CF_GB_2008_E_300309.qxd:Layout 1 30.03.2009 19:25 Uhr Seite 2 CONTENTS/ Annual Report 2008 Pages 5/6 -- Foreword Pages 7/9 -- Report by the Supervisory Board Pages 11/12 -- Corporate strategy Page 13 -- The 5-sector strategy Page 15 onwards -- Investor relations Page 23 -- Contents / financial information Page 25 onwards -- Combined management report of the Group and AG for the 2008 fiscal year Page 62 onwards -- Consolidated financial statements Pages 144/145 -- AG balance sheet Page 146 -- AG income statement Page 147 onwards -- Filmography Page 166 onwards -- Terminology Page 171 -- Summary of equity interests CF_GB_2008_E_300309.qxd:Layout 1 30.03.2009 19:25 Uhr Seite 3 KEY FIGURES / Group 01.01. – 01.01. – 31.12.2007 31.12.2008 € million € million Sales 225.0 248.5 of which in-house and co-productions 178.9 203.7 of which third-party productions 46.1 44.7 EBITDA 81.7 104.9 Gross profit 32.0 35.5 Operating result 12.4 15.1 Earnings for the year attributable to the shareholders of the parent company 6.2 10.5 Investments in film assets 79.1 73.6 Depreciation of film assets 68.2 88.9 31.12.2007 31.12.2008 Film assets 181.7 166.3 Equity 74.6 84.7 Balance sheet total 333.3 339.5 Permanent employees (number) 481 500 Earnings per share in € (undiluted and diluted) 0.49 0.83 Annual Report 2008 | | Page 3 CF_GB_2008_E_300309.qxd:Layout 1 30.03.2009 19:25 Uhr Seite 4 CF_GB_2008_E_300309.qxd:Layout 1 30.03.2009 19:25 Uhr Seite 5 FOREWORD by the Management Board of Constantin Film AG Dear shareholders, dear friends of Constantin Film AG, A positive trend compared with the previous year was apparent again the industry’s overall cost burden, to offer audiences a larger selection in the German theatrical industry in 2008. In spite of the strong of films and to move the theatrical business into the digital age. economic turbulence, which is having a noticeable effect on the media industry too and is likely to make the funding and exploitation of film In the in-house production segment, Constantin Film succeeded in projects more difficult in general in future, sales in the 2008 theatrical achieving even better results in the theatrical distribution and home year were 4.9 per cent higher than in the previous year. This was due entertainment operations last year than in 2007. This is attributable above all to the increasing quality and appeal of German films, which primarily to the outstanding performance of our 2008 distribution was attributable to a large extent to the Constantin Film productions programme, with such excellent films as The Wave, Asterix at the The Baader Meinhof Complex and The Wave. Germans went to Olympic Games, Freche Mädchen and The Baader Meinhof movie theatres more often in 2008 – and they were attracted primarily Complex. by productions from their own country: as a result, the proportion of the market accounted for by German films rose from 18.9 per cent in The environment in which the home entertainment business operates the previous year to 26.6 per cent in 2008. (source: FFA) remains stable and all the planned targets were reached. The debate about digitisation continued in 2008. Following lengthy Constantin Film generated excellent revenues in the licence trading The Management Board discussions with the political community, progress was made with the operations, e.g. with the international exploitation of the successful of Constantin Film AG digitisation process in Germany at the end of the year with the Bernd Eichinger production Perfume – The Story of a Murderer. (from left to right): approval of the “100 model” by the central association of German Hanns Beese, movie theatres (HDF) and the AG Kino-Gilde. Beforehand, Bernd The difficult economic situation depressed operations in the service Bernhard Burgener, Neumann, the State Minister of Culture and Media Affairs, had argued production field at Constantin Film AG too. Preparations are therefore Franz Woodtli, strongly for comprehensive introduction of digital projection in being made to enter new sales markets. In addition to the existing Martin Moszkowicz Germany. In the next few years, digitisation needs to help to reduce production companies abroad (Poland, Romania, Croatia, Turkey), new markets are to be entered in the entertainment field in 2009, e.g. in Annual Report 2008 | | Page 5 CF_GB_2008_E_300309.qxd:Layout 1 30.03.2009 19:25 Uhr Seite 6 FOREWORD by the Management Board of Constantin Film AG Greece and the Czech Republic. Commissions can be obtained from view of this, we consider it to be advisable to issue our forecast for the and produced for the television stations on a direct local basis as a company’s sales and operating result in 2009 as an estimated corridor. result. We are planning sales of between € 220 million and € 240 million and The clear focus of Constantin Film AG’s corporate operations combined a positive operating result of between € 10 and € 12 million in 2009. with a team of creative and highly qualified staff and intensive