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The Year 2005
February 2005 EM.TV Beteiligungs GmbH & Co. KGcompletely repays the zero-coupon note to its holders,through the transfer of net proceeds from the sale ofits 45 percent stake in Tele München Gruppe (TMG).
EM.TV AG reaches an agreement with KarstadtQuelleNew Media AG and Swiss sports investor Dr. h. c.Hans-Dieter Cleven regarding the acquisition of theirstakes in sports TV station DSF and online sportsplatform Sport1. The EM.TV Group is now sole stake-holder of both sports companies.
With C&A and the Deichmann Group, EM.TV wins tworespected retail companies as new licensees for the2006 FIFA World Cup™. Their extensive national andinternational retail networks are a decisive contributi-on to the expansion of distribution channels.
March 2005 EM.TV subsidiary EM.EntertainmentGmbH reaches an agreement with ZDF on the exten-sion to their existing framework contract until 2012.The agreement relates to the period starting 2006and encompasses a total of around 625 half-hourprograms. Furthermore, the two companies agree tocontinue their joint co-production activities within thechildren’s and youth sector.
May 2005 DSF acquires an extensive rights packageto the UEFA Cup matches for the next three seasonsfrom sports rights marketing agency SPORTFIVE,beginning with the 2005/2006 season.
June 2005 EM.TV AG partially repays the 8% bondwith warrants attached of 2004/2009 with a nominalpayment of 10 million Euro on June 30, 2005.
September 2005 Following countless anniversaryinitiatives in celebration of the 30th TV birthday ofcartoon series Vicky the Viking, the three-part Vickypromotion run in 2004 by EM.Entertainment GmbHin co-operation with Autobahn Tank & Rast GmbH isvoted Promotion of the Year by licensing body LIMA.
December 2005 EM.Entertainment GmbH takes animportant step in the expansion of its home entertain-ment activities when it secures long-term program con-tracts with Munich-based Universum Film GmbH andHamburg-based Warner Bros. Entertainment GmbH.
In the course of the TV rights issue by DFL DeutscheFußball Liga GmbH in Frankfurt, DSF secures an exten-sive rights package to the Premier and Second GermanSoccer League for the next three seasons, starting withthe 2006/2007 season. The rights package encom-passes the exclusive first free-TV highlights to both theSunday matches played in the Premier Soccer League,as well as the exclusive free-TV highlights to the SecondSoccer League, including the live match on Mondays.
PLAZAMEDIA reaches an agreement with PREMIEREon the continuation of their long-term strategic partner-ship, as of January 1, 2007. Within the scope of thepartnership, PLAZAMEDIA will provide a wide rangeof services in studio production (contract term untilJune 30, 2011) and outside production (contract termuntil December 31, 2009).
In addition, PLAZAMEDIA takes over 100 percent ofthe stakes in PREMIERE subsidiary Creation Club (CC)GmbH. Creation Club and PREMIERE also agree onan extensive production framework contract with aterm of three years and an option to extend by a fur-ther two years.
Key Figures
2003
414.8
284.1
675.9
146.0
-17.5
-2.6%
435.8
80.8
270.0
89.6
179.6
0.8
-11.6
-85.5
-97.1
-135.2
-129.9
85.3
-40.1
-14.5
146.0
0.85
122.7
146.0
-0.89
570
In Euro million
Non-current assets
> Intangible assets
Total assets
Subscribed capital
Equity
Equity ratio (in percent)
Long-term financial liabilities
Short-term financial liabilities
Sales
> Sports
> Entertainment
> Others
Earnings before interest, taxes, depreciation and amortization (EBITDA)
Depreciation and amortization
Earnings before interest and taxes (EBIT)
Earnings before taxes (EBT)
Shareholders’ interests
Cash flow from operational activities
Cash flow from investment activities
Cash flow from financing activities
Outstanding shares in million
Share price December 31, in Euro
Market capitalization (based on outstanding shares)
Average number of outstanding shares (undiluted) in million
Earnings per share (undiluted) in Euro
Employees (annual average)
*In acordance with IFRS 2 the previous year numbers (2004) were adjusted.
2005
178.9
89.8
316.2
66.6
153.6
48.6%
64.5
5.6
209.5
177.8
30.6
1.1
21.2
-15.5
5.7
0.8
0.2
-4.0
53.5
-115.8
53.1
4.33
229.9
51.5
0.00
640
2004*
131.1
94.1
426.6
65.6
153.1
35.9%
181.9
0.0
206.6
177.6
29.0
0.0
73.1
-22.5
50.6
142.5
134.3
26.2
-19.4
-13.1
49.3
2.87
141.4
41.7
3.22
609
Corporate Structure I Simplified Structure
18.9% 100%Junior.TV GmbH & Co. KG
EM.Entertainment GmbHEM.Sport GmbH
Sport Media Holding GmbH
DSF DeutschesSportFernsehen GmbH
Sport1 GmbH
PLAZAMEDIA GmbH TV- und Film-Produktion
Creation Club (CC) GmbH
50.1%
100%
100%
100
%
81.1
%81
.1%
49.9%
18.9%
100%
Yoram Gross- EM.TV Pty. Ltd.
Australia
Planeta Junior S.L. Spain
Junior ProduktionsGmbH
EM.TV & Wavery B.V.Netherlands
100
%
33
.3%
100
%
100
%
Sports segment Entertainment segment
EM.TV – Our Profile
We are a medium-sized media company which operates in
the core sectors of Sports and Children and Youth
Entertainment. In sports business we are the leading
German TV production company and run the leading plat-
forms DSF and Sport1. In the entertainment business we
are internationally oriented, have one of the largest pro-
gram libraries in the children and youth sector and distin-
guish ourselves by many years of experience with the deve-
lopment and marketing of license themes and characters,
all of which are duly esteemed and appreciated in the mar-
ket. After a successful restructuring and reorientation from
2001 to 2004, we now have an attractive investment port-
folio, together with a sound financial basis for further
growth in the future.
EM.TV – Our Strengths
We are an independent group and on account of this inde-
pendent position an established partner for a large number
of companies. We encounter the challenges of our markets
with classical medium-sized virtues such as speed, flexibili-
ty, reliability and creativity.
EM.TV – Our Objectives
With our products and services, our aim is to satisfy the
emotional requirements of our ultimate customers. We will
only succeed in this respect if our products are marked by
a high level of creativity and quality.
As far as our shareholders are concerned, our aim is to
seize market opportunities with a due sense of proportion
by means of a growth strategy, to create added-value and
to ensure an attractive return on their investment.
EM.TV intends to comply with its social responsibilities with its productsand entrepreneurial actions.
Dr. Andreas Pres Werner E. Klatten Rainer Hüther
Forward-looking statementsThis annual report contains statements relating to future events that arebased on management’s assessments of future developments. A series offactors beyond the control of the company, such as changes in the generaleconomic and business environment and the incidence of individual risks oroccurrence of uncertain events, can result in the actual results differing sub-stantially from those forecast. EM.TV does not intend to continually updatethe forward-looking statements contained in the annual report.
Important noticeIn case of any differences the German version of the annual report prevails.
Content
2 Foreword by the Chairman of the Management Board
5 Boards6 Report of the Supervisory Board
10 Corporate Governance Report14 The EM.TV AG Share18 Company Strategy
22 Business Units Reports I Sports22 TV I DSF Deutsches SportFernsehen24 Online I Sport125 Production Services I PLAZAMEDIA27 Licensing I European Licensing Representative
2006 FIFA World Cup™
30 Business Units Reports I Entertainment30 Production31 TV-Sales33 Licensing I Merchandising34 Licensing I Home Entertainment35 TV I Junior Channel
38 Management Report on the Situation of the Group and the AG
38 Economic Conditions 42 Sales and Earnings45 Net Worth Position46 Financial Position48 Investments49 Personnel Report50 Innovation51 Risk and Opportunities Report57 Occurrences after the End of the Fiscal Year57 Forecast Report
63 Consolidated Financial Statements64 Consolidated Balance Sheet66 Consolidated Profit an Loss Account67 Consolidated Cash Flow Statement68 Changes in Consolidated Equity
69 Notes on the Consolidated Financial Statements69 General Explanation76 Accounting and Valuation Principles81 Explanations on Invidual Items in the Balance Sheet96 Explanations on Items in the Profit and Loss Account
102 Explanations on Items in the Cash Flow Statement103 Segment Reporting106 Contingent Liabilities and Other Financial
Commitments107 Occurrences after the End of the Fiscal Year108 Other Mandatory Disclosures108 Other Explanations and Disclosures111 Auditors’ Report
113 Annual Financial Statements of the AG114 Balance Sheet116 Profit an Loss Account
117 Finance Calendar117 Production Credits
1
2005 saw EM.TV AG continue on a path of positive deve-
lopment. For the first time since 1999, we have been able
to report a Group profit before tax and special or one-off
effects, as well as achieve a single figure percentage
growth in Group sales. This falls exactly within the forecast
that we issued at the beginning of the business year.
EM.TV has thus been true to its word. This is of great
importance to me, as the new EM.TV, which came into
being as a result of the restructuring of the former EM.TV &
Merchandising AG, must take its place on the capital mar-
ket as a reliable and predictable player.
The result that has been achieved pleases me all the more,
as we found ourselves facing numerous obstacles during
2005 that were either not apparent at the start of the year
or, at least, not as substantial:
> The development of the German economy in 2005 was
disappointing, and was unable to inject new life into
the advertising market. This had a subduing effect on
sales development at our free-TV station DSF.
> Due to the failure to pay on the part of two of its busi-
ness partners, DSF found itself obliged to make a sub-
stantial bad debt provisions.
> During the previous year, EM.TV made significant
investments in attractive programming and new busi -
ness activities. These included the acquisition of exten-
sive rights packages in sports, as well as expenditure
on the preparation for market entry into the “sports
betting” sector. While these investments had a nega-
tive short-term impact on performance, in the medium-
term they will significantly strengthen the operating
business and deliver a positive contribution to profitabi-
lity. In this respect, this money has been well invested.
The 2005 business year demonstrated that the EM.TV Group
is strategically well positioned with its two operating busi-
ness divisions Sports and Entertainment, and able to ope-
rate profitable. We have made progress in both segments
as well as securing and extending our market position.
Within the Sports segment, we took over the stakes of the
former co-owners of DSF and online portal Sport1 on attrac-
tive terms. This means that EM.TV now holds also, either
directly or indirectly, 100 percent of the stakes in these
companies.
> In the free-TV sector, the reporting year saw DSF stabi-
lize its market share within its core target group of
males aged 14 to 49 at 1.9 percent. With the acquisi-
tion of extensive rights packages to the UEFA Cup for
the 2005/2006 to 2007/2008 seasons, and to the
Premier and Second German Soccer League for the
2006/2007 to 2008/2009 seasons, DSF has secured
its ability to offer top soccer to its viewers. Therefore
DSF offers an attractive advertising environment for its
advertising customers. This is an important condition
for the station’s ongoing commercial success. These
rights acquisitions also demonstrate that, through the
establishment of a clear program profile, DSF has
achieved a position over the last three years as one of
the top players on the German TV market. The editorial
quality and the independence of the station is valued
and respected by not only the viewers, but also by the
sporting community.
> In terms of production services, our subsidiary PLAZA-
MEDIA enjoyed continued success with good levels of
capacity utilization across all its business units. The
company completed close to 90,000 program hours
2
Foreword by the Chairman of the Management Board
3
and handled around 1,500 national and international
productions. PLAZAMEDIA concentrates its service offe-
ring on state-of-the-art production technology, and thus
is increasingly able to offer its customers genuine added
value. One good example of this innovative spirit is the
company’s introduction of new television standard
HDTV (High Definition Television) throughout its entire
production chain, thus giving PLAZAMEDIA a unique
position within the market. At the end of 2005, we were
able to significantly strengthen the position as a provider
of creative production services through the acquisition
of Creation Club GmbH from PREMIERE. The Creation
Club is successfully positioned in promotion, on and
off-air design, advertising and TV formats, and thus
complements perfectly PLAZAMEDIA’s service portfolio.
> Within the online sector, sports portal Sport1 was yet
again successful in strengthening its position signifi-
cantly as the most popular German-language sports
website, with a 40 percent growth in ratings. Sport1
is also demonstrating increasing success in its media
sales activities, i.e. the sale of sports content for tele-
text and mobile platforms (SMS, MMS, and WAP) to
third parties.
> We have been delighted with the development during
the last year of our merchandising marketing activities
for the 2006 FIFA World Cup™. By the end of 2005 we
had secured contracts with a total of 53 license partners
– clear proof that the timely introduction of our marke-
ting strategy for this mega-event has been highly
successful. It is already evident that the commercial
success of the FIFA project will be significantly greater
than originally forecast.
Within the Entertainment segment – encompassing the pro-
duction and marketing of high quality program for children
and young people – 2005 saw us achieve the conditions
necessary in terms of structure and human resources in
order to put the business onto a path of sustainable growth.
These measures included the bundling of all production and
distribution activities into EM.Entertainment GmbH, with the
purpose of achieving clear and transparent divisional respon-
sibilities. This also included the strengthening of production
competence by means of a partial renewal of EM.Entertain-
ment’s management team. It remains our objective to en-
sure the continued attractiveness of our library with additio-
nal new, in-house program rights.
Although demand for children’s and youth program wit-
nessed a slight increase both nationally and internationally
during 2005, this trend has yet to impact pricing. EM.Enter-
tainment has, however, demonstrated that it remains possi-
ble to secure attractive business under these conditions,
with extensive and long-term agreements such as those se-
cured in the home entertainment sector during the fourth
quarter with Universum Film GmbH and Warner Bros. Enter-
tainment GmbH. Despite the difficult market conditions, the
entertainment division was nevertheless able to improve its
financial result – proof of the substance of our program
portfolio.
The global market for children’s and youth programming con-
tinues to find itself in a phase of consolidation. During the
reporting year, the Management Board considered various
options for the development of the Entertainment division
through M&A transactions. In the end, these intensive inve-
stigations did not produce any results that were commerci-
ally compelling. This notwithstanding, we will continue to
strive to play an active role in the consolidation of the sector.
The progress made in the operating business is also reflec-
ted in the development of the EM.TV share price. During
2005 it demonstrated a growth in value of 51 percent, thus
significantly exceeding the overall growth of the SDAX, which
increased by 35 percent. With a daily average of 500,000
shares, EM.TV was the most traded share of the SDAX. For
the sake of every one of our shareholders that stood by us
during the long process of restructuring, we are particularly
pleased by this positive share price development, which is
accompanied by an ever-increasing interest in our company
on the part of investors and analysts.
During the current business year, we want to develop our
market position within both of our key business sectors. One
significant step in this process is the agreement reached in
the Sports segment at the beginning of March between PLA-
ZAMEDIA and Arena Sport Rechte und Marketing GmbH,
making PLAZAMEDIA the exclusive production partner for
Arena’s pay-TV offer for the German Soccer League. In
order to improve our position in the market place, we will
also seek in future to make greater use of synergies between
our Sports segment stakeholdings in order to be able to
offer customers turnkey solutions.
The organizational and conceptual preparations for EM.TV’s
entry into the “sports betting” sector are well advanced.
The German market remains restricted, preventing our entry
for the time being. We continue to attribute substantial
sales and profit potential to this business, but are prepared
to take a decision to act only when the commercial concept
is fully cohesive and its legal basis beyond all possible
doubt.
Within the Entertainment segment, the focus of efforts du-
ring 2006 will be on the start of in-house productions. We
will also be pushing forward with the further internationali-
zation of our businesses, with particular emphasis on streng-
thening our presence within the Anglo-Saxon markets. In
this regard, added-value M&A activities are certainly con-
ceivable.
Dear shareholders,
in recent years, EM.TV has developed a market position
that presents many fascinating perspectives. Our ultimate
objective continues to be to guide the EM.TV Group into a
phase of sustainable growth, evidenced by an ongoing
improvement of profitability. In this spirit, EM.TV will enrich
the media market as an independent and flexible partici-
pant, operating on all the best principles of a medium-sized
enterprise.
Unterföhring, March, 2006
With best regards,
Werner. E. Klatten
Chairman of the Management Board
4
Foreword by the Chairman of the Management Board
5
Werner E. Klatten,
Chairman of the Management Board, CEO
Werner E. Klatten is Chairman of the Management Board
of the EM.TV AG. He is responsible for the the corporate
strategy, the Entertainment segment, central functions:
Legal Matters, Communication, Human Resources and
Administration, as well as for shareholdings.
Rainer Hüther,
Member of the Management Board, COO Sports
Rainer Hüther is resposible for the Sports segment. In addi-
tion to his Board Member activities at EM.TV, he is Chief
Executive of sports broadcaster DSF since June 2, 2003.
Dr. Andreas Pres,
Member of the Management Board, CFO
Dr. Andreas Pres is member of the Board and responsible
for Finance, Investor Relations, Accounting, Controlling, IT
and Process Management.
Management Board
Boards
Dr. Bernd Thiemann, Chairman
Dr. Hans-Holger Albrecht, Deputy Chairman
Arthur Bastings, Member
Supervisory Board
The Supervisory Board of EM.TV AG met a total of six times
during 2005, including one telephone conference. As in the
previous year, the board, which in accordance with legal
requirements consists of only three members, did not crea-
te any separate committees.
Under the terms of the German Stock Corporation Act, the
Supervisory Board is responsible for monitoring the activities
of the Management Board. During the reporting year, the
Supervisory Board of EM.TV regularly monitored the Manage-
ment Board and provided it with advice. By means of oral
and written reports from the Management Board, the Super-
visory Board was kept abreast with business operations at
EM.TV AG and the EM.TV Group, business planning, ongoing
business development, risk factors and significant business
events.
The Supervisory Board was represented in full at all mee-
tings held in 2005. Furthermore, all members of the Ma-
nagement Board also participated in those meetings in
order to report to the Supervisory Board and to answer its
questions. In keeping with previous years, the Supervisory
Board also called upon the advice of external experts, in
the form of lawyers and publicly certified accountants.
Furthermore, between meetings, there was ongoing contact
between the members of the Management and Supervisory
Boards, and between the Chairmen of the Management
and Supervisory Boards in particular. Where necessary in
the interests of timing, documentary information was circu-
lated between meetings in order to obtain decisions from
the Supervisory Board.
During 2005, the Supervisory Board of EM.TV AG dealt prin-
cipally with the following issues:
Business status and current business development
Throughout the entire business year, the Supervisory Board
dealt in detail with the current business status of EM.TV AG
and the EM.TV Group. This included principally the analysis
of business activities during the course of the year in both
the Sports and Entertainment divisions, with particular em-
phasis on positive and negative deviations from the budget.
Within this process, the Management Board gave clear and
detailed statements on the current status of the business
and on plans for the year ahead for the individual divisions
and for EM.TV AG as the holding company, as well as on the
risks to group business development.
Significant investments in the operating business
The Supervisory Board used the circulation procedure to ap-
prove the acquisition by DSF of extensive exploitation rights
to the UEFA Cup matches for the 2005/2006, 2006/2007
and 2007/2008 seasons. It likewise gave its approval to
the acquisition by DSF of exploitation rights to the Premier
and Second German Soccer League for the 2006/2007,
2007/2008 and 2008/2009 seasons. The Supervisory
Board is of the opinion that both rights acquisitions ensure
that DSF’s program portfolio is suitably stocked with attrac-
tive top-end sports on a long-term basis. This is a fundamen-
tal requirement for the further commercial success of the
station.
Portfolio initiatives
In 2005, EM.TV AG completed the reorganization of the
Entertainment division, as a result of which the company
takes on the role of holding company without direct business
operations. In the course of this process, the Supervisory
Board used the circulation procedure to approve the mea-
sures necessary in order to bundle all the production and
6
Report of the Supervisory Board
Dr. Bernd Thiemann I Chairman of the Supervisory Board
7
sales activities of the Entertainment division into EM.Enter-
tainment GmbH and its subsidiaries. EM.Entertainment is a
100 percent subsidiary of EM.TV AG.
The Supervisory Board also used the circulation procedure
to approve the acquisition of further shares in sports com-
panies DSF and Sport1 from the possession of their previous
co-owners KarstadtQuelle New Media AG and Dr. h. c. Hans-
Dieter Cleven. The acquisition means that EM.TV AG now
holds either directly or indirectly 100 percent of each sports
company. The Supervisory Board considers the transactions
as important to the strengthening of the Sports segment.
Using the circulation procedure, the Supervisory Board
granted its approval to the acquisition of all stakes in the
Creation Club (CC) GmbH from PREMIERE through EM.TV
subsidiary PLAZAMEDIA. This included an extension of the
current production services framework contract between
PLAZAMEDIA and PREMIERE, ending December 31, 2006,
for a period of three years (outside production) and 4.5
years (studio production). In acquiring the Creation Club, the
Supervisory Board is convinced that PLAZAMEDIA is now
able to broaden significantly the added value of its creative
activities, while at the same time having achieved a long-
term relationship with an important customer in the shape
of PREMIERE.
Legal issues
2005 also saw the Supervisory Board focus a great deal of
its advisory efforts on the investigation of corporate dama-
ges claims against former board members. The Supervisory
Board heard reports on a regular basis from the appointed
legal experts, as well as from the Management Board, on
the status of the investigations and the outcome of the claim
entered on October 13, 2004 at the Munich I Regional Court.
This claim is against former CEO Thomas Haffa, former
Deputy CEO Florian Haffa and former Supervisory Board
Chairman Dr. Nickolaus Becker, and cites negligent breach
of duty in respect of the acquisition of Formula 1 shares in
2000. The damages claims asserted run to almost 148 mil-
lion Euro, plus release from claims entered by the Morgan
Grenfell Group.
As a result of the oral hearing of March 31, 2005, the
Munich I Regional Court ruled on August 25, 2005 that the
evidence of expert witnesses be submitted for consideration
in respect of certain factual matters. It is estimated that
the report of the expert witnesses will be submitted in the
course of 2006.
The intensive examination of further factual circumstances
revealed possible breach of duty in respect of loans made
to TheatrO CentrO GmbH in 2000 and 2001, the acquisiti-
on of stakes in Tabaluga Film- und Fernsehproduktion GmbH,
a major charitable donation, and in respect of the closing
of several co-production and licensing contracts. Following
requisite statements made by the former board members,
neither the Management nor the Supervisory Board were
able to reach any alternative conclusion on these matters,
and thus the company entered claims with the Munich I
Regional Court in August and September 2005. The claims
for damages entered in respect of the combined TheatrO
CentrO/Tabaluga/donation issues amount to around 17 mil-
lion Euro, with those arising from the co-production and
licensing contracts totaling around 18 million Euro.
With the exception of the aforementioned issues, the highly
time intensive and complex investigations carried out into
the major business transactions of the former EM.TV & Mer-
chandising AG have not led to the establishment of any
enforceable damages claims resulting from the dealings of
former board members – despite repeated acts of negli-
gence. This is particularly the fact in respect of the acquisi-
tion of major holdings Junior.TV, Tele München Gruppe and
the Jim Henson Company. In spite of the necessary in-depth
investigation, insufficient grounds were found on which the
company could base a case for damages resulting from the
misconduct of the former company directors. The same
applies to around ten further, smaller company acquisitions;
to the majority of co-production, rights purchase and license
contracts agreed by the company; and to a series of other
business transactions.
Group strategic direction
During the reporting year, the Supervisory Board dealt inten-
sively with issues concerning the future strategic direction
of the EM.TV Group. This included, in particular, opportuni-
ties for strategic development in both the Sports and Enter-
tainment segments through acquisition or divestment ini-
tiatives, and on the development of new business sectors.
The Management Board called extensively upon advice in
the matter of its plans for entry into the “betting” sector. The
Supervisory Board considered detailed reports on the vario-
us strategic options associated with this potential venture.
Changes to the Boards of Directors
The Management Board saw no changes in the course of
the reporting year.
Supervisory Board Members Prof. Roland Berger and
Dr. Andreas Meissner stepped down from their positions
with effect from the Annual General Meeting (AGM) on July
5, 2005. Prof. Berger and Dr. Meissner were with the com-
pany throughout its restructuring and reorientation, and
brought their extensive knowledge and advice to bear
during a very difficult phase for EM.TV. The Chairman of
the Supervisory Board offers his sincere gratitude to both
Prof. Berger and Dr. Meissner for their commitment to the
good of the company.
At the AGM on July 5, 2005, Dr. Hans-Holger Albrecht and
Mr. Arthur Bastings were approved as new members of the
Supervisory Board. With these two individuals, EM.TV has
gained the services of two highly knowledgeable and hands-
on media managers, with huge international experience. In
its meeting of July 5, 2005, the Supervisory Board unani-
mously voted Dr. Albrecht to the position of Deputy Chairman
of the Board.
Having been tasked with auditing the company reports,
PricewaterhouseCoopers AG Wirtschaftsprüfungsgesell-
schaft, München audited the annual accounts of EM.TV AG,
the Group annual accounts and the combined company
and Group management reports of December 31, 2005,
and issued them with an unconditional audit certificate. The
company annual accounts, the Group annual accounts and
the combined Group and company management reports
were passed in a timely manner to all members of the Super-
visory Board along with the audit reports.
The auditors furnished the Supervisory Board with the
significant findings of their audit at the meeting of the
Supervisory Board on March 23, 2006. The Supervisory
Board examined in detail the annual accounts of the AG
and the Group, as well as the combined company and
Group management reports, and approved the findings of
the auditors. Following the completion of its examination,
the Supervisory Board raised no objections to either the
company annual accounts or the Group annual accounts
and thus approved the company and Group annual
accounts as presented by the Management Board on
March 27, 2006. The annual accounts are thus final.
8
Report of the Supervisory Board
9
In the aftermath of the far-reaching restructuring that took
place in 2004, the Supervisory Board is of the opinion that
the 2005 business year was a successful one. Despite initi-
ally unforeseen burdens such as those arising through im-
portant program investments and ongoing difficult market
conditions, the forecast of a positive Group financial result
before tax and special and one-off effects has been achie-
ved for the first time since 1999. In addition, the business
year saw the foundations laid for the continuation of this
positive business development through a series of success-
ful business agreements. The Supervisory Board thanks
the Management Board and all the employees of the EM.TV
Group for their enormous commitment.
March 2006
Supervisory Board of EM.TV AG
Dr. Bernd Thiemann
Chairman of the Supervisory Board
In accordance with Article 3.10 of the German Corporate
Governance Code, the Management Board and the Super-
visory Board hereby report on the corporate governance of
EM.TV AG.
The Management Board and the Supervisory Board work
together on a basis of mutual trust for the benefit of the
company, and are fundamentally committed to achieving
sustainable growth in the company’s corporate worth. It is
the objective of EM.TV AG to justify the trust put in it by its
shareholders, customers and employees, as well as to live
up to its corporate responsibilities. EM.TV AG thus stands
for transparent and timely communication.
Shareholders and Annual General Meeting
In its annual and quarterly reports, EM.TV AG regularly pub-
lishes information regarding the development of its business.
In so doing, shareholders are provided with regular opportu-
nities to follow analysts’ conferences on those reports live
in the internet. Further detailed information on EM.TV AG is
also available on our homepage www.em.tv.
EM.TV AG shareholders are able to exercise their rights, as
well as their voting rights at the Annual General Meeting
(AGM). Each and every shareholder is entitled to participate
in the AGM, to take the floor on any agenda item, to ask
questions and to submit requests. EM.TV AG simplifies the
process for its shareholders to exercise their rights perso-
nally, by providing proxy voting representation bound by the
instruction of the shareholder. The AGM for the 2004 busi-
ness year took place on July 5, 2005, at which around 1,150
shareholders were represented, with a total of some 9.8 mil-
lion votes. All agenda items were agreed with majorities of
over 99 percent.
Cooperation between the Management and Supervisory
Boards
As the Group’s holding company and a German incorporati-
on (Aktiengesellschaft), EM.TV AG has a two-tier manage-
ment and control system i.e. the Management and Super-
visory Boards operate on a strictly separate basis.
The Management Board of EM.TV AG comprises three mem-
bers. The Management Board is responsible for running
EM.TV AG’s operating business, and for representing the
company to third parties. The main tasks of the Management
Board include the establishment of strategic direction, ma-
nagement of the Group and monitoring of risk management.
The Supervisory Board of EM.TV AG comprises three mem-
bers. The Supervisory Board advises and monitors the
Management Board in its management of the company. Its
responsibilities include, but are not restricted to, the appoint-
ment of Management Board members and the determinati-
on of Management Board remuneration.
The Management Board works together with the Supervisory
Board. It provides the Supervisory Board in a regular and
timely manner with information on all planning issues rele-
vant to the company and the Group, as well as on business
development, risk exposure and risk management. In doing
so, the Management Board agrees the company’s strategic
direction with the Supervisory Board, and discusses strate-
gic implementation at regular intervals.
Documents requiring approval, in particular EM.TV AG’s an-
nual accounts, its consolidated financial statement and
audit report, are presented in front of a meeting of the
Supervisory Board members. Laid down in the internal regu-
lations governing the Management Board is the requirement
for the approval of the Supervisory Board in respect of busi-
ness decisions of fundamental importance to the company.
A total of six Supervisory Board meetings were held during
the 2005 business year.
10
Corporate Governance Report
Corporate Governance Report
11
Further information concerning the Management and Super-
visory Boards can be found in the section on corporate bo-
dies and within the Group appendix.
Management and Supervisory Board Remuneration
The Management Board contract with Mr. Werner E. Klatten
runs until December 31, 2007.
Following the acquisition in early 2005 of all stakes in DSF
GmbH and Sport1 GmbH from KarstatdtQuelle and Dr. h.c.
Hans-Dieter Cleven, both positions held by Mr. Rainer Hüther
– one with EM.TV AG and one with DSF GmbH – were trans-
ferred into a single contract effective as of June 1, 2005.
Mr. Hüther’s contract ends on February 28, 2009. The con-
tract of Chief Financial Officer Dr. Andreas Pres runs until
December 31, 2008.
In accordance with the German Code of Corporate Gover-
nance, the total remuneration of each Management Board
member comprises both fixed and variable elements. The
variable remuneration elements are made up of one-off com-
ponents granted by the Supervisory Board for extraordinary
performance, and from components based on the financial
performance of the Group and its subsidiaries. The values
of these variable components are set by the Supervisory
Board and have contractual limits.
As variable remuneration components with a long-term in-
centive, the members of the Management Board of the for-
mer EM.TV & Merchandising AG had, at an earlier juncture,
received stock option packages as part of the stock option
program 2000 (“Option Program 2000”).
As the result of a decision made by the AGM of the former
EM.TV & Merchandising AG on July 22, 1999 (“Option Pro-
gram 1999”), which was then changed by a decision made
by the AGM of the former EM.TV & Merchandising AG on
July 26, 2000 (“Option Program 2000”), the Management
Board of the former EM.TV & Merchandising AG was empo-
wered, with the approval of the Supervisory Board, to issue
a stock option program for employees and members of the
Management Board of the Group companies. These options
also retain their fundamental validity following the restruc-
turing that took place in 2004.
