members. The Supervisory Board has created a Personnel and Nominations Committee, as well as an Audit Committee. The Personnel and Nominations Committee is responsible in particular for contracts with Management Board Members and for nominations for the election of new Supervisory Board Members by the Annual General Meeting. It also works out proposals for Management Board remuneration to the Supervisory Board plenum. The Audit Committee assists the Supervisory Board in its oversight role, in particular in the areas of accounting, internal control system, risk management, the selection and monitoring of the auditors, and compliance as far as they concern accounting principles and risk management. The Chairman of the Audit Committee, Mr Werner E. Klatten, has special knowledge and experience from his professional practice regarding the application of accounting principles and internal control procedures. In addition, Mr Weidner is represented in the Audit Committee as an independent financial expert. In its meeting convened on July 1, 29, the Supervisory Board resolved to establish a Legal and Compliance Committee, comprising of two Members. The Legal and Compliance Committee has been constituted on January 19, 21. The Supervisory Board convened at a total of four ordinary plenary meetings and four extraordinary meetings during 29. The Audit Committee met on five occasions and the Personnel and Nominations Committee met twice. 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. His contract term runs until August 31, 211. Effective April 1, 28, Mr Antonio Arrigoni assumed the position of Chief Financial Officer of Constantin Medien AG. His contract term runs until March 31, 211. The contract with Mr Rainer Hüther was extended on September 25, 27 until December 31, 211. Effective as of the end of June 3, 29, Mr Hüther resigned from the Management Board of Constantin Medien AG. Up until this date, he was responsible for all activities within the Sports Segment 14

19 and also acted as Deputy Chairman of the Management Board since September 1, 28. Remuneration of Management Board Members In accordance with the German Corporate Governance Code, the total remuneration of each Management Board Member consists of both fixed and variable components. The variable remuneration elements are each prescribed differently in the individual contracts; in part this is based on the earnings achieved by the Group and its subsidiaries. In part, the variable remuneration is awarded by the Supervisory Board according to its best judgment. To the extent to which these variable components are determined by the earnings of the Group and its subsidiaries they are contractually limited. short and partly on the long-term success of the Company. Remuneration is paid on a pro rata basis for resignation or entry into the Supervisory Board during the year. Further information on the Management and Supervisory Boards can be found within the section on the Boards (page 7) and within Note 13 Other Information and Disclosures of the Notes to the Consolidated Financial Statements (page 142). Nature of other services paid by the Company The Management Board Members are reimbursed for all out-ofpocket expenses and other costs incurred in performing tasks for the Company as well as a company vehicle made available to them for business and personal use. Moreover, the Company has concluded a Directors' & Officers (D&O) liability insurance policy and an accident/invalidity insurance policy for the benefit of the Management Board Members. Payment guarantee in the event of a change in control relating to Constantin Medien AG There are no payment guarantees to Members of the Management Board of Constantin Medien AG in the event of a change in control relating to Constantin Medien AG. Remuneration to Supervisory Board Members The remuneration of the Supervisory Board Members is regulated by section 12 of Constantin Medien AG s Articles of Association. In addition to reimbursement of expenditures incurred, Members of the Supervisory Board also receive fixed and variable annual remuneration. The fixed remuneration amounts to 2, Euro for Members of the Supervisory Board, 3, Euro for the Deputy Chairman of the Supervisory Board and 6, Euro for the Chairman of the Supervisory Board. The fixed remuneration also takes into consideration membership (5, Euro) and chairing (1, Euro) of Supervisory Board Committees. The variable remuneration is based partly on the 15

20 THE COMPANY CONSTANTIN MEDIEN AG SHARE CONSTANTIN MEDIEN AG SHARE Performance of the capital markets At the beginning of 29 the general downward trend on the German stock market and the international capital markets was continuing as triggered by the international financial and economic crisis, which led to partially sizable drops in stock prices worldwide. While the markets continued to be primarily characterized by the persistent uncertainties and bleak economic data in the first quarter of 29, the second quarter faced a countermovement from the improvement in the overall economic expectations, which brightened the stock market sentiment. With a falling risk aversion, an improvement in the economic early indicators and the anticipated ending of the worst economic crisis of the postwar period, positive signals were increasingly stronger perceived as new aggravating factors. Additional impetus came from the government economic stabilization programs and the expansionary monetary policy of the central banks, which led to a high level of liquidity in the capital markets and historically low interest rates. The growing confidence on the markets also led to a slowdown in the underweighting of risky assets in the portfolios of investors and a steady upwards trend in the stock indices. However, risk factors still persisted regarding the stability of the financial system and the quality of the economic recovery, which once again were brought into focus. Even if the recession ends, the fundamental macroeconomic conditions remain tense. The positive performance delivered during the year resulted in a listing of many leading indices at year end at a level well above the lows of early March. Thus, the German leading index DAX, as an example of the brightened global stock market sentiment, rose by 24 percent in the calendar year 29, closing at 5,957 points on December 31. Since its year low in early March, the German stock exchange barometer gained more than 6 percent in value. The German small cap and media stocks partially recorded even higher gains, although these values were comparatively more affected by the previous stock drops than the blue chip stocks. The small cap index SDAX, which also lists the Constantin Medien shares, gained almost 27 percent, closing at 3,549 points. The German media index (DAXsector Media) closed at 89 points, a gain of more than 42 percent since the beginning of the year. Constantin Medien Share Performance Since April 9, 29, the Company has been listed on the regulated market (Prime Standard) under the new registered company name Constantin Medien AG. Stock exchange abbreviation, ISIN and Securities Identification Number remain exchanged however. In addition, the capital increase, passed at the extraordinary General Meeting in January 29, was successfully placed in May 29 with about 7.2 million shares. Since July 2, 29, the new shares, which have been initially listed under a separate ISIN starting May 14, 29, have been listed under the identification number of the remaining shares. In 29, the Constantin Medien share performance was marked by a volatile downward trend, thus underperforming the general market trend. At the beginning of the year, the share price moved laterally in contrast to the overall market, demonstrating only slight reductions that were compensated by a price increase in early February. In line with the general market trend, the downwards movement occurring until the middle of the second quarter was nearly offset. Starting mid-may 29, the share price development detached itself considerably from the generally observed brightening of the stock market sentiment, demonstrating a gradual downwards movement until the end of the third quarter. Following a brief recovery, the share price continued along its descending movement in the fourth quarter, closing after a countermovement at 2. Euro at the end of the year. As of December 31, 29, the 52-week high stood at 2.75 Euro (February 5, 29), with the 52-week low coming in at 1.62 Euro (September 14, 29). Consequently, at -2. percent the Constantin Medien share price substantially underperformed the comparative German small cap index SDAX (+26.7 percent) and the German media index DAXsector Media (+41.8 percent). In addition to announcing the result of operations for the 29 business year, the Company also published the change in company name, the successfully placed capital increase of 7.2 million shares, the squeeze-out of Constantin Film AG by Highlight Communications AG, the sale of Creation Club, an ad hoc notification concerning the business development in the Sports Segment and the extraordinary income arising from the 16