contacts to key global players and prominent companies in the media We would like to thank you for the confidence you have placed in us industry will continue to make sure our company is successful. and for your loyalty to us. 2009 promises an attractive theatrical distribution programme, to which the intensive development and production operations and the successful integration of all the company’s activities are making steady contributions. It is practically impossible to forecast reliably how the economic situation will develop at the present time all the same. In ▲ ▲ BERNHARD BURGENER / Chairman of the Management MARTIN MOSZKOWICZ / Film and television Board and Executive Director Licence and Rights Trading; corporate strategy, corporate communications, legal affairs, investor relations, national licence and rights trading, TV entertainment production ▲ ▲ HANNS BEESE /Finance FRANZ WOODTLI / Theatrical and home entertainment sales Page 6 ||Annual Report 2008 CF_GB_2008_E_300309.qxd:Layout 1 30.03.2009 19:25 Uhr Seite 7 REPORT BY THE SUPERVISORY BOARD Fred Kogel The Supervisory Board carried out its advisory and control assignments this context was to assist the Management Board of the company in throughout the 2008 fiscal year. The Management Board kept the preparing the necessary steps for this. Supervisory Board informed promptly and in detail by providing oral and written reports. The Supervisory Board and the Management The Supervisory Board also reviewed the ongoing development of Board remained in close contact above and beyond this as well. corporate governance by the company and its compliance with the recommendations of the German Corporate Governance Code. The All the main issues of business policy, particularly the economic statement specified in § 161 of the German Companies Act that has development of the company, strategy and planning, relevant business been issued by the Management Board and the Supervisory Board is events and business transactions that required approval, were re - being made available to the shareholders on a permanent basis in viewed and discussed intensively, in detail, analytically and empirically the Internet (www.constantinfilm.de). There is a general production on the basis of reports by the Management Board at five ordinary agreement with Bernd Eichinger, one of the members of the meetings held in the 2008 fiscal year as well as in written decision- Supervisory Board; individual production and/or authorship contracts making processes, including discussion of these issues with the are concluded for each of his projects. No contracts were concluded Management Board. The Supervisory Board exercised its right to with Mr Eichinger in the 2008 fiscal year on the basis of the general inspect the company’s books, other documentation and assets on production contract. Individual production contracts are concluded several occasions in the 2008 fiscal year too. with Professor Dr Günter Rohrbach, one of the members of the Super - visory Board, on a project basis. An existing consultancy agreement During the 2008 fiscal year, the Supervisory Board focussed on between DIANA Film GmbH and Professor Dr Günter Rohrbach about extensive discussion of the performance of the films currently in the the Hotel Lux project was transferred from DIANA Film GmbH to process of being exploited, on making sure long-term commitments Constantin Film Produktion GmbH in the 2008 fiscal year. The were made with producers and management, on the planning and Supervisory Board approved the conclusion of this contract. The approval of new productions and on the strategic alignment of the Supervisory Board reviewed whether it is possible for this activity as a company’s operations. The company’s business and audit reports were consultant to lead to conflicts of interest in the activities of the member discussed with the Management Board and the auditor in detail as of the Supervisory Board concerned and for the company. The well. In view of the global financial crisis, the company’s refinancing Supervisory Board is convinced that no major conflicts of interest will strategy was another subject of intensive discussion in the 2008 fiscal arise. Any potential conflicts of interest are avoided by the member year. The Supervisory Board approved the obtainment / extension of of the Supervisory Board concerned abstaining when a vote is two credit facilities and satisfied itself that the company has sufficient taken by the Supervisory Board on any resolutions associated with liquidity reserves. Another subject that demanded the Supervisory the implementation of the above-mentioned project. There is a Board’s attention at the end of the 2008 fiscal year and in the course consultancy agreement between the company and Fred Kogel GmbH, of the 2009 fiscal year so far was the request made by Highlight where the Supervisory Board member Fred Kogel is indirect sole Communications AG in a letter dated December 2, 2008 in accordance shareholder.