Within the scope of the restructuring process, the AGM of
EM.TV AG decided on March 19, 2004, to grant those entit-
led to stock options the right to take one 10/73 ordinary
share in EM.TV AG at the strike option price, in return for
the right to one ordinary share in EM.TV & Merchandising
AG at the strike option price. The original issue volume of
1,488,012 shares comes from the Conditional Capital III
set aside for this purpose. Of the total stock option volume,
30 percent was reserved for members of the Management
Board and Group directors, with 70 percent reserved for
group company employees. This notwithstanding, the opti-
on terms of the 1999 and 2000 Option Programs retain
their validity. In accordance with the option terms, this in-
cludes a reduction in strike price in respect of the issue of
share certificates to existing shareholders within the scope
of the merger (dilution protection).
The Option Program 2000 requires that 50 percent of the
stock options may be exercised at the earliest after no less
than 2 years (in subsequent tranche 1), with the remaining
50 percent to be exercised at the earliest after no less than
4 years (in subsequent tranche 2). The strike price is deter-
mined by averaging the opening and closing price of EM.TV
shares on the Frankfurt Stock Exchange on the day of the
decision to issue (reference price); the price being no less
than the pro-rata amount of the subscribed capital for one
share, plus an additional 10 percent for tranche 1 and 20
percent for tranche 2. The stock options are valid for ten
years. On exercising stock options, the holder receives
ordinary shares in EM.TV AG, whereby shares arising from
options are eligible for participation in profit sharing from
the start of the year in which the option was exercised.
As of December 31, 2005, members of the Management
Board were eligible for a total of 600,000 stock options from
the Option Program 2000, entitling them to a total of
82,190 shares in EM.TV AG. The stock options are appor-
tioned among the members of the Management Board as
follows:Notes:1 Original strike price per share in the former EM.TV & Merchandising AG
prior to increases in accordance with option terms and dilution protection2 Price payable per EM.TV AG share on exercising option following increase
in accordance with option terms. Adjustment in keeping with the merger ratio of 73:10 and dilution protection in respect of issued certificates
12
Corporate Governance Report
Stock options
Quantity
200,000
200,000
100,000
100,000
Name
Werner E. Klatten
Rainer Hüther
Dr. Andreas Pres
Issue Date
31/01/02
31/01/02
07/06/02
30/06/03
Original StrikePrice1
Euro/Share
2.28
2.28
1.29
1.60
Shares
Quantity
27,397
27,397
13,698
13,698
Price perShare2
Tranche 1Euro/Share
17.48
17.48
9.53
12.02
Price perShare2
Tranche 2Euro/Share
19.14
19.14
10.47
13.19
SharePrice
31/12/05Euro
4.33
4.33
4.33
4.33
Due to the share price performance of the former EM.TV &
Merchandising shares, as well as those of EM.TV AG, it has
thus far not been possible to exercise stock options held by
the Management Board. Therefore we currently attribute no
tangible value to the stock options.
Remuneration of Supervisory Board members is specified
in paragraph 12 of EM.TV AG’s articles of association.
Alongside the reimbursement of their expenses, Supervisory
Board members receive a fixed remuneration. The introduc-
tion of success-based remuneration for the Supervisory
Board has been deferred. The fixed remuneration of
Supervisory Board members in the 2005 business year
was as follows:
Name Function Period Fixed Remuneration
Dr. Bernd Thiemann Chairman / Supervisory Board 01/01/2005 to 31/12/2005 90,000.00 Euro
Dr. Hans Holger-Albrecht Deputy Chairman / Supervisory Board 05/07/2005 to 31/12/2005 22,068.49 Euro
Arthur Bastings Member / Supervisory Board 05/07/2005 to 31/12/2005 14,712.33 Euro
Prof. Dr. h.c. Roland Berger Deputy Chairman / Supervisory Board 01/01/2005 to 05/07/2005 22,931.51 Euro
Dr. Andreas Meissner Member / Supervisory Board 01/01/2005 to 05/07/2005 15,287.67 Euro
13
Neither the Management Board members nor the Supervi-
sory Board members conducted any acquisitions or dispo-
sals during the 2005 business year that were subject to
mandatory reporting requirements. The direct or indirect
ownership by any board member of any shares issued by
EM.TV AG was no greater than 1%. The position with regards
to shares and shares from stock options on the part of any
board member as of December 31, 2005 was as follows:
Further information regarding the remuneration of the
Management and Supervisory Boards can be found in the
group appendix and on our homepage.
Statement of Conformity with the German Code of
Corporate Governance
The Management and Supervisory Boards of EM.TV AG state
that the recommendations of the German Code of Corporate
Governance dated May 21, 2003 have been met, with the
exceptions detailed below, as will the recommendations of
the Code dated June 2, 2005 be met, with the same excep-
tions:
> Section 4.2.3 para. 2, final clause of the code
With regard to stock options, a cap will be agreed on new
option issues. In the case of existing share options, which
currently have no tangible value, it is not necessary to
amend finalized contracts in respect of a cap.
> Section 4.2.4 para. 2 of the code
The remuneration of Management Board members is not
individually reported as this is the personal information of
the Management Board members. The company will re-
port Management Board remuneration individually as of
the 2006 business year, as required by law.
> Sections 5.3.1 and 5.3.2 of the code
Separate committees were not formed, as the Supervisory
Board consists of only three members.
> Section 5.4.7 of the code
The introduction of success-based remuneration for the
Supervisory Board has been deferred, as there currently
remains a lack of clarity in respect of the reliability of
success-based remuneration.
> Section 7.1.2 of the code
The deadline for publication of quarterly reports (interim
reports) has not yet been reduced to 45 days after the end
of the reporting period. The Management Board is striving
to meet this recommendation as quickly as possible by
optimizing internal procedures.
The current version of the statement of conformity with the
German Code of Corporate Governance, as well as earlier
versions, can be found on our homepage.
Number of Shares fromShares Stock Options
Werner E. Klatten 0 27,397
Rainer Hüther 0 27,397
Dr. Andreas Pres 6,000 27,396
Supervisory Board Members 0 0
Development of the EM.TV share
The EM.TV Share developed with substantial price fluctu-
ations very positively in 2005 with a value increase of 51
percent. The percentage increase of the share price excee-
ded that of the SDAX therefore which advanced by 35 per-
cent and also the Prime Media which fell by 1 percent. The
share price rose from January to the middle of March and
reached its current 52-week high of Euro 6.37 during a pe-
riod of high trading volumes. A consolidation then set in un-
til the end of May, with the share price falling to Euro 4.76
in April. The share price then rose again until the middle of
July. Between July and the end of the year, the share price
declined and reached its current 52-week low of Euro 3.68.
The price of the EM.TV share closed the year at Euro 4.33.
This was equivalent to a price increase of Euro 1.46 and
51 percent respectively.
In 2005, the EM.TV share was the SDAX security with the
highest level of trading with a total volume of approximately
199 million shares (daily average of 0.5 million). Over the
12-month period, this was equivalent to a trading volume
of approximately four times the outstanding shares and re-
flected the high liquidity of the share.
Subscribed capital and shareholder structure
The subscribed capital of the EM.TV share amounted to
approximately Euro 69.9 million as of December 31, 2005,
including new shares from exercised warrants of the bond
with warrants attached, the entry of which in the Commercial
Register was still outstanding at the balance date.
EM.TV AG held 23.9 percent of the subscribed capital equi-
valent to 16.7 million non-voting shares. Approximately
15.0 million thereof were reserved for servicing the certifi-
cate series. After deducting the Company’s own, non-voting
shares, there were approximately 53.1 million outstanding
shares as of December 31, 2005.
On June 8, 2005, Centaurus Capital LP fell below the thres-
hold of 5 percent of the voting rights in EM.TV AG. As of
December 31, 2005, Constant Ventures B.V. held 6.9 per-
cent of the share capital, equivalent to 9.1 percent of the
voting rights. Scattered shareholders therefore held 69.2
percent of the share capital, equivalent to 90.9 percent of
the voting rights.
Shareholder structure as of December 31, 2005
14
The EM.TV AG Share
The EM.TV AG Share
Constant Ventures B.V. 6.9%
Treasury Shares 23.9%
Free Float 69.2%
Constant 9.1% Ventures B.V.
90.9% Free Float
15
Issues of derivates by EM.TV AG
As part of the restructuring of the convertible bond of
2000/2005, three different derivatives have been issued
which enable to purchase EM.TV shares.
Approximately 3.3 million shares were issued from Condi-
tional Capital I in 2005 after exercising warrants for the
8% bond with warrants attached of 2004/2009. By the
end of the exercise period on March 30, 2006, it will be
possible to purchase approximately an additional 1.0 mil-
lion shares at a subscription price of Euro 1.00 per share.
As part of the merger of EM.TV & Merchandising AG into
EM.TV AG, the shareholders have also received certificates
in addition to shares in EM.TV AG. The Certificates (Series
1 and 2) relate to covered warrants, i.e. if they are exerci-
sed, shares will be issued from EM.TV AG’s treasury sha-
res. In 2005 0.5 million shares were issued by exercising
the Certificates Series 1. An additional 7.3 million shares
may still be purchased at a subscription price of Euro 2.50
per share by the end of the exercise period on April 18,
2006. The exercise of Certificates Series 2 resulted in the
issue of 0.1 million shares in 2005. An additional 7.7 milli-
on shares may still be purchased at a subscription price of
Euro 3.50 per share by the end of the exercise period on
April 18, 2008.
0
1
2
3
4
5
6
7
01/01/05 31/03/05 30/06/05 30/09/05 31/12/05
EM.TV AG SDAX Prime Media
Xetra closing prices of the EM.TV share in comparison
with the SDAX and Prime Media
Comparative indices indexed to the EM.TV closing price as of December 31, 2004
7
6
5
4
3
2
1
0
16
The EM.TV AG Share
Investor Relations activities
EM.TV AG aims at justifying the trust of investors and the
public by timely and transparent publications of its finan-
cial data, business transactions, corporate strategy, oppor-
tunities and risks. Extensive information concerning EM.TV
AG is available on our homepage www.em.tv.
Investor Relations activities were intensified in 2005. All
quarterly figures were explained to analysts and investors
by telephone or in person. The results for the third quarter
were presented at the Deutsches Eigenkapitalforum 2005
(German Equity Capital Forum) in Frankfurt.
EM.TV AG participated in six capital market conferences
and a road-show in Frankfurt and London. It was also avai-
lable to institutional investors in a large number of additio-
nal one-on-one meetings. Various individual enquiries by
private investors were also handled by our Investor Rela-
tions team.
Investor Relations activities were particularly directed to a
systematic extension of analysts’ coverage. Three additio-
nal institutes initiated coverage during the course of 2005.
Regular contacts are currently being maintained with the
following institutes:
> CA Cheuvreux > Deutsche Bank
> DZ Bank > WestLB
The aim of Investor Relations activities in 2006 will be par-
ticularly directed to expanding the analyst coverage even
further and increasing the number of long-term oriented in-
stitutional investors.
17
ISIN
> Ordinary Share DE0009147207
> New Share* DE000A0AHSX7
Segment Prime Standard
Regulated Market
Indices SDAX, Prime Media Index
Bloomberg /Reuters EV4 GR/EV4G.DE
Share price Euro 4.33
52-week high/52-week low Euro 6.37/Euro 3.68
Subscribed capital (inkl. shares from exercised warrants of bond with warrants attached) Euro 69.9 million
Outstanding shares 53.1 million Shares
Potential shares from outstanding warrants
> Certificates Series 1 (Subscribed price Euro 2.50 until April 18, 2006) 7.3 million Shares
> Certificates Series 2 (Subscribed price Euro 3.50 until April 18, 2008) 7.7 million Shares
> Warrants of bond with warrants attached (Subscribed price Euro 1.00 until March 30, 2006) 1.0 million Shares
> Others (Employee participation programs and convertible bond) 0.4 million Shares
Market capitalization (based on outstanding shares) Euro 230.1 million
Market evaluation for own issues of outstsanding derivates Euro 29.2 million
Information on the EM.TV Share as of
December 31, 2005
*Since January 1, 2006, shares are issued by EM.TV AG from the conditional capital.These are being traded under a separate ISIN as “New Shares”. The background to thisis a deviating profit entitlement in comparison with ordinary shares. The “New Shares”will be transferred into ordinary shares after the resolution of the General Meeting on theappropriation of profits for the 2005 financial year.
The Company considers itself as a lean and flexible medium
sized media company which is able to manoeuvre indepen-
dently within the rapidly changing media industry, as it is
not part of one of the large media groups in Germany.
Therefore, the Company is able to cooperate with nearly all
other market participants from a neutral position.
The Company pursues a two segment strategy focusing on
sports and entertainment.
The Company is generally aiming to achieve organic growth
as well as growth by acquisitions in each segment. The
growth path will only be pursued provided that it does not
jeopardize the primary goal of the Company to achieve pro-
fitability for each segment and to generate a positive free
cash flow before extra ordinary investments.
However, due to currently consolidating markets, the Com-
pany may also decide to sell certain of its assets if the cir-
cumstances are favourable to the Company.
Strategy of Sports segment
The Sports segment comprises mainly of DSF, PLAZAMEDIA
and Sport1 with a range of seamlessly fitting services to
offer turnkey production solutions together with access to
distribution platforms in the TV and the internet and mobile
devices.
It is intended that DSF will further sharpen its profile as a
niche sports channel towards its target group of men aged
14 to 49 years by increasing the number of hours of natio-
nal and international premium sports as highlights or even
live formats. In addition, the channel will further seek to level
out the dependency on classical advertising with other add
on services such as T-Commerce i.e. revenue streams from
interactive formats. In the medium term, an expansion of
the existing broadcast activities by additional DSF channels,
particularly via digital distribution platforms could become
an attractive option.
PLAZAMEDIA shall further exploit its current market positi-
on as one of the leading sports production companies by
means of expanding its customer base. It shall seek to de-
velop itself further towards a general contractor for a varie-
ty of sport events. As such, its involvement in production
services during the upcoming 2006 FIFA World Cup™ may
qualify PLAZAMEDIA for additional sports production con-
tracts. Moreover, demand from foreign TV stations as well
as the changing environment for new broadcast technology
such as HDTV offer opportunities that PLAZAMEDIA intends
to take advantage of.
Sport1 shall further exploit its market position as the lead-
ing German sports internet platform in order to grow its ad-
vertising revenue and expand its strategic partnerships for
cross promotions. International expansion may also be con-
sidered. Given the strong development of online advertising
market in other countries, the Company believes that
Sport1 has potential to grow profits.
The market for sports betting has developed very positively
in the last few years in the German speaking area and offers
significant sales and earnings opportunities in the opinion
of the Company. In the event of liberalization, EM.TV would
be in a position to enter the market immediately as a result
of the extensive preparations carried out in 2005 and would
be able to participate with promising market perspectives.
With DSF and Sport1, the Group also has two extremely
18
Company Strategy
Company Strategy
19
appropriate advertising platforms for making appropriate
offers for sports betting.
Strategy of Entertainment segment
The Entertainment segment with its large library is aiming
at producing and acquiring youth and kids’ content and the
comprehensive exploitation of all its properties throughout
distribution channels and territories worldwide.
The Company, through its subsidiaries EM.Entertainment
GmbH and Junior Produktions GmbH, intends to increase
its production activities in order to heighten the value of the
library and its freshness. Further, it is intended to adjust its
rights library to older children and teenagers with an increa-
sed focus on distribution channels besides TV. Thus, the
aim is to grow the non-TV related revenue in order to lower
the dependency on TV license fees currently paid for kids’
and youth program.
The Company is also endeavouring to obtain increased
direct access to distribution platforms such as television
stations, audio and video distributors. Content exploitation
through mobile platforms and applications could become
an additional distribution tool.
In order to get access to territories, where the Company has
so far been weak distributing to such as UK, US and
Canada, the Company contemplates acquisitions, partner-
ships or distribution joint ventures and expand its entertain-
ment activities in a fragmented, but consolidating media
market.
21
With its products, EM.TV intends to satisfy the interests and emotionalrequirements of its customers and viewers. These products have to becreative, emotional, qualitatively equivalent to the „state of the art“ andupright from a contents point of view.
DSF has been an integral feature of the German media
landscape since the station was founded. With a clear
focus on the core advertising target group of males aged
14 to 49, DSF has achieved distinctive positioning. No
other German free-TV station provides such comprehensive
reporting on sporting events, with independence, neutrality
and critical distance being hallmarks of the station’s edito-
rial policy.
Long-term coverage secured
In keeping with the station’s motto “Mehr Sport, Mehr Live”
(more sport, more live), the top quality broadcast rights ac-
quired during the previous year were converted into attrac-
tive sports coverage. At the same time, the reporting period
saw comprehensive premium soccer rights secured for the
future. A further operational highlight was the successful
finalization of feeder contracts with cable companies, secu-
ring both analog and digital transmission on a long-term
basis. With these sports rights and new levels of transmis-
sion security, DSF has laid a firm foundation for the further
development of the station.
Financial result impacted by program investments and
special effects
Despite a difficult TV advertising market, in which DSF – in
contrast to 2004 – was no longer able to buck the general
trend in terms of advertising income, turnover remained on
the same level as the previous year.
DSF’s operating result was down against the 2004 business
year. This decrease was largely due to costs associated with
the acquisition of the UEFA Cup rights, and bad debt provi-
sions in respect of two service partners, which could not be
compensated for by other positive effects.
Co-operations with key customers expanded
In spite of difficult overall conditions, DSF was able to ex-
pand or extend co-operations with key customers, as well
as form new partnerships within the sponsoring and special
advertising sector. Top class customers such as Deutsche
Telekom, Hasseröder, Betandwin, DA Direkt, Nike, Erdinger
Weißbräu and BMW extended their partnerships, while other
customers have expanded their co-operations with DSF.
Thus, Krombacher (current title sponsor of DSF-Doppelpass)
is now also presenter of the UEFA Cup broadcasts. Suzuki
has now entered in soccer, in addition to its involvement in
motorsport projects. New customers in the sponsoring sec-
tor include König Pilsner, LG Electronics, Puma and DiBa.
DSF grows market share over previous year
Within the target group of viewers overall, DSF succeeded
in increasing its market share for the year from 1.1 to 1.2
percent against 2004. In the core target group of males
aged 14 to 49, DSF maintained its market share against
the previous year at 1.9 percent. The previous year’s level
was also reached in the fourth quarter 2005, with 1.1 per-
cent (viewers overall) and 1.9 percent (males aged 14 to
49) exactly matching the figures for the last quarter 2004.
Significant growth in market share was achieved by DSF-
teletext. For the full year 2005, DSF saw increases over
2004 among viewers overall (from 4.8 to 5.2 percent), as
well as among the target group of males aged 14 to 49
(from 6.3 to 7.6 percent).
Long-term rights secured: German Soccer League, UEFA
Cup, FA Cup and Davis Cup
DSF remains the soccer station in German free-TV. Following
the TV rights granted by the Deutsche Fußball Liga (German
Soccer League) (DFL), December 2005 saw DSF receive a
22
Business Units Reports I Sports
TV I DSF Deutsches SportFernsehen
23
renewal for the next three years of the exclusive first high-
lights in free-TV to the Premier Soccer League Sunday mat-
ches, as well as the exclusive first free-TV highlights to the
Second Soccer League, including the live match on Mon-
days. With this deal, DSF has secured its core rights for the
next three years. License expenditure for this is not due
until the start of each respective season.
Alongside the Soccer League, the 2005 business year saw
DSF invest in further long-term, top-class broadcasting rights.
The top event acquired by DSF next to the Soccer League
was the UEFA Cup. From the 2005/2006 season through
to the 2007/2008 season, DSF will be broadcasting at least
two UEFA cup matches live on every match day up to and
including the semi-finals. Furthermore, DSF has also secu-
red the exclusive live and highlights rights to the traditional
English FA Cup for a period of two years up to and including
the 2006/2007 season, as well as the live and exclusive
rights to the matches of the German Davis Cup team for
2005 and 2006.
DSF increases its share of live coverage against previous
year
DSF has stood by the motto it issued at the beginning of the
year “Mehr Sport, mehr Live” and presented a host of pro-
gram highlights during 2005. Alongside top soccer from the
Premier and Second Soccer League and the UEFA Cup, DSF
reported live from, among others, the Handball World Cham-
pionship (January), the Ice Hockey World Championship
(May), the Tour de Suisse (June) and the European Basket-
ball Championship and the Davis Cup (both in September).
Thus DSF demonstrated during 2005, an increase in live
reporting of a little over seven percent. In the fourth quar-
ter 2005 alone, DSF achieved an increase against the
same period the previous year of around 17 percent.
In addition, DSF also presented a program innovation in
2005. For the very first time, viewers were able to select
for themselves a live match from the Handball Bundesliga
over a period of six weeks. With this initiative, DSF presen-
ted something completely new in German sports free-TV.
On the road to success with Bundesliga formats and the
UEFA Cup
The soccer formats on DSF continue on the road to success.
All formats from the Premier and Second Soccer League
achieved significant increases in market share against the
previous year within the core target group of males aged 14
to 49. For example, during the reporting period, Bundesliga
– Der Sonntag recorded growth in market share against
2004 from 10.1 to 10.7 percent, while DSF-Doppelpass
witnessed an improvement from 7.9 to 9.3 percent.
With Bundesliga – Der Sonntag, DSF achieved a milestone
in its broadcast history on March 13, 2005. The highlights
of the Sunday matches Schalke 04 versus Bayern Munich,
and Borussia Dortmund versus VfB Stuttgart achieved ra-
tings of an average of 4.7 million, and a peak value of 5.5
million viewers. This saw DSF record its second best ratings
since the station was founded, and only narrowly missed its
absolute record from 1993 (an average of 4.8 million vie-
wers watched the UEFA Cup semi-final Dortmund versus
Auxerre). With 17.6 percent market share in the target group
of males aged 14 to 49, March 13 saw DSF achieve a new
best for Bundesliga – Der Sonntag since the acquisition of
the Bundesliga rights in 2003. Bundesliga – Der Sonntag
was also DSF’s highest-rating format for 2005 as a whole.
Alongside the Bundesliga, DSF also achieved very good
ratings with the UEFA Cup. An average of 1.8 million viewers
followed the broadcasts on DSF; with the station achieving
a market share of 11.7 percent among males aged 14 to
49. DSF achieved its top ratings for the UEFA Cup with FSV
Mainz 05 versus FC Sevilla. An average of 2.31 million vie-
wers overall followed the match live on DSF (market share
males 14 to 49 years – 13.3 percent). This was almost
equaled in the fourth quarter 2005, when the live transmis-
sion of HSV versus Viking Stavanger on November 3 brought
an average of 2.3 million viewers (market share males 14
to 49 – 11.9 percent).
Strong ratings with European Basketball Championship
and Handball World Championship
Other sporting disciplines also produced outstanding
ratings during 2005. With the final of the European Basket-
ball Championship in September between Germany and
Greece, DSF achieved strong ratings averaging 1.34 million
viewers, while the Handball World Championship at the end
of January was equally well received with up to 1.1 million
viewers.
24
Business Units Reports I Sports
Online I Sport1
Sport1.de continues to be the most popular German-lan-
guage sports website offering up-to-the-minute, well-re-
searched content from the exciting world of sports. In addi-
tion, as a multimedia sports platform, Sport1 provides
sports content for teletext and mobile platforms such as
SMS, MMS and WAP. Within this business sector, Sport1
includes private TV stations and leading telecommunica-
tions companies among its customers.
Focus on core business
Following the portfolio restructuring that took place in 2004,
efforts during the 2005 business year were focused entirely
on the core business activities of media sales and content
syndication. Due to the absence of major sporting events,
Sport1 took the opportunity to use 2005 as a preparation
year for the forthcoming major event – the 2006 FIFA
World Cup™ in Germany.
Sport1 further developed its successful strategy of mana-
ging operations outside of its core business with external
partners. The Auto&Motor unit saw a partnership agreed
with production service “onpact” during the first quarter, as
well as a co-operation with auto portal “mobile.de”. This
concept, which minimizes risk for Sport1, has also been
successfully implemented in a similar way within the
Games unit with partner “Gameduell”.
Successful business year for Sport1
Due to the ongoing focus on core business, Sport1 was able
to sustain the successful business development achieved
in the previous year, and to confirm its position as Germany’s
leading multimedia sports platform.
Massive growth in usage of more than 40 percent – mar-
ket leadership position expanded
With over 180 million visits and over 1.3 billion page im-
pressions during the 2005 business year, equating to an
increase in usage of well over 40 percent compared with
2004, Sport1 accomplished yet another significant expan-
sion in its market leadership. Sport1 achieved the highest
visit ratings in its six year history in September 2005 with
over 17.3 million visits.
Sport1 confirms position as teletext producer
In the second quarter 2005, the major contract with Seven
One Interactiv GmbH for the production and delivery of
25
editorial teletext content for the sports sector was extended
until December 31, 2008. Thus, Sport1 still produces and
delivers the entire editorial teletext sports content for TV
stations ProSieben, Sat.1, kabel eins, N24 and DSF.
Co-operations with Adidas and Suzuki
2005 saw a long-term strategic co-operation reached with
sporting goods manufacturer Adidas. This encompasses
exclusive advertising campaigns for the DAX group within
the soccer sector. Furthermore, “Suzuki” was also secured
as a strategic and long-term partner.
New marketing agency mediasquares GmbH
In recognition of the strong growth ongoing in the online ad-
vertising market, 2005 saw Sport1 further expand its sales
team. In another move, a contract was signed on March 1,
2005 with Hamburg-based online marketing agency medias-
quares GmbH for the marketing of classic advertising space
on www.sport1.de, as well as the associated ad manage-
ment. Mediasquares is one of Germany’s highest performers
in online marketing and is therefore an excellent strategic
partner for sport1.de, ideally complementing its in-house
marketing activities associated with sponsoring, co-opera-
tions and cross-media.
Sport1 with new sports database
In respect of future strategy at Sport1, the third quarter 2005
saw the implementation of an in-house sports database. This
technical project was realized in co-operation with Norwe-
gian sports data supplier “Betradar.com-Market Monitor AS”.
PLAZAMEDIA is a leading full-service company for TV and
new media, operating in outside production, studio produc-
tion, post production, new media, program management and
creative services. Within the reporting period, the company
created close to 90,000 hours of programming and mana-
ged around 1,500 national and international productions.
2005 business year sees positive development and posi-
tioning for further growth
The 2005 business year was marked by good capacity utili-
zation across all business activities. Despite the loss of the
contract to produce the base signal for the Premier and
Second Soccer League as of the 2004/2005 season,
PLAZAMEDIA’s business development in 2005 was in line
with expectations. Major contributors to the progress made
during the reporting period were increased profitability and
additional contracts. The opening up of new technologies
and business sectors was pushed forward, and will also con-
tinue to bring about sustainable business growth.
During the last year, PLAZAMEDIA was able to lay down the
foundations for forward-looking production technology.
Through the introduction of “HDTV” (High Definition Tele-
vision) throughout the entire production chain, the company
was able to secure its unique position in the marketplace.
This production capability has already won PLAZAMEDIA
significant contracts such as that for the production of the
2005 FIFA Confederation Cup from Host Broadcast Service
(HBS) based in Switzerland, which is also the official produc-
tion partner of the 2006 FIFA World Cup™. This tournament
functioned as a dress rehearsal for the imminent 2006
FIFA World Cup™ in Germany, which, for the first time ever,
will be produced entirely in the new HDTV technology.
Production Services I PLAZAMEDIA
The last business year also saw an agreement reached with
HBS to provide production services on the worldwide signal
for the 2006 FIFA World CupTM. HBS has contracted PLAZA-
MEDIA to generate the worldwide signal using two venue
production teams. The contract also covers the final of the
2006 FIFA World Cup™ in Berlin.
In addition to this, PLAZAMEDIA will also create, under con-
tract to HBS, the city profiles for all the host cities of the
2006 FIFA World Cup™. These profiles are the means by
which the individual host cities will be presented to the
event’s worldwide audience.
Numerous other contracts were also secured during the re-
porting period. These included the take over by PLAZAMEDIA
of playout for the PLANET documentary channel, the realiza-
tion of the PREMIERE SPORT PORTAL, as well as the first
live-capable program production in HDTV for PREMIERE HD
SPORT, plus production of the 2005 FIFA Confederation Cup
as well as the UEFA Champions League (2005/2006 sea-
son) for Premiere and the UEFA Cup for DSF. In addition,
the company also handled conception and production of
the Kabel Deutschland Info Channel under contract to Kabel
Deutschland GmbH.
Entry into international markets and capacity expansion
During 2005, Outside Production also realized numerous
national and international series productions, including pro-
duction of the Premier and Second Soccer League for DSF;
the Red Zac First League and T-Mobile Bundesliga for
PREMIERE Austria; Formula 1, the German BBL Basketball
League and the DEL German Ice Hockey League for Pre-
miere; plus the HBL German Handball League for DSF.
At the same time, the New Media business unit further
expanded its international activities. Under contract to US
internet company Bluelake Media, PLAZAMEDIA produced
the Premier and Second Soccer League, the 2005 IIHF Ice
Hockey World Championship, the 2005 European Basket-
ball Championship, the qualifying matches for the 2006
FIFA World Cup™ and the three-language highlights of all
16 of the 2005 FIFA Confederation Cup matches. Japanese
company Softbank and Brazilian telecommunications com-
pany Terra Networks received pre-prepared video clips of
the German Soccer League.
During the fourth quarter, PLAZAMEDIA reached an agree-
ment with PREMIERE for the continuation of their long-term
strategic partnership as of January 1, 2007, as well as ex-
tending the framework production contract covering exten-
sive studio and outside production services. In terms of
sports, the studio production services (period of agreement
extends until June 30, 2011) will in future also encompass
full program management of PREMIERE’s sports program
and HD portfolio, post production, studio production and
production of the conference channel for the Champions
League matches. In outside production, PLAZAMEDIA will
also continue production of the Champions League, as well
as handling the multi-channel transmission of Formula 1 for
a period of three years until December 31, 2009.
Expansion of management team and the Creative
Services business unit
In addition, December 31, 2005 saw PLAZAMEDIA take
over from PREMIERE 100 percent of shares in PREMIERE
subsidiary Creation Club (CC) GmbH. With this acquisition,
PLAZAMEDIA expanded its creative services portfolio within
both its existing and new customer business activities. The
Creation Club is successfully positioned in promotion, on
and off-air design, advertising and TV formats. Creation
Club’s Managing Director Zeljko Karajica has also been
appointed to the PLAZAMEDIA management team.
26
Business Units Reports I Sports
27
Licensing I EM.TV is exclusive marketer of merchandising rights to the 2006FIFA World Cup™ within Europe
Since acquiring the European merchandising marketing
rights to the 2006 FIFA World Cup™ in spring 2002, EM.TV
AG has been focused on implementing its objective of crea-
ting a broad network of distribution channels for licensees.
