Q1 - Constantin Medien€¦ · The Company Q1 2014 First Quarter 2014 First Quarter 2014 January...
Transcript of Q1 - Constantin Medien€¦ · The Company Q1 2014 First Quarter 2014 First Quarter 2014 January...
Content Q1 2014
Content
2 Key Figures
3 First Quarter 2014
4 Foreword by the Chairman of the Management Board
6 Constantin Medien AG Share
9 Interim Group Management Report
32 Consolidated Interim Financial Statements
40 Consolidated Interim Financial Statements | Notes to the Consolidated Interim Financial Statements
50 Finance Calendar | Imprint
Forward-looking statements
This quarterly report contains statements relating to future events thatare based on management’s assessments of future developments. A se-ries of factors beyond the control of the company, such as changes in thegeneral economic and business environment and the incidence of indi-vidual risks or occurrence of uncertain events, can result in actual re-sults differing substantially from the forecast. Constantin Medien AGdoes not intend to continually update the forward-looking statementscontained in this quarterly report.
Important notice
This document is a free translation into English of the original Germantext. It is not a binding document. In the event of a conflict in inter-pretation, reference should be made to the German version, which isthe authentic document.
2
Q1 2014 The Company
Key Figures
Key Figures
Non-current assets
Film assets
Other intangible assets
Balance sheet total
Subscribed capital
Equity
Equity ratio (in percent)
Non-current financial liabilities
Current financial liabilities
Sales
Sports
Film
Sports- and Event-Marketing
Other Business Activities
Earnings before interest, taxes, depreciation and amortization (EBITDA)
Amortization, depreciation and impairment
Loss/profit from operations (EBIT)
Earnings before taxes (EBT)
Earnings attributable to shareholders
Cash flow from operating activities
Cash flow for investing activities
Cash flow for financing activities
Shares outstanding in million
Share price in EUR
Market capitalization (based on shares outstanding)
Average number of shares outstanding (basic) in million
Earnings per share (basic) in EUR
Earnings per share (diluted) in EUR
Employees (at closing)
3/31/2014
225.1
135.5
31.9
465.0
85.1
49.7
10.7%
109.8
99.1
1/1 to3/31/2014
136.1
33.4
92.1
10.1
0.5
51.3
-53.6
-2.3
-4.2
-5.5
46.8
-18.4
-25.2
3/31/2014
77.7
1.58
122.8
1/1 to3/31/2014
77.7
-0.07
-0.07
1,600
12/31/2013
258.8
172.2
31.6
495.6
85.1
55.2
11.1%
109.6
124.0
1/1 to3/31/2013
103.7
37.1
55.8
10.1
0.7
19.2
-17.4
1.8
0.7
-0.5
17.2
-15.9
-9.4
12/31/2013
77.7
1.69
131.3
1/1 to3/31/2013
77.7
-0.01
-0.01
1,547
in EUR million
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The Company Q1 2014
First Quarter 2014
First Quarter 2014
January
Effective January 1, 2014, Bernhard Burgener, Chairman of
the Management Board of Constantin Film AG until that point,
moves to the Company's Supervisory Board and is elected as
Chairman of this Board on January 7, after the previous office
holder Fred Kogel stepped down ahead of time. The Man age-
ment Board Member Martin Moszkowicz is appointed as new
Chairman of the Management Board of Constantin Film AG.
At this year’s Bavarian Film Awards ceremony in mid- January,
the Constantin Film blockbuster “Fack ju Göhte” receives the
Audience Award. The Constantin Film co-production “Ostwind”
receives the Bavarian Film Award in the category Best Chil-
dren's and Teen Film of 2013.
Since the end of January, SPORT1 US can also be received via
Entertain, the pay-TV platform of Deutsche Telekom, in SD and
HD quality. A co-operation was concluded with Zattoo: also
since the end of January, Zattoo HiQ subscribers can receive
SPORT1 HD.
February
In early February, SPORT1 acquires the exploitation rights to
the Women's and Men's Rabobank Hockey World Cup 2014,
which is to take place in Den Haag, Netherlands, from May 31
to June 15. In addition, it also acquires the rights package for
the biennial FIH Champions Trophy, which is due to take place
in November and December 2014.
After obtaining the exploitation rights for the Olympic Men's
and Women's Ice Hockey Tournaments at the 2014 Olympics
Winter Games in Sochi, SPORT1 in February broadcasts a total
of 27 live matches in free-TV and as live streamings on
SPORT1.de.
At this year's Monte-Carlo Film Festival de la Comédie at the
end of February, “Fack ju Göhte” receives three awards:
Director and scriptwriter Bora Dagtekin wins Best Directors,
Elyas M'Barek wins Best Lead Performance and cameraman
Christof Wahl receives the Special Jury Prize.
March
SPORT1 agrees a co-operation with Ticketmaster GmbH and
since March 3 offers its own online ticket shop on SPORT1.de,
offering tickets for numerous sports, music and comedy high-
lights.
In mid-March, SPORT1 announces the acquisition of the
exploitation rights to Major League Baseball (MLB) for the
German-speaking region for the next three match periods. The
pay-TV channel SPORT1 US is broadcasting at least 60 live
matches per period with original US commentary.
Also in mid-March, the Constantin Film co-production “3096”
receives the “Deutscher Hörfilmpreis” in the category Theat ri-
cal Film. The Constantin Film TV series “Dahoam is Dahoam”
receives the “Deutscher Hörfilmpreis” Audience Award.
In the reference funding of the German Federal Film Board
(Filmförderungsanstalt, FFA) for 2013, the Constantin Film
Group is awarded the Golden FFA Industry Tiger for the ninth
time in the category Production and for the tenth time in the
category Distribution at the end of March 2014.
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Q1 2014 The Company
Foreword by the Chairman of the Management Board
Foreword by the Chairman of the Management Board
Dear Shareholders,
in the first three months of the current year, the Constantin
Medien Group recorded a varied development in its operative
segments. Overall, business development remained in line with
expectations, even though our Company's earnings position
was impacted by non-recurring charges.
In the Sports Segment, the positive development of market
shares and coverage of our multimedia offers continued. The
free-TV channel SPORT1 was able to increase its market share
compared to the previous year's quarter, and also our pay-TV
offers SPORT1+ and SPORT1 US recorded further growth in
terms of subscribers. The accumulated coverage of the online
and mobile offers under our umbrella brand SPORT1 recorded
in visits went up in the first quarter by a monthly average of
more than 13 percent to 63.5 million, considering that the
shift of content use from online to mobile, which has been ap-
parent for some time, remained at a high level. The consist -
ently favorable response of viewers and users to our extensive
sports contents demonstrates that we are on the right track with
our digi ti zation strategy and with our further program develop-
ments implemented in 2013.
However, as expected, the increase in sales of SPORT1 in the
first quarter were insufficient to compensate for the loss of the
production of the former Bundesliga channel LIGA total! Con-
sequently, segment sales in the first quarter of EUR 33.4 mil-
lion were below the previous year’s figures. The segment result
of EUR 1.2 million was further impacted by the higher expen-
ses for our digitization strategy. Nevertheless, we view this as
an important investment for the future of our Sports Segment.
The Film Segment recorded a jump in revenues by 65 percent
to EUR 92.1 million between January and March. In particular,
the areas of theatrical distribution and license trading were
able to generate significantly higher sales compared to the
comparative quarter in 2013 due to the global distribution of
the film title “Pompeii”. In a slightly declining German thea-
tri cal market, German in-house and co-productions pleasingly
increased their market share compared to the previous year's
first quarter by almost 10 percentage points to 42 percent.
Taking together the performance of all of its films released in
German cinemas in the first quarter 2014, the Constantin Film
Group reached an impressive market share of 11.9 percent by
viewers and 11.0 percent by revenue. The basis for this was
the teen adventure “Fünf Freunde 3”, which was released in
January 2014 and attracted 1.2 million viewers, as well as the
sensational success “Fack ju Göhte” already launched in
November 2013, which attracted a further 1.5 million movie-
goers in the first quarter 2014. Impairments on film assets, in
particular the movie “Tarzan”, had a negative impact. The
impair ments significantly contributed to the negative segment
result for the first three months of EUR 2.6 million.
The Sports- and Event-Marketing Segment continued to pre-
sent itself highly successful. In the first quarter 2014, the
TEAM group was able to realize additional agreements in the
marketing process for the commercial rights for the UEFA
Champions League and UEFA Europa League (each for the
match periods 2015/16 to 2017/18). TV contracts were con-
cluded for such varied markets as Italy, Israel and Myanmar. In
the sponsorship rights area, the Japanese automobile manufac -
turer Nissan was acquired as a new sponsor for the UEFA Cham-
pions League. At stable revenues, the segment result increased
by EUR 0.5 million to EUR 3.9 million.
The Constantin Medien Group generated sales of EUR 136.1
million for the first three months, an increase of 31 percent
compared to the same period last year. However, earnings
attrib utable to shareholders – our key reporting figure for the
development of earnings – amounted to EUR -5.5 million, thus
weaker than last year (EUR -0.5 million). In addition to higher
impairments, non-recurring charges in the context of our Com-
pany's so-called Formula One proceedings also had an im pact.
In February 20 this year, the High Court of Justice in London
as the Court of First Instance had rejected the claim. As a result,
we took legal steps in order to achieve admission to appeal and
to further assert our compensation claims.
On May 19, 2014 we announced that we will not continue
negotiations with Sky Deutschland regarding the transaction
agreed on December 5, 2013. The agreement provided the
sale of 100 percent of the shares of PLAZAMEDIA and of 25.1
5
percent each of the shares in Sport1 GmbH and Constantin
Sport Marketing GmbH. The execution, among others, was sub-
ject to the conclusion of a new multi-year production frame-
work contract between Sport1 GmbH and PLAZAMEDIA GmbH
TV- und Film-Produktion. However, it was not possible to reach
an agreement with Sky regarding this arrangement.
As a result, we have adjusted our financial expectations for the
current year because the sales of PLAZAMEDIA now continue
to be included in the year and due to the loss of the transac-
tion's income. We now assume sales of between EUR 460 mil-
lion and EUR 500 million for the Constantin Medien Group
(previously: EUR 420 million to EUR 460 million) and Group
earnings attributable to shareholders of between EUR
-13 million and EUR -15 million (previously: EUR +13 million
to +15 million).
Strategically, the non-conclusion of the transaction has no im-
pact on our Sports Segment. We will proceed on the path that
we have chosen and also continue our multimedia strategy with
the same determination as before in order to profit from the
digitization as best as possible.
With best regards
Bernhard Burgener
Chairman of the Management Board
6
Q1 2014 The Company
Constantin Medien AG Share
XETRA closing prices of the Constantin Medien share compared to SDAX and DAXsector Media
Comparative indices indexed to Constantin Medien's closing price as of December 31, 2013
12/31/13 1/31/14 2/28/14 3/31/14
1.85
1.80
1.75
1.70
1.65
1.60
1.55
1.50
Constantin Medien AG SDAX DAXsector Media
Constantin Medien AG Share
Performance of the capital markets
In the first quarter 2014, the German stock market and most
international capital markets were marked by a volatile lateral
shift. The most important international prime rates remained
unchanged on a very low level in the first quarter 2014. The
relaxed monetary policy of the federal banks con tinued to
stimulate the markets. In the meantime, geopolitical tensions
around the future annexation of Crimea to Russia led to
uncertainty in the markets. The DAX rose by 0.04 percent in
the first quarter, closing at 9,556 points on March 31. In the
same period, the German small-cap index SDAX showed a sig-
nificantly more positive development with an increase of 5.6
percent, closing at 7,169 points. The German media index
(DAXsector Media) closed at 318 points at the end of March
2014 after a drop of 6.7 percent.
Constantin Medien share performance
In the first quarter 2014, the Constantin Medien share's per-
formance was marked on the whole by a downward movement.
At a markdown of 6.4 percent since the start of 2014, the
share of Constantin Medien AG was below the comparative
small-cap index of the SDAX but in line with the German media
index DAXsector Media. The Constantin Medien share closed
at EUR 1.58 at the end of the first quarter. As of March 31,
2014, the 52-week high stood at EUR 1.88 (April 2, 2013)
with the 52-week low coming in at EUR 1.35 (June 13, 2013).
In the remaining post-balance sheet period, the Constantin
Medien AG share followed a lateral movement, closing at EUR
1.49 on April 30, 2014.
7
The Constantin Medien share is being actively monitored by
no table research institutions. In the last twelve months, the
follow ing institutions published studies on Constantin Medien
AG:
– Close Brothers Seydler Bank – Deutsche Bank
– DZ Bank – Matelan Research
Share capital and shareholder structure
Constantin Medien AG's share capital did not change during
the first quarter 2014, amounting to EUR 85.1 million as of
March 31, 2014. As a consequence of the full consolidation
of its subsidiary Highlight Communications AG, its shares in
Constantin Medien AG qualify as treasury shares; and so the
Company held a total of 7.4 million non-voting treasury shares
(8.7 percent of share capital) through Highlight Communica-
tions AG as of March 31, 2014. After deducting these shares,
there were approximately 77.7 million shares out standing as of
the balance sheet date.
There were no reportable changes to the shareholder structure
of Constantin Medien AG in the first quarter 2014. The free
float of the Constantin Medien share stood at 51.9 percent of
the share capital as of March 31, 2014.
Additional Constantin Medien AG capital market
securities
At a drop of 6.3 percent, the share of Highlight Communica -
tions AG also fell below the comparative small-cap index SDAX
in the first quarter 2014 and was in line with the comparative
German media index DAXsector Media. The share price closed
at EUR 3.72 on March 31, 2014. As of April 30, 2014, the
shares traded at EUR 3.75.
On October 13, 2010, Constantin Medien AG had issued a cor-
porate bond with a volume of EUR 30 million in the form of a
private placement with institutional investors in Germany and
abroad. The bond has a term of five years and accrues interest
at 9.0 percent p.a. The bond was included as a follow-through
by third parties in the open market of the Stock Exchange. At
the end of the first quarter 2014 the bonds closed at 104.70
percent. As of April 30, 2014, they stood at 104.20 percent.
On April 4, 2013, the Company's Management Board with the
consent of the Supervisory Board decided to issue a corporate
bond with a volume of up to EUR 65 million, a coupon of 7.0
percent p.a. and a maturity of five years. As a result of the strong
demand, Constantin Medien AG was able to successfully place
its 7.0% corporate bond 2013/2018 with private investors and
institutional investors on April 15, 2013 – already on the first
day of the subscription period. The trad ing of the bond started
on April 17, 2013 in the open market of Deutsche Börse AG
(Regulated unofficial market of the Frankfurt Stock Exchange)
in the segment Entry Standard for Bonds. April 23, 2013 was
the issuance and value date. At the end of the first quarter
2014 they closed at 99.70 percent. As of April 30, 2014 they
stood at 101.25 percent.
KF 15 GmbH & Co. KG
Treasury shares1
Dr Erwin Conradi
Bernhard Burgener
BWVA2
Dr Dieter Hahn
1Predominantly held through Highlight Communications AG2Baden-Württembergische Versorgungsanstalt für Ärzte, Zahnärzte und Tierärzte
Shareholder structure as of March 31, 2014
Share capital: 85.1 million shares
18.7%
8.7%
6.2%
51.9%
6.7%
5.1%2.7%
Free float
8
Q1 2014 The Company
Constantin Medien AG Share
DE0009147207 / 914720
CH0006539198 / 920299
DE000A1EWS01 / A1EWS0
DE000A1R07C3 / A1R07C
DAXsector Media
EUR 1.58 / 1.88 / 1.35
EUR 3.72 / 4.45 / 3.43
104.70 / 105.00 / 100.40 percent
99.70 / 103.00 / 94.00 percent
85.1 million shares
77.7 million shares
29,000 bonds
65,000 bonds
EUR 122.8 million
EUR 165.7 million
EUR 30.4 million
EUR 64.8 million
ISIN/WKN
– Ordinary share (Prime Standard Segment)
– Highlight Communications AG share (Prime Standard Segment)
– Corporate bond 2010/2015 (Open market)
– Corporate bond 2013/2018 (Segment Entry Standard for Bonds)
Indices
Closing rate 3/31/2014 / 52-week high / 52-week low
– Constantin Medien AG (Xetra)
– Highlight Communications AG (Xetra)
– Corporate bond 2010/2015 (Frankfurt)
– Corporate bond 2013/2018 (Frankfurt)
Share capital (3/31/2014)
Shares outstanding (3/31/2014)
Corporate bond 2010/2015 outstanding
Corporate bond 2013/2018 outstanding
Market capitalization (related to shares outstanding as of 3/31/2014)
– Constantin Medien AG (Xetra)
– Highlight Communications AG (Xetra)
– Corporate bond 2010/2015
– Corporate bond 2013/2018
Information on Constantin Medien securities as of March 31, 2014
Directors’ Dealings/Shareholdings of Board Members as of March 31, 2014
In the first quarter 2014, the Company was not notified of any
reportable purchase and sales transactions by Members of the
Management Board and the Supervisory Board. The number of
shares held by the executive bodies and their related persons
as of March 31, 2014 has therefore not changed compared to
the table shown in the 2013 annual report. No share entitle-
ments associated with option rights for executive Board Mem-
bers exist.
The Board Members Mr Bernhard Burgener (Chairman of the
Management Board) and Dr Dieter Hahn (Supervisory Board
Member) each held a direct or indirect holding in shares or
share entitlements exceeding 1 percent of the share capital as
of March 31, 2014.
