annual financial statement 2011 - conwert Immobilien Invest SE

CONWERT IMMOBILIEN INVEST SE
ANNUAL FINANCIAL 2011 STATEMENT ANNUAL REPORT 2011
106
Cash flow from the disposal of assets and liabilities in the form of subsidiaries:
in € million 2011 2010
Receivables and other assets 2.2 1.3
Non-current assets 108.3 2.5
Liabilities and provisions (61.1) 0.0
Non-current liabilities 0.0 0.0
Net assets/liabilities sold 49.4 3.8
Loss on the disposal of subsidiaries (107.7) (3.5)
Net cash flow 58.3 0.3
10. OPERATING LEASES
10.1. CLAIMS ARISING FROM OPERATING LEASES
The conwert Group has concluded operating leases with apartment tenants as part of its rental
activities. These rental agreements can be terminated by the tenants at any time on short notice
(between one and three months). Therefore, the non-cancellable part of the lease represents only
three month’s rental income on average. The respective amount for apartment and commercial
rentals is € 12.3 million (2010: € 13.0 million).
10.2. OTHER FINANCIAL OBLIGATIONS ARISING FROM OPERATING LEASES
The conwert Group has concluded leases for motor vehicles and office equipment. The average
term of these leases is three to five years. All leases were concluded at normal market conditions.
11. CONTINGENT LIABILITIES AND OTHER FINANCIAL OBLIGATIONS
The conwert Group held no contingent liabilities due to third parties as of 31 December 2011 (2010:
€ 0.6 million).
12. OBJECTIVES AND POLICIES OF FINANCIAL RISK MANAGEMENT
The principal financial instruments used by the Group – with the exception of derivative financial
instruments – include bank loans and overdrafts, bonds, trade payables and loans granted. The
main purpose of these financial instruments is to finance the Group’s operating activities. The
conwert Group has various financial assets such as trade receivables, receivables from the sale of
properties and flats, rents receivable as well as cash and short-term deposits that result from its
business operations.
The conwert Group also holds derivative financial instruments. These instruments include interest
rate swaps, which are designed to manage the interest rate risk arising from the Group’s business
operations and financing sources.
The major risks arising from the Group‘s financial instruments are interest-based cash flow risks,
liquidity risk, foreign currency risk and credit risk. In order to manage the individual types of risk,
management has developed and implemented the following strategies and processes.
INTEREST RATE RISK
The conwert Group is exposed to a risk arising from changes in market interest rates primarily
through its variable rate financial liabilities. Interest costs are managed with a combination of
fixed and variable interest rate borrowings, whereby the objective is to maintain the majority of
interest-bearing debt at fixed rates based on continuous monitoring of the financial markets. In order
to meet this objective, the Group enters into interest rate swaps that require it to exchange the
difference between fixed and variable rate interest amounts calculated by reference to an agreed
nominal principal with the contract partner at specified intervals. As of 31 December 2011 84.0%
(2010: 85.3%) of the Group’s borrowings carried fixed interest rates.