Annual Report 2013/14

Transcription

INVESTING
THE RIGHT WAY.
THE MOST NORMAL THING
WITH BUWOG.
Annual Report 2013/14
BUWOG Group
BUWOG Group is the leading full service provider in the German-Austrian residential property sector and
can look back on wide ranging experience that covers nearly 60 years. Its high-quality portfolio consists of
around 53,000 units of which half is located in Austria and half in Germany.1) The business areas of Property
Sales and Property Management complement that of Asset Management to cover the entire value chain in
the residential sector.
BUWOG AG shares have been listed on the stock exchanges in Frankfurt, Vienna and Warsaw since the end
of April 2014.
THE 3 PILLARS OF THE BUWOG GROUP BUSINESS MODEL
Asset Management
- Generation of rental income
from investment portfolio
with around 53,000 units1)
- Optimisation through
active management
- Further selective growth
in Germany planed
Property Sales
- Realisation of attractive margins from
Unit Sales in Austria
Property Development
- Development of units in Vienna
for the investment portfolio
- Development pipeline in Vienna and
Berlin of about EUR 1.5 billion
- Balanced project pipeline in
various stages of development
Share of net operating income2)
66%
30%
4%
Sale properties and
portfolios for ongoing
optimisation in Austria
(not registered in Recurring FFO)
Recurring FFO
- Recurring FFO EUR 69.2 million3) in financial year 2013/14
- Medium-term objective to distribute 60% to 65% as dividends
1) Based on portfolio data as of 30 April 2014, including DGAG portfolio and Apollo portfolio whose acquisition was closed after this date
2)Net operating income before expenses that are not directly attributable to the business areas (EUR 21.7 million) and excluding other operating income of EUR 4.1 million
(based on the pro forma income statement)
3)Based on the pro forma income statement, see Management Report, page 136
Humboldtpalais, Hegelplatz 2 / Berlin
NORMAL
LIFESTYLES.
EXCEPTIONALLY
DESIGNED.
BUWOG Group Key Figures
2013/14
Earnings Data1)
pro forma
Net
Rental revenues
in EUR million
116.5
Results of Asset Management in EUR million
75.9
Results of Property Sales in EUR million
34.0 Results of Property Development in EUR million
4.9 Adjusted EBITDA2)
in EUR million
105.0
Revaluation result from Asset Management in EUR million
42.7 EBT in EUR million
131.5 Net profit in EUR million
111.8 FFO in EUR million
40.7 Recurring FFO in EUR million
69.2 Total FFO
in EUR million
81.8 AFFO in EUR million
75.5 30 April 2013
Asset and Financial Data Change
30 April 2014
pro forma3)
Balance sheet total Equity ratio Net financial liabilities
Loan-to-value (LTV)
EPRA Net Asset Value (NAV)
Ø Interest rate on financial liabilities4) Ø Term of financial liabilities4) 3,355.32,981.4 12.5%
in EUR million
%
46.3% 47.9% 1.6 pp
1,010.41,040.0
in EUR million
-2.8%
35.9% 38.1% -2.2 pp
%
1,714.3 1,602.7 in EUR million
2.45% %
7.0%
2.14% 0.31 pp
14.6 17.6 3.0
Years
Share Data 30 April 2014
Share price
Shares outstanding
Market capitalisation
Free float
Earnings per share1) 5)
in EUR
Number of shares
13.20
99,613,479
in EUR million
1,314.9
%
51%
in EUR
1.12
Recurring FFO per share1) 5) in EUR
0.69
EPRA Net Asset Value per share3) 5) in EUR
17.21
Enterprise value/adjusted EBITDA1)
x
22.1
1)The earnings data are presented on a pro forma basis. They show the BUWOG GmbH business, and thus reflect BUWOG Group, as had existed for the entire accounting period from 1 May 2013 to
30 April 2014.
2) Adjusted for valuation effects and shifts between periods (IFRS 5) in the Property Sales (EUR 7.1 million) and Property Development (EUR 0.6 million) business areas.
3) The presentation of the key data on the asset and financial position as of 30 April 2014 is based on audited figures; the data relating to 30 April 2013 is based on unaudited, pro forma figures.
4) Based on outstanding financial liabilities
5) Based on 99,613,479 shares
Definitions for all key figures shown can be found in the section Asset, Liability and Financial Position, page 136 and in the glossary starting on page 234.
The use of automated calculation systems may give rise to rounding differences.
NOTE
BUWOG Group has existed in its current structure since 26 April 2014. It was restructured in connection
with its spin-off from IMMOFINANZ Group – with BUWOG AG functioning as the parent company of
BUWOG Group. All subsidiaries of BUWOG AG were first included in the consolidated financial statements
once the spin-off became effective. While the current consolidated income statement and consolidated
cash flow statement represent only the income and expenses or cash flows of BUWOG AG, the earnings
data shown here reflect the BUWOG GmbH Business and therefore the BUWOG Group as if it had existed
for the full reporting year from 1 May 2013 to 30 April 2014 (pro forma; for additional information,
see also page 24).
Key Property Portfolio Data
Consideration
incl. DGAG
and Apollo
on data basis of
Asset Management (standing investments)
30 April 2014
30 April 2013
Change
30 April 20141)
Quantity
33,475 32,750 Austria Quantity
26,250
28,507 -7.9%26,250
Germany Quantity
7,225
4,243 70.3%26,468
Number of units
2.2% 52,718
in sqm
2,491,290 2,452,826
1.6% 3,660,034
Austria in sqm
2,012,137 2,171,404 -7.3% 2,012,137
Germany in sqm
Total floor area
Portion of residential floor area 479,153
%
Total in-place rent2)
281,422 70.3% 1,647,897
97.1% 97.1% – 96.8%
123 116 6.1% 195
in EUR million
Austria in EUR million
93
97 -3.8%
Germany in EUR million
30
19 57.5% 102
93
in EUR per sqm
4.314.124.6%4.63
Austria in EUR per sqm
4.063.913.8%4.06
Germany in EUR per sqm
5.345.70-6.3%5.31
Monthly in-place rent2)
%
1.8%
4.8%-3.0 pp
–
Development in Austria – like-for-like
%
1.9%
4.9%-3.0 pp
–
Development in Germany – like-for-like
%
1.6%
3.4%-1.8 pp
–
CAGR development in-place rent like-for-like3) %
3.4%–––
Vacancy rate4)
Development of monthly in-place rent – like-for-like
%
4.8%4.6%
0.2 pp4.1%
Austria
%
5.0%4.8%
0.2 pp5.0%
Germany
%
3.6%2.4%
1.2 pp2.9%
Fair value5)
in EUR million
2,526 2,485 3.7% 3,468
Austria in EUR million
2,127 2,236 -2.8% 2,127
Germany in EUR million
399
249 60.2% 1,341
Fair value5)
in EUR per sqm
1,014
1,0132.1% 947
Austria
in EUR per sqm
1,057 1,030
Germany in EUR per sqm
834
5.0% 1,057
883 -5.6% 814
%
4.9% 4.7%
0.2 pp 5.6%
Austria
%
4.4% 4.3%
0.1 pp 4.4%
Germany
%
7.4% 7.6%
-0.2 pp 7.6%
Net Rental Yield6)
2013/14
2012/13
Change
Maintenance costs in EUR per sqm
10.6
8.426.2%
Capex in EUR per sqm
2.6
4.5-42.2%
Property Sales
2013/14
2012/13
Change
Units sold
Units
2,2921,66637.6%
thereof Unit Sales Units
553 46718.4%
thereof Block Sales Units
1,7391,19945.0%
Margin on fair value – Unit Sales
%
54%
55%-1.0 pp
Margin on fair value – Block Sales %
11%
15%-4.0 pp
2013/14
2012/13
Change
in sqm
30,66367,789 -54.8%
thereof sold to third parties in sqm
30,66336,970 -17.1%
thereof transferred to investment portfolio in sqm
Completed total floor area Investments in property under construction
in EUR million
- 30,819-100.0%
122
148 -17.5%
1) A detailed explanation of this indicator can be found starting on page 50 of this report.
2) Based on monthly in-place rent (excluding utilities) as of the balance sheet date
3) Compound annual growth rate
4) Based on sqm
5) Based on fair value of standing investments according to CBRE valuation reports as of 30 April 2014 and on the purchase price for the DGAG and Apollo portfolio acquisitions;
DGAG incl. undeveloped land EUR 0.7 million, excl. pipeline projects
6) Annualised total in-place rent (based on monthly in-place rent excluding utilities as of the balance sheet date) in relation to fair value
The use of automated calculation systems may give rise to rounding differences.
WHEN INVESTING
IN PROPERTY SHARES TODAY:
NORMAL IS
THE NEW SEXY.
Unlike most of our competitors, BUWOG Group covers the entire value
chain in the residential sector – ranging from the Asset Management of
our investment portfolio and the development of our own or third party
residential property (Property Development) to the sale of apartments
through Unit Sales or Block Sales (Property Sales). Together these
three complementary pillars generate a high level of Recurring FFO –
and give BUWOG Group its strength, which is underlined by 2013/14 results.
Recurring FFO of EUR 69.2 million, net profit of EUR 111.8 million and an
EPRA Net Asset Value of EUR 1,714.3 million. That’s not only progress, but
a solid foundation for the future as well.
WITH US, NORMAL
IS THREE TIMES BETTER.
Fleschgasse 15 / Vienna
NORMAL RESIDENTIAL PROPERTY.
WITH A
REMARKABLY
PROFITABLE
STRATEGY.
The BUWOG Group portfolio
consists of exactly 52,718 units.
Of those, around 18,000 units
were added through the
successful acquisition of the
DGAG portfolio and approx.
1,200 units with the Apollo
portfolio since the end of the
reporting year on 30 April 2014.
A high-quality team ensures the
property portfolio is managed
professionally. Due to the team’s
commitment and the expansion
in Germany, Net Rental Yield
(incl. DGAG and Apollo)
increased from 4.7% to 5.6%.
10
BUWOG annual report 2013/14
11
A NORMAL MIX.
WITH A PERFECT MATCH.
It is the mix in the portfolio that makes BUWOG Group unique. Measured by total floor area,
45.0% of the investment portfolio (incl. DGAG and Apollo portfolios) is located in Germany –
with a focus on Berlin and the North-West – and 55.0% is located in Austria, with a focus on
Vienna as well as state capitals and major cities. 22.7% of the apartments are in the rural areas
of Austria and Germany. This mix and the expansion of BUWOG Group have paid off, as is
demonstrated by the 12.4% increase in total in-place rent per sqm to EUR 4.63.
NORMAL ENVIRONMENTS.
WITH JUST THE
RIGHT DECISIONS.
It is not only the portfolio of BUWOG Group that has grown substantially. Its
team has expanded as well. In parallel with the acquisition of the DGAG portfolio,
the company acquired DGAG‘s residential management platform with around
300 employees that manage this portfolio – and who will also manage BUWOG’s
other units in Germany going forward. This transaction ensures a smooth transition
of the DGAG portfolio to BUWOG while strengthening the company‘s capabilities
and resources in Germany. And that‘s just the right decision because, in the end,
it is the commitment of its approx. 640 employees that makes BUWOG Group so
special.
NORMAL COMPANY STRUCTURES.
WITH GENUINE
TRANSPARENCY
FROM TOP
TO BOTTOM.
As part of the public listing of BUWOG AG at the end of April 2014, great
importance was placed on establishing independent structures and resources
in the interest of transparent corporate governance. The de-domination
agreement concluded with IMMOFINANZ AG also ensures this independence.
That enables BUWOG Group to focus on what‘s relevant – its ongoing success.
NORMAL LOCATIONS
IN STRONG REGIONS.
WITH PROMISING
PROSPECTS.
Including the most recent portfolio acquisitions, the fair value of the BUWOG
portfolio, as determined by independent appraisers and based on the purchase
price for the DGAG and Apollo portfolios, is around EUR 3.5 billion. But there
are still further heights to be scaled, as is evidenced by a well stocked pipeline
encompassing 47 projects with an investment volume of around EUR 1.5 billion.
Added to that, with the ongoing improvement of the property portfolio and highmargin Unit Sales or Block Sales, BUWOG Group is fully leveraging its existing
potential to increase value. The focus on further expansion in the defined core
regions of Germany also aims to increase total long-term return.
Enenkelstraße 3 / Vienna
Scharnhorststraße 26 / Berlin
NORMAL EXPECTATIONS
FOR THE FUTURE.
WITH
INCREASING
SIGNIFIcANCE.
BUWOG shares have performed well since their initial listing at the end
of April 2014, recording an increase of 10.4% to EUR 14.35 as of 31 July
2014. With this positive start, it is important to continue the value-oriented
business strategy and transparent communication so that BUWOG shares
accurately reflect the value of the company. In addition, over the long
term, the Executive Board of BUWOG AG plans to propose to the Annual
General Meeting a dividend payment of around 60%–65% of Recurring
FFO. The proposal for the 2013/14 financial year allows for a dividend of
4% of the EPRA Net Asset Value, which is equivalent to EUR 0.69 per
share. The leadership team and employees of BUWOG Group will continue
to work hard on implementing the company‘s ambitious strategy so that
an attractive dividend policy of this kind will also be normal in the future.
Table of Contents
Foreword of The Management Board24
Investment Story and Highlights26
Interview with the Executive Board of BUWOG AG30
Overview of BUWOG Group38
Profitable value chain40
Responsible corporate governance41
Corporate strategy42
Founding of BUWOG AG and public listing44
Fully integrated business model 45
Corporate structure 46
History of the company 48
Transformation of BUWOG Group since the balance sheet date 50
Asset Management54
Structure of the standing investment portfolio 56
Structure of the portfolio by geographic cluster,
incl. DGAG and Apollo63
Influencing and success factors 65
BUWOG rental models67
Strategy and outlook69
Property Sales70
Strategic positioning 72
High margin business model72
Influencing and success factors74
Unit Sales 2013/1475
Block Sales 2013/1476
Strategy and outlook 77
Property Development78
Strategic positioning80
Various market-oriented development models 80
Influencing and success factors81
Reference projects in Vienna83
Reference projects in Berlin85
Strategy and outlook87
Investor Relations90
Spin-off and public listing92
Extraordinary General Meeting on 15 May 2014 92
Capital market environment93
BUWOG AG share performance94
Dividend policy94
Convertible bond95
Shareholder structure96
Investor relations activities 96
22
Inhalt
Corporate Governance Report98
Commitment to the Austrian Code of Corporate Governance100
Company established by spin-off100
Deviations from the ÖCGK’s C rules101
Executive Board102
Supervisory Board103
Supervisory Board committees105
Independence of the Supervisory Board106
De-domination agreement 107
Cooperation between the Executive Board
and the Supervisory Board107
Remuneration report108
Compliance108
Measures to promote women109
Directors’ dealings109
Internal audit and risk management109
External evaluation109
Letter of the Chairman of the Supervisory Board110
Management Report112
Overall economic environment114
Development of the property markets 116
Developments on the financial markets122
Portfolio report125
Property valuation131
Financing132
Information on the asset, liability and financial position136
Sustainable management143
Risk report 150
Internal control system153
Information on capital155
Outlook159
Subsequent events160
consolidated financial statements 161
Statement by the Executive Board231
Glossary234
23
Dear Ladies and Gentlemen,
Dear Shareholders of BUWOG AG,
we’ve done it – after performing all the preliminaries,
we successfully took BUWOG AG public at the end
of April 2014. A step that meant independence for
the former subsidiary of IMMOFINANZ AG. It is now
up to us and the entire team that is BUWOG Group
to make the most of the opportunities on offer to
further enhance the value of the company.
Even under the umbrella of IMMOFINANZ Group,
BUWOG operated as an independent corporate
unit. Over the past months, we have built up our
own resources to handle those central tasks that
used to be the responsibility of colleagues at
IMMOFINANZ Group. This holds particularly true for
the investor relations and communication functions.
We have made it one of our key priorities to satisfy
the capital market’s thirst for information with a
communication policy that is as informative and
timely as possible. Taking a company public is quite
rightly seen as a demonstration of shareholders’
trust in the company itself, but also principally in its
management. We want to prove ourselves worthy of
this trust by continuing the successful development
of BUWOG Group. We are, however, aware that
trust requires openness, clarity and a constructive
exchange. This first annual report for the 2013/14
financial year from 1 May 2013 to 30 April 2014
underlines our intention to further intensify the
regular exchange with our shareholders and other
interested parties that we began when the company
went public.
At this point we would like to explain a special
feature of this first Annual Report of BUWOG Group:
BUWOG Group has only existed in its current
structure since 26 April 2014. In conjunction with the
24
spin-off from IMMOFINANZ Group, BUWOG Group
was reconstituted with BUWOG AG as the holding
company of BUWOG Group but still under the
umbrella of IMMOFINANZ Group.
The International Financial Reporting Standards
(IFRS) currently in effect have no provisions for
the reporting of common control transactions.
The management of BUWOG Group made the
discretionary decision to establish its date of inclusion
as the effective date of the spin-off at the end of April
2014. Therefore the present consolidated income
statement and consolidated cash flow statement,
and the data of comparable periods, only show the
income and expenses or cash flows of BUWOG AG.
To ensure that the clear need for meaningful earnings
and financial data is fully addressed, please refer to
the additional information in section 8 of the notes
and to the net assets, financial position and results
discussed in the management report.
What are the benefits of diversifying the operations
of BUWOG along the entire value chain in the
residential sector? This is the overarching question
that we want to answer right at the start of this report
by outlining the rationale behind our investment
story. We also want to give detailed answers in the
form of an interview. Understandably explaining the
business model of BUWOG Group and providing
as much specific detail as possible on our strategic
plans are further key areas we want to address.
The second section therefore spotlights the three
pillars that make up the BUWOG business model
– Asset Management, Property Sales and Property
Development – together with how they function and
which strategic projects they are working on.
Foreword
Ronald Roos, CFO,
Daniel Riedl, CEO
The section on investor relations includes detailed
insight into the information policy of BUWOG Group
and explains the planned dividend distribution
policy. The issues of transparency and sustainability
are again addressed in the corporate governance
report starting on page 98. All financial information
is explained in detail in the group management
report and the notes to the consolidated financial
statements.
and drive. Not to mention all other partners who
were involved and who showed how strong and
reliable our network is.
We hope you find this report both interesting and
informative – and look forward to your continued
support as we build on the success of BUWOG
Group.
Yours,
We hope this report will help you to better
understand BUWOG Group and the diversity of our
business operations. At the same time, we invite
your feedback as we strive to continuously improve
our provision of information. Please let us know if
you are missing any information from this annual
report, or feel questions have been left unanswered.
Feel free to make use of the contact options listed
below to send us your criticisms, questions and
suggestions.
In addition to inviting you to start communicating
with us and BUWOG Group, we also want to take
this opportunity to thank everyone who supported
us while preparing the flotation and kept everyday
business running during this intense period. This
was a phase that allowed the entire team at BUWOG
Group to demonstrate once more its professionalism
Daniel Riedl
Ronald Roos
CEOCFO
Contact
BUWOG AG
Hietzinger Kai 131, 1130 Vienna, Austria
Tel: +43 (0)1/878 28-1203
E-Mail: office@buwog.com
25
INVESTMENT STORY OF BUWOG GROUP
The shares in BUWOG AG have been listed on the stock exchanges of Frankfurt, Vienna and Warsaw since the
end of April and have performed positively since then, posting a share price increase of 10.4% by 31 July 2014.
Below, you can find key features of the BUWOG business model that ensure a sustainable, value-driven
performance of the BUWOG Group.
HIGH-QUALITY PORTFOLIO OF APARTMENTS IN AUSTRIA AND GERMANY
- Through the acquisitions of the DGAG and Apollo portfolios with more than 19,000 units after the
balance sheet date, BUWOG Group advances to become the leading full-services provider in the
residential property business in Germany and Austria.
- Portfolio of approx. 53,000 units with a fair value of approx. EUR 3.5 billion.
- Geographically balanced with a nearly equal weighting of Austria and Germany (by number of units),
two of the most stable in residential property markets in Europe
- More than 80% of the portfolio (by fair value) is concentrated in urban areas of the federal capitals of
Vienna and Berlin as well as other state capitals and major cities in Austria and North-Western Germany,
including their immediate catchment areas.
UNIQUE BUSINESS MODEL WITHIN PEER GROUP
- Integrated business model along the residential business value-added chain with the three business areas
of Asset Management, Property Sales and Property Development
- Strong generation of Recurring FFO – combination of sustainably projectable, recurring operating cash
flows above and beyond merely managing the investment portfolio, i.e. including taking into account the
sale of individual units in the business areas of Property Sales and Property Development.
SHAREHOLDER STRUCTURE OF BUWOG AG
standing investment portfolio
as of 30 April 2014
by location categories
50%
IMMOFINANZ
Group
49%
38%
30%
Free float
51%
22%
13% 15%
Federal capitals
(Vienna, Berlin)
State capitals &
metropolises
Regions
close to the city
15%
17%
Rural regions
n 30 April 2014 nas of 30 April 2014
INCL. DGAG AND APOLLO
CONSERVATIVE DEBT FINANCING PROFILE (DETAILS INCL. DGAG AND APOLLO)
- Conservative, above-average long-term debt financing profile with average remaining term of 17 years
- Average interest rate at 2.6% lower than the peer group
- Significant diversification of financing instruments and financing partners
- 90% of financial liabilities are hedged with fixed interest rates or swaps
- Loan-to-value in the defined corridor from 50% to 55%
26
Investment story
LIQUID SHARE WITH ATTRACTIVE DIVIDEND YIELD
- Market capitalisation of approx. EUR 1.3 billion as of 30 April 2014
with stock listings in Frankfurt, Vienna and Warsaw
- 51% of shares in free float
- Dividend yield of approx. 4% on the EPRA Net Asset Value planned for the 2013/14 business year
- Medium-term distribution rate of about 60% to 65% of the Recurring FFO
planned to deliver a reliable and stable dividend policy
- Member of FTSE EPRA/NAREIT Developed Europe index and of Austrian sustainability index VÖNIX
successFUL business development 2013/141)
- Increase of annualised in-place rent by 6.1% to approx. EUR 123 million
(or by 68.2% to EUR 195 million incl. DGAG and Apollo)
- Increase of monthly in-place rent by 4.6% to about EUR 4.31 per sqm
(or by 12.4% to EUR 4.63 per sqm, incl. DGAG and Apollo)
- Adjusted EBITDA of EUR 105.0 million
- Net profit of EUR 111.8 million
- Recurring FFO of EUR 69.2 million
- Increase in fair value by 3.7% to approx. EUR 2.5 billion
(or by about 42% to approx. EUR 3.5 billion, incl. DGAG and Apollo)
1) Earnings data is shown on pro-forma-basis. It reflects BUWOG GmbH Business and therefore BUWOG Group as if it had existed for the full reporting year from 1 May 2013 to 30 April 2014.
Fair Value1) Standing Investment Portfolio
in EUR million
3,468
2,485
2,526
249
399
2,236
2,127
30 April 2013
n Austria
30 April 2014
OPERATING RESULT1)
BY BUSINESS AREAS
4%
1.341
Property Sales
30%
2,127
Asset
Management
66%
Consideration incl. DGAG
and Apollo on data basis of
30 April 2014
n GERMANY
1) Fair value basis in accordance with CBRE appraisal report of 30 April 2014 or 30 April 2013 as
well as in accordance with the purchase price for DGAG and Apollo and incl. DGAG and Apollo
as of 30 April 2014; DGAG incl. undeveloped land of EUR 0.7 million.
HIGHLIGHTS
BUWOG GROUP
1) Operating result before the subtraction of costs not directly attributable to the business
areas (EUR 21.7 million) and not including other operating income is EUR 4.1 million (based on
2013/14 pro forma income statement).
- Acquisitions of DGAG portfolio with approx. 18,000
units and the Apollo portfolio with approx. 1,200 units
strengthens the presence in the core region of Berlin
and North-Western Germany (closing of both transactions
by reporting period)
- Start of the integration of all units in Germany on a joint
platform after purchase of the residential management
platform of Prelios with approx. 300 employees – thereby
increase in workforce to approx. 640 employees (full time
equivalents)
- Establishment of own resources and structures to
ensure an independent management after the spin-off
of IMMOFINANZ AG
Esmarchstrasse, Kiel
Bad Segeberg,
Winklersgang
Lübeck,
Fischergrube
27
Highlights
Asset Management
- Expansion of the standing investment portfolio
incl. DGAG and Apollo by about 19,000 to
approx. 53,000 units or approx. 3.7 million sqm
- Active management of the standing investment
portfolio enables a further increase of
in-place rent on a like-for-like basis by 1.8%;
increase in annualised in-place rent
by 6.1% to approx. EUR 123 million
- Improvement of the Net Rental Yield
(incl. DGAG and Apollo) from 4.7% to 5.6%
Further details on the Asset Management business
area can be found from page 54.
TOTAL Floor AREA
in 1,000 sqm
3,660
1,648
2,430
2,453
2,491
151
281
479
2,279
2,171
2,012
2,012
30 April 2012
30 April 2013
30 April 2014
Consideration incl.
DGAG and Apollo
on data basis of
30 April 2014
7.4%
7.6%
n Austria
n GERMANY
Net Rental Yield
7.9%
7.6%
5.6%
4.4%
Flintbek, Hasselbusch
4.6%
Eckernförde,
Jungfernstieg
2011/12
Kiel-Mettenhof,
VaasastrasseSkandinaviendamm
n Austria
4.3%
4.7%
4.4%
2012/13
n GERMANY
4.9%
2013/14
4.4%
Consideration incl.
DGAG and Apollo
on data basis of
30 April 2014
n total
Highlights
Property Sales
- Successful continuation of Unit Sales with approx.
550 units at an average margin on fair value of
54% and portfolio optimisation with Block Sales
of approx. 1,700 units at an average margin of 11%
- Units with a fair value of approx. EUR 1.6 billion
were assigned to the Unit Sales or
Block Sales clusters earmarked for a
continuous sales programme
Further details on the Property Sales business area
can be found from page 70.
PERFORMANCE OF UNITS SOLD
2,292
1,666
1,739
935
479
456
2011/12
n Unit Sales
28
1,199
467
553
2012/13
2013/14
n BLOCK SALES
Highlights
AVERAGE PRICES REALISED
STATUS OF THE DEFINED SALES CLUSTERS
in EUR per sqm
as of 30 April 2014 in units, incl. DGAG and Apollo portfolios
2,015
1,958
Unit Sales
1,960
1,088
1,094
805
733
Total
Block Sales
Vienna
5,638539
6,177
Carinthia
2,9521,6674,619
Rest of Austria
4,9561,7406,696
63120183
Germany
Total
13,6094,066
17,675
Apartment sale in Vienna,
Hertha-Firnberg-Strasse 7
2011/12
2012/13
2013/14
n TOTAL
n Unit SALES
n BLOCK SALES
Highlights
Property
Development
Apartment sale in Upper Austria,
Gattern
- Completion of 374 units in the 2013/14
financial year, further 655 units currently
under construction
- Further expansion of the presence in Berlin,
currently 770 units under construction or
construction planned to start in 2014/15
- Current BUWOG GROUP pipeline with a total
investment volume of approx. EUR 1.5 billion in
various development stages, approx. 5,100 units
under construction or planning as well as land
reserves for a further 700 units
Further details on the Property Development
business area can be found from page 76.
Uferkrone, Berlin
Nordbahnhof,
Vienna
Danubio,
Vienna
INVESTMENT VOLUME
OF THE DEVELOPMENT PROJECTS
Gervin und
Wilmers,
Berlin
by implementation stages
Land reserves
EUR 165 million
819
In planning
(construction
start from
2015/16)
EUR 594 million
TOTAL VOLUME:
EUR 1,520
MILLION
741
Currently under
construction
or construction
start planned
in 2014/15
EUR 761 million1)
655
374
299
221
1) Thereof EUR 180.7 million under construction
713
2011/12
n UNITS COMPLETED
n UNITS SOLD
273
2012/13
238
2013/14
n UNITS UNDER CONSTRUCTION
29
“We want to convince the
capital markets that the BUWOG
business model is attractive.”
BUWOG AG Executive Board members Daniel Riedl and Ronald Roos
talking about the successful flotation and the underlying aims,
corporate strategy, and how the company is positioning itself with
its business model – and setting itself apart from its competitors.
BUWOG AG has been listed on the stock exchanges
in Frankfurt, Vienna and Warsaw since the end of
April 2014. As the Executive Board, what was your
experience with the public listing and the preliminary
work leading up to it?
Riedl: It was a step that we prepared down to the
very last detail over a period of several months.
It was a very intense and exciting time in every
respect. Even before the public listing, we were
striving to grow BUWOG Group and expand our
involvement in Germany, where we managed to
successfully conclude several transactions, not
least the acquisition of the DGAG portfolio with its
approx. 18,000 units. At the same time, the spin-off
of BUWOG AG from IMMOFINANZ AG was prepared
– a proposal that was approved by an overwhelming
majority of over 99% at an Extraordinary General
Meeting in March 2014. This resolution ultimately
paved the way for us to take the company public.
Roos: In the run-up to the public listing, we were
very keen to give the capital markets, i.e. investors
and analysts, detailed information about BUWOG
Group and its strategy. We organised an extended
roadshow with in-depth meetings – which aroused a
30
lot of interest and very positive feedback, neither of
which should be taken for granted in a capital market
environment that is still dominated by uncertainty.
What was the rationale behind the spin-off from
IMMOFINANZ AG and gaining a separate listing?
Riedl: Until the beginning of 2014, I had spent several
years on the Executive Board of IMMOFINANZ AG.
In recent years, we had increasingly tried to focus
our business activities more sharply on selected real
estate markets. After consciously divesting several
assets, our business model ultimately comprised
commercial real estate focusing on Eastern Europe,
on the one hand, and residential real estate in Austria
and Germany, on the other. However, the laws
governing these two areas are completely different
– not only in terms of risk and business model, but
also with regard to development possibilities. By
separating these two areas, we have responded to
investor requirements for product purity. Investors
can now decide for themselves which areas they
specifically want to invest in.
Roos: Equally important was the fact that
IMMOFINANZ shares were trading at a discount to
Interview with the Executive Board
Ronald Roos, CFO,
Daniel Riedl, CEO
net asset value of about 40% – presumably because
mixing different asset classes seemed less attractive
to the capital markets than had been the case
some years previously. Over the past months, this
discount on BUWOG shares has already decreased
considerably. Throughout the preparatory phase, we
were also helped by the fact that BUWOG already
had independent corporate structures in many
respects. We quickly started building up our own
resources for those administrative areas – such as
IT or accounting – that were previously covered by
IMMOFINANZ. In this respect, we have already made
very good progress and will be able to cover all areas
ourselves by the end of the financial year 2014/15 at
the latest.
But isn’t IMMOFINANZ AG still the controlling
shareholder of BUWOG AG?
Riedl: No, you can’t really say that. Although
IMMOFINANZ still owns a 49% stake in BUWOG AG,
it has stated that it plans to reduce this interest over
the medium term. Added to which, a de-domination
agreement between the two companies ensures that
the other shareholders are not disadvantaged in the
decision-making process. We felt it was important to
find transparent, fair and understandable answers to
these questions – which I believe we have managed
to do.
Roos: The whole idea, after all, was to strictly
separate the two companies to enable better use
to be made of their respective advantages and
market positions. Above all, though, BUWOG has
also gained its own access to the capital markets as
a result, which can only benefit a growth-oriented
company such as BUWOG.
Are you satisfied with the share price performance
of BUWOG so far?
Roos: The shares’ first price in Frankfurt was
EUR 13.00. By 31 July 2014, the price had risen to
EUR 14.35, equivalent to an increase of 10.4% in
just three months. The discount to EPRA NAV has
already decreased to 16.6%. For us, this impressive
performance is confirmation that the market has
understood and accepted BUWOG’s strategy and
business model. The next step is to reduce the
discount to our EPRA Net Asset Value with positive
performance and transparent communication.
31
What distinguishes BUWOG’s strategy and business
model from those of other property companies?
Riedl: BUWOG’s foremost – and most valuable – USP
lies in its broad value chain focusing on the residential
sector in Germany and Austria. Our business is
not restricted to buying and selling, or just letting.
Compared with our peer group, our business model
extends much further. In addition to conventionally
letting existing apartments, our strategy in Austria is to
sell between 450 and 500 individual apartments each
year. These sales generally earn us a margin of around
50% on the stated fair value – which incidentally
proves how very conservatively we approach the
measurement of our assets on the balance sheet.
We then invest the proceeds in project development,
which constitutes the third pillar of our business
model. About 80% of all newly built apartments
are sold to private and institutional investors, with
the remainder being added to BUWOG’s standing
investment portfolio. And here we come full circle –
after letting the apartments for several years, they are
then also put up for sale. This cycle sets us clearly
apart from our competitors.
How does the sale of the subsidiary BUWOG Facility
Management fit into a strategy of having as deep a
value chain as possible?
Riedl: In order to interpret this sale correctly, it
is important to note that BUWOG FM primarily
32
“BUWOG’s foremost – and most
valuable – USP lies in its broad
value chain focusing on the
residential sector in Germany
and Austria.”
Daniel Riedl, CEO
manages commercial property belonging to
IMMOFINANZ. And this sector is not part of our core
business. We continue to manage our portfolio with
our own staff – and to manage residential property
for third parties.
Which conditions govern the sale of apartments?
Roos: We have defined precise procedures for
taking these decisions. We sell if the achievable
sales price earns a higher yield than letting, and the
property or apartment offers no further potential for
value appreciation. Such decisions are, of course,
preceded by thorough analysis. Are there options
to raise the rent level, build loft extensions or make
better use of other areas? But since around 39% of
the annualised in-place rent of our current portfolio
is accounted for by subsidised housing in Austria
with statutory rent restrictions, the scope for raising
rental income here is limited. Consequently, we have
prepared, or are in the processing of preparing to sell
around half of our standing investment portfolio in
Austria in the course of natural tenant fluctuation. We
sold approx. 550 residential units in Austria through
unit sale transactions in the 2013/14 financial year –
which generated extremely good returns, as already
mentioned. Approx. 1,700 units were sold through
property or portfolio transactions.
Riedl: We successfully sold some larger portfolios
comprising a total of around 1,135 units in Upper
Austria and Salzburg and 55 units in Carinthia
during the reporting year. Measures such as these to
streamline the portfolio constitute a key element in
our strategy. We want to focus the BUWOG portfolio
more strongly on the two capitals – Berlin and
Vienna – as well as on selected state capitals and
economically strong metropolitan areas.
“We want to focus the
BUWOG portfolio more
strongly on the two
capitals – Berlin and
Vienna – as well as on
selected state capitals
and economically strong
metropolitan areas.”
Was that also why you acquired the DGAG portfolio?
Riedl: As already mentioned at the beginning, this
acquisition marked a key milestone towards making
BUWOG Group more attractive in the run-up to the
flotation. By acquiring this portfolio of around 18,000
units, we have expanded our footprint in Germany to
include economically strong regions in the NorthWest of the country. At the same time, we also took
over the residential administration structures and
resources from Prelios Deutschland. When this
transaction is concluded at the beginning of July
2014, the BUWOG team will have grown by around
300 members of staff.
Roos: We did not acquire a completely independent
company from Prelios; we only took over the
business units from their residential operation –
such as administration, asset management and
facility management. There is therefore no need
to eliminate any duplications with already existing
BUWOG units in Germany. From an operations
point of view, however, a joint platform will emerge
that will bring together all units – including
those from earlier acquisitions. We should be
there around the end of 2014, beginning of 2015.
Ronald Roos, CFO
33
How did you pay for the DGAG portfolio?
Roos: The purchase price of EUR 892 million was
funded from three different sources: by taking out
a mortgage with Berlin Hyp AG, issuing a EUR 260
million convertible bond, and taking over existing
subsidised loans. This combination enabled us to
keep the loan-to-value within our defined target
corridor of 50%–55%.
What is your specific strategy in the Property
Development division?
Riedl: Very ambitious – and strictly aligned to the
current situation in the respective markets. Securing
land reserves in good time – and especially the
right reserves – is crucial for successful project
development. In recent years, we have been able
to prepare a pipeline with a total volume of about
5,800 residential units, of which around 4,200 are in
Vienna and 1,600 in Berlin. Nevertheless, we naturally
keep on evaluating other options, interesting
properties, properties earmarked for demolition
or even office complexes that we can convert into
housing. Working constructively with the relevant
authorities is enormously important, especially in
new urban development areas such as Aspern, the
urban lakeside project, or the new main railway
station in Vienna. In addition to in-depth expertise
and understanding of the market, however, the size
of a company is also crucial – Vienna is home to only
a few project developers capable of tackling major
projects. BUWOG Group is definitely the market
leader in this field.
– such as a property with 80 units in Gervinusstrasse
in Charlottenburg, not far from the Kurfürstendamm.
Generally speaking, Berlin offers more options
for building new developments in central areas,
compared to Vienna. And we are taking very active
advantage of these options.
How many apartments are completed each year?
Roos: On a long-term we aim to complete around
500 apartments each year in Vienna and Berlin and
put them up for sale. We also want to build around
100 to 200 apartments for our standing investment
portfolio each year as well.
Isn’t the project development business exposed to
higher risk?
Riedl: Yes, it is. Generally, it takes higher per
formance, a willingness to accept more risk and
superior dedication to add value of the kind we
undisputedly create from development projects,
with returns of around 20%. Dealing professionally
with these risks is part of our everyday business. We
know where the stumbling blocks lie, but also where
there is potential to increase value. BUWOG Group
has an excellent team – in both Vienna and Berlin –
that is responsible for the entire project development
process, right through to marketing the projects.
Our experts understand the market, maintain
close ties to the authorities and our development
partners, and demonstrate outstanding motivation
and knowledge. And, last but not least, BUWOG has
now gathered more than 60 years of experience in
project development.
And what about Berlin?
Riedl: With the acquisition of the business
operations and individual projects of what is now
our subsidiary BUWOG-Meermann back in 2012,
BUWOG Group was quickly able to position itself
well in the Berlin market for residential project
development. We acquired several projects in the
course of construction, together with large reserves
of space that currently measure around 80,000 sqm
floor area in total. We have acquired other plots of
land in Berlin where we are building exciting projects
34
“BUWOG has now gathered
more than 60 years of
experience in project
development.”
Daniel Riedl, CEO
Do you see a bubble forming in the Viennese housing
market?
Riedl: I don’t buy into this market assessment,
which has repeatedly been voiced in recent times. It
is a fact that a great deal of equity has been invested
in recent years. I can therefore detect neither a taxinduced price drive, as witnessed in Holland, nor
speculation-induced demand, as we have witnessed
in Eastern Europe before the crisis, or in Spain. The
price increases in Vienna are being driven by the fact
that demand outstrips supply. I do, however, assume
that prices for owner-occupied housing in Vienna
will not increase at the same rate as they have been
doing in recent years. Our calculations reflect this
assessment very conservatively and cautiously.
What specific goals is BUWOG pursuing in its Asset
Management business area?
