100% 100% 100% 100%
80% 100% 100% 100%
Major subsidiaries of the Highlight Communications AG 47.3%
SIMPLIFIED CORPORATE STRUCTURE
As of December 31, 2009
KEY FIGURES
IN EURO MILLION Non-current assets Film assets Intangible assets Total assets Subscribed capital EquityEquity ratio (in percent) Non-current financial liabilities Current financial liabilities
Sales Sports Film
Sports- and Event-Marketing Others
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)
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 Employees at closing 12/31/2009 293.9 145.8 71.6 644.9 85.1 109.8 17.0% 86.3 214.5 1/1 to 12/31/2009 511.1 168.2 281.1 61.8 0.0 169.2 -167.8 1.4 -0.3 8.7 65.8 -64.0 -19.0 12/31/2009 77.7 2.00 155.4 1/1 to 12/31/2009 75.7 0.12 0.12 1,351 12/31/2008 381.9 187.0 109.0 683.3 77.9 106.1 15.5% 81.9 241.2 1/1 to 12/31/2008 384.6 217.7 147.9 18.9 0.1 69.0 -171.9 -102.9 -125.4 -131.9 59.6 34.4 19.9 12/31/2008 72.0 2.50 180.0 1/1 to 12/31/2008 73.4 -1.75 -1.75 1,725
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JANUARY, 2009The extraordinary General Meeting of EM.Sport Media AG held on Janu-ary 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.
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MARCH, 2009With 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.
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APRIL, 2009The Company is trading as Constantin Medien AG since April 6 – cove-ring 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 1stand 2ndGerman Soccer Bundesliga for
the seasons from 2009/10 until 2012/13 to the Constantin Medien Group. Through its subsidiary, Constantin Sport Medien, the Bun-desliga 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 share-holders of Constantin Film AG to Highlight Communications AG (squeeze-out).
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MAY, 2009The cash capital increase passed in January is successfully executed, with the new shares being placed in the full amount, Constantin Me-dien AG receives about 14.4 million Euro (before transaction costs).
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JUNE, 2009On June 30, Constantin Medien AG announces significant budget di-vergences in the Sports Segment for the entire 2009 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, redu-cing 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 Bundes-liga including an option to extend for another two seasons. The con-tract encompasses the TV broadcasting rights, sublicenses and Internet rights as well as national and international distribution.
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JULY, 2009On 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).
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AUGUST, 2009With the season kick-off on August 7, LIGA total! launches its ope-rations with the live broadcasting of all the 1stand 2ndBundesliga
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 30 million Euro to Constantin Medien.
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SEPTEMBER, 2009Michael 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 Bundes-liga until 2012. The contract starts with the 2009/10 season and consists of national and international audiovisual exploitation rights.
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OCTOBER, 2009The 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; ad-mission to the official trading ends.
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NOVEMBER, 2009On 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.
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DECEMBER, 2009Constantin 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 draw-ing a final line under the actions for damages raised against former board members.
CONTENT
THE COMPANY | CONTENTForward-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 ge-neral economic and business environment and the incidence of indivi-dual 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.
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COMBINED GROUP MANAGEMENT
AND MANAGEMENT REPORT
24 1. Business and General Conditions 42 2. Result of Operations, Financial and
Net Asset Positions 49 3. Employees 50 4. Addendum Report
50 5. Disclosures in the Group Management Report in Accordance with § 289 and § 315 para. 4 HGB 52 6. Material Transactions with Related Companies and Related Persons in the Reporting Period 52 7. Risk Report
58 8. Opportunities Report 60 9. Outlook
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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
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CONSOLIDATED FINANCIAL
STATEMENTS
66 Consolidated Balance Sheet 68 Consolidated Profit and Loss Account 69 Consolidated Statement of Comprehensive
Income/Loss
70 Consolidated Cash Flow Statements 72 Changes in Consolidated Equity
74 Notes to the Consolidated Financial Statements 74 1. General Information
75 2. Accounting Policies 79 3. Scope of Consolidation
84 4. Accounting and Valuation Principles 96 5. Notes to Selected Line Items in the
Consolidated Balance Sheet
120 6. Notes to Selected Line Items in the Consoli-dated Profit and Loss Account
125 7. Disclosures regarding Financial Risk Management
135 8. Segment Reporting
139 9. Accounting Estimates and Assumptions 140 10. Financial Commitments, Contingent Liabilities
and Other Financial Commitments 141 11. Relationships with Related Companies and
Persons
142 12. Subsequent Events after the Balance Sheet Date
142 13. Other Information and Disclosures 146 Responsibility Statement
147 Auditor’s Report
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INDIVIDUAL FINANCIAL
STATEMENTS (HGB)
148 AG-Balance Sheet (HGB) 150 AG-Profit and Loss Account (HGB)
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THE COMPANY
151 Finance Calendar 2010 151 Imprint
Dear Shareholders,
2009 marked the first business year illustrating the Constan-tin 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 mag-nitude with sales of some 500 million Euro. Given the chal-lenging macroeconomic environment, we repositioned the Sports Segment and have set the strategic target at a cross-media 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 Seg-ment 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 thea-trical, DVD and television films. In a very successful year for the cinema industry, five productions of Constantin Film AG were among the top 10 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 poli-tical satire ”Horst Schlämmer – Isch kandidiere!” starring Hape Kerkeling or the comedy ”Maria – Ihm schmeckt´s nicht!” coun-ted 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 2009/10, 2010/11 and 2011/12 seasons. Despite the economic and financial crisis, TEAM managed to surpass the high benchmark of the three-year period from 2006/07 to 2008/09, again
