Major subsidiaries of Highlight Communications AG 47.3%
Key Figures
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
Sales Sports Film
Sports- and Event-Marketing Other Business Activities
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
Shares outstanding in million Share price in Euro
Market capitalization (based on shares outstanding)
Average number of shares outstanding (basic) in million Earnings per share from continuing operations (basic) in EUR Earnings per share from continuing operations (diluted) in EUR
Employees (at closing)
12/31/2012 234.0 135.1 32.7 471.9 85.1 83.7 17.7% 28.6 149.0 1/1 to 12/31/2012 520.5 161.9 293.1 57.6 7.9 140.6 -119.0 21.6 16.5 5,0 127.8 -117.6 -69.9 12/31/2012 77.7 1.52 118.1 1/1 to 12/31/2012 77.7 0.06 0.06 1,488 12/31/2011 248.9 128.1 43.2 544.5 85.1 73.9 13.6% 28.4 205.0 1/1 to 12/31/2011 465.7 155.0 236.7 73.2 0.8 110.6 -105.1 5.5 3.1 -2.6 93.5 -69.2 -83.2 12/31/2011 77.7 1.28 99.5 1/1 to 12/31/2011 77.7 -0.03 -0.03 1,470 in Euro ‘000
rungsanstalt, FFA) for 2011 in early April 2012, the Constantin Film group is awarded the “Goldenen FFA Branchentiger” for the eighth time in the categories “Production” and “Distribution”.
As part of the DFL's decision regarding the broadcasting rights tender for the Soccer Bundesliga and the 2ndBundesliga for the seasons 2013/14 to 2016/17, Sport1 GmbH again acquires the exclusive first exploitation rights in free-TV for the 2ndBundesliga on Fridays and Sundays, Monday’s live match of the 2ndBundesliga, as well as exclusive rights of Friday and Saturday Bundesliga matches for post-exploitation on Sundays. Effective April 1, 2012, Highlight Event AG is sold to today's Highlight Event & Entertainment AG (previously: Escor Casinos & Entertainment SA). As a result, the music activities – Vienna Philharmonic Orchstra and Eurovision Song Contest – are outsourced from the TEAM group. Since then, they have been part of the Segment Other Business Activities. May 2012
As part of its internationalization strategy, Constantin Film AG and David Garrett, co-founder of Summit Entertainment, announce the foundation of Mister Smith Entertainment Ltd. The company operates in the areas fin anc -ing, co-financing and licensing of theatrical films for global distribution. On May 14, 2012, Constantin Medien announces the renewal of the frame work agreement in the areas outside broadcast (OB) and in-house production between the production subsidiary PLAZAMEDIA and the Sky Group until June 30, 2017. The new production framework contract covers services for both Sky Deutschland and Sky Österreich.
June 2012
In early June 2012, Sport1 GmbH and Sky Deutschland agree the distribution of SPORT1+ in HD. The pay-TV channel is available to Sky
Wednesday matches. In addition, ZDF also commissioned PLAZA MEDIA GmbH to provide production technology for unilateral ZDF productions both in Germany and abroad.
September 2012
At the beginning of September 2012, Sport1 GmbH obtains the Ger-man-speaking rights to the US National Football League (NFL) for their pay-TV channel SPORT1+ up to and including the 2014/15 season. Constantin Film AG announces the agreement of an output deal with the US studio DreamWorks. Due to this strategic partnership, Constan-tin Film is able to secure the German-speaking exploitation rights to a variety of productions by DreamWorks studios.
October 2012
The most successful theatrical comedy 2012, “Türkisch für Anfänger” – a production of the Constantin Film subsidiary Rat Pack – is honored with the German Comedy Award at the end of October 2012.
November 2012
On November 22, “Türkisch für Anfänger” is awarded the media prize BAMBI in the category of “Film National”.
At the end of November, Sport1 GmbH obtains an extensive rights package to the US National Basketball Association (NBA) up to and including the 2013/14 season for its pay-TV channel SPORT1+. Dezember 2012
On December 6, 2012, UEFA concludes a new agency agreement with the rights marketer TEAM to market an extended package of commercial rights for the UEFA Champions League, the UEFA Europa League and the UEFA Super Cup for the seasons 2015/16 to at least 2017/18.
The Company
5 Foreword by the Chairman of the Management Board 8 Boards
9 Report of the Supervisory Board
12 Declaration of Corporate Governance pursuant to § 289a HGB
17 Constantin Medien AG share
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 gen eral economic and business environment and the incidence of indi-vidual 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 interpre-tation, reference should be made to the German version, which is the authentic text.
Combined Group Management and Management Report
24 1. Business and general conditions
52 2. Result of operations, financial and net assets positions of the Constantin Medien Group
57 3. Result of operations, financial and net assets positions of the Constantin Medien AG
59 4. Employees 59 5. Addendum report
60 6. Disclosures in accordance with § 289 para. 4 and § 315 para. 4 of German Commercial Code (HGB 62 7. Risk report
69 8. Opportunities report
71 9. Risiks and opportunities of the Constantin Medien AG 71 10. Outlook
Consolidated Financial Statements
78 Consolidated Balance Sheet 80 Consolidated Income Statement
81 Consolidated Statement of Comprehensive Income/Loss
82 Consolidated Statement of Cash Flows 84 Consolidated Statement of Changes in Equity
86 Notes to the Consolidated Financial Statements 86 1. General information
86 2. Accounting policies 88 3. Scope of consolidation
93 4. Accounting and valuation principles
105 5. Notes to selected line items in the consolidated balance sheet
128 6. Notes to selected line items in the consolidated income statement
132 7. Disclosures regarding financial risk management 144 8. Segment reporting
146 9. Accounting estimates and assumptions
148 10. Financial commitments, contingent liabilities, other financial commitments and contingent assets 149 11. Relationships with related companies and persons 150 12. Subsequent events after the balance sheet date 150 13. Other information and disclosures
154 Responsibility Statement 155 Auditor’s Report
Annual financial statements
156 Balance sheet (HGB) 158 Income statement (HGB)
The Company
159 Finance Calendar 2013 159 Imprint
The Company 2012
Foreword by the Chairman of the Management Board
Foreword by the Chairman of the Management Board
Dear Shareholders,
Constantin Medien AG achieved an important objective in the 2012 financial year. After the earnings position already im-proved continually in previous years, our Company reported a positive consolidated net profit. Earnings attributable to share -holders were EUR 5.0 million, up EUR 7.6 million compared to the previous year. We therefore exceeded expectations of a balanced result. The development of Group sales also exceeded the forecast: At EUR 520.5 million, sales were both signifi-cantly above the prior year value of EUR 465.7 million and above the range set for 2012 of between EUR 460 million and EUR 480 million.
