annual financial statement 2011 - conwert Immobilien Invest SE
annual financial statement 2011 - conwert Immobilien Invest SE
annual financial statement 2011 - conwert Immobilien Invest SE
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51 551<br />
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Operating environment<br />
Organisation Organ Org Or Org Or Org Or Org Or Org Or Org rg rgan a and corporate structure<br />
Notes in accordance ac with § 243a para 1 UGB<br />
Development t of o business<br />
Development of f revenues r<br />
Development of earnings ea a<br />
Analysis of balance e sheet<br />
Employees<br />
Research and development<br />
develo<br />
Risk management t report r<br />
Outlook<br />
Post-balance sheet sh s date report<br />
CONSOLIDATED CONSOL SOL OL OOL<br />
O FINANCIAL STATEMENT<br />
Notes N<br />
Auditors’ Report<br />
Report of the Administrative Board<br />
Corporate Governance Report<br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
<strong>conwert</strong> is a fully integrated<br />
property company focusing on residential<br />
properties and apartmen<br />
buildings bui buildi bbui bu bui bu bui ldi ldings ld ldi l ngs in iin Au Aus Au Aust Austria st str st str st<br />
and Germany<br />
This focus is comp complemented om mp mpple<br />
le l le by<br />
a commercial property rty p pportfolio<br />
<strong>conwert</strong> owns, develops, le let llets<br />
et ets and<br />
sells (older) high-quality pr pro proper- op<br />
ties ties in inner-city locations in rra<br />
pidly growing regions. <strong>conwert</strong>’s conwerr<br />
business model is based on th three r<br />
pillars: portfolio asset manage- mana ag a<br />
ment, ment, the the development development and<br />
d sale<br />
of properties properties and the the property p pr p<br />
service segment. The<br />
he c ccompany’s<br />
core cor c e competencies ccompete<br />
etenci ncies ci cies i es e ccomprise<br />
asse<br />
management, portfolio develop-
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
2
CONTENT<br />
5<br />
8<br />
11<br />
12<br />
14<br />
17<br />
19<br />
22<br />
26<br />
27<br />
28<br />
35<br />
41<br />
42<br />
51<br />
118<br />
119<br />
121<br />
132<br />
154<br />
155<br />
156<br />
157<br />
174<br />
177<br />
Statement of all Legal Representatives<br />
MANAGEMENT REPORT<br />
Operating environment<br />
Organisation and corporate structure<br />
Notes in accordance with § 243a para 1 UGB<br />
Development of business<br />
Development of revenues<br />
Development of earnings<br />
Analysis of balance sheet<br />
Employees<br />
Research and development<br />
Risk management report<br />
Outlook<br />
Post-balance sheet date report<br />
CONSOLIDATED FINANCIAL STATEMENT<br />
Notes<br />
Auditors’ Report<br />
Report of the Administrative Board<br />
Corporate Governance Report<br />
FINANCIAL STATEMENTS<br />
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
Management report<br />
Balance sheet<br />
Income <strong>statement</strong><br />
Schedule of non-current assets<br />
Notes<br />
Auditors’ Report<br />
Imprint<br />
CONWERT<br />
IMMOBILIEN INVEST <strong>SE</strong><br />
<strong>conwert</strong> is a fully integrated<br />
property company focusing on residential<br />
properties and apartment<br />
buildings in Austria and Germany.<br />
This focus is complemented by<br />
a commercial property portfolio.<br />
<strong>conwert</strong> owns, develops, lets and<br />
sells (older) high-quality properties<br />
in inner-city locations in rapidly<br />
growing regions. <strong>conwert</strong>’s<br />
business model is based on three<br />
pillars: portfolio asset management,<br />
the development and sale<br />
of properties and the property<br />
service segment. The company’s<br />
core competencies comprise asset<br />
management, portfolio development<br />
and property services, which<br />
range from property management<br />
to sales and the privatisation of<br />
apartments.<br />
<strong>conwert</strong> relies on a transparent<br />
corporate culture and a clear strategy<br />
for the implementation of its<br />
objectives. A code of conduct applicable<br />
to all employees of the group<br />
lays down the ethical principles<br />
of entrepreneurship and governs<br />
the behaviour of employees when<br />
dealing with one another and with<br />
the stakeholders.<br />
3
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
4
| MANAGEMENT REPORT | CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
INTRO<br />
Statement of all Legal Representatives<br />
STATEMENT BY THE LEGAL REPRE<strong>SE</strong>NTATIVES<br />
OF CONWERT IMMOBILIEN INVEST <strong>SE</strong> IN ACCORDANCE<br />
WITH § 82 (4) 3 OF THE AUSTRIAN STOCK EXCHANGE ACT<br />
“The Executive Directors confirm to the best of their knowledge that<br />
the consolidated <strong>financial</strong> <strong>statement</strong>s give a true and fair view of the assets, liabilities, <strong>financial</strong><br />
position and profit or loss of the group as required by the applicable accounting standards and that<br />
the group management report gives a true and fair view of the development and performance of<br />
the business and the position of the group, together with a description of the principal risks and<br />
uncertainties the group faces.<br />
the separate <strong>financial</strong> <strong>statement</strong>s give a true and fair view of the assets, liabilities, <strong>financial</strong> position<br />
and profit or loss of the parent company as required by the applicable accounting standards<br />
and that the management report gives a true and fair view of the development and performance of<br />
the business and the position of the company, together with a description of the principal risks and<br />
uncertainties the company faces.”<br />
Vienna, 26 March <strong>2011</strong><br />
Executive Directors<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
Thomas Doll Franz Jürgen Kelber<br />
Member Member<br />
5
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
6<br />
_ 6,904 units<br />
_ Increase in total revenues by 55.9%<br />
_ 613.3 million € proceeds on property sales at 8.7% margin
sold<br />
_ EBIT increase plus 16.1%<br />
_ Reduction of total vacancies (3.3)%<br />
MANAGEMENT REPORT<br />
7
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
8<br />
OPERATING ENVIRONMENT<br />
THE ECONOMIC SITUATION IN EUROPE<br />
The uncertainty related to the European sovereign debt crisis, which was strongly influenced by<br />
the developments in Greece, Italy and Spain, grew worldwide in the second half of <strong>2011</strong>. After three<br />
preceding interest rate moves in the year <strong>2011</strong>, the Governing Council of the European Central<br />
Bank (ECB) again reduced its monetary key rate by 25 basis points on 8 December <strong>2011</strong>. The rate<br />
on main refinancing operations therefore declined to 1.00% as of 14 December <strong>2011</strong>. At the same<br />
time, the interest rate on the marginal lending facility was also reduced by 25 basis points to 1.75%<br />
and the deposit rate was decreased by the same amount to 0.25%. After this fourth and last change<br />
of the interest rate in the past <strong>financial</strong> year, the base rate was back to the record low of the period<br />
from May 2009 to April <strong>2011</strong> again at the end of the year <strong>2011</strong>.<br />
Although the Austrian economy had been cooling off since mid-<strong>2011</strong>, because of the general<br />
economic conditions in Europe, the gross domestic product (GDP) increased by +3.3% for the whole<br />
year <strong>2011</strong> thanks to a strong first half of the year.<br />
The gross domestic product of Germany rose by 3.0% during the same period. As in Austria, growth<br />
in Germany was mainly concentrated on the first six months of the year <strong>2011</strong>. Above all, strong<br />
domestic demand and the relatively high level of consumer spending turned out to be of great<br />
support to the economic development in Germany.<br />
THE INVESTMENT MARKET EUROPE <strong>2011</strong><br />
As a result of a particularly strong final quarter, the transaction volume of the European commercial<br />
property market rose to 115.0 billion € in <strong>2011</strong>, up 4% on the previous year. In the fourth<br />
quarter of <strong>2011</strong>, the transaction volume even exceeded the prior quarter by 15% and amounted<br />
to 32.0 billion €. This reflects the trust investors place in the European property market –<br />
especially in Germany, France, the United Kingdom and the Nordic countries.<br />
(CBRE Germany, press release 18 January 2012)<br />
OPERATING ENVIRONMENT AUSTRIA<br />
INVESTMENT MARKET<br />
In the Austrian investment market, demand was strong in <strong>2011</strong> and the price level high at the same<br />
time. Overall, investments in properties totalled approximately 1.7 billion €. In comparison with<br />
the previous year, the transaction volume rose by nearly 7%, but fell short of experts’ estimates<br />
due to lower investments in the commercial property segment. This was above all attributable to<br />
the limited credit financing for medium and larger transactions. While the commercial property<br />
segment was faced with persistent low demand for retail space in the <strong>financial</strong> year <strong>2011</strong>, transactions<br />
in the market for apartment buildings from the late 19th century in Vienna increased. The<br />
trend towards increasing prices and decreasing yields is expected to continue to a moderate extent<br />
in this segment in 2012. The establishment of ownership in apartment buildings with a subsequent<br />
sale of freehold flats turned out to be particularly attractive for investors in <strong>2011</strong> as yields on<br />
rentals were low and the selling price for freehold flats was high.<br />
(CBRE Austria – Vienna Offices Market View <strong>2011</strong>, EHL Immoflash today 25 January 2012)<br />
RESIDENTIAL PROPERTY MARKET VIENNA<br />
The strong demand in the residential property market in Vienna was again contrasted by<br />
scarce supply in <strong>2011</strong>. This resulted in above-average price increases of up to 20% for soughtafter<br />
objects in good locations. Properties that were traded at a market value of 2,500 €/sqm<br />
two years ago, cost roughly 3,000 €/sqm in <strong>2011</strong>. In prime locations (not including the first<br />
district of Vienna) the purchase price for newly built freehold flats even ranged between 3,500<br />
and 5,000 €/sqm. Loft extensions cost between 3,500 and 5,500 €/sqm on average, depending<br />
on location. In the market for used freehold flats, prices ranging from 2,000 to 3,000 €/sqm<br />
were realised in moderate locations and up to 4,500 €/sqm in good locations. In the first district,<br />
purchasing prices for freehold flats ranged between 8,000 and 16,000 €/sqm.
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Operating environment<br />
In contrast to the massive increase in purchase prices for freehold flats, prices for rented<br />
apartments remained stable in <strong>2011</strong> despite high investments in furnishings and refurbishing,<br />
which were above all carried out by institutional rental companies. In inner-city locations, rental<br />
prices for objects with very good facilities ranged between 10 and 13 €/sqm, in less favourable<br />
locations outside the Gürtel road between 7 and 9 €/sqm.<br />
(ÖVI, December <strong>2011</strong> and Verband Österreichischer <strong>Immobilien</strong>treuhänder, 16 December <strong>2011</strong>)<br />
VIENNA APARTMENT BUILDING MARKET<br />
The demand for the classic apartment building from the late 19th century continued unabated in<br />
<strong>2011</strong>. According to the entries in the land register, a total of roughly 800 million € was invested in<br />
purchasing apartment buildings from this period in Vienna. In the whole year <strong>2011</strong> the number of<br />
transactions rose by 53.8% to 1.230 million € in comparison with the prior-year reference period.<br />
More than half of this volume was invested in the districts inside the Gürtel road, with the central<br />
business district of Vienna remaining the undisputed leader in terms of price per square meter.<br />
(Otto <strong>Immobilien</strong>, Dr. Eugen Otto)<br />
COMMERCIAL & OFFICE PROPERTIES<br />
The Austrian retail market remained relatively stable in <strong>2011</strong>, roughly 230 €/sqm/month in top<br />
inner-city locations. The prime yield declined slightly in comparison with the previous year and<br />
amounted to 4.4% at the end of the year. Demand by international suppliers continued to focus on<br />
the “golden U” (the area comprising Kärntner Straße, Kohlmarkt and Graben) in Vienna.<br />
Shopping centres and retail parks also recorded a largely stable development in <strong>2011</strong>. The average<br />
prime rent of shopping centres in Austria amounted to approx. 100 €/sqm/month, that of retail<br />
parks to approx. 12.00 €/sqm/month. While demand for good locations continued, prices in less<br />
favourable locations were under higher pressure and the landlords were faced with high vacancy<br />
rates in some parts.<br />
(CBRE Austria, 15 November <strong>2011</strong>)<br />
<strong>Invest</strong>ors, above all open-end funds and insurance companies from Austria, placed their focus<br />
also on office properties in <strong>2011</strong>. New office space of approx. 188.00 sqm (incl. refurbishments)<br />
was produced, up 14% on the year 2010 (approx. 165,000 sqm). These spaces were primarily rented<br />
by local companies that had relocated. Relocations of international companies were the exception<br />
rather than the rule. The vacancy rate rose to 6.1% at the end of the year <strong>2011</strong> and is expected to<br />
continue to increase in 2012 (2012 estimate: 6.5%). With the exception of increasing rents in the<br />
first district, which amounted to approx. 23.75 €/sqm/month (+3.3% in comparison with 2010), the<br />
average rent remained stable overall, with prices between 9.00 and 16.00 € depending on location<br />
and quality of the object.<br />
(CBRE Vienna Offices Market View <strong>2011</strong>, EHL, fondsprofessionell 11 January 2012)<br />
9
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
10<br />
OPERATING ENVIRONMENT GERMANY<br />
RESIDENTIAL PROPERTY MARKET GERMANY<br />
According to property experts, the flight into tangible assets due to the persisting uncertain <strong>financial</strong> market in Europe led to<br />
strong demand for residential portfolios in the large metropolitan regions in <strong>2011</strong>. The very stable residential property market in<br />
Germany attracted above all institutional investors from Germany and abroad. According to an analysis by CBRE, the transaction<br />
volume of residential developments and residential complexes exceeding 50 units increased by 44% in <strong>2011</strong> compared to the<br />
previous year and amounted to 6.1 billion €. (The indirect proceeds from the IPO of the Berlin-based property company GSW AG<br />
with a share of roughly 29,500 residential units were not considered in this calculation). With roughly 92,000 residential units sold<br />
in 194 registered transactions, the value exceeded the prior-year result by 27%. While twelve transactions comprising 1,000 or<br />
more residential units were carried out in 2010, 19 major transactions were registered in <strong>2011</strong>. On the buyer side, the investment<br />
market was dominated by publicly listed property companies with a share of 32% of the total volume, followed by private investors<br />
in combination with closed-end investment vehicles with a share of roughly 13.4%. Based on the number of transactions, the<br />
largest share, i.e. over 62% of investments in residential properties, was accounted for by the category up to 20 million € in <strong>2011</strong>.<br />
4.4 billion € or approx. 71% of the total volume came from buyers in Germany, followed by investors from the USA, at 5.7%, as<br />
well as Sweden and Austria with 4.2% and 3.4% respectively. On the seller side, publicly listed property companies were also the<br />
most active market participants and accounted for 24% of the transaction volume, followed by project developers and property<br />
developers, with roughly 12%.<br />
(CBRE Germany, press release 20 January 2012)<br />
BERLIN RESIDENTIAL PROPERTY MARKET<br />
The demand for residential properties in Berlin continued at a high level. With approximately 2.3 billion € and more than 32,300<br />
residential units traded, 37% of the nationally registered investment volume and 37% of all residential units were accounted for<br />
by the German capital. As a result of the large-volume transactions in Berlin and the project developments in the high-grade<br />
segment, the average purchase price per square meter reached 1,033.00 €. The yields for apartment buildings were still at a<br />
relatively moderate level compared to other metropolis areas. Experts estimate that in addition to the institutional investment<br />
segment, another 6.0 to 6.5 billion € were turned over through the sale of individual apartment buildings and freehold flats in<br />
<strong>2011</strong>. Yet, prices are still significantly below the level of 20 years ago despite the increase. While a freehold flat in Berlin cost some<br />
200,000 € in 1992, it is only 112,000 € today. Berlin thus underscores its position as the most important and most fungible local<br />
transaction market for residential properties in Europe.<br />
(Dr. Zitelmann GmbH, Berliner Zinshäuser – edition January 2012)<br />
In Berlin the asking rents continued to increase in the year <strong>2011</strong>. Apartments were offered for a cold rent of 6.59 € per square<br />
meter and month, versus 6.11 € in the previous year. This corresponds to an increase by 7.8%. Rents rose in the entire city, but<br />
not to the same extent in all price classes. The cold rent for high-quality apartments saw a particularly strong increase by 9.9%<br />
to an average of 12.04 € per square meter and month. The rising prices had the smallest effect on low-cost housing, where rents<br />
were up 4.6% to 4.50 €. Overall, low-rent apartments are still widely available in Berlin, but in the central locations of the city the<br />
available properties are becoming scarcer.<br />
(GSW / CBRE HousingMarketReport, Berlin <strong>2011</strong>)<br />
THE PROPERTY INVESTMENT MARKET GERMANY <strong>2011</strong> – OFFICE, COMMERCIAL, RETAIL<br />
In the investment market for commercial properties in Germany, roughly 5.8 billion € were invested in the last quarter of <strong>2011</strong>,<br />
a slightly higher volume than in the previous quarter, according to the property service provider CBRE. Overall, the transaction<br />
volume for commercial properties thus amounted to 22.6 billion € in the past <strong>financial</strong> year, which corresponds to an 18%<br />
increase on the previous year. After a significant increase by 36% on the previous year, retail accounted for roughly 10.5 billion €<br />
or nearly 47% of the total transaction volume. In addition, a total of 8.2 billion € (36%) was invested in office properties. Logistics<br />
and industry properties accounted for 904.0 million € or 4% of the investment volume. Other types of use recorded a share of<br />
just under 8% or 1.8 billion €, including investments in hotels of 1.1 billion € (or 4.9%). Moreover, investments in development<br />
properties with commercial use amounted to 1.2 billion € (5.1%). Overall, individual transactions accounted for nearly<br />
18.2 billion € or roughly 80% of the entire transaction volume in the investment year <strong>2011</strong>. In Germany’s five large investment<br />
centres (Berlin, Düsseldorf, Frankfurt, Hamburg and Munich) investments totalled 11.1 billion € in the past year, thus exceeding<br />
the previous year by 18%.<br />
(CBRE Germany, Q4 <strong>Invest</strong>ment Market Germany)
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Operating environment<br />
Organisation and shares<br />
ORGANISATION AND CORPORATE STRUCTURE<br />
INCL. STATEMENT REGARDING BRANCH OFFICES<br />
<strong>conwert</strong> is a publicly listed, single-tier Societas Europaea (<strong>SE</strong>), which consists of three corporate<br />
bodies: the Administrative Board, the Executive Board and the Annual General Meeting. The<br />
company is represented by two Executive Directors together, two Administrative Board members<br />
together, one Administrative Board member together with an Executive Director or a holder of<br />
power of attorney, or by an Executive Director together with a holder of power of attorney. Sole<br />
power of representation is thus not possible. The Administrative Board consists of a minimum of<br />
3 and a maximum of 5 persons.<br />
The place of business of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> is Vienna. The operating business is predominantly<br />
conducted through group-owned property holding companies.<br />
PROPERTY HOLDING COMPANIES<br />
In the business segment “Portfolio” <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> has wholly-owned subsidiaries<br />
in Austria, Germany, the Czech Republic, Hungary, Slovakia, Luxembourg and the Ukraine,<br />
which are operated as local property companies. As of 31 December <strong>2011</strong>, the share held in ECO<br />
Business-<strong>Immobilien</strong> AG in Vienna amounted to 95.76%. The results of ECO were fully consolidated<br />
for the first time in the third quarter of 2010.<br />
MANAGEMENT COMPANIES<br />
The management of <strong>conwert</strong>’s property portfolio, as well as trading and sales are carried out by<br />
<strong>conwert</strong> Management. The portfolios in Germany (located in Berlin & Leipzig) and Hungary (location<br />
Budapest), Slovakia (location Bratislava), the Czech Republic (location Brno) and the Ukraine (location<br />
Kiev) are each operated by local management companies.<br />
RESAG GROUP<br />
The RESAG Group is responsible for the property service business in Austria, including property<br />
management, administration, brokerage, apartment privatisations and the marketing of properties.<br />
<strong>conwert</strong> holds 100% in RESAG Property Management GmbH and 49% in RESAG <strong>Immobilien</strong>makler<br />
GmbH. In <strong>2011</strong> the contracts with RESAG <strong>Immobilien</strong>makler GmbH were completely<br />
renegotiated so that third-party comparisons are now possible. This will result in significant<br />
profitability and liquidity increases for <strong>conwert</strong> in the future. The property insurance brokerage<br />
business, which was previously the responsibility of RESAG Insurance Broker GmbH within the<br />
<strong>conwert</strong> Group, was externalised in <strong>2011</strong> for cost and efficiency reasons, and RESAG Insurance<br />
Broker GmbH was merged.<br />
CONWERT BAUDEVELOPMENT GMBH<br />
All construction management activities in Austria are currently performed by <strong>conwert</strong> Baudevelopment<br />
GmbH. The company primarily carries out modernisation projects. In the course<br />
of the corporate reorganisation <strong>conwert</strong> Bauträger GmbH was over several intermediate steps<br />
merged with RESAG Property Management GmbH.<br />
ALT+KELBER GROUP<br />
Since October 2007, alt+kelber has been a 100% subsidiary of the <strong>conwert</strong> Group in Vienna. The<br />
alt+kelber Group is a service provider for residential properties in Germany and, with its subsidiaries<br />
in Germany, is responsible for all property services of <strong>conwert</strong> including property management,<br />
administration, brokerage and apartment privatisation. alt+kelber currently manages approx.<br />
46,596 residential and commercial units in Germany, 13,745 units for <strong>conwert</strong> and 32,851 units<br />
for third parties. With the service segments consulting, management and marketing, alt+kelber<br />
addresses not only private and municipal housing companies, but also funds and banks as well<br />
as national and international private and institutional investors. The service provider, which was<br />
established 25 years ago and is based in Heilbronn, operates 46 offices throughout Germany and<br />
more than 430 employees. The restructuring/simplification of the alt+kelber Group has already<br />
been initiated and will be completed in 2012.<br />
11
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
12<br />
NOTES IN ACCORDANCE WITH § 243A PARA 1 UGB<br />
TRANSPARENCY AND CORPORATE GOVERNANCE<br />
A transparent and lean company structure will also strengthen the attractiveness of the <strong>conwert</strong><br />
share. This is why the Administrative Board unanimously decided to reduce the Executive Board<br />
to two persons – Jürgen F. Kelber as COO and Thomas Doll as CFO – after Volker Riebel resigned<br />
as CEO on 6 July <strong>2011</strong>, especially since the Administrative Board is more deeply involved in the<br />
operating business of a single-tier <strong>SE</strong> like <strong>conwert</strong> anyway. In accordance with § 243a para. 1 (9)<br />
of the Austrian Commercial Code (UGB), the two Executive Directors have the right to resign in the<br />
case of a takeover of <strong>conwert</strong> (“change of control”), which is associated with the entitlement to a<br />
payment of one up to a maximum of two gross <strong>annual</strong> salaries, depending on the remaining term<br />
of the employment contract. For more detailed information please refer to the Corporate Governance<br />
Report. In addition to different service relationships with subsidiaries which are included in<br />
the consolidated <strong>financial</strong> <strong>statement</strong>s as fully consolidated companies, the following related-party<br />
transactions were carried out: Thomas Rohr, Executive Director of <strong>conwert</strong> until 15 March <strong>2011</strong>,<br />
received commissions for property transactions brokered by him, which were paid via one of his<br />
companies. Two properties in Austria are let to Österreichisches Verkehrsbüro AG, whose CEO,<br />
Harald Nograsek, was a member of the Administrative Board of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
until 20 May <strong>2011</strong>. Subsidiaries of the alt+kelber Group are tenants of office space in an object in<br />
Germany. More detailed information on this topic can be found in the notes.<br />
At TPI Tourism Properties <strong>Invest</strong> AG, Volker Riebel resigned from the supervisory board in the extraordinary<br />
general meeting of 19 December <strong>2011</strong>. Johannes Meran was elected as a new member<br />
of the Supervisory Board with effect from the close of the general meeting on 19 December <strong>2011</strong>.<br />
SHARES OF THE COMPANY AND POSITION OF ITS SHAREHOLDERS<br />
On the balance sheet date at 31 December <strong>2011</strong>, the share capital of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong><br />
<strong>SE</strong> amounted to 853,592,730 €. It consists of 85,359,273 no-par ordinary bearer shares with voting<br />
rights, each with a stake of 10.00 € in the share capital. The company’s share capital is paid in<br />
entirely and all shares are evidenced in an amendable collective certificate. The certificate is deposited<br />
with Oesterreichische Kontrollbank AG, Am Hof 4, 1010 Vienna, as the custodial bank. In<br />
accordance with the articles of association claims to individual share certificates are excluded. All<br />
of the company’s shares issued as of the balance sheet date are admitted to trading on the Vienna<br />
Stock Exchange under the ISIN AT0000697750.<br />
Every single share grants its holder the right to participate in the Annual General Meeting and to<br />
exercise voting rights. Each share corresponds to one vote. Therefore no shareholder possesses<br />
any special rights of control.<br />
To the knowledge of the company, approximately 76.0% of the shares were free float as of<br />
31 December <strong>2011</strong>, 4.5% of the shares were in the possession of the company as a result of buying<br />
back treasury shares. The remaining shares of approx. 23% were held by a group of core shareholders<br />
with a long-term commitment, which includes Petrus Advisers Management Ltd, Petrus<br />
Advisers Control <strong>Invest</strong>ment Ltd, Albona I LP, Albona II LP, Albona III LP, Albona Ltd, Valluga LP<br />
and Valluga II LP. The Administrative Board and the Executive Board have no knowledge of any<br />
major changes in the shareholder structure after the balance sheet date.<br />
In accordance with § 4 paragraph 3 of the articles of association as amended on 11 October 2010,<br />
the Administrative Board was authorised until 8 June <strong>2011</strong> to increase the share capital of the<br />
company by a nominal 26,674,770 € by issuing up to 2,667,477 no-par bearer shares at a minimum<br />
issue price of 100% of the proportionate stake in the share capital per share, for a cash contribution<br />
or contribution in kind. This increase was possible in one or several tranches, also entirely or<br />
partially excluding subscription rights and also by means of indirect subscription rights in accordance<br />
with § 153 paragraph 6 of the Stock Corporation Act. In addition, the Administrative Board<br />
was authorised to determine the issue price and the conditions of the issue (authorised capital).<br />
However, the Administrative Board did not exercise this right.
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Organisation and shares<br />
In accordance with § 38 paragraph 2 <strong>SE</strong>G in conjunction with § 169 AktG, the Administrative Board<br />
is also authorised until 25 October 2012 to increase the company’s share capital by up to nominal<br />
400,121,590 € by issuing up to 40,012,159 no-par bearer shares at a minimum issue price of 100%<br />
of the proportionate stake in the share capital in one or several tranches, also by means of indirect<br />
subscription rights in accordance with § 153 paragraph 6 of the Stock Corporation Act, for a cash<br />
contribution or contribution in kind, and to determine the issue price and the conditions of the<br />
issue.<br />
Furthermore, the Administrative Board of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> was authorised at the<br />
extraordinary shareholder meeting of 11 October 2010 to acquire treasury shares of the company<br />
up to a legally defined maximum of 10% of the share capital at a minimum price of 4.0 € and a<br />
maximum of 14.0 € per share. The buyback of treasury shares is valid during a period of 30 months<br />
starting on the day the resolution is adopted. At its meeting held on 14 June <strong>2011</strong>, the Administrative<br />
Board adopted, based on the authorisation by the Annual General Meeting, the sixth share<br />
buyback programme, which is valid from 1 July <strong>2011</strong> to 30 June 2012. In the five preceding share<br />
buyback programmes, 2,894,445 <strong>conwert</strong> shares totalling 30.5 million € (not including fees) were<br />
repurchased in the period from 31 January 2008 to 30 June <strong>2011</strong>, of which 177,000 shares amounting<br />
to a total value of 2.1 million € were settled after 30 June <strong>2011</strong>. In the course of the sixth share<br />
buyback programme, a total of 967,519 shares with a value of 10.2 million € (not including fees)<br />
were acquired by 31 December <strong>2011</strong>. This corresponds to approximately 1.13% of the entire share<br />
capital. In total, the portion of treasury shares amounted to 4.52% of the share capital (i.e. 3,861,964<br />
shares) at the balance sheet date on 31 December <strong>2011</strong> and a value of 40.6 million € (not including<br />
fees). Considering the whole year <strong>2011</strong>, a total of 2,749,867 shares of a total value of 30.8 million €<br />
(not including fees) were bought back. This amount represents 3.22% of <strong>conwert</strong>’s share capital.<br />
In addition, the settlement for 11,485 units worth 0.1 million €, which had been purchased before<br />
31 December 2010, was carried out.<br />
In accordance with the Austrian Stock Exchange Act and the Publication Regulation, changes and<br />
transactions made within the buyback programme are published on the website www.<strong>conwert</strong>.at.<br />
Other <strong>statement</strong>s in accordance with § 243a paragraph 1 UGB are not applicable.<br />
Amendments to the articles of association are subject to a resolution by the Annual General Meeting.<br />
13
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
14<br />
DEVELOPMENT USABLE SPACE<br />
BY REGION (IN 1,000 SQM)<br />
3,000<br />
2,400<br />
1,800<br />
1,200<br />
600<br />
3,000<br />
2,400<br />
1,800<br />
1,200<br />
600<br />
3,500<br />
2,800<br />
2,100<br />
1,400<br />
700<br />
955<br />
1,422<br />
1,405<br />
1,008<br />
1,624<br />
1,439<br />
23<br />
93<br />
DEVELOPMENT USABLE SPACE<br />
BY <strong>SE</strong>GMENT (IN 1,000 SQM)<br />
2,453<br />
1,262<br />
894<br />
2010 <strong>2011</strong><br />
DEVELOPMENT OF PROPERTY AS<strong>SE</strong>TS<br />
(IN MILL. €)<br />
175<br />
2,453<br />
3,238<br />
826<br />
1,221<br />
2010 <strong>2011</strong><br />
Austria Germany<br />
Other Total<br />
Residential Retail/Offi ces<br />
Other Total<br />
1,362<br />
1,304<br />
2010 <strong>2011</strong><br />
Austria Germany<br />
Other regions Total<br />
26<br />
99<br />
163<br />
2,146<br />
2,146<br />
2,829<br />
DEVELOPMENT OF BUSINESS<br />
PROPERTY PORTFOLIO AND PROPERTY AS<strong>SE</strong>TS<br />
In <strong>2011</strong>, <strong>conwert</strong> used the market environment in Austria and Germany, which is still positive in the<br />
letting and sale of residential properties sector, to further expand its business activity. An<br />
increase in demand by private and institutional investors in these markets allowed <strong>conwert</strong> to realise<br />
the highest proceeds on the sale of properties in the company’s history in the past <strong>financial</strong> year.<br />
Moreover, <strong>conwert</strong> bought properties only in Germany. No properties were purchased in Austria.<br />
At 31 December <strong>2011</strong>, the <strong>conwert</strong> property portfolio consisted of 1,666 objects (2010: 1,811) in<br />
Austria, Germany and the other regions. The decline in the number of objects is attributable to<br />
the strong sales activities. This development is also reflected in the total usable space and the<br />
number of rental units. At the end of the year <strong>2011</strong>, total usable space amounted to 2,146,097 sqm<br />
(2010: 2,453,049 sqm) and the number of rental units to 22,923 (2010: 25,194 rental units), with<br />
apartments accounting for 18,312 units (2010: 20,307) and the commercial segment for 4,093 units<br />
(2010: 3,550). In addition <strong>conwert</strong> had 11,213 units parking spaces (2010: 11,894) and 518 „other<br />
units“ (2010: 580).<br />
The residential share amounted to 57% of <strong>conwert</strong>’s total usable space at 31 December <strong>2011</strong>.<br />
However, as <strong>conwert</strong> plans to sell ECO properties in the next 2 to 3 years, the share of residential<br />
space in relation to commercial space is expected to increase again in the future.<br />
At the end of <strong>2011</strong>, <strong>conwert</strong>’s property assets totalled 2,829 million € (2010: 3,238 million €), down<br />
12.6% due to a number of property sales. In the fourth quarter of <strong>2011</strong>, the entire portfolio of the<br />
<strong>conwert</strong> Group was subject to revaluation. For Germany, CBRE was commissioned. Their initial<br />
valuation of the German portfolio (including ECO) resulted in impairments of (48.1) million €, which<br />
were, however, offset by valuation gains of 58.7 million €. Consequently, the net result from the<br />
revaluation of the German portfolio was plus 10.6 million €. For Austria, the other countries and<br />
the ECO portfolio, a consortium led by Cushman & Wakefield won the bid for the valuation contract.<br />
The revaluation of the Austrian portfolio (including ECO) resulted in impairments of (33.9) million €,<br />
which were offset by valuation gains of 25.3 million €. The net gain from the revaluation of the<br />
Austrian portfolio amounted to (8.6) million €. In the other countries, the valuation (including ECO)<br />
resulted in (5.9) million € of impairments and 2.5 million € of valuation gains. The net valuation<br />
result equalled (3.4) million €. The net gain from the adjustment of fair value at 31 December <strong>2011</strong><br />
amounted to 7.8 million €. The revaluation result of <strong>conwert</strong> contains impairments on ECO properties<br />
of (18.0) million € valuation gains of 5.5 million €. Overall, negative fair value adjustments of<br />
(7.5) million € were recognised for properties held for sale in the past <strong>financial</strong> year. The bottom<br />
line is that the revaluation result for <strong>2011</strong> is basically unchanged (plus 0.3 million €). In the third<br />
quarter, the valuation result of <strong>conwert</strong> had still amounted to a (10.0), which was primarily attributable<br />
to the fact that a revaluation of the portfolio had to be carried out for Kapital & Wert <strong>Immobilien</strong>besitz<br />
AG, as part of the ECO portfolio, due to the <strong>financial</strong> year deviating from the calendar year<br />
and related impairment losses had to be recognised. The capitalisable investments in properties<br />
(CAPEX) amounted to approx. 74.4 million € in the past <strong>financial</strong> year. <strong>conwert</strong> confirms its NAV<br />
<strong>2011</strong> through the tender of the revaluation of the entire property portfolio of the <strong>conwert</strong> Group and<br />
at the same time records impairments on problematic properties.
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Development of business<br />
DEVELOPMENT OF RENTS AND VACANCIES<br />
The positive market environment led to a successful development of new rentals. The average residential<br />
rent in <strong>2011</strong> amounted to 5.37 €/sqm/month versus 5.19 €/sqm/month in the prior-year<br />
reference period. The average rent in the commercial sector equalled 9.32 €/sqm/month, also an<br />
increase in comparison with 2010 (8.25 €/sqm/month).<br />
Development of rents (sqm in €/m.) <strong>2011</strong> 2010 Change (in %)<br />
Residential 5.37 5.19 3.5<br />
Retail/Offices 9.32 8.25 13.0<br />
Due to the successful sale of properties with high vacancy rates, strategic vacancies improved<br />
from 4.4% in prior-year period to 5.1% in the past <strong>financial</strong> year <strong>2011</strong>. Actual vacancies increased<br />
slightly to 10.1% at the end of <strong>2011</strong> so that the vacancy rate amounted to 14.6% overall at the end<br />
of the <strong>financial</strong> year (2010: 15.1%). 47.8% of the total vacancies are attributable to only 30 objects,<br />
whose share in the property assets of <strong>conwert</strong> amounts to only 13.9%. Of the 30 objects with the<br />
highest vacancies, 13 are attributable to ECO.<br />
A consideration of the <strong>conwert</strong> portfolio not including that of ECO shows that a reduction of vacancies<br />
from 13.3% to 11.6% was realised in the past <strong>financial</strong> year. This significant improvement is<br />
primarily attributable to the sale of 77,902 sqm of vacant space. However, 6,976 sqm of new vacant<br />
space were added as a result of purchases.<br />
A separate consideration of the ECO portfolio shows that strategic vacancies in the property portfolio<br />
rose from 0% in the year 2010 to 2.0% in the year <strong>2011</strong> due to development measures, which<br />
entailed additional space that cannot be let in the short term. However, 13,973 sqm of vacant space<br />
were disposed of in the course of sales of properties from the ECO portfolio. Consequently, total<br />
vacancies at ECO rose from 23.5% to 26.7%. However, 57.4% of the ECO vacancies are attributable<br />
to only 5 objects, which represent only 12.3% of the property value of ECO (621.7 million €) and<br />
2.7% of <strong>conwert</strong>. The market value of these properties taken together totalled 76.6 million €.<br />
DEVELOPMENT VACANCIES<br />
CONWERT (in sqm/rate in %) ECO (in sqm/rate in %)<br />
280,000<br />
210,000<br />
140,000<br />
70,000<br />
267,000<br />
13.3%<br />
5.8%<br />
63,767<br />
6,976<br />
–9,936<br />
200,273<br />
11.6%<br />
5.0%<br />
2010 sale acquisition organic +/– <strong>2011</strong><br />
120,000<br />
90,000<br />
60,000<br />
30,000<br />
Total vacancies Strategic vacancies<br />
103,649<br />
23.5%<br />
13,973<br />
22,321 111,997<br />
26.7%<br />
2.0%<br />
2010 Verkauf Kauf Organisch +/– <strong>2011</strong><br />
15
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
16<br />
DEVELOPMENT OF PROPERTY MANAGEMENT<br />
(IN 1,000 SQM)<br />
5<br />
4<br />
3<br />
2<br />
1<br />
1.37<br />
2.77<br />
4.14<br />
1.33<br />
2.86<br />
4.19<br />
1.27<br />
3.41<br />
2009 2010 <strong>2011</strong><br />
RESAG alt+kelber<br />
Total<br />
DEVELOPMENT MANAGED SPACE<br />
(IN 1,000 SQM)<br />
5<br />
4<br />
3<br />
2<br />
1<br />
1.84<br />
2.30<br />
4.14<br />
2.16 2.03<br />
4.19<br />
1.91<br />
2.76<br />
2009 2010 <strong>2011</strong><br />
<strong>conwert</strong> Third-party assets<br />
Total<br />
4.67<br />
4.67<br />
PROPERTY <strong>SE</strong>RVICES<br />
In Austria and Germany, the property service segment saw several changes in the <strong>financial</strong><br />
year <strong>2011</strong>, and many successes were achieved. Amongst other things, three asset management<br />
departments in Austria were merged into one, accomplishing significant synergies in the management<br />
and re-letting of properties. Moreover, the technical and facility management departments<br />
of the RESAG Property Management GmbH were restructured in keeping with a streamlining of<br />
the group structure. The cooperation with RESAG GmbH <strong>Immobilien</strong>makler, a company in which<br />
<strong>conwert</strong> holds 49% and Wiener Privatbank 51%, was completely restructured in the <strong>financial</strong> year<br />
<strong>2011</strong>. As a result, the business relationship has now been put on a basis that allows third-party<br />
comparison. An internal sales department was established for the sale of entire apartment buildings<br />
or portfolios in order to internalise the profit of the most lucrative part of the sales and marketing<br />
activities. From the perspective of alt+kelber <strong>Immobilien</strong>vertrieb GmbH, the <strong>financial</strong> year<br />
<strong>2011</strong> was also characterised by massive restructuring, quality improvement and cost optimisation<br />
measures, which were implemented successfully. The combination of individual sales companies<br />
of the alt+kelber Group allowed the company to reach the goal of pooling sales competence in the<br />
year <strong>2011</strong>. Overall, 436,881 sqm were brokered in the reporting period with the help of the service<br />
companies, of which the <strong>conwert</strong> portfolio accounted for 224,139 sqm. 212.742 sqm were brokered<br />
for third parties.<br />
In total, <strong>conwert</strong> managed 63,100 units at 31 December <strong>2011</strong> through its service provider companies,<br />
after 57,618 units in the previous year. Space under management recorded an increase<br />
to approx. 4.67 million sqm (2010 approx. 4.19 million sqm). The sales units of the <strong>conwert</strong> Group<br />
sold <strong>2011</strong> 6,904 apartments in <strong>2011</strong>, with 115 objects accounting for 5,464 units. 80.3% of the sales<br />
of apartments were realised internally for the <strong>conwert</strong> Group, while business with third parties<br />
accounted for 19.7%. Newly brokered rental units totalled 7,811 units in <strong>2011</strong>, in comparison with<br />
6,687 units in the year 2010. Here the share of external customers came to 51.0%.<br />
At the balance sheet date, <strong>conwert</strong> had property assets totalling 2.83 billion € (2010: 3.24 billion €),<br />
which were managed by all management and service companies pertaining to the group.
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Development of revenues<br />
DEVELOPMENT OF REVENUES<br />
REVENUES<br />
Due to an increase in rental income and higher proceeds on property sales, total revenues<br />
improved by 55.9% to 852.9 million € in <strong>2011</strong> (2010: 547.2 million €). This improvement is primarily<br />
attributable to the increase in proceeds on the sale of properties by 88.6% in the past <strong>financial</strong> year.<br />
Development revenues (in mill. €) Rental income Proceeds on the<br />
sale of properties<br />
REVENUES BY REGION<br />
Service revenues Total revenues<br />
2009 162.3 361.3 36.6 560.2<br />
2010 187.7 325.1 34.4 547.2<br />
<strong>2011</strong> 210.0 613.3 29.5 852.9<br />
in mill. € <strong>2011</strong> 2010 Change<br />
Austria Germany Other Group Group Group (in %)<br />
regions elimination<br />
Rental income 82.5 122.6 6.0 (1.1) 210.0 187.7 11.9<br />
Proceeds on the sale of properties 309.0 292.9 11.5 0.0 613.3 325.1 88.6<br />
Revenues from property services 37.3 55.2 1.8 (64.8) 29.5 34.4 (14.2)<br />
Total revenues 428.8 470.7 19.3 (65.9) 852.9 547.2 55.9<br />
RENTAL INCOME<br />
In terms of rental income, <strong>conwert</strong> recorded an increase by 11.9% to 210.0 million € in the reporting<br />
period (2010: 187.7 million €). Net rental income (NRI) improved by 15.9% to 119.1 million €.<br />
The net initial yield amounted to 5.30% after 5.24% in the previous year.<br />
Rental income by region before group elimination (in %) <strong>2011</strong> 2010<br />
Austria 39.3% 40.1%<br />
Germany 58.4% 57.4%<br />
Other regions 2.8% 3.0%<br />
Development NRI by region (in million €) <strong>2011</strong> 2010<br />
Austria 46.9 41.2<br />
Germany 62.9 53.1<br />
Other region 3.4 3.9<br />
Group elimination 6.0 4.7<br />
Group 119.1 102.9<br />
119.1 mill. €<br />
Net Rental Income<br />
613.3 mill. €<br />
proceeds on the sale of properties<br />
55.9%<br />
increase in total revenues<br />
17
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
18<br />
PROCEEDS ON THE SALE OF PROPERTIES<br />
With total <strong>annual</strong> revenues of 613.3 million € in the year <strong>2011</strong>, <strong>conwert</strong> increased the proceeds on<br />
the sale of properties by 88.6% in comparison with the <strong>financial</strong> year 2010, thus nearly doubling<br />
this figure. The focus of the sales activities was placed on the two core markets Germany and<br />
Austria, with proceeds on the sale of properties being nearly equal in these two countries. In<br />
Austria, they totalled 309.0 million € and in Germany 292.9 million € in <strong>2011</strong>. The average profit<br />
margin of the objects sold in comparison with the IFRS figures shown in the balance sheet amounted<br />
to 8.7% in the whole <strong>financial</strong> year. The cash profit margin at 16.0% fell short of the prior-year<br />
figure of 27.8%. The IFRS profit for <strong>2011</strong> for the total portfolio of properties sold amounted to<br />
49.1 million € at the balance sheet date.<br />
Overall, <strong>conwert</strong> sold 5,542 residential and commercial units in the past <strong>financial</strong> year. The<br />
average selling price per sqm amounted to 1,354 €.<br />
Proceeds on sale by region (in %) <strong>2011</strong> 2010<br />
Austria 50.4% 68.3%<br />
Germany 47.7% 31.5%<br />
Other regions 1.9% 0.2%<br />
Margins on property<br />
sales (premium on carrying<br />
amount in %)<br />
Properties held as <strong>financial</strong><br />
investment<br />
Properties held<br />
for sale<br />
Cash margin IFRS margin<br />
2010 6.8 33.1 27.8 13.1<br />
<strong>2011</strong> 2.4 19.8 16.0 8.7<br />
<strong>SE</strong>RVICE REVENUES<br />
Service revenues from third parties equalled 29.5 million € in the <strong>financial</strong> year <strong>2011</strong>, down 14.2%<br />
on the figures of the prior-year reference period (2010: 34.4 million €). The decline is due to<br />
the consolidation of ECO, as the services rendered for ECO are now treated as internal service<br />
revenues in the entire year <strong>2011</strong>. Due to the massive growth in the third-party asset management<br />
business, especially in Germany, the decrease in revenues in the service sector resulting from the<br />
consolidation of ECO was, however, nearly completely compensated.<br />
Development of property services (in mill. €) Revenues from<br />
third party services<br />
Internal revenues Total revenues from<br />
property services before<br />
group elimination<br />
2009 36.6 33.9 70.5<br />
2010 34.4 52.0 86.4<br />
<strong>2011</strong> 29.5 64.9 94.4
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Development of earnings<br />
DEVELOPMENT OF EARNINGS<br />
The strong proceeds on the sale of properties and higher rental income due to the reduction of<br />
vacancies led to a very good development of the operating earnings figures. EBITDA (earnings<br />
before interest, tax, depreciation and amortisation) equalled 124.8 million € at 31 December <strong>2011</strong>.<br />
In comparison with the previous year (2010: 184.9 million € – adjusted for the effect from the consolidation<br />
of ECO), the result was up 32.5%, which is attributable to the lucky buy of ECO. But<br />
the operating success of <strong>conwert</strong> in <strong>2011</strong> is reflected in EBIT. Here, an increase by 16.1% was<br />
realised in comparison with the previous year. At the balance sheet date <strong>2011</strong>, EBIT amounted<br />
to 119.8 million € in comparison with the prior-year figure of 103.2 million €. The guidance of<br />
<strong>conwert</strong>, with a target of a minimum increase in EBIT by 15%, was therefore exceeded in the past<br />
<strong>financial</strong> year. Earnings before tax, EBT, also rose substantially by 95.0% to 23.6 million €.<br />
Overview of selected earnings data <strong>2011</strong> 2010 Change (in %)<br />
Rental income mill. € 210.0 187.7 11.9<br />
Proceeds on the sale of properties mill. € 613.3 325.1 88.7<br />
Service revenues mill. € 29.5 34.4 (14.2)<br />
Total revenues mill. € 852.9 547.2 55.9<br />
Property expenses mill. € (90.9) (84.9) (7.1)<br />
Disposals of properties mill. € (564.3) (287.4) (96.3)<br />
Other operating income mill. € 9.1 9.6 (5.2)<br />
Personnel expenses mill. € (35.3) (38.2) (7.6)<br />
Other operating expenses mill. € (46.7) (56.7) 17.6<br />
Gain from the acquisition of<br />
a company below market value<br />
mill. € 0 95.3 -<br />
Earnings before interest, taxes,<br />
depreciation and amortisation (EBITDA)<br />
mill. € 124.8 184.9 (32.5)<br />
EBITDA minus gain from the acquisition<br />
of a company below market value<br />
mill. € 124.8 89.6 39.3<br />
Net gains from fair value adjustments mill. € 7.8 7.8 -<br />
Negative fair value adjustments<br />
to properties held for sale<br />
mill. € (7.5) (5.4) (38.9)<br />
Depreciation, amortisation and impairment mill. € (5.3) (84.1) 93.7<br />
Earnings before interest and tax (EBIT) mill. € 119.8 103.2 16.1<br />
Financial results mill. € (96.2) (91.1) (5.6)<br />
Earnings before tax (EBT) mill. € 23.6 12.1 95.0<br />
Group profit mill. € 18.5 25.7 (28.0)<br />
Group profit after minority interests mill. € 23.3 23.8 (2.1)<br />
Funds from Operations (FFO) 1) mill. € 81.3 53.5 52.0<br />
Cash Profit 2) mill. € 73.8 44.1 67.3<br />
Net Rental Income (NRI) mill. € 119.1 102.9 15.7<br />
Earnings per share mill. € 0.28 0.29 (3.4)<br />
Adjusted earnings per share 3) mill. € 0.28 0.29 (3.4)<br />
FFO per share mill. € 0.98 0.65 50.8<br />
1) FFO: Earnings before tax (EBT) – net gain/loss from fair value adjustments + difference between cash gains on sale to IFRS gains on sale +<br />
depreciation + non-cash parts of fi nancial result and other costs<br />
2) Cash Profi t: FFO – actual income taxes paid<br />
3) Earnings per share after the deduction of actual income taxes paid<br />
DEVELOPMENT OF EBIT (IN MILL. €)<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
DEVELOPMENT OF EBITDA (IN MILL. €)<br />
200<br />
160<br />
120<br />
80<br />
40<br />
94.9<br />
105.0<br />
103.2<br />
184.9<br />
119.8<br />
2009 2010 <strong>2011</strong><br />
124.8<br />
2009 2010 <strong>2011</strong><br />
19
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
20<br />
Fair value adjustments <strong>2011</strong> by segment/region<br />
REVALUATION RESULT<br />
The revaluation result of <strong>conwert</strong>’s investment portfolio amounted to 7.8 million € at the balance<br />
sheet date. This is the result of the revaluations carried out by independent experts in accordance<br />
with IAS 40 in late <strong>2011</strong>. In the comparable period of the previous year, the revaluation result of the<br />
investment portfolio was at exactly the same level.<br />
The fair value, which is determined by independent experts, must always be taken into consideration<br />
for investment properties in accordance with IAS 40. Increases and decreases therefore have an<br />
effect on the balance sheet and income <strong>statement</strong> and can be seen in the net gains or losses from<br />
fair value adjustments. The lower of cost or market principle is applicable to properties available<br />
for sale, which stipulates that the lower of acquisition cost or fair value has to be applied. This<br />
means that revaluation gains higher than the acquisition costs are not possible. However, value<br />
impairments fully impact the balance sheet. The impairment of the portfolio of properties held for<br />
sale amounted to 7.5 million € in the past <strong>financial</strong> year (2010: 5.4 million €).<br />
Austria Germany<br />
Other<br />
regions <strong>2011</strong><br />
Net gain/(loss) from fair value adjustments mill. € (1.8) 11.3 (3.4) 7.81 1)<br />
<strong>Invest</strong>ment properties mill. € 1,053.2 1,219.5 151.4 2,424.2 1)<br />
Impairment of properties held for sale mill. € (6.8) (0.7) 0 (7.5) 1)<br />
Total valuation adjustments mill. € (8.6) 10.6 (3.4) 0.3 1)<br />
Property assets at 31/12/<strong>2011</strong> mill. € 1,361.7 1,304.0 162.9 2,828.6 1)<br />
Property assets per sqm of residential space € 1,606.1 984.7 1.041.7 1,148.7 1)<br />
Property assets per sqm of commercial space € 1,680.1 1,362.2 2,108.1 1,603.28 1)<br />
1) after consolidation<br />
DEPRECIATION AND AMORTISATION<br />
Depreciation and amortisation decreased significantly from 69.2 million € in 2010 to 5.3 million €<br />
in <strong>2011</strong>. This development is primarily due to amortisation of <strong>financial</strong> assets. A detailed presentation<br />
of impairments can be found under note 8.2. Intangible Assets.<br />
PERSONNEL EXPEN<strong>SE</strong>S<br />
Personnel expenses declined from 38.2 million € in the <strong>financial</strong> year 2010 to 35.3 million € in<br />
<strong>2011</strong>. This reduction resulted from cost savings due to leaner management and the restructuring<br />
of facility management, asset management, sales and marketing in Germany and Austria as well<br />
as of <strong>conwert</strong> Holding.<br />
OTHER OPERATING EXPEN<strong>SE</strong>S<br />
Other operating expenses amounted to 46.7 million € in <strong>2011</strong>, compared with 56.7 million €<br />
in 2010. They include as the main items brokerage commissions and sub-commissions for the<br />
brokerage and marketing of properties of 3.2 million € (2010: 4.8 million €), 6.4 million € for<br />
consulting services (2010: 9.5 million €) and valuation adjustments on receivables amounting to<br />
4.9 million € (2010: 11.4 million €).
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Development of earnings<br />
FINANCIAL RESULTS<br />
The <strong>financial</strong> results also deteriorated slightly by (5.6)% to minus (96.2) million € (2010:<br />
(91.1) million €).<br />
INCOME TAXES<br />
Tax expenses normalised in <strong>2011</strong> in contrast to 2010. In the <strong>financial</strong> year 2010, the <strong>conwert</strong> Group<br />
recorded a positive tax result of 13.5 million €. This was due to special effects related to the consolidation<br />
of ECO. In <strong>2011</strong>, tax expenses, at (5.1) million €, reflect a normalised tax volume.<br />
PROFIT FOR THE YEAR AND EARNINGS PER SHARE<br />
The group’s profit after income tax and minority interests equalled 23.3 million € at 31 December<br />
<strong>2011</strong>, down (2.1)% on the previous year (2010: 23.8 million €).<br />
Therefore, basic earnings per share of <strong>conwert</strong> of 0.28 € were realised taking into account minority<br />
interests. In the prior-year period, it had been 0.29 €, which corresponds to a decline by (3.4)%.<br />
FUNDS FROM OPERATIONS (FFO)<br />
FFO was raised by 52.0% to 81.3 million € in the <strong>financial</strong> year <strong>2011</strong> thanks to the good letting<br />
and selling business (2010: 53.5 million €). FFO per share also rose from 0.65 € to 0.98 € in the<br />
reporting period. This corresponds to an FFO yield of 11.5% with respect to the share price at<br />
31 December <strong>2011</strong>. This development is attributable to a significantly increased EBIT, higher net<br />
gains from sales and a substantially lower impact by one-off effects.<br />
DEVELOPMENT FFO (IN MILL.€)<br />
100<br />
80<br />
60<br />
40<br />
20<br />
72.6<br />
53.5<br />
81.3<br />
2009 2010 <strong>2011</strong><br />
<strong>conwert</strong><br />
21
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
22<br />
BALANCE SHEET STRUCTURE (IN MILL. €)<br />
3,500<br />
3,000<br />
2,500<br />
2,000<br />
1,500<br />
1,000<br />
500<br />
3,176.4 3,176.4<br />
Current<br />
assets<br />
596,4<br />
Non-current<br />
assets<br />
2,580.0<br />
Assets Liabilities<br />
<strong>conwert</strong><br />
Current<br />
liabilities<br />
462.7<br />
Non-current<br />
liabilities<br />
1,465.3<br />
Equity<br />
1,248.3<br />
ANALYSIS OF BALANCE SHEET<br />
BALANCE SHEET TOTAL<br />
The balance sheet total at 31 December <strong>2011</strong> amounted to 3,176.4 million € and was therefore<br />
(10.5)% lower than in the year 2010 (31.12.2010: 3,550.8 million €). The item “investment properties”,<br />
at 2,424.2 million €, again represented the largest item in the balance sheet (corresponds to 76.3%<br />
of the balance sheet total). The assets of “properties held for sale” amounted to 404.4 million €<br />
at the balance sheet date. Current assets totalled 596.4 million € as of 31 December <strong>2011</strong> and thus<br />
dropped by (15.15 )% in comparison with the prior-year period (2010: 702.9 million €).<br />
Overview balance sheet indicators <strong>2011</strong> 2010 Change (in %)<br />
Non-current assets mill. € 2,580.0 2,847.9 (9.4)<br />
Thereof investment properties mill. € 2,424.2 2,701.1 (10.3)<br />
Thereof investments in associates mill. € 9.4 0 -<br />
Thereof <strong>financial</strong> assets mill. € 4.7 3.7 27.0<br />
Current assets mill. € 596.4 702.9 (15.2)<br />
Thereof available-for-sale properties mill. € 404.4 537.1 (24.71)<br />
Total assets mill. € 3,176.4 3,550.8 (10.5)<br />
Equity mill. € 1,248.3 1,330.1 (6.1)<br />
Thereof minority interests mill. € 11.8 19.1 (38.2)<br />
Non-current liabilities mill. € 1,465.3 1,642.3 (10.8)<br />
Thereof non-current loans and borrowings mill. € 1,005.9 1,211.9 (17.0)<br />
Thereof bond liabilities mill. € 0 49.8 -<br />
Thereof convertible bonds mill. € 273.8 276.0 (0.8)<br />
Current liabilities mill. € 462.7 578.3 (19.99)<br />
Thereof current loans and borrowings mill. € 408.9 456.1 (10.4)<br />
Total equity and liabilities mill. € 3,176.4 3,550.8 (10.5)<br />
EPRA NAV per share € 17.03 16.35 4.2<br />
Equity ratio *) % 39.3 37.5 4.8<br />
Gearing **) % 137.2 151.8 (9.6)<br />
Net debt mill. € 1,713.2 2,019.0 (15.2)<br />
*) Equity incl. minority interests<br />
**) Net debt/equity<br />
EQUITY<br />
Equity at the balance sheet date on 31 December <strong>2011</strong> declined slightly to 1,248.3 million € in<br />
comparison with 1.330,1 million € in the balance sheet as of 31 December 2010. In contrast, the<br />
equity ratio as of 31 December <strong>2011</strong> was increased by 1.8 percentage points to 39.3% (31.12.2010:<br />
37.5%). Gearing amounted to 137.2% as of 31 December <strong>2011</strong>, after 151.8% in the prior year.<br />
AUTHORI<strong>SE</strong>D AND CONDITIONAL CAPITAL<br />
In accordance with the articles of association as amended on 11 October 2010, the Administrative<br />
Board is authorised to increase the share capital of the company until 25 October 2012 by up to a<br />
nominal value of 400.1 million € by issuing up to 40,012,159 no-par bearer shares at a minimum<br />
issue price of 100% of the proportionate stake in the share capital, in one or several tranches,<br />
also by means of indirect subscription rights for a cash contribution or contribution in kind, and to<br />
determine the issue price and the conditions of the issue.<br />
In addition, the company has conditional capital of 384.1 million € at its disposal, which is intended<br />
to serve the convertible bonds. However, no use has been made yet of the latest authorisation to<br />
issue a third convertible bond, for which conditional capital in the amount of 128.0 million € was<br />
adopted at the Annual General Meeting on 15 April 2010.