gene-rating a significant increase in revenues by about 40 percent for the UEFA. The successful marketing of the world's most im-portant 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 economy-induced 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 Deut-sche 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 com-prehensive restructuring and realignment of the Sports busi-ness, the streamlining and partial replacement of key manage-ment 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 acti-vities starting April 11, 2010. Content networking, the combi-ning of skills, but also greater efficiency and additional revenue opportunities are all advantages of this repositioning. A major success in the Sports Segment in 2009 was the acqui-sition of the sublicensing rights to the 1stand 2ndGerman Soc-cer Bundesliga from Deutsche Telekom. Within a few months
FOREWORD BY THE CHAIRMAN OF
THE MANAGEMENT BOARD
THE COMPANY | FOREWORD BY THE CHAIRMAN OF THE MANAGEMENT BOARDwe managed, with ”LIGA total!”, to conceptualize and set-up an entirely new premium station in IPTV in terms of both edi-torial and production technology and launched it successfully on the market.
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 Com-pany's name change to ”Constantin Medien AG”. The new name was well-received by the public.
– The Holding's structure was streamlined and the Manage-ment Board of Constantin Medien AG was reduced from three to two persons. In this context, regrettably, this requi-red the downsizing of nearly 10 percent of the entire work-force in the Sports Segment and in the Holding.
– An important task in 2009 was the strengthening and reor-ganization of our financing base. This included the cash ca-pital increase executed in the second quarter with cash in-flows of some 14 million Euro and the successful refinan-cing of bank borrowings.
– In the reporting year, we detached ourselves from the crea-tive agency Creation Club and from other smaller invest-ments. 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.
– Of considerable economic importance in 2009 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 2001. The extraordinary General Meeting on December 15, 2009 voted by almost 100 percent in favor of both settlement
agree-ments, and led to a gross income of 57.5 million Euro in the first quarter 2010. This closes an important chapter in wrapping-up of the Company's past.
Dear Shareholders,
With sales of 511 million Euro, the Constantin Medien Group slightly surpassed the most recently announced target of about 500 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 ear-nings 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 2010. 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 busi-ness field of TV service productions, the conditions are likely to remain difficult. In the Sports- and Event-Marketing Seg-ment, we expect the continuation of the solid business deve-lopment 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. Con-cerning operational activities, we will uphold our proven prin-ciple of decentralization: We rely on the skills, know-how and the commitment of the Management and the employees across all individual segments and subsidiaries.
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 parti-cipation in the Company's success. Finally, I would like to sin-cerely thank our customers, employees, business partners and of course you, our valued shareholders, for your support in ma-king difficult decisions and for the trust you have placed in us.
With best regards
Bernhard Burgener
Management Board
As of December 31, 2009, the Management Board of Con-stantin 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, 2008. 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, 2009, 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, High-light Communications AG, where he is CEO of the Board of Di-rectors; for the Film Segment comprising the Highlight Com-munications subsidiary, Constantin Film AG, where he holds the position of CEO since January 1, 2009; and for the Sports-and Event-Marketing Segment, which comprises the Highlight shareholding TEAM, where Mr Burgener is the President (Chair-man) of the Board of Directors.
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, 2008. He is respon-sible for the areas of Finance, Investor Relations, Accounting, Controlling, Human Resources and Administration, Legal as well as IT and Process Management. Mr Arrigoni is also a Mem-ber of the Board of Directors of Highlight Communications AG.
Supervisory Board
As of December 31, 2009, the Supervisory Board of Constan-tin Medien AG* was structured as follows:
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 du-ring the year please refer to page 8 of the ”Report of the Supervisory Board” and Note 13 of the Notes to the Consolidated Financial State-ments (page 142)
BOARDS
Fred Kogel,
Chairman of the Supervisory Board
During 2009, the Supervisory Board of Constantin Medien AG met its obligations in accordance with the law and the Com-pany'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 Super-visory 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 Mee-ting held on January 28, 2009. In his place Dr Dieter Hahn, Ma-naging 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 them-selves for re-election after expiry of their terms at the Annual Ge-neral Meeting held on July 1, 2009. In their place, the share-holders elected Mr Fred Kogel, Producer, and Mr Jan P. Weid-ner, Investment Banker, to the Supervisory Board. On the same day, the Supervisory Board elected Mr Kogel as the new Chair-man of the Supervisory Board, thus, succeeding Dr ThieChair-mann. The Supervisory Board currently comprises of the following three committees:
– The Personnel and Nominations Committee, which convened twice in 2009, is responsible inter alia for the employment contracts with Management Board Members and the hand-ling 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, 2009, 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 Per-sonnel and Nominations Committee.