This overall pleasing business development confirms Constantin Medien's demand to generate stable positive results as one of the leading media companies in the German-speaking region. The 2012 financial year marks a big step ahead on this path – not only in view of the business development, but also strate-gically because we were able to conclude important agreements.
It is worth mentioning the renewal of the production framework agreements between our production subsidiary PLAZA -MEDIA and Sky Deutschland as well as Sky Österreich up to June 30, 2017, and securing the status quo for SPORT1 when the broadcasting rights for the Soccer Bundesliga for the 2013/14 to 2016/17 match periods were awarded in the second quarter. As part of its internationalization strategy, Con-stantin Film founded “Mister Smith Entertainment Ltd.”, which carries out its activities in the areas financing, financing and licensing of theatrical films for global distribu-tion. In addition, Constantin Film AG agreed an output deal with the US studio DreamWorks. As part of this, Constantin Film was able to secure the German-speaking exploitation rights of many top-class DreamWorks productions. Further, at the end of 2012, the European Football Association UEFA con-cluded a new agency agreement with our rights marketer TEAM to market the commercial rights for the top events UEFA Champions League, UEFA Europa League and UEFA Super Cup for at least three additional seasons from 2015/16 to 2017/18. All of these agreements have significant strategic importance for the further development of our Group in the next years. In addition, they evidence our partners' trust in us,
where a close partnership has frequently existed for many years. All segments except the Segment Other Business Activities contributed to a positive Group’s net profit in the past year:
The Sports Segment recorded an increase in sales by 4.4 per-cent to EUR 161.9 million in a market environment that was particularly challenging for SPORT1. The Segment result went up EUR 0.9 million to EUR 4.9 million. The multimedia strat -egy of our umbrella brand SPORT1, whose objective is to dis-tribute the extensive editorial contents to as many digital channels and platforms as possible, made good progress in 2012. After 1.25 million subscribers in 2011, our pay-TV offer SPORT1+ had 1.65 million subscribers in mid-2012, and the distribution of SPORT1+ was again significantly expanded since August 2012 due to the agreement with Sky. We there-fore became established in the fast-growing pay-TV market in just over two years.
SPORT1.de recorded the strongest year in terms of coverage since the launch of the online platform. The number of visits increased slightly by another 1.3 percent to an average of 31.5 million a month. It becomes ever more apparent that user erences are shifting towards the mobile area: The SPORT1-iPhone/iPad-App had been downloaded more than 1.8 million times by the end of the year, and the android app saw around 626,000 downloads. SPORT1 responded to this trend by con-tinually expanding the content and technical features of its smartphone apps.
2012 was a difficult year for the free-TV channel SPORT1. The strong competition of other channels, especially regarding the broadcast of major events, particularly UEFA EURO 2012™ and the Summer Olympics in London, but also a generally increased competition for coverage due to new male-oriented digital channels led to a reduction in annual market shares. Nevertheless, SPORT1 was again able to generate good cover -age and market share successes with program highlights such as the 2ndSoccer Bundesliga reporting, the Handball European Championship and the Motorcycling World Championship MotoGP.
The Film Segment looks back on a pleasant financial year with an increase in sales of 23.8 percent to EUR 293.1 million,
which exceeded expectations. In addition to higher sales in the theatrical distribution and license trading areas, strong revenue impulses also came from TV service production. In 2012 the Constantin Film Group released 12 films to German cinemas and slightly increased its market share by viewers to as much as 6 percent. The comedy “Türkisch für Anfänger” was the Constantin title with the most viewers, attracting 2.4 million moviegoers. The international 3D in-house production “Resident Evil: Retribution” celebrated international success: The fifth part of the action spectacle brought in approximately over USD 220 million in more than 70 countries throughout the world by the end of the year.
In 2012, the Sports- and Event-Marketing Segment was again able to exceed its contractual performance targets agreed with UEFA in marketing the commercial rights to the UEFA Champions League and the UEFA Europa League despite the deterio -rating global economic situation. Around 170 million fans worldwide watched the dramatic UEFA Champions League final of FC Bayern München versus Chelsea FC in Munich on May 19 on their TV screens – including the heads of state and govern-ment of the most important industrial nations, who even inter-rupted their G8 summit at Camp David in order to experience the penalty shootout live. There could hardly be a more im-pressive way to document the fascination felt for these major club soccer competition.
The fact that, at EUR 57.6 million, the Segment's sales were significantly below the prior year value of EUR 73.2 million, was mainly due to UEFA took over the organization of club competitions itself since July 1, 2012. The Segment result how -ever increased significantly to EUR 14.7 million compared to the prior year. This increase was largely due to the end of the so-called PPA-amortization since the third quarter of 2012, which resulted from Constantin Medien AG's holding in the TEAM parent company Highlight Communications AG. The end of these amortization means that the Segment's high earnings power will in future be reflected more strongly in the Group’s net profit.
Dear Shareholders,
In the current 2013 financial year, we want to maintain the positive development of the Constantin Medien Group.
In the Sports Segment, the focus is on the further develop-ment of the free-TV channel SPORT1 in order to respond to structural changes in the German TV landscape and the resul-ting stronger competition. For this purpose, the managers and employees of our sports companies very committedly developed several new formats and projects in an intensive creative and cross-area process already in the fourth quarter of 2012, which on the one hand aim at enhancing and expanding the profile of SPORT1 as a sports channel and on the other hand will also further strengthen the SPORT1 brand in its multimedia focus. With this, we will continue our path towards a stronger link between free-TV, pay-TV, online, mobile and social media acti-vities under the umbrella brand SPORT1 in order to account for the changing media usage behavior of consumers. It has already become apparent that this path will require increase invest-ments in the Sports Segment in 2013.
In the Film Segment, the Constantin Film group will focus more strongly on English-speaking films and formats both in theatrical production and in TV service production, which appeal to a broad international audience both in terms of themes and cast. In theatrical distribution, we base our strategy on the tried and tested mix of top in-house and co-productions on the one hand, and attractive licensed films on the other hand. It is becoming ever more important to establish brands in the movie business by re-interpreting known material or building on established material by continuing the story of successful plots and popular characters. Following these trends, our distribu-tion line-up for the 2013 theatrical year is expected to com-prise 18 films – including the lavish 3D-CGI in-house production “Tarzan”, the co-production “City of Bones”, which is based on the world bestseller book series “The Mortal Instru -ments”, or the licensed films “Ender's Game” and “Walking with Dinosaurs 3D”.
In the Sports- and Event-Marketing Segment, we will continue our successful marketing strategy for the UEFA club competi-tions in 2013. We are confident that we will be able to meet or exceed the expectations towards our marketer company TEAM regarding the new marketing cycle 2015/16 to 2017/18.