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Analysis of balance sheet<br />
EPRA NAV PER SHARE<br />
In order to increase comparability with market participants and enhance transparency even<br />
further, <strong>conwert</strong> shows both the diluted and the non-diluted EPRA NAV for the year <strong>2011</strong>. The<br />
EPRA NAV serves primarily to show the long-term fair value of equity. The calculation is based on<br />
equity (before minority interests) adjusted for effects from exercising options, convertible bonds<br />
and other rights in equity as well as taking into account the adjustment of the market value of<br />
derivative <strong>financial</strong> instruments and deferred taxes, i.e. adjusting items which have no influence on<br />
the long-term development of the group.<br />
in mill. € (unless indicated otherwise) 31.12.<strong>2011</strong> 31.12.2010 Change (in %)<br />
Equity 1,248.3 1,330.1 (5.7)<br />
Number of shares on the balance sheet date (in units) 81,497,309 84,258,661 (3.3)<br />
Equity attributable to the shareholders of <strong>conwert</strong> 1,236.5 1,311.0 (5.7)<br />
Revaluation of the sell portfolio 65.9 41.4 59.2<br />
Fair value <strong>financial</strong> instruments 137.3 65.9 63.8<br />
Long-term financing contributions from tenants 14.6 16.4 (11.0)<br />
Deferred tax 75.5 62.5 20.8<br />
Non-diluted EPRA NAV / share (in €) 18.35 17.28 6.2<br />
The non-diluted EPRA NAV per share rose by 6.2% to 18.35 € / share due to the positive contribution<br />
to earnings, but also due to the effect from the buyback of treasury shares, which are listed with<br />
a significant discount on the NAV.<br />
In the past, <strong>conwert</strong> showed the diluted EPRA NAV, which takes into account the dilution that would<br />
result from the issue of new shares in the course of exercising the conversion option of convertible<br />
bonds. At the end of the year <strong>2011</strong>, it amounted to 17.03 € / share (2010 this figure was 16.35 €).<br />
NON-CURRENT AND CURRENT LOANS AND BORROWINGS<br />
Volume of financing in mill. € Volume of financing<br />
(before deduction<br />
of transaction fees)<br />
Thereof fixed<br />
interest<br />
Thereof<br />
variable interest<br />
Thereof term to maturity up to 1 year 248.5 25.6 222.9<br />
Thereof term to maturity 1 – 5 years 727.7 365.7 361.9<br />
Thereof term to maturity over 5 years 719.9 41.6 678.3<br />
Total 1,696.1 432.9 1,263.1<br />
At the end of <strong>2011</strong>, the volume of financing totalled 1,696.1 million € (2010: 2,004.6 million €). The<br />
decline by (15.4)% on the previous year results primarily from loan repayments associated with<br />
the sale of properties. Non-current loans accounted for 1,005.9 million € of the financing volume<br />
(2010: 1,211.9 million €) and current loans to 408.9 million € (2010: 456.1 million €). 248.5 million €<br />
of the current loans are due within one year (see chart “Terms of maturity of <strong>financial</strong> liabilities”).<br />
The financing volume with a term to maturity of up to 1 year includes the actual current financing<br />
volume and, in addition, loans and borrowings which have a non-current maturity profile, but contain<br />
a right to cancel at any time for both parties, and the non-current portion of the loans and<br />
borrowings of properties available for sale. The average term to maturity of the loans amounted to<br />
10.95 years as of the balance sheet date, after 10.76 years at the end of 2010. Currently, 74.5% of<br />
the financing volume carries variable interest, 25.5% carries fixed interest. 84.0% of the <strong>financial</strong><br />
liabilities were hedged against interest risks at the balance sheet date. The cash effective interest<br />
rate of the financing portfolio at the balance sheet date amounted to 2.9% p.a. before hedging<br />
and 4.3% p.a. after hedging costs. For new loans, the premium on the 3-month EURIBOR ranged<br />
between 150 and 250 basis points. 99.0% of the liabilities were denominated in Euro, the remaining<br />
part consisted of liabilities in foreign currencies such as Czech crowns and Swiss francs.<br />
The interest rate sensitivity analysis in the notes contains further information. Due to the high<br />
percentage of <strong>financial</strong> liabilities hedged against interest risks, the effect on the result amounts to<br />
only (2.2) million € if the interest rate is increased by 100 basis points.<br />
EPRA NAV PER SHARE (IN €)<br />
20<br />
15<br />
10<br />
5<br />
17.28<br />
16.35<br />
Non-diluted <strong>conwert</strong> EPRA NAV<br />
Diluted EPRA NAV<br />
18.35<br />
2010 <strong>2011</strong><br />
17.03<br />
23
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
24<br />
The <strong>financial</strong> results of (96.2) million € included cash interest expenses as well as significant noncash<br />
items, which predominantly result from non-cash effects of convertible bonds of (7.9) million €,<br />
IFRS financing costs (4.5) million € and restructuring of derivatives (net 3.4 million €).<br />
Terms of maturity of <strong>financial</strong> liabilities<br />
repayment schedule (in mill. €)<br />
The structure of loans and borrowings due within one year is shown below:<br />
Prolongation volume<br />
2012 85.5<br />
2013 48.5<br />
2014 119.0<br />
2015 40.8<br />
2016 109.4<br />
2017 144.8<br />
in mill. € Loan volume<br />
First six months 2012 26.1<br />
Last six months 2012 59.4<br />
Total 85.5<br />
Property assets of 2,828.6 million € were contrasted by loans solely related to property projects<br />
amounting to 1,621.7 million €. The loan-to-value ratio thus amounted to 57.3% (2010: 59.0%).<br />
<strong>conwert</strong> has a broad lender structure. Lenders range from major international banks to mortgage<br />
companies, small-scale regional savings banks and regional banks. As of 31 December <strong>2011</strong>,<br />
1,368.4 million € were secured by mortgages, which corresponds to roughly 80.7% of the financing<br />
volume. This reflects <strong>conwert</strong>’s conservative approach.<br />
LOAN TO VALUE (in %) LIABILITIES TO BANKS (in mill. €)<br />
80<br />
60<br />
40<br />
20<br />
55.2<br />
59 57.3<br />
2009 2010 <strong>2011</strong><br />
1) Debt capital amount from convertible bonds.<br />
On 7 November 2007, the <strong>conwert</strong> Group issued a convertible bond with a total value of<br />
196.4 million €. The conversion price equals 130% of the share price of common shares on the<br />
day the convertible bond was issued. The conversion right may be exercised at any time until<br />
3 November 2014. If the conversion right is not exercised, the bonds are repaid on 12 November<br />
2014. Interest is paid each year until settlement at a rate of 1.5% p.a.<br />
1,800<br />
1,500<br />
1,200<br />
900<br />
600<br />
300<br />
1,696.1<br />
126.6¹ )<br />
147.3¹ )<br />
358.4<br />
343.9<br />
713.4<br />
<strong>2011</strong><br />
5.3 % Convertible bond<br />
1.5 % Convertible bond<br />
Capital costs<br />
39 banks<br />
Range
INTRO |<br />
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MANAGEMENT REPORT<br />
Analysis of balance sheet<br />
The bondholder is entitled to cancel bonds with effect from 12 November 2012. <strong>conwert</strong> is entitled<br />
to redeem the bond prematurely at the applicable redemption price if the price of the common<br />
shares to be delivered on conversion equals at least 130% of the redemption amount on 20 of 30<br />
successive stock exchange days. By the balance sheet date, <strong>conwert</strong> had repurchased convertible<br />
bonds of a nominal value of 45.4 million € (2010: 34.3 million €) for 32.3 million € (incl. transaction<br />
costs, 2010: 21.0 million €). The conversion price was adapted from previously 14.33 € to 13.87 €<br />
to reflect the dividend payment.<br />
In the past <strong>financial</strong> year, repurchased convertible bonds with a nominal value of 41.9 million €<br />
were cancelled, reducing the original nominal value from 196.4 million € to 154.5 million €.<br />
In the first quarter of 2010, <strong>conwert</strong> issued a convertible bond with a total value of 135.0 million €.<br />
The term of the convertible bond is six years (maturity date 01 February 2016). The holders have<br />
the right to declare the bond due and payable prematurely four years after the issue at the nominal<br />
value, including accrued interest. The coupon is 5.25% p.a. and is payable semi-<strong>annual</strong>ly. The<br />
conversion price was adapted from previously 11.60 € to 11.22 € to reflect the dividend payment.<br />
As of 31 December <strong>2011</strong>, <strong>conwert</strong>’s net debt amounted to 1,713.2 million €, after 2,019.0 million €<br />
in 2010.<br />
CASH FLOW<br />
The development of cash flow shows the following picture: on the basis of the profit for the year<br />
of 18.5 million € on the balance sheet date, cash flow from operating activities amounted to a high<br />
190.2 million € (2010: 83.4 million €). Cash flow from investing activities increased significantly –<br />
above all due to the high volume of sales and a lower investment volume than in the previous<br />
year – and equalled 262.4 million € at the balance sheet date, after 4.7 million € in the prior-year<br />
reference period. Cash flow from financing activities amounted to (422.0) million € at 31 December<br />
<strong>2011</strong> after (84.4) million € in the previous year. Cash and cash equivalents at the end of the period<br />
amounted to 95.8 million €, exceeding the prior-year figure by 29.6 million €.<br />
Overflow of cash (in mill. €) <strong>2011</strong> 2010 Change (in %)<br />
Profit for the year 18.5 25.7 (28.0)<br />
Subtotal (gross cash flow) 113.2 60.6 86.8<br />
Cash flow from operating activities 190.2 83.4 > 100<br />
Cash flow from investing activities 262.4 4.7 >100<br />
Cash flow from financing activities (422.0) (84.4) >(100)<br />
Change in cash and cash equivalents 30.7 3.7 >100<br />
Cash and cash equivalents at the beginning of the period 66.2 61.6 7.5<br />
Currency translation differences (1.1) 0.9 NA<br />
Cash and cash equivalents at the end of the period 95.8 66.2 44.7<br />
<strong>conwert</strong>’s investment expenses for properties (CAPEX) totalled 74.4 million € at in the year<br />
<strong>2011</strong>. Capitalisable investment expenditures for hold-portfolio properties (CAPEX) amounted to<br />
55.6 million € in the <strong>financial</strong> year <strong>2011</strong>. For the sell portfolio, this figure was 18.8 million €, so that<br />
a total of 74.4 million € capitalisable investment expenditures were recorded. With an average of<br />
2,330,308 sqm in the overall portfolio of the group, CAPEX averaged at 31.9 € per sqm. Moreover,<br />
<strong>conwert</strong> invested a total of 19.2 million € in the maintenance of the property portfolio.<br />
Capex (investment costs) Group<br />
Capex total (in mill. €) 74.4<br />
Capex per average sqm (in €) 31.9<br />
Maintenance (in mill. €) 19.2<br />
Maintenance per average sqm 8.3<br />
25
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
26<br />
EMPLOYEES<br />
Every single employee is a central success factor for the <strong>conwert</strong> Group. It was only because of<br />
the exceptional commitment of each team member that <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> realised<br />
another good <strong>annual</strong> result in a difficult market environment in <strong>2011</strong>. Therefore, the <strong>conwert</strong> management<br />
attaches great importance to creating an optimal working environment for all <strong>conwert</strong><br />
employees. In the past <strong>financial</strong> year, the focus was primarily placed on further education of executives,<br />
young managers and all new employees. The career academy “<strong>conwert</strong>.karriere”, which<br />
was established in the year 2010, trained numerous executives and young managers at the <strong>conwert</strong><br />
locations within the leadership programme “<strong>conwert</strong>.führung” in the <strong>financial</strong> year <strong>2011</strong>. Priority<br />
was attached to seminars in the areas of leadership and personnel development for these target<br />
groups. Overall, 15 persons successfully completed training at the <strong>conwert</strong> academy in the year<br />
<strong>2011</strong>. Employees were offered courses in the areas of tenancy and tax law, IT and organisation.<br />
Moreover, technical workshops and project management training courses were held. Expenses<br />
for training and further education in the <strong>conwert</strong> Group totalled 103.0 T€ in the <strong>financial</strong> year <strong>2011</strong>.<br />
At 31 December <strong>2011</strong>, the <strong>conwert</strong> Group employed 660 people (FTE) at more than 53 <strong>conwert</strong><br />
locations in six countries. Despite normal attrition and the outsourcing of individual segments,<br />
the number of employees remained stable overall (2010: 656 employees). For example, RESAG<br />
Insurance Broker was closed down, the activities of Lifestyle Living GmbH were discontinued and<br />
individual alt+kelber sales companies were merged in the year <strong>2011</strong>. <strong>conwert</strong> hired 240 new employees<br />
in Austria and Germany in <strong>2011</strong>, in order to meet new market requirements and to optimally<br />
fill key positions. 75 employees worked at the Group’s headquarters in the past <strong>financial</strong><br />
year, 95 employees for the RESAG Group in Austria and 435 employees for the alt+kelber Group in<br />
Germany. In the other regions, an additional 24 employees worked in order to provide optimal service<br />
for the portfolio locally. The slightly lower personnel expenses of 35.3 million € in the <strong>financial</strong><br />
year <strong>2011</strong> (2010: 38.2 million €) essentially resulted from expiring management contracts and the<br />
related variable remuneration.<br />
Part-time models, and especially part-time models for parents, combined with flexitime are intended<br />
to make the work place within the <strong>conwert</strong> Group even more attractive for employees. In<br />
Austria and Germany, a total of 15 employees were on parental leave in the year <strong>2011</strong> and 159<br />
employees worked part-time. At the same time, <strong>conwert</strong> trained 20 apprentices in Germany.<br />
Part of the <strong>annual</strong> salary of employees in management positions consists of variable components.<br />
They depend to the accomplishment of group targets (EBIT target), interdepartmental targets and<br />
individual targets, which are renewed <strong>annual</strong>ly. In terms of social benefits, pension subsidies exist<br />
for long serving employees. In Austria and Germany, <strong>conwert</strong> invests in a provision for the future<br />
for employees. Life and accident insurance was provided for the Executive Directors.
INTRO |<br />
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MANAGEMENT REPORT<br />
Employees<br />
Research and development<br />
RE<strong>SE</strong>ARCH AND DEVELOPMENT<br />
The business model of <strong>conwert</strong>, which focuses on the development of older residential buildings<br />
and property services, does not require extensive research and development activities. Therefore,<br />
there is no separate department for research and development activities and they are not shown<br />
separately in the income <strong>statement</strong>. However, <strong>conwert</strong> continuously works on the improvement<br />
and modernisation of its properties and consults only recognised experts for this purpose. With<br />
these activities, <strong>conwert</strong> also takes the necessary steps in order to realise a sustainable increase<br />
in value and to secure the value of the properties in the long term.<br />
Prior to renovating an apartment building, <strong>conwert</strong> reviews, together with its partner companies,<br />
all measures that could increase the energy efficiency of the respective older residential property.<br />
In the course of the development activities, facades are (partially) insulated in attic conversions,<br />
windows and doors are exchanged and basements and roofs are completely (re-)insulated. This<br />
enables <strong>conwert</strong> to enhance the energy class of buildings from class D to class A.<br />
<strong>conwert</strong> tries to use environmentally friendly materials wherever possible in all development<br />
activities. In the course of refurbishments, existing residual pollution and materials containing<br />
toxic and environmentally harmful substances are eliminated and replaced with modern materials<br />
that present no health risks. <strong>conwert</strong> increasingly uses the ecologically outstanding building<br />
material wood for loft extensions because it is by far more CO 2 neutral than other materials. In addition,<br />
<strong>conwert</strong> ensures that material consumption is minimised through recycling and through the<br />
combination of existing, environmentally friendly raw materials with new materials. In this context,<br />
<strong>conwert</strong> also relies on innovative developments and consults external experts.<br />
In all its development activities <strong>conwert</strong> attaches great importance to primarily working with<br />
certified partners with special quality and eco-labels. Through innovative purchasing management<br />
costs can be cut considerably through the choice of suppliers on the one hand, and positive contributions<br />
can be made to research and development in the area of development activities on the<br />
other.<br />
In the year 2010, <strong>conwert</strong> started a cooperation with GRIFFNER, the market leader for prefabricated<br />
houses based on ecological building methods in Austria, which focused, among other things,<br />
on research and development. This cooperation was also continued in <strong>2011</strong> with a project in<br />
Bujattigasse in the 14th district of Vienna. In this project, only ecological building materials such as<br />
wood, cellulose and cork were used. An innovative, zero-emission heating system was developed,<br />
which is based on a heat pump system.<br />
The large-scale earth quake test, which <strong>conwert</strong> conducted together with the Austrian Institute of<br />
Experts for Structural Property Assessment (ÖIBI) in 2010, was part of a European research programme<br />
to determine the earthquake safety of older properties. The findings derived from it were<br />
used for both the development of new measuring techniques and the targeted modernisation of<br />
historic buildings in <strong>2011</strong>. Based on the findings, <strong>conwert</strong> was able to plan a “loft conversion heavy”<br />
in accordance with the earthquake standard Eurocode 8 without the additional measures required<br />
otherwise. <strong>conwert</strong> thus made a scientific contribution and provided evidence for the safety of older<br />
properties in the course of this field test.<br />
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CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
28<br />
RISK MANAGEMENT REPORT<br />
RISK MANAGEMENT SYSTEM<br />
As an internationally operating Group, <strong>conwert</strong> is exposed to a variety of risks. The Group therefore<br />
has an established comprehensive risk management system which complies with international<br />
standards. This system is reviewed regularly for its functionality by internal and external bodies to<br />
ensure that internal quality requirements and legal regulations are met.<br />
The risk management system of <strong>conwert</strong> is developed further continuously and adapted to changing<br />
external conditions and altered internal requirements. In the past <strong>financial</strong> year, the catalogue<br />
of risks was revised and both the reporting processes and competences were adapted. This way, an<br />
effective and efficient risk management is to be guaranteed for the future.<br />
The risk management system implemented for the entire <strong>conwert</strong> Group is defined as a framework<br />
and based on concerted activities, methods and competences.<br />
6. Monitoring<br />
5. Risk communication<br />
4. Risk treatment<br />
1. Risk strategy<br />
2. Risk identification<br />
3. Risk assessment<br />
The risk strategy comprises the basic formulation of the understanding of risks, the definition of<br />
the purpose and applicability of the risk management system as well as the clear differentiation<br />
from other functions and activities aimed at realizing the economic targets of the <strong>conwert</strong> Group.<br />
Like the overall strategy of the <strong>conwert</strong> Group, the risk strategy is adapted regularly to changed<br />
framework conditions. Moreover, the risk strategy of the <strong>conwert</strong> Group provides that no unforeseeable<br />
risks are taken and that appropriate measures are implemented for calculable risks to<br />
ensure that no effects that could jeopardise the company’s ability to continue as a going concern<br />
are to be expected if such a risk materialises.<br />
Risk identification deals with defining risk areas, identifying individual risks as such and determining<br />
areas of observation, in which risks must be identified in any case. In addition, risk identification<br />
includes the identification of changes in the risk environment occurring in the short term,<br />
or of new risks. Risk identification is a permanent process, which is carried out in all areas of the<br />
Group on an ongoing basis.
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In risk assessment the nominal risk potential (“effect”) of individual risks is determined taking<br />
into account the probability of occurrence. The nominal risk potential is the value which has a<br />
significantly negative influence on the planned result for the period. Identifiable risk correlations<br />
are taken into account. The aggregation of individual assessed risks, results in a cumulative risk<br />
position, which is reduced to a risk net position by measures of risk treatment.<br />
Risk treatment covers both preventative and reactive measures including ad hoc-measures, which<br />
are taken in the case of suddenly occurring new risks.<br />
Risk communication serves for the structured collection, presentation and disclosure of information<br />
within the framework of the reporting system by the defined risk owners to the Group<br />
management.<br />
The implementation of risk management and of the measures defined in the risk management<br />
process is supervised as part of the ongoing monitoring. Monitoring also covers a regular review of<br />
the functionality of the entire risk management system.<br />
Central management functions<br />
ADMINISTRATIVE BOARD<br />
EXECUTIVE BOARD<br />
RISK MANAGEMENT BOARD<br />
Controlling,<br />
risk management<br />
and ICS<br />
Regional managements<br />
Risk management is conducted based on the function and on the structure of the Group, both<br />
centrally by managers (risk owners) in the areas of group management and administration, and<br />
decentralised by the regional managements in Germany, Austria and the other regions. The risk<br />
owners meet regularly (quarterly) as the Risk Management Board at the Risk-Jour-Fixe, where<br />
the main identified risks are dealt with and the monitoring is conducted if it falls under the competence<br />
of the risk owners. The administration and coordination of the entire risk management is<br />
carried out by the centralised management area “Controlling, Risk Management and ICS”, which<br />
falls under the scope of responsibility of the CFO. Risk management as such is the responsibility of<br />
the entire Executive Board, which reports to the Administrative Board on a regular basis.<br />
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ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
30<br />
CATEGORIES OF RISKS<br />
Six risk categories were identified within risk identification. These risk categories cover all sources<br />
of risks and levels of effect relevant to the <strong>conwert</strong> Group. Individual risks were identified for each<br />
category and summarised in a risk catalogue. The risk catalogue, together with the group risk<br />
management guideline, serves the risk owners as a basis for exercising the risk owner function.<br />
Based on the risk categories, the main risks, which are described in the following, are dealt with:<br />
Strategy<br />
Economic and<br />
political<br />
environment<br />
Organisation<br />
and IT<br />
Operations<br />
Market<br />
Finance<br />
STRATEGY<br />
Risks which may result from the development of the strategy for the Group, from the implementation<br />
of the strategy, from strategic cooperations and investments as well as their management<br />
including the investment structure and the organisational contracts fall under the risk category<br />
“strategy”. Responsibility for the risk category “strategy” lies in the hands of the central group<br />
function “Group Strategy” as the risk owner, directly incorporating the entire Executive Board and<br />
the Chairman of the Administrative Board.<br />
Therefore, ongoing market observation and monitoring of the Group segments based on plan<br />
values, continuous benchmarking and an active investor and public relations policy were established<br />
in the <strong>conwert</strong> Group in order to counteract risks in this category. In addition, the investment<br />
strategy of the <strong>conwert</strong> Group is clearly defined, with the economic parameters set out in the<br />
investment guidelines both for the regions and the sectors. <strong>Invest</strong>ments of any kind are subject<br />
to an adequate internal approval process depending on the investment volume. Nevertheless,<br />
it cannot be ruled out that the <strong>conwert</strong> Group could indirectly be jeopardised in its existence due to<br />
persisting developments that have adverse effects on the overall economy.<br />
DESCRIPTION OF RISK EFFECTS COUNTER-MEASURES<br />
General corporate risk<br />
+ Company’s development will not proceed<br />
as planned<br />
General economic risk<br />
+ Economic crises and market cycles<br />
encumber the property market<br />
SIGNIFICANT STRATEGIC RISKS<br />
+ Declining profitability<br />
+ Loss of efficiency<br />
+ Lack of identification with company<br />
by staff members<br />
+ Non-realisation of outside commissions<br />
+ Slumps on property markets<br />
+ Business drops<br />
+ Monitoring on an ongoing basis of corporate<br />
divisions and budgets<br />
+ Monitoring of internal processes on<br />
an ongoing basis<br />
+ Diversified property portfolio<br />
+ High degree of price stability due<br />
to high-value properties in top locations<br />
+ Income from a wide range<br />
of property services<br />
+ Focus of business activities on markets<br />
with a fundamentally positive development
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ORGANISATION AND IT<br />
The risk category “Organisation and IT” covers all potential scenarios that may occur as part of the regular management tasks<br />
including the selection and remuneration of employees and leadership as well as from organisational aspects and in all areas<br />
of information technology. The individual risks summarised under this category were assigned to the respective risk owners in<br />
the central group functions and, where there is a direct relation with the operating segments at the regional level, are managed<br />
by the regional managements as additional risk owners at the same time. As the central and regional activities are consistently<br />
coordinated, duplications of effort in processes are avoided without neglecting regularity aspects.<br />
Due to the special importance of the entire IT segment from a risk perspective, the existing IT strategy has been advanced further<br />
so that, consequently, no limitations of the operating activities of the <strong>conwert</strong> Group are to be expected in the future. However,<br />
situations may occur, especially as a result of unforeseeable criminal intrusion, which disrupt the proper operations of the IT<br />
infrastructure in such a way that it may be detrimental to the <strong>conwert</strong> Group.<br />
MARKET<br />
The risk category market covers risks that result from developments in markets in which the <strong>conwert</strong> Group operates. They<br />
include risks arising from customer relations or the competitive situation. Therefore, the appointed risk owners in the operating<br />
segment at the regional level specifically monitor the competition and analyse the development of demand in the different<br />
markets on an ongoing basis. Due to the multi-dimensional diversification of the market services of the <strong>conwert</strong> Group, which is<br />
represented in several regionally and factually differentiated markets, there are no individual risks or risk clusters which could<br />
directly endanger the Group’s existence from a today’s perspective. Should any major permanent adverse changes occur in the<br />
future, this may, nevertheless, lead to considerable negative effect on the equity situation of the Group.<br />
ECONOMIC AND POLITICAL ENVIRONMENT<br />
The risks related to the economic and political environment were also assigned to the central function <strong>Invest</strong>or Relations as the<br />
risk owner. This category includes primarily those risks which occur as a result of changes in legislation or macro-economic<br />
developments. If such risks materialize, the access to capital and liquidity for the <strong>conwert</strong> Group or its customers could become<br />
so difficult that a further participation in the market appears to be unfavourable in the long term or even has to be ruled out. Such<br />
risks may result from changes in the government’s subsidy or fiscal policy related to the establishment, purchase and sale of<br />
properties or due to inflationary economic developments or negative developments in the capital markets which are directly or<br />
indirectly influenced by overriding political interests. The <strong>conwert</strong> Group currently has a widely diversified and balanced financing<br />
structure and pursues a continuous improvement in the equity ratio. If borrowed or equity capital should become dramatically<br />
more expensive, this could also lead to a significant negative impact on the <strong>conwert</strong> Group.<br />
OPERATIONS<br />
Operating risks are those risks that result directly or indirectly from operating activities. The <strong>conwert</strong> Group is represented<br />
primarily in the letting, sale and service segments in its core markets. As the risk owners, the regional managements manage<br />
all identified risks in the above mentioned business units. The risks result from the respective service provision processes and,<br />
accordingly, are minimised through appropriate preventive measures integrated in the processes and controls so that no damage,<br />
that may endanger continued operations, can arise from a today’s perspective. However, damage that jeopardises operations<br />
cannot be ruled out completely as this risk category also includes risks that cannot be influenced or fully covered by insurance.<br />
Such risks are, for example, natural hazards of all kinds or unconventional criminal activities, which are carried out on a large<br />
scale over a longer period of time.<br />
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ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
32<br />
KEY PROPERTY-RELATED RISKS<br />
DESCRIPTION OF RISK EFFECTS COUNTER-MEASURES<br />
Property valuations<br />
+ Fluctuations in property<br />
prices caused by alterations<br />
in economic parameters<br />
Sale of property<br />
+ Demand for residential<br />
and commercial properties<br />
collapses<br />
Lettings<br />
+ Lettings of apartments<br />
declines, or tenants fail to pay<br />
Development<br />
+ Volatility of costs of investing<br />
in project development<br />
+ Divergence in results<br />
reported in <strong>financial</strong> accounts<br />
+ Effects on credit rating<br />
+ Fluctuation of earnings in<br />
trading business<br />
+ Costs of vacancies<br />
+ Shortfall in rental incomes<br />
due to tenants with low<br />
credit ratings or due to falling<br />
market prices<br />
+ Cost overruns in project<br />
development<br />
+ Appraisals by independent<br />
experts<br />
+ High-quality and price-stable<br />
properties in top locations<br />
+ Doing business in markets<br />
showing fundamentally positive<br />
trends<br />
+ Ongoing analyses of locations<br />
+ No-delay responses to market<br />
conditions and trends<br />
+ Strategy of increasing value to<br />
tap value potential in properties<br />
+ Proactive asset management<br />
reducing vacancies<br />
+ Examination of creditworthiness<br />
+ High degree of diversification<br />
of property portfolio<br />
+ High-quality and price-stable<br />
properties in top locations<br />
+ Adjusting rents to market levels<br />
+ Strategy of increasing<br />
value and leading to write-ups<br />
of properties<br />
+ Spreading of cost-related<br />
risks among suppliers, service<br />
providers and others<br />
+ Agreeing upon penalties<br />
+ <strong>conwert</strong> Baudevelopment GmbH<br />
is an in-group supplier<br />
+ Supervision on an ongoing<br />
basis of budgets and stage of<br />
construction completion<br />
FINANCE<br />
This category includes all indirect and direct risks which have a significant effect on securing<br />
liquidity, securing solvency and thus the going concern of the <strong>conwert</strong> Group. It comprises<br />
securing income, securing cash and cash equivalents and hedges of interest charges on loans. In<br />
addition, it contains risks related to the timely and correct reporting to authorities and investors.<br />
<strong>conwert</strong> manages its liquidity requirements on the basis of continuously updated liquidity planning,<br />
which takes into account the probable and foreseeable cash inflows and outflows. Nevertheless,<br />
it cannot be ruled out that correlating endogenous or exogenous events in other risk categories<br />
can lead to liquidity shortages. With respect to compliance with timely reporting to authorities and<br />
investors, improvements in the systems used, their operational safety and the processes and methods<br />
applied are made on an ongoing basis. In the case of a longer-term complete failure of the<br />
systems used, delays may occur which make timely reporting impossible.
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KEY FINANCING AND FOREIGN EXCHANGE RISKS<br />
DESCRIPTION OF RISK EFFECTS COUNTER-MEASURES<br />
Capital market<br />
+ Volatility or crashes on<br />
exchanges<br />
+ Financial risks<br />
Interest rate risks<br />
+ Rising interest rates<br />
Credit risks<br />
+ Restrictive supplies of<br />
loans by banks<br />
Foreign exchange risks<br />
+ Volatile foreign currencies<br />
Risks from <strong>financial</strong> instruments<br />
+ Negative effects from<br />
evaluations<br />
+ Inefficient hedging of loan<br />
liabilities<br />
+ More difficult to secure equity<br />
+ Less liquidity<br />
+ Impaired capabilities of<br />
expansion<br />
+ Increasing costs of financing<br />
+ Scarcity of liquidity<br />
+ Increasing costs of financing<br />
+ Scarcity of liquidity<br />
+ Scarcity of liquidity<br />
+ Lessening of equity<br />
+ Evaluation of inefficient<br />
hedges negatively influences<br />
<strong>financial</strong> results<br />
+ Broad and long-term<br />
spreading of loans<br />
+ Strengthening of in-group<br />
<strong>financial</strong> resources<br />
+ Ongoing planning and<br />
management of liquidity<br />
+ Extending of liquidity base<br />
+ Entering into interest rate<br />
hedges (84.0% of the<br />
variable-interest volume of<br />
financing is hedged)<br />
+ Ongoing assessing of risks<br />
from non-hedged credit volume<br />
+ Broad and long-term spreading<br />
of loans<br />
+ Strengthening of in-group<br />
<strong>financial</strong> resources<br />
+ Broad and long-term spreading<br />
of loans (average term of<br />
11 years, received from more<br />
than 51 banks)<br />
+ <strong>conwert</strong> is nearly exclusively<br />
active in Eurozone (96% of<br />
property assets)<br />
+ <strong>conwert</strong> has basically no foreign<br />
currency liabilities<br />
+ Umbrella hedges in holding<br />
company enable flexible<br />
assignment of loan liabilities<br />
at the SPV level<br />
+ The average interest rate on<br />
hedges amounts to 4.09%<br />
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ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
34<br />
REPORT ON SIGNIFICANT FEATURES OF THE INTERNAL<br />
CONTROL AND RISK MANAGEMENT SYSTEM WITH RESPECT<br />
TO THE FINANCIAL REPORTING PROCESS<br />
The Executive Board is responsible for the risk management of the <strong>conwert</strong> Group. With a view to<br />
the accounting process, risk management falls under the responsibility of the CFO, who is operationally<br />
supported in risk management by his staff.<br />
The ongoing internal reporting system is particularly important for a functioning risk management<br />
in the <strong>conwert</strong> Group. Risks can thus be identified at an early stage and countermeasures can be<br />
taken. Timely, quarterly reporting within a Risk-Jour-Fixe, in which the individual risk owners participate,<br />
forms the basis for this.<br />
The parent company has provided uniform standards for the implementation and documentation<br />
of the accounting process for its subsidiaries. The objective is to prevent the risks of incomplete<br />
or incorrect <strong>financial</strong> reporting. In addition, the head office reviews the internal reports prepared<br />
by the subsidiaries for plausibility and compares them with the budget plans. Hence, appropriate<br />
measures can be taken rapidly in the case of deviations. In order to maintain the process described<br />
above, the subsidiaries are required to provide <strong>annual</strong> budgets for the following year in November<br />
of the current year. These budgets are subject to approval by the Executive Board.<br />
At regular meetings of the Executive Board with the regional and operating managers, the current<br />
business development and foreseeable opportunities and risks resulting from changed framework<br />
conditions are discussed. International accounting standards are complemented by internal<br />
guidelines in the preparation of the consolidated <strong>financial</strong> <strong>statement</strong>s.<br />
This ensures a consistent presentation of the subsidiaries included in the consolidated <strong>financial</strong><br />
<strong>statement</strong>s in terms of measurement and presentation.<br />
The cornerstones of the existing internal control system and the risk management system with<br />
respect to the (group) accounting process at <strong>conwert</strong> can be described as follows:<br />
+ The <strong>conwert</strong> Group has a clearly defined structure of management and corporate operations.<br />
Cross-departmental requirements are specified by the central group management and administration.<br />
+ With a view to the accounting process, the functions of the accounting department are clearly<br />
separated from other areas such as payment transactions and group treasury.<br />
+ The finance systems are protected against unauthorised access by IT facilities.<br />
+ The finance systems employed use standard software wherever possible.<br />
+ An adequate system of guidelines (accounting guidelines, payment guidelines, etc.) is in place<br />
and is updated on a regular basis.<br />
+ Accounting data received and passed on is checked for completeness and correctness by the<br />
persons responsible, for example by taking random samples.<br />
+ The four-eye principle is applied to all processes relevant to <strong>financial</strong> accounting.<br />
+ The consolidation software MIS is used for the purpose of consolidation. For the principles of<br />
accounting and valuation refer to the notes to the consolidated <strong>financial</strong> <strong>statement</strong>s.<br />
+ Processes relevant to accounting are audited by the (process-independent) internal audit department<br />
on a regular basis.<br />
The control and risk management system described ensures that all business transactions are<br />
correctly entered, processed and evaluated in the balance sheet and included in the accounting<br />
process. Qualified employees, the use of specific software and clear legal and internal regulations<br />
provide the basis for an appropriate, uniform and continuous accounting process. A clear separation<br />
of responsibilities as well as different control and verification mechanisms are to ensure a<br />
correct and responsible accounting process. Business transactions can thus be recorded,<br />
processed and documented in accordance with legal requirements, the articles of association and<br />
internal guidelines.
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OUTLOOK<br />
OVERALL ECONOMY IN THE EURO AREA INCLUDING GERMANY<br />
The overall economic situation in the euro area is still tense and early economic indicators suggest<br />
a mild recession. In its forecast for the year 2012 from February of the current year, the EU<br />
Commission expects GDP to decline by 0.3% in the euro area. The Commission thus predicts a<br />
stagnation in economic growth for the year 2012, but sees indications that the European economy<br />
will stabilise. Inflation is expected to amount to 2.3% in the European Union (EU27) in the current<br />
year. Moreover, the Monetary Council of the European Central Bank again decided to maintain the<br />
base rate at 1% at its regular meetings on 9 February and on 8 March 2012. However, several experts<br />
assume that, with determined actions, a turnaround is possible in the course of the year 2012<br />
and the European Union will be able to achieve growth and increasing employment figures through<br />
the stabilisation. The agreement to a further development of the crisis instruments throughout the<br />
EU and the <strong>financial</strong> pact for fiscal policy coordination in the euro zone creates new framework<br />
conditions, which are designed to contribute to decreasing the existing uncertainty in the economy.<br />
However, <strong>financial</strong> experts believe that – aside from temporary phases of recovery – negative influences<br />
will be the prevailing element until spring 2012, which indicates further declines in share<br />
prices. Only with a new start in the euro periphery and first signs of economic stabilisation, the<br />
development should level out and could introduce a turnaround in the second half of the year 2012.<br />
(EU Commission, Interim Forecast February 2012, Peter Brezinschek, Raiffeisen Research, Q4/<strong>2011</strong>)<br />
According to a forecast by the German Institute for Economic Research (DIW) in Berlin on the<br />
development of the real gross domestic product in Germany in the year 2012, GDP growth is<br />
expected to amount to 0.6% compared with the previous year. In contrast, a 2.2% change in GDP is<br />
forecasted for the year 2013.<br />
(DIW Berlin; Federal Statistical Office)<br />
AUSTRIA<br />
Although from today’s perspective it is not yet certain whether the measures taken so far by the EU<br />
and the ECB will suffice, many <strong>financial</strong> experts assume that the euro area has the means to end<br />
the crisis. Therefore, they still do not expect another recession of the Austrian economy. However,<br />
the confidence crisis is likely to leave massive traces on the real economy in Austria in the year<br />
2012. The EU Commission therefore only expects an increase by 0.7% in the Austrian GDP. Moreover,<br />
it assumes that demand by the public sector will decline also in Austria in 2012, which may<br />
lead to a reduction of investment activities. The Commission predicts an inflation rate of approx.<br />
2.4% in Austria in the year 2012. Despite overcoming the confidence crisis, growth prospects will<br />
remain subdued as the reins will be tightened significantly in terms of fiscal policy, but thanks to a<br />
more robust global upswing, a higher increase in GDP should be possible again in 2013.<br />
(Unicredit Research, 15 December <strong>2011</strong>; EU Commission, Interim Forecast February 2012)<br />
Wiener Börse AG also expects a volatile year on the stock exchange in 2012. Should the market<br />
climate take an unexpected turn and develop positively, the management of the stock exchange<br />
expect stocks to return to pre-crisis levels and new initial public offerings. In early 2012, a trend<br />
towards short IPO windows was visible. Several candidates for the stock exchange are in the<br />
waiting loop. International investors continue to be very important for the domestic capital market.<br />
As in the past, major investors will come from the USA and Great Britain in the year 2012.<br />
(Vienna Stock Exchange, 30 December <strong>2011</strong>, Statement of the Management Board Vienna Stock Exchange)<br />
PROPERTY MARKETS<br />
RESIDENTIAL PROPERTIES VIENNA<br />
The residential property boom in Vienna will continue in 2012 despite, or rather because of, the<br />
weak economic prospects, according to experts. Freehold flats are considered an ideal investment<br />
in the debt crisis. In <strong>2011</strong>, freehold flats recorded price increases between 7% and 9% in individual<br />
submarkets. Especially in the sixth, seventh and ninth districts, prices per square meter exceeded<br />
5,000 €. The fifth and the adjacent twelfth district, previously less popular, are expected to outperform<br />
the market average in 2012, according to experts’ forecasts. This upward trend will not<br />
prevail in terms of rental prices. Competition from municipal and non-profit housing with legally<br />
defined upper limits for rents and the strong demand for freehold flats should dampen an upward<br />
development for rents. The increase will roughly correspond to the inflation rate in the experts’<br />
opinion.<br />
(EHL, Report on investment properties 2012)<br />
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36<br />
OFFICE & COMMERCIAL PROPERTIES VIENNA<br />
Experts think that the situation will be more difficult in the office market in Vienna in 2012, although<br />
new space will reach a new record low of 170.000 sqm in 2012. EHL forecasts an overall take-up of<br />
200,000 sqm, which would correspond to a decline by 10.000 sqm in comparison with the previous<br />
year. Relocations of foreign companies will be the exception rather than the rule, and the space<br />
will be rented primarily by local companies that move office. Difficult times are looming for market<br />
participants for older office projects with low spatial efficiency and high running costs. The strongest<br />
motives for relocations will be increased efficiency and spatial optimization. Therefore, property<br />
experts expect vacancy rates to increase to roughly 6.5% on average. In contrast, retail will<br />
not yet be affected by the crisis in the year 2012. In the so-called “golden U”, the area comprising<br />
the inner city streets Kärntnerstraße, Graben and Kohlmarkt, the rent per sqm rose by 20 € within<br />
only a year in <strong>2011</strong> and currently amounts to 340 €, with an increasing tendency.<br />
(EHL Report, Office Market Report Vienna, spring 2012 & Retail Market Report, Vienna 2012)<br />
GERMAN PROPERTY MARKET<br />
In a weakening economic environment and in view of an expectable lack of alternative investments<br />
with ongoing historically low capital market interest rates, the property experts of CBRE expect<br />
the demand for secure property investments to remain dynamic in the year 2012. Especially the<br />
yield differential between core property investments and long-term debt instruments of the federal<br />
government, which reached 3.13 percentage points for top-class office properties, will lead<br />
to persisting strong demand for German property investments. The reduction of risk items in the<br />
balance sheets of banks as well as the required higher capital base will also lead to an increase<br />
in ailing, management-intensive properties becoming available in the market in the second half of<br />
the year. Against this backdrop, many property experts expect a comparable transaction volume to<br />
remain in 2012 as in the previous 12 months of <strong>2011</strong>. As the medium-term growth perspectives for<br />
the German economy are considered positive and Germany increasingly asserts itself as a secure<br />
investment location, the share of foreign investors should continue to increase as well.<br />
(CBRE Germany <strong>Invest</strong>ment Quarterly Q4)<br />
GERMAN RESIDENTIAL PROPERTY MARKET<br />
According to property experts, tenants and property buyers should be prepared for rising costs<br />
in 2012, with a significant increase forecast for new rentals in strained residential markets. Here,<br />
new tenancy agreements may exceed the customary local rents by between 10% and 30%. Current<br />
studies show that buyers of properties will also have to pay more in 2012. According to calculations<br />
of the Association of German Pfandbrief Banks (vdp), owner-occupied homes in Germany were<br />
as expensive as never before since this value was first calculated in the year 2003. In particular,<br />
freehold condominiums were substantially more expensive for buyers than in <strong>2011</strong>. Within a year,<br />
prices rose by 5.2%. Against this background, permits for property projects also rose by 21%. The<br />
causes were low interest rates, declining unemployment and the growing popularity of tangible<br />
assets during the crisis. While the decline in public sector building projects caused some concern<br />
for the construction industry, housing construction will provide a stimulus for the construction<br />
activities in the years to come, according to the ifo Institute. The institute estimates that more than<br />
200,000 new apartments will be built in Germany in 2013, nearly 50% more than in 2009. Thanks to<br />
brisk demand for apartments, the ifo experts expect an average <strong>annual</strong> growth of just under 0.5%<br />
to 254 billion € until 2020. In contrast to this trend, public sector construction projects will drop<br />
from 38.5 billion € to less than 35.0 billion € by 2020.<br />
(Study of Dr. Zitelmann)
INTRO |<br />
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MANAGEMENT REPORT<br />
Outlook and post-balance sheet date report<br />
BERLIN RESIDENTIAL PROPERTY MARKET<br />
Experts forecast stable demand for apartment buildings in the Berlin residential property market<br />
in the year 2012. Prices will presumably remain at the current level. For owners who want to<br />
take advantage of a tax-free sale after ten years – an opportunity that currently still exists – there<br />
are good chances of attractive selling prices. German players will continue to dominate the market,<br />
although demand from countries like Austria, Italy, Sweden, Norway, Israel, etc. will increase<br />
further. Private and institutional investors with a strong equity basis will most likely use the market<br />
for purchases. The average debt ratio will range between 60 and 70% of the purchase price as the<br />
financing behaviour of banks is unlikely to change fundamentally. Experts assume that Berlin will<br />
again see the strongest demand in the property market, ahead of Hamburg and Munich by a clear<br />
margin. Many investors are expected to have the German capital on their radar in 2012, after Berlin<br />
was not in the investment focus for many institutional investors in the previous years. Increasing<br />
rents and very good forecasts for the residential market have ensured that in addition to private<br />
investors, who have considered Berlin an investment stronghold for a long time, institutional<br />
investors are active as buyers again. For many affluent private investors the reasons for a stable<br />
investment in uncertain times are evident. Interest rates will continue to be favourable in the year<br />
2012, according to numerous experts. Rental income currently grows above the inflation rate<br />
and the vacancy rate is declining continuously. Scarce supply should continue to lead to further<br />
moderate price increases, with the average prices in Berlin having remained remarkably stable so<br />
far. Although purchase prices rose, there was no price explosion. According to experts, Berlin still<br />
represents a market full of opportunities for investors in 2012, which, unlike other large cities in<br />
Germany, has sufficient fungibility. Many property experts are convinced that, searching systematically,<br />
there are still sufficient investments to be made in the German capital, while the apartment<br />
building market in other cities appears to be less appealing because of shortages in supply.<br />
(Study of Dr. Zitelmann)<br />
37
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
38<br />
OUTLOOK FOR 2012<br />
In the <strong>financial</strong> year <strong>2011</strong>, <strong>conwert</strong> underwent a restructuring phase. In many areas of <strong>conwert</strong> the<br />
necessary transformation process was initiated and has already been completed in some parts.<br />
This step is required in order to turn <strong>conwert</strong> from a medium-sized company into an organisation<br />
that meets the standards of a growth-oriented ATX group.<br />
This has an impact on both the entire organisational structure of the Group, which we cleared out<br />
and simplified in a first stage, and on all internal processes, systems and guidelines.<br />
In <strong>2011</strong>, the entire organisation structure was realigned and professionalised. This process will<br />
be continued in 2012. In particular the structure in Germany will be subject to restructuring and<br />
simplification in the year 2012. The service structure was already adjusted in <strong>2011</strong>. The effects will<br />
be seen in 2012. However, efficiency increases are planned for the German service providers also<br />
in 2012, which will contribute to an increase in profitability of the <strong>conwert</strong> Group in 2012 and the<br />
subsequent years.<br />
The entire IT landscape of <strong>conwert</strong> was put on a more stable foundation and simplified by a newly<br />
hired IT manager in <strong>2011</strong>. This led to massive cost reductions in <strong>2011</strong>, which will take full effect in<br />
2012. Apart from the reduction of vacancies, the service segment of RESAG Property Management,<br />
which does not yet fully meet the standards in terms of profitability and service quality, needs to be<br />
improved. The restructuring of RESAG <strong>Immobilien</strong>makler GmbH, which was initiated in <strong>2011</strong>, will<br />
be continued and intensified under the management of Jasmin Soravia, the new regional manager<br />
for Austria. As a partial success in this restructuring process we managed to redefine the contract<br />
between <strong>conwert</strong> and RESAG <strong>Immobilien</strong>makler, in which <strong>conwert</strong> holds a minority interest, in<br />
tough negotiations. The exclusive character of the sales relationship with RESAG <strong>Immobilien</strong>makler<br />
GmbH has thus been cut down. The existing 3-year contract was replaced by a 1.25-year contract,<br />
and as of 31 March 2013 <strong>conwert</strong> can freely choose its external sales partners. Moreover, the<br />
portfolio to be marketed by RESAG <strong>Immobilien</strong>makler GmbH was redefined and massively limited.<br />
For this purpose, <strong>conwert</strong> has established its own internal sales team. Furthermore, with immediate<br />
effect, <strong>conwert</strong> will no longer pay a seller’s commission to RESAG <strong>Immobilien</strong>makler GmbH,<br />
which will generate a substantial cost benefit for <strong>conwert</strong> as early as 2012.<br />
On the administrative side <strong>conwert</strong> will also reduce the cost structure in 2012. The introduction<br />
of SAP, which will be completed in the first half of 2012, will lead to a substantial improvement in<br />
our administrative system. Furthermore, the structures of our management and service-providing<br />
units will be adapted in the year 2012.<br />
The portfolio adjustment will initially require higher expenses, namely to carry out these sales, but<br />
will also enable an adaptation of the structures to the size of the remaining portfolio. Although this<br />
process was started in <strong>2011</strong>, it will not produce results until 2012.<br />
With the introduction of a central purchasing and procurement department in mid-<strong>2011</strong>, we now<br />
centrally define a series of refurbishment and development standards and have cut down on the<br />
number of companies we cooperate with on refurbishment and development measures to a limited<br />
number of technical partners with whom we work together exclusively. To name only one example:<br />
In the past, <strong>conwert</strong> used to work with more than 540 suppliers in Vienna alone; this list has<br />
now been reduced to 20. This obviously will lead to massive savings in 2012 and the subsequent<br />
years. In keeping with better corporate governance, the central procurement department also ensures<br />
that the central management of awarding building and renovation contracts is based on predefined<br />
guidelines.<br />
With regard to our investments per sqm in our portfolio, we substantially exceed the investments<br />
made by our competitors. On the one hand, this is attributable to the inefficient way of awarding<br />
contracts and the lack of control of refurbishment activities in the past; on the other hand, it is due<br />
to the resulting investment backlog, on which we caught up in the past year. We assume that we<br />
will have to invest significantly less in our portfolio in the years to come as our investments will<br />
be better adapted to the market conditions as a result of enhanced control and higher efficiency.
INTRO |<br />
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MANAGEMENT REPORT<br />
Outlook and post-balance sheet date report<br />
In <strong>2011</strong>, we issued a new tender for the valuation of all our properties and awarded new contracts.<br />
In Germany, the revaluation contract was granted to CBRE, in all other regions to a consortium<br />
led by Cushman & Wakefield. As a result of this new tender, the valuation costs were lowered by<br />
0.3 million € per year and the figures confirmed by international experts. The German portfolio has<br />
been rebalanced. Inner-city locations recorded an increase in value while the value of locations on<br />
the outskirts decreased. The valuation reflects the demographic development.<br />
<strong>conwert</strong> will complete its restructuring in 2012 and pursue growth again. However, sustainable<br />
growth of our profitability and our cash flows is only possible through critical mass at individual<br />
locations and improved economies of scale. In addition, it is only possible to generate sustainable<br />
positive FFO (Funds from Operations) from the portfolio management in locations where the rental<br />
yield allows it.<br />
At our location in Vienna, we do have the critical mass, but with an average rental yield of less than<br />
4% and leverage in excess of 50%, it is hardly possible to generate positive cash flow from an asset<br />
portfolio after investments. The future business model in Austria will therefore strongly deviate<br />
from the business model in Germany.<br />
This results in two strategic guidelines for the Austrian portfolio. Firstly, the portfolio of properties<br />
yielding less than 4%, which is currently too high, has to be reduced further. At present, the<br />
Austrian property portfolio has a value of 1,362 million € and will shrink to a base of just under<br />
500 million € in the next few years. This portfolio will consist of properties generating yields with a<br />
minimum return on equity of 4.5% on the one hand; on the other hand it will comprise development<br />
objects and trading properties, where there is considerable development potential and a resale<br />
is possible within 2 years. Therefore, <strong>conwert</strong> will also make opportunistic purchases in Austria<br />
again. An analysis with a view to tax legislation has shown that it is advantageous to carry out such<br />
transactions with ECO companies.<br />
In order to be able to implement the adaptation of the business model in Austria, we deliberately<br />
enhanced the expertise of the <strong>conwert</strong> Group in the development segment and sales in Austria and<br />
installed a new management team.<br />
The objectives look different for the German market. Rental yields in Berlin, Dresden and Leipzig<br />
are still highly attractive, also in central locations, at an average of 6.3%. With such rental yields<br />
we generate a positive cash flow even after investments; through the internal service team <strong>conwert</strong><br />
usually improves the purchase yield substantially. The strategic orientation of the German portfolio<br />
will therefore concentrate on purchases in our core locations, and on sales in such locations where<br />
<strong>conwert</strong> lacks the critical mass. Moreover, the focus was placed on an increase in the efficiency of<br />
managing the portfolio. <strong>conwert</strong> also expects higher profitability in this area in the next year as a<br />
result of the measures implemented in <strong>2011</strong>.<br />
With respect to the property portfolio, two main objectives will be focused on above all in the<br />
coming two years. On the one hand, the sale of assets of up to 1.0 billion €, primarily in Austria, is<br />
planned, with proceeds on the sale of properties expected to amount to about half, i.e. 450 million €,<br />
in 2012. At the same time <strong>conwert</strong> pursues the goal to increase the average yield to 6.5% across<br />
the entire property portfolio by the end of the year 2013. This target is supposed to be met above<br />
all by strengthening the German asset portfolio, through the purchase of development and trading<br />
objects as well as through the sale of ECO objects with high vacancy rates and low yields.<br />
In order to meet the acquisition targets, <strong>conwert</strong> has adopted a budget of more than 225 million €<br />
for purchases in 2012, which will range between 20 and 30 million € per transaction. Larger transactions<br />
have deliberately not been budgeted as it is difficult to foresee the probability of occurrence<br />
and therefore the strength of our guidance would be negatively affected. The management and the<br />
Administrative Board are, however, also analysing structures in which individual transactions with<br />
an equity volume in excess of 100 million € can be carried out and in which <strong>conwert</strong> could participate<br />
in possible partnerships/partial purchases.<br />
39
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
40<br />
The <strong>conwert</strong> service segment will be significantly expanded in the year 2012 so that the assets under<br />
management will total up to 1.0 billion € at the end of the <strong>financial</strong> year. Amongst other things,<br />
<strong>conwert</strong> currently manages properties with a value of approx. 288 million € from the first two DWS<br />
residential property funds with long-term contracts of 11 to 25 years; another DWS fund is already<br />
under preparation (see the post-balance-sheet report below).<br />
With respect to the key <strong>financial</strong> figures, <strong>conwert</strong>’s target is to conclude the <strong>financial</strong> year 2012<br />
with earnings before tax (EBT) of 50 million € (including revaluation result). At the same time, the<br />
loan-to-value ratio (LTV) is to be reduced to 50 – 55%, while the equity ratio is to increase to roughly<br />
40%. This will gain <strong>conwert</strong> more flexibility when it comes to purchases in a capital market<br />
environment that is still volatile. Based on the recently conducted revaluation of the portfolio and<br />
the positive market environment in our core regions, we expect a positive revaluation result of<br />
1–1.5% of <strong>conwert</strong>’s property assets for 2012, which will contribute meeting the EBT target.<br />
On the liabilities side of our balance sheet, the year 2012 will be dominated by refinancing the 2014<br />
convertible bond, which can be re-sold to <strong>conwert</strong> through a put option in November. The management<br />
and the Administrative Board have decided to place a bond for retail customers. The placement<br />
of the bond is expected to take place in June/July 2012. <strong>conwert</strong> has bought back convertible<br />
bonds with a nominal value of 45.4 million € in the past years, so that the maximum volume to be<br />
refinanced will amount to 163 million €.<br />
In <strong>2011</strong>, the buyback of treasury shares was limited because the company’s distributable reserves<br />
were too low. The Administrative Board and the management thoroughly analysed an increase in<br />
distributable reserves by decreasing share capital and will propose a decrease of share capital to<br />
the Annual General Meeting 2012. Provided that the Annual General Meeting adopts this resolution,<br />
distributable reserves will be increased following a 6-month call to creditors, whereby both<br />
payouts and share buybacks of up to approx. 427 million € would be theoretically possible.<br />
The management and the Administrative Board will propose a dividend of 20 cents per share to the<br />
Annual General Meeting 2012 and – following a capital decrease – a payout of another 15 cents per<br />
share. The additional payout of 15 cents will be tax-free for some shareholders.<br />
It is planned that the dividend payout for the <strong>financial</strong> year 2012 will remain at the level of <strong>2011</strong> due<br />
to the measures planned and should amount to 20 cents per share.