– The three-member Audit Committee deals with issues cerning the accounting, the effectiveness of the internal con-trol system, the risk management system and the commis-sioning of the audit to the independent auditors. The Audit Committee held five meetings in 2009. Dr Dieter Hahn and Jan P. Weidner were elected as new Members with effect from July 1, 2009. Dr Bernd Thiemann and Dr Hans-Holger Albrecht had previously resigned from the Board. The Chair-man of the Audit Committee is Mr Klatten and the Deputy Chairman is Dr Hahn.
– In its meeting held on July 1, 2009, the Supervisory Board re-solved to establish a Legal and Compliance Committee con-sisting 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, 2010.
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 Mem-bers 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 com-mon practice, the Members of the Management Board also par-ticipated 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 Mem-bers 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.
REPORT OF THE SUPERVISORY BOARD
THE COMPANY | REPORT OF THE SUPERVISORY BOARDDuring 2009, 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 Com-pany, in particular with the business situation, business per-formance 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 develop-ment of the Holding. The consultations in 2009 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 medium-and long-term basis.
– Restructuring of the Sports Segment/Reduction of the Group Management Board: In connection with the budget diver-gences in the Sports Segment, the Supervisory Board ap-proved the restructuring and realignment of this Segment. Associated therewith was particularly the streamlining of management structures in the Sports companies and the re-duction of the Group Management Board. In the course of this, Rainer Hüther, COO Sports, resigned by mutual agree-ment from the Manageagree-ment Board of Constantin Medien AG with effect as of the end of June 30, 2009. 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 Seg-ment, the Supervisory Board approved the establishment of the consistent umbrella brand "SPORT1", summarizing the television as well as the online activities. The structure stream-lining – which led to the downsizing of jobs, the reorganiza-tion and reposireorganiza-tioning of the Sports companies'
manage-ment – also were essential from the Supervisory Board's per-spective in recovering and securing the Segment's profita-bility 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 re-porting 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 Super-visory 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 rea-ligning 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 agree-ments. The Supervisory Board approved the replacement of the existing syndicated credit facility in the amount of 30 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 Super-visory 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-2001. The liability actions were brought to a close during the reporting year, because two settlement agreements with both of the D&O insurers invol-ved in the liability actions, CHUBB Insurance Company of Europe SE (CHUBB) and ACE European Group Limited (ACE), were resolved. Further details regarding the settle-ment agreesettle-ments can be found in the Combined Group Ma-nagement and MaMa-nagement Report, Note 1.3; “Important events in the 2009 business year”. The Supervisory Board
unanimously agreed to the settlement with CHUBB on August 25, 2009. The unanimous approval of the settle-ment with ACE took place on November 2, 2009. 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 Con-stantin 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 settle-ments not only save additional legal costs of a substantial scale for Constantin Medien AG, but they also set free per-sonnel capacities in management and in dealing with other lawsuits.
Statements concerning disclosures contained within the Ma-nagement Report and the Group MaMa-nagement Report of the Company in accordance with § 315 para. 4 HGB
Constantin Medien AG disclosed information in the Group Management Report for the 2009 financial year in accordance with § 315 para. 4 HGB. The disclosures meet the require-ments prescribed in the 2004/25 EG guideline issued by the European Parliament and the Council of the European Union as of April 21, 2004, in respect of tender offers. The obliga-tion to issue this informaobliga-tion 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 assess-ment 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 consoli-dated financial statements and the Combined Group Manage-ment Report and ManageManage-ment Report of Constantin Medien AG as of December 31, 2009 have been examined by the as-signed auditor, PricewaterhouseCoopers AG Wirtschaftsprü-fungsgesellschaft 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, 2010, the auditor reported the key findings of their audit to the Supervi-sory Board. The SuperviSupervi-sory Board examined in detail the finan-cial statements of Constantin Medien AG and the consolidated financial statements as well as the Combined Group Manage-ment Report and ManageManage-ment Report and duly noted their ap-proval of the findings of the auditors. Following the completion of its examination on March 24, 2010, the Supervisory Board raised no objections to the financial statements and the con-solidated financial statements. The Supervisory Board appro-ved the financial statements and the consolidated financial statements in the form presented. The set of financial state-ments for the financial year ended 2009 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 – 2009 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 Super-visory Board, however, is convinced that the measures imple-mented 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 – espe-cially, when the advertising markets will have succeeded in overcoming their current phase of weakness.