9
Interim Group Management Report
1. Basis of the Group
1.1 Group structure and business activities
Constantin Medien AG is an internationally operating media
company and based in Ismaning near Munich. The Company is
focused on the Sports Segment and, through its holding in the
Swiss media company Highlight Communications AG, on the
Segments Film, Sports- and Event-Marketing as well as the
Segment Other Business Activities.
As parent company, Constantin Medien AG is the controlling
holding company. With the areas Finance, Accounting, Con-
trolling, Internal Audit, Communication, Investor Relations,
Human Resources and Legal, Constantin Medien AG provides
intercompany services and is responsible for the strategic con-
trol of the Group. Through its 100-percent subsidiary Constan -
tin Sport Holding GmbH, it holds a 100-percent share in each
of the companies in the Segment Sports.
Highlight Communications AG is a stock corporation according
to Swiss law, which has been listed on the Frankfurt Stock
Exchange since 1999. Its holdings include 100-percent hold -
ings in Constantin Film AG, in Rainbow Home Entertainment
AG, Pratteln/Switzerland, in Rainbow Home Entertainment
Ges.m.b.H., Vienna/Austria as well as in Team Holding AG,
Lucerne/Switzerland. In addition, it holds a 68.63-percent
share in Highlight Event & Entertainment AG, Düdingen/Swit-
zerland, which is listed on the Swiss Stock Exchange (SIX
Swiss Exchange).
The Segment Sports covers the activities in the TV area with
the free-TV channel SPORT1, the pay-TV channel SPORT1+
and since August 1, 2013, also the new pay-TV channel
SPORT1 US. Furthermore, the online portal SPORT1.de, the
mobile SPORT1 applications for iPhone/iPad and Android and
since July 19, 2013, the new digital sports radio SPORT1.fm
belong to the portfolio under the SPORT1 umbrella brand.
PLAZAMEDIA is another Group subsidiary and offers compre-
hensive services in the field of production together with its sub-
sidiaries in Austria and Switzerland. In addition, the central -
ized marketer Constantin Sport Marketing is responsible for
the integrated and cross-platform marketing of the Group-
owned brands in the Sports Segment.
On December 5, 2013, Constantin Sport Holding GmbH
agreed with Sky Deutschland Fernsehen GmbH & Co. KG the
sale of PLAZAMEDIA GmbH TV- und Film-Produktion, includ -
ing its subsidiaries as well as the sale of 25.1 percent each in
Sport1 GmbH and in Constantin Sport Marketing GmbH. The
transaction was subject, among others, to the conclusion of a
new multi-year production framework contract between
SPORT1 and PLAZAMEDIA. The total sales price for the 100-
percent share in PLAZAMEDIA as well as for the 25.1 percent
stake each in SPORT1 and Constantin Sport Marketing should
amount to around EUR 57.5 million (cash and debt free). The
execution of the transaction was provided for the first half of
2014 (for details, please refer to chapter 4).
In the Sports Segment the main sources of finance in the free-
TV/online/mobile area are the advertising and/or sponsoring rev -
enues and in the pay-TV area particularly the contractually
agreed guarantee payments and subscriber-based feed-in con-
tracts. In the production area, these include long-term pro-
duction framework contracts and indirectly also the advertising
revenues of the TV channels. The main expense items in the
Sports Segment comprise the costs of licensing rights, the
costs of production and manufacturing, distribution costs and
personnel expenses. In the production sector, these particu-
larly include the costs of production services, investments in
technical innovations and extensions, maintenance and service
as well as the costs of signal feeds and not least personnel.
The Segment Film contains the activities of Constantin Film
AG and its subsidiaries as well as the Highlight Communications
subsidiary Rainbow Home Entertainment. The Constantin Film
group is the most important independent German producer and
distributor of theatrical films. Its operations encompass the
development and production of films as well as the exploitation
of in-house productions and acquired film rights. In-house film
productions are usually distributed worldwide, while third-party
productions are basically exploited in German-speaking coun-
tries. In this, all steps along the exploitation chain are utilized
(theatrical distribution, DVD/Blu-ray, television). Apart from
theatrical films, the Constantin Film group creates fictional
and non-fictional productions for German and foreign TV sta-
tions. For purpose of exploiting the video rights for in-house
and licensed films, Highlight Communications AG has its own
distribution organization. In Switzerland and Austria, distribu-
tion is performed by the Rainbow Home Entertainment com-
panies. Distribution on the German market is conducted by
Highlight Communications (Deutschland) GmbH in co-opera-
tion with Paramount Home Entertainment.
Interim Group Management Report Q1 2014
Basis of the Group
10
Q1 2014 Interim Group Management Report
Basis of the Group
In the Film Segment, the main sources of finance result from
the exploitation of in-house and acquired film rights across all
steps along the exploitation chain. Additional revenues are
generated by production orders for TV channels and by natio-
nal and international film promotion grants. The main expense
items comprise acquisition and exploitation rights from scripts
and materials, production costs as well as marketing and re-
lease and promotion expenses for individual films (marketing
and copies).
The Segment Sports- and Event-Marketing includes the activ -
ities of Team Holding AG (TEAM) and its subsidiaries. The
TEAM group specializes in the global marketing of interna -
tional major sports events. Being one of the world's leading
agencies in this field, it exclusively markets on behalf of the
Euro pean Football Association (UEFA), the UEFA Champions
League as well as the UEFA Europa League and the UEFA
Super Cup.
In the Sports- and Event-Marketing Segment, the main sources
of finance are agency commissions relating to the marketing of
TV and sponsoring rights.
The Segment Other Business Activities includes the activities
of Highlight Event & Entertainment AG. The company operates
in the event and entertainment business and holds the market -
ing mandates for the Eurovision Song Contest and the Vienna
Philharmonic Orchestra. The Highlight Communications sub-
sidiary Rainbow Home Entertainment has a 50.004 percent
holding in the full service agency Pokermania GmbH located in
Cologne, which specializes in the development of online
gaming business models and on the social games market. The
activities in the area online/social gaming are included in the
Segment Other Business Activities.
In the Segment Other Business Activities, the main sources of
finance are revenues resulting from agency commissions relat -
ing to the marketing of TV and sponsoring rights as well as from
the marketing of social/online gaming products. The main
expense items here comprise technology costs as well as costs
relating to the development and programming of new social/on-
line gaming products.
Others primarily include the activities of the holding company
Constantin Medien AG.
1.2 Management system and performance indicators
1.2.1 Group management
The Management Board of Constantin Medien AG is respon-
sible for the strategy and control of the Group. With respect to
the Group companies of the Sports Segment, the operational
responsibility falls to the particular management of each sub-
sidiary. The controlling of the companies within this segment
is conducted through shareholder meetings, strategic manage -
ment meetings and regular meetings of the Executive Board
and the Corporate Board. Short- and medium-term planning
and regular reports are the basis for managing the activities of
the sports companies.
Highlight Communications AG and Highlight Event & Enter-
tainment AG as stock corporations subject to Swiss law as well
as Constantin Film AG as a stock corporation under German
law are autonomously managed by the Board of Directors and
the Management Board, respectively. As shareholder, Con-
stantin Medien AG exercises control in the Highlight Commu-
nications group by means of its 52.39 percent interest. Here,
short- and medium-term planning as well as regular reports to
the Boards also form the basis for managing the corresponding
activities. In addition, Highlight Communications AG reports
to Constantin Medien AG as part of the regular Group reporting.
1.2.2 Financial performance indicators
Sales figures and earnings attributable to shareholders are the
key performance indicators within the Constantin Medien
Group. In addition, the financial ratios earnings before interest
and taxes (EBIT), earnings before interest, taxes, depreciation
and amortization (EBITDA) and net debt (cash and cash equi-
valents less financial liabilities) are identified regularly for con-
trolling and managing the segments.
1.2.3 Non-financial performance indicators and success factors
Beyond the financial key performance indicators, non-financial
performance indicators and success factors arising from the
specific requirements of the particular business model are also
of key significance for the Company's performance.
Coverage and market shares: Market and TV viewer research is
the basis for Sport1 GmbH for monitoring the programming
line-up of its free-TV and pay-TV channels to examine its viewer
appeal, to acquire attractive license rights, to develop innova-
tive formats and to ensure programming that accurately reflects
viewer preferences.
11
In the free-TV area, these indicators include the daily coverage
and market shares that are surveyed by the Society for Consu-
mer Research (GfK). In case of SPORT1, this is in particular
the market share of its core target group of males aged 14 to
49 years (M14-49). In the pay-TV area, the key indicator is the
number of subscribers, and in the online area the standardized
online coverage currency unique user, which is reported
monthly by the Online Research Group (Arbeitsgemeinschaft
Online Forschung e.V., AGOF). Moreover, the German Infor-
mation Association for the Ascertainment of Distri bution of
Advertising Media (Informationsgemeinschaft zur Feststellung
der Verbreitung von Werbeträgern e.V., IVW) monthly reports
the number of page impressions (PI) and visits. In the mobile
area, visits are also reported by IVW and download figures are
shown via App Figures, Android Developer Market and the You-
Tube content management system.
In the TV service production area in the Film Segment, cover -
age and market shares are also important ratios for determining
the audience success of a broadcast format and often form the
basis for decisions regarding future commissions.
Technical coverage: Regarding the free-TV channel SPORT1's
appeal as a platform for advertisers, the technical coverage of
the channel is of great importance. SPORT1's coverage extends
to almost 32.08 million, and thus 87.4 percent of all acces -
sible households in Germany, which means that it can be
received area-wide. In pay-TV, area-wide distribution of the two
channels SPORT1+ and SPORT1 US using the main cable net-
work operators and infrastructure providers as far as possible
is a key non-financial performance indicator.
Number of visitors: In the theatrical distribution area of Con-
stantin Film AG, the number of viewers generated by a film is
a decisive factor because theatrical success usually also im-
pacts subsequent exploitation levels – particularly in Home
Enter tainment. In spite of intense prior market monitoring in
the target groups, the taste of cinema audiences is only
assessable to a limited extent. In addition, the theatrical films
released by Constantin Film AG always compete with titles by
other distributors running at the same time so that even a
marketing campaign perfectly matched to the relevant film can
not always meet the expected viewer figures.
Moreover, non-financial performance indicators and success
factors, which are not evaluated quantitatively and used for in-
ternal monitoring, are also of key importance to the Company's
performance, and essential for the Company's business model.
Access to rights: For the platforms under the umbrella brand
SPORT1 the access to and availability of attractive sports rights
are of great importance. This applies in particular to the broad-
casting of soccer matches. The access within this sector is also
dependent upon factors such as convincing programming con-
cepts, a solid finance basis and a close-knit network of con-
tacts with decision-makers in this area. In free-TV, attractive
sports rights are essential to be able to maintain or expand the
market share in the core target group (M14-49), for the pay-
TV sports channels SPORT1+ and SPORT1 US to guarantee
and successively increase their pay value and for the digital
sports radio SPORT1.fm to further expand listener and user
numbers.
With regard to the acquisition of literary material and scripts,
as well as to conclusions of contracts with successful directors,
actors and film studios, the Constantin Film group faces strong
competition. Therefore, Constantin Film AG has been working
for decades very closely with renowned and experienced
screenwriters, directors and producers in Germany and abroad,
who have a high level of know-how in the production of thea-
trical films and TV formats.
Professional expertise and network of contacts: Not only in
light of the increasingly digital and convergent media usage
behavior and the transformation to consuming cross-platform
offers, both technology and content competence are essential.
Correspondingly, recruiting, advancement and retaining well-
trained, qualified, dedicated and creative employees are of
high priority
In addition, a distinctive network of contacts and close and
trusting relationships with business partners are important
indicators for the success of the group of companies. In the
Sports Segment, this applies e.g. with regard to rights holders
and the advertising industry or media-political institutions. In
the Film Segment, the co-operation with scriptwriters, directors
and producers in Germany and abroad is particularly impor-
tant. In the Sports- and Event-Marketing Segment and in the
Segment Other Business Activities, trusting business rela tion -
ships with the rights holders and with existing and potential
sponsors are essential in marketing major international sports
or entertainment events.
1.3 Material legal factors
Constantin Medien AG has to comply with a large number of
stock market and legal requirements. As a stock corporation
listed on the regulated market (Prime Standard) of the Frank-
furt Stock Exchange according to German law, the Company is
in particular subject to the German Stock Exchange and
Capital Market legislation and has to comply with the recom-
mendations of the German Corporate Governance Code. High-
light Communications AG is a stock corporation according to
Swiss law, which has been listed on the Frankfurt Stock
Exchange and Highlight Event & Entertainment AG as stock
corporation under Swiss law has to meet the “Codes of Best
Practice“ of the SIX Swiss Exchange. The operational activities
of the companies in the individual segments are in accordance
with a variety of media, data protection and copyright laws as
well as with regulatory requirements.
Compared to the presentation in the Combined Group Man age-
ment and Management Report of Constantin Medien AG for
the 2013 financial year, there were the following changes in
the Segment Film:
The Constantin Film group makes use of different national and
international public film promotions when producing films. The
Federal Government promotes the production of theatrical
films in Germany in order to improve the general economic
conditions of the film industry in Germany, support the com-
panies in the film industry and their international competi tive-
ness as well as to sustainably expand Germany as film pro -
duction site. In 2013, the Federal Government made available
around EUR 30 million via promotion programs and awards for
the production of German films. In addition, it provides EUR
60 million for the “German Federal Film Fund” in 2014, which
compensates producers for up to 20 percent of specific film
production costs. The German states also provide significant
financing for the production of German films each year.
Further more, the European Union also awards film funding.
Sources: HDF Kino, April 17, 2014; Online Publication for the Fede-ral Government on Film Promotion (last accessed: April 28, 2014)
The amendment of the Film Funding Act (FFG) enacted by the
Federal Cabinet became effective with its planned changes
(expansion of the fee obligation for additional film providers,
flexibilization of holdback periods etc.) on January 1, 2014.
The judges of the Federal Constitutional Court confirmed the
constitutionality of the FFG on January 28, 2014.
Source: SKW Schwarz, Film & TV Ticker 1/2014
With its ruling on March 27, 2014, the European Court of Jus-
tice affirmed that courts can obligate internet providers to
block websites offering illegal contents for their customers.
This ruling constitutes a further milestone against piracy and
for the creative industry.
1.4 Market research and development
Compared to the presentation in the Combined Group Man age-
ment and Management Report of Constantin Medien AG for
the 2013 financial year, there were no changes regarding the
activities of the companies in the different Segments in the
area of market research and development.
2. Economic Report
2.1 Overall economic conditions in the first quarter 2014
After several difficult years, the global economic is slowly
regaining momentum. Especially in the industrial nations, the
economic framework conditions improved at the start of 2014.
In Europe, the recession in the Eurozone, which has continued
since 2011, is coming to an end. Since most early indicators
have improved, nearly all countries in the Eurozone are likely
to achieve a positive growth rate this year.
According to the Federal Ministry for Economy and Energy,
economic activity in Germany increased in the first months of
2014. The manufacturing industries particularly sent positive
impulses. On average in January and February, monthly aver -
ages exceeded those in the final quarter of 2013. This demon -
strates further growth in total production for the first quarter of
2014 compared to the previous quarter.
Private consumption was also on the rise. Stronger consumer
willingness to spend was reflected in the significant increase
in retail sales revenues (excluding passenger vehicle retail) in
January and February. The economic retail climate improved in
March – for a second month running. This positive trend is due
to higher income and a consistently moderate price develop-
ment.
Sources: M.M. Warburg & Co., Hamburg: Capital Market Perspectives,February 2014; Federal Ministry for Economic and Energy, Press Release,April 10, 2014
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2.2 Sector-specific general conditions, operating performance
of the segments and analysis of non-financial performance
indicators
2.2.1 Sector-specific general conditions in the Segment Sports
According to the information and media company Nielsen
Media Research, gross advertising investments in Germany had
a volume of EUR 6.3 billion in the first quarter of 2014. This
corresponds to a growth of 2.9 percent compared to the com-
parative period in 2013. Its most significant percentage
increase compared to the previous year was recorded in Feb-
ruary with a plus of 3.5 percent. In absolute terms, March
2014 may have been the strongest advertising month of the
first quarter at EUR 2.5 billion. However, compared to March
2013, it only achieved an increase of 2.4 percent, which was
particularly due to the fact that in 2013, Easter already took
place at the end of March. This resulted in traditionally inten-
sive advertis ing investments before Easter.
According to Nielsen, the categories TV, Online, Cinema, and
Out-of-Home were able to increase their gross sales in the first
quarter of 2014 compared to the previous year's reporting
period. The lead medium TV recorded the most significant
increases at around EUR 2.8 billion – a plus of 6.5 percent. As
a result, TV advertising in the reporting period had a share of
45.3 percent of the total gross advertising market. Advertising
expenditures in the online area went up to EUR 685.5 million
in the first quarter of 2014 – an increase of 2.9 percent com-
pared to the prior year period.
Mobile advertising continues to flourish inexorably and across
industries. Particularly customers with large advertising budg -
ets are increasingly including mobile display advertising in
their communication mix, which led to a growth of advertising
investments by 24.2 percent in the first quarter of 2014 to
approx. EUR 27 million.
By contrast, investments in radio advertising remained declin -
ing, falling below the prior year value by minus 0.2 percent at
EUR 388 million overall. However, the situation for radio is
likely to improve again in spring because advertising revenues
were up again in March. Print media also suffered losses in
advertising placements in the first quarter.
Quelle: Nielsen Media Research GmbH, press release, 16. April 2014
In the first quarter, the production market was also charac -
terized by technical innovations and further developments. The
focus in the reporting period was on the introduction of the
new high-resolution production technology 4K (Ultra-HD), as
well as the increased use of Cloud services, which will continue
to greatly impact the production market in the next few years.