INTRO |<br />
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS<br />
MANAGEMENT REPORT<br />
Outlook and post-balance sheet date report<br />
POST-BALANCE SHEET DATE REPORT<br />
At the beginning of the year 2012, <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> appointed Jasmin Soravia new<br />
regional manager for Austria. In this function, she is responsible for asset management, facility<br />
management and construction as well as the establishment of an in-house sales team in Austria.<br />
With Valentino Donau, a distinguished sales expert joined <strong>conwert</strong> to lead the newly established<br />
sales team at the beginning of the year.<br />
Moreover, due to the strong performance and the good cooperation of <strong>conwert</strong> and Deutsche Bank<br />
in the first two DWS residential property funds, the approval was given for the follow-up product<br />
DWS III at the end of the year <strong>2011</strong>. The fund volume for this third joint residential property fund will<br />
amount to approx. 120 million €. At the beginning of the year 2012, the definition of the seed portfolio<br />
was started. The preparation of a fund prospectus is scheduled for the months of March and<br />
April 2012 in close cooperation with the German <strong>financial</strong> market authority BaFin, so that an approval<br />
of the prospectus is also expected for the end of April 2012. In May the placement of the shares<br />
will be started. Based on the experience with the DWS I und DWS II funds, <strong>conwert</strong> expects the third<br />
fund to be closed in late 2012. The interim closing date for the first funding of the fund company<br />
is planned for 30 September 2012. If implemented as planned, the first property investments of<br />
the fund will be made starting in the fourth quarter of 2012 and subsequently in the year 2013. At<br />
the same time, <strong>conwert</strong> will start to take over the asset management and property management<br />
activities. They will also contribute to achieving the growth targets in the service segment in 2012<br />
and 2013. In addition to the fund business with DWS, <strong>conwert</strong> plans to seek and use further growth<br />
opportunities through additional investments in 2012.<br />
Vienna, 26 March 2012<br />
Executive Board of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
Thomas Doll Franz Jürgen Kelber<br />
Member Member<br />
41
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
42<br />
_ FFO up 52.0% to 81.3 million €<br />
_ equity ratio 39.3%<br />
_ +12.0% rise in rental income
_ non-diluted EPRA NAV<br />
up 6.2% to 18.35 € / share<br />
to 210.0 million €<br />
CONSOLIDATED<br />
FINANCIAL<br />
STATEMENTS<br />
43
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
44<br />
CONSOLIDATED INCOME STATEMENT<br />
FOR THE PERIOD FROM 1.1. – 31.12.<strong>2011</strong><br />
(IN € MILLION)<br />
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME<br />
FOR THE PERIOD FROM 1.1. – 31.12.<strong>2011</strong><br />
(IN € MILLION)<br />
Notes 01.01. –<br />
31.12.<strong>2011</strong><br />
01.01. –<br />
31.12.2010<br />
1. Rental income 7.1 210.0 187.7<br />
2. Proceeds from the disposal of properties held for sale 243.6 92.6<br />
3. Proceeds from the disposal of investment properties 369.8 232.5<br />
4. Revenues from property services 7.2 29.5 34.4<br />
5. Total revenues 852.9 547.2<br />
6. Property expenses 7.3 (90.9) (84.9)<br />
7. Expenses from the disposal of held-for-sale properties (203.3) (69.6)<br />
8. Expenses from the disposal of investment properties (360.9) (217.8)<br />
9. Subtotal of 5. to 8. 197.7 174.9<br />
10. Gains from fair value adjustments 87.7 63.8<br />
11. Losses from fair value adjustments (79.9) (56.0)<br />
12. Net gain/(loss) from fair value adjustments (Subtotal of 10. and 11.) 7.8 7.8<br />
13. Negative fair value adjustments to properties held for sale (7.5) (5.4)<br />
14. Gain from the acquisition of a company below market value 0.0 95.3<br />
15. Impairment charge in connection with the acquisition of a company 0.0 (14.9)<br />
16. Subtotal of 14. and 15. 0.0 80.4<br />
17. Depreciation, amortisation and other impairment charges 8.2 (5.3) (69.2)<br />
18. Other operating income 9.1 9.6<br />
19. Personnel expenses 7.4 (35.3) (38.2)<br />
20. Other operating expenses 7.5 (46.7) (56.7)<br />
21. Earnings before interest and tax (EBIT) 119.8 103.2<br />
22. Finance revenue 7.6 19.5 12.2<br />
23. Finance costs 7.7 (116.1) (95.1)<br />
24. Share of profit/(loss) from an associate 5. 0.3 2.1<br />
26. Financial results (96.2) (91.1)<br />
27. Earnings before tax (EBT) 23.6 12.1<br />
28. Income tax expense 7.8. (5.1) 13.5<br />
29. Profit/(loss) for the year 18.5 25.7<br />
Thereof attributable to non-controlling interests (4.8) 1.8<br />
Thereof attributable to equity holders of the parent 23.3 23.8<br />
Basic earnings per share in € 7.9. 0.28 0.29<br />
Diluted earnings per share in € 7.9. 0.28 0.29<br />
Weighted average number of shares outstanding 7.9. 82,779,113 82,496,796<br />
Equity holders<br />
of the parent<br />
01.01. – 31.12.<strong>2011</strong> 01.01. – 31.12.2010<br />
Noncontrolling<br />
interests Total<br />
Equity holders<br />
of the parent<br />
Noncontrolling<br />
interests Total<br />
Profit after tax for the year<br />
Other comprehensive income<br />
23.3 (4.8) 18.5 23.8 1.8 25.7<br />
Currency translation differences 0.0 0.0 0.0 (1.4) 0.0 (1.4)<br />
Tax effect of currency translation<br />
differences<br />
0.0 0.0 0.0 0.1 0.0 0.1<br />
Cash flow hedges (50.1) 0.0 (50.1) (1.4) 0.0 (1.4)<br />
Tax effect of cash flow hedges 13.3 0.0 13.3 0.4 0.0 0.4<br />
Other income from an associate (0.1) 0.0 (0.1) (2.0) 0.0 (2.0)<br />
Other 0.4 0.0 0.4 0.0 0.0 0.0<br />
Total other comprehensive income (36.4) 0.0 (36.4) (4.3) 0.0 (4.3)<br />
Total comprehensive income for the period (13.2) (4.8) (18.0) 19.6 1.8 21.4
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER <strong>2011</strong><br />
(IN € MILLION)<br />
Assets<br />
A. Non-current assets<br />
Notes 31.12.<strong>2011</strong> 31.12.2010<br />
<strong>Invest</strong>ment properties 8.1. 2,424.2 2,701.1<br />
Goodwill 8.2. 114.8 118.4<br />
Intangible assets 8.2. 3.7 4.6<br />
<strong>Invest</strong>ment in an associate 5. 9.4 0.0<br />
Miscellaneous property, plant and equipment 8.3. 1.2 1.6<br />
Other <strong>financial</strong> assets 8.10. 4.7 3.7<br />
Deferred tax assets 8.10. 22.1 18.4<br />
Total non-current assets 2,580.0 2,847.9<br />
B. Current assets<br />
Properties held for sale 8.4. 404.4 537.1<br />
Trade accounts receivable 8.10. 30.9 56.8<br />
Other <strong>financial</strong> assets 8.10. 59.4 40.1<br />
Other assets 8.5. 5.8 2.7<br />
Cash and cash equivalents 8.6. 95.8 66.2<br />
Total current assets 596.4 702.9<br />
Total assets 3,176.4 3,550.8<br />
Equity and Liabilities<br />
C. Equity 8.7.<br />
Issued capital 853.6 853.6<br />
Share premium 328.5 329.0<br />
Treasury shares (41.6) (10.7)<br />
Retained earnings 203.0 205.9<br />
Other reserves (106.9) (66.8)<br />
Equity attributable to equity holders of the parent 1,236.5 1,311.0<br />
Non-controlling interests 11.8 19.1<br />
Total equity 1,248.3 1,330.1<br />
D. Non-current liabilities<br />
Interest-bearing loans and borrowings 8.10. 1,005.9 1,211.9<br />
Convertible bond 8.10. 273.8 276.0<br />
Provisions 0.1 0.1<br />
Deferred tax liabilities 8.8. 22.7 35.7<br />
Financing contributions from tenants 8.10. 14.6 16.4<br />
Other non-current <strong>financial</strong> liabilities 148.2 102.2<br />
Total non-current liabilities 1,465.3 1,642.3<br />
E. Current liabilities<br />
Current interest-bearing loans and borrowings 8.10. 408.9 456.1<br />
Bond liabilities 8.10. 0.0 49.8<br />
Trade accounts payable 13.5 40.7<br />
Income tax payable 8.3 7.2<br />
Other current <strong>financial</strong> liabilities 8.10. 23.7 19.9<br />
Other current liabilities 8.9. 8.4 4.5<br />
Total current liabilities 462.7 578.3<br />
Total equtiy and liabilities 3,176.4 3,550.8<br />
45
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
46<br />
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY<br />
(IN € MILLION)<br />
Issued<br />
capital<br />
Share<br />
premium<br />
Treasury<br />
shares<br />
Retained<br />
earnings<br />
Reserve for<br />
derivatives<br />
Other<br />
reserves<br />
Subtotal:<br />
equity holders<br />
of the parent<br />
Noncontrolling<br />
interests<br />
Balance as of 01.01.2010 853.6 319.7 (48.2) 198.6 (49.7) (4.1) 1,269.9 10.0 1.279.9<br />
Profit for the period (after tax) 0.0 0.0 0.0 23.8 0.0 0.0 23.8 1.8 25.7<br />
Other comprehensive income 0.0 0.0 0.0 0.0 (1.7) (2.6) (4.3) 0.0 (4.3)<br />
Total comprehensive income for<br />
the period<br />
0.0 0.0 0.0 23.8 (1.7) (2.6) 19.6 1.8 21.4<br />
Dividend 0.0 0.0 0.0 (19.8) 0.0 0.0 (19.8) 0.0 (19.8)<br />
Change in convertible bond 0.0 9.3 0.0 0.0 0.0 0.0 9.3 0.0 9.3<br />
Other changes in equity 0.0 0.0 0.0 2.7 0.0 0.0 2.7 0.0 2.7<br />
Issue of treasury shares 0.0 0.0 64.2 0.6 0.0 (8.7) 56.1 0.0 56.1<br />
Purchase of treasury shares 0.0 0.0 (26.7) 0.0 0.0 0.0 (26.7) 0.0 (26.7)<br />
Acquisition of non-controlling<br />
interests<br />
0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.8 9.8<br />
Distribution to non-controlling<br />
interests<br />
0.0 0.0 0.0 0.0 0.0 0.0 0.0 (2.6) (2.6)<br />
Balance as of 31.12.2010 853.6 329.0 (10.7) 205.9 (51.4) (15.4) 1.311.0 19.1 1.330.2<br />
Balance as of 01.01.<strong>2011</strong> 853.6 329.0 (10.7) 205.9 (51.4) (15.4) 1.311.0 19.1 1.330.2<br />
Profit for the period (after tax) 0.0 0.0 0.0 23.3 0.0 0.0 23.3 (4.8) 18.5<br />
Other comprehensive income 0.0 0.0 0.0 0.0 (36.8) 0.4 (36.4) 0.0 (36.4)<br />
Total comprehensive income for<br />
the period<br />
0.0 0.0 0.0 23.3 (36.8) 0.4 (13.2) (4.8) (18.0)<br />
Dividend 0.0 0.0 0.0 (25.0) 0.0 0.0 (25.0) 0.0 (25.0)<br />
Change in convertible bond 0.0 (0.6) 0.0 0.0 0.0 0.0 (0.6) 0.0 (0.6)<br />
Other changes in equity 0.0 0.0 0.0 (1.2) 0.0 (3.7) (4.8) 0.0 (4.8)<br />
Purchase of treasury shares 0.0 0.0 (30.9) 0.0 0.0 0.0 (30.9) 0.0 (30.9)<br />
Distribution to non-controlling<br />
interests<br />
0.0 0.0 0.0 0.0 0.0 0.0 0.0 (2.3) (2.3)<br />
Change in non-controlling<br />
interests<br />
0.0 0.0 0.0 0.0 0.0 0.0 0.0 (0.2) (0.2)<br />
Balance as of 31.12.<strong>2011</strong> 853.6 328.5 (41.6) 203.0 (88.2) (18.8) 1,236.5 11.8 1,248.3<br />
Equity<br />
total
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
CONSOLIDATED CASH FLOW STATEMENT<br />
FOR THE PERIOD FROM 1.1. – 31.12.<strong>2011</strong><br />
(IN € MILLION)<br />
Note<br />
9<br />
01.01. –<br />
31.12.<strong>2011</strong><br />
01.01. –<br />
31.12.2010<br />
Profit for the year 18,5 25,7<br />
Net interest result 96,2 91,1<br />
Income tax expense 5,1 (13,5)<br />
Net gain/(loss) from fair value adjustments (7,8) (7,8)<br />
Impairment charges to held-for-sale properties 7,5 0,0<br />
Depreciation and amortisation 5,3 84,1<br />
Other non-cash effects on earnings (6,1) (107,0)<br />
Gain on the disposal of <strong>financial</strong> investments (8,8) (14,7)<br />
Income tax paid (7,5) (9,5)<br />
Interest received 10,8 12,2<br />
Subtotal<br />
Changes in:<br />
113,2 60,6<br />
Held-for-sale properties 85,5 13,8<br />
Receivables and other assets (3,9) 10,5<br />
Trade accounts payable (22,9) 7,3<br />
Tax provisions 0,0 1,8<br />
Other current <strong>financial</strong> liabilities 14,0 5,0<br />
Other current liabilities 4,3 (15,5)<br />
Cash flow from operating activities 190,2 83,4<br />
Payments for the acquisition of investment properties (55,6) (111,9)<br />
Payments for the acquisition of other <strong>financial</strong> assets,<br />
property, plant and equipment<br />
(1,2) (1,0)<br />
Cash inflows from the sale of investment properties 262,1 232,5<br />
Acquisition of shares in an associate (0,1) 0,0<br />
Cash outflows for the acquisition of subsidiaries,<br />
less cash and cash equivalents acquired<br />
9. (1,1) (115,2)<br />
Cash inflows from the sale of subsidiaries,<br />
less cash and cash equivalents acquired<br />
9. 58,3 0,3<br />
Cash flow from investing activities 262,4 4,7<br />
Proceeds from the issue of convertible bonds 0,0 135,0<br />
Dividend (23,8) (19,8)<br />
Purchase of treasury shares 8.7 (30,9) (26,7)<br />
Transaction costs for capital market transactions 0,0 (1,3)<br />
Dividend paid to non-controlling interests (1,0) 0,0<br />
Payments resulting from the decrease in<br />
non-controlling interests<br />
0,0 (20,8)<br />
Payments made/received from the change in<br />
current loans and borrowings<br />
(85,7) 42,4<br />
Payments made/received from the change in<br />
non-current loans and borrowings<br />
(180,3) (101,4)<br />
Payments made/received from the change in<br />
other non-current <strong>financial</strong> liabilities<br />
(8,7) 3,2<br />
Interest paid (91,6) (95,1)<br />
Cash flow from financing activities (422,0) (84,4)<br />
Change in cash and cash equivalents<br />
Cash and cash equivalents<br />
30,7 3,7<br />
Cash and cash equivalents at the beginning of the period 66,2 61,6<br />
Net foreign exchange differences (1,1) 0,9<br />
65,1 62,5<br />
Cash and cash equivalents at the end of the period 95,8 66,2<br />
Change in cash and cash equivalents 30,7 3,7<br />
47
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
48<br />
<strong>SE</strong>GMENT REPORTING BY REGION<br />
(IN € MILLION)<br />
Portfolio<br />
Sale of flats<br />
and buildings<br />
01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12.<br />
<strong>2011</strong> 2010 <strong>2011</strong> 2010<br />
Rental income 211.1 188.5 0.0 0.0<br />
Proceeds on sale 0.0 0.0 613.3 325.1<br />
Revenues from property services 0.0 0.0 0.0 0.0<br />
Revenues 211.1 188.5 613.3 325.1<br />
Property expenses (97.9) (90.4) 0.0 0.0<br />
Expenses from the disposal of properties 0.0 0.0 (564.3) (287.4)<br />
Net gain/(loss) from fair value adjustments 6.1 1.3 0.0 0.0<br />
Negative fair value adjustments to properties held for sale (7.5) (5.8) 0.0 0.0<br />
Gain from the acquisition of a company below market value 0.0 95.3 0.0 0.0<br />
Impairment charge in connection with the acquisition of a company 0.0 0.0 0.0 0.0<br />
Depreciation, amortisation and other impairment charges (0.7) 0.0 0.0 0.0<br />
Personnel expenses 0.0 (0.0) 0.0 0.0<br />
Other operating income 8.5 8.4 0.0 0.0<br />
Other operating expenses (43.2) (51.1) (21.2) (15.5)<br />
Earnings before interest and taxes (EBIT) 76.4 146.3 27.9 22.2<br />
Financial results (77.0) (71.4) 0.0 0.0<br />
Earnings before tax (EBT) (0.6) 74.9 27.9 22.2<br />
Property assets 2,816.4 3,228.6 0.0 0.0<br />
Interest-bearing <strong>financial</strong> liabilities related to investment properties 1,615.3 2,181.4 0.0 0.0<br />
<strong>Invest</strong>ment properties 69.0 865.3 0.0 0.0<br />
Austria<br />
01.01. – 31.12. 01.01. – 31.12.<br />
<strong>2011</strong> 2010<br />
Rental income 82.5 75.2<br />
Proceeds on sale 309.0 222.0<br />
Revenues from property services 37.3 49.0<br />
Revenues 428.8 346.2<br />
Property expenses (35.7) (34.0)<br />
Expenses from the disposal of properties (282.8) (195.8)<br />
Net gain/(loss) from fair value adjustments (1.8) (0.7)<br />
Negative fair value adjustments to properties held for sale (6.8) (4.4)<br />
Gain from the acquisition of a company below market value 0.0 95.3<br />
Impairment charge in connection with the acquisition of a company 0.0 (14.9)<br />
Depreciation, amortisation and other impairment charges<br />
Personnel expenses<br />
(4.8) (58.9)<br />
Other operating income (13.1) (16.1)<br />
Other operating expenses 7.5 4.9<br />
Earnings before interest and taxes (EBIT) (42.7) (52.4)<br />
Financial results 48.6 69.2<br />
Earnings before tax (EBT) (27.0) (39.8)<br />
Property assets 21.6 29.4<br />
Interest-bearing <strong>financial</strong> liabilities 1,361.7 1,623.7<br />
related to investment properties 866.9 1,028.8<br />
<strong>Invest</strong>ment properties 34.9 733.6<br />
Additional information is provided under note 6.<br />
<strong>SE</strong>GMENT REPORTING BY <strong>SE</strong>CTOR OF BUSINESS<br />
(IN € MILLION)
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Germany Other countries Group eliminations Group<br />
01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12.<br />
<strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010<br />
122.6 107.7 6.0 5.6 (1.1) (0.8) 210.0 187.7<br />
292.9 102.4 11.5 0.8 0.0 0.0 613.3 325.1<br />
55.2 35.5 1.8 1.9 (64.8) (52.0) 29.5 34.4<br />
470.7 245.6 19.3 8.3 (65.9) (52.8) 852.9 547.2<br />
(59.7) (54.6) (2.6) (1.7) 7.0 5.5 (90.9) (84.9)<br />
(269.8) (90.9) (11.7) (0.7) 0.0 0.0 (564.3) (287.4)<br />
11.3 7.4 (3.4) (5.4) 1.7 6.5 7.8 7.8<br />
(0.7) (0.5) 0.0 (0.8) 0.1 0.4 (7.5) (5.4)<br />
0.0 0.0 0.0 0.0 0.0 0.0 0.0 95.3<br />
0.0 0.0 0.0 0.0 0.0 0.0 0.0 (14.9)<br />
(0.4) (10.3) (0.0) 0.0 0.0 0.0 (5.3) (69.2)<br />
(19.5) (17.2) (0.9) (1.1) (1.8) (3.9) (35.3) (38.2)<br />
1.5 2.2 0.2 2.5 (0.1) 0.0 9.1 9.6<br />
(51.3) (35.9) (4.7) (3.7) 52.0 35.3 (46.7) (56.7)<br />
82.1 45.8 (3.9) (2.6) (7.0) (9.1) 119.8 103.2<br />
(49.5) (32.8) (2.5) (2.3) (17.3) (16.4) (96.2) (91.1)<br />
32.6 13.0 (6.4) (4.9) (24.3) (25.5) 23.6 12.2<br />
1,304.0 1,439.8 162.9 174.8 0.0 0.0 2,828.6 3,238.3<br />
702.6 822.9 52.2 58.4 66.9 83.7 1,688.6 1,993.8<br />
33.5 111.3 6.0 20.4 0.0 0.0 74.4 865.3<br />
Subtotal<br />
property project<br />
companies Property services<br />
Group<br />
eliminations Group<br />
01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12. 01.01. – 31.12.<br />
<strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010<br />
211.1 188.5 0.0 0.0 (1.1) (0.8) 210.0 187.7<br />
613.3 325.1 0.0 0.0 0.0 0.0 613.3 325.1<br />
0.0 0.0 94.4 86.4 (64.8) (52.0) 29.5 34.4<br />
824.4 513.6 94.4 86.4 (65.9) (52.8) 852.9 547.2<br />
(97.9) (90.4) 0.0 0.0 7.0 5.5 (90.9) (84.9)<br />
(564.3) (287.4) 0.0 0.0 0.0 0.0 (564.3) (287.4)<br />
6.1 1.3 0.0 0.0 1.7 6.5 7.8 7.8<br />
(7.5) (5.8) 0.0 0.0 0.1 0.4 (7.5) (5.4)<br />
0.0 95.3 0.0 0.0 0.0 0.0 0.0 95.3<br />
0.0 0.0 0.0 (14.9) 0.0 0.0 0.0 (14.9)<br />
(0.7) 0.0 (4.6) (69.2) 0.0 0.0 (5.3) (69.2)<br />
0.0 (0.0) (33.5) (34.3) (1.8) (3.9) (35.3) (38.2)<br />
8.5 8.5 0.7 1.1 (0.1) 0.0 9.1 9.6<br />
(64.3) (66.6) (34.4) (25.4) 52.0 35.3 (46.7) (56.7)<br />
104.3 168.5 22.5 (56.4) (7.0) (9.1) 119.8 103.2<br />
(77.0) (71.4) (2.0) (3.3) (17.3) (16.4) (96.2) (91.1)<br />
27.3 97.1 20.5 (59.7) (24.3) (25.5) 23.6 12.2<br />
2,816.4 3,228.6 12.2 9.6 0.0 0.0 2,828.6 3,238.3<br />
1,615.3 2,181.4 6.5 4.6 66.9 83.7 1,688.6 1,993.8<br />
69.0 865.3 5.3 0.0 0.0 0.0 74.4 865.3<br />
49
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
50
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
CONTENT<br />
Notes<br />
1. Corporate Information<br />
2. Significant Accounting Policies<br />
2.1. General principles<br />
2.2. Changes in accounting principles<br />
2.3. Basis of consolidation<br />
2.4. Summary of significant accounting policies<br />
3. Accounting Judgments, Estimates and Assumptions<br />
4. <strong>Invest</strong>ments in Joint Ventures<br />
5. <strong>Invest</strong>ment in an Associate<br />
5.1. <strong>Invest</strong>ment in an associate during <strong>2011</strong><br />
5.2. <strong>Invest</strong>ment in an associate during 2010<br />
6. Segment Reporting<br />
7. Notes to the Income Statement<br />
7.1. Property revenues and expenses<br />
7.2. Revenues from property services<br />
7.3. Other property expenses<br />
7.4. Personnel expenses<br />
7.5. Other operating expenses<br />
7.6. Finance revenue<br />
7.7. Finance costs<br />
7.8. Income tax expense<br />
7.9. Earnings per share<br />
8. Notes to the Balance Sheet<br />
8.1. <strong>Invest</strong>ment properties<br />
8.2. Intangible assets<br />
8.3. Other property, plant and equipment<br />
8.4. Properties held for sale<br />
8.5. Other assets<br />
8.6. Cash and cash equivalents<br />
8.7. Equity<br />
8.8. Deferred taxes<br />
8.9. Other current liabilities<br />
8.10. Financial instruments<br />
9. Notes to the Cash Flow Statement<br />
10. Operating Leases<br />
10.1. Claims arising from operating leases<br />
10.2. Other <strong>financial</strong> obligations arising from operating leases<br />
11. Contingent Liabilities and Other Financial Obligations<br />
12. Objectives and Policies of Financial Risk Management<br />
13. Related Party Transactions<br />
13.1. Provision of services<br />
13.2. Acquisition and sale of properties and other assets<br />
13.3. Other services<br />
13.4. Remuneration of persons in key positions<br />
14. Information on Bodies of the Corporation<br />
15. Events after the Balance Sheet Date<br />
16. Group Companies<br />
Corporate Governance Report<br />
52<br />
52<br />
52<br />
53<br />
56<br />
57<br />
67<br />
68<br />
68<br />
68<br />
70<br />
71<br />
72<br />
72<br />
72<br />
73<br />
73<br />
74<br />
75<br />
75<br />
75<br />
76<br />
77<br />
77<br />
86<br />
90<br />
90<br />
91<br />
91<br />
91<br />
93<br />
93<br />
94<br />
105<br />
106<br />
106<br />
106<br />
106<br />
106<br />
110<br />
110<br />
110<br />
110<br />
110<br />
111<br />
111<br />
112<br />
121<br />
51
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
52<br />
1. CORPORATE INFORMATION<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> is a European stock company that is listed in the Prime Market<br />
segment of the Vienna Stock Exchange. The registered headquarters of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong><br />
<strong>SE</strong> are located at Albertgasse 35, 1080 Vienna, Austria. The company is included in the company<br />
register of the commercial court of Vienna under number FN 212163f. The consolidated <strong>financial</strong><br />
<strong>statement</strong>s of the <strong>conwert</strong> Group for the <strong>financial</strong> year ending 31 December <strong>2011</strong> were completed<br />
and signed by the Executive Directors of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> on 26 March 2012 and released<br />
by the Administrative Board. <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> is the controlling parent company<br />
as well as the parent company in Austria.<br />
The business activities of the <strong>conwert</strong> <strong>Immobilien</strong> Group (the “Group“) are focused on property<br />
investments, in particular the acquisition, development, rental and best possible realisation of properties<br />
in order to optimise investments.<br />
These corporate goals are reflected in the Group’s three strategic fields of business:<br />
+ Portfolio<br />
+ Sale of flats and buildings<br />
+ Property services<br />
In the area of property services, the <strong>conwert</strong> Group concentrates on the following:<br />
+ Management of property companies<br />
+ Facility management<br />
+ Brokerage and sales<br />
+ Development and construction management<br />
2. SIGNIFICANT ACCOUNTING POLICIES<br />
2.1. GENERAL PRINCIPLES<br />
The Executive Directors of the Group were responsible for the preparation of these <strong>annual</strong> <strong>financial</strong><br />
<strong>statement</strong>s in accordance with the guidelines set forth in International Financial Reporting<br />
Standards (“IFRS“), as adopted by the European Union (“EU”). The requirements of the applied<br />
standards and interpretations were met in full. Therefore, the consolidated <strong>financial</strong> <strong>statement</strong>s<br />
present a true and fair view of the <strong>financial</strong> position, <strong>financial</strong> performance and cash flows of the<br />
<strong>conwert</strong> Group.<br />
The <strong>financial</strong> <strong>statement</strong>s of the companies included in the consolidation were prepared on the basis<br />
of the uniform accounting principles established by the <strong>conwert</strong> Group. The balance sheet date<br />
for these companies is generally 31 December <strong>2011</strong>. Interim <strong>financial</strong> <strong>statement</strong>s were prepared<br />
for the companies that did not use 31 December <strong>2011</strong> as their balance sheet date. The consolidated<br />
<strong>financial</strong> <strong>statement</strong>s were prepared on a historical cost basis, which was modified to include the<br />
measurement of land and buildings at fair value in accordance with IAS 40 as well as the measurement<br />
of certain <strong>financial</strong> instruments at fair value. The income <strong>statement</strong> was prepared in accordance<br />
with the nature of expense method under which “total costs” are shown.<br />
The consolidated <strong>financial</strong> <strong>statement</strong>s are prepared in million Euros (“€ million“). Numerous<br />
amounts and percentage rates in the consolidated <strong>financial</strong> <strong>statement</strong>s were rounded, and totals<br />
can therefore differ arithmetically from the sum of the individual amounts.<br />
The Group had a workforce of 660 (2010: 656) full-time equivalent (FTE) employees as of<br />
31 December <strong>2011</strong> at over 53 (2010: 50) locations in six countries (2010: six). The workforce as of<br />
the balance sheet date comprised 651 (2010: 646) salaried and 9 (2010: 10) wage employees.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
2.2. CHANGES IN ACCOUNTING PRINCIPLES<br />
The accounting principles that formed the basis for the consolidated <strong>financial</strong> <strong>statement</strong>s as of<br />
31 December 2010 were applied without change to the consolidated <strong>financial</strong> <strong>statement</strong>s as of<br />
31 December <strong>2011</strong>, with the exception of the changes described below.<br />
The <strong>conwert</strong> Group applied all applicable amendments to existing IAS as well as the new IFRS<br />
and the interpretations issued by the International Financial Reporting Interpretation Committee<br />
(“IFRIC“) and Standard Interpretation Committee (“SIC“), as adopted by the EU, which required<br />
mandatory application as of 31 December <strong>2011</strong>. <strong>conwert</strong> generally applies new standards and<br />
interpretations as well as changes to existing standards only when their application becomes<br />
mandatory.<br />
The following new or revised IFRS regulations require mandatory application in the <strong>2011</strong> <strong>financial</strong><br />
year (if not applied at an earlier date in 2010), and were therefore applied by the Group for the first<br />
time in the reporting year. These new standards and interpretations only had an impact on the<br />
consolidated <strong>financial</strong> <strong>statement</strong>s as of 31 December <strong>2011</strong> if they are designated with “yes“ in the<br />
following table.<br />
Rules<br />
Effective<br />
date 1)<br />
Impact on<br />
consolidated<br />
fi nancial<br />
<strong>statement</strong>s<br />
IFRS<br />
IFRS 1 Limited Exemption from Comparative IFRS 7 Disclosures for First-time<br />
Adopters<br />
01.07.2010 no<br />
Various<br />
IAS<br />
Improvements to IFRSs 2010 01.01.<strong>2011</strong> yes<br />
IAS 32 Classifi cation of Issued Rights 01.02.2010 no<br />
IAS 24 Related Party Disclosures (revised 2009) 01.01.<strong>2011</strong> no<br />
IFRIC<br />
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 01.07.2010 no<br />
IFRIC 14 Advance Contributions for Minimum Funding Requirements 01.01.<strong>2011</strong> no<br />
1) Applicable to fi nancial years beginning on or after the indicated date<br />
If the application of a standard or an interpretation has an impact on the presentation of the<br />
<strong>financial</strong> position, <strong>financial</strong> performance or cash flows of the Group, the resulting effects are<br />
explained below.<br />
IMPROVEMENTS TO IFRS 2010<br />
The Improvements to IFRSs 2010 comprise changes to various IFRS and represent a vehicle for<br />
making non-urgent but necessary amendments to the IFRS regulations.<br />
The changes to IFRS 7 can lead to additional disclosures on collateral held, but also eliminate a<br />
number of previously required disclosures. This amendment is designed to simplify the disclosures<br />
on collateral held by reducing the scope of the required information and to improve the<br />
disclosures by adding further qualitative information.<br />
The changes to IAS 34 could lead to more detailed disclosures in the notes for interim <strong>financial</strong><br />
reporting.<br />
The other changes included in the Improvements to IFRSs 2010 had no effect on the accounting<br />
principles applied by the Group or the presentation of the Group’s <strong>financial</strong> position, <strong>financial</strong><br />
performance or cash flows.<br />
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The following new or revised standards and interpretations have been announced by the IASB and<br />
adopted in full or in part by the EU, but do not require mandatory application for the <strong>2011</strong> <strong>financial</strong><br />
year. These standards and interpretations were not applied on an early basis by the <strong>conwert</strong> Group.<br />
Rules<br />
Effective<br />
date 1)<br />
Impact on<br />
consolidated<br />
fi nancial<br />
<strong>statement</strong>s<br />
Not yet applicable IFRS/IFRIC<br />
IFRS 7 Financial Instruments: Disclosures 01.07.<strong>2011</strong> no<br />
IAS 27 Changes: Separate Financial Statements 01.01.2013 no<br />
IAS 28 Changes: <strong>Invest</strong>ments in Associates 01.01.2013 no<br />
IFRS 7 Changes: Financial Instruments: Disclosures 01.07.<strong>2011</strong> no<br />
IFRS 9 Financial Instruments 01.01.2015 no<br />
IFRS 10 Consolidated Financial Statements 01.01.2013 no<br />
IFRS 11 Joint Arrangements 01.01.2013 no<br />
IFRS 12 Disclosure of Interests in Other Entities 01.01.2013 no<br />
IFRS 13 Fair Value Measurement 01.01.2013 no<br />
1) Applicable to fi nancial years beginning on or after the indicated date<br />
IAS 27 “Consolidated and Separate Financial Statements“ will be renamed “Separate Financial<br />
Statements“ and, in the future, will only include rules for the preparation of separate <strong>financial</strong><br />
<strong>statement</strong>s. However, the existing guidelines for separate <strong>financial</strong> <strong>statement</strong>s will remain<br />
unchanged.<br />
IAS 28 “<strong>Invest</strong>ments in Associates“ will be amended through the transfer of disclosure requirements<br />
for associated companies from this standard to IFRS 12.<br />
The changes to IFRS 7 “Financial Instruments: Disclosures“ introduce additional disclosure requirements<br />
for the derecognition of <strong>financial</strong> assets. This amendment defines further disclosure<br />
requirements for newly created liabilities arising from <strong>financial</strong> assets that are not completely<br />
derecognised despite the transfer of rights or an obligation to pass on incoming payments. In particular,<br />
the new disclosure requirements focus on whether the <strong>financial</strong> asset can still be utilised<br />
without limitation by the entity that continues to recognise the asset or whether the acquiring party<br />
has any claims to the <strong>financial</strong> asset. These changes have an effect on companies through sales,<br />
securitisation, factoring and other transactions that transfer <strong>financial</strong> assets to another party.<br />
Since the <strong>conwert</strong> Group has not carried out any such transactions to date, no additional disclosure<br />
requirements are expected.<br />
IFRS 9 “Financial Instruments“ changes the rules for the classification and measurement of<br />
<strong>financial</strong> instruments and will replace IAS 39. The new standard assigns all <strong>financial</strong> assets to two<br />
classification categories – <strong>financial</strong> assets carried at amortised cost and <strong>financial</strong> assets carried at<br />
fair value. New requirements are also introduced for the recognition of <strong>financial</strong> liabilities, and the<br />
rules for derecognising <strong>financial</strong> assets and liabilities will be transferred to IAS 39. Plans call for<br />
the extension of IFRS 9 to include new regulations for the impairment of <strong>financial</strong> assets carried at<br />
amortised cost and the inclusion of hedge accounting. The future effects of IFRS 9 on the <strong>conwert</strong><br />
Group must be evaluated, and EU approval is still outstanding.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
IFRS 10 “Consolidated Financial Statements“ will replace IAS 27 ‘Consolidated and Separate<br />
Financial Statements‘ and SIC 12 ‘Consolidation – Special Purpose Entities‘ and includes guidelines<br />
for control and consolidation. The definition of control will be clarified to include the possibility of<br />
exercising control over activities that can lead to variable cash flows from the entity. Cash flows<br />
can be positive, negative or both. The consolidation requirements remain unchanged. In the <strong>conwert</strong><br />
Group, the individual investments must be evaluated on the basis of this new definition of<br />
control but no major changes are expected. This new standard has not yet been adopted by the EU.<br />
IFRS 11 “Joint Arrangements“ defines two types of joint arrangements: joint operations and joint<br />
ventures. A joint operation represents an arrangement under which the parties with joint control<br />
have direct rights to the related assets the liabilities. A party to a joint operation recognises its<br />
share based on its involvement in the joint operation and not based on its holding. In contrast,<br />
a party to a joint venture has no rights to individual assets or liabilities. Instead, parties to joint ventures<br />
receive a share of the net assets and, in this way, a share of the results generated by the joint<br />
venture from its activities. Joint venture are accounted for by applying the equity method; proportionate<br />
consolidated is no longer permitted by IFRS 11. The <strong>conwert</strong> Group must review its existing<br />
or recently concluded agreements to determine whether it has invested in a joint arrangement or<br />
a joint venture under the new standard. This new standard has not yet been adopted by the EU.<br />
IFRS 12 “Disclosure of Interests in Other Entities“ defined the required disclosures for companies<br />
that have an interest in other entities. The new standard requires companies to disclose information<br />
that enables the users of <strong>financial</strong> <strong>statement</strong>s to evaluate the nature of and risks associated<br />
with these interests and the <strong>financial</strong> effects of interests in subsidiaries, associates, joint arrangements<br />
and unconsolidated structured entities (special purposes entities). This new standard has<br />
not yet been adopted by the EU.<br />
IFRS 13 “Fair Value Measurement“ defines fair value and expands the required disclosures on fair<br />
value. Fair value is defined as the price that would be received on the sale of an asset or paid on the<br />
transfer of a liability in a transaction between independent market participants on the measurement<br />
date. However, the standard does not provide any guidelines on the cases for which fair value<br />
is to be used. Since nearly all companies – and therefore also the <strong>conwert</strong> Group – use measurement<br />
at fair value, these new requirements must be met. The related effects on the <strong>conwert</strong> Group<br />
will focus primarily on the increased disclosure requirements. This new standard has not yet been<br />
adopted by the EU.<br />
The <strong>conwert</strong> Group does not expect any material effects from the initial application of the new or<br />
revised standards or interpretations on the presentation of its <strong>financial</strong> position, <strong>financial</strong> performance<br />
or cash flows.<br />
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2.3. BASIS OF CONSOLIDATION<br />
2.3.1. INTRODUCTION<br />
International Financial Reporting Standards require the application of IFRS 3 to business combinations.<br />
Relevant information is provided under note 2.4.2. When a company acquires a group of<br />
assets or net assets that do not constitute a business, it must allocate the cost of the acquisition<br />
between the individual identifiable assets and liabilities of the group based on their relative fair<br />
value at the acquisition date (IFRS 3.2(b)). All acquisitions of property project companies in <strong>2011</strong><br />
represented the purchase of individual assets by <strong>conwert</strong>. These transactions are not considered<br />
business combinations in the sense of IFRS 3 because the acquired companies only exercise property<br />
ownership functions and, for this reason, are not classified as integrated groups of activities<br />
or assets. These companies were consolidated as of the acquisition date in accordance with<br />
IFRS 3.2(b) and IAS 27 and deconsolidated as of the date on which control ceases to exist.<br />
In 2010 all acquisitions of property project companies, with the exception of the ECO Group,<br />
represented the purchase of individual assets by <strong>conwert</strong> and were not considered business combinations<br />
in the sense of IFRS 3.<br />
2.3.2. CONSOLIDATION RANGE<br />
The consolidated <strong>financial</strong> <strong>statement</strong>s include <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> as well as the subsidiaries<br />
under its control. Subsidiaries are fully consolidated beginning on the date of acquisition,<br />
i.e. the date on which the <strong>conwert</strong> Group obtains control. Consolidation ends as soon as the parent<br />
company loses control.<br />
A total of 109 domestic (2010: 87) and 159 foreign (2010: 144) companies were included through<br />
full or proportionate consolidation. An overview of the companies in the <strong>conwert</strong> Group is provided<br />
under note 16.<br />
2.3.3. CONSOLIDATION DATE<br />
In accordance with the principle of a uniform balance sheet date, the consolidated <strong>financial</strong> <strong>statement</strong>s<br />
are prepared as of the same balance sheet date as the <strong>financial</strong> <strong>statement</strong>s of the parent<br />
company, <strong>conwert</strong>. The individual <strong>financial</strong> <strong>statement</strong>s of all companies included in the consolidation<br />
were prepared as of the balance sheet date used for the consolidated <strong>financial</strong> <strong>statement</strong>s or<br />
interim <strong>financial</strong> <strong>statement</strong>s were prepared.<br />
2.3.4. CONSOLIDATION METHODS<br />
All transactions – receivables and liabilities, revenues, other income and expenses – between companies<br />
included through full or proportionate consolidation were eliminated.<br />
For each business combination, the acquirer measures the interest in the acquired company,<br />
excluding non-controlling interests, at fair value or at the proportionate share of the identifiable<br />
net assets in the acquired company. Furthermore, a proportionate share of profit or loss is also<br />
attributed to the non-controlling interests. Non-controlling interests are presented separately on<br />
the consolidated income <strong>statement</strong> and the consolidated balance sheet. On the consolidated balance<br />
sheet, non-controlling interests are reported under equity, but presented separately from<br />
the equity attributable to the equity holders of the parent. Any change in an investment in a subsidiary<br />
that does not lead to the loss of control, is accounted for as a transaction with owners in their<br />
capacity as owners. Therefore, these transactions cannot lead to the recognition of goodwill or a<br />
gain or loss. Differences between the consideration received and the carrying amount of the noncontrolling<br />
interests are consequently recognised directly in equity.<br />
The <strong>conwert</strong> Group is a partner in various joint ventures. A joint venture is defined as a contractual<br />
arrangement between two or more parties to undertake an economic activity that is subject to joint<br />
control. A joint venture is created by the founding of an independent entity, in which each partner<br />
holds an investment. Shares in joint ventures are included in the <strong>financial</strong> <strong>statement</strong>s through proportionate<br />
consolidation, whereby the appropriate percentage of the assets, liabilities, income and<br />
expenses of the joint venture are combined with the respective items in the consolidated <strong>financial</strong><br />
<strong>statement</strong>s. The <strong>financial</strong> <strong>statement</strong>s of joint ventures are prepared on the basis of consistent<br />
accounting and valuation methods as of the same balance sheet date as the <strong>financial</strong> <strong>statement</strong>s<br />
of the parent company.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
2.3.5. FOREIGN CURRENCY TRANSLATION<br />
BUSINESS TRANSACTIONS IN A FOREIGN CURRENCY<br />
The individual Group companies record business transactions in a foreign currency at the reference<br />
exchange rate in effect on the date of the transaction. Monetary assets and liabilities are<br />
translated into the Euro using the relevant reference rates issued by the European Central Bank<br />
for the balance sheet date. Any resulting foreign exchange gains and losses are recognised to<br />
profit or loss for the <strong>financial</strong> year.<br />
TRANSLATION OF INDIVIDUAL FINANCIAL STATEMENTS PREPARED IN A FOREIGN CURRENCY<br />
The Euro is the reporting currency and the functional currency for the Group companies in Austria<br />
and countries that are members of the European Economic and Currency Union. In cases where<br />
consolidated subsidiaries prepare their <strong>financial</strong> <strong>statement</strong>s in a foreign currency, these <strong>financial</strong><br />
<strong>statement</strong>s are translated into the Euro in accordance with IAS 21. The assets, liabilities and contingent<br />
liabilities are translated at the average rate for the balance sheet date, while equity – with<br />
the exception of income and expenses recognised directly in equity – are translated at historical<br />
exchange rates. Income and expenses are generally translated at the exchange rate in effect on the<br />
date of the transaction. Since these currencies are not subject to major fluctuations, an average<br />
<strong>annual</strong> exchange rate was used as an approximate value to simplify the calculation. Any foreign<br />
exchange gains and losses are recorded under other comprehensive income.<br />
2.4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES<br />
2.4.1. PROPERTIES<br />
2.4.1.1. INVESTMENT PROPERTIES<br />
<strong>Invest</strong>ment properties are initially recognised at cost. The measurement of these assets in subsequent<br />
periods reflects fair value, whereby gains or losses from changes in fair value are recognised<br />
to profit or loss. Objects are classified at the time of acquisition as investment properties<br />
or properties held for sale based on their expected return and future strategic orientation. If an<br />
investment property is reclassified as held for sale, the deemed cost for subsequent accounting<br />
equals the fair value at the date of the change in use. <strong>Invest</strong>ment property is derecognised when it<br />
is sold or can no longer be used on a lasting basis, and no future economic benefits are expected<br />
from its disposal. Properties are reclassified from investment property to property held for sale if<br />
there is a change in use.<br />
Borrowing costs incurred during the development of investment properties are capitalised at an<br />
amount equal to the direct interest expense. Additional details are provided under note 8.1.<br />
2.4.1.2. PROPERTIES HELD FOR SALE<br />
Properties held for sale are initially recognised at cost. <strong>Invest</strong>ment properties are only reclassified<br />
to this category when there is a change in use. Reclassified investment properties are carried at<br />
fair value as of the date of reclassification. In accordance with IAS 2, the subsequent measurement<br />
of these assets reflects the lower of acquisition or production cost and the net realisable value.<br />
Properties available for sale are derecognised when the risks and rewards are transferred. Additional<br />
details are provided under note 8.4.<br />
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2.4.2. BUSINESS COMBINATIONS AND GOODWILL<br />
The acquisition of subsidiaries and business operations is accounted for using the purchase method.<br />
This method includes the recognition of identifiable assets (including intangible assets not previously<br />
recognised) and liabilities (including contingent liabilities, but excluding future restructuring<br />
costs) in the acquired entity at fair value. The cost of a business combination represents the total<br />
compensation transferred, measured at fair value on the acquisition date, and any non-controlling<br />
interests in the acquired company. The costs incurred for a business combination are recognised<br />
as expenses and reported as transaction costs.<br />
The goodwill arising from a business combination is initially recognised at cost, which equals the<br />
excess of the compensation transferred and the amount of any non-controlling interests over the<br />
identifiable assets acquired and liabilities assumed by the Group. If this compensation is less than<br />
the fair value of the net assets in the acquired subsidiary, the difference is recognised to profit or<br />
loss.<br />
The subsequent measurement of goodwill reflects cost less any accumulated impairment losses.<br />
For the purpose of impairment testing, goodwill acquired in a business combination is allocated<br />
– beginning on the acquisition date – to the cash-generating units or group of cash-generating<br />
units that is expected to benefit from the synergies of the business combination. This allocation is<br />
made regardless of whether other assets or liabilities from the acquired company are assigned to<br />
this cash-generating unit or group of cash-generating units. Additional details on this subject are<br />
provided in note 8.2.<br />
2.4.3. INTANGIBLE AS<strong>SE</strong>TS<br />
Intangible assets acquired separately are initially recognised at purchase or production cost. The<br />
cost of intangible assets acquired in a business combination reflects fair value as of the date of<br />
acquisition. Intangible assets are measured in subsequent periods at purchase or production cost<br />
less accumulated amortisation and any accumulated impairment losses. Amortisation is based on<br />
the useful economic life of the asset. The amortisation period and the amortisation method for an<br />
intangible asset with a finite useful life are reviewed at least <strong>annual</strong>ly at the end of the <strong>financial</strong><br />
year. Changes in the expected useful life or the expected pattern of consumption of future economic<br />
benefits embodied in the intangible asset are reflected in a change in the amortisation period<br />
and/or the amortisation method, and are treated as changes in accounting estimates. The amortisation<br />
expense for intangible assets with finite useful lives is recognised to profit or loss under<br />
the position “depreciation, amortisation and other impairment charges” that reflects the function<br />
of the asset. Gains or losses arising from the derecognition of intangible assets are measured as<br />
the difference between the net disposal proceeds and the carrying amount of the asset, and are recognised<br />
to profit or loss in the period the asset is derecognised. Additional details on this subject<br />
are contained in note 8.2.<br />
Scheduled, straight-line amortisation is based on the following useful lives:<br />
Software: 3 years<br />
Customer relationships and management contracts: 5 – 11 years
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| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
2.4.4. PROPERTY, PLANT AND EQUIPMENT<br />
Property, plant and equipment are carried at acquisition or production cost, less accumulated<br />
systematic depreciation and accumulated impairment losses.<br />
Ordinary straight-line depreciation is based on the following useful lives:<br />
Customer relationships and management contracts: 5 – 10 years<br />
2.4.5. LEA<strong>SE</strong>S<br />
The <strong>conwert</strong> Group serves as a lessor when it rents the properties it owns to tenants, and also acts<br />
as a lessee when it carries out sale and leaseback transactions.<br />
The determination of whether an arrangement represents a lease is based on the substance of the<br />
arrangement on the date it is concluded. This determination requires an estimation of whether the<br />
fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether the<br />
arrangement conveys a right to use the assets. A renewed evaluation after the start of the lease is<br />
only possible if the requirements defined in IFRIC 4 are met.<br />
Leases that transfer all risks and rewards incidental to ownership are classified as finance leases.<br />
Leases that do not transfer all risks and rewards incidental to ownership from the Group to the<br />
lessee are classified as operating leases and accounted for accordingly.<br />
On sale and leaseback transactions that are classified as a finance lease under IFRS, the excess of<br />
the sale proceeds over the carrying amount is not recognised immediately as income, but is deferred<br />
and recognised over the term of the lease.<br />
The classification of leases for land and buildings involves the separate treatment of the land and<br />
building components. Whenever necessary for the classification and measurement of a lease, the<br />
minimum lease payments are allocated between the land and building components in proportion<br />
to the respective fair values of the payments made for the rights to these assets at the start of the<br />
lease. The land and building components are classified as an operating lease or a finance lease in<br />
accordance with the criteria defined in IAS 17.<br />
Separate measurement of the land and building components is not required when the lessee’s<br />
interest in the land and building represents investment property as defined in IAS 40 and the fair<br />
value model is adopted.<br />
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis<br />
over the term of the lease. However, if the transfer of ownership at the end of the lease is not<br />
reasonably certain, the leased asset is depreciated over the shorter of the estimated useful life and<br />
the lease term.<br />
An overview of finance lease liabilities and their terms is provided in note 8.10.<br />
2.4.6. IMPAIRMENT OF NON-FINANCIAL AS<strong>SE</strong>TS<br />
The <strong>conwert</strong> Group examines its assets for signs of impairment as of each reporting date. If such<br />
signs have been identified or when <strong>annual</strong> impairment testing is required, the Group estimates the<br />
recoverable amount of the relevant asset. The recoverable amount equals the higher of the fair<br />
value of the asset or cash-generating unit less the costs to sell and the value in use.<br />
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The following additional criteria are applied to specific assets:<br />
GOODWILL<br />
Goodwill is tested for impairment at least once each year. An impairment test is also performed<br />
when events or circumstances indicate that the carrying amount may be impaired.<br />
For the purpose of impairment testing, goodwill is allocated to cash-generating units. Impairment<br />
is determined by establishing the recoverable amount of the cash-generating unit to which the<br />
goodwill is allocated. The recoverable amount equals the relevant value in use, e.g. the present<br />
value of the future cash flows expected to be derived from the cash-generating unit. If the recoverable<br />
amount falls below the carrying amount of the cash-generating unit, an impairment loss<br />
is recognised; this impairment loss may not be reversed in a subsequent accounting period. Cashgenerating<br />
units are created by combining assets that generate independent cash flows. Additional<br />
information on this subject is provided under note 8.2.<br />
DEPRECIABLE, NON-CURRENT AS<strong>SE</strong>TS<br />
If there are objective indications that a depreciable non-current asset is impaired, an impairment<br />
loss is recognised equal to the difference between the carrying amount of the assets and its<br />
recoverable amount. The recoverable amount is determined on the basis of the value in use, i.e. the<br />
present value of the future cash flows expected to be derived from the asset. The carrying amount<br />
of the asset is then reduced through an adjustment account, and the impairment loss is recognised<br />
to profit or loss.<br />
If the amount of the impairment loss declines in subsequent reporting periods and this decline can<br />
be objectively attributed to circumstances that occurred after the recognition of the impairment<br />
loss, the previously recognised impairment loss is reversed (unless the asset represents goodwill).<br />
. However, the new carrying amount of the asset may not exceed depreciated cost at the time of the<br />
reversal. The reversal of the impairment loss is recognised to profit or loss.<br />
2.4.7. CASH AND CASH EQUIVALENTS<br />
Deposits with <strong>financial</strong> institutions are carried at their value as of the balance sheet date. Cash<br />
and cash equivalents as shown on the Group cash flow <strong>statement</strong> include the amounts shown for<br />
these items.<br />
2.4.8. FINANCIAL INSTRUMENTS<br />
Financial instruments are classified as <strong>financial</strong> assets or <strong>financial</strong> liabilities based on the economic<br />
characteristics of the relevant contract. Financial assets and liabilities are only netted out<br />
when there is a legal right to offset these amounts and plans call for settlement on a net basis or<br />
the settlement of the related liability concurrently with the realisation of the related asset.<br />
The fair value of <strong>financial</strong> investments that are traded in organised markets is determined by the<br />
quoted market bid price as of the balance sheet date. The fair value of <strong>financial</strong> investments for<br />
which there is no active market is established through valuation methods. These methods include<br />
recent business transactions between expert, willing and independent business partners as well<br />
as comparison with the current market value of a similar <strong>financial</strong> instrument and the analysis of<br />
discounted cash flows.<br />
The interest, dividends, gains and losses arising from these <strong>financial</strong> instruments are reported as income<br />
or expenses (excl. gains and losses on derivatives used for cash flow hedging – see note 8.10.3).
