IMMOEAST Annual Report 2006/07

Potential voting rights are to be considered in determining whether the requirements for significant influence are met.
The actual exercise of significant influence is not necessary. Significant influence as defined in IAS 28.6 is considered
to exist when the stake owned in a company equals 20% or more of the voting power, but this presumption can be
refuted. IMMOEAST holds stakes of more than 20% in the net assets of the following companies, which were not classified
as associated companies:
• Prime Property BG REIT, Bulgaria (42.23%)
• FF&P Russia Real Estate Limited, Guernsey (25.8%)
• Global Emerging Property Fund L.P., Jersey (25%)
• FF&P Development Fund (32.895%)
• Adama Holding Public Ltd. (25%)
• Bluehouse Accession Property Ltd. (25%)
• M.O.F. Immobilien AG (20%)
M.O.F. Immobilien AG was reclassified from associated companies to financial instruments as defined in IAS 39 during
2006/07 because IMMOEAST no longer has significant influence over this company (also see point 4.5).
The presumption of association is refuted by the absence of employees or corporate bodies of IMMOEAST on the managing
bodies of the above companies as well as the quorum of shareholders that is required to pass resolutions. The
financial statements of companies included at equity are generally prepared as of the same balance sheet date as the
parent company. The preparation of these statements on a different balance sheet date and the inclusion of any adjustments
for significant transactions is permitted when the balance sheet date used by the associated company varies by
three months or less .
The consolidated financial statements of the EPG Group and TriGránit Holding Ltd. have a balance sheet date of
31 December 2006. That means the three-month rule is not followed in these cases. However, non-compliance with this
rule has no material effect on these consolidated financial statements.
2.2.3 Full consolidation
A subsidiary is an entity that is controlled by another entity (parent company). Subsidiaries are included in the consolidated
financial statements through full consolidation. The control concept forms the basis for deciding when a
company must be classified as a subsidiary. Control is understood to mean the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. The possibility of control is sufficient for
this classification, while the actual exercise of control is less important. Direct or indirect control over more than 50%
of the voting rights in an entity is considered to be a refutable presumption for the existence of control. Moreover,
control is assumed to be irrefutable when the parent company:
• directly or indirectly controls the majority of voting rights, including potential voting rights that can be exercised or
converted as of the balance sheet date,
• holds the power over more than one-half of voting rights by virtue of an agreement (e.g. syndication agreement)
with other shareholders,
• has the power to govern the financial and operating policies of the entity under a statute or an agreement,
• has the power to appoint or dismiss the majority of the members to a governing body (board or directors, supervisory
board) or to cast the majority of votes on a governing body.
The inclusion of domestic and foreign subsidiaries in the consolidated financial statements is based on the economic
unity concept. This concept requires the inclusion of all assets, liabilities, income and expenses attributable
to subsidiaries in the consolidated financial statements – independent of the stake owned by the controlling parent
company – in cases where control exists. Equity in the consolidated financial statements is separated into the por-
Notes
Report by the Executive Board 123
Highlights 2006/07
Business Model and Strategy
Portfolio Structure
Corporate Governance and Outlook
Property Portfolio
Development of Business
Consolidated Financial Statements
Service and Glossary
IAS 28.9
IAS 28.6
IAS 28.24-25
IAS 27.12
IAS 27.4
IFRS 3.19
IAS 27.13