Irrespective of the certainly not easy economic environment in Europe, and of the challenges caused by many structural changes in the media landscape, we assume positive earnings attribut able to shareholders in the Constantin Medien Group for the 2013 financial year.
At all times, people have a need for entertainment, excitement and information. Constantin Medien will continue to service these needs by offering attractive content with the help of strong brands and through multimedia on many different plat-forms.
I would like to thank all employees of our Group for their suc-cessful work in 2012, which as always was performed with spirit, passion and competence. I would like to thank you, dear shareholders, for your continued trust in Constantin Medien AG, which we also want to justify in the new financial year.
With best regards,
Bernhard Burgener
Management Board
As of December 31, 2012, the Management Board of Constan-tin Medien AG was structured as follows:
Bernhard Burgener, Chairman of the Management Board/CEO Mr Bernhard Burgener has been CEO of Constantin Medien AG since September 1, 2008. He is responsible for the strategic development of the entire Group, the support of major stock-holders, M&A activities, Communications as well as Company and Stock Corporation Law and Compliance. Since December 10, 2012, the operational responsibility for Sport1 GmbH and for the entire Sports Segment lies with Mr Bernhard Burgener.
Furthermore, he is also responsible through the affiliated com-pany, Highlight Communications AG, where he is President and Delegate of the Board of Directors, for the Film Segment com-prising the Highlight Communications subsidiary, Constantin Film AG, where he has held the position of CEO since Janu -ary 1, 2009, and for the Sports- and Event-Marketing Segment, which comprises the Highlight Communications’ sub sidi ary TEAM. At TEAM, Mr Bernhard Burgener is the President of the Board of Directors. Mr Bernhard Burgener is also the President of the Board of Directors of Highlight Event & Enter tainment AG (previously Escor Casinos & Entertainment SA), a company of Highlight Communications AG, which bundles the activities of the Segment “Other Business Activities”.
Antonio Arrigoni, Chief Financial Officer/CFO
Mr Antonio Arrigoni has been a Member of the Management Board of Constantin Medien AG since April 1, 2008. He is respon s ible for the areas of Finance, Investor Relations, Accoun ting, Controlling, Internal Audit, Human Resources and Admin -is tration, Legal as well as IT and Process Management. In parallel, since December 14, 2012, Mr Antonio Arrigoni is Man aging Director of PLAZAMEDIA GmbH TV- und Film-Produktion as well as of Constantin Sport Medien GmbH. Apart from that, Mr Antonio Arrigoni is a Member of the Board of Directors of Highlight Communications AG.
Supervisory Board
As of December 31, 2012, the Supervisory Board of Constan-tin Medien AG was structured as follows:*
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 further information regarding the Boards of the Constantin Medien AG, please refer to the Report of the Supervisory Board (page 9), to the Declaration of Corporate Governance (page 12), to the Combined Group Management and Management Report (page 24) as well as in the Notes to the Consolidated Financial Statements, Note 13 Other Information and Disclosures (page 151).
The Company 2012
Report of the Supervisory Board
Fred Kogel, Chairman of the Supervisory Board
In the 2012 financial year, 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 Man -agement Board of Constantin Medien AG, as well as monitoring its activities.
Based on written and verbal reports, the Management Board in-formed the Supervisory Board on a regular, timely and com-prehensive basis about the business development, the planning and the situation of the Company, including risk status and risk management. On the basis of these reports, the Supervisory Board followed in detail the business performance of Constan -tin Medien AG and the Constan-tin Medien Group, as well as all significant business issues.
The Supervisory Board consists of six Members, which are elected by the General Meeting of the Company in accord ance with § 5 Number 1 of the Articles of Association of the Con-stantin Medien AG. In the 2012 financial year, there were no changes occurred within the composition of the Company’s Supervisory Board.
The nominated Members of the Company’s Supervisory Board Mr Fred Kogel and Mr Jan P. Weidner were confirmed by the Annual General Meeting on June 27, 2012, in Munich. After the Annual General Meeting, Mr Fred Kogel was again elected as Chairman of the Supervisory Board.
The Supervisory Board currently comprises the following three committees:
– The Personnel and Nominations Committee, which convened four times in the 2012 financial year, is responsible inter alia for the preparation and negotiation of employment contracts with Management Board Members and for preparing of nomi -nations for the election of Supervisory Board Members at the Company’s General Meeting. It consists of three Members: Fred Kogel (Chairman), Dr Dieter Hahn (Deputy Chairman) and Dr Erwin Conradi.
– The Audit Committee, which convened four times in the 2012 financial year, in particular deals with the areas of accounting, internal control systems, risk management, the
selection and monitoring of the auditors, and compliance within its area of responsibility. It consists of three Mem-bers: 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 2012 financial year, is responsible for the moni -toring and advising of the Management Board in complying with legal requirements and the internal corporate guide -lines. It consists of three Members: Dr Bernd Kuhn (Chair-man), Mr Fred Kogel (Deputy Chairman) and Mr Werner E. Klatten.
The Supervisory Board held a total of five ordinary and one extra -ordinary meeting in the 2012 financial year. All Members of the Board participated in five of the pre-mentioned meetings of the Supervisory Board; in one ordinary meeting there was an excused absence of one Member of the Supervisory Board.
With the exception of one ordinary Supervisory Board meeting, as has been common practice in the previous years, also in the 2012 financial year, all Members of the Management Board participated in the meetings of the Supervisory Board in order to report to the Supervisory Board and to answer its questions. Further, as in the previous years, as well, the Supervisory Board called on the advice of the auditors appointed by the General Meeting for the respective financial year. The Manage ment Board and the Members of the Supervisory Board were in regular contact also between the meetings, and thus the Super -visory Board was kept 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 Manage-ment and Supervisory Boards. 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.
During 2012, the Supervisory Board focused primarily on the following matters:
Business situation and performance: The Supervisory Board informed itself with the business situation of Constantin Medien AG and the Constantin Medien Group in all meetings. To this end, the current business situation in the Group and the Seg-ments as well as the liquidity situation and liquidity planning
Report of the Supervisory Board
were discussed in detail. The Management Board reported on the current business performance, potential deviations from projections and changes in the strategic environment. Special focus in the year under review was put on mediumterm liquid -ity planning.
Strategic development in the Sports Segment: At several of its meetings, the Supervisory Board extensively dealt with the stra-tegic perspectives and further development of the Sports Seg-ment. Different models for the future direction of the Segment were discussed, including partnerships, which could open up new strategic perspectives and business opportunities for the Sports Segment. The Management Board further extensively informed the Supervisory Board of measures and projects aimed at improving the market share development of the free-TV channel SPORT1.