Alongside a total of over 300 scheduled official 2006 FIFA
World Cup™ shops run by KarstadtQuelle, EM.TV also se-
cured both C&A and Deichmann as license partners at the
beginning of 2005. Their extensive national and internatio-
nal retail networks are playing a decisive role in the develop-
ment of distribution channels.
33 license contracts negotiated in 2005 – comprehensive
license program realized
The constantly increasing media attention focused on the
2006 FIFA World Cup™ was also evident during the past year
by the number of license contracts agreed. As FIFA “Licen-
sing Representative”, EM.TV negotiated 33 new license
contracts during the reporting period. By the end of 2005,
the total number of licensees stood at 53 companies. In
achieving this, however, EM.TV stood by its strategy of crea-
ting a comprehensive licensing program in each product
category with a relatively small group of respected compa-
nies. Due to its significant marketing success during the
reporting period, EM.TV was able to exceed expectations
considerably and to make a substantial contribution to the
operating result of the Sports segment.
Europe-wide development of distribution network
In the first quarter 2005, EM.TV secured two internationally
significant retail companies as 2006 FIFA World Cup™ licen-
sees, in the form of C&A and the Deichmann Group. German
fashion company C&A acquired a non-exclusive license for
non-branded textiles, while well-known shoe retailing group
Deichmann secured exclusive rights to shoes with the excep-
tion of flip-flops and bathing sandals.
Furthermore, NICI AG was granted an exclusive European
license for plush products, as well as non-exclusive rights
to plush cushions and polyresin figures, also within Europe,
for the 2006 FIFA World Cup™. Further agreements were
reached with companies such as Dillen Asiatex GmbH, which
expanded its existing license contract for home textiles to
incorporate a non-exclusive license for adult bedding (non-
branded), and with drinking bottle manufacturer SIGG
Switzerland AG, which acquired exclusive rights to reusable
drinking bottles made from aluminum and plastic.
2005 FIFA Confederation Cup increases demand
The second quarter was marked by the 2005 FIFA Confede-
ration Cup as a sort of “dress rehearsal”, not only from a
sporting perspective, but also in terms of the licensing pro-
gram for the 2006 FIFA World Cup™. Heightened interest
surrounding the “mini World Cup” precipitated an increase
in demand for Official Licensed Products. Agreements
reached in the second quarter included among others con-
tracts with cosmobrandlab AG and TVMania GmbH.
The ongoing high media presence enjoyed by this particular
licensing topic, also had a positive effect on the marketing
of merchandising rights during the second half of the year.
The third quarter saw EM.TV attract among others VIP Mer-
chandising GmbH and in the fourth quarter further nine new
licensees such as DOBE Merchandising AG, Selva S.p.A.
and MENTOR.NET Dienstleistungs- und Vermarktungs GmbH.
Official Licensed Products received an important boost in
Christmas business as a result of the final draw that took
place on December 9, 2005 in Leipzig, watched by around
350 million TV viewers and marking the start of the count-
down to the 2006 FIFA World Cup™.
29
EM.TV intends to work in a customer-oriented manner. Service provi-ders and customers are to be convinced of the quality claim, competi-tiveness and sense of responsibility of the Company.
The willingness of national and international TV stations to
invest in new programs continued to be subdued by a weak
advertising market during the 2005 business year. However,
program suppliers able to come up with creative and inno-
vative productions stood a good chance of awaking the
interests of buyers. Alongside a strong storyline and pithy
characters, a further decisive element is the marketing
potential of a new show. Thus – the broader the possibili-
ties for exploiting a new production, the greater its sales
chances on the TV market.
Alongside the establishment of new distribution channels,
EM.Entertainment GmbH was faced with the challenges of
appealing to the largest possible range of target groups,
and of offering great variety in the development of subject
matter. In order to meet these requirements, the company
is working on the development and production of a host of
new topics that appeal to both girls and boys, as well as to
a variety of age groups. Alongside programs for school kids
aged between eight and twelve, the spectrum ranges from
educational entertainment for pre-school kids, through to
productions for toddlers from two to four years old. In addi-
tion, TV stations also demonstrated a keen interest in
language-based shows for pre-school target groups, as well
as in interactive TV formats, whereby, for example, children
can participate in the storyline using mobile devices.
Among the key business events of the first quarter 2005,
was the extension of the existing framework contract with
ZDF. In March 2005, EM.Entertainment GmbH agreed with
the German TV station to extend the contract until 2012.
The new agreement covers the period from 2006, and com-
prises a total of around 625 half-hour programs. Additionally,
the license periods for a host of series and feature films
were also extended. Furthermore, EM.TV and ZDF agreed to
continue their joint co-production activities.
On April 1, 2005, Susanne Schosser came on board along-
side Patrick Elmendorff as Managing Director of
EM.Entertainment GmbH and its sister company Junior.TV
GmbH & Co. KG.
October 1, 2005 saw proven expert in the international pro-
gram market and experienced producer Dominique Chrisitina
Neudecker take over management of production activities.
In December 2005, Junior.TV GmbH & Co. KG acquired the
exclusive pay-TV rights to LazyTown – let’s go for the German-
speaking region. Following the great success of the children’s
series on Super RTL, January 1, 2006 saw the Icelandic pro-
duction celebrate its German pay-TV premiere on Junior.
The license package also includes the free-TV rights for Ger-
man-speaking Switzerland, which are being incorporated
into the existing framework contract with Swiss TV company
SF DRS.
In addition, EM.Entertainment and Junior.TV made a host
of further program acquisitions during the fourth quarter.
These included teen live-action series 15 Love, preschool
production Strawberry Shortcake, 2D comedy series Trollz
and Sponge Bob Square Pants, as well as studio producti-
on Finger Tips.
By the end of 2005, 21 episodes had been completed in
German and English of 2006 FIFA World Cup™ Official
Mascot TV series GOLEO VI. The first 16 of a total of 24
spots had also been filmed. GOLEO VI is a comedy for the
whole family consisting of a live-action production with pup-
pet animation (21 episodes of 40 seconds each) and a 3D
30
Business Units Reports I Entertainment
Production
31
animation with 24 ten second spots. Both formats were
conceived and developed under contract from Junior
Produktions GmbH by Creation Club (CC) GmbH, which has
belonged to EM.TV subsidiary PLAZAMEDIA GmbH TV &
Film Produktion since the end of 2005.
The 2005 business year saw a host of new TV stations
taking to the air, including children’s broadcasters such as
NICK in Germany and France (Viacom Group) and digital
terrestrial station GULLI, a co-operation project between
Lagardère Group and France Télévisions. In Spain, four new
licenses were granted for national TV broadcasters, also
including one children’s station, while numerous regional
programs were approved and are now being broadcast
across the digital terrestrial network.
The cable and satellite sector, particularly in Asia and
Eastern Europe, also witnessed the arrival of an array of
new platforms and TV channels, all of which present new
marketing opportunities for program suppliers such as
EM.TV.
The introduction of the new technologies in the TV, video
and mobile entertainment sectors also led to the creation
of a series of new markets during the 2005 business year,
and these will surely multiply further during the years to
come. As far as the business operations of EM.Entertain-
ment are concerned, i.e. the production and marketing of
children’s and youth programming, it was activities in video-
on-demand and mobile content that enjoyed the greatest
benefits. In these growing markets, EM.Entertainment can
already count among its customers Telekom Austria (video-
on-demand) and Plan B, a company that markets mobile
content worldwide.
Key agreements in the TV Sales business unit during the
first quarter 2005 included the licensing of 65 half-hour
programs to Italian media group Mediaset. In France, TF1
acquired rights to the third season of Tabaluga, while
France 5 secured a free-TV license for 52 episodes of the
Heidi animation series.
In pay-TV, EM.Entertainment successfully finalized contracts
with AON.TV, Telekom Austria’s broadband service provider,
and with Nickelodeon Latin America. The agreements secu-
red AON.TV exclusive pay-per-view rights to a wide range of
classics amounting to a total of 260 program half hours,
while Nickelodeon acquired the pay-TV rights to EM.TV co-
production Creepschool for Latin America.
The most important event of the second quarter was the
MIPTV trade fair in April 2005 in Cannes, France. And it was
there that EM.Entertainment secured a volume contract
with Ukrainian TV station K1, granting it exclusive exploitati-
on rights to a total of 1,200 half-hour episodes over a three
year period. In the same quarter, all 104 episodes of Maya
the Bee were licensed to Bulgarian distributor Diema Vision,
while Turkish program purchasing company Tara Film acqui-
red the free-TV rights to 24 animation films on behalf of
broadcaster ATV.
Within the pay-TV sector, EM.Entertainment successfully li-
censed 40 episodes of the Captain Future series to broadca-
sting group Universal Studio Networks for its SCI FI channel.
TV Sales
Third quarter highlights included the sale of three seasons
of live-action series Clueless to Nickelodeon Deutschland
for new children’s channel NICK, which began broadcasting
in September 2005. In addition, Asian media group Power
International Media (PIM) acquired all 50 episodes of series
classic Anne of Green Gables for pay-TV.
At MIPCOM in October 2005 – the year’s most important
TV trade fair alongside MIPTV in spring – EM.Entertainment
presented two new products; children’s series Marvi Häm-
mer presents NATIONAL GEOGRAPHIC WORLD and Dogstar.
The EM.TV subsidiary acquired the exclusive rights worldwi-
de, excluding the German-speaking region, to the entertai-
ning, bilingual educational program Marvi Hämmer from
licensor YOUA edutainment GmbH & Co. KG. The rights port-
folio to comedy cartoon series Dogstar extends across free-
TV, pay-TV and home entertainment, and covers the German-
speaking countries, the French-speaking areas of Europe
(excluding Switzerland), Spain, Asia (excluding Japan) and
Latin America. Dogstar is currently being produced by
Australian animation studio Media World Pictures Pty Ltd in
co-operation with ZDF, BCC, the EM.TV group and Daro Film
Distribution. It is scheduled for completion in March 2007.
At MIPCOM there were also good news for GOLEO VI, the
TV series accompanying the 2006 FIFA World Cup™ Official
Mascot. Pay-TV provider Premiere secured exclusive pay-TV
rights to the sitcom for the German-speaking region. Further-
more, the contract includes an option to acquire the Ger-
man-speaking free-TV rights, as well as non-exclusive rights
for radio use.
Further significant TV agreements reached in the fourth
quarter included the sale of Farscape I to children’s channel
NICK and the sale of new Futurikon production Dragon
Hunter to ORF. In France, TF1 acquired the rights to Flipper
& Lopaka III, and 30 episodes of live-action series A Twist
in the Tale were licensed to the Disney Channel. In addition,
Magyar RTL Television secured all four seasons of Digimon
for broadcast in Hungary, the Czech Republic, Slovakia and
Romania, while Dutch distributor AVRO purchased the free-
TV rights to the entire Pippi Longstocking library.
28
Business Units Reports I Entertainment
32
29
As in the previous year, promotional activities and joint mar-
keting initiatives attracted keen interest within the license
market for children’s and youth material, alongside classic
merchandising. Furthermore, growth potential is to be found
within the baby and toddler sector, where international com-
parison indicates that this segment has yet to be fully ex-
ploited. At a domestic level, the most important distribution
channels remained department stores and major retail
chains, although discounters were able to continue building
market share during the reporting period.
Maya the Bee proved to be one of the dominant products
during the reporting period, due to her 30th TV anniversary
in 2006. A host of companies were already buying licenses
in 2005 for an array of products featuring the popular bee.
In the first half, J. Bauer GmbH & Co. KG extended its con-
tract for children’s dairy products for a further two years. In
the stationery and paper goods sector, Papstar Vertriebs
GmbH & Co. KG secured Europe-wide rights to party goods,
while Wekre GmbH acquired a license for stationery.
Alongside Maya the Bee, the first half also saw substantial
demand for characters from Vicky the Viking and Tabaluga.
GlaxoSmith Kline Consumer Healthcare GmbH & Co. KG
was granted rights to the little Viking for dental care and
oral hygiene products within the German-speaking region.
EM.Entertainment also entered into a strategic partnership
with uniVersa Versicherung that took the form of an agree-
ment to use Tabaluga as a name and figurehead for its
new children’s insurance policy concept.
Alongside food, license categories that witnessed the stron-
gest sales included the home & living and textile sectors.
Within the textile category, SANETTA Textilwerk Gebrüder
Ammann GmbH & Co. KG and TVMANIA GmbH secured
contracts for children’s clothing featuring characters from
series classics Vicky the Viking and Maya the Bee.
Third quarter highlights included the licensing.forum 2005,
at which EM.Entertainment and Autobahn Tank & Rast
GmbH were honored with the LIMA Award in the “Best
Promotion” category for their three-part Vicky promotion.
Agreements reached during the third quarter included a
licensing contract with Flötotto GmbH, who acquired rights
to children’s furniture in Maya the Bee designs, and a con-
tract extension with SIGG Switzerland AG for aluminum
drinks containers. Further licenses were granted to FUN
LITES Handels- und Vertribs GmbH (lamps and lights),
Panini-Verlag (the Maya the Bee magazine) and the compa-
ny Global Labels for bedding.
In the fourth quarter, a license contract was agreed with
Ravensburger Spielverlag GmbH for a wide range of puzzle
games of Maya the Bee for the entire German-speaking
region. The products are set to reach the market during the
2006 anniversary year. Furthermore HEUNEC GmbH & Co.
KG extended its contract for soft toys featuring Maya the
Bee and her friends.
Licensing I Merchandising
33
Within the home entertainment division, which includes the
licensing of exploitation rights for video and DVD, the 2005
business year saw EM.Entertainment achieving a series of
national and international agreements.
In the first quarter, Koch Media AG acquired home entertain-
ment rights to 10-part fairy tale series Princess Fantaghiro
for the entire German-speaking region. Key international
sales included an agreement with TF1 Video, granting
France’s leading video producer and distributor exclusive
exploitation rights to Flipper & Lopaka I and II, as well as
to the Tabaluga Christmas movie.
In the second quarter, EM.Entertainment achieved its first
license contract with Epix Media AG. The Berlin company
secured video and DVD rights to children’s series Anne of
Green Gables and Marco. In France, EM.Entertainment
signed a contract with Innovation Distribution Production
(IDP). The distribution company acquired a video/DVD licen-
se for all 50 episodes of Tao Tao.
Third quarter highlights included the sale of exclusive rights
to the Heidi animation series and a TV feature film to Latin
American marketing group Tycoon Entertainment. In additi-
on, having already licensed an array of EM.TV co-producti-
ons, Finnish company Panvision has now also acquired the
rights to classics Maya the Bee and Tao Tao.
EM.Entertainment took a key step in the expansion of its
home entertainment activities during the fourth quarter.
The company secured two long-term agreements with Uni-
versum Film and Warner Bros. Entertainment, the total
value of which lies in the mid seven-figure ball park.
The program contract with Universum Film encompasses
DVD and video exploitation of popular children’s and youth
programs from the EM.Entertainment rights library, including
series and feature films based on the novels of Astrid Lind-
gren such as classic Pippi Longstocking and Heidi. The con-
tract also entitles Universum Film to select three out of six
new EM.Entertainment co-productions or program purchases
between now and 2011. The license region extends across
Germany and Austria, with some programs also including
Switzerland.
The second agreement saw Warner Bros. Entertainment
acquire home entertainment rights for Germany and Austria
over a long-term period to the Maya the Bee animation
series, as well as the animation feature film Maya the Bee.
34
Business Units Reports I Entertainment
Licensing I Home Entertainment
35
EM.TV subsidiary Junior.TV GmbH & Co. KG presents the
Junior children’s and family-orientated pay-TV channel, which
can be received in Germany via pay-TV provider PREMIERE.
Subscriptions to the channel are available individually, as
well as within the “PREMIERE Kinder” and “PREMIERE
Thema” packages, and the overall “PREMIERE Komplett”
package.
Alongside exclusive distribution within Germany, Austria and
South Tyrol, the agreement with PREMIERE encompasses
non-exclusive distribution in German-speaking Switzerland,
Luxembourg and Liechtenstein. Further partner companies
in Switzerland are Cablecom GmbH and Swisscom Broad-
cast AG, which likewise offer Junior on their pay-TV services.
In the first half of the year, Junior hosted broadcast premie-
res for a large number of series and feature films. Series
Der silberne Hengst and fairy tale Es war einmal in einem
fernen Land enjoyed their German premieres.
Channel and platform firsts included well-known children’s
series such as Hallo Spencer and Catweazle, as well as
animated feature film Beauty and the Beast and feature
film Sinbad the Sailor. Furthermore, animated special Irre
Kinderei – Unendliche Geschichten für einen Drachen and
Children’s series Rasmus und der Vagabund, based on the
novels of Astrid Lindgren, made their channel and platform
premiere.
TV I Junior Channel
37
EM.TV intends to assign its employees in line with their talents and therequirements of the company and to compensate them by results basedon the relevant corporate objectives.
1.1 The general economic environment
The economy remained on a growth course in 2005. Econo-
mic experts unanimously agreed on a growth in the gross
domestic product slightly in excess of 4 percent. The rate is
still above the medium-term growth trend of the world eco-
nomy therefore. Despite the increase in the price of oil, the
extremely robust world economy was again driven by the
USA and the booming economies of China and India.
Amongst the industrial countries, the upturn in Japan conti-
nued to increase further in 2005. On the other hand, the
speed of recovery even receded at times in the European
Currency Union and Great Britain. Generally speaking, the
economy in the Euro-zone failed to keep pace with the world-
wide trend. The gross domestic products in 2005 in the
countries of the European Currency Union only amounted
to 1.3 percent (2004: +2.1 percent). Germany was at the
lower end of the Euro member countries with a plus of 0.9
percent. Whereas German exports benefited from the favou-
rable operating conditions in the world economy, demand
on the domestic market remained weak. Private consump-
tion stagnated and gross capital investments receded slightly
once again.
Sources:2006 Economic Forecast, DZ Bank/F.A.Z. Institute, November 18, 2005Economic Report Federal Association of German Banks, November 2005Eurostat, Pres Release, February 14, 2006Federal Statistics Office, Press Release, January 12, 2006
1.2 The sports sector
Television
The subdued state of the general economy in Germany also
had its effect on the TV advertising market. Bookings were
increasingly made at short notice in media such as the
radio, online or daily newspapers. This development was
particularly reflected in the cautious booking conduct of
market participants in the sponsoring and special adverti-
sing sector, especially in the 1st half of the report year.
Classical advertising developed positively.
The slightly positive development of gross advertising reve-
nues by TV stations continued in 2005. Expenditures by
the advertising industry rose by approximately 4.3 percent
to more than Euro 8 billion (Source: NielsenMedia Research).
It is, however, questionable whether a similar recovery was
experienced with net income levels, i.e. after deducting
rebates and cash discounts.
As the growth motor in the German TV market, the so-called
transaction television continues to be prevalent, e.g. auc-
tions, gaming and betting offers. This market segment is
also marked by an increasing level of competition, however.
Online
The online advertising market in Germany developed ex-
tremely positively in 2005. According to Nielsen Market Re-
search, advertising spending rose by more than Euro 410
million in the online advertising market which is relevant for
Sport1 GmbH, with this being equivalent to a growth rate of
approximately 33 percent in comparison with 2004, when
growth amounted to 4 percent. This was mainly attributable
to the sharp increase in Internet accesses used for private
purposes, to quicker Internet connections and to the increase
attractiveness of online services. Online advertising has
gained very much in importance in the communication mix
of advertising companies as a result. The Internet offers
companies a unique direct interaction with consumers in
comparison with other media. This is an aspect which coun-
38
Management Report
1. Economic Conditions
39
teracts the changed advertising conduct - namely the trend
away from long-term oriented image advertising to short-
term sales advertising.
Production services
The business climate in the German production market was
basically tense in 2005. The continuing growth of new TV
stations and programs as well as higher demand for inno-
vative production solutions resulted in an increased level of
orders in comparison with 2004.
1.3 The entertainment sector
Production
The advertising market in the environment of children and
youth programs is still tense and is continuing to create a
difficult market environment for suppliers of the specific pro-
grams involved. Demand is for formats which can be used
in the whole exploitation chain, also including merchandi-
sing and publishing in addition to TV and video/DVD usages.
In order to build up products and minimize risks, TV stations
wish to make creative contributions and to be active as co-
production partners – or they only make a buying decision
when the first episodes are available so that the quality of
the series can be clearly and conclusively assessed.
In the continued tense market environment, program pro-
ducers are starting to develop new target groups and to es-
tablish new distribution channels. Programs are being increa-
singly developed for young children in the age of 1 to 3 which
are being mainly produced for the video market. In this way,
contact is made with parents who wish to promote the ear-
lier education of their children. Formats with educational
contents which prepare children for kindergarten and school
requirements at the earliest possible age are also the sub-
ject of increasing demand.
The dissemination of program contents on portable tele-
phones is also part of this upward trend (mobile contents).
In addition to ring tones and downloads which have already
established themselves with children, there is also an
increasing interest in TV formats which integrate viewers in
current happenings interactively and by portable telephone.
TV-sales
The market for the worldwide sale of TV rights also experi-
enced a slight upward trend in 2005 which is not yet reflec-
ted in the relevant achievable prices, however. Both on a
national and international level, demand by stations rose
for new productions and for existing program goods. This is
not least attributable to the establishment of a range of new
stations, including both full-programs and also specific chil-
dren’s stations (e.g. in Germany, France and Spain). Various
new platforms and stations which enquire children and youth
programs have also been established in the cable and satel-
lite sector across the globe – especially in Asia and Eastern
Europe.
Licensing
There was no dominant theme in the merchandising sector
in 2005. Strong, established characters were able to assert
themselves on the market but without setting any new
trends. There was an increased level of demand for licenses
from the promotion sector in particular and sport licenses
also gained in importance.
1.4 Group structure and organization
EM.TV AG is an international media company based in Unter-
föhring near Munich. It emerged in 2004 from the restructu-
ring of the former EM.TV & Merchandising AG. The operating
business activities of the EM.TV Group have been based on
the two segments Sports and Entertainment since 2003.
In the Sports segment, EM.TV operates in the television
sector (inter alia DSF), Online sector (Sport1), production
services (PLAZAMEDIA) and Licensing (European “Licensing
Representative” 2006 FIFA World Cup™). EM.Sport GmbH
is the parent company of the Sports segment which holds
100 percent of the shares in PLAZAMEDIA GmbH TV & Film
Produktion. The shares in DSF Deutsches SportFernsehen
GmbH and Sport1 GmbH are partially held directly by
EM.TV AG and partially indirectly by EM.Sport GmbH or its
subsidiary Sport Media Holding GmbH.
The Entertainment segment includes the production of
high-class children and youth programs, worldwide sales of
TV rights and the marketing of home entertainment and
merchandising rights. For this purpose, EM.TV has one of
the world’s largest program libraries for children and youth
entertainment besides the large studios (majors). Since the
report year, all production and selling activities in the enter-
tainment sector have been bundled in EM.Entertainment
GmbH which is a wholly-owned subsidiary of EM.TV AG and
its subsidiaries. The extensive program library is grouped
together in the legal right companies Junior.TV GmbH & Co.
KG and Junior Productions GmbH.
The Group parent company, EM.TV AG, acts as the Group
holding company. It is responsible for central functions (ac-
counting, law, financing and investor relations) and also
strategic control of the Group. The management of the Group
parent company mainly controls the companies beneath
the two segments through advisory boards or similar bodies.
Operating responsibility rests with the management of the
individual subsidiaries. Sales, earnings and cash-flow ratios
are the main control ratios applied within the Group.
1.5 Changes in the investment portfolio of the Group
Tele München Gruppe (TMG):
EM.TV Beteiligungs GmbH & Co. KG, a whole-owned subsi-
diary of EM.TV AG, sold its 45 percent holding in Tele Mün-
chen Group (TMG on December 15, 2004 to a company
owned by the co-shareholder Dr. Herbert Kloiber. As part of
the restructuring of the 4% convertible bond of 2000/2005
of the former EM.TV & Merchandising AG carried out in the
first half of 2004, EM.TV committed itself to sell the afore-
said. The transaction was executed on January 3, 2005 by
payment of the purchase price of EUR 118 million. On
February 3, 2005, the full redemption of the zero-coupon
notes was effected by transferring the net income after de-
ducting costs and other expenses to the holders of the zero-
coupon notes which had been granted in return for the issue
of the 4% convertible bond of 2000/2005 to the former
bondholders.
DSF/Sport1
EM.TV increased the existing holdings in DSF Deutsches
SportFernsehen GmbH and Sport1 GmbH in two stages to
100 percent in 2005.
On February 1, 2005, EM.TV reached an agreement with
KarstadtQuelle New Media AG on the purchase of the sha-
res held by KarstadtQuelle in Sport Media Holding GmbH
(49.9 percent) for a price of EUR 27 million. EM.TV AG the-
reby increased its indirect holding in Sport Media Holding
GmbH – which in turn holds 81.13 percent in DSF and
Sport1 – to 100 percent.
On February 10, 2005 EM.TV AG reached an agreement
with the Swiss investor Dr. h.c. Hans-Dieter Cleven for the
purchase of his 18.87 percent holding in DSF and Sport1
for a price of EUR 12.6 million. The increase in the hol-
dings was executed after submitting all cartel and media
related approvals on May 23, 2005. EM.TV AG has had a
direct or indirect 100 percent holding in both sports com-
panies since then.
Arena Media
With effect from July 12, 2005, EM.TV’s subsidiary PLAZ-
AMEDIA acquired a 33.33 percent holding in arena media
GmbH in Munich. Arena Media commenced the interactive
auction station arena on September 27 of last year. The
holding of PLAZAMEDIA which is also responsible for the
40
Management Report
41
complete production and processing of the station was
reduced to 25 percent in the report year by the entry of an
additional shareholder. This holding is consolidated by the
EM.TV Group at equity.
Creation Club:
EM.TV’s subsidiary PLAZAMEDIA acquired all shares in
Creation Club (CC) GmbH from Premiere Fernsehen GmbH
& Co. KG with effect from December 31, 2005. Creation
Club is positioned as an independent and innovative com-
pany for audiovisual services with promotion, on and off air
design, advertising and TV formats. The range of the audio-
visual services which it offers is extremely extensive with a
networked team of graphic artists, animation experts, text
writers, promotion producers, editors and sound designers.
The company has already been distinguished with an award
for its creative productions with a whole series of recognized
prizes, inter alia with the “Eyes & Ears Award 2004“ and
the Promax & BDA International Awards 2005.
The Company has been included in the consolidated finan-
cial statements of the EM.TV Group since December 31,
2005.
1.6 Group financial reporting and accounting principles
EM.TV AG draws up its consolidated financial statements in
accordance with International Financial Reporting Standards
(IFRS). The prerequisites laid down in §315 a of the German
Commercial Code (HGB) for the preparation of the consolida-
ted financial statements based on IFRS as they are to be
applied by the EU have been met. The consolidated financial
statements have been supplemented by additional notes
and the Group Management Report. The annual financial
statements of the individual company have been prepared
in accordance with the German Commercial Code.
In comparison with the consolidated financial statements
in the previous year, IFRS 2 (share-based compensation)
has been applied for the first time in the accompanying
consolidated financial statements at December 31, 2005,
with this giving rise to an adjustment in the previous year’s
figures.
The valuation and accounting principles in the annual
financial statements of EM.TV AG have remained unchan-
ged in the report year.
EM.TV changed its segment reporting at the beginning of
2005. For greater transparency, the “Others” segment is
shown in detail, with this including amongst other things
the income and costs of EM.TV AG as the holding company
of the Group. The holding company was previously alloca-
ted to the Entertainment Segment. In addition, the previous
“Consumer Products” segment has been transferred to the
“Others” segment. The previous year’s figures for the new
segment have been adjusted in order to ensure compari-
son validity.
2.1 Overall evaluation
The EM.TV-Group developed in line with its budgets in
2005 and achieved its financial objectives. The Group
attained positive earnings before taxes (EBT) for the first
time since 1999 excluding one-off and special effects. This
was achieved despite additional, originally unplanned
expenses, e.g. for the acquisition of attractive sports rights
(e.g. the UEFA Cup) and preparations for the entry into the
betting and gambling sector. Against the background of
these additional expenses and in view of the continuing
tense situation in the TV advertising market, the
Management Board regards the earnings for the financial
year 2005 to be a positive achievement.
2.2 Consolidated sales and earnings
Sales of the EM.TV Group amounted to EUR 209.5 million
in the financial year 2005. This was equivalent to an increa-
se of 1.4 percent in comparison with the previous year
(EUR 206.6 million), with the forecast of a slight growth
rate being achieved. EUR 63.0 million of the sales for the
year were attributable to the strong fourth quarter (2004:
EUR 58.0 million). The long-term program agreements rea-
ched in December with Universum Film GmbH and Warner
Bros. Entertainment GmbH in the Home Entertainment sec-
tor had a positive effect on the development of sales in the
final quarter.
Other operating income amounted to EUR 22.4 million, the-
reby remaining well below the corresponding amount for
the previous year (EUR 76.8 million) which was, however,
marked to a considerable extent (EUR 48.2 million) by the
one-off income amounts from the final agreement with
KirchMedia GmbH & Co. KGaA i.In. (“Kirch-Settlement“).
Other operating expenses particularly consisted in the report
year of the release of provisions, exchange rate differences
and non-period income.
At EUR 114.0 million, the cost of materials were 3.3 per-
cent lower than the previous year at EUR 117.9 million.
Personnel expenses increased by 4.1 percent from EUR
48.2 million to EUR 50.2 million, with the aforesaid reflec-
ting the increased number of employees in the EM.TV
Group. Depreciation and amortization amounted to EUR
15.5 million in the report year (2004: EUR 22.5 million).
Other operating expenses increased at a moderate rate of
4.0 percent from EUR 45.3 million to EUR 47.1 million.
They mainly consisted of legal and consultancy expenses,
valuation adjustments, advertising and travelling expenses
and expenses relating to premises. Other operating expen-
ses include bad debt provisions of DSF in respect of two
major service partners amounting to EUR 3.6 million.
Earnings before interest, taxes and depreciation (EBITDA)
amounted to EUR 21.2 million in the report year compared
with EUR 73.1 million in the previous year. If the previous
year’s figure is adjusted for the one-off income from the
“Kirch-Settlement” (EUR 48.2 million), the EBITDA amoun-
ted to EUR 24.9 million.
At EUR 15.5 million, depreciation and amortization were
31.1 percent lower than in the previous year (EUR 22.5 mil-
lion). No exceptional amortization charges were necessary
on intangible assets in the report year, especially on film
assets.
After charging depreciation, the EM.TV Group achieved ear-
nings before interest and tax (EBIT) of EUR 5.7 million which
42
Management Report
2. Sales and Earnings
43
was therefore higher than the adjusted figure in the previo-
us year (2004: EUR 50.6 million, adjusted for the “Kirch-
Settlement”: EUR 2.4 million).