Already, 4K is to be used for live sports reporting at the 2014
FIFA World Cup™ in Brazil.
2.2.2 Operating performance in the Segment Sports
Further expansion of rights portfolio – In the first quarter of
2014, Sport1 GmbH added further attractive rights to its pro-
gram portfolio: In the 2014 season, extensive highlights and
some live reporting of the FIA World Rally Championship
(WRC) will also be broadcast in free-TV on SPORT1. The agree-
ment with WRC Promoter GmbH concluded at the start of
Janu ary contains extensive, platform-neutral exploitation rights
for Germany, Austria and Switzerland. In February, Sport1
GmbH acquired the platform-neutral, Germany-exclusive media
exploitation rights to the Women's and Men's Rabobank
Hockey World Cup 2014, which is to take place in Den Haag,
Netherlands, from May 31 to June 15. In addition the rights
package also contains the biennial FIH Champions Trophy,
which is due to take place in November and December 2014.
In January, Sport1 GmbH already acquired the rights to the final
round of the HERO Hockey World League and broadcasted
them. In mid-March, Sport1 GmbH announced that it had ob-
tained the platform-neutral exploitation rights to Major League
Baseball (MLB) for the German-speaking region. Since the start
of this year's season on March 22, up to and including the
2016 season, the pay-TV channel SPORT1 US will be broad-
casting at least 60 matches per match period with original US
commentary.
SPORT1 and SPORT.fm with new Apps – Since the start of the
return leg of the Soccer Bundesliga at the end of January, the
new version of the SPORT1 App for Android Smartphones and
tablets has been available from the Google Play Store. It has also
been possible to download the digital sports radio SPORT1.fm
for free as an App for Windows Phone and Windows 8 since the
start of March – in addition to the Apps for iOS and Android.
New distribution platforms for SPORT1 US and SPORT1 HD –
Since January 31, SPORT1 US can also be viewed via Enter-
tain, Germany's largest-range IPTV offer, in SD and HD quality.
With Zattoo, Sport1 GmbH gained a new co-operation partner
for SPORT1 HD. The live-TV provider has been offer ing
SPORT1 HD to its HiQ subscribers also since late January.
SPORT1.de launches co-operation with Ticketmaster –
SPORT1.de has been running an own online ticket shop since
March 3. Since then, tickets for numerous sports, music and
comedy highlights have been on offer via this channel as part
of a co-operation with Ticketmaster GmbH. The new online
ticket shop can be reached via the menu item “Tickets” and on
tickets.sport1.de.
Expansion/renewal of important marketing agreements and
expansion of new customer business – In the first quarter
2014, Constantin Sport Marketing renewed and/or expanded
important sponsoring co-operations with long-term partners for
the relevant core rights. In addition, new customers were
acquired in the traditional advertising area, including Luft-
hansa, Apple and BMW.
PLAZAMEDIA expands circle of customers – Commissioned by
FC Bayern Munich, PLAZAMEDIA as host broadcaster pro -
duced six home matches of FC Bayern Basketball in the report-
ing period in the Top-16 round of the Turkish Airlines Euro-
league. In addition to SPORT1, which broadcast a number of
selected live matches, the signal was used by around ten TV
channels around the world and was also streamed live on the
Euroleague website.
PLAZAMEDIA provides technical broadcasting services for
long-term customers – In the reporting period, PLAZAMEDIA
was host broadcaster for ZDF in the round of sixteen of the
UEFA Champions League between FC Schalke 04 and Real
Madrid CF. In addition, PLAZAMEDIA was also responsible for
the unilateral provision of broadcasting technology for three
further UEFA Champions League broadcasts by the channel.
In the first quarter, productions for the Sky Deutschland focused
on 16 UEFA Champions League matches – including two as
host broadcaster – and on five UEFA Europa League matches.
PLAZAMEDIA also worked for Sky in this year's Formula One
season, as in previous years. In the reporting period, PLAZA -
MEDIA provided the unilateral production of the first two races
in Melbourne (Australia) and Sepang (Malaysia).
2.2.3 Analysis of non-financial performance indicators in the
Segment Sports
Positive development in free-TV continues – After the upswing
in 2013, the upward trend in free-TV also continued in the
first quarter of 2014: SPORT1 achieved a market share of 0.8
percent of total viewers (Z3+). At a market share of around 0.7
percent, this corresponds to an increase of 12 percent com-
pared to the previous year's quarter. In the core target group of
males aged 14 to 49 years (M14-49), SPORT1 went up by 11
percent – from 1.2 percent in the first quarter of 2013 to 1.3
percent in the quarter under review.
The “Hattrick Live” broadcasts of the 2nd Bundesliga Monday
match in the first quarter contributed to the positive develop-
ment of market share. SPORT1 achieved the quarter's highest
percentage of viewers on March 17 with its broadcast of the
season's top game between 1. FC Kaiserslautern and 1. FC
Köln. An average of 1.24 million viewers (Z3+) watched the
teams draw at nil goals, making up a market share of 3.8 per-
cent. 1.9 million even watched at peak. In the core target
group M14-49, the market share was 6 percent. In addition,
“Der Volkswagen Doppelpass” again achieved top coverage in
the first three months. For instance, 1.05 million viewers (Z3+)
on average watched the broadcast on February 16, which cor-
responded to a market share of 6.8 percent. The market share
for M14-49 was around 10 percent. Other soccer formats,
such as “Bundesliga Pur” or “Der Mobilat Fantalk” at times
recorded coverage in excess of half a million viewers (Z3+). In
addition to soccer reporting, SPORT particularly met viewer
taste with the finals of the Darts World Cup, watched by nearly
one million viewers at peak (Z3+) when it was aired on New
Year's Day. Around 700,000 viewers at peak (Z3+) watched
the final of the Handball European Championship between the
host Denmark and France on January 26 and the season kick-
off of the Motorcycling World Championship MotoGP in Katar
on March 23. Moreover, the Men's and Women's Olympic Ice-
Hockey Tournaments in Sochi, which SPORT1 broadcast in
free-TV and on SPORT1.de as a free livestream, also received
a positive resonance. A total of 27 matches were broadcast
live, and a further two matches were broadcast live and exclu-
sively only on SPORT1.de.
Slight increases in pay-TV area – At the end of March, the
number of subscribers of the pay-TV channel SPORT1+ were
around 1.87 million, plus those subscribers reached via the Sky
platform. The new US sport channel SPORT1 US, which went
on air in August 2013, had around 1.56 million subscribers at
the end of March, plus those subscribers reached via Sky.
Significant increase in accumulated online and mobile cover -
age – In the first quarter of 2014, SPORT1.de recorded growth
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15
in accumulated online and mobile coverage compared to the
previous year's period, and reached an increase in visits from
around 56 million to around 63.5 million per month on average
– a plus of around 13.3 percent. Page impressions (PIs) were
also on the rise and went up by just over 18.8 percent from
381 million to a monthly average of 452.5 million.
Online coverage continues at high level – In spite of the in-
creasing shift of content use from online to mobile, pure online
coverage remained at a high level: At an average of 30 million
visits, SPORT1.de was only just under the prior year value of
30.9 million visits. In terms of page impressions, SPORT1.de
achieved an average of 233.5 million page impressions per
month in the first quarter 2014, which was slightly below the
figure for the previous year (235 million page impres sions). In
spite of the slight reduction in coverage in the first quarter of
2014, SPORT1 attracted more unique users in January than
the previous year. At 2.87 million unique users, the online plat-
form exceeded the prior year value of 2.83 million.
Favorable development thanks to Olympics and early cham-
pionship decision – The reporting of the Winter Olympics in
Sochi in February especially contributed to the positive devel -
opment – inter alia with intensive editorial commentary from
SPORT1 reporters on location and with the live ticker. The early
championship decision in the Soccer Bundesliga, the knock-
out rounds of the UEFA Champions League, the kick-off of the
Formula One and the MotoGP in March as well as the closely
followed tax proceedings against Uli Hoeneß contributed to an
increase in access figures.
Reduction in access figures in video area – In the video area,
the number of access figures in the online and mobile field in
the first quarter 2014 averaged at 4.7 million per month,
which put them clearly below the value for the first quarter
2013 (5.2 million). This was e.g. due to the lower access
figures in January, particularly in the soccer and news areas. In
addition, it is worth noting that user videos are also increas -
ingly consumed directly on YouTube and no longer only on their
original content platforms.
Strong growth in mobile area – At around 33.3 million visits a
month on average, SPORT1 was very successful in the first
quarter of 2014, achieving an increase of around 32.6 per-
cent compared to the previous year (25.1 million visits per
month on average). Page impressions in the mobile area also
developed very well during the reporting period. At around 219
million page impressions per month, PIs were also significantly
above their prior year value (146 million page impressions).
This development is particularly due to the relaunch of the
SPORT1 App for Android and the mobile website, as well as
the general shift from online to mobile use.
After the first quarter of 2014, the SPORT1 App for iPhone/
iPad stood at 2.2 million unique downloads (after Q1 2013:
1.9 million unique downloads). The unique downloads of the
SPORT1 Android App developed very positively and after the
first quarter of 2014 totaled more than 1.2 million compared
to around 764,000 unique downloads after the first quarter of
2013.
Sources: IVW (German Information Association for the Ascertainment ofDistribution of Advertising Media e.V.) 1-3 2013/2014; AGOF internet-facts: January 2013/2014; App Figures 4/2014; Android DeveloperMarket 4/2014; YouTube Content Management System 1-3 2013/2014
New monthly record for sports radio SPORT1.fm – The digital
sports radio SPORT1.fm, which was launched in July 2013,
in March achieved a total of around 4.2 streaming sessions,
and thus a new monthly record. Streaming sessions are calls of
the SPORT1.fm stream with a duration of at least 60 seconds.
Overall, SPORT1.fm recorded more than 7.5 million streaming
sessions in the first quarter 2014. The reporting highlights of
SPORT1.fm in the quarter under review included the live
broadcasts of the Bundesliga and 2nd Bundesliga from the kick-
off of the second leg, the quarter finals of the DFB Pokal as
well as the round of sixteen of the UEFA Champions League.
The access figures for the SPORT1.fm App in the first quarter
also developed very positively. From going on air to the end of
March, the SPORT1.fm App for Android, iOS, Windows Phone
and Windows 8 reached a total of 1.12 million downloads. In
addition to distribution via WLAN radios, SPORT1.fm reached
additional listeners in the context of a co-operation via ENERGY
via DAB+, which also aired the soccer live broadcasts as part
of their program.
2.2.4 Sector-specific general conditions in the Segment Film
Theatrical production/rights acquisition – On the film market at
this year's Berlinale in February 2014, the offer and the
demand of high quality licensed films was rather weak – a fact
which had already been apparent at the film markets in
Cannes, Toronto and Los Angeles last year. This development
is primarily due to the fact that the conclusion of correspond -
ing contracts on these markets is by now more of an exception
than the rule. In addition, film markets could also not escape
the drastic changes in the film industry, particularly due to the
opportunities of digitization and the strategic realignment of
Hollywood studios.
Source: Blickpunkt:Film 47/13
TV service production – Discussions regarding the shift from
traditional TV consumption to a more individual use in terms
of time of internet-based program contents have grown further.
In particular, the user behavior of younger viewers is changing,
with social media, YouTube or the use of a second screen
(Smartphone, Tablet PC etc.) playing an ever bigger role in the
consumption of moving image contents. As a result, cross-plat-
form concepts or even concepts working independently of tradi -
tional television were implemented increasingly. One example
of this is the online TV-channel group Mediakraft Networks,
which produces program formats and – without airing them on
TV first – distributes them via portals such as YouTube, Clip-
fish and Snack-TV.
Source: Blickpunkt:Film 10/14
In other countries, online services such as Netflix, amazon,
Hulu and other providers have already significantly changed
the TV landscape. For instance, Netflix users in the USA can
access unlimited films and series without set program listings
for only just less than eight US dollars per month. By now, the
way has also been smoothed for Netflix in Germany, after the
joined video-on-demand services of ARD and ZDF were closed
down after an intervention by the supervisory authorities.
Source: Association of German TV and Film Producers e.V., January 23,2014
The reduction of the radio license fee recommended by the
commission determining the financial needs of the public
channels was unanimously rejected by TV producers. For exam-
ple, the Producer Alliance demanded that a reduction of the
fee should be waived. The expected surplus from license fee
revenues should be used to balance out the higher costs in the
production area, which in the past have been born by the TV
producers. This was said to be the only way not to endanger the
future extent and quality of TV productions.
Source: Association of German TV and Film Producers e.V., press release, March 10, 2014
Theatrical distribution – In the first three months of 2014, Ger-
man cinemas generated approx. EUR 248 million (first quarter
of 2013: approx. EUR 265 million) and around 30.7 million
cinema tickets were sold (first quarter of 2013: 33.1 million).
The theatrical market was thus below the prior year's compara -
tive values by around 6.4 percent by revenues and 7.3 percent
by viewers.
This reduction is especially due to the relatively weak perfor-
mance of many Hollywood productions, with US films tailored
to a young audience particularly staying behind expectations.
Only the finance drama “The Wolf of Wall Street” generated
convincing results. With at nearly 2.4 million viewers it was
the most successful film by viewers of the first quarter. Only
two other US productions achieved seven-digit viewer figures:
the fantasy spectacle “The Hobbit: The Desolation of Smaug”
(around 1.5 million) and the CGI production “Frozen” (more
than 1.2 million), which had already been released in mid-
December and at the end of November 2013, respectively.
By contrast, already five German in-house and co-productions
attracted more than one million viewers in the first quarter of
2014. The most successful of these was the Matthias Schweig-
höfer comedy “Vaterfreuden” (nearly 2.3 million), followed by
the surprising success “Stromberg – Der Film” (more than 1.2
million) and the Constantin Film co-production “Fünf Freunde 3”
(around 1.2 million). These were supplemented by the block-
buster “Der Medicus” (Q1 2014: more than 2.4 million) and
“Fack ju Göhte” (Q1 2014: nearly 1.5 million), which were
already launched in the previous year.
Based on these audience successes, the viewer market share
of German films in the first three months of this year went up
to 41.7 percent (first quarter of 2013: 31.9 percent) – a value
which had not been achieved in decades.
Source: Rentrak Report, Evaluations of the theatrical market, 1st quarter2014
Home Entertainment – The Society for Consumer Research
(GfK) forecasted total sales from the German video rental and
sell-through market for the first two months of 2014* of EUR
271 million. As a result, the German Home Entertainment in-
dustry was slightly below the comparative prior year value of
EUR 276 million.
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According to GfK’s forecast, the sale of DVDs and Blu-ray discs
in the months January and February 2014* generated retail
sales of EUR 191 million (prior year period: EUR 207 million).
Thereof, DVDs generated EUR 131 million, 11.4 percent less
than in the prior year period (EUR 148 million). By contrast,
revenues from Blu-ray discs went up from EUR 59 million to
EUR 60 million, thus gaining further in importance.
The digital video sell-through market continued to be on the
rise: Total sales in electronic sell-through in the first two
months* of 2014 grew by 33.3 percent to EUR 16 million
(comparative period 2013: EUR 12 million). However, the
increases in sales from Blu-rays and electronic sell-through
were not able to compensate for the reduction in sales from
DVDs, so that total sales in the physical and digital purchasing
market fell from EUR 219 million to EUR 207 million.
For the video rental market, GfK predicted total sales of EUR
64 million for the months January and February 2014* – an
increase of 12.3 percent compared to the same period in 2013
(EUR 57 million). Thereof, EUR 38 million (comparative
period in 2013: EUR 39 million) related to rentals of DVDs
and Blu-ray discs, and EUR 26 million (comparative period in
2013: EUR 18 million) to digital rentals via video-on-demand
or pay-per-view. The digital video rental market was able to gain
44.4 percent, thereby continuing its positive development of
the prior year. This increase was particularly due to the higher
sales figures of internet-compatible TVs, which are driving
digital rentals.
Source: GfK 2014, Forecast of Key Figures for the Months January andFebruary 2014
*GfK data for the first quarter of 2014 were not yet available at thetime of editorial
License trading/TV exploitation – Based on current analyses, in
2013, every adult and adolescent (from 14 years of age) in Ger -
many spent an average of 221 minutes per day in front of their
TVs. However, the free TV channels are ever more strongly com-
peting with pay-TV, download portals and streaming platforms,
with pay-TV even being called the strongest growth segment in
the German TV market. Particularly for TV series, stream ing
platforms seem to be tailored to the needs of viewers, allowing
them to watch several episodes or even whole seasons in a row.
Video-on-demand offers, such as the platform iTunes run by
Apple, Maxdome by ProSiebenSat.1, Videoload, the video-on-
demand offer by Deutsche Telekom, Select Video by Kabel
Deutschland or Prime by amazon, are playing an ever bigger
role.
Sources: Association of Private Broadcasting and Telemedia e.V., pressrelease, February 11, 2014; Blickpunkt:Film 7/14)
2.2.5 Operational development in the Segment Film
New in-house and co-productions in the theatrical production
area – After the major success of the dramatization “Dampf-
nudelblues. Ein Eberhoferkrimi”, which attracted both cinema-
goers and TV viewers last year, a further part of the bestseller
book series by Rita Falk, “Winterkartoffelknödel”, started shoot -
ing in the first quarter of 2014. Shooting was completed in
early April, and theatrical release is scheduled for mid-October
2014.
In mid-March, shooting started for the new Sönke Wortmann
comedy “Frau Müller muss weg”, which is based on the award-
winning play of the same name by Lutz Hübner and Sarah
Nemitz. The film is scheduled for release in Germany in mid-
November 2014.