Questions of Corporate Governance: The Supervisory Board dealt with different Corporate Governance questions regarding the guidelines and recommendations of the German Corporate Governance Code. This included inter alia the appropriateness of remuneration of the Management Board, the efficiency re-view of the Supervisory Board and the appointment of the Con-stan tin Medien AG’s Management Board. In this context, Mr Bern hard Burgener was again appointed as Chairman of the Company's Management Board until August 31, 2016. In addi tion, the Supervisory Board appointed Mr Thilo Proff as Member of the Management Board effective from March 1, 2012, responsible for the Sports Segment. This appointment was annulled effective December 10, 2012, because Mr Proff left the Company for personal reasons. The Supervisory Board would like to thank Mr Proff for his work and wishes him all the best.
Legal and compliance questions: The Supervisory Board ple-num, and particularly the responsible Legal and Compliance Committee discussed different legal disputes of Constantin Medien AG. These – in addition to the last pending shareholder lawsuits and the legal challenge – also included the action for damage filed at the High Court of Justice in London by Con-stantin Medien AG against, among others, Bernard Ecclestone, the responsible person of the race series Formula 1. This law-suit is based on the sale of the shares in Speed Ltd. originally held by Constantin Medien AG's legal predecessor via Bayer -ische Landesbank.
Statements concerning disclosures contained within the Management Report and Group Management Report of the Company in accordance with § 315 para. 4 HGB
The Company disclosed information in the Group Management Report for the 2012 financial year in accordance with § 315 para. 4 HGB. The disclosures meet the requirements prescribed in the 2004/25 EG guideline issued by the European Parlia-ment and the Council of the European Union as of April 21, 2004 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 irre-spective 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 Constantin Medien AG 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 (section 6).
Audit and adoption of the annual financial statements The annual 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, 2012 have been audited by the assigned auditor, PricewaterhouseCoopers AG Wirtschafts-prüfungsgesellschaft München (“Auditor”), and have been issued with an unqualified Auditor’s Certificate. The annual financial statements, consolidated financial statements and the Management Report of the Constantin Medien Group and the Constantin Medien AG together with the audit reports, were submitted in a timely manner to all Members of the Supervi-sory Board, enabling a detailed examination of the documents.
In its meeting held on March 20, 2013, the auditors reported on the key findings of their audit to the Supervisory Board. The Supervisory Board examined in detail the annual financial statements of Constantin Medien AG and the consolidated financial statements of the Constantin Medien Group 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 20, 2013, the Supervisory Board raised no objections to the
annual financial statements and the consolidated financial statements of the Constantin Medien AG. It approved the annual financial statements and the consolidated financial statements of Constantin Medien AG in the form presented by the Management Board. The annual financial statements are thereby adopted.
The Constantin Medien Group further improved its result of operations in the 2012 financial year and generated signifi-cantly higher earnings attributable to shareholders. Due to challenging macroeconomic conditions and diverse structural changes in the media environment, a lot was demanded from the Management Board, the Managing Directors and all em-ployees of the Constantin Medien Group. The Supervisory Board would like to sincerely express its appreciation for the work performed and the high commitment for the well-being of our Company.
March 2013
Supervisory Board of Constantin Medien AG
Fred Kogel Chairman
Declaration of compliance with the German
Corpo rate Governance Code (DCGK)
The Management and Supervisory Boards of Constantin Medien AG in December 2012 submitted the annual Declaration of Compliance with the German Corporate Governance Code (“GCGC”) applicable according to § 161 AktG.
In this, the Management and Supervisory Boards of Constantin Medien AG confirm that Constantin Medien AG duly observed the recommendations of the GCGC published by the Federal Ministry of Justice in the official section of the Federal Gazette, in the version dated May 26, 2010 and in the version dated May 15, 2012, since making the last Declaration of Compli-ance in December 2011 with the exceptions stated below (section 5.1.2 and section 7.1.2 since December 2011 and section 5.4.6 since the version dated May 15, 2012, came into force) and that it will continue to do so:
Section 5.1.2 para.2 sentence 3 of the GCGC recommends to determine an age limit for the Members of the Management Board. This section is not met because in light of the age of Management Board Members of Constantin Medien AG, an age limit does currently not seem necessary. In addition, a general age limit is a very rigid instrument that unnecessarily restricts the flexibility of the Supervisory Board in selecting and/or appointing or reappointing Members to the Management Board; moreover, the Supervisory Board will in any case take into account the age of the Management Board Members in their new or reappointed terms.
Section 5.4.6 para.2 sentence 2 of the GCGC recommends that Super visory Board Members be granted a success oriented remunera tion, to be focused on sustainable corporate perfor-mance. This section is not met because § 12 of the Articles of Association of Constantin Medien AG states that the Super -visory Board Members receive a variable remuneration both for shortterm and longterm success of the Company. The Man -agement and Supervisory Boards still deem this remuneration rule to be functionally appropriate because the Supervisory Board remuneration may be partially linked to short-term but is also linked to long-term corporate success. Overall, the com-bination of the different remuneration components result in a balanced incentive structure.
Section 7.1.2 sentence 3 of the GCGC recommends inter alia that quarterly and interim reports shall be published within 45 days of the end of the reporting period. This section is not met because the decentralized corporate structure of the Constan-tin Medien Group does currently not currently allow this 45-day period to be observed. However, it is planned to meet this GCGC recommendation as soon as possible. In respect of the accounting complexity of the Constantin Medien Group, this can only be implemented when the optimization of internal processes can be assured so that this 45-day period is observed with the required sustainability and reliability.
The most recent version of the Declaration of Conformity with the GCGC according to § 161 AktG, as well as previous versions, can be found on the homepage www.constantin-medien.de.
Objectives for the composition of the Company's
Supervisory Board
The Supervisory Board of Constantin Medien AG aims to take into account the following criteria in its composition:
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 par -ticularly on these prerequisites, which are essential for ob-serv ing its legal obligations, when making proposals for ap-pointments to the Supervisory Board. The Supervisory Board must include at least one Member who is independ ent within the meaning of § 100 (5) AktG and who is an expert in the areas of accounting and auditing.
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 nomina-tions, the extent to which mutually complementary profes-sional profiles, and profesprofes-sional and life experience as well as an adequate representation of both genders can be ben efi -cial 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 in-dustry.
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 Commercial Code in its current version) irrespective of its legal form.
5. Internationality
The Supervisory Board shall have at least one Member whose professional experience provides him/her with inter-national expertise in the Company's area of business.
6. Female Supervisory Board Members
The Supervisory Board of Constantin Medien AG currently includes no female Members. During nominations for ap-pointments 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 sug-gested 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. Addition -ally, 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.
With the exception of section 6, the Supervisory Board cur-rently meets these objectives. The objective of section 6 taking account of applicable law as part of appointments and reap-pointments as well as for potentially required legal replace-ment appointreplace-ments is to be implereplace-mented until the Annual General Meeting in 2014.