The financial performance deteriorated from EUR -2.3 mil-
lion to EUR -4.9 million. The major influential factors were
lower interest income as a result of the reduction in liquid
funds and higher interest expenses as a result of the first-
time inclusion of the 8% bonds with warrants attached of
2004/2009 for a full year and a special expense with no
liquidity effect as a result of the early redemption of part of
the aforesaid bond with warrants attached.
The Group showed earnings before tax (EBT) of EUR 0.8 mil-
lion in 2005 of which EUR 7.2 million was attributable to the
strong fourth quarter. The previous year’s earnings of EUR
142.5 million were particularly marked by a substantial
income with no liquidity effect (EUR 94.4 million) arising
from the restructuring of the 4% convertible bond of
2000/2005 of the former EM.TV & Merchandising AG in
addition to the one-off “Kirch-Settlement”. The EBT for the
year adjusted for both the aforesaid effects amounted to a
loss of EUR 0.1 million.
The slightly positive EBT was achieved despite intensive
preparations for the envisaged entry into the betting busi-
ness. A total of EUR 2.7 million was spent on the betting
business in the report year. This had a negative effect of
EUR 1.5 million on the EBT.
The Group shows a tax income of EUR 0.3 million for 2005,
compared with a tax charge of EUR 4.2 million in 2004.
After tax, earnings prior to minority interests were equiva-
lent to EUR 1.1 million. The amount in the previous year
was EUR 138.3 million, with post-tax losses being equiva-
lent to EUR -4.3 million after adjusting for the “Kirch-
Settlement” and the restructuring gain.
At EUR 0.8 million, minority interests were much lower than
in the previous year (EUR 4.0 million). This downturn was
mainly attributable to the increase of EM.TV’s holdings in
the subsidiaries DSF and Sport1 to 100 percent in both
cases; there were no more minority interests accruing after
the relevant date of May 23, therefore.
After minority interests, the Group showed a surplus of EUR
0.2 million (2004: EUR 134.3 million; adjusted for the
“Kirch-Settlement” and the restructuring gain of EUR -8.3
million). The undiluted earnings per share amounted to
EUR 0 (2004: EUR 3.22) and the diluted earnings per share
taking account of the outstanding warrants to EUR 0
(2004: EUR 2.96).
2.3 Development of the segment business
The major value generators in the Sports Segment are main-
ly the access to attractive sports rights with a high marke-
ting potential, marketing activities for the 2006 FIFA World
Cup™, the development of intelligent value-added services
and utilizing capacities in the production service sector by
means of technologically high-class and innovative orders.
The Sports Segment attained a sales level of EUR 177.8
million in 2005 which was the same level as the previous
year (EUR 177.6 million). The subsidiaries PLAZAMEDIA and
DSF reached slightly lower sales whereas higher sales were
achieved by the marketing of the merchandising rights to
the 2006 FIFA World Cup™. The share of the Sports Seg-
ment in relation to total sales remained almost unchanged
at 85 percent (2004: 86 percent). The Segment earnings
of EUR 10.1 million were significantly lower than the previo-
us year (EUR 21.8 million), however. This was attributable
to a weaker earnings contribution by DSF, inter alia on ac-
count of the costs for the UEFA Cup and higher bad debt
provisions. In the case of PLAZAMEDIA, the discontinuation
of the production order for the basis signal for the Premier
and Second Soccer League with effect from the 2004/2005
season had a dampening effect on earnings.
A major value generator in the Entertainment Segment is
the maintenance of the library program quality, access to
rights and production structures and a national and inter-
national distribution access. Sales of EUR 30.6 million were
generated by this Segment in 2005, equivalent to an in-
crease of 5.5 percent in comparison with 2004 (EUR 29.0
million). This corresponded to 14 percent of Group sales
(2004: 14 percent). Segment earnings amounted to EUR
5.7 million. The previous year’s level of EUR 43.4 million
was mainly marked by the one-off income from the “Kirch-
Settlement”; on an adjusted basis, it would have amounted
to EUR -4.8 million.
The “Others” Segment shown as such for the first time
shows sales of EUR 1.1 million in connection with contracts
remaining from the reorganization of the Entertainment Seg-
ment in EM.TV AG. The earnings of EUR -10.0 million reflect
the costs of the Group’s holding function. The previous
year’s equivalent amounted to EUR -14.6 million. This reduc-
tion is attributable to stricter cost management and costs
recharged to the individual segments.
2.4 Sales and earnings of EM.TV AG
The individual financial statements of EM.TV AG which
have been prepared in accordance with the provisions of
the German Commercial Code (HGB) show sales of EUR 8.8
million in 2005, with these being mainly attributable to the
marketing of merchandising rights for the 2006 FIFA World
Cup™. This activity is allocated to the Sports Segment in
the Group. The downturn in sales in comparison with the
previous year was equivalent to EUR 23.7 million. This resul-
ted from the reorganization the Entertainment Segment
with the introduction of all production and selling activities
into EM.Entertainment GmbH and its subsidiaries (cf. Sec-
tion 1.4.). Most of the other items in the profit and loss
account were also affected by the aforesaid reorganization,
especially cost of materials and depreciation/amortization.
At EUR 19.6 million, other operating expenses remained
well below the level of the previous year (EUR 25.8 million).
This downturn was, inter alia, attributable to lower bad debt
provisions which fell from EUR 8.3 million to EUR 3.1 milli-
on. The previous year’s amount was marked by expenses in
connection with the “Kirch-Settlement” to a very large extent.
Financial results were increased from EUR -6.5 million to
EUR 9.1 million. A substantially lower level of investment
income in comparison with the previous year was offset by
the absence of major write-downs of financial assets and
marketable securities under current assets. In the previous
year, extensive write-downs were made on the valuation of
various affiliated companies in connection with the settle-
ment of intra-group receivables. In addition, the net interest
payable included in the financial results was reduced from
EUR -5.6 million to EUR -2.0 million.
EM.TV AG shows earnings of EUR 2.8 million from ordinary
business activities in 2005 (2004: EUR -28.7 million). Unlike
the situation in the previous year, no expenses were incurred
in the report year arising in connection with the restructu-
ring of the 4% convertible bond of 2000/2005. Earnings
for the year amounted to EUR 1.5 million compared with a
loss of EUR 38.8 million in 2004.
44
Management Report
45
3.1 Net worth position of the Group
At EUR 316.2 million, the balance sheet totals of the EM.TV
Group at December 31, 2005 was 25.9 percent or EUR
110.4 million lower than the equivalent value at the end of
2004. The main reason for the substantial reduction is the
execution of the sale of the 45 percent holding in TMG in the
first quarter. The largest asset item in the Group at the end
of 2005 were intangible assets which reached an amount
of EUR 89.8 million. The downturn in comparison with the
amount in the previous year (EUR 94.1 million) was mainly
attributable to scheduled amortization charges. Goodwill in-
creases substantially from EUR 8.9 million to EUR 54.5 mil-
lion, mainly on account of the increased holdings in the
sports companies DSF and Sport1. Investments in affiliated
companies rose from EUR 2.8 million to EUR 5.3 million, with
this being attributable to the minority holding of PLAZAMEDIA
in arena media GmbH. In total, long-term assets rose by EUR
47.8 million from EUR 131.1 million to EUR 178.9 million.
Short-term assets decreased by EUR 158.4 million from
EUR 295.6 million to EUR 137.2 million. This downturn was
attributable to the reduction in liquid funds (cash on hand
and at banks) in addition to the execution of the sale of the
holding in TMG which resulted in a reduction in other assets
from EUR 138.2 million to EUR 19.9 million. Cash on hand
and at banks fell from EUR 106.0 million to 45.8 million,
mainly on account of the acquisitions in the Sports Segment
(DSF, Sport1 and Creation Club), together with the partial re-
demption of the 8% bond with warrants attached of 2004/
2009. In contrast, trade accounts receivable rose by EUR
21.7 million to EUR 68.7 million with this being mainly on
account of the marketing of the merchandising rights to the
2006 FIFA World Cup™ to a very large extent.
On the liabilities side of the consolidated balance sheet,
shareholders’ equity amounted to EUR 153.6 million at
December 31, 2005. This change in comparison with the
previous year (EUR 153.1 million) was, inter alia, caused by
the reduction of minority interests in view of the fact that
EM.TV increased its holdings in DSF and Sport1 to 100
percent in the report year and also on account of the con-
tributions made to execute the resolved capital increase
connected with exercised warrants from the 8% bond with
warrants attached of 2004/2009. The Group showed a
sound equity ratio of 48.6 percent at December 31, 2005
which is well above the ratio of the previous year on
account of the substantial reduction in the balance sheet
total (35.9 percent).
After the redemption of the zero-coupon note on February
3, 2005 arising from the sale proceeds of the shares in
TMG, the Company had no long-term, non-interest bearing
financial liabilities at the end of the financial year. Long-
term financial liabilities amounted to EUR 64.5 million com-
pared with EUR 181.9 million at the end of 2004. The down-
turn was attributable to the partial repayment of the nomi-
nal amount of EUR 10 million of the 8% bond with warrants
attached of 2004/2009 (with a value of EUR 34.3 million
on the balance sheet date). The remaining balance of the
restructured 4% convertible bond of 2000/2005 issued by
the former EM.TV & Merchandising AG is also included
under this heading (with a value of EUR 26.0 million on the
balance sheet date). In addition, an amount of EUR 4.2 mil-
lion is included which was still payable on the balance sheet
date to a former co-shareholder for the acquisition of sha-
res in the Sports Segment.
Short-term liabilities are marked by “Other liabilities” which
3. Net Worth Position
4.1 Cash flow of the Group
The outflow of funds in connection with normal business
activities amounted to EUR 4.0 million in the 2005 finan-
cial year, compared with an inflow of funds equivalent to
EUR 26.2 million in the previous year. The downturn is in
connection with the restructuring effects in the previous
year. Based on the operating business, the increase in net
working capital and the increase in deferred taxes had a
negative effect.
The inflow of funds in the report year relating to investment
activities amounted to EUR 53.5 million compared with an
outflow of funds equivalent to Euro 19.4 million in the pre-
vious year. The investments in new film rights receded in
the 2005 financial year in comparison with 2004 in view
4. Financial Position
reached EUR 44.1 million on the balance sheet date (De-
cember 31, 2004: EUR 36.5 million). They relate to a very
large extent to customary liabilities in connection with ordi-
nary business activities, such as outstanding invoices or
unpaid commission and licence claims. The Group shows
short-term bank liabilities of EUR 5.6 million on the balan-
ce sheet date (December 31, 2004: EUR 0) which are attri-
butable to PLAZAMEDIA.
3.2 Net worth position of EM.TV AG
The balance sheet total of the individual financial year of
EM.TV AG amounted to EUR 284.0 million at December 31,
2005 (December 31, 2004: EUR 295.1 million).The reor-
ganization of the Entertainment Segment concluded in the
report year by contributing the whole production and sales
activities of EM.TV AG to EM.Entertainment GmbH gave rise
to significant changes in the structure of the individual
balance sheet. Intangible assets fell from EUR 24.9 million
to EUR 0.8 million in view of the fact that the rights library
was sold to Junior Produktions GmbH. As a result of the
investment acquisition in the Sports Segment and the reor-
ganization of the Entertainment Segment, shares in affilia-
ted companies rose from EUR 130.9 million to EUR 197.5
on the balance sheet date; financial investments rose from
EUR 141.7 million to EUR 199.1 million.
In current assets, the increase in accounts receivable from
affiliated companies rose from EUR 18.2 million to EUR
24.3 million, mainly attributable to the effects of the reor-
ganization of the Entertainment Segment. Other assets
amounting to EUR 14.6 million (December 31, 2004: EUR
9.9 million) include a loan of EUR 4.0 million to EM.TV
Sport Management GmbH for the development of concepts
in the betting and gambling sector. Liquid assets (cash on
hand and at banks) fell from EUR 73.4 million to EUR 25.9
million on account of large investments in the report year.
EM.TV AG had an equity of EUR 169.5 million at December
31, 2005, with this representing an increase of EUR 6.4 mil-
lion compared with the equivalent amount in the previous
year. The equity ratio was equivalent to 59.7 percent and
rose by 4.4 percentage points in comparison with December
31, 2004. Bond liabilities fell from EUR 73.6 million to EUR
63.8 million on account of the redemption of the 8% bond
with warrants attached of 2004/2009. EM.TV AG had no
bank liabilities at December 31, 2005.
46
Management Report
47
of the fact that additional investments were made in the
previous year as part of the “Kirch-Settlement”. In contrast,
additional investments were effected in production systems.
The main outflow of funds for acquisitions and financial
investments consisted of EUR 39.8 million for the acquisiti-
on of outstanding shares in DSF Deutsches SportFernsehen
GmbH and Sport1 GmbH together with a cash-effective pur-
chase price installment in the amount of EUR 10.0 for the
acquisition of shares in Creation Club (CC) GmbH. On the
other hand, the inflow of funds in connection with the exe-
cution of the sale of shares in Tele München Gruppe had a
positive effect in the amount of EUR 118.0 million.
The outflow of funds for financing activities amounted to
EUR 115.8 million and were therefore significantly higher
than the previous year’s amount of EUR 13.1 million. The
outflow of funds was mainly attributable to repayment of
the zero-coupon note of EUR 113.4 million and the partial
repayment of the 8% bond with warrants attached of
2004/2009. This item also includes the inflows from the
receipt of long-term financial loans of EUR 4.2 million and
EUR 4.8 million in connection with exercised warrants and
certificates.
Total payment flows gave rise to an outflow of funds
amounting to EUR 66.4 million compared with an inflow of
funds equivalent to EUR 60.9 million in the previous year.
4.2 Liquidity position and liquidity management of the
Group
Liquid funds of the Group amounted to EUR 45.8 million at
December 31, 2005. In the consolidated financial state-
ments, liquid funds of EUR 18.0 are allocated to the Sports
Segment, EUR 13.5 to the Entertainment Segment and
EUR 14.3 million to the Others Segment. The control of
liquid funds is carried out by the Group parent company in
co-ordination with the operating companies.
The net debt of the EM.TV Group consisted of the following
items at December 31, 2005:
Of the long-term interest-bearing financial liabilities, the
balance of the 4% convertible bond is repayable by January
9, 2007 and the 8% bond with warrants attached until
March 30, 2009. Inflows of funds for the exercised war-
rants and certificates of EM.TV AG are earmarked for the
redemption of the bond with warrants attached.
The short-term financial liabilities originate from a bank
loan of EUR 5.6 million being taken up by PLAZAMEDIA.
At December 31, 2005 the EM.TV Group had bank credit
lines of EUR 17.5 million. The aforesaid credit lines are
attributable to DSF in the amount of EUR 10.0 million and
PLAZAMEDIA in the amount of EUR 7.5 million. There were
no bank credit lines of any materiality with any other Group
companies.
Liquidity management of the EM.TV Group which is structu-
red conservatively is mainly concerned with safeguarding
liquidity. Operating companies are basically required to
finance their liquidity requirements from the cash flow from
operational activities. Any additional financing measures
are agreed with the Group parent company in the event of
any larger investments or acquisitions.
Liquide funds Euro 45.8 m
./. Less short-term financial liabilities Euro -5.6 m
./. Less long-term financial liabilities Euro -64.5 m
= Net debt Euro -24.3 m
Investments in the EM.TV Group amounted to EUR 64.6
million in the report year, of which EUR 52.3 was used for
investments in company acquisitions and financial invest-
ments. In the Entertainment Segment, EUR 3.9 million was
mainly invested for acquisitions of new programs in the TV
sector. In the Sports Segment EUR 8.4 million was mainly
invested for new technologies in order to be able to meet
increased customer requirements and also to maintain the
existing systems.
5. Investments
EM.TV is striving to optimize the financing structure of the
Group. The Group is in ongoing discussions with banks in
this respect in order to be able to exploit favourable market
circumstances for financing growth or refinancing existing
financial liabilities. For this purpose, it may be attractive to
have recourse to external capital listed on the stock
exchange, especially bond witch warrants attached and
convertible bonds. The aim is to ensure that EM.TV is able
to operate its business activities with a reasonable and
appropriate external capital ratio. This is ultimately desi-
gned to increase the return on the equity capital employed.
4.3 Liquidity situation and liquidity management of
EM.TV AG
EM.TV AG had liquid funds of EUR 25.9 million in its indivi-
dual financial statements drawn up in accordance with the
German Commercial Code (HGB) at December 31, 2005.
The net debt of EM.TV AG consisted of the following items
at December 31, 2005:
EM.TV AG had no bank credit lines on the balance sheet
date. The Company is striving to have active access to short
and long-term sources of finance and secures its liquidity
by means of profit and loss transfer agreements with its
subsidiaries inter alia.
Of the long-term financial liabilities, the balance of the 4%
convertible bond is repayable by January 9, 2007 and the
8% bond with warrants attached until March 30, 2009.
Inflows of funds for the exercised warrants and certificates
of EM.TV AG are earmarked for the redemption of the bond
with warrants attached.
48
Management Report
Liquid funds Euro 25.9 m
./. Short-term liabilities to banks Euro -0.0 m
./. Long-term financial liabilities Euro -68.0 m
= Net debt Euro -42.1 m
49
The EM.TV Group had an average of 640 employees during
the financial year 2005 (2004: 609). The increase was
attributable to the moderate increase in personnel in the
Sports companies.
The average number of employees in EM.TV AG was reduced
from 72 employees in the previous year to 49 in 2005. This
reduction was connected to a very large extent to the reor-
ganization of the Entertainment Segment in which emplo-
yees were taken over by the subsidiary EM.Entertainment
GmbH.
The aim of EM.TV’s personnel policy is to establish a creati-
ve corporate culture in all companies within the Group. For
the aforesaid purpose, EM.TV allocates employees on the
basis of the requirements of the individual companies and
the corresponding individual talents and capabilities of the
relevant employees. The EM.TV Group will only be success-
ful and competitive in the long-term with qualified and dedi-
cated employees.
Clear principles and rules are essential in personnel ma-
nagement for a successful personnel policy. The manage-
ment principles defined for the EM.TV Group define the
form of collaboration with employees in order to promote
the key qualifications of “Customer Orientation”, “Dedi-
cation” and “Professionalism” together.
A guideline for structured discussions with employees has
been developed on the basis of the aforesaid principles
and was introduced in several Group companies in April
2005. The principles are designed to consolidate the dialo-
gue and feedback-oriented corporate culture even further
and to improve collaboration and understanding between
employees and their superiors. It is also a question of for-
mulating and agreeing clear and binding objectives between
all the parties concerned and opening up individual advan-
ced training and development possibilities for employees.
The compensation of employees of the EM.TV Group are to
be in line with the individual target agreements and the last
results achieved. Whereas the aforesaid compensation prin-
ciples are already binding for senior and junior managerial
staff to a very large extent, compensation should be linked
to personal target achievement even more than has been
the case in the past.
A total of 14 apprentices, eight volunteers and one student
from the university of cooperative education were employed
in the EM.TV Group in the report year. In the commercial sec-
tor, apprenticeships for an “Office Clerk” and a “Business-
man/-woman for audio-visual media” are offered; in the
technical sector “Audiovisual Media Designer” and “Events
Technician” are offered. By promoting young persons, the
Company is ensuring that the Company has qualified per-
sonnel at an early stage who are familiar with the corporate
structure and also with the relevant entrepreneurial objecti-
ves. The Group is also offering training positions in the com-
mercial and technical sectors in 2006.
EM.TV also enables young motivated people to gain detailed
insights into operating procedures in various departments
within the Company.
6. Personnel Report
Innovation activities are also held in various sectors of the
EM.TV Group.
Television
DSF’s aim is to implement innovative program concepts
and to increase market shares, with the question of TV vie-
wer research being an important component in the afore-
said respect. The subsidiary is a licensed broadcaster of
the “Television Research Working Group (Arbeitsgemein-
schaft Fernsehforschung) which commissions the Company
for Consumer Research (Gesellschaft für Konsumforschung
(GfK)) with ongoing TV viewer research. DSF has all the data
and analysis possibilities of this joint research system there-
fore. DSF’s media research takes account of the special
requirements of a divisional broadcasting station in its
coverage reporting by means of competition analyses detai-
led on a daily basis and interpreted in writing. Special sport
events data banks provide information on coverages and
target groups of the whole supports transmitted on German
television during the last four years.
The combination of classical TV advertising together with
sponsoring and special forms of adverting plays an impor-
tant part in the advertising research conducted by DSF. In
addition to the customary planning tools, such as a”target
group navigator”, DSF not only offers advertising partners
regular tracking of their advertising commitments (cross
media tracking of the German Soccer League and the UEFA
Cup) but also acts as a fundamental study for the complex
response and impact pattern of integrated communication
on the trademark. DSF is also involved in several study
courses in the sponsoring sector which are held every year.
Production services
As part of the production of the sport contents for new
media, PLAZAMEDIA completed production processes in
2005 which have been possible for the first time by HDTV.
With the “Pan & Scan Technology”, the contents for the
relatively small display of a mobile terminal are, on account
of the high resolution, produced in a visibly better quality in
which the optimal picture detail is selected and which can
be zoomed into the picture.
PLAZAMEDIA is developing the “Camera Moving Systems”
together with TV Skyline GmbH from Mainz as its technolo-
gy partner. These are flexible and innovative camera and
high-speed camera tracking systems which are used at
national and international events. The camera family has
had a HDTV-capability since 2005 and is being continually
expanded. TV Skyline’s research and development depart-
ment is developing the innovative camera systems in coope-
ration with the Technical University of Ilmenau. Research
and production is closely oriented to the production require-
ments of the market and PLAZAMEDIA’s TV productions.
50
Management Report
7. Innovation
51
8.1 Risk management
Risks are interpreted as the possibility of unfavourable de-
velopments or circumstances occurring in the future which
are anticipated with a substantial, although not necessarily
overriding, degree of probability. EM.TV assesses and con-
trols risks on the basis of a risk management guideline
which defines the risk management systems of the Group.
The aforesaid guideline applies for all companies in the
Group.
Defined risks are summarized in a quarterly risk report which
consolidates the relevant risks and consolidates the precau-
tionary measures already taken for the Group and lists and
assesses them on an individual basis for each company.
The risk report is discussed in the Management Board and
is presented to the Supervisory Board in its major aspects.
Major individual risks are also noted and reported indepen-
dently of the quarterly procedure.
8.2 Risks in the Sports Segment
Television
The availability of attractive sports rights is of elementary
importance for a sports TV station. With regard to the acqui-
sition of such rights, DSF is in intense competition with other
free-TV stations and increasingly with other content suppliers
such as telecommunication groups, for example. DSF could
therefore be exposed to increased competition in the future
both as far as the purchase of rights is concerned and also
with viewers and the adverting industry. This particularly
applies for soccer transmission rights as by far the most
popular sports in Germany. A similar development also
applies in the long-term for offers in the Internet in the
sports sector.
As is the case with all free-TV stations, the development of
DSF’s sales depends on the development of the advertising
markets in Germany. The TV market is still in an unchanged
tense situation. A radical increase in advertising expenditu-
re cannot be anticipated in the short-term. By means of a
systematic development of new sources of income (e.g. the
development of additional interactive show formats), DSF is
still making efforts to have a balanced sales mix which
restricts its dependency on the classical television adverti-
sing market.
DSF is making itself independent of rights to a certain extent
by means of its own formats. In view of the fact that the
station has been able to secure major rights with some of
them extending well beyond the 2005 report year, the risk
of a short-term increase in license costs is reduced as a re-
sult. An increase in license expenses cannot be ruled out in
the medium-term, however.
The TV market for added-value services is subject to increa-
sing competition and is approaching saturation limits with
viewers. Against this background, it is not certain that DSF
will be able to maintain its strong position in this particular
income sector in the long-term.
For exercising its television activities, DSF is dependent on
limited licenses and permits issued by the German Super-
visory Authorities for private broadcast (Federal Media Insti-
tutions). The Company is assuming that the existing trans-
mission licenses and permits will be extended as in the past
as long as DSF continues to comply with the conditions and
8. Risk and Opportunities Report
impositions in force with regard to the transmission licen-
ses and permits; there is therefore no guarantee that addi-
tional transmission licenses or permits will be issued or that
the current transmission licenses and permits will be exten-
ded or renewed after their expiry.
With the exception of one cable network operator, DSF has
concluded long-term contracts with all other operators for
transfers into the digital and analogue cable network.
Negative effects cannot be excluded if DSF has to secure
access to the digital program platforms, however.
Online
In addition to special interest portals, the main competitors
of Sport1 in the future will be the general interest portals
with their sport rubrics and these will possibly strength com-
petitors’ activities. The establishment of new sport portals
is also not excluded. Sport1 is preparing itself for this com-
petition by means of close cooperation with DSF, e.g. in the
cross media marketing sector.
Production services
The major risk for PLAZAMEDIA and its subsidiary Creation
Club lies in its dependency on the pay-TV provider Premiere.
As a result of the agreement reached in December 2005
between PLAZAMEDIA and Premiere on a new extensive
frame production contract with effect from January 1, 2007
and a term of 3 to 5 years, PLAZAMEDIA has acquired a
planning safeguard for the next few years.
Creation Club and Premiere also concluded an extensive
frame production agreement in December 2005 which has
an outstanding term of three years and may be extended
for a further two years. A negative development of Premiere’s
business holds an inherent risk, however, that both PLAZA-
MEDIA and also Creation Club would have to reckon with
significant sales and earnings impairments. Extending the
customer portfolio is therefore still a strategic objective for
both companies – not least for PLAZAMEDIA by means of
intensified internationalization efforts. This is also the case
in the light of the sustained pricing pressures in Germany.
It has to be generally assumed that competition and pricing
pressures will continue unabated with production services.
Sports betting
In the report year, EM.TV made intense preparations for its
entry into the sport betting and gambling sector which ne-
cessitated corresponding consultancy, planning and develop-
ment costs being incurred. EM.TV is still planning to enter
this particular sector, with this being associated with additio-
nal costs. The sports betting market is still regulated in Ger-
many, however, with the result that an offer of sports betting
is not legally possible as such in Germany. Market experts
and also the Company, are anticipating a speedy liberaliza-
tion of the market but whether and when this will ultimately
take place will depend above all on the ruling of the Federal
Constitution Court which is expected on March 28, 2006.
8.3 Opportunities in the Sports Segment
As a result of its close integration with the Sport1 online
portal, DSF is well prepared to encounter the increasing
competition for attractive sports rights. In addition, the tele-
vision broadcasting station has also succeeded in acquiring
such rights in recent years (inter alia, Sunday games in the
1st and 2nd Soccer League, and extensive rights package
for the UEFA Cup for three seasons as from 2005/2006)
which secures the presence of top-class soccer in DSF in
the coming years and increases the attractiveness of the
station for the classic advertising industry.
PLAZAMEDIA is encountering competition and price pres-
sures in the market for production services by positioning
itself as a premium supplier which offers technologically
innovative solutions. For example, the Company sees itself
as a pioneer in the market with regard to the new television
technology HDTV for which the Company is already able to
52
Management Report
53
depict the whole production chain. The acquisition of Crea-
tion Club (CC) GmbH in the report year extends the creativity
service portfolio of PLAZAMEDIA even further. This good
technological presentation constitutes an opportunity to in-
tensify existing customer relationships and to acquire new
customers.
The market for sports betting has developed very positively
in the last few years in the German speaking area and
offers significant sales and earnings opportunities in the
opinion of the Company. In the event of liberalization, EM.TV
would be in a position to enter the market immediately as a
result of the extensive preparations carried out in 2005 and
would be able to participate with promising market perspec-
tives. With DSF and Sport1, the Group also has two extreme-
ly appropriate advertising platforms for making offers for
sports betting. However, it is not sure that that the volume
of business in the coming years will develop as dynamically
as predicted by market experts.
8.4 Risks in the Entertainment Segment
Program/Production
In the internal and co-production sector, there is a risk that
it will not be possible to re-license programs produced inter-
nally or in co-production to the anticipated extent or whether
they can only be re-licensed to third parties at license pri-
ces which do not cover the relevant costs. The acceptance
of new programs by the public cannot be predicted reliably
either at this stage. In addition, there is already a wide
range of children and youth programs both nationally and
internationally with the result that higher license privacies
can only be obtained on the market for new productions
with difficulty.
The ongoing market environment calls for the application of
stricter investment criteria with productions in order to
ensure the competitiveness of EM.TV. In order to reduce
the producer’s own risk, production costs are being allocated
to several co-producers. The refinancing of a large part of
this investment volume also ought to be secured by future
sales to TV stations or other buyers. In particular, it may be
necessary to vary compliance with the aforesaid criteria on
different levels if EM.TV has entered in delivery obligations
for its own productions.
TV Sales
On the one hand, there is still a surplus of children and
youth programs. On the other hand, it is the buying policy
of TV stations to continue to be cautious in the light of the
stagnating advertising market. This market environment is
also resulting in producers and license dealers frequently
not being able to demand price which are commensurate
with the quality of the programs involved.
From the point of view of the Company, it is not certain that
the advertising income of the TV stations will consistently
increase again in the future and also that the prerequisites
for an increasing demand with regard to children and youth
programs are thereby assured.
EM.TV has carried out several value adjustments to its rights
inventory in the past. It cannot be excluded that future im-
pairment tests will lead to further adjustment to the value
of the program inventory.
In the pay-TV sector, the development of Junior.TV is connec-
ted to the developed of the pay-TV provider Premiere with
which an agreement was reached in August 2004 for an
exclusive distribution in Germany until December 31, 2009.
It also remains to be seen how the future develops and
whether the Junior channel has developed positively in the
report year.
EM.TV is still striving to internationalize its pay-TV activities
in order to reduce its dependency on the German market.
This could give rise to a possible weakening of the pay-TV
market with the result that Junior.TV will not be able to
establish itself abroad as speedily as intended. In the event
of weakness in the German market, it cannot be ruled out
that access to program windows on foreign pay-TV chan-
nels will not be possible either.
Merchandising
Merchandising business is typically very much dependent on
the development of the economy as a whole and the attrac-
tiveness of the themes to be marketed. The market accep-
tance of initially successful themes may change quickly for
the worse with the result that a sustained exploitation can-
not be reliably predicted on account of the short terms of
the merchandising and license agreements in many cases.
Finally, suppliers of merchandising and licensing themes
are dependent on making new, attractive themes available
to an adequate extent in addition to the themes already
acquired. EM.TV is also exposed to the aforesaid risk. In
addition, in the present market situation, merchandising
and licensing business is marked by a noticeable surplus
of license themes in the children’s sector and by the resul-
ting downward turn in price levels.
EM.TV is encountering these risks by positioning itself as a
full service merchandise agent which offers licensees an
extensive package of service and consultancy performances.
It is also intended that a risk reduction will be achieved by
extending the target groups.
8.5 Opportunities in the Entertainment Segment
As one of the world’s leading suppliers of children and youth
programs in the production sector, EM.TV has many years’
of extensive know-how for estimating the market opportuni-
ties of individual productions. In addition, this segment was
strengthen personnel-wise and restructured from an organi-
zational point of view last year. These factors reduce the
risk of incorrect estimates of market opportunities and
enable new attractive programs to be developed and produ-
ced with corresponding marketing opportunities.
