Annual Report 2007 / 2008

Transcrição

ANNUAL REPORT 2007/2008
Key figures
Financial year from 1 April 2007 to 31 March 2008
in € million
“IMW, the feel-good
factor.”
2007/2008
2006/2007
Sales
60.2
41.3
EBT
10.3
41.5
Group net income
33.2
30.6
2.5
6.1
Balance sheet total
976.0
953.7
Real estate assets
921.6
887.7
Net debt
665.3
761.8
NAV (net asset value)
295.8
169.1
19.5
20.6
261.3
118.8
26.8
12.5
Earnings per share in €
NAV per share in €
Equity
Equity ratio in %
Telefon +49 30 25 461-200
Fax
+49 30 25 461-299
[email protected]
www.imw-ag.de
IMW Immobilien AG
IMW Immobilien AG
Stresemannstraße 78
10963 Berlin
Germany
Annual Report 2007/2008
NET RENTAL EXCLUDING ANCILLARY
COSTS BY REGION in %
82.2 Berlin
(€49.5 million)
3.5 Other locations
(€2.1 million)
6.1 North Rhine-Westphalia
(€3.7 million)
8.1 Hamburg and Hanover
(€4.9 million)
Total
€60.2 million
TOTAL RENTAL SPACE IN PORTFOLIO
in m2
857,000 residential
107,000 commercial
Key figures
Financial year from 1 April 2007 to 31 March 2008
in € million
2007/2008
2006/2007
Sales
60.2
41.3
EBT
10.3
41.5
Group net income
33.2
30.6
2.5
6.1
Balance sheet total
976.0
953.7
Real estate assets
921.6
887.7
Net debt
665.3
761.8
NAV (net asset value)
295.8
169.1
19.5
20.6
261.3
118.8
26.8
12.5
Earnings per share in €
NAV per share in €
Equity
Equity ratio in %
in m2
82.2 Berlin
(€49.5 million)
3.5 Other locations
(€2.1 million)
(€3.7 million)
(€4.9 million)
Total
€60.2 million
857,000 residential
107,000 commercial
IMW Immobilien AG
OVERVIEW OF PORTFOLIO
Profile
BERLIN
•Proprietor of residential and commercial real estate in German metropolitan
centres, particularly Berlin
Berlin is an important European centre
for politics and culture. Berlin’s historical
legacy and diverse architectural styles are
acknowledged well beyond Germany’s
borders. IMW is convinced of the German
capital’s sustainability and owns real estate
holdings in the districts of Lichtenberg,
Buckow “Gropiusstadt” and Hellersdorf.
OVERVIEW OF BERLIN PORTFOLIO
31.03.2008
Residential units
12,155
Commercial units
240
Residential floor space in m2
753,000
Commercial floor space in m2
55,000
Actual rent in € million p. a.
49.5
Locations
•Focus on residential real estate
•Approximately €920 million real estate assets in over 220 locations
and a total of 14,323 units
•8 operative subsidiaries and 48 real estate companies
•98 employees
IMW AG
Berlin, Hamburg, Hanover, Ilsede, Munich
Hamburg
AUSTERLITZ
PRIMA
Hamburg
Berlin
VALBONNE
•Active and efficient portfolio management
Berlin, Bochum, Dortmund, Düsseldorf,
Gelsenkirchen, Herne, Iserlohn, Witten,
Aachen, Halle
•Service competence includes property management, rental, collection, and
location and cost analysis
Berlin, Balatonstraße 43–49
FALCON CREST
HAMBURG/HANOVER
The Hanseatic City of Hamburg is Germany’s second-largest city. IMW owns
real estate in the popular districts of
Eppendorf, Hoheluft and Alsterdorf. The
trade fair and exhibition city of Hanover is
part of the metropolitan region Hanover–
Braunschweig–Göttingen, the fifth-largest
metropolitan region in Germany. Its central location ensures that the capital of
Lower Saxony is an important transport
hub for the whole country.
OVERVIEW OF HAMBURG/HANOVER
PORTFOLIO
31.03.2008
Residential units
156
Commercial units
95
Commercial floor space in m
Ammersbek
OUR BUSINESS ACTIVITIES ARE C ONCENTRATED
IN THE FOLLOWING AREAS:
Hamburg
10,000
2
43,000
4.9
Hanover
Berlin
Ilsede
Asset and property
management
Hamburg, Hoheluftchaussee 91–93
Herne
• Concept development together with our
operative subsidiaries
Düsseldorf
• Increase in value creation
NORTH RHINE-WESTPHALIA
Gelsenkirchen
Dortmund
Bochum
North Rhine-Westphalia is the fourthlargest German Federal state and the most
populous. NRW is one of the most important economic regions in Europe and by
far the most significant business region in
Germany. As well as real estate in Düssel
dorf and Dortmund, IMW has further
properties in Herne, Bochum, Witten and
Iserlohn.
Witten
31.03.2008
1,100
Commercial units
17
Residential floor space in m
2
60,000
6,000
3.7
Iserlohn
Aachen
OVERVIEW OF NORTH RHINE-WESTPHALIA
PORTFOLIO
Residential units
Halle
Portfolio management
Varied real estate
services
• Rental income accounting
• Debt management
• Property management
• Purchase of real estate with
value-added potential
• Renting
• Reduction of vacancy rates
• Improvements to real estate
• Construction supervision
Witten, Berliner Straße 7
Munich
IMW Immobilien AG
Profile
BERLIN
31.03.2008
Residential units
12,155
Commercial units
240
753,000
55,000
49.5
Locations
•98 employees
IMW AG
Hamburg
AUSTERLITZ
PRIMA
Hamburg
Berlin
VALBONNE
Aachen, Halle
FALCON CREST
HAMBURG/HANOVER
PORTFOLIO
31.03.2008
Residential units
156
Commercial units
95
Ammersbek
Hamburg
10,000
2
43,000
4.9
Hanover
Berlin
Ilsede
Asset and property
management
Herne
Düsseldorf
Gelsenkirchen
Dortmund
Bochum
Iserlohn.
Witten
31.03.2008
1,100
Commercial units
17
2
60,000
6,000
3.7
Iserlohn
Aachen
PORTFOLIO
Residential units
Halle
Varied real estate
services
• Debt management
• Renting
Munich
1
MISSION
As a proprietor of residential and commercial real
estate we are constantly upgrading our portfolio by
pursuing an opportunistic buy and sell strategy.
We have many years of experience on the German
real estate market and have excellent prospects for
future development through our network of subsid
iaries. Our goal is to further optimise our real estate
holdings, to extend them and to create a national
real estate management company.
CONTENTS
2 Foreword by the Executive Board
30 Consolidated management report
116 Financial statements of IMW AG
4 Management
56 Consolidated financial statements
122Assurance by the Executive Board
8 Strategy
62Notes to the consolidated
12 Properties
financial statements
(IMW AG)
122Audit opinion (IMW AG)
18 The share
114Assurance by the Executive Board
124 Financial calendar|Publication data
22 Corporate governance
114Audit opinion
Locations
23 Report of the Supervisory Board
2
Information about the company | Foreword by the Executive Board
IMW Immobilien AG
Foreword by the Executive Board
Dear shareholders,
Following a period of rapid growth and expansion, we went through a phase of consolidation in 2007. We had previously considerably expanded our activities on the German
property market as a result of large-scale acquisitions. The value of our real estate assets
increased from €214 million to over €900 million over the past three years.
In the second half of the calendar year 2007, however, the turbulences on the financial
markets almost brought the flow of transactions on the property market to a standstill.
This development was triggered by the banks’ more restrictive lending policies, which
were a serious hindrance to financing activities.
In this difficult environment, we made sure that we did our homework. We adjusted the
structure of the IMW Group to take account of the changes in the fiscal framework on
the German property market. In the past three financial years we extended the group of
consolidated companies substantially from five to its current total of 56, most of them
real estate companies.
In a parallel development, the shareholder structure underwent radical changes: the admission of 10.8 million additional shares for stock market trading led to an increase in
the company’s ordinary share capital and its potential free float. The changes in the shareholder structure were accompanied by new appointments to the Executive Board and the
Supervisory Board. At the beginning of the year, I changed from the chairmanship of the
Supervisory Board to the chairmanship of the Executive Board in order to implement the
company’s reorientation aimed at consolidation. Boris Töppe was recruited as a further
member of the Executive Board with responsibility for operating activities, or asset management.
To make IMW AG more interesting for foreign investors as well, it was decided to transform IMW AG into a European company. By transforming ourselves into a European
company we are leaving the dual system of a German public limited company. The bundling of the supervisory and executive functions within a single, standardised administrative board will make the company considerably more efficient as far as its decisionmaking and reaction potential is concerned. This transformation is a consistent step in
the company’s development following its robust growth over the past few years.
Needless to say, our company’s rapid development would not have been possible without
the extraordinary enthusiasm and great commitment of our employees. On behalf of the
Executive Board, I would like to thank the entire IMW team.
Information about the company | Foreword by the Executive Board
In order to get back to our previous growth rates over the next few years – capital markets permitting –, we have been empowered by the IMW shareholders to issue debenture
bonds in an amount of up to €100 million. A conditional capital increase of up to 6.76 mil
lion shares serves to guarantee the debenture bond, which can be issued up to 2013.
However, the persistently volatile stock market landscape for financial and property
shares is currently making it very difficult to raise capital on the stock markets. At the
moment, most property shares are being traded at a considerable markdown on their net
asset value. We too were forced to put our plans for a capital increase for cash on ice.
At the moment it cannot be foreseen when this project might be realised.
In this environment, the IMW Group nevertheless achieved its corporate goals quite successfully. We can look back on a favourable operating trend over the financial year ended:
rental income was increased to some €60 million, while the Group net income improved
by 20% to €33.2 million.
The IMW Group’s positive business development is also reflected in the progress made
by the IMW share. An increase of 59% in the reporting period is quite remarkable,
especially against the backdrop of the financial market weakness described above and
the substantial deductions for risk with which financial and property shares are currently
being traded.
Instead of the capital-raising measures which are being impeded by the prevailing market conditions, we are currently looking into the possibilities of cooperation with other
investors’ groups, underpinned if desired or necessary by an appropriate capital participation.
We are optimistic that we will again achieve pronounced growth in the foreseeable
future. The market for German residential real estate is still regarded as attractive –
especially by foreign investors – and there are still enough properties on offer. With our
consolidated organisation, streamlined portfolio and continuing policy of solid financing, we are well prepared for the upcoming tasks.
Hartmut Fromm
3
4
Information about the company | Management
IMW Immobilien AG
MANAGEMENT
Hartmut Fromm
Chief Executive Officer
Hartmut Fromm was appointed as a member of the Executive Board of IMW AG
in January 2008, when he simultaneously
assumed the post of CEO. Mr. Fromm is
co-owner of the law firm Buse Heberer
Fromm. This renowned expert in the field
of international company and tax law is a
member of numerous corporate supervis
ory and administrative bodies. Mr. Fromm
was Chairman of the Supervisory Board of
IMW AG from 2003 until the end of 2007,
during which time he played a key role in
the establishment and expansion of the
company.
Boris P. Töppe
Chief Operating Officer
In March 2008 Boris Töppe was appointed
as a member of the Executive Board of
IMW Immobilien AG with a view to
strengthening its operating activities. Before joining IMW AG, he served in various
management positions in the real estate
sector, in which he has worked for 18 years
now. Mr. Töppe lives in Falkensee.
Roland Pöhlmann
Chief Administration Officer
Roland Pöhlmann has been a member of
the Executive Board of IMW AG since
August 2003. He runs the daily operations
of the company. Before joining IMW AG,
he worked in various management positions in small and medium-sized com
panies. He lives in Berlin.
Maic Schäfer
Chief Finance Officer
Maic Schäfer has been a member of the
Executive Board of IMW AG since 1 October 2006. He is responsible for Finance.
Previously he was Managing Director of
IMW AIM GmbH, the company which
provides the organisation, structuring and
commercial management of a real estate
network. Mr. Schäfer lives in Wolfenbüttel.
Information about the company | Management
Hartmut Fromm
Boris P. Töppe
Roland Pöhlmann
Maic Schäfer
5
6
IMW Immobilien AG
“I wouldn’t live
anywhere else.”
7
The subject of living space affects everyone. The buildings people live in are often
referred to affectionately as a “third skin”. IMW focuses mainly on residential real
estate. The resultant large number of rented units reduces the default risk and makes
the company less dependent on a small number of large-scale tenants. In the finan
cial year ended, the IMW Group generated net rental, excluding ancillary costs, of
€60 million from residential real estate.
Information about the company | Strategy
8
IMW Immobilien AG
PROPERTY PEOPLE VALUES
The value of a property is increased by long-term, stable
tenant relationships and an optimum tenant structure.
IMW stands for property, people and values. Having emphasised our properties and
projects in the 2006/2007 annual report for the previous financial year, we would now
like to make the people – our tenants – the focus of attention in this financial report. In
this report we will introduce you to people whose individuality represents the diversity of
our 14,300 or so tenants. More than 97% are tenants living in residential units.
The individuality of our tenants and of what they demand and expect from modern living space is matched by the individuality of our properties and our services. We offer our
tenants high-quality residential space and create living conditions worthy enjoying. We
also offer them a varied cultural environment to improve their quality of life.
82.2 Berlin
(€49.5 million)
3.5 Other locations
(€2.1 million)
(€3.7 million)
(€4.9 million)
Total
€60.2 million
in m2
In the individual locations, a quarterly tenants’ magazine provides information about
tenants’ parties, readings and exhibitions. We keep available for our tenants a number of
guest flats that can be rented at short notice as well as tickets to events at reduced prices.
An on-site liaison office records suggestions, wishes and complaints from tenants. We
provide our support for local social amenities through donations. These are all concrete
examples of our commitment to society.
Phase of consolidation
The IMW Group is a growing real estate company which focuses on the German property market. We acquire property portfolios with the aim of renting them and achieving
lasting increases in their value through active asset and portfolio management. We prefer to invest in residential holdings, which we own and look after over a longer period of
time.
We realise our value-added potential and optimise our real estate portfolio by pursuing
an opportunistic buy and sell strategy. Our investment and growth strategy is based on
acquiring real estate with the appropriate potential and optimising the yield potential of
that real estate as its proprietor.
857,000 residential
107,000 commercial
The IMW Group’s business activities are divided into three main focus areas: residential,
commercial and other services. Its primary focus is placed on the renting and management of own real estate for residential purposes. The rental income generated from these
activities accounts for the majority of the IMW Group’s operative cash flow.
Information about the company | Strategy
In order to manage and administer our properties, we have built up a network which
currently encompasses 56 companies. Our real estate holdings are accommodated in
separate subsidiaries which operate exclusively as real estate companies.
9
DEVELOPMENT OF VALUE
IN REAL ESTATE PORTFOLIO
in € million
Approx.
890
Adjustment to changed legal framework
In the last financial year, we managed to grow strongly and build up substantial real estate assets amounting to more than €900 million. The last twelve months were therefore
dominated by the consolidation and integration of the newly acquired real estate holdings into the IMW Group.
The priority during the implementation of these activities was the legal and organisational adjustment of the IMW Group with a view to creating a solid basis of growth for the
future. These steps were necessitated by the constant changes in the legal and fiscal conditions prevailing on the German property market.
The changed treatment of owner-occupied homes or the introduction of an interest rate
cap can undoubtedly have a negative impact for real estate companies.
The interest rate cap means that a negative balance of interest income and expenses will
in future be tax-deductible only up to 30% of a company’s earnings before interest, taxes,
depreciation and amortisation. Each company is audited individually. By structuring our
portfolio appropriately into different companies with real estate holdings, we have reacted with foresight to the coming changes.
Continuation of investment and growth
The IMW Group intends to make further investments in real estate and continue its positive development once the financial markets have calmed down and financing opportunities re-emerge as a result. The IMW Group is aiming to generate substantial increases in
value and achieve sustainable growth in its real estate portfolio.
When choosing properties to invest in, the Group attaches importance to a good location,
structural soundness and a good infrastructure. Particular attention is paid to a high occupancy rate, a healthy tenant structure and the question of whether these properties can
generate a stable cash flow. The long-term objectives are to further improve and expand
our real estate holdings and to establish efficient real estate management.
Approx.
920
Approx.
200
31.03.2006 31.03.2007 31.03.2008
10
IMW Immobilien AG
11
“A nice flat gives me that
homey feeling.”
A renovated bachelor pad with a sunny balcony, a spacious four-room flat with a
playground in front of the building, or a well-kept flat in a historical building: the
IMW Group’s spectrum is broad and extremely diverse. All in all, the IMW Group
manages some 14,000 residential properties with an aggregate residential space
of 857,000 m². 12,155 residential properties, or 87.9% of the company’s total
residential space, are located in Berlin.
12
Information about the company |Properties
IMW Immobilien AG
ATTRACTIVE PORTFOLIO WITH
SUBSTANCE AND POTENTIAL
IMW Immobilien AG is an expanding real estate company which focuses on the German
residential real estate market. The IMW Group’s real estate holdings are currently all located in Germany. Most of its residential and commercial units are situated in the metro
politan area of Berlin. In addition, we also concentrate on the investment focal points of
Hamburg, Hanover and Dortmund.
Our real estate holdings are held solely through investment companies and real estate
companies. The portfolio is spread over 220 properties containing more than 14,300 units
– of which almost 14,000 are residential units and 359 are commercial units. 84% of the
rental income in the financial year 2007/2008 was generated by the renting of residential
property. The remaining 16% of rental income was accounted for by the renting of commercial real estate. Apart from that, we generated sales from diversified real estate services amounting to some €0.3 million. The net asset value improved from €169.2 million
as of 1 April 2007 to €295.8 million as of 31 March 2008, an increase of €126.6 million.
Developments on the German residential real estate market
Germany again increased its attractiveness among international real estate experts in
2007. A comparison with other European countries is illuminating: the German housing
market is the largest in the EU with 39.7 million residential properties. The continuing
high level of interest among international investors is an indicator of possible value appreciation potential and attractive investment prospects. Additional investment potential
is promised through the privatisation of real estate assets by the public sector.
BERLIN
Berlin, Kurfürstendamm 73
Type of property
Built
Residential units
Commercial units
Berlin, Coppistraße 10 –12
Mixed usage
1971
28
7
Type of property
Built
Residential units
Commercial units
1,887
1,012
Mixed usage
1975
293
1
17,960
154
Information about the company | Properties
13
The demand for residential space, too, is going to increase sharply over the next few years.
This trend will result in particular from the growing number of one-person households
and the general desire among the population for more spacious living accommodations.
Another reason can be found in the declining number of building permits and new
building activities in Germany. According to the German Federal Statistical Office, the
construction of 182,300 residential properties was approved in Germany in 2007. This
figure was 26.3% or 65,200 building permits below the total for 2006.
The owner-occupied rate of 43% in Germany, a low figure by European standards, will
provide an incentive for creating owner-occupied residential property. In this area,
growth potential is evident above all in the metropolitan areas of Berlin (owner-occupied
rate: 13%) and Hamburg (owner-occupied rate: 22%).
Berlin: primary focus of the portfolio
The primary focus of the IMW Group’s real estate holdings is the metropolitan region of
Berlin, where we intend to expand our market presence further over the next few years.
Around 80% of our current holdings are located in the German capital. An increase in
the quality of the objects we rent in that city has reduced the vacancy rate to 7%.
Berlin, Mommsenstraße 45,
Giesebrechtstraße 22
Type of property
Built
Residential units
Commercial units
Berlin, Gensinger Straße 2–22
Mixed usage
1905
10
9
1,533
2,602
Type of property
Apartment
building
Built
1982
Residential units
428
2
20,920
OVERVIEW OF THE BERLIN PORTFOLIO
31.03.2008
Residential units
Commercial units
Actual rent in € million p.a.
12,155
240
753,000
55,000
49.5
14
IMW Immobilien AG
With some 3.4 million inhabitants and a land area of some 892 million m², Berlin is the
largest city in Germany in terms of both population and surface area. The market for residential real estate in Berlin is shaped by lively demand, especially in the segment for larger residential locations. All in all, some 321,200 residential units were sold there between
1997 and mid-2006 as sizeable portfolios of residential units were sold off. In addition to
the districts in the eastern part of the city, there is healthy demand for, in particular, good
and mid-level residential locations in the western areas. Berlin has significant growth and
value-added potential, a fact that becomes particularly evident when the city is compared
with foreign locations.
RENTAL FLOOR SPACE IN
BERLIN’S SHARE OF TOTAL PORTFOLIO
BERLIN PORTFOLIO in m2
in € million
753,000 residential
49.5 actual rent, Berlin
55,000 commercial
10.7 actual rent, rest of
portfolio
HAMBURG
HANOVER
Hamburg, Hoheluftchaussee 95, 95a
Hanover, Lange Laube 14, Stiftstraße 1
Type of property
Mixed usage
Built
1902
Residential units
1
Commercial units
26
2
223
5,192
Type of property
Mixed usage
Built
1911
Residential units
1
Commercial units
10
2
50
1,772
Other portfolio locations
In addition to Berlin, we concentrate on the metropolitan regions of Hamburg, Hanover
and Dortmund. It is seen as probable that German companies, and especially the Federal
states of Hamburg and North Rhine-Westphalia, will sell off part of their housing stock
over the next few years – mainly to ease the burden on their respective budgets. This
development promises to result in some interesting business opportunities.
In Hamburg we possess real estate in the popular districts of Eppendorf, Hoheluft
and Alsterdorf. In North Rhine-Westphalia we have holdings in Düsseldorf, Dortmund,
Herne, Bochum, Witten and Iserlohn.
As a result of individual acquisitions of properties in packets, we sometimes receive
properties which do not coincide with our investment strategy. After purchasing these,
we carry out thorough analyses before deciding to re-sell some of them. This applies in
particular to real estate in Halle and Munich.
Munich
Munich, Zweigstraße 10
Herne, Mont-Cenis-Str. 306+308,
Saarstr. 37–51, Im Braunskamp 1
Type of property
Commercial
real estate
Built
1900
Commercial units
7
2
2,841
Type of property
Apartment
building
Built
1930
Residential units
65
2
4,644
15
16
IMW Immobilien AG
17
“Thinking of the
future.”
Imagine that an IMW tenant decides to move from Berlin to Hamburg. In the pro
cess, the tenant can benefit from the IMW Group’s nationwide real estate port
folio. IMW can procure properties in a quick and unbureaucratic way thanks to
intercompany housing offers from within the Group. Another advantage is that no
estate agent needs to be commissioned in the respective location. The IMW Group
possesses real estate in various locations, including the major cities of Berlin, Ham
burg, Hanover and Dortmund.
Information about the company | The share
18
IMW Immobilien AG
The share
IMW share price increases substantially –
contrary to the industry trend
DEVELOPMENT OF THE IMW SHARE PRICE 2007/2008
in %
BASIC SHARE DATA
Class of shares
Stock market listing
Stock market segment
Industry
Trading symbol
ISIN
Registered shares
Berlin, Frankfurt,
Stuttgart, XETRA
General Standard
Real estate
The year 2007 was a turbulent one for the companies listed on the European stock markets, one that was characterised in particular by great heterogeneity in industry trends.
The DAX and the MDAX, for example, fell by 5.4% and 15.3%, respectively, in the reporting period (1 April 2007 to 31 March 2008). The losses posted by real estate shares were
even greater, and as a result they forfeited most of the previous years’ price gains across
a wide front. The real estate index DIMAX lost a third of its value in the reporting period.
GARY
DE000A0BVWY6
DE000A0BVWZ3
Repeat outperformance by the IMW share
The US subprime crisis left its mark on Germany and Europe as well. The price trends
shown by most of the listed real estate companies were significantly less than pleasing.
The IMW share, on the other hand, convinced market participants through considerable buoyancy and an impressive outperformance: its price was €15.30 at the start of the
reporting period. At the end of the financial year it was quoted at €24.31. This represents
an increase of around 59%.
Admission of 10.8 million non-listed shares for stock market trading
On 8 February 2008, 10,800,020 no-par-value regular registered shares in IMW AG were
listed on the Frankfurt stock exchange. The shares were generated by capital increases
through contributions in kind which were adopted at the Annual Shareholders’ Meeting on 18 August 2006 and at the extraordinary Shareholders’ Meeting on 30 April 2007,
respectively. The shares were included in the listing which already existed. In this way, the
number of IMW shares has increased to 15,200,000 IMW shares admitted for trading to
the regulated market (General Standard) on the Frankfurt stock exchange.
Information about the company | The share
Impact on the shareholder structure
Compared with the previous year, our shareholder structure changed substantially: the
company has a major shareholder, Watermark CH AG, Zug, Switzerland, which holds
around 44.3% of the shares.
19
SHAREHOLDER STRUCTURE
in % (as of March 2008)
7.2 Others and free float
5.3 D. G. van Riemsdijk
Based on the resolution of the extraordinary Shareholders’ Meeting of 30 April 2007,
the company’s ordinary share capital was increased by a total of €7,000,000 against
contributions in kind. Hofer 2 Corporation N.V., Curaçao, Netherlands Antilles, and
Valbonne Real Estate Holding B.V., Amsterdam, Netherlands, were admitted as subscribers. In the process, Hofer 2 Corporation N.V. and Valbonne Real Estate Holding B.V.
acted for Messrs. Th. J. M. Moeskops, H. P. C. M. van de Moesdijk, D. G. van Riemsdijk,
M. Boekhoorn and J. W. F. M. Neggers, as well as Domus Vastgoed Holding B.V. for
administrative reasons.
4.9 M. Bookhorn
3.8 OFM Immobilien
beteiligung GmbH
The stock market admission process was accompanied by an extensive share prospectus,
which is available for download on the website.
44.3 Watermark CH AG
Capital increase postponed
In view of the difficult financial and capital market environment, we felt compelled to
postpone our planned capital increase for cash for an indefinite period. At the present,
shares are being traded with substantial deductions for risk. A satisfactory share price
cannot be achieved under the conditions currently prevailing.
To safeguard our further growth, the Executive Board was empowered at the extraordinary Shareholders’ Meeting of 22 May 2008 to issue convertible bonds and/or option
bonds in an amount of up to €100 million. A conditional capital increase of up to
6.76 million shares serves to guarantee the debenture bond that can be issued up to
2 May 2013.
KEY DATA ON THE IMW SHARE
2007/2008
2006/2007
15,200
8,200
Result per share (IFRS) in €
2.53
6.06
Price-earnings ratio on 31 March
9.27
2.56
Highest price in €
30.10
17.18
Lowest price in €
15.31
9.09
Price on 31 March in €
24.31
15.50
Stock market value on 31 March in € million
369.51
127.10
Net asset value in € million
295.78
169.12
1.25
0.75
15.20
8.20
261.39
118.80
Number of shares in thousands
Stock market valuation to NAV
Ordinary share capital on 31 March in € million
Equity on 31 March in € million
12.1 Th. J. M. Moeskops
12.1 H. P. C. M. van de Moesdijk
10.3 swisspartners AG
20
IMW Immobilien AG
21
“We’re bursting with
pride for our home.”
Flats worth living in give you a feeling of security, match your tastes and have an im
pact on your attitude towards life. IMW gains the long-term loyalty of its tenants with
the high quality of the properties it rents and its active, committed policy of tenant
care. Units for which notice has been given are rented again as quickly as possible.
In the financial year ended, the vacancy rate was 7%. The company’s long-term goal
is to reduce this figure to 4%.
22
Information about the company | Corporate governance
IMW Immobilien AG
Corporate governance
According to our understanding, corporate governance comprises the entire system of
business management, its business principles and also the internal and external control
mechanisms.
Above and beyond the statutory obligations of disclosure, we provide regular information
within short periods of time concerning the development of our company. In observance
of the basic principle of equal treatment of all shareholders, all important reports and
announcements are published on the Internet. Transparent business management also
means for us reporting comprehensively on the remuneration of the Management Board
and the Supervisory Board, on the share option programmes and on the share transactions of the company management.
Furthermore, the Management Board and the Supervisory Board resolved a code of conduct for all employees and organs of the Group. Within the terms of this code IMW AG
will emphatically make sure the observance of legal and other regulations. By this code,
an organisation framework was set up which secures the compliance of external and
internal regulations and complicates vialotions hereto. The code of conduct will be
adjusted continuously.
German Code of Corporate Governance
The Supervisory Board and Management Board of IMW Immobilien Aktiengesellschaft,
Berlin, declare that the company complies with the recommandation of the German Code
of Corporate Governance as amended on 14 June 2007, with the following deviations:
Shares exist with preference rights (Para. 2.1.2).
A D+O insurance policy exists without an excess agreement (Para. 3.8).
The 2005 share option plan does not provide for any possibility of limitation (Para. 4.2.3).
No age limit exists for members of the Management Board (Para. 5.1.2).
No age limit exists for members of the Supervisory Board (Para. 5.4.1).
The declaration is also retrievable on the Internet at www.imw-ag.de. Declarations of
former years are available at the same address.
Information about the company | Report of the Supervisory Board
Report of the Supervisory Board
The Supervisory Board carried out the advisory and control tasks assigned to it under the
law and the articles of association in the full scope in the 2007/2008 business year.
Supervision of the management
The Supervisory Board regularly advised the Management Board in relation to the
management of the company and continuously supervised the management of the
company. It was involved in all decisions which were of significant importance for
IMW Immobilien AG or the Group.
The Management Board reported regularly, comprehensively and promptly – verbally and
in writing – on all relevant questions of business planning and further strategic development. The reports were made in compliance with the requirements of § 90 AktG [Aktien
gesetz – Stock Corporations Act]. The Management Board reported in particular on the
economic situation and the development of the company and of the Group, including the
risk situation and risk management, on significant business occurrences, on the planning
and any deviations thereof, on fundamental questions of the business policy, including
the strategic and organisational realignment, the development of costs and earnings, the
liquidity and finance planning and also the investment measures.
The respective chairman and further members of the Supervisory Board also supported
the Management Board with their advice in individual discussions. The chairmen of the
Supervisory Board participated – at the request of the Management Board – in the meetings of the Management Board on relevant subjects.
On individual points, the Supervisory Board, of its own initiative, requested reports from
the Management Board, which were provided promptly and in proper manner.
For the first time, the Supervisory Board formed two committees in the period under
review: the Investment Committee and the Audit Committee. The Investment Committee serves to discuss investments, to decide on individual investments up to a volume of
€50 million and, where necessary, to arrange for decisions of the whole board. The Audit
Committee has the task of preparing the examination of the financial statements and
the consolidated financial statements by the Supervisory Board and of supervising the
accounting processes. Furthermore, it will in future supervise the effectiveness of the risk
management system installed and of the internal monitoring system.
23
24
IMW Immobilien AG
In the 2007/2008 business year, the Supervisory Board held a total of six meetings. One
member of the Supervisory Board was unable to participate in one meeting. For all trans
actions requiring consent, informative written documents for the purpose of making
a decision were available to the Supervisory Board. In addition, some resolutions were
passed by way of circular procedure.
Focal points of discussion
The major topics of the discussions and resolutions in the 2007/2008 business year were
the structuring and integration of the Flying Dutchman portfolio, the planned increase in
capital and the stock exchange admission prospectus, the liquidity situation, the process
of the rescissory actions, changes in the internal rules of procedure, measures in the compliance area, the transformation into a European stock corporation “Societas Europaea”
(SE) and also the further expansion of the company. Finally, the Supervisory Board intensively discussed with the Management Board the implementation of the specifications
and recommendations of the Corporate Governance Code. In the meeting of 3 March
2008, the Management Board and Supervisory Board submitted an updated declaration
of compliance in accordance with § 161 AktG in relation to the German Corporate Governance Code of the version of June 2007. The declaration is printed in the annual report
and was also made accessible to the shareholders on the homepage at www.imw-ag.de.
In various meetings, the Supervisory Board concerned itself with questions relating to
the efficiency of its own work. This concerned procedures in the Supervisory Board, the
establishment of two committees, the change of the common rules of procedure and also
the information from the Management Board and the cooperation of the two organs.