Roos: In terms of absolute contributions to profits,
Asset Management remains the most important
pillar in the BUWOG Group business model. As of
our reporting date of 30 April 2014, the standing
investment portfolio comprised some 33,500
units, with Austria accounting for around 80% and
Germany around 20%. Following completion of
the acquisition of the DGAG portfolio at the end of
June 2014, we achieved our balanced target ratio
of 50% Austria to 50% Germany. From a strategic
perspective, we must now further optimise the rental
income from the existing portfolio while continuing
to streamline the portfolio, as explained above. As
things stand at present, the weighting of the German
portfolio will increase over the medium term. We aim
to purchase between 2,000 and 4,000 additional
rental apartments in Germany over the coming
“We are taking advantage
of the current market
environment in Austria and then
invest some of the proceeds
in expanding our portfolio in
Germany in order to raise the
overall Net Rental Yield.”
Ronald Roos, CFO
years. In doing so, we will increase the bottom line
return of BUWOG Group since we earn much higher
Net Rental Yields in Germany than in Austria.
Riedl: This is absolutely key to our strategy. We are
taking advantage of the current market environment
in Austria to sell apartments at very attractive yields
and then invest some of the proceeds in expanding
our portfolio in Germany in order to raise the overall
Net Rental Yield.
35
Having said that, Austria will continue to constitute a
key market – and, as mentioned before, that applies
equally for projects to construct new housing,
regardless of whether privately financed or subsidised.
The advantage of subsidised housing is that it ties up
less equity, and we can start putting the apartments
up for sale once they have been let for ten years.
Now that you have explained the strategy and
business model of BUWOG Group, can you discuss
business performance in the 2013/14 financial year?
Roos: The result of our operations was positive in
every respect in 2013/14. Despite the stated portfolio
sales in Austria, we managed to increase total
annualised in-place rent by 6.1% year on year to around
EUR 123 million due to acquisitions in Germany. And
that is even without the DGAG portfolio, which will
not be consolidated until 30 June 2014 in the 2014/15
financial year. Earnings from the Asset Management
business area were EUR 75.9 million. Property Sales
recorded earnings of EUR 34.0 million and Property
Development 4.9 million. Adjusted EBITDA was also
extremely satisfactory at EUR 105.0 million.
36
“we managed to increase total
annualised in-place rent to
around EUR 7 million.”
Ronald Roos, CFO
Riedl: In addition to these key figures from the
income statement, we also use Recurring FFO, as
already mentioned, as a benchmark for assessing
our operations that provides better insight into the
company’s profitability. For 2013/14, this key figure
is EUR 69.2 million. To evaluate the performance of
rental income, we look at in-place rent. Year on year,
we managed to improve this key figure by 1.8% on
a like-for-like basis, i.e. adjusted for changes in the
portfolio.
How do BUWOG AG shareholders participate in this
success?
Roos: On the one hand, they benefit from the
resulting increase in company value in terms of
net asset value per share. On the
other, of course, through dividend
payments. At the Annual General
Meeting in October 2014, we are
going to propose a dividend of
EUR 0.69 per share, which is more
or less equivalent to 4% of the net
asset value or to a dividend yield of
5.2% on EUR 13.20, which was the
closing price of BUWOG shares on
30 April 2014.
Are you going to adhere to this dividend policy in
the coming years?
Riedl: Ultimately, that is for BUWOG shareholders
to decide at the Annual General Meeting. As far as I
am concerned, it makes sense over the medium term
to pay out around 60%–65% of the Recurring FFO
“As far as I am concerned,
it makes sense over the medium
term to pay out around
60%–65% of the Recurring FFO
as dividends.”
Daniel Riedl, CEO
as dividends and invest the remainder in growth.
Overall, BUWOG shares should offer both attractive
dividends and value appreciation. That is our goal.
Can you name specific goals for the 2014/15 financial
year?
Riedl: I’m really not a fan of grand announcements
and much prefer to put specific plans into practice –
but yes, we have set ourselves a number of goals for
2014/15 and beyond. We will push ahead with selling
apartments in Austria, with the aim of selling around
500 units. In addition, we want to manage our
assets actively and intelligently raise rents further.
In our Property Development business area, we are
going to adhere to our dual strategy in Austria of
developing both privately financed projects that can
be executed rapidly and sold as owner-occupied
housing, and subsidised rental apartments that
lessen the burden on equity and can be sold at a
later date. In Germany, of course, we are also working
hard to move our ongoing development projects
forward and to secure new projects.
Roos: Key areas of focus in Germany in 2014/15 will
be the further integration of the DGAG portfolio and
the establishment of the platform mentioned above.
At the same time, we will be evaluating further
possible acquisitions. Thanks to our very profitable
business with existing housing in Austria, BUWOG
Group has the capacity to finance these growth
projects.
One final question: where and how do you see
BUWOG Group in five years’ time?
Roos: As a solid company with strong earnings
that is continuing to grow in the interests of its
shareholders, and capable of meeting its strategic
goals. I play team sports, and therefore particularly
want to further develop a constructive team spirit,
with shared goals and a clear understanding of the
needs of all BUWOG stakeholders. We are heading
into an exciting future, and I am really looking
forward to it.
Riedl: I see BUWOG Group as a strong representative
of its peer group that has succeeded in establishing
itself as an independent company in every respect.
The far-reaching value chain of our business model
will also be reflected in our future earnings power,
and will enable us to implement an attractive
dividend policy. This is our key commitment to
our shareholders who have entrusted us with their
capital. We must and want to earn this trust by
demonstrating sustainable success. Last but not
least, I would like to stress that we will make every
effort to point BUWOG share prices in the only right
direction there is, which is above the net asset value.
On that note, I would really like to put the spotlight
on our magnificent team and express my thanks to
them. They never waiver, even when faced with great
challenges – and we saw some of those in 2013/14.
These aspects are also part of what makes BUWOG
Group such a special company.
Notes on further information
Information about the areas of responsibility and
past careers of the Executive Board members can be
found in the corporate governance report starting on
page 98, and about the company’s strategy on page
42, while detailed explanations of the three business
areas can be found starting on page 54.
37
Overview of
BUWOG Group
As one of the leading full-service providers in the
residential property segment, BUWOG Group can look back
on more than 60 years of company history. Alongside Austria,
the company has successfully established itself in defined
core markets in Germany in recent years.
38
Forsthausgasse / Vienna
Overview of BUWOG Group
39
Profitable value chain
BUWOG Group sets itself distinctly apart from its peers with its fully integrated business model (see page
45 for details). Strong Recurring FFO, which enable an attractive dividend policy while continuing to grow
the company, are generated by the three business areas: Asset Management, Property Sales and Property
Development.
Asset Management
Following the acquisition of the DGAG portfolio, which was concluded at the end of June 2014, the portfolio
held by BUWOG Group comprises some 53,000 units, half of which are in Austria and half in Germany (see
also page 54).
Property Sales
In the interests of continuously optimising the standing investment portfolio, a total of around 2,300 units
were sold in the 2013/14 financial year through both Unit Sales and Block Sales (property and portfolio
transactions), whereby Block Sales in Austria particularly served the purpose of financing the strategic goal
of portfolio expansion into high-yield markets, primarily in Germany, as well as streamlining portfolios in noncore markets (see also page 70 onwards).
Since it was founded in Austria, BUWOG Group has completed more than 30,000 apartments. Building
around 700 new apartments each year in the greater Vienna area makes BUWOG Group one of the most
active residential property developers in Austria. BUWOG also entered into new residential construction in
the German market in 2012 with the acquisition of the business and specific projects of the current subsidiary
BUWOG Meerman. Around 1,600 apartments are currently in the project pipeline there, with the aim of
completing around 500 apartments per year in the mid-term (see also page 78 onwards).
40
Profitable value chain,
Responsible corporate governance
Responsible corporate governance
As a leading company in the housing sector, BUWOG Group is aware of its responsibilities vis-à-vis its various
stakeholders. Consideration of these – sometimes conflicting – interests plays a key role in the structuring of
the business model (see page 42) and corporate strategy (see page 42).
The ultimate goal of steadily increasing the value of BUWOG Group can only be achieved by establishing a
reasonable balance between economic, social and environmental aspects. This awareness, and a respectful
attitude towards both business partners and staff while strongly upholding the interests of shareholders,
characterise the corporate culture and identity of BUWOG Group.
Value-oriented corporate
governance and transparency
make the company an attractive
investment for shareholders
Responsible employer
for approx. 640 members of staff
Reliable partner
for contractors,
municipalities and banks
BUWOG Group
Professional and fair
towards customers when
letting, developing and selling
residential property.
Visionary partner for the delivery
of pioneering urban development
projects, sustainable construction
and resource conservation
41
Corporate strategy
The foremost strategic goal of BUWOG Group is to steadily increase the value of the company, whereby
Recurring FFO and EPRA Net Asset Value are the relevant benchmarks. With its transparent communications
policy, an ambitious growth strategy, and by building a relationship of trust with capital market participants,
the company is striving towards a price trend for BUWOG shares that reflects the company’s development
measured by EPRA Net Asset Value.
The corporate strategy of BUWOG Group is based on clearly defined principles. Considerable value is
added across all market cycles by the three business areas: Asset Management, Property Sales and Property
Development. The combination of these three business areas aims to secure substantial – and above all
sustainable – Recurring FFO, of which 60%–65% are intended to be distributed as dividends, in the years to
come.
The corporate strategy is aimed at reducing presence in the lower-yielding Austrian markets, while at the
same time continuing to grow by purchasing portfolios in high-yielding markets, especially in Germany, with
a view to keeping the company on its existing course for growth and continuous company value appreciation.
The strategy is secured, on the one hand, by the superb quality of the property portfolio with a high proportion
of urban locations. On the other hand, the integrated business model of BUWOG Group constitutes a closed
cycle of value creation. Professional facilities management of the property portfolio forms a solid basis for
generating Recurring FFO, which active asset management can continuously enhance by raising rents, and
reducing the vacancy rate and running costs. These measures are rounded off by careful investment to
maintain or steadily increase the value of the existing portfolio.
The Property Sales business area strives to take advantage of attractive market opportunities to sell residential
real estate in unit or Block Sales (property or portfolio sales) at a good return.
The Property Development business area undertakes construction projects to ensure the steady addition of
new assets to the standing investment portfolio, while at the same time generating earnings for reinvestment
by selling some of the projects straight to owner-occupiers or investors.
Together with strict cost awareness, the conservative financing profile with its low interest costs meets the
fundamental conditions for generating high Recurring FFO.
Numerous measures, as outlined below, are planned over the short to medium term to implement the strategy
of BUWOG Group.
BUWOG Group
- Identify and realise value-oriented growth opportunities in the defined
core markets within Austria and Germany, taking advantage of the
regional differences in margins
- Guarantee that the corporate culture is performance-oriented with the aid
of state-of-the-art human resource management tools
- Position the company as an attractive employer
- Secure the company’s leadership role in sustainable residential construction
and resource conservation
- Ensure communications policy is fair, timely, informative and transparent, with the
aim of giving a detailed and accurate view of the performance of the company
42
Corporate strategy
Asset Management
Integrated platform
- Actively manage and invest in the number of
units to increase rental revenue
- Continue to grow the German portfolio:
- Acquire portfolios in existing or
complementary macro locations in Berlin
and North-West Germany
- Continue to improve the company’s
competitive position in regional markets
and to optimise the cost structure
- Conclude integration of BUWOG’s investment
portfolio in Germany into the residential
platform acquired from Prelios
- Continue to identify and exploit potential
synergies to improve operating processes in
order to lower costs in Austria and Germany
Financing
Property Sales
−Continue high-margin Unit Sales in Austria
through sales of standing investment units
outside of Vienna and the regional capitals
−Realise further property and portfolio sales
in Austria for the purpose of optimising
and adjusting the portfolio structure on an
ongoing basis
- Capital recycling – reinvest proceeds from
sales, partly in new acquisitions to strengthen
the German portfolio, and partly in the project
development pipeline in Vienna and Berlin
- Ensure a disciplined capital structure in respect
of both equity measures (dilution of existing
shares) and debt instruments (Loan-to-value
corridor of 50%–55%).
- Examine possibilities for refinancing the existing
convertible bond (maturing in 2019)
- Continue to develop a balanced debt duration
profile with low average interest cost
- Focus on new residential developments in the
federal capitals Vienna and Berlin
- Take advantage of the current risk/reward ratio
afforded by the strong competitive position
of BUWOG Group, on the one hand, and the
demand potential in these markets, on the other
Attractive dividend policy
- Executive Board to propose to the Annual
General Meeting a dividend distribution of
around 4% of EPRA Net Asset Value for the
2013/14 financial year
- Medium-term dividend ratio of around
60%–65% of Recurring FFO to BUWOG AG
shareholders within the framework
of a foreseeable and continuous profit
distribution strategy
Norma l.
43
Founding of BUWOG AG and public listing
Following the spin-off from IMMOFINANZ AG, BUWOG AG has been listed as a separate company on the
stock exchanges in Frankfurt, Vienna and Warsaw since the end of April 2014.
In recent years, the residential business operations had been bundled together in BUWOG – Bauen und
Wohnen Gesellschaft mbH under the umbrella of IMMOFINANZ AG. Overall, IMMOFINANZ Group united
different classes of assets, but these also appealed to different types of investors. In order to simplify the
corporate structures and clearly focus the two companies – IMMOFINANZ and BUWOG – on their respective
core businesses, a separation under company law was put in motion as desired by capital market participants
and in accordance with a resolution passed by IMMOFINANZ AG shareholders. This separation required
several steps, which are outlined below.
BUWOG AG was established as a legal entity in the form of a GmbH (limited liability company) by declaration
of the establishment of the company on 7 July 2010, and was initially called “Artemis Immobilien GmbH”. By
a resolution passed by an Extraordinary General Meeting on 27 November 2013, the legal form of Artemis
Immobilien GmbH was changed to an Aktiengesellschaft (stock corporation) (Sections 245 et seq Austrian
Stock Corporation Act (AktG)) and, at the same time, the name of the company was changed to BUWOG AG
(effective from 17 December 2013 following entry in the company register).
When BUWOG Group was spun off, IMMOFINANZ AG merged its indirect interest in BUWOG – Bauen und
Wohnen Gesellschaft mbH (“BUWOG GmbH”) into BUWOG AG, the new holding company, in three steps in
the 2013/14 financial year: The first step involved a contribution in kind for an indirect 5.1% stake in BUWOG
GmbH. The next step involved spinning off the remaining indirect 94.9% interest in BUWOG GmbH to
GENA SECHS Immobilienholding GmbH (“GENA SECHS”), the joint holding company of IMMOFINANZ AG,
(around 59.71% stake) and BUWOG AG (around 40.29% stake). The final step – the actual spin-off – involved
IMMOFINANZ AG spinning off its stake of around 59.71% in GENA SECHS (indirect stake of around 56.67%
in BUWOG GmbH) to BUWOG AG. This transaction was accompanied by the issue of new BUWOG shares to
the shareholders of IMMOFINANZ AG. As a result of the spin-off, which became effective on 26 April 2014
with entry in the company register, BUWOG AG indirectly acquired a 100% stake in BUWOG GmbH. BUWOG
shares started trading on 28 April 2014 on the Frankfurt Stock Exchange and Vienna Stock Exchange, and
on 29 April 2014 on the Warsaw Stock Exchange (further details on the stock exchange listing can be found
starting on page 90).
Key milestones
14 march 2014
16 april 2014
26 april 2014
28/29 april 2014
The Extraordinary General
Meeting of IMMOFINANZ AG
approves the spin-off
The BUWOG AG prospectus
is published
The current BUWOG AG is
spun off in several steps and
is entered into the company
register
Initial listing on the Frankfurt
Stock Exchange and Vienna
Stock Exchange on 28 April
2014 and on the Warsaw Stock
Exchange on 29 April 2014.
IMMOFINANZ AG shareholders
receive one BUWOG share for
every 20 IMMOFINANZ shares.
The shares initially traded on
the Frankfurt Stock Exchange
at EUR 13.00 each.
44
Founding of BUWOG AG and public listing,
business model
Fully integrated business model
As a full-service property company, BUWOG Group covers the entire value chain in the residential property
sector. Together with the Asset Management business area, the professional development of new-build
projects for realisation or inclusion in the BUWOG standing investment portfolio (Property Development)
and the value-oriented Unit Sales or Block Sales (Property Sales) constitute a closed cycle of value creation.
THE 3 PILLARS OF THE BUWOG GROUP BUSINESS MODEL
Asset Management
- Generation of rental income
from investment portfolio
with around 53,000 units1)
- Optimisation through
active management
- Further selective growth
in Germany planed
Property Sales
- Realisation of attractive margins from
Unit Sales in Austria
- Development of units in Vienna
for the investment portfolio
- Development pipeline in Vienna and
Berlin of about EUR 1.5 billion
- Balanced project pipeline in
various stages of development
66%
30%
4%
Sale properties and
portfolios for ongoing
optimisation in Austria
(not registered in Recurring FFO)
Recurring FFO
- Recurring FFO EUR 69.2 million3) in financial year 2013/14
- Medium-term objective to distribute 60% to 65% as dividends
1) Based on portfolio data as of 30 April 2014, including DGAG portfolio and Apollo portfolio whose acquisition was closed after this date
2) Net operating income before expenses that are not directly attributable to the business areas (EUR 21.7 million) and excluding other operating income of EUR 4.1 million
(based on the pro forma income statement)
3) Based on the pro forma income statement, see Management Report, page 136
What sets the business model of BUWOG Group apart from its peers is the breadth and depth of its value
chain and the optimal interlinking of the three business areas:
- Professional management of the investment portfolio (Asset Management)
- Profit-orientated residential property sales and optimised cyclical property and portfolio sales
(Property Sales)
- Development of properties in the core Austrian and German markets for inclusion in own portfolio
or immediate sale (Property Development)
Asset Management is an active, decentralised business area of BUWOG Group that strives to sustainably
increase rental income while observing any statutory rent restrictions. The goal is to take full advantage of
each property’s potential through with a clear strategy, and by optimising the cost and earnings structures
and, in doing so, securing strong cash flows and the overall value of the properties.
The apartments are generally put up for sale (Property Sales) when the present value of the discounted
cash flows falls below the recoverable market price. The cash proceeds from Unit Sales or Block Sales are
invested in additions to the company’s own portfolio, new and existing development projects (Property
Development), and the purchase of portfolios in high-yielding markets, amongst other things. Profitability
is ensured along the entire value chain through a clearly defined, standardised and industrialised process.
Efforts to steadily optimise the portfolio are aimed at increasing cash flows and thus enabling further growth
of BUWOG Group, while, at the same time, financing an attractive dividend policy. The relevant benchmark
for measuring this performance is recurring funds from operations (Recurring FFO).
45
Corporate structure
The current company law structure of BUWOG Group only emerged once it was spun off from IMMOFINANZ
Group in April 2014 and following the acquisition of the DGAG portfolio, which was concluded at the end
of June 2014. BUWOG AG, which is the holding company for the group and is domiciled in Vienna, is listed
on the stock exchanges in Frankfurt, Vienna and Warsaw. The properties are mainly held by pure holding
companies.
In addition to BUWOG AG, responsibility for operations in Austria lies with BUWOG – Bauen und Wohnen
Gesellschaft mbH and its subsidiaries. As of 30 April 2014, BUWOG Group employed 406 people in total in
Austria. Apart from Vienna, members of the BUWOG team – and especially those in Asset Management – are
also deployed throughout the Austrian provinces, in locations such as Villach, Linz and Graz, to ensure close
contact with the market when managing the investment properties.
The business operations of BUWOG Group in Germany are covered by several companies, with major offices in
Kiel, Lübeck, Hamburg and Berlin. The Asset Management business area’s activities in Germany are managed
from Kiel. Property Development in Germany solely focuses on Berlin and is also managed from there. As
part of the process for integrating the DGAG portfolio, restructuring measures are planned in Germany to
bundle the management of all BUWOG properties together on a joint platform.
Relationship with IMMOFINANZ Group
BUWOG Group has been independent since the spin-off from IMMOFINANZ Group in April 2014. In the run-up
to, and months following, the spin-off, the company established its own departments to take responsibility for
tasks formerly performed by IMMOFINANZ. Clearly defined business relations at standard arm’s length terms
currently still exist with IMMOFINANZ in the areas of group accounting/consolidation, although here, too, the
company will be building up its own resources over the course of the 2014/15 financial year. The business and
strategic independence of BUWOG Group is ensured through a de-domination agreement concluded with
IMMOFINANZ AG. (Details can be found in the corporate governance report starting on page 98.)
Overview of the legal structure of BUWOG Group
BUWOG AG
100%
100%
Parthica
Immobilien GmbH
GENA SECHS
Immobilienholding GmbH
100%
GENA ZWEI
Immobilienholding GmbH
94.9%
5.1%
BUWOG – Bauen und Wohnen Gesellschaft mbH
100%
ESG Wohnungs
gesellschaft mbH
100%
BUWOG
Deutschland GmbH
100%
BUWOG – Nord
deutschland GmbH
A detailed list of all participating interests starts on page 229 of this report (Group companies of BUWOG AG).
46
Corporate structure
FUNCTIONAL ORGANISATION OF BUWOG GROUP
Management Board
Daniel Riedl, CEO / Ronald Roos, CFO
Asset Management
Austria
Herwig Teufelsdorfer
Germany
Daniel Riedl1)
Accounting & Taxes
Property Sales
Austria
Herwig Teufelsdorfer
Germany
Daniel Riedl1)
Austria
Andreas Holler
Germany
Alexander Happ
Other Corporate Departments
Andreas Ratzinger
Financial Accounting
Consolidation, Taxes
i.e.: Controlling, Auditing, IT, Purchasing, Risk Management, Investor Relations & Corporate
Finance, Legal, Marketing & Communication, Human Resources & Organisation
1) Provisional
From an operating standpoint, BUWOG Group’s organisation is divided into the segments Austria and
Germany, which in turn are subdivided into the business areas Asset Management, Property Sales and
Property Development. Besides these operating units, corporate departments are set up at BUWOG Group,
likewise directly under the Executive Board.
47
History of the company
Although BUWOG AG has only been listed on the stock exchange since the end of April 2014, its roots stretch
back as far as 1951, when it was entered in the commercial register with the purpose of providing housing
assistance to civil servants.
In its first year of existence, BUWOG employed 24 people and its residential portfolio then comprised
210 units. The following decades were characterised by acquisitions and efforts to expand the residential
portfolio – 1970 marked the transfer of the 10,000th apartment to its tenants. Not until 2001 was the law
changed to abolish the company’s non-profit status. Three years later, the Austrian government decided to
sell BUWOG to IMMOFINANZ AG, which started with the residential property sales just one year later.
Milestones in the history of BUWOG
BUWOG is
founded for
the purpose
of providing
housing
assistance to
civil servants
1951
The 10,000th
apartment is
handed over
1957
BUWOG merges
with BEWOG
48
Privatisation –
the Republic
of Austria sells
the company to
IMMOFINANZ AG
Acquisition
of ÖGSG
1970
2001
Non-profit status
abolished by law
2004
Acquisition of a
stake in ESG –
the integration
of ESG marks
the “birth” of
BUWOG Group
2005
Start of residential
property sales
2006
2008
By focusing
on privately
financed
owneroccupied
housing,
BUWOG has
become one
of the largest
residential
property
developers in
Vienna
History of the company
Since then, the business model of BUWOG Group has been expanded to include new, privately financed,
residential construction and subsidised housing, and market-oriented structures have been put in place.
In 2006, BUWOG acquired a stake in ESG in Carinthia, which had also originally been state-owned (and
founded as a non-profit railway housing cooperative (Gemeinnützige Eisenbahnsiedlungsgenossenschaft) in
1942). The year 2010 saw the first expansion abroad with the acquisition of some 2,300 apartments in Berlin,
followed in 2012 by the acquisition of the business and specific projects of the current subsidiary BUWOG
Meerman. In the run-up to the public listing, the acquisition of the DGAG portfolio in February marked the
achievement of the strategic goal of enlarging and regionally diversifying the property portfolio. At the same
time, preparations to acquire the Prelios residential property management platform with its team of around
300 employees were underway, with the integration of all BUWOG properties in Germany on this platform
commencing from June 2014.
The development of
subsidised housing
projects commences
2009
Start of property
development work
in Berlin with the
acquisition of the
business and specific
projects of the current
subsidiary BUWOG
Meerman
2010
2012
Expansion to Germany
starts with the acquisition
of around 2,300
apartments in Berlin
2013
Acquisition of the DGAG
portfolio of around
18,000 units in northern
Germany, concluded at
the end of June 2014,
and the Prelios platform
Feb. 2014
Active implementation
of the portfolio strategy
by way of portfolio sales
in Carinthia and Upper
Austria (around 1,900
units) and expanding the
German portfolio in Berlin
and North-West Germany
(around 1,500 units)
Integration of the
residential property
platform of Prelios
Deutschland with
its 300 or so
employees starts
with the aim of
concentrating the
German standing
investment
portfolio
April 2014
Juni 2014
Spin-off from
IMMOFINANZ AG
and going public in
Frankfurt and Vienna
(28 April 2014), and
Warsaw (29 April 2014)
49
TRANSFORMATION OF BUWOG GROUP
SINCE THE BALANCE SHEET DATE
AND IMPACT ON KEY DATA
Since the balance sheet date of 30 April 2014, BUWOG Group concluded a number of transactions that will
have a significant impact on the size of the company and its future development. Consistent with our aim
of ensuring the highest possible level of transparency, these transactions and their effects on selected key
indicators of BUWOG Group are discussed below.
ACQUISITION OF THE DGAG PORTFOLIO WITH AROUND 18,000 UNITS
On 27 June 2014, BUWOG Group formally closed its acquisition of the DGAG portfolio for which the agreement
had been signed on 12 February 2014. The transaction took place by means of a number of share deals. The
acquired residential portfolio comprises around 18,000 units with a total floor area of around 1.1 million
sqm. The properties are concentrated in the German states of Schleswig-Holstein (approx. 990,000 sqm)
and Lower Saxony (approx. 85,000 sqm) and are thus in BUWOG’s preferred growth region of North-West
Germany.
The acquisition price for the investment properties amounts to around EUR 892 million (819 EUR per sqm).
The Net Rental Yield is approx. 7.6% with a vacancy rate of around 2.5%. The BUWOG Group is financing
the transaction through mortgage loans from a consortium led by BerlinHyp AG in the nominal amount of
around EUR 399 million, the transfer of subsidised loans in the nominal amount of around EUR 203 million
and proceeds from the convertible bond issued in April 2014 with a nominal volume of EUR 260 million.
Concurrently with the acquisition of the residential portfolio, the BUWOG Group closed its planned purchase
of the residential management infrastructure of Prelios Deutschland with around 300 employees.
ACQUISITION OF THE MANAGEMENT PLATFORM WITH AROUND 300 EMPLOYEES
In addition to the acquisition of the DGAG portfolio (see above), the BUWOG Group also agreed on
12 February 2014 to the purchase of its residential management platform with around 300 employees, through
which the DGAG portfolio is managed. The acquisition took place on 4 July 2014 by means of a share deal.
This transaction has enabled a smooth transition of the DGAG portfolio to BUWOG and the company has
gained a well-established and highly qualified team designated to manage the entire German standing
investment portfolio of BUWOG Group in the medium term. It can also ensure that synergies and further
cost-efficient growth are achieved in the company’s preferred regions in Germany. The management – in
particular, Asset and Property Management – of around 33,000 residential units, which are owned by third
parties and under contract to be managed by the acquired management platform, is also transferred to
BUWOG. As part of this transaction, the company assumed financial liabilities of around EUR 37 million.
ACQUISITION OF A PORTFOLIO WITH 1,206 UNITS IN BERLIN AND THE SURROUNDING AREA
(APOLLO PORTFOLIO)
The acquisition of the Apollo portfolio was agreed on 13 November 2013 and closed on 1 July 2014. Based
on the acquisition price of EUR 50 million, it represents an average price per sqm of around EUR 629 and
a Net Rental Yield of around 8.7%. The portfolio comprises 1,206 units with a total floor area of 79,553 sqm
which are mainly located in Berlin (677 units) and the surrounding area of Berlin (529 units) (see page 61). This
transaction results in an increase in financial liabilities of EUR 38 million.
SALE OF BUWOG FM
With the sale of property management subsidiary BUWOG Facility Management GmbH (BUWOG FM) to
the Austrian property service provider EHL Immobilien, BUWOG took a further step towards focusing on
its strategic core residential business. This transaction took financial effect on 30 April 2014. The actual
contract of assignment of its shares, through which ownership of the shares in the business is transferred to
the purchaser, was executed on 26 June 2014. As of the balance sheet date, BUWOG FM managed around
50
Transformation
1.1 million sqm with 52 employees, focusing on commercial properties (office buildings, retailers, hotels). No
financial liabilities or properties of BUWOG Group were disposed of in this transaction.
KEY PROPERTY INDICATORS
The portfolio of BUWOG Group comprised 33,475 units as of 30 April 2014. Through the transactions
described, the number of units increased to 52,718. Development of the key property indicators is shown in
the following table.
KEY PROPERTY INDICATORS INCL. PORTFOLIO ADDITIONS
AFTER THE BALANCE SHEET DATE
BUWOG Group
DGAG portfolio
Apollo portfolio
(incl. DGAG and
BUWOG Group
as of
as of
Apollo as of
30 April 2014
30 April 2014
30 April 2014
30 April 2014)
Total number of units
Quantity
33,47518,037 1,20652,718
Austria
Quantity
26,250--
26,250
Germany
Quantity
Total floor area
Total annualised in-place rent1)
7,22518,037 1,20626,468
in sqm
2,491,2901,089,191
79,5533,660,034
in EUR million123 68
4195
in EUR per sqm
4.315.334.764.63
Austria
in EUR per sqm
4.06--
4.06
Germany
in EUR per sqm
Fair value2) of standing investments
Fair value2) of standing investments
5.345.334.765.31
in EUR million2,526
892
503,468
in EUR per sqm
1,014819629947
Austria
in EUR per sqm
1,057--
1,057
Germany
in EUR per sqm
Net Rental Yield3)
834819629814
%
4.9%7.6%8.7%5.6%
Austria
%
4.4%--
4.4%
Germany %
Vacancy rate4)
7.4%7.6%8.7%7.6%
%
4.8%2.5%3.9%4.1%
Austria
%
5.0%--
5.0%
Germany
%
3.6%2.5%3.9%2.9%
2) Based on fair value of standing investments according to CBRE valuation reports as of 30 April 2014 and on the purchase price for the DGAG and Apollo portfolio acquisitions;
DGAG including undeveloped land EUR 0.7 million
3) Annualised total in-place rent (based on monthly in-place rent excluding utilities as of the reporting date) in relation to fair value
4) Based on sqm
For additional details on the standing investment portfolio, including the DGAG portfolio and the Apollo
portfolio, please see the Asset Management section starting on page 54.
51
KEY FINANCING INDICATORS
The following statements reflect the position of
BUWOG Group as of 30 April 2014, including the
financial instruments acquired or disposed of in the
course of the transactions described above. The
resulting outstanding financial liabilities amount to
around EUR 2,180 million with an LTV in our target
range between 50% and 55%.
Structure of amount outstanding
by type of financing
Convertible bond
12%
total:
EUR 2,180
Million
Bank loans
54%
Local
authorities/
subsidised loans
34%
In keeping with the long-term nature of its core business, BUWOG Group strives to secure a long-term
and balanced financing structure to protect its defensive risk profile. The majority of financing agreements
entered into are aligned with this principle. The average maturity is approx. 17 years. The repayment structure
is broken down as follows:
MATURITY STRUCTURE OF OUTSTANDING FINANCIAL LIABILITIES
in EUR million (total: EUR 2,180 million)
344
685
260
36
42
85
70
69
3
68
7
69
23
65
64
65
65
99
by April
2015
by April
2016
by April
2017
by April
2018
by April
2019
by April
2020
by April
2021
by April
2022
by April
2023
n Regular repayments
n Final repayment
44
by April
2024
from May
2024
n Convertible bond
The weighted average nominal interest rate for the financial liabilities, including expenses for derivatives,
allowing for financial instruments acquired or disposed of in the course of the transactions described above,
is 2.62%.
KEY FINANCING PARAMETERS
Amount
outstanding
in EUR million
Share
Ø interest rate
Ø term in years
Bank liabilities 1,189 54%3.21% 12.3
thereof Austria
550 46%2.68% 14.9
thereof Germany
640 54%3.66% 10.1
Local authorities/subsidised loans
730 34%1.35% 28.9
thereof Austria
518 71%1.36% 21.1
thereof Germany
212 29%1.32% 47.9
Convertible bond
260 12%3.50%
5.0
BUWOG Group 2,180 100%2.62% 17.0
52
Transformation
In accordance with the long-term nature of the financing structure, around 90% of the agreed financing
contracts are hedged against the risk of interest rate changes with fixed interest rate agreements and/or
interest rate swaps.
INTEREST RATE STRUCTURE
Floating
rate loans
10%
total:
EUR 2,180
Million
Hedged loans
(swaps)
37%
Fixed
interest loans
53%
KEY PERSONNEL INDICATORS
As of 30 April 2014, 406 full-time equivalents were employed in the fully consolidated companies of BUWOG
Group, of whom 338 were salaried employees and 68 wage employees. Including the transactions described
above, this figure increases to a net total of 642 full-time equivalents (491 salaried employees and 151 wage
employees).
As of 30 April 2014, 70% of full-time equivalent staff were employed in the three business areas of Asset
Management, Property Sales and Property Development. Including the transactions described above, this
figure increases to 73%. The following charts show the breakdown of employees (full-time equivalents) by
region and by operational area, including the employees who joined or left as a result of the transactions
described above.
Salaried Employees (FTE)1)
Salaried Employees (FTE)1)
by area of operation
by region
Personal &
Organisation/
IT
8%
Legal/Marketing
3%
total:
491 FTE
Asset &
Property
Management
60%
Accounting
Controlling
Finance
15%
Property
Sales
5%
Austria
51%
total:
491 FTE
Germany
49%
Property
Development
9%
1) FTE = full time equivalent
53
asset
management
As the largest business area of BUWOG Group, Asset Management
generated EUR 75.9 million operating income (before expenses and
other operating income not directly attributable to the business area)
in the 2013/14 financial year. It includes the letting and sustainable
management of the investment portfolio, its continuous optimisation
and the creation of value through maintenance and CAPEX as well
as the coordination of all internal and external services necessary in
fulfilling the company’s role as real estate owner.
54
asset management
55
Structure of the standing investment
portfolio
The standing investment portfolio of BUWOG Group includes both subsidised and privately financed
apartments with a high degree of individuality, as well as terraced and semi-detached houses. As of 30 April
2014, the portfolio included 33,475 units with a total floor area of approx. 2.5 million sqm. This corresponds
to an increase in area of 1.6% over the previous year. Sales in Austria, with a focus on the provinces of
Carinthia and Upper Austria, were offset by acquisitions with a total volume of 2,982 apartments and a total
floor area of approx. 200,000 sqm in Germany. In the reporting year, the acquisitions of the DGAG portfolio
with approx. 18,000 units and the Apollo portfolio with approx. 1,200 units, both in Germany, were also
signed (“Signing”); however the exchange of benefits and obligations (“Closing”) did not take place until
after the balance sheet date of 30 April 2014. The following information therefore distinguishes numerous
times between portfolio indicators as of the balance sheet date 30 April 2014 and an illustration including
the DGAG and Apollo portfolios.
As of 30 April 2014, 26,250 units (prior year: 28,507 units) with a total floor area of approx. 2.0 million sqm
(prior year: 2.2 million sqm) and a fair value of around EUR 2,127 million (previous year: EUR 2,236 million)
were held in Austria. This represents a fair value of EUR 1,057 per sqm. The monthly in-place rent amounted
to EUR 4.06 per sqm as of 30 April 2014, which resulted in a Net Rental Yield of 4.4%. The vacancy rate in
Austria as of 30 April 2014 was 5.0%, of which 1.7 percentage points were attributable to properties that were
deliberately not re-let as a pipeline for Unit Sales.
In the reporting year, the development of the property portfolio in Germany was highly dynamic. As of
the balance sheet date of 30 April 2014, the number of housing units had increased over the prior year by
about 70% to 7,225 units. In April 2014, the monthly
in-place rent amounted to an average of EUR 5.34
per sqm, which resulted in a ratio of Net Rental
STRATEGIC PORTFOLIO CLUSTER SPLIT
incl. DGAG and Apollo portfolios
Yield to fair value of 7.4%. The average fair value
of the standing investments in Germany was EUR
834 per sqm as of 30 April 2014. The vacancy rate
Block Sales
7%
of the portfolio in Germany was only 3.6% due to
active asset management and was supported by
the positive development of the market and of
demand.
Fair Value
total:
EUR 3,467
million
Unit Sales
41%
Core Portfolio
52%
The strategic portfolio expansion to Germany highlights the strategy of the BUWOG Group as leading
full-service provider in the residential properties
sector: A strong part of the core portfolio, representing around 52% of the total portfolio value, is to
be expanded by an attractive portfolio of housing,
which is suitable for selling individually and which
represents around 41% of the total portfolio value.
PORTFOLIO SPLIT BY STRATEGY CLUSTER
Core portfolio
Standing investments
Floor area
Quantity35,043
in sqm
in EUR per sqm 4.94
in EUR million1,821
Fair value2)
in EUR per sqm795
in %7.2%
Vacancy rate per cluster by sqm
Block Sales
13,609
2,291,3191,068,837
Fair value2)
Net Rental Yield3)
Unit Sales
3.8%
4.16
1,412
4,066
52,718
299,8793,660,034
3.87
234
4.63
3,467
779
947
3.6%
5.6%
5.6%
4.0%
6.4%
4.1%
1,322
2) Based on fair value of standing investments according to CBRE valuation reports as of 30 April 2014 and on the purchase price for the DGAG and Apollo portfolio acquisitions
56
Total portfolio
Asset Management
Property Portfolio Data
Austria
Number of units
Total floor area
Quantity26,250
Fair value2) BUWOG Group
as of 30 April 2014
Germany
in sqm2,012,137
BUWOG Group
(incl. DGAG and
Apollo portfolios)
as of 30 April 20141)
7,225
33,475
479,153
2,491,290
52,718
3,660,034
in EUR million 2,127
399
2,526
3,467
Fair value2) in EUR per sqm1,057
834
1,014
947
Annualised in-place rent3) in EUR million93
30
123
195
Monthly in-place rent3) in EUR per sqm4.06
5.34
4.31
4.63
Net Rental Yield4) %4.4%
7.4%
4.9%
5.6%
Vacancy rate5) %5.0%
3.6%
4.8%
4.1%
1) A detailed explanation of this evaluation can be found on page 50.
5) In terms of sqm
Through active asset management BUWOG Group pursues the goal of continuous optimisation of the
individual properties and the property portfolio in order to ensure that cash flow generation and earnings
are maintained or further improved in the long-term. All key success parameters were substantially improved
during the last year and also during the reporting period.
Fair Value increase by approx. EUR 3.5 billion
The fair value of the portfolio as of the reporting date 30 April 2014 determined by the independent appraiser
CBRE was EUR 2,526.1 million. The fair value per sqm is EUR 1,014, with the level in Austria at EUR 1,057,
well above the comparable figure for Germany, which is EUR 834 per sqm. Taking into account the DGAG
and Apollo portfolios not yet recognised through profit or loss during the reporting period, the fair value
increased by approx. 37% to approx. EUR 3.5 billion.