In the TV sales sector, EM.TV has a wide range of national
and international frame agreements constituting a good
starting point in the struggle for transmission places for chil-
dren and youth entertainment. Access to one of the largest
libraries across the globe also constitutes a competitive ad-
vantage for supplying whole channels and program windows
with high-class children and youth programs.
The worldwide market for producers and rights dealers in
the children and youth program sector is currently in a con-
solidation phase. In the opinion of market experts, including
the Company, there will be a trend to larger units and there-
by to an elimination of small competitors. In this process,
EM.TV sees an opportunity for playing an active role and
moving out of the consolidation phased strengthened in
the sense of an improvement in its national and internatio-
nal position on the market.
8.6 Financial risks
Default risks
A creditworthiness or default risk exists with the danger
that the liable party in respect of a claim is unable to settle
his or its aforesaid claim. The maximum default risk with
original financial instruments corresponds in theory to the
current value of all claims less liabilities due to the same
liable parties if offsetting can be applied. In the annual
financial statements of EM.TV AG and the EM.TV Group,
identified default risks have been taken into account by
means of appropriate bad debt provisions. In addition, the
Company insures the risk of a default caused by the insol-
vency of a debtor by means of an insurance of accounts
receivable to a very large extent.
54
Management Report
55
Currency risks
A currency risk exists in particular if accounts receivable or
payable are stated in a currency which is different from the
underlying currency used for the annual financial state-
ments. Exchange rate fluctuations can then change the cur-
rent value of the relevant Euro currency used in the annual
financial statements. The exchange rate of the US Dollar/
Euro is important for the Group in this respect. In order to
reduce exchange rate risks associated with its business
activities, the Group concluded currency hedging transac-
tions with the US-Dollar relating to future payment flows. In
view of the fact that the development of the US Dollar in
terms of the Euro cannot be predicted, additional effects
on earnings may also arise in future in the aforesaid
respect.
Liquidity risks
A liquidity risk may also arise if the payment obligations of
the Group cannot be covered by existing liquidity or corre-
sponding credit lines. On the balance sheet date, the EM.TV
Group had adequate liquidity reserves on the 2005 balance
sheet date.
The EM.TV Group could be forced in the medium or long-
term to refinance its existing financial liabilities or to finance
its growth by taking up external capital in the capital market
or through banks. It is, as yet, not certain that the aforesaid
financing resources will be available on market conditions
or whether they will be available at all.
Interest risk
The Company is only exposed to interest fluctuations to a
minor extent. These interest fluctuations relate to liquid
funds, bank liabilities, convertible bond and bond with war-
rants attached which are sensitive to interest rate move-
ments. No interest hedging contracts have been concluded
in view of the fact that the Company only has minor finan-
cial instruments subject to variable interest rates.
8.7 Risks in connection with legal proceedings
Compensation claims and shareholders’ lawsuits
140 lawsuits and 21 payment orders together with a whole
series of claim letters have been received by EM.TV &
Merchandising AG and EM.TV AG. The total damage
amount currently stands at around EUR 13 million.
A petition has also been submitted for approval of litigation
cost assistance at the “ORA”, the Public Legal Information
and Conciliation Office of the Free Hanseatic City of
Hamburg, and four petitions were submitted for executing
reconciliation proceedings. The claims were enforced by
means of a complaint after conciliation proceedings had
broken down. The claims in question were based on diffe-
rent legal reasons and circumstances. The background was
the fall in the value of the EM.TV share.
All rulings to date (63 in the first instance and 28 in the
second instance) have been issued in favour of EM.TV.
Approximately 50 rulings are now legally binding. A large
number of claimants have withdrawn their claims prior to a
judicial ruling being issued.
One petitioner submitted a petition for a ruling on a number
of facts and legal matters based on the new Capital Investor
Specimen Protection Act (KapMuG). It is possible that such
specimen proceedings will be conducted on certain matters
with a possible consequence of a binding effect for other
proceedings.
It cannot be excluded that Plaintiffs will succeed in indivi-
dual cases with the documentation of causality and that a
favourable ruling will be issued. If this is the case, the Com-
pany will enforce any recourse claims against the former
board members of the Company.
Substantial legal costs will be incurred in certain cases for
various active and passive litigation processes being con-
ducted by the Company (approximately EUR 1.3 million)
which cannot be settled in the event of defeat.
8.8 Opportunities in legal proceedings
Liability proceedings against former board members
On October 13, 2004, EM.TV AG opened judicial proceedings
against former board members at the Munich I Regional
Court in connection with the purchase of the Formula 1
participation in 2000. Action was also brought for judge-
ment that the former board members are obliged to indem-
nify EM.TV AG against claims lodged by the German Morgan
Grenfell Group. In addition to the aforesaid proceedings
which are already known, the Company also lodged an ad-
ditional claim in the Munich I Regional Court in August 2005
against a number of former members of the Management
and Supervisory Boards for possible breaches of duty in
connection with TheatroCentro GmbH, the acquisition of
participations in Tabaluga GmbH and a large donation to a
charitable organization.
In September 2005, EM.TV also initiated three additional
proceedings for breaches of duty by former board members
and is continuing the aforesaid on account of the fact that,
in the opinion of the Company, the necessary approvals of
the corresponding bodies had not been obtained in respect
of various co-productions and license contracts and the
respective economic bases had not been sufficiently deter-
mined when a decision was made.
The Company estimates its prospects of success as good
in all the aforesaid proceedings.
8.9 Tax risks
EM.TV AG undertook to sell its indirect holding in Tele-
München Gruppe as an integral part of the restructuring
carried out in 2004. EM.TV Beteiligungs GmbH & Co, KG, a
subsidiary of EM.TV AG, sold its shares in Tele München
Gruppe at the end of 2004. This transaction did not give
rise to a direct tax charge for EM.TV AG but it cannot be ex-
cluded that the disposal had indirect implications on the
restructuring gain. This, in turn would have implications for
the tax situation of EM.TV AG after the restructuring. As the
relevant risk, there could be a tax charge of approximately
EUR 13 million for EM.TV AG in the aforesaid respect.
In connection with the restructuring, various companies in
which EM.TV AG held more than 50 percent of the shares
were restructured within the Group. If new assets are mainly
acquired by these companies in the next five years, the tax
loss carry-forward existing at the time of the transfer of
shares would be lost.
56
Management Report
57
On January 11, 2006, the Company announced that
EM.Entertainment GmbH had acquired the remaining 50
percent in Yoram Gross-EM.TV PTY Ltd.. EM.Entertainment
now owns 100 percent of the Australian production Group,
including a participation of 45 percent in Yoram Gross
Productions, a production unit forming part of the Group in
which the founders still retain a majority holding.
On February 14, 2006, DSF and Premiere agreed on a stra-
tegic co-operation extending over a period of three years.
Under the “Champions TV” brand name, Premiere is to pre-
sent a European top soccer game in the UEFA Champions
League live and unencrypted in DSF on every playing day
with effect from the 2006/2007 season. “Champions-TV”
selected matches of all the German teams and highlights
of additional games will be shown on the 13 playing days.
“Champions TV” which was developed in consultation with
UEFA is produced by Premiere.
As a result of this agreement, no significant effects are to
be expected on the sales and earnings of DSF. An increase
in the market share and a strengthening of if its position as
the “Soccer channel” is anticipated, however.
On March 3, 2006, PLAZAMEDIA and Arena Sport Rechte
und Marketing GmbH (hereinafter referred to as “Arena”)
agreed on an extensive cooperation on March 3, 2006. The
agreement envisages that PLAZAMEDIA will exclusively
assume the whole technical production of the live reporting
of the games of the DFL Premier German Soccer League
and the Second Soccer League for the 2006/2007,
2007/2008 and 2008/2009 seasons. The transaction
volume will depend on the program project planned by
Arena and will probably be in the mid-double-digit-million-
Euro range over the whole period, but at least in the lower-
double-digit-million-Euro range.
9. Occurrences after the End of the Fiscal Year
10.1 Economic environment
Economic experts are assuming that the robust develop-
ment of the world economy will also continue in 2006. The
Asiatic threshold companies India and China and also, as
in the past, the USA and increasingly also Japan are regar-
ded as motors of the world economy. The forecasts for the
Euro zone are concurringly and reservedly optimistic. For
example, the OECD is anticipating a growth rate in the BIP
of 2.1 percent. A slight upward turn in the development of
the economy is also anticipated for Germany whereby a
slight increase in private spending is considered possible
(Sources: Economic forecasts for 2006, BZ Bank/F.A.Z.
Institute, November 18, 2005; OECD Prospects, 29.
November 2005).
10. Forecast Report
10.2 Sectoral environment
An upturn in the TV advertising market is generally not anti-
cipated in 2006. Even though the first reservations at the
beginning of the year were above those of the previous year,
a generally stagnating development is assumed. Impulses
may emanate from major events, however, especially the
FIFA WM 2006™ (Sources: GfK Advertising Climate, OMG
Summer Monitor 2005, OMW).
10.3 Strategic priorities
The Company’s strategic priorities for 2006 will be concen-
trated on developing the Sports sector and also strengthe-
ning the Entertainment sector
.
As part of the new issue of transmission rights for the 1st
and 2nd Soccer League, a main aspect in the Sports sector
will be directed to increasing the customer portfolio of
PLAZAMEDIA. Another objective is to develop the brand sta-
tus of Sport1 further against the background of the 2006
FIFA World Cup™. For DSF and Sport1, a major step in the
realization of advertising income will be in the betting and
gambling sector.
The start of new productions is of major importance in the
Entertainment sector. Efforts will simultaneously be made
to increase the exploitation scope, especially in the mobile
sector. The anticipated consolidation in the Entertainment
sector will be an opportunity for value-increasing M&A acti-
vities, ideally in combination with access to Anglo-Saxon
markets.
From the point of view of the Holding company, a refinan-
cing of the Group until 2007 is also under consideration.
10.4 Forecast and prospects
The EM.TV Group regards itself to be excellently positioned
especially in view of the latest changes in the sports environ-
ment in Germany. The appearance of new and strong mar-
ket participants in the pay-TV sector is making it possible
for the Group to establish new customer relationships and
to enter into new strategic partnerships. Digitalization and
the increased offering of videos/motion pictures over the
Internet is having an effect in the same direction. As far as
EM.TV is concerned, perspectives are opening in the medi-
um-term of becoming a producer or becoming a major sup-
plier of sports content in particular, with focus on soccer,
for end-customer oriented distribution networks (cable,
satellite and broad band Internet). This perspective allows
growth in sales and earnings, as well as a reduction in the
volatility of sales in view of the lower dependency on adver-
tising and a broader customer basis.
For the 2006 financial year, the Management Board is anti-
cipating an increase in Group sales of approximately 10 per-
cent. Group earnings targets are not being specified at this
moment, as possible negative contributions to earnings
cannot yet be quantified, among others, in connection with
new business activities (especially regarding sports betting).
However, it is already forseeable, that the results of our
main operational units will show positive development.
Unterföhring, March 17, 2006
The Management Board
Werner E. Klatten, Chairman
Rainer Hüther, Member of the Board
Dr. Andreas Pres, Member of the Board
58
Management Report
EM.TV intends to generate a sustained rate of return for its investorsand will be a transparent, cost-efficient and generally responsibility-conscious partner in dealings with them.
61
Content
63
Consolidated Financial Statements
64 Consolidated Balance Sheet66 Consolidated Profit and Loss Account67 Consolidated Cash Flow Statements68 Changes in Consolidated Equity69 Notes on the Consolidated Financial Statements69 General Explanations76 Accounting and Valuation Principles81 Explanations on Individual Items in the Balance Sheet96 Explanations on Items in the Profit and Loss Account
102 Explanations on Individual Items in the Cash-Flow Statement
103 Segment Reporting106 Contingent Liabilities and Other Financial Commitments107 Occurences after the End of the Fiscal Year108 Other Mandatory Disclosures108 Other Explanations and Disclosures111 Auditors’ Report
Annual Financial Statements EM.TV AG
114 Balance Sheet116 Profit and Loss Account
Note
3.1
3.2
3.3
3.3
3.3
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
31/12/2005
89,832
54,508
1,285
7,806
4,026
790
5,253
328
9,021
6,069
178,918
72
68,650
2,827
19,886
45,806
137,241
316,159
31/12/2004
94,056
8,906
1,617
3,965
1,702
73
2,768
322
12,761
4,895
131,065
66
46,991
4,346
138,194
105,961
295,558
426,623
ASSETS AT DECEMBER 31, 2005 in EUR ‘000
Non-current assets
Intangible assets
Goodwill
Land, property rights and buildings
Technical equipment and machinery
Other equipment, factory and office equipment
Advance payments and assets under construction
Investments in associated companies
Other investments
Long-term receivables
Deferred tax assets
Current assets
Finished goods and merchandise/work in progress
Trade receivables
Receivables due from associated companies
Other assets
Cash and cash equivalents
64
Consolidated Financial Statements I Balance Sheet
31/12/2004
65,617
-17,317
983
100,631
33
-142,268
134,331
11,090
153,100
3,100
181,935
0
7,316
192,351
30
0
3,100
18,759
1,675
36,511
16,871
4,226
81,172
426,623
31/12/2005
66,601
-16,726
3,274
101,600
316
-7,937
229
6,242
153,599
1,763
64,549
210
8,966
75,488
30
5,577
3,353
17,516
1,386
44,106
9,837
5,267
87,072
316,159
Note
3.11
3.11
3.11
3.11
3.11
3.11
3.20
3.13
3.14
3.15
3.16
3.17
3.18
3.18
3.19
3.20
EQUITY/LIABILITIES AT DECEMBER 31, 2005 in EUR ‘000
Equity
Subscribed capital
Own shares
Contributions made to execute the resolved captial increase
Capital reserves
Other reserves
Accumulated losses carried forward
Shareholders’ interests
Minority interests
Long-term liabilities
Long-term accruals
Long-term financial liabilities
Pension accruals
Deferred tax liabilities
Short-term liabilities
Bonds
Liabilities to banks
Advance payments
Trade accounts payable
Liabilities due to joint ventures
Other liabilities
Other accruals
Tax accruals
65
1/1 to31/12/2004
206,619
1,152
207,771
76,847
-40,987
-76,951
-117,938
-41,503
-6,739
-48,242
-22,519
-22,519
-45,326
50,593
-216
5,010
-2,925
-4,363
-2,278
94,366
142,465
-2,975
-1,182
-4,157
138,308
-3,977
134,331
3.22
2.96
1/1 to31/12/2005
209,495
569
210,064
22,413
-44,647
-69,312
-113,959
-43,328
-6,857
-50,185
-15,548
-15,548
-47,093
5,692
-16
2,685
-11
-7,565
-4,891
0
785
-1,335
1,625
290
1,075
-846
229
0.00
0.00
JANUARY 1 TO DECEMBER 31, 2005 in EUR ‘000
Sales
Own work capitalized
Total output
Other operating income
Expenses for licenses, comissions and materials
Expenses for outside services
Cost of materials
Salaries
Social security and pension costs
Personnel expenses
Amortization of intangible assets and depreciation of tangible fixed assets
Amortization and depreciation
Other operating expenses
Earnings before interest and taxes
Earnings from investments in associated companies
Interest and similar income
Write-downs of financial assets and marketable securities
Interest and similar expenses
Financial result
Restructuring gain
Earnings before taxes
Taxes on income
Deferred taxes
Taxes
Earnings after taxes
thereof minority interests
Shareholders’ interests
Shareholders’ interests for the year per share undiluted in Euro
Shareholders’ interests for the year per share diluted in Euro
Note
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
Consolidated Financial Statements I Consolidated Profit and Loss Account
66
Consolidated Financial Statements I Consolidated Cash Flow Statements
67
1/1 to31/12/2004
134,331
3,977
1,224
2,975
-647
216
-94,366
9,151
15,834
-520
-44,197
16,103
-21,473
-198
4,749
-969
0
26,190
-1,828
-13,613
-4,659
-71
620
106
89
-19,356
67,220
1,054
-3
0
-18,853
4,684
-13,118
60,936
47,573
105,961
-2,548
60,936
1/1 to31/12/2005
229
846
-1,638
1,335
4,880
16
0
2,326
15,558
-47
-5,735
-9,834
-9,928
-4,215
2,333
-401
243
-4,032
-49,772
-4,597
-7,737
-2,511
5
81
118,000
53,469
0
4,833
0
160
-124,986
4,200
-115,793
-66,356
105,961
40,229
624
-66,356
JANUARY 1 TO DECEMBER 31, 2005 in EUR ‘000
Shareholders’ interests
Minority interests
Deferred taxes
Taxes on income
Net interest expenses
Income from associated companies
Restructuring gain
Cost of materials through use of fixed assets disposal
Amortization depreciation of fixed assets
Losses on disposal of fixed assets
Other non-cash items
Changes in inventories, trade receivables and other assetswhich are not allocable to investment or financing activities
Changes in trade payables and other liability which are not allocable to investment or financing activities
Paid interests
Received interests
Paid taxes on income
Received taxes on income
Cash flow from operating activities
Payments for acquisition of companies
Payments for intangible assets
Payments for tangible assets
Payments for financial assets
Proceeds from disposals of intangible assets
Proceeds from disposals of tangible assets
Proceeds from disposals of financial assets
Cash flow from investment activities
Cash flow form changes in liquid funds through deconsolidation
Proceeds from capital increases and allowances by shareholders
Dividends paid
Proceeds from minority interests
Repayment of long-tem liabilities
Proceeds from receipt of long-term liabilities
Cash flow from financing activities
Cash flow for the year
Net funds at the beginning of the year
Net funds at the end of the year
Effects of foreign currency differences
Changes in net funds
Note
5.2
5.1
68
Consolidated Financial Statements I Changes in Consolidated Equity
JANUARY 1 TO DECEMBER 31, 2005 in EUR ‘000
Balance 1/1/2004
Reclassification of earnings brought forward from the previous year
Withdrawl from special reservefor payment of convertible loan
Employee shared-based payment
Cash increase from convertible bonds
Withdrawl from capital reserve for end of conersion right for the convertible bond
Capital reduction as a result of the merger (73:10)
Capital increase from issueing of shares to the former bondholders
Creation of own shares
capital increase from bonds
Capital increase from options
Offsetting of capital reserves with accumulated losses carried forward
Changes in consolidated enities
Adjustments on equity
Currency conversion differences
Dividends paid
Net profit for the year
Balance 31/12/2004
Reclassification of earnings brought forward from the previous year
Cash increase from convertible bonds
Capital increase from convertible loans
Capital increase from options
Employee shared-based payment
Changes in consolidated enities
Currency conversion differences
Acquisition of minority interests
Net profit of the year
Balance 31/12/2005
Resolved capital
increase
0
983
983
-983
3,274
3,274
Total
-17,552
0
0
57
17
0
0
28,265
0
3,184
1,054
0
-2
-84
-144
-3
138,308
153,100
0
0
3,274
1,560
65
184
218
-5,878
1,075
153,599
Subscribedcapital
146,054
17
-126,062
28,265
17,343
65,617
983
66,601
Capitalreserves
1,968,527
-28,660
126,062
3,184
45
-1,968,527
100,631
969
101,600
Otherreserves
651
-24
57
-507
-144
33
65
218
316
Accumulatedlosses carried
forward
-2,010,021
-129,965
24
28,660
507
1,968,527
-142,268
134,331
-7,937
Share-holders’
interests
-129,965
129,965
134,331
134,331
-134,331
229
229
OwnShares
0
-17,343
26
-17,317
591
-16,726
Minorityinterests
7,202
-2
-84
-3
3,977
11,090
184
-5,878
846
6,242
1.1 General information on the Group
As the group parent company, EM.TV AG has its registered
office in Beta-Straße 11, Unterföhring near Munich,
Germany.
The business activities of the Group include the following
segments:
Sports segment
This Segment includes coverage of the whole medial
added-value chain in the sports sector, commencing with
the original license right for the production and implemen-
tation of the respective contents and extending to distribu-
tion through its own TV and online platform.
Entertainment segment
This Segment includes the sale of television and home-video
rights and rights to sound carriers and music production,
including merchandising, promotion and also the producti-
on and co-production of film and television contributions.
The consolidated financial statements are presented in
EUR which is the functional and reporting currency of the
Company. The individual amounts are basically in thousand
Euro (TEUR) unless stated otherwise.
Consolidated companies have drawn up their annual finan-
cial statements at December 31, 2005 with the exception
of Yoram Gross-EM.TV PTY Ltd., Sydney, Australia with a fis-
cal year ending on June 30, 2006. In the case of Yoram
Gross-EM.TV PTY Ltd., interim financial statements were
drawn up on the consolidated balance sheet date in order
to make an appropriate period allocation.
1.2 Accounting
Application of IFRS regulations
The consolidated financial statements of EM.TV AG have
been drawn up in accordance with § 315a, para. 1 of the
German Commercial Code in compliance with International
Reporting Standards (IFRS) as they are to be applied in the
EU, together with the supplementary commercial law regula-
tions which have to be applied. All IFRS/IAS and SIC/IFRIC
regulations which had to be applied on December 31,
2005 have been duly observed.
A schedule of the subsidaries and joint venture companies
included in the consolidated financial statements is provi-
ded in these Notes. The effects of the initial consolidation
of subsidaries and joint venture companies is shown in the
section “Details of the companies consolidated”.
The profit and loss account has been prepared using the
cost summary method.
The annual and interim financial statements of the compa-
nies included in the consolidated financial statements are
based on the uniform accounting and valuation methods
corresponding to the individual activities.
The preparation of the consolidated financial statements
necessitates estimates and assumptions to be made which
affect the value of assets, liabilities and financial obliga-
tions on the balance sheet date and also income and expen-
ses in the report year. Further details on the bases of esti-
mates are to be found under the individual balance sheet
items with separate explanations.
69
1. General Explanations
Consolidated Financial Statements I Notes
In the report year, the Company has applied IFRS 2 “Share-
based compensation” for the first time. The comparative
figures for the previous year have been adjusted in compli-
ance with IFRS 2, No. 55, According to IFRS 2, No. 53, all
options granted after November 7, 2002 and not exercised
as at January 1, 2005 have been included in the valuation.
The effects of the first-time application are shown under
Section 2.8.
A premature application of IFRS 7 has been waived, namely
”Financial Instruments: Disclosures” (obligatory as from
January 1, 2007), IFRS 6 ”Exploration for and evaluation of
Mineral Resources” (obligatory as from January 1, 2006),
changes in IAS 39 (Option right of valuing at the attributable
market value) (obligatory as from January 1, 2006), IAS 19
(Actuarial profits and losses, group plans and disclosure
information in the Notes) (obligatory as from January 1,
2006) and IFRIC 4,5 and 6 (obligatory as from January 1,
2006). The application of the aforesaid regulations will pro-
bably give rise to no changes in accounting procedures
with the exception of the change in IAS 39. The change in
IAS 39 will result in financial instruments previously classi-
fied as “available-for-sale financial assets” having to be
reclassified as, inter alia, “at fair value through profit and
loss” and their value fluctuation having to be shown under
equity instead of in the profit and loss account.
Explanations on the major differences between the IFRS
and German Commercial Code
Internally produced intangible assets, especially film and
merchandising rights (production and development), have
been capitalized at cost in these IFRS consolidated financi-
al statements insofar as the prerequisites of IAS 38 are met.
Capitalization is not permitted under the HGB ("Handels-
gesetzbuch": German Commercial Code), however.
Derivative goodwill („Goodwill“) is, in accordance with IFRS 3,
not being amortized at the standard rate. Any amortization
requirement is established annually instead by means of an
appropriate impairment test. According to the HGB, acquired
goodwill has to be spread over the estimated useful life
and has to be amortized in the following years in at least
four instalments. Any negative goodwill arising on consolida-
tion (“Badwill“) has to be written off against earnings im-
mediately in accordance with IFRS 3. According to the
HGB, a release may only be made with a net income effect
if the occurrence justifying the lower purchase price occurs
or if it is clear that the deferred differences corresponds
with a realized gain on the balance sheet date.
Convertible bonds are shown under equity and debt based
on IAS 32. These allocations are also reduced by the attri-
butable issue costs. According to the HGB, it is not allowed
to deduct issue costs and, in order to account for the obli-
gation at the relevant repayment amount, equity capital
share is increased by a discount which is recorded off in
instalments over the term of the debt in question or is
immediately released as income.
In accordance with IFRS 2 “Share-based payment”, options
on the purchase of shares of the issuing company to
employees and members of the executive boards are to be
stated at their fair value on the issue date. The amount
determined in this way is to be allocated over the option
period and included as a personnel expense. A separate
item is to be simultaneously established under equity in
the same amount.
According to the HGB, issued options are to be valued at
their intrinsic value on the balance sheet date and the dif-
ferent between the aforesaid valuation and the intrinsic
value at the commencement of the period is to be recor-
ded as an expense and a accrual. The intrinsic value on
the balance sheet date may deviate significantly from the
option value on the date of the issue.
70
Consolidated Financial Statements I Notes
1.3 Information on the companies included in the conso-
lidated financial statements
71
SUBSIDIARIES (fully consolidated) in %
ACC-Agentur für Communication und Concept Gesellschaft für Public Relation GmbH, Unterföhring
Creation Club (CC) GmbH, Unterföhring
DSF Deutsches SportFernsehen GmbH, Ismaning
EM.Entertainment GmbH, Unterföhring
EM.Sport GmbH, Unterföhring
EM.TV Sport Management GmbH
EM Supply Handelsgesellschaft mbH i.L., Unterföhring
EM.TV France S.A.S., Paris, France
EM.TV Musikverlag GmbH, Unterföhring
EM.TV Publishing GmbH, Unterföhring
EM.TV USA Inc., New York, USA
EM.TV Verwaltungs GmbH, Unterföhring
EM.TV & Wavery B.V. Rijswijk, Netherlands
EM.TV Beteiligungs GmbH & Co. KG, Unterföhring
EM-VA Film und TV-Produktions GmbH, Unterföhring
Haffa Inc., Hermosa Beach, USA
Junior Produktions GmbH, Unterföhring
Junior.TV GmbH & Co. KG, Unterföhring
Junior.TV Verwaltungs GmbH, Unterföhring
MUC Media GmbH, Munich
OM Oktoberfest München, Merchandising, Film und Fernseh GmbH i.L., Unterföhring
PLAZAMEDIA GmbH TV- und Film-Produktion, Ismaning
PMM Sports Production GmbH, Ismaning
Produktions-GbR Castillo II, Unterföhring
Produktions-GbR Cocco Bill, Unterföhring
Produktions-GbR Nick & Perry, Unterföhring
Produktions-GbR Tabaluga II, Unterföhring
Produktions-GbR The World of Tosh, Unterföhring
Sport Media Holding GmbH, Unterföhring
Sport1 GmbH, Ismaning
Sport1 Multimedia GmbH, Vienna, Austria
Tabaluga Film- und Fernsehproduktion GmbH, Unterföhring
Capitalholding
100
100
100
100
100
0
100
100
100
100
100
100
100
100
100
100
100
100
100
60
100
100
85
66.5
60
90
65
75
100
100
100
100
Period included in the con-solidated financial statements
1/1 to 31/12/2005
31/12 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
not included
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
not included
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
22/12 to 31/12/2005
not included
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
72
Consolidated Financial Statements I Notes
ASSOCIATED COMPANIES in %
Planeta Junior S.L., Barcelona, Spain
Planeta Junior s.r.I., Milan, Italy
Tabaluga Coproduktions GbR, Unterföhring
Trackdown Digital Pty. Limited, Sydney, Australia
arena media GmbH, Munich
Capitalholding
33.33
33.33
66.7
21
25
Period included in the con-solidated financial statements
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
12/7 to 31/12/2005
Joint Ventures Companies
The following joint venture companies are included in the
consolidated financial statements on the basis of a propor-
tionate consolidation.
Balance effects attributable to joint ventures
Proportional profit and loss account amounts attributa-
ble to joint ventures
JOINT VENTURE COMPANIES in %
Produktions-GbR Fairy Tale Police Department, Unterföhring
Produktions-GbR Flipper + Lopaka 2, Unterföhring
Yoram Gross-EM.TV PTY Ltd., Sydney, Australia
Capitalholding
50
50
50
Period included in the con-solidated financial statements
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to 31/12/2005
1/1 to31/12/2005
3,465
260
-1,053
-1,213
-1,313
-465
70
16
-233
1/1 to31/12/2004
8,454
960
-8,820
-1,707
-3,151
-4,654
246
-82
-8,754
PROFIT AND LOSS ACCOUNT, JOINT VENTURES in EUR ‘000
Total output
Other operating income
Cost of material
Personnel expenses
Amortization and depreciation
Other operating expenses
Financial result
Tax income/expenses
ASSETS, JOINT VENTURES in EUR ‘000
Non-current assets
Current assets
31/12/2005
4,044
2,332
31/12/2004
3,852
1,857
LIABILITIES, JOINT VENTURES in EUR ‘000
Long-term liabilities
Short-term liabilities
31/12/2005
1,104
1,140
31/12/2004
1,052
830
73
Associated companies
The associated companies are included in the consolida-
ted financial statements „at equity“.
A detailed presentation of the assets, liabilities, income
and the period results of the associated companies is to
be found under No. 3.4.
Tabaluga Coproduktions GbR, Unterföhring
The Articles of Association of Tabaluga Coproduktions GbR
provide that all important business decisions are to be
made with a qualified majority (75 percent). EM.TV is not in
a position to exercise control therefore. A proportionate or
full consolidation is not possible, therefore. The participati-
on is included “at equity” even though nominally EM.TV
holds a majority share.
The following changes were made in the companies
included in the consolidated financial statements in
2005:
First consolidation
EM.TV Sport Management GmbH, Ismaning
This company was included in the consolidated financial
statements with effect from January 1, 2005. EM.TV AG
has an option to acquire 90 percent of the shares and
voting rights which is exercisable at any time. This is a
potential voting right within the meaning of IAS 27.14. No
purchase price has been paid. The company develops new
business models in the sports sector. The share capital
amounts to EUR 25,000.
MUC Media GmbH, Munich
PLAZAMEDIA GmbH TV- und Film-Produktion, a wholly-
owned subsidiary, acquired all the shares in MUC Media
GmbH with an agreement dated December 22, 2005. EUR
25,000 was paid in cash as the purchase price. The com-
pany’s business is concerned with the production and pro-
cessing of TV-productions.
The share capital is EUR 25,000. A capital increase of EUR
75,000 to EUR 100,000 was made by issuing two new
shares in the company, with PLAZAMEDIA GmbH TV- und
Film-Produktion’s holding being reduced to 60 percent as a
result. As part of this capital contribution, additional EUR
284,000 were paid in cash into the capital reserve.
arena media GmbH, Munich
PLAZAMEDIA GmbH TV- und Film-Produktion, a wholly-
owned subsidiary, acquired a 33.33 percent interest in
arena media GmbH with effect from July 12, 2005. The
capital contribution amounted to EUR 2,500,000 and was
paid in cash. The share capital was increased from TEUR
50 to TEUR 75 at the time of the capital contribution. This
company operates an interactive auction channel. With
effect from September 27, 2005, PLAZAMEDIA’s share was
reduced to 25 percent as a result of a capital increase to
EUR 100,000 and the entry of an additional shareholder.