Instructions to the auditor
In accordance with the recommendations of the Corporate Governance Code, the Supervisory Board issued the instructions for the auditing of the 2007/2008 financial statements
of IMW Immobilien AG and the 2007/2008 consolidated financial statements to the firm
of accountants Ernst & Young AG, Stuttgart, elected by the meeting of shareholders.
The auditor submitted a declaration of independence in accordance with Art. 7.2.1 of
the German Corporate Governance Code which did not raise any cause for doubt. The
requirements of Art. 7.2.3 German Corporate Governance Code concerning the relationship of engagement between the company and the auditor are fulfilled.
Dependence report
In accordance with § 312 AktG, IMW Immobilien AG has to prepare a dependence
report concerning its business relationships with affiliated companies. In the 2007/2008
business year, the dependence report comprised the business relationships of IMW
Immobilien AG, including affiliated companies, with Watermark CH AG, Zug/Switzerland, including the affiliated companies of the latter.
This report was examined in detail on the basis of the audit report of the auditor, the
explanations of the auditor as well as the pertinent documents.
The auditor issued the statutory unqualified audit opinion for the dependence report for
the 2007/2008 business year on 31 July 2008. The Supervisory Board, following its own
audit, also comes to the final conclusion that no objections are to be raised in relation to
the declaration submitted by the Management Board at the end of the report concerning
the relationships with affiliated companies.
Adoption of the financial statements and
the consolidated financial statements
The financial statements and management report as well as the consolidated financial
statements, including the consolidated management report, of IMW Immobilien AG for
the period 1 April 2007 to 31 March 2008, including the accounting, were audited by the
auditor.
All members of the Supervisory Board received, in due time prior to the balance sheet
meeting, the financial statements, the consolidated financial statements, the management
report and the consolidated management report of IMW Immobilien AG, and also the
reports of the auditor direct from the firm of accountants Ernst & Young AG.
The auditor participated in the deliberations of the Audit Committee and of the Super
visory Board at the balance sheet meeting, reported in detail and comprehensively on the
course and the significant results of his audits, and was available to provide supplementary information. The auditor further confirmed that the early risk recognition system
established by the Management Board is suitable for recognising at an early stage any
developments which could jeopardise the continued existence of the company.
25
26
IMW Immobilien AG
The consolidated financial statements of IMW Immobilien AG were prepared in compliance with the International Financial Reporting Standards (IFRS). In accordance with
§ 315 a HGB [Handelsgesetzbuch – German Commercial Code], the preparation of
consolidated financial statements under the HGB was waived. The auditor issued the
consolidated financial statements submitted in accordance with IFRS and the consolidated management report with an unqualified audit opinion.
The financial statements prepared by the Management Board as at 31 March 2008, in
accordance with the provisions of the HGB, and also the management report of IMW
Immobilien AG, were likewise audited by the firm of accountants Ernst & Young AG.
The auditor issued an unqualified audit opinion.
The Audit Committee analysed, in its meeting on 29 July 2008, the financial reports of
IMW AG as of 31 March 2008, and the consolidated financial statements of the IMW
Group as of 31 March 2008, in detail. The auditors were present. After detailed examin
ation, the Audit Committee recommended to the Supervisory Board to accept the financial statements of IMW AG and the consolidated financial statements of IMW Group.
The Supervisory Board noted the result of the audit and the recommendation of the
Audit Committee and consented thereto. The Supervisory Board discussed in detail the
remarks of the auditors.
The Supervisory Board and the Audit Committee consented to the opinion of the
Management Board that the negotiations with banks about observing the covenants in
the “Austerlitz” portfolio, or about asserted breach of information duties of the portfolios
VRE 7 and VRE 10 and about an amortization or a prolongation of a part of a €34.2 million loan in the “Falcon Crest” portfolio, could be brought to a successful end.
Also following its own examination of the financial statements, the management report,
the consolidated financial statements and the consolidated management report, it raised
no objections.
The Supervisory Board approved, in its meeting of today, 12 September 2008, the
financial statements and the consolidated financial statements prepared by the Management Board. The financial statements and consolidated financial statements are thereby
adopted. Further, it consents to the proposal of the Management Board for the application of the balance sheet profit.
Declarations in accordance with § 289, 315 HGB
The management report of IMW Immobilien AG and the consolidated management
report for the 2007/2008 business year contain statements in accordance with § 289,
Para. 4, HGB and § 315, Para. 4, HGB. The Supervisory Board examined the statements
and explanations in its meeting on 30 July 2008. Reference is made to the corresponding
passages in the consolidated management report. The Supervisory Board has examined
the statements and explanations, and adopts the same as its own. According to the opinion of the Supervisory Board, they are complete and accurate. In the management report
and the consolidated management report, in particular, it is described how the share capital of IMW Immobilien AG is composed. Furthermore, the existing direct holdings in
the share capital of IMW Immobilien AG which exceed 3% of the voting rights are listed.
The Management Board prepared these details on the basis of notifications received by
IMW Immobilien AG in accordance with §§ 21, 22 WpHG [Wertpapierhandelsgesetz –
Securities Trading Act] in the business years 2003/2004, 2006/2007 and 2007/2008.
Changes in the Management Board
and Supervisory Board
As from 26 July 2007, Mr Jan-Willem Neggers, Eindhoven, Netherlands, was appointed
member of the Supervisory Board by resolution of the local court of Berlin-Charlottenburg. In the meeting of shareholders of 26 November 2007, he was elected member of the
Supervisory Board.
As from 31 December 2007, Mr Hartmut Fromm, Berlin, retired as member of the
Supervisory Board and as its chairman, and was appointed as from 1 January 2008 to the
Management Board of the company. As from 1 February 2008, Mr Fromm was appointed
chairman of the Management Board.
As from 1 January 2008, Mr Marcus S. Wisskirchen assumed the chairmanship of the
Supervisory Board. Mr Jan-Willem Neggers was elected as his deputy.
Mr Eckhard Rodemer retired from the company as member of the Management Board
and as the chairman of the same as from 31 January 2008, and was appointed member
of the Supervisory Board by resolution of the local court of Berlin-Charlottenburg with
effect from 1 February 2008.
27
28
IMW Immobilien AG
With effect from 1 March 2008, Mr Boris Töppe was appointed as a further member of
the Management Board. He is responsible for the areas of organisation, property management, technical affairs and letting.
Dr Eugen von Lackum resigned his office as Supervisory Board member with effect from
31 March 2008.
Dr Marc Schulten resigned his office as Management Board member with effect from
31 August 2008. The Supervisory Board consents to the resignation of Dr Schulten.
The Supervisory Board warmly thanks those members who have left the Management
Board and the Supervisory Board for their contributions and for their commitment to
IMW Immobilien AG. It wishes the newly appointed members a skilful touch at all times
in their respective tasks.
The Supervisory Board further expresses its thanks and recognition to the Management
Board and all employees of the Group for the work performed.
Berlin, 12 September 2008
Marcus S. Wisskirchen (Chairman Supervisory Board)
Financial report | Contents
29
Financial Report
Consolidated management report
84 Income and expenses from operating expenses
30 Structure and business activities
that can be charged on
31 General market development in the calendar year 2007
84 Real estate operating expenses
31 84Income from the sale of real estate
Effects of the sub-prime crisis
32 The development on the German real estate markets in the 33 held as a financial investment
calendar year 2007
84 Personnel expenses
Consolidation phase
85 Other operating income
35 Earnings situation
85 Other operating expenses
38 Financial situation
85 Non-operating result
40 Assets situation
85 Income taxes
43 Report on events subsequent to the balance sheet date
87 Earnings per share
44 Risk report
87 Real estate held as a fi
nancial investment
45 Market- and branch-specific risks
88 Property, plant and equipment
46 Risks associated with the business activities
90 Shares in associated companies
47 Acquisition of real estate properties
90 Intangible assets including goodwill
47 Legal and regulatory framework conditions
92 Other financial assets (non-current)
48 General risks
92 Share-based remuneration
49 Forecast report
94 Inventory properties
50 Dependence report
95 Trade accounts receivable and other financial assets (current)
51 Reporting under § 315, para. 4, HGB [Handelsgesetzbuch – 96 Income tax receivables
German Commercial Code]
53 Reporting on the basic principles of the remuneration system of the company in accordance with § 289, para. 2, no. 5
HGB (German Commercial Code)
53 Voting right disclosures
Consolidated financial statements
96 Derivative financial instruments
97 Cash and cash equivalents
97 Other short-term assets
97 Subscribed capital and reserves
101 Financial liabilities
102 Provisions
102 Income tax liabilities
56 Consolidated balance sheet
102 Trade accounts payable
58 Consolidated income statement
102 Other liabilities
59 Consolidated cash flow statement
103 Contingencies and other fi
nancial obligations
60 Consolidated statement of changes in equity
103 Related party disclosures
Notes
103
Executive Board
104
Supervisory Board
62 General informationen
106
Related Parties
62 Accounting and valuation principles
106 Goals and methods of fi
nancial risk management
62 Principles governing the preparation
109 Financial instruments
of the financial statements
109 Assets classified as available for sale
65 Changes to the accounting and
valuation methods
110 Events after the balance sheet date
and associated liabilities
67 Significant discretionary decisions
111 Other disclosures
69 Summary of significant accounting
111
and valuation methods
111
Number of employees
Cash flow statement
78 Future changes in the accounting
111
Disclosures in accordance with §20(1) and (4) AktG,
and valuation methods
§21(1) wphg and §41(2)(1) wphg
81 Business combinations
112
Declaration on the c orporate governance code
83 Segment reporting
113 Auditors’ fees
84 Income from the renting of real estate
Consolidated management report | Structure and business activities
30
IMW Immobilien AG
Consolidated management report for the 2007/2008 business
year
1. Structure and business activities
An overview of residential and
commercial real estate
Total floor space in m2
964,000
857,000
107,000
Residential units
13,964
Commercial units
359
Number of properties
220
Market value in € million
923
IMW Immobilien AG, a company quoted on the stock exchange and with registered
offices in Berlin, is an expanding real estate company with a focus on the German residential real estate market. It is the parent company of the IMW Group which comprises
56 companies. The IMW Group possesses residential and commercial real estate properties in German metropolitan areas. The real estate properties held by the IMW Group
with a market value of approx. €923 million comprise approx. 964,000 m² of lettable
area, of which approx. 857,000 m² is attributable to residential and approx. 107,000 m²
to commercial surfaces. The real estate portfolio is comprised of over 220 objects, with a
total of 14,323 units (thereof 13,964 residential units and 359 commercial units).
The overall portfolio is divided into the segments residential, commercial and other ser
vices. Approximately 84% of the rental income of the IMW Group in the 2007/2008 business year was derived from the letting of residential properties; the remaining approx.
16% of the rental income resulted from the letting of commercial properties.
The sphere of activity of the IMW Group can be described by the following main aspects:
(1) Portfolio management: Here, the focus lies on the acquisition of real estate properties with value added potential, whereby these objects are intended to be integrated into
the portfolio of the IMW Group. Through controlled synergistic effects between the real
estate properties, prosperous portfolios are formed or focussed disinvestments carried
out for the purpose of optimisation of the portfolio.
(2) Asset and property management: The aim is, through stringent management and
a focus on the driving forces of the values, to increase, on a long-term basis, the values of
the real estate properties acquired.
(3) General real estate services: The management of the properties, the letting service
and the claims management are primarily carried out through Group subsidiaries.
(4) Letting of own real estate properties: A letting service primarily aligned to the
Group’s own real estate properties ensures the necessary rental income for the IMW
Group. However, this service is also offered to other real estate investors.
The IMW Group operates in selected regions in Germany. In this respect it concentrates
on the cities of Berlin, Hamburg and Hanover, and also the area of Dortmund. The fed
eral capital is currently the focus of investment with approx. 80%. It is also intended to
pursue this strategy further in the future.
Consolidated management report | Structure and business activities | General market development
Up until now, investments were made primarily in residential properties. It is also intended to pursue this further in the future. In this connection, the IMW Group, as holder
of the portfolio, is orientated on realising value-creation potentials through targeted purchases and sales of individual real estate properties, and also on increasing the returns
of the individual real estate packages on a sustained basis through the value-creating
management of the same.
In this connection, IMW AG, as a company quoted on the stock exchange, was able to
present the acquisition of major real estate portfolios in connection with capital increases
through contributions in kind with the issue of shares. This model is increasingly intend
ed to address international real estate investors who are interested in the development
of their own real estate portfolios and who, at the same time, wish to participate in the
prosperity of a real estate company quoted on the stock exchange.
2. General market development in
the 2007 calendar year
In the year 2007, the German economy once again grew considerably. According to the
Federal Office for Statistics, the rate of growth of the gross domestic product (GDP),
adjusted as to price and calendar, lay at 2.6%. The price-adjusted exports increased by
8.3%. The growth of imports, with a plus of 5.7%, lay clearly behind the exports. The
price-adjusted excess in exports resulting therefrom contributed significantly to the GDP
growth with 1.4 percentage points.
This development was once more supported by investments in equipment: businesses
invested 8.4% more in machines, plant and vehicles than in the previous year. On the
other hand, investments in building rose by only 2.0%. In this respect, the growth re
sulted almost exclusively from investments in non-residential buildings which, with a
plus of 4.3%, were able to build on the good result of the year 2006 (likewise +4.3%). As
against this, the price-adjusted investments in residential building rose by just 0.3% and
remained significantly behind the growth rate of the previous year (+4.3%).
The economic performance was, on average for the year 2007, provided by approximately
39.7 million gainfully employed persons; that was 649,000 persons more (+1.7%) than
one year previously. The number of persons gainfully employed thereby reached the
highest level since German reunification. The number of unemployed sank on average
for the year by approx. 641,000 (−15.1%) to 3.6 million persons.
Effects of the sub-prime crisis
The year 2007 was divided into two parts. The extraordinary good result in the first
half-year helped to surpass once again the investment level of the record year 2006. The
second half of the 2007 calendar year was characterised by the sub-prime crisis. The
credit squeeze resulting therefrom and the revaluation led in the second half-year to a
noticeable reduction of the activities in the USA and on the European markets.
31
Company structure (simplified)
IMW
Versicherungen
IMW AIM
Insurance brokerage
Real estate and project
management, controlling
IMW AG
IMW Prima/
PRIMA Lichtenberg
Property management
Comecon GmbH
Debt management
and consultancy
W&S Immobilien
Renting and marketing
of rental space
32
Consolidated management report | General market development
IMW Immobilien AG
Nevertheless, overall, the year 2007 showed good results. This is essentially the result of
two significant aspects in the first half-year: on the one hand, the favourable conditions
on the credit markets and on the other hand, an extraordinary interest on the part of
investors. The good situation on the capital markets during the first half-year of 2007
had a positive impact on this.
The crisis in the US housing and mortgage market, which commenced in the second
half-year and the effects of which are still to be felt today, resulted from the calling-in
of loans granted, in particular, from private customers who had fallen into difficulties.
The losses resulting therefrom for a number of German and international financing
institutes who had invested in loan commitments of low credit-worthiness (so-called
sub-prime loans) or in corresponding securities had detrimental effects on the liquidity
of the capital markets. The result was a smaller availability of outside financing on the
real estate market.
Through this credit squeeze, the activities of investors with high shares of outside
financing noticeably declined. There was a significant fall in the number of major real
estate packages transferred; hardly any major individual projects were realised. This
situation led to general uncertainty and to a waiting tactic on the part of many market
participants.
The development on the German real estate markets in the 2007 calendar year
Notwithstanding the turbulences described on the financial markets in the second half of
the 2007 calendar year, the volume of transactions for commercial real estate properties
in Germany rose by 20% in comparison with the previous year to €59.5 billion. Alone in
the six most important German office locations Berlin, Düsseldorf, Frankfurt, Hamburg,
Cologne and Munich, office properties in a value of approx. €33.7 billion changed hands.
The rising demand for office properties reflects the rising number of o
ffice workers.
According to publications from the Federal Office for Statistics, planning permission for
182,300 residential properties was granted in Germany between January and December
2007. That was 26.3% or 65,200 fewer than in the previous year period.
Of the residential properties for which planning permission was granted in the year 2007,
157,100 were new apartments in apartment blocks (–27.4% in comparison with 2006).
The decrease in planning permission approvals for residential properties in detached and
semi-detached houses turned out considerably higher in this regard (approx. –35%) than
the decrease in approvals for residences in multi-dwelling properties (–12.2%).
33
The reason for the significant decline is likely, in particular, to be a result of the abolition
of the allowance for owner-occupied dwellings. These allowances could only be claimed
for planning permission approvals which were applied for prior to 1 January 2006,
and enjoyed for a subsidy period of eight years. Primarily in relation to detached and
semi-detached houses, this had the effect that projects were brought forward in relation
to applications for planning permission, with high numbers of approvals being granted
right up to and including the first quarter of 2006.
In contrast to the development described above of the reduction in new building activ
ities in the residential sector, the demand for residential premises will rise considerably in
the coming years. This is due, on the one hand, to a rising number of single households
and, on the other hand, to the wish for more generous living space.
Rental income
in € million
60.2
As already seen in the years before, the German real estate market in the 2007 calendar
year could be regarded as comparably attractive. The reason continues to lie in the moderate rent and purchase price level for real estate properties. Accordingly, an increasing
number of international investors continue to place their focus on the German market.
41.3
11.7
Consolidation phase
Following the strong growth of the IMW Group in the business year 2006/2007, the
real estate properties newly acquired were integrated into the IMW Group in the period
under review. The integration of nearly 10,000 additional leases consumed enormous
capacities. Accordingly, the consolidation of the properties and the restructuring asso
ciated therewith had priority in order to create a solid basis on which the IMW Group
could build in the future.
2005/2006 2006/2007 2007/2008
Rental income by proportion of resi
dential and commercial real estate
in %
Nevertheless, all company data show a noticeable increase. In the 2007/2008 business
year, the IMW Group increased its rental income by 73.4% to €60.2 million since the
real estate portfolios “Austerlitz”, “Falcon Crest” and “Valbonne” acquired in the previous year now contributed for a full twelve months to the company development.
During the year under review, the Group possessed a total lettable area of over 964,000 m²
with annual rental income of approximately €60 million (net, without service charge). The
rental units belonging to the Group itself increased to 14,400, of which 80% are attributable to the location Berlin. Vacant properties throughout the entire portfolio lie at approx.
7%. About 84% of the rental income is attributable to residential rental income.
84 residential
16 commercial
34
IMW Immobilien AG
The real estate properties acquired were brought into special companies (so-called SPVs).
These are pure object-related companies. We steer these companies through value-orien
tated results which are calculated on a monthly basis. At the level of the real estate port
folios, the result in each case is established before interest, taxes, depreciation and amortisation (EBITDA). The EBIDTA-margin (EBITDA in relation to rental income) serves as
a measure of comparison for the individual portfolios, whereby in particular the development over the course of time and the comparison with the forecasted values are taken into
consideration. The target figure in this respect is 75%. In addition, there are further ratios
(e.g. MEQ = rental income quotient, vacant properties, number of new lettings) which are
constantly calculated and pursued.
For the operational companies, the basis taken is the result before interest and taxes. The
company development is likewise measured by this ratio.
These parameters also serve as decision aids for the purchase of real estate properties. The
portfolios must generate a stable cash flow which will ensure enough to serve the interest
and redemption payments. By way of measure for the return, a return applies which an
investor can achieve through capital investments with a comparable risk.
In addition, the company worked with great commitment on measures to increase capital.
This work was commenced already in the business year 2006/2007. Through the evolving
crisis on the financial markets, a change took place in July 2007 in the bank which had
been involved in these measures. This led to fundamental changes in the documents prepared. Since, in the following months, the conditions on the capital market, in particular
for real estate companies, deteriorated dramatically, the Management Board decided to
cancel the increase in capital through the issue of new shares originally announced for
mid-November 2007. However, so that the documents already created and the preparatory work for the planned increase in capital did not remain completely worthless, a stock
exchange prospectus was prepared in order to admit the 10,200,000 shares for trade on
the stock exchange which had been issued in the years 2006 and 2007 as a result of capital
increases through contributions in kind. The prospectus for admission to the stock ex
change was approved on 6 February 2008 by the BaFin (Federal Supervisory Authority
for Financial Services), and trading started in the shares on 8 February 2008.
Consolidated management report | Earnings situation
3. Earnings situation
The following presentation of the earnings situation for the last two business years allows
an insight into the development of the Group in the 2007/2008 business year:
€ ’000
2007/2008
2006/2007
Change
Rental revenues
60,175
34,693
25,482
Income from allocatable operating
expenses
23,992
10,936
13,056
Allocatable operating expenses
– 25,517
– 11,324
– 14,193
Property operating expenses
– 12,135
– 5,196
– 6,939
637
1,462
– 825
Personnel expenses
– 4,539
– 3,242
– 1,297
Amortisation and depreciation
– 5,459
– 125
– 5,334
Gains on disposal of properties
Other operating income
3,779
1,178
2,601
– 14,388
– 6,051
– 8,337
26,545
22,331
4,214
Non-realised gains from valuation
50,093
40,294
9,799
Non-realised losses from valuation
– 29,639
– 448
– 29,191
Other operating expenses
Operating income
Income from equity-method
companies
Interest income
Interest expenses
18
3
15
784
1,021
– 237
– 35,741
– 22,836
– 12,905
Result from change of
fair values derivatives
– 1,734
1,182
– 2,916
Income taxes
22,924
– 10,906
33,830
Group net income
33,250
30,641
2,609
The consolidated financial statements are prepared in accordance with the international
accounting standards IFRS. In this connection, the operating costs were, for the first
time, shown separately.
The rental income in the Group amounted in the period under review to €60.2 million
(previous year: €34.7 million) and also comprises income from rental guarantees in an
amount of €2.1 million (previous year: €0).
35
36
IMW Immobilien AG
The income from allocatable operating costs in the year under review amounted to
€24.0 million (previous year: €10.9 million). This compared to expenditure on allocatable
operating costs in an amount of €25.5 million (previous year: €11.3 million). The properties’ operating expenses amounted to €12.1 million (previous year: €5.2 million).
The increase in the rental income and also in the allocatable operating expenses and
properties’ operating costs is based primarily on the fact that – as already mentioned
– the portfolios “Austerlitz”, “Falcon Crest” and, in particular, “Valbonne” contributed
throughout the entire year to the company result.
A result of €0.6 million (previous year: €1.5 million) was achieved from the sale of real
estate properties. These were individual properties such as semi-detached houses, terraced houses and separate ownership apartments which belonged to the “Valbonne”
portfolio and were intended for selling-off. In the previous year particular, it was in the
sale of the ALC building in Hanover-Langenhagen which significantly determined this
position.
Average number of employees
during the year
98
79
36
2005/2006 2006/2007 2007/2008
The personnel costs in the IMW Group rose in the year under review to €4.5 million
(previous year: €3.2 million). This increase reflects in part the necessary expansion of
the personnel capacities for the management and care of the growing stock of real estate
properties. An average of 84 staff was employed in the Group in the period under review.
In the previous period, this figure lay at 69 members of staff. As at the balance sheet date
of 31 March 2008, 98 persons, including the Management Board and trainees, worked for
the IMW Group (previous year: 79).
Our Group was able to perform the considerable tasks associated with the integration
of the individual portfolios and also the preparation of the prospectus for the stock exchange with a comparably small number of persons. This was only possible because our
employees worked with great commitment and a high degree of motivation to achieve
the goals.
The depreciation in the 2007/2008 business year rose to €5.5 million (previous year:
€0.1 million). The reason for this is an extraordinary adjustment of the goodwill acquired
in an amount of approx. €5.3 million (previous year: €0) and also depreciation on assets
of €0.2 million (previous year: €0.1 million).
The other operating income shows an amount of €3.8 million (previous year: €1.2 million).
Extensive activities associated with examinations in connection with proposed
purchases and sales of portfolios and individual real estate properties, and also the
preparation of a prospectus for the stock exchange and the extensive valuation of the
stocks of real estate properties by experts associated with the preparation of balance
sheets in accordance with IAS 40, resulted in a sharp increase in the other operating
expenses. In the period under review, these amounted to €14.4 million (previous year:
€6.1 million) and basically comprise costs of professional advisors in the amount of
€3.0 million (previous year: €2.2 million), costs for the preparation of the prospectus
for the stock exchange, including fees, in an amount of €3.2 million (previous year:
€0.2 million), costs for the valuation of real estate properties of €0.8 million (previous
year: €0.1 million), for audit performances in relation to the interim and annual financial statements €0.2 million (previous year: €0.1 million), for valuation adjustments
€1.6 million (previous year: €0.6 million) and also further positions.
In accordance with IAS 40, the value of the stock of real estate properties is newly
assessed. Increases in value are shown on the assets side as non-realised contributions
to the result, diminutions in value as non-realised losses. The valuation analysis of the
stocks of the IMW Group was carried out by CB Richard Ellis GmbH as at 31 March
2008. Significant shifts arose within the respective portfolios which were occasioned
by the general developments in value in real estate properties, changes specific to the
location and also investment measures carried out. The increases in value amounted to
€50.1 million (previous year: €40.3 million), the diminutions in value to €29.6 million
(previous year: €0.5 million). This balanced out at an increase of €20.5 million (pre
vious year: €39.8 million).
The interest income in the period under review lay at €0.8 million (previous year:
€1.0 million). Liquid funds were invested with banks at overnight interest. In relation to the results from the change in the fair values of financial derivatives, a loss
of €1.7 million was shown in the year under review; in the previous year, income of
€1.2 million could be achieved. This result derives from the development of interest,
since, in order to limit the interest risk from the long-term financial liabilities, corres
ponding interest–rate swaps and caps were concluded.
The expense of interest rose to €35.7 million (previous year: €22.8 million). This results
in part from the inclusion over the entire year of the portfolios acquired in the previous
year. A further €3.0 million results from the delayed entry in the Commercial Register
of the capital increase through the contribution in kind of the “Valbonne” portfolio. As a
result of rescissory actions which were lodged by minority shareholders against the resolutions of the shareholders’ meeting, the capital increase through contributions in kind
could only be entered and the shares issued in September 2007. Up until then, interest
had to be paid on a purchase price liability of €110.1 million at 6% p.a.
37
Consolidated management report | Earnings situation | Financial situation
38
IMW Immobilien AG
By the reduction of the rate of corporation tax to 15% as from 1 January 2008, the
deferred taxes formed needed to be adjusted. This led to a tax benefit of over €30.0 million, so that relief of €22.9 million arose in relation to the taxes on income in the year
under review. In the previous year, a tax expense of €10.9 million was shown.
Group net income
in € million
33.2
30.6
15.0
The Group result of €33.2 million for the 2007/2008 business year surpassed the already
good result of €30.6 million for the previous year by €2.6 million. This result was driven
by the mentioned valuation increase and the deferred tax adjustments, both according to
IFRS, which will not occur again in the next year.
At IMW Immobilien AG itself, some cost positions have special character, too. This includes the interest expense caused by the delayed entry in the Commercial Register of the
capital contribution in kind (€3.0 million), the costs of the preparation of the prospectus
(€3.2 million) and write-offs of subsidiaries according the German accounting principles
(HGB) (€5.3 million).
4. Financial situation
2005/2006 2006/2007 2007/2008
In relation to the financial situation in the year under review, reference is made to the
consolidated cash flow statement.
The cash flow from current business activities in the Group amounted to €4.6 million
(previous year: €10.6 million), the cash flow from investment activities lay at €–14.3 million (previous year: €–115.8 million) and the cash flow from financing activities
amounted to €11.0 million (previous year: €111.3 million).
The cash flow from operations fell by €6.0 million in relation to the previous year. This
was caused by the cost of preparing the prospectus (€3.2 million) and other items.
For the purchase of tangible and intangible assets €0.4 million was invested. Investments
in the amount of €15.2 million were made in the refurbishment of buildings in the year
under review.
Consolidated management report | Financial situation
The cash flow from financing activities resulted mainly from the refinancing of a loan of
Valbonne Real Estate 7. B.V., the planned amortisation of existing loans and new loans
for investments.
The liquid funds of the IMW Group amounted to €13.7 million (previous year: €8.5 million) at the balance sheet date. As soon as the situation on the capital markets makes it
appear commercially expedient, it is intended to improve the equity capital basis through
various capital measures. In this connection, the extraordinary general meeting of 22 May
2008 authorised the Management Board to issue debenture bonds in a nominal value of
up to €100 million with the consent of the Supervisory Board.
The steering of the financing is carried out through the central finance department in
accordance with guidelines passed jointly by the Management Board and the Supervisory Board. In this respect, the granting of loans for the acquisition of real estate
properties is mostly made on a non-recourse-basis in order to minimise liability risks
for IMW Immobilien AG. In order to counter risks of increases in interest, corresponding hedging transactions were entered into in the case of long-term loans. The payment
processes are optimised through cash pools. In addition to the aim of improving the
efficiency, the trans-company financial management also enables the Group to secure the
liquidity; reports are made on the development of the latter on a regular basis.
In the view of the Management Board, the acquisition of major real estate portfolios
through the issue of shares makes very good sense. By these means, transactions can be
concluded faster in terms of time. The costs of this manner of approach are significantly
lower than within the scope of increases in capital in return for cash. Finally, the liquidity
is spared, the credit rating improved and groups of new shareholders are won.
39
40
Consolidated management report | Assets situation
IMW Immobilien AG
5. Assets situation
The following overview shows the changes in the assets structure which have occurred in
comparison with the previous year:
€ ’000
2007/2008
2006/2007
Change
842,607
886,809
– 44,202
737
570
167
3
81
– 78
6,709
11,919
– 5,210
3
0
3
8,079
10,793
– 2,714
295
0
295
858,433
910,172
– 51,739
Inventories
4,979
7,440
– 2,461
Trade accounts receivable
4,433
2,682
1,751
523
643
– 120
98
0
98
Cash and cash equivalents
13,749
8,461
5,288
Other financial assets
13,497
7,105
6,392
Non-current assets
Investment property
Property, plant and equipment
Equity method companies
Intangible assets including goodwill
Deferred tax assets
Derivatives
Other non-current assets
Current assets
Income tax receivables
Derivatives
Other current assets
Assets of disposal group,
classified as held for sale
Total assets
1,275
489
786
38,554
26,820
11,734
78,970
0
78,970
117,524
26,820
90,704
975,957
936,992
38,965
The balance sheet sum of the IMW Group as at 31 March 2008 rose to €976.0 million
(previous year: €937.0 million). This basically results from the increase in real estate
properties held as financial investments to €921.6 million (previous year: €886.8 million) and also the increase in the other financial assets to €13.5 million (previous year:
€7.1 million).
Through the valuation of our stock of real estate properties in accordance with IAS 40, an
appreciation in value resulted of €20.5 million (previous year: €39.8 million). In addition,
there were investments of €15.4 million in investment properties.
8,200
7,000
Capital reserve
152,916
49,418
103,498
Fair value reserve
4,271
5,075
– 804
Retained earnings
Minority interests
76,107
45,645
30,462
248,494
108,338
140,156
12,843
10,457
2,386
261,337
118,795
142,542
442,040
555,943
– 113,903
48,289
72,848
– 24,559
1,038
0
1,038
491,367
628,791
– 137,424
115,889
11,824
104,065
Assets
Equity and
liabilities
936,992
Assets
975,957
Derivatives
Current financial liabilities
Current provisions
1,067
180
887
Income tax liabilities
9,285
8,835
450
Trade accounts liabilities
10,805
6,847
3,958
Other liabilities
19,938
161,720
– 141,782
156,984
189,406
– 32,422
Liabilities with regard to a disposal
group classified as held for sale
Total equity and liabilities
66,269
0
66,269
223,253
189,406
33,847
975,957
936,992
38,965
The intangible assets, including goodwill, fell from €11.9 million to €6.7 million. The
goodwill formed upon the assumption of the “Prima” portfolio in the year 2005 of
€11.2 million was written down by €4.5 million (previous year: €0). The goodwill formed
upon the assumption of the “Valbonne” portfolio in the year 2007 as of €0.7 million was
written down totally.
The value of non-current derivative financial instruments shrank to €8.1 million (pre
vious year: €10.8 million) in the course of the interest development.
Through selling-off, the book value of the inventory real estate properties was reduced to
€5.0 million (previous year: €7.4 million). In this connection, €0.5 million proceeds were
achieved by selling activities and write-offs from €0.6 million.