Shooting starts for two ZDF projects in TV service production –
At MOOVIE – the art of entertainment GmbH, shooting started
for the ZDF two-parter “Die Abrechnung” at the end of Febru-
ary. Inspired by true events like the fate of Schlecker, the movie
thematize the collapse of a drug store empire. The drama will
probably be aired in the fall this year. Also for ZDF, the TV film
“Das Zeugenhaus”, which is based on true events surrounding
the Nuremberg Trials in 1945, started shooting in early March.
On behalf of SAT.1, Constantin Entertainment GmbH produced
further episodes for the dailies “Schicksale” and “Im Namen
der Gerechtigkeit” in the first quarter of 2014. In addition, the
pilot for “Geht’s noch?! Kayas Woche” was produced for RTL.
Seven further episodes of this format have been commissioned
and have been broadcast weekly since April 25, 2014.
In other European countries, the subsidiaries of Constantin
Entertainment GmbH in Poland among others produced new
seasons of the tried and tested formats “Kuchenne Rewolucje”
and “Malanowski & Partnererzy”, in Israel “The Voice of Israel
3” and “Dan Shilon-Show” and in Switzerland “The Voice of
Switzerland 2” and in Hungary “Csaladi Titkok”.
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“Fünf Freunde” series successful again in theatrical distribu-
tion – In the theatrical distribution area, the Constantin Film
Group released a total of five films (four in-house/co-produc tions
and one licensed film) in German cinemas in the reporting pe-
riod. Especially, “Fack ju Göhte” and the youth adventure
“Fünf Freunde 3”, which was even more successful than the
first two parts, were very popular with viewers.
Stable market position in the Home Entertainment area – In
the first quarter of 2014, the Highlight Communications Group
was able to stabilize its market position in the German-speak -
ing Home Entertainment market. In particular, it was able to
benefit from the new releases under the Constantin Film label,
above all “The Mortal Instruments – City of Bones”. In addi-
tion, the licensed film “Ender's Game”, which was released at
the start of March 9, achieved highly favorable sales results.
Development in the license trading/TV exploitation areas im-
pacting on revenues – In license trading of the Constantin Film
Group, the first licenses for free-TV of “Glück” (ZDF), “Benve-
nuti al Sud” (ProSiebenSat.1), “Werner Eiskalt” (ProSieben-
Sat.1) and “Wrong Turn 4” (ProSiebenSat.1) all impacted on
sales. Added to these in pay-TV were the first licenses of “Free-
lancers”, “LOL”, “Step Up: Miami Heat” and “Resident Evil:
Retribution”. All of these films were licensed for Sky Deutsch-
land.
2.2.6 Analysis of non-financial performance indicators in the
Segment Film
Long-term commitment of know-how carriers and talents in the
theatrical production/rights acquisition area – Constantin Film
AG relies strongly on the long-term commitment of talents and
has for decades worked very closely with renowned and expe-
rienced screenwriters and producers in Germany and abroad,
who have a high level of know-how in the production of thea-
trical films and TV formats.
Continued coverage succes in TV service production – Two TV
productions by the Constantin Film subsidiaries were able to
generate very favorable ratings in the first quarter of 2014. For
example, the “Tatort” episode “Kopfgeld” starring Til Schweiger,
a service production of Constantin Television GmbH for ARD,
was aired in early March and attracted 10.12 million viewers.
This corresponds to a total audience market share of 27.7 per-
cent – ARD's highest coverage of that weekend.
Source: mediabiz/Blickpunkt:Film, March 10, 2014
One of the big TV projects of MOOVIE – the art of entertain-
ment GmbH, “Die Hebamme” starring Josefine Preuß, was
broadcast on SAT.1 at the end of March, and at a market share
of 22.8 percent (2.64 million viewers) secured the success of
the day in the advertising target group of 14- to 49-year-olds.
At a total audience coverage of 5.36 million viewers (market
share: 17.5 percent), it reached third place for that TV
evening.
Source: mediabiz/Blickpunkt:Film, March 26, 2014
Constantin Film stays most successful independent distributor –
In the theatrical distribution business area, the Constantin
Film Group achieved very good results in the first quarter 2014,
with two films reaching the Top Ten of the German cinema
charts. The sensational success “Fack ju Göhte”, which was
already released in November 2013, made it to number five,
again attracting around 1.5 million viewers in the first three
months of this year. The teen adventure “Fünf Freunde 3”
released in mid-January 2014 came eighth, also attracting
seven-digit viewer figures at 1.2 million viewers.
Taking together the performance of all of its films released in
German cinemas in the first quarter of 2014, the Constantin
Film group reached an impressive market share of 11.9 per-
cent by viewers and 11.0 percent by sales. In the ranking of
distributors, it came third after Warner and Universal in both
categories, once again securing its pole position among inde-
pendent German distributors.
Source: Rentrak, “Evaluations of the theatrical market”, 1st quarter of2014
“The Mortal Instruments – City of Bones” bestseller in Home
Entertainment exploitation – In the first quarter of 2014, the
Home Entertainment are continued to enjoy stables sales –
both with new releases and with catalog titles. For instance the
Constantin Film co-production “The Mortal Instruments – City
of Bones”, released in mid-January, shot directly to the top of
the German sales charts, remaining in the Top Ten until mid-
March. Overall, 200,000 units were sold in the German-speak-
ing area by the end of the quarter.
Based on its attractive program line-up and on numerous
financially successful second utilizations, the Constantin Film
Group – in co-operation with its distribution partner Paramount
Home Entertainment – was able to secure a market share of 10
percent in the German video sell-through market in January
19
and February 2014 (2013: 9 percent).
Source: GfK 2014, Forecast of Key Figures for the Months January andFebruary 2014
*GfK data for the first quarter of 2014 were not yet available at thetime of editorial.
When first aired, the cartoon “Werner – Eiskalt”, whose license
start impacted on sales in the first quarter of 2014, reached a
total of 2.13 million viewers on ProSieben at the end of April,
making up a total audience market share of 7.6 percent (13.2
percent of 14- to 49-year-olds).
Source: mediabiz/Blickpunkt:Film, April 28, 2014
2.2.7 Sector-specific general conditions in the Segment
Sports- and Event-Marketing
TV rights/Sponsoring – The changes in the media landscape
have strengthened the position of sports contents in the media
mix. Particularly commercial channels need viewer magnets in
order to retain their subscribers and to secure advertising rev -
enues. Sports events are ideally suited to this. The US cable
chan nel Comcast is proof of this, reporting an increase in net
earnings by 30 percent in the first quarter of 2014 compared
to the previous year's period. To a large part, this increase is due
to the TV broadcast of the Winter Olympics in Sochi in Feb-
ruary 2014.
Quelle: Sportcal, April 22, 2014
2.2.8 Operational development in the Segment Sports- and
Event-Marketing
Additional marketing successes at UEFA tournaments – After
the positive results achieved in the 2013 financial year, the
TEAM group was also able to realize additional important
agreements in the first quarter of 2014 in the marketing
process for the commercial rights of the UEFA Champions
League and the UEFA Europa League (each for the match cycle
2015/16 to 2017/18).
TV contracts were concluded in as varied markets as Italy
(Mediaset and Sky Italia), Israel or Myanmar. In terms of spon-
sor ship rights, also further progress was made. Starting with
the 2014/15 season, the Japanese automobile manufac turer
Nissan will act as sponsor of the UEFA Champions League,
replacing Ford, the sponsoring partner for many years.
The finals in the spotlight – Operatively, TEAM focused on ac -
tively supporting the commercial partners in the knock-out
rounds of both tournaments. In addition, preparations were
under way for the major finals in Turin on May 14 (UEFA Europa
League) and in Lisbon on May 24 (UEFA Champions League).
2.2.9 Analysis of non-financial performance indicators in the
Segment Sports- and Event-Marketing
UEFA Champions League generates high viewer figures – The
TV broadcast of the UEFA Champions League matches con-
tinues to attract many viewers. In Germany, for instance, 8.0
million viewers on average watched the group phase matches
of the current season in free-TV and 2.1 million in pay-TV. Both
values are the highest achieved in the last eight match periods.
The same applies to Italy, where the group phase also gener-
ated the best value of the last eight match periods, at an aver-
age of 9.9 million viewers.
Source: ZenithOptimedia, Sponsorship Intelligence
2.2.10 Sector-specific general conditions in the Segment
Other Business Activities
Event/Entertainment business – Sponsoring is gaining in im-
portance in the financing mix of cultural providers in the Ger-
man-speaking region. Whereas in 2007, only an average of 6.7
percent of their total revenues came from sponsoring, this
proportion had increased to 16.5 percent by 2013 – more than
double the 2007 figure. In addition, a clear upward trend
towards long-term partnerships between the cultural providers
and sponsors is apparent. The financial services sector (banks,
insurances, etc.) are by far in the lead, followed by the media
industry (TV, radio, publishing houses) and energy providers.
Source: Causales – Gesellschaft für Kulturmarketing und Kulturspon-soring mbH, “Der Kultursponsoringmarkt 2013” (survey period: April tothe end of July 2013)
Online/Social gaming – A current representative survey by the
Federal Association for Interactive Entertainment Software (BIU)
shows that computer and video games have by now become a
mass medium in Germany. At the start of 2014, around 34.2
million Germans used digital games correspond ing to a pro-
portion of 46 percent of the population. Compared to the pre-
vious year with 31.4 million, the number of active gamers thus
increased by 9 percent. The increase was par ticularly notice-
able in the daily use of digital games, whose figure went up by
around 31 percent to 13.5 million. Computer and video games
are also becoming ever more popular with women (+12 per-
cent) and with the generation of the over-50s (+12 percent).
Source: Federal Association for Interactive Entertainment Software(BIU), press releases, March 10 and 20, 2014
20
Q1 2014 Interim Group Management Report
Economic Report
2.2.11 Operational development in the Segment Other Busi-
ness Activities
Successful realization of the New Year's Concert – At the start
of the year, the activities of Highlight Event AG initially focused
on the commercial realization of the Vienna Philharmonic
Orchestra’s New Year’s Concert 2014, conducted for the
second time by the world famous conductor Daniel Barenboim.
Major events in preparation – The operative preparations for
the 59th Eurovision Song Contest, which took place in the
Danish capital Copenhagen between May 6 and 10, 2014, also
progressed well in the reporting period. The activities particu-
larly focused on the implementation of design, hospitality area,
sponsor media presence (TDC/Samsung, Visit Denmark and
ALCON), the Eurovision Village, sponsorship campaigns and
merchandising.
Highlight Event AG further concentrated on preparing the com-
memorative concert of the Vienna Philharmonic Orchestra on
the occasion of the start of World War I 100 years ago. The
European Broadcasting Union (EBU) called this concert, which
is scheduled to take place in Sarajevo/Bosnia-Herzegovina at
the end of June 2014, a key event for all public channels in
Europe. For the first time, Highlight Event AG will act as a link
between the orchestra and the EBU at this event.
Continuous further development of the FunPoker software –
Pokermania GmbH continued to develop further its “White -
label” software FunPoker in the first quarter of 2014. The aim
of this development work is to integrate additional poker ver-
sions into the game in order to be able to acquire new gamers
internationally.
2.2.12 Analysis of non-financial performance indicators in the
Segment Other Business Activities
New Year's Concert again broadcast globally – The successful
marketing activities of Highlight Event AG significantly contri-
buted to the broadcast of the Vienna Philharmonic Orchestra's
New Year's Concert 2014 in more than 80 countries – as the
previous year. This international coverage of the New Year's
Concert again demonstrated that it is the biggest classical
music event in the world.
2.3 Results of operations, net assets and financial position of
the Constantin Medien Group
The accompanying unaudited consolidated interim financial
statements as of March 31, 2014 have been prepared in con-
formity with IAS 34 Interim Financial Reporting. Details regard -
ing the accounting are presented in note 2 and 3 of the notes
to the consolidated interim financial statements in this report.
2.3.1 Overall assessment of the reporting period
Business development in the first quarter 2014 was generally
in line with own expectations. In the Sports Segment sales
declined in the first quarter as expected due to the loss of the
production of LIGA total! The Film Segment achieved signifi-
cant growth in sales in the first quarter due to numerous film
releases, while there has been a decline in earn ings. The
development in the Segments Sports- and Event-Marketing
and Other Business Activities was as expected.
In the first quarter, the Group reached sales of EUR 136.1 mil-
lion. This corresponds to an increase of 31.2 percent com -
pared to the prior year’s quarter (EUR 103.7 million). Profit
from operations (EBIT) decreased by EUR 4.1 million to EUR
-2.3 million (3M 2013: EUR 1.8 million). On the one hand,
the decline in earnings in the Film Segment had an impact. On
the other hand, in the Others divison non-recurring charges
were incurred in connection with the so-called Formula One
proceedings in London.
Earnings attributable to shareholders amounted to EUR -5.5
million in the first three months 2014, after EUR -0.5 million
in the same period last year.
21
The Sports Segment recorded sales of EUR 33.4 million in the
first three months 2014, a decrease of 10.0 percent compared
to the corresponding previous year’s value (3M 2013: EUR
37.1 million). In the first quarter both market share and cover -
age in the TV and accumulated in the online and mobile sector
could be further increased. This led to an increase in sales
at SPORT1 compared to the same quarter last year, but as
expected could not compensate the decline in sales after the
loss of the production of LIGA total! At the same time the
digitization strategy of the sports business was further driven
forward, which resulted in higher material expenses compared
to the same quarter last year. Therefore, the segment result
decreased by 25.0 percent to EUR 1.2 million (3M 2013:
EUR 1.6 million). Higher other operating income, mainly from
the reversal of provisions, could not fully compensate the de-
cline in sales and increased cost of materials.
In the first three months 2014, the Film Segment recorded
sales of EUR 92.1 million, 65.1 percent more than in the same
period of the previous year (3M 2013: EUR 55.8 million). In
particular, the areas of theatrical distribution and license trad -
ing achieved significantly higher sales due to the global distribu -
tion of the movie “Pompeii”, compared to the first quarter of
the previous year. With the release of the film, the minimum
guarantees which are used to finance the production costs of
the film, were realized. At the same time the capitalized pro-
duction costs of the film were written down, so that the mini-
mum guarantees were set off against appropriate amortization.
Furthermore, impairments on film assets, in particular the
movie “Tarzan", impacted the result. Thus, the impairments on
film assets rose by EUR 5.8 million to EUR 7.3 million in the
first quarter 2014. The segment result of EUR -2.6 million for
the first three months 2014 was therefore below the level of
the previous year’s period (3M 2013: EUR -1.8 million).
Sales in the first three months 2014 in the Sports- and Event-
Marketing Segment stood with EUR 10.1 million at the previous
year’s level (3M 2013: EUR 10.1 million). The segment result
of EUR 3.9 million was EUR 0.5 million above the result of the
corresponding period of the previous year due to cost savings
(3M 2013: EUR 3.4 million).
The Other Business Activities Segment achieved sales of EUR
0.5 million in the first three months 2014 (3M 2013: EUR
Sales
Sports
Film
Sports- and Event-Marketing
Other Business Activities
Others
Total
Segment result
Sports
Film
Sports- and Event-Marketing
Other Business Activities
Others
Total
Change
-3,668
36,271
-12
-200
0
32,391
-388
-773
481
-133
-3,231
-4,044
1/1 to3/31/2013
37,085
55,816
10,152
695
0
103,748
1,592
-1,835
3,425
-399
-1,014
1,769
1/1 to3/31/2014
33,417
92,087
10,140
495
0
136,139
1,204
-2,608
3,906
-532
-4,245
-2,275
Segment performance January 1 to March 31, 2014 in EUR ‘000
2.3.2 Segment performance
Q1 2014 Interim Group Management Report
Economic Report
22
0.7 million) as well as a result of EUR -0.5 million (3M 2013:
EUR -0.4 million). The segment loss results from the online/
social gaming area.
The result of the Others division stood at EUR -4.2 million (3M
2013: EUR -1.0 million). The significant decline in earnings
resulted in particular from expenses of EUR 3.0 million for
counterparty lawyers in the Formula One proceedings, which
Constantin Medien AG has to bear following the ruling of the
High Court of Justice in London.
2.3.3 Sales and earnings performance of the Constantin
Medien Group
The Group’s net result for the first quarter 2014 amounted to
EUR -5.0 million after EUR 0.5 million in the same quarter last
year. Earnings attributable to shareholders included therein
amounted to EUR -5.5 million after EUR -0.5 million in the
same period last year. Thus, earnings per share both basic and
diluted stood at EUR -0.07 (3M 2013: EUR -0.01) in the first
quarter 2014.
Despite the increase in total output (sales including capital-
ized film production costs and other own work capitalized) by
EUR 26.9 million to EUR 143.1 million (3M 2013: EUR
116.2 million) and in spite of lower cost of materials and
licenses (from EUR 53.9 million by EUR 8.0 million to EUR
45.9 million) profit from operations (EBIT) was negative with
EUR 2.3 million in the first quarter 2014 (3M 2013: EUR
+1.8 million). The reason for this are disproportionately in-
creased amortization, depreciation and impairment by EUR
36.1 million to EUR 53.6 million (3M 2013: EUR 17.5 mil-
lion) in the first quarter 2014.
While sales increased by EUR 32.4 million to EUR 136.1 mil-
lion (3M 2013: EUR 103.7 million), the capitalized film pro-
duction costs and other own work capitalized went down by
EUR 5.4 million to EUR 7.0 million (3M 2013: EUR 12.4 mil-
lion) due to lower production volume of in-house film pro-
ductions. The reasons for the development of sales are pres -
ented in the explanations in chapter 2.3.2.