Creation Club (CC) GmbH, Munich
PLAZAMEDIA GmbH TV- und Film-Produktion, a wholly-
owned subsidiary, acquired all the shares in Creation Club
(CC) GmbH with effect from December 31, 2005 for an
amount of EUR 16,433,926. The purchase price was or will
be paid in cash. The company provides services in the “On
Air Design” and “On Air Promotion” sectors. The share capi-
tal amounts to EUR 25,000.
If Creation Club (CC) GmbH had been included in the con-
solidated financial statements as at January 1, 2005, this
would have had the following effects on the sales and ear-
nings of the Group.
As part of the purchase price allocation, long-term custo-
mer contracts of Creation Club (CC) GmbH were capitalized
in the amount of TEUR 5,271 and which will be written-off
over the contract term. The capitalization was made on the
basis of a five-year earnings plan. No further capitalizable
intangible assets were identified. The book values of the
remaining balance sheet items correspond with their cur-
rent fair values to a very large extent.
The additional price representing the goodwill can be justi-
fied on the strength of the positive operational prospects,
existing synergies between the product range of PLAZAME-
DIA GmbH TV- und Film- Produktion and the services of
Creation Club (CC) GmbH. Better and new customers can
also be acquired for Creation Club (CC) GmbH with the help
of PLAZAMEDIA GmbH TV- und Film-Produktion.
The assets and liabilities assumed are shown in detail for
each balance sheet item in the cash-flow notes (Section
5.2)
No purchase price allocations have been made with MUC
Media GmbH and EM.TV Sport Management GmbH as
there were no hidden reserves or liabilities.
All other companies were new foundations or only com-
menced their business activities after forming part of the
EM.TV Group. Their inclusion on the consolidated financial
statements at the beginning of the report year would have
no effect on the sales and earnings of the Group therefore.
EFFECTS OF FIRST CONSOLIDATIONS in EUR ‘000
Subsidiaries (fully consolidated)
EM.TV Sportmanagement GmbH
Creation Club (CC) GmbH
MUC Media GmbH
Associated companies (at equity)
arena media GmbH
Earnings after tax
-1,055
0
-1
-344
Current assets
1,461
2,068
121
0
Non currentassets
1,486
19,357
521
2,156
Long-term liabilities
0
2,186
0
0
Short-term liabilities
181
2,805
74
0
Sales
0
0
0
0
74
Consolidated Financial Statements I Notes
EFFECTS ON SALES AND EARNINGS in EUR ‘000
1/1 to 31/12/2005 (fully consolidated)
Creation Club (CC) GmbH
Sales
18,266
Earnings after tax
395
Business combination after December 31, 2005
Yoram Gross-EM.TV Pty Ltd., Sydney, Australia
With effect from January 11, 2006, EM.Entertainment
GmbH, a wholly-owned subsidiary of EM.TV AG, acquired
the second 50 percent of the joint venture company
Yoram Gross-EM.TV PTY. The purchase price amounted to
TEUR 4,674. The seller was the previous partner Yoram
Gross Holdings.
75
The company will be included in the consolidated financial
statements by means of a full consolidation with effect from
the aforesaid date (to date on a pro rata basis).
TEUR 623 of the purchase price is allocated to hidden reserves
in the existing film assets, TEUR 623 to a new technical deve-
lopment in the interactive games sector and TEUR 156 to the
investment book value in Trackdown Digital Pty. Ltd. There are
no other detectable potentials or risks which have to be inclu-
ded in the company’s financial statements. The balance repre-
sents the acquisition goodwill.
The aforesaid goodwill is justified by better using the poten-
tials and synergies that it was previously the case as a joint
venture company and on account of the positive business pro-
spects for the company and its subsidiaries.
Information on the assets and liabilities to be assumed and
the exact amount of the goodwill cannot be made at this
stage in view of the absence of available financial statements
on the acquisition date.
Consolidation methods
All major subsidiaries for which EM.TV AG has the possibility
of controlling are included in full in the consolidated financial
statements. The consolidation of joint venture companies is
carried out on a pro rata basis, i.e. assets values and liabili-
ties together with items of income and expenditure are inclu-
ded in the consolidated financial statements in line with the
respective investment ratio. Holdings in associated compa-
nies are valued on the equity method.
The capital consolidation – consolidation of inter-company
shareholdings – is carried out in accordance with IFRS 3 by
setting off the investment book values against the proportio-
nate newly valued pro rata equity of the subsidiaries at the
time of their acquisition. For this purpose, assets and liabili-
ties are stated at their fair value. The remaining differences
are capitalised as goodwill. Any resulting impairment require-
ment is recorded as an expense with a net income effect. Any
credit balance difference arising upon consolidation is shown
in full as an income component in the year in which the afore-
said credit balance occurs.
Investments which are recorded in the Group on the equity
method are stated at their acquisition cost at the time of
acquisition. Any identified goodwill is recorded in the invest-
ment valuation and is not taken into account as independent
goodwill. The earnings of the companies are taken over by the
Group and are added to the investment book value.
Companies which leave the consolidation group in view of the
fact that they can no longer be controlled cease to be consoli-
dated in full in accordance with IAS 27. The date of the subsi-
diary’s departure from the group is regarded as the deconsoli-
dated date. The deconsolidation is treated in this connection
as a disposal of all assets and liabilities attributable to the
subsidiary, in-cluding goodwill and debts. The income and
expenses accruing up to the aforesaid date are included in
the consolidated financial statements.
The effects of inter-company transactions have been elimina-
ted. Receivables and liabilities due to or from fully consolidated
companies are set off against each other and existing differen-
ces are eliminated by a transfer to operations. Inter-company
profits are eliminated if they are material. Intercompany income
is set off against the corresponding expense.
Consolidated Financial Statements I Notes
76
1.4 Foreign currency conversions
The balance sheets of foreign group companies are conver-
ted in accordance with the functional currency at the mid-
rates on the balance sheet date, the profit and loss
account being converted at the annual average rates and
equity at historic rates. The resulting foreign currency con-
version differences and differences arising from the con-
version of the previous year’s figures are included under
equity capital with no effect on earnings.
Foreign currency items which are valued during the year on
the date of the relevant transaction are basically converted
at the year-end rate in the financial statements of the indi-
vidual group companies, with the resulting foreign currency
differences being shown directly in earnings.
The exchange rates of the consolidation currencies in
terms of the EUR have changed as follows:
The basis of the rate on the balance sheet date is the offi-
cial mid-rate on the last trading day in the respective finan-
cial year.
EXCHANGE RATE TO EURO: 1 EUR
Closing rate
2005
2004
Average rate
2005
2004
Australia – AUD
1.61090
1.74849
1.63060
1.68668
USA – USD
1.17970
1.36040
1.24539
1.24386
2. Accounting and Valuation Principles
2.1 Intangible assets
These are mainly film rights, merchandising rights and soft-
ware programs and intangible assets identified during the
course of purchase price allocations, e.g. customer relati-
onships, which are valued at acquisition cost less standard
straightline and impairment depreciation/amortization and
utilization-related disposals. We refer in this respect to our
comments in the section on “Profit Realization Principles”.
Amortization is determined on the basis on the contrac-
tually agreed term (film rights, merchandising rights and
customer relationships) or the normal useful service life of
three years (software programs). Film rights are subject to
impairment amortization in individual cases. Film and mer-
chandising rights with an unlimited useful life are not amor-
tized on a standard basis in accordance with IAS 38 but
are subject to an examination of their value every year
(further explanations under Section 2.13).
Production costs for licenses are capitalized upon completi-
on and are written off in accordance with the same stan-
dards such as film and merchandising rights. The capitaliza-
tion includes directly allocable costs and also development
costs allocable to specific productions. General research
and development costs are not capitalized in accordance
with IAS 38.
2.2 Goodwill
Derivative goodwill is stated at its acquisition cost. Goodwill
is the difference between the acquisition cost and the fair
value of the identifiable assets and liabilities acquired on
77
the purchase date. Goodwill is allocated to the individual
segments as the smallest cash-flow generating units.
An “impairment test” in accordance with IAS 36 will be car-
ried out once a year for goodwill if corresponding indications
are available in order to establish the achievable amount
which constitutes the higher amount arising from the net
sales value and the usable value and this is then compared
with the corresponding book value. If the achievable amount
determined in this way is less than the book value, an extra-
ordinary write-down has to be made. Standard amortization
in accordance with IFRS 3 is not made. Exceptional write-
downs of goodwill cannot be written back again in subse-
quent years.
2.3 Tangible fixed assets
Land, property rights and buildings are valued at their
acquisition cost less standard depreciation based on an
estimated useful life of 25 years on buildings. Technical
plant and equipment, including factory and office equip-
ment, are valued at their acquisition cost less standard
and non scheduled depreciation. Standard depreciation is
charged on a straight-line basis over a normal useful life of
three to ten years. Repair and maintenance work is normal-
ly charged as an expense when it is incurred.
In the case of lease contracts in which the Group acts as
lessee, the leased asset is capitalized and the leasing liabi-
lity for the same amount is capitalized if the economic
ownership of the leased asset is attributable to the lessee
(financing lessee). This is the case in accordance with IAS
17 if the lessee mainly bears the risks and rewards in con-
nection with the leased assets associated with the owner-
ship. The capitalization is effected in these cases at the
attributable fair value of the leased asset at the commen-
cement of the lease contract or at the cash value of the
minimum lease payments if the latter is lower. The corre-
sponding lease liabilities are shown in the balance sheet
under long-term liabilities. The interest element of the lease
liability is included under financial expenses with a charge
to income over the term of the lease contract.
If the economic ownership of the leased asset is attributable
to the lessor (operating lease), the leased asset is included
in the balance sheet of the lessor. Lease payments in con-
nection with operating leases are recorded in the profit and
loss account as other operating expenses on a basis over
the term of the lease contract.
2.4 Financial assets
Financial assets include participations in associated com-
panies, other investments, other loans and derivatives which
are shown under other assets. With the exception of shares
in associated companies valued on the equity method, in-
vestments and short-term financial assets as defined in
IAS 39 are allocated to the category “at fair value through
profit and loss”.
Management classifies financial assets at the time of
acquisition and reviews this classification at regular inter-
vals with regard to whether the criteria for the classification
can be maintained. All purchases and sales of financial
assets are recorded on the relevant trading date.
Acquisition costs include the related transaction costs. In
the following period, other investments/participations and
short-term financial assets such as derivatives are revalu-
ed at the fair value corresponding to the stock exchange
price on the balance sheet date. If no market value is avai-
lable, an attributable fair value is to be determined by
means of other valuation methods. Realized and unreali-
zed gains and losses arising from changes in the fair value
of the aforesaid financial assets are shown in the profit
and loss account.
Consolidated Financial Statements I Notes
78
Loans are classified as “loans and receivables” and are to
be stated at their updated acquisition costs.
2.5 Inventories
Raw materials and supplies are valued at their acquisition
cost, or their estimated lower net selling price, less any costs
which still have to be incurred (sales-oriented, loss-free va-
luation). Acquisition and production costs are valued on
the average price method. Slow-moving or obsolete stocks
are written off in full.
2.6 Receivables and other assets
Short-term receivables are stated at cost. Non-interest-bea-
ring monetary receivables with a term of more than one
year are discounted to their current cash value at an annu-
al rate of 5.488 percent. In accordance with IAS 18, the
net value of the transaction and the related financing as-
pects are taken into account in sales in the consolidated
financial statements.
If there are doubts concerning the collectibility of outstan-
ding receivables, the receivables in question are stated at
their lower realisable value. In addition to any necessary
specific bad debt provisions, a flat rate provision is made
for general default risks based on past experience. The
book values are approximately equivalent to their fair
values.
2.7 Cash and cash equivalents
This item includes cash and sight deposits at banks which
are only subject to immaterial value fluctuations and which
have a term to maturity of less than three months. This
item also includes partially available sight deposits which
are deposited as security within the scope of guarantees.
Liquid assets are stated at their updated acquisition costs;
deposits in foreign currencies are valued at the closing rate
on the balance sheet date and approximate their fair values.
2.8 Share options
In accordance with IFRS 2, No. 53, all options issued to em-
ployees or executive bodies after November 7, 2002 but
which were not exercisable as at January 1, 2005 are valu-
ed at their fair value on the respective issue date. The re-
sulting personnel expenses are allocated over the remaining
holding periods taking due account of any fluctuations.
For options which were granted prior to November 7, 2002
and which have not been valued in accordance with IFRS 2,
there are only certain information obligations (cf. Section
3.11).
In accordance with IFRS 2, Section 55, an adjustment of
comparable information and any opening balance sheet
value of profit reserves has to be made for the earliest re-
porting period shown. As a result, this gave rise to the follo-
wing adjustments in the profit and loss account and also in
the balance sheet of the previous year:
EFFECTS OF INITIAL APPLICATION OF IFRS 2 in EUR ‘000
Effects on the P&L
Personnel expenses
Deferred taxes
Balance sheet effects to 31/12/2004
Adjustment reserveAccumulated loss
Deferred tax assets
1/1 to31/12/2005
-65
24
1/1 to31/12/2004
-57
21
87-54
33
79
As a result of the initial application of IFRS 2, there are only
marginal effects on undiluted and diluted earnings per
share (less than one cent per share).
2.9 Accruals
In accordance with IAS 37, accruals include all identifiable
obligations to third parties which have arisen in the past
and the settlement of which will probably result in an out-
flow of funds and if it is possible to make a reasonable
esti-mate of the amount of the obligation involved.
Accruals are stated at the anticipated payment amount or,
in the case of any long-term accruals, at the cash value of
the anticipated payment amount calculated by applying the
applicable current market rate of interest if the interest
effect is material.
The actuarial valuation of the performance-related pension
and similar obligations within the provisions for pensions
and similar obligations are based on the accrued cash
benefit valuation method. On the basis of the accrued cash
benefit valuation method to be applied (“projected unit cre-
dit method), future obligations are determined on the basis
of the pro rata benefit entitlements accrued on the balan-
ce sheet date. With regard to the valuation, trend assumpti-
ons are taken into account for the relevant orders of
magnitude which have an effect on the benefit amount.
The anticipated increases in salaries and pensions are
included as relevant orders of magnitude. Pension obligati-
ons have been determined on the basis of an actuarial
valuation. The interest element included in pension expen-
ses is shown as part of the financial results. Actuarial
gains and losses are recorded in full with a net income
effect when they have been established.
Accruals for anticipated losses arising in connection with
incomplete business (provisions for anticipated losses) are
formed if the unavoidable costs for executing the business
in question is higher than the anticipated economic benefit.
Before an accrual is made, value-reductions on assets are
to be made in connection with the aforesaid business.
2.10 Liabilities
Long and short-term financial liabilities (bonds, liabilities to
banks, etc.) trade accounts payable, advance payments
and other liabilities are subsummated under liabilities.
These are capitalized at their updated acquisition costs. If
the interest effect is material, long-term liabilities bearing
lower or interest free are stated at their respective cash
value when incurred and interest is accrued on a period
basis up to maturity.
The carrying values of the monetary liabilities included
under this item are equivalent to their fair values. Reference
is made to special explanatory comments under Section
3.14 for the accounting treatment of long-term financial lia-
bilities.
2.11 Deferred taxes
The group determines deferred taxes for temporary diffe-
rences between the book values and tax values of assets
and liabilities and tax loss carry-forwards. Deferred tax
assets on temporary deductible differences and tax loss
carry-forwards are only shown to the extent that it can be
assumed with reasonable probability that the company in
question is able to generate sufficient taxable income to
utilise the deferred tax assets.
In accordance with IAS 12.47, deferred tax liabilities are
calculated on the basis of the tax rates which are applica-
ble in the individual countries at the realization date or tax
rates to be applied in the future. Deferred taxes within the
group are based on a uniform rate of 37.5 percent.
Consolidated Financial Statements I Notes
80
Set-off is practiced if deferred tax assets and deferred tax
liabilities exist from or to the same tax authorities relating
to the same tax type and if they cancel each other out in
the same financial year
2.12 Borrowing costs
External borrowing costs are stated as expenses in the
period in which they are incurred.
2.13 Profit Realization Principles
Realisation of profit
Sales in the entertainment segment are realized at the
time of the transfer of transmission rights. A prerequisite
for this, however, is that the Company has basically com-
plied with its obligations and commitments, i.e. the serials
or TV programs are ready for transmission and only have to
be requisitioned by the TV station.
Contracts with an imputable minimum guarantee are main-
ly concluded in the merchandising sector. This gives rise to
a corresponding sale when the license commences. If addi-
tional sales are reported by the licenses over and above
the aforesaid minimum guarantee, these are received on
an instalment basis.
Sales are basically only realized when the following conditi-
ons have been met:
> there is a signed contract prior to the balance sheet date;
> the series or programs are complete and have been deli-
vered or are ready for delivery;
> there are no doubts concerning settlement of claims;
> the total amount of the royalties has been established,
has been agreed with the licensee and is also payable
even if the series or programs are not broadcasted;
> the license period has commenced.
Distribution and sales commissions for film and merchan-
dise rights are recorded when the contract is signed in
view of the fact that performances have carried out.
In the case of the sports companies, sales are realized
when the relevant service has been provided. If advertising
income is involved, the sales realization is basically on the
date of the transmission of the advertising spot. In the pro-
duction sector, sales are realized upon completion and
acceptance of the production by the customer.
Amortization and recording of license-related expenditure
Amortization based on a specific time period
Film rights included under intangible assets are amortized
on a straight-line basis over their estimated useful lives,
normally between 5 and 20 years. If a film asset with a
short life is involved with its exploitation rights in cinemas
being re-stricted, for example, the amortization period may
be significantly shorter (between one and five years).
Usage-related fixed asset disposal
For the purpose of usage-related and performance-related
income and expenditure accruals, performance-related dis-
posals are charged in line with the granted license period
over and above the specific term-related impairment char-
ge. Addition disposals to be recorded are shown under cost
of materials.
“Impairment test”
In accordance with IAS 36 an “impairment test” has to be
made annually for goodwill and intangible assets with an
undefined lifetime. This means, the relevant assets have to
be examined for a reduction in value. If value reduction
have to be made in previous periods, value increase need
to be taken into account. An “impairment test” is also car-
ried out during the year if there are indications of an value
decrease. For example, reductions in current values are
based on a substantial reduction in the market value of
81
assets, significant changes in the economic environment
and substantiated indications of obsolescence or any
changed earnings expecta-tions. The calculation of an
impairment write-down is based on the calculation of the
achievable amount equivalent to the net selling price or
the usable value of an asset whichever is the higher. If the
calculation of the achievable amount is made in the form
of the utilizable value of the asset, corresponding cash-flow
projections are applied.
If value increases are established on the basis of the
“impairment tests”, these are made with a net income
effect but with a maximum up to the theoretically updated
acquisition costs. Exceptions from the aforesaid value
increases are value reductions for goodwill.
3. Explanations on Individual Items in the Balance Sheet
3.1 Intangible assets
In addition to typical film library business, the group is also
involved in the co-production and co-financing of animated
programs. There are four programs in various stages of co-
production in the Group at the present point of time. They
are being financed either from existing liquidity or by
means of special project loans.
Intangible assets are stated at their attributable beneficial
usage value determined on the basis of the “discounted
cash-flow method” as part of an “impairment test”. This
method was based on a uniform discounting interest rate
of six percent. This interest rate is determined on the
basis of the security equivalence method.
The future beneficial value of film rights is influenced by a
large number of exploitation forms. The growth in adverti-
sing revenues of the television station is substanstal. The
Company estimates the annual growth potential documen-
ted by external studies. This assumption is used as a basis
for impairment considerations. If the growth changes by
one percent, there would be a change in the beneficial use
of approximately three percent based on the aforesaid
model.
The “impairment test” gave rise to no accelerated amorti-
zation charges in the current reporting period (2004: TEUR
8,212). Value adjustments were necessary in the previous
year on account of extraordinary amortization charges of
TEUR 6,685 made in previous years. Of the intangible
assets shown in the consolidated financial statements,
TEUR 53,045 (2004: TEUR 59,885) are, inter alia, pledges
as security for the 8% bond with warrants attached
2004/2009 (cf. the section on “Securities” under 3.13).
With our present amortization rate, the average residual
usage term of the Group’s film assets is seven years.
The book value of TEUR 88,651 (2004: TEUR 93,915)
includes internally developed intangible assets amounting
to TEUR 13,510 (2004: TEUR 12,634).
Consolidated Financial Statements I Notes
82
Total intangible
assets
654,003
5,569
491
4,596
15,817
648,842
559,947
322
12,227
13,486
559,010
660,535
-5,513
-235
13,613
14,397
0
654,003
376,428
174,058
-151
10,960
8,312
6,685
2,975
559,947
89,832
94,056
AdvancePayments
1,494
0
0
1,040
0
2,534
1,353
0
0
0
1,353
14,397
-6,449
0
38
0
-6,492
1,494
1,353
0
0
0
0
0
0
1,353
1,181
141
Intangibleassets
652,509
5,569
491
3,556
15,817
646,308
558,594
322
12,227
13,486
557,657
646,138
936
-235
13,575
14,397
6,492
652,509
375,075
174,058
-151
10,960
8,312
6,685
2,975
558,594
88,651
93,915
Goodwill
8,906
45,601
1
0
0
54,508
0
0
0
0
0
72,246
-48,241
-2
0
15,097
0
8,906
42,700
-27,601
-2
0
0
0
15,097
0
54,508
8,906
INTANGIBLE ASSETS in EUR '000
Acquisition and production costs 2005
01/01/2005
Changes in consolidated group
Foreign currency differences
Additions
Disposals
Total 31/12/2005
Accumulated depreciation 2005
01/01/2005
Foreign currency differences
Depreciation for the year
Disposals
Total 31/12/2005
Acquisition and production costs 2004
01/01/2004
Changes in consolidated group
Foreign currency differences
Additions
Disposals
Transfers
Total 31/12/2004
Accumulated depreciation 2004
01/01/2004
Changes in consolidated group
Foreign currency differences
Depreciation for the year
Non-scheduled depreciation
Write-up
Disposals
Total 31/12/2004
Net book values 2005
Net book values 2004
83
Total tangible
assets
18,670
2,147
69
7,739
459
28,166
11,313
50
3,321
425
14,259
15,827
-1,246
-37
4,659
533
18,670
9,449
-929
-25
3,247
429
11,313
13,907
7,357
Advance pay-ments and
assets underconstruction
73
0
0
717
0
790
0
0
0
0
0
33
0
0
40
0
73
0
0
0
0
0
0
790
73
Technicalequipment
and machinery
6,881
0
0
5,710
161
12,430
2,916
0
1,867
159
4,624
3,839
0
0
3,265
2,230
6,881
2,124
0
0
964
172
2,916
7,806
3,965
Land,Property
rights andbuildings
5,104
49
0
123
0
5,276
3,487
0
504
0
3,991
5,110
-166
0
172
120
5,104
2,471
-43
0
1,068
9
3,487
1,285
1,617
TANGIBLE ASSETS in EUR ‘000
Acquisition and production costs 2005
01/01/2005
Changes in consolidated group
Foreign currency differences
Additions
Disposals
Total 31/12/2005
Accumulated depreciation 2005
01/01/2005
Foreign currency differences
Depreciation for the year
Disposals
Total 31/12/2005
Acquisition and production costs 2004
01/01/2004
Changes in consolidated group
Foreign currency differences
Additions
Disposals
Total 31/12/2004
Accumulated depreciation 2004
01/01/2004
Changes in consolidated group
Foreign currency differences
Depreciation for the year
Disposals
Total 31/12/2004
Net book values 2005
Net book values 2004
Other equip-ment factory
and officeequipment
6,612
2,098
69
1,189
298
9,670
4,910
50
950
266
5,644
6,845
-1,080
-37
1,182
298
6,612
4,854
886
-25
1,215
248
4,910
4,026
1,702
3.2 Tangible assets
Consolidated Financial Statements I Notes
84
EFFECTS ON PROFIT AND LOSS ACCOUNT in EUR '000
Effects on profit and loss account
Associated companies
Tabaluga Coproduktions GbR
Planeta Junior Group
arena media GmbH
Trackdown Digital Pty. Ltd.
Earningsafter tax
69
1,042
-1,376
-242
Sales
127
11,890
268
0
EFFECTS ON THE BALANCE SHEET in EUR '000
Effects on the balance sheet
Associated companies
Tabaluga Coproduktions GbR
Planeta Junior Group
arena media GmbH
Trackdown Digital Pty. Ltd.
Total liabilities
3,255
11,162
1,430
665
Total assets
5,836
20,595
5,200
741
3.3 Goodwill
The goodwill amounts attributable to the Group in connecti-
on with shares in subsidiaries and joint ventures acquired in
prior years and in the report year are shown as follows:
As part of the impairment test for goodwill, future cash-flows
have been taken into account on the basis of a detailed fife
year earnings calculation. A discount rate of 12 percent has
been used for calculating the corresponding cash value.
This interest rate was determined with the help of the risk
premium method.
The future cash-flow is influenced by the development of the
advertising market in the case of sports companies and, in
the case of DSF Deutsches SportFernsehen GmbH, also be
development of view market shares in particular. The growth
rate over and above the detailed planning period has been
specified at zero percent. If the actual growth rate changes
by one percentage point, this would give rise to a change in
value of approximately fife percent .
3.4 Investments in associated companies
The companies included under investments in associated
companies have shown the following values in their financi-
al statements at December 31, 2005 (with the exception of
Trackdown, with the last available financial statements
being June 30, 2005):
3.5 Long-term receivables
Long-term receivables are all receivables with a due date in
excess of one year. Net receivables of TEUR 9,021 include
long-term receivables from associated companies in the
amount of TEUR 4,028 (2004: TEUR 3,775). These consist
exclusively of receivables from Planeta Junior S.L., Barcelona
and its 100 percent subsidiary Planeta Junior s.r.l., Milan.
New receivables originating in the report year and falling
due after December 31, 2006 have been discounted at the
interest rate of 5.488 percent (2004: 5.154 percent) valid
on the date of the original transaction. The 3M EURIBOR
increased by 300 base points has been used as the rele-
vant basis. Discounted long-term receivables originating
prior to the report year have been discounted by using the
original interest rate.
The fair value of long-term receivables is TEUR 8,983
(2004: TEUR 12,769).
31/12/2005
162
54,346
54,508
31/12/2004
162
8,744
8,906
GOODWILL in EUR ‘000
Segment Entertainment
Segment Sports
Total
85
3.6 Deferred tax assets
Deferred tax assets of TEUR 6,069 (2004: TEUR 4,895)
have developed as follows:
The previous year’s figure has been increased by TEUR
33 in comparison with the previous year’s value on
account of the effects of the initial application of IFRS 2
“Share-based Payment”.
Deferred tax assets are valued at a tax rate of 37.5 percent.
They are to be regarded as long-term.
In total within the Group, there are tax loss carry-forwards
of TEUR 139,672 (2004: TEUR 143,637).
3.7 Trade receivables
TEUR 2,167 of the specific bad debt provisions is mainly
attributable to receivables from Q1 Deutschland GmbH,
TEUR 1,628 to receivables from SAT1 Satelliten Fernsehen
GmbH, TEUR 1,622 to receivables from Buena Vista
International Inc. and TEUR 1,471 to receivables due from
Dr. Weinsziehr Media GmbH.
On account of higher outstanding receivables in US
Dollars, the Company decided during the report year to
hedge foreign currencies in the form of forward exchange
dealings. In view of the fact that the conditions for hedge
accounting are not specified in accordance with IAS 39,
the effects are directly taken up with an appropriate ear-
nings effect. On the balance sheet date, there was a nega-
tive current value (TEUR -313) with forward exchange trans-
actions and consequently they are stated under other liabi-
lities in the balance sheet.
LONG-TERM RECEIVABLES in EUR ‘000
Long-term receivables
Discounts
Total
31/12/2005
9,608
-587
9,021
31/12/2004
13,783
-1,022
12,761
DEFERRED TAX ASSETS in EUR ‘000
Temporary differences in the individual financial statements
Accumulated losses
Consolidation differences
Total
31/12/2005
135
5,920
14
6,069
31/12/2004
130
4,765
0
4,895
DEVELOPMENT OF DEFERRED TAX ASSETS ON LOSSESCARRIED FORWARD in EUR ‘000
Total
Not accounted for due tolack of utilization
Total
31/12/2005cumulative
52,377
-46,457
5,920
31/12/2004cumulative
53,864
-49,099
4,765
DEVELOPMENT OF RECEIVABLES in EUR ‘000
Gross amount
Specific bad debt provision
General bad debt provision
Net amount
31/12/2005
84,116
-14,975
-491
68,650
31/12/2004
97,519
-50,103
-425
46,991
Consolidated Financial Statements I Notes
86
3.8 Receivables due from associated companies
3.9 Other assets
The Purchase price receivables shown in the previous year
in the amount of TEUR 118,000 was due from HK Beteili-
gungs GmbH. The basis for this claim which was settled on
January 3, 2005 was the sale of shares in Tele-München
Gruppe.
The guarantee payments mainly include the minimum gua-
rantee payments to FIFA and relate to the commercialisati-
on of the 2006 FIFA World Cup™. They are reduced by the
notified sales.
Other assets mainly include option premiums, deposits
and amounts recharged. The option premium is valued at
its relevant market price with a corresponding charge or
credit to earnings. The acquisition costs of foreign currency
options amounted to TEUR 655 ( cf. Section 3.10): The
market value amounted to TEUR 2,539 (TEUR 3,521) on
the balance sheet date.
This item also includes a derivative of TEUR 207 (2004:
TEUR 470) arising from the premature repayment possibili-
ty at 101 percent of the 8% bond with warrants attached in
conjunction with an assumed improved refinancing rate of
7.4 percent. This downturn is attributable on the one hand
to the premature part-repayment of a nominal EUR 10 milli-
on on June 30, 2005 and, on the other, to the reduction in
the relevant current value.
3.10 Cash and cash equivalents
Out of the liquid funds of TEUR 45,806 (2004: TEUR
105,961), TUSD 9,500 equivalent to TEUR 8,053 (2004:
TEUR 6,983) were deposited on a blocked account in order
to obtain a guarantee payment by the banks in connection
with the 2006 FIFA World Cup™. The cash deposit ist secu-
red by a currency option which is shown in the balance
under “other assets”. In addition, TEUR 2,379 (2004: TEUR
1,057) in connection with the encashment of options and
certificates (cf. also Section 3.11) are pledged for the
repayment of the 8% bond with warrants attached of
2004/2009.
