ANNUAL REPORT 2018 SCREENSHOT FILMOTV CROC-BLANC, WHITE FANG LAZZARO FELICE BURNING HIGHLIGHTS REVENUES GROSS PROFIT in € thousand in € thousand 101,420 81,282 17,985 12,945 2018 2017 2018 2017 OPERATING RESULT EARNINGS PER SHARE in € thousand in € -6,503 734 -6.36* -3.05* 2018 2017 2018 2017 OPERATING CASH FLOW NET DEBT in € thousand in € thousand 98,180 85,990 26,418 5,509 2018 2017 2018 2017 *on the basis of 2,044,075 shares § Initiation of a groupwide financial restructuring with resolutions of the Annual General Meeting on 26 September 2018. Capital reduction at a ratio of 40:1 and financing in the amount of € 22.500 million successfully completed. § Revenues declined to € 81.282 million. The gross profit margin decreased to 15.9 % (previous year: 17.7 %). § Operating result (EBIT) of € -6.503 million mainly burdened by lower revenues and restructuring costs. § Wild Bunch generates positive cash flow of € 5.509 million from operating activities. CONTENT Company Profile 04 Report of the Supervisory Board 08 The Share 13 1. General Information about the Group 20 1.1 Group structure and business model 21 1.2 Business model 22 1.3 Employees 23 1.4 Research and development 23 1.5 Management system 23 2. Business report 25 2.1 Macroeconomic and sector-specific environment 26 2.1.1 Business environment 26 2.1.2 Industry-specific economic environment 27 2.2 Financial and non-financial performance indicators 32 2.3 Business performance and analysis of non-financial performance indicators 33 2.3.1 International sales and distribution and film production segment 34 2.3.2 Miscellaneous business segment 38 2.3.3 Other information 38 2.4 Net assets, financial position and results of operations of the Group 38 2.4.1 Overall assessment of the reporting period 39 2.4.2 Segments performance 40 2.4.3 The Group's financial performance 41 2.4.4 The Group's net assets 41 2.4.5 The Group's net financial situation 42 2.4.6 Wild Bunch Group liquidity trends 43 2.4.7 Investments made by Wild Bunch Group 43 2.5 Net assets, financial position and result of operations of Wild Bunch AG 44 2.5.1 Earnings position of Wild Bunch AG 44 2.5.2 Assets and financial position of Wild Bunch AG 45 3. Forecast report 47 3.1 Trends in the market environment 48 3.2 Group focus for the 2019 financial year 49 3.3 Expected development 49 3.4 Overall statement from the management board about the Group’s development 53 4. Report on opportunities and risks 55 4.1 Risk management system 56 4.2 Internal control system 57 4.3 Risk report 58 4.3.1 Market, operational and business risks 58 4.3.2 Financial risks 63 4.3.3 Legal risks 66 4.4 Report on opportunities 69 4.4.1 Opportunity management 69 4.4.2 Information regarding individual opportunities 69 4.5 Overall assessment of the opportunities and risks 71 5. Corporate Governance 72 5. Disclosure required by takeover law pursuant to Section 315a (1) of the German Commercial Code (HGB) 74 6. Corporate Governance Statement pursuant to Sections 289f HGB 76 7. Report on affiliated companies 76 8. Remuneration report 77 CONSOLIDATED FINANCIAL STATEMENTS 79 Consolidated income statement (IFRS) 80 Consolidated statement of comprehensive income (IFRS) 81 Consolidated balance sheet (IFRS) – Assets 82 Consolidated balance sheet (IFRS) – Equity and liabilities 83 Consolidated statement of cash flow (IFRS) 84 Consolidated statement of changes in equity (IFRS) 86 Notes to the consolidated financial statements 88 Responsibility statement 168 Auditors’ report 169 COMPANY PROFILE COMPANY PROFILE 4 COMPANY PROFILE Based in Paris and Berlin, Wild Bunch AG is a leading independent film and TV series distribution and production services company that is listed on the Regulated Market (General Standard) of the Frankfurt Stock Exchange. THE BUSINESS MODEL – ACTIVE IN THE AREAS Wild Bunch continuously supplies the entertain- OF CONTENT ACQUISITION, FILM AND TV ment sector with high-quality content – whether SERIES FINANCING, CO-PRODUCTION, FILM through its expertise in identifying attractive AND TV SERIES DISTRIBUTION AND INTER- projects, its global network of filmmakers or its NATIONAL SALES WITH AN INTERNATIONAL proven expertise in international film financing. DISTRIBUTION NETWORK Its growing TV arm, Wild Bunch TV, builds on all the assets of the Group with the ambition of Wild Bunch is a leading innovative independent becoming a unique multi-domestic TV content European film and TV series distribution and coproducer, and a global distributor of such production services company. Actively engaged content. Wild Bunch TV already distributed such in the areas of acquisition, film and TV series TV series as THE EXCHANGE PRINCIPLE, FOUR financing, co-production, film and TV series SEASONS IN HAVANA, MEDICI MASTERS OF distribution and international sales, the company FLORENCE OR NAME OF THE ROSE, TEAM offers a wide range of sales services. CHOCOLATE… As a major player