The decrease in the cost of materials and licenses in the first
quarter 2014 largely related to the lower production volume in
the Film Segment.
The increase in amortization, depreciation and impairment is
primarily attributable to the increase of amortization of film
assets due to higher consumption of film rights. Those amoun-
ted in the first three months to EUR 45.2 million compared to
EUR 13.1 million in the first three months 2013. Also impair -
ment on film assets increased significantly. They amounted to
EUR 7.3 million compared to EUR 1.5 million in the previous
year’s period.
The increase in other operating expenses by EUR 3.2 million
to EUR 22.6 million in the first three months (3M 2013: EUR
19.4 million) mainly related to legal and consulting costs,
which increased by EUR 3.0 million to EUR 5.0 million. The legal
and consulting costs include EUR 3.0 million in connection
with the Formula One proceedings of Constantin Medien AG.
The financial result amounted to EUR -2.0 million in the first
three months 2014 after EUR -1.0 million in the previous
year’s period. The reason for the decline is essentially due to
the interest expense of EUR 1.2 million for the corporate bond
2013/2018 issued in April 2013.
Non-current assets
Current assets
Total assets
Change
-33,694
3,146
-30,548
12/31/2013
258,796
236,793
495,589
3/31/2014
225,102
239,939
465,041
Consolidated balance sheet (abbreviated version) as of March 31, 2014 in EUR ‘000
2.3.4 Net assets position of the Constantin Medien Group
23
The Constantin Medien Group’s equity as of March 31, 2014
decreased to EUR 49.7 million (December 31, 2013: EUR
55.2 million). Equity attributable to shareholders decreased
due the development of earnings by EUR 5.7 million to EUR
8.7 million. Equity attributable to non-controlling interests
remained virtually unchanged with EUR 41.0 million (Decem-
ber 31, 2013: EUR 40.8 million).
The equity ratio (total equity divided by the balance sheet total)
as of March 31, 2014 stood at 10.7 percent after 11.1 per-
cent as of December 31, 2013. The decline in the equity ratio
is attributable to the negative result in the first quarter; the
decline in the balance sheet total was only able to offset this
partially. The adjusted equity ratio (after netting advance pay-
ments received against film assets and film-related cash and
cash equivalents with the corresponding financial liabilities)
amounted to 12.1 percent (December 31, 2013: 12.6 percent).
The decrease in non-current liabilities by EUR 2.7 million to
EUR 135.8 million (December 31, 2013: EUR 138.5 million)
is mainly related to lower deferred tax liabilities (EUR -3.2 mil-
lion). The decrease in deferred tax liabilities is primarily due to
the change of the item film assets.
The current liabilities decreased by EUR 22.4 million to EUR
279.5 million in the first quarter 2014 (December 31, 2013:
EUR 301.9 million). Thereby, current financial liabilities
decreased by EUR 24.9 million to EUR 99.1 million, as loans
to finance film projects were repaid following the theatrical
release of these films and sales realizable in this context. Also
advanced payments received decreased (EUR -4.9 million).
This was partly offset by the increase in liabilities due to
associated companies and joint ventures (EUR +2.5 million)
and the increase in income tax liabilities (EUR +3.9 million).
2.3.6 Liquidity development of the Constantin Medien Group
The Constantin Medien Group reported a positive cash flow
from operating activities of EUR 46.8 million in the first three
months 2014 (3M 2013: EUR 17.2 million). The increase is
mainly attributable to the cash inflow from the film business.
A cash outflow of EUR 18.4 million resulted from investing
activities (3M 2013: cash outflow of EUR 15.9 million), which
was mainly incurred in the Film Segment.
The Group’s financing activities led to a cash outflow of EUR
25.2 million (3M 2013: cash outflow of EUR 9.4 million). The
Equity attributable to the shareholders
Non-controlling interests
Total equity
Non-current liabilities
Current liabilities
Total equity and liabilities
Change
-5,669
192
-5,477
-2,634
-22,437
-30,548
12/31/2013
14,353
40,843
55,196
138,475
301,918
495,589
3/31/2014
8,684
41,035
49,719
135,841
279,481
465,041
2.3.5 Financial position of the Constantin Medien Group
Consolidated balance sheet (abbreviated version) as of March 31, 2014 in EUR ‘000
The reason for the decline in non-current assets in the first
quarter 2014 was primarily the amortization-related reduction
of film assets by EUR 36.7 million to EUR 135.5 million (De-
cember 31, 2013: EUR 172.2 million).
The increase in current assets (EUR +3.1 million to EUR
239.9 million) is mainly due to the increase in the item “non-
current assets held for sale and disposal group” (EUR +2.7
million to EUR 44.7 million). This item increased mainly due
to the increase in cash and cash equivalents of the PLAZA ME-
DIA companies by closing-date comparison (EUR +2.5 million
to EUR 17.6 million).
24
Q1 2014 Interim Group Management Report
Personnel Report | Addendum Report
3. Personnel Report
At closing day March 31, 2014, the Constantin Medien Group
had a total of 1,600 employees including freelance employees
(March 31, 2013: 1,547 employees). The number of salaried
employees as of March 31, 2014 increased to 1,201 em-
ployees (March 31, 2013: 1,155 employees). The number of
freelance employees slightly increased to 399 (March 31,
2013: 392 employees). New salaried employees were espe -
cially added in the Film Segment in the TV service production
area. An increase in the number of freelancers in the Film Seg-
ment compensated for the reduction in freelancers in the
Sports Segment, especially due to the loss of LIGA total!
4. Addendum Report
Intended transaction with Sky Deutschland will not be executed
On May 19, 2014, Constantin Medien AG announced its
decision, not to continue the negotiations with Sky Deutsch-
land Fernsehen GmbH & Co. KG in connection with the trans-
action agreed on December 5, 2013. The agreement provided
the sale of 100 percent of the shares of PLAZAMEDIA GmbH
TV- und Film-Produktion (including its subsidiaries in Austria
and Switzerland) as well as the sale of 25.1 percent each of the
shares in Sport1 GmbH and Constantin Sport Marketing GmbH.
The transaction was subject, among others, to the conclusion
of a new multi-year production framework contract between
Sport1 GmbH and PLAZAMEDIA GmbH TV- und Film-Produk-
tion. But no agreement could be reached on this arrangement.
This development requires a change of the financial targets of
the Constantin Medien Group for the 2014 financial year. The
continuation of the activities of PLAZAMEDIA GmbH TV- und
Film-Produktion and its subsidiaries under the umbrella of
Constantin Medien AG on the one hand leads to an increase in
sales of the Constantin Medien Group and simultaneously to
the loss of the other income from the deconsolidation of the
PLAZAMEDIA companies. Therefore, the profit planning 2014
was adjusted and this has also been considered in the guid -
ance for the 2014 financial year (see chapter 6.3).
Constantin Medien AG is planning measures to refinance the
corporate bond 2010/2015
Capital increase planned – On the one hand, the Management
Board of Constantin Medien AG intends to perform, in agree-
ment with the Supervisory Board and using part of the Author -
ized Capital 2013/I, a capital increase against cash contribu -
tions excluding subscription right of the shareholders pursuant
to § 186 para. 3 sentence 4 German Stock Companies Act
(Aktiengesetz). For this purpose, selected investors will be ad-
dressed. It is planned to increase the share capital of Constan-
Cash and cash equivalents
Current financial liabilities
Non-current financial liabilities
Net debt
Change
3,283
-24,896
166
28,013
13/31/2013
82,918
123,988
109,640
-150,710
3/31/2014
86,201
99,092
109,806
-122,697
Net debt as of March 31, 2014 in EUR ‘000
cash outflow resulted from the repayment of short-term loans
in the Film Segment.
The total cash inflow in first three months 2014 amounted to
EUR 3.2 million after a cash outflow of EUR 8.1 million in the
first three months 2013.
High cash effective sales in the Film Segment, particularly
from the global distribution of “Pompeii”, which were also
used to repay short-term loans to finance this film, have posi-
tively impacted the net debt of the Constantin Medien Group.
It is composed as follows as of March 31, 2014
25
Interim Group Management Report Q1 2014
Risks and Opportunities Report
tin Medien AG of EUR 85,130,780.00 through the issu ance
of new bearer shares of up to 10 percent of the share capital
with a calculated proportion of the share capital of EUR 1.00
per share. The Management Board and the Supervisory Board
of Constantin Medien AG will decide on the execution of the
capital increase, if the other parameters of this capital in-
crease, in particular the issue price, have been determined.
New loan agreement with private investor – Moreover, a further
loan agreement totaling CHF 14 million and EUR 4.5 million
will be concluded with a private investor in addition to the exist -
ing loan amounting to approximately EUR 17.5 million. The
new loans will have a term up to June 30, 2016; the interest
rate will be 5.0 percent p.a. as before.
Proceedings of Constantin Medien AG against Bernard Eccle-
stone and others
In the proceedings of Constantin Medien AG against Mr Ber-
nard Ecclestone and others, the High Court of Justice in Lon-
don, the Court of First Instance, rejected a direct claim and
this action against Mr Bernard Ecclestone and others with its
ruling on February 20, 2014. The appeal launched by Con-
stantin Medien AG with the High Court of Justice was also
rejected on March 27, 2014. On April 24, 2014, Constantin
Medien AG submitted an application to admit an appeal with
the Court of Appeal in London, the Court of Second Instance.
The decision regarding this application is still pending.
Changes to personnel in the bodies of the Constantin Medien
Group
On April 2, 2013, Constantin Medien AG announced changes
to the Group's bodies. After five years as Chairman of the
Supervisory Board, Mr Fred Kogel will leave the media com-
pany's Supervisory Board with the end of the Annual General
Meeting of Constantin Medien AG on July 30, 2014. He is to
be appointed as Chief Operating Officer (COO) in the Manage-
ment Board of Constantin Medien AG effective from October 1,
2014. At the same time, he shall become COO in the Man age-
ment Board of the Group company Constantin Film AG and
shall be responsible for the TV and new business areas. Dr
Dieter Hahn is to succeed Mr Fred Kogel as Chairman of the
Supervisory Board of Constantin Medien AG. He will again be
recom mended for the Board on the upcoming Annual General
Meeting. Werner E. Klatten, Deputy Chairman of the Super visory
Board of Constantin Medien AG sine 2008, will no longer run
for an appointment to the Supervisory Board. Jean-Baptiste
Felten and a further qualified person will be proposed to the
Annual General Meeting as new members to the Supervisory
Board.
The National Hockey League (NHL) live and exclusive on
SPORT1 US
On May 6, 2014, Sport1 GmbH announced the acquisition of
the platform-neutral exploitation rights to the National Hockey
League (NHL) for the next two match periods up to and includ -
ing 2015/16 for Germany, Austria and Switzerland from the
rights agency Advisers Media International (AMI) and Medge.
From the upcoming season starting in October 2014, the pay-
TV channel SPORT1 US will be broadcasting at least 60 live
matches with original US commentary.
5. Risk and Opportunities Report
5.1 Risk management system
Entrepreneurial actions and utilization of opportunities always
also involve risks. In order to protect the continuing existence
of the Constantin Medien Group, and to support the achieve-
ment of corporate objectives, an integrated, enterprise-wide
risk management system (RMS) was implemented.
The risk management system of the Constantin Medien Group
comprises both risks and opportunities. According to the de-
cen tra lized Group structure, the operative responsibility in
dealing with risks lies with the relevant risk officers. These are
largely the Boards and Committees as well as the Managing
Directors and the department heads of the individual subsidi -
aries. The repor ted risks are consolidated, and if applicable cat-
e gorized consistently, at Constantin Medien AG level, and as-
sessed at Group level.
A detailed presentation of the risk management system is set
out in chapter 8.1.2 of the combined Group management and
management report of the Annual Report 2013 of Constantin
Medien AG. The same applies to the description of the internal
control system in relation to the Group financial statement pro-
cess and the opportunities and risks of Constantin Medien AG.
Additionally, reference is made to the opportunities and risks
report of the Interim Financial Report of Highlight Communi-
cations AG as of March 31, 2014.
5.2 Main changes to opportunities and risks in the reporting
period
The opportunities and risk profile of the Constantin Medien
Group for the months coming after the first three months of
2014 largely corresponds to the assessments reported in the
consolidated financial statements as of December 31, 2013.
A detailed presentation of the company's risks is set out in
chapter 8.1.2 of the combined Group management and man -
agement report of the Annual Report 2013 of Constantin
Medien AG. Additionally, reference is made to the opportuni-
ties and risks report of the Annual Report 2013 as well as of
the Interim Financial Report of Highlight Communications AG
as of March 31, 2014.
Compared to previous reports, particularly the Group manage-
ment report for the 2013 financial year, no noteworthy devia-
tions could be identified in the distribution of individual factors
to the different classes. The current assessment of risk factors
by the responsible parties still supports the classification of
opportunities and risks of Constantin Medien AG as summarized
in the combined Group management report and management
report for the 2013 financial year.
The following changes or additions to the risks described in
the 2013 Annual Report have occurred:
Currently, shareholder claims are pending against Constantin
Medien AG as the legal successor of EM.TV & Merchandising
AG. The damage claims asserted in these proceedings amount
to approx. EUR 1.45 million as of March 31, 2014. The claims
of these shareholders are based on a number of different cir-
cum stances and legal foundations, the background being the
drop in the EM.TV stock price that occurred during 2000/
2001. Several shareholders have filed petitions for rulings on
certain facts and judicial subjects based on the German Capi-
tal Investor Proceedings Act (KapMuG). So far, the competent
senate of the Munich Higher Regional Court only announced
only one best case proceedings on April 2, 2012 in the Federal
Gazette. So far, these best case proceedings have not yet been
finalized. In order to settle the best case proceedings and the
above-mentioned pending shareholder claims, the Company
has submitted an agreement for a settlement for these pro-
ceedings to the plaintiffs and the best case plaintiffs. This
agreement was published by the competent senate of the
Munich Higher Regional Court in the Federal Gazette on March
5, 2014. The settlement was, among others, subject to the
condition that at least 95 percent of the total disputed value
join the settlement agreement or waive withdrawal from the
settlement (hereinafter called “quorum”). This quorum has not
yet been achieved so that the Company will not present the
settlement to the Annual General Meeting 2014 of Constantin
Medien AG for a vote. A new settlement offer with an adjusted
quorum is currently being checked.
With its ruling on February 20, 2014, the High Court of Justice
in London, the Court of First Instance, rejected a direct claim
and this action against Mr Bernard Ecclestone and others in
the proceedings of Constantin Medien AG against Mr Bernard
Ecclestone and others. The appeal launched by Constantin
Medien AG with the High Court of Justice, was also rejected by
this Court on March 27, 2014, and the legal costs of the
opposing parties, which have to be born, have partially been
speci fied (Q1 2014: EUR 3.0 million). On April 24, 2014,
Con stantin Medien AG submitted an application to admit
an appeal with the Court of Appeal in London, the Court of -
Second Instance. The decision regarding this application is
still pend ing.
From today's perspective, it cannot be ruled out that Constan-
tin Medien AG might have to bear additional legal costs for the
opposing parties. Given the potential effects, this risk must be
classified as medium.
Constantin Sport Holding GmbH had agreed with Sky Deutsch-
land Fernsehen GmbH & Co. KG to sell 100 percent of its shares
in its subsidiary PLAZAMEDIA GmbH TV- und Film-Produktion,
including its subsidiaries PLAZAMEDIA Austria Ges.m.b.H and
PLAZAMEDIA Swiss AG, as well as 25.1 percent each of the
shares in Sport1 GmbH and Constantin Sport Marketing GmbH
to Sky Deutschland Fernsehen GmbH & Co. KG.
Since – as already described – the transaction had not been
executed, the results planning for 2014 was adjusted accord -
ingly, and this is also taken into account in the guidance for the
2014 financial year.
5.3 Consolidated presentation of opportunities and risk
situation
The Management Board sees the main risk factors in regulatory
interventions, the maintenance of technical coverage as a basis
for generating strong revenues, the access to licenses and
literary materials for exploitation and in anticipating customer
26
Q1 2014 Interim Group Management Report
Risk and Opportunities Report
taste as well as the future media use. The Management Board
continues to see the biggest opportunities in the co-operation
with script authors, directors and producers in Germany and
abroad as well as the access to attractive literary materials and
licenses, which the Constantin Medien Group not least can at-
tribute to its image and its creative and committed personnel,
as well as to its portfolio of existing rights and licenses.
Based on the information available and on estimates, particu-
larly the probability of occurrence, the maximum amount of
damage and the effect of counter measures taken, the Manage -
ment Board of Constantin Medien AG reaches the conclusion
that these risks do not represent a going concern character.
This particularly applies to individual risks, as well as to the
risks as a whole as far as the effect of all risks together can be
reasonably simulated or otherwise estimated. The Management
Board considers the Group to be sufficiently prepared to deal
with the remaining risks not reduced by counter measures. It
is convinced that the measures taken keep risk at an econo-
mically reasonable level and that the Group's ability to bear
risks is sufficient.
6. Outlook
6.1 Economic environment
The International Monetary Fund (IMF) is expecting the global
recovery this year to result in global economic growth of 3.6
percent, with regional differences in growth subject to high
risks: As a consequence of the last financial and economic cri-
sis, many countries continue to have high debt and unem-
ployment ratios. Added to these are new risks such as a low
inflation rate in the developed industrial nations, weaker
growth prospects for emerging markets and new geopolitical
conflicts such as the crisis in the Ukraine.