If daily deposits or sight deposits are involved, the afore-
said funds bear interest at the current rate. In the case of
Euro deposits, the average interest rate was 2.2 percent
(2004: 2.0 percent). An average interest rate of 2.7 percent
has been achieved for US deposits. (2004: 1.5 percent).
ANALYSIS in EUR ‘000
Planeta Junior S.L.
Planeta Junior s.r.l.
Tabaluga Coproduktions GbR
arena media GmbH
Other companies
Net amount
31/12/2005
256
812
1,131
551
77
2,827
31/12/2004
2,325
1,275
711
0
35
4,346
OTHER ASSETS in EUR ‘000
Other taxes
Guarantee payments
Taxes on income
Deferred expenses
Suppliers with debit balance
Advance payments
Purchase price receivables
Other assets
Total
31/12/2005
4,683
4,383
2,226
1,590
1,521
1,108
0
4,375
19,886
31/12/2004
4,451
3,418
1,854
1,203
1,604
1,985
118,000
5,679
138,194
87
3.11 Equity
Reference is made to the analysis of equity changes during
the report year.
Subscribed capital
The subscribed capital of the group parent company, EM.TV
AG, at December 31, 2005 amounted to EUR 66,600,936,
divided into 66,600,936 bearer shares with a nominal
value of EUR 1.00 per share.
At December 31, 2004, the registered capital of EM.TV AG
amounted to EUR 65,617,462 divided into 65,617,462
bearer shares. Following the entry in the Commercial
Register of the balance sheet item shown separately on
December 31, 2004 with effect from February 3, 2005 –
“Contributions made to execute the resolved capital increa-
se” – the subscribed capital was increased to a total of
EUR 66,600,936 as a result of the exercise of the conversi-
on rights in connection with convertible bonds amounting
to EUR 983,474.
Own shares
In order to discharge the certificates granted on April 19,
2004, 15,607,652 ordinary shares were held back at the
beginning as own shares. In addition, a total of 1,735,500
ordinary shares could not be issued to former holders of
the convertible bond on account of the acceptance ratio
for the restructuring of the 4% convertible bonds which
was less than 100 percent.
After the completion of the restructuring process, the Com-
pany therefore had 17,343,152 own shares with a nominal
value of EUR 1.00 for each own share, i.e. a total of EUR
17,343,152. A separate reserve for own shares was esta-
blished in this amount in accordance with IAS 32.33.
In view of the fact that a total of 591,115 own shares were
issued in the report year after the exercise of subscription
and purchase rights in connection with certificates, the
reserve for own shares at December 31, 2005 fell to EUR
16,726,149, with this being equivalent to 16,726,149 own
shares. The Company has no rights whatsoever in connecti-
on with its own shares.
Capital reserve
The capital reserve of the Group amounted to EUR
101,599,782.15 at December 31, 2005.
The exercise of the subscription and purchasing rights in
connection with certificates resulted in the report year to
an issue of 591,115 own shares and an increase in the
capital reserve of EUR 968,855.50 arising from the addi-
tional contributions received.
Other reserves
Other reserves include the special reserve for employee
convertible bonds in the amount of TEUR 50 (2004: TEUR
50), the reserve for the employee option program in the
amount of TEUR 152 (2004: TEUR 87) and the reserve for
the foreign currency conversion in the amount of TEUR 218
(2004: TEUR -104).
As part of the restructuring process, the outstanding 2 per-
cent employee convertible loans 1997/2007 which were
issued on the basis of the annual general meeting held on
September 17, 1997 were transferred to EM.TV AG. The
holders of the convertible loan have the right to subscribe
for new ordinary shares, with their total arithmetical value
of the subscribed capital exceeding the nominal value of
the convertible loan. In accordance with § 218, clause 2 of
the German Joint Stock Corporation Act (AktG), a special
reserve was established in order to cover the difference
between the issue amount of the convertible loan and the
pro rata amount of the subscribed capital.
Consolidated Financial Statements I Notes
88
Upon exercising the conversion rights under the employee
convertible loan, the subscribed capital is replenished from
this reserve. Upon repayment of the convertible loan, the
corresponding amount of the special reserve will be trans-
ferred to retained earnings with no net income effect.
As a result of the application of IFRS 2, the expense in con-
nection with the employee option program (cf. below) is
simultaneously transferred to reserves. The previous year’s
figures have also been adjusted according the standard
The reserve in connection with the foreign currency conver-
sion includes conversion differences arising as part of the
consolidation of Yoram Gross-EM.TV PTY Ltd., Sydney.
Authorized capital
Authorized capital I
Based on the resolution of the annual general meeting on
July 5, 2005 and subject to approval by the Supervisory
Board, the Management Board was empowered to increase
the subscribed capital by a total of EUR 9,000,000 by
means of a single or multiple cash contribution or contribu-
tion in kind by July 4, 2010 and to exclude the subscription
right of the shareholders on certain conditions, especially
in the event of capital increases for assets in kind.
Conditional capital
Conditional capital I
Based on the resolution of March 19, 2004, the annual
general meeting of the Company resolved to conditionally
increase the subscribed capital of the Company by up to
EUR 5,625,000 by the issue of up to 5,625,000 bearer
shares. The conditional capital is designed to discharge
option rights in connection with the 8% convertible bond
2004/2009 which had been issued in return for the acqui-
sition of EM.Sport GmbH (formerly EM-Sport Sportmarketing
GmbH).
After the capital increase was entered in the commercial
register on February 3, 2005 for the 983,474 shares issued
in 2004 with a nominal value of EUR 1.00, the conditional
capital I amounted to EUR 4,641,526 at December 31,
2005.
After exercising option right, an additional 3,273,967 shares
were issued from conditional capital I in 2005 with a pro
rata amount of the subscribed capital equivalent to EUR
1.00 per share. The entry of the capital increase in the Com-
mercial Register was made in February 7, 2006.
As at December 31, 2005, there were 9,263 option rights
outstanding which entitle holders up to subscribe for
1,042,087 ordinary shares in EM.TV AG with a nominal
value of EUR 1.00 per share.
Conditional capital II
Based on the resolution of March 19, 2004, the annual
general meeting of the Company resolved to conditionally
increase the registered capital of the Company by up to
EUR 181,096 by the issue of up to 181,096 bearer shares.
The conditional capital is designed to discharge conversion
rights in connection with the 2% convertible loan issued by
the former EM.TV Merchandising AG as from 1997.
At December 31, 2005, EUR 30,038 convertible bonds
were nominally outstanding with the conversion rights to
80,476 shares in EM.TV AG securing a pro rata amount of
the subscribed capital equivalent to EUR 1.00 per share.
Conditional capital III
Based on the resolution of March 19, 2004, the annual
general meeting of the Company resolved to conditionally
increase the registered capital by up to EUR 1,488,012 by
the issue of up to 1,488,012 bearer shares. The conditional
capital is designed to discharge option rights which were
89
issued on the strength of the resolutions of the annual ge-
neral meetings of EM.TV & Merchandising AG of July 22,
1999 and July 26, 2000 (hereinafter referred to as “Stock
Options”).
At December 31, 2005, a total of 1,915,000 option rights
had been issued which entitle the purchase of 262,329
shares in EM.TV AG with a value of the registered capital
equivalent to EUR 1.00 per share.
Conditional capital IV
By the resolution passed in the annual general meeting of
the Company on March 19, 2004, it was resolved to condi-
tionally increase the subscribed capital up to EUR 515,020
by the issue of up to 515,020 bearer shares. The conditio-
nal increase is designed to discharge conversion rights in
connection with the 4% convertible bond 2000/2005 which
had been issued by the former EM.TV & Merchandising AG
in February 2000.
At December 31, 2005, bonds equivalent to a nominal
EUR 23,127,000 were outstanding which secure the conver-
sion rights to 29,820 shares in EM.TV AG with a value of
the subscribed capital equivalent to EUR 1.00 per share.
Conditional capital V
Wirth the resolution of the general meeting on July 5,
2005, the subscribed capital of the Company was conditio-
nally increased by up to EUR 15,000,000 by the issue of up
to 15,000,000 bearer shares. The conditional capital is to
be used to discharge the conversion and option rights on the
basis of the authorization granted by the general meeting
on July 5, 2005 to issue convertible bonds and bonds with
warrants attached by July 4, 2010 for a total amount of up
to EUR 100 million.
No use had been made of the aforesaid authorization by
December 31, 2005.
Contributions made for executing the resolved capital
increases
After executing the option rights in 2005, the shareholders’
equity was increased by EUR 3,273,967 by the issue of
3,273,967 ordinary shares in EM.TV AG equivalent to EUR
1.00 per share of conditional capital I. The shares are fully
paid and are made out to bearer. The aforesaid amount
has to be shown separately until the capital increase has
been entered in the commercial register. The entry of the
capital increase was made in the Commercial Register on
February 7, 2006.
Distributions
EM.TV AG distributed no dividends in fiscal year 2005.
Stock options
As part of the restructuring process, the general meeting of
EM.TV AG resolved in March 19, 2004 to grant the enti-tled
parties under the stock options which were issued by the
former EM.TV Merchandising AG on the basis of the resolu-
tions passed by the general meetings of EM.TV & Merchan-
dising AG on July 22, 1999 (1999 Option Program) and July
26, 2000 (2000 option program), instead of the right to
purchase one bearer share in EM.TV & Merchandising AG
to grant them the right to purchase 10/73 ordinary shares
in EM.TV AG at the underlying price for each option right.
The shares to be granted are issued from the Conditional
Capital III envisaged for the aforesaid purpose.
The conditions of the 1999 option program envisage that
50 percent of the option rights may be exercised at the ear-
liest 2 years after their issue date and the remaining 50 per-
cent at the earliest 4 years after their issue date if the pre-
tax DVFA earnings of the Company have risen by an average
of at least 15 percent p.a. in the financial years since the
issue and prior to the exercise of the option right. The under-
lying price is calculated on the basis of the average of the
closing rate in XETRA-trading for the EM.TV share during
Consolidated Financial Statements I Notes
90
the last 10 stock exchange days prior to the issue of the
option right, plus an increase factor of 5 percent p.a. for the
period up to the exercise of the option right is fixed as the
underlying price. The stock options have a term of 10 years.
The option conditions on the 2000 option program envisage
that a maximum of 50 percent of the granted option rights
may be exercised at the earliest 2 years after their issue
date (hereinafter referred to as „Tranche 1“) and the remai-
ning 50 percent at the earliest 4 years after their issue date
(hereinafter referred to as „Tranche 2“). The underlying price
is calculated on the basis of the average of the opening and
closing rate of the EM.TV share on the Frankfurt Stock Ex-
change on the date of the issue resolution (reference price)
but at least the pro rata amount of the subscribed capital
for one share, plus an uplift of 10 percent for Tranche 1
and a 20 percent uplift for Tranche 2. The stock options
have a term of 10 years.
A total of 1,915,000 (2004: 2,017,500) option rights relating
were outstanding on December 31, 2005, with this entitling
EM.TV AG to purchase 262,329 (2004: 276,369) shares
with a pro rata amount of the subscribed capital equivalent
to EUR 1.00 per share. Thereof, 348,000 option rights and
47,672 ordinary shares were attributable to the 1999 option
program and 1,567,000 option rights and 214,658 shares
under the 2000 option program. The reduction in compari-
son with the previous year is explained by the encashment
of stock options after the departure of employees.
The following parameters have been used as a basis for
calculating the attributable current values of the options:
INPUTS TO OPTION PRICING MODELS IN ACCORDANCE WITH IFRS 2
Originally issued options Amount
Resting period Years
Expiry date
Market price Euro
Exercise price at the grant date* Euro
Average option life Years
Risk-free interest Percent
Expected volatility Percent
Estimated fluctuation Percent
Expected dividend yield Percent
*Exercise price after merger Euro
Tranche 1
78,250
2
30/06/2013
1.60
1.76
3
2.479
68.89
30
0
12.84
Tranche 2
78,250
4
30/06/2013
1.60
1.92
7
3.523
68.89
30
0
14.01
20/12/2002
Tranche 2
66,500
4
20/12/2012
0.91
1.09
7
3.084
67.29
30
0
7.96
Tranche 2
19,000
4
19/09/2013
1.51
1.81
7
3.955
65.43
30
0
13.22
Tranche 1
19,000
2
19/09/2013
1.51
1.66
3
3.021
65.43
30
0
12.12
30/06/2003 19/09/2003
For valuing the options on the issue date, the Black-Scholes-
Model was used by making the above-mentioned assump-
tions. The anticipated volatility is a derivation from the
historic closing rates in the last 250 trading days (equiva-
lent to one year) prior to the resolution/issue date. No divi-
dends were assumed for the period from 2002 to 2007 in
view of the fact that no dividends could be anticipated on
the issue date either. The basis for risk-free interest is the
91
OPTIONS NOT ACCOUNTED FOR IN ACCORDANCE WITH IFRS 2
Date of issue
November 15, 1999
August 3, 2000
March 1, 2001
January 31, 2002
June 7, 2002
December 20, 2002
Number ofauthorized
Options
348,000
2,500
184,500
1,043,000
119,000
58,000
Amount ofshares
47,671
342
25,273
142,876
16,301
7,945
Referenceprice after
consolidationin EUR
357.55
381.43
47.45
16.64
9.42
6.64
Outstandingat the end of
the period
348,000
2,500
180,500
992,500
119,000
54,000
Outstandingat the begin-
ning of theperiod
365,500
2,500
184,500
1,061,000
123,500
58,000
OPTIONS ACCOUNTED FOR IN ACCORDANCE WITH IFRS 2
Date of issue
December 20, 2002
June 30, 2003
September 19, 2003
Amount ofauthorized
Options
58,000
137,500
27,000
Amount ofshares
7,945
18,835
3,698
Referenceprice after
consolidationin EUR
6.64
11.68
11.02
Outstandingat the end of
the period
54,000
137,500
27,000
Outstandingat the begin-
ning of theperiod
58,000
137,500
27,000
so-called “stripped” government bond whereby an interest
rate is established for a “synthetic zero-coupon note” by
separating the interest claims from the capital amount
from a financial point of view with the aim of excluding the
reinvestment problem for distributed interest amounts.
The estimates are reviewed on each balance sheet date.
The effects of any changes of original estimates which may
have to be taken into account are included in the profit
and loss account by means of an appropriate adjustment
in the equity capital over the outstanding period in questi-
on.
The payment includes with the exercise of the options are
credited to subscribed capital (nominal value) and to the
capital reserve.
Consolidated Financial Statements I Notes
92
3.12 Accruals and liabilities
MATURITY DATES OF ACCRUALS AND LIABILITIES in EUR '000
Long-term liabilities
Long-term accruals
Pension accruals
Financial depts
Deferred tax liabilities
Total
Previous year
Short-term liabilities
Bonds
Liabilities to banks
Advance payments
Trade accounts payable
Liabilities due to joint ventures
Other liabilities
Other accruals
Tax accruals
Total
Previous year
Less than 1 year
0
0
30
5,577
3,353
17,516
1,386
44,106
9,837
5,267
87,072
81,172
1 to 5 years
1,763
64,549
8,966
75,278
192,302
0
0
Total
1,763
210
64,549
8,966
75,488
192,351
30
5,577
3,353
17,516
1,386
44,106
9,837
5,267
87,072
81,172
More than 5 years
210
210
49
0
0
3.13 Long-term financial liabilities
Long-term financial liabilities are mainly made up of the fol-
lowing items:
Convertible bond
Based on the authority granted by the annual general mee-
ting on July 22, 1999, the former EM.TV & Merchandising
AG issued a 4% p.a. convertible bond on the capital market
on February 16, 2000 with a nominal value of EUR 400
million and an original term of 5 years.
The convertible bond was restructured in 2004 on the
strength of an offer to all bond holders to conclude a wai-
ver agreement with EM.TV & Merchandising AG as a result
of which the bond holders were to completely release EM.TV
& Merchandising AG from its liabilities in connection with
the convertible bonds. Approximately 94.22 percent of the
bond holders had accepted the offer of EM.TV & Merchan-
dising AG by the end of the acceptance period and period
of grace on March 17, 2004 with the result that a nominal
amount of EUR 23,127,000 was still outstanding.
93
The outstanding convertible bonds have been transferred
to the Company as part of the restructuring process. The
annual general meeting of the Company resolved on March
19, 2004 to make an offer to the non-complying bond hol-
ders to exchange them into an equivalent number of shares
in EM.TV AG with a nominal value of EUR 1.00 per share
multiplied with the merger ratio of 10/73 instead of the
right arising in accordance with the conditions of the conver-
tible bond to make an exchange into a specified number of
bearer shares in EM.TV & Merchandising AG. The shares to
be granted will be issued from Conditional Capital IV.
After taking account of the merger, a convertible bond with
a nominal amount of EUR 1,000 justifies a conversion into
1.2894 ordinary shares in EM.TV AG with the result that
there were outstanding conversion rights to 29,820 ordinary
shares in EM.TV AG on December 31, 2005 with a par value
of the subscribed capital equivalent to EUR 1.00 per share.
The convertible bonds will bear interest at 4 percent p.a.
retroactively as from February 16, 2006 and are due for re-
demption on January 9, 2007 at a rate of EUR 1,172.51 for
each bond with a nominal amount of EUR 1,000, plus ac-
cumulated interest.
The convertible bond is separated into an equity portion
and a third party liability portion. The third party liability
portion bears interest over the term of the bond up to the
repayment amount.
The effective interest rate of the convertible bond is 7.4
percent. The fair value on the balance sheet date is EUR
26,017,875 (2004: EUR 22,664,460).
Bond with warrants attached
Based on the resolution of the annual general meeting on
March 5, 2004, the Management Board of the Company
was empowered to make a single issue of a bond with war-
rants attached with a total amount of EUR 50 million by
March 4, 2009 which entitle the purchase of 5,625,000
ordinary shares with a nominal value of EUR 1.00 in the
registered capital of the Company. On the strength of the
aforesaid authority, the bond with warrants attached was
issued on March 30, 2004 with an interest rate of 8 per-
cent p.a. and a maturity term of 5 years and with a separa-
ble and, after detachment, with an independent tradable
option right to subscribe for 112.5 ordinary shares in the
Company for a subscription price of EUR 1.00 per ordinary
share. The option rights are discharged from Conditional
Capital I.
As a result of the acceptance level which was less than 100
percent for the offer to restructure the 4% convertible bond
2000/2005, it was not possible to give out a nominal
amount of EUR 2,893,000 to former holders of the conver-
tible bond and was then withdrawn on September 28, 2004.
A nominal amount of EUR 47,107,000 was therefore outstan-
ding on January 1, 2005. The bonds with warrants attached
are payable on March 30, 2009 at a nominal amount of
EUR 1,000 plus accumulated interest. The Company is en-
titled to repurchase fractional bonds on the market. The
Company is also entitled to make a premature repayment
at 101 percent of the nominal amount, plus accumulated
interest.
Use was made of the aforesaid redemption right on June 30,
2005 and a partial nominal amount of EUR 10,000,000
was repaid.
CONVERTIBLE BOND in EUR ‘000
Equity portion
Liabilitiy portion
Total
31/12/2005
1,760
26,020
27,780
31/12/2004
1,760
24,226
25,986
Consolidated Financial Statements I Notes
94
A nominal amount of EUR 37,107,000 was still outstanding
on December 31, 2005.
As a result of the repayment possibilities referred to above,
there is a valid embedded derivative in view of the fact that
the refinancing possibilities of the Company have improved.
Reference is made in this respect to the notes on “Other
assets”.
The bond with warrants attached is separated into an equi-
ty portion and a third party liability portion. The third party
liability portion bears interest over the term of the bond
(at an effective rate of 10.9 percent) up to the repayment
amount.
As part of the aforesaid repayment all options not yet sepa-
rated from the bond with warrants attached up to the afore-
said date are listed as independently tradable option rights
on the stock exchange.
A total of 29,102 option rights (2004: 8,742) were issued
in 2005 and a total of 3,273,967 ordinary shares (2004:
983,474) were there upon issued with a par value of the
registered capital equivalent to EUR 1.00 per share. The
capital increase was entered in the commercial register on
February 7, 2006.
The remaining 9,263 option rights (2004: 38,365) were
quoted with a closing rate of EUR 375 at December 31,
2005 (2004: EUR 110.50) for each option right, with this
being equivalent to a current value of EUR 3,473,625
(2004: EUR 4,239,333) for the purchase of a total of
1,042,087 ordinary shares in EM.TV AG (2004: 4,316,063)
with a par value of the registered capital equivalent to EUR
1.00 per share.
The following securities have been provided for the bond
with warrants attached (net assets within the Group):
> a pledge on all shares in EM.Sport GmbH (TEUR 37,601)
> a pledge on all shares in Junior.TV Verwaltungs GmbH
(TEUR 28)
> a pledge on all limited partners’ shares in Junior.TV
GmbH & Co. KG (TEUR 69,508)
> a pledge on the account held by WestLB, with receipts
arising from the exercise of the option rights secured as
purchase warrants being made to this account (TEUR
2,379).
Purchase price liability
Other long-term liabilities of TEUR 4,200 (2004: EUR 0) are
connected with the finance required for the purchase of the
18.87 holding in DSF Deutsches SportFernsehen GmbH
and Sport1 GmbH. The financial liabilities bear interest at
market rates with the result that the fair value corresponds
with the book value.
Zero-coupon-note
The TEUR 113,439 shown under this heading in the previo-
us year resulted from the zero-coupon-note which was issu-
ed as part of the restructuring of the 4% convertible bond
of 2000/2005. This was repaid in full in February 2005
with the net proceeds arising from the sale of Tele München
Gruppe with a settlement ratio of 76.39 percent.
3.14 Pension accruals
Creation Club (CC) GmbH which was consolidated for the
first time on December 31, 2005 has made pension promi-
ses to its employees. The relevant pension plans relate to
defined benefit pension plans, with the pension obligation
BOND WITH WARRATNS ATTACHED in EUR '000
Equity portion
Liability portion
Total
31/12/2005
3,184
34,272
37,456
31/12/2004
3,184
42,628
45,812
95
being dependent in the remuneration of threw individual
employees when they go into retirement. The pension pro-
mise also includes widow, surviving dependants’ and invali-
dity pension benefits in addition to a retirement pension.
In view of the fact that no pension plan assets are availa-
ble within the meaning of IAS 19 and all actuarial gains
and losses are recorded immediately as soon as they have
been established, the corresponding reversionary cash
value of the pension promise (“present value of the defi-
ned benefit obligation - DBO”) and pension-related obligati-
ons are equivalent to the pension accruals as shown in the
balance sheet.
In view of the fact that the pension accruals only existed as
a result of the company acquisition on December 31, 2005,
it is not possible to present any development of the DBO.
The book value which simultaneously corresponds with the
fair value amounted to TEUR 210 on the balance sheet date.
In view of the fact that the pension obligations have only
been included in the consolidated financial statements at
December 31, 2005, there are no effects in the profit and
loss account as far as the report year is concerned.
3.15 Deferred tax liabilities
Deferred tax liabilities have been accrued in the amount of
TEUR 8,966 (2004: TEUR 7,316) and have developed as
shown in the following Table:
Other temporary differences are made up of a number of
individual items. In the first place, they relate to foreign
currency valuations of accounts receivable and payable,
tax write-offs on goodwill and other asset usage periods
deviating from a tax point of view.
We also refer to our comments and explanations on the tax
charge. The consolidation differences refer to consolidation
adjustments with an earnings effect.
3.16 Bonds
Convertible loan
Based on the approval of the annual general meeting of
EM.TV & Merchandising AG granted on September 17,
1997, the Management Board of EM.TV & Merchandising
AG issued a 2 percent p.a. convertible loan with a total
nominal amount of EUR 316,490 (formerly DM 619,000)
DEFERRED TAX LIABILITIES in EUR '000
Temporary differences in individual statements
Consolidation differences
Total
31/12/2005
8,623
343
8,966
31/12/2004
6,336
980
7,316
ASSUMPTION FOR THE CALCULATION OF THE PENSIONACCRUALS
Discount rate
Pension growth
Salary growth
Staff turnover rate
31/12/2005
4.25%
1.50%
2.00%
8.30%
COMPOSITION OF THE DEFERRED TAX LIABILITIES inEUR '000
Bonds
Own film productions
Costumer base activation
Non-recognition of accruals
Other temporary differences
Total
31/12/2005
1,361
1,223
1,977
1,881
2,524
8,966
31/12/2004
2,556
1,331
0
1,125
2,304
7,316
Consolidated Financial Statements I Notes
96
with a term of up to 10 years, i.e. at the latest by October
28, 2007. The conversion right may only be exercised for at
least one tenth of the loan amount or for a multiple there-
of. It may only be exercised for the first time two years
after it was granted for 50 percent of the shares to be pur-
chased and four years after it was granted for an additio-
nal 50 percent. The conversion price for the shares to be
exchanged is reduced if the borrower issues bonds with
conversion or option rights simultaneously granting a direct
or indirect subscription right to the shares or if the capital
increases as a result of the issue of new shares or if the
issue price falls below the falls below the relevant conversi-
on price for the convertible loan unless a subscription right
is granted to the loan lenders.
In connection with the merger of EM.TV & Merchandising
AG into EM.TV AG, the annual general meeting of the com-
pany resolved on March 19, 2004 that, instead of the right
of conversion into a bearer share of EM.TV & Merchandising
AG in exchange for the difference between the conversion
price and the nominal amount of the convertible loan to be
exchanged, the convertible loan creditors should be granted
a right of conversion into 10/73 ordinary bearer shares of
the company in exchange for payment of the difference bet-
ween the nominal amount of the convertible loan and the
conversion price for a share in EM.TV & Merchandising AG
in accordance with the terms and conditions of the conver-
tible loan. The shares to be granted are to be issued from
Conditional Capital II. The terms and conditions of the con-
vertible loan apply in other respects in accordance with the
loan contracts between convertible loan creditors and EM.TV
& Merchandising AG. The outstanding balance of the conver-
tible loan which also corresponds with its fair value amoun-
ted to EUR 30,038 on December 31, 2005 and included
conversion rights on a total of 80,476 ordinary shares.
3.17 Liablilities to banks
These relate to a short-term bank loan. The nominal interest
rate is 4.128 percent which simultaneously also reflects the
effective interest rate.
3.18 Trade accounts payable
The liabilities shown in the balance sheet are not collatera-
lised further with the exception of customary reservations
of ownership. The aforesaid liabilities of TEUR 17,516
(2004: TEUR 18,759) are mainly connected with licensing
or services.
3.19 Other liabilities
The significant liabilities from outstanding invoices mainly
result from delayed receipts of invoices from service pro-
viders in the sports sector.
Liabilities for personnel expenses relate to obligations for
bonuses, pensions which do not satisfy the relevant criteria
OTHER LIABILITIES in EUR '000
Outstanding invoices
Commissions and licences
Purchase price liabilities
Personnel liabilities
Other taxes and social security
Short-term interest
Debitor accounts with credit balances
Sales tax liabilities
Deferred income
Others
Total
31/12/2005
12,994
7,618
6,434
5,180
2,723
2,347
2,215
1,966
1,343
1,286
44,106
31/12/2004
12,452
7,463
0
2,884
2,478
2,834
2,130
4,114
596
1,560
36,511
97
of IAS 19 on the valuation of a accrual, together with
claims for overtime and outstanding vacation entitlements.
Interest liabilities – mainly attributable to the bond with
warrants attached – were lower in comparison with the pre-
vious year on account of the nominal partial repayment of
EUR 10 million remitted on June 30, 2005, plus the inte-
rest accumulated up to the payment date. Current interest
charges have been significantly reduced as a result of the
partial repayment.
The purchase price liability shown in the balance sheet is
connected with the acquisition of shares in Creation Club
(CC) GmbH and is due on March 15, 2006 at the latest.
3.20 Accruals
OTHER ACCRUALS in EUR '000
Licenses
Losses from onerous contracts
Accruals for litigations costs
Accruals for personnel expenses
Other accruals
Total
Balance1/1/2005
5,607
638
4,811
468
8,447
19,971
Changes inconsolidation
0
0
0
85
1
86
Balance31/12/2005
3,670
107
2,752
230
4,841
11,600
Utilization
2,093
313
282
133
823
3,644
Allocation
200
88
97
134
476
995
Release
44
306
1,874
324
3,260
5,808
The license accrual has been made for third party licenses
which have not yet been settled. The accrual for litigation
costs has been made in order to take account of various liti-
gation proceedings which are pending or threatening.
Other accruals include long-term obligations of TEUR 1,763
(2004: TEUR 3,100) in connection with vacant office premi-
ses, together with reinstatement commitments. Rents are
subject to an escalation clause.
Consolidated Financial Statements I Notes
98
4.1 Sales
With regard to the analysis of sales, reference is made to
the following segment reporting in the Notes (Section 6).
4.2 Own work capitalized
Own work capitalized in the amount of TEUR 569 (2004:
TEUR 1,152) relates to intangible assets produced internal-
ly (TV-/film productions).
4.3 Other operating income
Income from the release of accruals mainly consists of re-
leases of other accruals amounted to TEUR 3,260. These
include, inter alia, the release of an accrual for the purchase
of rights for servicing a skeleton agreement (TEUR 2,374)
and the release of an accrual for reinstatement obligations
(TEUR 700) in view of the fact that an agreement has been
reached with the lessor regarding a lapse of the aforesaid
obligation. This item is also marked by the release of accru-
als for litigation costs (TEUR 1,874). This partially resulted
from the termination of the underlying processes and revised
estimates regarding risks.
In the previous year, an agreement was reached on a final
and conclusive arrangement and settlement of all mutual
rights and license matters existing between Kirch Media,
Junior TV and EM.TV AG as part of the acquisition of the
second fifty percent of Junior TV GmbH & Co. KG from Kirch
Media GmbH & Co. KG in insolvency (“Kirch-Settlement”).
This gave rise to one-off income and expenses items in the
Group companies’ equivalent to a net amount of TEUR
17,226. In addition, the treatment as income as required by
IFRS 3 of the credit balance difference (“Badwill”) arising
from the transitional consolidation of Junior.TV GmbH &
Co. KG gave rise to an income of TEUR 30,994.
The income arising from the incremental value in the pre-
vious year resulted from the impairment test on the film
rights at the end of the year. It was established in this pro-
cess that the development of part of the film stock has
been better than was assumed in 2004. Part of the excep-
tional amortization charged in the past has been reversed
therefore. The impairment test in 2005 gave rise to no
incremental value requirement.
Income from the write-off of liabilities mainly relates to re-
leases of accrued debts which were not incurred to the full
extent.
OTHER OPERATING INCOME in EUR '000
Income from the release of accruals
Exchange gains
Prior year income
Income from teletext
Income from the release of bad dept provisions
Income from write-off of liabilities
Income from Kirch-Settlement
Write-up film portfolio
Income from the sale of TMG investment
Other income
Total
31/12/2005
5,808
4,598
3,100
2,738
1,970
1,561
0
0
0
2,638
22,413
31/12/2004
2,677
420
3,721
2,213
3,477
4,717
48,220
6,685
3,061
1,656
76,847
4. Explanatory Comments on Items in the Profit and Loss Account
Income not relating to the current year results from subse-
quent contract changes of contracts concluded in prior
periods or from the lapse of obligations included in prior
year annual financial statements.