The Supervisory Board would like to sincerely thank the Ma-nagement Board and all employees of the Group for their work given in a challenging environment in 2009. Their commit-ment forms the basis for Constantin Medien AG to develop suc-cessfully.
March 2010
The Supervisory Board of Constantin Medien AG
Fred Kogel Chairman
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 3.10 of the German Corporate Governance Code. The Management and Supervisory Boards of Constantin Medien AG herby confirm that the recommendations of the Ger-man Corporate Governance Code in the version dated June 6, 2008 have been duly observed, with the exceptions stated in the Declaration of Conformity dated December 2008, and that the recommendations of the Code in the version dated June 18, 2009 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 10 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).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 Com-pany'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 4.2.3 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
recognized in the German Corporate Governance Code in June 2008. The Management Board contracts currently in effect do not have a duration of more than two years, such that a (sub-sequent) 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 5.1.2 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 time limit for the submission of quarterly reports (interim financial reports) has not yet been reduced to 45 days fol-lowing the end of the reporting period (section 7.1.2 of the Code).
It is deemed to comply with this recommendation of the Ger-man Corporate Governance Code (submission of interim reports within 45 days) as early as is feasible. In respect of the accoun-ting complexity within the Company and additional require-ments in connection with the intended business combinations of the companies Constantin Medien AG, Highlight Communi-cations 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 reliabi-lity 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 www.constantin-medien.de.
DECLARATION OF CORPORATE GOVERNANCE
PURSUANT TO § 289a HGB new version
Information regarding corporate
gover-nance 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 cor-porate responsibilities. Here the principles of responsible and good corporate governance determine the actions of manage-ment 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 con-cerning 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 www.constantin-medien.de. Shareholders and Annual General Meeting
The shareholders of Constantin Medien AG are entitled to exer-cise 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 indivi-dual agenda items, to ask questions and to propose motions. 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
Constantin Medien AG prepares its consolidated financial statements and consolidated interim financial statements in conformity with the International Financial Reporting Stan-dards (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 prepa-ration of the consolidated and separate financial statements is the responsibility of the Management Board. Following the pre-paration 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 con-flicts 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 opera-tional responsibility of the subsidiaries of the Sports Segment underlies the particular managing director of each subsidiary. Highlight Communications AG and Constantin Film AG are auto-nomously managed by the Board of Directors and the Manage-ment Board, respectively. Authoritative control indicators com-prise of financial performance indicators (such as sales and ear-nings ratios) and non-financial performance indicators (based on the respective business models of the individual segments). Detailed information about the controlling system and perfor-mance indicators can be found in the Combined Group Manage-ment and ManageManage-ment 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 appro-priateness 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 52.
Collaboration between the Management and Supervisory Boards As a German public limited company, the Group parent com-pany Constantin Medien AG has a dual management and con-trol system ("Two-Tier System"), i.e. the Management and Supervisory Boards are separate bodies with strictly separate Members and duties.
Since July 1, 2009, the Management Board of Constantin Me-dien AG has been consisting of two Members, Mr Bernhard Burgener (CEO) and Mr Antonio Arrigoni (CFO). The Manage-ment 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 deter-mination of corporate strategy, Group management and the moni-toring of risk management.
The Management Board works closely with the Supervisory Board. It informs the Supervisory Board on a regular, timely and comprehensive basis of all Company and Group 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 discus-ses its strategic implementation on a regular basis. Documents requiring decisions, in particular the Constantin Medien AG separate financial statements, consolidated financial state-ments 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 incor-porate veto rights on the part of the Supervisory Board for busi-ness transactions of fundamental and major significance. The Supervisory Board of Constantin Medien AG consists of six Members since July 2007. The Supervisory Board advises and monitors the Management Board in its management of the Company. In addition its responsibilities also include the ap-pointment 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 Ma-nagement 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
re-muneration to the Supervisory Board plenum. The Audit Com-mittee 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 ac-counting principles and internal control procedures. In addition, Mr Weidner is represented in the Audit Committee as an inde-pendent financial expert.
In its meeting convened on July 1, 2009, the Supervisory Board resolved to establish a Legal and Compliance Commit-tee, comprising of two Members. The Legal and Compliance Committee has been constituted on January 19, 2010. The Supervisory Board convened at a total of four ordinary ple-nary meetings and four extraordiple-nary meetings during 2009. 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 pre-sented 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, 2008, and has since then acted as Chairman of the Management Board. His contract term runs until August 31, 2011.
Effective April 1, 2008, Mr Antonio Arrigoni assumed the po-sition of Chief Financial Officer of Constantin Medien AG. His contract term runs until March 31, 2011.
The contract with Mr Rainer Hüther was extended on Septem-ber 25, 2007 until DecemSeptem-ber 31, 2011. Effective as of the end of June 30, 2009, Mr Hüther resigned from the Manage-ment Board of Constantin Medien AG. Up until this date, he was responsible for all activities within the Sports Segment THE COMPANY | DECLARATION OF CORPORATE GOVERNANCE PURSUANT TO § 289a HGB new version
and also acted as Deputy Chairman of the Management Board since September 1, 2008.