26,820
Current liabilities
2006/2007
Non-current assets
Current assets
Equity
Non-current liabilities
Current liabilities
117,524
Deferred tax liabilities
189,406
Non-current liabilities
Non-current financial liabilities
Equity and
liabilities
261,337
Subscribed capital
491,367
15,200
Equity
Balance sheet structure
€ ’000
223,253
Change
858,433
2006/2007
118,795
2007/2008
41
628,791
€ ’000
910,172
2007/2008
42
IMW Immobilien AG
The trade receivables increased to €4.4 million (previous year: €2.7 million).
The cash and cash equivalents amounted, as at 31 March 2008, to €13.7 million, and lay
above the comparable value of the previous year (€8.5 million). The development of this
position can be seen from the cash flow statement.
The other financial assets likewise significantly increased to €13.5 million (previous year:
€7.1 million), which resulted mainly from receivables of refurbishment guarantees at
the amount of €3.2 million and receivables from refinancing of loans at the amount of
€2.6 million.
For the first time we introduced a new item: “assets of disposal group classified as held
for sale”. In this item we added the fair values of such properties which we intend to sell.
These are mainly commercial used properties at the amount of €79.0 million (previous
year: €0).
Equity capital of the group
in € million
261.3
118.8
29.8
2005/2006 2006/2007 2007/2008
The equity capital of the Group increased primarily due to the increase in capital through
contributions in kind already mentioned to €261.3 million (previous year: €118.8 million). In addition to the increase in the subscribed capital to €15.2 million (previous year:
€8.2 million), this is, in particular, reflected in the capital reserve which amounted to
€152.9 million (previous year: €49.4 million) as at the balance sheet date. Through the
issue of 7.0 million shares at a price of €15.73 per share, it was possible to transfer more
than €103.1 million to the capital reserve.
The reserve for market valuation fell by €0.8 million to €4.3 million through the reduction of the values of the financial derivatives.
As a result of the improvement of the result for the Group, the accrued results rose to
€76.1 million (previous year: €45.6 million). Parallel to this, the share of other shareholders increased to €12.8 million (previous year: €10.5 million).
In relation to the bank loans and overdrafts, certain refinancing is pending in the course
of the year. Furthermore, liabilities with regard to assets classified as held for sale have
to be shown separately. Accordingly, the long-term financial liabilities had to be shown
at €442.0 million (previous year: €555.9 million); the short-term financial liabilities rose
to €115.9 million (previous year: €11.8 million) and liabilities with regard to a disposal
group classified as held for sale amounted to €66.3 million.
The deferred tax liabilities fell to €48.4 million (previous year: €72.8 million) as a result of
the adjustment to the changed corporation tax rates.
The accruals and provisions increased to €1.1 million (previous year: €0.2 million).
Consolidated management report | Assets situation | Report on events subsequent to the balance sheet date
The income-based tax liabilities rose to €9.3 million (previous year: €8.8 million). The
trade payables increased significantly to €10.8 million (previous year: €6.8 million).
For the first time – caused through the interest development – it was necessary in the
case of certain swaps to show a liability under financial derivatives of €1.0 million
(previous year: €0).
The other liabilities were considerably reduced, in particular through the reposting of
the purchase price liability arising from the increase in capital through the contribution
in kind of “Valbonne”. They amounted to €19.9 million (previous year: €161.7 million)
as at the balance sheet date. This amount contains liabilities from refinancing of loans of
€8.3 million (previous year: €42.2 million), liabilities to affiliated companies of €3.4 million (previous year: €4.1 million) and liabilities resulting from interest of €2.7 million
(previous year: €1.6 million).
6. Report on events subsequent to
the balance sheet date
At an extraordinary general meeting of shareholders on 22 May 2008, it was resolved:
1. That the existing authority to issue option bonds and convertible bonds and to exclude
the pre-emptive rights (resolution of the general meeting of shareholders of 26 November 2007) be revoked and replaced by a new authority.
On 26 November 2007, under agenda point 11, the ordinary general meeting of
IMW Immobilien AG resolved to authorise the Management Board to issue option
bonds and convertible bonds and to grant option and conversion rights for registered
shares of the company with a proportionate amount of the share capital of in total
up to €1,520,000 through the issue of up to €1,520,000 individual registered shares,
in accordance with the conditions of the issue of the option bonds and convertible
bonds, together with the creation of corresponding contingent capital in the amount of
€1,520,000.
This power had not been fully exercised until then; accordingly, a new authority
needed to be created which would enable the company in a wider scope than previously to issue option bonds and convertible bonds, or a corresponding combination of
these instruments.
The Management Board was now authorised, with the consent of the Supervisory
Board, up until 2 May 2013, either on a one-off basis or several times, to issue bearer
or registered conversion and/or option bonds (or a combination of these instruments)
(together “Bonds”), with or without a limitation on the period, in a total nominal
value of up to €100.0 million, and to grant the creditors of the Bonds’ conversion or
option rights for registered individual shares of the company with a proportionate
amount of the share capital of in total up to €6,760,000, in accordance with the more
precise conditions of the issue.
43
44
Consolidated management report | Report on events subsequent to the balance sheet date | Risk report
IMW Immobilien AG
2. That the existing contingent capital III be revoked and a corresponding contingent
capital 2008/I be created for servicing conversion and/or option rights under Bonds or
similar instruments.
3. That the draft Merger Plan of 3 March 2008 between IMW Immobilien AG and Straet
Vastgoed N.V., Eindhoven, Netherlands, be approved.
On 3 March 2008, the Management Board and Supervisory Board of IMW Immobilien
AG and the Management Board of Straet Vastgoed resolved to transfer IMW Immobilien AG by way of merger through incorporation into the legal form of a European
Company (Societas Europaea, SE). In this connection, Straet Vastgoed is to be merged
with IMW AG which, in the course of the merger, will assume the legal form of an SE.
Individual shareholders have initiated rescissory actions. The implementation will
probably be delayed by several months.
On 11 July 2008, the company announced that Dr Marc Schulten will resign from his
duties as managing director from 31 August 2008.
On 15 July 2008, the company announced that it will buy the remaining part of 10% of
Aircargo Logistic Center Langenhagen Grundstücksverwaltungs GmbH, which required
an approval of the Supervisory Board.
7. Risk report
The Management Board of an Aktiengesellschaft – stock corporation – quoted on the
stock exchange is, in accordance with § 91 AktG [Aktiengesetz – Stock Corporations
Act] obliged to install a risk management system and to adjust the same continually to
the current developments.
Each entrepreneurial activity is associated with risks and chances. Risks are generally
understood as the possibility of unfavourable future developments through which the
actual result of an entrepreneurial activity deviates from the anticipated result. Normal
risks comprise risks of damage through which the assets are directly diminished. The
speculative risk, on the other hand, comprises those occurrences which have the effect of
diminishing or augmenting assets (chances) through entrepreneurial acts.
Entrepreneurial risks cannot be avoided; they should, however, be recognised and
monitored at an early stage. The nature and scope of the risk management are defined in
this connection by the size and complexity of the business and also the risk potentials,
specific to the branch, to which our company is exposed.
Consolidated management report | Risk report
In the year 2004, a risk management manual was drawn up, and the aims and methods
were laid down in the same. In the following years, this manual was continually aligned to
the respective requirements. Risk-relevant ratios are constantly examined, and the border
and threshold values for the changed business conditions newly defined. Furthermore,
the list of individual risks is constantly analysed and supplemented by newly identified
risks. In particular in the business year 2006/2007, the ratio systems underwent a considerable expansion which, in the future, will be extended in even more detail. For the
integration of the “Valbonne” portfolio, a consultancy firm was instructed to draw up a
suitable reporting system.
In the course of the preparation of the stock exchange prospectus, the risk situation of
IMW Immobilien AG was once more comprehensively analysed. In this connection, a
distinction was made between risks specific to the market and branch, risks of the business activities, those arising under legal and regulatory framework conditions and other
specific risks.
Market- and branch-specific risks
The business activities of the IMW Group are, in addition to the portfolio, asset and
property management areas, concentrated on the acquisition and subsequent letting of
real estate properties and real estate property portfolios. The business model accordingly
depends on the possibility of acquiring suitable real estate properties with value-added
potential. Accordingly, the important issues are the structural fabric, the capability of
development and further factors influencing value such as, for example, achievable rental
income, situation and quality of location, as well as the credit-worthiness of the tenant.
Furthermore, there are a number of prevailing market conditions over which the IMW
Group has no influence (economic growth, inflation, interest level). These have considerable influence on possibilities and the points in time of acquisition and achievable prices.
The reason that this is of significance is that attractive returns are mostly only attainable
by anti-cyclical investment behaviour.
An additional factor is the increased competition through domestic and foreign investors
which, in particular, influences the price level for real estate properties. This is certainly
an advantage for the seller side but tends to be unfavourable for the purpose of assessment when, as IMW AG currently does, establishing a portfolio.
IMW AG requires ample financial resources which it uses for the acquisition of real
estate properties. With a rising level of interest, the financing costs increase. However,
the rental income cannot be increased in the same manner. In order to reduce the risk of
increases in interest, time-matched safety mechanisms such as swaps or caps are concluded. Nevertheless, it cannot be excluded that the intended security instruments only take
effect in part, and that the extension or new conclusion of expiring financing agreements
need to be made upon considerably more unfavourable conditions. Further information
is provided under point 8 of the report forecast.
45
46
IMW Immobilien AG
The value of the real estate properties held as financial investments was assessed as at the
balance sheet date. The value of this stock of real estate properties essentially depends
upon the development of the real estate market, the competition between the investors,
the financing conditions, the economic situation and the demographic development.
Furthermore, a change in the social structure of a town district may also have disadvantageous effects.
As a holder of portfolios of residential properties, we must monitor the demographic
development, the development of the number of households and the changes in the living behaviour of the tenants. We try to include all these factors when acquiring real estate
properties.
Risks associated with the business activities
Companies which hold real estate properties are frequently obliged, apart from interest
and redemption payments, to enter into further obligations. For instance, the value of the
real estate properties mortgaged and the value of loan lie in a particular ratio (LTV). As
soon as such ratios are not met, the loan agreements open the possibility of adjustment
or termination of the loans granted. We refer to point 8 of the forecast report. Accordingly, it is necessary to have a comprehensive system to analyse the corresponding criteria
and record their development in the short and long term, in order to be able to react
where necessary. These measures may extend to increasing rental income or reducing the
premises vacant, but the value of the real estate properties which can be influenced by
modernisation and renovation measures is also of major importance.
For the added value sought, the efficient management of the stock of real estate properties is a decisive factor. Having regard for the restrictions under landlord and tenant law,
the reduction of the vacant premises and the increase of the rental income are assigned
much importance. In this connection, residential premises conforming to market conditions, marketing and advertising measures, and an offer tailored to potential tenants must
create sufficient demand. Existing tenancy relationships must be nurtured and the client
bond be strengthened.
More than 80 % of the rental areas of the IMW Group are let to residential tenants. In
this respect, there is a considerable spread of risk, since an individual tenancy agreement
– measured against the overall volume – only represents a small part. Accordingly, the
default in payment on the part of individual tenants has no serious effect on the overall
result.
Through costly and proper investment and renovation measures, our inventory of residential premises is, for the most part, in a good condition, so that high losses of rent as
a consequence of vacant premises can be largely be excluded. Corresponding funds for
modernisation and improvements in standards will also be available in the future so as to
meet the rising demands in relation to residential space.
In our own letting company, all measures are coordinated which are intended to con
tribute to ensuring that vacant residential premises are quickly re-let. In this connection,
the measures are initiated very early; as a rule, corresponding letting activities are started
already upon the receipt of the notice of termination of the tenancy.
This applies to the same degree for the area of commercial tenants. An additional factor is
that unfavourable developments are registered at an early stage through consistent claims
management and reaction measures instigated in good time.
Acquisition of real estate properties
By the nature of things, the greatest risk for the business activities of IMW AG and its
subsidiaries lies in the acquisition of new real estate properties. These may arise through
the location, specific features of the objects and technical and economical risks.
Risks in relation to location may arise from the vicinity to danger potentials, c onditions
associated with the development plans and traffic development measures. Specific features related to the objects may derive from planning permission, the existing building
fabric or fixtures and fittings. However, the current letting status, the tenant structure and
fluctuation, level of rental, etc. are also important parameters.
With the aid of checklists, expert reports and cash flow analyses, possible risk sources are
identified and taken into account in fixing the purchase price. Furthermore, professional
advisors, experts and real estate specialists are instructed to make a careful examination
of the respective stocks. No acquisition is made without corresponding analyses.
After all the facts have been assembled, an economic analysis is carried out. From the anticipated rental income and ancillary costs, investment requirements and also the interest
and redemption payments, the analysis produces a monthly/annual cash flow presentation. This leads to a yield value which must correspond to our profit ratio expectations.
Legal and regulatory framework conditions
The German real estate market is characterised by continuous changes in the statutory – in particular landlord and tenant, tax and environmental framework-conditions.
These frequently effect a change in the decision-making parameters of the market participants. Accordingly, negative effects may arise through the treatment of residential
ownership under tax law provisions or the introduction of an interest barrier and the
new regulation of the add-back criteria under trade tax provisions.
47
48
IMW Immobilien AG
In the tenancy agreements used and the management of the tenancy agreements, we see
only a small risk potential, since we have aligned our formulations and contents of the
tenancy agreements to many years of established case law. The examination of the agreement is the responsibility of the staff entrusted with the management of the stocks, who
are correspondingly trained at regular intervals.
In particular, tax risks arising from shareholder debt financing which entails a reduction in the deductibility of loan interest is likely to cause considerable headaches to real
estate companies. This also applies for the introduction of the interest barrier under
§ 4 h EStG [Einkommensteuergesetz – Income Tax Act]. Under this provision, a negative balance arising from interest income and expenditure is only tax deductible up
to 30% of the profit before interest, taxes and depreciation. Since the prerequisites are
examined per operation, we shall, through the corresponding spread of the portfolios of
over a total of 40 companies holding real estate properties, not be affected so strongly.
Further risks may arise from the breach of conditions imposed by authorities, the failure
to fulfil the requirements for public subsidies, the breach of provisions concerning the
protection of customer data or the data of business partners.
General risks
The IMW Group bears the risk that the real estate properties and buildings in its ownership are encumbered with contamination, soil pollution or other harmful substances, and
that the removal of the same involves considerable costs. Effects having an influence on
the value and intangible damage may also arise. No significant environmental risks in the
existing portfolios could be ascertained within the framework of the numerous examina
tions and surveys. Risks from this area are avoided as far as possible through corres
ponding technical expert reports and also contractual provisions when purchasing real
estate properties. No indications have arisen in the period under review of any hitherto
unknown risks.
The success of the IMW Group essentially depends upon the commitment and the
knowledge of its staff and management. Should certain employees leave, this would lead
to a corresponding loss of know-how and also the loss of contacts and relationships.
Through intensive further training, attractive working arrangements and also a shareoption programme, the Group tries to bind its staff to the company over the long term.
The classic risks which exist in connection with the use and letting of real estate properties are covered in appropriate scope by corresponding insurance policies (e.g. fire, water,
storm, liability, environmental hazards). Furthermore, D+O insurance and third-party
liability insurance have been taken out, so that the insurance cover may be regarded as
adequate. We have subjected our entire insurance structure to an external review.
Consolidated management report | Forecast report
8. Forecast report
At the present time, international investors – particularly from Scandinavia – are using
the current market situation in order to acquire real estate properties in Germany. According to their assessment, the rentals and prices of real estate properties are still at an
attractive level. Nevertheless, significant increases in purchase prices are already to be
observed. The offer of real estate properties continues to remain large. In particular, it is
anticipated that also in the future an increasing number of real estate packages will be
offered from the public sector.
However, the so-called sub-prime crisis in the previous months has almost brought the
transaction activities to a standstill. Just recently, the first indications are recognisable of a
preparedness on the part of banks to make funds available to the real estate market once
again.
This is currently also affecting the financing of the part-portfolio, which is due to be
prolonged as of 15 July 2008 with a partial amount of €34.125 million. At the moment
we are involved in promising negotiations with creditors to prolong the tranche, and are
assuming that by the end of the year, one half of the loan can be repaid and the other half
prolonged.
In the “Austerlitz” part-portfolio, the covenants from the loan agreement with IMW
Austerlitz Beteiligungen GmbH, Berlin, that were agreed with the financing bank are currently not being complied with in full, with the result that the bank can now prematurely
claim back the loan amounting to €28,618 thousand as of the balance sheet date which, in
principle, was to be redeemed over the long term. We have already commenced talks with
the banks in relation to the “Austerlitz” part-portfolio with the aim of finding an acceptable solution for both sides, possibly by furnishing additional security. In view of the positive prospects offered by the negotiations and the promising re-letting activity, the bank is
not currently expected to demand the repayment of the loan. In addition, IMW Austerlitz
Beteiligungen GmbH has the possibility of restoring compliance with the covenant by
repaying part of the loan.
In addition, objections have been raised with Valbonne Real Estate 7 B.V. and Valbonne
Real Estate 10 B.V. by the financing bank on the issue of their compliance with the dis
closure obligations from the loan agreements amounting, as of the balance sheet date,
to €19,800 thousand. We do not recognise these objections. We are assuming that the
talks held with the bank on the subject of demonstrating compliance with the disclosure
obligations can be brought to a positive conclusion.
IMW AG itself assumes no liability in relation to the property financing a rrangements
specified above. Should the negotiations initiated with the banks turn out to be unsuccess
ful, however, the subsidiaries concerned would be unable to meet their payment obligations without assistance from IMW AG. This could have a negative impact on the liquidity
position.
49
50
Consolidated management report | Forecast report | Dependence report
IMW Immobilien AG
In addition, the Executive Board is examining the possibility of selling properties which
are not achieving the desired returns within a reasonable period or which do not corres
pond to the Group’s regional orientation. By implementing these selective disinvestments,
the Group will generate the liquidity required for the yield-oriented further development
of its portfolio while further reducing the indebtedness ratio.
In this environment, the IMW Group has been able to successfully implement its entrepreneurial goals, and has, primarily, pushed ahead with the consolidation of the real estate
stocks acquired. The expansion of various business activities will also be pursued further as
soon as sufficient financial scope presents itself herefor. At the present time, the possibilities
of cooperation with other investor groups are being examined which, where appropriate,
should be supported by a corresponding capital participation. Furthermore, the chances of
carrying out capital increase measures which can be quickly implemented are being ana
lysed, since considerable preparatory work has already been invested in the preparation of
the stock exchange prospectus.
The result can be forecast only roughly because of the great difficulty in assessing the
development of property values, financial derivatives and other extraordinary influencing factors. We are expecting our operating result to improve over the next two financial
years.
9. Dependence report
In accordance with § 312 AktG (Stock Corporations Act), IMW Immobilien Aktienge
sellschaft has to prepare a dependence report on the business relationships with majority
shareholders and their affiliated companies.
Since 12 August 2003, 94.73% of the shares of IMW AG have been in the hands of Watermark CH AG, Zug/Switzerland, which is, in turn, a subsidiary of Watermark Holding
Ltd., London. Warwick Square Ltd., London, has a participation in the latter of over 93%,
and is, for its part, a 100% subsidiary of Warwick Square Trust (UK), a large real estate
fund company with widespread shareholdings.
Through the increases in capital, the share of Watermark CH AG has fallen to approx.
44.3%.
Watermark Holding Ltd., St. Helier, Jersey, has granted a loan to IMW AG in a total
amount of €3.1 million, upon which interest is payable at 6.8% p. a. until June 2007,
and thereafter at 8.0% p.a. This loan was assigned to CIF 1 Asset GmbH & Co KG on
31 March 2008.
Consolidated management report | Dependence report | Reporting
The dependence report further comprises legal transactions of our subsidiaries such as,
for example, of IMW Autarke Immobilien Matrix GmbH, IMW Prima GmbH, IMW
W&S Immobilien GmbH, and also of further subsidiaries of Watermark CH AG and its
affiliated companies. In these areas, a comprehensive transfer of performance took place
in part, which, for the most part, comprised management and other service tasks. All
agreements were made and performed at normal market conditions.
“The Management Board declares that, according to the circumstances known to it at
the point in time when the respective legal transactions were made, or measures taken
or omitted, IMW Immobilien Aktiengesellschaft, Berlin, received a reasonable consideration for each legal transaction and was not disadvantaged through the measures
which were taken or omitted.”
10. Reporting under § 315, para. 4, HGB
[Handelsgesetzbuch – German Commercial Code]
In accordance with the Übernahme Richtlinie – Umsetzungsgesetz (Implementation Act
on the Take Over Directive), the following is to be reported in the management report and
the consolidated management report for the business year from 1 April 2007 to 31 March
2008:
The share capital of IMW Immobilien Aktiengesellschaft amounts, as at 31 March 2008, to
€15.2 million and is divided into 15,200,000 registered shares (no par value shares) so that,
mathematically, a nominal value arises of €1 per share. All shares are fully paid up.
As far as the Management Board of the company is aware, no restrictions existed as at
31 March 2008 affecting the voting rights or the transfer of shares.
Watermark CH AG, Zug/Switzerland and its shareholder, Watermark Holding Ltd.,
St. Helier, Jersey, has a holding in the capital, either directly or indirectly, of more than
10% of the voting rights. Warwick Square Ltd., London/Great Britain, has a holding in
Watermark Holding Ltd. of over 93%. This company is, for its part, a 100% subsidiary of
Warwick Square Trust, London/Great Britain.
Furthermore, the following persons have holdings with more than 10% of the voting rights:
Mr Th. J. Moeskops, Eindhoven, Netherlands, and Mr H.P.C.M. van de Moesdijk, Eindhoven, Netherlands, and also swisspartner AG, Zurich/Switzerland.
At the general meeting of shareholders of 1 July 2004, the conversion to registered shares
was resolved. Furthermore, it was provided in the new company statutes that two shares
each comprise the right to nominate a member of the Supervisory Board. One of these
shares is held by Watermark CH AG, Zug/Switzerland, the second share by VERMAR
Verwaltungs- und Marktstudien AG, Zurich/Switzerland. No further shares with special
rights have been issued.
51
52
Consolidated management report | Reporting
IMW Immobilien AG
No voting trust agreements between employee shareholders have been made, nor do any
other voting right controls exist in relation to employees who participate in the capital.
Members of the Management Board are to be appointed and removed corresponding to
the statutory provisions of §§ 84, 85 AktG (Stock Corporations Ac)]. Amendments to the
company statutes are made in accordance with §§ 133, 179 AktG.
The Management Board is authorised, with the consent of the Supervisory Board, to
issue 7,600,000 new shares in the amount of the authorised capital. Reference is made to
the explanations on equity capital in the notes.
Significant agreements which are subject to the condition of a change of control as a
result of a takeover offer were made as follows:
In the case of a takeover offer or of a change of control, the terms of the 2005 share
option plan provide for the following special arrangement:
The provisions of the pre-emptive rights may provide that the pre-emptive rights can
already be exercised prior to the expiration of the waiting period within a reasonable
period of time following an effected change of control, provided that in such case performance is provided for through cash payment. The terms of the pre-emptive rights may
further provide that the pre-emptive rights can, within a reasonable period of time, be
terminated unilaterally by the company following any change of control effected, including during the waiting period, in return for cash payment in the amount of the difference
between the exercise price and the closing price of the share of the company in XETRA
trade (or in any other functionally comparable successor system replacing the same) on
the last stock exchange trading day prior to the date of the termination (date of issuing
the declaration of termination).
The terms of the pre-emptive rights provide that the holders of the pre-emptive rights are
obliged to transfer the pre-emptive rights to an offerer (within the meaning of WpÜG
– Wertpapiererwerbs- und Übernahme Gesetz – Act concerning the Acquisition and
Transfer of Securities) who makes a voluntary takeover offer or a compulsory offer for
all issued shares of the company, provided the price per pre-emptive right offered for the
transfer of the pre-emptive rights corresponds at least to the difference between the exercise price and the price offered per share for the acquisition of the shares issued (including any price increases).
No increases in the salaries of the members of the Management Board are provided for in
the case of any change of control.
No compensation agreements have been made with the members of the Management
Board or with employees in the event of any takeover offer.
By way of amplification, reference is made to the observations in relation to the equity
capital in the notes under Para. III.3.
In some loan agreements of subsidiaries there are regulations of treating Change of
Control events. They provide information rights and termination rights to the bank if
there is a change of shareholders by the SPV or the company.
11. Reporting on the basic principles of the remuneration system of the company in accordance with
§ 289, para. 2, no. 5 HGB (German Commercial Code)
The members of the Management Board receive for their activities a basic salary and also
remuneration in kind in the form of the provision of company cars and pension schemes.
Mr Eckhard Rodemer was granted a loan in a nominal amount of €60 thousand as from
1 February 2005 for a period of three years. No interest is payable on the loan and is re
mitted as to one third in so far as Mr Rodemer still has an unterminated appointment as
its chairman of the Management Board after twelve months. Provided the same conditions
are still fulfilled after two and three years respectively, a further third, and after three years
the last third, is remitted. The book value as at 31 March 2008 amounted to €0 thousand.
In addition, the members of the Management Board receive a variable remuneration in
an amount of 25% to 30% of the fixed components in accordance with the provisions of a
target catalogue to be laid down by the Supervisory Board.
Furthermore, 440,000 share options were issued to the members of the Management
Board. Here, reference is made to the explanations to the share-option plan in the notes
under Para. VI.1.
Voting right disclosures
Watermark CH AG, Zeughausgasse 9a, CH-6301 Zug/Switzerland, notified us on 19 September 2007 that on 13 September 2007 it fell below the threshold of 50% and of 75% of
the voting rights in IMW Immobilien AG. The holding of Watermark CH AG amounted
as at 31 March 2008 to 44.3%.
Watermarks Holding Ltd., St. Helier, Jersey, notified us on 19 September 2007 that its
voting right shares in IMW Immobilien AG fell below the thresholds of 50% and 75%
on 13 September 2007 and, since then, amount to 49.7%. Of this, 44.3% of its subsidiary
Watermark CH AG, Zug/Switzerland, is attributable to Watermark Holdings Ltd. in
accordance with § 22, Para. 1, 1st sentence, no. 1, WpHG (Securities Trading Act). A further 5.4% is attributable to it in accordance with § 22, Para.1, 1st sentence, no. 1, WpHG
from its subsidiary OFM Immobilienbeteiligungen GmbH, Stresemannstr. 74/Berlin.
53
54
IMW Immobilien AG
At the same time, it was notified that the share of the voting rights of the parent company
of Watermark Holdings Ltd., Warwick Square Ltd., St. Helier/Jersey, in IMW Immobilien
AG had fallen below the thresholds of 50% and 75% on 13 September 2007 and, since
then, amounted to 49.7%. Of this, 49.7% of its subsidiary Watermark Holdings Ltd. is to
be attributed to Warwick Square Ltd. in accordance with § 22, Para. 1, 1st sentence, no. 1,
WpHG.
Furthermore, it was notified that the share of voting rights of the parent company of
Warwick Square Ltd., Warwick Square Trust, St. Helier/Jersey, in IMW Immobilien AG
fell below the thresholds of 50% and 75% on 13 September 2007, and, since then,
amounted to 49.7%. Of this, 49.7% of its subsidiary Warwick Square Ltd. is to be attributed to Warwick Square Trust in accordance with § 22, Para. 1, 1st sentence, no. 1, WpHG.
OFM Immobilienbeteiligungen GmbH, Stresemannstr. 74/10963 Berlin, notified us on
19 September 2007 that its share in the voting rights fell below the threshold of 10% on
13 September 2007 and, since then, amounted to 5.4%. Of this, 1.6% of Wertbau GmbH,
Stresemannstr. 74/10963 Berlin, is to be attributed to OFM Immobilienbeteiligungen
GmbH in accordance with § 22, para. 1, 1st sentence, no. 1, WpHG.
Thuraya Value Growth REIT AG, CH-6304 Zug/Switzerland notified us on 19 September
2007 that its share in the voting rights fell below the threshold of 3% on 13 September
2007 and, since then, amounted to 2.5%.
At the same time, it was notified that the share of the voting rights of its parent company,
Thuraya Foundation for Arts and Sciences, FL-9490 Vaduz, Liechtenstein, had likewise fallen below the threshold of 3% and, since then, amounted to 2.5%. Of this, 2.5%
is attributable to Thuraya Foundation for Arts and Sciences in accordance with § 22,
Para. 1, 1st sentence, no. 1, WpHG.
Mr H.P.C.M. van de Moesdijk, NL-5644 Eindhoven/Netherlands, notified us on 19 September 2007 that on 13 September 2007 his share of voting rights in IMW Immobilien
AG exceeded the thresholds of 3%, 5% and 10% and, since then, amounted to 14.6%.
Mr Th. J. M. Moeskop, NL-5611 Eindhoven/Netherlands, notified us on 19 September
2007 that on 13 September 2007 his share of voting rights in IMW Immobilien AG exceeded the thresholds of 3%, 5% and 10% and since then amounted to 14.6%.
Mr Boekhoorn, NL-6721 Benekom/Netherlands, notified us on 19 September 2007 that
on 13 September 2007 his share in the voting rights in IMW Immobilien AG exceeded
the threshold of 3% and, since then, amounted to 4.9%.
Mr D.G. van Riemsdijk, London/Great Britain, notified us on 19 September 2007 that on
13 September 2007 his share in the voting rights in IMW Immobilien AG exceeded the
thresholds of 3%, 5% and 10% and, since then, amounted to 10.3%.
On 30 November 2007, Mr D.G. van Riemsdijk notified us that his share in the voting
rights in IMW Immobilien AG had fallen below the thresholds of 3%, 5% and 10% and,
since then, amounted to 0%.
With the same date, swisspartner AG, CH-8022 Zurich/Switzerland, notified us that its
share in the voting rights in IMW Immobilien AG had exceeded the thresholds of 3%,
5% and 10% on 27 November 2007 and, since then, lay at 10.3%.
On 10 December 2007, Mr Rainer H. Moser, CH-8703 Erlenbach/Switzerland, notified
us that his share in the voting rights in IMW Immobilien AG had exceeded the threshold
of 3% on 27 November 2007 and, since then, amounted to 4.0%. These voting rights are
attributable to him in accordance with § 22, Para. 1, 1st sentence, no. 2, WpHG through
swisspartners AG, CH-8022 Zurich/Switzerland.
On 10 December 2007, Mr Martin P. Egli, CH-8038 Zurich/Switzerland, notified us
that his share in the voting rights in IMW Immobilien AG had exceeded the threshold
of 3% on 27 November 2007 and, since then, amounted to 4.0%. These voting rights are
attributable to him in accordance with § 22, Para. 1, 1st sentence, no. 2, WpHG through
swisspartners AG, CH-8022 Zurich/Switzerland.
Mr D.G. van Riemsdijk, London/Great Britain, notified us on 31 December 2007 that
his share in the voting rights in IMW Immobilien AG had exceeded the thresholds of 3%
and 5% on 28 December 2007 and, since then, amounted to 5.3%.
Berlin, 29 July 2008
IMW Immobilien Aktiengesellschaft
The Management Board
Hartmut Fromm
Roland Pöhlmann
Maic Schäfer
Boris Töppe
Dr Marc Schulten
55
56
Consolidated financial statements | Consolidated balance sheet
IMW Immobilien AG
Consolidated balance sheet
as of March 31, 2008
Assets
€
Notes
31.03.2008
31.03.2007
(adjusted) € ’000
A. Non-current assets
1. Investment property
15.
842,607,000.00
886,809
2. Property, plant and equipment
16.
736,526.21
570
3. Equity method companies
17.
2,795.00
81
4. Intangible assets including good will
18.
6,708,931.86
11,919
5. Deferred tax assets
13.
2,914.80
0
6. Derivatives
24.
8,078,628.79
10,793
7. Other non-current assets
19.
295,496.41
0
858,432,293.07
910,172
B. Current assets
1. Inventories
21.
4,979,411.10
7,440
2. Trade accounts receivable
22.
4,432,850.94
2,682
3. Income tax receivables
23.