The leading German economic research institutes in their spring
forecasts are expecting a further economic recovery in the Euro-
zone. In particular, gross investments are to be on the rise, due
to the required replacement investments and a low level of un-
certainty regarding the future of the Euro. Private consump-
tion is also predicted to increase again. However, this encour -
aging development is burdened by the slow reduction in un-
employment in the Eurozone, the still high debt ratios of com-
panies and countries as well as the bank's limited willingness
to grant credits.
For Germany, the economic research institutes are predicting
an economic upswing in the current year. Almost all available
early indicators (Ifo Index, ZEW and Consumer Climate or the
Purchasing Managers' Indices for the Processing Industry and
the Services Sector) suggest that the economic framework con-
ditions for companies are improving. The gross domestic pro-
duct is to grow by 1.9 percent in 2014, after a forecast of only
1.6 percent growth in the 2013 autumn report. Private con-
sumption is to make the biggest contribution to the increase in
general economic production. Stronger consumers’ willingness
to spend is supported by an increase in available income and
in only a moderate increase in consumer prices.
Sources: International Monetary Fund (IMF): World Economic Outlook,Update April 2014; M.M. Warburg & Co., Hamburg: Capital market per-spectives, February 2014
6.2 Priorities for the financial year 2014
6.2.1 Segment Sports
Sector-specific general conditions
In their current quarterly forecast ”Advertising Expenditure
Fore cast“, the media agency group ZenithOptimedia is predict -
ing further growth for the global advertising market also in the
next three years. After 2013 ended with a plus of 3.9 percent,
the agency is expecting a growth rate of 5.5 percent for 2014,
5.8 percent for 2015 and even 6.1 percent in 2016. Zenith-
Optimedia thus revises its forecast for the global advertising
mar ket upward for the third time in a row. The ongoing positive
development of the global economy and the continuing growth
in mobile advertising were the reasons for this confident pre-
diction.
In 2014, the advertising market will be driven by the Winter
Olympics, the Soccer Wold Cup and the US midterm elec tions,
with the medium TV profiting most. In 2013, TV bundled 40
percent of the global advertising budget – almost twice as
much as investments in online advertising (21 percent). In ad-
dition, the confidence of advertising customers in the Euro-
zone strengthened, particularly the situation in the Southern
European countries stabilized.
For Germany, ZenithOptimedia expects growth of 1.5 percent
for the current year, and growth rates of 1.3 or 1.2 percent for
2015 and 2016. Germany will profit especially in the category
TV. Notwithstanding, the internet will continue to be the fastest
growing medium in Germany according to ZenithOptimedia,
with a predicted increase in net investments of 8.5 percent in
27
Interim Group Management Report Q1 2014
Outlook
2014. According to ZenithOptimedia, the rapid development of
the medium is due to the “revolution of programmatic pur-
chases”, which enable agencies and advertising customers to
select advertising spots automatically and target-group-specifi-
cally, thus managing and optimizing digital campaigns in real
time. By now, this is also true of social ads and online videos,
so that several trends are reinforcing each other.
ZenithOptimedia still expects the highest growth rates in the
mobile area: The advertisements on mobile devices are to go
up by an average of 50 percent a year until 2016. Globally,
USD 13.4 billion were spent on mobile advertising in 2013.
This corresponds to 12.9 percent of total spendings for online
advertising and 27 percent of the total advertising volume. By
2016, investments in mobile advertising are to increase to
USD 45 billion, making up 28 percent of online investments
and 7.6 percent of total investments. Therefore, mobile will
advance to become the fourth biggest advertising medium glo-
bally after radio, magazines and outdoor advertising.
Source: ZenithOptimedia, press release, April 7, 2014 for the study“Advertising Expenditure Forecast”
In its advertising statistics for Germany, the Circle of Online
Marketers (Online-Vermarkterkreis, OVK) assumes total spend -
ings of EUR 1,430 billion for the current year, which corre -
sponds to a strong growth of +8.4 percent. The Unit Mobile
Advertising (MAC) also expects further growth for the display
advertising area on mobile devices and for 2014 is forecasting
an increase of total advertising spendings of around 65 per-
cent to EUR 107 million.
Source: Circle of Online Marketers (OVK) and Unit Mobile Advertising(MAC) in BVDW e.V., press release, March 27, 2014
For the pay-TV area, the auditing company PwC is predicting
a slight increase in the proportion of pay-TV households of total
households in Germany to 53.5 percent by 2017. The propor-
tion was 52.6 percent in 2012. Overall, PwC is expecting 20.5
sub scriber households for 2017. This development will be
especially due to the further increase in the demand for IPTV
and pay-TV offers. Subscriber households are made up of cable
and IPTV households, satellite households with pay-TV as well
as customers of the pay-TV platform Sky, and the users of pay-
TV HD packages via satellite as well as the users of 3D offers
– however, the latter will for now continue to be a niche as fore-
cast by PwC. According to PwC, the number of pay-TV house -
holds in Germany will total 12.2 million in 2017, which
cor responds to an annual increase of 6.6 percent based on 8.9
mil lion pay-TV households in 2012. PwC expects the propor-
tion of pay-TV households to be 31.9 percent in 2017 (23.1
percent in 2012).
Source: PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft,“German Entertainment and Media Outlook: 2013 – 2017”, October2013
According to PwC, in the production sector, the medium TV will
benefit from the continuing strong demand for program offers
in high definition and from the higher number of TV channels
as part of the ongoing digitization. As a result, TV usage is at
a stable high level and TV is staying attractive to advertisers.
Source: PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft,“German Entertainment and Media Outlook: 2013 – 2017”, October2013
The TV industry continues to be significantly driven by the intro -
duction of the new TV standard Ultra HD (4K). This was also
confirmed on the world's biggest specialist trade fair for pro-
duction technology, the NAB, which takes place in Las Vegas
in mid-April each year. In addition to innovative IP broadcast-
ing techniques, which are to make the broadcasts of live events
more cost efficiently and more flexible, the focus was particu-
larly on the 4K production technology (Ultra-HD). Sony and
FIFA announced their co-operation to this aim: For the first
time, the official film for the 2014 FIFA World Cup™ will be
produced in 4K resolution. At some match sites, professional
4K equipment will be integrated into the production workflow.
This once more documents the development from HD to 4K.
Sources: “4k-Produktionen zur FIFA WM als neue hochauflösende Produktionstechnik”; mebucom.de, April 14, 2014; “Fast schon Geschichte: die NAB2014” in film-tv-video.de, April 10, 2014
Priorities for the financial year 2014
Alongside the further continuous expansion of sports contents
and live broadcasts, both in free-TV and in pay-TV, the even
more consistent cross-platform content use and distribution
will be a focus in the current financial year – not least against
the background of the further increase in digital and conver-
gent media use for cross-platform offers. As a result, SPORT1
will drive the digitization of its offers even more stringently.
Above all, SPORT1.de will aim at positioning itself also as
a portal for access to all digital offers under the SPORT1 um-
brella brand. For this purpose, SPORT1 will create the corre -
sponding technical infrastructure and implement user inter -
28
Q1 2014 Interim Group Management Report
Outlook
faces focused on convergent media use. In addition, the digi-
tal diversification of the SPORT1 brand is to be driven forward
via additional sub-brands in the online area, while simulta-
neously creating new marketing environments. In the context
of the perpetual increase in the distribution of mobile devices
such as Smartphones and Tablets, SPORT1 will further focus
on extending its mobile offers and Apps, and on intensifying its
social media activities, in 2014.
6.2.2 Segment Film
Sector-specific general conditions
As a result of the now secured continuation and increase of
the DFFF until 2016, an important contribution to financing
German films will also be made in the next few years. This will
inspire production companies such as Constantin Film AG to
offer a creative and ambitious production business in Germany.
The ruling of the Federal Constitutional Court, which confirmed
the unlimited legality of the German Film Funding Act, pro vides
the entire industry with an immensely important basis for sus-
tainable growth perspectives.
In the TV service production area, innovations in the product
portfolio of private program providers can be assumed, par tially
due to stagnating coverages for long-term formats. Pay-TV
could become an increasingly interesting partner for service pro-
ductions, whose growth is currently strong and stable. Fans of
sports, films and demanding TV series are increasingly shift ing
towards pay-TV. The internet (subscription video-on-demand)
can also be viewed as a potential competitor of commercial TV
and must hence be monitored closed as a potential new partner.
In the theatrical distribution area, it can be assumed that the
theatrical market in Germany will be able to generate a good
result by sales and viewers in the second quarter 2014 – in
spite of the upcoming 2014 FIFA World Cup™. This is because
international titles such as “The Amazing Spider-Man 2: Rise
of Electro”, “The Other Woman”, “Godzilla”, “X-Men: Days of
Future Past”, “Maleficent” and “A Million Ways to Die in the
West” will be released in this period.
On the German Home Entertainment market, digital exploita-
tion formats (Electronic sell-through, Video-on-Demand and
Pay-per-View) will continue to gain in importance. For instance,
Constantin Film AG assumes that – compared to the current
market volume – video-on-demand will reach a two-digit market
share in the next few years.
Priorities for the financial year 2014
In theatrical production, Constantin Film AG's priority is on the
continuous optimization of the persistent high quality of its
national and international in-house productions. It is the aim
to primarily produce titles that are emotionally-triggered to the
needs of the audience and that are based e.g. on specific
brands and/or have event-character. But also productions with
smaller budgets and correspondingly a containable audience
risk are of interest if they are compelling. Each project must be
measured based on high creative and economic benchmarks.
Due to the current plans, a further ten promising film projects
are in the pipeline for the rest of 2014. Three of these thea-
trical films – including “Fantastic Four 2” and “Resident Evil
6” – are English-speaking productions tailored to the interna-
tional market. Productions for the German theatrical market
include, among others, “Ostwind 2 – Die Rückkehr nach Kal-
tenbach” as well as a second part to “Fack ju Göhte”.
In the TV service production area, the subsidiaries of Con-
stantin Film AG are continually working on developing innova-
tive TV formats and establishing contacts with the major TV
chan nels. For the coming months, Constantin Film AG is ex-
pecting an improved order situation in this area, which could
also be influenced positively by the increasingly aggressive
acquisition policy of the major online portals. In 2014, these
include the Ken Follett dramatization “The Pillars of the Earth”
as well as a further episode of the Rita Falk provincial crime
series “Schweinskopf al dente”.
In theatrical distribution, Constantin Film AG will continue to
rely on its tried and tested strategy of combining national and
international in-house and co-productions with high-quality
third-party titles, which are released in cinemas at a strategi-
cally favorable time with an appropriate press and marketing
strategy. Against the background that especially American stu-
dios spend large marketing budgets when releasing their major
event films in order to attract audience attention, Constantin
film AG will in future analyze more closely when and how to po-
si tion its films on the German theatrical market.
From today's perspective, approximately nine films will be
released to German cinemas between April and December
2014. Due to the 2014 FIFA World Cup™, only one film
release is planned for the second quarter of 2014 with “Irre
sind männlich” (in cinemas since April 24). Other theatrical
29
30
Q1 2014 Interim Group Management Report
Outlook
releases – contrary to the usual seasonal trend – are planned
from August because in the summer months, the theatrical
market is dominated by US blockbusters released globally.
In the current financial year, the Home-Entertainment area will
benefit particularly from the re-release of the theatrical hit
“Fack ju Göhte”, which came on the market at the beginning
of May. Other significant sales are expected from titles such as
“Pompeii”, “Need for Speed” and “Fünf Freunde 3”.
Revenues in free-TV exploitation in the second quarter of 2014
will be largely determined by the license starts of the films
“Agent Ranjid rettet die Welt” (ZDF), “The Three Musketeers”
(ProSiebenSat.1), “God of Carnage” (ARD), “Wickie auf großer
Fahrt” (ProSiebenSat.1) and “Blutzbrüdaz” (ProSiebenSat.1).
In pay-TV exploitation, “So Undercover”, “Fünf Freunde 2”,
“Texas Chainsaw – The Legend is back” and “Wrong Turn 5”
will generate revenues in the second quarter of 2014.
6.2.3 Segment Sports- and Event-Marketing
Sector-specific general conditions
According to estimates by the consulting company for spon-
sor ship measurement IEG, global sponsoring expenditures in
2014 will increase by 4.1 percent (previous year: 3.9 percent)
to USD 55.3 billion. IEG expects the largest percentage growth
spurt in the Asia/Pacific region (5.6 percent after 5.0 percent
the previous year), but the Central and South American region
will also increase due to the 2014 FIFA World Cup™, which is
to take place in Brazil (5.0 percent after 2.6 percent last year).
By contrast, IEG forecasts a strong curbing of the growth rate
in Europe (2.1 percent after 2.8 percent the previous year),
whereas at 4.3 percent, the increase in North America is to be
slightly below the prior year value (4.5 percent).
Source: IEG Sponsorship Report, January 7, 2014
Priorities for the financial year 2014
The repeated extension of the TEAM mandate for the marke-
t ing of the commercial rights for the UEFA Champions League,
UEFA Europa League and UEFA Super Cup (each for the
match periods 2015/16 to 2017/18) still provides very good
per spec tives for continuing the close co-operation with the
Euro pean Foot ball Association. If contractually agreed perfor-
mance targets for the current marketing process will be
achieved, then TEAM’s mandate will be automatically extend -
ed for three additional match periods (2018/19 to 2020/21).
As a result, it is the primary target of the TEAM group to
achieve a premature extension with UEFA.
For this purpose, as many new agreements at best possible
conditions are to be conducted in the current financial year –
both in the area of TV rights and for sponsorship rights. The two
finals in Turin and Lisbon are offering the perfect sales plat-
form in the current marketing phase.
6.2.4 Segment Other Business Activities
Sector-specific general conditions
Online/Social Gaming – PwC assumes that the games market
in Germany will grow more strongly again in the next few years
and is expecting revenues of EUR 2.4 billion for 2016. Com-
pared to the comparative value of EUR 1.85 billion in 2012,
this corresponds to an average increase per year of 3.9 per-
cent. PwC mentions additional virtual contents in the so-called
free-to-play area as one of the most important growth drivers.
In this business model, game publishers provide basic game
contents for free in order to offer potential users the lowest
possible entrance threshold. Additional contents such as game
extensions or functional items can be acquired during the
course of the game for a charge. PwC assumes that this sector
will grow by an average of 10 percent per year – a significantly
stronger growth than the market as a whole.
Source: PricewaterhouseCoopers (PwC), study “Media Trend Outlook –Virtuelle Zusatzinhalte in Videospielen: ein Geschäftsmodell mit Aus-sicht“, August 2013
Priorities for the financial year 2014
Highlights Event AG is primarily focusing on the high-quality
implementation of the events of the Vienna Philharmonic
Orchestra and the EBU, as these projects offer the greatest op-
portunities for the future. With regard to the newly added
projects (merchandising for the Eurovision Song Contest and
Eurovision Young Musicians), there are good strategic possibil -
ities to further expand the existing business areas. This par -
ticularly applies to the Eurovision Young Musicians project,
which combines existing activities in the area of classical music
with those of the EBU, with which there is a long-standing and
successful partnership.
Furthermore, online gaming provides the great opportunity to
interact with users/fans in the forward-looking social media,
events and entertainment sector. As a result, any already made
activities are to be extended further.
31
6.3 Financial targets of the Group
It should be noted that actual results could significantly differ
from expectations of projected developments if the assump -
tions underlying the forward-looking statements prove to be
inaccurate.
Since the originally agreed sale of PLAZAMEDIA GmbH TV-
und Film-Produktion as well as the sale of the minority stake
of 25.1 percent each in Sport1 GmbH and Constantin Sport
Marketing GmbH to Sky Deutschland Fernsehen GmbH & Co.
KG will not be executed, this results in a change of the finan-
cial targets of the Constantin Medien Group for the financial
year 2014.
Caused by the continuation of the activities of PLAZAMEDIA
GmbH TV- und Film-Produktion and its subsidiaries under the
umbrella of Constantin Medien AG, compared to the previous
year, now an increase in sales is expected for the financial year
2014 in the Segment Sports. Despite the loss of the planned
other income resulting from the transaction with Sky Deutsch-
land Fernsehen GmbH & Co. KG, however higher earnings are
assumed compared to the previous year (previous guidance for
the financial year 2014: lower sales together with an increase
in earnings).
Overall, the Management Board now assumes Group sales of
between EUR 460 million and EUR 500 million (previously:
EUR 420 million and EUR 460 million) for the financial year
2014. Considering the holding costs and the financial expenses
and taxes and due to the fact, that the intended transaction
has not been executed, the Management Board is expecting
Group earnings attributable to shareholders of between EUR
-13 million and EUR -15 million (previously: EUR +13 million
and EUR +15 million).