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| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
2.4.8.1. FINANCIAL AS<strong>SE</strong>TS<br />
INITIAL RECOGNITION<br />
Financial assets as defined in IAS 39 are classified on the basis of their individual characteristics as<br />
<strong>financial</strong> assets at fair value through profit or loss, as loans and receivables, as held-to-maturity<br />
investments or as available-for-sale <strong>financial</strong> assets. The initial recognition of <strong>financial</strong> assets<br />
reflects fair value. The fair value of investments that are not valued through profit or loss also<br />
includes transaction costs that are directly related to the purchase of the asset. The Group decides<br />
whether a contract contains an embedded derivative when it becomes a party to the contract. The<br />
embedded derivative is separated from the host contract if the contract is not recognised at fair<br />
value through profit or loss and an analysis shows that the economic characteristics and risks of<br />
the embedded derivative are not closely related to the economic characteristics and risks of the<br />
host contract.<br />
Financial assets are assigned to the appropriate valuation category at the time of initial recognition.<br />
All regular way purchases and sales of <strong>financial</strong> assets are recognised as of the trading<br />
date, which is the date the Group commits to purchase or sell the asset. Regular way purchases or<br />
sales represent purchases or sales of <strong>financial</strong> assets that require delivery of the asset within the<br />
period generally established by regulations or convention in the marketplace.<br />
SUB<strong>SE</strong>QUENT MEASUREMENT<br />
The subsequent measurement of <strong>financial</strong> assets is dependent on their classification, and is<br />
described below.<br />
FINANCIAL AS<strong>SE</strong>TS AT FAIR VALUE THROUGH PROFIT OR LOSS<br />
This group of assets comprises <strong>financial</strong> assets held for trading. Financial assets are classified<br />
as held for trading when the Group acquires the asset with the intention to resell it in the near<br />
future. Derivatives are also classified as held for trading, with the exception of derivatives that are<br />
designated as a <strong>financial</strong> guarantee contract or effective hedging instrument. Gains or losses on<br />
<strong>financial</strong> assets held for trading are recognised to profit or loss.<br />
LOANS AND RECEIVABLES<br />
Loans and receivables are non-derivative <strong>financial</strong> assets with fixed or determinable payments that<br />
are not quoted in an active market. After initial recognition, loans and receivables are carried at<br />
amortised cost less any adjustments to reflect impairment.<br />
AVAILABLE-FOR-SALE FINANCIAL AS<strong>SE</strong>TS<br />
Available-for-sale <strong>financial</strong> assets are non-derivative <strong>financial</strong> assets that are designated as<br />
available-for-sale and not classified under one of the three above-mentioned categories. After<br />
initial recognition, available-for-sale <strong>financial</strong> assets are measured at fair value with unrealised<br />
gains or losses principally recognised to other comprehensive income. When these assets are<br />
sold, the accumulated gains and losses previously recognised in equity are recognised to profit or<br />
loss. Interest paid on or received from <strong>financial</strong> assets is included under finance revenue or finance<br />
costs. The effective interest rate method is applied. Dividends from <strong>financial</strong> investments are<br />
recognised to profit or loss as “dividends received” when the Group’s right to receive the payment<br />
is established.<br />
Other non-current <strong>financial</strong> assets represent equity instruments for which there is no active<br />
market price and whose fair value cannot be reliably determined. These assets are therefore<br />
carried at cost.<br />
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DERECOGNITION OF FINANCIAL AS<strong>SE</strong>TS<br />
An asset is derecognised when the contractual rights to the cash flows arising from the asset<br />
expire. An asset is also derecognised when all major risks and rewards associated with the asset<br />
are transferred.<br />
IMPAIRMENT OF FINANCIAL AS<strong>SE</strong>TS<br />
As of every balance sheet date, the <strong>conwert</strong> Group tests its <strong>financial</strong> assets or groups of assets to<br />
identify any objective evidence of impairment. A <strong>financial</strong> asset or group of <strong>financial</strong> assets is only<br />
considered to be impaired when one or more events have occurred since the initial recognition<br />
of the asset (a “loss event“) and this loss event has an impact on the estimated future cash flows<br />
of the <strong>financial</strong> asset or group of <strong>financial</strong> assets that can be reliably estimated. Evidence of impairment<br />
includes the following: signs that a debtor or group of debtors has significant <strong>financial</strong><br />
difficulties; default or delinquency in interest or principal payments; the probability of bankruptcy<br />
or other <strong>financial</strong> reorganisation; and when observable data indicates there will be a measurable<br />
decrease in estimated future cash flows, e.g. due to an increase in delayed payments or economic<br />
conditions that correlate with default.<br />
An impairment charge is recognised to receivables through a valuation adjustment account when<br />
there are substantial objective indications that the Group will not be able to realise the full amount<br />
of the receivables. The impairment charge is calculated as the difference between the carrying<br />
amount and the present value of expected future cash flows. Material <strong>financial</strong> assets are tested<br />
individually for impairment, while <strong>financial</strong> assets that are not considered to be material are tested<br />
individually or together. If the <strong>conwert</strong> Group determines that there are no indications of impairment<br />
to an individually tested <strong>financial</strong> asset – whether the asset is considered material or not –<br />
the asset is aggregated together with other <strong>financial</strong> assets that have similar credit risk profiles,<br />
and the group of assets is subsequently tested for impairment. In cases where the impairment<br />
tests of individual assets led to the recognition of an impairment charge, these assets are not<br />
included in any further aggregated testing.<br />
If the estimated impairment increases or decreases in a later accounting period due to another<br />
event, the previously recognised impairment charge is increased or decreased through the valuation<br />
adjustment account with a corresponding recognition to profit or loss.<br />
Receivables are derecognised when they are classified as uncollectible. If a derecognised receivable<br />
is subsequently reclassified as collectible because of an event that occurred after derecognition,<br />
the relevant amount is immediately recognised to profit or loss.<br />
The <strong>conwert</strong> Group also tests available-for-sale <strong>financial</strong> assets for objective signs of impairment<br />
as of every balance sheet date. For available-for-sale equity instruments, a significant or lasting<br />
decline in the fair value of the instrument below its acquisition cost would represent an objective<br />
indication of impairment. If there are any indications of impairment, an impairment charge is recognised<br />
to profit or loss at an amount equal to the difference between the acquisition cost and the<br />
current fair value.<br />
Debt instruments are considered to be impaired when the expected future cash flows are likely to<br />
be cancelled or delayed. If debt instruments classified as available for sale are considered to be<br />
impaired, interest is still recorded on the reduced carrying amount of the relevant asset based on<br />
the original effective interest rate; this interest is included under finance revenue.<br />
The reversal of impairment charges to equity instruments takes place through equity, and for debt<br />
instruments through profit or loss.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
2.4.8.2. FINANCIAL LIABILITIES<br />
INITIAL RECOGNITION<br />
Financial liabilities are initially recognised at fair value plus transaction costs. The costs for the<br />
procurement of <strong>financial</strong> liabilities are netted out with the relevant <strong>financial</strong> liability.<br />
Current <strong>financial</strong> liabilities comprise current loans and borrowings, trade accounts payable and<br />
other current <strong>financial</strong> liabilities.<br />
Non-current <strong>financial</strong> liabilities comprise non-current loans and borrowings, convertible bonds,<br />
financing contributions from tenants and other non-current <strong>financial</strong> liabilities.<br />
Additional information is provided under note 8.10.<br />
FINANCING CONTRIBUTIONS FROM TENANTS<br />
The financing contributions from tenants that are shown on the consolidated balance sheet are<br />
attributable to subsidised new residential construction. These payments must be refunded to the<br />
tenants when a lease is terminated, but the landlord has a right to receive a financing contribution<br />
from the new tenant when the object is let again, and the amounts are therefore recorded as noncurrent<br />
liabilities. The initial recognition of financing contributions from tenants reflects the actual<br />
amount received, while subsequent measurement includes index adjustments. The resulting<br />
amount represents the repayment amount of the obligation, which reflects fair value.<br />
SUB<strong>SE</strong>QUENT MEASUREMENT<br />
Subsequent measurement is based on amortised cost and includes the application of the effective<br />
interest rate method. The costs for the procurement of funds are released over the term of the<br />
financing and reported under <strong>financial</strong> results.<br />
DERECOGNITION OF FINANCIAL LIABILITIES<br />
A <strong>financial</strong> liability is derecognised when the underlying obligation is discharged, cancelled or<br />
expired.<br />
2.4.8.3. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING<br />
INITIAL RECOGNITION<br />
Derivative <strong>financial</strong> instruments are used to minimise the risks associated with changes in interest<br />
rates. All derivative transactions are concluded with <strong>financial</strong> institutions that have first-class credit<br />
ratings. These <strong>financial</strong> instruments are initially recognised at market value and reported separately<br />
under other <strong>financial</strong> assets or other <strong>financial</strong> liabilities in accordance with their market<br />
valuation. Derivative <strong>financial</strong> instruments are classified as current or non-current based on the<br />
underlying contractual cash flows. Derivative <strong>financial</strong> instruments that were designated as hedges<br />
and are considered to be effective are classified in accordance with the underlying transaction.<br />
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SUB<strong>SE</strong>QUENT MEASUREMENT<br />
Subsequent measurement is based on the market value. If the criteria for cash flow hedge<br />
accounting as defined in IAS 39 are met, unrealised gains or losses relating to the effective part of<br />
the hedge are recognised in other comprehensive income. The amounts recognised in other comprehensive<br />
income are transferred to profit or loss of the period in which the hedged transaction<br />
influences results, e.g. when the hedged <strong>financial</strong> income or expense is recognised or when an<br />
expected sale is completed. If a hedge results in the recognition of a non-<strong>financial</strong> asset or a non<strong>financial</strong><br />
liability, the amounts recognised in equity are accounted for a part of the acquisition cost<br />
of the non-<strong>financial</strong> asset or a non-<strong>financial</strong> liability at the date of inception.<br />
If a forecast transaction or firm commitment is no longer expected to occur, the amounts previously<br />
recognised in other comprehensive income are transferred to profit or loss. When the hedging<br />
instrument expires or is sold, terminated or exercised without replacement or rollover, or when<br />
the criteria for hedge accounting are no longer met, the amounts previously recognised in other<br />
comprehensive income remain as a separate component of equity until the forecast transaction or<br />
firm commitment occurs.<br />
Gains or losses during a <strong>financial</strong> year, which arise from changes in the fair value of derivative<br />
<strong>financial</strong> instruments that do not meet the criteria for recognition as hedges, as well as the ineffective<br />
part of effective hedging instruments are recognised immediately to profit or loss.<br />
2.4.9. SHARE BUYBACK PROGRAMME, SHARE PREMIUM AND OTHER RE<strong>SE</strong>RVES<br />
When the <strong>conwert</strong> Group purchases its own shares, these shares are recognised at cost and<br />
deducted from equity. They are reported separately on the balance sheet as “treasury shares“.<br />
When treasury shares are sold, the actual proceeds on sale less transaction costs are recorded as<br />
an increase in equity. Differences to the amount recognised for the purchase of treasury shares<br />
are charged or credited to the share premium. Additional information on the share buyback programme<br />
is provided under note 8.7.1.<br />
The share premium includes the premium from earlier capital increases as well as shareholder<br />
contributions (from the year the company was founded). The transaction costs (net of tax) related<br />
to the capital increases were deducted.<br />
Other reserves include the reserves for unrealised gains, the cash flow hedge, available-for-sale<br />
<strong>financial</strong> instruments, the equity component of the convertible bond and settlement items from<br />
foreign exchange translation.<br />
2.4.10. PROVISIONS, CONTINGENT LIABILITIES AND RECEIVABLES<br />
A provision is recognised if and only if when the Group has a present obligation arising from a past<br />
event; if it is probable that an outflow of resources embodying economic benefits will be required<br />
to settle the obligation; and if the amount of the obligation can be reliably estimated.<br />
Contingent liabilities are not recognised to the balance sheet, but are disclosed in the notes. They<br />
are not disclosed when the possibility of an outflow of resources embodying economic benefits is<br />
improbable.<br />
Contingent receivables are not recognised on the balance sheet, but disclosed when the inflow of<br />
resources embodying economic benefits is probable.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
2.4.11. GOVERNMENT GRANTS<br />
Government grants are recognised as income and matched with the costs they are intended to<br />
compensate. The government grants received for assets (subsidies as defined by the provisions<br />
of the Vienna residential construction and renovation act) represent subsidies for new residential<br />
construction. They were accounted for in accordance with the option provided by IAS 20, i.e. the<br />
subsidies were deducted from the carrying amount of the individual assets prior to the revaluation<br />
of the individual assets and liabilities. In <strong>2011</strong> no companies were acquired that had received<br />
government grants for new residential construction in earlier years (in 2010, one company).<br />
2.4.12. REVENUE RECOGNITION<br />
Revenue is recognised when it is probable that the economic benefits will flow to the Group and<br />
the revenue can be reliably measured. Revenue is measured at the fair value of the consideration<br />
received, excluding discounts, rebates and value added tax or other duties.<br />
Net rental income and operating costs are recognised on an accrual basis in agreement with the<br />
provisions of the underlying lease.<br />
Revenue from the sale of properties is recognised in accordance with the transfer of dangers and<br />
risk as specified in the underlying contract, when the major risks and opportunities associated with<br />
ownership are transferred to the buyer.<br />
Service revenues are recognised in accordance with the relevant performance.<br />
2.4.13. INCOME TAXES<br />
Income tax expense is based on <strong>annual</strong> profit, and also includes deferred taxes.<br />
Tax refunds and tax liabilities for the current and prior reporting periods are recorded at the<br />
amount that is expected to be received from or paid to the taxation authorities. The calculation of<br />
these amounts is based on the tax rates and tax regulations in effect as of the balance sheet date.<br />
The taxes relating to items that are recognised in other comprehensive income or directly in equity<br />
are not recognised to profit or loss, but in other comprehensive income or in equity.<br />
Deferred taxes are calculated using the balance sheet liability method. They reflect the tax effects<br />
of temporary differences between the carrying amounts of assets and liabilities for <strong>financial</strong> reporting<br />
purposes and the amounts of these items as defined by the applicable tax regulations.<br />
Deferred tax assets and deferred tax liabilities are calculated using the tax rates that are expected<br />
to apply to taxable income in the year the temporary differences are settled. This calculation<br />
applies the tax rates (and tax laws) that have been enacted or substantively enacted as of the<br />
balance sheet date. The amount of the deferred tax assets and deferred tax liabilities reflects the<br />
tax effects that the Group would expect if the carrying amounts of the assets were realised and the<br />
liabilities were settled as of the balance sheet date.<br />
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Deferred tax assets and deferred tax liabilities are generally recognised for all temporary<br />
differences and tax loss carryforwards, with the exception of the following:<br />
+ Deferred tax assets and deferred tax liabilities arising from the initial recognition of goodwill,<br />
assets or liabilities relating to a transaction that is not a business combination and, at the time<br />
of the transaction, did not have an effect on net income for the year as calculated according to<br />
commercial law or on taxable profit, and<br />
+ Deferred tax assets and deferred tax liabilities arising from temporary differences that are related<br />
to investments in subsidiaries, associates or joint ventures, when the timing of the reversal of<br />
the temporary differences can be managed and it is probable that the temporary difference will<br />
not reverse in the foreseeable future.<br />
Deferred tax assets are created when it is probable that sufficient taxable profit will be available<br />
when the deductible temporary differences and/or tax loss carryforwards are realised. The unrecognised<br />
deductible temporary differences and/or tax loss carryforwards as well as the carrying<br />
amount of deferred tax assets are reassessed as of each balance sheet date. Unrealised deferred<br />
tax assets are recognised when it has become probable that future taxable profit will allow the<br />
deferred tax asset and/or tax loss carryforward to be recovered. In contrast, the carrying amount<br />
of deferred tax assets is reduced when it is no longer probable that sufficient taxable profit will<br />
be available in the future to utilise the deductible temporary differences or tax loss carryforward.<br />
The deferred taxes relating to items that are recognised in other comprehensive income or directly<br />
in equity are not recognised to profit or loss, but also recorded in other comprehensive income or<br />
in equity.<br />
Deferred tax assets are offset with deferred tax liabilities when:<br />
+ these assets and liabilities relate to the same taxation authority, and<br />
+ when these assets and liabilities fall under the existing tax assessment and group contract for<br />
Austrian companies, which establishes a legally enforceable right to offset the items.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
3. ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS<br />
The <strong>conwert</strong> Group classified the properties in its portfolio as investment properties (IAS 40) or<br />
as properties held for sale (IAS 2). This assessment is made by management on the acquisition<br />
date based on expectations for the income to be generated from the future use. If these plans or<br />
expectations change in subsequent years, the property is reclassified. An investment property is<br />
only reclassified as held for sale when a development project is started in preparation to selling<br />
the property.<br />
The following section describes the most important future-oriented assumptions and other key<br />
sources of estimation uncertainty as of the balance sheet date, which have a significant risk of<br />
causing a material adjustment to the carrying amount of assets and/or liabilities during the next<br />
<strong>financial</strong> year.<br />
Management believes the major judgments and estimates are related primarily to the measurement<br />
of investment property (carrying amount: € 2,424.2 million; 2010: € 2,701.1 million). The<br />
valuation of property is dependent on the valuation method used and the underlying valuation parameters.<br />
Although the expert opinions on the objects owned by the Group reflect internationally<br />
recognised standards, it cannot be excluded that a different valuation method would lead to another<br />
– possibly lower – appraisal of the Group’s properties. The valuation of a property is based on<br />
the level of rents and the sustainability of this level, and also includes the condition and location<br />
of the object as well as other factors and far-reaching assumptions. It cannot be excluded that a<br />
negative change in one of these factors or assumptions could lead to a decrease in the value of a<br />
property, and consequently to a negative effect on the <strong>financial</strong> position and performance of the<br />
Group. Additional information on this subject and on the book values of the relevant items is provided<br />
under note 8.1.<br />
Properties held for sale (carrying amount: € 404.4 million; 2010: € 537.1 million) are carried at cost<br />
or at the lower fair value less costs to sell. Additional information on this subject and on the book<br />
values of the relevant items is provided under note 8.4. The comments on judgments and estimates<br />
relating investment property also apply to properties held for sale.<br />
The <strong>conwert</strong> Group tests goodwill for impairment at least once each year. This testing requires an<br />
estimate of the value in use of the cash-generating unit to which the goodwill is allocated. In order<br />
to estimate the value in use, management must approximate the expected future cash flows of the<br />
cash-generating unit and select an appropriate discount rate to determine the present value of<br />
these cash flows. The carrying amount of goodwill totalled € 114.8 million as of 31 December <strong>2011</strong><br />
(2010: € 118.4 million). Additional details on this subject are provided under note 8.2.<br />
The value of intangible assets is determined by applying an appropriate valuation method that<br />
reflects the type of asset and the availability of information. Customer relationships and management<br />
contracts (carrying amount: € 2.8 million; 2010: € 3.9 million) are valued using the multiperiod<br />
excess earnings method. This method involves the calculation of the present value of cash<br />
flows generated by the intangible asset. Based on the assumption that the intangible asset will only<br />
generate cash flows in connection with other tangible and intangible assets, contributory asset<br />
charges are included in the determination of the these cash inflows.<br />
Deferred tax assets (carrying amount: € 22.1 million; 2010: € 18.4 million) are the result of tax<br />
loss carryforwards and deductible temporary differences from the fair value measurement of properties<br />
and derivatives. The valuation of these deferred tax assets requires estimates concerning<br />
the future earnings and tax situation of the <strong>conwert</strong> Group. It cannot be excluded that a negative<br />
change in the relevant assumptions would not justify the capitalisation of deferred tax assets at<br />
this same amount and would therefore have a negative influence on the <strong>financial</strong> position, <strong>financial</strong><br />
performance and cash flows of the Group. Additional details on this subject are provided under<br />
note 8.8.<br />
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4. INVESTMENTS IN JOINT VENTURES<br />
The <strong>conwert</strong> <strong>Immobilien</strong> Group holds investments in the joint ventures listed under note 16, which<br />
are all active in the property sector. The following table shows the proportional share of assets,<br />
liabilities, income and expenses attributable to the Group during the reporting year from its investments<br />
in joint ventures as of 31 December <strong>2011</strong> and 2010:<br />
in € million <strong>2011</strong> 2010<br />
Current assets 1.8 1.9<br />
Non-current assets 25.2 24.6<br />
Total 27.0 26.5<br />
Current liabilities (9.6) (9.9)<br />
Non-current liabilities (11.7) (11.7)<br />
Total (21.3) (21.6)<br />
Income 3.0 2.7<br />
Expenses (2.3) (2.4)<br />
Gewinn/Verlust 0.7 0.2<br />
5. INVESTMENT IN AN ASSOCIATE<br />
5.1. INVESTMENT IN AN ASSOCIATE DURING <strong>2011</strong><br />
The successful acquisition and sale of the Berliner Coinvest portfolio (the “Goud portfolio“), which<br />
consisted entirely of properties held for sale, had the following effects during the reporting year:<br />
The portfolio was initially consolidated during the second quarter of <strong>2011</strong> and deconsolidated<br />
during the third quarter of <strong>2011</strong> following the sale of 80% of the shares. The <strong>conwert</strong> Group retained<br />
a stake of 20%. In accordance with the percentage owned, the remaining investment in the Goud<br />
portfolio is presented as an associated company. On the cash flow <strong>statement</strong>, this transaction is<br />
treated as a non-cash reclassification (also see note 9).<br />
The basic principle defined by IAS 27 (2008) for changes and by IAS 28 for subsequent changes<br />
resulted in the recognition of a disposal when control was lost and the measurement of the remaining<br />
stake at fair value.<br />
In <strong>2011</strong> a total of € 0.3 million was recognised to profit or loss in connection with the Goud portfolio,<br />
while a further minus € 0.1 million was recorded without recognition through profit or loss.<br />
The following table presents summarised <strong>financial</strong> information on the investment held by the<br />
<strong>conwert</strong> Group in the Goud portfolio:<br />
Share of assets and liabilities<br />
in the associate<br />
Total in<br />
€ million<br />
Thereof 20%<br />
Non-current assets 107.9 21.6<br />
Current assets 4.7 0.9<br />
Current liabilities (59.1) (11.8)<br />
Non-current liabilities (6.4) (1.3)<br />
Proportional share of net assets 47.1 9.4<br />
Carrying amount of the investment 9.4
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Income <strong>statement</strong> of the associate<br />
from 01.10.-31.12.<strong>2011</strong><br />
Notes<br />
Total in<br />
€ million<br />
Thereof 20%<br />
Operating income 3.7 0.7<br />
Operating expenses (3.5) (0.7)<br />
Operating profit 0.2 0.0<br />
Financial results (0.7) (0.1)<br />
Profit before tax (0.4) (0.1)<br />
Income tax 1.3 0.3<br />
Profit after tax 0.8 0.3<br />
Other comprehensive income (0.4) (0.1)<br />
Total comprehensive income for the period 0.4 0.1<br />
Cash flow from the acquisition of the assets and liabilities in the Goud portfolio comprises the<br />
following:<br />
in € million <strong>2011</strong><br />
Cash and cash equivalents (0.6)<br />
Receivables and other assets (4.4)<br />
Properties held for sale (89.2)<br />
Liabilities and provisions 91.7<br />
Net assets/liabilities acquired = purchase price (2.4)<br />
Cash and cash equivalents 0.6<br />
Net cash flow (1.9)<br />
Cash flow from the disposal of assets and liabilities in the Goud portfolio comprises the following:<br />
in € million <strong>2011</strong><br />
Cash and cash equivalents 0.8<br />
Receivables and other assets 4.9<br />
Properties held for sale 105.7<br />
Liabilities and provisions (94.5)<br />
Net assets/liabilities sold 16.9<br />
Fair value of the at-equity stake (20%) (3.4)<br />
Loss on the disposal of subsidiaries (10.3)<br />
Cash and cash equivalents (0.8)<br />
Net cash flow 2.4<br />
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5.2. INVESTMENT IN AN ASSOCIATE DURING 2010<br />
The investment in ECO amounted to 24.9% up to the takeover during the second half of 2010. This<br />
investment was presented in the consolidated <strong>financial</strong> <strong>statement</strong>s as an associate up to the date<br />
of the takeover based on the amount of the stake owned. Following the successful conclusion of the<br />
takeover, ECO was fully consolidated for the first time in the third quarter of 2010.<br />
As part of a voluntary takeover offer, the <strong>conwert</strong> Group acquired additional shares in the listed<br />
ECO during 2010 for a price of € 7.15 per share. The purpose of this acquisition was to better leverage<br />
the opportunities available in the markets of the <strong>conwert</strong> Group.<br />
The takeover offer ended on 3 November 2010 after the expiration of a three-month additional offer<br />
period. The <strong>conwert</strong> Group now holds 95.76% of the share capital of ECO.<br />
The voluntary takeover offer raised the stake held by the <strong>conwert</strong> Group in ECO to 87.23% by the<br />
acquisition date on 1 August 2010. A further 8.53% of the shares were purchased for € 20.9 million<br />
during the three-month additional offer period, respectively up to the end of that year.<br />
The carrying amount of the acquired shares, excluding non-controlling interests, amounted to<br />
€ 20.9 million.<br />
The following table shows the fair value of the identifiable assets and liabilities of ECO on the initial<br />
consolidation date (1 August 2010):<br />
in € million Fair value on<br />
acquisition date<br />
Assets<br />
<strong>Invest</strong>ment property 566.5<br />
Other property, plant and equipment and intangible assets 0.1<br />
Property held for sale 146.0<br />
Receivables and other <strong>financial</strong> assets 11.0<br />
Cash and cash equivalents 39.6<br />
Deferred tax assets<br />
Liabilities<br />
15.8<br />
779.0<br />
Liabilities 438.5<br />
Deferred tax liabilities 1.4<br />
439.9<br />
Total identifiable net assets 339.1<br />
Non-controlling interests as of initial consolidation date (12.77%) (31.1)<br />
Share of profit attributable to equity holders of the parent from an acquisition<br />
below market value<br />
(95.3)<br />
Fair value of previous at equity investment (24.90%) (60.7)<br />
Cash outflow for acquisition in 2010 152.0<br />
The non-controlling interests resulting from the acquisition of ECO were recognised at fair value,<br />
i.e. at the applicable stock market price.<br />
The acquisition of the shares was based on the purchase price stated in the voluntary takeover<br />
offer. This price was lower than the inherent value of the shares, which resulted in a positive effect<br />
of € 95.3 million on earnings for the <strong>conwert</strong> Group. This amount is shown separately on the<br />
income <strong>statement</strong> under position 14 “Gain from the acquisition of a company below market value”.<br />
This acquisition also led to an impairment charge of € 14.9 million to the management contract<br />
with ECO.<br />
The stake originally held in ECO (24.9%) was valued at equity up to the date of acquisition, and the<br />
carrying amount on the acquisition date equalled € 71.0 million. In accordance with IFRS 3.42,<br />
this stake was remeasured as of the acquisition date to reflect fair value; the resulting loss of<br />
€ 10.3 million is reported on the income <strong>statement</strong> under position 25 “Impairment charge to an<br />
investment in an associate“ in <strong>financial</strong> results.<br />
The fair value of the acquired trade accounts receivable amounted to € 2.3 million, which also<br />
represents the gross amount.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
ECO contributed € 46.8 million to <strong>conwert</strong> Group revenues and € 6.3 million to earnings before<br />
tax (EBT) from the initial consolidation on 1 August 2010 to 31 December 2010. Prior to the initial<br />
consolidation, the <strong>conwert</strong> Group reported a proportional share of € 2.1 million in 2010 under the<br />
position “share of profit/(loss) from an associate”. If this business combination had taken place at<br />
the beginning of that year, ECO would have contributed € 53.7 million to <strong>conwert</strong> Group revenues<br />
and € 11.4 million to earnings before tax (EBT).<br />
The related transaction costs of € 4.6 million were recognised as expenses and are reported on the<br />
income <strong>statement</strong> under position 20 “Other operating expenses“.<br />
6. <strong>SE</strong>GMENT REPORTING<br />
The <strong>conwert</strong> Group is organised into regional business units for management purposes and has<br />
three reportable operating segments.<br />
+ Region Austria<br />
+ Region Germany<br />
+ Other regions<br />
The reportable segment “Other region“ covers business activities in the CEE countries as well as<br />
other countries inside and outside the European Union.<br />
The various business activities of the <strong>conwert</strong> Group are presented in business segments. These<br />
business activities involve the acquisition, development and letting of residential and commercial<br />
properties (“Portfolio“), the sale of these properties (“Sale of flats and buildings“) and the provision<br />
of property-related services (“Property services“) for asset management, facility management,<br />
property insurance and property brokering. The segment “Sale of flats and buildings“ is the<br />
reporting segment for proceeds generated by the sale of investment properties and properties<br />
held for sale.<br />
The transfer prices for transactions between the reportable segments are determined on the basis<br />
of ordinary market conditions.<br />
The segment report presents detailed information on revenues by business segment and region. It<br />
represents an integral part of these consolidated <strong>financial</strong> <strong>statement</strong>s.<br />
Segment assets comprise investment properties and properties held for sale. Segment liabilities<br />
consist of the borrowings attributable to these properties.<br />
The column “Group reconciliation and elimination” shows the effects resulting from the elimination<br />
of intersegment transactions. The amounts shown in this reconciliation column result<br />
primarily from income and expenses recorded by the property service companies as well as other<br />
<strong>financial</strong> positions relating to income, expenses, assets and liabilities that could not be allocated<br />
to a specific segment. Transactions between the individual segments principally reflect normal<br />
market conditions.<br />
Interest is charged on intersegment settlements at rates established by the Group (<strong>2011</strong>: 5.0%<br />
and 6.0%, 2010: 4.8% and 5.0%). The only other charges between the segments represent external<br />
costs. Interest expense for the convertible bonds issued by the <strong>conwert</strong> Group is not allocated to<br />
the segments because these funds were used to refinance the Group as a whole and management<br />
was not provided with any additional information on this bond at the segment level.<br />
The impairment charges recognised to customer relations in the alt+kelber Group and to goodwill<br />
in the cash generating unit “Services alt+kelber Group” (2010: € 9.1 million) were allocated<br />
to the segment “Germany”. Impairment charges to goodwill and intangible assets amounted to<br />
€ 3.7 million in <strong>2011</strong> (2010: € 51.0 million) and were recognised in the segment “Austria”. The<br />
impairment charges to goodwill were related to the property services segment.<br />
The method used to present the consolidation of intragroup charges for service revenues and other<br />
operating expenses in the property services segment was changed in <strong>2011</strong>. Therefore, comparison<br />
with the prior year is limited.<br />
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72<br />
7. NOTES TO THE INCOME STATEMENT<br />
7.1. PROPERTY REVENUES AND EXPEN<strong>SE</strong>S<br />
The following table provides detailed information on property revenues and expenses:<br />
in € million <strong>2011</strong> 2010<br />
Net rental income 159.7 141.9<br />
Operating costs charged to tenants 50.3 45.8<br />
Rental income<br />
Less property expenses<br />
210.0 187.7<br />
Operating costs charged to tenants (50.3) (45.8)<br />
Other property expenses (40.6) (39.1)<br />
Property expenses (90.9) (84.9)<br />
Total 119.1 102.8<br />
The following table shows rental income classified by property sector:<br />
in € million <strong>2011</strong> 2010<br />
Residential space 122.6 122.2<br />
Office and commercial space (ownership) 84.3 62.8<br />
Parking 3.2 2.8<br />
Total 210.0 187.7<br />
7.2. REVENUES FROM PROPERTY <strong>SE</strong>RVICES<br />
Revenues from property services are classified as follows:<br />
in € million <strong>2011</strong> 2010<br />
Management of property companies 3.3 5.9<br />
Facility management 17.2 15.8<br />
Brokerage and sales 7.9 10.7<br />
Development and construction management 0.1 0.7<br />
Property insurance 1.0 1.3<br />
Total 29.5 34.4
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
7.3. OTHER PROPERTY EXPEN<strong>SE</strong>S<br />
These expenses comprise the following items:<br />
in € million <strong>2011</strong> 2010<br />
Operating costs charged to tenants 50.3 45.8<br />
Vacancy costs 9.8 9.3<br />
Maintenance 19.2 17.2<br />
Thereof covered by insurance 0.5 1.1<br />
Facility management 0.4 0.3<br />
Miscellaneous 11.2 12.3<br />
Total 90.9 84.9<br />
7.4. PERSONNEL EXPEN<strong>SE</strong>S<br />
The components of personnel expenses are shown in the following table:<br />
in € million <strong>2011</strong> 2010<br />
Salaries and wages 29.6 32.0<br />
Thereof bonuses 3.1 3.4<br />
Thereof severance compensation 0.5 0.7<br />
Expenses for legally required duties and contributions 5.6 5.8<br />
Miscellaneous 0.1 0.4<br />
Total 35.3 38.2<br />
Personnel expenses include contributions of € 0.2 million (2010: € 0.2 million) to employee pension<br />
funds in Austria.<br />
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7.5. OTHER OPERATING EXPEN<strong>SE</strong>S<br />
Other operating expenses consist of the following items:<br />
in € million <strong>2011</strong> 2010<br />
Administrative costs (from property service companies):<br />
Non-income based taxes and duties 0.9 1.6<br />
Consulting, incl. contract services 3.4 3.6<br />
Sub-commissions and broker commissions for property development and sales 1.3 1.9<br />
Write-off of uncollectible receivables and impairment charges to trade receivables 0.3 3.7<br />
Advertising 0.6 1.0<br />
Training 0.2 0.2<br />
Office space 1.7 2.1<br />
Office operations 0.7 0.7<br />
IT expenses 2.0 1.8<br />
Motor vehicle expense and travel costs 2.2 1.9<br />
Bank charges 0.1 0.1<br />
Miscellaneous 3.2 2.1<br />
Subtotal<br />
Property-specific and Group costs:<br />
16.7 20.7<br />
Management fees 0.0 0.1<br />
Non-income based taxes and duties 2.5 2.3<br />
Consulting, incl. contract services 6.4 9.5<br />
Sub-commissions and broker commissions for property development and sales 6.9 2.9<br />
Advertising 1.7 2.5<br />
Exchange rate losses 1.1 1.2<br />
Write-off of uncollectible receivables and impairment charges to trade receivables 4.6 7.7<br />
Bank charges 2.7 2.1<br />
Miscellaneous 4.2 3.0<br />
Subtotal 30.0 31.3<br />
Transaction costs from the acquisition of ECO 0.0 4.6<br />
Total 46.7 56.7<br />
The fees charged by the auditor and property appraisers consist of the following:<br />
in € million <strong>2011</strong> 2010<br />
Fees charged by the auditor for legally required audits 0.5 0.6<br />
Fees charged by the auditor for other services 0.0 0.0<br />
Fees charged for valuation of the property portfolio 0.9 1.2<br />
Total 1.4 1.8
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
7.6. FINANCE REVENUE<br />
Finance revenue is classified as follows:<br />
in € million <strong>2011</strong> 2010<br />
Interest income on deposits with <strong>financial</strong> institutions 3.8 5.6<br />
Interest income from swaps 13.4 6.3<br />
Interest income from the change in value of ineffective swaps 2.2 0.0<br />
Income from <strong>financial</strong> assets 0.1 0.4<br />
Total 19.5 12.2<br />
7.7. FINANCE COSTS<br />
The classification of finance costs is shown below:<br />
in € million <strong>2011</strong> 2010<br />
Interest expense on loans and overdrafts 64.2 58.8<br />
Interest expense for swaps 44.8 31.7<br />
Cost for the procurement of funds 4.5 4.2<br />
Other finance costs 2.5 0.4<br />
Total 116.1 95.1<br />
Finance costs rose significantly in comparison with the previous year. This increase resulted,<br />
among others, from the inclusion of the ECO Group in the consolidation range of the <strong>conwert</strong> Group.<br />
7.8. INCOME TAX EXPEN<strong>SE</strong><br />
This item includes income taxes paid or owned by the individual Group companies as well as<br />
deferred tax liabilities.<br />
in € million <strong>2011</strong> 2010<br />
Current tax expense (9.6) (9.5)<br />
Deferred tax income/expense from the creation and reversal of temporary differences 5.3 24.2<br />
Changes in tax rates (0.8) (1.2)<br />
Total (5.1) 13.5<br />
The reconciliation between the <strong>conwert</strong> Group’s effective tax rate and the legal tax rate of 25% in<br />
Austria (2010: 25%) is shown below:<br />
in € million <strong>2011</strong> 2010<br />
Earnings before tax (EBT) 23.6 12.2<br />
Theoretical tax expense at tax rate of 25% (5.9) (3.0)<br />
Tax effects of tax-free income (non-temporary differences) 5.0 10.7<br />
Tax effects of different tax rates (3.4) 7.0<br />
Effects of changes in tax rates on profit-related positions (0.8) (1.2)<br />
Income tax expense (5.1) 13.5<br />
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76<br />
7.9. EARNINGS PER SHARE<br />
As indicated in the consolidated income <strong>statement</strong>, basic earnings per share are calculated by<br />
dividing the profit attributable to the equity holders of the parent by the weighted average number<br />
of common shares outstanding during the <strong>financial</strong> year.<br />
Diluted earnings per share are calculated by dividing the profit attributable to the equity holders<br />
of the parent by the weighted average number of common shares outstanding during the <strong>financial</strong><br />
year plus the weighted average number of common shares that would result from the conversion<br />
of all potential dilutive common shares.<br />
The issued capital of <strong>conwert</strong> amounted to € 853,592,730 as of 31 December <strong>2011</strong> and is divided<br />
into 85,359,273 bearer shares. A total of 10,158,663 shares were repurchased in 2008, 2009, 2010<br />
and <strong>2011</strong> and 6,296,699 treasury shares were sold. Accordingly, 81,497,309 shares were outstanding<br />
as of 31 December <strong>2011</strong>.<br />
BASIC EARNINGS PER SHARE<br />
<strong>conwert</strong> carried out a share buyback during <strong>2011</strong> and 2010. The individual transactions were<br />
disclosed on the homepage of the company and the homepage of the Austrian Financial Market<br />
Authority in accordance with legal regulations.<br />
in € or number of shares <strong>2011</strong><br />
Total number of shares outstanding as of the balance sheet date 81,497,309<br />
Weighted average number of shares 82,779,113<br />
Profit attributable to equity holders of the parent company in € million 23.3<br />
Earnings per share in € 0.28<br />
in € or number of shares 2010<br />
Total number of shares outstanding as of the balance sheet date 84,258,661<br />
Weighted average number of shares 82,496,796<br />
Profit attributable to equity holders of the parent company in € million 23.8<br />
Earnings per share in € 0.29<br />
DILUTED EARNINGS PER SHARE<br />
The diluting effects of the convertible bond were reflected in the calculation of diluted earnings per<br />
share. However, this figure exceeds basic earnings per share and is therefore not shown.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
8. NOTES TO THE BALANCE SHEET<br />
8.1. INVESTMENT PROPERTIES<br />
The properties owned by the <strong>conwert</strong> Group were valued by several independent experts as of<br />
31 December <strong>2011</strong>, similar to the procedure followed in the previous year. The objects located in<br />
foreign countries were valued in cooperation with local experts in accordance with international<br />
valuation principles and based on the relevant national circumstances.<br />
The development of the carrying amount of investment properties is explained in the following<br />
table:<br />
in € million 31.12.<strong>2011</strong> 31.12.2010<br />
Carrying amount at the beginning of the <strong>financial</strong> year 2,701.1 2,143.4<br />
Net foreign exchange differences (1.1) 2.4<br />
Additions from the acquisitions of properties 0.0 145.7<br />
Additions to existing properties 55.6 60.0<br />
Additions from changes in the consolidation range 0.0 592.1<br />
Additions/disposals resulting from the reclassification of properties as held for sale 21.6 (32.4)<br />
Disposals (360.9) (217.8)<br />
Net gain/loss from fair value adjustments 7.8 7.8<br />
Carrying amount at the end of the reporting period 2,424.2 2,701.1<br />
As of 31 December <strong>2011</strong> the <strong>conwert</strong> Group owned 1,416 investment properties (2010: 1,467) with<br />
approx. 1,860,375 sqm of usable space (2010: approx. 2,090,762 sqm). The national locations of<br />
these properties are as follows: 184 objects (2010: 201) in Austria, 1,195 objects (2010: 1,231) in<br />
Germany and 37 objects (2010: 35) in other countries. The investment properties were measured<br />
at fair value, which was based primarily on appraisals carried out in December <strong>2011</strong> and January<br />
2012 by independent property experts.<br />
<strong>Invest</strong>ment properties of € 2,424.2 million (2010: € 2,701.1 million) serve as collateral for loans;<br />
the related mortgages amount to € 1,178.0 million (2010: € 1,178.0 million). <strong>Invest</strong>ment properties<br />
include € 72.3 million (2010: € 96.4 million) that were obtained through finance leases.<br />
In <strong>2011</strong> € 2.4 million (2010: € 1.9 million) of borrowing costs were capitalised on investment properties<br />
(average interest rate: 5.0%; (2010: 5.0%).<br />
No contracts for the purchase of individual properties had been signed as of 31 December <strong>2011</strong> that<br />
would result in the transfer of assets after this date (2010: € 0).<br />
8.1.1. THE PROPERTY MARKET IN AUSTRIA<br />
The Austrian portfolio of the <strong>conwert</strong> Group comprises objects in the residential, office, commercial,<br />
warehouse and hotel sectors, whereby the residential sector is dominant. This property<br />
portfolio was valued as of 31 December <strong>2011</strong> based on the parameters described in the following<br />
sections.<br />
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8.1.1.1. APPLIED VALUATION METHODOLOGY<br />
A combined asset value and income capitalisation approach was used to value most of the properties<br />
in the Austrian portfolio, whereby the weighting between these two methods was based on<br />
the use of the property and the extent of the deviation. Properties used exclusively for commercial<br />
purposes were valued in accordance with the discounted cash flow method. The use of methods<br />
that also include the net asset value is necessary for the Austrian market because certain subsegments<br />
and appraised objects are still subject to legally defined rent controls that would distort the<br />
estimation of value under an income capitalisation approach.<br />
The following national and international standards formed the basis for valuation in Austria:<br />
Austrian Property Valuation Act (“Liegenschaftsbewertungsgesetz“):<br />
ÖNORM B 1802: Basis of property valuation<br />
ÖNORM B 1802-2: Discounted cash flow method<br />
Professional associations: Description of valuation guidelines:<br />
Royal Institution of Chartered Surveyors (RICS) "Red Book"<br />
The European Group of Valuers Associations (TEGoVA) "Blue Book"<br />
International Valuation Standards Committee (IVSC) "White Book“<br />
8.1.1.2. PARAMETERS FOR THE DETERMINATION OF VALUE<br />
The following section presents detailed information on special parameters that were used to<br />
determine the value of the Group’s properties in Austria. This data refers to the valuations made<br />
as of 31 December <strong>2011</strong>. The following table shows the range, i.e. the highest and lowest value, for<br />
each parameter.<br />
Based on these considerations, the discount in this submarket remained relatively constant in<br />
comparison with the prior year. The risk assessment was increased for several objects. In the<br />
Austrian submarket, the discount rates ranged from 2.25% to 8.5% (2010: 2.0% to 7.5%).<br />
CONWERT MASTER PORTFOLIO<br />
<strong>2011</strong> Discount<br />
rate<br />
Maintenance<br />
costs *)<br />
Default risk<br />
on rents *)<br />
Rent/sqm/<br />
month in €<br />
Vienna<br />
Minimum 2.25% 0.3% 2.0% 1.06<br />
Maximum<br />
Lower Austria<br />
6.0% 0.8% 5.0% 14.53<br />
Minimum 3.5% 0.5% 2.0% 2.19<br />
Maximum<br />
Upper Austria<br />
7.0% 1.0% 7.0% 16.49<br />
Minimum 3.5% 0.5% 2.0% 4.72<br />
Maximum<br />
Salzburg<br />
7.5% 0.8% 8.0% 13.11<br />
Minimum 4.0% 0.5% 2.0% 5.75<br />
Maximum<br />
Vorarlberg<br />
7.0% 1.2% 5.0% 12.02<br />
Minimum 4.0% 0.5% 3.0% 4.99<br />
Maximum<br />
Burgenland<br />
6.0% 1.2% 6.0% 10.49<br />
Minimum 4.5% 0.5% 5.0% 4.86<br />
Maximum 6.5% 0.5% 5.0% 5.23<br />
*) Based on gross <strong>annual</strong> income
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
2010 Discount<br />
rate<br />
ECO PORTFOLIO<br />
<strong>2011</strong> Discount<br />
rate<br />
Maintenance<br />
costs *)<br />
Default risk<br />
on rents *)<br />
Rent/sqm/<br />
month in €<br />
Vienna<br />
Minimum 3.5% 8.0% 3.0% 4.46<br />
Maximum<br />
Lower Austria<br />
7.5% 12.0% 10.0% 11.64<br />
Minimum 7.0% 8.0% 5.0% 3.03<br />
Maximum<br />
Upper Austria<br />
8.5% 14.0% 8.0% 12.16<br />
Minimum 8.0% 7.0% 7.0% 4.39<br />
Maximum<br />
Salzburg<br />
8.0% 14.0% 8.0% 10.91<br />
Minimum 6.5% 10.0% 5.0% 7.55<br />
Maximum<br />
Tyrol/Vorarlberg<br />
7.0% 14.0% 6.0% 8.25<br />
Minimum 7.0% 8.0% 5.0% 20.02<br />
Maximum<br />
Styria<br />
8.5% 10.0% 7.0% 21.28<br />
Minimum 5.5% 10.0% 5.0% 4.37<br />
Maximum<br />
Carinthia<br />
7.5% 12.0% 10.0% 10.52<br />
Minimum 7.0% 5.0% 5.0% 6.20<br />
Maximum 8.0% 10.0% 8.0% 11.58<br />
*) Based on gross <strong>annual</strong> income<br />
Maintenance<br />
costs*<br />
Default risk<br />
on rents *)<br />
Rent/sqm/<br />
month in €<br />
Vienna<br />
Minimum 2.0% 0.3% 1.0% 1.06<br />
Maximum<br />
Lower Austria<br />
6.0% 1.0% 6.0% 16.54<br />
Minimum 3.5% 0.5% 2.0% 2.09<br />
Maximum<br />
Upper Austria<br />
6.5% 1.3% 7.0% 12.00<br />
Minimum 4.0% 0.5% 2.0% 5.21<br />
Maximum<br />
Salzburg<br />
7.3% 1.3% 5.0% 13.05<br />
Minimum 4.0% 0.5% 2.0% 6.50<br />
Maximum<br />
Vorarlberg<br />
7.5% 1.0% 5.0% 10.25<br />
Minimum 4.0% 0.6% 2.0% 6.50<br />
Maximum<br />
Burgenland<br />
6.0% 1.5% 6.0% 10.25<br />
Minimum 4.5% 0.5% 5.0% 4.93<br />
Maximum 7.0% 0.5% 5.0% 5.04<br />
*) Based on gross <strong>annual</strong> income<br />
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The ECO Group portfolio was appraised by various experts in 2010. In order to develop a comparison<br />
with the prior year, individual properties from the different asset classes (office, retail, entertainment,<br />
parking) were selected through sampling to produce a representative overview of the portfolio.<br />
The parameters used to determine value were then compared with the previous year.<br />
Rental income was generally stable or slightly higher than the previous year. The discount rates<br />
were substantially higher and reflected an increase in the estimated market risk. Maintenance<br />
expenses were increased or decreased to reflect the current state of the property.<br />
The comparable parameters used to value the ECO portfolio in 2010 are as follows:<br />
Rental income per<br />
year in € million<br />
Fair value in<br />
€ million<br />
Discount rate<br />
in %<br />
Maintenance *)<br />
Brunn am Gebirge, Campus 21<br />
<strong>2011</strong> 6.5 102.3 6.0 8.0<br />
2010<br />
Graz, Eggenberger Allee<br />
5.0 116.5 3.3 4.4<br />
<strong>2011</strong> 1.0 15.6 5.5 10.0<br />
2010<br />
Innsbruck, Cineplexx<br />
1.0 15.2 5.5 7.9<br />
<strong>2011</strong> 1.5 20.6 7.0 8.0<br />
2010<br />
Eferding, FMZ<br />
1.7 21.7 6.5 4.6<br />
<strong>2011</strong> 0.3 2.9 7.5 7.0<br />
2010<br />
Vienna, Neubaugasse<br />
0.3 2.9 7.0 7.0<br />
<strong>2011</strong> 0.3 6.6 4.0 3.0<br />
2010 0.3 5.9 3.3 7.0<br />
*) Based on gross <strong>annual</strong> income<br />
8.1.1.3. DERIVATION OF THE DISCOUNT RATE<br />
The property appraisers developed the discount rate in two different ways:<br />
Under the first method, the discount rate was based on similar transactions realised on the market.<br />
The second method involved the evaluation of alternative forms of investment (fixed-interest,<br />
no-risk securities, etc.) and the subsequent development of additions or deductions to the discount<br />
rate.<br />
8.1.1.4. <strong>SE</strong>NSITIVITY ANALYSIS<br />
Sensitivity analyses for the Austrian submarket show that a decrease of 25% in the average discount<br />
rate would increase fair value by roughly 27% (2010: 19%). In contrast, an increase of 25% in<br />
the average discount rate would reduce the average fair value by approx. 19% (2010: 14%).<br />
in %
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
8.1.2. THE GERMAN PROPERTY MARKET<br />
The portfolio of the <strong>conwert</strong> Group in Germany covers all sectors (residential, office, commercial<br />
and warehouse), whereby residential properties are the predominant category.<br />
8.1.2.1. APPLIED VALUATION METHODOLOGY<br />
The internationally accepted discounted cash flow method (DCF) was used to value the properties<br />
in the German portfolio, with the exception of the objects attributable to the ECO Group. This method<br />
is based on a dynamic investment calculation that focuses exactly on valuation parameters<br />
and, in this way, allows for the transparent determination of market value. The DCF method begins<br />
with ten years of monthly forecasts for the future cash inflows and outflows connected with the<br />
valuation object. The payment flows at the beginning of each month are discounted back to the<br />
valuation date to determine the specific effects of relevant incoming and outgoing payments during<br />
the forecast period on the market value of the object as of the valuation date.<br />
The discount rate used for the calculation reflects the market situation and the expected return of<br />
a potential investor as well as the forecast uncertainty connected with future payment flows. Since<br />
the weighting of future payment flows decreases and forecast uncertainty increases during the<br />
forecast period, cash flows after this period are normally capitalised based on a growth rate and<br />
discounted back to the valuation date.<br />
The DCF method determines the average market value that investors would generally be prepared<br />
to pay for the property on the valuation date under the given economic circumstances in order to<br />
realise an appropriate return on investment consistent with their respective business model.<br />
A combined asset value and income capitalisation approach was used to value most of the properties<br />
in the German ECO portfolio, whereby the weighting between these two methods was based<br />
on the use of the property and the extent of the deviation. The DCF method was used in a limited<br />
number of cases.<br />
The following international standards formed the basis for valuation in Germany:<br />
Professional associations: Description of valuation guidelines<br />
Royal Institution of Chartered Surveyors (RICS) "Red Book"<br />
The European Group of Valuers Associations (TEGoVA) "Blue Book"<br />
International Valuation Standards Committee (IVSC) "White Book“<br />
8.1.2.2. PARAMETERS FOR THE DETERMINATION OF VALUE<br />
The following section presents detailed information on special parameters that were used to determine<br />
the value of the Group’s properties in Germany. The table shows the range, i.e. the highest<br />
and lowest value, for each parameter.<br />
Based on these considerations, the discount in this submarket remained relatively constant. The<br />
risk assessment was increased slightly for several objects. In the German submarket, the discount<br />
rates ranged from 3.8% to 9.5% (2010: 3.5% to 7.0%).<br />
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82<br />
<strong>2011</strong> Discount<br />
rate<br />
Maintenance<br />
costs €/sqm<br />
Structural<br />
vacancy<br />
Rent/sqm/<br />
month in €<br />
Augsburg<br />
Minimum 4.75% 8.50 0.0% 5.99<br />
Maximum 5.75% 9.50 1.0% 7.74<br />
Berlin<br />
Minimum 3.75% 6.50 0.0% 4.36<br />
Maximum 6.45% 11.45 2.7% 11.86<br />
Fürth<br />
Minimum 5.00% 7.50 0.0% 4.35<br />
Maximum 5.70% 10.45 1.25% 6.44<br />
Nürnberg<br />
Minimum 5.00% 8.50 0.0% 4.69<br />
Maximum 6.00% 12.10 2.5% 7.86<br />
Potsdam<br />
Minimum 4.35% 7.50 0.0% 5.91<br />
Maximum 5.00% 9.35 0.9% 9.00<br />
Wiesbaden<br />
Minimum 4.85% 9.25 1.0% 7.29<br />
Maximum 5.25% 10.45 4.0% 17.82<br />
Dresden<br />
Minimum 4.00% 6.5 0.0% 2.72<br />
Maximum 6.25% 12.10 2.5% 7.50<br />
Leipzig<br />
Minimum 4.75% 2.50 0.0% 2.39<br />
Maximum 8.00% 11.45 10.0% 7.28<br />
Chemnitz<br />
Minimum 5.25% 7.50 1.6% 3.81<br />
Maximum 6.35% 11.00 5.0% 6.09<br />
Magdeburg<br />
Minimum 5.00% 8.50 2.5% 4.19<br />
Maximum 7.00% 10.00 5.0% 6.65<br />
Altenburg<br />
Minimum 5.25% 7.50 2.4% 4.36<br />
Maximum 7.25% 12.00 3.6% 5.16<br />
Bielefeld<br />
Minimum 5.00% 8.50 0.9% 3.65<br />
Maximum 5.50% 9.50 1.9% 6.24<br />
Bremen<br />
Minimum 4.75% 8.50 1.8% 4.01<br />
Maximum 5.60% 10.50 2.1% 6.03<br />
Erfurt<br />
Minimum 5.10% 7.50 1.3% 4.81<br />
Maximum 5.60% 10.45 1.9% 6.55<br />
Essen<br />
Minimum 5.00% 8.50 1.1% 5.01<br />
Maximum 5.35% 9.50 2.3% 6.38<br />
Jena<br />
Minimum 4.75% 8.25 0.5% 6.32<br />
Maximum 5.60% 11.00 2.0% 7.57<br />
Naumburg<br />
Minimum 5.25% 7.50 0.5% 3.65<br />
Maximum 6.05% 12.50 6.0% 4.71<br />
Zwickau<br />
Minimum 5.50% 8.50 2.5% 3.74<br />
Maximum 6.15% 9.50 6.0% 5.36
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
2010 Discount<br />
rate<br />
Maintenance<br />
costs *)<br />
Default risk<br />
on rents *)<br />
Rent/sqm/<br />
month in €<br />
Augsburg<br />
Minimum 4.4% 0.5% 2.0% 6.40<br />
Maximum 6.5% 0.6% 5.0% 17.44<br />
Berlin<br />
Minimum 3.5% 0.5% 2.0% 4.11<br />
Maximum 6.6% 1.0% 4.0% 11.16<br />
Fürth<br />
Minimum 5.0% 0.6% 2.0% 4.83<br />
Maximum 5.6% 1.0% 4.0% 7.12<br />
Nürnberg<br />
Minimum 4.1% 0.5% 2.0% 2.87<br />
Maximum 6.5% 1.0% 4.0% 10.14<br />
Potsdam<br />
Minimum 4.3% 0.5% 2.0% 6.4<br />
Maximum 4.9% 0.6% 2.0% 17.44<br />
Wiesbaden<br />
Minimum 4.5% 0.6% 3.0% 7.14<br />
Maximum 5.6% 0.6% 4.0% 12.34<br />
Dresden<br />
Minimum 4.0% 0.7% 2.0% 3.00<br />
Maximum 6.0% 1.2% 5.0% 8.00<br />
Leipzig<br />
Minimum 4.5% 0.7% 2.5% 2.10<br />
Maximum 6.5% 1.2% 6.0% 7.67<br />
Chemnitz<br />
Minimum 4.5% 0.7% 3.1% 3.06<br />
Maximum 6.0% 1.2% 4.3% 6.56<br />
Magdeburg<br />
Minimum 4.3% 0.6% 3.0% 3.16<br />
Maximum 6.5% 0.9% 5.0% 7.09<br />
Altenburg<br />
Minimum 5.0% 0.7% 3.0% 3.09<br />
Maximum 7.0% 1.12% 6.0% 5.46<br />
Bielefeld<br />
Minimum 4.0% 0.7% 2.0% 2.92<br />
Maximum 6.0% 1.3% 5.0% 6.39<br />
Bremen<br />
Minimum 5.0% 0.7% 2.0% 4.66<br />
Maximum 6.5% 1.3% 5.0% 5.58<br />
Erfurt<br />
Minimum 4.3% 0.8% 2.0% 4.00<br />
Maximum 6.0% 1.2% 5.0% 6.65<br />
Essen<br />
Minimum 4.8% 0.8% 3.0% 4.18<br />
Maximum 6.8% 1.3% 6.0% 6.72<br />
Jena<br />
Minimum 4.5% 0.8% 2.0% 4.40<br />
Maximum 6.5% 1.2% 4.0% 8.57<br />
Naumburg<br />
Minimum 5.0% 0.8% 3.0% 3.30<br />
Maximum 7.0% 1.2% 6.0% 5.50<br />
Zwickau<br />
Minimum 5.0% 0.8% 3.0% 3.40<br />
Maximum 7.0% 1.3% 6.0% 5.40<br />
*) Based on gross <strong>annual</strong> income<br />
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ECO PORTFOLIO<br />
<strong>2011</strong> Discount<br />
rate<br />
8.1.2.3. DERIVATION OF THE DISCOUNT RATE<br />
The property appraisers developed the discount rate in two different ways:<br />
Under the first method, the discount rate was based on similar transactions realised on the market.<br />
The second method involved the evaluation of alternative forms of investment (fixed-interest,<br />
no-risk securities, etc.) and the subsequent development of additions or deductions to the discount<br />
rate.<br />
8.1.2.4. <strong>SE</strong>NSITIVITY ANALYSIS<br />
In <strong>2011</strong> the market value of the German portfolio was determined by applying the discounted cash<br />
flow method. The sensitivity analysis involved a 25% increase and decrease in the discount rate for<br />
the entire portfolio at the individual object level to determine the effect on discounted cash flows.<br />
The exit cap rate for the capitalisation of the terminal value was increased and decreased by 20%.<br />
Sensitivity analysis<br />
German Portfolio<br />
Maintenance<br />
costs *)<br />
Default risk<br />
on rents *)<br />
Market value<br />
€ million<br />
Rent/sqm/<br />
month in €<br />
Minimum 6.25% 8.0% 2.0% 3.85<br />
Maximum 9.5% 15.0% 12.0% 15.99<br />
*) Based on gross <strong>annual</strong> income<br />
Deviation<br />
in %<br />
Sensivität:<br />
Discount rate - 25%<br />
Exit cap rate - 20%<br />
1,422.0 30.2<br />
Market value as of 31.12.<strong>2011</strong><br />
Sensitivity:<br />
1,091.9<br />
Discount Rate + 25%<br />
Exit Cap Rate + 20%<br />
876.8 (19.7)<br />
In the prior year, sensitivity analyses based on the Berlin submarket showed that a decrease of<br />
25% in the average discount rate would have increased fair value by 27%. An increase of 25% in the<br />
average discount rate would have decreased fair value by approx. 18%.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
8.1.3. THE CZECH PROPERTY MARKET<br />
The portfolio of the <strong>conwert</strong> Group in the Czech Republic covers all sectors (residential, office,<br />
commercial and warehouse).<br />
8.1.3.1. APPLIED VALUATION METHODOLOGY<br />
A combined asset value and income capitalisation approach was used to value the mixed use properties<br />
in the Czech portfolio, whereby the weighting between these two methods was based on the<br />
use of the property and the extent of the deviation. The discounted cash flow method was used to<br />
value one object that is used exclusively for commercial purposes (hotel).<br />
The use of methods that also include the net asset value is necessary for the Czech market because<br />
certain subsegments and appraised objects are still subject to legally defined rent controls that<br />
would distort the estimation of value under an income capitalisation approach.<br />
The following international standards formed the basis for valuation in the Czech Republic:<br />
Professional associations: Description of valuation guidelines:<br />
Royal Institution of Chartered Surveyors (RICS) "Red Book"<br />
The European Group of Valuers Associations (TEGoVA) "Blue Book"<br />
International Valuation Standards Committee (IVSC) "White Book“<br />
8.1.3.2. PARAMETERS FOR THE DETERMINATION OF VALUE<br />
The following section presents detailed information on special parameters that were used to determine<br />
the value of the Group’s properties in the Czech Republic. The table shows the range, i.e.<br />
the highest and lowest value, for each parameter.<br />
Based on these considerations, the discount in this submarket remained relatively constant. The<br />
discount rates ranged from 5.0% to 7.5% (2010: 5.2% to 7.6%) for the Czech submarket as a whole.<br />
Prague is not presented separately because the Group owns only one object in this city.<br />
<strong>2011</strong> Discount<br />
rate<br />
Maintenance<br />
costs<br />
Default risk<br />
on rents<br />
Rent/sqm/<br />
month in CZK<br />
Brno<br />
Minimum 5.0% 0.5% 3.0% 93.50<br />
Maximum 7.5% 1.0% 4.0% 299.57<br />
Ostrava<br />
Minimum 6.3% 0.5% 3.0% 135.44<br />
Maximum 7.0% 0.5% 3.0% 192.10<br />
Pilzen<br />
Minimum 5.8% 0.4% 3.0% 68.40<br />
Maximum 7.4% 0.6% 4.0% 191.74<br />
2010 Discount<br />
rate<br />
Maintenance<br />
costs<br />
Default risk<br />
on rents<br />
Rent/sqm/<br />
month in CZK<br />
Brno<br />
Minimum 5.2% 0.5% 2.0% 90.00<br />
Maximum 7.6% 1.0% 5.0% 337.86<br />
Ostrava<br />
Minimum 6.3% 0.5% 3.0% 157.85<br />
Maximum 6.7% 0.7% 3.0% 158.21<br />
Pilzen<br />
Minimum 5.8% 0.4% 3.0% 103.21<br />
Maximum 7.4% 0.6% 4.0% 179.89<br />
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86<br />
8.1.3.3. DERIVATION OF THE DISCOUNT RATE<br />
The property appraisers developed the discount rate in two different ways:<br />
Under the first method, the discount rate was based on similar transactions realised on the market.<br />
The second method involved the evaluation of alternative forms of investment (fixed-interest,<br />
no-risk securities, etc.) and the subsequent development of additions or deductions to the discount<br />
rate.<br />
8.1.3.4. <strong>SE</strong>NSITIVITY ANALYSIS<br />
Sensitivity analyses for the Czech submarket show that a decrease of 25% in the average discount<br />
rate would have increased fair value by roughly 30% (2010: 30%). In contrast, an increase of 25% in<br />
the average discount rate would have reduced the average fair value by approx. 19% (2010: 20%).<br />
The property portfolio of the <strong>conwert</strong> Group was valued by the following independent external experts:<br />
+ Sachverständigenbüro Prof. Mag. Thomas N. Malloth (MRICS)<br />
+ Reinberg & Partner <strong>Immobilien</strong>beratung GmbH (MRICS)<br />
+ Cushman & Wakefield Österreich Inter-pool <strong>Immobilien</strong> GmbH<br />
+ CB Richard Ellis GmbH<br />
+ Knight Frank LLC<br />
8.2. INTANGIBLE AS<strong>SE</strong>TS<br />
The development of customer relationships, management contracts and goodwill as of<br />
31 December <strong>2011</strong> is as follows:<br />
The position “intangible assets” comprises customer relationships and management contracts as<br />
well as capitalised software with a carrying amount of € 0.8 million (2010: € 0.7 million).<br />
in € million Customer relationships and<br />
management contracts<br />
Goodwill Total<br />
Gross value:<br />
Balance as of 1 January <strong>2011</strong> 61.4 176.1 237.5<br />
Acquisition of subsidiaries 0.0 0.0 0.0<br />
<strong>Invest</strong>ments 0.0 0.0 0.0<br />
Balance as of 31 December <strong>2011</strong><br />
Amortisation and impairment:<br />
61.4 176.1 237.5<br />
Balance as of 1 January <strong>2011</strong> (57.5) (57.8) (115.3)<br />
Amortisation (0.9) (0.0) (0.9)<br />
Impairment (0.1) (3.6) (3.7)<br />
Balance as of 31 December <strong>2011</strong><br />
Carrying amount:<br />
(58.5) (61.4) (119.9)<br />
Balance as of 31 December <strong>2011</strong> 2.8 114.8 117.6<br />
Balance as of 1 January <strong>2011</strong> 3.9 118.4 122.2
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
The development of customer relationships, management contracts and goodwill as of<br />
31 December 2010 is as follows:<br />
in € million Customer relationships and<br />
management contracts<br />
Goodwill Total<br />
Gross value:<br />
Balance as of 1 January 2010 61.4 176.1 237.5<br />
Acquisition of subsidiaries 0.0 0.0 0.0<br />
<strong>Invest</strong>ments 0.0 0.0 0.0<br />
Balance as of 31 December 2010<br />
Amortisation and impairment:<br />
61.4 176.1 237.5<br />
Balance as of 1 January 2010 (19.3) (13.4) (32.7)<br />
Amortisation (7.6) (0.0) (7.6)<br />
Impairment (30.6) (44.4) (75.0)<br />
Balance as of 31 December 2010<br />
Carrying amount:<br />
(57.5) (57.8) (115.3)<br />
Balance as of 31 December 2010 3.9 118.4 122.2<br />
Balance as of 1 January 2010 42.1 162.7 204.8<br />
The customer relationships and management contracts that were acquired with the purchase of<br />
the service companies will be amortised on a straight-line basis over a period of five to eleven<br />
years, unless there are indications of impairment. Amortisation expense is shown on the income<br />
<strong>statement</strong> under the position “depreciation, amortisation and other impairment charges”.<br />
The carrying amounts of the capitalised customer relationships and management contracts as of<br />
31 December <strong>2011</strong> are as follows:<br />
in € million <strong>2011</strong> 2010<br />
Management contract ECO 1.2 1.8<br />
Customer relationships alt + kelber Group 0.5 0.6<br />
Customer relationships RESAG Group 1.2 1.5<br />
2.8 3.9<br />
These assets were tested for impairment as of 31 December <strong>2011</strong> and on an interim basis if there<br />
were any indications of impairment. In addition to straight-line amortisation of € 0.9 million,<br />
impairment charges of € 0.1 million were recognised to RESAG customer relations.<br />
The impairment charges of € 3.6 million to goodwill in the RESAG and € 0.1 million to customer<br />
relations resulted from a change in strategy and the new focus of the <strong>conwert</strong> Group in connection<br />
with sales activities in Austria.<br />
These impairment charges were recognised in the Austria regional segment and in the property<br />
services operating segment.<br />
In 2010, impairment charges of € 30.6 million were recognised over and above straight-line amortisation<br />
of € 7.6 million. The impairment charges reflect a change in strategy by <strong>conwert</strong> and comprise<br />
€ 14.6 million for the <strong>conwert</strong> Group management contract and € 14.9 million for the ECO<br />
management contract.<br />
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88<br />
Goodwill was allocated to the following cash-generating units for the purpose of impairment testing:<br />
in € million <strong>2011</strong> 2010<br />
Portfolio: letting and development 68.4 68.4<br />
Portfolio: sale 10.6 10.6<br />
Services: alt + kelber Group 25.3 25.3<br />
Services: RESAG Group 10.5 14.1<br />
114.8 118.4<br />
The cash-generating unit “alt+kelber“ Group comprises the property service companies in<br />
Germany. The cash-generating unit “RESAG“ includes the property service companies that are<br />
located in Austria.<br />
Goodwill is considered to be impaired when the underlying business activity is discontinued or<br />
when impairment testing in accordance with IAS 36 leads to such a conclusion. If certain business<br />
activities within a cash-generating unit are discontinued, IAS 36 calls for impairment testing only<br />
on the continuing operations in this cash-generating unit. The share of goodwill originally attributed<br />
to the discontinued business activities is written off in full (impairment charge).<br />
Impairment charges totalling € 3.7 million were recognised during the reporting year. The entire<br />
amount is attributable to impairment resulting from a strategic shift in the underlying business<br />
activities to another cash-generating unit in the <strong>conwert</strong> Group.<br />
All impairment charges to goodwill are related to the property services segment. The impairment<br />
charge of € 3.6 million to Resag <strong>Immobilien</strong>makler GmbH was recorded under the Austrian segment.<br />
In 2010, impairment charges amounted to € 44.4 million: € 23.1 million of this total resulted from<br />
the termination of the underlying business activities, while the remaining € 21.3 million reflected<br />
strategic or foreseeable changes in the long-term economic development of specific business activities<br />
that had a significant impact on the results of the IAS 36 impairment test.<br />
The recoverable amount represents the relevant criterion for an impairment test as defined in<br />
IAS 36. It equals the higher of the fair value less costs to sell and the value in use. If the carrying<br />
amount of an asset exceeds the recoverable amount, the difference is recognised as an impairment<br />
charge.<br />
The value in use equals the present value of the estimated future cash flows expected to be derived<br />
from the assets in a cash-generating unit. The method used to determine the value in use reflects<br />
an enterprise valuation based on a discounted cash flow procedure. The impairment testing of<br />
goodwill is based on mid-term company forecasts for cash flows over the next one to eleven years<br />
and the application of a discount rate that reflects the business activities and risk position of<br />
the company. The future <strong>financial</strong> plans were developed on the basis of the approved budget for<br />
2012, in accordance with the medium- and long-term targets for the development of the property<br />
portfolios.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
The calculation of the value in use was based on the assumptions listed below. The following<br />
section explains the estimation uncertainty connected with these assumptions:<br />
+ Growth rates beyond the budget year <strong>2011</strong><br />
+ Increase in personnel and operating expenses<br />
+ Gross profit margin on the sale of flats and buildings<br />
+ Volume of property turnover<br />
+ General development of the property market<br />
+ Discount rates<br />
GROWTH RATES<br />
Average branch assumptions were used to establish growth rates for the individual sub-segments.<br />
The projects for the forecast period are based above all on the medium-term strategy of the parent<br />
company for the future development of the property portfolio.<br />
INCREA<strong>SE</strong> IN PERSONNEL AND OPERATING EXPEN<strong>SE</strong>S<br />
The increase in these costs is dependent on the medium- to long-term development of the economy<br />
and inflation as well as the estimated resources required to support the above-mentioned<br />
strategic developments.<br />
GROSS PROFIT MARGIN, VOLUME OF PROPERTY TURNOVER AND NEW ACQUISITIONS<br />
The gross profit margin on the sale of flats and buildings is based on an average value for past<br />
years that reflects ordinary business activities as well as realistic forecasts for the future. The<br />
volume of property turnover and new property acquisitions is dependent on opportunities offered<br />
by the property market as well as general economic developments.<br />
The company generated the following gross profit margins in <strong>2011</strong> and 2010:<br />
Region <strong>2011</strong><br />
Gross profit margin<br />
2010<br />
Gross profit margin<br />
Austria 9.3% 13.3%<br />
Germany 8.6% 12.6%<br />
Other regions (2.2)% 8.3%<br />
GENERAL DEVELOPMENT OF THE PROPERTY MARKET<br />
As in the previous year, the development of the residential property market in Austria was very<br />
favourable for the <strong>conwert</strong> Group in <strong>2011</strong>. Private investors and foundations with a sound capital<br />
base have created steady demand for the purchase of individual flats and apartment buildings,<br />
with institutional investors providing added support for the general market improvement. In<br />
Germany, the Group has shifted the focus of its residential properties to a higher class clientele,<br />
and an upward trend has therefore been visible since the end of the <strong>financial</strong> crisis. The local banks<br />
are still restrictive in lending to potential customers, which means the key requirements are not<br />
only an interest in buying but also sufficient equity. In the other regions, where only a small part<br />
of the portfolio is held, the situation remains tense above all due to continued restrictive lending<br />
practices by the banks.<br />
DISCOUNT RATES<br />
The discount rate is based on the weighted average cost of capital for equity and debt as well as<br />
the situations in the individual cash-generating units. Given the current economic environment, the<br />
applied rates reflect a value at the upper end of the interest rate scale. An interest rate sensitivity<br />
of +/- 50 basis points was therefore selected for the valuation test.<br />
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90<br />
The following long-term discount rates were used:<br />
Region <strong>2011</strong> 2010<br />
After tax Before tax After tax Before tax<br />
Austria 5.7% – 6.1% 12.3% – 16.0% 5.5 % – 6.2% 12.1 % – 15.3%<br />
Germany 5.6% 11.8% 5.5% 10.8%<br />
<strong>SE</strong>NSITIVITY OF THE ASSUMPTIONS MADE<br />
In the case of cash-generating units that were not adjusted through impairment charges and are<br />
subject to only limited current or future market fluctuations, management believes reasonable<br />
analysis cannot identify any fundamental changes in the assumptions for determining the value<br />
in use of a cash-generating unit that could cause the carrying amount to significantly exceed the<br />
recoverable amount<br />
A change of +/- 50 basis points in the applied discount rates would lead to only an immaterial increase<br />
or decrease in the impairment charges to goodwill.<br />
8.3. OTHER PROPERTY, PLANT AND EQUIPMENT<br />
Other property, plant and equipment comprise furniture, fixtures and office equipment from the<br />
acquisition of the service companies. Depreciation is reported on the income <strong>statement</strong> under<br />
position 17.<br />
The development of this position is shown in the following table:<br />
in € million <strong>2011</strong> 2010<br />
Gross amount:<br />
Balance as of 1 January 4.5 3.9<br />
<strong>Invest</strong>ments 0.4 0.6<br />
Balance as of 31 December<br />
Depreciation and impairment:<br />
4.9 4.5<br />
Balance as of 1 January (2.9) (1.9)<br />
Depreciation (0.7) (1.0)<br />
Balance as of 31 December<br />
Carrying amount:<br />
(3.6) (2.9)<br />
Balance as of 31 December 1.2 1.6<br />
Balance as of 1 January 1.6 2.0<br />
8.4. PROPERTIES HELD FOR SALE<br />
The Group’s held-for-sale properties are located in Austria, Germany, Slovakia and Hungary. Heldfor-sale<br />
properties are owned by the <strong>conwert</strong> Group for an average of six to ten years.<br />
The <strong>conwert</strong> Group owns 250 objects that are classified as held for sale; these properties have<br />
285,722 sqm of total usable space. The flats and individual buildings sold in this segment during the<br />
reporting year amounted to € 243.6 million.<br />
Held-for-sale properties are measured at the lower of acquisition or production cost and the net realisable<br />
value. The valuation resulted in an adjustment of € 7.5 million in <strong>2011</strong> (2010: € 5.4 million)<br />
to reflect the lower market value. This adjustment is presented on the income <strong>statement</strong> under<br />
position 13. The properties measured at net realisable value have a total value of € 88.9 million<br />
(2010: € 92.3 million).<br />
The market value of these properties as of 31 December <strong>2011</strong> and 2010 was determined by independent,<br />
court-certified experts in accordance with the general market situation.<br />
The properties held for sale have a combined carrying amount of € 404.4 million (2010:<br />
€ 537.1 million). Of this total, € 190.4 million (2010: € 426.5 million) were mortgaged as collateral<br />
for loans and other liabilities.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
8.5. OTHER AS<strong>SE</strong>TS<br />
Notes<br />
in € million <strong>2011</strong> 2010<br />
Receivables due from fiscal authorities 5.1 0.0<br />
Miscellaneous 0.7 2.7<br />
Total 5.8 2.7<br />
The position ”Miscellaneous“ consists primarily of prepayments on sales commissions and<br />
payments for expenses related to future periods. Of these other miscellaneous current assets,<br />
€ 0.7 million (2010: € 1.3 million) will be realised within one year.<br />
8.6. CASH AND CASH EQUIVALENTS<br />
This position comprises the following items:<br />
in million € <strong>2011</strong> 2010<br />
Cash on hand 0.1 0.1<br />
Deposits with <strong>financial</strong> institutions 95.7 66.0<br />
Savings books 0.0 0.1<br />
Total 95.8 66.2<br />
The interest rates on deposits with <strong>financial</strong> institutions are variable and reflect the levels applicable<br />
to daily demand deposits. The interest rates on bank deposits ranged from 0.06% to 1.26%<br />
(2010: 0.12% to 1.125%). The fair value of cash and cash equivalents totalled € 95.8 million as of<br />
31 December <strong>2011</strong> (2010: € 66.2 million).<br />
8.7. EQUITY<br />
8.7.1. ISSUED CAPITAL<br />
The issued capital of the company totals € 853,592,730 (2009: € 853,592,730) and is divided into<br />
85,359,273 (2009: 85,359,273) bearer shares that carry equal rights to issued capital. The share<br />
capital is fully paid in.<br />
TREASURY SHARES<br />
The extraordinary general meeting of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> on 11 October 2010 revoked<br />
the authorisation of the <strong>annual</strong> general meeting on 26 May 2009 for the repurchase of the<br />
company’s shares and, at the same time, authorised the Administrative Board to repurchase the<br />
company’s shares up to the legally defined maximum of 10% of share capital during a period of<br />
30 months beginning on this same date. The range for the share purchase was set at € 4.00 to<br />
€ 14.00 per share.<br />
This share buyback programme led to the repurchase of 3,861,964 shares by 31 December <strong>2011</strong><br />
(2010: 1,100,612) for a total price of € 41.6 million (2010: € 10.7 million), including fees, or an average<br />
price of € 10.78 per share (2010: € 9.72). This represents 4.5% (2010: 1.3%) of issued capital.<br />
The average price for the shares repurchased in <strong>2011</strong> was € 11.20. No shares were issued during<br />
the reporting year.<br />
91
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
92<br />
The development of the shares outstanding is as follows:<br />
Number<br />
of shares<br />
The authorised capital approved in 2007 totalled € 400,121,590 (2010: € 400,121,590), and is divided<br />
into 40,012,159 (2010: 40,012,159) bearer shares. Furthermore, the company has authorised<br />
capital of € 26,674,770 (2010: € 26,674,770) that was approved in 2006; it is divided into 2,667,477<br />
(2010: 2,667,477) bearer shares. Details on the convertible bond are provided under note 8.10.2.<br />
8.7.2. DIVIDEND<br />
The dividend approved by the <strong>annual</strong> general meeting on 20 May <strong>2011</strong> was paid on 30 May <strong>2011</strong>.<br />
The dividend attributable to 11,172,936 of the <strong>conwert</strong> shares held by Albona Limited was due<br />
for payment, without interest, on 31 December <strong>2011</strong>. The dividend attributable to 4,154,158 of the<br />
<strong>conwert</strong> shares held by Albona Limited is due for payment on 10 May 2012. The remaining outstanding<br />
dividend due to Albona Limited amounts to € 1.2 million and is included under other current<br />
<strong>financial</strong> liabilities.<br />
<strong>2011</strong><br />
(Gross) dividend paid in <strong>2011</strong><br />
for the 2010 <strong>financial</strong> year<br />
in € million Number of<br />
common shares<br />
(excl. treasury shares)<br />
Per share<br />
in €<br />
25.0 83,397,945 0.30<br />
2010<br />
(Gross) dividend paid in 2010<br />
for the 2009 <strong>financial</strong> year<br />
in € million Number of<br />
common shares<br />
(excl. treasury shares)<br />
Value, incl. fees<br />
in € million<br />
<strong>2011</strong><br />
Balance on 31.12.2010 84,258,661<br />
Shares repurchased (2,761,352) 30.9<br />
Balance on 31.12.<strong>2011</strong><br />
2010<br />
81,497,309<br />
Balance on 31.12.2009 80,991,875<br />
Shares repurchased (3,029,913) 26.7<br />
Shares issued 6,296,699 64.8<br />
Balance on 31.12.2010 84,258,661<br />
Per share<br />
in €<br />
19.8 79,157,871 0.25
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
8.8. DEFERRED TAXES<br />
Deferred tax assets and deferred tax liabilities as of 31 December <strong>2011</strong> and 2010 are the result of<br />
the following timing differences between the carrying amounts of assets and liabilities in the IFRS<br />
consolidated <strong>financial</strong> <strong>statement</strong>s and the tax bases of these items:<br />
in € million <strong>2011</strong> 2010<br />
Assets Liabilities Assets Liabilities<br />
IAS 40 valuation of investment property 0.0 75.5 0.0 62.5<br />
Fair value adjustments to other assets 9.7 0.0 16.1 0.0<br />
Total 9.7 75.5 16.1 62.5<br />
Valuation of derivatives 33.5 0.0 23.7 0.0<br />
Fair value adjustments to other liabilities 0.0 1.3 0.0 7.3<br />
Tax loss carryforwards 32.9 0.0 12.8 0.0<br />
Deferred tax assets / deferred tax liabilities 76.2 76.8 52.6 69.8<br />
Offset of deferred tax assets / deferred tax liabilities (54.1) (54.1) (34.1) (34.1)<br />
Net deferred tax assets / deferred tax liabilities 22.1 22.7 18.4 35.7<br />
All changes in deferred tax assets and deferred tax liabilities were recognised through profit or<br />
loss, with the exception of deferred taxes on the changes in cash flow hedges and other changes in<br />
other comprehensive income totalling € 13.7 million (2010: € 2.9 million).<br />
The changes in deferred taxes comprise the following items:<br />
in € million <strong>2011</strong> 2010<br />
Deferred tax assets 18.4 3.8<br />
Deferred tax liabilities (35.7) (50.0)<br />
Carrying amounts as of 31 December of the prior year (17.2) (46.2)<br />
Deferred taxes arising from changes in the consolidation range 2.9 13.1<br />
Deferred taxes arising from temporary differences 4.7 11.2<br />
Deferred taxes arising from changes in income tax rates (0.8) (1.2)<br />
Deferred taxes arising from changes in temporary differences on derivatives 9.8 6,7<br />
Other differences 0.0 (0.7)<br />
Thereof<br />
(0.6) (17.2)<br />
Deferred tax assets 22.1 18.4<br />
Deferred tax liabilities (22.7) (35.7)<br />
8.9. OTHER CURRENT LIABILITIES<br />
Other current liabilities are comprised primarily of value added tax liabilities as well as liabilities<br />
arising from property acquisition taxes and registration fees.<br />
93
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
94<br />
8.10. FINANCIAL INSTRUMENTS<br />
8.10.1. FINANCIAL AS<strong>SE</strong>TS<br />
Non-current <strong>financial</strong> assets consist primarily of shares in Vienna Estate <strong>Immobilien</strong> AG, an<br />
Austrian property holding company, and shares in CD Deutsche Eigenheim AG, a German property<br />
company, which are classified as available for sale and carried at cost.<br />
Trade accounts receivable (less impairment charges recognised as of 31 December <strong>2011</strong>) total<br />
€ 30.9 million (2010: € 56.8 million) and comprise receivables from the sale of objects and shares<br />
in properties as well as rents receivable and receivables due to the property, management and<br />
property service companies.<br />
The purchase prices for shares in properties are generally paid without delay, and impairment<br />
charges are therefore not recognised. The agreements for the sale of buildings and property<br />
companies call for payment when the title is transferred or short-term payment with settlement<br />
through a trustee. Therefore, impairment charges are not recognised to these items.<br />
Trade accounts receivable are related to the rental business and do not normally have specific<br />
payment terms. The recognition of impairment charges to these items is based on experience with<br />
default.<br />
Rents receivable of € 14.1 million (2010: € 16.3 million) were adjusted through impairment charges<br />
to reflect any loss in value as of the balance sheet date. The <strong>conwert</strong> Group holds deposits of<br />
€ 1.5 million (2010: € 1.9 million) as security for these outstanding items. Overdue receivables do<br />
not represent a material valuation risk for the Group.<br />
The following tables show the age structure of rents receivable for <strong>2011</strong> and 2010 that were not<br />
reduced through impairment charges:<br />
<strong>2011</strong><br />
in € million<br />
Up to 30<br />
days<br />
The changes in impairment losses are as follows:<br />
30 to 60<br />
days<br />
60 to 90<br />
days<br />
90 to 120<br />
days<br />
Over 120<br />
days<br />
Austria, Germany, CEE 7.5 0.9 0.2 0.8 9.7<br />
2010<br />
in € million<br />
Up to 30<br />
days<br />
30 to 60<br />
days<br />
60 to 90<br />
days<br />
90 to 120<br />
days<br />
Over 120<br />
days<br />
Austria, Germany, CEE 9.8 0.9 0.6 1.0 11.5<br />
in € million <strong>2011</strong> 2010<br />
Balance as of 1 January 7.5 3.0<br />
Impairment of receivables – addition 2.2 5.7<br />
Derecognition to reflect non-collectability / reversal to reflect payment 4.6 1.2<br />
Balance as of 31 December 5.1 7.5<br />
The impairment testing of rents receivable also includes any changes in the credit standing of<br />
tenants as of the relevant balance sheet date. Only individual adjustments are recognised. There is<br />
no material concentration of credit risk because the Group has a very broad tenant base and there<br />
is no concentration or correlation. Management is therefore convinced that no provisions for risk<br />
are required above and beyond the previously recognised impairment losses.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
Other current <strong>financial</strong> assets are classified as follows:<br />
in € million <strong>2011</strong> 2010<br />
Trust funds from the sale of properties 40.5 19.7<br />
Short-term financing and loans 7.9 1.4<br />
Accrued interest on derivatives, resp. positive market valuation 1.4 10.8<br />
Miscellaneous 9.6 8.2<br />
Total 59.4 40.1<br />
Other receivables and assets have a remaining term of less than one year.<br />
Other current financing and loans include no receivables due from related parties (2010:<br />
€ 0.0 million). Additional information is provided under note 13.3 (Related party transactions).<br />
8.10.2. FINANCIAL LIABILITIES<br />
The components of the decline in non-current and current loans and borrowings from <strong>financial</strong><br />
in € million <strong>2011</strong> 2010<br />
Balance on 1 January 1,668.0 1,289.1<br />
New borrowings 186.7 303.8<br />
Addition from expansion of the consolidation range (ECO Group) 0.0 369.6<br />
Scheduled repayments (52.1) (41.1)<br />
Special repayments due to the sale of properties (387.8) (253.4)<br />
Balance on 31 December 1,414.8 1,668.0<br />
institutions (excluding the convertible bond) are shown in the following table:<br />
Five Austrian and German <strong>financial</strong> institutions hold a share of approx. € 713.5 million in these<br />
current and non-current loans and borrowings. The obligations to these banks range from<br />
€ 72.0 million to € 268.4 million. A further seven <strong>financial</strong> institutions have a share of approx.<br />
€ 342.9 million, which consists of individual obligations ranging from € 33.7 million to<br />
€ 67.7 million. The remaining balance of approx. € 358.4 million is distributed among a further 39<br />
Austrian and foreign banks, whereby the individual obligations are less than € 26.8 million.<br />
The liabilities arising from loans and borrowings were reduced by related fees and transaction<br />
costs of € 7.5 million (2010: € 10.8 million).<br />
95
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
96<br />
The terms of interest-bearing <strong>financial</strong> liabilities (before the deduction of transaction costs) are<br />
shown in the following table. This table also provides an overview of the Group’s fixed and variable<br />
financing:<br />
<strong>2011</strong> in € million Financing volume<br />
(before deduction of<br />
transaction costs)<br />
Thereof<br />
at fixed<br />
interest rates<br />
Thereof<br />
at variable<br />
interest rates<br />
Thereof remaining term up to 1 year 248.5 25.6 222.9<br />
Thereof remaining term between 1 and 5 years 727.7 365.7 361.9<br />
Thereof remaining term over 5 years 719.9 41.6 678.3<br />
Total 1,696.1 432.9 1,263.1<br />
2010 in € million<br />
Thereof remaining term up to 1 year 235.0 57.4 177.6<br />
Thereof remaining term between 1 and 5 years 597.8 235.8 362.0<br />
Thereof remaining term over 5 years 1,171.8 237.1 934.7<br />
Total 2,004.6 530.3 1,474.3<br />
Loans and borrowings with a nominal value of € 91.6 million were reported under current liabilities<br />
as of 31 December <strong>2011</strong> because of cancellation rights that can be exercised by either contract<br />
party at any time. These loan agreements and the underlying internal bank approvals for this financing<br />
have terms ending between 2024 and 2030. Based on the intent of the parties and the current<br />
economic status of financing, the <strong>conwert</strong> Group estimates the following probable term structure<br />
for these liabilities: € 4.8 million in the one-year segment, € 24.0 million in the one- to five-year<br />
segment and € 62.7 million over five years.<br />
The current loans and borrowings reported on the balance sheet include € 248.5 million, which represents<br />
the non-current portion of loans and borrowings attributable to held-for-sale properties.<br />
Of the € 1,263.1 million in variable interest financing, approx. € 952.8 million is covered by interest<br />
rate hedges. A total of 84.0% of the loans and borrowings held by the <strong>conwert</strong> Group (including<br />
€ 39.9 million of loans from building societies) is therefore hedged against future fluctuations in<br />
interest rates.<br />
The amounts due to <strong>financial</strong> institutions represent variable and fixed interest-bearing loans and<br />
borrowings. The following table provides an overview of the fixed interest loans and borrowings,<br />
which total € 66.0 million (2010: € 92.9 million).