522,983.68
643
4. Derivatives
24.
97,522.00
0
5. Cash and cash equivalents
25.
13,749,352.12
8,461
6. Other financial assets
22.
13,497,086.99
7,105
7. Other current assets
26.
1,275,453.65
489
8. Assets of disposal group, classified as held for sale
37.
78,970,000.00
38,554,660.48
26,820
78,970,000.00
0.00
117,524,660.48
26,820.00
975,956,953.55
936,992
Consolidated financial statements | Consolidated balance sheet
57
Equity and liabilities
€
A. Equity
Notes
31.03.2008
31.03.2007
15,200,000.00
8,200
152,915,896.89
49,418
4,270,768.36
5,075
27.
1. Subscribed capital
2. Capital reserve
3. Provisions for market valuations
4. Revenue reserves
45,645
76,107,073.20
Equity attributable to the parent company’s shareholders
5. Minority interests
12,843,526.50
248,493,738.45
108,338
12,843,526.50
10,457
261,337,264.95
118,795
B. Non-current liabilities
1. Non-current financial liabilities
28.
442,040,299.40
555,943
2. Deferred tax liabilities
13.
48,288,143.55
72,848
3. Derivatives
24.
1,038,359.00
0.00
491,366,801.95
628,791
C. Current liabilities
1. Current financial liabilities
28.
115,889,203.25
11,824
2. Current provisions
29.
1,067,008.52
180
3. Income tax liabilities
30.
9,284,633.94
8,835
4. Trade accounts liabilities
31.
10,804,855.94
6,847
5. Other liabilities
32.
19,938,256.82
161,720
156,983,958.47
6. L iabilities with regard to a disposal
group classified as held for sale
37.
66,268,928.18
189,406
66,268,928.18
0
223,252,886.65
189,406
975,956,953.55
936,992
Consolidated financial statements | Consolidated income statement
58
IMW Immobilien AG
Consolidated income statement
for the period 1 April 2007 to 31 March 2008
€
Notes
1. Income from the renting of real estate
of which from rent guarantees €2,067,825.08
(previous year: €0 thousand)
5.
2007/2008
2006/2007
60,175,208.48
34,693
2. Income from operating costs that can be charged on
6.
23,992,303.52
10,936
3. Expenses from operating costs that can be charged on
6.
– 25,517,213.75
– 11,324
4. Real estate operating costs
7.
– 12,135,371.91
– 5,196
5. Income from the sale of inventory properties
2,361,151.09
500
6. Book values of the inventory properties sold
– 1,900,775.97
– 500
7. Result from the sale of real estate held as investments
8.
176,647.58
1,462
8. Personnel expenses
9.
– 4,539,397.95
– 3,242
9. Depreciation and amortisation
16./18.
– 5,458,807.61
– 125
10. Other operating income
10.
3,778,855.01
1,178
11. Other operating expenses
11.
– 14,388,233.85
– 6,051
12. Non-realisable profits from valuation at fair value
15.
50,093,107.44
13. Non-realisable losses from valuation at fair value
15.
– 29,639,147.74
14. Income from equity-method companies
15. Interest income
12.
784,477.93
16. Interest expenses
12.
– 35,740,823.57
17. Result from the change in the fair values of financial derivatives
12.
– 1,734,043.21
18. Result before taxes
19. Income taxes
13.
20. Net Group income
40,294
20,453,959.70
– 448
17,720.20
3
1,021
– 22,836
– 36,690,388.85
1,182
10,325,655.69
41,547
22,924,006.71
– 10,906
33,249,662.40
30,641
2,787,712.70
1,599
30,461,949.70
29,042
Income attributable to
minority shareholders
shareholders of parent company
Result per share undiluted in €
14.
2.53
6.04
Result per share diluted in €
14.
2.47
5.96
Consolidated financial statements | Consolidated cash flow statement
59
Consolidated cash flow statement
2007/2008
2006/2007
(adjusted)
Pre-tax result for the period (including interests of minority shareholders)
10,326
41,547
+/– Financial result
36,690
20,633
5,459
125
€ ’000
+/– Write-downs/Write-ups of non-current assets
–/+ Profits/losses from valuation of real estate held as investments at fair value
– 20,454
– 39,846
+/– Increase/decrease in provisions
887
533
+/– Other non-cash expenses/income
– 30
– 419
– 177
– 1,462
– 1,834
– 7,988
–/+ Profits/losses from disposals of real estate held as financial investment
–/+ Increase/decrease in inventories, trade accounts receivable and other assets
not from investment or financing activities
–/+ Increase/decrease in trade accounts payable and other liabilities not from investment
or financing activities
3,178
12,847
+
Income tax received
165
0
–
Income taxes paid
– 47
– 73
+
Interest received
–
Interest paid
=
Cash flow current operating activities
+
Proceeds from the disposal of property, plant and equipment
–
Outflows for investment in property, plant and equipment
–
Outflows for investment in intangible assets
+
Proceeds from the disposal of financial assets
–
Outflows for investment in the real estate held as investments
+
Proceeds from dividend distributions from companies consolidated at equity
–
Outflows for the acquisition of “real estate held as financial investment”
–
Outflows for the acquisition of companies less cash and cash equivalents acquired
=
Cash flow investment activities
+/– Payments from/to minority shareholders
+
Income from loans
–
Outflows for repayment of loans
=
Cash flow financing activities
784
931
– 30,392
– 16,262
4,555
10,566
5
0
– 349
– 150
– 71
– 39
1,242
24,800
– 15,211
0
43
29
0
– 85,018
82
– 55,465
– 14,259
– 115,843
0
– 2,562
28,683
140,801
– 17,693
– 26,906
10,990
111,333
Changes in cash and cash equivalents affecting cash flows
1,286
6,056
+
Cash and cash equivalents at beginning of period
8,461
2,405
=
Cash and cash equivalents at end of period
9,747
8,461
Liquid assets
13,749
8,461
Current account credit at banks
– 4,002
0
9,747
8,461
Composition of cash and cash equivalents:
60
Consolidated financial statements | Consolidated statement of changes in equity
IMW Immobilien AG
Consolidated statement of changes in equity
for the financial year 2007/2008
Subscribed
capital
Capital
reserves
Revenue
reserves
Reserve for
market valuation
4,400
1,343
16,604
3,517
Market valuation of financial instruments IAS 39
0
0
0
2,116
Deferred taxes
0
0
0
– 558
Total earnings reported directly in equity
0
0
0
1,558
Group net income
0
0
29,041
0
Total result for the period
0
0
29,041
1,558
3,800
47,916
0
0
Costs of capital increase
0
– 272
0
0
Share-based payment
0
431
0
0
Capital contributions by minority shareholders
0
0
0
0
Capital withdrawals by minority shareholders
0
0
0
0
8,200
49,418
45,645
5,075
Market valuation of financial instruments IAS 39
0
0
0
– 1,816
Deferred taxes
0
0
0
1,012
Total earnings reported directly in equity
0
0
0
– 804
Group net income
0
0
30,462
0
Total result for the period
0
0
30,462
– 804
7,000
103,125
0
0
Costs of capital increase
0
– 113
0
0
Share-based payment
0
486
0
0
Other
0
0
0
0
15,200
152,916
76,107
4,271
€ ’000
As of 01.04.2006
Capital increase
As of 31.03.2007 (adjusted)
Capital increase
As of 31.03.2008
Consolidated financial statements | Consolidated statement of changes in equity
Equity held by
shareholders in the
parent company
Minority
Shareholders
Group
equity
25,864
3,954
29,818
2,116
122
2,238
– 558
– 32
– 590
1,558
90
1,648
29,041
1,600
30,641
30,599
1,690
32,289
51,716
0
51,716
– 272
0
– 272
431
0
431
0
7,375
7,375
0
– 2,562
– 2,562
108,338
10,457
118,795
– 1,816
– 105
– 1,921
1,012
58
1,070
– 804
– 47
– 851
30,462
2,788
33,250
29,658
2,741
32,399
110,125
0
110,125
– 113
0
– 113
486
0
486
0
– 355
– 355
248,494
12,843
261,337
61
62
Consolidated financial statements | Notes
IMW Immobilien AG
Notes to the Consolidated financial
statements for the financial year 2007/2008
1. General Informationen
The listed public company IMW Immobilien AG (hereinafter also
referred to as “the company” or “IMW AG”), registered at Stresemannstraße 78, 10963 Berlin, Germany, is the parent company of
the IMW Group.
On 24 July 2008, the consolidated financial statements of IMW AG
for the financial year ended 31 March 2008 were approved for pub-
lication by a resolution of the company’s management subject to
the consent of the Supervisory Board.
IMW Group business is divided into the following areas:
• Portfolio management
(acquisition of real estate with potential to increase value)
• Asset and property management
• A full range of property services
• Renting of own real estate holdings
The real estate holdings of the IMW Group are held almost exclusively by subsidiaries of IMW Immobilien AG. The subsidiaries
are structured as special purpose vehicles (SPV). This structure
allows financing on a non-recourse basis (limitation of liability)
and securitisation of loans (mortgage-backed securities), which
should make it easier to tap the financial markets for the refinancing needed to acquire properties.
2. ACCOUNTING AND VALUATION PRINCIPLES
2.1 PRINCIPLES GOVERNING THE PREPARATION
OF THE FINANCIAL STATEMENTS
The consolidated financial statements are prepared on the basis
of the historical cost principle. Exceptions to this rule are real
estate properties held as financial investments, derivative financial
instruments and assets available for sale that were valued at fair
value. The consolidated financial statements are prepared in euro.
Unless otherwise indicated, all values are rounded up or down
to thousands of euro (€ ‘000) in accordance with commercial
accounting practice.
Declaration of conformity with IFRS
IMW Immobilien AG has prepared its consolidated financial
statements – consisting of consolidated balance sheet, consolidated income statement, consolidated statement of changes in equity,
consolidated cash flow statement and notes to the consolidated
financial statements – for the financial year from 1 April 2007 to
31 March 2008 in accordance with the International Financial
Reporting Standards (IFRS), and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC),
as they are applicable in the EU, and supplemented in accordance
with the applicable rules under German commercial law as per
§315a(1), German Commercial Code (HGB). In the process, all
the announcements made with binding force for the financial
year by the International Accounting Standards Board (IASB) and
the IFRIC were taken into account.
Principles of consolidation
The consolidated financial statements encompass the financial
statements of IMW AG and its subsidiaries as per 31 March of
each financial year.
Subsidiaries are consolidated fully as from the time of acquisition,
i.e. as from the time when the Group acquires a controlling influence. The consolidation is brought to an end as soon as the parent
company no longer has a controlling influence.
The subsidiaries’ financial statements are prepared using uniform
accounting and valuation methods. The balance sheet date for all
the companies included in the consolidated financial statements
is 31 December 2007 or 31 March 2008. Insofar as the financial
years of subsidiaries do not end on 31 March 2008, interim financial statements were prepared as of 31 March 2008. The information relates to the annual financial statements that were prepared
in accordance with International Financial Reporting Standards.
All intercompany balances, income and expenses are eliminated
in full. There were no unrealised profits and losses from intercompany transactions.
63
Minority interests show the proportion of earnings and net
assets that is not attributable to the Group. Minority interests are
reported separately in the consolidated income statement and
the consolidated balance sheet. In the consolidated balance sheet
they are reported in equity, separate from the equity attributable
to the parent company’s shareholders. The acquisition of minority
interests is recorded in the balance sheet using the parent entity
extension method. In the process, the difference between the purchase price and the book value of the pro rata net assets acquired
is recorded as goodwill.
Companies consolidated
In addition to IMW AG, the following subsidiaries were included
in the consolidated financial statements as of 31 March 2008:
Company
Comment*
Shareholding %
“PRIMA” portfolio
PRIMA Wohnbauten Privatisierungs-Management GmbH, Lichtenberg, Berlin
94.54
PRIMA Immobilien GmbH & Co. KG Berlin, Berlin
2
94.54
Prima Beteiligungsgesellschaft mbH, Berlin
2
94.54
Prima Immobilienentwicklung GmbH, Berlin
2
94.54
“Austerlitz” portfolio
IMW Austerlitz Beteiligungen GmbH, Berlin
100.00
“Falcon Crest” portfolio
Aircargo Logistics Center Langenhagen Grundstücksverwaltungs GmbH, Berlin
90.00
Capricorn GmbH, Berlin
94.00
EIF Excelsior Immobilien Fonds GmbH & Co. KG, Berlin
1
93.50
EIF GmbH, Berlin
2
93.50
CIF GmbH, Berlin
2
94.00
ALC Asset GmbH & Co. KG, Berlin
2
89.60
CIF 1 Asset GmbH & Co. KG, Berlin
2
93.50
2
93.50
2
93.50
EIF Asset GmbH & Co. KG, Berlin
3
93.60
FIF 1 Asset GmbH & Co. KG, Berlin
100.00
100.00
100.00
WB Industrieweg Asset GmbH & Co. KG, Berlin
100.00
Zweigstraße Asset GmbH & Co. KG, Berlin
2
100.00
IMW Secunda Beteiligungen GmbH, Berlin
100.00
IMW Tertia Beteiligungen GmbH, Berlin
100.00
64
Company
IMW Immobilien AG
Comment*
Shareholding %
“Valbonne” portfolio
Valbonne Real Estate 3 B.V., Amsterdam
94.90
94.90
Bavaria-Ikarus GmbH & Co. Objekt Hellersdorf KG, Berlin
2
94.90
Bavaria-Ikarus GmbH & Co. Objekt Adlershof KG, Berlin
2
94.90
Bavaria-Ikarus GmbH & Co. Objekt Leipziger Straße KG, Berlin
2
94.90
Valbonne Immobilien GmbH, Berlin
2
94.90
94.90
94.90
94.90
94.90
Valbonne Real Estate 3 Verwaltungs-GmbH, Berlin
2
94.90
2
94.90
Valbonne Real Estate Aachen Verwaltungs-GmbH, Berlin
2
94.90
2
94.90
2
94.90
2
94.90
2
94.90
Valbonne Real Estate Objekt 3 GmbH & Co. KG, Berlin
2
94.90
2
94.90
Valbonne Real Estate Objekt Aachen GmbH & Co. KG, Berlin
2
94.90
2
94.90
2
94.90
2
94.90
2
94.90
Others
IMW Autarke Immobilien Matrix GmbH, Berlin
IMW Prima GmbH, Berlin
100.00
3
IMW Versicherungs-Vermittlungsgesellschaft mbH, Langenhagen
74.00
85.00
IMW Services GmbH, Berlin
100.00
IMW Quinta Beteiligungen GmbH, Berlin
100.00
IMW Sexta Beteiligungen GmbH, Berlin
100.00
IMW Medic Grundstücksverwaltungs GmbH & Co. KG, Berlin
2
100.00
IMW Septima Beteiligungen GmbH i.G., Berlin
100.00
IMW Oktava Beteiligungen GmbH i.G., Berlin
100.00
Comecon GmbH, Berlin
* 1 Participation in result as silent shareholder
2 Indirect investment
3 Direct and indirect investment
3
100.00
In the financial year, restructuring measures were carried out
within the Group for tax reasons. These have no influence on
the consolidated financial statements. The Dutch limited liability
companies (BVs) in the “Valbonne” portfolio each set up a wholly
owned subsidiary in the legal form of a limited commercial partnership with a limited liability company as general partner (GmbH
& Co. KG). The BVs’ real estate was brought into the GmbH & Co.
KGs effective from 1 May 2007. The shares in the newly established
management companies (Verwaltungs-GmbHs) are likewise held
in their entirety by the BVs.
Compared with the consolidated financial statements as of
31 March 2007, the following companies in the “Valbonne” portfolio were included in the consolidated Group for the first time as
a result of the restructuring described above:
Valbonne Real Estate 3 Verwaltungs-GmbH
Valbonne Real Estate Aachen Verwaltungs-GmbH
Valbonne Real Estate Objekt 3 GmbH & Co. KG
65
Shares in companies over whose financial and business policies
the Group has a controlling influence (associated companies) are
reported in accordance with the equity method. This relates to the
following significant companies:
Company
IMW Wohnen & Services
Immobilien GmbH, Berlin
Shareholding %
50.00
EIF Excelsior Immobilien Fonds GmbH & Co. KG was included
in accordance with SIC 12.10 (c), as IMW AG is entitled as a
silent shareholder to draw most of the benefit from the special
purpose vehicle and is therefore exposed to the risks that the
business activity involves.
Comecon GmbH, which in the previous year was included in
accordance with the equity method, was fully consolidated in
accordance with IAS 27 for the first time as a result of the acquisition of the remaining 52% of the shares at the end of March 2008.
2.2 C
HANGES TO THE ACCOUNTING AND
VALUATION METHODS
The accounting and valuation methods applied generally correspond to the methods used in the previous year, with the following exceptions:
Valbonne Real Estate Objekt Aachen GmbH & Co. KG
IMW Medic Grundstücksverwaltungs GmbH & Co. KG
IMW Septima Beteiligungen GmbH i.G.
IMW Oktava Beteiligungen GmbH i.G.
a) Change in the presentation of the balance sheet reporting of
operating expenses that can be charged on in rental agreements
where IMW AG acts as principal.
To improve the presentation of the asset structure, the claims
arising from the charging on of operating expenses to tenants as a
result of the operating expenses incurred (previous year: work in
progress amounting to €16,098 thousand) were set off against the
deposits received from tenants (previous year: €16,505 thousand)
and the balance was reported as trade accounts receivable or, in
the case of overpayment, as other liabilities. In the reporting year
this led to trade accounts receivable of €1,205 thousand and other
liabilities of €1,716 thousand. The previous year was adjusted
accordingly for comparative purposes and led to additional trade
accounts receivable amounting to €765 thousand and other liabil
ities of €1,172 thousand.
66
In addition, following the classification proposals of the Euro
pean Public Real Estate Association, which are widespread
among real estate companies, the expenses and proceeds from
operating expenses that can be charged on and the real estate
operating expenses that cannot be charged on are reported
separately in the consolidated income statement to improve the
presentation of the earnings position. This has led to the following adjustments in the previous year’s income statement:
ADJUSTMENTS IN PREVIOUS YEAR’S
CONSOLIDATED INCOME STATEMENT
€ ’000
01.04.2006–
31.03.2007
Income from the renting of real estate
– 6,639
Changes in inventories
– 4,351
Income from operating expenses
10,936
Expenses from operating expenses
– 11,324
Real estate operating expenses
– 5,196
Other operating income
55
Cost of materials
15,527
Other operating expenses
992
Total
0
IMW Immobilien AG
c) Change in the reporting of liabilities and provisions
In contrast to the previous year, a different deferral was carried
out in respect of the reporting of provisions in comparison to
other debts, such as trade accounts payable and deferred debts, in
accordance with IAS 37.11 in order to improve the significance
of the reported asset structure. This led to an adjustment in the
previous year’s figures in that €160 thousand of the provisions
were reclassified as other liabilities and €1,124 thousand of them
as trade accounts payable.
d) New IFRS standards and interpretations
The Group applied the new and revised IFRS standards and interpretations listed below in the financial year. The application of
these revised standards and interpretations had no impact on the
Group’s asset structure or financial and earnings position.
• IFRS 7 Financial Instruments: Disclosures
Change in IAS 1 Presentation of Financial Statements
• IFRIC 8 Scope of IFRS 2
• IFRIC 9 Reassessment of Embedded Derivatives
• IFRIC 10 Interim Financial Reporting and Impairment
• IFRIC 11 IFRS 2: Group and Treasury Share Transactions
b) Reporting of fair value changes of financial derivatives
The material effects of these changes are as follows:
In contrast to the previous year, the fair value changes of financial
derivatives were reported in a separate line in the consolidated
income statement in order to improve the significance of the stated
earnings position. The previous year’s figures were adjusted accordingly, resulting in the following adjustments:
IFRS 7 Financial Instruments: Disclosures
This standard requires disclosures that enable the addressees of
the financial statements to assess the significance of the financial
instruments for the financial position and the earnings power
of the Group, as well as the type and scale of the risks resulting
from these financial instruments. The new disclosures which result from this are used throughout the entire financial statements.
The application of this standard has no impact on the Group’s
asset structure or financial and earnings position. The necessary
comparative information process was carried out.
ADJUSTMENTS IN PREVIOUS YEAR’S
CONSOLIDATED INCOME STATEMENT
€ ’000
Interest income
Interest expenses
Result from the change in the fair value of
the financial derivatives
Total
01.04.2006–
31.03.2007
– 1,193
11
1,182
0
IAS 1 Presentation of Financial Statements
This change results in new disclosures which enable the addressees of the financial statements to assess the objectives, methods
and processes of the Group’s capital management. The new disclosures are presented in note 35.
IFRIC 8 Scope of IFRS 2
This interpretation demands the application of IFRS 2 for all
transactions in which a company cannot identify specifically
some or all of the goods or services received. This applies in particular when the counterperformance for the equity instruments
issued by the company appears to be lower than the fair value.
As equity instruments are issued solely to employees as part of
the employee share option programme within the Group, the application of this interpretation had no impact on the Group’s asset
structure or financial and earnings position.
IFRIC 9 Reassessment of Embedded Derivatives
According to IFRIC 9, the company must always assess a contract
governing a structured instrument at the time when the contract
is concluded to ascertain whether it is an embedded derivative. A
reassessment is permissible only if there is a substantial change in
contractual conditions which leads to a significant change in the
payment flows. As the Group has no embedded derivatives which
are to be separated from the underlying contract, this interpretation had no impact on the Group’s asset structure or financial and
earnings position.
IFRIC 10 Interim Financial Reporting and Impairment
The Group applied IFRIC interpretation 10 for the first time as
of 1 April 2007. This stipulates that any impairment expenses for
goodwill, for equity instruments or financial assets held which are
reported in the balance sheet at historical cost, recorded as a part
of interim financial statements may not be reversed in subsequent
financial statements. As the Group has not carried out any such
impairment in interim financial statements, this interpretation
had no impact on the Group’s asset structure or financial and
earnings position.
67
IFRIC 11 IFRS 2 – Group and Treasury Share Transactions
The Group decided to apply the IFRIC interpretation 11 for the
first time as of 1 April 2007 insofar as it relates to the Group’s financial statements. This interpretation stipulates that agreements
under which employees are granted rights to a company’s equity
instruments must be reported as share-based payment transactions to be settled with equity instruments even if the company
acquires the instruments from a third party or if the shareholders
provide the required equity instruments. As the Group does not
have any transactions of this kind, the new interpretation has no
impact on the Group’s asset structure or financial and earnings
position.
2.3 SIGNIFICANT DISCRETIONARY DECISIONS
When the consolidated financial statements are being prepared,
the management makes discretionary decisions, estimates and
assumptions which impact the amounts of the earnings, expenses,
assets and liabilities reported on the balance sheet date, as well as
the reporting of contingent liabilities. The uncertainty inherent
in these estimates and assumptions, however, can generate results
which lead to substantial adjustments to the book values of the
relevant assets or liabilities in the future.
Discretionary decisions
In applying the accounting and valuation methods, the management made the following discretionary decisions which materially influence the amounts in the financial statements. Decisions
containing estimates are not taken into account in this context:
Obligations under operating lease
agreements – the Group as lessor
The Group has concluded lease agreements for the commercial
renting of its real estate held as financial investment. In the pro
cess, it established with the help of an analysis of the contractual
terms that all of the decisive opportunities and risks associated
with the ownership of this real estate rented within the scope of
operating lease agreements remain within the Group, which accor
dingly reports these agreements as operating lease relationships.
68
Reporting of real estate used by the Group itself
The real estate reported in the Group as financial investment is
rented almost entirely to third parties. There are two properties
which are used only to a minor extent by IMW Immobilien AG or
its subsidiaries for their own administrative purposes. The extent
of the Group’s use of these two properties is no more than 5% of
their aggregate use, however, which in the view of the management is insignificant. All of the real estate is therefore classified
in its entirety as “held as financial investment”. In the interim
financial statements as of 30 September 2007, no use was made
of the simplifying rule in IAS 40.10.
Estimates and assumptions
The most important assumptions concerning the future, and
other sources of estimation uncertainty that exist on the balance
sheet date involving an appreciable risk that the book values of
assets and liabilities will have to be adjusted substantially within
the next financial year, are explained below.
Valuation of real estate held as financial investment
The best possible fundamental indication of the fair value is provided by the current prices of similar properties quoted on an active market which are in the same location and in the same condition and have comparable rental relationships and other contracts
relating to the real estate. If no prices from an active market are
currently available, the Group takes account of information from
a wide variety of sources, including:
(i) current prices on an active market for real estate of a divergent
type, in a different condition and/or in different locations (or
real estate with different rental relationships or divergent con
tractual arrangements) which have been adjusted to reflect
those differences;
(ii) the prices recently achieved on a less active market for similar
real estate that have been adjusted to reflect changes in the
general economic conditions since the time of the transaction
in which those prices were achieved; and
IMW Immobilien AG
(iii) discounted cash flow forecasts based on a reliable estimate of
future cash flows, supported by the contractual terms of existing rental relationships and other contracts and by (if possible) external fundamental indicators such as current market
rental rates for similar real estate in the same location and
condition for which discounting rates were applied which
reflect current market valuations in view of the uncertainty of
the amounts and time progression of future cash flows.
In view of the steep decline in the number of market transactions involving comparable real estate in recent months, the
Group generally had to resort to possibility (iii). For the “PRIMA”
portfolio, the assessed values were adjusted by an independent
expert as of 31 March 2008 based on a detailed valuation as of
31 December 2007, and for the remaining real estate based on a
detailed valuation as of 30 June 2007.
The valuations/adjustments of assessed values were made with the
help of the discounted cash flow method (“Falcon Crest” portfolio
and valuation properties used predominantly for commercial
purposes) and the term and reversion method (“Valbonne” and
“PRIMA” portfolio).
The expert made assumptions so that the market conditions
prevailing on the balance sheet date would be reflected optimally
in the valuation of the real estate. The most significant of these
assumptions concern future market rental rates, future trends in
vacancy rates, the costs of managing and maintaining the real
estate and, in particular, the use of appropriate property-related
market discounting rates. These assumptions are aligned with
current market data for comparable properties.
It was assumed that for the “Valbonne” and “PRIMA” portfolios,
future maintenance costs would be von €6–9 per m² per year plus
€30–80 per m² in the event of tenant fluctuation, and that for the
“Falcon Crest” portfolio they would be €5–7 per m² plus €30–70
per m² in the event of tenant fluctuation. It was generally assumed
that future management costs would be 4% of the estimated
market rent for the “Falcon Crest” portfolio and €150–300 per
residential unit, depending on the property and location, for the
“Valbonne” and “PRIMA” portfolios. It was assumed that after
1–5 years, a long-term vacancy rate of 2.5–7.5% (in a few exceptional cases 10–15%) would be achieved, depending on the type
of property and the location.
The valuation using the DCF method was based on the assumption of rent and cost increases of 2.3% next year and subsequently
of 2% per year. Detailed plans were made for a period of ten years,
after which the sale of the real estate at estimated market values
on the basis of a perpetuity was assumed.
If average market discounting rates were 0.5% higher or lower,
this would lead to the following changes for real estate held as
financial investment:
€ million
Portfolio
69
rate in order to ascertain the present value of these cash flows.
Further details, including a sensitivity analysis of the most important assumptions, can be found in note 18.
Share-based payment
The costs of granting equity instruments to employees are valued
in the Group using the fair values of these equity instruments at
the time of their being granted. The estimation of fair value re
quires that a suitable valuation procedure be determined for the
granting of equity instruments; this depends on the terms on
which they are granted. The determination of suitable data for
inclusion in this valuation procedure, including in particular
the likely option term, volatility and dividend yield, as well as
appropriate assumptions, are also required. The assumptions and
related procedures are reported in note 20.
2.4 S
UMMARY OF SIGNIFICANT ACCOUNTING
AND VALUATION METHODS
Interest rate
Valuation as of
31.03.2008
0.5%
higher
0.5%
lower
921.6
848.9
1,008.3
The Group is obliged to pay income taxes in Germany. Significant assumptions have to be made to ascertain the income tax
rate. There are many transactions and calculations for which the
final tax rate cannot be ascertained with certainty within the
normal course of business. The Group measures the amount of
future expenses from future tax audits on the basis of estimates
as to whether and in what amounts additional income taxes will
become payable. Insofar as the final taxation of these transactions
deviates from the initial assumption, this will have an impact on
the actual and deferred taxes in the period in which the tax rate is
finally ascertained.
Impairment of goodwill
On every balance sheet date the Group ascertains whether there
are any indications of possible impairment. Goodwill is examined
for impairment at least once a year and additionally if there are
any concrete indications of impairment. To estimate the value in
use, the management must estimate the likely future cash flows of
the cash-generating unit and choose an appropriate discounting
Property, plant and equipment are reported at cost of acquisition or production less accumulated scheduled depreciation and
accumulated impairment costs. The cost of replacing a part of a
property, plant or equipment item is included in the book value
of the item in question at the time when the cost was incurred,
insofar as the reporting criteria are fulfilled. All other repair and
maintenance costs are immediately recognised in profit or loss.
The scheduled straight-line depreciation is based on the following
useful lives of the assets:
Technical equipment
5–10 years
Office furniture and equipment
3–12 years
Property, plant and equipment are deleted from the accounts
either upon disposal or when no economic benefit is expected
from the asset’s further utilisation or sale. Any profit or loss
resulting from the removal of the asset from the accounts is as
certained as the difference between the net realisable value and
the book value of the asset, and is reported with effect on income
in the income statement in the period when the asset is deleted
from the accounts.
70
The residual values, the useful lives and the depreciation methods
are reviewed at the end of each financial year and adjusted as and
when required.
Borrowing costs
Borrowing costs are recorded in the period in which they are
incurred.
Real estate held as financial investment
Real estate held as financial investment is valued when first reported at original cost including ancillary costs. The cost of replacing a part of a real estate property held as financial investment
is included in the book value of the property at the time when the
costs were incurred, insofar as the reporting criteria are fulfilled.
The book value does not contain the costs incurred in the ongoing maintenance of the properties. In subsequent valuations,
real estate properties held as financial investments are reported
at their fair values. The fair value reflects the market conditions
prevailing on the balance sheet date. Any profits or losses resulting from changes in the fair values are recognised in the income
statement in the year when they arose.
Real estate properties held as financial investments are deleted
from the accounts when they are sold or when they become permanently unfit for utilisation and no economic benefit from their
disposal is expected. Any profits or losses from the shutdown or
disposal of real estate held as financial investment are recognised
in profit or loss in the year of the shutdown or disposal.
Properties are transferred from or into the portfolio of real estate
held as a financial investment only if there is a change in their use.
In the event of a transfer from the portfolio of real estate held as
financial investment to the portfolio of owner-occupied property,
for subsequent valuation purposes the acquisition or productions
costs correspond to the fair value at the time of the change in use.
IMW Immobilien AG
If a previously owner-occupied property is assigned to the portfolio of real estate held as financial investment, this property is
reported in the balance sheet using the method described under
“Property, plant and equipment” until the time of the change
in use.
Business combinations and goodwill
Business combinations are reported in the balance sheet using the
purchase method.
In the case of gradual business combinations the individual share
purchases are treated separately and the costs of the individual
share purchases are compared stage-by-stage with the purchaser’s
proportion of the fair value of the identifiable assets, liabilities
and contingent liabilities acquired as of the time each stage is
reached.
When goodwill is first reported, it is valued at acquisition cost,
which is measured as the surplus of the business combination’s
acquisition costs over the Group’s share of the fair values of the
identifiable assets, liabilities and contingent liabilities.
After initial reporting, goodwill is valued at acquisition cost less
accumulated impairment costs. In order to carry out the im
pairment test, the goodwill acquired within the framework of a
business combination is allocated as from the time of acquisition
to the Group’s cash-generating units that are intended to benefit
from the synergy effects of the business combination. This applies
irrespective of whether other assets or liabilities of the acquired
company are allocated to those cash-generating units.
If the purchaser’s share of the total fair values of the identified
assets, liabilities and contingent liabilities reported exceeds the
acquisition costs of the business combination even after being examined a second time, the residual surplus amount is recognised
in profit or loss.
