ANNUAL REPORT 2009 Swiss-Based Highlight Communications AG Is One of the Largest and Most Successful Media Stocks Listed in the German Capital Market
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ANNUAL REPORT 2009 Swiss-based Highlight Communications AG is one of the largest and most successful media stocks listed in the German capital market. Its unique selling proposition is its broad product portfolio. Highlight Communications AG at a glance (TCHF) 2009 2008 Consolidated Total assets 632,429 639,883 balance sheet Film assets 205,746 247,627 Cash and cash equivalents 201,090 187,459 Financial liabilities 317,871 304,805 Equity attributable to the shareholders 106,091 91,696 Consolidated Revenues 517,918 518,376 profi t and loss account Profi t from operations 52,900 57,752 Profi t before taxes 44,246 44,552 Net profi t (Highlight shareholders) 31,999 29,777 Earnings per share (CHF) 0.69 0.65 Consolidated Cash fl ow from operating activities 122,841 148,519 cash fl ow statement Cash fl ow for investing activities –94,992 –146,676 thereof payments for fi lm assets –120,676 –116,858 Cash fl ow for/from fi nancing activities –14,067 1,860 thereof dividend payments –9,726 –9,837 Cash fl ow for the reporting period 13,782 3,703 Personnel Headcount as of December 31 670 705 The companies of the Highlight Group design, produce and market top events and premium formats in the areas of fi lm, sports and music. Highlight Communications AG, Pratteln, Switzerland FILM SPORTS- & EVENT-MARKETING 100 % 100 % 80 % Constantin Film AG Highlight Communications Team Holding AG Munich, Germany (Deutschland) GmbH Lucerne, Switzerland Munich, Germany Subsidiaries of T.E.A.M. Television Event And Constantin Film AG Rainbow Home Entertainment AG Media Marketing AG Pratteln, Switzerland Lucerne, Switzerland Rainbow Home Team Football Marketing AG Entertainment GmbH Lucerne, Switzerland Vienna, Austria W Film production W UEFA Champions League W Theatrical distribution W UEFA Europa League W Film license trading W UEFA Super Cup W DVD/Blu-ray exploitation (wholesale, retail and rental) W U21-European Championship W TV service production W Eurovision Song Contest W Vienna Philharmonic Orchestra The Highlight spectrum ranges from top theatrical fi lms and TV formats, premium football in the UEFA Champions League to traditional music events such as the New Year’s Day Concert by the Vienna Philharmonic Orchestra or the Eurovision Song Contest. Members of the Highlight Group: 1 CONTENTS FOREWORD BY THE CHAIRMAN AND THE DELEGATE 2 MEMBERS OF THE BOARD OF DIRECTORS 7 CORPORATE GOVERNANCE 9 HIGHLIGHT STOCK 20 REPORT ON THE HIGHLIGHT GROUP’S SITUATION 26 Business and general conditions 27 Report on business performance and the situation in the Film segment 30 Report on business performance and the situation in the Sports- and Event-Marketing segment 40 Important events in the fi scal year 45 Result of operations, net assets and fi nancial situation of the Highlight Group 46 Personnel report 50 Events after the balance sheet date 50 Risk report 50 Report on opportunities 54 Forecast 54 CCONSOLIDATED FINANCIAL STATEMENTS 58 Consolidated balance sheet 60 Consolidated profi t and loss account 62 Consolidated statement of comprehensive income 63 Changes in consolidated equity 64 Consolidated cash fl ow statement 66 Notes to the consolidated fi nancial statements 68 REPORT OF THE STATUTORY AUDITOR 136 FINANCIAL STATEMENTS 139 Balance sheet 140 Profi t and loss account 142 Notes to the fi nancial statements 143 Proposal for the appropriation of available retained earnings 149 REPORT OF THE STATUTORY AUDITOR 150 CALENDAR OF EVENTS 2010 (back inside cover) 2 Proud winner: Anja Kling received the Bavarian Film Award 2009 for her outstanding acting performance in the TV production “Wir sind das Volk – Liebe kennt keine Grenzen”. FOREWORD BY THE CHAIRMAN AND THE DELEGATE The Highlight Group again systematically continued its income-oriented growth course in fi scal year 2009. • Both consolidated revenues and earnings per share were up on the forecast fi gures. • With six fi lms each drawing an audience of more than one million to cinemas, the Highlight subsidiary Constantin Film was once more by far and away Germany’s most successful independent distributor. • The Highlight subsidiary TEAM successfully concluded the sale of the commer- cial rights for the UEFA Champions League and the new UEFA Europa League, achieving a considerable revenue upturn for the UEFA. 3 Dear shareholders and other interested parties, Much of 2009 was dominated by the impression of the global fi nancial crisis, which in- creasingly impacted the real economy. In this diffi cult environment, the Highlight Group succeeded in reaching, even partly exceeding, its targets. It closed the reporting year with a record result. • At CHF 517.9 million, consolidated revenues were above our planning corridor of CHF 490 million to CHF 510 million. • The net profi t of Highlight shareholders reached CHF 32.0 million, the highest level in the history of our company. • Consequently the same applies to earnings per share, which improved to CHF 0.69. • Highlight Group’s equity increased in comparison to the previous year by CHF 12.6 million to CHF 110.8 million. As a result, our adjusted equity ratio was 29.3 % at the end of fi scal year 2009. This all goes to show that the Highlight Group is well positioned and has a very solid foundation. Our business model is a sustained one, successful even in diffi cult times. 