Other operating income includes a whole range of items
which cannot be allocated to the items shown separately,
including insurance compensation payments, marketing
compensation, indemnity payments, supplier reimburse-
ments and other refunds.
Foreign exchange gains include earnings effects of TEUR
88 (2004: TEUR 190) arising from the valuation of foreign
currency options and the corresponding US-Dollar account.
4.4 Cost of materials
Expenses for licenses, commissions and materials amoun-
ting to TEUR 44,647 (2004: TEUR 40,987) are attributable
in full to payments for licenses and commissions in the
amount of TEUR 44,629 (2004: TEUR 40,987) and other
material expenses of TEUR 18 (2004: TEUR 0).
Expenses for bought-in services in the amount of TEUR
69,312 (2004: TEUR 76,951) are made up of usage-related
fixed asset disposals of TEUR 2,326 (2004: TEUR 9,151),
production costs of TEUR 60,958 (2004: TEUR 59,767)
and expenses for bought-in services amounted to TEUR
6,028 (2004: TEUR 8,033).
4.5 Personnel expenses
An expense of TEUR 3,698 has been taken into account
for contribution-related commitments, of which TEUR
2,968 were paid to the state pension fund.
4.6 Amortization and depreciation of intangible assets
and tangible fixed assets
The total amortization and depreciation charge of TEUR
15,548 (2004: TEUR 22,519) includes no amortization of
goodwill in view of the fact that the impairment tests gave
rise to no exceptional amortization charge.
Likewise no exceptional amortization of film rights was made
in 2005 (2004: TEUR 8,312) in view of the fact that no
additional impairment requirement was established on the
basis of the relevant impairment considerations.
As part of the impairment tests, the future beneficial
values of fixed assets have been determined by using the
discounted cash-flow method. A discount rate of 6 percent
was applied in these calculations.
4.7 Other operating expenses
99
31/12/2005
9,919
9,312
9,287
7,302
2,766
1,660
1,538
1,480
931
578
394
119
101
1,706
47,093
31/12/2004
9,083
10,120
5,425
6,713
1,641
1,628
1,600
3,026
1,250
2,022
456
204
854
1,304
45,326
OTHER OPERATING EXPENSES in EUR ‘000
Advertising and travelling expenses
Legal, consultancy and year-end costs
Additions in bad dept provisions
Rental, repair and maintenance expenses
Administration expenses
IT costs
Insurance expenses and dues
Exchange losses
Freelancer, other personnel expenses
Non-period expenses
Vehicle expenses
Costs of sales
Bank charges
Other expenses
Total
Consolidated Financial Statements I Notes
100
In addition to trade fair costs, advertising and travelling
expenses also include costs for advertising agencies and
marketing consultancy services.
Legal, consultancy and year-end costs include a wide range
of individual items for numerous projects, inter alia, con-
sultancy expenses (TEUR 1,833) are included in connecti-
on with the marketing of the 2006 FIFA World Cup™. The
costs for the sale of the TMG investment were also inclu-
ded under this heading in the previous year.
Bad debt provision expenses are mainly connected with
the write-down of advance payments in the amount of
TEUR 639 (2004: TEUR 1,278), an increased risk in receiv-
ables from a program agent in the amount of TEUR 2,346
(2004: TEUR 1,291) and provisions of TEUR 2,300 relating
to skeleton agreements in prior years which are not paid.
Exchange losses include TEUR 313 in connection with the
valuation of forward exchange transactions
4.8 Earnings from investments in associated companies
4.9 Interest and similar income
TEUR 2,685 (2004: TEUR 5,010) of the total interest and
similar income amounting to TEUR 527 (2004: TEUR 390)
are attributable to interest on accounts receivable and
TEUR 2,158 (2004: TEUR 2,379) to interest income on bank
credit balances and loans granted. TEUR 60 (2004: TEUR
55) of the loan interest is subject to a bad debt provision.
The amount in the previous year included an income of
TEUR 1,771 in connection with the discounting of non-con-
verted parts of the 4% convertible bond of 2000/2005
when they were rebooked and an income of TEUR 470 ari-
sing from the capitalization of an embedded derivative in
the 8% bond with warrants attached of 2004/2009.
4.10 Write-downs of financial investments and marketa-
ble securities
The write-down of financial investments and marketable
securities amounted to TEUR 11 (2004: TEUR 2,925). In
the previous year, they were almost exclusively attributable
to impairments of Tele München Gruppe as a financial
investment.
4.11 Interest and similar expenses
4.12 Restructuring gain
An one-off gain of TEUR 94,366 was made in 2004 on the
restructuring of the 400 million Euro 4% convertible bond
of 2000/2005. This consists of the following items:
1/1 to31/12/2005
347
-363
-16
1/1 to31/12/2004
21
-237
-216
EARNINGS FROM ASSOCIATED COMPANIES in EUR ‘000
Earnings from associated companies
Planeta Junior Group
Other companies
Total
31/12/2005
5,015
1,795
262
493
7,565
31/12/2004
3,441
724
0
198
4,363
INTEREST EXPENSES in EUR ‘000
Interest on the 8% bond with warrants attached of 2004/2009
Interest on the 4% convertible bond of 2000/2005
Valuation of derivatives
Other interests and similar expenses
Total
101
4.13 Taxation expenses
The anticipated tax rate (37.5 percent) has been calculated
in the amount of the corporation tax (25 percent) plus the
solidarity surcharge (5.5 percent of the corporation tax)
and the corresponding trade tax on income (11.1 percent).
Current and deferred taxes
The income tax calculation is based on the tax laws in
force in the financial year. An anticipated average rate of
37.5 percent has been used for calculating deferred taxes.
This takes account of the different national tax rates and
assumes that the calculated rate will probably apply upon
the materialization date of the relevant deferred taxes. It is
assumed that the calculated rate will probably apply when
the deferred taxes are realized.
The difference between the changes in the asset and liabi-
lity items in the balance sheet presentation of deferred
taxes between the report year and the previous year does
not correspond with the deferred tax expense as shown in
the profit and loss account, with this being attributable to
foreign currency conversions. The foreign currency conver-
sion difference amounts to TEUR 90 (2004: TEUR 93).
RESTRUCTURING GAIN in EUR ‘000
Waiver by holders (write-off of bond liabilities)
Surrender of zero-coupon-note
Write-down of investment in Tele München Guppe
Surrender of bond with warrants attached
Surrender of shares
Cash severance payments
Release of deferred tax liabilities
Others
Total
31/12/2004
422,146
-91,619
-144,505
-47,108
-28,265
-18,843
2,565
-5
94,366
31/12/2005
785
-294
-113
0
0
-114
-1,155
411
-755
290
36.9
31/12/2004
142,465
-53,425
0
-677
35,387
-14,171
0
0
387
-4,157
2.9
CALCULATION OF TAXES in EUR '000
Earnings before tax
Anticipated taxes by tax rate of 37.5 percent
Derivating tax rates
Write-down of deferred tax assets on losses carried forward
Tax-free income
Permanent differences
Deferred tax assets
Tax income for prior year
Other effects
Actual taxes
Effective tax rate in percent
4.14 Annual earnings per share
5.1 Composition of the net funds
5.2 Cash outflow attributable to changes in the consoli-
dated group
“Others” includes the additions for MUC Media GmbH and
EM.TV Sport Management GmbH and in the “Sport compa-
nies” column, the minority interest purchases by DSF,
Sport1 and Sport Media Holding. The incremental
assets and liabilities in the case of the first two companies
is immaterial in total. In the case of the minority interest
acquisitions, all that changes are the minority interests and
goodwill because these companies have already been con-
solidated in full.
Consolidated Financial Statements I Notes
102
CONSOLIDATED EARNINGS PER SHARE
Shareholders’ interest
Average number of outstanding shares
Average number of outstanding convertible and option rights
Shareholders’ interest per share undiluted
Shareholders’ interest per share diluted
1/1 to 31/12/2004
134,331 TEUR
41,669,042 shares
3,757,236 shares
EUR 3.22
EUR 2.96
1/1 to 31/12/2005
229 TEUR
51,527,546 shares
17,734,393 shares
EUR 0.00
EUR 0.00
5. Explanations on Individual Items in the Cash-Flow Statement
1/1 to31/12/2005
45,806
-5,577
40,229
-60,155
5,577
1.1 to31/12/2004
105,961
0
105,961
-22,381
-80,769
COMPOSITION OF THE NET FUNDS in EUR '000
Cash and cash equivalents*
Short-term liabilities to banks
Short-term net financial ressources at the end of the reporting year
Changes of liquidity funds
Changes of short-term liabilities to banks
*thereoff 10.432 TEUR are bound for security reasons (2004: 8.040 TEUR)
103
Creation Club(CC) GmbH
5,570
2,147
7,717
2,030
9
6
23
2,068
-210
-1,977
-956
-1,763
-85
-4,991
4,794
11,640
16,434
Sportscompanies
0
0
5,877
0
5,877
33,891
39,768
Total
5,570
2,147
7,717
2,030
59
307
23
2,419
10,136
5,852
-210
-1,977
-956
-1,849
-85
-5,077
775
10,911
45,602
56,513
307
-6,434
49,772
Others
0
50
301
351
-25
-86
-86
240
71
311
The allocation of sales and assets to the individual regions
has been made on the basis of the location where the rele-
vant performances of the Group companies were rendered.
Sales and services between the business sectors are basi-
cally performed at prices which would have been agreed by
third parties.
6. Segment Reporting
CASH OUTFLOW FROM INVESTMENTS in EUR '000
Intangible assets
Tangible assets
Non-current assets
Trade receivables
Other current assets
Cash and cash equivalents
Current assets
Minority interests
Pension accruals
Deferred tax liabilities
Trade account payables
Other liabilities
Other accruals
Short-term liabilities
Net worth
Goodwill
Purchase price
Acquired liquid funds
Outstanding purchase price
Cash outflow from investments
Consolidated Financial Statements I Notes
104
SEGMENT INFORMATION BASED ON REGIONS in EUR ‘000
External sales
Period results of associated companies
Segment assets
> thereof shares of associated companies
Segment investments
Rest ofEurope
1,305
347
10,270
3,082
1,142
Rest ofthe world
2,874
-19
4,871
0
1,363
Total
209,495
-16
309,762
5,253
15,193
German-speaking
205,316
-344
294,621
2,171
12,688
Group
209,495
0
569
22,413
-226,785
-15,547
5,692
-16
-11
-7,565
2,685
785
309,762
5,253
6,397
316,159
78,171
84,389
162,560
15,193
Entertainment
30,637
80
569
6,311
-31,919
-11,366
5,678
328
133,019
3,097
17,439
3,893
Others
1,101
0
0
9,828
-20,971
-1,055
-10,042
0
31,659
0
20,781
181
Sports
177,757
132
0
8,900
-176,733
-3,126
10,056
-344
145,084
2,156
39,951
11,119
Transition
0
-212
0
-2,626
2,838
0
0
6.1 Segment information from January 1 to December 31, 2005
SEGMENT INFORMATION BASED ON OPERATING SECTORS in EUR ‘000
External sales
Intercompany sales
Other capitalized service
Remaining segment gains
Segment expenses
> thereof amortization and depreciation
Segment result
Period result of associated companies
Non-allocated operational elements
Write-down financial assets and marketable securities
Interest expenses
Interest income
Earnings before taxes
Other segment informations
Segment assets
> thereof shares of associated companies
Non-allocated elements
Assets of the Group
Segment liabilities
Non-allocated elements
Liabilities of the Group
Segment investments
105
6.1 Segment information from January 1 to December 31, 2004
Group
206,619
1,152
76,847
-234,025
-22,519
-8,312
50,593
-216
-2,925
-4,363
5,010
94,366
142,465
421,406
2,768
5,217
426,623
80,016
193,507
273,523
18,343
Entertainment
28,973
1,152
64,491
-51,238
-18,688
-8,312
43,378
-216
334,690
2,768
50,225
13,525
Others
0
0
3,742
-18,304
-1,114
-14,562
0
472
543
0
Sports
177,646
0
8,614
-164,483
-2,717
21,777
0
86,244
29,248
4,818
Transition
0
SEGMENT INFORMATION BASED ON REGIONS in EUR ‘000
External sales
Period results of associated companies
Segment assets
> thereof shares of associated companies
Segment investments
Rest ofEurope
3,201
21
9,323
2,735
113
Rest ofthe world
3,098
-52
4,178
18
1,404
Total
206,619
-216
421,406
2,768
18,343
German-speaking
200,320
-185
407,905
15
16,826
SEGMENT INFORMATION BASED ON OPERATING SECTORS in EUR ‘000
External sales
Intercompany sales
Other capitalized service
Remaining segment gains
Segment expenses
> thereof amortization and depreciation
Segment result
Period result of associated companies
Non-allocated operational elements
Write-down financial assets and marketable securities
Interest expenses
Interest income
Restructuring gain
Earnings before taxes
Other segment information
Segment assets
> thereof shares of associated companies
Non-allocated elements
Assets of the Group
Segment liabilities
Non-allocated elements
Liabilities of the Group
Segment investments
Consolidated Financial Statements I Notes
106
7. Contingent Liabilities and Other Financial Commitments
7.1 Rental and leasing commitments
The company rents, hires and leases offices, storage space
and equipment. The contracts have outstanding terms of
between 1 and 7 years.
The main rental and leasing contracts arte allocable to the
“operating lease” category as defined in IAS 17.
The minimum obligations for non-terminable contracts at
December 31, 2005 are shown in the following Table:
7.2 Guarantees and warranties
Guarantees and warranties amounted to TEUR 8,073 at
December 31, 2005 (2004: TEUR 33,402).
The liability risk of EM.TV AG as shown in the previous year
to Jim Henson Company arising from the sale of the com-
pany expired on July 31, 2005 as far as most of the war-
ranties are concerned. There are nonetheless still statutory
warranty claims under US law which have not yet expired.
In the event of any over-indebtedness of the affiliated com-
panies Junior Produktions GmbH, EM Supply Handels-
gesellschaft mbH in liquidation, all based in Unterföhring,
and also EM.TV France S.A.S., Paris, the group parent com-
pany has issued letters of comfort and/or financing commit-
ments in which it undertakes to structure the aforesaid
companies financially in such a way that they are able to
settle their obligations in an orderly and proper manner.
These commitments amounted to TEUR 500 on the balan-
ce sheet date (2004: TEUR 672).
As a result of a liquidity guarantee to the indirect subsidiary
PLAZAMEDIA GmbH TV- und Film-Produktion, the Company
has undertaken up to a maximum amount of EUR 15 milli-
on to structure it financially in such a way that PLAZAME-
DIA GmbH TV- und Film-Produktion is at all times able to
settle all its payment obligations to its present and future
creditors on time.
7.3 Contingent liabilities
Contingent liabilities amounted to TEUR 5,000 (2004:
TEUR 7,067) at December 31, 2005. TEUR 4,500 (2004:
TEUR 3,000) thereof relate to litigation costs and TEUR
500 (2004: TEUR 1,277) to subsequent acquisition costs.
The probability of the contingent liabilities materializing is
well below 50 percent.
RENTAL AND LEASING CONTRACTS in EUR ‘000
Due within one year
Due between one and five years
Due after five years
Total
31/12/2005
13,689
31,318
3,680
48,687
31/12/2004
16,428
36,941
255
53,624
RENTAL AND LEASING CONTRACTS WITH JOINT VENTURES in EUR ‘000
Due within one year
Due between one and five years
Due after five years
Total
31/12/2005
76
77
0
153
31/12/2004
75
125
63
263
107
7.4 Purchase commitments
Contractual commitments for the purchase of license
rights and orders place for services for film productions
relating to children and youth programs and sporting rights
amounted to TEUR 47,371 on the balance sheet date
(2004: TEUR 78,991). TEUR 42,324 of the aforesaid com-
mitments (2004: TEUR 74,895) are attributable to the
acquisition of license rights and TEUR 4,047 to services
(2004: TEUR 4,096).
On January 11, 2006, the Company announced that
EM.Entertainment GmbH had acquired the remaining 50
percent in Yoram Gross-EM.TV PTY Ltd.. EM.Entertainment
now owns 100 percent of the Australian production group,
including a participation of 45 percent in Yoram Gross
Productions, a production unit forming part of the Group in
which the founders still retain a majority holding.
On February 14, 2006, DSF and Premiere agreed on a stra-
tegic co-operation extending over a period of three years.
Under the “Champions TV” brand name, Premiere is to pre-
sent a European top soccer game in the UEFA Champions
League live and unencrypted in DSF on every playing day
with effect from the 2006/2007 season. “Champions-TV”
selected matches of all the German teams and highlights
of additional games will be shown on the 13 playing days.
“Champions TV” which was developed in consultation with
UEFA is produced by Premiere. As a result of this agree-
ment, no significant effects are to be expected on the
sales and earnings of DSF. An increase in the market share
and a strengthening of if its position as the “Soccer chan-
nel” is anticipated, however.
On March 3, 2006, PLAZAMEDIA and Arena Sport Rechte
und Marketing GmbH (hereinafter referred to as “Arena”)
agreed on an extensive cooperation on March 3, 2006.
The agreement envisages that PLAZAMEDIA will exclusively
assume the whole technical production of the live reporting
of the games of the DFL Premier German Soccer League
and the Second Soccer League for the 2006/2007,
2007/2008 and 2008/2009 seasons. The transaction
volume will depend on the program project planned by
Arena and will probably be in the mid-double-digit-million-
Euro range over the whole period, but at least in the lower-
double-digit-million-Euro range.
8. Occurences after the End of the Fiscal Year
Consolidated Financial Statements I Notes
108
9.1 Relationships with associated companies
There are business relationships with associated participati-
ons in Tabaluga GbR for mediating sales of film and mer-
chandising rights. In the report year, commission payments
were made by Tabaluga GbR to Group companies in the
amount of TEUR 48 (2004: TEUR 0). Revenue participations
in the amount of TEUR 47 (2004: TEUR 43) also had to be
paid by Group companies to the aforesaid company.
There are business relationships with the associated partici-
pation in Planeta Junior S.L., Barcelona and its 100 percent
subsidiary Planeta Junior s.r.l., Milan arising from the sale
of film and merchandising rights. This gave rise to no sales
in the report year (2004: TEUR 9,005).
There are business relationships with the associated partici-
pation arena media GmbH, Munich arising from the provi-
sion of services as part of program arrangements and their
execution. This gave rise to sales of TEUR 315 in 2005.
The development of claims and liabilities is to be found
under the corresponding balance sheet items.
9.2 Relationships with related persons
Related persons in the Group are the members of the
Management Board and Supervisory Board and their rela-
tives as set out under Section 10.5. The wife of a Director
provided consultancy services of TEUR 12 during the
report year. The invoice has been paid in full. Services of
TEUR 120 were performed for companies in the Modern
Times Group which is controlled by the Supervisory Board
member Dr. Hans-Holger Albrecht. There were no outstan-
ding items on the balance sheet date. An office of the
attorneys of the former Supervisory Board member Dr.
Andreas Meissner submitted charges for services amoun-
ting to TEUR 32 up to his departure from the Supervisory
Board.
Notes on the remuneration of the members of the
Management Board and Supervisory Board are to be found
in Section 10.5.
9. Other Mandatory Disclosures
10. Other Explanations and Disclosures
10.1 Financial risks
Liquidity risk
A liquidity risk may also arise if the payment obligations of
the Group cannot be covered by existing liquidity or corre-
sponding credit lines. On the balance sheet date, the EM.TV
Group had adequate liquidity reserves on the 2005 balance
sheet date.
The EM.TV Group could be forced in the medium or long-
term to refinance its existing financial liabilities or to finan-
ce its growth by taking up external capital in the capital
market or through banks. It is, as yet, not certain that the
aforesaid financing resources will be available on market
conditions or whether they will be available at all.
109
Default risk
A creditworthiness or default risk exists with the danger
that the liable party in respect of a claim is unable to settle
his or its aforesaid claim. The maximum default risk with
original financial instruments corresponds in theory to the
current value of all claims less liabilities due to the same
liable parties if offsetting can be applied. In the annual
financial statements of EM.TV AG and the EM.TV Group,
identified default risks have been taken into account by
means of appropriate bad debt provisions. In addition, the
Company insures the risk of a default caused by the insol-
vency of a debtor by means of an insurance of accounts
receivable to a very large extent.
Currency risk
A currency risk exists in particular if accounts receivable or
payable are stated in a currency which is different from the
underlying currency used for the annual financial state-
ments. Exchange rate fluctuations can then change the
current value of the relevant Euro currency used in the
annual financial statements. The exchange rate of the US
Dollar/ Euro is important for the Group in this respect. In
order to reduce exchange rate risks associated with its
business activities, the Group concluded currency hedging
transactions with the US-Dollar relating to future payment
flows. In view of the fact that the development of the US
Dollar in terms of the Euro cannot be predicted, additional
effects on earnings may also arise in future in the afore-
said respect.
Interest risk
The Company is only exposed to interest fluctuations to a
minor extent. These interest fluctuations relate to liquid
funds, bank liabilities, convertible bond and bond with war-
rants attached which are sensitive to interest rate move-
ments. No interest hedging contracts have been concluded
in view of the fact that the Company only has minor finan-
cial instruments subject to variable interest rates.
10.2 Audit expenses
An expense of TEUR 379 payable to PriceWaterhouse
Coopers AG, auditor of the consolidated financial state-
ments, is shown under other operating expenses. This
amount refers exclusively to audit services. No consultancy
services were required in the report period.
10.3 German Corporate Governance Code
The Management and Supervisory Boards of EM.TV AG
have agreed on applying the German Code of Corporate
Governance for companies listed on a stock market. The
recommendations of the German Code of Corporate
Governance were met with only a view exceptions. The
statement is published on the homepage www.em.tv.
10.4 Number of employees
21 of the aforesaid employees (2004: 32) are attributable
to companies which have been included in the consolida-
ted financial statements on a pro rata basis.
The average number of employees in the Group developed
as follows in the fiscal year:
NUMBER OF EMPLOYEES
Salaried employees
Industrial employees
Total
2005
640
0
640
2004
609
0
609
Consolidated Financial Statements I Notes
110
10.5 Executive bodies of the company
Management Board
Werner E. Klatten, Hamburg (Chairman)
Rainer Hüther, Munich
Dr. Andreas Pres, Munich
The above-mentioned members of the Management Board
are members of the following control bodies:
Mr. Werner E. Klatten is a member of the following control
bodies:
> Member of the Advisory Board of Tele München Gruppe,
Munich (until January 31, 2005)
Dr. Andreas Pres is a member of the following control
bodies:
> Member of the Advisory Board of Tele München Gruppe,
Munich (until January 31, 2005)
Mr. Rainer Hüther was not a member of a control body
during the report year.
Remuneration of the members of the Management Board
The remuneration expense for members of the Management
Board amounted to TEUR 2,824 (2004: TEUR 2,866). The
total remuneration includes fixed payments of TEUR 1,594
and variable payments of TEUR 1,230. TEUR 28 (2004:
TEUR 31) are also booked as expenses for option rights
issued to members of the Management Board.
Compensation to the members of the Supervisory Board
amounted to TEUR 165 (2004: TEUR 165) in the financial
year from January 1 to December 31, 2005. No share opti-
on rights were issued to members of the Supervisory
Board. No shares in the Company were held by members of
the Supervisory Board either.
Supervisory Board
Dr. Bernd Thiemann, Managing Partner of Drueker & Co.
GmbH Co. KG , Frankfurt a.M. (Chairman)
Prof. Dr. h.c. Roland Berger, Management Consultant,
Munich (Deputy Chairman until July 5, 2005)
Dr. Andreas Meissner, Attorney-at-Law, Hamburg (until July
5, 2005)
Dr. Hans-Holger Albrecht, President of the Management
Board of Modern Times Group AB, Stockholm (Deputy
Chairman as from July 5, 2005)
Arthur Bastings, Managing Director of Discovery Networks
Europe, London (as from July 5, 2005)
Unterföhring, March 17, 2006
Management Board of the Group parent Company
Werner E. Klatten, Chairman of the Management Board
Rainer Hüther, Member
Dr. Andreas Pres, Member
SHAREHOLDINGS AND OPTIONS HELD BY MANAGEMENT BOARD
Werner E. Klatten
Rainer Hüther
Dr. Andreas Pres
Shares held
0
0
6,000
Share options
27,397
27,397
27,396
111
We have audited the consolidated financial statements
prepared by the EM.TV AG, comprising the balance sheet,
the income statement, statement of changes in equity,
cash flow statement and the notes to the consolidated
financial statements, together with the group management
report, which is combined with the management report of
the EM.TV AG for the business year from January 1 to
December 31, 2005. The preparation of the consolidated
financial statements and the combined management
report in accordance with the IFRSs, as adopted by the EU,
and the additional requirements of German commercial
law pursuant to § (Article) 315a Abs. (paragraph) 1 HGB
("Handelsgesetzbuch": German Commercial Code) are the
responsibility of the parent Company's Board of Managing
Directors. Our responsibility is to express an opinion on the
consolidated financial statements and the combined
management report based on our audit.
We conducted our audit of the consolidated financial state-
ments in accordance with § 317 HGB and German general-
ly accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer (Institute
of Public Auditors in Germany) (IDW). Those standards
require that we plan and perform the audit such that miss-
tatements materially affecting the presentation of the net
assets, financial position and results of operations in the
consolidated financial statements in accordance with the
applicable financial reporting framework and in the combi-
ned management report are detected with reasonable
assurance. Knowledge of the business activities and the
economic and legal environment of the Group and expecta-
tions as to possible misstatements are taken into account
in the determination of audit procedures. The effectiveness
of the accounting-related internal control system and the
evidence supporting the disclosures in the consolidated
financial statements and in the combined management
report are examined primarily on a test basis within the fra-
mework of the audit. The audit includes assessing the
annual financial statements of the companies included in
consolidation, the determination of the companies to be
included in consolidation, the accounting and consolidati-
on principles used and significant estimates made by the
Company's Board of Managing Directors, as well as evalua-
ting the overall presentation of the consolidated financial
statements and the combined management report. We
believe that our audit provides a reasonable basis for our
opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit the con-
solidated financial statements comply with the IFRSs, as
adopted by the EU, the additional requirements of German
commercial law pursuant to § 315a Abs. 1 HGB and give a
true and fair view of the net assets, financial position and
results of operations of the Group in accordance with these
provisions. The combined management report is consistent
with the consolidated financial statements and as a whole
provides a suitable view of the Group's position and suitably
presents the opportunities and risks of future development.
Munich, March 17, 2006
PricewaterhouseCoopers AG
Wirtschaftsprüfungsgesellschaft
Wagner, German Public Auditor
Fell, German Public Auditor
11. Auditors’ Report
Consolidated Financial Statements I Auditors’ Report
113
Annual Financial Statements I Content
Annual Financial Statements EM.TV AG
114 Balance Sheet 116 Profit and Loss Acount
Annual Financial Statements I Balance Sheet
114
31/12/2005
837
3
928
479
197,529
0
1,098
439
201,313
17,837
24,270
0
14,631
0
25,909
82,647
42
284,002
31/12/2004
24,876
3
1,160
576
130,854
1,976
8,338
578
168,361
18,266
18,214
5,369
9,856
1,146
73,429
126,280
412
295,053
ASSETS AT DECEMBER 31, 2005 in TEUR
Fixed assets
Film and merchandising rights, software programs
Advance payments
Land, property rights and buildings
Other equipment, factory and office equipment
Shares in affiliated companies
Loans to affiliated companies
Shares in associated companies
Loans to associated companies
Current assets
Trade receivables
Receivables due from affiliated companies
Receivables due from associated companies
Other assets
Other securities
Checks, Cash on hand and bank balances
Deferred expenses
Assets
115
31/12/2004
65,617
983
135,273
50
-38,810
163,113
0
22,975
22,975
73,568
2,975
9,688
14,900
3,097
4,737
108,965
295,053
31/12/2005
66,601
3,274
136,833
50
-37,266
169,492
1,155
17,619
18,774
63,841
1,652
3,746
14,759
3,211
8,527
95,736
284,002
EQUITY AND LIABILITIES AT DECEMBER 31, 2005 in TEUR
Equity
Subscribed capital
Contributions made to execute the resolved captial increase
Capital reserves
Other reserves
Accumulated losses
Accruals
Tax acccruals
Other accruals
Liabilities
Bonds
Advanced payments
Trade accounts payable
Liabilities due to affiliated companies
Liabilities due to associated companies
Other liabilities
Equity and liabilities
Annual Financial Statements I Profit and Loss Account
116
1/1 to31/12/2004
23,719
9,984
-10,012
-536
-10,548
-6,420
-677
-7,097
-12,441
-25,819
-22,202
39,725
3,835
-40,640
-9,374
-6,454
-28,656
-9,633
-517
-1
-38,807
-3
-38,810
1/1 to31/12/2005
8,795
12,556
-41
-2
-43
-6,512
-507
-7,019
-1,055
-19,589
-6,355
11,273
2,613
-153
-4,598
9,135
2,780
0
-1,234
-2
1,544
-38,810
-37,266
JANUARY 1 TO DECEMBER 31, 2005 in TEUR
Sales
Other operating income
Expenses for licenses, comissions and materials
Expenses for outside services
Cost of materials
Salaries
Social security and pension costs
Personnel expenses
Amortization of intangible assets and depreciation of tangible fixed assets
Other operating expenses
Earnings before interest and taxes
Income from participations
Interest and similar income
Write-downs of financial assets and marketable securities
Interest and similar expenses
Financial result
Earnings for ordinary business
Extraordinary expenses
Taxes on income and earnings
Other taxes
Earnings after taxes
Loss carried forward
Accumulated losses
Finance calendar 2006
May 23, 2006 Report for the first quarter of 2006
June 30, 2006 Annual General Meeting (AGM) for 2005
business year
August 22, 2006 Report for the second quarter of 2006
November 21, 2006 Report for the third quarter of 2006
Note: Analysts conference calls will usually be on the release day of the annualreport and the quarterly reports respectively.
Production credits
Published by
EM.TV AG
Beta-Straße 11, 85774 Unterföhring, Germany
Tel. +49 (0) 89 99 500-0, Fax +49 (0) 89 99 500-111
E-Mail [email protected], www.em.tv, HRB 148 760 AG Munich
Edited by
EM.TV AG Kommunikation/Investor Relations
Frank Elsner Kommunikation für Unternehmen GmbH,
Westerkappeln
Designed by
EM.TV AG Graphics
Picture credits
Andreas Pohlmann Fotografie,
PLAZAMEDIA, DSF, Yoram Gross-EM.TV
EM.TV AGBeta-Straße 1185774 Unterföhring, GermanyTel. +49 (0) 89 99 500-0Fax +49 (0) 89 99 500-111E-Mail [email protected] www.em.tvHRB 148 760 AG Munich