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
Type of financing Effective interest rate<br />
as of 31.12.<strong>2011</strong> in %<br />
Due on Carrying amount<br />
in € million<br />
<strong>Invest</strong>ment loan(s) 1.00 01.10.2043 0.3<br />
<strong>Invest</strong>ment loan(s) 1.00 30.06.2043 0.8<br />
<strong>Invest</strong>ment loan(s) 2.50 31.03.2013 1.4<br />
<strong>Invest</strong>ment loan(s) 3.00 15.10.2038 4.2<br />
<strong>Invest</strong>ment loan(s) 3.50 28.07.2028 6.3<br />
<strong>Invest</strong>ment loan(s) 3.60 30.05.2015 7.1<br />
<strong>Invest</strong>ment loan(s) 3.60 30.07.2039 1.1<br />
<strong>Invest</strong>ment loan(s) 3.70 30.05.2029 1.2<br />
<strong>Invest</strong>ment loan(s) 3.75 30.09.2025 19.3<br />
<strong>Invest</strong>ment loan(s) 3.75 30.10.2035 0.9<br />
<strong>Invest</strong>ment loan(s) 3.80 28.02.2031 2.0<br />
<strong>Invest</strong>ment loan(s) 3.80 30.04.2015 0.6<br />
<strong>Invest</strong>ment loan(s) 3.94 28.02.2015 2.0<br />
<strong>Invest</strong>ment loan(s) 4.43 30.07.2039 13.7<br />
<strong>Invest</strong>ment loan(s) 4.63 21.06.2021 0.4<br />
<strong>Invest</strong>ment loan(s) 4.76 30.06.2014 0.2<br />
<strong>Invest</strong>ment loan(s) 4.86 30.01.2013 3.0<br />
<strong>Invest</strong>ment loan(s) 5.13 15.06.2024 0.9<br />
<strong>Invest</strong>ment loan(s) 7.12 30.06.2014 0.6<br />
Type of financing Effective interest rate<br />
as of 31.12.2010 in %<br />
Due on Carrying amount<br />
in € million<br />
<strong>Invest</strong>ment loan(s) 1.00 01.10.2043 0.3<br />
<strong>Invest</strong>ment loan(s) 1.00 30.06.2043 0.8<br />
<strong>Invest</strong>ment loan(s) 3.50 28.07.2028 6.5<br />
<strong>Invest</strong>ment loan(s) 3.60 30.07.2039 1.1<br />
<strong>Invest</strong>ment loan(s) 3.60 30.05.2038 7.2<br />
<strong>Invest</strong>ment loan(s) 3.70 30.05.2029 1.2<br />
<strong>Invest</strong>ment loan(s) 3.70 30.06.2016 11.4<br />
<strong>Invest</strong>ment loan(s) 3.75 30.10.2035 0.9<br />
<strong>Invest</strong>ment loan(s) 3.75 30.09.2025 20.3<br />
<strong>Invest</strong>ment loan(s) 3.80 28.02.2031 2.1<br />
<strong>Invest</strong>ment loan(s) 3.80 30.04.2015 0.7<br />
<strong>Invest</strong>ment loan(s) 3.94 28.02.2015 2.1<br />
<strong>Invest</strong>ment loan(s) 4.43 30.07.2039 14.0<br />
<strong>Invest</strong>ment loan(s) 4.47 01.07.2013 3.5<br />
<strong>Invest</strong>ment loan(s) 4.60 01.07.2013 1.4<br />
<strong>Invest</strong>ment loan(s) 4.63 21.06.2021 0.4<br />
<strong>Invest</strong>ment loan(s) 4.72 30.09.2013 0.6<br />
<strong>Invest</strong>ment loan(s) 4.72 31.10.2013 2.6<br />
<strong>Invest</strong>ment loan(s) 4.76 01.10.2013 1.9<br />
<strong>Invest</strong>ment loan(s) 4.86 30.01.2013 3.1<br />
<strong>Invest</strong>ment loan(s) 4.88 15.10.2038 7.1<br />
<strong>Invest</strong>ment loan(s) 4.93 01.02.2014 2.3<br />
<strong>Invest</strong>ment loan(s) 5.13 15.06.2024 1.0<br />
<strong>Invest</strong>ment loan(s) 5.43 01.02.2014 0.5<br />
97
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
98<br />
A detailed classification of the creditors and terms is not practical because of the large number<br />
of loans and broad distribution of lending institutions. In <strong>2011</strong> the weighted average interest rate<br />
(excluding non-cash effects) equalled 4.37% for short-term loans and borrowings (2010: 3.82%)<br />
and 4.34% (2010: 4.17%) for long-term loans and borrowings. The <strong>conwert</strong> Group has unused credit<br />
lines of € 8.5 million at the end of the reporting year (2010: € 9.2 million).<br />
Loans and borrowings of € 1,368.4 million (excluding short-term working capital credits) are secured<br />
by mortgages (2010: € 1,604.6 million). In addition, an average volume of current and future<br />
rents receivable have been assigned.<br />
Non-current loans and borrowings include finance lease liabilities with terms ranging from 180<br />
to 300 months. Lease payments amounted to € 25.2 million in <strong>2011</strong> (2010: € 10.6 million)<br />
and comprised € 23.5 million (2010: € 9.0 million) of principal repayments and € 1.7 million (2010:<br />
€ 1.6 million) of interest.<br />
<strong>2011</strong> in € million<br />
The present value test and the term test formed the main criteria for classification as a finance<br />
lease. These lease agreements include extension and price adjustment clauses as well as an option<br />
that entitles the <strong>conwert</strong> Group to purchase the properties at an advantageous price at the end<br />
of the lease term.<br />
The most important conditions of the leases are as follows:<br />
+ The lessee takes over the object of the lease agreement for use in its present condition.<br />
+ The lessee is entitled to the risks and rewards arising from rental agreements for space in the<br />
leased object that are valid when the lease is concluded as well as rental agreements that will be<br />
concluded in the future.<br />
+ The lessee is responsible for administration of the rental agreements.<br />
+ At the end of the lease term, the lessee has the option to acquire the leased object as well as the<br />
shares in the lessor company.<br />
BOND LIABILITIES<br />
In 2004 the Group issued 100,000 bearer bond certificates with a nominal value of € 500 each, for<br />
a total value of € 50,000,000. The issue price of these bond certificates was set at 101.441. The<br />
surplus of proceeds received from the issue was released to profit or loss over the seven-year term<br />
of the bonds, which began on 1 December 2004 and ended on 30 November <strong>2011</strong>. The bond certificates<br />
called for bullet repayment, and were repaid at their nominal value on 1 December <strong>2011</strong>.<br />
Total<br />
Thereof remaining<br />
term<br />
up to 1 year<br />
Thereof remaining<br />
term<br />
between<br />
1 and 5 years<br />
Thereof remaining<br />
term<br />
over 5 years<br />
Minimum lease payments<br />
Less:<br />
90.4 2.5 10.7 77.2<br />
Future financing costs 34.8 1.5 6.3 27.0<br />
Present value of lease obligations 55.6<br />
Net carrying amount 55.6<br />
<strong>2011</strong> in € million<br />
Minimum lease payments<br />
Less:<br />
147.2 3.0 16.1 128.0<br />
Future financing costs 68.1 1.9 11.7 54.6<br />
Present value of lease obligations 79.1<br />
Net carrying amount 79.1
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
CONVERTIBLE BOND<br />
On 7 November 2007 the Group issued a convertible bond with a price of € 0.1 million per certificate<br />
and a total value of € 196.4 million. The conversion price equals 130% of the common share price<br />
on the date the convertible bond was issued. The conversion rights can be exercised at any time<br />
from 27 December 2007 to 3 November 2014. If the conversion right is not exercised, the bond will<br />
be repaid on 12 November 2014 at a price € 0.11 million per certificate. Interest will be paid each<br />
year until settlement at a rate of 1.5% per year.<br />
The bondholder is entitled to cancel some or all of the bonds in his/her possession that have not<br />
been converted or redeemed as of 12 November 2012. The issuer is entitled to redeem the bond<br />
prematurely at the applicable redemption price on or after 24 November 2010, if the price of the<br />
common shares to be delivered on conversion equals at least 130% of the redemption amount on<br />
20 of 30 successive stock exchange days. The company started to repurchase the convertible bonds<br />
during the fourth quarter of the 2008 <strong>financial</strong> year. Convertible bonds with a nominal value of<br />
€ 45.4 million (2010: € 34.3 million) had been repurchased by 31 December <strong>2011</strong> for € 32.3 million<br />
(incl. transaction costs, 2010: € 21.0 million). This represents 3,273,252 (2010: 2,393,580) shares of<br />
stock. The conversion price was adjusted from € 14.33 to € 13.87 to reflect the dividend.<br />
In <strong>2011</strong> repurchased convertible bond certificates with a nominal value of € 41.9 million were cancelled,<br />
which reduced the original nominal volume from € 196.4 million to € 154.5 million.<br />
In the first quarter of 2010 the <strong>conwert</strong> Group issued a convertible bond with a price of € 0.1 million<br />
per certificate and a total value of € 135.0 million. This bond has a six-year term ending on 1 February<br />
2016. The bondholders have the right to redeem their bond certificates prematurely four years<br />
after the date of issue at the nominal value including accrued interest. The convertible bond certificates<br />
were issued at 100% of the nominal value of € 0.1 million. Interest is paid semi-<strong>annual</strong>ly at<br />
a rate of 5.25% per year. The conversion price was adjusted from € 11.60 to € 11.22 to reflect the<br />
dividend payment.<br />
The net proceeds from the issue of the bond were classified into a debt component and an equity<br />
component (which represents the amount required to convert the liability into equity). The classification<br />
as of 31 December <strong>2011</strong> and 2010 is shown below:<br />
CONVERTIBLE BOND 2010 – 2016<br />
<strong>2011</strong> in € million<br />
Issue proceeds (excl. proportional share of transaction costs),<br />
less repurchases<br />
135.0<br />
Debt component as of 31 December 126.6<br />
Equity component 10.2<br />
2010 in € million<br />
Issue proceeds (excl. proportional share of transaction costs),<br />
less repurchases<br />
135.0<br />
Debt component as of 31 December 124.8<br />
Equity component 10.2<br />
99
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
100<br />
The equity component of the convertible bond is attributable to the conversion rights connected<br />
with the bond, and represents the difference between the issue proceeds and the present value<br />
of the debt component as determined on the basis of a customary market interest rate of 6.9%<br />
(2010: 6.9%). The equity component of € 10.2 million, less a proportional share of € 0.1 million for<br />
transaction costs, was added to equity.<br />
The debt component is carried at amortised cost less transaction costs of € 1.0 million. Interest<br />
expense for the convertible bond totalled € 8.8 million in <strong>2011</strong>, and comprised cash interest<br />
payments of € 7.1 million, a write-up of € 1.5 million to the bond component and the release of<br />
€ 0.2 million in issue costs.<br />
CONVERTIBLE BOND 2007 – 2014<br />
<strong>2011</strong> in € million<br />
Issue proceeds (excl. proportional share of transaction costs),<br />
less repurchases<br />
154.5<br />
Debt component as of 31 December 147.3<br />
Equity component 28.5<br />
2010 in € million<br />
Issue proceeds (excl. proportional share of transaction costs),<br />
less repurchases<br />
162.1<br />
Debt component as of 31 December 151.2<br />
Equity component 29.4<br />
The equity component of the convertible bond is attributable to the conversion rights connected<br />
with the bond, and represents the difference between the issue proceeds and the present value<br />
of the debt component as determined on the basis of a customary market interest rate of 6.2%<br />
(2010: 6.2%). The repurchase of convertible bonds during the reporting period reduced this equity<br />
component by € 0.6 million to € 28.5 million.<br />
The debt component is carried at amortised cost less transaction costs of € 1.2 million (2010:<br />
€ 1.5 million). The debt component amounted to € 162.5 million on the issue date. Interest expense<br />
for the convertible bond totalled € 9.0 million in <strong>2011</strong>, and comprised cash interest payments of<br />
€ 2.3 million, a write-up of € 6.3 million to the bond component and the release of € 0.3 million in<br />
issue costs.<br />
The financing contributions from tenants reported on the consolidated balance sheet are attributable<br />
to new residential construction. These contributions must be refunded to the tenants when a<br />
lease is terminated. However, the landlord has a right to receive a financing contribution from the<br />
new tenant when the object is let again, and these amounts are therefore recorded as non-current<br />
liabilities.<br />
Other current <strong>financial</strong> liabilities are classified as follows:<br />
in € million 2010 2009<br />
Deposits 1.5 1.9<br />
Prepayments of rents 0.0 0.7<br />
Property management 5.1 5.6<br />
Miscellaneous 17.1 11.7<br />
Total 23.7 19.9
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
The term structure of the <strong>financial</strong> liabilities held by the Group is shown in the following table. This<br />
data is based on the non-discounted contractual payments. The payment flows from derivative<br />
<strong>financial</strong> instruments are included under non-current loans and borrowings.<br />
<strong>2011</strong><br />
in € million<br />
Interest-bearing loans and borrowings of € 907.8 million (2010: € 1,421.5 million) have a term of<br />
more than five years, and include € 374.8 million (2010: € 659.9 million) with a remaining term of<br />
more than ten years.<br />
8.10.3. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGES<br />
The <strong>conwert</strong> Group uses a variety of derivative <strong>financial</strong> instruments to manage interest rate risk.<br />
These instruments include interest rate swaps and interest rate caps. The fair value of the hedges<br />
is based on market valuation as of the balance sheet date.<br />
Total<br />
Thereof remaining<br />
term<br />
up to 1 year<br />
Thereof remaining<br />
term<br />
between<br />
1 and 5 years<br />
Thereof remaining<br />
term<br />
over 5 years<br />
Non-current loans and borrowings 1,554.6 180.5 588.6 785.5<br />
Convertible bond 325.2 9.5 315.7 0.0<br />
Financing contributions from tenants 14.6 0.0 0.0 14.6<br />
Other non-current liabilities 4.6 0.0 3.5 1.1<br />
Current loans and borrowings 314.4 128.7 63.4 122.3<br />
Trade accounts payable 13.5 13.5 0.0 0.0<br />
Other <strong>financial</strong> liabilities 23.7 23.7 0.0 0.0<br />
2010<br />
in € million<br />
Notes<br />
Total<br />
Thereof remaining<br />
term<br />
up to 1 year<br />
Thereof remaining<br />
term<br />
between<br />
1 and 5 years<br />
Thereof remaining<br />
term<br />
over 5 years<br />
Non-current loans and borrowings 1,903.9 211.3 565.3 1.127.3<br />
Bond liabilities 52.2 52.2 0.0 0.0<br />
Convertible bond 346.4 9.6 198.2 138.6<br />
Financing contributions from tenants 16.4 0.0 0.0 16.4<br />
Other non-current liabilities 5.3 0.3 3.6 1.4<br />
Current loans and borrowings 477.8 60.2 123.4 294.2<br />
Trade accounts payable 40.7 40.7 0.0 0.0<br />
Other <strong>financial</strong> liabilities 19.9 18.0 0.0 1.9<br />
101
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
102<br />
Financial institution<br />
The following table shows the value of the derivative <strong>financial</strong> instruments held by the <strong>conwert</strong><br />
Group as of 31 December <strong>2011</strong>, which were recorded as cash flow hedges without recognition<br />
through profit or loss in accordance with IAS 39.<br />
Derivative Beginning End Hedge<br />
Reference<br />
value as of<br />
31.12.<strong>2011</strong><br />
in mill. €<br />
Fixed<br />
interest<br />
rate<br />
Reference<br />
interest rate<br />
Market value<br />
31.12.<strong>2011</strong><br />
in mill. €<br />
Aareal Bank AG Interest rate swap 30.06.06 31.05.16 Interest rate change 12.6 4.300 3-M-EURIBOR (1.4)<br />
Barclays Capital Interest rate swap 31.07.07 26.06.17 Interest rate change 100.0 4.080 3-M-EURIBOR (13.9)<br />
Barclays Capital Interest rate swap 01.10.07 01.10.17 Interest rate change 50.0 4.160 3-M-EURIBOR (7.6)<br />
Barclays Capital Interest rate swap 01.10.07 02.10.17 Interest rate change 20.0 4.687 3-M-EURIBOR (3.5)<br />
Barclays Capital Zins-Floor 30.09.10 31.03.20 Interest rate change 150.0 3.990 3-M-EURIBOR (26.9)<br />
Barclays Capital Interest rate cap 01.07.10 01.04.20 Interest rate change 20.0 4.000 3-M-EURIBOR 0.6<br />
BAWAG P.S.K. AG Interest rate swap 30.09.09 30.06.16 Interest rate change 26.0 4.150 3-M-EURIBOR (3.1)<br />
BAWAG P.S.K. AG Interest rate swap 08.11.11 30.09.17 Interest rate change 34.0 3.115 6-M-EURIBOR (2.7)<br />
BAWAG P.S.K. AG Interest rate swap 01.10.07 01.10.20 Interest rate change 30.0 4.490 3-M-EURIBOR (5.9)<br />
DZ Bank AG Interest rate cap 19.05.10 30.06.15 Interest rate change 1.7 4.000 3-M-EURIBOR 0.0<br />
Kreissparkasse Köln Interest rate swap 01.10.08 01.10.18 Interest rate change 7.0 4.500 3-M-EURIBOR (1.2)<br />
Landesbank Berlin Interest rate swap 31.12.09 31.05.16 Interest rate change 15.6 4.150 3-M-EURIBOR (2.0)<br />
Landesbank Berlin Interest rate cap 30.04.09 30.09.17 Interest rate change 0.4 4.200 3-M-EURIBOR 0.0<br />
Landesbank Berlin Interest rate swap 31.03.08 31.03.18 Interest rate change 5.0 4.280 3-M-EURIBOR (0.8)<br />
Landesbank Hessen-Thüringen Interest rate swap 02.10.08 30.06.17 Interest rate change 20.0 4.870 3-M-EURIBOR (3.5)<br />
Landesbank Hessen-Thüringen Interest rate swap 30.07.08 30.04.18 Interest rate change 10.0 4.495 3-M-EURIBOR (1.7)<br />
Landesbank Hessen-Thüringen Zins-Collar 30.07.08 30.04.18 Interest rate change 37.0 2.750 / 4.800 3-M-EURIBOR (2.7)<br />
Raiffeisenbank International AG Interest rate swap 10.07.08 06.07.17 Interest rate change 50.0 4.380 3-M-EURIBOR (7.6)<br />
Raiffeisenbank International AG Interest rate swap 01.10.07 02.10.17 Interest rate change 50.0 4.680 3-M-EURIBOR (8.4)<br />
Raiffeisenbank International AG Interest rate swap 22.08.08 22.08.18 Interest rate change 14.0 4.200 3-M-EURIBOR (3.2)<br />
Raiffeisenbank International AG Interest rate swap 07.10.08 08.10.18 Interest rate change 50.0 4.310 3-M-EURIBOR (8.0)<br />
Raiffeisenbank International AG Interest rate cap 31.03.10 31.03.20 Interest rate change 12.3 4.000 3-M-EURIBOR 0.3<br />
Raiffeisenbank International AG Interest rate cap 31.03.10 31.03.20 Interest rate change 30.0 4.000 3-M-EURIBOR 0.7<br />
Raiffeisenbank International AG Interest rate swap 02.01.12 30.12.22 Interest rate change 35.0 3.985 3-M-EURIBOR (5.9)<br />
Raiffeisenbank International AG Interest rate swap 07.08.03 01.07.23 Interest rate change 3.0 4.373 12-M-EURIBOR (0.3)<br />
Raiffeisenbank International AG Interest rate cap 31.03.10 31.03.25 Interest rate change 7.7 4.000 3-M-EURIBOR 0.2<br />
Raiffeisenbank International AG Interest rate swap 01.07.16 30.06.26 Interest rate change 30.0 4.600 3-M-EURIBOR (3.7)<br />
UniCredit Bank Austria AG Interest rate swap 17.06.05 17.06.15 Interest rate change 2.0 3.680 3-M-EURIBOR (0.2)<br />
UniCredit Bank Austria AG Interest rate swap 20.06.05 22.06.15 Interest rate change 2.0 3.680 3-M-EURIBOR (0.2)<br />
UniCredit Bank Austria AG Interest rate swap 07.05.07 08.05.17 Interest rate change 20.0 4.090 3-M-EURIBOR (2.7)<br />
UniCredit Bank Austria AG Interest rate cap 01.04.10 31.03.20 Interest rate change 20.0 4.000 3-M-EURIBOR 0.4<br />
Raiffeisenlandesbank Niederösterreich-Wien AG Interest rate cap 01.04.10 01.04.20 Interest rate change 20.0 4.000 3-M-EURIBOR 0.5<br />
Raiffeisenlandesbank Niederösterreich-Wien AG Interest rate cap 01.07.10 01.04.20 Interest rate change 40.0 4.000 3-M-EURIBOR 0.9<br />
Total (113.7)<br />
Financial institution<br />
As of 31 December <strong>2011</strong> the <strong>conwert</strong> Group held the following derivative <strong>financial</strong> instruments that<br />
were recognised through profit or loss:<br />
Derivative Beginning End Hedge<br />
Reference<br />
value as of<br />
31.12.<strong>2011</strong><br />
in mill. €<br />
Fixed<br />
interest<br />
rate<br />
Reference<br />
interest rate<br />
Market value<br />
31.12.<strong>2011</strong><br />
in mill. €<br />
Hypo Landesbank Vorarlberg Interest rate swap 15.03.10 15.03.13 Interest rate change 10.7 4.150 3-M-EURIBOR (0.4)<br />
Hypo Landesbank Vorarlberg Interest rate cap 02.01.06 01.01.16 Interest rate change 1.9 3.500 3-M-EURIBOR 0.0<br />
Hypo Landesbank Vorarlberg Interest rate swap 02.01.06 01.01.16 Interest rate change 4.6 3.530 3-M-EURIBOR (0.3)<br />
Hypo Landesbank Vorarlberg Interest rate swap 31.03.06 31.03.16 Interest rate change 2.6 3.860 3-M-EURIBOR (0.2)<br />
Hypo Landesbank Vorarlberg Interest rate swap 31.03.06 31.03.16 Interest rate change 6.1 3.840 3-M-EURIBOR (0.5)<br />
Hypo Landesbank Vorarlberg Interest rate swap 31.03.06 31.03.16 Interest rate change 11.1 3.840 3-M-EURIBOR (1.0)<br />
Landesbank Hessen-Thüringen Interest rate swap 30.09.09 30.09.16 Interest rate change 8.5 3.183 6-M-EURIBOR (0.5)<br />
Österr. Volksbanken AG Interest rate swap 31.03.06 01.10.27 Interest rate change 9.8 3.955 3-M-EURIBOR (1.4)<br />
Raiffeisenbank International AG Interest rate swap 15.03.06 31.12.13 Interest rate change 6.3 3.720 3-M-EURIBOR (0.3)<br />
Raiffeisenbank International AG Interest rate swap 30.03.07 31.12.15 Interest rate change 15.7 3.470 3-M-EURIBOR (1.2)<br />
Raiffeisenbank International AG Interest rate swap 02.01.06 04.01.16 Interest rate change 2.3 3.450 3-M-EURIBOR (0.2)<br />
Raiffeisenbank International AG Interest rate swap 02.01.06 04.01.16 Interest rate change 2.3 3.450 3-M-EURIBOR (0.2)<br />
Raiffeisenbank International AG Interest rate swap 01.02.06 01.02.16 Interest rate change 9.9 3.470 3-M-EURIBOR (0.8)<br />
Raiffeisenbank International AG Interest rate swap 03.04.06 01.04.16 Interest rate change 4.7 3.890 3-M-EURIBOR (0.5)<br />
Raiffeisenbank International AG Interest rate swap 03.04.06 01.04.16 Interest rate change 14.8 3.890 3-M-EURIBOR (1.4)<br />
Raiffeisenbank International AG Interest rate swap 04.08.06 30.06.16 Interest rate change 39.1 4.060 3-M-EURIBOR (4.4)<br />
Raiffeisenbank International AG Interest rate swap 04.08.06 30.06.16 Interest rate change 16.5 4.060 3-M-EURIBOR (1.9)<br />
Raiffeisenbank International AG Interest rate swap 07.10.08 08.10.18 Interest rate change 30.0 4.330 3-M-EURIBOR (4.9)<br />
Raiffeisenbank International AG Interest rate swap 15.03.06 31.12.25 Interest rate change 23.8 4.430 SMR issuers (2.3)<br />
UniCredit Bank Austria AG Interest rate swap 12.01.06 31.12.15 Interest rate change 5.2 3.495 3-M-EURIBOR (0.4)<br />
UniCredit Bank Austria AG Interest rate swap 12.01.06 31.12.15 Interest rate change 5.2 3.495 3-M-EURIBOR (0.4)<br />
<strong>Invest</strong>kredit AG Interest rate cap 30.12.05 30.06.15 Interest rate change 5.6 3.250 3-M-EURIBOR 0.0<br />
<strong>Invest</strong>kredit AG Interest rate swap 30.12.05 31.12.15 Interest rate change 5.9 3.450 3-M-EURIBOR (0.4)<br />
Total (23.6)
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
The following table shows the value of the derivative <strong>financial</strong> instruments held by the <strong>conwert</strong><br />
Group as of 31 December 2010, which were recorded as cash flow hedges without recognition<br />
through profit or loss in accordance with IAS 39.<br />
Financial institution<br />
Notes<br />
Derivative Beginning End Hedge<br />
Reference<br />
value as of<br />
31.12.2010<br />
in mill. €<br />
Fixed<br />
interest<br />
rate<br />
Reference<br />
interest rate<br />
Market value<br />
31.12.2010<br />
in mill. €<br />
Barclays Capital Zins-Swap 31.07.07 26.06.17 Interest rate change 100.0 4.080 3-M-EURIBOR (10.0)<br />
Barclays Capital Zins-Swap 01.10.07 01.10.17 Interest rate change 50.0 4.160 3-M-EURIBOR (5.7)<br />
Barclays Capital Zins-Swap 01.10.07 01.10.17 Interest rate change 20.0 4.687 3-M-EURIBOR (2.8)<br />
Barclays Capital Zins-Floor 30.09.10 31.03.20 Interest rate change 150.0 3.990 3-M-EURIBOR (18.3)<br />
Barclays Capital Zins-Cap 01.04.10 01.04.20 Interest rate change 20.0 4.000 3-M-EURIBOR 1.0<br />
BAWAG P.S.K. AG Zins-Swap 30.09.09 30.06.16 Interest rate change 26.0 4.150 3-M-EURIBOR (2.4)<br />
BAWAG P.S.K. AG Zins-Swap 01.10.07 01.10.20 Interest rate change 30.0 4.490 3-M-EURIBOR (3.8)<br />
DZ Bank AG Zins-Cap 19.05.10 30.06.15 Interest rate change 1.7 4.000 3-M-EURIBOR 0.0<br />
EUROHYPO AG Zins-Swap 30.06.06 31.05.16 Interest rate change 13.1 4.150 3-M-EURIBOR (1.1)<br />
Hypo Landesbank Vorarlberg Zins-Swap 15.03.10 15.03.13 Interest rate change 11.1 4.150 3-M-EURIBOR (0.7)<br />
Hypo Landesbank Vorarlberg Zins-Cap 02.01.06 01.01.16 Interest rate change 2.1 3.500 3-M-EURIBOR 0.0<br />
Hypo Landesbank Vorarlberg Zins-Swap 02.01.06 01.01.16 Interest rate change 4.8 3.530 3-M-EURIBOR (0.2)<br />
Hypo Landesbank Vorarlberg Zins-Swap 31.03.06 31.03.16 Interest rate change 2.7 3.860 3-M-EURIBOR (0.2)<br />
Hypo Landesbank Vorarlberg Zins-Swap 31.03.06 31.03.16 Interest rate change 6.4 3.840 3-M-EURIBOR (0.4)<br />
Hypo Landesbank Vorarlberg Zins-Swap 31.03.06 31.03.16 Interest rate change 11.8 3.840 3-M-EURIBOR (0.8)<br />
<strong>Invest</strong>kredit AG Zins-Swap 09.06.06 30.06.14 Interest rate change 2.6 4.250 6-M-EURIBOR (0.2)<br />
<strong>Invest</strong>kredit AG Zins-Swap 02.01.06 01.07.14 Interest rate change 1.9 3.400 6-M-EURIBOR (0.1)<br />
<strong>Invest</strong>kredit AG Zins-Swap 02.01.06 01.07.14 Interest rate change 1.0 3.400 6-M-EURIBOR (0.0)<br />
<strong>Invest</strong>kredit AG Zins-Swap 02.01.06 01.07.14 Interest rate change 3.3 3.400 6-M-EURIBOR (0.1)<br />
<strong>Invest</strong>kredit AG Zins-Cap 30.12.05 30.06.15 Interest rate change 6.3 3.250 3-M-EURIBOR 0.1<br />
<strong>Invest</strong>kredit AG Zins-Swap 30.12.05 31.12.15 Interest rate change 6.5 3.450 3-M-EURIBOR (0.3)<br />
Kreissparkasse Köln Zins-Swap 01.10.08 01.10.18 Interest rate change 7.0 4.500 3-M-EURIBOR (0.9)<br />
Landesbank Berlin Zins-Swap 31.12.09 31.05.16 Interest rate change 16.5 4.150 3-M-EURIBOR (1.5)<br />
Landesbank Berlin Zins-Cap 30.04.09 30.09.17 Interest rate change 0.4 4.200 3-M-EURIBOR 0.0<br />
Landesbank Berlin Zins-Swap 31.03.08 31.03.18 Interest rate change 5.0 4.280 3-M-EURIBOR (0.5)<br />
Landesbank Hessen-Thüringen Zins-Swap 02.01.07 30.12.11 Interest rate change 27.0 3.870 3-M-EURIBOR (0.7)<br />
Landesbank Hessen-Thüringen Zins-Swap 30.09.09 30.09.16 Interest rate change 56.3 3.183 6-M-EURIBOR (1.6)<br />
Landesbank Hessen-Thüringen Zins-Swap 30.09.09 30.09.16 Interest rate change 33.9 3.183 6-M-EURIBOR (1.0)<br />
Landesbank Hessen-Thüringen Zins-Swap 30.09.09 30.09.16 Interest rate change 8.6 3.183 6-M-EURIBOR (0.3)<br />
Landesbank Hessen-Thüringen Zins-Swap 02.10.08 30.06.17 Interest rate change 20.0 4.870 3-M-EURIBOR (2.8)<br />
Landesbank Hessen-Thüringen Zins-Swap 30.07.08 30.04.18 Interest rate change 10.0 4.495 3-M-EURIBOR (1.2)<br />
Landesbank Hessen-Thüringen Zins-Collar 30.07.08 30.04.18 Interest rate change 37.0 2.750 / 4.800 3-M-EURIBOR (1.3)<br />
Österr. Volksbanken AG Zins-Swap 31.03.06 01.10.27 Interest rate change 10.3 3.955 3-M-EURIBOR (0.7)<br />
Raiffeisenbank International AG Zins-Swap 24.11.04 24.11.11 Interest rate change 25.0 3.740 3-M-EURIBOR (0.6)<br />
Raiffeisenbank International AG Zins-Swap 24.11.04 24.11.11 Interest rate change 25.0 3.800 3-M-EURIBOR (0.6)<br />
Raiffeisenbank International AG Zins-Swap 15.03.06 31.12.13 Interest rate change 6.7 3.720 3-M-EURIBOR (0.3)<br />
Raiffeisenbank International AG Zins-Swap 30.03.07 31.12.15 Interest rate change 16.5 3.470 3-M-EURIBOR (0.8)<br />
Raiffeisenbank International AG Zins-Swap 02.01.06 04.01.16 Interest rate change 2.4 3.450 3-M-EURIBOR (0.1)<br />
Raiffeisenbank International AG Zins-Swap 02.01.06 04.01.16 Interest rate change 2.4 3.450 3-M-EURIBOR (0.1)<br />
Raiffeisenbank International AG Zins-Swap 01.02.06 01.02.16 Interest rate change 10.3 3.470 3-M-EURIBOR (0.5)<br />
Raiffeisenbank International AG Zins-Swap 03.04.06 01.04.16 Interest rate change 4.9 3.890 3-M-EURIBOR (0.3)<br />
Raiffeisenbank International AG Zins-Swap 03.04.06 01.04.16 Interest rate change 15.4 3.890 3-M-EURIBOR (1.0)<br />
Raiffeisenbank International AG Zins-Swap 04.08.06 30.06.16 Interest rate change 39.8 4.060 3-M-EURIBOR (3.1)<br />
Raiffeisenbank International AG Zins-Swap 04.08.06 30.06.16 Interest rate change 16.8 4.060 3-M-EURIBOR (1.3)<br />
Raiffeisenbank International AG Zins-Swap 10.07.08 06.07.17 Interest rate change 50.0 4.380 3-M-EURIBOR (5.7)<br />
Raiffeisenbank International AG Zins-Swap 01.10.07 02.10.17 Interest rate change 50.0 4.680 3-M-EURIBOR (6.0)<br />
Raiffeisenbank International AG Zins-Swap 22.08.08 22.08.18 Interest rate change 14.0 4.200 3-M-EURIBOR (2.6)<br />
Raiffeisenbank International AG Zins-Swap 07.10.08 08.10.18 Interest rate change 50.0 4.310 3-M-EURIBOR (4.9)<br />
Raiffeisenbank International AG Zins-Swap 07.10.08 08.10.18 Interest rate change 30.0 4.330 3-M-EURIBOR (3.0)<br />
Raiffeisenbank International AG Zins-Cap 31.03.10 31.03.20 Interest rate change 12.3 4.000 3-M-EURIBOR 0.6<br />
Raiffeisenbank International AG Zins-Cap 01.07.10 01.04.20 Interest rate change 30.0 4.000 3-M-EURIBOR 1.4<br />
Raiffeisenbank International AG Zins-Swap 02.01.12 30.12.22 Interest rate change 35.0 3.985 3-M-EURIBOR (1.2)<br />
Raiffeisenbank International AG Zins-Swap 07.08.03 01.07.23 Interest rate change 3.3 4.373 12-M-EURIBOR (0.3)<br />
Raiffeisenbank International AG Zins-Cap 31.03.10 31.03.25 Interest rate change 7.7 4.000 3-M-EURIBOR 0.4<br />
Raiffeisenbank International AG Zins-Swap 15.03.06 31.12.25 Interest rate change 25.5 4.430 SMR Emittenten (0.4)<br />
Raiffeisenbank International AG Zins-Swap 01.07.16 30.06.26 Interest rate change 30.0 4.600 3-M-EURIBOR (0.6)<br />
UniCredit Bank Austria AG Zins-Swap 17.06.05 17.06.15 Interest rate change 2.0 3.680 3-M-EURIBOR (0.1)<br />
UniCredit Bank Austria AG Zins-Swap 20.06.05 22.06.15 Interest rate change 2.0 3.680 3-M-EURIBOR (0.1)<br />
UniCredit Bank Austria AG Zins-Swap 12.01.06 31.12.15 Interest rate change 5.7 3.495 3-M-EURIBOR (0.3)<br />
UniCredit Bank Austria AG Zins-Swap 12.01.06 31.12.15 Interest rate change 5.7 3.495 3-M-EURIBOR (0.3)<br />
UniCredit Bank Austria AG Zins-Swap 07.05.07 08.05.17 Interest rate change 20.0 4.090 3-M-EURIBOR (2.1)<br />
UniCredit Bank Austria AG Zins-Cap 01.04.10 31.03.20 Interest rate change 20.0 4.000 3-M-EURIBOR 0.9<br />
Raiffeisenlandesbank Niederösterreich-Wien AG Zins-Cap 01.03.04 01.03.11 Interest rate change 20.0 4.000 3-M-EURIBOR 0.0<br />
Raiffeisenlandesbank Niederösterreich-Wien AG Zins-Cap 01.04.10 01.04.20 Interest rate change 20.0 4.000 3-M-EURIBOR 0.9<br />
Raiffeisenlandesbank Niederösterreich-Wien AG Zins-Cap 01.07.10 01.04.20 Interest rate change 40.0 4.000 3-M-EURIBOR 1.7<br />
Total (89.31)<br />
103
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
104<br />
8.10.4. FAIR VALUE OF FINANCIAL INSTRUMENTS<br />
The following methods and assumptions were used to estimate the market value of the individual<br />
<strong>financial</strong> instruments:<br />
CASH AND CASH EQUIVALENTS<br />
The carrying amount of cash and cash equivalents approximates market value because of the<br />
relatively short terms of these <strong>financial</strong> instruments.<br />
CURRENT INTEREST-BEARING LOANS AND BORROWINGS / LOANS AND RECEIVABLES<br />
The carrying amount of these liabilities approximates market value (fair value) because of their<br />
relatively short term. This also applies to receivables and originated loans.<br />
NON-CURRENT INTEREST-BEARING LOANS AND BORROWINGS<br />
The fair value of non-current interest-bearing loans and borrowings is based on the current interest<br />
rates for liabilities with the same maturity. The fair value of non-current loans and other liabilities<br />
with variable interest rates approximates the carrying amounts of these items. The market<br />
value of fixed interest loans and borrowings totalled € 73.9 million as of 31 December <strong>2011</strong> (2010:<br />
€ 98.9 million) (also see note 2.4.8.2).<br />
CONVERTIBLE BOND LIABILITIES<br />
The fair value of the two convertible bonds was € 282.9 million as of 31 December <strong>2011</strong> (2010:<br />
€ 304.7 million).<br />
DERIVATIVE FINANCIAL INSTRUMENTS<br />
The fair value of derivatives held as hedges or for trading purposes is based on the market value of<br />
these instruments as of the balance sheet date. The fair value of derivative <strong>financial</strong> instruments<br />
was calculated by discounting the expected future cash flows at regular way interest rates.<br />
AVAILABLE-FOR-SALE FINANCIAL AS<strong>SE</strong>TS<br />
The market price was used to determine the fair value of listed available-for-sale <strong>financial</strong> assets<br />
and <strong>financial</strong> assets held for trading.<br />
The following table shows the carrying amount and the fair value of the <strong>financial</strong> assets and liabilities<br />
held by the <strong>conwert</strong> Group, classified by category:<br />
in € million Fair value<br />
<strong>2011</strong><br />
Fair value<br />
2010<br />
Carrying<br />
amount<br />
<strong>2011</strong><br />
Carrying<br />
amount<br />
2010<br />
Derivative <strong>financial</strong> instruments recognised at<br />
fair value directly in equity<br />
(113.7) (94.0) (113.7) (94.0)<br />
Derivative <strong>financial</strong> instruments carried at fair value (23.6) 7.0 (23.6) 7.0<br />
Available-for-sale <strong>financial</strong> instruments 2.2 3.7 2.2 3.7<br />
Loans and receivables 186.1 165.8 186.1 165.8<br />
Financial liabilities carried at amortised cost 1,897.7 2,125.6 1,888.6 2,090.8
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
As of 31 December <strong>2011</strong> the <strong>conwert</strong> Group held the following <strong>financial</strong> instruments that were<br />
carried at fair value. The <strong>conwert</strong> Group uses the following hierarchy to determine and present the<br />
fair value of <strong>financial</strong> instruments by valuation category:<br />
Level 1: Listed (unadjusted) prices on active markets for similar assets or liabilities.<br />
Level 2: Methods for which all input parameters that have a material effect on the recognised fair<br />
value can be monitored, either directly or indirectly.<br />
Level 3: Methods that rely on input parameters that cannot be monitored but have a material effect<br />
on the recognised fair value.<br />
The following table shows the classification of the fair value of <strong>financial</strong> assets and liabilities held<br />
by the <strong>conwert</strong> Group (by level) for <strong>2011</strong> and 2010:<br />
<strong>2011</strong> in € million Level 1 Level 2 Level 3<br />
Derivative <strong>financial</strong> instruments with effective hedges 0.0 (113.7) 0.0<br />
Derivative <strong>financial</strong> instruments 0.0 (23.6) 0.0<br />
Convertible bond 282.9 0.0 0.0<br />
2010 in € million Level 1 Level 2 Level 3<br />
Non-current <strong>financial</strong> assets 0.0 (94.0) 0.0<br />
Derivative <strong>financial</strong> instruments with effective hedges 0.0 7.0 0.0<br />
Derivative <strong>financial</strong> instruments 50.3 0.0 0.0<br />
Bonds 304.7 0.0 0.0<br />
9. NOTES TO THE CASH FLOW STATEMENT<br />
Cash flow from the acquisition of assets and liabilities in the form of subsidiaries:<br />
in € million <strong>2011</strong> 2010<br />
Cash and cash equivalents 0.0 (39.6)<br />
Receivables and other assets (0.2) (12.0)<br />
Properties held for sale (0.9) (146.0)<br />
Non-current assets 0.0 (603.5)<br />
Liabilities and provisions 0.0 459.2<br />
Non-controlling interests 0.0 31.1<br />
Net assets/liabilities acquired = purchase price (1.1) (310.8)<br />
Cash and cash equivalents 0.0 39.6<br />
Gain on an acquisition below market price 0.0 95.3<br />
Fair value of previous at-equity investment 0.0 60.7<br />
Net cash flow (1.1) (115.2)<br />
105
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
106<br />
Cash flow from the disposal of assets and liabilities in the form of subsidiaries:<br />
in € million <strong>2011</strong> 2010<br />
Receivables and other assets 2.2 1.3<br />
Non-current assets 108.3 2.5<br />
Liabilities and provisions (61.1) 0.0<br />
Non-current liabilities 0.0 0.0<br />
Net assets/liabilities sold 49.4 3.8<br />
Loss on the disposal of subsidiaries (107.7) (3.5)<br />
Net cash flow 58.3 0.3<br />
10. OPERATING LEA<strong>SE</strong>S<br />
10.1. CLAIMS ARISING FROM OPERATING LEA<strong>SE</strong>S<br />
The <strong>conwert</strong> Group has concluded operating leases with apartment tenants as part of its rental<br />
activities. These rental agreements can be terminated by the tenants at any time on short notice<br />
(between one and three months). Therefore, the non-cancellable part of the lease represents only<br />
three month’s rental income on average. The respective amount for apartment and commercial<br />
rentals is € 12.3 million (2010: € 13.0 million).<br />
10.2. OTHER FINANCIAL OBLIGATIONS ARISING FROM OPERATING LEA<strong>SE</strong>S<br />
The <strong>conwert</strong> Group has concluded leases for motor vehicles and office equipment. The average<br />
term of these leases is three to five years. All leases were concluded at normal market conditions.<br />
11. CONTINGENT LIABILITIES AND OTHER FINANCIAL OBLIGATIONS<br />
The <strong>conwert</strong> Group held no contingent liabilities due to third parties as of 31 December <strong>2011</strong> (2010:<br />
€ 0.6 million).<br />
12. OBJECTIVES AND POLICIES OF FINANCIAL RISK MANAGEMENT<br />
The principal <strong>financial</strong> instruments used by the Group – with the exception of derivative <strong>financial</strong><br />
instruments – include bank loans and overdrafts, bonds, trade payables and loans granted. The<br />
main purpose of these <strong>financial</strong> instruments is to finance the Group’s operating activities. The<br />
<strong>conwert</strong> Group has various <strong>financial</strong> assets such as trade receivables, receivables from the sale of<br />
properties and flats, rents receivable as well as cash and short-term deposits that result from its<br />
business operations.<br />
The <strong>conwert</strong> Group also holds derivative <strong>financial</strong> instruments. These instruments include interest<br />
rate swaps, which are designed to manage the interest rate risk arising from the Group’s business<br />
operations and financing sources.<br />
The major risks arising from the Group‘s <strong>financial</strong> instruments are interest-based cash flow risks,<br />
liquidity risk, foreign currency risk and credit risk. In order to manage the individual types of risk,<br />
management has developed and implemented the following strategies and processes.<br />
INTEREST RATE RISK<br />
The <strong>conwert</strong> Group is exposed to a risk arising from changes in market interest rates primarily<br />
through its variable rate <strong>financial</strong> liabilities. Interest costs are managed with a combination of<br />
fixed and variable interest rate borrowings, whereby the objective is to maintain the majority of<br />
interest-bearing debt at fixed rates based on continuous monitoring of the <strong>financial</strong> markets. In order<br />
to meet this objective, the Group enters into interest rate swaps that require it to exchange the<br />
difference between fixed and variable rate interest amounts calculated by reference to an agreed<br />
nominal principal with the contract partner at specified intervals. As of 31 December <strong>2011</strong> 84.0%<br />
(2010: 85.3%) of the Group’s borrowings carried fixed interest rates.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
OVERVIEW OF INTEREST RATE RISK<br />
The following table shows the sensitivity of Group earnings before tax to a reasonably possible<br />
change in interest rates through the effects on variable rate borrowings. Interest-bearing borrowings<br />
are concluded on the basis of the 3-month Euribor, 6-month Euribor and 12-month Euribor<br />
as well as combinations of the secondary market yield and the Euribor. The 3-month Euribor is<br />
the dominant base rate for variable interest borrowings, and the following sensitivity analysis was<br />
therefore limited to this area.<br />
Increase/decrease<br />
in basis points<br />
Due to the currently low level of interest rates and expectations for a continuation of this situation<br />
in 2012, an interest calculation that simulates interest rate trends with a decrease of 50 and 100<br />
basis points at specific times would be based on a negative reference curve. Since this type of<br />
development is unlikely, any simulation that uses such parameters would almost certainly lead to<br />
incorrect conclusions. The parameters for the <strong>2011</strong> simulation were therefore reduced to minus<br />
10 and minus 25 basis points.<br />
The results shown above are partly offset by the recognition in other comprehensive income of the<br />
effects arising from the fair value measurement of derivative <strong>financial</strong> instruments. The effects of<br />
derivatives on other comprehensive income in the form the cash flow hedge reserve totalled minus<br />
€ 50.1 million in <strong>2011</strong> (2010: minus € 1.4 million).<br />
The following table shows the sensitivity of equity to a reasonably possible change in interest rates<br />
through the effects on variable rate borrowings.<br />
Increase/decrease<br />
in basis points<br />
Effect on earnings before tax<br />
in € million<br />
31.12.<strong>2011</strong><br />
3-month Euribor +50 (1.1)<br />
3-month Euribor +100 (2.2)<br />
3-month Euribor -10 0.2<br />
3-month Euribor<br />
31.12.2010<br />
-25 0.6<br />
3-month Euribor + 50 (1.0)<br />
3-month Euribor + 100 (2.0)<br />
3-month Euribor - 50 1.0<br />
3-month Euribor - 100 2.0<br />
Effect on equity<br />
in € million<br />
31.12.<strong>2011</strong><br />
3-month Euribor + 50 30.1<br />
3-month Euribor + 100 58.5<br />
3-month Euribor - 10 (31.7)<br />
3-month Euribor<br />
31.12.2010<br />
-25 (65.1)<br />
3-month Euribor + 50 22.4<br />
3-month Euribor + 100 45.1<br />
3-month Euribor - 50 (27.8)<br />
3-month Euribor - 100 (55.5)<br />
107
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108<br />
FOREIGN CURRENCY RISK<br />
The Austrian and German subsidiaries of the <strong>conwert</strong> Group do not hold any significant borrowings<br />
in foreign currencies. Fluctuations in the Czech Krone, Slovakian Krone and Hungarian Forint<br />
versus the Euro are monitored on a regular basis because of the borrowings concluded in these<br />
currencies. The Group is therefore in a position to take immediate action in the event of negative<br />
developments. These possible foreign currency fluctuations do not have a material effect on Group<br />
earnings or equity.<br />
CREDIT RISK<br />
Credit risk represents the risk that a business partner will be unable to meet the obligations arising<br />
from a <strong>financial</strong> instrument or framework contract, and consequently bring about a <strong>financial</strong><br />
loss. Business operations expose the <strong>conwert</strong> Group to default risk as well as various risks connected<br />
with financing activities, e.g. deposits with banks and <strong>financial</strong> institutions, foreign currency<br />
transactions and other <strong>financial</strong> instruments. Credit risk, or the risk of delayed payment by a<br />
contract partner, is managed through credit examinations, credit limits and verification routines.<br />
The <strong>conwert</strong> Group only works with <strong>financial</strong> partners whose ratings have reflected a sound credit<br />
standing up to now, and credit risk is therefore limited. However, even <strong>financial</strong> partners with excellent<br />
credit ratings may carry a certain degree of credit risk and the Group therefore monitors<br />
developments on capital markets continuously. The maximum – but unlikely – credit risk equals<br />
€ 196.6 million (2010: € 169.5 million).<br />
LIQUIDITY RISK<br />
The <strong>conwert</strong> Group uses a liquidity planning tool to continuously monitor liquidity and thereby<br />
prevent a liquidity shortage. The objective of this process is to establish a balance between the<br />
continuous coverage of financing requirements and thereby maintain sufficient <strong>financial</strong> flexibility<br />
through the use of overdrafts, bank loans, bonds, preferred shares, finance leases and leasepurchase<br />
agreements. All sales of individual apartments are formalised through a notary public or<br />
attorney as the trustee in order to protect the <strong>financial</strong> assets of both the buyer and the seller. As<br />
a rule, the sales of buildings are also executed by a notary public or attorney as the trustee. Incoming<br />
payments are monitored with a treasury software tool. Liquidity flows in the rental segment<br />
are monitored by the responsible facility management companies, which make monthly transfers<br />
on account to the Group. Rents receivable are protected by deposits collected from tenants. The<br />
payment of rents is also monitored with the above-mentioned software module. As of the balance<br />
sheet date, the Group owned approximately 22,923 apartments, offices, commercial and other<br />
units as well as parking spaces. There is no tenant concentration because of the large number of<br />
units and therefore no increased liquidity risk associated with rents receivable.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
CAPITAL MANAGEMENT<br />
The <strong>conwert</strong> Group monitors its capital structure with the help of the so-called gearing ratio, which<br />
equals net debt divided by equity. Internal <strong>financial</strong> guidelines call for a ratio of 40:60% equity to<br />
debt financing, which represents a gearing ratio of 150%. This optimal financing structure will be<br />
reached over the short- to medium-term through additional project refinancing. Net debt comprises<br />
non-current interest-bearing loans and borrowings plus current trade and other payables,<br />
less cash and cash equivalents and current trade and other receivables. Equity comprises equity<br />
attributable to the equity holders of the parent and non-controlling interests<br />
in € million <strong>2011</strong> 2010<br />
Cash and cash equivalents 95.8 66.2<br />
Current trade and other receivables 96.1 99.6<br />
Current trade and other payables (462.7) (578.3)<br />
Total current net <strong>financial</strong> surplus (270.8) (412.5)<br />
Non-current payables (1,442.5) (1,606.5)<br />
Total net debt (1,713.2) (2,019.0)<br />
Equity 1,248.3 1,330.1<br />
Gearing as a % of equity 137.2 % 151.8 %<br />
The <strong>conwert</strong> Group also calculates and monitors the loan-to-value ratio of its property portfolio on<br />
a regular basis. This ratio shows the relationship between borrowings and the related collateral.<br />
The loan volume comprises non-current and current liabilities, the bond liability and the convertible<br />
bonds as well as all other types of interest-bearing loans and borrowings.<br />
in € million <strong>2011</strong> 2010<br />
<strong>Invest</strong>ment property 2,424.2 2,701.1<br />
Property held for sale 404.4 537.1<br />
Project-related financing 1,621.7 1,910.1<br />
Loan-to-value ratio in % 57.3 % 58.9 %<br />
The loan agreements concluded with financing partners often include so-called covenants, which<br />
require the <strong>conwert</strong> Group to maintain certain <strong>financial</strong> indicators at the individual loan level.<br />
These <strong>financial</strong> indicators are generally based on the ratio between the fair value of the property<br />
and the outstanding loan balance (LTV – Loan to Value) or on the earnings generated by the project<br />
that are available to service the respective loan obligations (interest coverage or debt coverage).<br />
These requirements are recorded in the information systems used by the <strong>conwert</strong> Group. The various<br />
<strong>financial</strong> covenants are monitored separately for each loan because of the different calculation<br />
requirements and parameters. The <strong>conwert</strong> Group met the provisions of all loan agreements as of<br />
31 December <strong>2011</strong> and, accordingly, no <strong>financial</strong> covenants were violated.<br />
109
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110<br />
The <strong>conwert</strong> Group also monitors the interest cover of its current and future unsecured liabilities<br />
with the indicator “funds from operations“ (“FFO“), and follows a policy that calls for a level over<br />
1.5. Interest cover on the basis of a simplified FFO calculation shows the following results:<br />
in € million <strong>2011</strong> 2010<br />
Earnings before interest and tax (EBIT) 119.8 103.2<br />
Exceptional items 0.0 (19.8)<br />
Net gain from fair value adjustments (7.8) (7.8)<br />
Negative fair value adjustments to held-for-sale properties 7.5 5.4<br />
Depreciation and amortisation 5.3 8.6<br />
Expenses from the disposal of properties 564.3 287.4<br />
Subtotal 689.1 377.0<br />
Disposals of properties at cost (528.6) (254.3)<br />
Other non-cash income/expenses 1.1 5.7<br />
Subtotal 161.6 128.4<br />
Financial results less non-cash income and plus non-cash expenses (80.3) (74.8)<br />
Funds from operations (“FFO“) 81.3 53.6<br />
Interest cover 1.8 1.6<br />
13. RELATED PARTY TRANSACTIONS<br />
For the purpose of this presentation, related parties are defined as the members of the Executive<br />
Board and the Administrative Board as well as their closely related companies and subsidiaries,<br />
joint ventures and associates.<br />
Business transactions with related parties are carried out at normal arm’s length conditions.<br />
13.1. PROVISION OF <strong>SE</strong>RVICES<br />
In <strong>2011</strong> Thomas Rohr, who served as an Executive Director of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> up to<br />
15 March <strong>2011</strong>, received commissions of € 0.6 million from the <strong>conwert</strong> Group for the brokering of<br />
property transactions. There were no such service transactions in 2010.<br />
13.2. ACQUISITION AND SALE OF PROPERTIES AND OTHER AS<strong>SE</strong>TS<br />
No properties or apartments were sold to related parties of the <strong>conwert</strong> Group in <strong>2011</strong>.<br />
13.3. OTHER <strong>SE</strong>RVICES<br />
Subsidiaries of the alt+kelber Group rent office space in 07548 Gera, Straße des Friedens 104 and<br />
Handwerkerhof 13, which are properties owned by AK Holding GmbH & Co. KG and Infrabau GmbH<br />
& Co. KG. The rents equal € 7 and € 4.55/sqm per month (net rent, excluding operating costs and<br />
VAT).<br />
Harald Nograsek was identified as a related party in his function as chairman of the management<br />
board of Österreichische Verkehrsbüro AG. This company rents space in a building owned by the<br />
<strong>conwert</strong> Group. The rent amounts to € 2.3 million per year.<br />
13.4. REMUNERATION OF PERSONS IN KEY POSITIONS<br />
in € million <strong>2011</strong> 2010<br />
Remuneration of persons in key positions of the <strong>conwert</strong> Group<br />
(active and former members)<br />
1.6 4.3<br />
Thereof current payments 0.0 0.0<br />
Thereof variable remuneration 0.3 1.6<br />
Thereof payments on the termination of employment 0.2 0.2
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
The remuneration system for the Executive Directors (key positions) consists of a fixed and a variable<br />
component. There are no stock options or pension plans.<br />
Total remuneration consists of a fixed and a variable component, whereby the variable share can<br />
range up to 50% depending on the fulfilment of targets. The criteria for the performance-based<br />
(variable) component are as follows:<br />
Up to 50% of the performance-based component will be paid out when the EBIT or NAV target is reached;<br />
30% of the performance-based component is linked to the attainment of individually defined<br />
corporate goals and 20% to individually defined, non-<strong>financial</strong> performance goals.<br />
14. INFORMATION ON BODIES OF THE CORPORATION<br />
The following persons served on the Executive Board during the reporting year:<br />