Ismaning, May 22, 2014
Constantin Medien AG
Bernhard Burgener Antonio Arrigoni
Chief Executive Officer Chief Financial Officer
32
Q1 2014 Consolidated Interim Financial Statements | Consolidated Balance Sheet
Assets
3/31/2014
135,461
31,900
43,471
5,461
378
1,130
2,964
187
4,150
225,102
4,071
116,747
1,859
1,501
2,495
68,576
44,690
239,939
465,041
12/31/2013
172,154
31,558
43,295
5,455
328
871
2,512
201
2,422
258,796
3,178
118,505
1,862
1,850
1,593
67,851
41,954
236,793
495,589
Non-current assets
Film assets
Other intangible assets
Goodwill
Property, plant and equipment
Investments in associated companies and joint ventures
Non-current receivables
Receivables due from associated companies and joint ventures
Other financial assets
Deferred tax assets
Current assets
Inventories
Trade accounts receivable and other receivables
Receivables due from associated companies and joint ventures
Other financial assets
Income tax receivables
Cash and cash equivalents
Non-current assets held for sale and disposal group
Total assets
Consolidated Balance Sheet as of March 31, 2014 in EUR ‘000
33
3/31/2014
85,131
-7,422
103,605
12,824
-179,679
-5,775
8,684
41,035
49,719
109,806
130
5,660
4,347
15,898
135,841
99,092
43,159
107,796
2,478
8,227
4,796
13,933
279,481
465,041
12/31/2013
85,131
-7,422
103,605
12,718
-170,054
-9,625
14,353
40,843
55,196
109,640
137
4,907
4,653
19,138
138,475
123,988
48,031
107,446
21
8,674
949
12,809
301,918
495,589
Equity/Liabilities
Equity
Subscribed capital
Treasury stock
Capital reserve
Other reserves
Accumulated loss
Shareholders' interests
Equity attributable to the shareholders
Non-controlling interests
Non-current liabilities
Financial liabilities
Other liabilities
Pension liabilities
Provisions
Deferred tax liabilities
Current liabilities
Financial liabilities
Advance payments received
Trade accounts payable and other liabilities
Liabilities due to associated companies and joint ventures
Provisions
Income tax liabilities
Liabilities of the disposal group
Total equity and liabilities
Consolidated Balance Sheet as of March 31, 2014 in EUR ‘000
34
Q1 2014 Consolidated Interim Financial Statements | Consolidated Income Statement
Sales
Capitalized film production costs and other own work capitalized
Total output
Other operating income
Costs for licenses, commissions and materials
Costs for purchased services
Cost of materials and licenses
Salaries
Social security and pension costs
Personnel expenses
Amortization and impairment on film assets
Amortization/depreciation and impairment on intangible assets
and property, plant and equipment
Impairment on goodwill
Amortization, depreciation and impairment
Other operating expenses
Loss/profit from operations
Profit from investments in associated companies and joint ventures
Financial income
Financial expenses
Financial result
Loss/profit before taxes
Income taxes
Deferred taxes
Taxes
Net loss/profit
thereof non-controlling interests
thereof shareholders' interests
Consolidated Income Statement
1/1 to3/31/2014
136,139
6,970
143,109
5,809
-10,614
-35,304
-45,918
-25,490
-3,604
-29,094
-52,527
-1,074
0
-53,601
-22,580
-2,275
50
2,047
-4,049
-2,002
-4,227
-5,220
4,485
-735
-4,962
533
-5,495
1/1 to3/31/2013
103,748
12,427
116,175
5,845
-12,434
-41,440
-53,874
-25,913
-3,651
-29,564
-14,706
-2,746
0
-17,452
-19,361
1,769
4
1,943
-2,970
-1,027
746
-532
277
-255
491
1,036
-545
January 1 to March 31, 2014 in EUR ‘000
35
Consolidated Statement of Comprehensive Income | Consolidated Interim Financial Statements Q1 2014
1/1 to3/31/2014
-0.07
-0.07
77,708,287
77,708,287
1/1 to3/31/2013
-0.01
-0.01
77,706,409
77,706,409
Earnings per share
Earnings per share attributable to shareholders, basic (in EUR)
Earnings per share attributable to shareholders, diluted (in EUR)
Average number of outstanding shares (basic)
Average number of outstanding shares (diluted)
Net loss/profit
Foreign currency translation differences
Items that probably will be reclassified to profit or loss in subsequent periods
Actuarial gains and losses on defined benefit plans
Items that will not be reclassified to profit or loss in subsequent periods
Other comprehensive loss/income, net of tax
Total comprehensive loss/income
thereof non-controlling interests
thereof shareholders' interests
1/1 to3/31/2014
-4,962
81
81
-534
-534
-453
-5,415
254
-5,669
Consolidated Statement of Comprehensive Income
1/1 to3/31/2013
491
178
178
0
0
178
669
1,239
-570
January 1 to March 31, 2014 in EUR ‘000
January 1 to March 31, 2014
36
Q1 2014 Consolidated Interim Financial Statements | Consolidated Statement of Cash Flows
Net loss/profit
Deferred taxes
Income taxes
Financial result
Profit (-) / loss (+) from investments in associated companies and joint ventures
Amortization, depreciation and impairment and write-ups on film assets, intangible assets
and property, plant and equipment
Profit (-) / loss (+) from disposal of film assets, intangible assets and property, plant and equipment
Other non-cash items
Increase (-) / decrease (+) in inventories, trade accounts receivable
and other assets not classified to investing or financing activities
Decrease (-) / increase (+) in trade accounts payable and other
liabilities not classified to investing or financing activities
Dividends received from associated companies and joint ventures
Interest paid
Interest received
Income taxes paid
Income taxes received
Cash flow from operating activities
Change in cash and cash equivalents due to acquisitions of companies/shares in companies, net
Payments for intangible assets
Payments for film assets
Payments for property, plant and equipment
Payments for financial assets
Proceeds/payments due to sale of companies/shares in companies, net
Proceeds from disposal of intangible assets and film assets
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of financial assets
Cash flow for investing activities
Consolidated Statement of Cash Flows
1/1 to3/31/2014
-4,962
-4,485
5,220
2,768
-50
53,601
26
-1,044
1,662
-3,022
0
-713
80
-2,276
8
46,813
0
-855
-16,123
-1,022
-439
0
0
0
0
-18,439
1/1 to3/31/2013
491
-277
532
1,268
-4
17,452
4
-1,232
-9,566
12,184
0
-1,113
271
-5,800
2,982
17,192
0
-225
-14,827
-800
-8
0
0
8
0
-15,852
January 1 to March 31, 2014 in EUR ‘000
37
Proceeds from capital increase and from issuance of equity instruments
Payments for purchase of treasury stock
Proceeds from sale of treasury stock
Payments for purchase of non-controlling interests
Proceeds from sale of non-controlling interests
Repayment and buy-back of non-current financial liabilities
Repayment and buy-back of current financial liabilities
Proceeds from receipt of non-current financial liabilities
Proceeds from receipt of current financial liabilities
Dividend payments
Cash flow for financing activities
Cash flow from/for the reporting period
Cash and cash equivalents at the beginning of the reporting period
Change in cash and cash equivalents due to exchange rate movements
Cash and cash equivalents at the end of the reporting period
Change in cash and cash equivalents
1/1 to3/31/2014
0
0
0
0
0
0
-25,828
0
708
-62
-25,182
3,192
82,918
91
86,201
3,192
1/1 to3/31/2013
0
0
0
0
0
0
-10,208
0
814
0
-9,394
-8,054
91,113
-11
83,048
-8,054
January 1 to March 31, 2014 in EUR ‘000
38
Q1 2014 Consolidated Interim Financial Statements | Consolidated Statement of Changes in Equity
Balance 1/1/2014
Foreign currency translation differences
Items that probably will be reclassified to profit or loss in subsequent periods
Actuarial gains and losses on defined benefit plans
Items that will not be reclassified to profit or loss in subsequent periods
Other comprehensive income/loss
Net profit/loss
Total comprehensive income/loss
Reclassification of prior year's net result
Capital increase
Change in treasury stock
Dividend payments
Other changes
Balance 3/31/2014
Balance 1/1/2013
Retrospective change in accounting principle due to adoption of IAS 19R
Adjusted balance 1/1/2013
Foreign currency translation differences
Items that probably will be reclassified to profit or loss in subsequent periods
Actuarial gains and losses on defined benefit plans
Items that will not be reclassified to profit or loss in subsequent periods
Other comprehensive income/loss
Net profit/loss
Total comprehensive income/loss
Reclassification of prior year's net result
Capital increase
Change in treasury stock
Dividend payments
Other changes
Balance 3/31/2013
Subscribedcapital
85,131
0
0
0
0
85,131
85,131
85,131
0
0
0
0
85,131
Treasurystock
-7,422
0
0
0
0
-7,422
-7,424
-7,424
0
0
0
0
-7,424
Capitalreserve
103,605
0
0
0
0
103,605
110,195
110,195
0
0
0
0
1
110,196
Otherreserves
12,718
106
106
0
106
106
12,824
14,788
-888
13,900
-25
-25
0
-25
-25
13,875
Consolidated Statement of Changes in Equity
January 1 to March 31, 2014 in EUR ‘000
39
Shareholders'interests
-9,625
0
-280
-280
-280
-5,495
-5,775
9,625
-5,775
4,962
-11
4,951
0
0
0
-545
-545
-4,951
-545
Non-controlling
interests
40,843
-25
-25
-254
-254
-279
533
254
-62
41,035
50,959
-1,175
49,784
203
203
0
203
1,036
1,239
51,023
Equity attributable to
shareholders
14,353
106
106
-280
-280
-174
-5,495
-5,669
0
0
0
0
0
8,684
32,766
-899
31,867
-25
-25
0
0
-25
-545
-570
0
0
1
0
0
31,298
Total
55,196
81
81
-534
-534
-453
-4,962
-5,415
0
0
0
-62
0
49,719
83,725
-2,074
81,651
178
178
0
0
178
491
669
0
0
1
0
0
82,321
Accumulatedloss
-170,054
0
0
0
0
-9,625
-179,679
-174,886
-174,886
0
0
0
0
4,951
-169,935
40
Notes to the Consolidated Interim Financial Statements
1. General information about the Group
The Group parent company, Constantin Medien AG, has its re-
gistered office in Münchener Straße 101g, Ismaning, Germany.
Constantin Medien AG's Management Board authorized the
publication of the accompanying unaudited, condensed con-
solidated interim financial statements at its meeting on May
22, 2014.
2. Accounting and valuation principles
The accompanying unaudited, condensed consolidated interim
financial statements for the period from January 1, 2014 to
March 31, 2014 have been prepared according to Internatio-
nal Accounting Standard Interim Financial Reporting (IAS 34).
The condensed consolidated interim financial statements do
not include all explanations and disclosures required for annual
reports and should be read in conjunction with the consolidated
financial statements as of December 31, 2013 published by
the Company.
The accounting and valuation principles used in this condensed
consolidated interim financial statements are consistent with
those applied in the consolidated financial statements as of
December 31, 2013 (refer to the annual report 2013, notes to
the consolidated financial statements, note 4) except for the
first-time adoption of new or revised standards and interpreta-
tions explained below.
The consolidated interim financial statements are presented
in Euros, which represent the functional and reporting currency
of the Group parent company. In general, the amounts are
stated in thousands of Euros (EUR thousand or EUR ‘000),
except where otherwise indicated.
The preparation of the condensed consolidated interim finan-
cial statements requires management to use estimates and
assumptions that affect the classification and measurement of
reported income, expenses, assets, liabilities and contingent
liabilities as of the balance sheet date. These estimates and
assumptions represent management's best estimate based on
historical experience and other factors, including estimates
about future events. The estimates and assumptions are contin -
ually reviewed. Changes in accounting estimates are necessary
if changes occur in the circumstances on which the estimates
were based on or as a result of new information or additional
findings. Such changes are recognized in the period of the
change. For additional information, refer to the annual report
2013, notes to the consolidated financial statements, note 5.
3. Changes in accounting principles
The Group has the following standards and amendments of
accounting standards, mandatory applicable in the EU from
January 1, 2014, already voluntarily early adopted in the
financial year 2013:
Q1 2014 Consolidated Interim Financial Statements | Notes to the Consolidated Interim Financial Statements
General information about the Group | Accounting and valuation principles | Changes in accounting principles
IFRS 10, Consolidated Financial Statements
IFRS 11, Joint Arrangements
IFRS 12, Disclosures of Interest in Other Entities
Transition Regulations (Amendments to IFRS 10, IFRS 11, IFRS 12)
IAS 27, Separate Financial Statements (Amendment)
IAS 28, Investments in Associates and Joint Ventures (Amendment)
IAS 36, Impairment (Amendment)
Mandatory application for annual periods beginning on or after:
1/1/2014
1/1/2014
1/1/2014
1/1/2014
1/1/2014
1/1/2014
1/1/2014
Standards/Amendments/ Interpretations
41
For additional information, refer to annual report 2013, notes
to the consolidated financial statements, note 2.
The mandatory first-time adoption for annual periods begin-
ning on January 1, 2014 of the following accounting standards
and interpretations did not materially impact this condensed
consolidated interim financial statements and it is not ex-
pected that these changes materially impact the full financial
statements at year-end.
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
IAS 32, Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities
(Amendment)
IAS 39, Financial Instruments: Recognition and Measurement – Novation of Derivatives
(Amendment)
IFRIC 21, Levies
Mandatory application for annual periods beginning on or after:
1/1/2014*
1/1/2014*
1/1/2014*
1/1/2014**
Standards/Amendments/ Interpretations
* Already endorsed by the EU** Interpretation not yet been endorsed by the EU
The Constantin Medien Group waived the early application of
new or revised standards and interpretations, whose applica-
tion is not yet mandatory for the Constantin Medien AG on
January 1, 2014. For additional information, refer to annual
report 2013, notes to the consolidated financial statements,
note 2.
4. Changes in the scope of consolidation
Acquisitions, new formations and first-time consolidation
In the reporting period no new acquisitions, formations and
first-time consolidation took place.
Other changes
On January 1, 2014 Constantin Production Services Inc., USA
was merged to the Constantin Film Development Inc., USA.
This transaction has no effect on these consolidated interim
financial statements.
5. Explanatory notes to selected line items in the
balance sheet and income statement
Film assets
Film assets include third-party and in-house productions. In
the first three months of the financial year 2014 EUR 15,826
thousand (3M 2013: EUR 14,101 thousand) were invested in
film assets. Amortization and impairment for the reporting
period amount to EUR 55,527 thousand (3M 2013: EUR
14,706 thousand).
Trade accounts receivable and other receivables
Trade accounts receivable and other receivables are as follows:
Other receivables include loans to co-producers for film pro-
jects of EUR 34,139 thousand (December 31, 2013: EUR
35,211 thousand).
Cash and cash equivalents
Cash and cash equivalents are as follows:
Trade accounts receivable
Other receivables
Total
12/31/2013
52,798
65,707
118,505
3/31/2014
48,006
68,741
116,747
Trade accounts receivable and other receivables in EUR ‘000
Notes to the Consolidated Interim Financial Statements | Consolidated Interim Financial Statements Q1 2014
Changes in the scope of consolidation | Explanatory notes to selected line items in the balance sheet and income statement
42
Q1 2014 Consolidated Interim Financial Statements | Notes to the Consolidated Interim Financial Statements
Explanatory notes to selected line items in the balance sheet and income statement
As of March 31, 2014 Constantin Medien AG has pledged a
total of cash and cash equivalents in the amount of CHF 7.6
million for guarantees in variable amounts (December 31,
2013 CHF 0 million). As of the balance sheet date thereof
EUR 3,175 thousand (December 31, 2013: EUR 0 thousand)
have been claimed.
Non-current assets held for sale
This item comprises on the one hand the property held for sale
from Highlight Event & Entertainment AG, whose activities are
reported in the Other Business Activities Segment, in the
amount of EUR 3,197 thousand (December 31, 2013: EUR
3,181 thousand) as well as the disposal group of PLAZAMEDIA
GmbH TV- und Film-Produktion and its subsidiaries. As of
March 31, 2014 the disposal group is measured at carrying
value. The assets and liabilities presented include the values
of PLAZAMEDIA GmbH TV- und Film-Produktion, PLAZA -
MEDIA Austria Ges.m.b.H and PLAZAMEDIA Swiss AG:
3/31/2014
83,201
3,000
86,201
-17,625
68,576
12/31/2013
72,918
10,000
82,918
-15,067
67,851
Cash on hand and balance at banks
Short-term deposits
Subtotal
Reclassification to disposal group
Total
Cash and cash equivalents in EUR ‘000
Assets
Other intangible assets
Property, plant and equipment
Non-current receivables
Deferred tax assets
Inventories
Trade accounts receivable and other receivables
Income tax receivables
Cash and cash equivalents
Assets of the disposal group
Liabilities
Trade accounts payable and other liabilities
Income tax liabilities
Non-current other liabilities
Deferred tax liabilities
Provisions
Liabilities of the disposal group
12/31/2013
608
7,426
689
1,722
434
12,827
0
15,067
38,773
12/31/2013
12,169
75
0
116
449
12,809
Disposal group in EUR '000
3/31/2014
642
7,839
621
1,528
434
12,803
1
17,625
41,493
3/31/2014
13,212
84
5
321
311
13,933
The cumulative gains or losses in other comprehensive income,
which are assigned to the disposal group, amount to EUR -1
thousand (December 31, 2013: EUR 4 thousand). For addi-
tional information, refer to the annual report 2013, notes to
the consolidated financial statements, note 6.13.
43
Equity
As of March 31, 2014, the balance of directly and indirectly
held non-voting treasury shares stood at 7,422,493 Constantin
Medien AG shares taking into account shares held by Highlight
Communications AG (December 31, 2013: 7,422,493 shares).
Non-current financial liabilities
The following table shows the composition of non-current fi-
nancial liabilities as of March 31, 2014:
Current financial liabilities
Current financial liabilities consist of EUR 99,092 thousand
(December 31, 2013: EUR 123,988 thousand) of current liabil -
ities due to banks, whereof EUR 54,003 thousand (December
31, 2013: EUR 79,123 thousand) fall upon film financing.
Trade accounts payable and other liabilities
Trade accounts payable and other liabilities are as follows:
Sales
Sales in the first three months 2014 amounted to EUR
136,139 thousand compared to EUR 103,748 thousand in
the same period in 2013. For further details about the sales
development refer to note 7 (segment reporting) of these notes
and to chapter 2.3.2 (segment performance) of the interim
group management report. Sales from barter transactions
involv ing dissimilar advertising services amount in the report -
ing period to EUR 1,031 thousand (3M 2013: EUR 597 thou-
sand).
