CONTENTS / Annual Report 2007 Pages 5/6 -- Foreword Pages 8/9 -- Report by the Supervisory Board Pages 11/12 -- Corporate strategy Page 13 -- The 5-sector strategy Page 15 onwards -- Investor relations Page 21 -- Contents / financial information Page 23 onwards -- Management report Page 52 onwards -- Consolidated financial statements Pages 108/109 -- AG balance sheet Page 110 -- AG income statement Page 111 onwards -- Filmography Page 126 onwards -- Terminology Page 131 -- Summary of equity interests NOTE: We draw attention to the fact that the German Annual Report 2007 is the only legally binding version. KEY FIGURES Group 01.01. – 01.01. – 31.12.20061) 31.12.2007 € million € million Sales 262.7 225.0 of which in-house productions 236.7 178.9 of which third-party productions 26.0 46.1 EBITDA 99.9 81.7 Gross profit 33.5 32.0 Operating result 14.2 12.4 Result attributable to the shareholders of the parent company 7.7 6.2 Investments in film assets 64.2 79.1 Depreciation of film assets 84.6 68.2 31.12.2006 31.12.2007 Film assets 170.8 181.7 Equity 68.8 74.6 Balance sheet total 308.4 333.3 Employees (number) 232 300 Earnings per share in €(undiluted and diluted) 0.60 0.49 1) The figures for the period 01.01. – 31.12.2006 and as per December 31, 2006 have been adjusted as described in the notes to the consolidated financial statements page 65 ff. Annual Report 2007 | | Page 3 FOREWORD by the Management Board of Constantin Film AG Dear shareholders, dear friends of Constantin Film AG, 2007 was a very challenging year: 5.7 per cent lower sales were of film, television and other audiovisual products in a media world recorded during the past theatrical year. German films accounted for that is subject to constant, rapid change. At both the national and 18.9 per cent of the market, a reduction of 6.9 per cent over the previous international level, the alliance of German producers – film & television year. These figures are a cause for concern, but they are no surprise. This is therefore to promote the interests of the producers with respect to the development has already been apparent for a number of years now. political community, exploitation companies, collective agreement There has never been any dispute about the fact that the theatrical partners and all the institutions in the media and culture industry, in market goes through cycles and involves parameters that cannot be order to create fair conditions for the production and media market in influenced. The flood of film releases – almost 500 again last year – general both effectively and efficiently. The alliance was established combined with the poor quality of many films and general reluctance on on January 19, 2008. the part of Germans to go to the cinema are tremendous challenges for our industry. New incentives must be created, movie theatres need to The home entertainment and TV production operations accounted for become a more attractive place to meet again. This process includes most of Constantin Film AG’s business last year. The home entertainment progress with digitisation and the provision through technologies like market in Germany grew again slightly in 2007 from an already high 3D projection of an alternative to comfortable living rooms with Dolby level. Although it will take a great deal more time to establish new The Management Board Surround and HD quality – although what are essential in this context technologies like Blu ray on a comprehensive basis, it can be assumed of Constantin Film AG more than anything else are attractive films. that home entertainment will be a very promising area of operation for (from left to right): Constantin Film AG in future too, with a strong basic business. Since HANNS BEESE In the theatrical and television production field, initial successful steps numerous film rights will be returning to the company in the coming FRANZ WOODTLI were taken last year to establish a long overdue joint association of all years, it can be expected that the growth prospects in the important MARTIN MOSZKOWICZ German theatrical and TV producers – known as the ”alliance of German home entertainment catalogue business will be good, if the market FRED KOGEL producers – film and television“. The central goal of the alliance is to conditions remain constant. The gradual return of the Constantin Film liaise on developing and maintaining a consistent position as an library in the coming years will continue to have a positive impact on TV independent representative of the interests of the German producers rights sales, i.e. our licence trading operations, too. Annual Report 2007 | | Page 5 FOREWORD by the Management Board of Constantin Film AG In connection with these licence trading operations, we were very The clear alignment of our company, our team of creative and qualified interested to note the investment that Rupert Murdoch’s News Corp. made staff and the proven, intensive contacts we have established and in the Premiere television channel at the beginning of 2008. It would be a maintained over decades to key people and companies in the media welcome development if the