annual financial statement 2011 - conwert Immobilien Invest SE

CONWERT IMMOBILIEN INVEST SE
ANNUAL FINANCIAL 2011 STATEMENT ANNUAL REPORT 2011
108
FOREIGN CURRENCY RISK
The Austrian and German subsidiaries of the conwert Group do not hold any significant borrowings
in foreign currencies. Fluctuations in the Czech Krone, Slovakian Krone and Hungarian Forint
versus the Euro are monitored on a regular basis because of the borrowings concluded in these
currencies. The Group is therefore in a position to take immediate action in the event of negative
developments. These possible foreign currency fluctuations do not have a material effect on Group
earnings or equity.
CREDIT RISK
Credit risk represents the risk that a business partner will be unable to meet the obligations arising
from a financial instrument or framework contract, and consequently bring about a financial
loss. Business operations expose the conwert Group to default risk as well as various risks connected
with financing activities, e.g. deposits with banks and financial institutions, foreign currency
transactions and other financial instruments. Credit risk, or the risk of delayed payment by a
contract partner, is managed through credit examinations, credit limits and verification routines.
The conwert Group only works with financial partners whose ratings have reflected a sound credit
standing up to now, and credit risk is therefore limited. However, even financial partners with excellent
credit ratings may carry a certain degree of credit risk and the Group therefore monitors
developments on capital markets continuously. The maximum – but unlikely – credit risk equals
€ 196.6 million (2010: € 169.5 million).
LIQUIDITY RISK
The conwert Group uses a liquidity planning tool to continuously monitor liquidity and thereby
prevent a liquidity shortage. The objective of this process is to establish a balance between the
continuous coverage of financing requirements and thereby maintain sufficient financial flexibility
through the use of overdrafts, bank loans, bonds, preferred shares, finance leases and leasepurchase
agreements. All sales of individual apartments are formalised through a notary public or
attorney as the trustee in order to protect the financial assets of both the buyer and the seller. As
a rule, the sales of buildings are also executed by a notary public or attorney as the trustee. Incoming
payments are monitored with a treasury software tool. Liquidity flows in the rental segment
are monitored by the responsible facility management companies, which make monthly transfers
on account to the Group. Rents receivable are protected by deposits collected from tenants. The
payment of rents is also monitored with the above-mentioned software module. As of the balance
sheet date, the Group owned approximately 22,923 apartments, offices, commercial and other
units as well as parking spaces. There is no tenant concentration because of the large number of
units and therefore no increased liquidity risk associated with rents receivable.