+ Jürgen F. Kelber, born 21 September 1957<br />
+ Thomas Doll, born 27 December 1965<br />
+ Volker Riebel, born 15 October 1955 (up to 6 July <strong>2011</strong>)<br />
+ Thomas Rohr, born 30 March 1965 (up to 15 March <strong>2011</strong>)<br />
The members of the Administrative Board (Non-Executive Directors) are listed below:<br />
+ Johannes Meran, born 22 February 1972 – Chairman<br />
+ Franz Pruckner, born 20 May 1956 – Vice-Chairman (Member up to 28 September <strong>2011</strong>)<br />
+ Kerstin Gelbmann, born 30 May 1974 – Member (since 28 September <strong>2011</strong>) (Vice-Chairwoman<br />
from 20 May <strong>2011</strong> to 28 September <strong>2011</strong>)<br />
+ Eveline Steinberger-Kern, born 27 January 1972 – Member (since 20 May <strong>2011</strong>)<br />
+ Alexander Tavakoli, born 6 August 1969 – Member (since 20 May <strong>2011</strong>)<br />
+ Friedrich Kadrnoska, born 28 June 1951 – Vice-Chairman (up to 20 May <strong>2011</strong>)<br />
+ Harald Nograsek, born 5 October 1958 – Member (up to 20 May <strong>2011</strong>)<br />
The members of the Administrative Board received remuneration of € 0.3 million (2010:<br />
€ 0.4 million).<br />
The remuneration scheme for the members of the Administrative Board is as follows: The chairman<br />
receives fixed remuneration of € 0.05 million per <strong>financial</strong> year; each vice-chairman receives<br />
fixed remuneration of € 0.03 million; and each ordinary member of the Administrative Board receives<br />
fixed remuneration of € 0.02 million.<br />
ADDITIONAL REMUNERATION FOR THE<br />
MEMBERS OF THE ADMINISTRATIVE BOARD COMMITTEES<br />
The chairman of the Audit Committee receives an additional payment equal to 50% of fixed remuneration.<br />
The other members of this committee receive an additional payment equal to 12.5% of<br />
fixed remuneration.<br />
In addition, each member of the Administrative Board receives a fee of € 0.003 million for each<br />
meeting attended.<br />
15. EVENTS AFTER THE BALANCE SHEET DATE<br />
In connection with the share buyback programme, 2,000 shares were repurchased between 1 January<br />
2012 and 21 March 2012 at an average price of € 7.8 per share for a total of € 15.611.8 (incl.<br />
fees). This represents 0.002% of issued capital.<br />
111
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112<br />
16. GROUP COMPANIES<br />
Companies included through full consolidation Headquarters <strong>Invest</strong>ment<br />
Austria<br />
1010 Wien, Marc-Aurel-Straße 7, <strong>Immobilien</strong>treuhand GmbH Vienna 100.00%<br />
Anton Baumgartner-Straße 125, 1230 Wien, Projektentwicklung GmbH Vienna 100.00%<br />
Bösendorferstraße 7 GmbH Vienna 100.00%<br />
Brunn am Gebirge Realbesitz GmbH Vienna 95.47%<br />
Bürocenter Raxstraße Projektentwicklungsges.m.b.H. Vienna 100.00%<br />
Bürocenter Raxstraße Projektentwicklungsges.m.b.H. & Co. KG Vienna 100.00%<br />
campus 21 GmbH Vienna 95.76%<br />
CENTUM <strong>Immobilien</strong> GmbH *) Vienna 100.00%<br />
Cicero 1 Holding GmbH Vienna 100.00%<br />
Cicero 2 Holding GmbH Vienna 100.00%<br />
Cicero 3 Holding GmbH Vienna 100.00%<br />
CHORHERR & REITER ökologische Bauprojekte GmbH Vienna 100.00%<br />
Con Tessa <strong>Immobilien</strong>verwertung GmbH Vienna 100.00%<br />
Con value one <strong>Immobilien</strong> GmbH Vienna 99.40%<br />
<strong>conwert</strong> Baudevelopment GmbH Vienna 100.00%<br />
<strong>conwert</strong> Dienstleistung und Bauträger Holding GmbH Vienna 100.00%<br />
Con Wert Handelsges.m.b.H. Vienna 100.00%<br />
<strong>conwert</strong> <strong>Immobilien</strong> GmbH & Co Alpenresidenz Gastein KG Vienna 100.00%<br />
<strong>conwert</strong> <strong>Invest</strong> GmbH Vienna 100.00%<br />
<strong>conwert</strong> Management GmbH **) Vienna 100.00%<br />
<strong>conwert</strong> Projektentwicklungs GmbH Vienna 100.00%<br />
CONWERT <strong>SE</strong>CURITISATION Holding GmbH Vienna 100.00%<br />
<strong>conwert</strong> Treasury OG Vienna 100.00%<br />
COUNTRY INN VIC Hotelerrichtungs- und Betriebsgesellschaft m.b.H. Vienna 92.00%<br />
CWG Beteiligungs GmbH Vienna 100.00%<br />
DATAREAL Beteiligungsgesellschaft m.b.H. & Co. Gablenzgasse 60 KG Vienna 100.00%<br />
DATAREAL Beteiligungsgesellschaft m.b.H. & Co. Heiligenstädter Straße 9 OG Vienna 100.00%<br />
EB <strong>Immobilien</strong> <strong>Invest</strong> GmbH Vienna 95.76%<br />
EBI Beteiligungen GmbH Vienna 95.76%<br />
EBI Beteiligungen GmbH & Co, 1190 Wien, Rampengasse 3-5, KG Vienna 95.76%<br />
EBI Beteiligungen GmbH & Co, 1110 Wien, Simmeringer Hauptstraße 24 KG Vienna 95.76%<br />
ECO Beteiligungen Holding GmbH & Co KG Vienna 95.76%<br />
ECO Business-<strong>Immobilien</strong> AG Vienna 95.76%<br />
ECO Business-<strong>Immobilien</strong>-Beteiligungen GmbH Vienna 95.76%<br />
ECO CEE & Real Estate Development GmbH Vienna 95.76%<br />
ECO Eastern Europe Real Estate GmbH Vienna 95.76%<br />
ECO Finance Holding GmbH Vienna 95.76%<br />
ECO GmbH & Co. 3580 Horn, Wilhelm-Miklas-Platz 1 OG Vienna 95.76%<br />
ECO <strong>Immobilien</strong> Verwertungs GmbH Vienna 95.76%<br />
ECO KB GmbH Vienna 95.76%<br />
ECOman GmbH Vienna 96.11%<br />
ECO Rechenzentren Vermietungs GmbH & Co KG Vienna 95.76%<br />
ECO Treasury GmbH Vienna 95.76%<br />
Epssilon Altbaudevelopment GmbH Vienna 100.00%<br />
Epssilon Liegenschaftsverwertungs und -verwaltungs GmbH Vienna 100.00%<br />
Epssilon Liegenschaftsdevelopment GmbH Vienna 100.00%<br />
Epssilon Meidlinger Hauptstr. 27 Liegenschaftsverwaltungs GmbH Vienna 100.00%<br />
Favoritenstraße 34 BeteiligungsgmbH Vienna 100.00%<br />
G1 <strong>Immobilien</strong>verwertung GmbH Vienna 100.00%<br />
Gewerbepark Urstein Projekterrichtungs GmbH Vienna 92.00%<br />
Gewerbepark Urstein Projekterrichtungs GmbH & Co KG Vienna 92.00%<br />
GGJ Beteiligungs GmbH Vienna 100.00%<br />
GGJ Beteiligungs GmbH & Co Projekt Eins OG Vienna 100.00%
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
Companies included through full consolidation Headquarters <strong>Invest</strong>ment<br />
GGJ Beteiligungs GmbH & Co Projekt Zwei OG Vienna 100.00%<br />
GGJ Beteiligungs GmbH & Co Projekt Drei OG Vienna 100.00%<br />
GGJ Beteiligungs GmbH & Co Projekt Vier OG Vienna 100.00%<br />
GGJ Beteiligungs GmbH & Co Projekt Fünf OG Vienna 100.00%<br />
GGJ Beteiligungs GmbH & Co Projekt Sechs OG Vienna 100.00%<br />
GJ-Beteiligungs GmbH Vienna 100.00%<br />
GJ-Beteiligungs GmbH & Co Projekt Fünf OG Vienna 100.00%<br />
GJ-Beteiligungs GmbH & Co. Rudolfsplatz 6 OG Vienna 100.00%<br />
G-Unternehmensbeteiligung GmbH & Co. Friedrichstraße 4 KG Vienna 100.00%<br />
G-Unternehmensbeteiligung GmbH & Co. Meidlinger Hauptstraße 19 KG Vienna 100.00%<br />
G-Unternehmensbeteiligung GmbH ***) Vienna 100.00%<br />
GK <strong>Immobilien</strong>verwertung GmbH Vienna 100.00%<br />
GKB Beteiligungs GmbH ****) Vienna 0.00%<br />
GKHK Handelsgesellschaft m.b.H. Vienna 100.00%<br />
Guess Club & Restaurant GmbH Vienna 92.00%<br />
Herbststraße 6-10 Liegenschafts GmbH Vienna 100.00%<br />
Hertha-Firnberg-Straße 10, 1100 Wien, Projektentwicklung GmbH Vienna 100.00%<br />
Hotel und Fachmarktzentrum Ansfelden GmbH Vienna 92.00%<br />
Kapital & Wert <strong>Immobilien</strong>besitz AG Vienna 95.47%<br />
Lifestyle Living GmbH Vienna 92.00%<br />
Lindau 18, Doischberg Liegenschaftsdevelopment GmbH Vienna 92.00%<br />
Lithinos <strong>Immobilien</strong> <strong>Invest</strong> GmbH Vienna 100.00%<br />
MAHIS Consulting GmbH Vienna 100.00%<br />
Mariahilferstraße 156 <strong>Invest</strong> GmbH Vienna 100.00%<br />
MEZ - Vermögensverwaltungs Gesellschaft m.b.H. Vienna 95.76%<br />
mog-Projektentwicklung GmbH Vienna 100.00%<br />
PI Beteiligungen GmbH Vienna 95.76%<br />
PI Eggenberger Allee 49 GmbH & Co OG Vienna 95.76%<br />
PI <strong>Immobilien</strong> GmbH Vienna 95.76%<br />
PI Grabmayr-Straße 4 GmbH & Co OG Vienna 95.76%<br />
PI Gudrunstraße 124 / Keplerplatz 14 GmbH & Co OG Vienna 95.76%<br />
PI Marktstraße 6 GmbH & Co OG Vienna 95.76%<br />
PI Stubenring 2 GmbH & Co OG Vienna 95.76%<br />
Radetzkystraße 15+17, 1030 Wien, Projektentwicklung GmbH Vienna 100.00%<br />
RESAG <strong>Immobilien</strong>makler GmbH ******) Vienna 49.00%<br />
RESAG Insurance Broker GmbH Vienna 100.00%<br />
RESAG Property Management GmbH Vienna 100.00%<br />
RG <strong>Immobilien</strong> GmbH Vienna 100.00%<br />
Roßauer Lände 47 - 49 Liegenschaftsverwaltungs GmbH Vienna 100.00%<br />
Schmalzhofgasse 26 Liegenschaftsentwicklungs GmbH & Co. KG Vienna 100.00%<br />
S-H Vermögensverwaltungs GmbH Vienna 100.00%<br />
SHG 6 <strong>Immobilien</strong>entwicklungs GmbH Vienna 100.00%<br />
Stadiongasse 4 Liegenschaftsverwertungs GmbH Vienna 100.00%<br />
Steinamangererstraße 189 und 191 Liegenschafts GmbH Vienna 100.00%<br />
Stubenbastei 10 und 12 <strong>Immobilien</strong> GmbH Vienna 100.00%<br />
St. Magdalen Projektentwicklungs- und Verwertungsgesellschaft m.b.H. Vienna 95.76%<br />
Teinfaltstraße 9 Liegenschafts GmbH Vienna 100.00%<br />
Themelios <strong>Immobilien</strong> <strong>Invest</strong> GmbH Vienna 100.00%<br />
TPI <strong>Immobilien</strong> Holding GmbH Vienna 92.00%<br />
TPW <strong>Immobilien</strong> GmbH Vienna 95.76%<br />
TPI Tourism Properties <strong>Invest</strong> AG Vienna 92.00%<br />
T-Unternehmensbeteiligung GmbH ***) Vienna 100.00%<br />
Universitätsstraße 5 Liegenschafts GmbH Vienna 100.00%<br />
Waldvilla Velden GmbH Vienna 92.00%<br />
Wienerstraße 196-198 Development GmbH Vienna 92.00%<br />
WZH Projektentwicklung GmbH Vienna 100.00%<br />
113
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
114<br />
Companies included through full consolidation Headquarters <strong>Invest</strong>ment<br />
Germany<br />
alt+kelber <strong>Immobilien</strong>gruppe GmbH Heilbronn 100.00%<br />
alt+kelber <strong>Immobilien</strong>management GmbH Heilbronn 100.00%<br />
alt+kelber <strong>Immobilien</strong>verwaltung GmbH Heilbronn 100.00%<br />
alt+kelber <strong>Immobilien</strong>vertrieb GmbH Heilbronn 100.00%<br />
Defida Verwaltungs GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> & kelber Besitz 10/2007 GmbH Heilbronn 99.79%<br />
<strong>conwert</strong> & kelber Besitz 11/2007 GmbH Heilbronn 99.79%<br />
<strong>conwert</strong> & kelber Bestand 10/2007 GmbH Heilbronn 99.79%<br />
<strong>conwert</strong> Alfhild <strong>Invest</strong> GmbH Grünwald 99.79%<br />
<strong>conwert</strong> Alfhild II <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> alpha <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Aries <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Berlin 2 <strong>Immobilien</strong> <strong>Invest</strong> GmbH Berlin 94.90%<br />
<strong>conwert</strong> beta <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Capricornus <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Carina <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Cassiopeia <strong>Invest</strong> GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> Centaurus <strong>Invest</strong> GmbH *****) Berlin 100.00%<br />
<strong>conwert</strong> delta <strong>Invest</strong> GmbH Berlin 75.00%<br />
<strong>conwert</strong> Corvus <strong>Invest</strong> GmbH Heilbronn 99.75%<br />
<strong>conwert</strong> Deutschland Beteiligungsholding GmbH Berlin 100.00%<br />
<strong>conwert</strong> Deutschland Holding GmbH Berlin 100.00%<br />
<strong>conwert</strong> Deutschland Holding GmbH & Co. KG Heilbronn 100.00%<br />
<strong>conwert</strong> Deutschland <strong>Immobilien</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Dresden Drei <strong>Invest</strong> GmbH Berlin 51.00%<br />
<strong>conwert</strong> Dresden <strong>Invest</strong> GmbH Berlin 51.00%<br />
<strong>conwert</strong> Dresden Zwei <strong>Invest</strong> GmbH Berlin 51.00%<br />
<strong>conwert</strong> Dresden Vier <strong>Invest</strong> GmbH Berlin 51.00%<br />
<strong>conwert</strong> Dresden Fünf <strong>Invest</strong> GmbH Berlin 51.00%<br />
<strong>conwert</strong> Eisa <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> Eisa II <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> Eisa III <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> Elbflorenz <strong>Invest</strong> GmbH Berlin 51.00%<br />
<strong>conwert</strong> epsilon <strong>Invest</strong> GmbH *****) Berlin 100.00%<br />
<strong>conwert</strong> Epitaurus <strong>Invest</strong> GmbH Grünwald 94.00%<br />
<strong>conwert</strong> Fenja <strong>Invest</strong> GmbH Grünwald 99.79%<br />
<strong>conwert</strong> gamma <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Gemini <strong>Invest</strong> GmbH *****) Berlin 100.00%<br />
<strong>conwert</strong> Grazer Damm Development GmbH Berlin 100.00%<br />
<strong>conwert</strong> Grundbesitz Leipzig Besitz GmbH Leipzig 100.00%<br />
<strong>conwert</strong> Grundbesitz Leipzig Bestand GmbH *****) Leipzig 100.00%<br />
<strong>conwert</strong> Hulda <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> <strong>Immobilien</strong> Development GmbH Berlin 100.00%<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> GmbH Berlin 94.90%<br />
<strong>conwert</strong> Kirchsteigfeld Beteiligungs GmbH Berlin 100.00%<br />
<strong>conwert</strong> Kirchsteigfeld 11 <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Kirchsteigfeld 12 <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Kirchsteigfeld 13 <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Kirchsteigfeld 14 <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Kirchsteigfeld 15 <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Kirchsteigfeld 16 <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Kirchsteigfeld 17 <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Kirchsteigfeld 18 <strong>Invest</strong> GmbH Berlin 100.00%
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
Companies included through full consolidation Headquarters <strong>Invest</strong>ment<br />
<strong>conwert</strong> Kirchsteigfeld 19 <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> lambda <strong>Invest</strong> GmbH Berlin 75.00%<br />
<strong>conwert</strong> Leo <strong>Invest</strong> GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> Lepus <strong>Invest</strong> GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> Libra <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> omega <strong>Invest</strong> GmbH *****) Berlin 100.00%<br />
Deutsche Heimstätten omega GmbH & Co. KG Heilbronn 100.00%<br />
<strong>conwert</strong> Pegasus <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Perseus <strong>Invest</strong> GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> Phoenix <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Sachsen <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Scorpius <strong>Invest</strong> GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> Seniorenzentrum Berlin <strong>Immobilien</strong> GmbH Heilbronn 92.00%<br />
<strong>conwert</strong> sigma <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Taurus <strong>Invest</strong> GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> Thüringen Portfolio GmbH Berlin 100.00%<br />
<strong>conwert</strong> Vela <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Viktoria Quartier <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Virgo <strong>Invest</strong> GmbH Berlin 100.00%<br />
<strong>conwert</strong> Wali <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> Wali II <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> Wali III <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> Wara <strong>Invest</strong> GmbH Grünwald 99.79%<br />
<strong>conwert</strong> Wara II <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> Wara III <strong>Invest</strong> GmbH Grünwald 100.00%<br />
<strong>conwert</strong> Beteiligungsgesellschaft Fonds GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> Wohn-Fonds GmbH Heilbronn 100.00%<br />
<strong>conwert</strong> Wölva <strong>Invest</strong> GmbH Grünwald 99.79%<br />
Defida 2016 GmbH & Co KG Heilbronn 95.90%<br />
Diak-Nd Pflege-Altenheime Besitz GmbH Heilbronn 92.22%<br />
Dinami GmbH Grünwald 95.77%<br />
GAG Grundstücksverwaltungs GmbH Heilbronn 99.79%<br />
ECO Business-<strong>Immobilien</strong> Deutschland GmbH Grünwald 95.77%<br />
ECO Business-Immobilie Saarbrücken GmbH & Co. KG Grünwald 95.78%<br />
ECO Büroimmobilien GmbH & Co. KG Grünwald 95.78%<br />
ECO Büroimmobilie Darmstadt GmbH & Co. KG Grünwald 95.78%<br />
ECO Büroimmobilie Starnberg Percha GmbH & Co. KG Grünwald 95.78%<br />
ECO Büroimmobilie Starnberg Petersbrunner Straße GmbH & Co. KG Grünwald 95.78%<br />
ECO Einkaufszentrum Meitingen GmbH & Co. KG Grünwald 95.78%<br />
ECO Fachmarktzentren GmbH & Co. KG Grünwald 95.78%<br />
ECO Fachmarktzentrum Geiselhöring GmbH & Co. KG Grünwald 95.78%<br />
ECO Fachmarktzentrum Naabtalcenter GmbH & Co. KG Grünwald 95.78%<br />
ECO Fachmarktzentrum Pocking GmbH & Co. KG Grünwald 95.78%<br />
ECO Fachmarktzentrum Tittling GmbH Grünwald 95.77%<br />
ECO Real Estate Deutschland GmbH Grünwald 95.77%<br />
IESA <strong>Immobilien</strong> Entwicklung Sachsen GmbH Berlin 51.00%<br />
KKS Projektentwicklung GmbH Heilbronn 99.79%<br />
Projektgesellschaft Kreiller Str. 215 mbH Grünwald 95.78%<br />
Projektgesellschaft Nymphe 82 mbH Grünwald 95.76%<br />
Seniorenresidenz Köln <strong>Immobilien</strong> GmbH Heilbronn 100.00%<br />
115
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
116<br />
Companies included through full consolidation Headquarters <strong>Invest</strong>ment<br />
Czech Republic / Slovakia<br />
<strong>conwert</strong> sk 01 s.r.o. Bratislava 100.00%<br />
<strong>conwert</strong> sk 02 s.r.o. Bratislava 85.00%<br />
<strong>conwert</strong> sk s.r.o. Bratislava 100.00%<br />
CWIcz brno, s.r.o. Brno 100.00%<br />
CWI-<strong>Invest</strong> s.r.o. Brno 100.00%<br />
<strong>conwert</strong> <strong>Invest</strong> s.r.o. Brno 92.00%<br />
JCB <strong>Invest</strong> s.r.o. Brno 100.00%<br />
NB <strong>Invest</strong> s.r.o. Brno 100.00%<br />
NB-Správa nemovitostí s.r.o. Brno 100.00%<br />
Odcz brno, s.r.o. Brno 100.00%<br />
Pd sk bratislava s.r.o. Bratislava 60.00%<br />
Pdcz brno s.r.o. Brno 60.00%<br />
Weka Real s.r.o. Brno 100.00%<br />
Správa bytov Conwert s.r.o. Bratislava 100.00%<br />
Hungary<br />
Bokréta Alfa Ingatlanforgalmazo Kft Budapest 100.00%<br />
BOKRÉTA Management Kft Budapest 70.00%<br />
Immo-Rohr Kft Budapest 100.00%<br />
Immo-Rohr Plusz Kft Budapest 100.00%<br />
Klauzál u. 7 - 9 Projekt Kft. Budapest 57.70%<br />
My-Box Debrecen Ingalan-fejlesztö Korlátolt Felelösségü Társaság Budapest 95.76%<br />
Cyprus<br />
Graforco <strong>Invest</strong>ments Limited Nicosia 95.76%<br />
Ukraine<br />
Ukrainska Comertsiina Nerukhomist Zaporizhzhya 95.76%<br />
Luxembourg<br />
ECO Real Estate Luxembourg S.à.r.l. Luxembourg 95.76%<br />
Companies included through proportionate consolidation<br />
Germany<br />
Tizian Wohnen 1 GmbH Berlin 34.00%<br />
Tizian Wohnen 2 GmbH Berlin 34.00%<br />
CD Deutsche Eigenheim AG Berlin 25.00%<br />
Initial consolidations (incl. newly founded companies)<br />
Netherlands<br />
Goudsmitplein Beheer B.V. Baarn 19.73%<br />
Germany<br />
cor 18. GmbH & Co KG Berlin 94.90%<br />
<strong>conwert</strong> goud <strong>Invest</strong> GmbH Berlin 15.52%
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Notes<br />
Deconsolidations<br />
Czech Republic<br />
PDcz MAGNUM a.s. Brno 50.00%<br />
Austria<br />
Waldvilla Velden Targex Management- und UnternehmensberatungsgmbH & Co KG Velden 92.00%<br />
Rudolfsplatz 13A Liegenschafts GmbH Vienna 100.00%<br />
Berolinum Liegenschaften Eins GmbH Vienna 100.00%<br />
Berolinum Liegenschaften Zwei GmbH Vienna 100.00%<br />
Berolinum Liegenschaften Drei GmbH Vienna 100.00%<br />
Germany<br />
<strong>conwert</strong> goud <strong>Invest</strong> GmbH Berlin 15.52%<br />
Netherlands<br />
Goudsmitplein Beheer B.V. Baarn 19.73%<br />
Restructured companies<br />
Austria<br />
<strong>conwert</strong> Bauträger GmbH Vienna 100.00%<br />
cw Bauträger Projekt Zwei GmbH Vienna 100.00%<br />
cw Bauträger Projekt Eins GmbH Vienna 100.00%<br />
ECO Management GmbH Vienna 100.00%<br />
ECO Beteiligungen GmbH & Co Schönbrunner Allee 18 OG Vienna 95.76%<br />
GETINA <strong>Immobilien</strong>-Management GmbH Vienna 95.76%<br />
GJ-Beteiligungs GmbH & Co Projekt Zwei GmbH Vienna 100.00%<br />
ECO Holding GmbH Vienna 95.76%<br />
LLL Luxury Living Liegenschaftsentwicklungs GmbH Vienna 100.00%<br />
Berolinum Liegenschaftsbesitz GmbH Vienna 100.00%<br />
Germany<br />
LIBRE <strong>Immobilien</strong> <strong>Invest</strong> GmbH Berlin 100.00%<br />
alt+kelber Wohninvest GmbH Heilbronn 100.00%<br />
alt+kelber <strong>Immobilien</strong>kontor GmbH Gera 100.00%<br />
alt+kelber Eigenheim GmbH Heilbronn 100.00%<br />
Janus <strong>Invest</strong> GmbH Grünwald 100.00%<br />
*) Owns three limited partnerships<br />
**) One branch in Germany<br />
***) <strong>Invest</strong>ment held through trustee<br />
****) Included through agreement under the law of obligations<br />
*****) <strong>conwert</strong> omega <strong>Invest</strong> GmbH, <strong>conwert</strong> Centaurus <strong>Invest</strong> GmbH, <strong>conwert</strong> Gemini <strong>Invest</strong> GmbH, <strong>conwert</strong> Grundbesitz<br />
Leipzig Bestand GmbH and <strong>conwert</strong> epsilon <strong>Invest</strong> GmbH together own 27 limited partnershps<br />
******) <strong>Invest</strong>ment of 49% included through full consolidation due to control relationship<br />
These consolidated <strong>financial</strong> <strong>statement</strong>s were completed and signed by the Executive Board of<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> and released by the Administrative Board on 26 March 2012.<br />
Vienna, 26 March 2012<br />
The Executive Directors of<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
Thomas Doll m.p. Jürgen F. Kelber m.p.<br />
117
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
118<br />
AUDITORS’ REPORT (REPORT OF THE INDEPENDENT AUDITORS) *)<br />
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS<br />
“We have audited the accompanying consolidated <strong>financial</strong> <strong>statement</strong>s of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong>, Wien and its subsidiaries<br />
(hereinafter referred to as “the Company”), for the <strong>financial</strong> year from 1 January <strong>2011</strong> to 31 December <strong>2011</strong>. These consolidated <strong>financial</strong><br />
<strong>statement</strong>s comprise the consolidated balance sheet as at 31 December <strong>2011</strong>, the consolidated income <strong>statement</strong> and the<br />
consolidated <strong>statement</strong> of comprehensive income, the consolidated cash flow <strong>statement</strong> and the consolidated <strong>statement</strong> of changes<br />
in equity for the year ended 31 December <strong>2011</strong>, and a summary of significant accounting policies and other explanatory notes.<br />
Management’s responsibility for the consolidated <strong>financial</strong> <strong>statement</strong>s and for the group accounting<br />
The management of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> is responsible for the group accounting as well as the preparation and fair<br />
presentation of these consolidated <strong>financial</strong> <strong>statement</strong>s in accordance with International Financial Reporting Standards (IFRS) as<br />
adopted by the EU. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation<br />
and fair presentation of <strong>financial</strong> <strong>statement</strong>s that are free from material mis<strong>statement</strong>, whether due to fraud or error; selecting<br />
and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.<br />
Auditors’ responsibility and description of the type and extent of the statutory audit<br />
Our responsibility is to express an opinion on these consolidated <strong>financial</strong> <strong>statement</strong>s based on our audit. We conducted our audit<br />
in accordance with laws and regulations applicable in Austria and in accordance with International Standards on Auditing, issued<br />
by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). Those<br />
standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance<br />
whether the <strong>financial</strong> <strong>statement</strong>s are free from material mis<strong>statement</strong>.<br />
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated <strong>financial</strong><br />
<strong>statement</strong>s. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material mis<strong>statement</strong><br />
of the <strong>financial</strong> <strong>statement</strong>s, whether due to fraud or error. In making those risk assessments, the auditor considers<br />
internal control relevant to the entity’s preparation and fair presentation of the consolidated <strong>financial</strong> <strong>statement</strong>s in order to<br />
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness<br />
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the<br />
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated<br />
<strong>financial</strong> <strong>statement</strong>s.<br />
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.<br />
Opinion<br />
Our audit did not give rise to any objections. Based on the results of our audit in our opinion, the consolidated <strong>financial</strong> <strong>statement</strong>s<br />
present fairly, in all material respects, the <strong>financial</strong> position of the group as of 31 December <strong>2011</strong>, and of its <strong>financial</strong> performance<br />
and its cash flows for the <strong>financial</strong> year from 1 January <strong>2011</strong> to 31 December <strong>2011</strong> in accordance with International Financial<br />
Reporting Standards (IFRS) as adopted by the EU.<br />
Statement on the consolidated management report<br />
Laws and regulations applicable in Austria require us to perform audit procedures to determine whether the consolidated management<br />
report is consistent with the consolidated <strong>financial</strong> <strong>statement</strong>s and whether the other disclosures made in the consolidated<br />
management report are misleading to the group’s position. The audit report must also include a <strong>statement</strong> as to whether<br />
the consolidated management report is consistent with the consolidated <strong>financial</strong> <strong>statement</strong>s and if the disclosures pursuant to<br />
section 243a UGB are appropriate.<br />
In our opinion, the consolidated management report for the group is consistent with the consolidated <strong>financial</strong> <strong>statement</strong>s. The<br />
disclosures pursuant to section 243a UGB are appropriate.”<br />
Vienna, 26 March 2012<br />
Ernst & Young<br />
Wirtschaftsprüfungsgesellschaft m.b.H<br />
Alexander Wlasto m.p. Hans-Erich Sorli m.p.<br />
Wirtschaftsprüfer Wirtschaftsprüfer<br />
1) The report (in the German language, or translations into another language, including shortened or amended versions) may not be made public or used by third parties,<br />
when reference is made in part or in whole to the auditor’s report, without the express written consent of the auditors.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Auditors‘ Report<br />
Report of the Administrative Board<br />
REPORT OF THE ADMINISTRATIVE BOARD<br />
(IN ACCORDANCE WITH § 41 OF THE AUSTRIAN SOCIETAS EUROPAEA ACT)<br />
The Administrative Board performed the duties required by law and the articles of association,<br />
strategically managed the company and conducted its business together with the Executive Directors<br />
during the <strong>2011</strong> <strong>financial</strong> year. Moreover, the Administrative Board monitored the daily operating<br />
activities that were delegated to the Executive Board and provided advice and support to the Executive<br />
Board for this work. At Administrative Board meetings and on other occasions, the Executive Board<br />
supplied the Administrative Board with regular and extensive information in oral or written form on<br />
operating activities, the <strong>financial</strong> position of the company and development of the Group.<br />
Kerstin Gelbmann, Eveline Steinberger-Kern and Alexander Tavakoli were elected new members of<br />
the Administrative Board at the Annual General Meeting on 20 May <strong>2011</strong> At the constituent meeting<br />
subsequent to the Annual General Meeting, Kerstin Gelbmann was elected Vice-Chairwoman and<br />
Chairwoman of the Audit Committee. At the same time, Friedrich Kadrnoska and Harald Nograsek<br />
resigned from their mandate as members of the Administrative Board at the end of the Annual<br />
General Meeting, which had to resolve on the <strong>financial</strong> <strong>statement</strong>s of the <strong>financial</strong> year 2010. In the<br />
course of these new appointments, Johannes Meran was confirmed as Chairman of the Administrative<br />
Board and Vice-Chairman of the Audit Committee. At the meeting of the Administrative Board on<br />
28 September <strong>2011</strong>, Franz Pruckner was elected new Vice-Chairman of the Administrative Board and<br />
Chairman of the Audit Committee. The Administrative Board thus consists of the following members:<br />
+ Johannes Meran, Chairman of the Administrative Board<br />
+ Franz Pruckner, Vice-Chairman of the Administrative Board<br />
+ Kerstin Gelbmann, Member<br />
+ Eveline Steinberger-Kern, Member<br />
+ Alexander Tavakoli, Member<br />
The Administrative Board therefore consisted of five members as of 31 December 2010 and held<br />
15 meeting during the <strong>2011</strong> <strong>financial</strong> year.<br />
At its meeting on 25 January <strong>2011</strong> the Administrative Board adopted the resolution to deal with all<br />
matters which fall under its scope of responsibility in its entirety in the future and to abolish all<br />
committees with the exception of the legally required Audit Committee. All five Administrative Board<br />
members were members of the Audit Committee during the entire year <strong>2011</strong>.<br />
The focus of the work of the Administrative Board was of course placed on the property business in its<br />
scope of competence again in the year <strong>2011</strong>. As the Property Committee no longer exists, the entire<br />
Administrative Board now had to consider any property investment with a value of more than EUR 3<br />
million in accordance with the rules of procedure. In the <strong>financial</strong> year <strong>2011</strong>, the Administrative Board<br />
adopted a total of 59 resolutions at 15 meetings and 31 resolutions by circulation.<br />
The Audit Committee discussed the <strong>annual</strong> and consolidated <strong>financial</strong> <strong>statement</strong>s including the<br />
management reports, the Corporate Governance Report, as well as the audit reports and the<br />
management letter issued by the auditor, and reported to the Administrative Board on these<br />
documents. The Audit Committee was also responsible for the selection of the auditor, negotiations<br />
to determine the auditor’s fee, the preparation of the audit schedule for the reporting year as well as<br />
the essential results of the audit. The Audit Committee met twice.<br />
The <strong>annual</strong> <strong>financial</strong> <strong>statement</strong>s and the management report of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> for<br />
the 2010 <strong>financial</strong> year as well as the consolidated <strong>financial</strong> <strong>statement</strong>s and the group management<br />
report of the <strong>conwert</strong> Group for the 2010 <strong>financial</strong> year, which were prepared by the Executive Board,<br />
were audited by Ernst & Young Wirtschaftsprüfungsgesellschaft mbH. This audit provided no grounds<br />
for objections. The auditor has therefore confirmed that the <strong>annual</strong> <strong>financial</strong> <strong>statement</strong>s of <strong>conwert</strong><br />
<strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> comply with the principles of correct bookkeeping and provide a true and fair<br />
view of the asset, <strong>financial</strong> and earnings position of the company, and that the management report<br />
agrees with the <strong>annual</strong> <strong>financial</strong> <strong>statement</strong>s. The consolidated <strong>financial</strong> <strong>statement</strong>s were audited<br />
on the basis of the International Standards on Auditing issued by the International Federation of<br />
Accountants (IFAC) and considered to be in accordance with these rules. Accordingly, the auditor has<br />
issued an unqualified opinion in each case.<br />
The compliance audit of the Corporate Governance Report in accordance with §243b of the Austrian<br />
Commercial Code (UGB) was performed by Univ. Prof. DDr. Waldemar Jud Corporate Governance<br />
Forschung CGF GmbH, and the results provided no grounds for material objections.<br />
119
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
120<br />
The Executive Board proposed to use the profit of the <strong>financial</strong> year starting on 1 January <strong>2011</strong> and<br />
ending on 31 December <strong>2011</strong> to the amount of 30,098,111.35 € as follows: For each share of the<br />
company which is entitled to dividend at the time of the adoption of the resolution regarding the<br />
appropriation of accumulated profit (i.e. on the day of the Annual General Meeting of the Company,<br />
hence 31 May 2012) a dividend of 0.20 € will be paid. The total dividend paid will thus result from the<br />
multiplication of the amount of 0.20 € by the number of shares of the company which are entitled to<br />
dividend on the day of the resolution on the appropriation of the accumulated profit. The remaining<br />
part of the profit will be carried forward. The Administrative Board agrees with this proposal of the<br />
Executive Board. On 21 March 2012, 17:45 (close of the market) the company held a total of 3,863,964<br />
treasury shares, which are not entitled to a dividend, so that the total of the dividend payment would<br />
currently amount to 16,299,061.80 € and the portion of accumulated profit to be carried forward<br />
would amount to 13,799,049.55 €. If the number of treasury shares held by the company increases<br />
until the day of the Annual General Meeting, 31 May 2012, no dividend will be paid for that part of<br />
accumulated profit which is accounted for by treasury shares additionally acquired between the time<br />
the proposal for the appropriation of accumulated profit was made and the Annual General Meeting;<br />
rather, it will be carried forward. If the number of treasury shares held by the company declines<br />
until the day of the Annual General Meeting, a dividend will be paid for that part of the accumulated<br />
profit which is accounted for by these treasury shares, as far as this is required for the payment of a<br />
dividend to the amount of 0.20 € per share entitled to dividend. The remaining part of accumulated<br />
profit will be carried forward.<br />
A review of the individual and consolidated <strong>financial</strong> <strong>statement</strong>s and an audit of the respective<br />
management reports and the Corporate Governance reports in accordance with § 41 (2) of the<br />
Austrian Societas Europaea Act provided no grounds for objections. The Administrative Board has<br />
approved the individual and consolidated <strong>financial</strong> <strong>statement</strong>s, which are considered authorised in<br />
accordance with § 41 (4) of the Austrian Societas Europaea Act.<br />
The Administrative Board would like to thank the Executive Board and all employees of the <strong>conwert</strong><br />
Group for their commitment and their work.<br />
Vienna, 26 March 2012<br />
On behalf of the Administrative Board<br />
Johannes Meran<br />
Chairman of the Administrative Board
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Report of the Administrative Board<br />
Corporate Governance<br />
CORPORATE GOVERNANCE REPORT<br />
Corporate Governance represents an important tool for <strong>conwert</strong> to ensure transparent management<br />
aimed at sustainable value creation. Therefore, <strong>conwert</strong> was the first Austrian property company<br />
to commit to compliance with the Austrian Code of Corporate Governance (CGC) on a voluntary<br />
basis in the year 2005. The CGC contains the international standards for good management and<br />
provides a framework for the management and monitoring of business activities by Austrian stock<br />
corporations and European stock corporations that are listed on the stock exchange in Austria. The<br />
Austrian Code of Corporate Governance is available on the website www.corporate-governance.at.<br />
The Code in the version of January 2010 comprises a total of 83 rules, which consist of L-Rules,<br />
C-Rules and R-Rules. L-Rules are based on mandatory Austrian legal requirements and must therefore<br />
be complied with. C-Rules represent standards that should be complied with. Any deviations<br />
must be explained in order to ensure compliance with the Code. R-Rules are recommendations;<br />
deviations do not have to be disclosed or explained. <strong>conwert</strong> applied the Austrian Code of Corporate<br />
Governance in the <strong>financial</strong> year <strong>2011</strong> and had compliance with the provisions of the Code evaluated<br />
externally by Univ. Prof. DDr. Waldemar Jud Corporate Governance Forschung CGF GmbH.<br />
For <strong>conwert</strong> as a monistic Societas Europaea (<strong>SE</strong>), all rules of the CGC relating to the Management<br />
Board and Supervisory Board are applicable mutatis mutandis to the Executive Board and the<br />
Administrative Board. Therefore, the following principles are considered in the application of the<br />
CGC to <strong>conwert</strong>:<br />
+ The assignment of the individual Code rules relating to the Administrative Board and/or Executive<br />
Directors reflects the intent of the Code as well as the division of responsibilities within the<br />
corporate bodies of the <strong>SE</strong>.<br />
+ The rules of behaviour defined by the CGC for Supervisory Boards fall under the general<br />
responsibility of the Administrative Board.<br />
+ The rules of behaviour defined by the CGC for Management Boards fall under the general<br />
responsibility of the Executive Board; activities allocated to the Administrative Board by law or<br />
internal rules governing the allocation of authority fall under the competence/responsibility of<br />
the Administrative Board.<br />
EXECUTIVE BOARD<br />
Thomas Doll<br />
born on 27.12.1965<br />
Jürgen F. Kelber<br />
born on 21.09.1957<br />
Responsible for First appointed Other functions in supervisory or Administrative Boards or<br />
comparable functions in other Austrian or foreign subsidiaries not<br />
included in the consolidated <strong>financial</strong> <strong>statement</strong>s<br />
Finance, controlling/risk management/ICS,<br />
group accounting and tax,<br />
legal matters and investments,<br />
corporate communications IT and personnel<br />
Operating segments portfolio management,<br />
services, sale of properties,<br />
group organisation,<br />
funds/investment products, acquisitions,<br />
procurement and sales management<br />
On 1 September 2010<br />
for a period of 4 years<br />
On 14 December 2007<br />
for a period of 5 years<br />
THE FOLLOWING PERSONS RESIGNED FROM THE EXECUTIVE BOARD IN THE FINANCIAL YEAR <strong>2011</strong>:<br />
Thomas Rohr<br />
born on 30.03.1965<br />
Volker Riebel<br />
born on 15.10.1955<br />
Responsible for First appointed Other functions in supervisory or Administrative Boards or<br />
comparable functions in other Austrian or foreign subsidiaries not<br />
included in the consolidated <strong>financial</strong> <strong>statement</strong>s<br />
Region Austria (apartment buildings,<br />
commercial – sales and investment)<br />
Strategy, legal matters and investments,<br />
quality assurance, corporate communications,<br />
audit, personnel and purchasing<br />
From 1 March 2009<br />
to March <strong>2011</strong><br />
From 1 January <strong>2011</strong><br />
to 6 July <strong>2011</strong><br />
None<br />
None<br />
None<br />
+ AVW Assekuranzvermittlung der Wohnungswirtschaft GmbH & Co KG,<br />
Chairman of the Supervisory Board<br />
+ AVW Versicherungsmakler GmbH, Chairman of the Supervisory Board<br />
121
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
122<br />
The Executive Board currently consists of Jürgen F. Kelber in the function of COO and Thomas Doll<br />
in the function of CFO. After the resignations of Volker Riebel as CEO as of 6 July <strong>2011</strong> and of Thomas<br />
Rohr as Regional Manager Austria as of 15 March <strong>2011</strong>, the Administrative Board reduced the<br />
Executive Board to two members based on a unanimous decision. The responsibilities of Volker<br />
Riebel and Thomas Rohr were distributed to the remaining two directors. No successors were<br />
appointed since the Administrative Board of a single-tier <strong>SE</strong> like <strong>conwert</strong> is involved more strongly<br />
in the operating activities of the company. The responsibilities of Thomas Rohr as the regional<br />
manager for Austria were transferred to Jasmin Soravia, the new regional manager for Austria, in<br />
early January 2012. All strategic tasks of Volker Riebel were taken over by Thomas Doll, while his<br />
operating tasks, for example purchasing, now fall under the responsibility of Jürgen Kelber. The<br />
group strategy and internal audit have since been the responsibility of the Administrative Board.<br />
PROCEDURES OF THE EXECUTIVE BOARD<br />
The Executive Board conducts the business of the company in accordance with the law, the articles of<br />
association and the rules of procedure for the Executive Board. It currently consists of two persons,<br />
Thomas Doll (CFO) and Jürgen F. Kelber (COO). The meetings of the Executive Board, which are<br />
held regularly, serve for mutual information and decision-making on all matters which are subject<br />
to the approval of this corporate body. The rules of procedure of the Executive Board include the<br />
obligation to inform and report to the Administrative Board as well as a catalogue of measures,<br />
which absolutely require the approval of the Administrative Board.<br />
REMUNERATION OF THE EXECUTIVE BOARD<br />
Total remuneration consists of a fixed component and a variable component or profit sharing plan.<br />
Various qualitative and quantitative criteria are decisive for the granting of the performance-linked<br />
component. Depending on the accomplishment of the criteria, the variable portion of the remuneration<br />
may amount to up to 100% of the fixed component. The performance-linked component of<br />
remuneration is made up as follows:<br />
(1) Accomplishment of EBIT target (25% profit sharing),<br />
(2) Accomplishment of NAV target (also 25% profit sharing),<br />
(3) Accomplishment of individual targets defined by the Administrative Board (20% variable profit<br />
sharing) and<br />
(4) Accomplishment of interdepartmental, long-term, multi-year sustainable targets (30% profit<br />
sharing), which were also determined together with the Administrative Board.<br />
These variable, performance-linked components of remuneration were revised for the year <strong>2011</strong><br />
and for the two Executive Directors, Thomas Doll and Jürgen F. Kelber.<br />
The following variable performance-based model was applicable for Thomas Rohr, who resigned<br />
as an Executive Director in the year <strong>2011</strong>: 50% of the performance-based component was payable<br />
if the weighted average share price increased by 10% in a year; another 50% was payable if<br />
earnings per share increased by 10% in a <strong>financial</strong> year. The following regulation was applicable<br />
for Volker Riebel: The performance-based remuneration, i.e. both the cash bonus and the share<br />
bonus, depended on the following parameters:<br />
(a.) 25% on the increase in the average share price of the company in a <strong>financial</strong> year,<br />
(b.) 50% on the profitability (margin and volume) realised by the company in a <strong>financial</strong> year, and<br />
(c.) 25% exclusively at the discretion of the Administrative Board of the company.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Corporate Governance<br />
Volker Riebel and Thomas Rohr were each granted voluntary termination payments in addition to<br />
the variable component under this section.<br />
REMUNERATION <strong>2011</strong> (IN €)<br />
Fixed component Variable component Remuneration<br />
in kind<br />
Thomas Doll 224,000 168,750 7,374 400,124<br />
Jürgen F. Kelber 430,629 252,000 7,709 690,338<br />
Thomas Rohr 110,007 218,750 9,168 162,925<br />
Volker Riebel 203,518 190,000 8,679 212,197<br />
Total Executive Directors 968,154 829,500 32,930 1,830,584<br />
Members who resign from the Executive Board are entitled to severance compensation:<br />
+ Severance compensation following premature retirement:<br />
In the case of premature termination of their term of office, Executive Directors are – depending<br />
on their contract – entitled to the remuneration they would have received if they had fulfilled their<br />
term of office until the expiry of the term; in the case of contracts concluded after 31 December<br />
2009, they are entitled a payment of a minimum of one, but a maximum of two <strong>annual</strong> gross<br />
salaries. The payment must be effected as a single payment and is due for payment to the<br />
resigned Executive Director without a discount at the date of termination. If the term of office is<br />
terminated prematurely for an important reason to be justified by the Executive Director, there<br />
is no entitlement to a termination payment. There are no separate regulations for severance<br />
compensation in the case of a change of control. The agreements on severance compensation<br />
made on the occasion of the premature termination of the function as an Executive Director<br />
take into account the circumstances of the resignation of the relevant Executive Director and the<br />
economic situation of the company.<br />
+ Severance compensation when a contract is not renewed or the member retires:<br />
A member of the Executive Board is entitled to severance compensation if his/her employment<br />
ceases at the end of the term of office because the Administrative Board has not offered to renew<br />
the previous contract or to conclude a new contract under the same conditions, or has not<br />
reappointed the member concerned for a further term. This severance compensation equals six<br />
months’ gross remuneration after the first term of office and one year’s remuneration after the<br />
second term of office. If a member of the Executive Board resigns because he/she has reached<br />
the age limit specified for reappointment by the articles of association, he/she is also entitled to<br />
severance compensation equal to one year’s gross salary.<br />
Total<br />
123
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
124<br />
Johannes Meran<br />
born on 22.02.1972<br />
Franz Pruckner<br />
born on 20.05.1956<br />
Kerstin Gelbmann<br />
born on 30.05.1974<br />
Eveline Steinberger-Kern<br />
born on 27.01.1972<br />
Alexander Tavakoli<br />
born on 06.08.1969<br />
Friedrich Kadrnoska<br />
born on 28.06.1951<br />
Harald Nograsek<br />
born 05.10.1958<br />
ADMINISTRATIVE BOARD<br />
Function First appointed End of term of office Other Supervisory Board or Administrative Board<br />
mandates and comparable functions in Austrian and<br />
foreign listed companies<br />
+ Chairman of the Administrative Board<br />
+ Vice-chairman of the Audit Committee<br />
+ Vice-chairman of the Administrative Board<br />
+ Chairman of the Audit Committee<br />
+ Financial expert<br />
+ Representative of free float shareholders<br />
+ Member of the Administrative Board<br />
+ Member of the Audit Committee<br />
+ Financial expert<br />
+ Member of the Administrative Board<br />
+ Member of the Audit Committee<br />
+ Representative of free float shareholders<br />
+ Member of the Administrative Board<br />
+ Member of the Audit Committee<br />
11.10.2010 AGM 2015<br />
11.10.2010 AGM 2015<br />
20.05.<strong>2011</strong> AGM 2016<br />
20.05.<strong>2011</strong> AGM 2016<br />
20.05.<strong>2011</strong> AGM 2016<br />
+ Member of the Administrative Board, STRABAG <strong>SE</strong><br />
THE FOLLOWING PERSONS RESIGNED FROM THE ADMINISTRATIVE BOARD<br />
IN THE FINANCIAL YEAR <strong>2011</strong><br />
Term of office Other Supervisory Board or Administrative Board mandates<br />
and comparable functions in Austrian and foreign listed companies<br />
From 14 December 2007<br />
to 20 May <strong>2011</strong><br />
(at the close of the<br />
Annual General Meeting)<br />
From 26 May 2009<br />
to 20 May <strong>2011</strong><br />
(at the close of the<br />
Annual General Meeting)<br />
+ Allgemeine Baugesellschaft – A. Porr Aktiengesellschaft, Deputy Chairman of the Supervisor Board<br />
+ card complete Service Bank AG, member of the Supervisory Board<br />
+ Österreichisches Verkehrsbüro Aktiengesellschaft, Chairman of the Supervisory Board<br />
+ UniCredit S.p.A., member of the Supervisory Board<br />
+ Wienerberger AG, Chairman of the Supervisory Board<br />
+ Wiener Börse AG, Chairman of the Supervisory Board<br />
+ CEE<strong>SE</strong>G AG, Chairman of the Supervisory Board<br />
+ Wiener Privatbank <strong>SE</strong>, member of the Administrative Board<br />
+ Wienerberger AG, member of the Supervisory Board<br />
+ DDSG – Blue Danube Schiffahrt GmbH, Chairman of the Supervisory Board<br />
+ Motel One Austria GmbH, member of the Supervisory Board<br />
+ Verkehrsbüro Business Travel GmbH, Deputy Chairman of the Supervisory Board<br />
+ Verkehrsbüro Hotellerie GmbH, Chairman of the Supervisory Board<br />
+ Verkehrsbüro-Ruefa Reisen GmbH, Deputy Chairman of the Supervisory Board<br />
INDEPENDENCE OF THE MEMBERS OF THE ADMINISTRATIVE BOARD<br />
In accordance with Rule 53 of the CGC, <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> has defined the following<br />
guidelines for the independence of Administrative Board members:<br />
A member of the Administrative Board is considered to be independent when he/she maintains<br />
no business or personal relationship with the company or its Executive Board that constitutes a<br />
material conflict of interest and is therefore likely to influence the behaviour of the member. The<br />
Administrative Board should also adhere to the following guidelines when determining the criteria<br />
for evaluating the independence of its members:<br />
+ A member of the Administrative Board should not maintain any business relationships with the<br />
company or a subsidiary of the company in a scope considered material for that member during<br />
the current <strong>financial</strong> year, and should also not have maintained such relationships in the previous<br />
<strong>financial</strong> year. The same applies to business relationships with companies in which the member<br />
of the Administrative Board holds a significant economic interest. This does not apply if the business<br />
relationship was disclosed prior to the member’s appointment. The approval of individual<br />
transactions by the Administrative Board in accordance with § 95 para.5 (12) of the Austrian Stock<br />
Corporation Act as amended does not automatically lead to classification as not independent.