Currently, the Supervisory Board consists by at least one half of independent Members within the meaning of section 5.4.2 of the GCGC, which the Supervisory Board considers to be appropriate. The Supervisory Board will review the mentioned objectives according to the new version of the GCGC dated May 15, 2012, before the next appointments or reappointments, and make adjustments if necessary.
In addition, the Supervisory Board reviews each of these objectives regularly.
Information regarding corporate governance
practices
Principles
The Management and Supervisory Boards work together in good faith for the benefit of the Constantin Medien AG 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 princi-ples of responsible and good corporate governance determine the actions of management and controlling bodies of the Con-stantin Medien AG. Integrity in dealing, as well as credibility, reliability and dependability with its employees, business part-ners and customers, shareholders, investors and the public form the basic principles of conduct.
The Constantin Medien Group is committed to regular, trans-parent and timely communication. In its Annual, Half-year and Quarterly Reports, Constantin Medien AG regularly issues in-formation concerning the financial situation and development of its business. Moreover, information is published by means of press releases and ad-hoc notifications.
All reports, notices and presentations as well as comprehensive information about the Constantin Medien AG are made
avail-able by the Company on its homepage medien.de.
Shareholders and General Meeting
The shareholders of the Constantin Medien AG are entitled to exercise their rights at the General Meeting, where they may cast their votes. Each shareholder is entitled to participate in the General Meeting, to voice their opinion on individual agenda items, to ask questions and to propose motions. The Constantin Medien AG simplifies the process by which share-holders may exercise their voting rights through the appoint-ment of a shareholder-committed voting representative.
Accounting and year-end audit
The Constantin Medien AG prepares its consolidated financial statements and consolidated interim financial statements in conformity with the International Financial Reporting Stand -ards (IFRS), as adopted by the European Union. The annual financial statements of Constantin Medien AG are prepared according to the German Commercial Code (HGB). The prepa-ration of the consolidated and annual financial statements is the responsibility of the Management Board. Following the preparation of the consolidated and annual financial state-ments, they are audited by the independent auditors appointed by the General Meeting and approved or 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 of 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 respon -sible for the strategic course and the control of the Group. The operational responsibility of the subsidiaries of the Sports Seg-ment underlies the particular managing director of each sub-sidiary. Highlight Communications AG, Team Holding AG and Highlight Event & Entertainment AG (formerly Escor Casinos & Entertainment SA), are autonomously managed by the relevant Board of Directors and Constantin Film AG by the Management Board. Authoritative control indicators comprise of financial performance indicators and non-financial performance indica-tors (based on the respective business models of the
indivi-dual segments). Detailed information about the controlling system and performance indicators can be found in the Com-bined Group Management and Management Report under section 1.5 ”Controlling system and performance indicators” (page 30).
The internal control system of the Constantin Medien Group encompasses all principles, procedures and measures undertaken to assure the effectiveness, profitability and appropriate -ness of the internal and external accounting system and contributes to compliance with authoritative legislation. A detailed description of the elements of the internal control system within the Group, which also incorporates the risk man -agement system throughout the Group, can be found in the Com bined Group Management and Management Report under section 7.2 (page 62).
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 sys-tem (“Two-Tier Syssys-tem”), i.e. the Management and Supervisory Boards are separate bodies with strictly separate Members.
From July 1, 2009, to February 29, 2012, the Management Board consisted of two Members: Mr Bernhard Burgener, the Chairman of the Management Board, and Mr Antonio Arrigoni, the Chief Financial Officer. On March 1, 2012, the Manage-ment Board division sports was added to the Board, for which the new Management Board Member Mr Thilo Proff was respon -sible. Mr Thilo Proff left the Management Board of Constantin Medien AG for personal reasons on December 10, 2012. Since then, this committee again consists of two Members. The Man -agement 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 de-termination 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 Constantin Medien AG and Group relevant issues associated with planning, business per-formance, risk status and risk management. The Management Board agrees with the Supervisory Board on the corporate strat -egy and discusses its strategic implementation at regular
intervals. Documents requiring decisions, in particular the Constan tin Medien AG annual financial statements, consolidated finan -cial statements and the 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 significance.
The Supervisory Board of Constantin Medien AG consists of six Members. The Supervisory Board advises and monitors the Man agement 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 Nominati-ons Committee, an Audit Committee and a Legal and Compli-ance Committee. The Personnel and Nominations Committee is responsible in particular for preparing and negotiating con-tracts with Management Board Members and for nominations for the election of the Supervisory Board Members by the 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 monitor -ing role, in particular in the areas of account-ing, internal con-trol system, risk management, the selection and monitoring of the auditors, and compliance in its area of responsibility. The Chair man of the Audit Committee, Mr Jan P. Weidner, is an inde pendent financial and capital market expert with special knowledge and experience regarding the application of ac-counting 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 2012 financial year, the Supervisory Board convened at a total of five ordinary and one extraordinary Board meetings. The Audit Committee, according to schedule, met on four occasions, the Personnel and Nominations Committee met on four occasions and the Legal and Compliance Committee met on four occasions.
The Chairman of the Supervisory Board explains the activities of the Supervisory Board and its committees in its report pre-sented each year to the shareholders in the respective Annual Report of Constantin Medien AG.
Management Board contractual terms
Mr Bernhard Burgener has been a Member of the Management Board of Constantin Medien AG since September 1, 2008, and has since then acted as Chairman of the Management Board. His contract term initially ran to August 31, 2011 and was ex-tended on November 10, 2010 until August 31, 2013. Based on a resolution passed by the Supervisory Board of Constantin Medien AG on December 10, 2012, Mr Burgener was appoin-ted as Chairman of the Management Board beyond August 31, 2013 until August 31, 2016 and his employment contract was revised accordingly.
Mr Antonio Arrigoni has been the Chief Financial Officer of Constantin Medien AG since April 1, 2008. His contract ran until March 31, 2011. On August 18, 2010, Mr Arrigoni was appointed as a Management Board Member by the Supervisory Board of Constantin Medien AG for a term extending beyond March 31, 2011 until June 30, 2014 and his employment contract was revised accordingly.
Report on Management Board remuneration
In compliance with the GCGC, the monetary remuneration components for each Management Board Member consist of both fixed and variable components. The variable remuneration components consist of a performance-based bonus (“Bonus 1”) set each year by the Supervisory Board at its dutiful discretion and by taking into account the result of the past financial year, and of a multi-year bonus (“Bonus 2”), whose assessment base, among others, is inter alia oriented on the development of the Constantin Medien AG share price and the results of the Group in this period. The Supervisory Board also sets Bonus 2 at its dutiful discretion. These variable compen-sation components are contractually limited. The contracts of the Management Board Members also contain a so-called severance payment cap in the event that the contract is prema -turely terminated without due cause.