Total floor area
Fair Value
in 1,000 sqm
in EUR million
3,660
3,467
2,485
2,343
2,526
249
399
2,216
2,236
2,127
30 April 2012
30 April 2013
30 April 2014
127
n Austria
n Germany
1,340
2,430
2,453
2,491
151
281
479
2,127
2,279
2,172
2,012
2,012
Consideration incl.
DGAG and Apollo
on data basis of
30 April 2014
30 April 2012
30 April 2013
30 April 2014
Consideration incl.
DGAG and Apollo
on data basis of
30 April 2014
n Austria
1,648
n Germany
57
6.1% increase of annualised in-place rent
The development of the annualised in-place rent paralleled the development of market values and increased
by 6.1% to EUR 122.7 million compared to the prior year. The average rent per sqm is EUR 4.31 compared
to EUR 4.12 in the prior year. This development is due to rent increases, including as a result of indexing,
as well as the active use of rental potential, for example by reducing the vacancy rate and through project
developments. Around 76% of the in-place rent is attributable to the Austrian portfolio. As a result of several
acquisitions recognised through profit or loss during the reporting year, Germany’s share increased from 16%
in the prior year to around 24%. The acquisition of the DGAG and Apollo portfolios is expected to result in
the generation of additional annualised in-place rent of EUR 72.2 million.
Annualised in-place rent
Monthly in-place rent
in EUR million
in EUR per sqm
5.71
5.70
195
5.34
107
102
123
116
3.91
19
30
97
97
93
93
2011/12
2012/13
2013/14
Consideration incl.
DGAG and Apollo
on data basis of
30 April 2014
10
n austria
excl.
DGAG and Apollo
n Germany
2012/13
n austria
4.06
2013/14
5.31
4.06
Consideration incl.
DGAG and Apollo
on data basis of
30 April 2014
3.86
Like-for-like
(excl. DGAG and
Apollo) as of
30 April 2014
n Germany
Improvement of Net Rental Yield from 4.7% to 4.9%
The development of the Net Rental Yield of BUWOG Group was influenced by two opposing trends: The
yield of the Austrian portfolio was slightly increased to 4.4%. With the acquisition of portfolios in Kassel,
Kiel, Lüneburg and Syke the Net Rental Yield in Germany fell from 7.6% in the prior year to 7.4%. Including
the DGAG and Apollo portfolios, the figure improves to 7.6%. Due to the higher weighting of the Germany
portfolio, the Net Rental Yield of BUWOG Group rose from 4.7% last year to 4.9%, or 5.6% including the
DGAG and Apollo portfolios.
Net Rental Yield
7.9%
7.6%
7.6%
7.4%
5.6%
4.4%
4.6%
2011/12
n Austria
58
4.3%
4.7%
2012/13
n Germany
4.4%
4.9%
2013/14
n Total
4.4%
Consideration incl.
DGAG and Apollo
on data basis of
30 April 2014
Asset Management
Acquisition-related increase in the vacancy rate from 4.6% to 4.8%
The vacancy rate of BUWOG’s investment portfolio remained at a low level throughout the past year. In
the reporting year, however, the vacancy rate increased from 4.6% to 4.8%, due mainly to the acquisition of
portfolios in Kassel, Kiel, Lüneburg and Syke. This development was considered acceptable in view of the
attractive purchase price conditions of these portfolios, and a marked improvement in the rental rate of these
properties has already been achieved. The vacancy rate was 4.1% when the DGAG and Apollo portfolios are
included.
Vacancy rate development
5.0%
4.8%
4.8%
4.6%
5.0%
4.1%
3.6%
3.4%
3.4%
2.9%
2.4%
2.1%
30 April 2012
n austria
30 April 2013
n Germany
30 April 2014
Consideration incl.
DGAG and Apollo
on data basis of
30 April 2014
n total
Expansion of the portfolio in 2013/14
In the 2013/14 financial year BUWOG Group firmly pursued its expansion strategy in Germany and
purchased the following portfolios in Germany, which led to a significant expansion of the overall portfolio.
The acquisitions, which were fully recognised through profit and loss in the financial year are shown in the
overview below.
Lüneburg, Syke
-
884 units
Floor area: 62,205 sqm
Average rent per sqm: EUR 5.19
Net Rental Yield: 7.8%
Vacancy rate: 8.9%
Transfer date: September 2013
The “Sky” portfolio is located in the cities of Lüneburg
and Bremen/Syke in the state of Lower Saxony. Lüneburg
has about 73,500 inhabitants and is part of the Hamburg
metropolitan region. Syke is located on the outskirts of Bremen
(about 20 km away) and has about 25,000 inhabitants. The
population has grown by about 3% in the last ten years.
59
Kassel I
-
1,194 units
Vacancy rate: 2.5%
Transfer date: November 2013
Almost three-quarters of the portfolio acquired in November
2013 in Kassel is located in Kassel-Waldau, which is near the
city centre, just under a quarter is in Kassel-Oberzwehren, the
small remainder is in Kassel-Eichwald.
Kassel II
-
317 units
Vacancy rate: 6.5%
Transfer date: January 2014
The acquired residential complexes are located in green
areas in the urban districts Bettenhausen, Nord-Holland
and Kirchditmold. The average rent of EUR 3.98 per sqm is
below the local market average and there is expected to be
corresponding growth potential given the level of demand in
these districts.
Kiel
-
587 units
Vacancy rate: 5.8%
Transfer date: February 2014
The nine properties of the portfolio are located mainly in Pries/
Friedrichsort in Kiel, the capital of Schleswig-Holstein. This
district has seen above-average development in the past and
has become an attractive residential area near the beach. The
properties purchased by BUWOG were built in the 1950s and
are in good structural condition.
60
Asset Management
Portfolio acquisitions with recognition
to profit or loss in 2014/15
BUWOG also acquired two other portfolios in Germany in the 2013/14 financial year. The transfer date of the
properties will not occur until the first quarter of the 2014/15 financial year.
Berlin and surrounding area (Apollo portfolio)
-
1,206 units
Vacancy rate: 3.9%
Locations in the capital: Berlin-Kaulsdorf and Strausberg
Transfer date: July 2014
Just below than 60% of the units (677 apartments) are
located in Berlin, mainly in the Berlin district of MarzahnHellersdorf. Another focus is the city of Strausberg, located
about 15 kilometres east of Berlin, with 409 apartments;
smaller portions of the portfolio are in Grünheide Mark
(64 apartments), Sydower Fließ (24 apartments) and
Fredersdorf (32 apartments).
DGAG portfolio, Northern Germany
In February 2014, BUWOG Group signed the acquisition of the DGAG apartment portfolio including the
associated management business of Prelios Deutschland. The portfolio comprises about 18,000 units with a
total rental area of approx. 1.1 million sqm. Details of this transaction can be found beginning on page 50 of
this report.
61
BUWOG standing investment portfolio BY REGION (INCL. DGAG AND APOLLO PORTFOLIOS)
Number of units per site and percentage of total in %
KIEL
3,260 units, 6.2%
Suburban:
366 units, 0.7%
LÜBECK
6,275 units, 11.9%
HAMBURG
Suburban Hamburg:
2,868 units, 5.4%
LÜNEBURG
708 units, 1.3%
BRAUNSCHWEIG
REGION
NORTH/WEST
GERMANY
1,171 units, 2.2%
Suburban:
138 units, 0.3%
BERLIN
5,005 units, 9.5%
Suburban:
529 units, 1.0%
KASSEL
1,511 units, 2.9%
LINZ
VIENNA
7,060 units, 13.4%
Suburban:
543 units, 1.0%
586 units, 1.1%
SALZBURG
INNSBRUCK
717 units, 1.4%
Suburban:
468 units, 0.9%
786 units, 1.5%
Suburban:
255 units, 0.5%
REGION
AUSTRIA
PROVINCES
n FEDERAL CAPITALS
● STATE CAPITALS AND MAJOR CITIES1)
1,279 units, 2.4%
Suburban:
482 units, 0.9%
VILLACH
2,812 units, 5.3%
Suburban:
1,136 units, 2.2%
SUBURBAN AREAS2)
1) More than 50,000 inhabitants and a significant share of the portfolio > 600 units
2) The immediate catchment area up to about 15 km around federal capitals, state capitals and major cities, as well as Hamburg
62
GRAZ
KLAGENFURT
710 units, 1.3%
Suburban:
1,601 units, 3.0%
RURAL AREAS
Asset Management
Structure of the standing investment portfolio by geographic cluster,
incl. DGAG and Apollo
Number
of units
Federal capitals
Total
floor area
in sqm
Annualised
in-place rent1)
in EUR million
Monthly inplace rent1)
in EUR
Fair value2)
per sqm in EUR million
Fair value2)
in EUR
per sqm
Net
Rental Vacancy
rate4)
Yield3)
12,065 949,691
58
5.27
1,309
1,378 4.4%3.2%
Vienna
7,060 617,569
36
5.05
1,002
1,623 3.6%3.7%
Berlin
924 7.2%2.2%
5,005 332,122
22
5.67
307
State capitals and major cities5)19,8151,287,660
69
4.57
1,053
Lübeck
6,275 363,921
23
5.36
292
Kiel
3,260 195,301
12
5.54
174
892 7.2%3.0%
Villach
2,812 201,297
8
3.39
120
597 6.6%3.2%
818
6.5% 2.8%
801 7.9%1.9%
Kassel
1,511 107,316
5
4.07
62
574 8.2%3.2%
Graz
1,279
4
3.80
101
1,044 4.2%3.0%
Braunschweig
1,171
70,965
4
5.19
52
727 8.5%1.1%
786
58,072
2
3.52
70
1,200 3.5%1.8%
1,371 3.4%1.2%
Innsbruck
96,363
Salzburg
717
47,558
2
3.88
65
Klagenfurt
710
53,001
2
3.49
34
632 6.4%4.0%
Lüneburg
708
51,067
3
5.19
37
727 8.0%7.0%
586
1,122 3.8%4.1%
42,800
2
3.74
48
Suburban areas6)
Linz
8,386 592,165
31
4.50
526
889 5.8%4.4%
Hamburg
2,868 176,540
11
5.25
166
940 6.6%0.9%
Klagenfurt
1,601 116,419
5
3.69
92
786 5.2%8.1%
Villach
1,136
4
3.67
63
708 5.6%9.4%
1,243 3.8%4.3%
88,604
Vienna
543
44,942
2
4.10
56
Berlin
529
33,987
2
4.82
16
464 11.5%7.4%
Graz
482
36,176
2
4.16
32
895 5.5%1.4%
1,390 4.4%1.2%
Salzburg
468
36,669
2
5.11
51
Kiel
366
28,777
2
5.60
22
749 8.7%3.1%
Innsbruck
255
21,874
1
3.72
25
1,125 4.0%0.3%
138
8,177
1
4.99
5
611 9.3%5.5%
12,452 830,518
38
4.05
579
697 6.5%7.0%
Braunschweig
Rural areas Rural areas Austria
7,815 550,796
20
3.44
369
671 5.7%7.8%
Rural areas Germany
4,637 279,723
17
5.22
209
748 7.9%5.3%
Total Austria
26,2502,012,137
93
4.06
2,127
1,057
4.4% 5.0%
Total Germany
26,4681,647,897
102
5.31
1,341
814
7.6% 2.9%
Total
52,7183,660,034
195
4.63
3,467
947
5.6% 4.1%
1) Based on monthly in-place rent (excluding utilities) as of reporting date
4) Based on sqm
5) More than 50,000 inhabitants and a significant share of the portfolio > 600 units
6) The immediate catchment area up to about 15 km around federal capitals, state capitals and major cities, as well as Hamburg
63
Description of the standing investment portfolios
As of 30 April 2014, the standing investment portfolio of BUWOG Group – including the acquisitions closed
after the reporting period (Apollo portfolio, DGAG portfolio, see page 63) – comprises 52,718 units with a
total floor area of 3,660,034 sqm and a fair value of about EUR 3.5 billion.
The geographical orientation of the portfolio is noteworthy in two respects: Firstly, with over 26,000
units, each in Austria and Germany, the portfolio is not only almost equally distributed between Austria
and Germany in terms of number of units, but BUWOG Group also has the necessary critical mass in both
countries. Accordingly, BUWOG Group is one of the largest landlords in Austria and by number of units is
among the biggest players in the German residential market.
Secondly, the quality of the distribution of the portfolio within the two countries, with the four geographical
clusters, “Federal Capitals,” “State Capitals and Major Cities,” “Urban Areas” and “Rural Areas” is convincing.
About 38% of the portfolio – with a total value of more than EUR 1.3 billion and significantly more than a third
– of the residential portfolio of BUWOG Group by fair value is located in the urban areas of Vienna and Berlin.
No company within its peer group has such a high concentration in these two capitals. A further 45% of the
portfolio by fair value – just under EUR 1.6 billion – is located in state capitals and major cities with more than
50,000 inhabitants including their suburban areas extending to an area 15 km max. beyond the city limits.
These include Braunschweig, Graz, Hamburg, Innsbruck, Kassel, Kiel, Klagenfurt, Linz, Lübeck, Lüneburg,
Salzburg and Villach (in alphabetical order). This means that in terms of fair value 83%, or approx. EUR 2.9
billion, of the property portfolio of BUWOG Group is located in these three regional clusters, all of which are
very attractive in terms of the development of their economies, infrastructure and demographics.
Fair Value
Portfolio structure by date
of construction
by location category (Total: about EUR 3.5 billion)
Total floor area: around 3.7 million sqm
50%
from 2000
1990–1999
38%
15.9%
39.2%
1960–1979
22%
17%
15%
15%
13%
Suburban
areas
10.3%
1947–1959
9.4%
1921–1946
through 1920
State capitals and
major cities
17.5%
1980–1989
30%
Federal capitals
(Vienna, Berlin)
7.2%
0.5%
Rural
areas
n 30 April 2014
n Consideration incl. DGAG and
Apollo on Data basis of 30 April 2014
n austria
nConsideration incl. DGAG and
Most of the residential portfolio of BUWOG Group has been developed in-house, with around 55% of the
portfolio by floor area comprising buildings constructed from 1960 to 1989. Pre-war buildings and post-war
buildings from 1947 to 1959 make up about 10% each by floor area. Around 25% of the portfolio by floor area
was built from 1990 until today.
The quality of the portfolio of BUWOG Group is also reflected in the profile of the number of floors the
buildings have. Approx. 86% of the total portfolio by floor space consists of buildings of only up to five upper
storeys, approx. two-thirds of the buildings have up to just three upper storeys. Only 14% of the portfolio
has six or more upper storeys. This has positive effects on the lettability of the apartments as well as the life
cycle costs of the properties and their technical equipment, due, for example, to lower expenses for required
maintenance and repair.
The distribution of apartment sizes in the BUWOG Group portfolio is another key factor in their strong rental
attractiveness and the low vacancy rate. Over half of the apartments in the portfolio are in the 61 to 80 sqm
category (generally corresponding to three rooms), where demand is particularly strong. Apartments of less
than 40 sqm comprise only 2% of the residential portfolio by floor area, while large (81 to 100 sqm) and/or
very large (over 100 sqm) apartments make up about 23% and 5% of the portfolio, respectively, by floor area.
64
Asset Management
The average rent in the total portfolio on the reporting date was EUR 4.63 per sqm and month. However,
there are substantial differences between the geographical regions of the portfolio. For example, the average
rent in Austria was EUR 4.06 per sqm and month, well below the level of the inventory located in Germany
where rents averaged EUR 5.31 per sqm and month; this is due to the specific structural gaps in the markets
of both countries. The average rent level in the urban clusters is significantly higher than in the rural areas,
with Vienna and Berlin having averages of EUR 5.05 and EUR 5.67 per sqm and month, respectively, together
with the regions of Braunschweig, Hamburg, Kiel, Lübeck, Lüneburg and Salzburg forming the top group at
over EUR 5.05 per sqm and month. The structure of the average rent level, which is below the peer group
overall, is due in particular to the share of publicly subsidised residential buildings in the portfolio of BUWOG
Group, which makes up approx. 66% of the total floor area of about 3.7 million sqm. The expiring subsidy
commitments increase the potential for medium to long-term realisable rent increases in the portfolio.
apartment size
in-place rent per month
Total floor area: around 3.7 million sqm
> 100 sqm
per sqm as of the balance sheet date
(Ø total portfolio: EUR 4.63 per sqm)
5.2%
>7
6.01–7.00
23.1%
81–100 sqm
2.0%
6.7%
28.7%
5.01–6.00
51.4%
61–80 sqm
25.9%
4.01–5.00
18.4%
40–60 sqm
< 40 sqm
1.9%
n austria
21.8%
3.01–4.0
< 3.00
14.9%
n austria
Influencing and success factors
The activities of BUWOG’s Asset Management business area are influenced by various internal and external
parameters. Besides efficient structures, which make good use of the expertise and experience of employees,
and strict cost management to ensure the profitable management of residential properties, statutory and
regulatory provisions on the fixing of rental prices have an influence on the company’s business. The most
important effects associated therewith are discussed below. Further details on this topic can be found in the
Management Report from page 116 “Property market report” and on page 150 “Risk management”.
Established property markets with the potential for value appreciation
The standing investment portfolio of BUWOG Group focuses on metropolitan areas in Austria and Germany.
Both markets are considered highly developed and intact. Despite the increasing demand and strong investor
interest there are still options available to further expand the portfolio, as was demonstrated by the numerous
successful transactions in the reporting year. A key priority of Asset Management in the standing investment
portfolio is to take active steps to leverage letting and other value creation potential and subsequently to
identify favourable sales opportunities.
65
Efficient structures, clear areas of responsibility
In order to ensure the market-oriented management of the investment portfolio, the Asset Management
business area of BUWOG Group is organised by teams with regional responsibilities. In their role as
representatives of the owner, the experts on these teams are responsible for maximising the value of the
properties. They cooperate with the internal departments such as controlling, property accounting and
legal as well as external service providers such as brokers, lawyers and notaries. Their main tasks are to
continuousely segment the portfolio, set the property strategies, identify and realise the potential of the
portfolio and thus ensure the ongoing optimisation of the cost and revenue structure, the property cash
flows and thus the total value of the property – for the benefit of investors, of the standing investment
portfolio and the customers of BUWOG Group.
Ongoing optimisation of rental income
The main tasks of Asset Management include the ongoing optimisation of rental income, although the current
rental restrictions limit the room for manoeuvre here. On a like-for-like basis, BUWOG Group achieved an
increase in in-place rent of 1.8% to EUR 4.10 per sqm. On a like-for-like basis, in Austria, growth moderately
declined to 1.9% against the previous year’s 4.9% increase in the reporting period. The reason for this is
essentially the effect of the adjustments of Maintenance and Improvement Contributions (Erhaltungs- und
Verbesserungsbeiträge [MIC]) due to legal thresholds being exceeded. In the previous financial year, the
BUWOG Group benefited both from an increase in the MICs to the legally possible maximum rate of EUR 1.62
per sqm in part of the portfolio, and from the adjustment of the maximum rate of EUR 1.54 per sqm to EUR 1.62
per sqm. Fundamentally, the charging of higher MICs (MIC II) depends on when a building was constructed:
Charging above the base rate (MIC I) is first possible in the tenth year after construction; the increase to
the maximum possible rate is only possible from the twentieth year after construction. Depending on the
respective market compatibility, BUWOG in the future plans to also take full advantage of the corresponding
rent increase potential for the respective parts of the portfolio.
In Germany, it was possible to raise the base rental price (excluding utilities) on a similar basis by 1.6%, which
is due to increases in rent in the Berlin portfolio. For the Verdi portfolio, it was only possible to raise the
base rental price (excluding utilities) slightly due to rental price restrictions on publicly funded residential
construction. For the Tempelhof/Spandau portfolio, it was possible to raise the base rental price (excluding
utilities) by 2.8%. Base rental prices for the previous year (30 April 2013 compared with 30 April 2012) in
Germany grew 3.4%, which was purely due to the Tempelhof/Spandau portfolio on a similar basis. According
to a weighted valuation over a two-year period (CAGR), the development of base rental prices on a similar
basis for the BUWOG Group was 3.4%.
Strict cost management
The efficient and proactive planning of necessary maintenance measures by BUWOG Group’s asset
management results in significant cost savings. The efficient use of resources is supported by bundling
order quantities and the coordinated awarding of service contracts by central purchasing to ensure that the
required services are provided at a favourable price.
Maintenance and capex
per year and sqm in EUR
10.6
8.4
4.5
2.6
2012/13
n Maintenance costs
66
2013/14
n Capex
To some extent the cost of maintenance affects
the amount of rent (cost-covering rent). Regular
inspections of standing investments by the local
property manager prevent the backlog of necessary
maintenance work and ensure the timely correction
of defects as well as the bundling of larger measures
with corresponding cost advantages. Following
the economic and financial crisis, the maintenance
expenses were increased in the 2011/12 and 2012/13
financial years in comparison with prior years. With
total costs for ongoing maintenance and capital
expenditures of EUR 13.2 per sqm in the reporting
period, the level of the previous year was nearly
reached.
Asset Management
Services
The various areas of BUWOG Group also provide services to third parties. These services range from
traditional property management (residential properties and entire third-party properties in the residential
segment) to apartment rental.
BUWOG Rental Model
Several legal stipulations apply in Austria and Germany when setting the rent for housing:
Austria
The predominant area of BUWOG Group’s total holdings in Austria will be regulated and rented out according
to the Non-Profit Housing Act (WGG). The WGG contains numerous models for establishing housing rent.
In addition to rent for covering costs, which are composed of proportionate costs for purchasing property,
construction, financing and administration costs, there is the “Burgenland standard value -30% (BRW-30)”
for rental agreements after 1994 with a yearly increase in accordance with legal regulations (EUR 3.30 per
sqm). No general indexing is performed, but changes to financing costs may apply. In the second case, the
legally-stipulated standard value for Burgenland is reduced by 30% and increased by administration expenses
and additional costs. These costs can be adjusted yearly, indexing is predefined. Regulated rental agreements
in Austria show a rented total usable area of around 1.7 million sqm and/or 89.5% of the rented total usable
area of Austrian holdings (1.9 million sqm). The annualised net rent without utilities from the cost-covering
rent and according to the Burgenland standard value of -30% amounts to approximately EUR 75.9 million,
which results in an average monthly rent of around EUR 3.70 per sqm.
Unregulated rental agreements in Austria show a total rented area of around 138,000 sqm or 7.2% of the
rented holdings in Austria (1.9 million sqm). The average monthly rent for these rental agreements amounts
to 5.33 per sqm.
Rental agreements for others, including businesses which do not contain rental restrictions, are shown without
subdividing them into Austria and Germany. The percentage of these areas amounts to approximately 3% of
the rented total usable area of BUWOG Group’s total holdings in Austria and Germany and exhibit an average
monthly rent of EUR 10.32 per sqm.
Germany
There are unregulated rental agreements for around 960,000 sqm of the BUWOG portfolio, this equals 60%
of the rented total usable space of the Germany portfolio of 1.6 million sqm. The resulting annualised net rent
without utilities consists of around EUR 60.5 million for an average rent of EUR 5.25 per sqm.
The regulated rental agreements in the German holdings consist of around 37% of the overall rented total
usable space of the holdings portfolio (1.6 million sqm). For these real estate holdings, the annualised net
rent without utilities consists of around EUR 35.8 million for an average rent of EUR 5.05 per sqm. Rental law
limitations in Germany originated, among other things, from the Schleswig-Holstein Housing Allowance Act
(Wohnraumförderungsgesetz).
As of 30 April 2014, 7,303 stock units in the DGAG portfolio are deemed to be fixed price (40.5% of this
portfolio). 6,122 apartments thereof fall under the transitional provision of the Schleswig-Holstein Housing
Allowance Act (§16 SHWoFG). Ever since the amendment to the law came into force on 1 July 2009, the cost
rents stipulated at this point in time are deemed to be so-called base rents. Starting on 1 July 2014, the base
rents may be increased by a maximum of 9% (differing cap limit) within a time period of three years based
on §16 of the Schleswig-Holstein Housing Allowance Act (SHWoFG) (which now allows ways of increasing
the rent pursuant to § 558 of the Civil Code [BGB]). With the elimination of the rent control stipulated in
conjunction with the funding, a rent increase no greater than 20% is possible on the basis of legal regulations,
but no earlier than 31 December 2018. The aforementioned capping limits do not apply to modernisations.
Legal increase options apply here.
67
Portfolio structure
by type of rental agreement
in-place rent incl. DGAG and Apollo portfolios
Other
incl. commercial
7%
Unregulated
rental
agreements
36%
Regulated
rental
agreements
57%
While rent controls are in place, the aforementioned
rent controls must also be taken into account when
reletting. After the controls are eliminated, reletting can take place at market rents. So-called occupancy commitments continue to apply to publicly
subsidised rental apartments. Under these controls,
apartments can only be rented to certain persons
entitled to their occupancy.
For rental apartments that have complied with the
occupancy commitment for 35 years as of 1 July 2014,
the legally binding commitment ends on 30 June
2014. This is the case for 2,469 units. After this date,
there are thus no restrictions on the occupancy of the
apartment. Otherwise, the occupancy commitments
expire after 35 years. If the 35-year period ends after
1 January 2019, the rent controls and occupancy
commitments expire at the same time. Of the
previously mentioned 6,122 apartments in the DGAG
portfolio, occupancy commitments and rent controls
will expire for 52.4% of these apartments within the
next five years. Only 12.1% of the apartments will be
subject to these controls beyond 2030.
Structure of rental Agreements as of 30 April 2014
incl. DGAG and Apollo portfolios
Rental area
in sqm
as of 30 April 2014
Annualised
in-place rent
in EUR million
as of end 2013/14
Proportion
of annualised
in-place rent
In-place rent
per sqm
in EUR
as of end 2013/14
Unregulated rental agreements Austria
(incl. reasonable rents pursuant to WGG and MRG)1)
138,421
8.9
5%
5.33
Regulated rental agreements Austria
(incl. other provisions under WGG)2)1,709,529
75.9
39%
3.70
60.5
31% 5.25
(incl. DGAG and Apollo portfolios)590,429
35.8
18% 5.05
Other incl. commercial112,572
13.9
Unregulated rental agreements Germany
(incl. DGAG and Apollo portfolios)959,490
Regulated rental agreements Germany
Total3,510,441
195.0
7% 10.32
100%
4.63
1) Reasonable rents under WGG includes properties for which subsidies received have already been repaid and for which indexing can be individually agreed.
2) Cost-covering rent and Burgenland guidelines -30%
3) Based on monthly in-place rent/excluding utilities) as of the balance sheet date
Due to the external requirements described regarding the structure of rents, an increase in rental income can
mainly be achieved only through tenant turnover and prescribed annual adjustments. In this environment, it
is particularly important to use active asset management to exploit the existing potential of the properties
to the greatest degree possible, to identify potential for value appreciation in the form of additions and
extensions and to contain costs structures.
68
Asset Management
Strategy and outlook
The Asset Management business area of BUWOG will continue to pursue the strategy of maintaining and
developing a portfolio with low risk by holding properties in attractive locations in federal and state capitals
with a high occupancy rate. This strategy is based on high cash flow generation, which is ensured by the
following:
- Ongoing increases in rental income through active asset management
and improvements to occupancy rates
- Further improvement in the cost efficiency of management and maintenance
- Continuous optimisation of the standing investment portfolio through targeted Unit Sales and
Block Sales (see Property Sales from page 70)
Herwig Teufelsdorfer MRICS:
“BUWOG Group moved into a new dimension in 2013/14.”
“The 2013/14 financial year was a special year in many ways. With several
successful acquisitions, we were able to expand the standing investment portfolio
of BUWOG Group by over 60% to approx. 53,000 units. With the acquisition of the
DGAG residential portfolio we achieved an important strategic milestone in the
optimisation of the regional focus of the portfolio – 50% Germany, 50% Austria –
based on the number of units. In the view of the asset manager, both markets have
their special appeal. As in the reporting year, we will continue to make every effort in
the years to come to exploit the potential of the markets and standing investments
through active portfolio management as well as to implement effective measures
to further improve rent levels and cost optimisation. An exciting time lies ahead of
us and we will actively take advantage of the attractive opportunities that arise.”
Herwig Teufelsdorfer is the managing director of Asset Management & Property Sales Austria. He has 16 years of professional experience
in the real estate business and studied industrial engineering at the Technical University of Graz and Corporate Real Estate Management at
the European Business School in Oestrich-Winkel, Germany.
Of the total portfolio 52% account for the major part of the core portfolio fair value (including the DGAG and
Apollo portfolios). Around 41% of the fair value of the total portfolio has been categorised for eligibility for
Unit Sales in the mid-term, whilst the remaining 7% qualify for Block Sales. The transfer of new projects into
the BUWOG portfolio counteracts the reduction to total inventory. This secures the basis for the continuation
of the company’s successful business model. The portfolio’s returns will be further increased mainly from
the expansion of the property portfolio in Germany. In the mid-term, the Asset Management business area
is expected to generate around 70% of operating earnings (before non-attributable expenses and other
operating income) of BUWOG Group.
The strategic focus in Austria remains on the further optimisation of the standing investment portfolio. The
company seeks to steadily increase average rents by concentrating on the Vienna property market.
After the successful acquisitions in the reporting year, BUWOG Group is evaluating further growth
opportunities in selected regions in North-Western Germany and in Berlin with strong potential for value
appreciation. Depending on the market conditions, annual acquisitions with a volume of 2,000 to 4,000
units are expected to be concluded over the next several years. Sales are made only in the context of
continuous portfolio optimisation. Valuable synergies and cost savings are ensured by bringing together
previously externally managed units with the services unit taken over as part of the DGAG acquisition.
The Berlin property market, which is currently experiencing dynamic development in comparison to other
European cities, remains an area of strategic focus of the BUWOG Group in Germany.
69
property
sales
In the Property Sales business area,
BUWOG Group primarily focuses on
Unit Sales with the aim of maximising
profits. If beneficial conditions apply
Block Sales (property and portfolio sales)
are also executed in Austria.
70
Piaristengasse 31 / Vienna
property sales
71
STRATEGIC POSITIONING
The Property Sales business area pursues a clearly defined strategy. Individual vacant units are sold when
BUWOG Group estimates that their full potential value has been reached. Furthermore, properties and
portfolios are sold irrespective of their vacancy rate if they are no longer in line with the current corporate
strategy, such as the company’s regional orientation, and the market conditions are attractive.
In the context of this strategy, Property Sales will continue with the high margin sale of individual units in
central locations by exploiting the current attractive market environment. At the same time, the Austrian
portfolio in rural areas will mainly be adjusted through Block Sales.
In the 2013/14 financial year, the Property Sales business area generated around EUR 34 million of results
of operations (before expenses not directly attributable to the business area and other operating income of
BUWOG Group). Of the total FFO of EUR 81.8 million, EUR 28.5 million is attributable to Unit Sales, which is
considered part of BUWOG Group’s Recurring FFO due to its re-occurrence across cycles. EUR 12.6 million
of the total FFO resulted from Block Sales.
High margin business model
The Property Sales business model aims to achieve attractive prices through Unit Sales to owner occupiers
or Block Sales to investors to continuously improve the standing investment portfolio in terms of earnings.
Based on a thorough analysis of the overall portfolio, BUWOG Group continuously identifies property suitable
for monetisation in the medium to long term via Unit Sales or Block Sales. As of the reporting date of 30
April 2014, the cluster Unit Sales comprised 13,609 units and the cluster Block Sales 4,066 units (both figures
include the DGAG and Apollo portfolios).
Cluster Unit Sales
as of 30 April 2014
Number of units
Fair value1)
in EUR million
Share
of fair value
Fair value1)
per sqm in EUR
Net Rental Yield2)
Vienna
5,63875954% 1,6103.3%
Carinthia
2,95221515% 9544.4%
Rest of Austria
4,95643331%
1,181 3.8%
Germany
63
Total
5
0% 9907.4%
13,609 1,412 100% 1,322 3.6%
1) Based on fair value according to CBRE assessment reports of 30 April 2014 and 30 April 2013 as well as purchasing prices for DGAG and Apollo portfolios
Cluster Block Sales
as of 30 April 2014
Number of units
Vienna
Fair value1)
in EUR million
539
Share
of fair value
76
Fair value1)
per sqm in EUR
Net Rental Yield2)
32% 1,551 4.5%
Carinthia
1,667
88 38% 7095.5%
Rest of Austria
1,740
68 29% 5736.5%
Germany
Total
120
2
1% 26617.3% 3)
4,066 234 100% 779 5.6%
1) Based on fair value according to CBRE assessment reports of 30 April 2014 and 30 April 2013 as well as purchasing prices for DGAG and Apollo portfolios
3) The units defined in Germany for Block Sales are located in Berlin-Brandenburg and are not representative of the entire Germany portfolio.
The Property Sales business model is based on the fact that the value of the discounted cash flow from
letting is lower than the value of these units for the users or for investors who expect lower but solid yields.
BUWOG Group leverages this potential through targeted sales.
72
Property Sales
STRATEGIC POSITIONING,
High margin business model
Whilst lower Net Rental Yields are achieved in Austria due to the rents achievable in the subsidised housing
sector in relation to relatively high fair values, the opposite situation pertains in Germany where generally
higher rents are achieved with lower fair values. BUWOG Group uses these differing market situations to
optimise the portfolio weighting in terms of earnings. Resources generated by the sale of portfolio units in
Austria are used to finance the growth strategy in Germany.
During the reporting year, average margins of 54% on the corresponding fair value were achieved for Unit
Sales and 11% for Block Sales. Independent experts determine the fair values in this area using a method
which includes the potential sales price of the apartments and the planned sale at the level of the expected
turnover in the relevant properties, as well as the discounted rental income for a specific period.
Unit Sales
In the cluster area of Unit Sales, the relevant residential units are first prepared for Unit Sales through the
creation of condominiums (Parifizierung). In the second stage, the units becoming vacant in these apartment
buildings are then sold to the tenants themselves or to third parties. As of the reporting date of 30 April
2014, 5,638 properties in Vienna, 7,908 units in the remaining Austrian provinces and 63 units in Germany
were allocated to this area. During the reporting year, a total of 553 units from this area were sold, achieving
a contribution to Recurring FFO of EUR 28.5 million. Unit Sales achieved a margin of 54% on fair value in the
financial year.
Units sold
Average prices achieved
in EUR per sqm
2,292
2,015
1,958
1,960
1,666
1,088
1,199
935
1,094
1,739
733
805
479
456
2011/12
n Unit Sales
467
553
2012/13
2013/14
2011/12
2012/13
2013/14
n total n Unit Sales n block sales
n block sales
Margin on the fair Value
in %
55
54
15
11
2012/13
n Unit Sales
2013/14
n block sales
73
BLOCK SALES (PROPERTY AND PORTFOLIO SALES)
Residential units, which are not offered in Unit Sales from a profitability perspective, are allocated to Block
Sales if they are no longer strategically relevant. In the case of these units, a medium-term sale to local
private investors whose focus is on sustainable yields and stable cash flow is more expedient than an unit
sale. Around 539 portfolio units in Vienna, around 1,667 in Carinthia, around 1,740 in the rest of Austria and
120 in Germany are allocated to this area. During the reporting year, a total of 1,739 portfolio units were sold
in Block Sales. The sales margin realised in relation to the corresponding fair value was 11%.
INFLUENCING AND SUCCESS FACTORS
The course of business of the Property Sales business area largely depends on transaction-related fluctuations:
whilst changes in sales volume are mainly triggered by larger Block Sales, the flow of Unit Sales may be
characterised by its stable and recurring nature. In general, investment portfolios are sold if no further value
or rent increases can be achieved through active asset management, and the sales proceeds that can be
realised are more than the cash value of the future rental income. In addition to general market demand,
which determines the level of the selling price in relation to the offer, macroeconomic indicators such as
interest rates, the development of real income and consumer sentiment influence buying patterns. Other
important influencing and success factors are discussed below in summary.
REALISATION OF ADDED VALUE THROUGH INVESTMENTS
Due to the existing building regulations, it is possible to still develop loft extensions before the planned sale,
which allows additional lettable area to be created without incurring land costs. As a rule, a loft extension is
carried out in combination with a comprehensive renovation or modernisation of the standing investment.
However, such investments are only made on the premise that significant additional revenue can be generated
in the course of the later sale.
PREPARING PROPERTIES FOR SALE THROUGH THE CREATION OF CONDOMINIUMS (“PARIFIZIERUNG”)
It is only possible to sell individual apartments through “Parifizierung”. In contrast, the sale of entire
complexes can take place without “Parifizierung”, as the conditions of the Austrian Condominium Act
(Wohnungseigentumgesetz, “WEG”) do not apply here. “Parifizierung” ensures that the legal, financial and
administrative aspects of the acquisition and associated obligations for the purchaser can be calculated
through a clearly defined condominium agreement. During the course of the “Parifizierung” of a property, the
pro rata usable value of the individual apartments in the entire property is determined through a usable value
report prepared by an expert. This value also defines the voting rights of the individual apartment owners on
issues of management and renovation.
ACTIVE MARKETING
The units allocated to the areas of Unit Sales and Block Sales are offered for sale by the in-house sales team
as well as through selected external estate agents. Due to the portfolio structure, some in-house staff work
in Carinthia and Styria, as well as Vienna.
Individual apartments are mainly offered in metropolitan areas or in regions with a high recreational value,
such as near the lakes in Carinthia. Whole properties or smaller portfolios are mainly put on the market where
there is interest from local investors, whereas Unit Sales can only be realised over a longer period of time.
Selected sales transactions in the 2013/14 financial year, which illustrate the strategy selected, are shown
below.
74
Property Sales
INFLUENCING AND SUCCESS FACTORS,
Unit SALES 2013/14
Unit SALES 2013/14
In the 2013/14 financial year, BUWOG Group concluded total sales of 553 portfolio units in individual
transactions. The average price per sqm was EUR 1,960, achieving a margin of 54% on the fair value. Some
examples of these transactions are listed below.
Lascygasse 24, 1170 VIENNA
3 units of 240 sqm
at an average price
of EUR 2,358/sqm,
remaining total floor
area of 4,146 sqm at an
average monthly rent of
EUR 3.31/sqm
Lorenz-Mandl-Gasse 46, 1160 VIENNA
7 units of 520 sqm
at an average price
of EUR 2,602/sqm,
EUR 5.32/sqm
Rustenschacherallee 30, 1020 VIENNA
10 units of 728 sqm
at an average price
of EUR 3,699/sqm,
EUR 3.22/sqm
Bonygasse 31, 1120 VIENNA
10 units of 744 sqm
at an average price
of EUR 2,350/sqm,
EUR 6.85/sqm
hertha-Firnberg-StraSSe 7, 1100 VIENNA
5 units of 359 sqm
at an average price
of EUR 2,142/sqm,
average monthly rental
of EUR 4.74/sqm
Forsthausgasse 15, 1020 VIENNA
4 units of 266 sqm
at an average price
of EUR 2,091/sqm,
EUR 2.90/sqm
An der Furt 14, Innsbruck
2 units of 106 sqm
at an average price
of EUR 2,220/sqm,
EUR 3.10/sqm
75
BLOCK SALES 2013/14
When structuring the standing investment portfolio, BUWOG Group focuses on the federal capitals of Berlin
and Vienna, and on selected state capitals and metropolitan areas in economically prosperous areas of Austria
and North-West Germany. In accordance with this strategy, further sales were made in the Austrian standing
investment portfolio in the 2013/14 financial year to improve the portfolio. After portfolios in Vorarlberg and
Styria had already been sold in previous years, a portfolio with 48 properties, or 1,135 residential units, with a
total rental area of just under 84,000 sqm in Upper Austria was sold to WAG, a residential property company
based in Linz, in August 2013. This disposal reduced the portfolio in Upper Austria to 18 properties with
619 units or a rental area of 45,657 sqm as of 30 April 2014. Of these, 597 units are allocated to Unit Sales
and 22 units to Block Sales.