Other operating expenses
In Constantin Medien AG’s proceeding against Mr Bernard
Ecclestone, among others, the High Court of Justice in London,
Court of First Instance, rejected a direct claim against Mr
Bernard Ecclestone, among others, in its judgment dated Feb-
ruary 20, 2014. The appeal filed by Constantin Medien AG
was rejected by the High Court of Justice in London on March
27, 2014. For further comments on the legal proceedings of
Constantin Medien AG against Mr Bernard Ecclestone, among
others, refer to note 10, events after balance sheet date, of these
notes. Due to the decision of the Court in late March a negative
impact on earnings of EUR 2,964 thousand relating to costs
for counterparty lawyers resulted in the first quarter 2014.
Amortization, depreciation and impairment
Amortization, depreciation and impairment for the first three
months 2014 are as follows:
Financial result
Financial income and financial expenses for the first three
months 2014 are as follows:
Corporate bond 2013/2018
Corporate bond 2010/2015
Loan private investor
Total
12/31/2013
63,401
28,700
17,539
109,640
3/31/2014
63,479
28,739
17,588
109,806
Non-current financial liabilities in EUR ‘000
Trade accounts payable
Other liabilities
Total
12/31/2013
41,466
65,980
107,446
3/31/2014
37,072
70,724
107,796
Trade accounts payable and other liabilities in EUR ‘000 Scheduled amortization of film
assets
Scheduled amortization of
intangible assets
Scheduled depreciation of pro-
perty, plant and equipment
Impairment on film assets
Total
1/1 to3/31/2014
45,239
483
591
7,288
53,601
1/1 to3/31/2013
13,168
652
2,094
1,538
17,452
Amortization, depreciation and impairment in EUR '000
44
Q1 2014 Consolidated Interim Financial Statements | Notes to the Consolidated Interim Financial Statements
Financial risk management
Unrecognized allocable loss from entities accounted for at
equity
In the reporting period the unrecognized allocable loss from
entities accounted for at equity amounts to EUR 323 thousand
(3M 2013: EUR 388 thousand). The cumulative unrecogni-
zed allocable loss totals EUR 2,528 thousand (December 31,
2013: EUR 2,193 thousand).
6. Financial risk management
The Group is exposed to various financial risks arising from
operating business activities and financing activities. Finan-
cial risks of relevance to the Group arise from changes in foreign
exchange rates, market risks for financial assets as well as
changes in interest rates, liquidity, creditworthiness and the
payment ability of the Group's business partners. There have
been no changes relating to the classification of the financial
assets and liabilities compared to the latest consolidated
financial statements. For additional information, refer to the
annual report 2013, notes to the consolidated financial state-
ments, note 8.
Fair value hierarchy
Financial assets and liabilities that are measured at fair value,
or fair values to be disclosed in the notes, are allocated to the
following levels of the fair value hierarchy, based on the lowest
level input that is significant for the fair value measurement as
a whole:
– Level 1: Inputs are quoted prices (unadjusted) in active mar-
kets for identical assets or liabilities that the entity can
access at the measurement date
– Level 2: Inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly
– Level 3: Inputs are unobservable inputs for the asset or lia-
bility
In the first three months until March 31, 2014, there have
been no changes in the valuation principles (refer to the annual
report 2013, notes to the consolidated financial statements,
note 4.3).
Foreign currency exchange gains
Gains from changes in the fair value of financial instruments
Other interests and similar income
Total
1/1 to3/31/2014
1,605
155
287
2,047
1/1 to3/31/2013
920
720
303
1,943
Financial income in EUR '000
Interest expenses on the corporate bonds (previous year: incl. convertible bond)
Foreign currency exchange losses
Loss arising from changes in the fair value of financial instruments
Other interest and similar expenses
Total
1/1 to3/31/2014
1,882
838
243
1,086
4,049
1/1 to3/31/2013
706
678
25
1,561
2,970
Financial expenses in EUR ‘000
45
Financial assets
Derivative financial instruments
Financial assets at fair value through profit or loss
Financial liabilities
Financial liabilities (non-current)
Derivative financial instruments
Level 1
0
179
95,168
0
Level 2
143
0
19,946
388
Level 3
0
0
0
0
Total
143
179
115,114
388
Fair value hierarchy as of March 31, 2014 in EUR ‘000
The following table presents an allocation of financial assets
and liabilities measured at fair value, or fair values to be dis -
closed in the notes according to the three-level fair value hier -
archy:
Net carryingvalue
143
179
109,806
388
Financial assets
Derivative financial instruments
Financial assets at fair value through profit or loss
Financial liabilities
Financial liabilities at fair value through profit or loss
Financial liabilities (non-current)
Financial liabilities with hedging relationships
Derivative financial instruments
Level 1
0
185
0
94,870
0
0
Level 2
543
0
520
19,816
413
704
Level 3
0
0
0
0
0
0
Total
543
185
520
114,686
413
704
Fair value hierarchy as of December 31, 2013 in EUR ‘000
Net carryingvalue
543
185
520
109,640
413
704
For the determination of fair values the own credit risk and the
default risk of the counterparty has been taken into account
according the Group’s accounting principles (refer to the
annual report 2013, notes to the consolidated financial state-
ments, note 4.3).
There have been no reclassifications between the individual
categories of the fair value hierarchy.
Fair value of financial assets and liabilities
The valuation at fair value of financial assets measured at fair
value through profit or loss, which is included in level 1, is
deter mined by means of stock prices. Derivative financial
instru ments included in level 2 are measured at current mar-
ket prices. To determine the fair value of financial instruments
in level 2, a discounted cash flow method has been applied.
Financial assets and liabilities measured at amortized cost
The carrying amounts of current financial assets and liabilities
almost correspond to their fair value due to the short-term ma-
turities of these instruments. The non-current receivables are
discounted according to their maturity and therefore the carry -
ing amounts correspond almost to their fair value. A differ ence
between the amortized cost and fair value exist for the non-
current financial liabilities.
Fair value
Fair value
46
Q1 2014 Consolidated Interim Financial Statements | Notes to the Consolidated Interim Financial Statements
Segment reporting
The fair value of the corporate bonds accounted for at amor -
tized cost is equivalent to the XETRA closing rate at the
balance sheet date, and is therefore included in level 1.
The fair value of the loan from a private investor accounted for
at amortized cost was determined using the discounted cash
flow method. The discount rates adopted correspond to the
market yield curve of a German government bond at the
balance sheet date. As the market interest rate is the most sig-
nificant input factor and thus deemed to be observable, the
fair value is classified in level 2 of the fair value hierarchy.
Fair value of non-financial assets and liabilities
As of March 31, 2014, with the exception of the property, no
non-financial assets and non-financial liabilities have been
measured at fair value. The property which is measured at fair
value less cost to sell is classified in level 2 of the fair value
hierarchy like on December 31, 2013 (refer to annual report
2013, notes to the consolidated financial statements, note
6.13).
7. Segment reporting
The segment information below is based on the man agement
approach. The Company's Management Board, as the chief
operating decision maker, makes decisions about the allo cation
of resources to the segments and still assesses their success on
the basis of key indicators for sales and segment result. Based
on the internal management reporting system and the under-
lying organizational structure of internal reporting, the Group
is still classified into the four operative segments Sports, Film,
Sports- and Event-Marketing as well as Other Business Activ -
ities. Others contain the administrative functions of the holding
company, Constantin Medien AG, and in the previous year
additionally the activities of EM.TV Finance B.V. until the com-
pletion of its liqui dation in October 2013.
The segment result is defined as earnings before earnings from
investments in associated companies and joint ventures, before
financial result and before taxes.
Sales and services transacted between business segments are
generally rendered at prices that would have been agreed with
third parties.
Sports
33,417
85
33,502
2,707
-35,005
-218
0
1,204
External sales
Intercompany sales
Total sales
Other segment income
Segment expense
thereof scheduled amortization
and depreciation
thereof impairments
Segment result
Non-allocated items
Earnings from investments in associated
companies and joint ventures
Financial income
Financial expenses
Loss before taxes
Sports- andEvent-
Marketing
10,140
0
10,140
111
-6,345
-177
0
3,906
Others
0
0
0
781
-5,026
-57
0
-4,245
Group
136,139
0
136,139
12,779
-151,193
-46,313
-7,288
-2,275
50
2,047
-4,049
-4,227
Film
92,087
0
92,087
10,025
-104,720
-45,591
-7,288
-2,608
Recon -ciliation
0
-121
-121
-1,046
1,167
0
0
0
Segment reporting January 1 to March 31, 2014 in EUR ‘000
Other Business Activities
495
36
531
201
-1,264
-270
0
-532
47
Notes to the Consolidated Interim Financial Statements | Consolidated Interim Financial Statements Q1 2014
Financial commitments, contingent liabilities and other financial commitments | Relationships with related companies and persons
Sports
37,085
127
37,212
867
-36,487
-1,696
0
1,592
External sales
Intercompany sales
Total sales
Other segment income
Segment expense
thereof scheduled amortization
and depreciation
thereof impairments
Segment result
Non-allocated items
Earnings from investments in associated
companies and joint ventures
Financial income
Financial expenses
Profit before taxes
Sports- andEvent-
Marketing
10,152
0
10,152
21
-6,748
-211
0
3,425
Others
0
0
0
1,800
-2,814
-59
0
-1,014
Group
103,748
0
103,748
18,272
-120,251
-15,914
-1,538
1,769
4
1,943
-2,970
746
Film
55,816
0
55,816
16,563
-74,214
-13,688
-1,538
-1,835
Recon -ciliation
0
-163
-163
-1,189
1,352
0
0
0
Segment reporting January 1 to March 31, 2013 in EUR ‘000
Other Business Activities
695
36
731
210
-1,340
-260
0
-399
8. Financial commitments, contingent liabilities
and other financial commitments
Financial commitments, contingent liabilities and other finan-
cial commitments decreased by EUR 19,008 thousand to EUR
166,616 thousand as of March 31, 2014, compared to the
consolidated financial statements as of December 31, 2013.
9. Relationships with related companies and
persons
The Company maintains relations as part of the ordinary busi-
ness activities with associated companies and joint ventures
as well as companies that are controlled by Members of the
Supervisory Board. Receivables due from associated compa-
nies and joint ventures include in some cases loans, which
have arisen from non-binding financing activities of operational
projects. The volume of actual transactions in the reporting
period can be seen in the following table.
There were no business relationships between Constantin
Medien AG and associated companies and joint ventures in the
reporting period and in the previous year. Transactions with
associated companies and joint ventures were made by the
Highlight Communications group.
Transactions with other related companies and persons include
mainly the following relationships:
Expenses of EUR 75 thousand are incurred in the first three
months 2014 (3M 2013: EUR 75 thousand) from the consul-
tancy agreement between the Constantin Film group and the
Fred Kogel GmbH covering license trading, TV service produc -
tions and film distribution. As of March 31, 2014, liabil ities
to taled EUR 25 thousand (December 31, 2013: EUR 25 thou-
sand).
There exists a legal consultancy agreement between Constantin
Medien AG and the Sozietät Kuhn Rechtsanwälte. In the first
three months 2014, expenses are incurred in the amount of
EUR 40 thousand (3M 2013: EUR 0 thousand). The liabil ities
amount to EUR 0 thousand as of March 31, 2014 (December
31, 2013: EUR 0 thousand). A provision in the amount of EUR
107 thousand (December 31, 2013: EUR 200 thousand) has
been recognized for services not yet billed.
48
There exists a consultancy agreement between Constantin
Sport Marketing GmbH, Sport1 GmbH, Sky Deutschland Fern-
sehen GmbH & Co. KG and Dr Dieter Hahn which has been
signed in the financial year 2013.
Constantin Medien AG is asserting, out of court and/or in court,
the rights granted in a debtor warrant in the context of an
agreement dated February 17, 2003 for the sale and transfer
of the holding in Speed Investments Ltd. to BayernLB Motor-
sport Ltd., with the help of a rights association of former For-
mula One shareholders – Civil rights Association. The
shareholders of the rights association have made an agreement
(i) in the case of a successful prosecution of these claims an
arrangement for distribution of the remaining proceeds after
deduction of any legal costs, and (ii) in the case of an unsuc-
cessful prosecution of these claims an arrangement of distri-
bution for payment of the legal costs incurred. KF15 GmbH &
Co. KG is also a shareholder of the rights association. In the
context of the agreement, Constantin Medien AG has incurred
legal costs of EUR 0 thousand in the reporting period (3M
2013: EUR 0 thousand) for KF 15 GmbH & Co. KG.
Related persons comprise of the Management and Supervisory
Board Members and their relatives. In the first three months
2014 no material transactions between Constantin Medien AG
and Members of the Management Board and the Supervisory
Board as well as their relatives occurred.
All transactions with related companies and persons are carried
out on an arm’s length basis.
Q1 2014 Consolidated Interim Financial Statements | Notes to the Consolidated Interim Financial Statements
Relationships with related companies and persons
Joint Ventures
Receivables
Liabilities
Sales and other income
Cost of materials and licenses and other expenses
Associated companies
Receivables
Liabilities
Sales and other income
Cost of materials and licenses and other expenses
Other related companies and persons
Receivables
Liabilities
Provisions
Sales and other income
Legal and consulting expenses
3/31/2014
1,840
2,442
1/1 to3/31/2014
1,060
945
3/31/2014
2,983
36
1/1 to3/31/2014
1
37
3/31/2014
0
25
107
1/1 to3/31/2014
0
115
12/31/2013
1,862
0
1/1 to3/31/2013
1,850
1,924
12/31/2013
2,512
21
1/1 to3/31/2013
0
35
12/31/2013
0
46
200
1/1 to3/31/2013
0
75
Relationships with related companies and persons in EUR ‘000
49
10. Subsequent events after the balance sheet date
On May 19, 2014, Constantin Medien AG announced its de-
cision, not to continue the negotiations with Sky Deutschland
Fernsehen GmbH & Co. KG in connection with the transaction
agreed on December 5, 2013. The agreement provided the
sale of 100 percent of the shares of PLAZAMEDIA GmbH TV-
und Film-Produktion (including its subsidiaries in Austria and
Switzerland) as well as the sale of 25.1 percent each of the
shares in Sport1 GmbH and Constantin Sport Marketing
GmbH.
The transaction was subject, among others, to the conclusion
of a new multi-year production framework contract between
Sport1 GmbH and PLAZAMEDIA GmbH TV- und Film-Pro-
duktion. But no agreement could be reached on this arrange-
ment.
This development requires a change of the financial targets of
the Constantin Medien Group for the financial year 2014. The
continuation of the activities of PLAZAMEDIA GmbH TV- und
Film-Produktion and its subsidiaries under the umbrella of
Constantin Medien AG on the one hand leads to an increase in
sales of the Constantin Medien Group and simultaneously to
the loss of the other income from the deconsolidation of the
PLAZAMEDIA companies. Therefore, the profit planning 2014
was adjusted and this has also been considered in the guid -
ance for the 2014 financial year.
Constantin Medien AG is planning measures to refinance the
corporate bond 2010/2015. On the one hand, the Manage-
ment Board of Constantin Medien AG intends to perform, in
agreement with the Supervisory Board and using part of the
Authorized Capital 2013/I, a capital increase against cash con-
tributions excluding subscription right of the shareholders pur-
suant to § 186 para. 3 sentence 4 German Stock Companies
Act (Aktiengesetz). For this purpose, selected investors will be
addressed. It is planned to increase the share capital of Con-
stantin Medien AG of EUR 85,130,780.00 through the issu-
ance of new bearer shares of up to 10 percent of the share
capital with a calculated proportion of the share capital of EUR
1.00 per share. The Management Board and the Supervisory
Board of Constantin Medien AG will decide on the execution of
the capital increase, if the other parameters of this capital in-
crease, in particular the issue price, have been determined.
Moreover, a further loan agreement totaling CHF 14 million
and EUR 4.5 million will be concluded with a private investor
in addition to the existing loan amounting to approximately
EUR 17.5 million. The new loans will have a term up to June
30, 2016; the interest rate will be 5.0 percent p.a. as before.
In the legal proceedings of Constantin Medien AG against Mr
Bernard Ecclestone, among others, Constantin Medien AG has
filed an application of appeal at the Court of Appeal in London,
Court of Second Instance, on April 24, 2014. The decision
regarding this application is still pending.
Ismaning, May 22, 2014
Constantin Medien AG
Bernhard Burgener Antonio Arrigoni
Chief Executive Officer Chief Financial Officer
Notes to the Consolidated Interim Financial Statements | Consolidated Interim Financial Statements Q1 2014
Subsequent events after the balance sheet date
50
Q1 2014 Finance Calendar
Finanance Calendar 2014 | Imprint
Imprint
Published by
Constantin Medien AG
Münchener Straße 101g, 85737 Ismaning, Germany
Phone +49 (0) 89 99 500-0, Fax +49 (0) 89 99 500-111
E-Mail [email protected]
www.constantin-medien.de
HRB 148 760 AG Munich
Edited by
Constantin Medien AG
Communication/Accounting/Investor Relations
Frank Elsner
Kommunikation für Unternehmen GmbH, Westerkappeln
Finance Calendar 2014
May 23, 2014
Report for the first quarter of 2014
July 30, 2014
Annual General Meeting (AGM) for the financial year 2013
August 2014
Interim Financial Report 2014
November 2014
Report for the third quarter of 2014