The Management Board Members are reimbursed for all out-of-pocket expenses and other costs incurred in performing tasks for the Constantin Medien AG. In addition, a company vehicle is made available to each of them for business and personal use.
There are no payment guarantees to Members of the Manage-ment 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 defined in § 12 of the Articles of Association of Constantin Medien AG. In addition to reimbursement of expenditures incurred, Mem-bers of the Supervisory Board also receive fixed and variable remuneration. The fixed remuneration amounts to 20,000 Euro for Members of the Supervisory Board, 30,000 Euro for the Deputy Chairman of the Supervisory Board and 60,000 Euro for the Chairman of the Supervisory Board. For each member-ship in Committees, Supervisory Board Members receive an additional fixed remuneration. The fixed remuneration amounts to 5,000 Euro for a Member of the Committee, 7,500 Euro for
the Deputy Chairman of a Committee and 10,000 Euro for the Chairman of the Committee. The variable remuneration for Supervisory Board Members is based partly on the short-term and partly on the longterm success of the Company. Remu -neration is paid on a pro rata basis for entry into or resig nation from the Supervisory Board during the year.
Further information about the Management and Supervisory Board remuneration can be found in the Combined Group Man -agement and Man-agement Report under section 1.7 ”Remu-neration Report” (page 32).
The Company 2012
Constantin Medien AG share
Constantin Medien AG share
Performance of the capital markets
In the stock market year 2012, the German stock market and the international capital markets were marked on the whole by a volatile upward movement. The recovery already initiated in 2011 due to extensive political and financial support measures at first continued but then culminated in the second quarter 2012 in a volatile downward movement. In the further course of the year, an upward movement reasserted itself independent of any signs of a global weakening of the economy, which shifted key leading indexes closer to old record levels. Markets in 2012 were first of all marked by attempts to find a politico-economic solution to the financial and debt crisis in Europe, a per sistently low interest rate and the willingness of the central banks to make significant interventions and acquisitions of govern ment bonds. In the Eurozone, dampening effects further limited debts and impacted on uncertainties surrounding the continued existence of the monetary union. Also in the stock market year 2013, the focus will remain on risk factors such as national debt, economic growth as well as the stability of the monetary union.
The upward movement on the capital markets resulted in a listing of leading indices at year-end at a level well above the share prices posted at the beginning of the year. For instance, the German leading index DAX in the calendar year 2012 was able to grow by approx. 29.1 percent, closing at 7,612 points on December 31. The small caps and media stocks on the German stock market also showed a positive performance. The German small cap index SDAX, which also includes the Con-stantin Medien share, improved by 18.7 percent, closing at 5,249 points. The German media index (DAXsector Media) also closed at a more solid 183 points at the end of December 2012 after an increase of 46.4 percent delivered during the course of the year.
Constantin Medien share performance
In the financial year 2012, the Constantin Medien share's performance was marked on the whole by a volatile upward move -ment. At the beginning of the year, the share price initially recovered considerably in line with the overall market, which in the second quarter of 2012 culminated in a downward
move-ment, which partially offset the initial price increases. In the second half of the year, the share's performance was again marked by a slight upward movement. Consequently, at an increase of 19.0 percent the Constantin Medien AG share per-formed in line with the German small cap index SDAX (+18.7 percent), however not as strong as the German media index DAXsector Media (+46.4 percent). The Constantin Medien share closed at EUR 1.52 at the end of the year. As of De-cember 31, 2012, the 52-week high stood at EUR 1.80 (March 29, 2012) and the 52-week low came in at EUR 1.19 (January 18, 2012). In the remaining course after the balance sheet date, the Constantin Medien AG's share price followed an upward movement. The share price closed at EUR 1.73 on February 28, 2013.
In addition to publishing the business figures in the 2012 financial year, the Company also focused on the renewed acquisition of exclusive first-exploitation rights in free-TV of Friday and Sunday 2nd Soccer Bundesliga matches, the 2nd Bundesliga live match on Monday and also exclusive rights to Friday and Saturday Bundesliga matches for post-exploitation on Sunday by Sport1 GmbH, the renewal of the production framework agreement of the subsidiary PLAZAMEDIA GmbH TV- und Film-Produktion with Sky Deutschland and Sky Austria in the areas OB and in-house production up to mid-2017, the further distribution of the pay-TV channel SPORT1+ on the Sky platform and in the channel offerings of A1 TV in Austria. Fur-thermore, changes to the Management of subsidiaries and in the Management Board of Constantin Medien AG were an-nounced. In the Film Segment, the subsidiary Constantin Film AG again received an award from the German Federal Film Board (Filmförderungsanstalt, FFA) as the most successful pro-ducer and distributor in Germany. As part of its internationali-zation strat egy, Constantin Film AG together with David Garett founded “Mister Smith Entertainment Ltd.”, which carries out its activ ities in the areas financing, co-financing and licensing of theatrical films for global distribution. In addition, Con-stantin Film AG in September announced the output deal with the US studio DreamWorks. As part of this, Constantin Film was able to secure the German-speaking exploitation rights to a variety of top productions by the DreamWorks studios, shot up to December 31, 2016. In the Sports- and Event-Marketing Segment, the subsidiary TEAM succeeded in renewing the agency agreement with the UEFA until 2018.
In the financial year 2012, approximately 23.2 million Con-stantin Medien shares were traded on the German stock exchanges (a daily average of 0.09 million units). Subse-quently, the trading volume decreased by 24.9 percent com-pared to the prior year's period. Due to lower trading volumes compared with the same period last year, the stock turn rate for shares outstanding over a twelve-month period decreased
to 0.30 (prior year: 0.39). The position of the Constantin Medien share in German stock exchange rankings of all MDAX and SDAX listings stood at ranking number 101 as of December 31, 2012 (prior year: 101) in respect of trading volume over the last twelve months, or at ranking number 104 (prior year: 103) for the so-called free float market capitali-zation.
XETRA closing prices of the Constantin Medien share compared to SDAX and DAXsector Media
Comparative indices indexed to Constantin Medien's closing price as of December 31, 2011
12/31/11 3/31/12 6/30/12 9/30/12 12/31/12 2.00 1.50 1.00 0.50 0.00
Constantin Medien AG SDAX DAXsector Media
Share capital and shareholder structure
The Constantin Medien AG's share capital did not change during 2012, amounting to around EUR 85.1 million as of December 31, 2012. As a consequence of the full consoli -dation 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, 2012. After
deducting of these treasury shares, there were approximately 77.7 million shares outstand ing as of the balance sheet date.
There were no material changes to the shareholder structure of Constantin Medien AG in the financial year 2012. The free float of the Constantin Medien share stood at 57.0 percent of share capital as of December 31, 2012.