Property from the sale of WAG, Linz
In the 2013/14 financial year, BUWOG Group sold 1,739 units through Block Sales. The average price per sqm
was EUR 805, achieving a margin of 11% on the fair value. Some examples of these transactions are listed
below.
Krapfenwaldgasse 34, 1190 vienna
10 units with
a total floor area
of 741 sqm
Kaserngasse 9, KörnerschlöSSl, 1230 vienna
8 units with a total floor
area of 960 sqm (plus
a lot area of 23,230 sqm
incl. forest)
76
Joseph-Haydn-strasse 14–20, Amstetten
24 units with
a total floor area
of 1,440 sqm
Willertgasse 6–22, Wiener Neustadt
104 units with a total
floor area of 6,204 sqm
Property Sales
Block Sales 2013/14,
STRATEGY AND OUTLOOK
Properties from the ÖSW sale in Carinthia
HERWIG
TEUFELSDORFER
MRICS
“The ongoing sale
of residential units
enables us to fund
new projects to further
improve the overall
profitability of
BUWOG Group.”
Herwig Teufelsdorfer is Director of
Asset Management & Property Sales
Austria.He has spent 16 years working
in real estate after studying Business
Engineering at Graz Technical University
and Corporate Real Estate Management
at the European Business School in
Oestrich-Winkel, Germany.
“BUWOG Group will continue to work
intensively on further improving its
standing investment portfolio. In total,
just under 17,500 units were defined
in Austria and around 180 units in
Germany which will be offered for
sale in the coming years. We pursue
very clearly defined yield targets in
this respect. BUWOG Group will use
the funds generated from these sales
for new construction projects and
additional additions to the portfolio
in high-growth markets such as Berlin
and Vienna to continue to increase
overall profits, as well as for dividend
payments. This well-balanced business
model, with its closed cycle of value
creation, will also ensure the further
success of BUWOG Group in the
future.”
BUWOG Group will continue its strategy of actively selling defined units in the coming years. As part of this
strategy, the standing investment portfolio will be improved and re-structured to focus on profits. In total,
13,609 units were allocated to Unit Sales and 4,066 units allocated to Block Sales. The focus in Austria is
mainly on Vienna (6,177 units) and Carinthia (4,619 units).
In the area of Unit Sales, approx. 500 units will be sold annually on an ongoing basis in the next few years.
Due to the current market and demand situation, particularly high profit ranges can be achieved if multiplestorey residential complexes are monetised in the form of Unit Sales.
Given continuing favourable market conditions, the company plans to sell approx. 500 apartments annually
in Block Sales. These transactions are primarily for the purpose of promptly selling properties outside of the
defined strategic focus markets in the federal and state capitals.
77
property
development
The Property Development business area of BUWOG Group
comprises the project development of residential properties for
the company’s own holdings or for direct sale after completion.
This covers the entire property development value chain – from the
purchase of land through to the execution of planning and approval
processes, and the completion and marketing of projects.
78
79
property development
STRATEGIC POSITIONING
The Property Development business area focuses on the demographically and financially strong federal
capitals of Vienna and Berlin. Due to its many years of experience and excellent market knowledge, BUWOG
Group is one of the leading project developers in the residential sector in both cities.
In the 2013/14 financial year, the Property Development business area generated results of operations
(before expenses not directly attributable and other operating income) of EUR 4.9 million. This high level
of contribution to earnings from project development is a unique selling proposition of BUWOG Group
compared to other listed property companies, which mainly focus on renting and trading in apartments, but
do not generally develop the properties themselves.
Various MARKET-ORIENTED
DEVELOPMENT MODELS
BUWOG Group pursues various implementation models depending on the relevant market and demand
situation (see information in the management report starting on page 116), which are meticulously analysed
prior to project realisation. In the privately financed sector, residential projects are implemented for private
and institutional investors, owner-occupiers and for the company’s own rental portfolio. In the subsidised
residential housing market, the properties are sold as subsidised condominium apartments or they are
rented out under the subsidy regulations. These subsidised rental apartments are held in the BUWOG Group
investment portfolio for at least ten years before they are monetised in Unit Sales or Block Sales transactions
(see the Property Sales business area starting on page 70).
In Austria, BUWOG Group is one of the largest project development companies with around 30,000 apartments
realised during the course of the company’s history. An acquisition made in 2012 also enabled BUWOG Group
to position itself in the Berlin residential property development market. Alongside a professional team of
employees, the acquisition included multiple projects at various development stages, as well as land reserves
for new development projects. These include the Humboldt Palais on Hegelplatz, two projects at Pankepark
in the BND district and a 100,000 sqm site on Regattastrasse in Berlin-Köpenick. Additional development
projects have been prepared or started since then.
Residential units in the
project development
819
741
713
655
374
299
221
2011/12
n Completed Units
n Units sold
80
273
2012/13
238
2013/14
n Units under construction
STRATEGIC POSITIONING, DEVELOPMENT MODELS,
In addition to the company’s long experience and the outstanding expertise of its employees, the success of
BUWOG Group in the Property Development business area is primarily due to the specific selection criteria
used, non-compromising market proximity when acquiring properties or selling them at the right time, as
well as access to project financing at attractive terms. At the same time, the geographic focus on the two
federal capitals of Vienna and Berlin has resulted in a favourable risk profile.
SPECIFIC SELECTION CRITERIA
Alongside its specific financing and profitability targets, BUWOG Group also has strict selection criteria, such as:
- Project size
- Quality of the location
-Accessibility
- Demand situation
- Technical and social infrastructure
for assessing investment decisions in the Property Development business area.
IDENTIFYING AND SECURING MARKET OPPORTUNITIES
Thanks to its solid expertise in the Vienna and Berlin markets, and a strong network of partners along the
entire value chain, BUWOG Group identifies attractive development projects early on. Due to the transaction
security as a result of the company’s size, positive collaboration with the relevant authorities and internal
expertise, BUWOG Group is able to secure sufficient land reserves for future projects. Potential project
opportunities are analysed by an internal department whose task it is to actively assess sites that are not yet
on the market in order to ensure a competitive advantage.
In the Vienna residential market, BUWOG Group particularly benefits from land reserves and a well prepared
and structured project pipeline which has been developed and continuously supplemented in recent years.
The company mainly focuses on major projects that can only be implemented by a few project development
companies with the required financial strength and experience. Although new development projects are
only occasionally possible in inner cities due to the high urban density, BUWOG Group is able to utilise
these opportunities due to its leading market position and good network. It also focuses on new urban
development projects such as the lakeside town of Aspern and the area around the new main railway station
in Vienna.
New large development projects are also more often possible in central areas and districts of Berlin than in
Vienna due to open spaces and demolition projects caused for historical reasons. Similarly to Vienna, the
Berlin residential market also benefits from the continuous growth in the population and the trend to single
households (for details see the management report, page 120).
ACTIVE TIMELY MARKETING
Internal experts, the BUWOG Group sales team and selected market-leading external estate agents are
responsible for the timely marketing of the apartments for rent or for sale. The insights gained regarding
current market demand provide valuable information for the direction and development of new building
projects. Due to the general increase in the cost of apartments, there has been greater focus on more compact
floor plans, for example, in recent years. Flexible usage and adaptation to changing needs in different life
stages are becoming more important.
Energy-efficient buildings, high-quality fittings and fixtures, low-energy housing with appropriate building
technology, generous communal areas, convenient underground parking, recharging stations for electric
cars and bikes as a contribution to climate protection, and generous open space (balconies, terraces, etc.),
modern sound insulation and well-designed bathrooms are additional comfort elements that significantly
influence the success of a project.
BUWOG Group did not develop any properties for its own portfolio in the 2013/14 financial year, but is
targeting the addition of numerous properties currently under development in the coming years.
81
Early marketing successes that should ideally be achieved in the planning stage also shorten the financing
term and, therefore, also reduce financing costs. On average, approx. 80% of the units developed by BUWOG
Group are sold; with the remaining 20% being rented out in the long term.
TAILOR-MADE PROJECT FINANCING
BUWOG Group generally uses its own funds to finance the expenses for the purchase of land or demolition
properties, as well as for the planning and approval processes. Tailor-made project financing is agreed for
the building and construction costs. On average, around 40% of subsidised apartment construction projects
is financed by bank loans and around 30% each by a government subsidy as a fixed amount and financing
contributions from tenants, which comprise a one-off contribution to land and construction costs due on
occupancy. Due to a lack of attractive subsidy models in Germany, BUWOG Group currently focuses on the
development of privately financed rental and condominium apartments in Berlin.
Government subsidies and bank liabilities are capitalised during the implementation stage in accordance with
the construction progress on the particular project. Depending on the degree of utilisation, the previously
used own funds can be gradually reduced. Due to these different forms of financing, BUWOG Group is not
only able to spread the associated risk but also achieves favourable overall terms.
Enenkelstraße 3 / Vienna
In Austria, government subsidies are used if the associated conditions, such as the upper limits for the value
of the land parcel, can be met and the project design or utilisation of the subsidised units is economically
feasible. These conditions are generally met by projects located in the outer districts of Vienna.
82
REFERENCE PROJECTS IN VIENNA
REFERENCE PROJECTS IN VIENNA
During the reporting year, BUWOG Group completed around 227 residential units in Vienna and delivered
them to their owners or occupants. An additional 411 units were under construction as of the balance sheet
date of 30 April 2014. A selection of these properties is listed below.
7HIRTEN4LIVING
-
-
-
73 privately financed condominium apartments with
balcony, terrace, loggia or own garden
Apartment sizes of 42 sqm to 95 sqm
Handover to occupants in December 2013
BUWOG Group built a total of 73 residential units of various
sizes at this location in four four-storey buildings. The location
is attractive due to its excellent public transport links and
proximity to the major business parks in the south of Vienna.
Basler Gasse 65, 1230 Vienna
WOHNQUARTIER 22 – PROPERTIES TO OWN ON THE MÜHLWASSER RIVER
-
-
-
46 privately financed condominiums and investment
apartments with garden, balcony or terrace
Handover to occupants in April 2014
BUWOG Group built Wohnquartier 22 in Vienna’s 22nd district.
It was handed over to its occupants in May 2014 as planned.
The property is attractive due to its proximity to the Mühlwasser
river with its open swimming areas, the Donauauen National
Park and the popular Danube Island. The centre of Vienna can
be reached in 15 minutes by U2 underground train and the
remaining infrastructure is also excellent.
Wulzendorfstrasse 22, 1220 Vienna
APART19 – A NEW WAY OF LIVING IN DÖBLING
-
-
-
41 apartments with high-quality fittings,
balcony/loggia or terrace
Handover to owners PREMIUM in May 2014
Located in a quiet, but conveniently situated area in Vienna’s 19th
district, BUWOG Group built this complex with 41 apartments
and 18 parking spaces, and equipped to a high standard. The
sale to Premium Immobilien AG was concluded on handover in
May 2014.
Boschstrasse 49+51, 1190 Vienna
83
SKY 9 BY THE MAIN RAILWAY STATION
-
-
-
85 privately financed condominiums and
investment apartments with balcony, terrace or loggia
Completion in May 2014
BUWOG Group completed the first residential construction
project in the urban development area around Vienna’s new
main railway station in spring 2014. In total, 85 apartments of
varying sizes and 77 parking spaces were built. The complex is
ideally located in this vibrant new district near to the centre of
Vienna.
Gombrichgasse 4, 1100 Vienna
Danubio
-
-
-
108 privately financed condominium apartments
with terrace, loggia or own garden
Completed in July 2013
BUWOG Group built 108 privately financed condominium
apartments in a central and easily accessible location in
Floridsdorf, which had all been sold by the time of their
completion in July 2013. The location combines the advantages
of a central position and good transport links with the benefits
of natural surroundings.
Jedleseer Strasse 5, 1210 Vienna
NORDBAHNHOF PROJECT
-
-
-
-
198 subsidised in 16 privately financed rental units
Focus on affordable housing for single people and
single-parent families
klima:aktiv passive house
Handover to client Bank Austria Real Invest in April 2013
(and therefore shortly before the reporting period)
In an easily accessible location near the Nordbahnhof railway
station in Vienna’s 2nd district, BUWOG Group developed and
built a total of 206 apartments, which specifically focus on the
housing requirements of young people and families.
Corner of Vorgartenstrasse/Rabensburgerstrasse, 1020 Vienna
84
REFERENCE PROJECTS IN Berlin
REFERENCE PROJECTS IN BERLIN
BUWOG Group is currently developing and building several residential projects in the most popular locations
in Berlin via its subsidiary BUWOG-Meermann GmbH. As of the reporting date of 30 April 2014, 244 residential
units were under construction and 147 units were completed during the 2013/14 financial year. Some of the
more important projects in various different development stages are listed below.
52 GRAD NORD – ENTIRE PROJECT
- Construction to start in stages from October 2014
- Entire project planned to be finished in 2021
The approx. 100,000 sqm waterfront property is located in the
rapidly developing south-eastern part of Berlin in the TreptowKöpenick district and is thus not far from BER, the future main
airport. A new residential area, including childcare facilities and
small commercial units, will be constructed here right on the
shores of the Dahme river between 2014 and 2022. BUWOG
Group will start marketing the first phase “Seefeld” with
114 residential units along the central private expanse of water
at the centre of the area in 2014.
Regattastrasse 11–51, Berlin-Grünau
52 GRAD NORD – 1 st CONSTRUCTION STAGE SEEFELD
-
-
-
113 residential units, 1 commercial unit and
77 car parking spaces
Total floor area: 9,914 sqm
Construction starts in stages from October 2014
Uferkrone – LindenstraSSe
-
-
-
-
High-quality apartment buildings on the banks
of the Spree river
198 apartments and 170 underground parking spaces
Residential space: 20,034 sqm
Construction expected to start in September 2014;
planned completion of last phase in 2021
Condominium apartments for owner-occupiers and investors
will be built on this waterfront site on the Spree river in the
first construction phase between 2014 and 2021. In the second
construction phase, for which planning work will be started
from 2018, rental apartments will also be built.
Lindenstrasse 36, Berlin-Köpenick
85
Westendpark
-
-
-
112 condominium apartments and 119 underground parking
spaces in eleven classically elegant apartment buildings
Construction started in March 2014; completion planned
from April 2015 in several construction stages
The high-quality two to five-room apartments vary in size
between 70 sqm and 210 sqm, have large windows and
south-facing balconies, terraces or private gardens. The welllit apartments, with ceiling heights of 2.90–3.05 metres, are
exceptionally stylishly designed.
Tharauer Allee 4–14, Berlin-Charlottenburg
Gervin & Wilmers
-
-
-
77 condominium apartments and 47 parking spaces
3 commercial units on the ground floor
Construction started in March 2014;
completion planned for August 2015
With their various different floor plans and stylish interiors,
the high-quality modern condominium apartments meet the
demand for contemporary urban living. Micro-flats, studios,
penthouses and the “house-in-house” concept make up the
varied offering for the many living requirements of modern city
lovers.
Gervinusstrasse 1-3, Berlin-Charlottenburg
QUARTIER IM PANKEPARK
-
-
-
52 privately financed rental apartments and
33 underground parking spaces
Construction started in June 2013;
completion planned for March 2015
Located centrally near the main railway station and the
government district, BUWOG Group is building this property
with a total of 52 units that will be offered as rental apartments.
Scharnhorststrasse 4, Berlin-Mitte
86
The strategy of BUWOG Group in the Property Development business area aims at the market-orientated
and continuous realisation of residential development projects in Vienna and Berlin. Priority is on securing
high profitability, allowing for the respective risk situation, rather than merely generating volume. In parallel,
BUWOG Group has started to expand its pipeline for future development opportunities through the ongoing
acquisition of attractive plots of land. It is not planned to broaden project development activity beyond
Vienna and Berlin.
There are currently 47 projects in the pipeline which will be implemented over the next few years. The
investment volume estimated for this is a total of around EUR 1,520 million with 68% allocated to Vienna and
32% to Berlin. In the 2014/15 financial year, 27 projects are under construction or will start construction. The
investment volume for these projects amounts to approx. EUR 761 million.
Development projects
Berlin
EUR 490
million
Land reserves
EUR 165 Million
by location
by implementation stage
total:
EUR 1,520
million
total:
EUR 1,520
Million
Vienna
eur 1,030
Million
In planning
stage
(Construction to
start from 2015/16)
EUR 594 Million
Currently
under
construction
or planned
start of
construction
in 2014/15
EUR 761
Million1)
1) Thereof EUR 180.7 million under construction
87
VIENNA
Despite challenging conditions in the Vienna property market, BUWOG Group was able to secure several
sites for building additional residential construction projects. In the 2014/15 financial year, the company will
start or continue to build around 1,775 residential units in 21 projects. The investment volume estimated for
this amounts to around EUR 512 million. An additional 1,740 residential units are currently in planning and
they will be built from the 2015/16 financial year onwards.
Progress of Development Projects in Vienna
as of 30 April 2014
Number
of projects
Number
of units
Floor area
in sqm
Investment volume
in EUR million
Currently under construction or
planned construction start in 2014/1521
1,775
167,349
512
In planning stage (construction to start from 2015/16)11
1,740
125,998
353
Land reserves1)
9
Total
41
70660,653
165
4,221354,000 1,030
1) Outside Vienna: Mödling, Krems, Salzburg, Innsbruck
Development in Vienna
Andreas
Holler,
“In the next
few years,
we will
build more
than 3,500
residential
units in
Vienna.”
S1
A 23
A 22
A1
A 23
A4
Vienna
International
Airport
A 21
A2
● ACurrently under construction
● Planned Construction Start 2014/15
● In planning1)
● Land reserves2)
1) Construction starts from the 2015/16 financial year
2) Outside of Vienna: Mödling, Krems, Salzburg, Innsbruck
“BUWOG Group has a highly attractive
project pipeline in Vienna. Over the next
few years, we will execute construction
projects without land reserves with
more than 3,500 residential units with
a total investment volume of around
EUR 865 million, thereby solidifying
and further expanding our marketleading position, while continuing
to remain true to our principles:
meticulous selection of projects and
implementation
partners,
marketoriented design with added value for
users and risk-conscious financing.
This will also enable the Property
Development business area to remain
an important source of income for
BUWOG Group in the future.”
Andreas Holler is the Director of Property Development Austria.
He has more than nine years of professional experience in property
management and studied Business Administration at Boston
University.
88
berlin
BUWOG Group will implement multiple projects in Berlin in the up-and-coming districts in the east of the
city as well as in the established western regions. In the 2014/15 financial year, the company will continue or
start the construction of approx. 770 residential units as part of 6 projects. The investment volume estimated
for this amounts to approx. EUR 249 million. The Regattastrasse project is expected to be realised in several
stages with different start dates, with the first stage starting in the 2014/15 financial year.
Progress of Development Projects in berlin
as of 30 April 2014
Number
of projects
Number
of units
Floor area
in sqm
Investment volume
in EUR million
Currently under construction or
planned construction start in 2014/156
770
72,289
249
In planning stage (construction to start from 2015/16)1)-
810
72,394
241
Land reserves1)
- --
Total
6
1,580144,683
490
1) The Regattastrasse project will be carried out in multiple phases with different dates for the beginning of construction. The first construction phase will begin in the 2014/15 financial year.
Development in Berlin
Berliner Ring /
Hamburg / Rostock
A 10
A 10
Berliner Ring
Tegel
Airport
Alexander
Happ
“We will
exploit the
potential of
the Berlin
residential
market for
future growth.”
Berlin
Mitte
Köpenick
Potsdam
A9
A 13
BER
Berlin
Brandenburg
Airport
Halle / Leipzig /
Hannover
● Currently under construction
● Planned Construction Start 2014/15
1) Construction starts from the 2015/16 financial year.
2) The Regattastrasse project will be carried out in multiple phases with different dates for the beginning of
construction. The first construction phase will begin in the 2014/15 financial year.
“BUWOG Group has managed to secure
valuable project opportunities in Berlin
in recent years. This will allow us to
benefit from the strong demand in the
Berlin residential market. Overall, we
intend to build around 1,600 residential
units with a total investment volume
of almost EUR 500 million over the
next few years. In the 2013/14 financial
year, we made significant progress on
the current projects and started new
projects in parallel. I am convinced
that the high level of commitment
and outstanding expertise of our team
will enable us to make best use the
potential of the Berlin market – we
look forward to actively taking on the
exciting challenges that lie ahead.”
Alexander Happ is the Director of Property Development Germany.
He has worked in the property sector for around 22 years and
studied Business Administration at the University of Kiel.
89
investor
relations
Since its public listing at the end of April 2014, an active
and transparent communications policy with all financial
market players has been a key priority for BUWOG AG
and its management. The focus centres on a regular dialogue
with existing shareholders and potential investors, as well
as expanding the marketability of BUWOG shares by
promoting an understanding of the company’s strategy.
All these activities and efforts strive to ensure the equal
treatment of all shareholders and potential investors, as
well as the provision of timely and meaningful information.
-Share price increase from initial listing
until 31 July 2014 of 10.4% to EUR 14.35
-Inclusion of BUWOG shares in the sector index
FTSE EPRA/NAREIT Developed Europe and
in the Austrian VÖNIX Sustainability Index
-Coverage by six financial institutions
and research experts
-Proposal to the Annual General Meeting
for a dividend of EUR 0.69 per share for
the 2013/14 financial year.
90
Investor relations
91
Spin-off and public listing
The 2013/14 financial year was dominated by the spin-off from the former sole shareholder, IMMOFINANZ AG
– which was entered in the company register on 26 April 2014 – and the subsequent public listing of BUWOG
AG shares. Following in-depth discussions with private and professional investors, IMMOFINANZ AG had
decided to simplify the business model of both companies. The spin-off of BUWOG AG was effected by a
resolution passed at an Extraordinary General Meeting of the shareholders of IMMOFINANZ AG on 14 March
2014. As part of the public listing, shareholders received one BUWOG AG share for every 20 IMMOFINANZ
AG shares. By legally separating the companies in this manner, shareholders were able to clearly decide
whether, in addition to their investment in IMMOFINANZ AG, they also wanted to own shares in BUWOG AG
to participate in the stable performance and steady cash flow generated by a purely residential portfolio in
what are currently the two safest investment regions in Europe – Austria and Germany.
Detailed information on the business model of BUWOG AG can be found in the “Company profile” section,
starting on page 45.
Following the spin-off from IMMOFINANZ AG, BUWOG shares started trading on the Frankfurt Stock
Exchange (Prime Standard) and Vienna Stock Exchange (Prime Market) on 28 April 2014, and on the Warsaw
Stock Exchange (Main Market) on 29 April 2014. The listing on three stock exchanges reflects the presence of
BUWOG AG in its home markets of Austria and Germany, while at the same time ensuring good comparability
with its peer group. The Warsaw Stock Exchange was chosen for BUWOG AG because IMMOFINANZ AG
shares are also listed there. The procedure of transferring shares was therefore made easier for existing
shareholders. At the same time, institutional investors who may only invest in shares listed in Poland, such as
insurance companies, were able to continue holding shares in BUWOG AG.
The Austrian Financial Market Authority (FMA) confirmed in writing to BUWOG AG on 10 July 2014, that
BUWOG AG is not considered an Alternative Investment Fund (AIF) pursuant to § 2 (1) no. 2 of the AIFM Law
in its current version, whereby BUWOG AG is not covered by the rules of the AIFM Law and therefore requires
no particular concessions for the practice of its business.
Extraordinary General Meeting
on 15 May 2014
An Extraordinary General Meeting of BUWOG AG was held on 15 May 2014 in the Austria Center in Vienna.
In addition to a detailed presentation of the company by the Executive Board, the agenda also included the
election of the new Supervisory Board and the authorisation for the Executive Board to buy and sell treasury
shares up to 10% of the company’s share capital in each case. The Extraordinary General Meeting approved
the election of the new Supervisory Board, with its size and composition adjusted to suit the new shareholder
structure of BUWOG AG. All five nominated candidates were elected, and IMMOFINANZ AG in its capacity
as shareholder only took part in the election of two of the candidates to ensure that three members of the
supervisory bord would be independent shareholder representatives. Since then, the Supervisory Board has
comprised the following members:
- Vitus Eckert (Chairman)
- Eduard Zehetner (Vice-Chairman)
- Volker Riebel
- Klaus Hübner
- Jutta Dönges
92
Investor relations
Spin-off, General Meeting,
Capital market environment
Further information on the members of the Supervisory Board and the de-domination agreement between
BUWOG AG and IMMOFINANZ AG can be found in the Corporate Governance Report starting on page 98.
Authorising the Executive Board to buy and sell treasury shares reflects common practice on the capital
markets and enables the Executive Board to take advantage of any opportunities to add value for the benefit
of the company’s shareholders. No plans currently exist to exercise this anticipatory resolution.
Capital market environment
The effects of the international debt crisis are currently still the dominating theme on the capital markets. The
world’s leading central banks are adhering to their expansive monetary policy. Although its bond re-purchase
programme is coming to an end, the US Federal Reserve is still making sure the markets have plenty of
liquidity, while the ECB is struggling against the expansion of the Fed’s balance sheet to stop the Euro gaining
too much strength. The result is a continuation of the phase of low interest rates, which – in conjunction with
the liquidity flooding the markets – is driving share prices. (Details on financial market trends in the year
under review can be found in the Management Report starting on page 112).
The DAX started the reporting period at 7,913.7 points on 1 May 2013 and closed on 30 April 2014 at 9,603.2
points, having gained 21.4%. Over the same period, the ATX increased from 2,414.3 to 2,525.2 points, equivalent
to a gain of 4.6%, while the EURO STOXX 50 Index climbed 17.9% from 2,712.6 to 3,198.4 points. Another key
index for BUWOG AG is the FTSE EPRA/NAREIT Developed Europe Index, which posted a significant gain of
14.5% from 15.82 to 18.12 points.
Buwog ag share performance in comparison
(indexed using opening prices of 28 April 2014)
115
110
105
100
95
90
28 April 2014
– Buwog
– mdax
15 May 2014
– atx
30 May 2014
15 June 2014
1 July 2014
15 July 2014
31 July 2014
– epra Developed Europe
93
BUWOG AG share performance
BUWOG AG shares started trading on the Frankfurt Stock Exchange on 28 April 2014 at an initial price of
EUR 13.00. At the end of the reporting period on 30 April 2014, the shares had a closing price of EUR 13.20. By
31 July 2014, around 17.2 million shares in BUWOG AG had been traded on the stock exchanges in Frankfurt,
Vienna and Warsaw, equivalent to an average daily trading volume of 260,600 shares. Prior to 31 July 2014,
there was no point at which the closing price for BUWOG shares was below the initial price of EUR 13.00.
Between initial listing and this date, the share price rose by 11.28% in Frankfurt, 9.74% in Vienna, and 5.26%
in Warsaw.
Just a few days after initial listing, BUWOG AG shares were granted fast-track entry into the FTSE EPRA/
NAREIT Developed Europe Index on 7 May 2014. This industry-specific index is recognised as a benchmark
worldwide and is the most commonly used index for listed property companies. In addition, in June 2014,
BUWOG shares were included in the VÖNIX Sustainability Index, which includes listed companies that are
considered to be leaders in terms of their social and environmental performance. As of 31 July 2014, BUWOG
AG shares were weighted at 19.7% in the IATX (Austrian real estate index), which is used as the base value
for options and futures contracts traded on the Vienna Stock Exchange, and features all real estate shares
listed on the Vienna Prime Market.
REFERENCE DATA FOR BUWOG SHARES
STOCK EXCHANGE DATA AS OF 30 APRIL 2014
ISINAT00BUWOG001
WKNA1XDYU
Bloomberg Ticker BWO GR
BWO AV
BWO PW
Official Market
Frankfurt Stock Exchange
(Prime Standard)
Vienna Stock Exchange
(Prime Market)
Warsaw Stock Exchange
(Main Market)
Year-end share price in EUR 13.20
Number of shares issued
99,613,479
1,314.9
Market capitalisation in EUR million Free float
51%
Net profit per share1)2) in EUR1.12
Recurring FFO per share1)2) in EUR0.69
EPRA Net Asset Value per share1)3) in EUR17.21
Enterprise Value/EBITDA adjusted2)22.1
1) Based on 99,613,479 shares
2) The earnings data are presented on a pro forma basis. They show the BUWOG GmbH
business, and thus reflect BUWOG Group, as had existed for the entire accounting period from
1 May 2013 to 30 April 2014.
3) The presentation of the key data on the asset and financial position as of 30 April 2014 is
based on audited figures; the data relating to 30 April 2013 is based on unaudited, pro forma
figures.
Dividend policy
The ability to pay a dividend is a key indicator of a property company’s earnings power. The Executive Board
of BUWOG AG is especially committed to protecting the interests of its shareholders and that includes
granting them a reasonable cash–on-cash return from the cash flow generated by the company. Over the
long term, the Executive Board plans to propose to the Annual General Meeting of BUWOG AG that regular
dividends are paid representing around 60%–65% of Recurring FFO.
As part of this dividend policy, and to ensure that the shareholders of BUWOG AG can also participate in the
extraordinary success of the 2013/14 financial year, which was generated by strategic portfolio acquisitions,
the Executive Board intends to propose that the Annual General Meeting approves a dividend payment for
the 2013/14 financial year of around 4% of the company’s EPRA Net Asset Value as of 30 April 2014, which is
equivalent to the recommended dividend of EUR 0.69 per share. The resulting return of 5.2% on the closing
price of EUR 13.20 ranks BUWOG shares among the highest-yielding real estate shares in Europe. They also
offer considerable potential for further increase, given the share price discount to EPRA Net Asset Value of
around 23% per share as of the reporting date.
94
Investor relations
share performance,
Dividend policy, Convertible bond
Convertible bond
In the run-up to its public listing, BUWOG AG issued a convertible bond with a volume of EUR 260 million.
These funds played a key role in financing the acquisition of the DGAG portfolio comprising some 18,000
units in Germany. The transaction, costing about EUR 892 million, closed at the end of June 2014, when the
antitrust authorities gave their approval. The convertible bond is listed on the Third Market of the Vienna
Stock Exchange and was subscribed in its entirety by IMMOFINANZ AG at the issue price of 100%. The bond
conversion price was set at EUR 18.93 on 6 May 2014, which equates to a premium of 40% on the arithmetical
average daily XETRA closing price of BUWOG shares between 28 April 2014 and 5 May 2014 of EUR 13.52.
The convertible bond has a 3.5% interest coupon and matures on 25 April 2019.
INFORMATION ON THE BUWOG CONVERTIBLE BOND
Issue date
25 April 2014
Total principal amount
EUR 260 million
Issue amount
100%
Division
EUR 100,000
Coupon
3.5% p.a., payment semi-annually in arrears on 25 April and
25 October each year, commencing on 25 October 2014
Maturity
25 April 2019
Dividend protection
Full dividend protection
Conversion
9 months after listing up to maturity date
Conversion price
EUR 18.93
Hard call for BUWOG AG1) During the first 9 months after listing, at 101% of the principal amount
Soft call for BUWOG AG2) 3 years after listing, if the volume-weighted average priceon 20 days
equals or exceeds 130% of applicable conversion price
ISINAT0000A17CA5
1) Anti-dilution call
2) Conversion call
Prior to 27 January 2015, BUWOG AG is entitled to call the entire convertible bond with at least 30 days’
notice and to repay it at 101% of the nominal value plus accrued interest. BUWOG AG is currently evaluating
alternative refinancing scenarios. Alternatively, BUWOG AG is also entitled to call the entire convertible bond
after three years from listing, with a notice period of at least 30 days but no more than 90 days, and to repay
it at nominal value plus accrued interest if the average volume-weighted daily share price is at least 130% of
the applicable conversion price on at least 20 trading days within a period of at least 30 consecutive trading
days, if the holders of the CB 2019 do not exercise their conversion rights.
Based on the fixed conversion price of EUR 18.93, the convertible bond carries conversion rights to around
13,734,812 BUWOG AG shares. The conversion period starts on 28 January 2015 and ends in April 2019.
95
Shareholder structure
In the course of the spin-off of BUWOG AG and its deconsolidation from IMMOFINANZ AG, the latter’s share
in BUWOG AG decreased to 49% of the 99,613,479 shares currently in circulation. Since BUWOG AG has not
received any voting rights’ disclosures from other shareholders, 51% of BUWOG AG shares may be classified
as free float.
SHAREHOLDER STRUCTURE OF BUWOG AG
as of 30 April 2014
PRO FORMA SHAREHOLDER STRUCTURE
OF BUWOG AG
following potential exercise of the conversion rights
IMMOFINANZ
Group
49%
Free Float
51%
Free Float
45%
IMMOFINANZ
Group
55%
Because IMMOFINANZ AG bought all EUR 260 million of the 3.5% convertible bond issued by BUWOG AG, the
number of shares in circulation would ultimately increase to 113,348,291 in the event of a complete conversion
at a later date. In this case, the pro forma holding of IMMOFINANZ AG would increase to 55%. Such a change
to the shareholder structure is unlikely from today’s perspective, given that the conversion period for the
investment does not start until 28 January 2015 and the conversion price is currently significantly higher than
the stock exchange price.
INVESTOR RELATIONS ACTIVITIES
In-depth communication with its shareholders, potential investors and analysts is a key priority for BUWOG
AG. The company is especially committed to ensuring transparency with regard to its corporate strategy and
the development prospects for the company. In the course of an extensive roadshow to various destinations
in the run-up to the public listing of BUWOG AG, in-depth meetings were held with investors in Amsterdam,
Boston, The Hague, Frankfurt am Main, London, Prague, Warsaw and Vienna.
BUWOG AG plans to increase its presence on the capital markets in the 2014/15 financial year, especially
by participating in capital market conferences and hosting roadshows. Further details are available on the
company’s calendar of financial events, the current version of which is included below. The calendar is
regularly updated and published on www.buwog.com
96
Investor relations
Shareholder structure,
Investor relations activities
Calendar of financial events
29 Aug 2014
Publication of the 2013/14 annual report
23–25 Sept 2014
Goldman Sachs/Berenberg Conference in Munich
23–25 Sept 2014
Baader Bank Conference in Munich
24–25 Sept 2014
EPRA Annual Conference in London
29 Sept 2014
Publication of the quarterly report for the period from 1 May–31 July 2014
7–8 Oct 2014
Erste Bank Conference in Stegersbach
14 Oct 2014
1st Annual General Meeting
15 Oct 2014
Ex-dividend date
23 Oct 2014
Dividend payment date
22 Dec 2014
Publication of the six-monthly report for the period 1 August–31 October 2014
31 Mar 2015
Publication of the quarterly report for the period
from 1 November 2014 to 31 January 2015
Analyses by well-known financial institutions and research experts constitute an important source of
information and basis for decision-making, especially for institutional investors. BUWOG AG maintains a
regular dialogue with these experts and, as of 31 July 2014, the following institutions had published analyses
of BUWOG AG shares:
Institution Date Target price
Recommendation
Kepler Cheuvreux
Erste Bank
Raiffeisen Centrobank
Baader Bank
HSBC
Barclays
29 Apr 2014
10 Jun 2014
11 Jun 2014
17 Jun 2014
2 Jul 2014
24 Jul 2014
EUR 16.50
EUR 16.70
EUR 15.00
EUR 14.70
EUR 18.00
EUR 17.00
buy
buy
hold
hold
overweight
overweight
Through its membership of EPRA, the leading European association of listed property companies, BUWOG
is committed to upholding the association’s standards on transparency in accounting, and emphasises its
credibility in striving for professionalism and excellence.
Contact
Holger Lueth
Head of Investor Relations & Corporate Finance
E-mail: holger.lueth@buwog.at
Tel: +43-1-878 28-1203
Fax: +43-1-878 28-5203
97
Corporate
Governance
Report
in accordance with Section 243b Austrian Commercial Code (UGB)
Zahnradbahnstraße 10 / Vienna
BUWOG Group considers good corporate governance to be an
essential element in ensuring transparent corporate communications
and sustainable business management.
-Clear recognition of the need to comply with the provisions
of the Austrian Code of Corporate Governance
-Transparent disclosure of board members’ remuneration
and directors’ dealings
-Supervisory Board members elected at
Extraordinary General Meeting on 15 May 2014
98
Corporate Governance Report
99
Commitment to the Austrian Code
of Corporate Governance
The Executive and Supervisory Boards of BUWOG AG are committed to complying with the rules of the
Austrian Code of Corporate Governance (ÖCGK), which is generally recognised on the Vienna Stock
Exchange. BUWOG AG shares have been admitted for trading on the Prime Standard market of the Frankfurt
Stock Exchange and the Prime Market of the Vienna Stock Exchange since 28 April 2014, and on the Main
Market (Rynek podstawowy) of the Warsaw Stock Exchange since 29 April 2014. Because the registered
office of the company is in Vienna, the ÖCGK is the applicable code. The ÖCGK was first introduced in 2002
by the Austrian Working Group for Corporate Governance as the regulatory framework for managing and
controlling all listed Austrian stock corporations and listed European stock corporations (SEs) registered in
Austria, with a view to assuring the creation of sustainable and long-term value. The latest version of the
ÖCGK can be accessed at www.corporate-governance.at and at www.buwog.com.
The ÖCGK version dated July 2012 applies for the 2013/14 financial year and comprises a total of 90 rules
which are broken down into L, C and R rules. “L rules” (legal requirements) are based on mandatory statutory
provisions. Deviation from the “C rules” (comply or explain) must be explained or justified in order to comply
with the code. Non-compliance with the “R rules” (recommendations) does not require either disclosure or
justification.
Company established by spin-off
BUWOG AG was established as a legal entity in the form of a GmbH (Austrian limited liability company)
by a declaration of the establishment of the company dated 7 July 2010, and was initially called “Artemis
Immobilien GmbH”. By a resolution passed at an Extraordinary General Meeting on 27 November 2013, the
legal form of Artemis Immobilien GmbH was changed to an Aktiengesellschaft (stock corporation) (Sections
245 et seq. Austrian Stock Corporation Act (AktG)) and, at the same time, the name of the company was
changed to BUWOG AG (effective from 17 December 2013 following entry in the company register).
When BUWOG Group was spun off, IMMOFINANZ AG transferred its indirect interest in BUWOG – Bauen und
Wohnen Gesellschaft mbH (“BUWOG GmbH”) in three steps into BUWOG AG, the new holding company, in
the 2013/14 financial year: The first step involved a contribution in kind for an indirect 5.1% stake in BUWOG
GmbH. The next step involved spinning off the remaining indirect 94.9% interest in BUWOG GmbH to
GENA SECHS Immobilienholding GmbH (“GENA SECHS”), the joint holding company of IMMOFINANZ AG,
(around 59.71% stake) and BUWOG AG (around 40.29% stake). The final step – the actual spin-off – involved
IMMOFINANZ AG spinning off its stake of around 59.71% in GENA SECHS (indirect stake of around 56.67%
in BUWOG GmbH) to BUWOG AG. This transaction was accompanied by the issue of new BUWOG shares to
the shareholders of IMMOFINANZ AG. As a result of the spin-off, which became effective on 26 April 2014
with entry in the company register, BUWOG AG indirectly acquired a 100% stake in BUWOG GmbH. BUWOG
shares started trading on 28 April 2014 on the Frankfurt Stock Exchange and Vienna Stock Exchange, and on
29 April 2014 on the Warsaw Stock Exchange. The number of shares issued currently stands at 99,613,479.
100
Commitment, Founding, Deviations
Deviations from the ÖCGK’s C rules
Because it was only recently established as a listed stock corporation, BUWOG AG was unable to comply with
all ÖCGK rules by its reporting date of 30 April 2014. The operations of BUWOG were not fully integrated into
BUWOG AG until 26 April 2014.