Intangible assets
Intangible assets which are not acquired within the framework of
a business combination are reported for the first time at acquisition or production cost. The acquisition costs of intangible assets
acquired within the framework of a business combination corres
pond to their fair value at the time of acquisition. The intangible
assets are reported in the subsequent periods at acquisition or
production cost less accumulated amortisation and accumulated
impairment costs.
A distinction is made between intangible assets with limited useful lives and those with indefinite useful lives. The Group has no
intangible assets with indefinite useful lives.
Intangible assets with limited useful lives are amortised using the
straight-line method over their economic useful lives and examined for possible impairment insofar as there are indications that
the value of the intangible asset might have been impaired. The
amortisation period and method for intangible assets with limited
useful lives are examined at least on conclusion of each financial
year. Any changes to the amortisation method or the amortisation
period necessitated by changes in the expected useful life or the
expected exhaustion of the asset’s future economic usefulness are
treated as changes in estimates. The amortisation of intangible assets with limited useful lives is recorded in the income statement
under the expenses category that reflects the intangible asset’s
function in the company.
Profits or losses from the removal from the accounts of intangible
assets are ascertained as the difference between the net realisable
value and the book value of the asset and posted to income in the
period when the asset is deleted from the accounts.
71
Shares in an associated company
Shares in an associated company are reported in the balance sheet
using the equity method. An associated company is a company
in which the shareholder has a controlling influence and which is
neither a subsidiary nor a joint venture.
The equity method is used to record the shares in an associated
company in the balance sheet at the cost of acquisition plus any
changes in the Group’s share of the associated company’s net
assets which occur after the acquisition. The goodwill connected
with the associated company is contained in the book value of
the shareholding and is not subjected to scheduled amortisation.
The income statement contains the Group’s share of the associated
company’s earnings. Changes reported directly in the associated
company’s equity are recorded by the Group in accordance with
its shareholding and presented accordingly in the statement of
changes in equity. Profits and losses from transactions between
the Group and the associated company are eliminated in accordance with the share in the associated company.
The associated company’s financial statements are prepared as
of the same balance sheet date as the parent company’s financial
statements. Adjustments to accounting and valuation methods
used as standard throughout the Group are made as and when
required.
Impairment of non-financial assets
On every balance sheet date, the Group makes an assessment
as to whether there are any indications that an asset might
be impaired. If there are any such indications, or if an annual
impairment test is required for an asset, the Group carries out an
estimate of the recoverable amount for the asset in question. The
recoverable amount of an asset is the fair value of either an asset
or of a cash-generating unit less selling costs and value in use,
whichever is higher. The recoverable amount must be determined
for each individual asset, unless an asset generates no cash flows
which are largely independent of those of other assets or other
72
groups of assets. If the book value of an asset exceeds its recoverable amount, the asset is impaired and will be written down at
its recoverable amount. To ascertain the value in use, the expected
future cash flows are discounted to their present value on the basis
of a discounting rate before tax that reflects the current market
expectations with regard to the interest rate effect and the specific
risks represented by the asset. The fair value less selling costs is
determined by applying an appropriate valuation model. This
model is based on valuation multipliers or other available indicators of fair value.
Impairment costs in the business segments scheduled for continuation are recorded with effect on income in the expenses
categories that correspond with the function of the impaired asset
in the company.
Assets, with the exception of goodwill, are examined on each
balance sheet date to determine whether there are any indications
that impairment costs previously ascertained no longer apply
or have decreased. If there are such indications, the Group makes
an estimate of the recoverable amount. Impairment costs that
were previously recognised are reversed only if, during the period
since the last recognition of the impairment costs, there has
been a change in the estimates that were used to determine the
recoverable amount. If this is the case, the asset’s book value is
increased to its recoverable amount. This amount, however, may
not exceed the book value that would emerge after scheduled
amortisation has been taken into account if no impairment
costs had been recorded for the asset in previous years. A writeup is recorded in the result for the period unless the asset is
reported in the balance sheet using the revaluation method. In
this case, the write-up must be treated as an increase in value
from the revaluation.
For particular assets, the following criteria must additionally be
taken into account:
IMW Immobilien AG
Goodwill
On every balance sheet date, the Group ascertains whether there
are any indications of an impairment of goodwill. The current
value of goodwill is examined at least once a year. A test is likewise
carried out when events or circumstances indicate that the value
might be impaired.
The impairment is determined by ascertaining the recoverable
amount of the cash-generating unit to which the goodwill was
allocated. Insofar as the cash-generating unit’s recoverable amount
falls short of that unit’s book value, impairment costs are recognised. Impairment costs recognised for goodwill may not be written up in the subsequent reporting periods. The Group carries out
the annual impairment test for its goodwill as of 31 March.
Financial investments and other financial assets
Financial assets as defined by IAS 39 are classified either as financial assets which are valued with effect on income at fair value,
as loans and receivables, as held-to-maturity investments or as
available-for-sale financial assets. When recorded for the first
time, the financial assets are valued at fair value. In the case of
other financial assets classified as being valued at fair value with
effect on income, transaction costs directly attributable to the
acquisition of the asset are additionally taken into account.
The financial assets are placed in the valuation categories when
they are first reported. Reallocations, if permitted and necessary,
are made at the end of the financial year.
All purchases and sales of financial assets which are customary
on the market are reported in the balance sheet on the transaction day, i.e. the day on which the Group assumed the obligation
to buy or sell the asset. Purchases and sales customary on the
market are purchases and sales of financial assets which prescribe
delivery of the assets within a period determined by market regulations or conventions.
73
Financial assets measured at fair v alue
through profit and loss
The group of financial assets measured at fair value through profit
and loss contains financial assets held for trading and financial
assets valued at fair value at initial recognition.
transactions between competent and independent business partners willing to enter into a contract, comparison with the current
fair value of another, essentially identical financial instrument,
analysis of discounted cash flows, and the use of other valuation
models.
Financial assets are classified as held for trading if they were
acquired for the purpose of selling them in the near future. Deri
vatives, including embedded derivatives recorded separately,
are likewise classified as held for trading, with the exception of
derivatives that were designated as hedging instruments and are
effective as such. Any profits or losses from financial assets held
for trading are posted to income.
Amortised cost
Held-to-maturity investments, as well as loans and receivables,
are valued at amortised cost. They are determined using the effective interest method less any valuation allowances and taking
account of any premiums and discounts upon acquisition and
contain transaction costs and charges which are an integral part
of the effective interest rate.
At the time when it first becomes a contracting party, the Group
ascertains whether embedded derivatives must be reported
separately from the underlying contract in the balance sheet. A
reassessment is carried out only if there is a substantial change
in the terms of a contract which leads to a significant change in
the payment flows that would otherwise have been produced
by the contract.
Impairments of financial assets
On each balance sheet date, the Group ascertains whether there
has been an impairment of a financial asset or a group of financial
assets.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments which are not quoted on an
active market. After they are recorded for the first time, the loans
and receivables are valued at amortised cost using the effective
interest method less any impairment. Any profits or losses are
recorded in the result for the period if the loans and receivables
have been deleted from the accounts or are impaired and within
the framework of amortisation.
Fair value
The fair value of financial investments which are traded on organised markets is determined by the market price (bid price) quoted
on the balance sheet date. The fair value of financial investments
for which there is no active market is ascertained using valuation
methods. These valuation methods include using the most recent
Assets reported at amortised cost
If there are any objective indications that an impairment of
assets valued at amortised cost has taken place, the amount of the
impairment loss is the difference between the book value of the
asset and the present value of the expected future cash flow (with
the exception of expected future loan defaults which have not
yet occurred), discounted by the financial asset’s original effective
interest rate, i.e. the effective interest rate determined upon
initial recognition. The book value of the asset is reduced using
an absorption account. The impairment loss is recognised in the
income statement.
If the amount of the valuation allowance decreases in the subsequent reporting periods, and if this decrease can objectively be
attributed to a circumstance that occurred after the impairment
was recorded, the valuation allowance made previously is reversed.
The new book value of the asset, however, may not exceed the
amortised historical cost of the asset at the time of the write-up.
The write-up is posted to income.
74
If, in the case of trade accounts receivable, there are objective
indications that not all due amounts will be received in accordance with the originally agreed billing terms (e.g. due to probable
insolvency or considerable financial difficulties of the debtor),
an impairment is carried out using an absorption account. The
receivables are then deleted from the accounts when they are
classified as irrecoverable.
Inventory properties
Inventory properties are properties that are held for resale
purposes. They are valued at the lower of acquisition cost or net
realisable value.
The net realisable value is the estimated sale proceeds that could
be realised in the normal course of business, less the estimated
costs to completion and the estimated selling costs.
The cash and cash equivalents depicted in the balance sheet encompass the cash on hand and cash in banks whose liquidity the
company can have at its disposal within three months.
The financial resource fund in the consolidated cash flow statement is delimited in accordance with the above definition and
also includes any current account credit that was utilised.
Financial liabilities
Interest-bearing loans (financial liabilities)
When recorded for the first time, loans are valued at fair value
less the transaction costs directly connected with the borrowing.
They are not designated as measured at fair value through profit
and loss.
After being recorded for the first time, the interest-bearing
loans are valued at amortised cost applying the effective interest
method.
Any profits or losses are recognised when the debts are deleted
from the accounts and within the framework of amortisation.
IMW Immobilien AG
Financial liabilities measured at fair v alue
through profit and loss
Financial liabilities measured at fair value through profit and
loss comprise the financial liabilities held for trading and other
financial liabilities which, upon first being reported, are classified
as measured at fair value through profit and loss.
Financial liabilities are classified as held for trading if they were
acquired for the purpose of resale in the near future. Derivatives,
including embedded derivatives recorded separately, are likewise
classified as held for trading, with the exception of derivatives
which are designated as hedging instruments and are effective as
such. Any profits or losses from financial liabilities held for trading are posted in the income statement.
Deletion of financial assets and liabilities
from the accounts
Financial assets
A financial asset (or part of a financial asset or part of a group of
similar financial assets) is deleted from the accounts if one of the
following three preconditions is fulfilled:
• The contractual rights to draw cash flows from a financial asset
have lapsed.
• Although the Group retains the rights to draw cash flows from
financial assets, it assumes a contractual obligation to pay the
cash flows immediately to a third party within the framework
of an agreement that fulfils the conditions of IAS 39.19 (Passthrough Arrangement).
• The Group has transferred its contractual rights to draw cash
flows from a financial asset, and in the process either (a) trans
ferred all opportunities and risks that the ownership of the financial asset entails or (b) neither transferred nor retained all
the opportunities and risks that the ownership of the financial
asset entails, but nevertheless transferred the power to dispose
of the asset.
A financial liability is deleted from the accounts if the obligation
forming the basis of that liability has been fulfilled or terminated
or has lapsed.
If an existing financial liability is replaced by another financial
liability from the same creditor with substantially different contractual terms, or if the terms of an existing liability are changed
substantially, such a replacement or change is treated as a deletion
of the original liability and the reporting of a new liability. The
difference between the respective book values is posted in the
income statement.
Provisions
Basic principles
A provision is set aside if the Group has a current (legal or de
facto) obligation to a third party because of some past event, the
outflow of economically beneficial resources to fulfil the obligation is probable and the amount of the obligation can be estimated
reliably. Insofar as the Group expects at least a partial refund for
a provision shown as a liability (as with an insurance contract, for
example), the refund is recorded as a separate asset if the inflow of
the refund is virtually certain. The expenses incurred in forming
the provision are shown less the refund in the income statement.
Share-based payment
As a reward for their work, the Group’s employees (including its
managers) receive share-based payment in the form of equity
instruments (transactions settled with equity instruments).
Transactions settled with equity instruments
Costs arising from the issuance of equity instruments are measured at the fair value of those equity instruments at the time of
their issuance. The fair value is ascertained by an external expert
using a suitable option price model (for details see note 20).
75
The ascertainment of expenses resulting from the issuance of
equity instruments and the corresponding increase in equity
take place over the period in which the exercise or performance
conditions must be fulfilled (vesting period). This period ends on
the day when exercising becomes possible, i.e. the time when the
employee in question has an irrevocable subscription right. The
accumulated expenses from the granting of equity instruments
reported on each balance sheet date up to the first possibility of
exercising the instruments reflect that part of the vesting period
that has already expired as well as the number of equity instruments which, to the best of the Group’s knowledge and judgment,
could actually be exercised upon expiry of the vesting period. The
income or expenses reported in the result for the period corres
pond to the development of the accumulated expenses recorded
at the beginning and end of the reporting period.
No expenses are recorded for remuneration rights that do not
become exercisable. Remuneration rights whose exercise requires
particular market conditions to be met are excluded from this
rule. These are regarded as exercisable irrespective of whether the
market conditions are met, provided that all other performance
conditions have been fulfilled.
If the conditions of a remuneration agreement to be settled with
equity instruments are changed, expenses are recorded at least to
the extent that they would have been incurred had the contractual
terms not been changed. In addition, the company records the
effects of changes which increase the entire fair value of the sharebased payment agreement or involve some other benefit for the
employee, valued at the time of the change.
If a remuneration agreement to be settled with equity instruments
is annulled, it is treated as though it would have been exercised
on the day of annulment. The expenses that had not yet been
recorded are recorded immediately. If the annulled remuneration
agreement is replaced by a new remuneration agreement and if
the new remuneration agreement is declared to be a replacement
76
for the annulled remuneration agreement on the day of its being
granted, however, the annulled and new remuneration agreements are reported in the balance sheet as a change in the original
remuneration agreement (cf. the above paragraph).
The diluting effect of the outstanding share options is taken into
account as an additional dilution when earnings per share are being calculated (for details see note 14).
Leases
Whether an agreement contains a lease is established on the basis
of the agreement’s commercial content at the time when that
agreement was concluded and requires an estimate of whether
or not the fulfilment of the contractual agreement is dependent
on the use of a particular asset and whether or not the agreement
grants a right to use the asset.
The Group as lessee
Lease instalments for operating leases are recorded as expenses
in the income statement using the straight-line method over the
term of the lease.
The Group as lessor
The rental agreements that IMW has concluded with its tenants
are classified under IFRS as operating leases. Conditional rent
payments are recorded as income in the period in which they are
generated.
Realisation of income
Income is realised when it is probable that the economic benefit
will accrue to the Group and the amount of the income can
be established reliably. Income is valued at the fair value of the
counterperformance received. Cash discounts, rebates, VAT and
other contributions are not taken into account. In addition, the
realisation of income requires the fulfilment of the reporting
criteria listed below.
IMW Immobilien AG
Sale of properties and rendering of services
Income is realised when the main opportunities and risks that
the ownership of the sold properties involves have passed to the
purchaser. This generally occurs when the purchase price is paid.
Commissions and proceeds for services are collected as soon as
the services have been rendered.
Interest income
Interest income is recognised when the interest was incurred
(using the effective interest rate, i.e. the calculatory interest rate
with which estimated future cash inflows are discounted to the
net book value of the financial asset over the expected term of the
financial instrument).
Rental income
Income from operating leases involving real estate held as financial investment is recorded using the straight-line method over
the term of the leases.
Income from operating expenses that can be charged on
Income from operating expenses that can be charged on is re
corded in the year the operating expenses for charging on were
incurred, less those costs attributable to vacancies.
Taxes
Actual income taxes
The actual tax refund claims and tax liabilities for the current and
previous periods are measured with the amount in which a refund is expected from the tax authority or, alternatively, in which
the tax authority expects a payment. The amount is calculated on
the basis of the tax rates and tax laws which are applicable as of
the balance sheet date.
Actual taxes relating to items which are recorded directly in equity
are recorded in equity rather than in the income statement.
Deferred taxes
Deferred taxes are formed by applying the asset and liability
method to temporary differences between the stated value of an
asset or a liability in the balance sheet and the tax basis as per
the balance sheet date.
Deferred tax liabilities are recorded for all taxable temporary differences with the exception of the:
77
The book value of the deferred tax assets is audited on each
balance sheet date and reduced to the extent that it is no longer
probable that a sufficient taxable result will be available against
which the deferred tax asset can at least partly be used. Deferred
tax assets which are not reported are audited on each balance
sheet date and reported to the extent that it has become probable that a future taxable result will enable the realisation of the
deferred tax asset.
• deferred tax liability from the first-time reporting of goodwill or
an asset or a liability from a transaction which is not a business
combination and which influences neither the result for the
period under commercial law nor the taxable result at the time
of the transaction, and
• deferred tax liability from taxable temporary differences connected with shareholdings in subsidiaries, associated companies
and shares in joint ventures if the time schedule of the reversal
of the temporary differences can be controlled and it is probable that the temporary differences will not be reversed in the
foreseeable future.
Deferred tax assets and liabilities are measured on the basis of
the tax rates which will probably be valid in the period in which
an asset is realised or a liability satisfied. The underlying tax rates
(and tax laws) used are those which apply as of the balance sheet
date. Future changes in tax rates must be taken into account as
of the balance sheet date insofar as material conditions precedent
for validity are fulfilled within the framework of a legislative
procedure.
Deferred tax claims are recorded for all deductible temporary
differences, still unutilised tax loss carryforwards and unutilised
tax credits to the extent that there is a probability that taxable
income will be available against which the deductible temporary
differences and the still unutilised tax loss carryforwards can be
used, with the exception of:
Deferred tax assets and deferred tax liabilities are offset against
each other if the Group has an enforceable claim to the offsetting
of the actual tax refund claims against actual tax liabilities and
these relate to income taxes for the same taxable entity levied by
the same tax authority.
• deferred tax assets from deductible temporary differences arising from the first-time reporting of an asset or a liability from
a transaction which is not a business combination and which
influences neither the result for the period under commercial
law nor the taxable result at the time of the transaction, and
• deferred tax liability from taxable temporary differences connected with shareholdings in subsidiaries, associated companies
and shares in joint ventures if it is probable that the temporary
differences will not be reversed in the foreseeable future or no
sufficient taxable result will be available against which the temporary differences can be used.
Deferred taxes relating to items which are recorded directly in
equity are likewise recorded in equity, not in the income statement.
Turnover tax
Sales, expenses and assets are usually recorded after deduction of
turnover tax. The following cases are exceptions:
• If turnover tax that becomes due upon the purchase of assets
or services cannot be demanded by the tax authority, the paid
turnover tax is recorded as part of the production costs of the
asset or as part of the expenses.
• Receivables and liabilities are recorded together with the turn
over tax amount contained therein.
The turnover tax amount which is refunded by or paid to the tax
authority is recorded in the consolidated balance sheet under
other financial assets or other liabilities.
78
Derivative financial instruments and
hedging relationships
The Group uses derivative financial instruments, such as interest
rate swaps, to hedge itself against interest rate risks. These derivative financial instruments are reported at fair value upon conclusion of the contract and measured at fair value in the subsequent
periods. Derivative financial instruments are reported as assets
if their fair value is positive and as liabilities if their fair value is
negative.
Profits or losses from changes in the fair value of derivative finan
cial instruments which do not fulfil the criteria for reporting in
balance sheet accounting as hedging relationships are posted to
the income statement immediately.
The fair value of interest rate swap contracts is ascertained with
reference to the market values of similar instruments.
In hedging relationships, both the commencement of the hedge
and the Group’s risk management goals and strategies are formally established and documented in respect of the hedge. The
documentation contains the establishment of the hedging instrument, the underlying transaction or the hedged transaction, as
well as the type of risk being hedged and a description of how the
company ascertains the effectiveness of the hedging instrument
when compensating for the risks from changes in the fair value or
the cash flow of the hedged underlying transaction. Hedging relationships of that kind are regarded as highly effective in respect
of achieving a compensation for the risks from changes in the
fair value or cash flow. They are assessed on an ongoing basis for
whether they really were highly effective during the entire reporting period for which the hedging relationship was defined.
Hedging transactions that fulfil the strict criteria for the balance
sheet accounting of hedging relationships are reported as follows:
IMW Immobilien AG
Cash flow hedges
The effective part of the profit or loss from a hedging instrument
is recorded directly in equity while the ineffective part is recognised immediately in the income statement.
The amounts recorded in equity are reposted to the income statement in the period in which the hedged transaction influences
the result for the period, e.g. when hedged financial income or
expenses are recorded or when an expected sale is carried out. If
a hedge results in a non-financial asset or a non-financial liability,
the amounts recorded in equity become part of the acquisition
costs at the time of addition of the non-financial asset or nonfinancial liability.
If the foreseen transaction or the firm obligation is no longer
expected to occur, the amounts previously recorded in equity are
reposted to the income statement. When the hedging instrument
expires or is sold, terminated or exercised with no replacement or
rollover into another hedging instrument, the amounts recorded
in equity until that point remain as a separate item in equity until
the foreseen transaction or firm obligation has occurred.
2.5 FUTURE CHANGES IN THE ACCOUNTING
AND VALUATION METHODS
The IASB has published the following standard, which has already
been integrated into EU law within the framework of the comitology procedure but was not yet mandatory in the financial year
2007/2008. The Group is not applying this standard prematurely.
IFRS 8 Operating Segments
IFRS 8 was published in November 2006 and must be applied
for the first time for financial years that begin on or after 1 January 2009. IFRS 8 requires the disclosure of information about
a company’s operating segments and replaces the obligation to
determine primary (business segments) and secondary (geographical segments) segment reporting formats for a company.
IFRS 8 adheres to the management approach, according to which
segment reporting is geared solely towards financial information
that is used by the company’s decision-makers for the internal
management of the company. The determining factors in this are
the internal reporting and organisational structure and those financial variables which are used to reach decisions on the allocation of resources and the valuation of earning power. The Group
has decided not to apply IFRS 8 prematurely and continues to
apply IAS 14 Segment Reporting. The new standard will influence
how financial information about the Group’s operating segments
is publicised, but will have no influence on the reporting and
valuation of assets and liabilities in the consolidated financial
statements.
The IASB and IFRIC have published the standards listed below,
whose application was not yet mandatory in the financial year
2007/2008. These standards and interpretations have not yet been
recognised by the EU and are not applied by the Group.
Change in IFRS 2 Share-based Payment
The change in IFRS 2 was published in January 2008 and must
be applied for the first time for financial years that begin on or
after 1 January 2009. The change concerns, firstly, the clarification
that the term exercise conditions refers solely to the service and
performance conditions. Secondly, the rules on the accounting
of a premature termination of share-based payment plans are extended to include cases of termination by employees as well. The
transitional stipulations provide for a retrospective application
of the new regulation. Given the low incidence of share-based
payment in the Group, the first application of this new regulation
is not expected to have any material impact on the consolidated
financial statements in the future.
IFRS 3 Business Combinations
The changed standard IFRS 3 was published in January 2008 and
must be applied for the first time for financial years that begin on
or after 1 July 2009. The standard was comprehensively revised
within the framework of the convergence project for IASB and
FASB. The material changes concern in particular the introduction of a right to choose between recording using the purchased
goodwill method and using the full goodwill method when
valuing minority interests, where the latter recognises the entire
goodwill of the acquired company, including that part which
79
is attributable to the minority shareholders. The revaluation
with effect on income of existing shareholdings upon first-time
acquisition of a controlling interest (gradual company acquisition), the mandatory inclusion of a counterperformance linked to
the occurrence of future events, at the time of acquisition, and the
treatment of transaction costs with effect on income must still be
emphasised. The transitional stipulations provide for a prospective application of the new regulation. There are no changes for
assets and liabilities which result from business combinations
carried out before the first-time application of the new standard.
The application of the full goodwill method, the balance sheet
reporting of gradual company acquisitions and the mandatory
consideration of conditional counterperformance at the time of
acquisition will tend to lead to higher goodwill amounts.
IAS 1 Presentation of Financial Statements
The revised standard IAS 1 was published in September 2007 and
or after 1 January 2009. The amended standard contains significant differences in the presentation and reporting of financial
information in the financial statements. The new features include,
in particular, the introduction of an overall calculation which encompasses both the result generated in a period and the still un
realised profits and losses, which were previously reported within
equity, and replaces the income statement in its present form. In
addition, as well as the balance sheet as of the balance sheet date
and the balance sheet as of the previous balance sheet date, a
balance sheet must now additionally be prepared as of the beginning of the comparative period insofar as the company applies
accounting and valuation methods retrospectively, is correcting
an error or is reclassifying an item in the financial statements.
The new standard will have an influence on the way the Group’s
financial information is published, but not on the reporting and
valuation of assets and liabilities in the consolidated financial
statements.
80
IAS 23 Borrowing Costs
The revised standard IAS 23 was published in March 2007 and
or after 1 January 2009. The standard demands the capitalisation
of borrowing costs that can be attributed to a qualifying asset. A
qualifying asset is defined as an asset for which a considerable
period of time will be required to bring it to its intended usable
or saleable condition. The standard provides for a p
rospective
application of the new regulation. In accordance with the standard’s transitional rules, the Group will apply it prospectively.
This means that as from 1 January 2009, borrowing costs will be
capitalised for qualifying assets. This will not involve any changes
for borrowing costs previously incurred which are expensed immediately.
IAS 27 Consolidated and Separate Financial Statements
in accordance with IFRS
The changed standard IAS 27 was published in January 2008. The
changes made must be applied for the first time for financial years
which begin on or after 1 July 2009. The changes result from the
joint project by IASB and FASB to revise accounting regulations
applicable for business combinations. The amendments primarily concern the accounting of shareholdings that do not bestow
a controlling interest (minority interests), which in future will
participate fully in the losses of the Group, and of transactions
which lead to a loss of control at a subsidiary and whose effects
must be posted to the income statement. Effects of disposals of
shareholdings which do not lead to a loss of control, on the other
hand, must be recorded in equity with no effect on earnings. The
transitional stipulations, which generally require a retrospective
application of changes made, provide for a prospective application
for the situations specified above. There are therefore no changes
for assets and liabilities that result from transactions of this kind
before the first-time application of the new standard. If, in the
financial year in which the standard is applied for the first time, a
loss situation leads to the full utilisation of amounts reported for
minority interests, the proportion of loss attributable to minorities will nevertheless be allocated fully to them. The negative
amount that results from this will be reported separately within
equity. Reporting on the asset side is out of the question because
there is no legal claim to compensation that can be enforced.
IMW Immobilien AG
Change in IAS 32 Financial Instruments: Presentation
and IAS 1 Presentation of Financial Statements
The change in IAS 32 and IAS 1 was published in February
2008 and must be applied for the first time for financial years
that begin on or after 1 January 2009. The change concerns the
classification of callable shareholders’ investments as own or
borrowed capital. Under the previous regulation, companies were
sometimes forced to report their capital under company law as
financial liabilities because of shareholders’ legally established
cancellation rights. It is intended that in future, these shareholders’ investments will generally be classified as equity insofar as a
fair value settlement is agreed upon and the investments made
constitute the most subordinate claim to the company’s net assets.
As the shareholders’ investments at subsidiaries partly fulfil the
requirements of the changed standards for classification as equity,
the first-time application of these standards will in future lead to
a reclassification of the shareholders’ investments into equity and
therefore to a proper presentation of the asset structure, financial and earnings position. In the future, valuation will be made
at nominal value rather than fair value. Any differences will be
posted to equity with no effect on income.
IFRIC 12 Service Concession Arrangements
The interpretation IFRIC 12 was published in November 2006
and must be applied for the first time for financial years that
begin on or after 1 January 2008. The interpretation regulates the
balance sheet treatment of obligations assumed and rights obtained within the scope of service concessions in the concession
operator’s financial statements. The companies included in the
consolidated financial statements are not concession operators as
defined by IFRIC 12. This interpretation will therefore have no
impact on the Group.
IFRIC 13 Customer Loyalty Programmes
The interpretation IFRIC 13 was published in June 2007 and
must be applied for the first time for financial years that begin
on or after 1 July 2008. According to this interpretation, benefits
(bonuses) granted to customers must be reported in the balance sheet as own sales separately from the transaction within
whose scope they were granted. Part of the fair value of the
counterperformance received will therefore be allocated to the
benefits (bonuses) and treated as a deferred liability. The sales
are recognised in the period when the benefits (bonuses) granted
are exercised or lapse. As the Group currently has no customer
loyalty programmes, this interpretation is not expected to have
any impact on the consolidated financial statements.
IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction
The interpretation IFRIC 14 was published in July 2007 and must
be applied for the first time for financial years that begin on or
after 1 January 2008. This interpretation provides guidelines for
determining the maximum amount of surplus from a defined
benefit plan, under which, according to IAS 19, benefits for employees may be capitalised as assets. As the Group has no defined
benefit pension plans, this interpretation is not expected to have
any impact on the consolidated financial statements.
IFRIC 15 Agreements for the Construction of Real Estate
The interpretation IFRIC 15 regulates the balance sheet reporting of real estate sales where the contract is concluded with the
purchaser before the building work has been completed. This
interpretation first provides clarification on the preconditions
under which IAS 11 or IAS 18 is to be applied. In addition, it
establishes when the respective sales are to be realised and what
information in connection with this is to be given in the notes.
The interpretation must be applied for the first time for financial
years that begin on or after 1 January 2009 and may be applied
on a voluntary basis prior to that date. IFRIC 15 must be applied
retrospectively in compliance with the provisions of IAS 8. As
the Group has no current agreements on the construction of real
estate, this interpretation is not expected to have any impact on
the consolidated financial statements.
81
IFRIC 16 Hedges of a Net Investment
in a Foreign Operation
The interpretation IFRIC 16 answers doubts in connection with
the hedging of foreign business operations, including:
• What risk must be hedged?
• How high is the maximum amount to be hedged?
• Which company within the Group may receive the hedging
instrument?
• What accounting steps must be taken when the foreign business
operations are disposed of?
Application of the amended version is mandatory for financial
years that begin on or after 1 October 2008 and may be applied
prematurely on a voluntary basis. As the Group currently has no
foreign business operations with a functional currency other than
the euro, this interpretation is not expected to have any impact
on the consolidated financial statements.
3. BUSINESS COMBINATIONS
In the previous year (February 2007), 94.9% of the shares in the
following companies were acquired:
• Valbonne Real Estate 3 B.V., Amsterdam,
• Valbonne Real Estate 4 B.V., Amsterdam, with the subsidiaries
Valbonne Immobilien GmbH, Berlin, Bavaria-Ikarus GmbH &
Co. Objekt Hellersdorf KG, Berlin, Bavaria-Ikarus GmbH & Co.
Objekt Adlershof KG, Berlin, and Bavaria-Ikarus GmbH & Co.
Objekt Leipziger Straße KG, Berlin,
• Valbonne Real Estate 10 B.V., Amsterdam and
• Valbonne Real Estate 12 B.V., Amsterdam.
82
The purchase price was €110,124 thousand plus ancillary acquisition costs amounting to €897 thousand. The first-time consolidation of the shares acquired had thus far been declared provisional.
The final allocation of acquisition costs was carried out in this
financial year within twelve months of the time of acquisition and
produces the following result for the acquired assets and liabilities:
FINAL FIRST-TIME CONSOLIDATION OF “VALBONNE” COMPANIES
€ ’000
Real estate held as financial investment
Fair value at time of
acquisition
= book value (adjusted)
415,269
258
Derivative financial instruments
2,322
Inventory properties
7,941
1,380
Deferred taxes
Other assets
Total assets
Deferred taxes
Tax provisions
Liabilities to banks
IMW Immobilien AG
The completion of the first-time consolidation led to the following adjustments in the previous year’s consolidated financial
statements as of 31 March 2007:
ADJUSTMENTS IN THE CONSOLIDATED FINANCIAL STATEMENTS,
PREVIOUS YEAR
€ ’000
31.03.2007
Real estate
– 850
– 494
– 1,344
Holdings of other shareholders (equity)
35
– 224
983
Other liabilities
– 2,138
– 1,344
49
1,550
428,769
46,400
8,546
62,571
Other liabilities
196,649
Total liabilities
314,166
Total assets
114,603
The consolidation of the “Valbonne” companies resulted in a
positive debit difference of €658 thousand arising from ancillary
purchase costs. The goodwill results from the advantages of pur
chase of company shares over an asset deal, since a functional
company is being acquired and contractual relationships need
not be transferred individually.