4 Share in Constantin Film increased to 100 % In March 2009, Highlight Communications AG detailed the squeeze-out demand to Constantin Film AG and in April Constantin Film AG’s Annual General Meeting resolved the transfer of the remaining shares of minority shareholders to Highlight Communica- tions AG. The resolution was entered into the Constantin Film AG commercial register on October 7. As a result, Constantin Film AG is a wholly owned subsidiary of our company. Constantin Film AG was delisted on the same day. Constantin Film again shoulder to shoulder with the US majors Last year, the German theatrical industry experienced a veritable boom. Strong products and the large-scale introduction of 3-D technology were key factors driving this success. Audience fi gures rose by approximately 13 %, while box offi ce takings surged even more strongly, rising by almost 23 %. This success record was crowned with the performance of domestic productions (including international fi lms with German involvement). With a 27.4 % share of visitors, it posted the highest level since statistical records began in 1991. For Constantin Film AG the theatrical year 2009 was yet another successful year. As many as six fi lms broke through the magical one-million barrier in admissions. With more than 11.6 million viewers, fi ve of these fi lms were ranked in the top ten German fi lms attracting the largest audiences. This means Constantin Film achieved a commendable market share of almost 11 %, taking fourth position among all distributors on the German cinema market – ranked ahead of the US majors Walt Disney and Universal. With almost 4.9 million viewers, the adventure comedy “Wickie und die starken Männer” of Michael Bully Herbig was the most successful German fi lm. Of all the fi lms launched in 2009, this put the Constantin co-production right behind the US blockbusters “Ice Age: Dawn of the Dinosaurs” and “Harry Potter and the Half-Blood Prince”. In addition to the commercial success, “Wickie” was showered with awards – from the German Comedy Prize and the renowned Bambi media prize to two Bavarian Film Awards. Home entertainment business area maintains its position in a growing market In the home entertainment market, the advance of the Blu-ray high-defi nition format further accelerated in 2009. In Germany, sales generated with the medium surged more than 183 %. After four years of declining or stagnating revenues, the German home entertainment industry generated growth of 5 % again. Foreword Board of Directors Corporate governance Highlight stock Management report Financial statements 5 Driven by top-quality fi rst releases on the Constantin fi lm label, the Highlight Group largely maintained its market position in this environment. The top product was the Bernd Eichinger production “The Baader Meinhof Complex”, of which we sold a total of 390,000 data carriers (DVD and Blu-ray). “Männersache” from and with star comedian Mario Barth also advanced to be a sales hit. Released at the end of September, a total of 210,000 units of the comedy were sold in only three months. Further bestsellers of our 2009 releases included Constantin’s licensed titles “Horst Schlämmer – Isch kandidiere!” and “Bangkok Dangerous”. Successful marketing in Sports- and Event-Marketing Our subsidiary TEAM successfully concluded the sale of the commercial rights for the UEFA Champions League and the new UEFA Europa League for the 2009/10 to 2011/12 seasons. Despite the economic crisis, TEAM surpassed the high benchmark of the three- year period from 2006/07 to 2008/09, further increasing income for the UEFA by approxi- mately 40 %. The TV rights for both competitions were sold worldwide. TEAM thus established the conditions for further comprehensive TV coverage of the two most important club football competitions. In terms of sponsorship for the UEFA Champions League, our subsidiary extended the agreements with the long-standing partners Heineken, Sony, MasterCard, PlayStation and Ford, at the same time with UniCredit even gaining a new sponsor for the remaining sixth rights package. Also extended was the offi cial ball supplier agreement with the sporting goods manufacturer adidas. The collaboration with the Vienna Philharmonic Orchestra began with the traditional New Year’s Day Concert in 2009. TEAM was responsible for the sale of TV and radio rights for this classic event for the fi rst time. The concert was broadcast to over 72 countries worldwide.