German pay TV business was strengthened business all over the world are important factors that will help considerably in the coming years and at long last reached a comparable Constantin Film AG to continue operating successfully. status to pay TV in such countries as France and Great Britain. Our attractive theatrical distribution programme, the intensive develop - In recent years, there have already been clear signs that the German ment and production operations and ongoing integration of all areas of TV service production market is suffering from more and more intense the company will be making further positive contributions to this process Scene from: pressure from the private stations in particular. This is due to increasing in the current year too. LA VIE EN ROSE cost pressure from the stations but also to the taste of German TV (theatrical release: viewers, who have unfortunately turned their backs on many German We are therefore planning sales of at least €230 million and a positive February: 22, 2007) fiction TV series programmes emphatically in the last 12 months in operating result of at least €12 million in 2008. with Oscar® prize - particular. We continue to hold a very good position on the TV service winner Marion Cotillard production market in spite of this development. Steady expansion of the We would like to thank you for the confidence you have placed in us and in the leading part production operations in other European countries – specially in the for your loyalty to us. entertainment field – is therefore a priority for us. ▲ ▲ FRED KOGEL / Chairman of the Management Board; MARTIN MOSZKOWICZ / production licence trading, distribution and marketing, legal affairs, human resources, TV entertainment, corporate communications and investor relations ▲ ▲ HANNS BEESE / finance and accounting FRANZ WOODTLI / home entertainment Page 6 ||Annual Report 2007 REPORT BY THE SUPERVISORY BOARD Bernhard Burgener The Supervisory Board carried out its advisory and control assignment agreement with Bernd Eichinger, one of the members of the Supervisory throughout the 2007 fiscal year. The Management Board kept the Board; individual production and/or authorship contracts are concluded Supervisory Board informed promptly and in detail by providing oral and for each of his projects. A production contract about the project written reports. The Supervisory Board and the Management Board Der Baader Meinhof Komplex was concluded with Mr Eichinger in remained in close contact above and beyond this as well. the 2007 fiscal year on the basis of the general production contract. The Supervisory Board approved the conclusion of this production All the main issues of business policy, particularly the economic contract. Individual production contracts are concluded with Professor development of the company, strategy and planning, relevant business Dr Günter Rohrbach, one of the members of the Supervisory Board, on a events and business transactions that required approval, were reviewed project basis. A production contract about the project Anonyma – Eine and discussed intensively, in detail, analytically and empirically on the Frau in Berlin and a production contract about the project Effi were basis of reports by the Management Board at the 4 ordinary meetings concluded with him in the 2007 fiscal year. The Supervisory Board held in the 2007 fiscal year as well as in written decision-making approved the conclusion of these production contracts. In each case, the processes, including discussion of these issues with the Management Supervisory Board reviewed whether it is possible for these activities as Board too. On several occasions in the 2007 fiscal year, the Supervisory producer to lead to conflicts of interest in the activities of the member of Board exercised its right to inspect the company’s books, other the Supervisory Board concerned or for the company. The Supervisory documentation and assets. Board is convinced that no major conflicts of interest will arise. Any potential conflicts of interest are avoided by the member of the At regular intervals during the 2007 fiscal year, the Supervisory Board Supervisory Board concerned abstaining when a vote is taken by focussed on analysing the commercial exploitation of the company’s the Supervisory Board on any resolutions associated with the imple - films in the theatrical and home entertainment operations in particular. mentation of one of the above-mentioned projects. The difficult market environment for theatrical exploitation and the impact of this on the company’s strategy were discussed in detail The Supervisory Board has only formed one committee, the Audit with the Management Board. The company’s feature film production Committee. Following the end of both the 2006 fiscal year and the 2007 operations, in connection with which budget proposals, earnings fiscal year, the Audit Committee reviewed the financial statement forecasts and artistic elements were discussed with reference to a large documents of Constantin Film AG and the Group, checked the risk number of projects, were again another emphasis.