In this financial year, a further 52% of Comecon GmbH was
acquired by means of a contract of sale dated 13 March 2008, the
acquisition date, in addition to the 48% interest that had existed
since the company’s foundation. Comecon GmbH is responsible
for the reminder and debt collection system for the Group’s own
rental income. The acquisition costs amounted to €13 thousand
(purchase price plus ancillary acquisition costs of €0 thousand)
and were settled entirely with cash and cash equivalents. For
reasons of materiality, the balance sheet as of 31 March 2008
was used for the first-time consolidation of the newly acquired
shareholding and a result for the period of zero was recorded in
the consolidated income statement. The following assets and liabilities were acquired:
Fair value = book value at time of acquisition
€ ’000
52%
100%
1
1
49
95
Other current assets
19
36
69
132
Short-term borrowings
12
22
Net assets
57
110
Acquisition costs
13
Less net assets
– 57
Difference
– 44
The surplus of €44 thousand in net assets produced by the acquisition of the shareholding was recorded with effect on income
under other operating income in the consolidated income statement. The surplus primarily results from the pro rate share in the
acquired company’s profit, to which the purchaser is entitled.
83
The previous year’s presentation was adjusted to the new segments and the new approach.
1 APRIL 2007–31 MARCH 2008
Residential
Commercial
Total
4. SEGMENT REPORTING
Sales
50,598
9,577
60,175
In this financial year, the delimitation of the segments was changed
in comparison with the previous year’s consolidated financial
statements as of 31 March 2007. We believe that the “Management
of own property” and “Management of third-party property” segments that were previously reported no longer properly represent
the Group’s focal points.
Segment result
39,352
7,163
46,515
The segment reporting as of 31 March 2008 refers to the operating segments:
• Residential
• Commercial
€ ’000
Financial income
– 35,741
Impairment
– 31,373
Appreciation
50,093
Income taxes
22,924
Other expenses and income
The segment reporting is based on the same accounting and valuation methods as the consolidated financial statements. The segment result contains the income from the renting of real estate,
the income and expenses from operating expenses that can be
charged on, and the real estate operating expenses. This segment
result differs from the previous approach as per 31 March 2007
as follows:
Impairment of assets: the impairment expenses for non-financial
assets, including goodwill, are not included in the segment result.
The segment assets do not include actual and deferred taxes or
goodwill because these assets must be classified as common and
not allocated to any one segment.
– 19,952
Group result
33,250
1 APRIL 2006–31 MARCH 2007
Residential
Commercial
Rollover
to income
statement
Total
Sales
25,008
8,741
943
34,692
Segment result
21,275
6,891
943
29,109
€ ’000
The “Residential” segment encompasses the renting and management of living space owned by the Group. The “Commercial” segment encompasses the renting and management of commercial
floor space owned by the Group. As all of the business activities
are conducted in Germany, there is no delimitation on a geogra
phical basis.
784
Financial expenses
Financial income
1,021
Financial expenses
– 22,836
Impairment
– 448
Appreciation
41,476
Income taxes
– 10,906
Other expenses and
income
– 6,775
Group result
30,641
There was no income from transactions between the segments.
€ ’000
Residential
Commercial
Not allo
cated
Total
2007/2008
Assets
780,972
145,256
49,729
975,957
Liabilities
515,684
112,211
86,725
714,620
15,184
195
Real estate held as
financial investment
2006/2007
Assets
740,888
147,995
48,109
936,992
Liabilities
601,426
113,491
103,280
818,197
Real estate held as
financial investment
496,206
159,550
84
5. INCOME FROM THE RENTING
OF REAL ESTATE
The IMW Group rents residential and commercial real estate
within the framework of operating leases. Whereas the renting of
residential real estate is mainly short-term and can be terminated
by the tenant with the statutory notice period of three months,
commercial real estate is rented predominantly for a fixed contractual term of up to ten years (or longer). The minimum rental
payments for residential real estate on the basis of the statutory
notice period for three months amount to €12.0 million. The annual net rental income from the commercial tenancy agreements
are classified as follows:
€ ’000
2007/2008
2006/2007
9,506
7,651
Due in
up to one year
one to five years
16,138
9,961
more than five years
17,428
12,007
6. INCOME AND EXPENSES FROM OPERATING
EXPENSES THAT CAN BE CHARGED ON
The expenses from operating expenses that can be charged on
include all operating expenses which can by nature be charged on.
The difference between the income from operating expenses that
can be charged on results from the prevailing vacancy rate and
the resultant costs that cannot be charged on.
7. REAL ESTATE OPERATING EXPENSES
The real estate operating expenses comprise expenses which cannot be charged on incurred in connection with the renting of real
estate held as a financial investment. These costs consist of the
following:
€ ’000
2007/2008
2006/2007
Repairs and maintenance
7,291
3,697
Third-party property
management costs
2,365
358
672
254
1,807
887
12,135
5,196
Housing subsidy
(non-apportionable share)
Other real estate operating
expenses that cannot be
charged on
IMW Immobilien AG
As of the balance sheet date there were no contractual obligations
to purchase, construct or develop residential properties, or to
carry out repairs, maintenance work or improvements, except in
the amount of the trade accounts payable already reported in the
balance sheet due to work already performed by third parties.
8. INCOME FROM THE SALE OF REAL ESTATE
HELD AS A FINANCIAL INVESTMENT
The income of €177 thousand was generated by the sale of
three small investment properties. The sale proceeds totalled
€1,242 thousand and the transferred book values €1,065 thousand.
In the previous year, real estate held as a financial investment
belonging to ALC Asset GmbH & Co. KG was sold, generating income of €1,462 thousand. The sale proceeds amounted
to €24,455 thousand and the transferred book values €22,993
thousand.
Personnel expenses include expenses for wages and salaries in the
amount of 3,553 thousand (previous year: €2,414 thousand). And
social security expenses in the amount of €500 thousand (previ
ous year: €396 thousand). Personnel expenses include the costs
from the share option programme in the amount of €486 thousand (previous year: €432 thousand).
In addition to a fixed salary, members of the Executive Board
receive variable salary components. The amount of bonus is
dependent on attainment of corporate targets and other individual agreements. One member of the Executive Board receives
pension subsidies in the amount of €13 thousand (previous year:
€15 thousand). Salary details of the Executive Board can be
found under note 34.
Personnel expenses include contributions to pension plans in
the amount of approximately €195 thousand (previous year:
€178 thousand).
85
10. OTHER OPERATING INCOME
12. NON-OPERATING RESULT
Other operating income is comprised as follows:
The non-operating result consists of the following:
€ ’000
2007/2008
2006/2007
Income from reductions of value
adjustments for receivables
430
202
Brokerage income
309
0
Other income, apartments
229
29
Income from easements
228
0
Income from non-rechargeable
costs
156
0
Income from cost reimbursement
125
35
Income from insurance payouts
64
39
Income from cash discounts
55
12
Income from tax refunds from
tax audit
Income relating to other periods
Other
0
235
342
39
1,841
587
3,779
1,178
2006/2007
Interest income from
bank account balances
587
467
Other
198
554
785
1,021
– 34,650
– 21,451
– 3,002
– 897
– 272
– 1,239
Interest expense
Interest expense for interest-bearing loans
of which for purchase price
obligations for “Valbonne”
Interest expense for obligations to
shareholders
Other
Expenses from changes in the fair value
of financial derivatives
11. OTHER OPERATING EXPENSES
Non-operating result
Other operating expenses consist of the following:
2007/2008
2006/2007
Legal and consultancy fees including costs of valuation reports
7,028
2,508
Allocation to value adjustments for
receivables and bad debt losses
1,597
645
Impairment of inventory properties
560
0
Allocation to the provision for
purchase price adjustment
500
0
Costs of communication and office
materials and equipment
403
289
Costs of annual financial statements
235
99
Rents and space costs
213
251
3,852
2,259
14,388
6,051
Other
2007/2008
Interest income
Income from changes in the fair value
of financial derivatives
The brokerage income refers to insurance premiums which in
the previous year were reported under sales in the amount of
€261 thousand.
€ ’000
€ ’000
– 819
– 146
– 35,741
– 22,836
0
1,182
– 1,734
0
– 1,734
1,182
– 36,690
– 20,633
13. INCOME TAXES
The material components of income tax expense consist of the
following:
€ ’000
2007/2008
2006/2007
Income tax expense in the period
– 210
– 537
Income taxes relating to other periods
– 225
3
–4 35
– 534
– 6,010
– 12,056
1,006
– 1,684
Actual taxes
Deferred taxes
Occurrence and reversal of temporary
differences
Change in deferred tax assets on
losses carried forward
Revaluation on grounds of change in
tax rate
Total income taxes
28,363
0
23,359
– 10,372
22,924
– 10,906
86
The applicable tax rate in the Group was 26.375% (corporate
income tax 25% and solidarity surcharge 5.5% on the assessment
basis for corporate income tax) in the financial year 2006/2007.
As from the financial year 2007/2008, the average tax rate pur
suant to the German Corporate Tax Reform Act 2008 will be
15.825% (corporate income tax 15% and solidarity surcharge 5.5%).
2007/2008
2006/2007
10,326
41,547
Applicable tax rate in %
15,825
26,375
Expected income tax expense
– 1,634
– 10,958
– 225
3
28,363
0
– 36
– 128
– 224
0
0
Revaluation of the deferred taxes
due to change in the tax rate
Tax rate differences
Adjustment of previous year’s losses
carried forward
Write-up of losses carried forward
previously not recognised
€ ’000
31.03.2008
31.03.2007
2007/2008
5,108
6,837
– 1,729
Revaluation of real estate
held as a financial investment at fair value
198
0
198
Revaluation of interest rate
swaps (cash ﬂow hedge
ineffective)
153
0
153
0
28
– 28
5,459
6,865
– 1,406
52,583
76,256
23,673
Special item with an equity
component
0
613
613
538
effective)
849
1,920
0
ineffective)
445
924
479
53,877
79,713
24,765
48,421
72,848
Non-recognition of deferred tax
assets on losses carried forward
and temporary differences
– 1,959
0
Non-deductible expenses
– 1,319
– 336
– 42
– 25
24,558
52
22,924
– 10,906
Other tax effects
Consolidated
income
statement
Consolidated
balance sheet
Tax losses carried forward
Earnings before taxes
Actual taxes relating to
other periods
Deferred taxes
The deferred taxes as per 31 March consist of the following:
Deferred tax assets
The offsetting and reconciliation between the reported and
the expected income tax expense for the financial years ended
31 March 2008 and 2007 are as follows:
€ ’000
IMW Immobilien AG
Other
Revaluation of real estate
held as a financial investment at fair value
After set-off
Deferred tax assets
Reported tax expense
Deferred tax income (+)/
Deferred tax expense (–)
23,359
Deferred tax liabilities amounting to €133 thousand are reported
in the item “Liabilities in connection with available-for-sale
assets”.
The reduction in the deferred tax liabilities to the effective cash
flow hedge of €1,071 thousand is recorded directly in equity in
the item “Provision for market valuation”.
The Group’s companies have corporate income tax losses carried
forward amounting to €45.7 million (previous year: €26.5 million). These tax losses can be netted to an unlimited extent against
the future taxable earnings of the companies in which these losses
occurred. No deferred tax assets were recognised for corporate
income tax losses carried forward amounting to €2,118 thousand
(previous year: €501 thousand) or deductible temporary differences of €521 thousand.
Of the deferred tax liabilities reported in the balance sheet,
€0.4 million (previous year: €0.6 million) were, as expected,
realised within twelve months of the balance sheet date. Of the
deferred tax assets, €3 thousand were realised within twelve
months.
14. EARNINGS PER SHARE
When the undiluted earnings per share are calculated, the earnings attributable to the owners of ordinary shares in the parent
company are divided by the weighted average number of ordinary
shares in circulation during the year. When the diluted earnings
per share are calculated, the earnings attributable to the owners of ordinary shares in the parent company are divided by the
weighted average number of ordinary shares in circulation during
the year, plus the weighted average number of ordinary shares
which would be produced by the conversion of all the potential
ordinary shares with a dilutive effect into ordinary shares. The following table contains the calculation of the underlying amounts
of the undiluted and diluted earnings per share:
87
2007/2008
2006/2007
The result in € ’000 which is
attributable to the owners of ordinary shares in the parent company
30,462
29,042
Weighted average number of
ordinary shares for calculating the
undiluted earnings per share
12,044,262
4,807,671
283,535
66,716
12,327,797
4,874,387
Undiluted earnings per share €
2.53
6.04
Diluted earnings per share €
2.47
5.96
Dilutive effect:
Share options
Weighted average number of
ordinary shares adjusted for the
dilutive effect
In the period between the balance sheet date and the preparation
of the consolidated financial statements, there were no further
transactions with ordinary shares or potential ordinary shares.
15. REAL ESTATE HELD AS A
FINANCIAL INVESTMENT
Properties are recognised at fair value, which was ascertained by
DTZ Zadelhoff Tie Leung GmbH and CB Richardt Ellis GmbH,
both accredited independent experts, by means of valuations carried out as of 31 March 2008 and 31 March 2007, respectively for
the current and previous financial years. In compliance with the
standards of the International Valuation Standards Committee,
the fair value corresponds to the amount at which an asset could
be exchanged between competent parties willing to enter into a
contract on terms customary on the market as of the valuation
date.
An adjustment of assessed values as of 31 March 2008 was carried
out for the “Austerlitz” portfolio on the basis of the values as of
30 September 2007.
88
Please refer to note 2.3 for the description of the valuation procedures applied.
IMW Group
€ ’000
31.03.2008
31.03.2007
886,809
214,200
0
575,372
from the acquisition of real estate
0
79,375
from subsequent production costs
15,379
1,009
Disposals from the sale of
real estate
– 1,065
– 22,993
Unrealised profits from valuation
50,093
40,294
Unrealised losses from valuation
– 29,639
– 448
Book value/fair value as of 31.03.
921,577
886,809
Amount carried forward as of
01.04.
Additions
from the acquisition of companies
Less assets classified as available
for sale
78,970
0
842,607
886,809
The additions of real estate held as a financial investment in
the financial year 2006/2007 include ancillary acquisition costs
amounting to €964 thousand.
Of the real estate held as a financial investment reported, properties worth €78,970 thousand are shown in the item “Available-forsale assets”.
IMW Immobilien AG
Land charges encumbering the properties serve to secure loans
amounting to €794 million (previous year: €785 million) according to loan agreements. There are no further restrictions on
saleability.
The rental income and the income from operating expenses that
can be charged on from real estate held as a financial investment
amounted to €83.9 million (previous year: €44.6 million) in the
financial year 2007/2008. The expenses incurred by these properties as operating expenses that can be charged on and real estate
operating expenses amounted to €35.0 million (previous year:
€16.2 million).
16. PROPERTY, PLANT AND EQUIPMENT
The development of the individual items of property, plant and
equipment is presented below. The depreciation of property, plant
and equipment shown there is reported in the income statement
in the item “Depreciation and amortisation”. All depreciation was
scheduled depreciation. Non-scheduled depreciation was not
necessary.
The additions mainly concern computer equipment and office
furniture. There are no special restrictions on ownership rights to
property, plant and equipment.
89
Acquisition costs
€ ’000
Machinery and
technical equipment
As of
01.04.2006
Addition
Addition
from firsttime consolidation
Disposal
As of
31.03.2007
51
2
258
0
311
Other facilities, office
furniture and equipment
292
148
0
0
440
Property, plant and
equipment
343
150
258
0
751
Accumulated impairment
Machinery and
technical equipment
Residual book value
As of
01.04.2006
Addition
Disposal
As of
31.03.2007 31.03.2006 31.03.2007
3
9
0
12
48
299
67
102
0
169
225
271
Property, plant and
equipment
70
111
0
181
273
570
Acquisition costs
As of
01.04.2007
Addition
Addition
Machinery and
technical equipment
311
5
0
0
40
356
440
343
2
15
– 36
734
Property, plant and
equipment
751
348
2
15
4
1.090
€ ’000
Disposal
Reclassifi
As of
cations 31.03.2008
Machinery and
technical equipment
Residual book value
As of
01.04.2007
Addition
Disposal
Reclassifi
As of
cations 31.03.2008 31.03.2007 31.03.2008
12
39
0
3
54
299
302
169
143
10
– 3
299
271
435
Property, plant and
equipment
181
182
10
0
353
570
737
90
17. SHARES IN ASSOCIATED COMPANIES
This item concerns the shares in IMW Wohnen & Services Immo
bilien GmbH (formerly W & S Immobilien GmbH Wisskirchen
& Schwardmann Immobilien GmbH). Comecon GmbH was
consolidated in full due to the acquisition of the remaining shares
in the company (for more information, see note 3). The following table contains summarised financial information about the
Group’s shareholdings:
€ ’000
Comecon
GmbH
IMW Wohnen & Services
Immobilien GmbH
2006/2007
2007/2008
2006/2007
48
50
50
133
156
165
18
112
74
Sales
137
838
538
Net result for the
year
– 12
– 47
19
Proportion in %
Assets
Liabilities
The above information was taken from the annual financial
statements prepared in accordance with IFRS and represents the
aggregate value of the respective company and not the proportion
attributable to the IMW Group.
IMW Immobilien AG
18. INTANGIBLE

ASSETS
INCLUDING GOODWILL
The development of the individual items of intangible assets is
presented below. The amortisation of intangible assets shown
there is reported in the consolidated income statement in the
item “Depreciation and amortisation”. The amortisation in question is scheduled amortisation of intangible assets amounting
to €28 thousand (previous year: €15 thousand). Impairment of
goodwill amounting to €5,249 thousand (previous year: €0 thousand) was necessary in this financial year.
The intangible assets including goodwill developed as follows:
91
Acquisition costs
€ ’000
Software and licences
As of
01.04.2006
Addition
Addition
As of
31.03.2007
Disposal
30
39
0
1
68
Goodwill
11,216
0
658
0
11,874
Total
11,246
39
658
1
11,942
Goodwill
Total
Residual book values
As of
01.04.2006
Addition
Disposal
10
14
1
0
0
10
14
As of
31.03.2007 31.03.2006 31.03.2007
23
20
45
0
0
11,216
11,874
1
23
11,236
11,919
Acquisition costs
€ ’000
As of
01.04.2007
Addition
Addition
Disposal
Reclassifi
As of
cations 31.03.2008
68
71
0
0
– 4
135
Goodwill
11,874
0
0
0
0
11,874
Total
11,942
71
0
0
– 4
12,009
Goodwill
Total
Residual book values
As of
31.03.2008 31.03.2007 31.03.2008
As of
01.04.2007
Addition
Disposal
23
28
0
51
45
84
0
5,249
0
5,249
11,874
6,625
23
5,277
0
5,300
11,919
6,709
Of the goodwill reported, €11,216 thousand concerns the acquisition of PRIMA Wohnbauten Privatisierungs-Management GmbH
as of 1 October 2005 and €658 thousand the acquisition of the
“Valbonne” companies in February 2007.
The goodwill was tested for impairment as of the balance sheet
date, which led to a full impairment of the goodwill that resulted
from the acquisition of the “Valbonne” companies. The background to the creation of this goodwill in 2007 was that acquiring
shares in the company was more advantageous than an asset deal,
as in this case an equipped business was acquired and contractual relationships did not have to be transferred one by one. In
the process, the “Valbonne” companies constituted a group of
cash-generating units (CGUs). In the course of the extensive assumption of organisational and administrative activities at those
companies in the current financial year 2007/2008 by the existing
companies in the Group and the extensive new conclusion of
contracts, this advantage originally acquired was replaced and
consequently a full impairment carried out.
The goodwill from the acquisition of PRIMA Wohnbauten
Privatisierungs-Management GmbH was subjected to an impairment test. The “Valbonne” portfolio and the “Falcon Crest”
portfolio were included as a group of cash-generating units
92
because in these two portfolios, cost saving effects from the
transfer of expertise and the efficient organisational structures
of the “PRIMA” portfolio are seen in comparison to the previous
external administrative structure of these two companies or to the
market in general.
The value in use was ascertained using a DCF procedure. A
discount factor of 6.3% (previous year: 5.4%) with a beta factor
of 0.82 (previous year: 0.6) and a market risk markup of 5% (pre
vious year: 4.5%) were applied to the cash flows produced by the
cost savings. It is assumed that the cost saving advantages will
persist over a period of 15 years after the acquisition of PRIMA
Wohnbauten Privatisierungs-Management GmbH. The impairment test resulted in impairment of €5,249 thousand to a value
of €6,625 thousand. The impairment results essentially from the
higher discount factor and the recognition of a finite cost saving
advantage compared with the previous year.
The goodwill allocated to the “Valbonne” portfolio as a cash-generating unit amounts to €5,820 thousand. The calculated annual
constant cost saving benefits for the management of the properties in the “Valbonne” portfolio result from the empirical figures
that were already gained with the “Falcon Crest” portfolio. Should
the estimated future internal management costs of 3.6% of the
basic rental rate in the “Valbonne” portfolio turn out to be 20%
higher or lower, there would be an impairment or appreciation of
the goodwill amounting to €1,774 thousand each attributable to
this CGUs.
If the discount rate were one percentage point higher or lower, the
total goodwill would be €384 thousand lower or €417 thousand
higher.
19. OTHER FINANCIAL ASSETS
(NON-CURRENT)
The other non-current assets reported include balances of bank
accounts which probably cannot be made available within a year
because they are pledged to banks on grounds of guarantees given
by banks to third parties.
IMW Immobilien AG
20. SHARE-BASED REMUNERATION
IMW Immobilien AG allows its employees to participate in its
earnings in accordance with the IMW share option plan 2005 by
way of profit-sharing models.
The prerequisite for the granting of the options is that the person
in question is in an ongoing employment relationship with IMW
Immobilien AG or one of its consolidated companies at the time
when the options are issued.
The share options can be exercised only against payment of the
strike price. The strike price is 100% of the average opening and
closing price of the company’s shares on the Frankfurt stock
exchange (or a functionally comparable successor system which
has taken its place) on the last five trading days before the option
is issued.
The options cannot be exercised for the first time until a waiting
period of two years has elapsed. The waiting period begins when
the options are granted. For purposes of the options’ terms, the
day on which the options are granted is designated as the last day
of the month in which the options are granted in accordance with
the respective individual agreement.
The term of the options begins on the day when the options are
granted and ends upon expiry of five years.
On 25 August 2005, IMW Immobilien AG granted 24,000 (after
share split: 264,000) option rights for shares with an arithmetical stake of €11.00 or €1.00 in the company’s share capital. The
fair value of these options was calculated in accordance with the
Black-Scholes model at €22.15 and €2.01, respectively.
On 25 September 2006, IMW Immobilien Aktiengesellschaft issued a further 16,000 (after share split: 176,000) option rights for
shares with an arithmetical stake of €11.00 or €1.00 in the company’s share capital. The fair value of these options was calculated
in accordance with the Black-Scholes model at €46.06 and €4.18
respectively.
93
The share capital of IMW Immobilien AG was increased conditionally by up to €440,000.00 by a resolution of the Annual
Shareholders’ Meeting on 14 July 2005 through the issuance of
up to 440,000 new no-par-value registered shares.
The conditional capital increase was carried out solely to cover
the issuance of up to 440,000 subscription rights (share options)
under the IMW share option plan 2005 to members of the company’s Executive Board, to other executive staff at the company
and to executive employees at subsidiaries of IMW Immobilien
Aktiengesellschaft.
The following table shows the options still outstanding (after
implementation of the share split):
SHARE OPTIONS
Number of options
Average weighted strike price per category in €
2007/2008
2006/2007
2005/2006
2007/2008
2006/2007
2005/2006
440,000
264,000
0
8.44
5.33
0
Options granted
0
176,000
264,000
0
13.11
5.33
Options returned
0
0
0
0
0
0
Options exercised
0
0
0
0
0
0
Expired options
0
0
0
0
0
0
Options outstanding on 31.03.
440,000
440,000
264,000
8.44
8.44
5.33
Exercisable options on 31.03.
264,000
0
0
0
0
0
Weighted average strike price in €
8,44
8,44
5,33
Weighted average remaining term
(years)
2,9
3,9
4,4
Options outstanding on 01.04.
A total of 440,000 share options were issued to Executive Board
members as follows:
1st tranche
Eckhard Rodemer
2nd tranche
Assignment
Options
Strike price
€
Options
Strike price
€
Options
Strike price
€
88,000
5.33
44,000
13.11
– 88,000
5.33
Roland Pöhlmann
44,000
5.33
44,000
13.11
–
–
Dr Marc Schulten
88,000
5.33
44,000
13.11
–
–
Maic Schäfer
44,000
5.33
44,000
13.11
–
–
–
–
–
–
88,000
5.33
Boris Töppe
94
The fair value of the options granted was calculated using the
Black-Scholes model. The following parameters were set:
Parameter
1st tranche
2nd tranche
5.59
13.27
Maximum term until issue date
5 years
5 years
Expected term of option
2 years
2 years
5.15
13.11
Share price on date of valuation
Strike price on expected strike date
Expected dividend yield
Risk-free interest rate for the term
Expected volatility over the term
Expected fluctuation in option
holders for the term
0%
1.37%
2.26%
3.50%
60%
55%
2.01%
7.44%
The expected term for the options is based on the estimation of
the Executive Board that the options will be exercised as quickly
as possible. This estimation is based on, among other things, the
tax treatment of income from the exercise of share options, as
against income from the sale of shares, after they have been held
for one year.
The goal of increasing the share price by at least 20% over the
strike price was not included in the valuation because, in the
opinion of the Executive Board, this goal was expected to be
attained on the basis of detailed planning for the respective issue
dates.
IMW Immobilien AG still retains the right to choose whether
to settle option rights with cash payments rather than shares. As
there is no obligation on the part of the company to settle option
rights in cash, no valuation adjustment is necessary under the
regulations of IFRS 2.43.
IMW Immobilien AG
The future volatility during the anticipated term of the share
options was estimated on the basis of historical volatility and in
consideration of the anticipated future development of the share
price. In principle, taking account of IFRS 2.B25, the annualised
historical volatility over the expected term of the options must
be used. For IMW Immobilien AG this amounts to two years per
tranche. In the estimation of the management, the comparability
of historical periods with future periods for IMW Immobilien AG
is limited in scope because of the Group’s development in recent
years. Recourse to purely historical data over a period of several
years is not a suitable basis for estimating the future volatilities
that are anticipated over a number of years. Anticipated future
volatility is therefore estimated on the basis of historical volatility
over 52 weeks.
The total value of the share options issued and valued in accordance with IFRS as of 31 March 2008 amounts to €1,269 thousand
(previous year: €1,269 thousand).
21. INVENTORY PROPERTIES
Those properties which are acquired for the purpose of resale
have decreased in value by €1,901 thousand to €5,539 thousand
due to many sales of individual residential and commercial properties. As of the balance sheet date write-downs had been carried
out with a total value of €560 thousand on €4,979 thousand, resulting from the revaluation of some properties at a lower net realisable value. As a result of that, inventory properties amounting
to €2,253 thousand (previous year: €0 thousand) were recognised
at net realisable value as of the balance sheet date.
22. TRADE ACCOUNTS RECEIVABLE AND
OTHER FINANCIAL ASSETS (CURRENT)
The other financial assets essentially consisted of the following:
This item contains only short-term receivables from supply and
performance relationships with tenants amounting to €2,999 thousand (previous year: €1,682 thousand) arising from rent and
ancillary cost payments, and receivables from the sale of inventory properties amounting to €1,434 thousand (previous year:
€1,000 thousand). For the items “Trade accounts receivable” and
“Other financial assets”, impairment expenses (including expenses
arising from the removal of receivables from the accounts) of
€1,597 thousand (previous year: €645 thousand) and income from
the reversal of value adjustments amounting to €430 thousand
(previous year: €202 thousand) were posted.
€ ’000
Less value adjustments
Less value adjustments
95
31.03.2008
31.03.2007
6,741
4,325
– 2,308
– 1,643
4,433
2,682
14,304
7,615
– 807
– 510
13,497
7,105
The value adjustments on trade accounts receivable are almost
proportional to the increase in the receivables. The increase in the
value adjustment on the other financial assets is necessitated by
the value adjustment on a claim against another related company.
Nearly all rental income was – as in the previous year – assigned
as security for bank loans.
€ ’000
31.03.2008
31.03.2007
Receivable from renovation cost
guarantees
3,173
0
Receivable from the refinancing of
loans
2,550
0
Receivables from property
managers
2,344
2,777
Receivables from previous shareholders in acquired companies
2,212
0
Claims for repayment of purchase
prices
1,605
1,605
Receivables from related companies
1,245
1,722
368
1,001
13,497
7,105
Other
Total
The receivables from renovation cost guarantees are connected
with two major investment projects for which, in the course of
the purchase of the “Valbonne” companies, guarantees were made
with regard to the costs incurred in connection with the planned
investments.
The receivable from the refinancing of loans results primarily
from the redemption of a loan liability to a non-bank at the beginning of the financial year (see note 32).
96
IMW Immobilien AG
As of 31 March, the age structure of the non-value-adjusted trade
receivables and other financial assets was as follows:
Neither
overdue nor
impaired
<60 days
60–180 days
180–360 days
> 360 days
Total
2,639
1,147
429
96
122
4,433
1,605
6,078
235
2,141
3,438
13,497
1,765
636
231
35
16
2,682
1,605
2,784
1,120
1,096
499
7,105
€ ’000
31.03.2008
31.03.2007
23. INCOME TAX RECEIVABLES
The income tax receivables largely concern receivables resulting
from corporate income tax advance payments.
24. DERIVATIVE FINANCIAL INSTRUMENTS
Derivatives were concluded to hedge interest rate risks. They are
comprised as follows.
Portfolio
Derivate
Loan amount
€ million
Interest rate
Positive fair value
€ ’000
Negative fair value
€ ’000
Term end
“PRIMA”
SWAP
96.0
3.19/3M Euribor
3,686
0
2012
“PRIMA”
SWAP
50.0
3.01/3M Euribor
1,349
0
2010
“PRIMA”
SWAP
17.0
3.35/3M Euribor
332
0
2012
CAP
19.3
3.30
60
0
2011
SWAP
107.0
3.99/3M Euribor
310
0
2013
CAP
34.2
4.10
97
0
2008
“Austerlitz”
“Falcon Crest”*
“Falcon Crest”
“Falcon Crest”
CAP
3.0
4.19
50
0
2013
“Valbonne”
SWAP
47.8
4.5/3M Euribor
0
– 547
2014
“Valbonne”
SWAP
54.1
3.96/3M Euribor
611
0
2014
“Valbonne”
SWAP
20.6
3.92/3M Euribor
266
0
2014
“Valbonne”
SWAP
27.2
3.52/3M Euribor
845
0
2014
“Valbonne”
SWAP
4.8
3.62/3M Euribor
107
0
2014
“Valbonne”
SWAP
35.0
4.25/3M Euribor
0
– 374
2016
“Valbonne”
SWAP
22.0
4.23/3M Euribor
0
– 48
2010
“Valbonne”
SWAP
34.6
3.96/3M Euribor
463
0
2016
“Valbonne”
SWAP
7.2
4.23/3M Euribor
0
–69
2014
8,176
– 1,038
* The loan amount hedged by the swap will be reduced to €96.0 million over the term in accordance with the redemption of the hedged loan.
The swaps for financing the “PRIMA” portfolio are capitalised at
market value within the framework of a cash flow hedge without
affecting income and taking account of deferred taxes by forming
a “provision for market valuation”. We refer to the explanatory
notes on the “provision for market valuation”.
The changes in the fair values of the other financial derivatives are
recognised in income.
25. CASH AND CASH EQUIVALENTS
The cash and cash equivalents shown contain balances of bank
accounts which, in the amount of €6.0 million (previous year:
€2.3 million), serve only interest rate and redemption purposes
and the settlement of investment obligations.
26. OTHER SHORT-TERM ASSETS
The other short-term assets comprise receivables from the
tax authority in respect of turnover tax and land purchase tax
amounting to €818 thousand (previous year: €220 thousand) and
advance payments for operating expenses relating to the period
following the balance sheet date €457 thousand (previous year:
€269 thousand).
27. SUBSCRIBED CAPITAL AND RESERVES
Share capital
The share capital as of 31 March 2008 amounts to €15.2 million.