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 com-ponents are determined by the earnings of the Group and its subsidiaries they are contractually limited.
Nature of other services paid by the Company
The Management Board Members are reimbursed for all out-of-pocket 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 bene-fit 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 Manage-ment 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 regu-lated by section 12 of Constantin Medien AG’s Articles of Asso-ciation. In addition to reimbursement of expenditures incurred, Members of the Supervisory Board also receive fixed and vari-able annual 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. The fixed remuneration also takes into consideration membership (5,000 Euro) and chairing (10,000 Euro) of Supervisory Board Committees. The variable remuneration is based partly on the
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).
Performance of the capital markets
At the beginning of 2009 the general downward trend on the German stock market and the international capital markets was continuing as triggered by the international financial and eco-nomic crisis, which led to partially sizable drops in stock pri-ces worldwide. While the markets continued to be primarily characterized by the persistent uncertainties and bleak econo-mic data in the first quarter of 2009, the second quarter faced a countermovement from the improvement in the overall eco-nomic expectations, which brightened the stock market senti-ment. 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 econo-mic stabilization programs and the expansionary monetary po-licy 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 sen-timent, rose by 24 percent in the calendar year 2009, closing at 5,957 points on December 31.Since its year low in early March, the German stock exchange barometer gained more than 60 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, 2009, the Company has been listed on the regu-lated market (Prime Standard) under the new registered com-pany name Constantin Medien AG. Stock exchange abbre-viation, ISIN and Securities Identification Number remain ex-changed however. In addition, the capital increase, passed at the extraordinary General Meeting in January 2009, was suc-cessfully placed in May 2009 with about 7.2 million shares. Since July 2, 2009, the new shares, which have been initially listed under a separate ISIN starting May 14, 2009, have been listed under the identification number of the remaining shares. In 2009, 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 in-crease in early February. In line with the general market trend, the downwards movement occurring until the middle of the se-cond quarter was nearly offset. Starting mid-May 2009, 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 2.00 Euro at the end of the year. As of December 31, 2009, the 52-week high stood at 2.75 Euro (February 5, 2009), with the 52-week low coming in at 1.62 Euro (September 14, 2009). Consequently, at -20.0 percent the Constantin Medien share price substantially under-performed 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 2009 business year, the Company also published the change in com-pany 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
CONSTANTIN MEDIEN AG SHARE
XETRA CLOSING PRICES OF THE CONSTANTIN MEDIEN SHARE COMPARED TO SDAX AND DAXSECTOR MEDIA INDICES Comparative indices indexed to Constantin Medien's closing price as of December 31, 2008
Constantin Medien AG SDAX DAXsector Media
12/31/08 03/31/09 06/30/09 09/30/09 12/31/09 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00
settlement of directors’ liability suits. In the further course, the Constantin Medien AG shares again moved analogous to the downward development of the capital markets, closing at 1.93 Euro on February 15, 2010.
In the financial year 2009 around 28.4 million Constantin Me-dien shares were traded on the German stock exchanges (daily average: 0.11 million units). Therefore, the trading volume was substantially lower by 18.9 percent over the prior year period.
Because of the lower trading volume versus the same period last year, the stock turnover rate for shares outstanding over a twelve-month period decreased to 0.37 (2008: 0.49). The po-sition of the Constantin Medien share in German stock exchange rankings of all MDAX and SDAX listings stood at rank number 86 as of December 31, 2009 (2008: 94) in respect of trading volume over the last twelve months. The share ranked 81st (2008: 78) for the so-called "free-float market capitalization".
THE COMPANY | CONSTANTIN MEDIEN AG SHARE
Share capital and shareholder structure
Constantin Medien AG's share capital increased by around 7.2 million Euro due to the capital increase in May 2009 and stood at around 85.1 million Euro as of December 31, 2009. 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, 2009. After deduction of treasury shares there were around 77.7 million shares outstanding as of the balance sheet date.The following changes took place in the shareholder structure of Constantin Medien AG during 2009:
On January 23 and May 18, 2009 Mr Burgener informed the Company that he had increased his shareholding and exceeded the 5 percent limit of share capital. As of the balance sheet date, his interest in share capital amounted to 5.1 percent. Being the largest shareholder, KF 15 increased its sharehol-ding as part of the capital increase. Accorsharehol-ding to a notification dated April 15, 2009 the Company announced that KF 15, with additional consideration of the subscribed 6.8 million vo-ting rights from a call option, had exceeded the 20 and 25 percent limits of share capital. The call option has a term until March 31, 2011. As of the balance sheet date, the company's interest in share capital amounted to 18.7 percent. Furthermore, Management Board Members of the Company and related parties announced their share purchases through the capital increase, which were published as so-called Directors' Dealings notifications (see table on page 21). On the basis of notifications published on June 26, 2009 and July 29, 2009 as well as October 6, 2009 and October 15, 2009, respectively, the Company announced that MarCap's shareholding had fallen below the 5 and 3 percent limits of share capital and that its shareholding thereafter stood at 2.3 percent of share capital. Therefore, its shareholding stood at below the statutory reporting limit and is now classified among the free-float of the Constantin Medien share.
