annual financial statement 2011 - conwert Immobilien Invest SE

INTRO | MANAGEMENT REPORT |
| FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
Notes
The calculation of the value in use was based on the assumptions listed below. The following
section explains the estimation uncertainty connected with these assumptions:
+ Growth rates beyond the budget year 2011
+ Increase in personnel and operating expenses
+ Gross profit margin on the sale of flats and buildings
+ Volume of property turnover
+ General development of the property market
+ Discount rates
GROWTH RATES
Average branch assumptions were used to establish growth rates for the individual sub-segments.
The projects for the forecast period are based above all on the medium-term strategy of the parent
company for the future development of the property portfolio.
INCREASE IN PERSONNEL AND OPERATING EXPENSES
The increase in these costs is dependent on the medium- to long-term development of the economy
and inflation as well as the estimated resources required to support the above-mentioned
strategic developments.
GROSS PROFIT MARGIN, VOLUME OF PROPERTY TURNOVER AND NEW ACQUISITIONS
The gross profit margin on the sale of flats and buildings is based on an average value for past
years that reflects ordinary business activities as well as realistic forecasts for the future. The
volume of property turnover and new property acquisitions is dependent on opportunities offered
by the property market as well as general economic developments.
The company generated the following gross profit margins in 2011 and 2010:
Region 2011
Gross profit margin
2010
Gross profit margin
Austria 9.3% 13.3%
Germany 8.6% 12.6%
Other regions (2.2)% 8.3%
GENERAL DEVELOPMENT OF THE PROPERTY MARKET
As in the previous year, the development of the residential property market in Austria was very
favourable for the conwert Group in 2011. Private investors and foundations with a sound capital
base have created steady demand for the purchase of individual flats and apartment buildings,
with institutional investors providing added support for the general market improvement. In
Germany, the Group has shifted the focus of its residential properties to a higher class clientele,
and an upward trend has therefore been visible since the end of the financial crisis. The local banks
are still restrictive in lending to potential customers, which means the key requirements are not
only an interest in buying but also sufficient equity. In the other regions, where only a small part
of the portfolio is held, the situation remains tense above all due to continued restrictive lending
practices by the banks.
DISCOUNT RATES
The discount rate is based on the weighted average cost of capital for equity and debt as well as
the situations in the individual cash-generating units. Given the current economic environment, the
applied rates reflect a value at the upper end of the interest rate scale. An interest rate sensitivity
of +/- 50 basis points was therefore selected for the valuation test.
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