This is split up into 15.2 million no-par-value registered shares
with an arithmetical stake of €1.00 per share in the company’s
share capital. The company’s shares are fully paid in. In the re
porting year there was a capital increase in kind amounting to
€7.0 million.
Capital increase in kind
The extraordinary shareholders’ meeting held on 30 April 2007
resolved to increase the share capital against contributions in kind
by a total of €7.0 million in six steps as follows:
• In accordance with the resolution of the extraordinary shareholders’ meeting held on 30 April 2007, the share capital of
IMW AG was increased by €3,629,240.00 against contributions
in kind for the issue amount of €15.73 per share by issuing
3,629,240 new no-par-value registered shares each with a stake
of €1.00 in the company’s share capital. Hofer 2 Corporation
N.V. Curaçao, Netherlands Antilles, was permitted to assume
the new shares. This company assumed the new shares against
97
contribution in kind by assigning to the company the claim
for payment of the remainder of the purchase price from the
contract of sale concluded with IMW AG on 2 February 2007
for shares in Valbonne Real Estate 3 B.V., Amsterdam, Netherlands. The residual purchase price receivable thus contributed
amounted to €57,095,636.00. The value of the contribution
in kind that exceeded the issue amount remained with the
company. The contribution in kind specified above was made by
means of a contribution agreement dated 23 August 2007.
IMW AG was increased by a further €1,714,123.00 against contributions in kind for the issue amount of €15.73 per share by
issuing 1,714,123 new no-par-value registered shares each with
a stake of €1.00 in the company’s share capital. Hofer 2 Corporation N.V. Curaçao, Netherlands Antilles, was again permitted to
assume the new shares. This company assumed the new shares
against contribution in kind by assigning to the company the
claim for payment of the remainder of the purchase price from
the contract of sale concluded with IMW AG on 2 February
2007 for shares in Valbonne Real Estate 4 B.V., Amsterdam,
Netherlands. The residual purchase price receivable thus contributed amounted to €26,966,784.00. The value of the contribution in kind that exceeded the issue amount remained with the
IMW AG was increased by a further €610,041.00 against con
tributions in kind for the issue amount of €15.73 per share by
issuing 610,041 new no-par-value registered shares each with a
stake of €1.00 in the company’s share capital. Hofer 2 Corporation N.V. Curaçao, Netherlands Antilles, was again permitted to
98
IMW AG was increased by a further €98,929.00 against contributions in kind for the issue amount of €15.73 per share by
issuing 98,929 new no-par-value registered shares each with a
stake of €1.00 in the company’s share capital. Hofer 2 Corporation N.V. Curaçao, Netherlands Antilles, was again permitted to
means of a contribution agreement dated 23 August 2007
IMW AG was increased by a further €874,857.00 against con
tributions in kind for the issue amount of €15.73 per share by
issuing 874,857 new no-par-value registered shares each with
a stake of €1.00 in the company’s share capital. Valbonne Real
Estate Holding B.V., Amsterdam, Netherlands, was permitted to
• Finally, in accordance with the resolution of the extraordinary
shareholders’ meeting held on 30 April 2007, the share capital of IMW AG was increased by a further €72,810.00 against
contributions in kind for the issue amount of €15.73 per share
by issuing 72,810 new no-par-value registered shares each with
a stake of €1.00 in the company’s share capital. Valbonne Real
Estate Holding B.V., Amsterdam, Netherlands, was permitted to
IMW Immobilien AG
The capital increases in kind were entered in the commercial
register on 13 September 2007. All in all, receivables with a nominal value of €110,124,807.00 were entered within the framework
of the contributions in kind. The amount in excess of the share
capital of €103,124,807.00 was allocated to the capital reserves.
At the Annual Shareholders’ Meeting held on 1 July 2004, it was
resolved to convert the shares to registered shares. In addition,
the new articles of association conferred upon each of two shares
the right to name one member of the Supervisory Board. One of
these shares is held by Watermark CH AG, Zug, Switzerland, and
the other is held by VERMAR Verwaltungs- und Marktstudien
AG, Zurich, Switzerland.
Resolutions on further capital increases
The extraordinary shareholders’ meeting held on 30 April 2007 resolved further to empower the Executive Board, with the approval
of the Supervisory Board, to increase the company’s registered
share capital by a maximum of €4,100,000.00 by issuing ordinary
shares or non-voting preference shares against contributions in
cash or kind on one or more occasions by 1 April 2012 (authorised capital II). As the cash capital increase of €2,000,000.00 resolved by the Annual Shareholders’ Meeting held on 18 August
2006 was not carried out, the nominal amount of this second
authorised capital, together with the first authorised capital re
solved by the Annual Shareholders’ Meeting held on 18 August
2006 (authorised capital I) exceeded 50% of the share capital and
was therefore impermissible. For this reason, the resolution on
authorised capital II was annulled at the company’s Annual Shareholders’ Meeting held on 26 November 2007 and a new resolution
was adopted.
Authorised capital I
The Executive Board is authorised by §2(4)(1) of the articles of
association (resolution of the Annual Shareholders’ Meeting held
on 18 August 2006), with the approval of the Supervisory Board
to raise the company’s authorised capital by 1 July 2011 by a maximum of €4.1 million by one or more increases in common shares
or non-voting preference shares for contribution in kind or for
cash (authorised capital I). The subscription rights of shareholders can hereby be excluded in the following circumstances:
a) To compensate residual amounts
b) T
o satisfy subscription rights to holders of share options, convertible bonds or debentures
c) To issue shares to employees as incentive shares, so long as
these do not exceed 10% of the share capital
d) T
o secure contributions in kind, particularly in the form of
companies or parts of companies which are in the interests and
scope of the company
e) To take advantage of new capital markets by way of share placement, particularly abroad
f) If during capital increases for cash the issue price is not significantly less than the stock market index price and the number of
shares to be issued with exclusion of existing shareholders from
subscription rights does not amount to more than 10% of share
capital at the date of effectiveness or at the date of exercise of
this authorisation.
Authorised capital I was entered in the company’s commercial
register on 20 June 2007.
Authorised capital II
In addition, the Executive Board is authorised by §2(5) of the
articles of association (resolution of the Annual Shareholders’
Meeting held on 26 November 2007), with the approval of the
Supervisory Board, to increase the company’s registered share
capital by a maximum of €3,500,000.00 by issuing ordinary shares
or non-voting preference shares against contributions in cash or
kind on one or more occasions by 1 November 2012 (authorised
capital II). In the process, the shareholders must be granted a
subscription right that is intended for shareholders generally
by means of the indirect subscription right (§186(5), German
Stock Corporation Act [AktG]). The Executive Board is however
authorised, with the approval of the Supervisory Board, to rule
out the shareholders’ statutory subscription right in the following
cases:
99
a) To compensate residual amounts
b) To satisfy subscription rights to holders of share options, convertible bonds or debentures
c) To issue shares to employees as incentive shares, so long as
these do not exceed 10% of the share capital
d) To secure contributions in kind, particularly in the form of
companies or parts of companies which are in the interests and
scope of the company
e) To take advantage of new capital markets by way of share placement, particularly abroad
f) If during capital increases for cash the issue price is not significantly less than the stock market index price and the number of
shares to be issued with exclusion of existing shareholders from
subscription rights does not amount to more than 10% of share
capital at the date of effectiveness or at the date of exercise of
this authorisation.
Authorised capital II was entered in the company’s commercial
register on 9 January 2008.
Conditional capital I
By a resolution of the Annual Shareholders’ Meeting held on
14 July 2005, the share capital of IMW Immobilien Aktiengesell
schaft was to be increased conditionally by up to €440,000.00, divided up into 40,000 no-par-value registered shares, through the
issuance of new shares, each entitling the holder to an arithmet
ical stake of €11.00 in the company’s share capital. By a resolution
of the Annual Shareholders’ Meeting held on 18 August 2006,
occasioned by the new division of the company’s share capital
into shares that was adopted on the same day (1:11 share split),
the regulations governing conditional capital I were adjusted in
such a way that the company’s share capital was to be increased
conditionally by up to €440,000.00, divided into up to 440,000
no-par-value registered shares, each entitling the holder to an
arithmetical stake of €1.00 in the company’s share capital, by
issuing new shares. The creation of the conditional capital was
entered in the commercial register on 25 August 2005.
The resolution of the Annual Shareholders’ Meeting held on
18 August 2006 on the adjustment of the conditional capital to
the new division of the share capital that had been carried out led
to a modification of the authorisation empowering the Executive
Board, or if applicable the Supervisory Board, to issue subscription rights to up to 440,000 no-par-value shares each with an
100
arithmetical stake of €1.00 on one or more occasions up to 31 December 2009. The change in the conditional capital was entered in
the company’s commercial register on 2 February 2007.
The conditional capital increase facilitates the granting of subscription rights to Executive Board members and employees of
the company, as well as board members, managing directors and
employees of Group subsidiaries on the basis of the authorisation
for a share option plan 2005 adopted by the Annual Shareholders’
Meeting held on 14 July 2005. The details of the share option plan
2005 are explained under “Share-based remuneration” (note 20).
Conditional capital II
26 November 2007, entered in the company’s commercial register
on 9 January 2008, the company’s share capital was increased by
up to €400,000 by issuing up to 400,000 new no-par-value registered shares (conditional capital II). The Executive and Supervisory Boards were authorised to issue subscription rights to up to
400,000 no-par-value shares each with an arithmetical stake of
€1.00 in the company’s share capital on one or more occasions up
to 1 November 2012.
The conditional capital increase is geared solely towards the issuance of subscription rights (share options), within the framework
of the share option plan 2007, to Executive Board members and
employees of the company, as well as managing directors and
employees of Group subsidiaries. The conditional capital increase
will be carried out only to the extent that share options are granted
within the framework of the share option plan 2007 and the holders of these subscription rights make use of those rights. Each
share option entitles the holder to subscribe to one no-par-value
share.
No share options have so far been issued in accordance with the
share option plan 2007.
IMW Immobilien AG
Conditional capital III
26 November 2007, the Executive Board was authorised, with the
approval of the Supervisory Board, to issue registered warrantlinked and convertible bonds with a total nominal amount of
up to €152,000,000 with a maximum term of 15 years on one or
more occasions up to 1 November 2012, and to grant the holders of warrant-linked bonds, option rights or convertible bonds
conversion rights for registered shares in the company with a proportional amount of the share capital of up to €1,520,000.00 by
issuing up to 1,520,000 no-par-value shares bearing the name of
the company in accordance with the terms of the warrant-linked
bonds or the convertible bonds. The resolution was entered in the
company’s commercial register on 9 January 2008.
At the extraordinary shareholders’ meeting held on 22 May 2008,
this resolution was annulled and replaced by a resolution that
facilitates the issuance of option and conversion rights for registered no-par-value shares in the company with a proportional
amount of the share capital totalling €6,760,000.00.
As of 01.04.
Financial year
2007/2008
Number
Financial year
2006/2007
Number*
8,200,000
4,400,000
Capital increase in kind I
21.02.2007
0
1,800,000
Capital increase in kind II
21.02.2007
0
2,000,000
Capital increase in kind
13.09.2007
As of 31.03.
7,000,000
0
15,200,000
8,200,000
* Taking account of the 11:1 share split on 5 February 2007.
Capital reserves
The development of the Group’s capital reserves is shown in the
consolidated statement of changes in equity. In addition to the
statutory capital reserves of IMW Immobilien Aktiengesellschaft
as an individual company amounting to €152,224 thousand, which
increased by €103,125 thousand in the financial year as a result
of the capital increase in kind described in the section on share
capital, the expenses arising from the share-based remuneration
amounting to a cumulative total of €1,076 thousand (addition in
financial year: €486 thousand) and costs of the capital increase
deducted from equity amounting to €385 thousand (net addition
in financial year: €113 thousand) were reported in the Group.
101
Reserves for market valuation
The item “provision for market valuation” indicates the changes in
value of the swaps for financing the “PRIMA” portfolio. Minority
interest shares are not included in the calculations.
Portfolio
Derivat
Fair value
€ ’000
Deferred taxes
€ ’000
Minority share
€ ’000
Provision
€ ’000
“PRIMA”
SWAP
5,367
– 849
– 247
4,271
Minority interests
This disclosure concerns the share of equity attributable to the
minority shareholders of the subsidiaries. For information on
their share of equity, we refer to the itemisation of the consolidated group (note 2.1).
28. FINANCIAL LIABILITIES
The financial liabilities are loans from financial institutions. Specifically, the financial liabilities are comprise as follows:
Portfolio
Original loan in € ’000
Amount on 31.03.2008 € ’000 less deferred
borrowing costs
Term until
Term over 1 year in € ‘000
“PRIMA”
“Austerlitz”
“Falcon Crest”
“Valbonne”
180,000***
29,500
165,216
309,093
169,574
28,628
144,185
277,675
2012
2022
2008/2013
2008 bis 2014
162,898
27,895
106,695
201,756
3M Euribor
3M Euribor
3M Euribor
3M Euribor
Interest rate in % p.a.
Margin
Margin
Margin
Margin
Adjustment of interest
Quarterly
Quarterly
Quarterly
Quarterly
6,676
733
37,490
75,919
*
*
*
*
SWAP
CAP
SWAP/CAP
SWAP/CAP
**
**
**
**
Term up to one year in € ‘000
Security
Interest risk security
Special contractual conditions
* Secured by mortgage, pledging of accounts, assignment of claims torental income and hedging agreements.
** Meeting certain key data of company.
*** The loan was refinanced when it stood at €177.6 million.
The average margin as of the balance sheet date is 1.2% per year.
In addition to the loans specified above, there was still an advance
on current account amounting to €4,003 thousand on the balance
sheet date bearing interest at the EONIA rate plus margin which
is reported under current financial liabilities.
In the “Austerlitz” part-portfolio, the covenants from the loan
agreement with IMW Austerlitz Beteiligungen GmbH, Berlin, that
were agreed with the financing bank are currently not being complied with in full, with the result that the bank can now prema-
turely claim back the loan, amounting as of the balance sheet date
to €28,618 thousand, which in principle was to be redeemed over
the long term. We have already commenced talks with the aim of
finding an acceptable solution for both sides, possibly by providing additional security. In view of the positive prospects offered by
the negotiations and the promising re-letting activity, the bank is
not currently aiming for the loan to be repaid. In addition, IMW
Austerlitz Beteiligungen GmbH has the possibility of restoring
compliance with the covenant by repaying part of the loan.
102
IMW Immobilien AG
The bank loan repayment sums amounting to €66,136 thousand
(of which €8,932 thousand are current) in connection with the
planned sale of real estate held as a financial investment are reported in the item “Liabilities in connection with available-forsale assets” (see note 37).
29. PROVISIONS
The provisions developed as follows:
€ ’000
Carried
forward
01.04.2007
Consumption
value
Release
0
0
0
500
Purchase price adjustment
Legal expenses
Addition Reclassification
As of
31.03.2008
0
500
108
3
0
200
0
305
Other
72
19
35
59
185
262
Total
180
22
35
759
185
1,067
The provision for purchase price adjustment is an anticipated
reduction in the agreed purchase price for a property sold in
previous years.
The outflow of assets is generally expected within the next financial year.
30. Income tax liabilities
“Income tax liabilities” refer mainly to provisions for corporation
tax and trade tax back-payments of subsidiaries.
31. Trade accounts payable
“Trade accounts payable” concern third parties and are payable
within one year.
32. OTHER LIABILITIES
€ ’000
31.03.2008
31.03.2007
Liabilities from the refinancing of
loans and from other property
financing arrangements
8,325
42,200
Liabilities to related persons or
parties
3,420
4,084
Liabilities from purchase price
interest and purchase price for
“Valbonne” companies
2,710
111,733
Liabilities from advance payments
of operating expenses
1,716
1,173
Liabilities to employees
692
371
Customers with credit balances
624
163
Liabilities to the tax authority
484
514
Liabilities from rent deposits
391
203
Other
1,576
1,279
Total
19,938
161,720
The liability from the purchase of the “Valbonne” companies
amounting to €110,124 thousand that existed in the previous
year was settled by means of the capital increase in kind that was
carried out in the financial year 2007/2008 (see note 27). As of the
balance sheet date, there are still residual interest liabilities from
the interest on the purchase price up to the point when the capital
increase in kind is entered in the commercial register.
The liabilities from the refinancing of loans and other property
financing arrangements mainly comprise residual liabilities from
former loan financing arrangements that were provided by nonbanks. The amount has decreased substantially as a result of the
refinancing of loans from two “Valbonne” companies.
The liability to Watermark CH AG that was shown under “Liabilities to affiliated companies” in the previous year is being reported
in this financial year as a liability to related persons or parties
amounting to €3,127 thousand (previous year: €2,928 thousand)
and adjusted to the previous year’s reporting to make comparisons easier.
33. C
ONTINGENCIES AND OTHER
FINANCIAL OBLIGATIONS
In the event of an employee leaving the Group, employment law
provides for joint liability for pension commitments, into which
the former shareholder De La Rue Systems GmbH has entered
as debtor. As the obligations are reinsured in full via a pension
insurance policy by the company against a one-off amount and its
assignment for security purposes to the beneficiary, their utilisation cannot be expected.
Rental and lease obligations
The Group has leased automobiles and office machinery. The
commercial content of these leasing agreements makes them
operating leases. The lease instalments break down as follows:
€ ’000
34. RELATED PARTY DISCLOSURES
Related parties are the members of the management bodies of
IMW Immobilien AG (Executive Board and Supervisory Board)
as well as close relatives of these persons. The group of related
companies consists of those companies with a controlling influence on the Group and companies with joint management or
controlling influence over IMW Immobilien AG.
34.1 EXECUTIVE BOARD
Eckhard Rodemer, Vögelsen (until 31 January 2008)
Chairman of the Executive Board, IMW Immobilien
Aktiengesellschaft, Berlin
Hartmut Fromm, Berlin (as from 1 January 2008)
Chairman of the Executive Board, IMW Immobilien Aktiengesellschaft, Berlin (as from 1 February 2008)
Roland Pöhlmann, Berlin
Member of the Executive Board, der IMW Immobilien
Dr Marc Schulten, Aschaffenburg
Member of the Executive Board, IMW Immobilien
Maic Schäfer, Wolfenbüttel
Deputy member of the Executive Board, IMW Immobilien Aktiengesellschaft, Berlin
2007/2008
2006/2007
Up to one year
144
43
One to five years
142
49
0
0
More than five years
103
Expenses from operating leases in the financial year amounted to
€148 thousand (previous year: €43 thousand).
Financial obligations from other contracts
Minimum payments resulting from other contracts, for example
maintenance contracts, amounted to €248 thousand (< 1 year)
and €38 thousand (> 1 year), respectively, as of the balance sheet
date.
Boris Töppe, Berlin (from 1 March 2008)
Member of the Executive Board, IMW Immobilien
The basic features of the remuneration system for the members of
the Executive Board are explained in the consolidated management report.
104
Executive Board remuneration for the financial year 2007/2008 is
comprised as follows:
€ ’000
Eckhard Rodemer
Fixed
salary
Expenses
Bonus
Total
133
26
25
184
previous year
130
51
39
220
Roland Pöhlmann
124
21
37
182
previous year
105
12
30
147
Dr Marc Schulten
158
19
40
217
previous year
120
12
30
162
Maic Schäfer
112
6
29
147
previous year
45
3
10
58
Boris Töppe
17
1
0
18
0
0
0
0
previous year
Total
544
73
131
748
previous year
400
78
109
587
Mr Rodemer was originally granted an interest-free loan of
€60 thousand, €20 thousand of which was waived in each year of
Mr Rodemer’s ongoing employment at IMW AG up to a period
of three years. The last amount of €16 thousand was waived in the
financial year 2007/2008 and is included in the above disclosures.
In addition, there were further remuneration items not included
in the above table:
Mr Töppe received compensation of €181 thousand for disadvantages incurred by him in connection with the premature termination of his previous employment relationship.
There were, moreover, further expenses in connection with the
annulment of Mr Rodemer’s employment relationship amounting
to €570 thousand (previous year: €0). The remuneration to former
members of the Executive Board amounted to €40 thousand.
The remuneration for Mr Fromm is arranged within the framework of a consultancy agreement with VERMAR GmbH, Berlin.
In the financial year 2007/2008, consultancy services amounting
to €71 thousand were billed in connection with this.
IMW Immobilien AG
Components with long-term effect refer to the share option plan
2005 by which IMW Immobilien Aktiengesellschaft made its
shares available to employees by way of an employee participation
scheme. Expenses from the share option programme amounted
to €486 thousand (previous year: €432 thousand). See explanation
under note 21 “Share-based remuneration”.
The Executive Board members hold 660 shares (previous year:
770 shares) in IMW Immobilien Aktiengesellschaft. The 110
shares held by Mr Rodemer are indicated under the disclosures
concerning Supervisory Board members.
In total, there were other liabilities of €239 thousand (previous
year: €49 thousand) from Executive Board remuneration and
€540 thousand (previous year: €0 thousand) from the termination
of employment relationships as of the balance sheet date.
34.2 Supervisory Board
Hartmut Fromm, Berlin, Lawyer (Chairman and member of the
Supervisory Board until 31 December 2007)
• Chairman of the Supervisory Board of Jack White Productions
AG, Berlin (until 3 July 2007),
• Chairman of the Supervisory Board of M. Tech Technologie und
Beteiligungs AG, Unterensingen,
• President of the Board of Directors of VERMAR Verwaltungsund Marktstudien AG, Zurich, Switzerland,
• Deputy Chairman of the Supervisory Board of CeWe Color
Holding AG, Oldenburg,
• Member of the Board of Directors of DUX Trust Partners AG,
FL-Triesen, Liechtenstein,
• Member of the Supervisory Board of All Welding Technologies
AG, Hanau (until 16 August 2007),
• Member of the Advisory Board of Homburg N.V., NL-Soest,
Netherlands,
• Member of the Advisory Board of Homburg Invest Inc.,
NL-Soest, Netherlands.
Marcus Sebastian Wisskirchen, London (Chairman as from 1
January 2008)
• Director and CEO, Watermark Holdings Ltd., St. Helier, Jersey.
Jan-Willem Neggers, Eindhoven (as from 26 July 2007)
(Deputy Chairman as from 1 January 2008).
Nigel Le Quesne, Managing Director Jersey Trust Company,
St. Heliers, Jersey
• Non-executive director of M&G Income Investment Company
Limited, London, Great Britain,
• Non-executive director of Renewable Energy Generation
Limited, London, Great Britain,
• Non-executive director of Fabian Romania Property Fund,
London, Great Britain,
• Non-executive director of Madara Bulgarian Property Fund,
London, Great Britain.
Mark Houslop, Consultant, London, Great Britain
• Non-executive director of Fabian Romania Property Fund,
London/Great Britain.
Dr Eugen von Lackum, Managing Director of TLG Immobilien
GmbH, Berlin, (until 31 March 2008)
• Member of Supervisory Board of BIH Berliner Immobilien
Holding GmbH, Berlin,
• Board of Directors of Bundesimmobilienanstalt, Berlin,
• Member of the Advisory Board (housing data) of Aareon AG,
Hamburg,
• Member of the Advisory Board of Berliner Volksbank eG,
Berlin.
Eckhard Rodemer, Vögelsen (as from 1 February 2008)
Member of the Supervisory Board, Vivacon AG, Cologne.
The articles of association provide for remuneration of €5,000.00
per year for the members of the Supervisory Board. The Chairman receives double the amount, and the Deputy Chairman one
and a half times the amount.
Under the amendment to the articles of association adopted on
1 July 2004, they also receive additional variable remuneration
amounting to €500 for each €0.10 dividend that the company
pays out to the shareholders. The Chairman receives double and
the Deputy Chairman one and a half times the remuneration of a
member of the Supervisory Board.
105
Members of the Supervisory Board received the following remuneration for their work in the financial year 2007/2008:
€
2007/2008
2006/2007
Hartmut Fromm
7,500.00
10,000.00
Marcus Sebastian Wisskirchen
8,125.00
7,500.00
Nigel Le Quesne
5,000.00
5,000.00
Dr Eugen von Lackum
5,000.00
5,000.00
Mark Houslop
5,000.00
5,000.00
Jan-Willem Neggers
4,047.00
0
Eckhard Rodemer
Helga Wisskirchen
820.00
0
0.00
3,524.25
The liabilities to members of the Supervisory Board as of the
balance sheet date amounted to €35 thousand.
The members of the Supervisory Board hold 200,110 shares
(previous year: 0) in the company.
Hartmut Fromm was active as a lawyer for the company, including in relation to defending legal claims. In the financial year
2007/2008, he received fee remuneration in the amount of
€18 thousand plus sales tax. Dr von Lackum received €5 thousand
for consultancy services within the framework of his Supervisory
Board membership.
The proportion of the premiums for the existing directors’ and
officers’ insurance, including insurance tax, attributable to the
Supervisory Board members is paid by IMW Immobilien AG.
Mr Fromm was active as a lawyer for the law firm Buse Heberer
Fromm until 31 December 2007. He has since suspended his
activity as a lawyer there. Work performed by the law firm led
to expenses of €642 thousand (including those already mentioned above; previous year: €378 thousand) in the financial year
2007/2008. The trade payables to the law firm outstanding as of
the balance sheet date amounted to €232 thousand (previous year:
€0 thousand).
106
34.3 RELATED PARTIES
Watermark CH AG, Zug, Switzerland, which acquired 94.73%
of the shares in IMW Immobilien Aktiengesellschaft’s share
capital as of 18 August 2003, is classified as an undertaking which
exerted a controlling influence over the company in the financial
year 2007/2008. Within the framework of the capital increases in
kind which were entered in the commercial register on 21 February 2007, Watermark CH AG’s shareholding in IMW Immobilien
AG has decreased to 82.03%. A further capital increase in kind
amounting to a nominal €7,000,000.00, which was adopted by
the company’s extraordinary shareholders’ meeting on 30 April
2007, has caused the shareholding held by Watermark CH AG to
decrease to 44.3%. The sole shareholder in Watermark CH AG,
which has share capital of SFR 100,000.00, is Watermark Holdings
Ltd., St. Helier, Jersey. To this company can be attributed not only
the indirect 44.3% shareholding in IMW Immobilien AG, but also
the voting shares of OFM Immobilienbeteiligungen GmbH, Berlin, amounting to 3.8%, which means that Watermark Holdings
Ltd.’s shareholding amounts to 48.1%. The last capital increase
in kind was entered in the commercial register on 13 September
2007. The legal transactions with these companies and their affiliated companies are classified as legal transactions with related
parties and are also detailed in the dependency report.
Watermark Holdings Ltd., St. Helier, Jersey, granted IMW Immo
bilien Aktiengesellschaft a loan of €2.0 million in the financial
year 2007/2008. The loan bore interest of 6.8% per year, and as
from 1 July 2007 8.0% per year, and on 31 March 2008 amounted
to €2.0 million plus interest.
The former Supervisory Board member Helga Wisskirchen and
the Supervisory Board member Marcus Sebastian Wisskirchen,
and companies in which they were shareholders, had sold shares
and rights from a silent investment in IMW Immobilien Aktien
gesellschaft for a purchase price of €15,242 thousand in the financial year 2006/2007. The purchase price corresponded to the
book value of the pro rata equity, with silent unrealised gains in
real estate that belonged to the assets of the sold companies being
taken into consideration at the current market values ascertained
by expert reports. In addition, the companies, in which Ms. Helga
Wisskirchen and Mr Marcus Sebastian Wisskirchen have direct
or indirect participating interests, sold real estate to subsidiaries
IMW Immobilien AG
of IMW Immobilien Aktiengesellschaft for a purchase price of
€66,170 thousand. The purchase price assessment was based on
current market values ascertained by expert reports. The acquisitions resulted as of 1 April 2007 in claims against IMW Immobilien AG amounting to €1.1 million, which were assigned to
Watermark Holdings Ltd. Since then the sum has borne interest
on the same terms as the loan from Watermark Holding Ltd. The
total interest expense in the financial year 2007/2008 consequently amounted to €272 thousand (previous year: €1,239 thousand).
The other liabilities outstanding as of the balance sheet date
amounted to €3,127 thousand (previous year: €2,928 thousand).
In addition, there are still liabilities to other related parties
amounting to €293 thousand (previous year: €293 thousand)
which came about as a result of transactions in the previous year,
primarily in connection with the acquisition of real estate.
As of the balance sheet date there were receivables from two other
related companies amounting to €1,245 thousand (previous year:
€1,722 thousand). The reduction results from the full write-down
of the receivables from one of these companies in the amount of
€477 thousand.
35. G
OALS AND METHODS OF
FINANCIAL RISK MANAGEMENT
The most significant financial liabilities used by the Group are the
loan and interest rate liabilities to financial institutions and trade
accounts payable, both of which are reported under financial
liabilities. The main purpose of these financial liabilities is to
finance the Group’s business activity. The Group additionally
holds financial assets such as cash and cash equivalents and trade
receivables which result directly from the business activity.
The Group also has financial derivatives at its disposal. These
include, in particular, interest rate swaps and forward exchange
contracts. The purpose of these derivative financial instruments
is to hedge against potential interest rate risks that result from the
business activity and its sources of financing.
In accordance with the Group’s internal standards, no trading
with derivatives was conducted in the financial years 2007/2008
and 2006/2007 and none will be conducted in the future.
The significant risks faced by the Group as a result of the financial
instruments comprise interest-related cash flow risks and liquidity and credit risks. The Executive Board decides upon strategies
and processes for managing individual types of risk, which are
explained below.
Interest rate risk
The risk of fluctuations in market interest rates to which the
Group is exposed results essentially from the bank loan liabilities which are reported under financial liabilities and, excluding
interest and credit cost deferrals, amounts to €621,784 thousand
(previous year: €567,549 thousand). The Group has concluded
only credit agreements with variable interest rates based on the
3-month Euribor or, in the case of an advance on current account,
the EONIA call money rate. Any change in these call money rates
will generally also increase the Group’s interest expense. In order
to limit this risk, various derivative instruments were acquired.
The terms of the derivatives correspond to the terms of the loans.
The financial instruments are, firstly, interest rate swaps within
the framework of which the company comes to an agreement
with its contracting partners to swap the difference between
fixed-interest and variable-interest sums at defined intervals. This
is calculated on the basis of an agreed nominal amount. Secondly,
the Group has acquired interest rate caps, in which the interest
rates are fixed at an agreed maximum level. If this maximum level
is exceeded, the difference between the actual interest rate and the
cap rate is paid out. A summary of the derivative financial instruments is provided in note 24.
The following overview shows the sensitivity of the Group’s earnings before taxes to a possible change in interest rates (due to the
impact on variable-interest loans taking account of the interestcompensating function of the financial derivatives) for the current financial year 2008. All the variables remain constant. The
change in the fair value of the derivative financial instruments
and of real estate held as a financial investment which this might
cause was not included in the calculations.
107
INTEREST RATE RISK
€ ’000
2007/2008
Impact on Group earnings before taxes
(+) 100 base points
– 826
(–) 100 base points
1,088
Credit risk
All those customers who wish to conclude transactions with the
company on the basis of credit are required to undergo a credit
investigation. In addition, the receivables portfolios are monitored constantly. The maximum default risk is limited to the book
values reported in note 22. There are no significant concentrations of default risks in the Group.
With the Group’s other financial assets, such as cash and cash
equivalents and the derivative financial instruments reported on
the assets side, the maximum credit risk corresponds to the book
value of these instruments in the event of the contracting party’s
insolvency.
Liquidity risk
The company uses a liquidity planning system to constantly
monitor the risk of potential liquidity bottlenecks. This system
bases its analysis on anticipated cash flows from operating activities and the terms of financial liabilities. As of the balance sheet
date, the financial liabilities had the due dates shown below. The
information is based on the contractual, non-discounted interest
and redemption rates and excludes borrowing costs which, in the
balance sheet, were deducted from the book value when the liabilities were first valued and are distributed at amortised cost over
the term of the loan upon the liabilities’ valuation. The deviation
of the other liabilities from the balance sheet reporting comprises
the rents paid in advance amounting to €199 thousand (previous year: €106 thousand) and the liabilities to the tax authority
amounting to €484 thousand (previous year: €514 thousand).