The free-float of the Constantin Medien share decreased to 57.8 percent of share capital as of December 31, 2009 (2008: 59.5 percent).
SHAREHOLDER STRUCTURE AS AT DECEMBER 31, 2009 Subscribed capital 85.1 million shares
TREASURY SHARES1 KF 152 DR ERWIN CONRADI BERNHARD BURGENER DR DIETER HAHN FREE FLOAT
1Predominantly held via the Highlight Communications AG 2Call option for further 8.0% of share capital until March 31, 2011
8.7% 18.7% 5.1% 57.8% 6.7% 3.0%
Investor Relations Activities
The Constantin Medien Group's focus of investor relations activities lies in the comprehensive and timely exchange of information with all capital market participants (institutional and private investors, analysts and the financial press). Our declared aim is to attain a fair evaluation of the Constantin Medien share by means of transparent public relations. This is based on our regularly published business and interim finan-cial reports that portray a detailed view of our Company's cur-rent performance and perspective. Furthermore, extensive information concerning the Constantin Medien Group can be found on our website under www.constantin-medien.de. In 2009, investor relations activities were once again pursued energetically, in order to satisfy the high level of interest in Constantin Medien AG on the part of analysts and investors during a period of turbulent stock market conditions. Besides a large number of one-on-one meetings with institutional investors, Constantin Medien AG also made itself available to investors at two investors' conferences. Various individual questions from private investors were also handled by our in-vestor relations team. Alongside participation in events for analysts and investors, it continues to be our objective to sup-port the highest possible number of analysts. The Constantin Medien share is currently being actively monitored by eight research institutions. In the last 12 months, the following seven different institutions published studies on Constantin Medien AG:
– Close Brothers Seydler Bank – Commerzbank – Deutsche Bank – DZ Bank – Sal. Oppenheim – Viscardi – WestLB
Additional Constantin Medien AG
capital market securities
In line with the bond market development that was characte-rized by declining yields, the price of the 5.25% convertible bond 2006/2013 rose by 37.3 percent in 2009, closing at 5.01 Euro. As of December 31, 2009, the bond reached a 52-week high of 5.10 Euro (November 25, 2009) and a 52-week low of 2.52 Euro (January 26, 2009). On February 15, 2010, the bond traded at 5.31 Euro. Each convertible bond entitles a conversion of 1.0123 shares of Constantin Medien AG.
The share price of Highlight Communications AG, a company of the Constantin Medien Group, developed similarly to the Constantin Medien share, underperforming the overall posi-tive market trend and closing at 4.06 Euro on December 31, 2009, down by 18.8 percent against the prior year's closing rate. On February 15, 2010, the share price came in at 3.90 Euro.
The squeeze-out request, which was passed by the Annual General Meeting of Constantin Film AG on April 21, 2009, was entered in the Commercial Register on October 7, 2009. Based on this entry, all shares held by the minority sharehol-ders (around 2.2 percent of share capital) were transferred to Highlight Communications AG by law at 17.64 Euro per share. The official listing of the Constantin Film shares were delisted on the same day at a closing price of 18.15 Euro and the stock listing admission was rescinded at the end of trading on the Frankfurt Stock Exchange on October 13, 2009.
DE0009147207 / EV4 CH0006539198 / HLG DE000A0GQKR4 / VGQKR
SDAX, DAXsector Media 2.00 / 2.75 / 1.62 Euro 4.06 / 5.00 / 3.53 Euro 5.01 / 5.10 / 2.52 Euro 85.1 million shares 77.7 million shares 10.0 million shares 155.4 million shares 187.2 million shares 49.9 million shares THE COMPANY | CONSTANTIN MEDIEN AG SHARE
INFORMATION OF CONSTANTIN MEDIEN SECURITIES AS OF DECEMBER 31, 2009
ISIN/Exchange abbreviation
– Ordinary share (Prime Standard Segment)
– Highlight Communications AG share (Prime Standard Segment) – Convertible bond 2006/2013 (Regulated market)
Indices
Closing rate 12/31/2009 / 52-week high / 52-week low – Constantin Medien AG (Xetra)
– Highlight Communications AG (Xetra) – Convertible bond 2006/2013 (Frankfurt) Share capital 12/31/2009 (incl. conversion shares) Outstanding shares (12/31/2009)
Convertible bond 2006/2013
Market capitalization (related to outstanding shares as of 12/31/2009) – Constantin Medien AG (Xetra)
– Highlight Communications AG (Xetra) – Convertible bond 2006/2013
Directors’ Dealings
In the financial year 2009, the Company was notified by the Members of the Management and Supervisory Boards of the following reportable purchase and sale transactions: NAME Management Board Bernhard Burgener Bernhard Burgener Supervisory Board DHV GmbH (Dr Dieter Hahn) Dr Dieter Hahn Dr Erwin Conradi DHV GmbH (Dr Dieter Hahn) DHV GmbH (Dr Dieter Hahn) DHV GmbH (Dr Dieter Hahn) RPRICE PER SHARE in Euro 2,10 2,00 2,00 2,00 2,00 1,96 1,96 1,96 DATE 01/20/09 05/14/09 05/11/09 05/11/09 05/13/09 07/06/09 07/07/09 07/08/09 TRANS-ACTION Buy Buy Buy Buy Buy Buy Buy Buy SECURITY Share Share Share Share Share Share Share Share TOTAL VOLUME in Euro 840,000 1,400,000 26,000 400,000 1,042,900 125,822 101,232 164,946 QUANTITY Share 400,000 700,000 13,000 200,000 521,450 64,195 51,649 84,156
The Executive Body Members Mr Bernhard Burgener (CEO), Dr Dieter Hahn (Supervisory Board Member) and Dr Erwin Conradi (Supervisory Board Member) each held a direct or in-direct holding of shares exceeding 1 percent in shares or share entitlements of the share capital as of December 31, 2009.