The Executive and Supervisory Boards are continually working to establish the necessary framework.
Compliance with all L rules has already been accomplished. The following deviations from the C rules, due
mainly to the company’s recent establishment, are justified as follows:
Rule C 18a
This rule requires an annual report to be made by the Executive Board to the Supervisory Board on the
measures taken to fight corruption. Internal Audit and Compliance have already been set up as departments
reporting to the Executive Board. The Executive Board is currently drafting an anti-corruption policy in
collaboration with the Compliance Officer. The implementation of this policy will result in a report being
made at least once a year to the Supervisory Board on the measures taken to fight corruption.
Rule C 27
The specifications of this rule include that precautions must be taken to ensure that the company can reclaim
variable remuneration components paid to Executive Board members if it becomes clear that these were
paid out only on the basis of obviously false data. Although the contracts with Executive Board members
do not include any specific provisions in this respect, BUWOG AG reserves the right to reclaim any variable
remuneration paid without justification.
Rule C 30
This rule specifies the disclosure in the corporate governance report of the ratio of the fixed and variable
components of the total remuneration paid to the Executive Board compared with the previous year. In
light of the company’s recent establishment as a listed stock corporation, a year-on-year comparison is not
possible, but this disclosure will be implemented from the next financial year onwards.
Rule C 51
This rule specifies the disclosure in the corporate governance report of the remuneration paid to the
Supervisory Board. Because BUWOG AG was only established in this reporting year, no resolution has been
passed on remuneration.
Rule C 74
This rule requires publication of a calendar of financial events for the coming financial year on the company’s
website at least two months before the start of the new financial year, with the content specified by the
ÖCGK. In light of the recent establishment of BUWOG AG as a listed company, it was not possible to publish
a calendar of financial events two months before the start of the 2014/15 financial year on 1 May. BUWOG AG
will comply with the deadline for publishing a calendar of financial events in the next financial year.
Rules C 82 and C 83
These rules affect the working relationship with the auditor engaged to audit the (consolidated) financial
statements. Firstly, the Supervisory Board must be informed of the results of the audit and, secondly, the
auditor must assess the effectiveness of the company’s risk management and report the findings to the
Executive Board. It is not currently possible to provide a response regarding rules 82 and 83, because the
corresponding resolutions for the previous year were passed in the reporting year outside of the application
of these rules.
101
Executive Board
As of the reporting date of 30 April 2014, the Executive Board of BUWOG AG was comprised of two members.
When Artemis GmbH was changed to BUWOG AG, the Extraordinary General Meeting passed a resolution
on 27 November 2013 appointing Daniel Riedl and Josef Mayer to the Executive Board. Josef Mayer resigned
from the Executive Board with effect from 17 February 2014. By resolution passed by the Supervisory Board
on 17 February 2014, Ronald Roos was appointed to the Executive Board, and Rules of Procedure were
subsequently defined for the Executive Board by the Supervisory Board. The areas of responsibility of the
two members of the Executive Board are set out below.
Daniel Riedl
born on 7 September 1969, appointed from 27 November 2013 to April 2017
Chairman of the Executive Board, responsible for Asset Management, Property Managment,
Transaction and Development, as well as Marketing & Communications, Human Resources
& Organisation, Legal, Internal Audit and Compliance, although the Executive Board as a
whole has functional responsibility for the two latter departments.
Daniel Riedl graduated in business administration (Handelswissenschaften) and is a
Fellow of the Royal Institute of Chartered Surveyors. Between 2004 and 2011, he headed
up BUWOG in its previous form. From 2008 to 2014, he served on the Executive Board of IMMOFINANZ AG
and chaired the Supervisory Board of BUWOG GmbH from the beginning of 2012 until October 2013. Daniel
Riedl does not serve on any Supervisory Boards or hold similar offices for any other Austrian or foreign
company not included in the consolidated financial statements of BUWOG AG.
Ronald Roos
born on 20 January 1968, appointed from 17 February 2014 to February 2017
Responsible for Accounting, Consolidation, Controlling, Tax, Finance, as well as Process
Management, Central Procurement, IT and Investor Relations.
Ronald Roos graduated in Business Administration (Betriebswirtschaft) from Bayreuth
University. He then worked in corporate finance for various management consultancy
firms before acting as CFO for companies in the real estate and insurance sectors. Before
being appointed to the Executive Board of BUWOG AG, he managed the reorganisation
of a shipping company in Northern Germany. Ronald Roos does not serve on any Supervisory Boards or
hold similar offices for any other Austrian or foreign company not included in the consolidated financial
statements of BUWOG AG.
Josef Mayer
born on 2 June 1967, member of the Executive Board from 27 November 2013 to 17 February 2014
Independence of the Executive Board
When passing resolutions, Executive Board members must not be guided by any personal interests or
the interests of specific shareholders, must employ their professional expertise, and must comply with all
relevant legal provisions. They must immediately disclose any personal interests in transactions involving
the company and any other conflicts of interests, and inform their Executive Board colleagues accordingly.
Executive Board members may only accept mandates on the Supervisory Boards of non-group companies
with the approval of the Supervisory Board. No Executive Board member currently holds any such mandate.
Statutory non-compete requirements have not been waived.
102
Executive Board,
Supervisory Board
Supervisory Board
The Supervisory Board of BUWOG AG oversees the management of the company by the Executive Board and
advises the latter in its management function, especially with regard to decisions of fundamental importance.
After Artemis GmbH was changed into BUWOG AG, three members were initially appointed to the
Supervisory Board by a resolution passed by the Extraordinary General Meeting on 27 November 2013:
Vitus Eckert, Eduard Zehetner and Birgit Noggler. At a constituent meeting of the Supervisory Board on
27 November 2013, Vitus Eckert was appointed Chairman, and Eduard Zehetner Vice-Chairman, of the
Supervisory Board. The second and final Supervisory Board meeting of BUWOG AG for the 2013/14 financial
year was held on 30 January 2014. Resolutions passed at this meeting included the spin-off of BUWOG
Group from IMMOFINANZ AG, the de-domination agreement between IMMOFINANZ AG and BUWOG AG,
and the financing for the acquisition of the DGAG portfolio. By a resolution passed by the Extraordinary
General Meeting on 7 March 2014, the number of Supervisory Board members increased from three to four
and the Articles of Association were amended accordingly. The three Supervisory Board members named
above resigned and stood for re-election to the Supervisory Board. In addition to their re-election, Klaus
Hübner was also appointed to the Supervisory Board for the first time at this Extraordinary General Meeting.
Birgit Noggler resigned as a Supervisory Board member with effect from 26 April 2014, the date on which
the spin-off was entered into the commercial register.
An Extraordinary General Meeting of BUWOG AG was held on 15 May 2014, after the reporting date. Since
the terms of office, of all Supervisory Board members elected prior to the spin-off from IMMOFINANZ AG,
becoming effective ended at this Extraordinary General Meeting, the second item on the agenda included both
a resolution to increase the Supervisory Board from four to five members and elections to the Supervisory
Board. Five members were nominated at the Extraordinary General Meeting for election to the Supervisory
Board. By a resolution passed by this meeting, Vitus Eckert, Eduard Zehetner, Klaus Hübner, Volker Riebel
and Jutta Dönges were appointed to the Supervisory Board. At the subsequent constituent meeting of
the Supervisory Board, Vitus Eckert was appointed Chairman, and Eduard Zehetner Vice-Chairman, of the
Supervisory Board.
On 2 June 2014, three members of the Works’ Council were delegated to the Supervisory Board: Elizabeth
Bulis by the Wage Employees’ Works Council, and Markus Sperber and Raphael Lygnos by the Salaried
Employees’ Works Council. The Chairman of the Supervisory Board was informed of this and it was confirmed
by him on 12 June 2014.
Vitus Eckert
born on 14 July 1969, Chairman of the Supervisory Board from 27 November 2013 to
7 March 2014 and again from 7 March 2014 to 15 May 2014, subsequently re-appointed
from 15 May 2014 until the Annual General Meeting that will pass resolutions pertaining to
the 2018/19 financial year.
Other Supervisory Board mandates: Chairman of the Supervisory Board of STANDARD
Medien AG, Vienna, and of the Supervisory Board of Vitalis Food GmbH, Linz, ViceChairman of the Supervisory Board of S. Spitz GmbH, Attnang, of the Supervisory Board
of Ankerbrot AG, Vienna, of the Supervisory Board of “Anker Snack & Coffee” Gastronomiebetriebs GmbH,
Vienna, and of the Supervisory Board of Adolf Darbo AG, Stans, member of the Supervisory Board of
St. Ambrosius AG, Stans, and member of the Executive Board of JCA International, Rotterdam
Executive Board mandates: Member of the Executive Board of Bronner Familien-Privatstiftung, Vienna,
Darbo Familien-Privatstiftung, Stans, Simacek Privatstiftung, Vienna, NAOMI Privatstiftung, Oberwaltersdorf,
and OBW Privatstiftung, Gunskirchen.
Vitus Eckert is a lawyer and partner in Eckert Fries Prokopp Rechtsanwälte GmbH, a law firm based in Baden
near Vienna.
103
Eduard Zehetner
born on 9 August 1951, appointed Vice-Chairman of the Supervisory Board from
27 November 2013 to 7 March 2014 and re-appointed from 7 March 2014 to 15 May 2014,
then subsequently re-appointed from 15 May 2014 until the Annual General Meeting that
will pass resolutions on the 2018/19 financial year.
Other Supervisory Board mandates: Member of the Supervisory Board of A.M.I. Agency
for Medical Innovations GmbH, of the Privatstiftung Sparkasse Niederösterreich, and of
the Sparkasse Niederösterreich Mitte West Aktiengesellschaft
Executive Board mandates: Chairman of the Executive Board of IMMOFINANZ AG
Eduard Zehetner is also the Chief Executive of “HSF” Vermögensverwaltung GmbH.
Klaus Hübner
born on 9 November 1952, appointed from 7 March 2014 to 15 May 2014, from 15 May 2014
until the Annual General Meeting that will pass resolutions on the 2018/19 financial year.
Other Supervisory Board mandates: Chairman of the Supervisory Board of ECOS Venture
Capital Beteiligungs AG and of WT-Akademie GmbH
Prof. Volker Riebel
born on 15 October 1955, appointed from 15 May 2014 until the Annual General Meeting
that will pass resolutions on the 2018/19 financial year.
Other Supervisory Board mandates: Deputy Chairman of the Supervisory Board of
ARBIREO Capital AG, Frankfurt am Main
Other mandates: Chairman of the Advisory Council of NETSEC GmbH, Düren, Member
of the Advisory Council of MVV Energie AG, Mannheim, and CEO and co-owner of Carpe
Diem GmbH, Düren
Jutta Dönges
born on 9 May 1973, appointed from 15 May 2014 until the Annual General Meeting that
will pass resolutions on the 2018/19 financial year.
Jutta Dönges currently holds no other mandates.
Birgit Noggler
born on 10 September 1974, appointed from 27 November 2013 to 7 March 2014, then re-appointed on
7 March 2014 and resigned with effect from 26 April 2014, the date on which the spin-off was entered into
the commercial register.
Executive Board mandates: Member of the Executive Board of IMMOFINANZ AG
104
Supervisory Board,
committees
Elisabeth Bulis
born 11 February 1962, delegated to the Supervisory Board by the Wage Employees
Works’ Council on 2 June 2014.
Markus Sperber
born 1 July 1985, delegated to the Supervisory Board by the Salaried Employees Works’
Council on 2 June 2014.
Raphael Lygnos
born 31 July 1980, delegated to the Supervisory Board by the Salaried Employees Works’
Council on 2 June 2014.
Supervisory Board committees
At its constituent meeting on 15 May 2014, the Supervisory Board established three committees:
Audit Committee
Vitus Eckert, Chairman
Eduard Zehetner, Vice-Chairman
Klaus Hübner
The Audit Committee deals with accounting issues. It is responsible for auditing and preparing approval of
the annual financial statements and the management report, auditing the consolidated financial statements
and the group management report, submitting a proposal on the distribution of profits, and for the corporate
governance report. Other functions include monitoring the accounting procedures, the effectiveness of
the internal control system and the audit of the financial statements, and reviewing and monitoring the
independence of the auditor. The Audit Committee did not meet during the 2013/14 financial year, which
ended on 30 April 2014, as it was not established until 15 May 2014. It held its first meeting on the same day. In
compliance with statutory requirements and the Code, at least one financial expert is a member of the Audit
Committee. The delegation of two Works’ Council members is planned at the next meeting.
105
Strategy Committee
The Strategy Committee is responsible for ongoing revision of the group strategy and advising the Executive
Board on related matters. It considers strategic development opportunities aimed at improving the longterm competitive position of BUWOG Group and adding sustainable value for shareholders. It therefore
monitors relevant market activity, evaluates opportunities for future development, and oversees the growth
of BUWOG Group in respect of decisions regarding investment, disinvestment and restructuring measures.
The Strategy Committee did not meet during the 2013/14 financial year as it was not established until the end
of the constituent Supervisory Board meeting on 15 May 2014. At the next meeting of the Supervisory Board,
an additional member of the capital representative will be appointed. Two Works’ Council members will also
be delegated to the Strategy Committee.
Personnel and Nominating Committee
The Personnel and Nominating Committee submits proposals to the Supervisory Board as a whole with
regard to the appointment of members to vacant positions on the Executive and Supervisory Boards, and
deals with succession planning issues. It also addresses the remuneration of Executive Board members and
the terms of their employment contracts. The Personnel and Nominating Committee did not meet during the
2013/14 financial year as it was not established until the end of the constituent Supervisory Board meeting
on 15 May 2014. The election of an additional member of the capital representative is planned for the next
Supervisory Board meeting.
Independence of the Supervisory Board
Members of the Supervisory Board are required to act in the interests of the company and must disclose any
conflicts of interest immediately. They do not exercise any management functions in other companies that
compete with BUWOG AG.
The Chairman of the Supervisory Board, Vitus Eckert, is a partner in Eckert Fries Prokopp Rechtsanwälte
GmbH, based in Baden near Vienna. This law firm charged fees of EUR 46,885.00 for legal advice to
IMMOFINANZ Group companies in 2013/14. The terms of these fees, especially the hourly rates, reflect
standard market conditions.
Apart from this, there are no other contracts within the meaning of rule L 48 between members of the
Supervisory Board and BUWOG AG or its subsidiaries in which a member of the Supervisory Board has a
significant economic interest. The members of the Supervisory Board have defined rule C 53 of the ÖCGK and
the guidelines included in Annex 1 of the ÖCGK as the criteria that constitute their independence. All members
have declared their independence in accordance with these criteria. Four members of the Supervisory Board
– Vitus Eckert (Chairman), Klaus Hübner, Volker Riebel and Jutta A. Dönges – meet the additional criteria for
independence defined in rule C 53 ÖCGK, in that they do not represent any shareholders with holdings of
more than 10% or the interests of such shareholders.
106
Independence,
De-domination agreement, Cooperation
Guidelines for determining the independence of the Supervisory Board
In accordance with rule 53 ÖCGK, a Supervisory Board member is deemed to be independent if he or she
do not have any business or personal relationship with the company or its executive board that constitutes a
material conflict of interest and is therefore likely to influence the behaviour of the member. The Supervisory
Board of BUWOG AG has adopted the following guidelines specified in Annex 1 to the ÖCGK as the criteria
for assessing the independence of its members:
- The Supervisory Board member has not served as a member of the Executive Board or as a
management-level member of staff of the company or of one of its subsidiaries in the past five years.
- The Supervisory Board member does not have or has not had any business relationship with the
company or one of its subsidiaries in the past year to an extent that is significant for the member of
the Supervisory Board. This also applies to relationships with companies in which a member of the
Supervisory Board has a considerable economic interest, but not to the awareness of board functions
in the group. The approval of individual transactions by the Supervisory Board in accordance with
rule L 48 does not automatically mean the person is not qualified as independent.
- The Supervisory Board member has not acted as auditor of the company, nor been a partner or
shareholder in the auditing company, nor worked there as an employee in the past three years.
- The Supervisory Board member is not a member of the executive board of another company in which
a member of the company’s Executive Board is a supervisory board member
- A Supervisory Board member may not remain on the Supervisory Board for more than 15 years.
This does not apply to Supervisory Board members who are shareholders with a business interest
in the company or who represent the interests of such a shareholder.
- The Supervisory Board member is not a close relative (direct offspring, spouses, life partners, parents,
uncles, aunts, sisters, brothers, nieces, nephews) of a member of the Executive Board or of a person in
one of the positions described in the aforementioned points.
De-domination agreement between
IMMOFINANZ AG and BUWOG AG
The shares in BUWOG AG that are held by IMMOFINANZ AG and affiliate companies, currently 49%, are
subject to contractual voting right restrictions in accordance with the de-domination agreement concluded
between the companies. For more details regarding the content of this agreement, please refer to the
“Capital” section starting on page 155 of the management report. The agreement can also be accessed online
at www.buwog.com in the Investor Relations section.
At the General Meeting of BUWOG AG on 15 May 2014, IMMOFINANZ AG only exercised the voting rights
conveyed by its BUWOG shares with regard to the election to the Supervisory Board of Vitus Eckert and
Eduard Zehetner. The other three members were elected without IMMOFINANZ AG exercising its voting
rights.
Cooperation between the Executive
Board and the Supervisory Board
The Executive Board and the Supervisory Board work closely together to fulfil their obligations for the
benefit of the company. They make every effort to support each other, while observing the principles of good
corporate governance. The Executive Board prepares the documents for meetings of and resolutions by
the Supervisory Board, and provides them in good time. It conducts open discussions with the Supervisory
Board, consults with the latter on the strategic direction of the company and reports on the progress of
strategy implementation. The Executive Board informs the Supervisory Board immediately of any significant
events that are of particular importance to the company’s profitability or liquidity.
107
Remuneration report
Remuneration of the Executive Board
The remuneration of the Executive Board members includes both fixed and profit-related, or variable,
components that, depending on the Board member, ranged between 37.5% and 100% of fixed salary in the
reporting year. The profit-related payment is linked to the achievement of qualitative and quantitative targets
as agreed with the Supervisory Board’s Personnel and Nominating Committee. These include Recurring FFO
per share and earnings before tax per share. The contracts with all members of the Executive Board include
a change of control clause that defines the entitlements in the event of premature termination.
In addition, a defined contribution pension of up to 10% of the Chairman’s fixed salary is paid as part of his
remuneration. Details can be found in the Notes to the consolidated financial statements.
The management bodies of BUWOG AG are covered by directors and officers liability (D&O) insurance
with cover of EUR 25 million. This policy does not include any excess for the managers concerned. Fidelity
insurance has also been obtained with a sum insured of EUR 15 million and an excess of EUR 500,000 per
claim. The two insurance contracts are interlinked to provide combined cover.
Josef Mayer was not paid any Executive Board remuneration by BUWOG AG for his work on the Board from
27 November 2013 to his resignation on 17 February 2014.
A long-term incentive programme for the Executive Board members is currently being set up. This long-term
incentive programme is due to be submitted to the next Annual General Meeting.
Executive board remuneration
in TEUR
Fix1)
Daniel Riedl2)
Ronald Roos3)
Josef Mayer4)
Total
Floating
Total
5.2
2.0
7.3
(720)
(270)
(990)
49.7
50.7
100.3
(250)
(250)
(500)
0.0
0.0
0.0
54.9
52.7
107.6
(970)
(520)
(1,490)
1) Incl. benefits in kind
2)Since 28 April 2014; salary previously paid by Immofinanz AG
3)Since 17 February 2014
4)Until 17 February 2014, no separate remuneration for membership of the BUWOG AG Executive Board
Supervisory Board remuneration
The members of the Supervisory Board have not yet received any remuneration for the 2013/14 financial year.
During the reporting year, no Annual General Meeting passed any resolutions in respect of Supervisory Board
remuneration because no Supervisory Board had been established in the relevant previous year, 2012/13.
Remuneration for the 2013/14 financial year payable to the Supervisory Board members affected will be
agreed at the Annual General Meeting on 14 October 2014.
Compliance
In accordance the Austrian Stock Exchange Act (Börsegesetz) and the Austrian regulation on compliance for
issuers (Emittenten-Compliance-Verordnung), the Executive Board has drafted a Compliance Policy aimed at
preventing the inappropriate use and dissemination of insider and compliance-related information. The rules
of this Compliance Policy apply to all members of staff of BUWOG Group. With this policy, the Executive
Board’s intention is to ensure the equal treatment of all shareholders, to prevent conflicts of interest and to
protect the interests of all stakeholder groups.
108
Remuneration, Compliance,
Measures to promote women, Directors’ Dealings,
Internal audit, External evaluation
BUWOG AG organises regular training courses to familiarise managers and people working in areas defined
as confidential, as well as all other members of staff, with the provisions of this Compliance Policy and to raise
awareness of the need to treat confidential information responsibly. It also specifies embargo periods and
trading bans in the run-up to sensitive company events, such as the publication of the quarterly and annual
results. A Compliance Officer and deputy have also been appointed. Adherence to the Compliance Policy is
monitored continuously.
Measures to promote women
BUWOG AG offers equal compensation, equal promotion opportunities and equal working conditions to
male and female employees. As of 30 April 2014, women occupied 32% of all management positions. The
Extraordinary General Meeting appointed a woman to the Supervisory Board of BUWOG AG, Jutta Dönges.
As of the same reporting date, women accounted for 69% of the total workforce. Coaching measures focusing
on specialised professional training and personal development are currently being planned to further increase
the percentage of women in management positions. HR policy measures are also being developed to ensure
a better work-life balance.
Directors’ dealings
In accordance with Section 48d (4) of the Austrian Stock Exchange Act, people with management roles
and anyone with a close relationship to a manager are required to report all purchases and sales of BUWOG
shares to the Austrian Financial Market Authority. These transaction reports are disclosed on the BUWOG
AG website via a link to the relevant section of the Financial Market Authority website. The following tables
present an overview of the direct and indirect shareholdings of members of the corporate bodies.
Number of BUWOG shares
Executive Board
(including any related parties) as of 30 April 2014
Number of BUWOG shares
Supervisory Board
(including any related parties) as of 30 April 2014
Daniel Riedl20,045 shares
Ronald Roos4,449 shares
Josef Mayer1)
Vitus Eckert1,000 shares
Eduard Zehetner87,339 shares
Klaus Hübner4,000 shares
Volker Riebel1)
Jutta Dönges1)
Birgit Noggler2)12,000 shares
1) Until 17 February 2014
1) From 15 May 2014
2)Until 26 April 2014
Internal audit and risk management
In accordance with rule C 18 ÖCGK, Internal Audit has been established as a separate department reporting
directly to the Executive Board. The Audit Committee of the Supervisory Board receives at least one report
each year on the audit plan and the results of these audits. The audit plan for the 2014/15 financial year was
presented to and unanimously passed by the Audit Committee of the Supervisory Board at their first meeting
on 15 May 2014.
External evaluation
Because BUWOG AG had only existed as a listed stock corporation for a short period when the financial year
ended on 30 April 2014, the company decided not to commission an external evaluation on compliance with
the provisions of the ÖCGK. An external evaluation is planned for future years.
109
DEAR LADIES
AND GENTLEMEN
The last few months have been a challenging and
exciting time for BUWOG Group, in which we have
set the course for a successful, independent path of
continued development for the company.
Following the resolution passed by the Extraordinary
General Meeting of IMMOFINANZ AG on 14
March 2014, the spin-off of BUWOG Group from
IMMOFINANZ AG took place in several steps.
Associated with this was the issue of new BUWOG
shares to the shareholders of IMMOFINANZ AG. This
culminated on 28 April 2014 when BUWOG shares
started trading on the Frankfurt Stock Exchange
and Vienna Stock Exchange, and on the Warsaw
Stock Exchange on 29 April 2014. Operations in
the residential sector in Austria and Germany were
already concentrated in BUWOG Group while
it was still part of IMMOFINANZ AG. The public
listing of BUWOG AG met the need of the capital
markets for a single-sector investment option. The
price performance of BUWOG shares confirms the
soundness of this decision. From its initial listing
through to the end of July 2014, BUWOG shares
have increased in value by 10.4% to EUR 14.35 and
the discount on their EPRA Net Asset Value has
been reduced to 16.6%.
The public listing of BUWOG AG was meticulously
planned by all participants. In some cases, company
resources that had not previously existed were built
up in order to also ensure the company could be
independently managed in accordance with best
practices on the capital markets. This especially
applies to the corporate bodies of BUWOG AG. To
ensure strategic continuity within BUWOG Group,
Daniel Riedl, who in his role as COO of IMMOFINANZ
AG had already been responsible for the residential
sector in Germany and Austria, and thus for the
businesses of BUWOG Group, was appointed to the
Executive Board of BUWOG AG in November 2013.
110
Ronald Roos was appointed Chief Financial Officer
as of 17 February 2014.
Due to procedures under company law, the
Supervisory Board of BUWOG AG had to be
established in several steps, which need to be
discussed briefly in the interest of transparency:
After Artemis GmbH was changed into BUWOG
AG in November 2013, Birgit Noggler and Eduard
Zehetner joined me in forming the Supervisory
Board. The second and final Supervisory Board
meeting of BUWOG AG for the 2013/14 financial year
was held on 30 January 2014. Resolutions passed
at this meeting included the spin-off of BUWOG
Group from IMMOFINANZ AG, the de-domination
agreement between IMMOFINANZ AG and BUWOG
AG, and the financing for the acquisition of the DGAG
portfolio. By a resolution passed by the Extraordinary
General Meeting on 7 March 2014, the number of
Supervisory Board members increased from three to
four and the Articles of Association were amended
accordingly. In addition to the re-election of the
previous Supervisory Board members, Klaus Hübner
was also elected to the Supervisory Board at this
Extraordinary General Meeting.
An Extraordinary General Meeting of BUWOG AG
was held on 15 May 2014, after the reporting date. In
order to also reflect the de-domination of BUWOG
AG from IMMOFINANZ AG in its supervisory body,
the second agenda item provided for a new election
of the Supervisory Board in addition to its expansion
from four to five members. In accordance with the
de-domination agreement, IMMOFINANZ AG took
part in the election of only two out of the total of
five candidates. By a resolution passed by this
Extraordinary General Meeting, Jutta Dönges, Eduard
Zehetner, Klaus Hübner, Volker Riebel and I were
elected to the Supervisory Board. At the subsequent
constituent meeting of the Supervisory Board, I
Letter of the Chairman
of the Supervisory Board
Vitus Eckert
Chairman of the Supervisory Board
accepted election as Chairman of the Supervisory
Board, as did Eduard Zehetner as Vice-Chairman.
The Audit Committee, Strategy Committee and
the Personnel and Nominating Committee were also
established at this meeting. Details can be found
in the corporate governance report starting on
page 98.
The Supervisory Board guides and promotes the
continued strategic development of BUWOG Group
in close coordination with the Executive Board. We
will inform you in detail as to the progress on this in
regular reports. Between now and the publication of
the next Annual Report, we will also work to further
develop the instruments of corporate governance
and provide you with information in this regard.
This also particularly applies to the activities of the
Supervisory Board and its committees.
The Executive Board submitted to the Supervisory
Board: the annual financial statements for 2013/14
prepared in accordance with the Austrian Commercial
Code (UGB), including the management report;
the consolidated financial statements for 2013/14
prepared in accordance with International Financial
Reporting Standards (IFRS), including the group
management report; the proposal by the Executive
Board on the use of profits; and the corporate
governance report for 2013/14. The annual financial
statements for 2013/14, including the management
report, and the consolidated financial statements for
2013/14, including the group management report
were audited by Deloitte Audit Wirtschaftsprüfungs
GmbH, the auditor of the financial statements and
consolidated financial statements, and each was
given an unqualified opinion. The annual financial
statements and consolidated financial statements,
and the audit report of the auditor of the annual
financial statements and consolidated financial
statements were discussed in detail by the Audit
Committee in the presence of representatives of the
auditor of the financial statements and consolidated
financial statements and of the Executive Board,
and reviewed in accordance with Section 96 of the
Austrian Stock Corporation Act (AktG). As a result of
this audit and discussion, the members of the Audit
Committee unanimously resolved to recommend
unqualified acceptance to the Supervisory Board.
The annual financial statements as of 30 April
2014 were approved by the Supervisory Board
and thereby adopted in accordance with Section
96 (4) AktG. The Supervisory Board also supports
the proposal by the Executive Board to the Annual
General Meeting to distribute a dividend of 4% of
EPRA Net Asset Value for the financial year 2013/14.
This equates to EUR 0.69 per share and a yield on
the closing price as of 30 April 2014 of 5.2%. In the
medium term, it is expected that total dividends will
be around 60% to 65% of Recurring FFO, ensuring
attractive shareholder remuneration as well as
continued growth for BUWOG Group.
On behalf of the entire Supervisory Board, I would
like to thank the members of the Executive Board
and all the employees of BUWOG Group for their
outstanding dedication and commitment. I would
like to thank the shareholders of BUWOG AG for the
confidence they have placed in us and invite them to
continue along the path with BUWOG Group.
Yours,
Vitus Eckert
Chairman of the Supervisory Board
Vienna, 29 August 2014
111
Management Report
NOTE
BUWOG Group has only existed in its present form
since the end of April 2014. It was restructured in
connection with its spin-off from IMMOFINANZ
Group – with BUWOG AG functioning as the parent
company of BUWOG Group.
Scharnhorststraße 26 / Berlin
All of the subsidiaries were only included in the
consolidated financial statements of BUWOG
Group once the spin-off had taken effect. While
the current consolidated income statement and the
consolidated cash flow statement present only the
income, expenses and cash flows of BUWOG AG,
the earnings figures contained in this management
report reflect the position of BUWOG GmbH
Business and therefore the BUWOG Group as it
would have been had it existed during the entire
reporting year from 1 May 2013 to 30 April 2014.
To this end and for the purposes of explaining
the figures relating to the net assets, financial
position and results of operation, a pro forma
consolidated balance sheet as of 30 April 2013 as
well as a pro forma income statement and a pro
forma consolidated cash flow statement for the
112
financial year from 1 May 2013 to 30 April 2014
were prepared (cf. also section 8 – “Explanatory
notes to pro forma information of BUWOG Group
(unaudited)” of the notes to the consolidated
financial statements in this regard).
The asset data as of 30 April 2014 presented herein
was taken from the audited consolidated
financial statements.
Management Report
113
Overall economic environment
Global economic recovery
The World Bank’s most recent estimates from spring 2014 assume that the pace of the global economic
recovery will gain momentum after several weak years. While global economic output as measured by real
GDP grew by 2.4% in 2013, growth of 3.2% and 3.4% is expected for 2014 and 2015, respectively. The emerging
markets in East Asia, the Pacific and Latin America are expected to be strong drivers of growth, and the
economic recovery in the USA and Europe is also expected to strengthen further.
Economic indicators at a glance
GDP
growth rate
2013
EU 28
Forecast GDP
growth rate
2014
Forecast GDP Unemployment
growth rate
rate
2015
in April 2014
Annual
inflation rate
in April 20141)
Gross national
debt to GDP
in 2013
Deficit/surplus
to GDP
in 2013
0.1% 1.6% 2.0%10.4% 1.0%87.1%–3.3%
Euro zone (18 countries) –0.4% 1.2% 1.7%11.7% 1.1%92.6%–3.0%
Austria
0.4% 1.6% 1.8% 4.9% 1.8%74.5%–1.5%
Germany
0.4% 1.8% 2.0% 5.2% 1.4%78.4%
1) Preliminary
–
Source: European Commission
Uneven economic development in Europe
The European Union emerged from the previous year‘s recession with a slight increase in GDP of 0.1%
in 2013. The European Commission expects further stabilisation or recovery in the economy in 2014 and
2015 and anticipates growth rates of 1.6% and 2.0% respectively. However, there remain major differences
between the 28 member countries; Austria and, in particular, Germany established themselves as anchors
of stability during and after the crisis. The Euro zone economy is recovering, but only slowly. The financial
market crisis is not generally considered to have been fully overcome, and in most member countries fiscal
policy has necessitated strict economic policies. National debt in the Euro zone was 92.6% of gross domestic
product, which illustrates the need for budget consolidation measures. Following a 0.4% decrease in 2013,
the European Commission estimates economic output in the Euro zone will grow by 1.2% and 1.7% in 2014
and 2015, respectively.
Modest economic upturn in Austria
The Austrian economy was still stagnating in the second quarter of 2013, but gained momentum as the
year progressed. However, the 0.4% increase in GDP is well below the previous year’s figure of 0.9%; the
European Commission’s forecasts for 2014 are more positive once again, with strong economic growth of
1.6% expected. One driving force was the export sector, which recorded real growth of 1.8%, according to
Statistics Austria. In contrast, private consumer spending declined slightly in 2013. One reason for this is the
increase in the unemployment rate from 4.3% in 2012 to 4.9% in April 2014. Parallel to this development, the
number of employed persons increased by 0.6% due to reduced early retirement and immigration.
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Overall economic environment
Due to the decline in average household income, the savings rate decreased from 7.4% in 2012 to 6.5%.
Corporate capital investment was more restrained than in previous periods and led to a 0.9% drop in real
gross capital investment. Mainly due to the declining price of fuel, inflation in Austria fell from 2.4% in 2012 to
1.8% in April 2014, calculated on an annual basis. Despite the necessary consolidation of public finances, the
European Commission expects a significant economic upturn in 2014 and 2015.
Economic stabilisation in Germany
Germany was once again the most important driver of growth for the European economy as a whole in 2013,
but only managed a 0.4% increase in GDP after recording a gain of 0.9% in 2012. However, the forecasts for
2014 and 2015 are significantly more optimistic at 1.8% and 2.0%, respectively. Domestic demand remains an
important pillar of the German economy; this has a stabilising effect due to the low unemployment rate and
the positive trend in private consumer spending. The export sector, in contrast, recently recorded a decline,
but should gain momentum in 2014 and 2015. With a balanced budget in 2013, the German government has
remained firmly on its consolidation path with an objective of limiting debt to 78.4% of GDP.
Development of real GDP
in comparison to the previous quarter
0.8
0.7
0.7
0.4
0.4
0.4
0.3
0.2
0.3
0.3
0.3
0.2
0.2
0.2
0.1
-
-
- -
-0.1
- - -
-
-0.1
-0.2
-0.2
-0.2
-0.3
-0.4
-0.5
2012 Q1
2012 Q2
n Euro zone (18 countries)
2012 Q3
-0.5
2012 Q4
n EU (28 countries)
2013 Q1
n Austria
2013 Q2
n Germany
2013 Q3
2013 Q4
2014 Q1
Source: European Commission
115
DEVELOPMENT OF THE PROPERTY MARKETS
INCREASED MOMENTUM ON THE EUROPEAN PROPERTY INVESTMENT MARKET
There was a significant revival in commercial real estate transactions recorded in Europe in 2013. According
to CBRE Global Research and Consulting, the total volume was over EUR 150 billion, exceeding the 2012 level
by about 21%. In addition to the UK, the main drivers of this trend were Spain, Italy and Portugal. Starting
from a low level as a result of the financial and economic crisis, transaction volumes in these markets more
than doubled in 2013. The positive trend continued in the first quarter of 2014, which saw an 18% increase in
volume over the first quarter of 2013. Spain, Finland, Austria, Germany and Poland turned in above-average
performances.
EUROPEAN PROPERTY TRANSACTIONS
by quarters, in EUR million
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
2007
2008
2009
2010
2011
2012
2013
2014
Source: CBRE
EUROPEAN CONSTRUCTION INDUSTRY IN RECESSION IN 2013
The European construction industry has posted declines in recent years under the impact of the tense overall
economic situation and the consolidation of national budgets initiated in several countries. According to
estimates made by the construction business research group Euroconstruct, construction output fell by
3% in 2013. A reversal of this trend is expected in all segments – residential construction, other building
construction and civil engineering – in 2014, although major regional differences will remain.
In Austria, in contrast, construction output rose by 0.5% in 2013, and this increase is expected to double in
the coming years. Germany also bucked the European trend as the construction industry there managed to
increase revenues by 3.0% in 2013 to more than EUR 96 billion.
Helped by a mild winter, this positive trend continued in the first quarter of 2014. For example, in March 2014
price-adjusted new orders increased by 5.6% compared to March 2013, with growth in building construction
(+9.2%) significantly exceeding that in civil engineering (+1.9%).
Because of the BUWOG Group’s strategic focus on the residential sector in Austria and Germany, these two
markets will now be discussed in greater detail – with a focus on those cities and regions that are of particular
importance to BUWOG Group’s portfolio.
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PROPERTY MARKETS
RESIDENTIAL MARKET – AUSTRIA
In 2013, according to Statistik Austria, the population
of Austria increased by 0.6% year on year to 8.5
million people, living in around 3.7 million private
households. More than one-third of these are
one-person households, and this trend is gaining
strength. More than 40% of all primary residences
are rental apartments, although there are major
regional differences. While in Vienna nearly 80%
of the total market consisted of rental apartments
in 2013, the figure for the other Austrian provinces
ranged from 17% to just under 40%. The main reason
for this high proportion of tenants is the dominance
of subsidised social housing in the rental market as
a whole. When the last survey was conducted in
2012, this market segment accounted for 60% of all
rented apartments: 19% council apartments and 41%
apartments subject to the Non-Profit Housing Act
(WGG).
According to the latest rental index produced by
the Austrian Chamber of Commerce in spring 2014,
the level of unrestricted rentals in Austria currently
ranges from around EUR 5.8 per sqm in Carinthia to
EUR 9.1 per sqm in Vienna. Compared to the previous
year, Vorarlberg recorded the largest increase at
5.2%, followed by Tyrol at 4.5% and Styria at 4.1%.
According to surveys by the Austrian Chamber of
Commerce, the current price of newly-constructed
owner-occupied apartments in Austria ranges from
an average of EUR 1,580 per sqm in Burgenland to
EUR 3,750 per sqm in Vienna, though location can
make an enormous difference (for details on Vienna
see page 118). In 2013, the largest price increases for
new apartments were seen in Vorarlberg and Styria.
In Austria as a whole, permits were issued for the
construction of nearly 60,000 new apartments and
around 18,000 new buildings in 2013. The proportion
of apartments created through expansion, extension
and conversion activities has risen steadily in recent
years and increased from 18.7% in 2012 to 21.7% in
2013. More than half of all apartments approved in
2013 were for buildings with three or more units. In
Vienna, where most of the BUWOG Group’s Austrian
new development projects are concentrated, permits
for over 12,000 new residential units were issued – as
against 6,900 in 2012 and 8,700 in 2011. In parallel
to this, however, the population of Vienna grew by
some 25,000 in 2013 to around 1.8 million.