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Corporate Governance<br />
+ A member of the Administrative Board should not have been an auditor of the company, should<br />
not have owned a share in or have been employed by the auditing firm entrusted with the current<br />
audit.<br />
+ A member of the Administrative Board should not serve on the management board or Executive<br />
Board of another company in which a member of the company’s Executive Board holds a position<br />
on the Administrative or Supervisory Board.<br />
+ A member of the Administrative Board should not be closely related (direct descendants,<br />
husband/wife, companion, parent, uncle, aunt, brother/sister, niece/nephew) to a member of the<br />
Executive Board or to persons who hold one of the positions mentioned above.<br />
In accordance with rule 53 and the above-mentioned guidelines of the Austrian Corporate Governance<br />
Code, the following members of the Administrative Board are considered to be independent:<br />
+ Johannes Meran<br />
+ Franz Pruckner<br />
+ Kerstin Gelbmann<br />
+ Eveline Steinberger-Kern<br />
+ Alexander Tavakoli<br />
For the sake of completeness it should be mentioned that the two Administrative Board members<br />
who resigned in <strong>2011</strong>, Friedrich Kadrnoska and Harald Nograsek, were to be considered independent<br />
in accordance with Rule 53 and the above-mentioned guidelines of the CGC.<br />
ADMINISTRATIVE BOARD MEETINGS IN THE FINANCIAL YEAR <strong>2011</strong><br />
In the <strong>financial</strong> year <strong>2011</strong>, the Administrative Board held 15 meetings. Kerstin Gelbmann and Eveline<br />
Steinberger-Kern were elected to the Administrative Board at the Annual General Meeting of<br />
20 May <strong>2011</strong>, and Kerstin Gelbmann was elected Vice-Chairwoman as well as Chairwoman of the<br />
Audit Committee. At the same time, Friedrich Kadrnoska and Harald Nograsek resigned from their<br />
mandates with the close of this Annual General Meeting. At the meeting held on 28 September<br />
<strong>2011</strong>, Franz Pruckner was elected the new Deputy-Chairman of the Administrative Board and the<br />
Chairman of the Audit Committee.<br />
With the exception of the Audit Committee, in which all members of the Administrative Board are<br />
currently members, all other committees were disbanded. The Administrative Board in its entirety<br />
deals with all matters that fall under its scope of competence. The focus of the work of the Administrative<br />
Board was of course placed on the property business in its scope of competence again in<br />
the year <strong>2011</strong>. Regarding related party transactions please refer to the notes.<br />
AUDIT COMMITTEE<br />
Function Meetings <strong>2011</strong><br />
The Audit Committee discusses the <strong>annual</strong> and consolidated <strong>financial</strong> <strong>statement</strong>s, monitors the accounting<br />
process as well as the audit of the <strong>annual</strong> and consolidated <strong>financial</strong> <strong>statement</strong>s itself. It reviews<br />
the audit reports and the management letter of the auditor on the functionality of the risk management<br />
system, the proposal of the Executive Board on the appropriation of profit, the (group) management report<br />
and the Corporate Governance report. In addition, the Audit Committee deals with the preparation of<br />
the proposal for the appointment of the auditor and the auditor fees. The Audit Committee reports to the<br />
Administrative Board on these matters.<br />
In addition, circular resolutions were passed. More detailed information on the activities of the<br />
committees can be found in the report of the Administrative Board.<br />
2<br />
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126<br />
REMUNERATION OF THE ADMINISTRATIVE BOARD<br />
The Annual General Meeting held on 26 May 2009 adopted a remuneration system for the Administrative<br />
Board. The new rules of compensation were also applied in the <strong>financial</strong> year 2010. Following<br />
the abolition of all committees except the Audit Committee at the meeting on 15 December 2010,<br />
the corresponding remuneration was also cancelled.<br />
REMUNERATION ADMINISTRATIVE BOARD PER YEAR<br />
Function Fixed Attendance fee per meeting<br />
Chairman 50,000 € 2,500 €<br />
Vice-chairman 25,000 € 2,500 €<br />
Member 15,000 € 2,500 €<br />
REMUNERATION AUDIT COMMITTEE (CAPPED WITH A MAXIMUM SURCHARGE OF 50%)<br />
Committee Chairman Member Attendance fee per meeting *)<br />
Audit Committee 50% of fixed remuneration 25% of fixed remuneration 2,500 €<br />
*) unless held on the same day as a plenary meeting of the Administrative Board<br />
REMUNERATION OF THE ADMINISTRATIVE BOARD <strong>2011</strong><br />
Fixed Surcharges Attendance fees Total<br />
Johannes Meran 50,000 12,500 37,500 100,000<br />
Franz Pruckner 17,500 5,938 37,500 60,938<br />
Kerstin Gelbmann 12,808 5,467 20,000 38,275<br />
Eveline Steinberger-Kern 9,185 2,296 20,000 31,481<br />
Alexander Tavakoli 9,185 2,296 20,000 31,481<br />
Friedrich Kadrnoska 15,839 7,920 12,500 36,259<br />
Harald Nograsek 9,503 2,376 17,500 29,379<br />
Total 124,020 38,793 165,000 327,813
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Corporate Governance<br />
PROMOTION MEASURES IN ACCORDANCE WITH § 243B PARA. 2<br />
OF THE AUSTRIAN COMMERCIAL CODE<br />
In accordance with § 243b para. 2 (2) of the Austrian Commercial Code as amended, measures<br />
taken to promote women in the Executive Board, the Administrative Board and management<br />
positions of the company must be disclosed as defined in § 80 of the Stock Corporation Act. <strong>conwert</strong><br />
states that women and men are equally promoted on a performance-related basis and the<br />
company has no special programme to promote women. However, at the 10th Annual General<br />
Meeting held on 20 May <strong>2011</strong>, two women, Kerstin Gelbmann and Eveline Steinberger-Kern, were<br />
elected to the Administrative Board. For the first time since the establishment of <strong>conwert</strong>, 40% of<br />
the <strong>financial</strong> experts in the Administrative Board are women.<br />
INSURANCE<br />
<strong>conwert</strong> has concluded directors‘ and officers‘ insurance to cover the members of its corporate<br />
bodies (Executive Board, Administrative Board, managing directors). The costs for this insurance<br />
are carried by the company.<br />
EXTERNAL EVALUATION<br />
In accordance with rule 62 of the CGC, <strong>conwert</strong> had the compliance with the Austrian Corporate<br />
Governance Code evaluated by Univ. Prof. DDr. Waldemar Jud Corporate Governance Forschung<br />
CGF GmbH for the <strong>financial</strong> year <strong>2011</strong>. The report is available for download at www.<strong>conwert</strong>.at<br />
under menue item “Corporate Governance / External examination”.<br />
COMPLIANCE<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> (until 2007 <strong>conwert</strong> Immobilen <strong>Invest</strong> AG) prepared a compliance<br />
guideline in accordance with the requirements of the Austrian Stock Exchange Act and the Issuer<br />
Compliance Guideline in 2002, which is designed to prevent the misuse and distribution of inside<br />
information and information relevant to compliance.<br />
In addition, the compliance guideline of <strong>conwert</strong> was revised in the year <strong>2011</strong>, and legal requirements<br />
which only became effective at the beginning of 2012 and are more restrictive, especially<br />
with a view to compliance-relevant information, were already implemented in <strong>2011</strong>.<br />
<strong>conwert</strong> is one of a few ATX companies to proactively adapt the compliance guideline accordingly.<br />
<strong>conwert</strong> is defined as a permanent confidentiality area. Other persons who work for <strong>conwert</strong> as<br />
well as persons who have access to inside information within specific projects are required to<br />
observe the provisions of the compliance guideline.<br />
<strong>conwert</strong> holds regular training courses for key managers and persons who work in classified<br />
units. These programmes are designed to familiarise employees with the compliance guideline,<br />
and thereby ensure the conscious and responsible handling of confidential information. In addition,<br />
blackout periods and a prohibition on trading prior to sensitive corporate events (e.g. <strong>annual</strong> and<br />
quarterly closings, capital increases) were defined and a compliance officer appointed.<br />
In accordance with the Austrian Corporate Governance Code and the Austrian Stock Exchange Act,<br />
the purchase and sale of <strong>conwert</strong> shares by key employees is disclosed on the company’s website<br />
and also reported to the Austrian Financial Market Authority.<br />
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ANNUAL FINANCIAL <strong>2011</strong> STATEMENT ANNUAL REPORT <strong>2011</strong><br />
128<br />
DIRECTORS’ DEALINGS<br />
In accordance with § 48d (4) of the Austrian Stock Exchange Act, transactions by members of<br />
management are disclosed on the company’s website www.<strong>conwert</strong>.at under “Corporate<br />
Governance / Directors’ Dealings” and also reported to the Austrian Financial Market Authority.<br />
Shares that are directly or indirectly attributable to members of the Administrative Board and of<br />
the Executive Board are listed in the following table:<br />
Name Number of shares as of<br />
31.12.<strong>2011</strong><br />
Administrative Board Members<br />
Johannes Meran 19,659,076 23.03<br />
Franz Pruckner - -<br />
Eveline Steinberger-Kern - -<br />
Kerstin Gelbmann - -<br />
Alexander Tavakoli - -<br />
Total Administrative Board<br />
Executive Directors<br />
19,659,076 23.03<br />
Thomas Doll 1,175
INTRO | MANAGEMENT REPORT |<br />
| FINANCIAL STATEMENTS<br />
CONSOLIDATED FINANCIAL STATEMENTS<br />
Corporate Governance<br />
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ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
130
FINANCIAL STATEMENTS<br />
CONWERT IMMOBILIEN<br />
INVEST <strong>SE</strong><br />
131
Annual Financial Report <strong>2011</strong><br />
Management report for the <strong>financial</strong> year <strong>2011</strong> of<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
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Annual Financial Report <strong>2011</strong><br />
Table of contents<br />
General information .............................................................................................................. 134<br />
Property Portfolio .................................................................................................................. 135<br />
Property Services ................................................................................................................. 135<br />
Revenues ............................................................................................................................. 136<br />
Earnings ............................................................................................................................... 136<br />
Asset and <strong>financial</strong> position .................................................................................................. 137<br />
Employees ............................................................................................................................ 138<br />
Research & development ..................................................................................................... 139<br />
Risk management report ...................................................................................................... 140<br />
Organisation and corporate structure incl. <strong>statement</strong> regarding branch offices ................... 148<br />
Notes in accordance with § 243a para 1 UGB ..................................................................... 150<br />
Outlook ................................................................................................................................. 152<br />
Post-balance-sheet-date-report ............................................................................................ 153<br />
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Annual Financial Report <strong>2011</strong><br />
General information<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> acted as the holding company of the <strong>conwert</strong> Group in the<br />
<strong>financial</strong> year <strong>2011</strong> and was as such responsible for the management, financing and<br />
liabilities of subsidiaries and lower-tier subsidiaries of the Group. Moreover, the company<br />
invests directly in properties in Austria and holds stakes in properties in Germany, the Czech<br />
Republic, Slovakia, Hungary, Luxemburg and the Ukraine via subsidiaries. In addition,<br />
<strong>conwert</strong> has direct and indirect investments in different property management and property<br />
service companies, thus covering the entire value chain in the property industry.<br />
In the Austrian investment market, demand was strong and the price level high in <strong>2011</strong>. A<br />
total of approximately 1.7 billion € was invested in properties. The transaction volume thus<br />
increased by nearly 7 % in comparison to the previous year, but fell short of experts’<br />
expectations due to the low level of investments in the commercial property segment. While<br />
demand for retail space continued to be low in the commercial segment in the <strong>financial</strong> year<br />
<strong>2011</strong>, the transaction volume in the market for apartment buildings from the late 19 th century<br />
in Vienna increased. The trend towards rising prices and falling returns is also expected to<br />
continue in this segment to a moderate extent in 2012. (CBRE Austria – Vienna Office Market View<br />
<strong>2011</strong>, EHL Immoflash today 25 January 2012) The strong demand for German residential properties<br />
in the major metropolitan regions was caused by the flight into tangible assets in <strong>2011</strong>, which<br />
is attributable to the persisting uncertainty in the <strong>financial</strong> markets in Europe, according to<br />
experts. The highly stable residential property market in Germany attracted primarily<br />
institutional investors from Germany and abroad. According to a CBRE analysis, the<br />
transaction volume for residential packages and residential complexes of 50 or more<br />
residential units in <strong>2011</strong> increased by 44 % on the previous year and amounted to<br />
6.1 billion €. (CBRE Germany, press release 20 January 2012) In the investment market for<br />
commercial properties in Germany, the transaction volume amounted to 22.6 billion € in the<br />
past year, which corresponds to an 18 % increase on the previous year. (CBRE Germany, Q4<br />
<strong>Invest</strong>ment market Germany) Regarding further details on the property markets, refer to the group<br />
management report <strong>2011</strong>.<br />
The strong demand for residential properties by predominantly private investors led to record<br />
proceeds on property sales for <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> in <strong>2011</strong>. Especially in the third<br />
quarter of <strong>2011</strong>, most sales transactions were carried out in Austria. <strong>conwert</strong> <strong>Immobilien</strong><br />
<strong>Invest</strong> <strong>SE</strong> did not purchase properties in Austria in the year <strong>2011</strong>.<br />
In the <strong>financial</strong> year <strong>2011</strong>, the revenues recorded by <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> soared in<br />
comparison to the previous year due to the high number of sales and amounted to<br />
63.0 million € (2010: 52.8 million €). This is equivalent to an increase by 19.3 %. The result<br />
from ordinary activities amounted to 30.6 million € in the reporting period (2010:<br />
51.3 million €) as the <strong>financial</strong> results declined significantly. One of the reasons was a<br />
substantial increase in impairment of <strong>financial</strong> assets. The significantly lower <strong>financial</strong> income<br />
amounted to 31.0 million € (2010: 58.0 million €). Income from investments totalled<br />
122.3 million € in the year <strong>2011</strong> (2010: 79.3 million €), up 54.2 %.<br />
As a property company, <strong>conwert</strong> pursues a strategy aiming to increase earnings and value.<br />
The core of its operating activities consists of the profitable management of its present<br />
property portfolio in compliance with environmental regulations, and of growth in selected<br />
high-yielding regions.<br />
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Annual Financial Report <strong>2011</strong><br />
Property Portfolio<br />
The business activities of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> again focused on the optimisation of<br />
the property portfolio in <strong>2011</strong>. Measures designed to increase earnings and value such as<br />
the refurbishment and modernisation of residential space, loft extensions and re-letting of<br />
portfolio properties were at the centre of the company’s activities. The improved situation of<br />
the property markets and increased interest on the part of predominantly private investors in<br />
residential properties led to strong proceeds on the sale of properties, which exceeded the<br />
2010 figures by nearly a third. As of 31 December <strong>2011</strong>, proceeds on the sale of properties<br />
amounted to 49.6 million € in comparison with 37.8 million € in the year 2010. Most sales<br />
transactions took place in the third quarter of <strong>2011</strong>. At the same time, rental income also<br />
increased as a result of <strong>conwert</strong>’s efficiency programme. No properties were purchased in<br />
Austria.<br />
The property portfolio of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> consisted of 34 objects at the balance<br />
sheet date (2010: 44) with total usable space of 63,922 sqm (2010: 87,935 sqm). All of these<br />
properties were located in Austria. Property assets as of 31 December <strong>2011</strong> amounted to<br />
103.9 million € (2010: 147.9 million €), thus 44.0 million € less than in the previous year<br />
(2010: (29.7) %).<br />
Through its subsidiaries GJ-Beteiligungs- GmbH and G-Unternehmensbeteiligung GmbH as<br />
well as direct investments, <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> held stakes in property companies<br />
in Austria and abroad. The total property portfolio of the <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> Group<br />
including subsidiaries and lower-tier subsidiaries comprised 1,666 objects at the balance<br />
sheet date (2010: 1,811) with total usable space of roughly 2,146,097 sqm (2010: 2,453,000<br />
sqm) and a total value (according to IFRS) of 2,829 million € (2010: 3,238 million €).<br />
The average residential rent per month amounted to 5.37 €/sqm in <strong>2011</strong>, after 5.19 €/sqm in<br />
the year 2010. This increase was realised despite the sale of numerous apartments with<br />
good rental prices per square meter. Strategic vacancies were reduced to 4.42 % due to the<br />
development programme launched in the year <strong>2011</strong> and targeted sales. This corresponds to<br />
an improvement by 14.0 % in comparison with the previous year (2010: 5.14 %). Actual<br />
vacancies deteriorated slightly to 10.13 % versus 9.97 % at the prior-year balance sheet<br />
date, with the share of construction and development vacancies declining significantly in this<br />
segment. Total vacancies amounted to 14.55 % in the reporting period after 15.11 % in the<br />
previous year.<br />
Property Services<br />
With its subsidiaries in the service sector, <strong>conwert</strong> is in a position to cover all property<br />
management and property service activities along the entire property value added chain.<br />
Services are provided both within the <strong>conwert</strong> Group and externally to third parties in the<br />
market. <strong>conwert</strong> offers services related to asset management, property management,<br />
brokerage as well as construction development and construction management. The<br />
privatisation of apartments and property consulting are also part of the service portfolio. All<br />
services are provided by the subsidiaries of the RESAG Group in Austria and the alt+kelber<br />
Group in Germany.<br />
In Austria and Germany, many things changed in the property service segment in the<br />
<strong>financial</strong> year <strong>2011</strong> and several successes were accomplished. Amongst other things, three<br />
asset management departments in Austria were merged to one, which led to significant<br />
synergies in the management and re-letting of properties. Moreover, the technical and facility<br />
management departments of the RESAG Group were restructured pursuant to the<br />
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Annual Financial Report <strong>2011</strong><br />
realignment of the group structure. The new customer centre, which had started trial<br />
operations in November 2010, started full operations in the first half of <strong>2011</strong>. By<br />
31 December <strong>2011</strong>, roughly 85,000 customer requests had been handled. From the<br />
perspective of alt+kelber <strong>Immobilien</strong>vertrieb GmbH, the <strong>financial</strong> year <strong>2011</strong> was<br />
characterised by massive restructuring measures as well as measures to enhance quality<br />
and optimise costs, which were successfully implemented. With the merger of individual<br />
sales companies of the alt+kelber Group, the goal of focusing sales competence was<br />
reached in <strong>2011</strong>. One of the highlights of the alt+kelber property management was the<br />
expansion of asset management in the service segment in <strong>2011</strong>. The cooperation with DWS<br />
Funds was expanded. Full investment was reached for the Access Wohnen I fund in <strong>2011</strong>.<br />
The fund DWS Access Wohnen II was closed in <strong>2011</strong>. First investments have been made.<br />
Due to the positive performance of the first two DWS funds, the follow-up product was<br />
approved by Deutsche Bank in <strong>2011</strong> and will be implemented in 2012. <strong>conwert</strong> plans to<br />
continue to seek and use growth opportunities through further investments in the future, in<br />
addition to the fund business.<br />
As of 31 December <strong>2011</strong>, all subsidiaries taken together managed a total of 63,100 units. In<br />
comparison with the year 2010, with 57,618 units, this represented an increase by 9.5 % or<br />
5,482 units. Space under management also recorded an increase by 11.5 % to<br />
4.672.749 sqm in the past <strong>financial</strong> year <strong>2011</strong> (2010: 4,190,643 sqm). 40.9 % of the facility<br />
management services relating to the total space under management were provided internally<br />
for the <strong>conwert</strong> Group and 59.1 % for external market participants. Furthermore, 436,881<br />
sqm of vacant space were brokered with the help of service companies. Space brokered for<br />
third parties amounted to 212,742 sqm. 6,904 were sold through the company’s brokerage<br />
business, of which 115 objects accounted for 5,464 units. In addition, 7,811 rental units were<br />
brokered; 51 % of this total, or 3,986 rental units, for third parties in the market.<br />
The management companies of the <strong>conwert</strong> Group were in charge of a property portfolio with<br />
total usable space of 4,672,749 sqm as of the balance sheet date (1,909,410 sqm own space<br />
and 2,763,339 sqm for third parties). In 2010 the space under management was<br />
4,190,643 sqm (2,163,887 sqm own space and 2,026,756 sqm for third parties).<br />
Revenues<br />
In the <strong>financial</strong> year <strong>2011</strong>, <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> increased its revenues by 19.3 %<br />
from 52.8 million € to 63.0 million €, which was attributable to the large number of sales.<br />
Overall, revenues consisted of 7.6 million € from the management of properties (2010:<br />
8.5 million €), 49.6 million € from proceeds on the sale of properties (2010: 37.8 million €) as<br />
well as 5.8 million € management fees charged to the Austrian subsidiaries (2010:<br />
6.4 million €). All revenues of the company were realised in Austria.<br />
Earnings<br />
Earnings before interest and taxes (EBIT) showed a clearly more positive figure in the<br />
<strong>financial</strong> year <strong>2011</strong> at (0.4) million € than in the previous year (2010: (6.7) million €). This<br />
development is above all attributable to lower personnel expenses, lower depreciation,<br />
amortisation and losses on receivables, substantially lower financing costs and currency<br />
translation differences as well as significantly lower other expenses. Due to higher<br />
impairments of <strong>financial</strong> assets, <strong>financial</strong> income declined considerably to 31.0 million € in<br />
<strong>2011</strong>, after 58.0 million € in the previous year. These impairments are primarily due to fair<br />
value adjustments of properties of subsidiaries. Moreover, the framework agreement for<br />
internal derivative contracts as part of cash pooling provides for charging interest expenses<br />
related to <strong>financial</strong> futures to the subsidiaries in accordance with their hedged credit volume.<br />
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Annual Financial Report <strong>2011</strong><br />
Accordingly, an amount of 19.9 million € was charged to the subsidiaries. Earnings before<br />
tax (EBT) fell from 51.3 million € in the previous year to 30.6 million €, which is primarily<br />
attributable to an increase in expenses related to <strong>financial</strong> assets of (100.7) million € (2010:<br />
(39.4) million €). A positive result of 23.4 million € was achieved for profit for the year (2010:<br />
41.9 million €). Accumulated profit recorded a significant decline from 56.7 million € in 2010<br />
to 30.1 million € in <strong>2011</strong>.<br />
Asset and <strong>financial</strong> position<br />
The balance sheet total also recorded a slight decline in the <strong>financial</strong> year <strong>2011</strong> to<br />
1,705.4 million €, after 1,755.1 million € in the previous year. Due to its holding function and<br />
the main business activity of investment in properties, the company’s balance sheet structure<br />
is dominated by property, plant and equipment as well as <strong>financial</strong> assets. Due to the sale of<br />
properties, property, plant and equipment amounted to 103.9 million € and thus fell slightly<br />
short of the prior-year level (2010: 147.9 million €).<br />
In addition to property, plant and equipment, non-current assets also included <strong>financial</strong><br />
assets of 1,323.0 million € at 31 December <strong>2011</strong>, after 1,439.5 million € at the end of 2010.<br />
The main part of the <strong>financial</strong> assets was accounted for by shares in associates with<br />
1,247.8 million €.<br />
Equity remained stable at 1,250.0 million € at the balance sheet date <strong>2011</strong> (2010:<br />
1.251,6 million €). The company’s share capital remained unchanged at 31 December <strong>2011</strong>.<br />
It amounted to 853.59 million € and was divided into 85,359,273 no-par shares.<br />
At 73.3 %, the equity ratio of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> at 31 December <strong>2011</strong> slightly<br />
exceeded the prior-year level (2010: 71.3 %).<br />
Gearing at the balance sheet date amounted to 13.8 %. This is equivalent to a decline by<br />
47.9 % in comparison with the previous year (2010: 26.5 %). Gearing is the ratio of total net<br />
debt to equity. The massive drop is primarily attributable to an increase in non-current trade<br />
and other receivables and a decrease in non-current payables.<br />
In the reporting period, liabilities declined from 481.4 million € in 2010 to 403.8 million €<br />
(corresponds to a reduction by 16.1 %) and predominantly consisted of bond liabilities of<br />
292.5 million € (2010: 332.5 million €) and loans and borrowings of 85.4 million € (2010:<br />
117.4 million €). The main part of loans and borrowings carried variable interest. The interest<br />
rate is based on the EURIBOR. 84.0 % of the interest-bearing variable liabilities (held directly<br />
by the company and through first and second tier subsidiaries) were hedged against interest<br />
risks (2010: 85.4 %).<br />
Receivables shown on the assets side totalling 256.4 million € at the balance sheet date<br />
<strong>2011</strong> (2010: 138.9 million €) largely consisted of receivables from fully consolidated<br />
companies at 221.3 million € and were therefore not subject to significant risks.<br />
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Annual Financial Report <strong>2011</strong><br />
Employees<br />
Every single employee is a central success factor for the <strong>conwert</strong> Group. It was only because<br />
of the exceptional commitment of each team member that <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
realised another good <strong>annual</strong> result in a difficult market environment in <strong>2011</strong>. Therefore, the<br />
<strong>conwert</strong> management attaches great importance to creating an optimal working environment<br />
for all <strong>conwert</strong> employees. In the past <strong>financial</strong> year, the focus was primarily placed on<br />
further education of executives, young managers and all new employees. The career<br />
academy “<strong>conwert</strong>.karriere”, which was established in the year 2010, trained numerous<br />
executives and young managers at the <strong>conwert</strong> locations within the leadership programme<br />
“<strong>conwert</strong>.führung” in the <strong>financial</strong> year <strong>2011</strong>. Priority was attached to seminars in the areas of<br />
leadership, personnel development for these target groups. Overall, 15 persons successfully<br />
completed training at the <strong>conwert</strong> academy in the year <strong>2011</strong>. Employees were offered<br />
courses in the areas of tenancy and tax law, IT, organisation, occupational safety, safety in<br />
the case of fire, and first aid. Moreover, technical workshops and project management<br />
training courses were held. Expenses for training and further education in the <strong>conwert</strong> group<br />
totalled 103.0 T€ in the <strong>financial</strong> year <strong>2011</strong>.<br />
At 31 December <strong>2011</strong>, the <strong>conwert</strong> Group employed 660 people (FTE) at 53 <strong>conwert</strong><br />
locations in six countries. Despite normal attrition and the outsourcing of individual segments,<br />
the number of employees remained stable overall (2010: 656 employees). For example,<br />
RESAG Insurance Broker was closed down, the activities of Lifestyle Living GmbH were<br />
discontinued and individual alt+kelber sales companies were merged in the year <strong>2011</strong>.<br />
<strong>conwert</strong> hired 240 new employees in Austria and Germany in <strong>2011</strong>, in order to meet new<br />
market requirements and to optimally fill key positions. 75 employees worked at the group’s<br />
headquarters in the past <strong>financial</strong> year, 95 employees for the RESAG Group in Austria and<br />
435 employees for the alt+kelber Group in Germany. In the other regions, an additional<br />
24 employees worked in order to provide optimal service for the portfolio locally. The slightly<br />
lower personnel expenses of 35.3 million € in the <strong>financial</strong> year <strong>2011</strong> (2010: 38.2 million €)<br />
essentially resulted from expiring management contracts and the related variable<br />
remuneration.<br />
Part-time models, and especially part-time models for parents, combined with flexitime are<br />
intended to make the work place within the <strong>conwert</strong> Group even more attractive for<br />
employees. In Austria and Germany, a total of 15 employees were on parental leave in the<br />
year <strong>2011</strong> and 159 employees worked part-time. At the same time, <strong>conwert</strong> trained 20<br />
apprentices in Germany.<br />
Part of the <strong>annual</strong> salary of employees in management positions consists of variable<br />
components. They depend to the accomplishment of group targets (EBIT target),<br />
interdepartmental targets and individual targets, which are renewed <strong>annual</strong>ly. In terms of<br />
social benefits, pension subsidies exist for long serving employees. In Austria and Germany,<br />
<strong>conwert</strong> invests in a provision for the future for employees. Life and accident insurance was<br />
provided for the Executive Directors.<br />
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Research & development<br />
The business model of <strong>conwert</strong>, which focuses on the development of older residential<br />
buildings and property services, does not require extensive research and development<br />
activities. Therefore, there is no separate department for research and development activities<br />
and they are not shown separately in the income <strong>statement</strong>. However, <strong>conwert</strong> continuously<br />
works on the improvement and modernisation of its properties and consults only recognised<br />
experts for this purpose. With these activities, <strong>conwert</strong> also takes the necessary steps in<br />
order to realise a sustainable increase in value and to secure the value of the properties in<br />
the long term.<br />
Prior to renovating an apartment building, <strong>conwert</strong> reviews, together with its partner<br />
companies, all measures that could increase the energy efficiency of the respective older<br />
residential property. In the course of the development activities, facades are (partially)<br />
insulated in attic conversions, windows and doors are exchanged and basements and roofs<br />
are completely (re-)insulated. This enables <strong>conwert</strong> to enhance the energy class of buildings<br />
from class D to class A.<br />
<strong>conwert</strong> tries to use environmentally friendly materials wherever possible in all development<br />
activities. In the course of refurbishments, existing residual pollution and materials containing<br />
toxic and environmentally harmful substances are eliminated and replaced with modern<br />
materials that present no health risks. <strong>conwert</strong> increasingly uses the ecologically outstanding<br />
building material wood for loft extensions because it by far more CO2 neutral than other<br />
materials. In addition, <strong>conwert</strong> ensures that material consumption is minimised through<br />
recycling and through the combination of existing, environmentally friendly raw materials with<br />
new materials. In this context, <strong>conwert</strong> also relies on innovative developments and consults<br />
external experts.<br />
In all its development activities <strong>conwert</strong> attaches great importance to primarily working with<br />
certified partners with special quality and eco-labels. Through innovative purchasing<br />
management costs can be cut considerably through the choice of suppliers on the one hand,<br />
and positive contributions can be made to research and development in the area of<br />
development activities on the other.<br />
In the year 2010, <strong>conwert</strong> started a cooperation with GRIFFNER, the market leader for<br />
prefabricated houses based on ecological building methods in Austria, which focused,<br />
among other things, on research and development. This cooperation was also continued in<br />
<strong>2011</strong> with a project in Bujattigasse in the 14 th district of Vienna. In this project, only ecological<br />
building materials such as wood, cellulose and cork were used. An innovative, zero-emission<br />
heating system was developed, which is based on a heat pump system.<br />
The large-scale earth quake test, which <strong>conwert</strong> conducted together with the Austrian<br />
Institute of Experts for Structural Property Assessment (ÖIBI) in 2010, was part of a<br />
European research programme to determine the earthquake safety of older properties. The<br />
findings derived from it were used for both the development of new measuring techniques<br />
and the targeted modernisation of historic buildings in <strong>2011</strong>. Based on the findings, <strong>conwert</strong><br />
was able to plan a “loft conversion heavy” in accordance with the earthquake standard<br />
Eurocode 8 without the additional measures required otherwise. <strong>conwert</strong> thus made a<br />
scientific contribution and provided evidence for the safety of older properties in the course of<br />
this field test.<br />
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Risk management report<br />
Risk management system<br />
As an internationally operating group, <strong>conwert</strong> is exposed to a variety of risks. The group<br />
therefore has a comprehensive risk management system in place, which complies with<br />
international standards. This system is reviewed regularly for its functionality by internal and<br />
external bodies to ensure that internal quality requirements and legal regulations are met.<br />
The risk management system of <strong>conwert</strong> is developed further continuously and adapted to<br />
changing external conditions and altered internal requirements. In the past <strong>financial</strong> year, the<br />
catalogue of risks was revised and both the reporting processes and competences were<br />
adapted. This way, an effective and efficient risk management is to be guaranteed for the<br />
future.<br />
The risk management system implemented for the entire <strong>conwert</strong> Group is defined as a<br />
framework and based on concerted activities, methods and competences.<br />
The risk strategy comprises the basic formulation of the understanding of risks, the<br />
definition of the purpose and applicability of the risk management system as well as the clear<br />
differentiation from other functions and activities aimed at realizing the economic targets of<br />
the <strong>conwert</strong> Group. Like the overall strategy of the <strong>conwert</strong> Group, the risk strategy is<br />
adapted regularly to changed framework conditions. Moreover, the risk strategy of the<br />
<strong>conwert</strong> group provides that no incalculable risks are taken and that appropriate measures<br />
are implemented for calculable risks to ensure that no effects that could jeopardise the<br />
company’s ability to continue as a going concern are to be expected if such a risk<br />
materialises.<br />
Risk identification deals with defining risk areas, identifying individual risks as such and<br />
determining areas of observation, in which risk must be identified in any case. In addition,<br />
risk identification includes the identification of changes in the risk environment occurring in<br />
the short term, or of new risks. Risk identification is a permanent process, which is carried<br />
out in all areas of the group on an ongoing basis.<br />
In risk assessment the nominal risk potential (“effect”) of individual risks is determined<br />
taking into account the probability of occurrence. The nominal risk potential is the value<br />
which has a significantly negative influence on the planned result for the period. Identifiable<br />
risk correlations are taken into account. The aggregation of individual assessed risks, results<br />
in a cumulative risk position, which is reduced to a risk net position by measures of risk<br />
treatment.<br />
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Risk treatment covers both preventative and reactive measures including ad hoc measures,<br />
which are taken in the case of suddenly occurring new risks.<br />
Risk communication serves for the structured collection, presentation and disclosure of<br />
information in the form of the reporting system by the defined risk owners to the group<br />
management.<br />
The implementation of risk management and of the measures defined in the risk<br />
management process is supervised as part of the ongoing monitoring. Monitoring also<br />
covers a regular review of the functionality of the entire risk management system.<br />
Risk management is conducted based on function and on the structure of the group, both<br />
centrally by managers (risk owners) in the areas of group management and administration,<br />
and decentrally by the regional managements in Germany, Austria and the other regions.<br />
The risk owners meet regularly (quarterly) as the Risk Management Board at the Risk-Jour-<br />
Fixe, where the main identified risks are dealt with and the monitoring is conducted if it falls<br />
under the competence of the risk owners. The administration and coordination of the entire<br />
risk management is carried out by the centralised management area “Controlling, Risk<br />
Management and ICS”, which falls under the scope of responsibility of the CFO. Risk<br />
management as such is the responsibility of the entire Executive Board, which reports to the<br />
Administrative Board on a regular basis.<br />
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Annual Financial Report <strong>2011</strong><br />
Categories of risks<br />
Six risk categories were identified within risk identification. These risk categories cover all<br />
sources of risks and levels of effect relevant to the <strong>conwert</strong> Group. Individual risks were<br />
identified for each category and summarised in a risk catalogue. The risk catalogue, together<br />
with the group risk management guideline, serves the risk owners as a basis for exercising<br />
the risk owner function. Based on the risk categories, the main risks, which are described in<br />
the following, are dealt with:<br />
Strategy<br />
Risks which may result from the development of the strategy for the group, from the<br />
implementation of the strategy, from strategic cooperations and investments as well as their<br />
management including the investment structure and the organisational contracts fall under<br />
the risk category “strategy”. Responsibility for the risk category “strategy” lies with the central<br />
group function “Group Strategy” as the risk owner, directly incorporating the entire Executive<br />
Board and the Chairman of the Administrative Board.<br />
Therefore, ongoing market observation and monitoring of the group segments based on plan<br />
values, continuous benchmarking and an active investor and public relations policy were<br />
established in the <strong>conwert</strong> Group in order to counteract risks in this category. In addition, the<br />
investment strategy of the <strong>conwert</strong> Group is clearly defined, with the economic parameters<br />
set out in the investment guidelines both for the regions and the sectors. <strong>Invest</strong>ments of any<br />
kind are subject to an adequate internal approval process depending on the investment<br />
volume. Nevertheless, it cannot be ruled out that the <strong>conwert</strong> Group could indirectly be<br />
jeopardised in its existence due to persisting developments that have adverse effects on the<br />
overall economy.<br />
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Annual Financial Report <strong>2011</strong><br />
Significant strategic risks<br />
Description of risk Effects Counter-measures<br />
General corporate risk<br />
+ Company’s development will<br />
not proceed as planned<br />
General economic risk<br />
+ Economic crises and market<br />
cycles encumber the<br />
property market<br />
+ Declining profitability<br />
+ Loss of efficiency<br />
+ Lack of identification with<br />
company by staff<br />
members<br />
+ Non-realisation of<br />
outside commissions<br />
+ Slumps on property<br />
markets<br />
+ Business drops<br />
+ Monitoring on an ongoing basis<br />
corporate divisions and budgets<br />
+ Monitoring of internal processes on<br />
an ongoing basis<br />
+ Diversified property portfolio:<br />
+ High degree of price stability due to<br />
high-value properties in top<br />
locations<br />
+ Income from a wide range of<br />
property services<br />
+ Focus of business activities on<br />
markets with a fundamentally<br />
positive development<br />
Organisation and IT<br />
The risk category “Organisation and IT” covers all potential scenarios that may occur as part<br />
of the regular management tasks including the selection and remuneration of employees and<br />
leadership as well as from organisational aspects and in all areas of information technology.<br />
The individual risks summarised under this category were assigned to the respective risk<br />
owners in the central group functions and, where there is a direct relation with the operating<br />
segments at the regional level, are managed by the regional managements as additional risk<br />
owners at the same time. As the central and regional activities are consistently coordinated,<br />
duplications of effort in processes are avoided without neglecting regularity aspects.<br />
Due to the special importance of the entire IT segment from a risk perspective, the existing IT<br />
strategy has been advanced further so that consequently no limitations of the operating<br />
activities of the <strong>conwert</strong> Group are to be expected in the future. However, situations could<br />
occur, especially as a result of unforeseeable criminal intrusion, which disrupt the proper<br />
operations of the IT infrastructure in such a way that it could be detrimental to the <strong>conwert</strong><br />
Group.<br />
Market<br />
The risk category market covers risks that result from developments in markets in which the<br />
<strong>conwert</strong> group operates. They include risks arising from customer relations or the competitive<br />
situation. Therefore, the appointed risk owners in the operating segment at the regional level<br />
specifically monitor the competition and analyse the development of demand in the different<br />
markets on an ongoing basis. Due to the multi-dimensional diversification of the market<br />
services of the <strong>conwert</strong> Group, which is represented in several regionally and factually<br />
differentiated markets, there are no individual risks or risk clusters which could directly<br />
endanger the group’s existence from today’s perspective. Should any major permanent<br />
adverse changes occur in the future, this may, nevertheless, lead to considerable negative<br />
effect on the equity situation of the group.<br />
Economic and political environment<br />
The risks related to the economic and political environment were also assigned to the central<br />
function <strong>Invest</strong>or Relations as the risk owner. This category includes primarily those risks<br />
which occur as a result of changes in legislation or macro-economic developments. If such<br />
risks materialize, the access to capital and liquidity for the <strong>conwert</strong> Group or its customers<br />
could become so difficult that a further participation in the market appears to be unfavourable<br />
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Annual Financial Report <strong>2011</strong><br />
in the long term or even has to be ruled out. Such risks may result from changes in the<br />
government’s subsidy or fiscal policy related to the establishment, purchase and sale of<br />
properties or due to inflationary economic developments or negative developments in the<br />
capital markets which are directly or indirectly influenced by overriding political interests. The<br />
<strong>conwert</strong> Group currently has a widely diversified and balanced financing structure and<br />
pursues a continuous improvement in the equity ratio. If borrowed or equity capital should<br />
become dramatically more expensive, this could also lead to a significant negative impact on<br />
the <strong>conwert</strong> Group.<br />
Operations<br />
Operating risks are those risks that result directly or indirectly from operating activities. The<br />
<strong>conwert</strong> Group is represented primarily in the letting, sale and service segments in its core<br />
markets. As the risk owners, the regional managements manage all identified risks in the<br />
above mentioned business units. The risks result from the respective service provision<br />
processes and, accordingly, are minimised through appropriate preventive measures<br />
integrated in the processes and controls so that no damage that may endanger continued<br />
operations can arise from today’s perspective. However, damage that jeopardises operations<br />
cannot be ruled out completely as this risk category also includes risks that cannot be<br />
influenced or fully covered by insurance. Such risks are, for example, natural hazards of all<br />
kinds or unconventional criminal activities, which are carried out on a large scale over a<br />
longer period of time.<br />
Key property-related risks<br />
Description of risk Effects Counter-measures<br />
Property valuations<br />
+ Fluctuations in property<br />
prices caused by<br />
alterations in economic<br />
parameters<br />
Sale of property<br />
+ Demand for residential<br />
and commercial<br />
properties collapses<br />
Lettings<br />
+ Lettings of apartments<br />
declines, or tenants fail<br />
to pay<br />
Development<br />
+ Volatility of costs of<br />
investing in project<br />
development<br />
+ Divergence in results<br />
reported in <strong>financial</strong> accounts<br />
+ Effects on credit rating<br />
+ Fluctuation of earnings in<br />
trading business<br />
+ Costs of vacancies<br />
+ Shortfall in rental incomes<br />
due to tenants with low credit<br />
ratings or due to falling<br />
market prices<br />
+ Cost overruns in project<br />
development<br />
+ Appraisals by independent experts<br />
+ High-quality and price-stable<br />
properties in top locations<br />
+ Doing business in markets showing<br />
fundamentally positive trends<br />
+ Ongoing analyses of locations<br />
+ No-delay responses to market<br />
conditions and trends<br />
+ Strategy of increasing value to tap<br />
value potential in properties<br />
+ Proactive asset management<br />
reducing vacancies<br />
+ Examination of creditworthiness<br />
+ High degree of diversification of<br />
property portfolio<br />
+ High-quality and price-stable<br />
properties in top locations<br />
+ Adjusting rents to market levels<br />
+ Strategy of increasing value and<br />
leading to write-ups of properties<br />
+ Spreading of cost-related risks<br />
among suppliers, service providers<br />
and others<br />
+ Agreeing upon penalties<br />
+ <strong>conwert</strong> Baudevelopment GmbH is<br />
an in-group supplier<br />
+ Supervision on an ongoing basis of<br />
budgets and stage of construction<br />
completion<br />
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Annual Financial Report <strong>2011</strong><br />
Finance<br />
This category includes all indirect and direct risks which have a significant effect on securing<br />
liquidity, securing solvency and thus the going concern of the <strong>conwert</strong> Group. It comprises<br />
securing income, securing cash and cash equivalents and hedges of interest charges on<br />
loans. In addition, it contains risks related to the timely and correct reporting to authorities<br />
and investors.<br />
<strong>conwert</strong> manages its liquidity requirements on the basis of continuously updated liquidity<br />
planning, which takes into account the probable and foreseeable cash inflows and outflows.<br />
Nevertheless, it cannot be ruled out that correlating endogenous or exogenous events in<br />
other risk categories can lead to liquidity shortages. With respect to compliance with timely<br />
reporting to authorities and investors, improvements in the systems used, their operational<br />
safety and the processes and methods applied are made on an ongoing basis. In the case of<br />
a longer-term complete failure of the systems used, delays may occur which make timely<br />
reporting impossible.<br />
Key financing and foreign exchange risks<br />
Description of risk Effects Counter-measures<br />
Capital market<br />
+ Volatility or crashes on<br />
exchanges<br />
+ Financial risks<br />
Interest rate risks<br />
+ Rising interest rates<br />
Credit risks<br />
+ Restrictive supplies of<br />
loans by banks<br />
Foreign exchange risks<br />
+ Volatile foreign<br />
currencies<br />
Risks from <strong>financial</strong><br />
instruments<br />
+ Negative effects from<br />
evaluations<br />
+ Inefficient hedging of<br />
loan liabilities<br />
+ More difficult to secure equity<br />
+ Less liquidity<br />
+ Impaired capabilities of<br />
expansion<br />
+ Increasing costs of financing<br />
+ Scarcity of liquidity<br />
+ Increasing costs of financing<br />
+ Scarcity of liquidity<br />
+ Scarcity of liquidity<br />
+ Lessening of equity<br />
+ Evaluation of inefficient<br />
hedges negatively influences<br />
<strong>financial</strong> results<br />
+ Broad and long-term spreading of<br />
loans<br />
+ Strengthening of in-group <strong>financial</strong><br />
resources<br />
+ Ongoing planning and management<br />
of liquidity<br />
+ Extending of liquidity base<br />
+ Entering into interest rate hedges<br />
(84.0 % of the variable-interest<br />
volume of financing is hedged)<br />
+ Ongoing assessing of risks from<br />
non-hedged credit volume<br />
+ Broad and long-term spreading of<br />
loans<br />
+ Strengthening of in-group <strong>financial</strong><br />
resources<br />
+ Broad and long-term spreading of<br />
loans (average term of 11 years,<br />
received from more than 51 banks)<br />
+ <strong>conwert</strong> is nearly exclusively active<br />
in Eurozone (97 % of property<br />
assets)<br />
+ <strong>conwert</strong> has basically no foreign<br />
currency liabilities<br />
+ Umbrella hedges in holding<br />
company enable flexible<br />
assignment of loan liabilities at the<br />
SPV level<br />
+ The average interest rate on<br />
hedges amounts to 4.09 %<br />
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Annual Financial Report <strong>2011</strong><br />
Report on significant features of the internal control and<br />
risk management system with respect to the <strong>financial</strong><br />
reporting process<br />
The Executive Board is responsible for the risk management of the <strong>conwert</strong> Group. With a<br />
view to the accountin process, risk management falls under the responsibility of the CFO,<br />
who is operationally supported in risk management by his staff.<br />
The ongoing internal reporting system is particularly important for a functioning risk<br />
management in the <strong>conwert</strong> Group. Risks can thus be identified at an early stage and<br />
countermeasures can be taken. Timely, quarterly reporting within a risk jour fixe, in which the<br />
individual risk owners participate, forms the basis for this.<br />
The parent company has provided uniform standards for the implementation and<br />
documentation of the accounting process for the subsidiaries. The objective is to prevent the<br />
risks of incomplete or incorrect <strong>financial</strong> reporting. In addition, the head office reviews the<br />
internal reports prepared by the subsidiaries for plausibility and compares them with the<br />
budget plans. Hence, appropriate measures can be taken rapidly in the case of deviations. In<br />
order to maintain the process described above, the subsidiaries are required to provide<br />
<strong>annual</strong> budgets for the following year in November of the current year. These budgets are<br />
subject to approval by the Executive Board.<br />
At regular meetings of the Executive Board with the regional and operating managers, the<br />
current business development and foreseeable opportunities and risks resulting from<br />
changed framework conditions are discussed. International accounting standards are<br />
complemented by internal guidelines in the preparation of the consolidated <strong>financial</strong><br />
<strong>statement</strong>s.<br />
This ensures a consistent presentation of the subsidiaries included in the consolidated<br />
<strong>financial</strong> <strong>statement</strong>s in terms of measurement and presentation.<br />
The cornerstones of the existing internal control system and the risk management system<br />
with respect to the (group) accounting process at <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> can be<br />
described as follows:<br />
+ The <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> Group has a clearly defined structure of management<br />
and corporate operations. Cross-departmental requirements are specified by the central<br />
group management and administration.<br />
+ With a view to the accounting process, the functions of the accounting department are<br />
clearly separated from other areas such as payment transactions and group treasury.<br />
+ The finance systems are protected against unauthorised access by IT facilities.<br />
+ The finance systems employed use standard software wherever possible.<br />
+ An adequate system of guidelines (accounting guidelines, payment guidelines, etc.) is in<br />
place and is updated on a regular basis.<br />
+ Accounting data received and passed on is checked for completeness and correctness by<br />
the persons responsible, for example by taking random samples.<br />
+ The four-eye principle is applied to all processes relevant to <strong>financial</strong> accounting.<br />
+ The consolidation software MIS is used for the purpose of consolidation. For the principles<br />
of accounting and valuation refer to the notes to the consolidated <strong>financial</strong> <strong>statement</strong>s.<br />
+ Processes relevant to accounting are audited by the (process-independent) internal audit<br />
department on a regular basis.<br />
The control and risk management system described ensures that all business transactions<br />
are correctly entered, processed and evaluated in the balance sheet and included in the<br />
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Annual Financial Report <strong>2011</strong><br />
accounting process. Qualified employees, the use of specific software and clear legal and<br />
internal regulations provide the basis for an appropriate, uniform and continuous accounting<br />
process. A clear separation of responsibilities as well as different control and verification<br />
mechanisms are to ensure a correct and responsible accounting process. Business<br />
transactions can thus be recorded, processed and documented in accordance with legal<br />
requirements, the articles of association and internal guidelines.<br />
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Annual Financial Report <strong>2011</strong><br />
Organisation and corporate structure incl. <strong>statement</strong><br />
regarding branch offices<br />
<strong>conwert</strong> is a publicly listed, single-tier Societas Europaea (<strong>SE</strong>), which consists of three<br />
corporate bodies: the Administrative Board, the Executive Board and the Annual General<br />
Meeting. The company is represented by two Executive Directors together, two<br />
Administrative Board members together, one Administrative Board member together with an<br />
Executive Director or a holder of power of attorney, or by an Executive Director together with<br />
an a holder of power of attorney. Sole power of representation is thus not possible. The<br />
Administrative Board consists of a minimum of 3 and a maximum of 5 persons.<br />
The place of business of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> is Vienna. The operating business is<br />
predominantly conducted through group-owned property holding companies.<br />
PROPERTY HOLDING COMPANIES<br />
In the business segment “Portfolio” <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> has wholly-owned<br />
subsidiaries in Austria, Germany, the Czech Republic, Hungary, Slovakia, Luxemburg and<br />
the Ukraine, which are operated as local property companies. As of 31 December <strong>2011</strong>, the<br />
share held in ECO Business-<strong>Immobilien</strong> AG in Vienna amounted to 95.76 %. The results of<br />
ECO were fully consolidated for the first time in the third quarter of 2010.<br />
MANAGEMENT COMPANIES<br />
The management of <strong>conwert</strong>’s property portfolio, as well as trading and sales are carried out<br />
by <strong>conwert</strong> Management. The portfolios in Germany (located in Berlin & Leipzig) and<br />
Hungary (location Budapest), Slovakia (location Bratislava), the Czech Republic (location<br />
Brno) and the Ukraine (location Kiev) are each operated by local management companies.<br />
RESAG GROUP<br />
The RESAG Group is responsible for the property service business in Austria, including<br />
property management, administration, brokerage, apartment privatisations and the marketing<br />
of properties. <strong>conwert</strong> holds 100 % in RESAG Property Management GmbH and 49 % in<br />
RESAG <strong>Immobilien</strong>makler GmbH. In <strong>2011</strong> the contracts with RESAG <strong>Immobilien</strong>makler<br />
GmbH were completely renegotiated so that third-party comparisons are now possible. This<br />
will result in significant profitability and liquidity increases for <strong>conwert</strong> in the future. The<br />
property insurance brokerage business, which was previously the responsibility of RESAG<br />
Insurance Broker GmbH within the <strong>conwert</strong> Group, was externalised in <strong>2011</strong> for cost and<br />
efficiency reasons, and RESAG Insurance Broker GmbH was merged.<br />
CONWERT BAUDEVELOPMENT GMBH<br />
All construction management activities in Austria are currently performed by <strong>conwert</strong><br />
Baudevelopment GmbH. The company primarily carries out modernisation projects. In the<br />
course of the corporate reorganisation <strong>conwert</strong> Bauträger GmbH was over several<br />
intermediate steps merged with RESAG Property Management GmbH.<br />
ALT+KELBER GROUP<br />
Since October 2007, alt+kelber has been a 100 % subsidiary of the <strong>conwert</strong> Group in Vienna.<br />
The alt+kelber Group is a service provider for residential properties in Germany and, with its<br />
subsidiaries in Germany, is responsible for all property services of <strong>conwert</strong> including property<br />
management, administration, brokerage and apartment privatisation. alt+kelber currently<br />
manages approx. 46,596 residential and commercial units in Germany, 13,745 units for<br />
<strong>conwert</strong> and 32,851 units for third parties. With the service segments consulting,<br />
management and marketing, alt+kelber addresses not only private and municipal housing<br />
companies, but also funds and banks as well as national and international private and<br />
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Annual Financial Report <strong>2011</strong><br />
institutional investors. The service provider, which was established 25 years ago and is<br />
based in Heilbronn, operates 46 offices throughout Germany and more than 430 employees.<br />
The restructuring/simplification of the alt+kelber Group has already been initiated and will be<br />
completed in 2012.<br />
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Annual Financial Report <strong>2011</strong><br />
Notes in accordance with § 243a para 1 UGB<br />
Transparency and Corporate Governance<br />
A transparent and lean company structure will also strengthen the attractiveness of the<br />
<strong>conwert</strong> share. This is why the Administrative Board unanimously decided to reduce the<br />
Executive Board to two persons – Franz Jürgen Kelber as COO and Thomas Doll as CFO –<br />
after Volker Riebel resigned as CEO on 6 July <strong>2011</strong>, especially since the Administrative<br />
Board is more deeply involved in the operating business of a single-tier <strong>SE</strong> like <strong>conwert</strong><br />
anyway. In accordance with § 243a para. 1 (9) of the Austrian Commercial Code (UGB), the<br />
two Executive Directors have the right to resign in the case of a takeover of <strong>conwert</strong> (“change<br />
of control”), which is associated with the entitlement to a payment of one up to a maximum of<br />
two gross <strong>annual</strong> salaries, depending on the remaining term of the employment contract. For<br />
more detailed information please refer to the Corporate Governance Report. In addition to<br />
different service relationships with subsidiaries which are included in the consolidated<br />
<strong>financial</strong> <strong>statement</strong>s as fully consolidated companies, the following related-party transactions<br />
were carried out: Thomas Rohr, Executive Director of <strong>conwert</strong> until 15 March <strong>2011</strong>, received<br />
commissions for property transactions brokered by him, which were paid via one of his<br />
companies. Two properties in Austria are let to Österreichisches Verkehrsbüro AG, whose<br />
CEO, Harald Nograsek, was a member of the Administrative Board of <strong>conwert</strong> <strong>Immobilien</strong><br />
<strong>Invest</strong> <strong>SE</strong> until 20 May <strong>2011</strong>. Subsidiaries of the alt+kelber Group are tenants of office space<br />
in an object in Germany. More detailed information on this topic can be found in the notes.<br />
At TPI Tourism Properties <strong>Invest</strong> AG, Volker Riebel resigned from the supervisory board<br />
in the extraordinary general meeting of 19 December <strong>2011</strong>. Johannes Meran was<br />
elected as a new member of the Supervisory Board with effect from the close of the<br />
general meeting on 19 December <strong>2011</strong>.<br />
SHARES OF THE COMPANY<br />
AND POSITION OF ITS SHAREHOLDERS<br />
On the balance sheet date at 31 December <strong>2011</strong>, the share capital of <strong>conwert</strong> <strong>Immobilien</strong><br />
<strong>Invest</strong> <strong>SE</strong> amounted to 853,592,730 €. It consists of 85,359,273 no-par ordinary bearer<br />
shares with voting rights, each with a stake of 10.00 € in the share capital. The company’s<br />
share capital is paid in entirely and all shares are evidenced in an amendable collective<br />
certificate. The certificate is deposited with Oesterreichische Kontrollbank AG, Am Hof 4,<br />
1010 Vienna, as the custodial bank. In accordance with the articles of association claims to<br />
individual share certificates are excluded. All of the company’s shares issued as of the<br />
balance sheet date are admitted to trading on the Vienna Stock Exchange under the ISIN<br />
AT0000697750.<br />
Every single share grants its holder the right to participate in the Annual General Meeting<br />
and to exercise voting rights. Each share corresponds to one vote. Therefore no shareholder<br />
possesses any special rights of control.<br />
To the knowledge of the company, approximately 76.0 % of the shares were free float as of<br />
31 December <strong>2011</strong>, 4.5 % of the shares were in the possession of the company as a result<br />
of buying back treasury shares. The remaining shares of approx. 23 % were held by a group<br />
of core shareholders with a long-term commitment, which includes Petrus Advisers<br />
Management Ltd, Petrus Advisers Control <strong>Invest</strong>ment Ltd, Albona I LP, Albona II LP, Albona<br />
III LP, Albona Ltd, Valluga LP and Valluga II LP. The Administrative Board and the Executive<br />
Board have no knowledge of any major changes in the shareholder structure after the<br />
balance sheet date.<br />