108
IMW Immobilien AG
31.03.2008
€ ’000
< 1 year
1–2 years
2–5 years
> 5 years
Total
154,957
101,711
343,705
180,723
781,096
Trade accounts payable
10,805
0
0
0
10,805
Other liabilities
19,255
0
0
0
19,255
185,017
101,711
343,705
180,723
811,156
41,794
71,133
136,545
489,554
739,026
31.03.2007
Trade accounts payable
Other liabilities
6,847
0
0
0
6,847
161,100
0
0
0
161,100
209,741
71,133
136,545
489,554
906,973
Capital management
The primary objective of the Group’s capital management is to
ensure that it maintains a high credit rating and an appropriate
equity ratio with the aim of supporting its business operations
and maximising its shareholder value.
The Group manages its capital structure and carries out adjust
ments taking account of changes in the general economic
conditions. Previously, the Group aimed to achieve growth in
a liquidity-friendly way, primarily through capital increases in
kind, which increased the equity ratio.
The Group monitors its capital with the help of the equity ratio,
which corresponds to the ratio of balance sheet equity to the
balance sheet total according to the IFRS regulations, allowing for
the deviation specified below, and should lie between 20% and
35%. The equity ratio was increased from 24.4% as of 31 March
2007 to 26.8% as of 31 March 2008. As of 31 March 2007, however, the purchase price liability of €110,125 thousand for the
acquisition of the “Valbonne” companies was already defined as
equity because of the planned capital increase in kind.
36. FINANCIAL INSTRUMENTS
The company has financial assets and financial liabilities that can
be categorised as follows:
€ ’000
2007/2008
2006/2007
5,367
7,288
Financial assets
Derivative financial instruments for
hedging, at fair value with effect
on income
hedging, at fair value with no effect
on income
Loans and receivables
of which trade accounts
receivable
of which other financial assets
Available-for-sale financial assets
hedging, at fair value with effect
on income
Interest rate risk
The market prices of derivative financial instruments are likewise
exposed to an interest rate risk. A change in the interest rate
would lead to the following changes for the derivatives existing as of 31 March 2008 for the two largest portfolios (“PRIMA”
and Valbonne Real Estate 3 B.V., where loan agreements as of
31 March 2008 are hedged in the amount of €287 million):
DERIVATIVE FINANCIAL
INSTRUMENTS
2,809
3,505
17,930
9,787
4,433
2,682
No change
13,497
7,105
(–) 100 base points
0
0
26,106
20,580
1,038
0
Financial liabilities valued at
amortised cost
654,126
735,714
of which financial liabilities
624,066
567,767
of which trade accounts payable
10,805
6,847
of which other liabilities
19,255
161,100
655,164
735,714
Fair value
The fair values of the financial assets and financial liabilities specified in the previous paragraph correspond closely to the book
values recognised under the IFRS regulation. Experts are commissioned to value the derivative financial instruments.
109
€ ’000
(+) 100 base points
31.03.2008
2007/2008
2007/2008
Fair value
Effect on
income
No effect on
income
17,699
6,120
4,927
6,652
0
0
– 4,235
– 6,119
– 4,768
37. ASSETS CLASSIFIED AS AVAILABLE FOR
SALE AND ASSOCIATED LIABILITIES
The Executive Board has decided to sell some of the real estate
held as a financial investment in Hamburg, Hanover and Munich
within the next financial year 2008/2009. The reasons for the sale
are regional in nature relating to the ownership of the properties
and the greater concentration on the company’s core competencies as regards the renting of residential property. For tax reasons,
the properties are scheduled for sale mainly in groups, although
they can also be sold individually in exceptional cases. The cash
inflow from the sale of the properties will be used partly to redeem the loans that had been taken up to finance the properties.
Although it is not certain that these loans will be sold together
with the properties to the potential purchasers, in the interests
of asset clarity, the loans will be reported in the separate item
“Liabilities associated with available-for-sale assets” in consideration of the repayment obligation that will then apply.
110
€ ’000
31.03.2008
Available-for-sale assets
Real estate held as a financial investment
78,970
Liabilities associated with
available-for-sale assets
66,136
133
66,269
Of the available-for-sale assets, €19,087 thousand are attributable
to the Residential segment and €59,883 thousand to the Commercial segment. With regard to the financial liabilities, €14,588 thousand are attributable to the Residential segment and €51,548 thousand to the Commercial segment.
38. EVENTS AFTER THE BALANCE SHEET DATE
At an extraordinary shareholders’ meeting held on 22 May 2008 it
was resolved:
1. To annul the existing authorisation to issue warrant-linked and
convertible bonds and to exclude subscription rights (resolution of the Annual Shareholders’ Meeting held on 26 November
2007) and replace it with a new authorisation.
The Annual Shareholders’ Meeting of IMW Immobilien AG
had resolved on 26 November 2007, under agenda item 11, to
authorise the Executive Board to issue warrant-linked and convertible bonds and to grant option or conversion rights for registered shares in the company with a pro rata amount of the share
capital totalling up to €1,520,000 by issuing up to 1,520,000
no-par-value registered shares in strict accordance with the
warrant-linked and convertible bond terms and the creation of
appropriate conditional capital amounting to €1,520,000.
This authorisation has not yet been utilised, and for that
reason it is planned to establish a new authorisation which
enables the company to a greater extent than hitherto to issue
warrant-linked and convertible bonds and to combine these
instruments as appropriate.
IMW Immobilien AG
The Executive Board has now been authorised, with the approval of the Supervisory Board, to issue registered convertible
bonds and/or warrant-linked bonds (or combinations of these
instruments) (together referred to as “bonds”) on one or more
occasions up to 2 May 2013 with or without a term limitation
up to a total amount of €100.0 million, and to grant to the creditors of bonds conversion or option rights for registered shares
in the company with a pro rata interest in the share capital of up
to €6,760,000 in strict accordance with the terms of issuance.
2. T
o annul the existing conditional capital III and to establish an
appropriate conditional capital 2008/I to service convertible
and/or share option rights from bonds or similar instruments.
3. T
o agree to the draft merger plan from March 2008 between
IMW Immobilien AG and Straet Vastgoed N.V., Eindhoven,
Netherlands.
On 3 March 2008, the Executive and Supervisory Boards
of IMW Immobilien AG and the Executive Board of Straet
Vastgoed resolved to convert IMW Immobilien AG to the legal
form of a European Company (Societas Europaea, SE) by way
of their merger. The intention is to merge Straet Vastgoed into
IMW AG, which will assume the legal form of an SE in the
course of the merger.
Some individual shareholders have filed actions to rescind this.
The realisation of the project is likely to take several months.
In an ad-hoc announcement made on 11 July 2008, notice
was given that Dr Marc Schulten, CFO, after three years of
successful work, would be leaving the Executive Board of
IMW Immobilien AG, Berlin, as of 31 August 2008 in order to
devote himself to other business assignments. This change in
personnel is connected with the planned restructuring of IMW
Immobilien AG as a European joint-stock company, Societas
Europaea (SE), which was resolved at the extraordinary shareholders’ meeting held on 22 May 2008.
In a contract recorded by a notary and dated 15 July 2008, IMW
Immobilien AG acquired the remaining 10% of the shares in
Aircargo Logistics Center Langenhagen Grundstücksverwaltungs GmbH in Berlin for a purchase price of €360 thousand
plus ancillary acquisition costs of €1 thousand. The contract is
subject to approval by the Supervisory Board. Provided that such
approval is given, the contract will mean that there is no change
in the company’s assets and liabilities, as it was already fully
consolidated. The acquisition costs correspond to the minority
interests as of the balance sheet date.
39. OTHER DISCLOSURES
39.1 NUMBER OF EMPLOYEES
In the financial year 2007/2008, the IMW Immobilien Group had
an average number of 84 employees (previous year: 69), 77 of
whom were employees (previous year: 67) and 7 of whom (pre
vious year: 2) were industrial employees.
39.2 CASH FLOW STATEMENT
In contrast to the previous year, the interest received amounting
to €784 thousand was reported in the cash flow statement as cash
flow from current operating activities, rather than as cash flow
from investment activities, because it results from operating activities and therefore provides a better presentation of the liquidity
position. The interest in question comprises interest income from
existing current and call money accounts. The previous year’s
comparable figure of €931 thousand was reclassified accordingly.
39.3 DISCLOSURES IN ACCORDANCE WITH §20(1) AND
(4) AKTG, §21(1) WPHG AND §41(2)(1) WPHG
Watermark CH AG, Zeughausgasse 9a, 6301 Zug, Switzerland,
notified the company on 19 September 2007 that its shareholding
in IMW Immobilien AG had fallen below the thresholds of 50%
and 75% on 13 September 2007. Watermark CH AG’s shareholding as of 31 March 2008 was 44.3%.
Watermark Holdings Ltd., St. Helier, Jersey, notified the company
on 19 September 2007 that its shareholding in IMW Immobilien
AG had fallen below the thresholds of 50% and 75% on 13 September 2007 and had been 49.7% since then. Of these, 44.3%
belonging to its subsidiary, Watermark CH AG, Zug, Switzerland,
111
must be attributed to Watermark Holdings Ltd. in accordance
with §22(1)(1)(1), German Securities Trading Act (WpHG). A
further 5.4% belonging to its subsidiary OFM Immobilienbeteiligungen GmbH, Stresemannstr. 74, Berlin, must be attributed to it
in accordance with §22(1)(1)(1) WpHG.
At the same time, the company was notified that its shareholding
in IMW Immobilien AG held by the parent company of Watermark Holdings Ltd., Warwick Square Ltd., St. Helier, Jersey, had
fallen below the thresholds of 50% and 75% on 13 September
2007 and had been 49.7% since then. Of these, the 49.7% belonging to its subsidiary Watermark Holdings Ltd. must be attributed
to Warwick Square Ltd. in accordance with §22(1)(1)(1) WpHG.
The company was also notified that the shareholding in IMW
Immobilien AG held by the parent company of Warwick Square
Ltd., Warwick Square Trust, St. Helier, Jersey, had fallen below the
thresholds of 50% and 75% on 13 September 2007 and had been
49.7% since then. Of these, the 49.7% belonging to its subsidiary
Warwick Square Ltd. must be attributed to Warwick Square Trust
OFM Immobilienbeteiligungen GmbH, Stresemannstr. 74, 10963
Berlin, notified the company on 19 September 2007 that its shareholding had fallen below the threshold of 10% on 13 September
2007 and had been 5.4% since then. Of these, the 1.6% belonging
to Wertbau GmbH, Stresemannstr. 74, 10963 Berlin, must be attributed to OFM Immobilienbeteiligungen GmbH in accordance
with §22(1)(1)(1) WpHG.
Thuraya Value Growth REIT AG, 6304 Zug, Switzerland, notified
the company on 19 September 2007 that its shareholding had
fallen below the threshold of 3% on 13 September 2007 and had
been 2.5% since then.
At the same time, the company was notified that the shareholding held by its parent company, Thuraya Foundation for Arts and
Sciences, 9490 Vaduz, Liechtenstein, had likewise fallen below
the threshold of 3% and had been 2.5% since then. Of these, 2.5%
must be attributed to Thuraya Foundation for Arts and Sciences
112
Mr H. P. C. M. van de Moesdijk, 5644 Eindhoven, Netherlands,
notified the company on 19 September 2007 that his shareholding
in IMW Immobilien AG had exceeded the thresholds of 3%, 5%
and 10% on 13 September 2007 and that it had been 14.6% since
then.
Mr Th. J. M. Moeskops, 5611 Eindhoven, Netherlands, notified
the company on 19 September 2007 that his shareholding in
IMW Immobilien AG had exceeded the thresholds of 3%, 5% and
10% on 13 September 2007 and had been 14.6% since then.
Mr M. Boekhoorn, 6721 Benekom, Netherlands, notified the
company on 19 September 2007 that his shareholding in IMW
Immobilien AG had exceeded the threshold of 3% on 13 September 2007 and had been 4.9% since than.
Mr D. G. van Riemsdijk, London, Great Britain, notified the
company on 19 September 2007 that his shareholding in IMW
Immobilien AG had exceeded the thresholds of 3%, 5% and 10%
on 13 September 2007 and had been 10.3% since then.
Mr D. G. van Riemsdijk notified the company on 30 November
2007 that his shareholding in IMW Immobilien AG had fallen
below the thresholds of 3%, 5% and 10% and had been 0% since
then.
On the same date, swisspartners AG, 8022 Zurich, Switzerland,
notified the company that its shareholding in IMW Immobilien
AG had exceeded the thresholds of 3%, 5% and 10% on 27 November 2007 and had been 10.3% since than.
IMW Immobilien AG
Mr Rainer H. Moser, 8703 Erlenbach, Switzerland, notified the
company on 10 December 2007 that his shareholding in IMW
Immobilien AG had exceeded the threshold of 3% on 27 November 2007 and had been 4.0% since then. These voting rights must
be attributed to him via swisspartners AG, 8022 Zurich, Switzerland, in accordance with §22(1)(1)(2) WpHG.
Mr Martin P. Egli, 8038 Zurich, Switzerland, notified the company on 10 December 2007 that his shareholding in IMW Immobilien AG had exceeded the threshold of 3% on 27 November
2007 and had been 4.0% since then. These voting rights must be
attributed to him via swisspartners AG, 8022 Zurich, Switzerland,
in accordance with§22(1)(1)(2) WpHG.
Mr D. G. van Riemsdijk, London, Great Britain, notified the
company on 31 December 2007 that his shareholding in IMW
Immobilien AG had exceeded the thresholds of 3% and 5% on
28 December 2007 and had been 5.3% since then.
39.4 DECLARATION ON THE C ORPORATE
GOVERNANCE CODE
A declaration of conformity with the German Corporate Governance Code has been made by the company’s offi cers and
published for the information of shareholders on the company’s
website under the internet address www.imw-ag.de. The declaration was amended in March 2004, February 2005, March 2006,
February 2007 and March 2008. The current version of the declaration has also been published on the website www.imw-ag.de.
39.5 AUDITORS’ FEES
The auditors in the financial year 2007/2008 were Ernst &
Young AG, Berlin. In the previous year the auditors were DHPG
Dr Harzem & Partner KG, Cologne.
Audit fees for the financial year 2007/2008 amount to €30 thousand (previous year: €24 thousand) for the audit of the financial
statements, and €110 thousand (previous year: €50 thousand) for
the audit of the consolidated financial statements. Fees for audit
of subsidiaries amounted to €95 thousand (previous year: €25
thousand). In addition, an amount of €870 thousand (previous
year: €145 thousand) was reported as expenditure for other audits
and certification, €20 thousand (previous year: €1 thousand) for
other services and €20 thousand (previous year: €10 thousand)
for reimbursement of out-of-pocket expenses.
The Executive Board
Hartmut Fromm
Roland Pöhlmann
Dr Marc Schulten
Maic Schäfer
Boris Töppe
113
Assurance by the Executive Board | Audit opinion
114
IMW Immobilien AG
ASSURANCE BY THE EXECU- Audit opinion
TIVE BOARD IN ACCORDANCE WITH §315(1)(6) GERMAN COMMERCIAL CODE
(HGB)
We give our assurance that, to the best of our knowledge and
belief, the consolidated financial statements of IMW Immobilien
Aktiengesellschaft for the financial year 2007/2008, in accordance
with the applicable accounting principles, convey a fair and accurate picture of the Group’s assets, financial and earnings position,
and that the course of business, including the business results
and the position of the Group, are presented in such a way in the
consolidated management report that a fair and accurate picture
of them is conveyed and the significant opportunities and risks of
the Group’s likely development are described.
The Executive Board
Hartmut Fromm
Dr Marc Schulten
Boris Töppe
We have issued the following opinion on the consolidated financial statements and the group management report:
“We have audited the consolidated financial statements prepared
by IMW Immobilien AG, Berlin, Germany, comprising of the
balance sheet, the income statement, the statement of changes in
equity, the cash flow statement and the notes, together with the
group management report for the fiscal year from 1 April 2007
to 31 March 2008. The preparation of the consolidated financial
statements and group management report in accordance with
IFRSs [International Financial Reporting Standards] as adopted
by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB [“Handelsgesetzbuch”:
HGB] is the responsibility of the parent company’s management.
Our responsibility is to express an opinion on the consolidated
financial statements and on the group management report based
on our audit.
Roland Pöhlmann
Maic Schäfer
We conducted our audit of the consolidated financial statements
in accordance with Sec. 317 HGB and German generally accepted
standards for the audit of financial statements promulgated by
the Institut der Wirtschaftsprüfer [Institute of Public Auditors
in Germany] (IDW). Those standards require that we plan and
perform the audit such that misstatements materially affecting
the presentation of the net assets, financial position and results of
operations in the consolidated financial statements in accordance
with the applicable financial reporting framework and in the
group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and
legal environment of the Group and expectations as to possible
misstatements are taken into account in the determination of
audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures
in the consolidated financial statements and the group management report are examined primarily on a test basis within the
framework of the audit. The audit includes assessing the annual
financial statements of these entities included in consolidation,
the determination of entities to be included in consolidation,
the accounting and consolidation principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements and the
group management report. We believe that our audit provides a
reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs as adopted by the
EU and the additional requirements of German commercial
law pursuant to Sec. 315a (1) HGB and give a true and fair view
of the net assets, financial position and results of operations of
the Group in accordance with these requirements. The group
management report is consistent with the consolidated financial
statements and as a whole provides a suitable view of the Group’s
position and suitably presents the opportunities and risks relating
to future development.
Without qualifying this opinion, we draw attention to the comments made by the Company in the group management report
under 8. “Outlook”. This section states that the covenants agreed
in the loan agreements of IMW Austerlitz Beteiligungen GmbH,
Berlin, for the loan of €28,618 thousand, as of the balance sheet
date, which is long term and not yet due, are not being adhered
to by the companies, which gives the Bank an extraordinary
right of termination for the loan in question. Furthermore, the
financing bank raised objections to Valbonne Real Estate 7 B.V.
and Valbonne Real Estate 10 B.V. with reference to compliance
with the obligations to report in the loan agreements valued at
€19,800 thousand as of the balance sheet date. These objections
have not been acknowledged by the management board. The
Audit opinion
115
management board assumes that the negotiations with the banks
currently in progress concerning the adjustment of the covenants
or a complete or partial refinancing of the loans and concerning the proof of compliance with the obligations to report will
be successful, and that the liquidity of the Company will not be
materially impaired.
Furthermore, we would like to draw your attention to the
Company’s comments in the group management report under 8.
“Outlook” concerning a loan of €34,125 thousand to finance the
Falcon Crest portfolio, which has not yet been extended.
The management board states in the report that the 50% payment
and extension of the loan at the year-end already negotiated will
be carried out by the end of the fiscal year and that the currently
pending refinancing will therefore have no effect on the liquidity
of the Company. IMW Immobilien AG bears no liability for the
abovementioned property financing. If, however, the negotiations with the banks initiated by the Group’s management board
should fail, the subsidiaries concerned would not be able to meet
their payment obligations without assistance from the parent
company. This could have a negative effect on the liquidity of the
Group.”
Berlin, Germany, 31 July 2008
Ernst & Young AG
Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft
(Seidel)
Wirtschaftsprüfer
[German Public Auditor]
(Köhler)
Wirtschaftsprüferin
116
Financial statements of IMW AG | Balance sheet
IMW Immobilien AG
Balance sheet
as of 31 March 2008
Assets
€
31.03.2008
31.03.2007
5,490.00
1,400.00
981,183.11
1,042,659.11
A. Non-current assets
I. Intangible assets
Software
II. Property, plant and equipment
1. Land and buildings
2. Office furniture and equipment
203,272.00
36,815.00
1,184,455.11
1,079,474.11
136,951,874.56
140,619,374.56
III. Financial assets
1. Shares in affiliated companies
2. Shareholdings
6,157,480.00
6,145,980.00
143,097,854.56
144,287,799.67
146,776,854.56
147,857,728.67
B. Current assets
I. Receivables and other assets
1. Trade accounts receivable
2. Receivables from affiliated companies
3. R
eceivables from undertakings in which the company
has a participating interest
4. Other assets
II. Cash, cash in banks
C. Prepaid expenses
30,065.76
24,843.46
27,568,204.58
27,569,473.29
52,826.99
25,470.00
648,521.36
448,373.57
28,299,618.69
28,068,160.32
1,475,446.95
29,775,065.64
692,883.91
28,761,044.23
2,316.53
11,468.62
174,065,181.84
176,630,241.52
Financial statements of IMW AG | Balance sheet
117
Equity and liabilities
€
31.03.2008
31.03.2007
15,200,000.00
8,200,000.00
II. Capital reserves
152,224,269.53
49,099,462.53
III. Net loss/profit for the year
– 11,064,960.33
A. Shareholders’ equity
I. Subscribed capital
B. Special item with an equity component
156,359,309.20
477,398.81
57,776,861.34
0.00
2,325,000.00
1,849,903.94
515,975.00
C. Provisions
1. Other provisions
D. Liabilities
1. Liabilities to banks
0.00
4,002,879.55
2. Trade accounts liabilities
2,129,271.74
149,845.06
3. Liabilities to affiliated companies
7,028,457.54
2,928,617.17
4. O
ther liabilities
of which taxes: €44,807.39
2,695,359.87
15,855,968.70
174,065,181.84
112,933,942.95
116,012,405.18
176,630,241.52
118
Financial statements of IMW AG | Income statement
IMW Immobilien AG
INCOME STATEMENT
€
2007/2008
2006/2007
1. Sales
206,575.56
645,039.50
4,632,340.72
3,898,870.71
– 1,856,170.04
– 723,140.33
2. O
ther operating income
of which from the reversal of the special item with an equity component:
€2,325,000.00 (previous year: €3,000 thousand)
a) Wages and salaries
b) S
ocial security contributions
of which relating to pensions: €12,500.00 (previous year: €15 thousand)
4. A
mortisation and depreciation of intangible assets and
property, plant and equipment
5. Other operating expenses
6. Income from shareholdings
7. O
ther interest and similar income
of which from affiliated companies: €1,440,201.23
8. Amounts written off long-term financial assets
9. Interest payable and other similar expenses
of which to affiliated companies: €27,826.46
(previous year: €1,239 thousand)
10. Profit/loss from ordinary activities
11. Income taxes
12. Other taxes
13. Net loss
14. Net profit for the previous year
15. Net loss/profit for the year
– 1,739,042.40
– 117,127.64
– 99,989.37
– 80,718.75
– 8,786,360.84
– 2,079,286.70
41,239.55
27,600.00
1,448,832.05
954,301.43
– 3,692,000.00
0.00
– 3,410,825.03
– 3,325,164.24
– 11,516,357.40
– 682,498.38
– 24,088.74
2,929.37
– 1,913.00
– 7,589.24
– 11,542,359.14
– 687,158.25
477,398.81
1,164,557.06
– 11,064,960.33
477,398.81
Financial statements of IMW AG | Cash flow statement
119
CASH FLOW STATEMENT
for the period 1 April 2007 to 31 March 2008 2007/2008
€ ’000
Profi t/loss for the period
+
Depreciation non-current assets
+/– Increase/decrease in provisions
+/– Other non-cash income/expenses
Cash flow
–/+ D
ecrease/increase in trade accounts receivable and other assets not attributable
to investment or financing activities
+/– Increase/decrease in trade accounts payable and other liabilities not attributable to
investment or financing activities
=
Cash flow from current business activities
–
Outflows for investment in property, plant and equipment and intangible assets
2007/2008
2006/2007
– 11,542
– 687
3,792
81
1,334
251
415
– 199
– 6,001
– 554
– 224
94
930
– 327
– 5,295
– 787
– 209
– 29
–
Outflows for investment in fi nancial assets
– 13
– 409
=
Cash flow from investment activities
– 222
– 438
+
Loans from affiliated companies
4,100
23,000
– 1,804
– 21,414
2,296
1,586
– 3,221
361
–
Loans to affiliated companies
=
Cash flow from financing activities
Changes in liquid funds impacting cash flows
+
Cash at start of period
=
693
332
– 2,528
693
1,475
693
Composition of cash and cash equivalents:
Liquid assets
Current account credit at banks
– 4,003
0
– 2,528
693
120
Financial statements of IMW AG | Statement of changes in non-current assets
IMW Immobilien AG
STATEMENT OF CHANGES IN NON-CURRENT ASSETS
as of 31 March 2008
Acquisition costs
€
Carried forward
as of
01.04.2007
Additions
Reclassifi
cations
Disposals
As of
31.03.2008
7,200.00
7,063.78
0.00
0.00
14,263.78
2,475,076.19
0.00
0.00
0.00
2,475,076.19
I. Intangible assets
Software
II. Property, plant and equipment
1. Land and buildings
2. Office furniture and equipment
83,242.63
202,531.63
0.00
535.04
285,239.22
2,558,318.82
202,531.63
0.00
535.04
2,760,315.41
140,619,374.56
3,232,012.03
24,500.00
3,232,012.03
140,643,874.56
6,157,480.00
13,000.00
– 24,500.00
0.00
6,145,980.00
146,776,854.56
3,245,012.03
0.00
3,232,012.03
146,789,854.56
149,342,373.38
3,454,607.44
0.00
3,232,547.07
149,564,433.75
III. Financial assets
1. Shares in affiliated companies
2. Shareholdings
Annual Report 2007/2008 Financial statements of IMW AG | Statement of changes in non-current assets
Depreciation and amortisation
121
Book value
Carried forward
as of
01.04.2007
Depreciation and
amortisation in the
financial year
Disposals
As of
31.03.2008
31.03.2008
31.03.2007
5,800.00
2,973.78
0.00
8,773.78
5,490.00
1,400.00
1,432,417.08
61,476.00
0.00
1,493,893.08
981,183.11
1,042,659.11
46,427.63
35,539.59
0.00
81,967.22
203,272.00
36,815.00
1,478,844.71
97,015.59
0.00
1,575,860.30
1,184,455.11
1,079,474.11
0.00
3,692,000.00
0.00
3,692,000.00
136,951,874.56
140,619,374.56
0.00
0.00
0.00
0.00
6,145,980.00
6,157,480.00
0.00
3,692,000.00
0.00
3,692,000.00
143,097,854.56
146,776,854.56
1,484,644.71
3,791,989.37
0.00
5,276,634.08
144,287,799.67
147,857,728.67
Assurance by the Executive Board (IMW AG) | Audit opinion (IMW AG)
122
IMW Immobilien AG
ASSURANCE BY THE EXECU- Audit opinion
TIVE BOARD IN ACCORDANCE WITH §298(1)(5) GERMAN COMMERCIAL CODE
(HGB)
We give our assurance that, to the best of our knowledge and
belief, the financial statements of IMW Immobilien Aktienge
sellschaft, in accordance with the applicable accounting principles, convey a fair and accurate picture of the company’s assets,
financial and earnings position, and that the course of business,
including the business results and the position of the company,
are presented in such a way in the management report that a
fair and accurate picture of them is conveyed and the significant
opportunities and risks of the company’s likely development are
described.
The Executive Board
Hartmut Fromm
Roland Pöhlmann
Dr Marc Schulten
Maic Schäfer
Boris Töppe
We have issued the following opinion on the financial statements
and the management report:
“We have audited the annual financial statements, comprising the
balance sheet, the income statement and the notes to the financial
statements, together with the bookkeeping system, and the man
agement report of IMW Immobilien AG, Berlin, for the fiscal
year from April 1, 2007 to March 31, 2007. The maintenance of
the books and records and the preparation of the annual financial
statements and management report in accordance with German
commercial law are the responsibility of the Company’s management. Our responsibility is to express an opinion on the annual
financial statements, together with the bookkeeping system, and
the management report based on our audit.
We conducted our audit of the annual financial statements in
accordance with Sec. 317 HGB [“Handelsgesetzbuch”: “German
Commercial Code”] and German generally accepted standards
for the audit of financial statements promulgated by the Institut
der Wirtschaftsprüfer [Institute of Public Auditors in Germany]
(IDW). Those standards require that we plan and perform the
audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations
in the annual financial statements in accordance with [German]
principles of proper accounting and in the management report
are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the
Company and expectations as to possible misstatements are taken
into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and
the evidence supporting the disclosures in the books and records,
the annual financial statements and the management report are
examined primarily on a test basis within the framework of the
audit. The audit includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the annual financial statements
and management report. We believe that our audit provides a
reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit the annual
financial statements comply with the legal requirements and give
a true and fair view of the net assets, financial position and results
of operations of the Company in accordance with German principles of proper accounting. The management report is consistent
with the annual financial statements and as a whole provides a
suitable view of the Company’s position and suitably presents the
opportunities and risks of future development.
Without qualifying this opinion, we draw attention to the comments made by the Company in the management report under
8. “Outlook”. This section states that the covenants agreed in the
loan agreements of IMW Austerlitz Beteiligungen GmbH, Berlin,
for the loan of €28,618 thousand, as of the balance sheet date,
which is long term and not yet due, are not being adhered to by
the companies, which gives the Bank an extraordinary right of
termination for the loan in question. Furthermore, the financing bank raised objections to Valbonne Real Estate 7 B.V. and
Valbonne Real Estate 10 B.V. with reference to compliance with
the obligations to report in the loan agreements valued at €19,800
thousand as of the balance sheet date. These objections have not
been acknowledged by the management board. The management
board assumes that the negotiations with the banks currently
in progress concerning the adjustment of the covenants or a
Audit opinion (IMW AG)
123
complete or partial refinancing of the loans and concerning the
proof of compliance with the obligations to report will be successful, and that the liquidity of the Company will not be materially
impaired.
Furthermore, we would like to draw your attention to the Company’s comments in the management report under 8. “Outlook”
concerning a loan of €34,125 thousand to finance the Falcon
Crest portfolio, which has not yet been extended.
The management board states in the report that the 50% payment
and extension of the loan at the year-end already negotiated will
be carried out by the end of the fiscal year and that the currently
pending refinancing will therefore have no effect on the liquidity
of the Company. IMW Immobilien AG bears no liability for the
abovementioned property financing. If, however, the negotiations
with the banks initiated by the management board should fail, the
subsidiaries concerned would not be able to meet their payment
obligations without assistance from the parent company. This
could have a negative effect on the liquidity of the Company.”
Berlin, Germany, 31 July 2008
Ernst & Young AG
Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft
(Seidel)
Wirtschaftsprüfer
(Köhler)
Wirtschaftsprüferin
124
Financial calendar | Publication data
IMW Immobilien AG
Financial CalendAr
Publication Data
25 November 2008
Annual Shareholders’ Meeting
IMW Immobilien AG
10963 Berlin
Germany
www.imw-ag.de
30 November 2008
Six-monthly report
Accounts press conference
16 February 2009
Third-quarter report
As of 30 September 2008,
IMW reserves the right to
change theses dates. The
current financial calendar
can be found on the internet
at www.imw-ag.de.
Phone
Fax
+49 30 25 461-200
+49 30 25 461-299
Contact
Jolanta Ziemann
[email protected]
Concept, design,
text and production
Kirchhoff Consult AG, Hamburg
Photography of Executive Board
Michael Lindner, Berlin
IMW Immobilien AG
Profile
BERLIN
31.03.2008
Residential units
12,155
Commercial units
240
753,000
55,000
49.5
Locations
•98 employees
IMW AG
Hamburg
AUSTERLITZ
PRIMA
Hamburg
Berlin
VALBONNE
Aachen, Halle
FALCON CREST
HAMBURG/HANOVER
PORTFOLIO
31.03.2008
Residential units
156
Commercial units
95
Ammersbek
Hamburg
10,000
2
43,000
4.9
Hanover
Berlin
Ilsede
Asset and property
management
Herne
Düsseldorf
Gelsenkirchen
Dortmund
Bochum
Iserlohn.
Witten
31.03.2008
1,100
Commercial units
17
2
60,000
6,000
3.7
Iserlohn
Aachen
PORTFOLIO
Residential units
Halle
Varied real estate
services
• Debt management
• Renting
Munich
IMW Immobilien AG
10963 Berlin
Germany
Telefon +49 30 25 461-200
Fax
+49 30 25 461-299
[email protected]
www.imw-ag.de