The number of shares or share entitlements associated with option rights on the part of executive body members and their related parties as of December 31, 2009 is presented below as follows:
BOARD NAME
Management Board Bernhard Burgener Antonio Arrigoni Supervisory Board Fred Kogel
Werner E. Klatten Dr Erwin Conradi Dr Dieter Hahn Martin Wagner Jan P. Weidner NUMBER OF SHARES 4,300,000 6,279 0 33,000 5,735,950 2,543,000 30,581 0 SHARE ENTITLEMENTS ASSOCIATED WITH OPTION RIGHTS
0 0 0 0 0 0 0 0
Shareholdings of Board Members as of December 31, 2009
COMBINED GROUP MANAGEMENT
AND MANAGEMENT REPORT
1
Business and General Conditions
1.1 Business activitiesConstantin Medien AG is an international media company based in Ismaning near Munich.
Highlight Communications AG is a media company and opera-tes in film production, film and TV rights distribution, theatri-cal film distribution, video/DVD exploitation and TV production. In this connection, its main shareholding is Constantin Film AG, Munich, together with its subsidiaries. For purposes of ex-ploiting video rights in in-house and licensed titles, Highlight Communications AG has established its own distribution organization. In Switzerland and Austria, distribution is con-ducted by the Rainbow Home Entertainment companies. Dis-tribution on the German market is conducted by the 100 percent holding Highlight Communications (Deutschland) GmbH in cooperation with Paramount Home Entertainment. Moreover, through its investment in Team Holding AG, Lucerne/ Switzerland, the Highlight Communications AG is also acting in Sports- and Event-Marketing.
Following the full consolidation of Highlight Communications AG, the Constantin Medien Group's segment reporting com-prises of the following segments:
The ”Sports” Segment primarily comprises television activities with the free-TV station DSF Deutsches SportFernsehen as well as Constantin Sport Medien GmbH as the operator of LIGA total!, the online activities (mainly the online portal Sport1.de) and the production activities of the PLAZAMEDIA group (i.e. PLAZAMEDIA in Germany, Austria and Switzerland). The ”Film” Segment combines the activities of Constantin Film AG and their subsidiaries as well as the Highlight Communi-cations holdings Rainbow Home Entertainment. The Constan-tin Film group is the major independent German producer and distributor of theatrical films, video/DVD and television films. The operations of Constantin Film AG encompass the produc-tion of films as well as the exploitaproduc-tion of in-house producproduc-tions and acquired film rights. In exploiting film rights, all steps
along the exploitation chain are utilized starting from theatrical to video/DVD platforms and up to television. In-house film pro-ductions are normally distributed worldwide, while co-produc-tions are essentially distributed in German-speaking countries. In addition, the Constantin Film group creates fictional and non-fictional productions for TV stations.
The ”Sports- and Event-Marketing” Segment includes the activi-ties of the 80 percent investment Team Holding AG, which markets the UEFA Champions League and the UEFA Europa League as its main projects via its subsidiaries. Additional dis-tribution projects include the Eurovision Song Contest and the Vienna Philharmonic Orchestra.
“Others” includes the activities of the holding company Con-stantin Medien AG and the financing activities of EM.TV Finance B.V.
1.2 Group structure
As parent company, Constantin Medien AG is the controlling holding company and responsible for the strategic control of the Group, as well as central functions such as Human Resour-ces, Accounting, Legal, Corporate Finance, Corporate Commu-nications and Investor Relations.