TREASURY SHARES1 KF 15 GmbH & Co. KG DR ERWIN CONRADI BERNHARD BURGENER DR DIETER HAHN FREE FLOAT
1Predominantly held via the Highlight Communications AG
8.7% 18.7% 5.9% 57.0% 6.7% 3.0%
Shareholder structure as at December 31, 2012
Subscribed capital 85.1 million shares
Investor Relations activities
The focus of Constantin Medien Group's investor relations activ -ities lies in the comprehensive and timely exchange of infor-mation 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 per-formance and perspectives. Furthermore, extensive informa-tion concerning the Constantin Medien Group is provided on our website under www.constantin-medien.de.
In addition to individual talks with institutional investors, Con-stantin Medien AG was also available to interested parties at the German Equity Capital Forum. Furthermore, numerous individual inquiries from private investors were processed by our Investor Relations department. Alongside participation in events for analysts and investors, it is our objective to support the highest possible number of analysts.
The Constantin Medien share is currently being actively moni-tored by notable research institutions. In the last twelve months, the following six different institutions published studies on Constantin Medien AG:
– Close Brothers Seydler Bank – Deutsche Bank
– DZ Bank – Matelan Research – WestLB
Additional Constantin Medien AG capital market
securities
The price of the 5.25% convertible bond 2006/2013 in creased by 5.1 percent in the financial year 2012, closing at EUR 5.90. As of February 28, 2013, the bond traded at EUR 6.08. Each convertible bond entitles to a conversion into 1.0123 Constantin Medien AG shares. The balance of convertible bonds outstanding totals 0.4 million bonds. Beyond that, the Constantin Medien Group itself held an additional 4.6 million bonds.
The shares of Highlight Communications AG, a company of the Constantin Medien Group, showed an increase of 15.4 percent in the 2012 financial year, underperforming the benchmark indices. The share price closed at EUR 3.98 on December 31, 2012. As of February 28, 2013, the shares traded at EUR 4.21.
On October 13, 2010, Constantin Medien AG issued a corpo-rate bond with a volume of EUR 30 million in the form of a private placement at institutional investors in Germany and abroad. The bond has a term of five years and accrues interest at 9.0 percent p.a. The corporate bond was included as a follow-through by third parties in the open market of the Stock Exchange.
DE0009147207/914720 CH0006539198/920299 DE000A0GQKR4/A0GQKR DE000A1EWS01/A1EWS0
SDAX, DAXsector Media
EUR 1.52 / 1.80 / 1.19 EUR 3.98 / 4.13 / 3.24 EUR 5.90 / 6.00 / 5.00 102.1 / 104.5 / 91.0 percent 85.1 million shares 77.7 million shares 0.4 million shares EUR 29,000 EUR 118.1 million EUR 183.5 million EUR 2.2 million EUR 29.6 million ISIN/Exchange abbreviation
– Ordinary share (Prime Standard Segment)
– Highlight Communications AG share (Prime Standard Segment) – Convertible bond 2006/2013 (Regulated market)
– Corporate bond 2010/2015 (Open market)
Indices
Closing rate 12/31/2012/52-week high/52-week low – Constantin Medien AG (Xetra)
– Highlight Communications AG (Xetra) – Convertible bond 2006/2013 (Frankfurt) – Corporate bond 2010/2015 (Frankfurt)
Share capital 12/31/2012 Shares outstanding (12/31/2012) Convertible bond 2006/2013 outstanding Corporate bond 2010/2015 outstanding
Market capitalization (related to shares outstanding as of 12/31/2012) – Constantin Medien AG (Xetra)
– Highlight Communications AG (Xetra) – Convertible bond 2006/2013 – Corporate bond 2010/2015
Information on Constantin Medien securities as of December 31, 2012
In the 2012 financial year, the Company was notified by Members of the Management and Supervisory Boards of the
following reportable purchase and sale transactions:
Name Werner E. Klatten Date of transaction 12/7/12 Transactions Transaction Sale Security Share Number of shares 23,000 Share price in EUR 1,5111 Total volume in EUR 34,755.62
Directors’ Dealings/Shareholdings of Board Members as of December 31, 2012
Board
The Board Members, Mr Bernhard Burgener (Chairman of the Management Board), Dr Dieter Hahn (Supervisory Board Member) and Dr Erwin Conradi (Supervisory Board Member) each held a direct or indirect holding in shares or share enti tlements exceeding 1 percent of the share capital as of Decem
-ber 31, 2012. The num-ber of shares of the bodies and persons related to them as of December 31, 2012, are presented in the following table. No share entitlements associated with op-tion rights for Board Members exist.
Board Management Board Supervisory Board Number of shares 5,050.000 6,279 0 10,000 5,735,950 2,543,000 8,470 0 Shareholdings of Board Members as of December 31, 2012
Name Bernhard Burgener Antonio Arrigoni Fred Kogel Werner E. Klatten Dr Erwin Conradi Dr Dieter Hahn Dr Bernd Kuhn Jan P. Weidner
1. Business and general conditions
1.1 Group structure and business activities
Constantin Medien AG is an internationally operating media company and based in Ismaning near Munich. The company is focused on the Sports Segment and, via its holding in the Swiss media company Highlight Communications AG, on the Segments Film, Sports- and Event-Marketing and the Segment Other Business Activities formed as of July 1, 2011.
As parent company, Constantin Medien AG is the controlling holding company. As controlling holding company with the areas Finance, Accounting, Controlling, Internal Audit, Com-munication, Investor Relations, Human Resources and Legal, Constantin Medien Group provides intercompany services. Via its 100-percent subsidiary Constantin Sport Holding GmbH, it holds a 100-percent share in each of the companies in the Sports Segment.
Highlight Communications AG is a stock corporation according to Swiss law, which has been listed on the Frankfurt Securities Exchange since 1999. Its holdings include 100-percent hol-dings in Constantin Film AG, Rainbow Home Entertainment AG, Pratteln/Switzerland, Rainbow Home Entertainment Ges.m.b.H., Vienna/Austria as well as in Team Holding AG, Lucerne/ Switzer-land. In addition, it holds a 59,89-percent share in Highlight Event & Entertainment AG (until May 11, 2012 Escor Casinos & Entertainment SA), Düdingen/Switzerland, which is listed on the Swiss stock exchange (SIX Swiss Exchange).
The Segment Sports covers the activities in the TV area with the free-TV channel SPORT1 and the pay-TV channel SPORT1+ as well as in the online area with the sports portal SPORT1.de. In the IPTV area, the subsidiary Constantin Sport Medien ope -rates the Bundesliga live channel LIGA total! as an independent live program. PLAZAMEDIA is another major Group sub sidiary and offers comprehensive services in the field of production together with its subsidiaries. In the creative area, the agency BRANDSOME covers broad services including Entertainment Media, Corporate Media and Cross Media. In addition, the cen-tralized marketer Constantin Sport Marketing is responsible for the integrated and cross-platform marketing of the Group-owned brands in the Sports Segment and also acts as a third-party marketer for external providers and their platforms.