AVERAGE in-place rent
IN AUSTRIA’S FEDERAL STATES
in EUR per sqm, average figures for new builds and relets
7.9
5.8
5.9
5.9
6.0
6.2
Carinthia
Burgenland
Styria
Lower
Austria
Upper
Austria
Tyrol
9.1
8.6
8.2
Salzburg
Vorarlberg
Vienna
Source: Austrian Chamber of Commerce
AVERAGE PRICES FOR NEWLY-CONSTRUCTED
OWNER-OCCUPIED APARTMENTS IN AUSTRIA’S
FEDERAL STATES
in EUR per sqm
3,750
3,320
3,060
2,700
1,580
Burgenland
1,790
1,810
Styria
Lower
Austria
1,960
Carinthia
2,040
Upper
Austria
Tyrol
Vorarlberg
Salzburg
Vienna
Source: Austrian Chamber of Commerce
NEW residential approvals
in Austria and Vienna, in 000s
59.5
57.7
51.4
49.7
47.5
6.9
2009
n Austria
5.3
2010
8.7
2011
n THEREOF VIENNA
12.2
6.9
2012
2013
Source: Statistik Austria
117
Vienna. In recent years, the residential market in Vienna has seen a significant increase in rental and property
prices. In the inner districts, which are already heavily built-up and where demand is strong (first and foremost
districts 1, 4, 7, 8 and 9), new-build projects are only possible in isolated cases. Because of the strong demand
and given the trends in population and households that we have already discussed, even major projects with
several thousand residential units – such as those that will be implemented in the next few years near the new
Central Station (district 10) and at Aspern Airfield (district 22) – will not lead to any significant relaxation in
the situation on the new-build market. In this environment, the appreciation in value of existing apartments
and the use of vacant parcels of land will gain in importance.
In the rental segment, 2013 brought a further
rise in demand and in prices, since there was
still little new construction going on. Among
the most sought-after rental properties are
apartments of 50 to 80 sqm and rents of up to
EUR 1,500, as well as apartments of more than
140 sqm and maximum rents of EUR 2,500 per
month. Key decision-making criteria are links
to the transport infrastructure and the location
and facilities of the property. This diagram
presents the rental-price level broken down by
district, the lower range applying basically to
older existing apartments and the upper range
to newly-built or renovated apartments.
RENTAL PRICE LEVEL, VIENNA
by district in EUR per sqm
25
20
15
10
5
1
2–9
10–12
13–14
15–17
18–19
n from n to
20–22
23
Source: CBRE
PURCHASE PRICE LEVEL, VIENNA
by district in EUR per sqm
25,000
20,000
15,000
10,000
5,000
1
2–9
10–12
13–14
15–17
18–19 20–22
n from n to
23
Source: CBRE
There are significant price differences in the
condominium segment in Vienna depending
on the location. Whereas the prices achievable
in district 1, according to the 2013 Market
Report from Colliers International, ranged from
EUR 6,000 to EUR 26,000 per sqm, prices in
the outlying districts began as low as 2,000
per sqm. This diagram presents the rentalprice level broken down by district, the lower
range applying basically to older existing
apartments and the upper range to newlybuilt or renovated apartments. The group
of investors has expanded greatly in recent
years to include many international buyers.
Traditional apartment buildings in inner city
locations are especially popular. According to
the assessment made by Colliers International,
Vienna has around 15,000 apartment buildings
from the 19th century Gründerzeit period, which
continue to be sold for top prices due to the
demand situation. The transaction volume for
apartment buildings is estimated at around
EUR 1 billion in 2013, maintaining the level of
the previous year.
Residential market – Germany
According to the surveys by the Federal Statistical Office in 2012, Germany had around 40.7 million households
and 80.5 million inhabitants. Almost 41% of all households consisted of just one person and this percentage is
on the rise. Around 43% of all households are in owner-occupied apartments or single-family houses. Whereas
in the former GDR and Berlin, some 31% of all households own their homes, the equivalent figure for West
German households is 46%.
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Management Report
PROPERTY MARKETS
CHANGES IN-place RENT
in EUR per sqm from Q1 2004 to Q3 20131)
9
8
7
6
5
4
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
– western germany – nominal – western germany – real
– eastern germany – nominal – eastern germany – real
1) For newly-built apartments of 60 to 80 sqm fitted out to a high standard, not including Berlin
Source: empirica price database
The moderate rise in-place rent in Germany continued in 2013. In western Germany, a benchmark apartment
(new build, 60 to 80 sqm, fitted out to a high standard) posted a rise of a nominal 3.3% or EUR 0.26 per sqm.
The states in the eastern part of the country recorded a slightly lower increase of 2.7%. Rental prices thus
once again increased more strongly than the consumer price index. Adjusted for inflation, rents in western
and eastern Germany rose by 1.7% and 1.1% respectively.
In its Spring Report for 2014, the Council of Real
Estate Experts estimates that while both the purchase
and rental prices of owner-occupied residences are
rising, purchase prices are only doing so after a slight
time lag. Prices have risen steadily in this segment
since 2010. The price of a benchmark apartment rose
by 3.3% in the western states in 2013 compared to
the previous year and by 4.4% in the eastern states,
although in the latter case the starting point was
lower. Both indicators are thus below the price levels
of 2005 and 2006, even taking inflation into account.
A significant increase in new apartment approvals was
recorded in the German market as a whole in 2013. In
total, over 270,000 units were approved, nearly 12%
higher than the previous year’s level. This represents
total living space of 29.5 million sqm. More than 88%
of these approvals were for the construction of new
buildings. The Federal Statistical Office estimates the
associated investment volume at over EUR 62 billion.
According to calculations by Jones Lang LaSalle,
the volume of transactions in the German residential
market amounted to around 236,000 units in 2013,
an increase of more than 40% over the previous
year’s level. The main reason for this above-average
increase was several large transactions. The total
volume amounted to around EUR 16 billion, Berlin
alone accounting for EUR 6.8 billion, Frankfurt am
Main for EUR 520 million and Hamburg for around
EUR 430 million.
NEW RESIDENTIAL APPROVALS
in Germany, in 000s
270.4
241.1
228.3
187.6
177.6
2009
2010
2011
2012
2013
Source: German Federal Statistical Office
INVESTMENTS IN RESIDENTIAL PROPERTY
in Germany
18
450
16
400
350
14
Outlook
12
300
10
250
8
200
6
150
4
100
2
50
2009
2010
2011
2012
n transaction volume
in EUR million
2013
2014 Q1
2014
otransactions
in 000s
Source: Jones Lang LaSalle
119
The transaction volume doubled in the first quarter of 2014 compared to the first quarter of 2013 to around
EUR 4.7 billion, or nearly 90,000 apartment units. Two major transactions – including the purchase of the
DGAG portfolio by BUWOG Group – were primarily responsible for this.
Berlin. Berlin’s residential market was again heavily influenced by economic and population growth in 2013.
Recent net annual immigration has been around 41,000, increasing the population to over 3.4 million over
the last few years. Immigration has been strongest in the city centre and the districts adjacent to it. In total,
there are about 2 million households, of which 54% are single-person households.
Approx. 12,000 building permits were issued in 2013, an increase of around a quarter on the previous year.
However, growth in the housing supply still does not match the growth in the number of households and this
will result in an even greater shortage of supply in subsequent years. According to estimates by Jones Lang
LaSalle, the active market vacancy rate is currently only 2%.
The rental price level figuring in new leases in 2013 is up by an average of almost 8% on the previous year
to EUR 8.20 per sqm. The price differential from one district to another is wide, however, ranging from EUR
5.9 per sqm in Marzahn-Hellersdorf, Berlin’s lowest price district, to EUR 10.0 per sqm in FriedrichshainKreuzberg. Rents for new-build apartments average around EUR 10.5 per sqm, about a third higher than
those for older apartments.
RESIDENTIAL CONSTRUCTION activity AND THE NEED FOR NEW BUIldingS IN BERLIN
in 000s
35
30
25
20
15
10
5
1995
– Building permits
2000
2005
– building completions
2010
2015
– need for new buildings
2020
2025
Source: Berlin-Brandenburg Statistical Office,
Federal Institute for Research on Building,
Urban Affairs and Spatial Development
Jones Lang LaSalle estimates that prices of owner-occupied apartments rose by an average of 8.7% in 2013
to EUR 2,570 per sqm. While inner-city districts like Mitte and Friedrichshain-Kreuzberg registered only
a moderate upward trend, prices increases were significantly greater in Neukölln and in Reinickendorf. In
trendy city-centre areas, there are now hardly any apartments on offer for less than EUR 3,000 per sqm.
In general, the price range in condominiums is more than three times as great as in the rental segment.
For example, an apartment in Berlin-Mitte costs approx. 2.6 times as much as one in Marzahn-Hellersdorf.
The price of new-build apartments in 2013 averaged around EUR 3,500 per sqm, about 3.6% up on the
previous year.
Treptow-Köpenick, Berlin’s largest district in geographic terms, has around 245,000 inhabitants and the
number is rising. This district, where BUWOG Group is currently implementing its largest new-build project,
is blessed with extensive woodlands and waterways – which, together with nature reserves and protected
landscapes, make up around 70% of its entire area. According to estimates by the Treptow-Köpenick district
administration, its population is set to grow by over 13,000 by 2020, which implies heavy residential demand.
In the first three months of 2014 alone, a total of 1,000 apartments were approved, ranging from smaller
apartment buildings with just a few units to larger projects with up to 100 residential units.
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PROPERTY MARKETS
Hamburg. At an average Hamburg’s population is growing by around 15,000 a year, reaching about 1.7 million
residents at the end of 2013. Around 54% of the city’s 990,000 households are single-person households.
According to estimates by Jones Lang LaSalle, the number of building permits increased by around 20% in
2013. Nevertheless, the supply of new housing remains modest at approx. 3,300 residential units annually, of
which about two-thirds are multiple-residence properties. However, a significant upturn is expected in the
market in 2014. With the current vacancy rate at around 1%, housing is set to remain in short supply, despite
increasing construction activity.
RESIDENTIAL CONSTRUCTION ACTIVITY AND THE NEED FOR NEW BUILDINGs IN HAMBURG
in 000s
12
10
8
6
4
2
1995
– Building permits
2000
2005
– building completions
2010
2015
– need for new buildings
2020
2025
Source: Berlin-Brandenburg Statistical Office,
Federal Institute for Research on Building,
Urban Affairs and Spatial Development
After a continuous rise since 2007, rents in Hamburg stagnated in 2013 at an average of EUR 10.7 per sqm.
While rents in sought-after locations north of the Elbe range from EUR 12 to 14 per sqm, their level in the
Harburg and Bergedorf districts is around EUR 8 per sqm. Premium rents of over EUR 17 per sqm are being
achieved for new-build apartments in Hafen-City, while the average rent for new-build apartments is around
EUR 13.1 per sqm.
In contrast to the rental market, prices for condominium apartments continued to rise dynamically in 2013.
Purchase prices rose by an average of 6.0% to EUR 3,420 per sqm. In sought-after city-centre locations,
prices range between EUR 3,000 and EUR 5,000 per sqm, while premium prices of around EUR 12,000
per sqm are being achieved near the Alster and in Hafen-City. In outlying areas, the lower limit is at a mere
EUR 2,000 per sqm.
Hamburg – surrounding area. This overall trend in the Hamburg residential market is having positive knock-on
effects on surrounding areas. The associated price rises are being driven by the continuous population
increase and an increase in the number of households. The most recent regional planning forecast assumes
an increase in the number of residents in the area surrounding Hamburg of 3% to 6% by 2030, while the
number of households is expected to increase by 18% to 23%.
The rents offered for new and existing properties in the Hamburg area rose steadily between 2009 and 2013.
According to the latest estimates by the Analyse & Konzepte consultancy, the highest in-place rents are
being achieved in Kreis Stormarn, at an average of EUR 9.8 per sqm for new-build apartments and EUR 7.8
per sqm for older properties. This area’s most important metropolitan centres include Ahrensburg and the
towns of Reinbek and Glinde, which are represented in the BUWOG Group portfolio.
Rents in the Segeberg area averaged EUR 10.5 per sqm for new-build properties in 2013 and EUR 8.6 per
sqm for older apartments – both being some 10% above their level in 2009. The largest cities in this region
include Norderstedt with around 75,000 inhabitants, Henstedt-Ulzburg with just under 27,000 inhabitants,
and Kaltenkirchen with nearly 20,000 inhabitants. BUWOG Group has investment portfolio in all three cities.
121
Kiel. Kiel has a population of around 240,000 and the number has been on a rising trend for several years.
Recently around 400 apartments per year have been approved and the housing stock totals about 132,000
apartments. The current rental index indicates a in-place rent of around EUR 7.0 per sqm for an average
apartment built in the last 20 years and relet during the last four years.
Lübeck. The population of Lübeck has been virtually constant during the last few years and stands at around
213,000. Only one person lives in about half of the 118,000 households. In 2012, approvals for approx. 340
apartments were granted, half of which were multiple-unit buildings. The price level for construction-ready
land has doubled in the last 13 years to EUR 137 per sqm. According to the current rental index, rents for
apartments in average locations, fitted out to an average standard, depend on the age of the building –
ranging from EUR 5.73 per sqm for buildings dating back to the 1980s to 8.50 per sqm for those built in the
last 20 years.
Kassel. The North-Hessian city of Kassel had a population of about 197,000 at year-end 2013, an increase of
almost 4,000 people over the previous year. The population has doubled if the surrounding communities are
included. The average household size is 1.9 persons. The city administration’s current rental index reports a
range of EUR 6.8-8.3 per sqm for unsubsidised new-build apartments. The level for older relet apartments is
between EUR 6.0 and EUR 8.0 per sqm.
DEVELOPMENTS ON THE FINANCIAL MARKETS
Interest rates and refinancing in Austria and Germany
Since the onset of the global financial and economic crisis in 2008, developments on the European financial
markets have been both challenging and turbulent. A significant role in this development has been played
by the European Central Bank (ECB), which in the last few years has been influencing European monetary
policies more than ever before since its foundation in 1998.
The ECB’s highest priority is ensuring price stability in the Euro zone, with a target inflation rate below but
close to 2%. It has been attempting to achieve and maintain this objective by means of monetary-policy
measures such as injections of liquidity, bond purchases and interest-rate cuts. The primary aim of these
measures is to provide companies and households sufficient liquidity via banks to stimulate the economy by
promoting low-cost investment.
The ECB has different tools available to implement this strategy, including open market operations to control
interest rates and liquidity in the market. The most important feature of these open market operations
concerns the main refinancing operations by which temporary liquidity-providing operations are agreed at
weekly intervals for a period of two weeks. These operations provide the banks with the bulk of their liquidity.
The minimum bid rate is one of the key ECB interest rates; it lies between the rates of the deposit facility
and the marginal lending facility, which
as so-called standing facilities represent
another instrument of European monetary
CHANGES IN THE ECB MAIN REFINANCING RATE
policy. These facilities make overnight
1 May 2007 – 30 April 2014, in %
liquidity available or absorb it.
5
4
3
2
1
2007
2008
2009
2010
2011
2012
2013
2014
Source: Bloomberg
122
Together, these three rates signal the
orientation of Euro zone monetary policy,
with financial markets considering the
development of the ECB’s main refinancing
rate to be the most important signal. This
was at its maximum of 4.25% in mid-2008,
gradually falling to 1% by May 2009. This
level was maintained for two years until the
ECB increased its base rate in two stages to
Management Report
financial markets
1.5% when it assumed the economy was recovering. After less than a year, the increase was gradually rolled
back until the base rate was fixed at 0.25% in November 2013. This low point was maintained until the end of
the 2013/14 financial year. It was not until after the period under review, in June 2014, that a new cut took it
to its all-time low of 0.15%.
CHANGES IN KEY INTEREST RATES
In Austria and Germany, the two reference rates, the 3-month and 6-month EURIBOR, are the main rates
used for floating-rate financing; their development is similar to that of the ECB base rate. After reaching a
high of 5.39% in October 2008, the reference rates fell for the first time in July 2009 to 1%. The 3-month
EURIBOR fell well below 1% and levelled off for the
first time below the ECB base rate, while the 6-month
EURIBOR remained at the level of the ECB base rate.
ECB MAIN REFINANCING RATE VS. EURIBOR
By the end of 2010, the reference rates had once
1 May 2007 – 30 April 2014, in %
again risen above the base-rate level. This upward
trend normalised the markets, but not for long. By
6
October 2011, the EURIBOR reference rates were on
5
the way back down, reaching a new low of 0.5%. At
this point, the gap between the ECB base rate and
4
the reference interest began to increase. At 0.567%,
3
the 3-month EURIBOR rate was below the base
rate of 0.75% in December 2012, while the 6-month
2
EURIBOR stood at 0.434%. It was not until the ECB’s
1
interest-rate cut to 0.25% in November 2013 that the
EURIBOR reference rates and the main refinancing
rate converged again. Since the cut to 0.15%, which
2007
2008
2009
2010
2011
2012
2013
2014
took place after the period under review, reference
– ECB’s main refinancing rate
rates have again been slightly above the key rate.
Source: Bloomberg
– 3-month EURIBOR – 6-month EURIBOR
An upward trend was noted in medium- and longterm interest rates at the beginning of the 2013/14
financial year. This rise was briefly interrupted in May,
although rates then hit their highest level of the year
in August 2013. A slight downward trend to less than
2% was observed in the ten-year segment until the
end of the period under review, though December
2013 was an exception. From the beginning of
2014, medium- and long-term interest rates fell
continuously. This trend was also evident at the
beginning of the 2014/15 financial year.
EURO SWAP RATES
1 May 2007 – 30 April 2014, in %
5
4
3
2
1
2007
2008
2009
2010
2011
– 5 years – 7 years – 10 years
2012
2013
2014
Source: Bloomberg
ECB: EXTRAORDINARY MONETARY POLICY MEASURES
In addition to the interest rate policy measures, since the economic and financial crisis began the ECB has
also sought to stimulate economic growth using extraordinary instruments. One of these instruments was the
lowering of the minimum reserve from 2% to 1% in December 2011. From this point, only 1% of deposits that
had no or only a short-term notice period had to be held on deposit at the ECB. This step freed additional
liquidity in the financial markets.
123
Further extraordinary measures were taken, such as purchases of government bonds and liquidity offensives
via cash injections. These large-volume cash injections were made available at the end of 2011 (EUR 489
billion) and in early 2012 (EUR 530 billion) with a term of three years and at a low interest rate in order to
prevent a credit crunch in the Euro zone. However, a large part of these funds flowed back into the ECB. In
May 2012, overnight deposits reached a record level of over EUR 800 billion. It was not until the deposit rate
was cut from 0.25% to 0.00% that the banks withdrew most of their money, no longer depositing it with the
ECB. Some of these long-term credits were repaid by the banks as early as the beginning of 2013. In June
2014, the ECB reduced the deposit rate to –0.10%, signalling even more emphatically that available liquidity
should not be put on deposit, but channelled to companies and households in the form of credits.
The ECB is using the measures described above to achieve its aim of maintaining price stability. By supplying
the markets with low-cost liquidity, the ECB seeks to encourage investment, which, in turn, stimulates
the economy and reduces unemployment. The weak Euro also boosts exports, which make an important
contribution to growth, especially in the economic drivers of the EU.
CHANGES IN FINANCING PARAMETERS
In Austria as well as Germany, it is the experience of the BUWOG Group that financing operations in the
property field are fundamentally secure by virtue of the strong demand for capital investments in this sector.
The increased capital adequacy reporting requirements for banks under Basel II and Basel III put the focus
on the ability to cover the financing obligations for the investment portfolio. This certainly leads to more
favourable refinancing costs for the bank, but it also reduces loan-to-value ratios and thus increases equity
requirements for property investments.
Basically there is also sufficient access to external capital for project developments, though lending conditions
– in terms of additional requirements and reporting obligations vis-à-vis the bank – have become significantly
more stringent in recent years. The increased risk associated with project developments, however, has made
the costs of project financing significantly higher than those of financing existing standing investment
portfolios. Key factors in the decision-making process are location, cost certainty through the appointment
of a general contractor with fixed-price and completion guarantees and demonstrable pre-letting.
In total, therefore, sufficient financing volumes are available. However, these are subject to more stringent
terms and conditions imposed by the banks.
124
Management Report
financial markets,
PORTFOLIO REPORT
PORTFOLIO REPORT
The core business of BUWOG Group is the letting of a diversified, risk-optimised and sustainable portfolio
of standing investments, the unit sale of residential units from the inventory at attractive margins and the
development and construction of easily marketable residential projects with a focus on Vienna and Berlin.
The objective is to maximise profitability along the entire value chain – from the in-house development of
new construction projects to optimisation of the inventories to active asset management through to the
cycle-optimised sale of new construction projects and portfolio units.
The following details refer to the balance sheet date for the 2013/14 financial year. Portfolio acquisitions
that were completed after 30 April 2014 – DGAG portfolio and Apollo portfolio – are therefore not taken
into account. The previous year values are presented as of 30 April 2013 on the basis of the pro forma
balance sheet. Regarding the balance sheet carrying amounts, reference is made to section 2 – Significant
Accounting Policies in the details in the notes.
BUWOG Group PROPERTY PORTFOLIO
The structure of the portfolio report reflects the balance sheet classification of invested properties broken
down into rental income generating standing investments as well as pipeline projects (new construction
projects and land reserves), standing investments under construction for the core property portfolio, noncurrent investment properties held for sale (standing investments) as well as property inventories broken
down into inventory development and inventory realisation.
The carrying amount of BUWOG Group’s overall portfolio as of 30 April 2014 amounts to a total of
EUR 2,820.5 million (previous year: EUR 2,739.0 million). The major share of EUR 2,526.1 million (previous
year: EUR 2,484.7 million) or 89.5% (previous year: 90.7%) is made up of standing investments and noncurrent investment properties held for sale. Active new construction and development projects (inventories),
account for EUR 155.1 million (previous year: EUR 126.2 million) or 5.5% (previous year: 4.6%) of the carrying
amount of the property portfolio. A carrying amount of EUR 120.5 million (previous year: EUR 106.9 million)
or 4.3% (previous year: 3.9%) is made up of pipeline projects. The carrying amount of the new builds, which
are stated under investment properties under construction and created for BUWOG inventories, amount to
EUR 10.9 million (previous year: EUR 12.8 million) or 0.4% (previous year: 0.5%). The other properties, plant
and equipment with the owner-occupied properties amount to EUR 7.9 million (previous year: EUR 8.4 million)
or 0.3% (previous year: 0.3%).
The property portfolio of BUWOG Group is broken down into non-current and current assets in the balance
sheet. According to the balance sheet as of 30 April 2014, the transition to the illustration in the portfolio
report is as follows:
property portfolio
30 April 2014 in EUR million
Investment properties 2,631.6
Non-current assets
Current assets
Total portfolio BUWOG Group
2,650.3
170.2
2,820.5
2,511.1
Pipeline projects
120.5
Other tangible assets
7.9
Owner-occupied properties1)
7.9
Investment properties under construction
10.9
Build in inventory
10.9
Non-current assets
held for sale
15.0
15.0
Inventories
155.1
155.1
2,820.5
2,820.5
1) Incl. furniture, fixtures and office equipment
125
The regional breakdown of the entire porperty portfolio can be found in the following chart:
REGIONAL STRUCTURE OF THE
PROPERTY PORTFOLIO BY FAIR VALUE
as of 30 April 2014
Germany
17%
TOTAL
CARRYING
AMOUNT:
EUR 2,820.5
MILLION
Austria
83%
PROPERTY PORTFOLIO
by fair value
Units
Units
in EUR
million
Pipeline
projects
in EUR
million
Owneroccupied
properties1)
in EUR
million
Build in
inventory
in EUR
million
Development
projects in
EUR million
Property
portfolio
in EUR
million
Share
Austria
26,250
2,126.7
96.9
7.5
10.9
100.4
2,342.4
83%
Germany
7,225
399.4
23.6
0.4
0.0
54.7
478.1
17%
33,475
2,526.1
120.5
7.9
10.9
155.1
2,820.5
100%
BUWOG Group
1) Incl. furniture, fixtures and office equipment
INVESTMENT PROPERTIES – STANDING INVESTMENTS (ASSET MANAGEMENT BUSINESS AREA)
BUWOG Group holds standing investments for the purpose of generating regular rental income. The
portfolio in Austria and Germany consisted of 33,475 units as of 30 April 2014, which represent a fair value of
EUR 2,526.1 million (previous year: EUR 2,484.7 million) and therefore correspond to about 90% of the total
property portfolio (incl. development projects). The standing investments are accounted for at fair value in
accordance with IAS 40 and also include investment properties reclassified as held for sale in accordance
with IFRS 5.
In the 2013/14 financial year, BUWOG Group successfully implemented its portfolio strategy of expanding to
Germany by making targeted portfolio acquisitions. The regional investment focus in Germany consists of the
regions of Berlin and North-Western Germany with the target cities of Kiel, Lübeck, Hanover, Braunschweig,
Bremen and Kassel as well as the metropolitan area of Hamburg. BUWOG Group’s key investment criteria
are properties with value increase and Unit Sales potential in economically stable growth regions as well as
homogenous residential complexes, built preferably between 1960 and 1979.
126
Management Report
PORTFOLIO REPORT
In the past financial year, a total of four portfolios with 2,982 units were acquired and taken over for a total
of about EUR 118 million in Germany. In addition, purchase agreements were signed for two further portfolios
(DGAG and Apollo) in the past financial year: the respective commercial transfers were carried out in the first
quarter of the 2014/15 financial year and are therefore not included in earnings or the balance sheet.
The core portfolio of BUWOG Group as of 30 April 2014 includes a total of 33,475 units. More than 85% of its
fair value and more than 77% of its units are located the areas surrounding the federal capitals of Vienna and
Berlin, the state capitals and major cities as well as their related catchment areas.
The average unit has a size of about 74 sqm. The annualised contractual in-place rent in the standing
investments as of 30 April 2014, including parking spaces, is EUR 122.7 million (previous year: EUR 115.8
million). This corresponds to an average in-place rent of EUR 4.31 per sqm (previous year: EUR 4.12 per sqm)
and a Net Rental Yield (annualised in-place rent as of the balance sheet date in relation to fair value) of
some 4.9% (previous year: some 4.7%). The vacancy rate is established on the basis of the area and amounts
to a total of 4.8% as of 30 April 2014 (previous year: 4.6%). The rental growth of BUWOG Group’s overall
inventories amounted to approx. 1.8% in 2013/14
in like-for-like comparison taking into account
the elimination of effects from the change to the
Closing
ACQUISITIONS
portfolio and the new letting of vacancies (previous
September 2013
884 units in Lüneburg/Syke
year period: approx. 4.8%).
November 2013
1,194 units in Kassel
January 2014
317 units in Kassel
The proportional higher change in the previous year
February 2014
587 units in Kiel
resulted primarily from one-off effects when adjusting
Total: 2,982 units
Maintenance and Improvement Contributions (MICs)
due to the exceeding of legal thresholds. In the
preceding financial year, BUWOG Group benefited,
on the one hand, from the increase of the MICs to the legally possible maximum rate of EUR 1.62 per sqm
in part of the portfolio and, on the other hand, from the adjustment of the maximum rate from EUR 1.54 per
sqm to EUR 1.62 per sqm. As a rule, the levy of increased MICs (MIC II) depends on the year of construction: a
levy above the basic rate (MIC I) is possible for the first time in the tenth year after construction, an increase
to the maximum possible rate only from the 20th year after construction. Depending on the relevant market
compatibility, BUWOG plans to utilise in full the corresponding rent increase potentials for the corresponding
parts of the portfolio depending on the relevant market compatibility.
PORTFOLIO OVERVIEW STANDING INVESTMENTS BY LOCATION
as of 30 April 2014
Annualised
in-place rent1)
in EUR
million
In-place
rent1)
in EUR
per sqm
Number
of units
Total
floor area
in sqm
Federal capitals
11,303
898,991
55
5.29
Vienna
7,060
617,569
36
5.05
Berlin
4,243
281,422
19
5.80
265
Fair value2)
in EUR
million
Fair value2)
in EUR
per sqm
Net Rental
Yield3)
Vacancy
rate4)
1,267
1,410
4.4%
3.3%
1,002
1,623
3.6%
3.7%
942
7.2%
2.4%
State capitals/
major cities5)
9,696
685,682
31
3.86
563
821
5.4%
3.4%
Regions close to the city6)
4,485
344,683
15
3.95
318
923
4.8%
6.0%
Rural regions
7,991
561,935
22
3.47
378
672
5.7%
8.0%
Total BUWOG Group
33,475
2,491,290
123
4.31
2,526
1,014
4.9%
4.8%
thereof Austria
26,250
2,012,137
93
4.06
2,127
1,057
4.4%
5.0%
7,225
479,153
30
5.34
399
834
7.4%
3.6%
thereof Germany
1) Basis monthly in-place rent (without ancillary costs) as of the balance sheet date
2) Basis fair value standing investments in accordance with appraisal report CBRE of 30 April 2014
3)Annualised in-place rent (basis monthly in-place rent excl. ancillary costs as of the balance sheet date) in relation to fair value
4) Basis sqm
5) More than 50,000 inhabitants and significant portfolio share (> 600 units)
6) Direct catchment area of up to 15 km around the federal, state capital and metropolises as well as Hamburg
127
In the 2013/14 financial year BUWOG Group invested in current maintenance and refurbishments for lettings
(maintenance) as well as for value-increasing, investment measures (CAPEX) a total of EUR 32.3 million
(previous year: EUR 30.7 million). This corresponds to a total of EUR 13.2 per sqm (previous year: EUR 12.9
per sqm). The investments in maintenance amount to EUR 26.0 million (previous year: EUR 20.1 million), this
corresponds to EUR 10.6 per sqm (previous year: EUR 8.4 per sqm). For CAPEX measures, EUR 6.3 million
(previous year: EUR 10.6 million) or EUR 2.6 per sqm (previous year: EUR 4.5 per sqm) was invested. BUWOG
continues to aim for a sustainable, return-driven maintenance control within the framework of an active asset
management approach in order to implement value growth potentials in the portfolios.
Within the standing investments of BUWOG Group, the properties are assigned to three clusters for portfolio
management: (a) core portfolio, (b) Unit Sales portfolio (current and planned sales stock on a recurring
basis) as well as (c) Block Sales portfolio (the sale of apartments or entire buildings within the framework
of an opportunistic approach for portfolio optimisation in the medium term). The following table shows the
cluster allocation:
STRATEGIC PORTFOLIO CLUSTER SPLIT
9%
Block Sales
Properties and portfolios for sale
within the framework of portfolio
optimisation
35%
Core portfolio
Standing investments for longterm letting and optimisation
FAIR VALUE
TOTAL:
EUR 2,526
MILLION
56%
Unit Sales
Privatisation objects for
current and planned Unit Sales
PORTFOLIO SPLIT BY STRATEGY CLUSTER
Core portfolio
Units Floor area Unit Sale portfolio
Quantity15,983
in sqm1,136,140
Block Sale portfolio
13,546
1,064,014
3,946
291,137
Total portfolio
33,475
2,491,290
4.15
3.85
4.31
Fair value2)
in EUR million887
1,408
231
2,526
Fair value2)
in EUR per sqm781
1,323
795
1,014
3.6%
5.5%
4.9%
In-place rent1)
Net Rental Yield3)
in EUR per sqm4.58
in %6.7%
Vacancy rate per cluster by sqm
5.1%4.0% 6.1%4.8%
1) Basis monthly in-place rent (without ancillary costs) as of the balance sheet date
2) Basis fair value standing investments in accordance with appraisal report CBRE of 30 April 2014
3)Annualised in-place rent (basis monthly in-place rent excl. ancillary costs as of the balance sheet date) in relation to fair value
128
Management Report
PORTFOLIO REPORT
SALE OF STANDING INVESTMENT portfolio (PROPERTY SALES BUSINESS AREA)
The Unit Sales portfolio within the Property Sales business area is a key part of generating recurring sales for
BUWOG Group. In doing so, vacant individual apartments from properties divided into condominiums are sold
to owner-occupants, capital investors or tenants.
In the current financial year, from the Austrian inventories approx. 550 units (previous year: approx. 470 units)
with sales proceeds of approx. EUR 83 million (previous year: approx. EUR 72 million) and a margin on the fair
value of approx. 54% (previous year: about 55%) were sold.
Within the framework of portfolio optimisation in the 2013/14 financial year, a total of 74 properties with about
1,700 units in predominantly rural areas were sold within the framework of the property and portfolio sales.
The sales turnover amounts to about EUR 38 million plus the turnover from a portfolio transaction (about
EUR 65 million), which was recognised in the deconsolidation result. The margin thereby achieved on fair
value amounts to about 11% (previous year: some 15%).
INVESTMENT PROPERTIES – PIPELINE PROJECTS (PROPERTY DEVELOPMENT BUSINESS AREA)
In addition to standing investments, investment properties as shown on the balance sheet also includes
pipeline projects at the fair value in accordance with IAS 40. Pipeline projects (held for value increase) are
defined as non-built-up land reserves as well new build projects in planning with a construction start later
than twelve months after the balance sheet date. They are regularly checked at BUWOG for development and
implementation options. The decision-making parameters here are the availability of construction permits, the
project planning progress, the legal situation, the amount of the equity already invested by BUWOG Group,
the availability of bank financing, the pre-letting, the expected margin, the margins achievable by alternative
projects, the project-specific factors and, not least, the macroeconomic environment.
The pipeline projects of BUWOG Group as of 30 April 2014 have a carrying amount of EUR 120.5 million
(previous year: EUR 106.9 million).
PIPELINE PROJECTS FAIR VALUE
Development
new build projects
starting > 12 months,
in EUR million
Development
land reserves
in EUR million
Asset Management
land reserves
in EUR million
Total
pipeline projects
in EUR million
Share in
total pipeline
Austria
79.7 14.8 2.4 96.9 Germany
23.5 0.0 0.1 23.6 80.4%
19.6%
BUWOG Group
103.2 14.8 2.5 120.5 100.0%
OTHER TANGIBLE ASSETS
The carrying amount of the other tangible assets of EUR 7.9 million (previous year: EUR 8.4 million) reflects
predominantly the office buildings owned and occupied by BUWOG Group in Vienna, Hietzinger Kai 131, as
well as in Villach, Tiroler Strasse 17, with a carrying amount of EUR 6.5 million.
129
INVESTMENT PROPERTIES UNDER CONSTRUCTION – BUILD IN INVENTORies
(ASSET MANAGEMENT BUSINESS AREA)
Investment properties under construction include subsidised rental properties in Austria that are currently
under construction or whose construction will begin within the next twelve months within the framework of
property development for the BUWOG core portfolio. BUWOG Group has long-standing experience in the
area of erecting subsidised rental properties for its own portfolio in Austria. The carrying amount of these
development projects amounted to EUR 10.9 million as of 30 April 2014 (previous year: EUR 12.8 million).
non-current assets HELD FOR SALE –
standing investments (Asset Management BUSINESS AREA)
For the properties classified under “non-current assets held for sale” and accounted for in accordance
with IFRS 5, there are specific sales plans as of 30 April 2014, which give rise to expect a timely sale of
these properties. Within the portfolio report, these properties are recognised with a carrying amount of
EUR 15.0 million (previous year: EUR 63.7 million) in the standing investments cluster.
INVESTMENT INVENTORIES – DEVELOPMENT PROJECTS
(PROPERTY DEVELOPMENT BUSINESS AREA)
In addition to the construction of subsidised rental apartments (stated under properties under construction),
the development of subsidised or freely financed owner-occupied apartments and buy-to-let apartments for
local customers, institutional investors and foundations is a key focus of the business activities of BUWOG
Group. They constitute the product matrix within the Property Development business area. As a rule, the
regional focus is on the markets of Vienna and Berlin that are dominated by demand for owner-occupied
apartments. The key selection criteria for the development projects represent the location, project size,
marketability and profitability.
These development projects, which are currently under construction or already completed, are reported
as inventories under current assets on the balance sheet and are accounted for at production cost in
accordance with IAS 2. The carrying amount as of 30 April 2014 totalled EUR 155.1 million (previous year:
EUR 126.2 million).
The development projects completed or still in sale as well as the development projects still under construction
with transfer scheduled in the next twelve months make up a carrying amount of some EUR 76.2 million or
about 49% of all property inventories.
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Management Report
PORTFOLIO REPORT,
PROPERTY VALUATION
PROPERTY VALUATION
The consolidated financial statements of BUWOG Group as of 30 April 2014 were prepared in accordance with
International Financial Reporting Standards (IFRS), which include the application of the fair value method.
Property assets are regularly revalued in order to determine the fair value. The valuation of the property
portfolio follows the best practice recommendations of the European Public Real Estate Association (EPRA)
for the application of the fair value method as defined in IFRS. BUWOG Group views the ongoing calculation
and transparent presentation of the fair value as an important internal controlling instrument, which also
allows a realistic external assessment of the investment properties.
The residential property holdings and any residential development projects and undeveloped properties
of the BUWOG Group are bi-annually valued by external, independent experts CBRE Residential Valuation
Germany as of the balance sheet dates of 30 April and 31 October.
CBRE is an acknowledged market leader in the valuation of residential property in Germany and Austria. In
2013 the company valued around 940,000 residential units with a total volume of approx. EUR 54 billion. With
around 44,000 employees in nearly 350 offices worldwide (excluding affiliated companies and subsidiaries),
CBRE acts as a property service provider for both owners and investors of all types.
CBRE uses a discounted cash flow (DCF) model to value Austrian real estate holdings, which has been
specifically developed to cater for the distinctive characteristics of the Austrian Non-Profit Housing Act –
WGG (particularly the cost-covering rent and the Burgenland indicative value -30%) and the sale of individual
apartments from these holdings. The adapted model utilises detailed payment cash flows for a period of
80 years to take account of long-term subsidy periods, rate hikes and the proceeds achievable in the long
term from Unit Sales. If the sale of apartments within a property is the most commercially sound option,
the individually-estimated sales quota flows into the valuation report on the property. The achievable sales
proceeds are determined by the comparative-value method and included in the DCF model for the relevant
periods.
A standard discounted cash flow (DCF) method is used for the German standing investments. The residual
value method is used for property under construction (project development) and the comparative value
method is used for undeveloped property (for future project developments) in Germany and Austria.
As of the balance sheet date, 30 April 2014, CBRE had valued the entire property portfolio of BUWOG Group.
The fair values of the real estate holdings and properties established in this way have a direct influence on
the net asset value (NAV) and are thus a material factor in assessing the financial position of BUWOG Group.
CHANGES IN PROPERTY MARKET VALUES IN THE 2013/14 FINANCIAL YEAR
According to the CBRE report, the fair value of the BUWOG Group’s property holdings as of 30 April 2014
had risen compared to the previous year.
The market value of the BUWOG Group’s standing investments recognised at their fair value in accordance
with IAS 40 (EUR 2,511.1 million) and pipeline projects (EUR 120.5 million) totalled approx. EUR 2,631.6 million
as of 30 April 2014 (previous year: approx. 2,527.9 million). In 2013/14, this resulted in a revaluation result
of the investment properties of EUR 42.7 million. The fair value of German property holdings was adversely
impacted by the increase in real estate transfer tax as well as increased cost rates for maintenance and
administration (pursuant to the 2nd Valuation Regulation), though the very positive performance of the rental
market and improved new rental agreements more than made up for these. The rise in the fair value of
Austrian property holdings was almost entirely due to the positive performance of purchase prices in the
portfolio designated for Unit Sales.
