annual financial statement 2011 - conwert Immobilien Invest SE

CONWERT IMMOBILIEN INVEST SE
ANNUAL FINANCIAL STATEMENT 2011
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OUTLOOK FOR 2012
In the financial year 2011, conwert underwent a restructuring phase. In many areas of conwert the
necessary transformation process was initiated and has already been completed in some parts.
This step is required in order to turn conwert from a medium-sized company into an organisation
that meets the standards of a growth-oriented ATX group.
This has an impact on both the entire organisational structure of the Group, which we cleared out
and simplified in a first stage, and on all internal processes, systems and guidelines.
In 2011, the entire organisation structure was realigned and professionalised. This process will
be continued in 2012. In particular the structure in Germany will be subject to restructuring and
simplification in the year 2012. The service structure was already adjusted in 2011. The effects will
be seen in 2012. However, efficiency increases are planned for the German service providers also
in 2012, which will contribute to an increase in profitability of the conwert Group in 2012 and the
subsequent years.
The entire IT landscape of conwert was put on a more stable foundation and simplified by a newly
hired IT manager in 2011. This led to massive cost reductions in 2011, which will take full effect in
2012. Apart from the reduction of vacancies, the service segment of RESAG Property Management,
which does not yet fully meet the standards in terms of profitability and service quality, needs to be
improved. The restructuring of RESAG Immobilienmakler GmbH, which was initiated in 2011, will
be continued and intensified under the management of Jasmin Soravia, the new regional manager
for Austria. As a partial success in this restructuring process we managed to redefine the contract
between conwert and RESAG Immobilienmakler, in which conwert holds a minority interest, in
tough negotiations. The exclusive character of the sales relationship with RESAG Immobilienmakler
GmbH has thus been cut down. The existing 3-year contract was replaced by a 1.25-year contract,
and as of 31 March 2013 conwert can freely choose its external sales partners. Moreover, the
portfolio to be marketed by RESAG Immobilienmakler GmbH was redefined and massively limited.
For this purpose, conwert has established its own internal sales team. Furthermore, with immediate
effect, conwert will no longer pay a seller’s commission to RESAG Immobilienmakler GmbH,
which will generate a substantial cost benefit for conwert as early as 2012.
On the administrative side conwert will also reduce the cost structure in 2012. The introduction
of SAP, which will be completed in the first half of 2012, will lead to a substantial improvement in
our administrative system. Furthermore, the structures of our management and service-providing
units will be adapted in the year 2012.
The portfolio adjustment will initially require higher expenses, namely to carry out these sales, but
will also enable an adaptation of the structures to the size of the remaining portfolio. Although this
process was started in 2011, it will not produce results until 2012.
With the introduction of a central purchasing and procurement department in mid-2011, we now
centrally define a series of refurbishment and development standards and have cut down on the
number of companies we cooperate with on refurbishment and development measures to a limited
number of technical partners with whom we work together exclusively. To name only one example:
In the past, conwert used to work with more than 540 suppliers in Vienna alone; this list has
now been reduced to 20. This obviously will lead to massive savings in 2012 and the subsequent
years. In keeping with better corporate governance, the central procurement department also ensures
that the central management of awarding building and renovation contracts is based on predefined
guidelines.
With regard to our investments per sqm in our portfolio, we substantially exceed the investments
made by our competitors. On the one hand, this is attributable to the inefficient way of awarding
contracts and the lack of control of refurbishment activities in the past; on the other hand, it is due
to the resulting investment backlog, on which we caught up in the past year. We assume that we
will have to invest significantly less in our portfolio in the years to come as our investments will
be better adapted to the market conditions as a result of enhanced control and higher efficiency.