Constantin Sport Holding GmbH (formerly EM.Sport GmbH) functions as the controlling parent company of the subsidiaries in the Sports Segment and is owned 100 percent by Constan-tin Medien AG. In turn, it holds 100 percent of the shares in DSF Deutsches SportFernsehen GmbH, in Constantin Sport Medien GmbH, in PLAZAMEDIA GmbH TV- und Film-Produk-tion as well as in Sport1 GmbH. Furthermore, PLAZAMEDIA has 100 percent shareholdings in other Group companies, amongst others including PLAZAMEDIA Austria Ges.m.b.H. and PLAZAMEDIA Swiss AG.
The Highlight Communications AG is a stock corporation under Swiss law and is listed on the Frankfurt Stock Exchange since 1999.
COMBINED GROUP MANAGEMENT AND MANAGEMENT REPORT | BUSINESS AND GENERAL CONDITIONS
COMBINED GROUP MANAGEMENT
AND MANAGEMENT REPORT
1.3. Important events in the 2009 business year
Renaming to Constantin Medien AG and execution of the cash capital increase
At the extraordinary General Meeting held on January 28, 2009, the shareholders of the former EM.Sport Media AG, re-presenting 45.1 percent of the share capital, approved all four agenda topics with majorities of more than 98 percent. One topic related to the renaming of the Company to „Constantin Medien AG“. The new name covers the entire spectrum of the media groups’ business activities in the Segments of Sports, Film as well as Sports- und Event-Marketing. Since entry of the amendment of the Articles of Association in the Commer-cial Register (Munich District Court, HRB 148 760) as of April 6, 2009 the Company is trading under Constantin Medien AG. Furthermore, for reasons of legal certainty, the authorized ca-pital I resolved at the Annual General Meeting of July 9, 2008 was cancelled and a new authorized capital 2009/I was crea-ted in the same amount.
In addition the shareholders resolved to a cash capital increase by issuing about 7.2 million shares at an issue price of 2.00 Euro per share, which was successfully executed in the second quarter 2009. The subscription period began on April 24, 2009 and ended on May 7, 2009. Subsequently, the share capital increased from 77,938,420 Euro by 7,192,360 Euro (+9.2 percent) to 85,130.780 Euro against issuance of up to 7,192,360 bearer shares. The subscription price was 2.00 Euro per share. Therefore, Constantin Medien AG received cash proceeds of 14.4 million Euro (before transaction costs). Moreover, the General Meeting appointed Dr Dieter Hahn as a new Supervisory Board Member and successor to Dr Alexander Ritvay.
Squeeze-out-request and stock quotation of Constantin Film AG At the Annual General Meeting of Constantin Film AG on April 21, 2009, the shareholders approved with 99.92 percent the transfer of shares held by minority shareholders of Constantin Film AG to the major shareholder, Highlight Communications AG, in return for an appropriate cash compensation in the amount of 17.64 Euro per share in accordance with §§ 327a ff.
of the Stock Companies Act (AktG) (squeeze-out request). Several shareholders filed complaints against this resolution at the Regional Court in Munich. Following the withdrawal of the actions the resolution was entered in the Commercial Register of Constantin Film AG on October 7, 2009. With the entry of this transfer resolution all the shares held by the mi-nority shareholders (about 2.2 percent of the share capital) were transferred to Highlight Communications AG in accor-dance with § 327e para. 3 sentence 1 AktG. Constantin Film AG was delisted on the same day. The admission to official trading ended as of October 13, 2009.
Acquisition of IPTV and Mobile exploitation rights to the 1st and 2ndGerman Soccer Bundesliga
On April 23, 2009 the Company announced that Deutsche Te-lekom AG had sub-licensed its audio-visual broadcasting rights for IPTV and Mobile to the 1stand 2ndGerman Soccer Bundes-liga for the seasons from 2009/10 until 2012/13 to the Con-stantin Medien Group. Since the start of the 2009/10 Bundesliga season on August 7 the Group operates via its 100-percent subsidiary Constantin Sport Medien GmbH the new Bundesliga live channel LIGA total! and distributes the chan-nel as stand-alone live program as part of a feed-in agreement via Entertain, the IPTV offer of Deutsche Telekom, and via Mo-bileTV, which is distributed by T-Mobile. LIGA total! is broad-casting all 612 soccer matches as well as the conference feed of the 1stand 2ndGerman Soccer Bundesliga live. Furthermore, Constantin Sport Medien GmbH also renders production-tech-nical services for so-called non-linear exploitation rights, i.e. time shift on-demand services in the IPTV and Mobile sector. The extensive editorial and production-technical services re-garding the operation of LIGA total!, Constantin Sport Medien GmbH applies the extensive and experienced services of DSF and PLAZAMEDIA and the creative agency Brandsome. As of July 1, 2009, Zeljko Karajica, Florian Nowosad as well as Markus Maximilian Sturm were appointed to the Managing Directors of Constantin Sport Medien GmbH.
Earnings/Budget divergences in the Sports Segment On June 30, 2009, Constantin Medien AG announced ear-nings divergences in the Sports Segment for the entire year