In accordance with § 4 paragraph 3 of the articles of association as amended on<br />
11 October 2010, the Administrative Board was authorised until 8 June <strong>2011</strong> to increase the<br />
share capital of the company by a nominal 26,674,770 € by issuing up to 2,667,477 no-par<br />
150
Annual Financial Report <strong>2011</strong><br />
bearer shares at a minimum issue price of 100% of the proportionate stake in the share<br />
capital per share, for a cash contribution or contribution in kind. This increase was possible in<br />
one or several tranches, also entirely or partially excluding subscription rights and also by<br />
means of indirect subscription rights in accordance with § 153 paragraph 6 of the Stock<br />
Corporation Act. In addition, the Administrative Board was authorised to determine the issue<br />
price and the conditions of the issue (authorised capital). However, the Administrative Board<br />
did not exercise this right.<br />
In accordance with § 38 paragraph 2 <strong>SE</strong>G in conjunction with § 169 AktG, the Administrative<br />
Board is also authorised until 25 October 2012 to increase the company’s share capital by up<br />
to nominal 400,121,590 € by issuing up to 40,012,159 no-par bearer shares at a minimum<br />
issue price of 100 % of the proportionate stake in the share capital in one or several<br />
tranches, also by means of indirect subscription rights in accordance with § 153 paragraph 6<br />
of the Stock Corporation Act, for a cash contribution or contribution in kind, and to determine<br />
the issue price and the conditions of the issue.<br />
Furthermore, at the Administrative Board of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> was authorised at<br />
the extraordinary shareholder meeting of 11 October 2010 to acquire treasury shares of the<br />
company up to a legally defined maximum of 10 % of the share capital at a minimum price of<br />
4.0 € and a maximum of 14.0 € per share. The buyback of treasury shares is valid during a<br />
period of 30 months starting on the day the resolution is adopted. At its meeting held on<br />
14 June <strong>2011</strong>, the Administrative Board adopted, based on the authorisation by the Annual<br />
General Meeting, the sixth share buyback programme, which is valid from 1 July <strong>2011</strong> to<br />
30 June 2012. In the five preceding share buyback programmes, 2,894,445 <strong>conwert</strong> shares<br />
totalling 30.5 million € (not including fees) were repurchased in the period from 31 January<br />
2008 to 30 June <strong>2011</strong>, of which 177,000 shares amounting to a total value of 2.1 million €<br />
were settled after 30 June <strong>2011</strong>. In the course of the sixth share buyback programme, a total<br />
of 967,519 shares with a value of 10.2 million € (not including fees) were acquired by<br />
31 December <strong>2011</strong>. This corresponds to approximately 1.13 % of the entire share capital. In<br />
total, the portion of treasury shares amounted to 4.52 % of the share capital (i.e.<br />
3,861,964 shares) at the balance sheet date on 31 December <strong>2011</strong> and a value of<br />
40.6 million € (not including fees). Considering the whole year <strong>2011</strong>, a total of<br />
2,749,867 shares of a total value of 30.8 million € (not including fees) were bought back. This<br />
amount represents 3.22 % of <strong>conwert</strong>’s share capital. In addition, the settlement for 11,485<br />
units worth 0.1 million €, which had been purchased before 31 December 2010, was carried<br />
out.<br />
In accordance with the Austrian Stock Exchange Act and the Publication Regulation,<br />
changes and transactions made within the buyback programme are published on the website<br />
www.<strong>conwert</strong>.at.<br />
Other <strong>statement</strong>s in accordance with § 243a paragraph 1 UGB are not applicable.<br />
Amendments to the articles of association are subject to a resolution by the Annual General<br />
Meeting.<br />
151
Annual Financial Report <strong>2011</strong><br />
Outlook<br />
The overall economic situation in the euro area is still tense and early economic indicators<br />
suggest a mild recession. In its forecast for the year 2012 from February of the current year,<br />
the EU Commission expects GDP to decline by 0.3 % in the euro area. The Commission<br />
thus predicts a stagnation in economic growth for the year 2012, but sees indications that the<br />
European economy will stabilise. Inflation is expected to amount to 2.3 % in the European<br />
Union (EU27) in the current year. Moreover, the Monetary Council of the European Central<br />
Bank again decided to maintain the base rate at 1 % at its regular meeting on 9 February<br />
and on 8 March 2012. However, several experts assume that, with determined actions, a<br />
turnaround is possible in the course of the year 2012 and the European Union will be able to<br />
achieve growth and increasing employment figures through the stabilisation. (Peter<br />
Brezinschek, Raiffeisen Research, Q4/ <strong>2011</strong>)<br />
According to a forecast by the German Institute for Economic Research (DIW) in Berlin on<br />
the development of the real gross domestic product in Germany in the year 2012, GDP<br />
growth is expected to amount to 0.6 % compared with the previous year. In contrast, a 2.2 %<br />
change in GDP is forecast for the year 2013. (DIW Berlin; Federal Statistical Office)<br />
Although from today’s perspective it is not yet certain whether the measures taken so far by<br />
the EU and the ECB will suffice, many <strong>financial</strong> experts assume that the euro area has the<br />
means to end the crisis. Therefore, they still do not expect another recession of the Austrian<br />
economy. However, the confidence crisis is likely to leave massive traces on the real<br />
economy in Austria in the year 2012. The EU Commission therefore only expects an<br />
increase by 0.7 % in the Austrian GDP. Moreover, it assumes that demand by the public<br />
sector will decline also in Austria in 2012, which may lead to a reduction of investment<br />
activities. The Commission predicts an inflation rate of approx. 2.4 % in Austria in the year<br />
2012. Despite overcoming the confidence crisis, growth prospects will remain subdued as<br />
the reins will be tightened significantly in terms of fiscal policy, but thanks to a more robust<br />
global upswing, a higher increase in GDP should be possible again in 2013. (Unicredit<br />
Research, 15 December <strong>2011</strong>, EU Commission, Interim Forecast February 2012)<br />
The residential property boom in Vienna will continue in 2012 despite, or rather because of,<br />
the weak economic prospects, according to experts. Freehold flats are considered an ideal<br />
investment in the debt crisis. In <strong>2011</strong>, freehold flats recorded price increases between 7 %<br />
and 9 % in individual submarkets. Especially in the sixth, seventh and ninth districts, prices<br />
per square meter exceeded 5,000 €. The fifth and the adjacent twelfth district, previously less<br />
popular, are expected to outperform the market average in 2012, according to experts’<br />
forecasts. This upward trend will not prevail in terms of rental prices. Competition from<br />
municipal and non-profit housing with legally defined upper limits for rents and the strong<br />
demand for freehold flats should dampen an upward development for rents. The increase will<br />
roughly correspond to the inflation rate in the experts’ opinion. ( EHL, Report on investment<br />
properties 2012)<br />
According to property experts, tenants and property buyers should be prepared for rising<br />
costs in 2012, with a significant increase forecast for new rentals in strained residential<br />
markets. Here, new tenancy agreements may exceed the customary local rents by between<br />
10 % and 30 %. Current studies show that buyers of properties will also have to pay more in<br />
2012. According to calculations of the Association of German Pfandbrief Banks (vdp), owneroccupied<br />
homes in Germany were as expensive as never before since this value was first<br />
calculated in the year 2003. In particular, freehold condominiums were substantially more<br />
expensive for buyers than in <strong>2011</strong>. Within a year, prices rose by 5.2 %. Against this<br />
background, permits for property projects also rose by 21 %. The causes were low interest<br />
rates, declining unemployment and the growing popularity of tangible assets during the crisis.<br />
While the decline in public sector building projects caused some concern for the construction<br />
152
Annual Financial Report <strong>2011</strong><br />
industry, housing construction will provide a stimulus for the construction activities in the<br />
years to come, according to the ifo Institute. The institute estimates that more than 200,000<br />
new apartments will be built in Germany in 2013, nearly 50 % more than in 2009. Thanks to<br />
brisk demand for apartments, the ifo experts expect an average <strong>annual</strong> growth of just under<br />
0.5 % to 254 billion € until 2020. In contrast to this trend, public sector construction projects<br />
will drop from 38.5 billion € to less than 35.0 billion € by 2020. (Study of Dr. Zitelmann)<br />
Outlook <strong>conwert</strong> for 2012<br />
As in the past <strong>financial</strong> year, <strong>conwert</strong> has set itself ambitious goals for the year 2012 in terms<br />
of both the property portfolio and the <strong>financial</strong> key figures. The company will continue to<br />
consistently pursue its strategy, which was introduced in early <strong>2011</strong> and focuses on the core<br />
business, enhanced transparency and improved performance in order to make the company<br />
and its shares more attractive for investors and third parties in the market.<br />
With regard to the property portfolio, special importance will be attached to two main<br />
objectives in the next two years: on the one hand, the sale of assets up to 1.0 billion € is<br />
planned above all in Austria, with the proceeds on property sales in the year 2012 accounting<br />
for roughly half of this amount, i.e. 500 million €. At the same time, <strong>conwert</strong> pursues the<br />
objective to increase the average yield throughout the entire property portfolio to 6.5 % by<br />
the end of 2013. This target is to be achieved by strengthening the portfolio in Germany, the<br />
sale of ECO objects with a high vacancy rate and low yield, and the externalisation of<br />
property development due to the risk-profit profile. However, <strong>conwert</strong> will continue to take<br />
advantage of opportunistic purchasing possibilities in Austria as well and resort to the special<br />
expertise in the development of and trading in apartment buildings. The expertise of the<br />
<strong>conwert</strong> Group in the development sector in Austria is to be used, especially after the<br />
installation of a new management team, to also make opportunistic purchases of objects<br />
where there is significant development potential and the possibility of a resale within two<br />
years. A tax-based analysis has indicated that it is advantageous to carry out such<br />
transactions within the <strong>conwert</strong> Group with ECO companies.<br />
The <strong>conwert</strong> service segment will be significantly expanded in the year 2012, so that the<br />
assets under management at the end of the current <strong>financial</strong> year should equal up to<br />
1.0 billion €. <strong>conwert</strong> currently manages properties with a value of approximately<br />
288 million € from the first two DWS residential property funds with long-term contracts of<br />
11 to 25 years, with another DWS fund in preparation (see the post-balance-sheet report<br />
below).<br />
Post-balance-sheet-date-report<br />
No events of significant importance for the company which would have led to a different<br />
presentation of the assets, <strong>financial</strong> and earnings position took place after the balance sheet<br />
date on 31 December <strong>2011</strong>.<br />
Vienna, 21 March 2012<br />
The Executive Board<br />
of<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
Thomas Doll m.p. Franz Jürgen Kelber m.p.<br />
Member Member<br />
153
Annual Financial Statement <strong>2011</strong><br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong>, Wien<br />
31 December <strong>2011</strong><br />
BALANCE SHEET AS OF 31 DECEMBER <strong>2011</strong><br />
AS<strong>SE</strong>TS EQUITY AND LIABILITIES<br />
Balance on Balance on Balance on Balance on<br />
31.12.<strong>2011</strong> 30.12.2010 31.12.<strong>2011</strong> 30.12.2010<br />
EUR EUR EUR TEUR EUR EUR TEUR<br />
A. NON-CURRENT AS<strong>SE</strong>TS A. EQUITY<br />
I. Intangible assets I. Issued capital 853.592.730,00 853.593<br />
Concessions and rights 19.880,23 15 II. Share premium<br />
II. Property, plant and equipment Appropriated 333.282.976,42 333.283<br />
1. Land, rights to land and buildings, including III. Reserves<br />
buildings on land owned by third parties 100.201.577,89 138.480 Reserve for treasury shares 32.998.615,12 8.008<br />
Thereof value of land EUR 21.163.691,39 (2010 TEUR 29.493) IV. Profit (loss) account 30.098.111,35 56.734<br />
2. <strong>Invest</strong>ments in building owned by third parties 119.604,19 129 Thereof profit carried forward<br />
3. Prepayments and construction in progress 3.572.055,87 9.279 EUR 31.714.696,67 (2010 TEUR 8.325)<br />
103.893.237,95 147.888 1.249.972.432,89 1.251.618<br />
III. Financial assets<br />
1. Shares in subsidiaries 1.274.789.739,48 1.403.082 B. PROVISIONS<br />
2. <strong>Invest</strong>ments in other companies 10.836.664,78 6.648 1. Tax provisions 16.856.900,00 13.634<br />
3. Securities 4.370.854,30 21.802 2. Other provisions 29.931.296,69 4.819<br />
4. Treasury shares 32.998.615,12 8.008 46.788.196,69 18.453<br />
1.322.995.873,68 1.439.540<br />
1.426.908.991,86 1.587.443 C. LIABILITIES<br />
1. Bonds 292.483.841,00 332.455<br />
B. CURRENT AS<strong>SE</strong>TS 2. Interest-bearing loans and borrowings 85.383.292,06 117.413<br />
I. Receivables and other assets 3. Trade accounts payable 2.109.837,61 2.050<br />
1. Trade accounts receivable 4.042.899,48 864 4. Amounts due to subsidiaries 13.068.033,05 24.098<br />
2. Receivables due from subsidiaries 221.343.056,07 125.209 5. Other liabilities 10.716.064,32 5.421<br />
3. Receivables due from companies Thereof taxes EUR 3.972.283,44 (2010 TEUR 1.047)<br />
in which an investment is held 3.669.246,80 3.342 Thereof social security<br />
4. Other receivables and assets 27.372.999,68 9.524 EUR 2.320,96 (2010 TEUR 54)<br />
256.428.202,03 138.939 403.761.068,04 481.437<br />
II. Cash and deposits with <strong>financial</strong> institutions 22.059.983,72 28.695<br />
278.488.185,75 167.634 D. DEFERRED INCOME 4.875.479,99 3.569<br />
1.705.397.177,61 1.755.077 1.705.397.177,61 1.755.077<br />
CONTINGENT LIABILITIES 516.260.433,77 644.442<br />
154
Annual Financial Statement <strong>2011</strong><br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong>, Vienna<br />
31 December <strong>2011</strong><br />
INCOME STATEMENT<br />
FOR THE PERIOD FROM 1 JANUARY <strong>2011</strong> TO 31 DECEMBER <strong>2011</strong><br />
2 0 1 1 2 0 1 0<br />
EUR EUR TEUR TEUR<br />
1. Revenues<br />
2. Other operating income<br />
62.957.389,16 52.825<br />
a) Income from the reversal of provisions 492.552,76 389<br />
b) Miscellaneous 2.755.648,11 3.248.200,87 3.564 3.953<br />
3. Cost of materials and services<br />
a) Cost of materials 40.222.202,66 29.523<br />
b) Cost of services<br />
4. Personnel expenses<br />
2.835.189,36 -43.057.392,02 3.090 -32.613<br />
a) Salaries<br />
b) Expenses for legally required social security<br />
and payroll-related duties and<br />
2.434.321,65 4.063<br />
mandatory contributions 172.168,14 428<br />
c) Other employee-related expenses 3.047,71 -2.609.537,50 0 -4.491<br />
5. Depreciation and amortisation<br />
Thereof impairment charges<br />
EUR 0,00 (2010 TEUR 950)<br />
6. Other operating expenses<br />
-2.528.455,56 -3.812<br />
a) Non-income-based taxes 542.330,41 355<br />
b) Miscellaneous 17.878.210,87 -18.420.541,28 22.161 -22.516<br />
7. Subtotal of No. 1 to 6 (operating profit) -410.336,33 -6.654<br />
8. Income from investments in other companies<br />
Thereof from subsidiaries<br />
EUR 122.258.126,30 (2010 TEUR 79.328)<br />
9. Income from other securities<br />
122.258.126,30 79.328<br />
recorded under <strong>financial</strong> assets 46.403,77 33<br />
10. Interest and similar income<br />
Thereof from subsidiaries<br />
EUR 10.004.927,23 (2010 TEUR 5.212)<br />
11. Income from the disposal and<br />
38.982.314,57 38.050<br />
write-up of <strong>financial</strong> assets 20.575.889,94 31.641<br />
12. Expenses arising from <strong>financial</strong> assets<br />
Thereof impairment charges<br />
EUR 72.799.621,76 (2010 TEUR 39.404 )<br />
Thereof from subsidiaries<br />
EUR 100.695.947,06 (2010 TEUR 39.404 )<br />
-100.695.947,06 -39.404<br />
13. Interest and similar expenses<br />
Thereof to subsidiaries<br />
EUR 754.976,25 (2010 TEUR 481)<br />
-50.155.465,41 -51.689<br />
14. Subtotal of No. 8 to 13 (<strong>financial</strong> results) 31.011.322,11 57.959<br />
15. Profit on ordinary activities 30.600.985,78 51.305<br />
16. Income taxes -7.227.103,50 -9.383<br />
17. Net profit for the year 23.373.882,28 41.922<br />
18. Reversal of reserves 0,00 6.487<br />
19. Addition to reserves -24.990.467,60 0<br />
Loss for the year -1.616.585,32 48.409<br />
20. Profit carried forward 31.714.696,67 8.325<br />
21. Total profit 30.098.111,35 56.734<br />
155
Annual Financial Statement <strong>2011</strong><br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong>, Vienna<br />
31 December <strong>2011</strong><br />
SCHEDULE OF NON-CURRENT AS<strong>SE</strong>TS IN ACCORDANCE WITH § 226 (1) OF THE AUSTRIAN COMMERCIAL CODE AS OF 31 DECEMBER <strong>2011</strong><br />
Acquisition or production cost Accumulated Book value Book value Depreciation Write-ups<br />
Balance on Additions Reclassification Disposals Balance on depreciation 31.12.<strong>2011</strong> 30.12.2010 for the for the<br />
31.12.2010 31.12.<strong>2011</strong> <strong>financial</strong> year <strong>financial</strong> year<br />
EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR<br />
NON-CURRENT AS<strong>SE</strong>TS<br />
I. Intangible assets<br />
Concessions, rights<br />
II. Property, plant and equipment<br />
1. Land, rights to land and buildings<br />
29.889,03 22.378,09 0,00 0,00 52.267,12 32.386,89 19.880,23 14.944,51 17.442,37 0,00<br />
Value of land 29.980.276,87 0,00 0,00 8.346.820,34 21.633.456,53 469.765,14 21.163.691,39 29.492.899,41 0,00 0,00<br />
Value of buildings 123.851.840,78 473.698,07 3.966.857,18 36.559.142,57 91.733.253,46 12.695.366,96 79.037.886,50 108.987.267,89 2.496.942,11 0,00<br />
153.832.117,65 473.698,07 3.966.857,18 44.905.962,91 113.366.709,99 13.165.132,10 100.201.577,89 138.480.167,30 2.496.942,11 0,00<br />
2. <strong>Invest</strong>ments in buildings owned by third parties 135.860,10 4.608,17 0,00 0,00 140.468,27 20.864,08 119.604,19 129.067,10 14.071,08 0,00<br />
3. Prepayments and construction in progress 9.279.247,36 1.159.665,69 -3.966.857,18 2.900.000,00 3.572.055,87 0,00 3.572.055,87 9.279.247,36 0,00 0,00<br />
III. Financial assets<br />
163.247.225,11 1.637.971,93 0,00 47.805.962,91 117.079.234,13 13.185.996,18 103.893.237,95 147.888.481,76 2.511.013,19 0,00<br />
1. Shares in subsidiaries 1.481.332.580,29 15.332.140,58 0,00 89.544.114,66 1.407.120.606,21 132.330.866,73 1.274.789.739,48 1.403.082.001,30 64.990.287,74 10.910.000,00<br />
2. <strong>Invest</strong>ments in other companies 6.648.467,48 4.437.166,87 0,00 248.969,57 10.836.664,78 0,00 10.836.664,78 6.648.467,48 0,00 0,00<br />
3. Securities 21.802.834,00 11.301.248,00 0,00 28.732.248,50 4.371.833,50 979,20 4.370.854,30 21.801.854,80 0,00 0,00<br />
4. Treasury shares 10.696.644,62 30.921.382,84 0,00 0,00 41.618.027,46 8.619.412,34 32.998.615,12 8.008.147,52 7.809.334,02 1.878.418,78<br />
1.520.480.526,39 61.991.938,29 0,00 118.525.332,73 1.463.947.131,95 140.951.258,27 1.322.995.873,68 1.439.540.471,10 72.799.621,76 12.788.418,78<br />
1.683.757.640,53 63.652.288,31 0,00 166.331.295,64 1.581.078.633,20 154.169.641,34 1.426.908.991,86 1.587.443.897,37 75.328.077,32 12.788.418,78<br />
156
Annual Financial Statement <strong>2011</strong><br />
Notes to the Individual Financial Statements of<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
1. Significant accounting policies<br />
1.1. General information<br />
The <strong>annual</strong> <strong>financial</strong> <strong>statement</strong>s were prepared in accordance with Austrian generally<br />
accepted accounting principles as well as the general objective of providing a true and fair<br />
view of the asset, <strong>financial</strong> and earnings position of the company.<br />
The principle of completeness was observed in preparing the individual <strong>financial</strong> <strong>statement</strong>s.<br />
The income <strong>statement</strong> was prepared in accordance with the nature of expense method under<br />
which “total costs“ are shown.<br />
The valuation methods applied to the 2010 <strong>financial</strong> <strong>statement</strong>s were also applied in preparing<br />
the <strong>annual</strong> <strong>financial</strong> <strong>statement</strong>s for <strong>2011</strong>.<br />
Assets and liabilities were valued individually.<br />
The valuation also reflects the assumption that the company will continue as a going concern.<br />
The principle of conservatism was observed in that only those profits realised as of the<br />
balance sheet date were included in the <strong>annual</strong> <strong>financial</strong> <strong>statement</strong>s. Recognisable risks and<br />
impending losses that occurred during the reporting year or in a previous accounting period<br />
were also included in the <strong>annual</strong> <strong>financial</strong> <strong>statement</strong>s, even if these circumstances first became<br />
known between the balance sheet date and the date the <strong>annual</strong> <strong>financial</strong> <strong>statement</strong>s were<br />
prepared.<br />
157
Annual Financial Statement <strong>2011</strong><br />
1.2. Non-current assets<br />
1.2.1. Property, plant and equipment<br />
Property, plant and equipment consist chiefly of real estate that is carried at acquisition or<br />
production cost less ordinary depreciation.<br />
Ordinary depreciation is calculated according to the straight-line method. Properties are<br />
depreciated over a useful life of 50 years.<br />
An impairment loss was recognised in cases where the fair value of an object was lower than<br />
its depreciated cost.<br />
1.2.2. Financial assets<br />
Financial assets are valued at cost less any necessary impairment losses. Impairment charges<br />
are recognised to investments in other companies and non-current securities if the decline in<br />
value is considered to be lasting.<br />
Treasury shares are always written down to the lower of purchase price and market price as of<br />
the respective balance sheet date.<br />
1.3. Current assets<br />
1.3.1. Receivables<br />
Receivables are recognised at nominal value and shown in detail on the balance sheet.<br />
Recognisable individual risks are reflected in the use of a lower value that is appropriate<br />
under the given circumstances.<br />
1.3.2. Deposits with <strong>financial</strong> institutions<br />
These items are carried at nominal value.<br />
1.4. Equity<br />
Equity comprises issued capital, the appropriated share premium, reserves, profit or loss<br />
carried forward and profit or loss for the year.<br />
1.5. Provisions<br />
1.5.1. Other provisions<br />
Other provisions are created in accordance with the principle of conservatism for all<br />
identifiable risks and obligations that cannot be quantified or are uncertain at the time the<br />
<strong>financial</strong> <strong>statement</strong>s are prepared. They reflect the amounts required by reasonable business<br />
judgment.<br />
158
Annual Financial Statement <strong>2011</strong><br />
1.6. Liabilities<br />
Liabilities (with the exception of bonds) are recognised at their repayment amount.<br />
On 7 November 2007 <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> issued a convertible bond with a price of<br />
EUR 100,000 per certificate and a total value of EUR 196.4 million. The conversion premium<br />
equalled 130% of the common share price on the date the convertible bond was issued.<br />
The conversion right can be exercised at any time from 27 December 2007 to 3 November<br />
2014. If the conversion right is not exercised, the bonds will be redeemed on 12 November<br />
2014 at a price of EUR 111,490 per certificate. Interest is paid <strong>annual</strong>ly up to settlement at a<br />
rate of 1.5% per year.<br />
The difference between the issue price of the bond and the higher repayment amount will be<br />
recognised over the term of the security.<br />
Bond certificates that have not been converted or redeemed as of 12 November 2012 may be<br />
put to the company for redemption. The issuer is entitled to redeem the bond prematurely at<br />
the applicable redemption price on or after 24 November 2010, if the price of the common<br />
shares to be delivered upon conversion equals at least 130% of the redemption amount on 20<br />
of 30 successive stock exchange days.<br />
Convertible bonds with a nominal value of TEUR 32,319 had been repurchased for<br />
TEUR 45,400 by the end of the <strong>2011</strong> <strong>financial</strong> year. In <strong>2011</strong> convertible bonds with a nominal<br />
value of TEUR 41,900 were withdrawn and therefore redeemed. The remaining convertible<br />
bonds are reported on the balance sheet under <strong>financial</strong> assets (non-current).<br />
In the first quarter of 2010 <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> issued another convertible bond<br />
with a price of EUR 100,000 per certificate and a total value of EUR 135.0 million. This bond<br />
has a six-year term ending on 1 February 2016. The bondholders have the right to put their<br />
bond certificates prematurely four years after the date of issue at the nominal value plus<br />
accrued interest. The convertible bond certificates were issued at 100% of the nominal value<br />
of EUR 100,000. Interest is paid semi-<strong>annual</strong>ly at a rate of 5.25% per year. The conversion<br />
price was adjusted from EUR 12.06 to EUR 11.60 to reflect the dividend payment.<br />
159
Annual Financial Statement <strong>2011</strong><br />
Notes to individual positions on the balance sheet<br />
2.1. Non-current assets<br />
Development<br />
The development of the individual components of non-current assets and the classification of<br />
<strong>annual</strong> depreciation or amortisation by component are shown on the schedule of non-current<br />
assets.<br />
Property, plant and equipment<br />
Land, rights to land and buildings, including buildings on land owned by third parties, totalled<br />
TEUR 100,202 as of 31 December <strong>2011</strong> (2010: TEUR 138,480). This amount includes land<br />
with a value of TEUR 21,164 (2010: TEUR 29,493) and buildings with a value of<br />
TEUR 79,038 (2010: TEUR 108,987). No borrowing costs were capitalised during the<br />
reporting year (2010: TEUR 0). Property, plant and equipment also include TEUR 120 (2010:<br />
TEUR 129) of investments in buildings owned by third parties.<br />
The remaining property, plant and equipment represent construction in progress of<br />
TEUR 3,572 (2010: TEUR 9,279).<br />
Property, plant and equipment totalled TEUR 103,893 as of 31 December <strong>2011</strong> (2010:<br />
TEUR 147,888).<br />
Financial assets<br />
Financial assets include shares in subsidiaries. The subsidiaries of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong><br />
<strong>SE</strong> are listed below:<br />
Stake in <strong>2011</strong> Stake in 2010<br />
Austria<br />
G-Unternehmensbeteiligung GmbH 100.00 % 100.00 %<br />
Con value one <strong>Immobilien</strong> GmbH 98.42 % 98.42 %<br />
GGJ Beteiligungs GmbH 100.00 % 100.00 %<br />
CONWERT <strong>SE</strong>CURITISATION Holding GmbH 100.00 % 100.00 %<br />
TPI Tourism Properties <strong>Invest</strong> AG 92.00 % 92.00 %<br />
<strong>conwert</strong> Dienstleistung und Bauträger Holding GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Treasury OG 100.00 % 100.00 %<br />
LLL-Luxury Living Liegenschaftsentwicklungs GmbH 0.00 % 99.00 %<br />
CWG Beteiligungs GmbH 100.00 % 100.00 %<br />
Berolinum Liegenschaftbesitz GmbH 0.00 % 94.90 %<br />
<strong>conwert</strong> Projektentwicklungs GmbH 99.03 % 99.03 %<br />
Cicero 1 Holding GmbH 100.00 % 100.00 %<br />
Cicero 2 Holding GmbH 100.00 % 100.00 %<br />
Cicero 3 Holding GmbH 100.00 % 100.00 %<br />
ECO Business <strong>Immobilien</strong> AG<br />
Germany<br />
95.76 % 95.76 %<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> GmbH 94.90 % 94.90 %<br />
<strong>conwert</strong> Berlin 2 <strong>Immobilien</strong> <strong>Invest</strong> GmbH 94.90 % 94.90 %<br />
<strong>conwert</strong> <strong>Immobilien</strong> Development GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Grazer Damm Development GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Viktoria Quartier <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> beta <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> gamma <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> delta <strong>Invest</strong> GmbH 75.00 % 75.00 %<br />
<strong>conwert</strong> Grundbesitz Leipzig Bestand GmbH 100.00 % 100.00 %<br />
160
Annual Financial Statement <strong>2011</strong><br />
<strong>conwert</strong> Grundbesitz Leipzig Besitz GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> lambda <strong>Invest</strong> GmbH 75.00 % 75.00 %<br />
<strong>conwert</strong> epsilon <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> sigma <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> omega <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Sachsen <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Deutschland Beteiligungsholding GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Centaurus <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Pegasus <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Deutschland Holding GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Wohn-Fonds GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Leo <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Taurus <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
<strong>conwert</strong> Cassiopeia <strong>Invest</strong> GmbH 100.00 % 100.00 %<br />
Defida Verwaltungs GmbH 100.00 % 100.00 %<br />
Defida 2016 GmbH & Co. KG 95.90 % 95.90 %<br />
GAG Grundstücksverwaltungs-GmbH 94.90 % 94.90 %<br />
Cor 18. GmbH & Co KG 94.90 % 0.00 %<br />
The additions to shares in subsidiaries amounted to EUR 15,332,140.58 (2010:<br />
TEUR 337,211) and represent acquisitions as well as shareholder contributions to<br />
subsidiaries.<br />
Shares in subsidiaries:<br />
<strong>2011</strong><br />
Company<br />
Head-<br />
Equity as of Results for<br />
quarters Book value Stake 31.12.<strong>2011</strong> <strong>2011</strong><br />
TEUR TEUR TEUR<br />
G-Unternehmensbeteiligung GmbH Vienna 0 100.00 % 35 (4,893)<br />
Con value one <strong>Immobilien</strong> GmbH Vienna 9,356 98.42 % 409 (364)<br />
GGJ Beteligungs GmbH<br />
CONWERT <strong>SE</strong>CURITISATION<br />
Vienna 0 100.00 % 116 364<br />
Holding GmbH<br />
Vienna 700 100.00 % 2,182 5,347<br />
TPI Tourism Properties <strong>Invest</strong> AG<br />
<strong>conwert</strong> Dienstleistung und Bauträger<br />
Vienna 41,889 92.00 % 45,550 (11,147)<br />
Holding GmbH<br />
Vienna 131,139 100.00 % 131,104 81,043<br />
<strong>conwert</strong> Treasury OG Vienna 539,220 100.00 % 539,220 28,315<br />
CWG Beteiligungs GmbH Vienna 70,317 100.00 % 71,064 (33,761)<br />
<strong>conwert</strong> Projektentwicklungs GmbH Vienna 3,821 99.03 % 1,744 319<br />
Cicero 1 Holding GmbH Vienna 57,803 100.00 % 57,209 1,653<br />
Cicero 2 Holding GmbH Vienna 4,145 100.00 % 4,669 (1)<br />
Cicero 3 Holding GmbH Vienna 16,546 100.00 % 16,520 (1)<br />
ECO Business <strong>Immobilien</strong> AG Vienna 264,356 95.76 % 318,241 (80,332)<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> GmbH<br />
<strong>conwert</strong> Berlin 2 <strong>Immobilien</strong> <strong>Invest</strong><br />
Berlin 7,646 94.90 % 10,655 694<br />
GmbH<br />
<strong>conwert</strong> <strong>Immobilien</strong> Development<br />
Berlin 1,717 94.90 % 2,767 947<br />
GmbH<br />
<strong>conwert</strong> Grazer Damm Development<br />
Berlin 0 100.00 % (618) (392)<br />
GmbH<br />
Berlin 22,366 100.00 % 25,303 1,036<br />
<strong>conwert</strong> Viktoria Quartier <strong>Invest</strong><br />
Berlin<br />
GmbH<br />
25 100.00 % (961) 444<br />
<strong>conwert</strong> beta <strong>Invest</strong> GmbH Berlin 4,025 100.00 % 2,385 1,015<br />
<strong>conwert</strong> gamma <strong>Invest</strong> GmbH Berlin 38 100.00 % 1,116 36<br />
<strong>conwert</strong> delta <strong>Invest</strong> GmbH<br />
<strong>conwert</strong> Grundbesitz Leipzig<br />
Berlin 6,564 75.00 % 5,035 (351)<br />
Bestand GmbH<br />
<strong>conwert</strong> Grundbesitz<br />
Leipzig 45,662 100.00 % 44,439 1,078<br />
161
Annual Financial Statement <strong>2011</strong><br />
Leipzig Besitz GmbH Leipzig 299 100.00 % (102) (24)<br />
<strong>conwert</strong> lambda <strong>Invest</strong> GmbH Berlin 0 75.00 % (11,023) (2,566)<br />
<strong>conwert</strong> epsilon <strong>Invest</strong> GmbH Berlin 7,025 100.00 % 5,888 772<br />
<strong>conwert</strong> sigma <strong>Invest</strong> GmbH Berlin 567 100.00 % (489) (825)<br />
<strong>conwert</strong> omega <strong>Invest</strong> GmbH Berlin 3,025 100.00 % (23,959) (4,830)<br />
<strong>conwert</strong> Sachsen <strong>Invest</strong> GmbH<br />
<strong>conwert</strong> Deutschland Beteiligungs-<br />
Berlin 24,806 100.00 % 27,557 805<br />
holding GmbH<br />
Berlin<br />
25<br />
100.00 %<br />
(1,039)<br />
<strong>conwert</strong> Centaurus <strong>Invest</strong> GmbH Berlin 1,291 100.00 % 4,425 (1,431)<br />
<strong>conwert</strong> Pegasus <strong>Invest</strong> GmbH Berlin 0 100.00 % (4,396) (1,055)<br />
<strong>conwert</strong> Deutschland Holding GmbH Berlin 7,025 100.00 % 6,880 (29)<br />
<strong>conwert</strong> Wohn-Fonds GmbH Heilbronn 30 100.00 % 6 (17)<br />
<strong>conwert</strong> Leo <strong>Invest</strong> GmbH Heilbronn 0 100.00 % 36 (31)<br />
<strong>conwert</strong> Taurus <strong>Invest</strong> GmbH Heilbronn 25 100.00 % (305) (134)<br />
<strong>conwert</strong> Cassiopeia <strong>Invest</strong> GmbH Heilbronn 25 100.00 % (174) (55)<br />
Defida Verwaltungs GmbH Heilbronn 0 100.00 % (23) (5)<br />
Defida 2016 GmbH & Co. KG Heilbronn 1,721 95.89 % 1,928 (71)<br />
GAG Grundstücksverwaltungs GmbH Heilbronn 0 94.90% (13,020) 3,035<br />
Cor 18. GmbH & Co KG Berlin 1,591 94.90 % 1,579 (11)<br />
2010<br />
Company<br />
Head-<br />
Equity as of Results for<br />
quarters Book value Stake 31.12.2010 2010<br />
TEUR TEUR TEUR<br />
G-Unternehmensbeteiligung GmbH Vienna 5,668 100.00 % 5,666 (75)<br />
Con value one <strong>Immobilien</strong> GmbH Vienna 14,273 98.42 % 5,769 (1,259)<br />
GGJ Beteligungs GmbH<br />
CONWERT <strong>SE</strong>CURITISATION<br />
Vienna 0 100.00 % 826 569<br />
Holding GmbH<br />
Vienna 700 100.00 % (2,464) (278)<br />
TPI Tourism Properties <strong>Invest</strong> AG<br />
<strong>conwert</strong> Dienstleistung und Bauträger<br />
Vienna 47,521 92.00 % 48,997 (2,932)<br />
Holding GmbH<br />
Vienna 131,139 100.00 % 135,178 (32,891)<br />
<strong>conwert</strong> Treasury OG<br />
LLL-Luxury Living<br />
Vienna 583,537 100.00 % 583,537 33,795<br />
Liegenschaftsentwicklungs GmbH Vienna 18 99.00 % (5,997) (741)<br />
CWG Beteiligungs GmbH Vienna 92,790 100.00 % 104,589 11,821<br />
Berolinum Liegenschaftbesitz GmbH Vienna 10,394 94.90 % 14,593 (137)<br />
Kallco <strong>Immobilien</strong>verwaltung GmbH Vienna 3,818 99.03 % 1,425 (112)<br />
Cicero 1 Holding GmbH *) Vienna 72,047 100.00 % 72,156 20,122<br />
Cicero 2 Holding GmbH *) Vienna 4,688 100.00 % 4,678 (4)<br />
Cicero 3 Holding GmbH *) Vienna 16,542 100.00 % 16,529 (5)<br />
ECO Business <strong>Immobilien</strong> AG Vienna 250,706 95.76 % 394,922 3,264<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> GmbH<br />
<strong>conwert</strong> Berlin 2 <strong>Immobilien</strong> <strong>Invest</strong><br />
Berlin 7,646 94.90 % 9,961 4,241<br />
GmbH<br />
<strong>conwert</strong> <strong>Immobilien</strong> Development<br />
Berlin 1,717 94.90 % 1,820 1,787<br />
GmbH<br />
<strong>conwert</strong> Grazer Damm Development<br />
Berlin 50 100.00 % (226) (141)<br />
GmbH<br />
Berlin 22,366 100.00 % 24,267 981<br />
<strong>conwert</strong> Viktoria Quartier <strong>Invest</strong><br />
Berlin<br />
GmbH<br />
25 100.00 % (1,406) (92)<br />
<strong>conwert</strong> beta <strong>Invest</strong> GmbH Berlin 4,025 100.00 % 1,370 (286)<br />
<strong>conwert</strong> gamma <strong>Invest</strong> GmbH Berlin 38 100.00 % 1,080 49<br />
<strong>conwert</strong> delta <strong>Invest</strong> GmbH<br />
<strong>conwert</strong> Grundbesitz Leipzig<br />
Berlin 8,538 75.00 % 5,387 (354)<br />
Bestand GmbH<br />
<strong>conwert</strong> Grundbesitz<br />
Leipzig 45,662 100.00 % 40,784 1,325<br />
Leipzig Besitz GmbH<br />
Leipzig 299 100.00 % (78) 68<br />
<strong>conwert</strong> lambda <strong>Invest</strong> GmbH Berlin 22,128 75.00 % 18,516 (989)<br />
<strong>conwert</strong> epsilon <strong>Invest</strong> GmbH Berlin 7,025 100.00 % 5,115 293<br />
(261)<br />
162
Annual Financial Statement <strong>2011</strong><br />
<strong>conwert</strong> sigma <strong>Invest</strong> GmbH Berlin 1,787 100.00 % 336 (780)<br />
<strong>conwert</strong> omega <strong>Invest</strong> GmbH Berlin 3,025 100.00 % (18,952) (4,979)<br />
<strong>conwert</strong> Sachsen <strong>Invest</strong> GmbH<br />
<strong>conwert</strong> Deutschland Beteiligungs-<br />
Berlin 29,806 100.00 % 29,489 79<br />
holding GmbH<br />
Berlin<br />
25<br />
100.00 %<br />
<strong>conwert</strong> Centaurus <strong>Invest</strong> GmbH Berlin 5,936 100.00 % 5,856 (1,129)<br />
<strong>conwert</strong> Pegasus <strong>Invest</strong> GmbH Berlin 0 100.00 % (3,341) (1,034)<br />
<strong>conwert</strong> Deutschland Holding GmbH Berlin 7,025 100.00 % 6,909 (27)<br />
<strong>conwert</strong> Wohn-Fonds GmbH Heilbronn 30 100.00 % 23 4<br />
<strong>conwert</strong> Leo <strong>Invest</strong> GmbH Heilbronn 25 100.00 % 67 43<br />
<strong>conwert</strong> Taurus <strong>Invest</strong> GmbH Heilbronn 25 100.00 % (171) (194)<br />
<strong>conwert</strong> Cassiopeia <strong>Invest</strong> GmbH Heilbronn 25 100.00 % (118) (142)<br />
Defida Verwaltungs GmbH Heilbronn 25 100.00 % (18) 0<br />
Defida 2016 GmbH & Co. KG Heilbronn 1,987 95.89 % 1,999 (1)<br />
GAG Grundstücksverwaltungs GmbH Heilbronn 0 94.90% (16,178) (1,765)<br />
*) Different <strong>financial</strong> year; balance sheet date 30 June<br />
<strong>Invest</strong>ments in other companies<br />
<strong>2011</strong><br />
TEUR TEUR TEUR<br />
Company<br />
Head-<br />
Equity as of Results for<br />
quarters Book value Stake 31.12.<strong>2011</strong> <strong>2011</strong><br />
TEUR TEUR TEUR<br />
Tizian Wohnen 1 GmbH Berlin 2,377 34.00 % 6,335 166<br />
Tizian Wohnen 2 GmbH Berlin 876 34.00 % 3,685 292<br />
<strong>conwert</strong> Goud <strong>Invest</strong> GmbH Berlin 4,413 15.52 % 28,431 (3)<br />
CD Deutsche Eigenheim AG Berlin 2,192 24.90 % 8,817* 58 *<br />
Alt & Kelber <strong>Immobilien</strong>verwaltung Heilbronn<br />
GmbH<br />
*) 2010 <strong>financial</strong> year<br />
977 22.00 % 37 679<br />
2010<br />
Company<br />
Head-<br />
Equity as of Results for<br />
quarters Book value Stake 31.12.2010 2010<br />
TEUR TEUR TEUR<br />
Tizian Wohnen 1 GmbH Berlin 2,481 34.00 % 6,170 16<br />
Tizian Wohnen 2 GmbH Berlin 997 34.00 % 3,492 715<br />
CD Deutsche Eigenheim AG Berlin 2,192 24.90 % 8,817 58<br />
Alt & Kelber <strong>Immobilien</strong>verwaltung Heilbronn<br />
GmbH<br />
977 22.00 % 1,014 963<br />
Securities (non-current)<br />
From December 2008 to October <strong>2011</strong>, convertible bonds with a nominal value of<br />
TEUR 41,900 were repurchased at a cost of TEUR 28,732 and subsequently withdrawn. In<br />
November <strong>2011</strong> convertible bonds with a nominal value of TEUR 3,500 were repurchased.<br />
The market value amounted to TEUR 3,611 as of 31 December <strong>2011</strong>.<br />
Treasury shares<br />
This position is used to record the company’s treasury shares. The extraordinary general<br />
meeting of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> on 11 October 2010 revoked the authorisation of<br />
the <strong>annual</strong> general meeting on 26 May 2009 for a share buyback and, at the same time,<br />
authorised the Administrative Board to repurchase the company’s shares up to the legally<br />
defined maximum of 10% of share capital during a period of 30 months beginning on this<br />
same date. The range for the share buyback was defined as EUR 4.00 to EUR 14.00 per share.<br />
(778)<br />
(235)<br />
163
Annual Financial Statement <strong>2011</strong><br />
A total of 3,861,964 shares had been repurchased by 31 December <strong>2011</strong> at a cost of<br />
TEUR 41,618 (incl. fees). This represents 4.524% of share capital. The average price paid for<br />
the buyback was EUR 10.78/share. Treasury shares are carried at cost or the lower stock<br />
exchange price on the respective balance sheet date. In <strong>2011</strong> this procedure resulted in a<br />
write-up of TEUR 1,878 to shares that were written down in 2008 as well as a write-down of<br />
TEUR 7,809 to shares purchased during or after 2009. Treasury shares are valued at their<br />
respective cost (incl. fees).<br />
2.2. Receivables<br />
All receivables have a remaining term of less than one year. None of the receivables are<br />
secured by a bill of exchange. Receivables due from subsidiaries are comprised exclusively of<br />
other receivables.<br />
Other receivables include income of TEUR 20,237 (2010: TEUR 1,134) that is only due and<br />
payable after the balance sheet date.<br />
Deposits with <strong>financial</strong> institutions<br />
Deposits with <strong>financial</strong> institutions include TEUR 6,629 that are held in a blocked account<br />
and not available for the company’s discretionary use.<br />
2.3. Equity<br />
2.3.1. Issued capital<br />
The issued capital of the company totals EUR 853,592,730.00 and is divided into 85,359,273<br />
bearer shares.<br />
The company had authorised capital of EUR 400,121,590.00 as of 31 December <strong>2011</strong>.<br />
The Annual General Meeting on 26 May 2009 approved the issue of participation capital as<br />
well as the issue of participation certificates with a maximum value of EUR 400 million up to<br />
26 May 2014.<br />
In order to service a convertible bond, the Annual General Meeting on 4 June 2007 approved<br />
a conditional capital increase of von EUR 128,038,900.00 through the issue of 12,803,890<br />
bearer shares.<br />
In order to service a convertible bond, the Annual General Meeting on 27 May 2008 approved<br />
a conditional capital increase of EUR 128,038,900.00 through the issue of 12,803,890 bearer<br />
shares.<br />
In order to service a convertible bond, the Annual General Meeting on 15 April 2010<br />
approved a conditional capital increase of EUR 128,038,900.00 through the issue of<br />
12,803,890 bearer shares.<br />
2.3.2. Appropriated share premium<br />
The appropriated share premium comprises the premium on earlier capital increases and the<br />
equity component of the convertible bonds.<br />
164
Annual Financial Statement <strong>2011</strong><br />
2.3.3. Reserves<br />
This position represents the reserve created in connection with the purchase of treasury<br />
shares, whereby TEUR 24,990 were added during <strong>2011</strong>.<br />
2.4. Provisions<br />
The following table shows the classification of provisions:<br />
Type of provision Balance on<br />
Balance on<br />
1.1.<strong>2011</strong> Use Addition 31.12.<strong>2011</strong><br />
TEUR TEUR TEUR TEUR<br />
Tax provisions 13,634 0 3,223 16,857<br />
Impending losses 0 0 27,896 27,896<br />
Legal and consulting expenses 737 737 919 919<br />
Employee-related provision 502 474 844 872<br />
Miscellaneous 3,580 3,540 204 244<br />
Total 18,453 4,751 33,086 46,788<br />
The tax provisions include provisions for subsequent tax payments in connection with current<br />
tax losses transferred from foreign (German) group companies as part of the group taxation<br />
scheme. These amounts were accrued because the respective assessments or resolutions had<br />
not been issued by the end of <strong>2011</strong>.<br />
The provision for impending losses relates to subsidiaries whose equity is negative after the<br />
inclusion of the undisclosed reserves contained in properties. The tax provisions were created<br />
for tax liabilities in connection with current tax losses transferred from foreign (German)<br />
group companies as part of the group taxation scheme.<br />
165
Annual Financial Statement <strong>2011</strong><br />
2.5. Liabilities<br />
<strong>2011</strong>:<br />
in TEUR<br />
As per<br />
balance sheet<br />
Remaining term<br />
up to one year<br />
Remaining<br />
term from one<br />
to five years<br />
Remaining term<br />
over five years<br />
Bonds 292,484 0 164,961* 127,523<br />
Interest-bearing loans and<br />
borrowings<br />
85,383 18,883 15,947 50,553<br />
Trade accounts payable 2,110 1,733 377 0<br />
Amounts due to<br />
subsidiaries<br />
13,068 13,068 0 0<br />
Miscellaneous 10,716 10,420 296 0<br />
Total 403,761 44,104 181,581 178,076<br />
2010:<br />
in TEUR<br />
As per<br />
balance sheet<br />
Remaining term<br />
up to one year<br />
Remaining<br />
term from one<br />
to five years<br />
Remaining term<br />
over five years<br />
Bonds 332,455 0 206,474 * 125,981 **<br />
Interest-bearing loans and<br />
borrowings<br />
117,412 23,609 26,626 67,177<br />
Trade accounts payable<br />
Amounts due to<br />
2,050 1,674 376 0<br />
subsidiaries<br />
24,099 24,099 0<br />
0<br />
Miscellaneous 5,421 5,135 286 0<br />
Total 481,437 54,517 233,762 193,158<br />
* The bond is due on 14 November 2014, but bondholders have the right to put their bonds<br />
prematurely as of 12 November 2012.<br />
** The bond is due on 1 February 2016, but bondholders have the right to put their bonds<br />
prematurely as of 1 February 2014 at the nominal amount plus accrued interest.<br />
Interest-bearing loans and borrowings of TEUR 76,764 (2010: TEUR 109,880) are secured by<br />
mortgages that are recorded in the company register.<br />
All properties serve as collateral for mortgages, with the exception of the following object:<br />
- 7000 Eisenstadt, Glorietteallee 3-Museumgasse 4<br />
Amounts due to subsidiaries are comprised solely of other liabilities.<br />
Miscellaneous liabilities include expenses of TEUR 3,290 (2010: TEUR 3,486) that will only<br />
become due and payable after the balance sheet date.<br />
166
Annual Financial Statement <strong>2011</strong><br />
2.6. Other <strong>financial</strong> obligations and <strong>financial</strong> instruments<br />
As of the balance sheet date, <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> held 28 derivatives with effective<br />
hedges. The company concluded interest rate swaps totalling TEUR 870,600 (2010:<br />
TEUR 942,750). These hedges are used to convert variable interest (3-, 6- and 12-month<br />
Euribor) loans and borrowings to fixed interest rates.<br />
The fair value of the hedges is determined on the basis of the market value as of the balance<br />
sheet date. Measurement as of the balance sheet date resulted in the following values:<br />
Reference value Term<br />
Market value <strong>2011</strong><br />
in TEUR<br />
With hedge relationship:<br />
Interest rate swap EUR 2.0 mill. 2005 - 2015 (169)<br />
Interest rate swap EUR 2.0 mill. 2005 - 2015 (170)<br />
Interest rate swap EUR 15.6 mill. 2009 - 2016 (1.956)<br />
Interest rate swap EUR 26.0 mill. 2009 - 2016 (3.145)<br />
Interest rate swap EUR 34.0 mill. <strong>2011</strong> - 2017 (2.748)<br />
Interest rate swap EUR 20.0 mill. 2007 - 2017 (2.700)<br />
Interest rate swap EUR100.0 mill. 2007 - 2017 (13.879)<br />
Interest rate swap EUR 20.0 mill. 2008 - 2017 (3.487)<br />
Interest rate swap EUR 50.0 mill. 2008 - 2017 (7.644)<br />
Interest rate swap EUR 50.0 mill. 2007 - 2017 (7.648)<br />
Interest rate swap EUR 50.0 mill. 2007 - 2017 (8.434)<br />
Interest rate swap EUR 30.0 mill. 2007 - 2020 (5.910)<br />
Interest rate swap EUR 20.0 mill. 2007 - 2017 (3.534)<br />
Interest rate swap EUR 10.0 mill. 2008 - 2018 (1.663)<br />
Interest rate collar EUR 37.0 mill. 2008 - 2018 (2.745)<br />
Interest rate swap EUR 14.0 mill. 2008 - 2018 (3.176)<br />
Interest rate swap EUR 7.0 mill. 2008 - 2018 (1.209)<br />
Interest rate swap EUR 50.0 mill. 2008 - 2018 (8.034)<br />
Interest rate cap (CAP) EUR 20.0 mill. 2010 - 2020 442<br />
Interest rate cap (CAP) EUR 12.3 mill. 2010 - 2020 283<br />
Interest rate cap (CAP) EUR 30.0 mill. 2010 - 2020 689<br />
Interest rate floor EUR150.0 mill. 2010 - 2020 (26.923)<br />
Interest rate cap (CAP) EUR 20.0 mill. 2010 - 2020 559<br />
Interest rate cap (CAP) EUR 20.0 mill. 2010 - 2020 456<br />
Interest rate cap (CAP) EUR 40.0 mill. 2010 - 2020 912<br />
Interest rate swap EUR 3.0 mill. 2003 - 2023 (346)<br />
Interest rate cap (CAP) EUR 7.7 mill. 2010 - 2025 221<br />
Interest rate swap EUR 30.0 mill. 2016 - 2026 (3.693)<br />
Measurement as of 31 December 2010 resulted in the following values:<br />
Reference value Term<br />
Market value 2010<br />
in TEUR<br />
With hedge relationship:<br />
Interest rate swap EUR 3.25 mill. 2003 - 2023 (266)<br />
Interest rate cap (CAP) EUR 20.0 mill. 2004 - <strong>2011</strong> 0<br />
Interest rate swap EUR 25.0 mill. 2004 - <strong>2011</strong> (584)<br />
Interest rate swap EUR 25.0 mill. 2004 - <strong>2011</strong> (598)<br />
Interest rate swap EUR 50.0 mill. 2008 - 2017 (5.721)<br />
167
Annual Financial Statement <strong>2011</strong><br />
Interest rate swap EUR 50.0 mill. 2007 - 2017 (5.683)<br />
Interest rate swap EUR100.0 mill. 2007 - 2017 (10.012)<br />
Interest rate swap EUR 50.0 mill. 2007 - 2017 (6.039)<br />
Interest rate swap EUR 20.0 mill. 2007 - 2017 (2.118)<br />
Interest rate swap EUR 20.0 mill. 2007 - 2017 (2.790)<br />
Interest rate swap EUR 30.0 mill. 2007 - 2020 (3.791)<br />
Interest rate swap EUR 16.5 mill. 2009 - 2016 (1.520)<br />
Interest rate swap EUR 26.0 mill. 2009 - 2016 (2.448)<br />
Interest rate swap EUR 2.0 mill. 2005 - 2015 (134)<br />
Interest rate swap EUR 2.0 mill. 2005 - 2015 (134)<br />
Interest rate swap EUR 14.0 mill. 2008 - 2018 (2.604)<br />
Interest rate swap EUR 50.0 mill. 2008 - 2018 (4.930)<br />
Interest rate swap EUR 10.0 mill. 2008 - 2018 (1.203)<br />
Interest rate collar EUR 37.0 mill. 2008 - 2018 (1.342)<br />
Interest rate swap EUR 20.0 mill. 2008 - 2017 (2.803)<br />
Interest rate swap EUR 7.0 mill. 2008 - 2018 (854)<br />
Interest rate swap EUR 30.0 mill. 2016 - 2026 (621)<br />
Interest rate swap EUR 35.0 mill. 2012 - 2022 (1.164)<br />
Interest rate floor EUR150.0 mill. 2010 - 2020 (18.319)<br />
Interest rate cap (CAP) EUR 20.0 mill. 2010 - 2020 951<br />
Interest rate cap (CAP) EUR 30.0 mill. 2010 - 2020 1.439<br />
Interest rate cap (CAP) EUR12.33 mill. 2010 - 2020 591<br />
Interest rate cap (CAP) EUR 20.0 mill. 2010 - 2020 873<br />
Interest rate cap (CAP) EUR 20.0 mill. 2010 - 2020 870<br />
Interest rate cap (CAP) EUR 40.0 mill. 2010 - 2020 1.740<br />
Interest rate cap (CAP) EUR 7.67 mill. 2010 - 2020 424<br />
Since all hedges are considered to be effective. the related transactions are not recorded in<br />
accordance with Austrian commercial law. Therefore. the book value equals EUR 0.00.<br />
There are no hedges without an effective hedge relationship. The effects of the hedges are<br />
reported on the income <strong>statement</strong> under interest income or interest expense. whereby – as<br />
indicated below – TEUR 17.983 were charged out to subsidiaries.<br />
As of 17 December 2009 <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> concluded a framework derivative<br />
agreement with its direct and indirect subsidiaries retroactive to 1 January 2009. This<br />
agreement calls for the credit-related allocation of payments made for derivatives and<br />
payments received on derivatives.<br />
Payment inflows and outflows arising from derivatives amounted to a net total of<br />
TEUR 22.184 (2010: TEUR 23.941). Of this total. TEUR 17.983 (2010: TEUR 22.196) were<br />
charged out to direct and indirect domestic and foreign subsidiaries.<br />
2.7. Deferred income<br />
Deferred income represents one-time settlement payments from interest rate swaps. which are<br />
accrued over the relevant terms.<br />
168
Annual Financial Statement <strong>2011</strong><br />
2.8. Contingent receivables and liabilities<br />
As of the balance sheet date. <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> held contingent liabilities<br />
totalling EUR 516.260.433.77 (2010: TEUR 644.442) on behalf of subsidiaries.<br />
Notes to individual positions on the income <strong>statement</strong><br />
3.1. Revenues<br />
Revenues amounted to TEUR 62.957 in <strong>2011</strong> (2010: TEUR 52.825). This amount comprises<br />
TEUR 7.589 (2010: TEUR 8.480) from property management. TEUR 49.613 (2010:<br />
TEUR 37.831) from the sale of properties. TEUR 5.755 (2010: TEUR 6.363) from<br />
management fees charged to subsidiaries and TEUR 0 (2010: TEUR 151) from other revenue<br />
sources. All revenues were realised in Austria.<br />
3.2. Cost of materials and services<br />
31.12.<strong>2011</strong> 31.12.2010<br />
TEUR TEUR<br />
Expenses related to properties 2,835 3,090<br />
Book values of properties sold 40,222 29,523<br />
Total 43,057 32,613<br />
The cost of materials and services for the management of properties include regular operating<br />
costs as well as maintenance and various property-related expenses.<br />
3.3. Personnel expenses<br />
The remuneration for the Executive Directors and former members of the Executive Board is<br />
paid by <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong>. This remuneration totalled TEUR 2.609 in <strong>2011</strong><br />
(2010: TEUR 4.491).<br />
3.4. Depreciation and amortisation<br />
Depreciation of TEUR 2.528 (2010: TEUR 3.812) to property. plant and equipment includes<br />
TEUR 0 (2010: TEUR 950) of impairment charges.<br />
169
Annual Financial Statement <strong>2011</strong><br />
3.5. Other operating expenses<br />
Other operating expenses comprise the following items:<br />
31.12.<strong>2011</strong> 31.12.2010<br />
TEUR TEUR<br />
Capital market costs 487 933<br />
Management fees 6,743 7,464<br />
Legal and consulting expenses 3,332 4,613<br />
Advertising 1,217 2,330<br />
Sales commissions 2,594 1,352<br />
Bank charges 648 3,194<br />
Miscellaneous 3,400 2,630<br />
Total 18,421 22,516<br />
The management fees included under other operating expenses are contrasted by income of<br />
TEUR 5.755 (2010: TEUR 6.363) from the charge out of these costs to third parties.<br />
3.6. Income from investments in other companies<br />
This position comprises income of TEUR 122.258 (2010: TEUR 79.328) from shares in<br />
subsidiaries.<br />
3.7. Income from the disposal and write-up of <strong>financial</strong> assets<br />
The major components of this position are as follows: income of TEUR 10.000 from the<br />
subsequent revaluation of the 24.9% stake in ECO Business AG that was written down in<br />
earlier years. income of TEUR 1.878 from the revaluation of treasury shares that were written<br />
down in 2008 and income of TEUR 4.538 from the sale of subsidiaries.<br />
3.8. Expenses related to <strong>financial</strong> assets<br />
This position includes impairment charges of TEUR 72.780 (2010: TEUR 39.404) to shares<br />
in subsidiaries. The major components are an impairment charge of TEUR 22.691 to CWG<br />
Beteiligungs GmbH. an impairment charge of TEUR 14.431 to Cicero 1 Holding GmbH and<br />
an impairment charge of TEUR 13.332 to TPI Tourismus Properties <strong>Invest</strong> GmbH. Treasury<br />
shares were written down by a total of TEUR 7.809 to reflect the lower stock exchange price.<br />
This position also includes a TEUR 27.896 provision for impending losses. which is related to<br />
subsidiaries whose equity is negative after the inclusion of the undisclosed reserves contained<br />
in properties<br />
170
Annual Financial Statement <strong>2011</strong><br />
3.9. Income taxes<br />
Corporate income tax amounted to TEUR 105 in <strong>2011</strong> (2010: TEUR 1.270). Based on the tax<br />
transfer agreement. the member companies of the group received credits totalling<br />
TEUR 3.899 (2010: TEUR 4.734). Expenses of TEUR 3.223 (2010: TEUR 3.378) resulted<br />
from an addition to the provision for subsequent tax liabilities in connection with current tax<br />
losses transferred from foreign (German) group companies as part of the group taxation<br />
scheme.<br />
On 28 November 2005 <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> concluded a group and tax<br />
compensation agreement. This agreement covers <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> as the head<br />
of the group and. as members of the group. all domestic and foreign direct and indirect<br />
subsidiaries over which <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong> held the majority of voting rights as of<br />
31 December 2004. The request for approval of a tax group in accordance with § 9 (8) of the<br />
Austrian Corporate Tax Act was approved by the taxation authorities on 22 December 2005.<br />
The group and tax compensation agreement was amended on 4 December 2006. 14 January<br />
2008. 3 June 2008. 27 July 2009. 17 March 2010 and 6 October <strong>2011</strong> to include additional<br />
direct and indirect subsidiaries of <strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong>. The group tax charge is<br />
calculated in a two-step process: the first step involves the calculation of a theoretical<br />
(positive or negative) tax charge for each group member on a "stand alone" basis; in the next<br />
step. the group tax benefits are distributed among the individual members.<br />
171
Annual Financial Statement <strong>2011</strong><br />
4. Other disclosures<br />
4.1.1. Consolidated <strong>financial</strong> <strong>statement</strong>s<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong>. as the parent company of the Group. prepares consolidated<br />
<strong>financial</strong> <strong>statement</strong>s that include most of the subsidiaries. The consolidated <strong>financial</strong><br />
<strong>statement</strong>s are prepared in accordance with International Financial Reporting Standards<br />
(IFRS). as adopted by the European Union. The consolidated <strong>financial</strong> <strong>statement</strong>s and the<br />
management report for the Group were filed with the company register court in Vienna.<br />
4.1.2. Auditor’s fees<br />
The auditor’s fees for the <strong>2011</strong> <strong>financial</strong> year comprised TEUR 294 for the audit of the <strong>annual</strong><br />
<strong>financial</strong> <strong>statement</strong>s and TEUR 30.5 for other services<br />
4.1.3. Executive Directors<br />
The following persons served as Executive Directors of the <strong>SE</strong> during the reporting year:<br />
Volker Riebel. born 15 October 1955 (from 1 January <strong>2011</strong> to 6 July <strong>2011</strong>)<br />
Thomas Doll. born 27 December 1965<br />
Franz Jürgen Kelber. born 21 September 1957<br />
Thomas Rohr. born 30 March 1965 (up to 15 March <strong>2011</strong>)<br />
The company had six employees in <strong>2011</strong> (2010: six employees).<br />
4.1.4. Non-Executive Directors<br />
The Non-Executive Directors received payments totalling TEUR 328 for their services in<br />
<strong>2011</strong> (2010: TEUR 404).<br />
The remuneration scheme for the Administrative Board calls for fixed <strong>annual</strong> remuneration as<br />
follows: EUR 50.000 for the chairman; EUR 25.000 for each vice-chairman and EUR 15.000<br />
for each member.<br />
Additional remuneration for the members of committees of the Administrative Board:<br />
The Administrative Board has had only one committee since year-end 2010 – the Audit<br />
Committee. The chairman of the Audit Committee receives additional remuneration equal to<br />
50% of his fixed remuneration. The other members of this committee receive additional<br />
remuneration equal to 25% of their fixed remuneration. All Non-Executive Directors are also<br />
members of the Audit Committee.<br />
In addition. every Non-Executive Director receives an attendance fee of EUR 2.500 for each<br />
meeting.<br />
172
Annual Financial Statement <strong>2011</strong><br />
The members of the Administrative Board (Non-Executive Directors) are listed below:<br />
Johannes Meran. born 22 February 1972 - Chairman<br />
Franz Pruckner. born 20 May 1956 – Vice-Chairman<br />
Kerstin Gelbmann. born 30 May 1974 - Member (since 20 May <strong>2011</strong>)<br />
Eveline Steinberger-Kern. born 27 January 1972 - Member (since 20 May <strong>2011</strong>)<br />
Alexander Tavakoli. born 6 August 1969 - Member (since 20 May <strong>2011</strong>)<br />
Friedrich Kadrnoska. born 28 June 1951 – Vice-Chairman (up to 18 June <strong>2011</strong>)<br />
Harald Nograsek. born 5 October 1958 - Member (up to 18 June <strong>2011</strong>)<br />
Vienna. 21 March 2012<br />
The Executive Directors<br />
of<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
Thomas Doll m.p. Franz Jürgen Kelber m.p.<br />
173
Annual Financial Statement <strong>2011</strong><br />
Report on the Financial Statement<br />
AUDITOR’S REPORT<br />
We have audited the accompanying <strong>financial</strong> <strong>statement</strong>s, including the accounting system, of <strong>conwert</strong> <strong>Immobilien</strong><br />
<strong>Invest</strong> <strong>SE</strong>, Vienna (hereinafter referred to as “the company”), for the fiscal year dating from January 1, <strong>2011</strong><br />
to December 31, <strong>2011</strong>. These <strong>financial</strong> <strong>statement</strong>s comprise the balance sheet as of December 31, <strong>2011</strong>, the<br />
income <strong>statement</strong> for the fiscal year ended December 31, <strong>2011</strong>, and the notes.<br />
Management’s Responsibility for the Financial Statements and for the Accounting System<br />
The Company’s management is responsible for the accounting system and for the preparation and fair presentation<br />
of these <strong>financial</strong> <strong>statement</strong>s in accordance with Austrian Generally Accepted Accounting Principles. This<br />
responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and<br />
fair presentation of <strong>financial</strong> <strong>statement</strong>s that are free from material mis<strong>statement</strong>, whether due to fraud or error;<br />
selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in<br />
the circumstances.<br />
Auditor’s Responsibility and Description of Type and Scope of the Statutory Audit<br />
Our responsibility is to express an opinion on these <strong>financial</strong> <strong>statement</strong>s based on our audit. We conducted our<br />
audit in accordance with laws and regulations applicable in Austria and Austrian Standards on Auditing. Those<br />
standards require that we comply with professional guidelines and that we plan and perform the audit to obtain<br />
reasonable assurance whether the <strong>financial</strong> <strong>statement</strong>s are free from material mis<strong>statement</strong>.<br />
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the <strong>financial</strong><br />
<strong>statement</strong>s. The procedures selected depend on the auditor’s judgment, including the assessment of the<br />
risks of material mis<strong>statement</strong> of the <strong>financial</strong> <strong>statement</strong>s, whether due to fraud or error. In making those risk<br />
assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation<br />
of the <strong>financial</strong> <strong>statement</strong>s in order to design audit procedures that are appropriate in the circumstances, but not<br />
for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also<br />
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates<br />
made by management, as well as evaluating the overall presentation of the <strong>financial</strong> <strong>statement</strong>s.<br />
174
Annual Financial Statement <strong>2011</strong><br />
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit<br />
opinion.<br />
Opinion<br />
Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the <strong>financial</strong><br />
<strong>statement</strong>s comply with legal requirements and give a true and fair view of the <strong>financial</strong> position of the Company<br />
as of December 31, <strong>2011</strong> and of its <strong>financial</strong> performance for the fiscal year from January 1, <strong>2011</strong> to December<br />
31, <strong>2011</strong> in accordance with Austrian Generally Accepted Accounting Principles.<br />
Comments on the Management Report<br />
Pursuant to statutory provisions, the management report is to be audited as to whether it is consistent with the<br />
<strong>financial</strong> <strong>statement</strong>s and as to whether the other disclosures are not misleading with respect to the Company’s<br />
position. The auditor’s report also has to contain a <strong>statement</strong> as to whether the management report is consistent<br />
with the <strong>financial</strong> <strong>statement</strong>s and whether the disclosures pursuant to Section 243a UGB are applicable pursuant<br />
§ 243a UGB.<br />
In our opinion, the management report is consistent with the <strong>financial</strong> <strong>statement</strong>s. The disclosures pursuant to<br />
section §243a UGB (Austrian Commercial Code) are appropriate.<br />
Vienna, March 26, 2012<br />
Ernst & Young<br />
Wirtschaftsprüfungsgesellschaft m.b.H.<br />
Alexander Wlasto mp ppa Hans-Erich Sorli mp<br />
Certified Public Accountant Certified Public Accountant<br />
*) The report (in the German language, or translations into another language, including shortened or amended<br />
versions) may not be made public or used by third parties, when reference is made in part or in whole to the auditor’s<br />
report, without the express written consent of the auditors.<br />
175
CONWERT IMMOBILIEN INVEST <strong>SE</strong><br />
ANNUAL FINANCIAL STATEMENT <strong>2011</strong><br />
176
IMPRINT<br />
Owner, editor and publisher<br />
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
Design, consulting, copywriting<br />
Dr. Ute Könighofer, Kommunikationsberatung / Finanzkommunikation<br />
Grafi k design, Illustration<br />
[PF: vienna<br />
Disclaimer<br />
This report contains forward-looking estimates and <strong>statement</strong>s that were made on the basis of the<br />
information available at the present time. These forward-looking <strong>statement</strong>s are usually described in<br />
terms such as “expect“, “estimate“, “plan“, “reckon“, “assume“, “should“, “supposed to”, “can“, etc.<br />
Forward-looking <strong>statement</strong>s refl ect the point of view at the time they are made. We would like to<br />
point out that the actual circumstances and, consequently, the actual results realised at a later<br />
date may differ from the forecasts presented in this report for a variety of reasons.<br />
Missprints and errors reserved.<br />
State<br />
March 2012<br />
177
<strong>conwert</strong> <strong>Immobilien</strong> <strong>Invest</strong> <strong>SE</strong><br />
Albertgasse 35, 1080 Vienna<br />
Austria<br />
T + 43 1 521 45 – 0<br />
F + 43 1 521 45 – 111<br />
E cwi@<strong>conwert</strong>.at<br />
Shareholders‘ hotline<br />
+ 43 1 521 45 – 700<br />
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