The Segment Film contains the activities of Constantin Film
AG and its subsidiaries as well as the Highlight Communications subsidiary Rainbow Home Entertainment. The Constantin Film group is the most important independent German producer and distributor of theatrical films. Its operations encompass the production of films as well as the exploitation of in-house pro-ductions and acquired film rights. In-house film propro-ductions are usually distributed worldwide, while third-party productions are essentially exploited in German-speaking countries. In this, all steps along the exploitation chain are utilized starting from theatrical distribution, right through to DVD/Blu-ray and up to television. Apart from theatrical films, the Constantin Film group creates fictional and non-fictional productions for German and foreign TV stations. For purposes of exploiting the video rights for in-house and licensed films, Highlight Communica-tions AG has its own distribution organization. In Switzerland and Austria, distribution is performed by the Rainbow Home Entertainment companies. Distribution on the German market is conducted by Highlight Communications (Deutschland) GmbH in co-operation with Paramount Home Entertainment.
The Segment Sports- and Event-Marketing includes the activi-ties of Team Holding AG (TEAM) and its subsidiaries. The TEAM group specializes in the global marketing of international major sports events. Being one of the world's leading agencies in this field, it exclusively markets on behalf of the European Football Association (UEFA), the UEFA Champions League as well as the UEFA Europa League and the UEFA Super Cup. Up to March 31, 2012, TEAM also held the marketing mandate to the Eurovision Song Contest and the Vienna Philharmonic Orchestra via its 100-percent holding in Highlight Event AG.
The Segment Other Business Activities includes the activities of Highlight Event & Entertainment AG. On April 1, 2012, High -light Event & Entertainment AG acquired all shares of High-light Event AG from Team Holding AG. Within this acquisition, it also took over the marketing mandate of the Eurovision Song Contest and the Vienna Philharmonic Orchestra, thus achieving entry in event- and entertainment business. In addition, the Highlight Event & Entertainment group via its subsidiary Escor Automaten AG carries out its activities in the gaming machines business.
Up to November 29, 2012, Highlight Event & Entertainment AG also held a 50.004 percent holding in the full-service agency Pokermania GmbH located in Cologne, which specia lizes in the development of online-gaming business models, as well as on
the social games market. This holding was sold to the Highlight Communications subsidiary Rainbow Home Enter tainment AG. However, the activities of Pokermania are still included in the Segment Other Business Activities.
Others includes the activities of the holding company Con-stantin Medien AG and the financing activities of EM.TV Finance B.V.
1.2 Important events in the 2012 business year
Changes to the Management Board of Constantin Medien AG and in the Management of the Group's sports companies. On March 1, 2012, Mr Thilo Proff was appointed as COO Sports for Constantin Medien AG and in this role was respon-s ible for all activitierespon-s bundled in the Group'respon-s Sportrespon-s Segment. From March 1, 2012, he also took over Management of Sport1 GmbH and Constantin Sport Medien GmbH. After the resigna-tion of Florian Nowosad, he also became responsible for the Management of PLAZAMEDIA GmbH TV- und Film-Produktion. Mr Thilo Proff resigned from his positions in the Constantin Medien Group for personal reasons on December 10, 2012. Since then, the operational responsibility for Sport1 GmbH and the entire Sports Segment of Constantin Medien AG underlies Mr Bernhard Burgener, the Chairman of the Management Board of Constantin Medien AG. In addition to his role as CFO of Constantin Medien AG, Mr Antonio Arrigoni has been responsible for the Management of PLAZAMEDIA and Con-stantin Sport Medien since December 14, 2012.
There was also a change in the Commercial Management of the Sports companies: On December 14, 2012, Mr Leif Arne Anders, until then Commercial Manager of SPORT1, took over as the Commercial Director of SPORT1 and Constantin Sport Mar keting, and Mr Markus Pieper, until then manager of the areas finance and accounting at PLAZAMEDIA, took over as the Commercial Director of PLAZAMEDIA and Constantin Sport Medien.
SPORT1 produces sport contents for teletext and HbbTV offers of ProSiebenSat.1
In February 2012, Sport1 GmbH announced its co-operation with ProSiebenSat.1 Digital in the area of editorial services. The agreement comprises the provision of editorial sports contents for the teletext offers of the channels SAT.1, Sieben, kabel eins, sixx and further teletexts produced by Pro-SiebenSat.1 Digital as well as the HbbTV offers by ProSieben,
SAT.1 and kabel eins.
SPORT1 to remain free-TV Bundesliga channel until 2017 As part of the DFL's decision on April 17, 2012 regarding the broadcasting rights tender for the Soccer Bundesliga and the 2ndBundesliga for the seasons 2013/14 to 2016/17, Sport1 GmbH again acquired the exclusive first exploitation rights in free-TV for the 2nd Bundesliga on Fridays and Sundays, Mon-day’s live match of the 2ndBundesliga, as well as exclusive rights of Friday and Saturday Bundesliga matches for exploi tation on Sundays. By means of the renewed acquisition of the rights packages Sport1 GmbH was able to secure one of its core rights for the coming years.
However, Constantin Sport Medien GmbH will not be able con-tinue as operator of the Bundesliga channel LIGA total! after the 2013/14 season. Thus, the company will largely cease pre-vious operations at the end of the Bundesliga season 2012/13. In this context, SPORT1 and PLAZAMEDIA will not provide editorial or production technology services as part of the LIGA total! project from the future rights period.
SPORT1 agrees two-year contract with the Beko Basketball League until the 2013/14 season
Sport1 GmbH and the Beko Basketball League announced on August 3, 2012, that their partnership would continue until the 2013/14 season: starting with the match period 2012/ 2013, SPORT1 produces 50 Beko BBL matches each season and broadcasts them on the platforms SPORT1, SPORT1+ and SPORT1.de. In addition, SPORT1 will air at least 40 live matches on free-TV. The package also includes the Beko BBL Champions Cup, Beko BBL ALLSTAR Day, Beko BBL TOP FOUR as well as selected matches of the three playoff rounds.
Agreement between SPORT1 and the DKB Handball Bundes-liga extended until the 2016/17 season
On September 25, 2012, Sport1 GmbH and the DKB Handball Bundesliga announced the early renewal of their partnership exceeding the contract period until 2013 up to and including the 2016/17 season. The new agreement is already valid in the current 2012/13 season and covers the live rights to all DKB Handball Bundesliga matches for each season for all five match periods, as well as the further exploitation on all SPORT1 platforms (TV, internet and mobile). As previously, the broadcasting scope includes the Super Cup at the kick-off of the new season, live matches from each DHB Cup round, the