131
FINANCING
In the 2013/14 financial year, various loans on standing investments were refinanced or extended, as scheduled
and at the best possible interest rates. Another important development during the period under review was
the acquisition of four property portfolios with long-term debt volumes totalling around EUR 79 million. In
total, the BUWOG Group was able to continue its funding operations on sustainably favourable terms, thus
further improving the Recurring FFO available for dividends and investment.
FINANCING STRUCTURE
The total financial liabilities of the BUWOG Group
consist of liabilities to banks, liabilities to local
authorities and liabilities under a convertible bond.
The remaining financial liabilities of the BUWOG
Group as of 30 April 2014, which are exclusively
denominated in Euros, amounted to approx.
EUR 1,504.2 million. This diagram presents an
overview of the financing structure of the BUWOG
Group as of 30 April 2014.
STRUCTURE OF THE AMOUNT OUTSTANDING
UNDER FINANCIAL LIABILITIES
as of 30 April 2014
Convertible bond
17%
Bank loans
48%
Total:
EUR 1,504
million
RESIDENTIAL CONSTRUCTION SUBSIDIES
IN AUSTRIA
Local
authorities/
One special characteristic of the BUWOG Group’s
Subsidised loans
financing operations is subsidised loans in Austria,
35%
accounting for approx. 35% of the amount out
standing under all financial liabilities. The majority of
construction projects executed by BUWOG Group
were financed with the aid of residential construction
subsidies from the public sector – with terms spanning several decades. The residential construction subsidies
granted to BUWOG Group can be classified by the following criteria:
-Provincial subsidies for construction and refurbishment
-Types of subsidy: annuity subsidies, construction cost subsidies or direct loans
The subsidies are defined in the residential building codes for the respective provinces. Despite the many
differences in the details of the legal provisions, the laws governing residential construction subsidies are all
based on several fundamental principles:
-Rents are subject to cost coverage throughout the term of the subsidy.
- Certain restrictions, such as temporary restrictions on sale, are required in order to secure
the residential construction subsidies.
- Subsidy misuse can incur sanctions, such as, especially, premature repayment.
All of the subsidised loans granted to BUWOG Group feature the aforementioned criteria and incur interest
at an average rate of around 1.37% as of 30 April 2014. Fixed interest is charged on the subsidised loans and
some agreements are subject to annuity increases. The annuity increases are known at the time of contract
signature, and are strictly passed on in the form of rent increases.
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Management Report
FINANCING
FINANCING PARTNERS
AND REPAYMENT STRUCTURE
KEY FINANCING PARTNERS
as of 30 April 2014
The BUWOG Group benefits from its longstanding, historical business relations with over
50 banks and financial institutions in Austria and
Germany. Its most important contractual partners
are Raiffeisenlandesbank NÖ-Wien, Oberbank,
Berliner Sparkasse, Bank Austria and Erste Bank. By
spreading its financing agreements across various
lenders, BUWOG Group avoids dependencies, while
at the same time gaining broad access to a wide
range of funding sources.
Raiffeisenlandesbank
NÖ-Wien
27%
Others (52 banks)
41%
Total:
EUR 716.8
million
Oberbank
9%
Berliner
Sparkasse
8%
Erste Bank
7%
Bank Austria
8%
In keeping with the long-term nature of its core business, BUWOG Group strives to secure a long-term and
balanced financing structure to safeguard its defensive risk profile. Most of its financing contracts are based
on long-term agreements. The average residual term is approx. 14.6 years.
The repayment structure by maturity is as follows:
REPAYMENT BY MATURITY
p.a., basic amount outstanding in EUR million
15
260
513
36
42
85
56
56
3
55
7
55
23
52
51
51
51
49
45
by April
2015
by April
2016
by April
2017
by April
2018
by April
2019
by April
2020
by April
2021
by April
2022
by April
2023
by April
2024
n Regular repayments
n Final repayment
from May
2024
n Convertible bond
133
The following table summarises the key financing parameters as of 30 April 2014:
FINANCIAL LIABILITIES
Amount outstanding
in EUR million
Bank liabilities
716.8
Share
Ø interest rate
Ø term in years
48%
2.87%
13.4
Local authorities/Subsidised loans527.4
35%
1.37%
21.1
Convertible bond
17%3.50%
BUWOG Group
260.0
5.0
1,504.2 100%2.45% 14.6
The BUWOG Group LTV as of the balance sheet date was 35.9%. Further details of the calculation of LTV can
be found in the “Loan-to-value” section on page 142 and the section Information on the Assets, Liabilities
and Financial Positions on page 136.
In keeping with the long-term nature of the financing structure, around 85% of the agreed financing
contracts are hedged against the risk of interest rate changes with fixed interest rate agreements and/or
interest rate swaps. The weighted average nominal interest rate is 2.45% (based on weighted IFRS carrying
amounts: 2.58%).
Fixed
interest loans
60%
Hedged loans
(swaps)
25%
Floating
rate loans
15%
Total:
EUR 1,504
million
DERIVATIVES
BUWOG Group uses derivative financial instruments to hedge against the risk of changes in interest rates. All
derivatives are used exclusively to hedge interest rates. Their main parameters such as term and repayment
structures are adapted to the relevant underlying transaction.
As of the balance sheet date, 30 April 2014, the BUWOG Group held derivatives with a reference amount of
EUR 377.8 million. A total of approx. 25% of financial liabilities are thus hedged by swaps against interestrate risk.
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Management Report
FINANCING
DERIVATIVES
Variable
element
Market value
Incl. interest
as of 30 April 2014
in EUR
Reference value
as of 30 April 2014
in EUR
Fixed
interest rate
Maturity
Interest rate of 0.5%–3%
Interest rate swap (Deka Bank)3-M-Euribor
-338,542 21,489,000
1.39% 31 Dec 2021
Interest rate swap (Deka Bank)3-M-Euribor
-61,146 3,880,000
1.39% 31 Dec 2021
Interest rate swap (LBB)
3-M-Euribor
-1,361,964 59,312,500
1.90%31 Aug 2015
Interest rate swap (HVB)
3-M-Euribor
-835,590 13,858,000
2.13%29 Sep 2023
Interest rate swap (RLB NÖ-Wien)6-M-Euribor
-1,587,806 23,900,000
2.41%
Interest rate swap (Hypo Steiermark)6-M-Euribor
-1,495,133 23,000,000
2.50%
31 Dec 2036
Interest rate swap (Bank Austria)6-M-Euribor
-1,922,164 28,680,000
2.51%
28 Nov 2036
-2,022,944 28,680,000
2.54%
30 Nov 2036
Interest rate swap (BAWAG)
-1,267,352 12,750,000
2.85%31 Dec 2030
-1,851,089 15,635,000
2.99%
30 Sep 2039
6-M-Euribor
30 Nov 2036
Number of derivatives: 10 -12,743,729 231,184,500
Interest rate of 3%–4.5%
-982,813 8,159,000
3.01%
30 Sep 2039
-3,110,454 25,993,000
3.09%
30 Sep 2031
-6,007,790 49,534,000
3.11%
30 Sep 2031
-3,304,304 27,244,000
3.11%
30 Sep 2031
-55,987 1,478,000
3.22%
30 Sep 2015
-139,679 4,980,000
3.26%
30 Dec 2014
-144,988 3,342,000
3.37%
30 Sep 2015
Interest rate above 4.5%
Interest rate swap
(Hypothekenbank Frankfurt)
3-M-Euribor
-4,239,945 25,900,000
4.58%30 Jun 2018
Total derivatives: 18-30,729,690377,814,500
2.67%
CONVERTIBLE BOND
The BUWOG AG convertible bond has a nominal value of EUR 260 million. As of 30 April 2014, the core
parameters of the convertible bond were as follows:
ISIN
Conversion
price
Maturity
in EUR
Convertible bond 2014–2019AT0000A17CA5 25 Apr 2019
Nominal
value as of Conversions
Interest 30 April 2013
2013/14
rate in EUR million
in TEUR
18.933.50%
-
Repurchased/
redeemed/
Nominal
issued
value as of
in 2013/14 30 April 2014
in TEUR in EUR million
-
260.00 260.00
Further details of the convertible bond can be found in the “Information on Capital”, page 155.
135
information on THE ASSET,
LIABILITy AND FINANCIAL POSITION
APPLICATION OF IFRS 1 AND PRESENTATION OF THE COMMON CONTROL TRANSACTION
With the restructuring having taken effect at the end of April 2014 and with the granting of shares of
BUWOG AG in consideration, as well as the de-domination agreement coming into effect, IMMOFINANZ
Group with its remaining activities and BUWOG Group are two independent entities within the meaning of
IAS 27 consolidated and ceparate financial statements. Since BUWOG AG had not previously prepared a
consolidated financial statement, its IFRS consolidated financial statement falls under the scope of IFRS 1,
First time adoption of international financial reporting standards. The date of transition to IFRS is 1 May 2012.
IFRS 3 business combinations was not applied as the business combination carried out meets the requirements
of a common control transaction according to the definition in IFRS 3.
The currently applicable IFRS do not contain regulations for the presentation of common control transactions.
Using the rules of IAS 8, accounting policies, changes in accounting estimates and errors, the management
of BUWOG Group opted to carry forward the spun-off net assets of BUWOG GmbH as well as its directly
and indirectly held subsidiaries (BUWOG Gmbh business) at the carrying amount previously recognised in
the IFRS consolidated financial statements of IMMOFINANZ AG insofar as there were no other accounting or
valuation principles within the framework of possibilities of IFRS 1. The IFRS rules also do not provide for any
definitive statements concerning the date of inclusion. The management of BUWOG Group decided that for
IFRS purposes the date of inclusion represented be the effective date of the spin-off at the end of April 2014.
The current consolidated income statement and the current consolidated cash flow statement therefore
contain only figures relating to the income, expenses and cash flows of BUWOG AG and are thus meaningful
only to a limited extent. Reference is made to the additional pro forma information in section 8 of the notes
and to the following information on the net assets, financial position and results of operation.
The current net profit reported in the consolidated income statement in the amount of EUR -1.0 million is
largely due to expenses not directly attributable (primarily expenses for the preparation and auditing of the
consolidated financial statements, roadshow costs and expenses arising in connection with the publication of
the current financial statements, as well as – to a lesser extent – Executive Board remuneration). The increase
in cash and cash equivalents is almost exclusively the result of inflows of liquid funds in connection with the
takeover of the BUWOG GmbH business in the amount of EUR 132.4 million.
The (historical) asset position as of 30 April 2013 is not comparable with the asset position as of 30 April 2014.
For more comprehensive information, please refer to section 1 – Information on the Consolidated Financial
Statements – 1.1 General Principles and to the information and explanatory notes contained in this group
management report.
Other carrying amounts were chosen in the following cases: Low-interest government loans and financial
liabilities to banks with annuity subsidies that are related to the subsidies for properties were recognised at
fair value. For further details, please refer to the information in section 2.4.16 – Financial liabilities, trade and
other liabilities in the notes to the consolidated financial statements.
136
Management Report
assets, liabilities and
financial position
The following sections of this group management report contain explanatory notes to the net assets, financial
position and results of operation of BUWOG Group (based on the consolidated balance sheet as of 30 April
2014 and on pro forma financial figures for the period from 1 May 2013 to 30 April 2014 and for the period
ending on 30 April 2013; see also the additional information in section 8 of the notes to the consolidated
financial statements). In the interests of ensuring greater comparability, this group management report also
contains some figures and explanatory notes for the period from 1 May 2012 to 30 April 2013 and for the
period ending on 30 April 2012, taking account of the entire BUWOG GmbH business.
The 2013/14 financial year was dominated by larger acquisitions of real estate inventory in Germany that,
however, affect the operating result in the reporting year only partly. Portfolio acquisitions, which were
closed after 30 April 2014 – DGAG portfolio and Apollo portfolio (Berlin) are not yet taken into account in
the financial statements.
The Asset Management business area posted an extremely strong performance in the financial year.
The number and total floor area of units increased to 33,475 or some 2.5 million sqm, driven largely by
acquisitions of some 200,000 sqm in Germany with a simultaneous strategic portfolio reduction in the
Austrian federal states of Carinthia, Upper Austria and Salzburg. With an operating result of EUR 75.9 million,
Asset Management thereby constituted the largest business area of BUWOG Group in the reporting year.
In the Property Sales business area, the targets for the sale of property investments were exceeded. As such,
at some 550 individual apartments sold in the reporting year, the previous year’s results was exceeded by
about 17%, whereas the underlying margin compared to the fair value at some 54% confirms the business
model of BUWOG Group in this area. Noteworthy are also the strategic Block Sales of some 1,700 units with
a margin on the fair value of some 11%. The equity thereby freed up made quite a contribution to driving the
expansion in Germany. The operating result from this business area in amount of EUR 34 million underlines
the positive operating performance.
The performance of the Property Development business area was dominated by acquisitions of land and
project development measures with correspondingly high investment costs, from which strong future income
increases can be expected. Nevertheless, the Property Development business area also made a positive
contribution to the consolidated profit, its operating result coming in at EUR 4.9 million.
results of operations
The information on the results of operations for the 2013/14 is provided on an unaudited pro forma basis.
The pro forma disclosure relating to the results of operation reflects the position of BUWOG GmbH Business
and therefore of BUWOG Group as it would have been had it existed during the financial year extending
from 1 May 2013 to 30 April 2014. For further details with regard to the pro forma disclosure, please refer to
the information in section 8 of the notes to the consolidated financial statements – Explanatory notes to pro
forma information of BUWOG Group (unaudited).
Condensed INCOME STATEMENT (PRO FORMA)
in EUR million
2013/14
Results of Asset Management
75.9
Results of Property Sales
34.0
4.9
Results of Property Development
4.1
Other operating income
Expenses not directly attributable
-21.7
Results of operations
97.3
43.4
Other revaluation results
Operating profit (EBIT)
140.7
-9.2
Financial results
Earnings before tax (EBT)
131.5
Net profit
111.8
Net profit per share1)
1.12
1) On the basis of 99,613,479 shares
137
Income from the Asset Management business area resulted from net cold rent for residential properties
in the amount of some EUR 110.1 million, other rental income of EUR 6.4 million as well as from operating
expenses charged to tenants (EUR 65.1 million) and other revenues (EUR 4.6 million). They are contrasted by
major expenditure from operating costs (EUR 63.8 million), expenses for third-party property management
(EUR 3.0 million) as well as expenses related directly to investment property in the amount of EUR 43.4
million (of which maintenance of EUR 26.0 million).
The following illustration shows the breakdown between maintenance expenses and investments (CAPEX).
MAINTENANCE AND INVESTMENT
in investment properties (PRO FORMA)
2013/14
Maintenance in EUR million
Modernisation (CAPEX) in EUR million
26.0
6.3
Average total floor area in 1,000 sqm1) 2,453.4
Maintenance in EUR per sqm
Investment (CAPEX) in EUR per sqm
10.6
2.6
1) Average weighted floor area taking into account increases and reductions from purchases and sales
In the 2013/14 financial year, the Property Sales business area generated EUR 34.0 million from property sales
and fair value adjustments to properties held for sale.
The key parameters for breakdown between Unit Sales and Block Sales (property and portfolio sale) can be
found in the following table:
OVERVIEW OF PROPERTY SALES (PRO FORMA)
2013/14
Sale of numbers of units
thereof Unit Sales
thereof Block Sales
2,292
553
1,739
Result according to pro forma income statement in EUR million 34.0
thereof Unit Sales in EUR million
thereof Block Sales in EUR million1)
28.5
5.5
Margin on the fair value
38%
Margin on the fair value – Unit Sales 54%
Margin on the fair value – Block Sales 11%
1) Contains the results contribution from the portfolio sale and one property sale in the amount of some EUR 1.9 million, which was included in the final consolidation result and therefore not taken into
account in the margin calculation.
The result from the Property Development business area includes the total profit from the sale of inventory
as well as a negative adjustment on the fair value of investment properties under construction in the amount
of EUR 0.6 million.
138
Management
lagebericht
Report
financial position
Expenses that cannot be directly allocated to the business areas include predominantly legal, auditing
and consultancy costs (EUR 6.3 million), personnel expenses (EUR 4.5 million), administrative costs
(EUR 3.1 million) and depreciation and amortisation of intangible assets and property, plant and equipment
(EUR 2.0 million).
The other valuation result includes predominantly the adjustments to the fair value (EUR 42.7 million) of
investment properties.
Financing costs (EUR 28.6 million, primarily from interest expenses) and financial income (EUR 5.6 million,
primarily from interest income) are included in the profit/loss result. These are opposed to income from
changes in the market value of derivatives (EUR 10.2 million), impairment charges to receivables (EUR 2.1
million) and financial instruments (EUR 5.6 million) connected with the fair value option that effect the profit/
loss result. For information on the fair value option, see sections 9.1 Information on financial instruments and
9.2 Financial risk management of the consolidated financial statements.
Transition to FFO. An essential management indicator for BUWOG is the Funds From Operations (FFO).
BUWOG Group systematically distinguishes between Recurring FFO (excluding results from Block Sales),
total FFO (including result from Block Sales) and AFFO (adjusted for value-improving measures, CAPEX) for
this indicator. Recurring FFO reflects BUWOG Group’s sustainable business model based on long-standing
experience in asset management, property development and property sales (excluding results from Block
Sales). The starting point of the calculation, which is shown in the below table, is net profit for the period.
FFO (pro forma)
in EUR million
2013/14
111.8
Net profit
-34.0
Other financial results1)
-13.7
0.4
Amortised costs of adjusted loans
-42.7
Fair value adjustments of investment properties
0.6
Fair value adjustments of properties under construction
1.3
Impairment losses
19.0
Deferred taxes
Other
-1.9
FFO
40.7
Unit Sales result
28.5
Recurring FFO 69.2
Block Sales result2)
12.6
Total FFO
81.8
CAPEX
-6.3
AFFO
75.5
Recurring FFO per share in EUR basic3)
0.69
Total FFO per share in EUR basic3) 0.82
1) Valuation of derivatives and financial liabilities as well as write-off of financial receivables
2)+ EUR 1.5 million revaluation of properties held for sale and + EUR 5.6 million portfolio sales from 2012/13 recognised to profit and loss in 2013/14
3)On the basis of 99,613,479 shares
The “Other” item contains, above all, the derecognition of liabilities.
139
assets
The comments on the asset position as of 30 April 2014 are based on the audited data, while the comments
relating to 30 April 2014 are based on the unaudited pro forma data. See section 8 of the consolidated
financial statements for additional information on the pro form presentation.
condensed BALANCE SHEET
in EUR million
30 April 2014
Investment properties
Inventories
Non-current assets held for sale
Intangible assets
Trade and other receivables
Other financial assets
30 April 2013
pro forma
2,631.62,527.9
Change
4.1%
10.9 12.8-14.9%
155.1126.2 22.9%
15.0 63.7-76.4%
1.7 1.70.1%
380.2
165.0>100.0%
17.1 19.5-12.4%
Deferred tax assets
1.5
Income tax receivables 1.4
0.1>100.0%
132.9
46.3>100.0%
Cash and cash equivalents
Assets
Equity
Liabilities from convertible bonds
Financial liabilities
Trade and other liabilities
Provisions Deferred tax liabilities
Income tax liabilities
Financial liabilities held for sale
Equity and liabilities
9.8-85.1%
7.9 8.4-6.8%
3,355.32,981.4
12.5%
1,552.11,426.9
8.8%
247.90.0
1,136.01,073.8
–
5.8%
260.6 347.6-25.0%
12.9 11.116.7%
124.0107.8 15.0%
14.3
1.8>100.0%
7.4 12.6-41.5%
3,355.32,981.4
12.5%
As regards the investment properties, investment properties under construction, inventories and noncurrent assets held for sale, we refer to the information in the portfolio report and corresponding details and
explanations in the notes to the consolidated financial statements. For a detailed illustration of the changes
in equity, see section 6.12 Equity of the notes to the consolidated financial statements.
Cash and cash equivalents rose year on year from EUR 46.3 million to EUR 132.9 million despite a high level
of investment activities, in particular the purchase of residential properties in Germany, while simultaneously
reducing the loan-to-value ratio. The increase in cash and cash equivalents is primarily attributable to the
higher cash flow from operating activities and the sale of individual apartments. It also reflects the fact that
purchase price receivables from the sale of properties in the previous year were paid during 2013/14 and the
payment of liabilities from the purchase of portfolios was transferred in part after 30 April 2014.
The increase in the trade and other liabilities results predominantly from the receivables from convertible
bonds (EUR 260.0 million) existing on the balance sheet date, which will be paid in the first quarter of the
2014/15 financial year. This is contrasted by a corresponding item from convertible bonds taking into account
an equity component (see section Financing). By contrast, outstanding purchase price receivables from
property sales were reduced by some EUR 53.8 million. This decline was related, above all, to the sale of a
larger property portfolio, whose purchase price was paid in the 2013/14 financial year.
140
Management Report
financial position
The financial liabilities include liabilities to credit institutions of EUR 691.0 million (previous year: EUR 596.0
million) as well as liabilities to local authorities of EUR 445.0 million (previous year: EUR 477.6 million). The
rise in liabilities to credit institutions results predominantly from the purchase of property companies in
Germany.
The decrease in trade and other liabilities results predominantly from lower purchase price liabilities from the
purchase of shares in property companies. They fell by EUR 81.1 million and result predominantly from the
acquisition of ESG as of 30 April 2013. The financial liabilities held for sale include the financial liabilities to
be assigned to the purchaser in the course of planned sales.
EPRA NET ASSET VALUE (EPRA NAV). Net asset value is determined in accordance with the best practice
recommendations of the European Public Real Estate Association (EPRA). The concept of EPRA Net Asset
Value (NAV) is used to present the fair value of net assets on a long term basis, in order to provide investors
with an understanding of the sustainable asset position of the company. For the calculation of EPRA NAV,
undisclosed reserves in inventories and own use properties are included along with (negative) fair values of
derivative financial instruments. The former are not included in the recorded values due to IFRS accounting
principles; The latter regularly serve as hedges for long-term financing and are therefore held to the end of
the term; therefore, the hypothetical losses recognised as of the balance sheet date are not realised. Deferred
taxes on this position are included.
In accordance with the EPRA guidelines, deferred taxes are included for inventories because of the Company’s
intention to hold these properties. The ongoing sale of individual apartments and entire buildings as part of
BUWOG Group’s business model is reflected in the adjustment of the deferred taxes recognised for potential
property sales within a specific period of time. Goodwill that results as a technical figure due to the recognition
of deferred taxes through business combinations is to be deducted.
EPRA NAV
in EUR million
30 April 2014
Equity before non-controlling interests
Goodwill
Inventories (carrying amount)
Inventories (fair value)
Owner occupied properties (carrying amount)
Owner occupied properties (fair value)
Positive market value of derivative financial instruments
Negative market value of derivative financial instruments
Deferred tax assets on investment properties
Deferred tax liabilities on investment properties (adjusted)1)
30 April 2013
pro forma
Change
1,544.21,423.4
-0.2
8.5%
-0.2-51.1%
-155.1-126.2 -22.9%
167.6137.9 21.5%
-6.5-7.17.7%
9.5 9.50.3%
0.00.0
–
27.9 38.1-26.8%
-2.6 -4.441.3%
139.8144.5 -3.2%
Deferred taxes on property inventories
-3.3 -3.2-0.4%
Deferred taxes on derivative financial instruments
-6.9 -9.527.4%
EPRA NAV basic (balance sheet date)
Total floor area
EPRA NAV in EUR per sqm
EPRA NAV basic (balance sheet date)
Shares issued as of the balance sheet date (excl. treasury shares)
EPRA NAV per share in EUR basic (balance sheet date)
1,714.31,602.7
2,491,290 2,452,826 688.1 653.4 1,714.31,602.7
7.0%
1.6%
5.3%
7.0%
99,613,479 17.21 1)Adjustment for deferred tax liabilities arising in connection with potential property sales of over EUR 29.2 million (2012/13: EUR 26.4 million)
141
Loan-to-value (LTV). The liabilities in relation to the fair value of the overall portfolio of BUWOG Group were
reduced slightly to about 35.9% compared to the previous year.
LOAN-TO-VALUE RATIO
(incl. sale of certain financing, financial amounts in EUR million)
30 April 2014
30 April 2013
pro forma
Change
Long-term financial liabilities
1,036.9975.3 6.3%
Short-term financial liabilities
99.298.5 0.7%
7.4 12.6-41.5%
1,143.41,086.3
-132.9
5.3%
-46.3-186.9%
Net financial liabilities
1,010.41,040.0
-2.8%
2,631.62,527.9
4.1%
10.9 12.8-14.9%
15.0 63.7-76.4%
155.1126.2 22.9%
Inventories
Carrying amount overall portfolio
2,812.72,730.6
Loan-to-value ratio
3.0%
35.9%38.1% -5.7%
The convertible bond in excess of a nominal value of EUR 260 million is not included in the non-current
financial liabilities, as they were not paid by the balance sheet date on 30 April 2014.
financial position
Cash flow statement. The condensed cash flow statement of the 2013/14 financial year is stated on a pro
forma basis. For further details on this pro forma illustration, please refer to the information section 8 of the
notes.
Condensed Cash Flow statement (pro forma)
in EUR million
2013/14
Cash flow from operating activities
57.5
Cash flow from investing activities
59.8
Cash flow from financing activities
-30.7
Cash flow
86.6
The cash flow from operating activities is largely attributable to rentals.
The cash flow from investment activities is strongly positive at EUR 59.8 million despite high investments
in new development and, in particular, the purchase of units on the basis of cash inflows from Block and, in
particular, Unit Sales.
The cash flow from financing activities amounted to EUR -30.7 million, largely as a result of payments of
principal and interest.
142
Management Report
Sustainable management
The different aspects of sustainability form an integral part of the corporate philosophy of BUWOG Group.
The construction and housing sector affects basic human needs in a variety of ways and BUWOG Group is
aware of its wide-ranging responsibilities in this regard. Beyond this basic approach, integrity and respect for
people and the environment are firmly anchored in the corporate culture in general and in the implementation
of specific projects in all business sectors.
Working on the basis of the relevant rules and regulations, the construction and housing sector can make
a significant contribution to protecting the environment and the climate through the responsible use of
resources, the use of climate-friendly technologies, a well-defined strategy for the reduction of energy
consumption, the renovation of suitable existing buildings and the construction of new buildings that meet
energy efficiency standards.
Sustainability – firmly rooted in the mission statement
The economy, ecology and social responsibility – all three aspects of sustainability have always been of great
importance in BUWOG Group. Only by bringing these aspects into balance with each other and taking equal
account of the interests of all stakeholders can the company’s long-term success be secured. Based on this
conviction, BUWOG Group focuses on the preservation and conservation of the environment and climate
protection, as well as finding optimal development opportunities for people and exercising responsible,
profitable management. BUWOG Group masters this
balancing act in its core business, the construction
and management of buildings, on a daily basis.
Close attention is paid to quality, durability and
Aspects of sustainability
environmental impact in property planning and in
the choice of materials. At the same time, priority
Social
is given to the welfare of the residents of the
Ecology
respon
apartments BUWOG Group builds and manages
sibility
under the slogan “happy living”. In addition, the
commitment to social and cultural projects is an
integral part of the company’s philosophy. And, last
but not least, BUWOG Group focuses on the needs of
its employees, providing them with support, training
Economy
and voluntary benefits. In short, sustainability is an
integral part of BUWOG Group in all its facets – it is
the foundation of the corporate culture.
Climate change and energy management
BUWOG Group (Austria) has been a klima:aktiv programme partner since 2007 and has been a pioneer in
corporate climate protection since 2011 as part of the klima:aktiv pakt2020. As a result, BUWOG Group is
one of twelve major Austrian companies, and the only real estate company, that has made a voluntary, but
binding, commitment to achieving Austrian climate targets by 2020 (base 2005).
Under the professional supervision of the Federal Ministry of Agriculture, Forestry, Environment and Water
Management (Ministry for an Austria that’s worth living in – BMLFUW), BUWOG Group is among the pioneers
and role models for a climate-friendly approach to business that goes beyond subsidies and regulations.
BUWOG Group places great importance on using targeted measures to achieve maximum effects and lasting
success in terms of sustainability, both in the renovation and new construction of properties, and in the
operation of the buildings it manages. BUWOG Group regularly collects comprehensive energy consumption
data, which serve as the basis for the analysis and planning of such measures. This process differentiates
BUWOG Group from many other companies in the property sector.
143
Ambitious objectives
The company’s well-defined energy policy includes the implementation of a certified energy management
system in accordance with ISO 50001, which allows for the efficient control of consumption and the planning
of appropriate actions. The energy assessment that is part of the annual reporting of klima:aktiv pakt2020 and
the auditing of the energy management system by external parties ensure that the targets of the measures
planned in the context of the energy policy are regularly updated and reviewed.
In order to ensure that the targets are met efficiently, BUWOG Group endeavours to make appropriate
and effective technological, organisational and behavioural provisions under the action plan. In addition, a
numerous energy consumption figures are regularly measured, recorded and analysed, and staff are actively
involved in the implementation of the energy policy. An energy manager has been appointed within BUWOG
Group to coordinate and implement the energy policy.
The overall objective is to support the Austrian energy and climate targets as far as possible, depending on
the potential of the project, through the agreement for the klima:aktiv pakt2020 with the Federal Ministry of
Agriculture, Forestry, Environment and Water Management. Based on 2005 figures, the following have been
set as the minimum targets for improving energy consumption:
- 16% reduction in greenhouse gas emissions
- 20% increase in energy efficiency and
- 34% of total energy requirements met with renewable energy sources
The goals that BUWOG Group has set for itself go beyond these:
Conservation goals of BUWOG Group (by 2020)
REDUCTION IN GREENHOUSE GAS EMISSIONS
-27.9%
REDUCTION IN GREENHOUSE GAS EMISSIONS
-13,300 t CO2 /YEAR
Minimum target: -16%
INCREASE IN
ENERGY EFFICIENCY
+22.9%
TOTAL SHARE
OF RENEWABLES
34.0%
TOTAL SHARE OF
VEHICLE RENEWABLES
10.2%
Minimum target: +20%
In order to minimise pollutants in construction projects, BUWOG Group exclusively uses products and coolants
whose production and processing does not involve the release of CFCs, HCFCs or HFCs. Waterproofing,
plumbing and electrical installations may only be made of halogen-free materials. In addition, wood
preservatives that contain solvents and halogenated substances cannot be used in wall and roof structures.
New buildings are built solely at the minimum in accordance with the low-energy standard. But BUWOG
Group is also committed to the dissemination and application of innovative and practical building standards.
BUWOG Group clearly exceeded the currently accepted standards in a number of new construction and
renovation projects.
The reduction of greenhouse gases (CO2) is a necessity, and BUWOG Group – as can be seen in its mission
statement – seeks to make the greatest possible contribution here. The potential for savings is particularly
great in the area of heating. Overall, the programme aims to reduce annual CO2 emissions by 13,300 tonnes.
To achieve its efficiency goals, BUWOG Group has voluntarily committed to carry out subsidised renovations
to the low energy standard (average annual heating requirement of around 40 kWh per sqm). This is
substantially below the requirements applicable under OIB-RL 6 for major renovations of residential buildings
(50 kWh per sqm per year at a characteristic length Lc of 2.5 m).
144
Management Report
Specific projects
In Lower Austria, in Kierling near the Klosterneuburg city centre, a property from the 1970s with 24 existing
apartments was renovated to meet the Passive House Standard and expanded to include 13 additional
apartments and a loft conversion with six residential units that meet the Passive House Standard. The property
exceeds the most stringent standards for new buildings; it is heated using renewable energy sources (pellets)
and has controlled ventilation with heat recovery. The water is heated by a solar thermal system.
In addition, BUWOG Group plans to implement the Building Energy Management System for the 2014/15
heating season in two pilot properties in Vienna. The aim of this system is the effective monitoring and control
of heating, ventilation and air conditioning data. Comparative measurements by the Fraunhofer Institute for
Building Physics (IBP) confirm that the system produces significant savings in heating energy consumption
of 13% to 20%. The operation and the savings potential of a possible broader use of the system will be tested
based on these benchmark projects. If the system is successful in improving the heating systems in terms of
the achievable savings, an effort will be made to use it in other portfolio properties.
In an effort to increase the use of renewable energy sources and resource efficiency, BUWOG Group is
increasingly focusing on photovoltaic systems. Photovoltaic systems in existing and new buildings will be
installed and/or operated through outside contractors. The systems being planned have an installed capacity
that can cover the majority of the general energy consumption. Under the contracting model, BUWOG Group
concluded agreements for the installation of photovoltaic systems in properties in Emil-Fucik Gasse and
Moselgasse in the 2013/14 financial year (output: approx. 100 kW and 60 kW peak, respectively).
Since 2014, BUWOG Group has also drawn a fixed quota of around 4,800 MWh of green electricity (renewable
electricity UZ46) to cover energy requirements in the communal areas of residential buildings in Austria and
in the company’s Vienna headquarters.
Two charging stations (E TANKS) for electric cars were also installed in BUWOG’s headquarters in Vienna,
in 2014. In 2013, an electric pool car was purchased for BUWOG employees and the company is making
efforts to further expand the conversion of the BUWOG fleet to alternative fuels by 2020. BUWOG Group
also invests in the e-mobility of the inhabitants of its properties. For example, e-charging stations were set
up for e-bikes and e-cars in 2013 in the new building projects on Assmayergasse and at the Nordbahnhof
railway station.
Research projects
BUWOG Group supports and/or participates in a number of research projects. Firstly, the company gains
learning experiences from the innovative projects undertaken in advanced research and development and, at
the same time, it can apply and disseminate the results of the research projects directly in housing industry
practice.
BUWOG Group was involved in the following R&D projects in the 2013/14 financial year:
- “GreenUrbanClimate – improving the urban climate and water balance
through green and permeable surfaces”
- “Low Energy Apartment Futures – LEAF” (formerly LER-MUH)
- “Innovative system concepts for the power-generating roof garden of the future”
Customer communications
Customer surveys. BUWOG Group places a high priority on external communication in general and dialogue
with customers in particular. The company can best fulfil its responsibilities towards its customers if it
understands what they want and need. For this reason, BUWOG Group conducts regular customer surveys.
The information gained on customer satisfaction is a reliable barometer of the efficiency of the company’s
services and, therefore, serves as the basis for their ongoing evaluation.
145
The customer surveys in 2013/14 focused on BUWOG Group’s management portfolio in Austria, in which a
total of 50 properties with 2,783 households were surveyed. The average response rate has been consistently
high for years and stood at 44% in the last financial year.
Selected results of the customer survey
in %
Overall satisfaction with housing
82
Satisfaction with the apartment
12
90
Satisfaction with the facilities
84
Would you choose this apartment again?
73
Would you recommend BUWOG Group as a service provider?
n satisfied/yes
68
n neutral
6
7
11
3
5
17
10
22
10
n unsatisfied/no
An important addition to this is the company-wide quality and complaints management process.
Social commitment in the housing sector and the promotion of art projects. BUWOG Group currently
offers housing for senior citizens in two residential complexes. At Saileräckergasse 47 in Vienna-Dobling,
elderly residents can be assisted and cared for by the staff of the adjacent “Fortuna” retirement home. The
entire complex is designed to meet the standards required by senior citizens and the disabled. There is also
a BUWOG service centre which offers on-site care with household services tailored to the needs of elderly
people and acts as an interface to property management. In the Hoffmannpark complex in Purkersdorf, some
of the apartments have also been designed for senior citizens and the disabled, and an appropriate care
package is organised by an external provider.
Other areas in the housing sector in which BUWOG Group’s social
commitment can be seen include the construction and management of
student residences, the promotion and support of car-sharing projects
– such as on Maurer Lange Gasse (Vienna 23) – and numerous initiatives
for art-in-architecture programmes. Besides making a valuable aesthetic
contribution, the art-in-architecture programmes add value by contributing
to an overall sense of well-being, and common areas that include art improve
communication among residents.
Examples of the successful integration of artistic works into residential projects include residential complexes on Hertha-Firnberg-Strasse
(Vienna-Favoriten), “Look” on Kaiserebersdorfer Strasse (Vienna-Simmering), Sailer
äcker
gasse (Vienna-Dobling) and, not least,
BUWOG Group’s office building on Hietzinger
Kai (Vienna-Hietzing).
“Look” by
Gerwald
Rockenschaub
BUWOG headquarters,
sculpture by Brigitte Kowanz
Light installation “Passer”
by Martin Kaar in the property
at 47 Saileräckergasse, Vienna
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Management Report
Oase 22: Caritas. The property Oase 22, which was awarded the Bauherrenpreis in 2014, was developed
in collaboration with Caritas in accordance with the principle of “Space for your entire life – communal
living in Neu Stadlau”. The residential complex on Adelheid-Popp-Gasse, 1220 Vienna, was built with a focus
on creating a real neighbourhood. The development and formation of a neighbourhood and community is
supported by the district management of Caritas Vienna.
The residents of Oase 22 are invited to participate actively in the process. The primary goal is to work
together to build a neighbourhood based on courtesy and mutual respect. The Caritas staff organise an
ongoing dialogue with and between the different interest groups in the new residential environment in order
to use their ideas and commitment to create socially sustainable solutions.
Women’s shelters. BUWOG Group provides two apartments to Wiener Frauenhäuser (Viennese women’s
shelters) free of charge under a co-operative agreement, and in Villach the company provides the local
partner an apartment as “emergency housing”. These apartments are used by clients of the women’s shelters
who need a place to live for an extended period of time. Emergency housing is a valuable addition to the
aid provided by the women’s shelter, particularly for women with children. Each of the three apartments
provided by BUWOG Group has three rooms and is furnished.
Inclusion in the VÖNIX Sustainability Index
The long-standing activities of BUWOG Group in all areas of sustainability and, in particular,
the actions taken in the 2013/14 financial year were rewarded in June 2014 with inclusion
in the VÖNIX Sustainability Index. The VBV Austrian Sustainability Index (VÖNIX) is a
capitalisation-weighted price index consisting of listed Austrian companies that are leaders
in terms of social and environmental performance.
Employees and social responsibility
Strong team is key to the company’s success. BUWOG Group considers the skills and motivation of its
employees to be an essential factor in the company’s success and the company’s values. This knowledge
results in genuine appreciation for the employees of BUWOG Group which is reflected in the excellent working
conditions at the company. The feedback from the staff needed to ensure these conditions is obtained in
regular surveys.
The human resources department, in close cooperation with management, is responsible for recruiting and
retaining motivated and capable staff, placing them in the right positions and developing their potential.
This department’s key functions are staff management and recruitment, alongside organisational and staff
development.
Activities by this department in 2013/14 concentrated on improving processes within human resources. At
the same time, emphasis is also placed on the electronic recording and support of employee appraisals. This
system supports the human resources department by providing documentation on goals and goal attainment
for employee appraisals and training requests.
Facts and figures. As of 30 April 2014, 406 full-time equivalents were employed in the fully consolidated
companies of BUWOG Group, of which 338 were salaried employees and 68 wage employees. In the previous
year the number of full-time equivalents as of the balance sheet date was 388 (of whom 287 were salaried
employees).