in international sales via its Wild Bunch currently has a total library of over sales labels Wild Bunch International Sales, Elle 2,500 film titles and co-finances and/or distri- Driver, Versatile and Wild Bunch TV but also in butes up to an additional 50 new independent direct distribution, Wild Bunch has established a films a year. worldwide distribution network that includes direct sales in five countries: Well positioned thanks to both a wealth of exper- ience widely recognized by the movie business § France with Wild Bunch Distribution SAS and world wide, as well as a broad, artistically Wild Side Video SAS, diverse selection of the best of director-led § Italy with BIM Distribuzione s.r.l., international cinema, Wild Bunch has facilitated § Germany with Wild Bunch Germany GmbH the successful international distribution and and Central Film Verleih GmbH success of numerous films, regularly honored at both European and international festivals, such § Austria with Wild Bunch Austria and as THE ARTIST, LES MISÉRABLES, CAPHAR- § Spain with Vértigo Films S.L. NAÜM, DHEEPAN, DRIVE, FAHRENHEIT 9/11, THE GRANDMASTER, INTOUCHABLES, KIKI, As early as 2008, Wild Bunch has positioned THE KING’S SPEECH, LITTLE NICHOLAS (LE itself on the market of direct electronic distribu- PETIT NICOLAS), MARCH OF THE PENGUINS, tion, creating the first VOD/SVOD service in MARY AND MIKE, PAN’S LABYRINTH, SHOP- France, FilmoTV. Furthermore, Wild Bunch also LIFTERS, SIN CITY, SPIRITED AWAY, TWO maintains a strong presence in the field of film LOVERS, VICKY CRISTINA BARCELONA… production with, among others, its brand Sena- tor Film Produktion in Germany. Wild Bunch The company is wholly committed to provide the produced or coproduced such movies as BLUE finest in international cinema to distributors and IS THE WARMEST COLOR, LE LIVRE D’IMAGES, broadcasters in the field of international cinema VICTORIA, WOLF TOTEM, ÜBERFLIEGER - throughout the world. KLEINE VÖGEL, GROSSES GEKLAPPER, HIGH LIFE, LOVELESS, OLAF MACHT MUT… 5 COMPANY PROFILE THE MANAGEMENT – THE STRATEGY – TAILOR-MADE PRODUCTS EXPERIENCED MANAGEMENT TEAM FOR PROFITABLE GROWTH Wild Bunch’s business activities are managed Wild Bunch has set itself the goal of further by an experienced management team. As Chief expanding its position as a leading independent Executive Officer (CEO) of Wild Bunch, Vincent European film distribution and production Grimond brings his many years of experience in services company. The strong international management positions in the film industry to the network and efficient structures within the Group. He has a global network in the media and group are to be used to further advance the entertainment sector and previously served as activities – especially in the core markets – and CEO of StudioCanal and Senior Executive Vice to make first-class films and TV series available President of Universal Studios. Max Sturm acts to film distributors worldwide and to all distribu- as Chief Financial Officer (CFO) on the board of tion platforms for films, from cinema to digital Wild Bunch AG. Max Sturm joined Senator video services. Besides further pene tration of Entertainment AG in 2013. Prior to that he had existing markets, the development of new worked for Constantin Medien AG, where he was market segments is an essential part of its Managing Director of the Sports Segment. growth strategy. In light of the ongoing digiti- sation and consequently the change from linear television consumption to on-demand TV, the company sees itself as a pioneer in the develop- ment of innovative solutions for production, distribution and international sales. The com- pany is actively shaping this radical paradigm shift and is continuously working commercializ- ing content via digital channels. Tailor-made, attractive content and services for the entertain- ment sector – in short, this is the way Wild Bunch aims to achieve profitable growth in the years to come. 6 COMPANY PROFILE 7 REPORT OF THE SUPERVISORY BOARD REPORT OF THE SUPERVISORY BOARD 8 REPORT OF THE SUPERVISORY BOARD In the following, the Supervisory Board reports plans that were urgent for the company, and – on its activities in the 2018 financial year, in if necessary – it issued its written vote. The particular on the type and scope of the audit of Chairman of the Supervisory Board was also the company's management and on consulta- regularly informed outside the Supervisory tions in the Supervisory Board, on compliance Board meetings about the current business with the requirements of the German Corporate situation and significant business transactions Governance Code (DCGK), on the audit of the as well as existing risks within the company. annual financial statements of Wild Bunch AG The Supervisory Board fulfilled its auditing and the Group and on personnel changes in the duties by receiving and discussing reports from company's executive bodies.