The increase in the number of employees is primarily due by the portfolio acquisitions in Germany and the
development of central areas that were handled by IMMOFINANZ AG as the parent company prior to the
spin-off.
The average age of BUWOG employees is around 37 years. This means that BUWOG Group offers an attractive
mix of experience – around 16% have more than ten years’ service with the company – and young employees.
The core activities of BUWOG Group include Asset Management, Property Development and Property Sales,
which together are responsible for 70% of the total full-time equivalent workforce. The following charts show
the breakdown of employees by region and by operational area.
147
employees (FTE)1)
employees (FTE)1)
as of 30 April 2014 by area of activity
as of 30 April 2014 by region
Legal/Marketing
5%
Personal &
Organisation/IT
9%
Asset
Management
53%
Accounting/
Controlling/
Finance
16%
Germany
12%
Total:
338
Total:
338
Property
Sales
5%
Austria
88%
Property
Development
12%
1) FTE = full time equivalent
Careers with BUWOG Group. The BUWOG team is characterised by a high degree of personal responsibility,
motivation, flexibility and professionalism. As an expression of the company’s high regard for its employees
and to support their continuous development, appraisal meetings are held each year and include the
definition of specific goals. Personalised training plans – in the form of individual group training courses – are
important components of this process, as they contribute both to raising professional qualifications and to
team development. The training that is offered ranges from subject-specific seminars on topics such as the
Austrian Act on Non-profit Housing and the Austrian Tenancy Act, to personal development seminars based
on the Process Communication Model®.
Workshops are held to develop tools and methods for management topics such as employee appraisals,
change processes, coaching, practice-oriented techniques for management and teamwork, and management
skills. This makes an important contribution to harmonising the management culture in BUWOG Group.
The biggest employee event in 2013/14 was the two-day “Setting the Course for the Future” event in
Loipersdorf, in which employees from all the BUWOG offices in Austria and Germany came together to learn
from each other. The focus was on the exchange of information and strategies in order to develop common
solutions to the new challenges that lie ahead for BUWOG Group as a result of the spin-off and public listing,
and the integration of the approx. 300 employees from Prelios Deutschland as part of the acquisition of the
DGAG portfolio.
BUWOG employees at “Setting the Course for the Future” in Loipersdorf, April 2014
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Management Report
BUWOG Group: Showing diversity and equal opportunity. Equal opportunity between women and men is
also a central corporate goal. BUWOG Group is a pioneer in this respect, as women comprise 63% of the total
workforce and hold 21% of the managerial positions (based on full-time equivalents).
BUWOG feel-good factor and communication. BUWOG employees are extremely motivated and highly
committed. This makes it vital for the company’s management to increase the feel-good factor in the
workplace. Shared activities, such as the annual company run and events, strengthen the sense of community.
The staff are kept informed of current internal topics via the intranet and the in-house TV. In the in-house
café, employees can take a short break or hold business meetings while enjoying complimentary coffee,
mineral water and fruit. In 2014, a regular “HR Breakfast” was also initiated to which the Executive Board
and the Human Resources department issue invitations. Here employees are informed of news, changes and
shared successes, and current issues and problems can be discussed in a relaxed atmosphere.
Other pillars in the work-life balance of employees of BUWOG Group include the promotion of health in
the workplace, honouring the principle of equal treatment at all times, and the availability of flexitime and
teleworking opportunities. In addition, the company offers attractive social benefits, pension plans and a
range of employee benefits.
1
Sierndorfer
4
Zurnhofer
Wondrak
6
5
Dr. K. Trost
7
Rösner
3
2
Probst
8
Freitag
Bergmüller
9
Mag. A. Karna
11
12
Hörmann
Friedrich
Hietzinger Hauptstrasse 149 / Vienna
10
F. Cermak
149
RISK REPORT
As a property owner and developer, BUWOG Group is exposed to a variety of risks. A continuous risk
management process ensures the timely identification of developments that could endanger the achievement
of strategic and operating goals, and allows this information to be included in decision-making processes.
In the course of the 2013/14 financial year, with the support of the BUWOG GmbH management structure,
BUWOG Group devised and implemented an active risk management system within its operating and
reporting processes. This system supports the rapid implementation of measures to counter risk and also
has a direct impact on strategic decisions and operating processes. Internal guidelines, reporting systems
and control measures have been installed throughout the company to support the monitoring, evaluation
and control of risks related to the operating business. Risks are managed at all levels in BUWOG Group.
Ultimate responsibility for risk management lies with the Executive Board, which is involved in all risk-related
decisions. In addition, BUWOG Group has further optimised its internal control system (ICS) to support the
early identification and monitoring of risk. For further details, please refer to the ICS sub-section.
The risk process identifies and analyses the risks at the company level and in the operating units on an
ongoing basis. The likelihood of occurrence and discovery, as well as the potential damage, are assessed for
each risk and a risk priority figure derived. Measures to mitigate the risks and/or minimise the damage are
taken jointly with the risk manager and the risk owner in the relevant area.
The most significant risk factors are financial risks and market/property-specific risks. The major financial risk
factors stem from fluctuations in interest rates and negative changes in the credit standing and solvency of
customers and business partners. For financial risk factors, please refer to section 9.2 of the Notes.
Market and property-specific risks can arise from micro and macro-economic trends, and developments at
the property level. Included here are the market-price risk as well as the competitive situation and transaction
risk.
The primary objective of risk management is to identify risks early enough to enable the timely implementation
of appropriate countermeasures.
MARKET RISK AND PROPERTY-SPECIFIC RISKS
The development of property markets is heavily dependent on economic growth and macro-economic
trends.
The related risks involve micro and macro-economic trends in German-speaking countries and in the global
financial and investment markets. The resulting effects on market prices, market rents and yields also play
an important role.
Alongside the typical risks facing property owners, which BUWOG Group minimises through propertyspecific insurance cover, the company is also exposed to property-specific risks. These principally relate to
the location of the properties, their architecture and the structural condition of the buildings, and to the direct
competitive situation and location-specific socio-economic factors. The approaches adopted by BUWOG
Group to minimise these risks include the use of controlling instruments to support the Asset Management
business area in its regular valuation of the properties and the assessment of the quality of location and
attractiveness of the market for each property, based on key indicators. In addition the results of the Asset
Management business area are discussed and analysed at regular meetings attended by representatives
of Asset Management, Property Controlling, Senior Management and the Executive Board. Management is
supported in its control of operating results by detailed budget planning at the level of individual properties,
medium-term planning and plan/actual comparisons. Properties that do not meet the portfolio analysis
requirements in terms of location, quality and competitiveness are sold over the medium term.
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Management Report
RISK REPORT
BUWOG Group is particularly susceptible to market risk arising from changes in supply and demand, as
they directly impact actual rental income and vacancy rates, and are ultimately reflected in the prices of the
properties. Diversification of its residential portfolio in terms of both region and product, new-build activity in
pursuit of a differentiated product-line concept and active property management utilising the region-specific
market expertise that it has built up over many years enable BUWOG Group to optimise its investments in
existing properties. In addition, the market risk is mitigated by matching rents to the respective properties
and locations within the limits permitted by law.
Development projects are exposed to increased risks in the form of schedule and construction cost overruns,
as well as utilisation and letting risks.
Other risks can arise from contamination and pollution in the soil and from the former use of the site.
BUWOG Group minimises these risks by first conducting in-depth checks and cost efficiency analyses before
starting on any projects, and by regularly checking costs and schedules and the associated variance analyses
throughout the project duration. For default risk, please refer to section 9.2.2 Default/credit risk.
Detailed market studies are prepared on a regular basis and analysed in connection with reports by recognised
real estate experts to allow for timely reaction to changes in the markets. All changes in the markets are taken
into account in the analysis of the property portfolio, and they have a decisive influence on the planning
of investments sales and projects – and thus on corporate planning in the medium term. BUWOG Group’s
acquisition process involves suitably graduated due-diligence audits, with the participation of independent
experts, to identify this type of risk prior to the acquisition of new properties and to assess all risks in
connection with legal, tax, commercial, technical and social issues.
The success of the Property Development business in Berlin hinges particularly on the “Regattastrasse”
project in Grünau, as it accounts for around 50% of the residential units in the current project pipeline in
Berlin. This is a conversion area on a former chemical site. The risk of land contamination has been minimised
through a clean-up order, and by monitoring and financing the clean-up (of which 90% is being paid by the
government and state). In addition, surveys were conducted in the market and neighbourhood to assess the
acceptance of the project history and the renovation in order to minimise the risk.
Property-valuation risk. As customary in the real estate industry, BUWOG Group uses the fair value model
to value its properties. Accordingly, properties are recognised at fair value. The properties owned by
BUWOG Group are valued semi-annually by external appraisers. The values determined by these experts are
heavily dependent on the calculation method and the underlying assumptions. A change in the underlying
assumptions can therefore lead to significant fluctuations in the value of a property. For example, any
change in the assumed occupancy rate or future investment costs of a property will have a direct effect
on the resulting profitability and fair value. Even minor changes in the underlying assumptions, prompted
by economic or property-specific considerations, can materially impact the consolidated result of BUWOG
Group.
REGULATORY, TAX AND LEGAL RISKS
Legal risks. As a property owner and developer, BUWOG Group is exposed to a multitude of legal risks.
These include risks related to the purchase or sale of property and those arising from legal disputes with
tenants or other contract partners.
Rent and housing laws, as well as building codes, and civil, tax and environmental laws are particularly
important for the business operations of BUWOG Group. BUWOG Group therefore follows regulatory
changes and high court rulings with particular interest to enable it to respond in good time to any binding
changes in general legal conditions.
The outcome of pending actions under civil and administrative law and of out-of-court settlements with
tenants, contractors and joint venture or development partners cannot be reliably predicted. There is the
risk that costs may be incurred due to judicial or administrative decisions or settlements that unexpectedly
impact the results of BUWOG Group. BUWOG Group purchases building insurance and property liability
insurance cover to mitigate the risks associated with the buildings and undeveloped land owned by the
company.
151
Tax risks. Both the formerly not-for-profit Austrian group companies BUWOG Bauen und Wohnen GmbH and
ESG Wohnungsgesellschaft mbH Villach have lodged appeals against the corporation tax assessments for
2001–2004 (BUWOG) and 2001–2003 (ESG) issued in the course of the audit. Proceedings remain pending.
The conflicting legal opinions held by the companies and the tax authorities relate to the valuation of the
subsidised loans when the companies acquired unlimited tax liability following the abolition of their nonprofit status.
Political and regulatory risks. BUWOG Group is exposed to general risks arising from changes in prevailing
circumstances due to legislation or other regulations (among them rental law, construction law, environmental
law and tax law). As BUWOG restricts its activities to Austria and Germany and changes of this nature do
not, as a general rule, take the form of overnight surprises, there is usually sufficient time to react to change.
OTHER RISKS
Concentration risk. Concentration risk is understood to mean the accumulation of similar risks that contradict
the principle of risk diversification. BUWOG Group consciously reduces these risks by adopting a business
model based on several different areas and by diversifying its portfolio in regional terms.
Integration risk. The risks associated with the purchase of property portfolios and the integration of those
portfolios into BUWOG Group are gathered during the due diligence process in the run-up to acquisition, and
reflected in the purchase price negotiations.
The risks are mainly of a financial and legal nature, or relate to the integration of the portfolio into BUWOG
Group and its performance, which can be influenced by market and property-specific risks. There is also
the risk that risks are not identified in the due diligence process and therefore not reflected in the purchase
price, or of overly optimistic assumptions being made in the due diligence process, resulting ultimately in
the payment of too high a purchase price. BUWOG Group mitigates these risks by involving both internal
and external experts from all relevant disciplines in the due diligence process, and by drawing up detailed
business plans based on the due diligence findings.
When integrating existing organisational structures, there is a risk of earnings not meeting budget
expectations, of synergies not materialising as planned, of an increased integration workload incurring
unscheduled additional costs, or of the integration taking longer than originally planned and necessitating
additional expenditure. BUWOG Group also mitigates these risks by involving both internal and external
experts from all relevant disciplines in the due diligence process, and by drawing up detailed business plans
based on their findings. To further reduce this risk, BUWOG Group also engages experienced integration
managers who draw up detailed integration plans in line with the envisaged schedule, and coordinate the
integration process.
Acquisition/development risk. There are particular risks with respect to legal, tax, commercial, technical and
social issues In connection with acquisition and development activities. In order to identify and evaluate such
risks even before the purchase of new properties, a comprehensive due diligence audit involving independent
experts is absolutely necessary, and is standard practice in the acquisition process of BUWOG Group.
Properties that do not meet the high quality expectations of BUWOG Group are generally not purchased.
The risk of becoming aware of activities of information that negatively influences commercial assumptions
(for example, incomplete responses in the due diligence audit), as well as the risk of interim changes to the
market only after purchasing cannot be completely ruled out.
The strategic goal of identifying properties with low fungibility and, if appropriate, selling them and replacing
them with properties in more liquid markets, was continued in the reporting year. Development projects are
exposed to increased risks in the form of schedule and construction cost overruns, as well as utilisation and
letting risks.
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Management Report
Risk Report,
Internal control system
BUWOG Group minimises these risks by regularly checking costs and schedules and the associated variance
analyses throughout the project duration. For default risk, please refer to section 9.2.2 Default/credit risk in
the Group notes.
In addition, in order to minimize acquisition, development and investment risks, an internal capital expenditure
policy is implemented within BUWOG Group. This regulates the framework and approval limits for all capital
expenditure (property acquisitions, development projects and on-going investments). This process minimises
or eliminates the major strategic and property-specific risks. Approval limits are defined in an extensive
guideline that applies to all Group companies and regulates all authorisations from individual employees up
to the Executive Board. Furthermore, in certain cases, Supervisory Board approval is required.
Internal control system
The internal control system (ICS) of BUWOG Group provides the Executive Board with a uniform reporting
system and group-wide guidelines as well as a comprehensive tool for analysing and managing uncertainties
and risks. In 2013/14 the Process and Risk Management/PMO department took major steps forward in the
refinement and optimisation of the ICS in BUWOG Group.
Basis of the ICS
The ICS comprises a wide range of coordinated methods and measures to safeguard assets and to ensure
the accuracy and reliability of data for accounting and financial reporting. The ICS also supports compliance
with the corporate policies defined by the Executive Board. In the 2013/14 financial year, the evaluation and
design of controls was based on the ICS benchmarks of IMMOFINANZ Group. The goal was to meet internal
and external requirements and ensure that corporate processes and controls remain efficient.
Control environment
The control environment at the company level represented the general framework under which internal control
activities were designed and implemented. The most important components were statutory regulations and
the standards and guidelines issued by BUWOG Group – e.g. the authorisation guideline – as well as a clear
management and organisational structure and the communication of basic values by management.
The process landscape formed the starting point for the evaluation of the ICS at the process level. The control
activities of BUWOG Group were integrated into procedures with special process management and ICS
software as part of a risk control matrix, taking into account key risks.
The ICS guarantees accuracy, security and efficiency in accounting and financial reporting, and also ensures
the correct, complete and timely preparation of all necessary information. The key features of the ICS in
BUWOG Group’s accounting processes are the appropriate segregation of duties, the thorough application
of the dual-control principle in all order and invoice approval procedures, compliance with internal guidelines,
the review of accounting data by Group Controlling for correctness, plausibility and completeness, the
integration of preventive and detective controls in processes, and the automation of key controls through
specific system settings in the Navision financial accounting software.
With the spin-off from IMMOFINANZ Group, BUWOG Group not only assumed responsibility for reporting,
but also for establishing and maintaining an adequate accounting-related ICS.
The implementation of new processes, guidelines and control measures is supported by regular information
events and feedback rounds. Progress and opportunities for improvement are subsequently reported at
management meetings.
153
Monitoring by Internal Audit
In the 2013/14 financial year, the compliance and effectiveness of the ICS was monitored by the Internal
Audit department of IMMOFINANZ Group as part of its auditing activities. The Internal Audit department
of IMMOFINANZ Group supported the Executive Board and Supervisory Board of IMMOFINANZ Group in
fulfilling their control and monitoring duties and was responsible for providing auditing services group-wide,
therefore including BUWOG Group prior to the spin-off.
All companies, business areas and processes were subject without limitation to audit by the Internal Audit
department. The associated rights and obligations and the provisions governing auditing activities were
established in a group-wide organisational directive (the “Audit Rules”).
The Internal Audit department carried out independent and objective audits in accordance with an annual
audit plan created on the basis of risk criteria and approved by the Executive Board and Supervisory Board
of IMMOFINANZ Group. These audits focused primarily on compliance, the effectiveness of the ICS and
opportunities to improve efficiency.
In the reporting period in which BUWOG Group was, essentially, part of the IMMOFINANZ Group, the results
of the audits were reported regularly to the Executive Board of IMMOFINANZ Group, the management of
BUWOG – Bauen und Wohnen Gesellschaft mbH, and, at least annually, to the Audit Committee of the
Supervisory Board of IMMOFINANZ Group. The audit reports included recommendations and measures.
Periodic follow-ups ensured the implementation of agreed improvements.
Chauseestrasse 86 / Berlin
Following the spin-off of BUWOG Group from IMMOFINANZ, the Executive Board of BUWOG AG established
an Internal Audit function which reports directly to the Executive Board of BUWOG AG, but the organisational
responsibility lies with the CEO. The Internal Audit department of BUWOG AG assumed the activities of
the Internal Audit department of IMMOFINANZ Group effective 26 April 2014 and performs this task in
accordance with the requirements of BUWOG Group.
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Management Report
Internal control system,
INFORMATION ON CAPITAL
The share capital of BUWOG AG totalled EUR 99,613,479.00 as of 30 April 2014 (30 April 2013: EUR 35,000.00),
consisting of 99,613,479 zero par value voting shares with a proportionate share in equity of EUR 1.00
(30 April 2013: a proportionate share of EUR 35,000.00). All shares of the company are zero par value bearer
shares that entitle the holders to participate in the Annual General Meeting and to exercise voting rights and
other shareholder rights in accordance with applicable legal regulations. Each bearer share is entitled to one
vote.
BUWOG AG was established as a legal entity in the form of a GmbH (limited liability company) by declaration
of the establishment of the company on 7 July 2010, and was initially called “Artemis Immobilien GmbH”. By
a resolution passed at an Extraordinary General Meeting on 27 November 2013, the legal form of Artemis
Immobilien GmbH was changed to an Aktiengesellschaft (stock corporation) (Sections 245 et seq. Austrian
Stock Corporation Act (AktG)) and, at the same time, the name of the company was changed to BUWOG AG
(effective from 17 December 2013 following entry in the company register).
When BUWOG Group was spun off, IMMOFINANZ AG merged its indirect interest in BUWOG – Bauen
und Wohnen Gesellschaft mbH (“BUWOG GmbH”) into BUWOG AG, the new holding company, in three
steps in the 2013/14 financial year: The first step involved a contribution in kind for an indirect 5.1% stake in
BUWOG GmbH. The next step involved spinning off the remaining indirect 94.9% interest in BUWOG GmbH
to GENA SECHS Immobilienholding GmbH (“GENA SECHS”), the joint holding company of IMMOFINANZ
AG, (around 59.71% stake) and BUWOG AG (around 40.29% stake). The final step – the actual spin-off –
involved IMMOFINANZ AG spinning off its stake of around 59.71% in GENA SECHS (indirect stake of around
56.67% in BUWOG GmbH) to BUWOG AG. Associated with this was the issue of new BUWOG shares to the
shareholders of IMMOFINANZ AG. As a result of the spin-off, which became effective on 26 April 2014 with
entry in the company register, BUWOG AG indirectly acquired a 100% stake in BUWOG GmbH.
All shares of the company (ISIN AT00BUWOG001) are listed for trading on the Regulated Market of the
Frankfurt Stock Exchange, on the Main Market of the Vienna Stock Exchange and on the Main Market (Rynek
podstawowy) of the Warsaw Stock Exchange (regulated markets within the meaning of Section 1 (2) BörseG
(Stock Exchange Act).
CONVERTIBLE BOND 2019 (CB 2019)
BUWOG AG, in the run-up to the spin-off of IMMOFINANZ AG on 25 April 2014, on the basis of the authorisation
of the Annual General Meeting of 7 March 2014, issued a 3.5% convertible bond with a total nominal value
of EUR 260.0 million maturing on 25 April 2019 (ISIN AT0000A17CA5). The CB 2019 was fully subscribed
by IMMOFINANZ AG. Under the terms of the issue, the initial conversion price was set at EUR 18.93 – which
represents a premium of 40% to the arithmetic average of the XETRA closing price of BUWOG shares during
the first five trading days (28 April 2014 to 5 May 2014). In the event of a dividend distribution by the company,
the conversion price will be adjusted pursuant to the terms of CB 2019. According to the initial conversion
price, the CB 2019 is currently linked with conversion rights to approx. 13,734,812 shares of BUWOG AG.
The conversion right from the CB 2019 can be exercised in the conversion period from 28 January 2015 to
25 April 2019 (including both days).
Contingent capital of EUR 14,218,275.00 pursuant to article 159(2) par. 1 AktG of the Austrian Stock
Corporation Act was approved by the Annual General Meeting on 7 March 2014 to service conversion rights
under CB 2019.
BUWOG AG is entitled to terminate the entire CB 2019 by 27 January 2015 (nine months after its shares were
listed), repaying the 101% of its nominal value plus accrued interest, giving notice of at least 30 days. BUWOG
is actively considering repayment of the CB 2019 and obtaining alternative financing.
155
Alternatively BUWOG AG is entitled to terminate the entire CB 2019 three years after its shares were listed,
repaying its nominal value plus accrued interest, giving notice of at least 30, but no more than 90 days. The
requirements for this repayment include the non-exercise of conversion rights by the holders of the CB 2019
and a share price that equals at least 130% of the average daily share price, weighted by volume, on at least
20 trading days within a period of at least 30 successive trading days.
A summary of the convertible bond and its issue conditions can be found on the company website:
www.buwog.com.
OWNERSHIP STRUCTURE
As of the balance sheet date, 30 April 2014, IMMOFINANZ AG and its affiliates held 43,730,320 BUWOG
shares, equivalent to approx. 43.9% of the BUWOG AG share capital. Furthermore, pursuant to the votingrights announcement of 6 May 2014, IMMOFINANZ AG is entitled and obliged to acquire 5,080,287 BUWOG
shares, equivalent to approx. 5.1% of the share capital, on the termination of financing transactions by
IMMOFINANZ AG. This will give IMMOFINANZ AG a 49% share of the current share capital of BUWOG AG.
The free float as of 30 April 2014 is thus 51%.
Furthermore, potential voting rights under shares in BUWOG AG still to be issued on the exercise of conversion
rights under CB 2019 must be assigned to IMMOFINANZ AG for the purposes of shareholding disclosures
pursuant to stock-exchange law (articles 91 et seq. BörseG of the Austrian Stock Exchange Act). On the basis
of the current share capital of BUWOG AG for determining the proportion of voting rights pursuant to article
91 (1a) BörseG of the Austrian Stock Exchange Act, this is equivalent to 13.79% of all voting rights (for details
of CB 2019 see above).
According to the de-domination agreement between IMMOFINANZ AG and BUWOG AG, IMMOFINANZ AG
has agreed to certain restrictions on the exercise of voting rights attaching to shares in the company, which
are discussed below.
RESTRICTIONS ON VOTING RIGHTS
De-domination agreement between IMMOFINANZ AG and BUWOG AG. In order to secure permanently
the independence of BUWOG Group, IMMOFINANZ AG and BUWOG AG have concluded a de-domination
agreement which has placed contractual restrictions on voting rights of the stake held by IMMOFINANZ AG
in BUWOG AG. The de-domination agreement limits the number of Supervisory Board members whose
election includes the exercise of voting rights by IMMOFINANZ AG. The purpose of this limitation is to
prevent majority decisions by members of the Supervisory Board whose election included the exercise of
voting rights by IMMOFINANZ AG, even if there is a change in the number of members on this body.
The Supervisory Board of BUWOG AG currently has five members, whereby IMMOFINANZ AG exercised its
voting rights in the election of Eduard Zehetner and Vitus Eckert. Furthermore, IMMOFINANZ AG undertakes
not to exercise its voting rights at the Annual General Meeting of BUWOG AG for decisions on discharge of
members from the Executive Board or other Supervisory Board members, the dismissal of other Supervisory
Board members, or with regard to management issues, if the Executive Board or the Supervisory Board
refers it to the Annual General Meeting for a decision.
The de-domination agreement may be terminated by either IMMOFINANZ AG or BUWOG AG only for good
cause. The term of the de-domination agreement ends on 29 April 2020; provided that IMMOFINANZ AG
does not object, the term of the de-domination agreement is extended automatically. Adherence to the
de-domination agreement may be enforced by shareholders of BUWOG AG who individually or collectively
represent 5% of share capital, as well as by each member of the Executive Board of BUWOG AG.
After the spin-off, IMMOFINANZ AG has no controlling influence on business and financial decisions of
BUWOG Group. IMMOFINANZ Group and BUWOG Group became two independent Groups as a result of
the spin-off.
The de-domination agreement can be downloaded from the company’s website: www.buwog.com.
156
Management Report
No other restrictions on voting rights or shares with control rights. There are no shares with special control
rights pursuant to article 243a (1) no. 4 of the Austrian Commercial Code (UGB Unternehmensgesetzbuch).
BUWOG AG has no employee share participation programme. The disclosure of voting-rights control pursuant
to article 243a (1) no. 5 UGB accordingly does not apply.
There are no provisions (other than those derived directly from legislation) regarding the appointment and
dismissal of members of the Executive and Supervisory Boards or regarding changes to the company’s
memorandum and articles of association pursuant to article 243a (1) no. 6 UGB (for the contractual restrictions
on the voting rights of IMMOFINANZ AG under the de-domination agreement, see above).
TREASURY SHARES
Authorisation of the Executive Board to purchase treasury shares. By resolution of the Annual General
Meeting of BUWOG AG on 15 May 2014 the Executive Board was authorised pursuant to article 65 (1)
no. 8 and (1b) AktG of the Austrian Stock Corporation Act, for a period of 30 months from the date of the
resolution and with the consent of the Supervisory Board, to acquire shares in the company representing up
to 10% of its share capital in one or more tranches, in the stock market or otherwise, allowing or excluding
shareholders’ proportionate pre-emption rights.
Authorisation of the Executive Board to sell treasury shares. By resolution of the Annual General Meeting
of BUWOG AG on 15 May 2014, the Executive Board was authorised, pursuant to article 65(1b) AktG, for a
period of five years from the date of the resolution and with the consent of the Supervisory Board, to dispose
of shares in the company in the stock market or otherwise or through a public offer or to utilise them for any
legally permissible purpose, excluding shareholders’ purchase rights (exclusion of subscription rights).
As of 30 April 2014, neither BUWOG AG nor controlled companies held treasury shares.
AUTHORISED CAPITAL
By resolution of the Annual General Meeting of the company on 7 March 2014, the Executive Board was
authorised, pursuant to article 169 AktG, with the consent of the Supervisory Board, to increase the
company’s share capital by up to EUR 21,582,922.00 by issuing up to 21,582,922 new shares for cash or noncash contributions by 25 March 2019, excluding subscription rights, if
- (i) the capital increase takes place against cash contributions and the proportion of shares issued
does not exceed the limit of 10% of the share capital of the company,
- (ii) for contributions in kind,
- (iii) to service a greenshoe option or
- (iv) for the settlement of peak amounts.
CHANGE OF CONTROL PROVISIONS
Convertible bond. The terms of issue for the convertible bond CB 2019 entitle the bondholders to put
some or all of the securities not yet converted or redeemed in the event of a change of control. In such
case, BUWOG AG must redeem the tendered securities at the nominal value plus accrued interest as of
the respective date. Details on these provisions can be found in the terms of issue for the convertible bond
CB 2019.
De-domination agreement. The de-domination agreement between IMMOFINANZ AG and BUWOG AG on
restrictions of voting rights relating to the BUWOG AG shares held by IMMOFINANZ AG sets out grounds
for termination in cases of change of control (see above for the de-domination agreement and grounds for
termination).
157
Executive Board and Supervisory Board. The employment agreements with the members of the Executive
Board contain a change of control clause that may lead to the cancellation of a contract.
The company and the members of the Executive Board have concluded compensation agreements that will
take effect in the event of a public takeover bid. Depending on their residual terms of office, the entitlements
of members of the Executive Board under their service contracts prevail for a maximum of one to two years.
There are no such agreements for the members of the Supervisory Board or for employees.
There are no other significant agreements which enter into force, change or terminate in the event of a
change of control in the company following a takeover bid. A number of the current financing agreements
provide for consensual agreement on the continuation of the existing credit relationship in the event of a
change of control.
Amendments to the Articles of Association, board appointments and dismissals
In accordance with Section 21 of the Articles of Association of BUWOG AG, the Annual General Meeting
passes its resolutions based on a simple majority of the votes cast and, for resolutions that require a majority
of capital, based on a simple majority of the share capital represented at the time of voting, unless legal
regulations require another majority. The same applies to amendments to the Articles of Association and to
the premature dismissal of members from the Supervisory Board.
In accordance with the Articles of Association of BUWOG AG, the person chairing the respective meeting
will have the casting vote in the event of a tie in voting on the Supervisory Board. The same applies to the
election and dismissal of members from the Executive Board.
158
Management Report
INFORMATION ON CAPITAL,
Outlook
Outlook
Current situation
BUWOG Group has fully achieved its ambitious strategic, operational and financial goals for 2013/14.
With the signing of the contract for the acquisition of the DGAG portfolio of around 18,000 units plus its
operating platform with around 300 employees in Germany, the cornerstone was laid for the transformation
of BUWOG Group into the leading residential property company in Germany and Austria. The spin-off from
IMMOFINANZ Group was also completed and, with a successful debut on the stock exchanges of Frankfurt,
Vienna and Warsaw, an independent company was created.
Recurring FFO of EUR 69.2 million generated in the reporting period ensures a stable and – with the
integration of the portfolio recently acquired in Germany – an expandable basis for the future growth of the
company, as well as the distribution of an attractive dividend to its shareholders.
In the Asset Management business area, in-place rent per sqm continued its upward trend on a like-for-like
basis, rising 1.8% as of the balance sheet date compared to the same date in the previous year, thus also
demonstrating an upward trend in the rental level based on a comparison of several years.
In the Property Sales business area, Unit Sales reached a new high of around 550, achieving a margin of 54%
on fair value. The opportunity also arose to sell around 1,700 units in Block Sales to improve the portfolio
structure.
In the Property Development business area, 227 completed units in Vienna confirmed BUWOG Group’s
leading position in the market while, in Berlin, the current project pipeline grew and 147 units were completed.
As of 30 April 2014, the balance sheet of BUWOG AG showed an LTV of 35.9%, an equity ratio of 46.3% and
cash and cash equivalents of EUR 132.9 million. Together with strong operating cash flows, these provide
a solid basis for further profitable growth in the interest of a continuous rise in company value along with
attractive dividend payouts.
Outlook for financial year 2014/15
General conditions. Economic conditions in both Germany and Austria are widely seen as positive overall.
Based on a sharp fall in inflation from 2.4% in 2012 to 1.8% in April 2014, and despite the necessary consolidation
of public finances, a significant economic upturn is expected in Austria. However, the development of the
crisis in Ukraine could pose a risk for the Austrian economy. In Germany, the financial discipline of the federal
government led to a balanced budget in 2013. This brought about an economic stimulus that is expected to
result in a continued recovery of economic momentum in 2014 and 2015.
Consistent with the overall economic situation, the property markets in Germany and Austria are seen
as robust. Continued price appreciation in rents and purchase prices can be expected, particularly in the
metropolitan areas, primarily due to relatively limited new construction activity in the residential sector.
In the financial markets, there are currently no signs of any change to the low interest rate policy pursued
by the ECB. BUWOG Group therefore assumes that it will continue to be able to refinance expiring loan
agreements at favourable terms.
For the 2014/15 financial year, the Executive Board of BUWOG Group expects a stable regulatory environment
with regard to the overall legal and tax conditions.
159
Integration of the DGAG platform. With the acquisition of the DGAG portfolio and its associated management
platform, BUWOG Group has taken a significant step toward geographic diversification in its portfolio.
The integration of this and other portfolios acquired in the 2013/14 financial year, as well as of the new
employees in Germany, will assume the highest priority in 2014/15. At the same time, emphasis will be placed
on improving the German property portfolio by reducing the existing maintenance backlog and targeted
investments to further reduce the vacancy rate, which already stands at a low level of 3.6%.
Recurring FFO and development of the individual business areas. For the 2014/15 financial year, the
Executive Board of BUWOG Group expects Recurring FFO of at least EUR 75 million.
In the Asset Management business area, BUWOG Group expects rental growth per sqm of approx. 1.5% to
2.0%. BUWOG Group adheres to a philosophy of growth in the value of its portfolio while generating high
operating cash flows. The investment necessary for growth in value is an essential component of this strategy.
Expenditure of around EUR 16 per sqm for maintenance and CAPEX is planned for the 2014/15 financial year
(previous year: EUR 13 per sqm).
The Property Sales business area will continue to focus on the Unit Sales Business in Austria. The aim is
to sell approx. 450 to 500 individual apartments in the 2014/15 financial year, during which the Executive
Board expects a continuation in the steady development of sales prices and margins. Strategic sales in the
Austrian regions will be reviewed on a case-by-case basis for the purpose of utilising the resulting cash for
the intended growth in Germany of around 2,000 to 4,000 units per financial year, when there are suitable
opportunities in the market.
In the Property Development business area, the focus will be on continuing to implement the project pipeline
in Vienna while also increasing the proportion of development projects in Berlin.
Subsequent EVENTS
Regarding relevant events after the balance sheet date of 30 April 2014, reference is made to the information
in the consolidated financial statements in section 9.4 Subsequent events.
The Executive Board of BUWOG AG
Daniel RiedlRonald Roos
160
Financial Statements
Financial
Statements
Consolidated
BUWOG Group
Table of Contents
1.General Information on the Consolidated Financial Statements
1.1General Principles
1.2Conformity with IFRS
168
168
169
169
169
171
173
1.2.1Statement of compliance with IFRS
1.2.2Application of IFRS 1 and description of the common control transaction
1.2.3Standards and interpretations adopted by the EU, but not yet applied
1.2.4Standards and interpretations announced, but not yet adopted by the EU
2.Accounting Policies
2.1Basis of Preparation of the Financial Statements
2.2Consolidation methods
175
175
175
175
175
176
176
176
2.2.1Basis of consolidation
2.2.2Fully consolidated companies
2.2.3Business combinations (initial consolidations)
2.2.4Structural changes
2.2.5Deconsolidations
2.3Currency translation
177
177
177
2.3.1Functional currency
2.3.2Foreign currency transactions
2.4Specific Accounting Policies
177
177
178
179
182
182
182
182
183
183
183
183
184
184
185
185
185
186
186
2.4.1Revenue realisation
2.4.2Impairment
2.4.3Investment properties
2.4.4Leasing
2.4.5Government grants
2.4.6Borrowing costs
2.4.7Other tangible assets
2.4.8Other intangible assets
2.4.9Trade and other receivables
2.4.10Other financial assets
2.4.11Income taxes
2.4.12Properties held for sale and disposal groups
2.4.13Inventories
2.4.14Cash and cash equivalents
2.4.15Compound financial instruments (convertible bonds)
2.4.16Financial liabilities, trade and other liabilities
2.4.17Provisions
2.4.18Employee benefits
2.5Judgments and estimation uncertainty
187
3.Scope of consolidation
3.1Development of the scope of consolidation
3.2Fully Consolidated Companies
3.3Common control transaction
189
189
189
189
4.Segment reporting
4.1Internal reporting
4.2Segment report
191
191
191
5.NOTES TO THE INCOME STATEMENT
5.1Other operating income
5.2Expenses not directly attributable
5.3Financial results
5.4Income taxes
5.5Earnings per share
192
192
192
192
192
193
6.Notes to the Consolidated Balance Sheet
6.1Investment properties
6.1.1Fair value
194
194
194
162
6.1.2Leasing
BUWOG Annual Report 2013/14
194
6.2Investment properties under construction
6.3Other tangible assets
6.4Intangible assets
6.5Trade and other receivables
6.6Other financial assets
6.7Deferred tax assets and deferred tax liabilities
6.8Tax Refund Claims
6.9Non-current assets held for sale
6.10Inventories
6.11Cash and cash equivalents
6.12Equity
6.13Liabilities from convertible bonds
6.14Financial liabilities
6.15Trade and other liabilities
6.16Provisions
6.17Tax liabilities
195
195
195
196
197
197
199
199
199
199
199
200
201
202
203
203
7.Notes to the Consolidated Cash Flow Statement
204
8.EXPLANATORY NOTES TO PRO FORMA INFORMATION OF BUWOG GROUP (UNAUDITED) 205
9.Other Information
9.1Information on financial instruments
209
209
209
212
212
214
9.1.1Classes and categories of financial instruments
9.1.2Net gains and losses
9.1.3Hierarchy of fair values of financial instruments
9.1.4Collateral
9.2Financial risk management
215
215
215
216
216
217
219
220
9.2.1General information
9.2.2Default/credit risk
9.2.3Capital market and financing risk
9.2.4Liquidity risk
9.2.5Interest rate risk
9.2.6Capital management
9.2.7Property valuation risk
9.3Financial obligations
222
222
222
222
9.3.1Contingent liabilities and guarantees
9.3.2Outstanding construction costs
9.3.3Other financial obligations
9.4Subsequent events
222
222
222
224
224
224
224
224
224
9.4.1Acquisitions of participations and acquisitions of real estate portfolios
9.4.1.1Acquisition of the DGAG portfolio and the DGAG management platform (“DGAG transaction”)
9.4.1.2Acquisition of the Apollo portfolio
9.4.2Sale of BUWOG Facility Management GmbH
9.4.3Extraordinary General Meeting
9.4.4Convertible bond
9.4.5Expired pledge of shares
9.4.6Other
9.5Transactions with related parties
225
225
226
227
9.5.1Related party transactions
9.5.2De-domination agreement and other information
9.5.3Information on corporate bodies and remuneration
9.6Auditor’s fees
228
9.7Release of the consolidated financial statements
228
10. Group companies of BUWOG AG229
Statement by the Executive Board231
Auditor´s report 232
163
Consolidated Income Statement
in TEUR
Notes
1 May 2013–
30 April 2014
1 May 2012–
30 April 2013
5.1
7.2
0.0
5.2
-1,026.0
-3.2
-1,018.8
-3.2
-28.8
0.0
0.0
0.1
-28.8
0.1
-1,047.6
-3.1
-0.4
Results of operations = Earnings before interest and tax (EBIT)
Net financing costs
Net financing revenue
Financial results
5.3
Income tax expenses
5.4
0.0
Deferred tax expenses
5.4
7.0
0.0
Net profit
-1,040.6
-3.5
Thereof attributable to owners of the parent company
-1,040.6
-3.5
0.0
0.0
Share of non-controlling interests
Basic earnings per share in EUR
5.5
-0.13
n.a.
Diluted earnings per share in EUR
5.5
-0.13
n.a.
1 May 2013–
30 April 2014
1 May 2012–
30 April 2013
-1,040.6
-3.5
Actuarial gains and losses arising from defined benefit obligations
0.0
0.0
Income taxes attributable to items which will not be subsequently reclassified to the
income statement
0.0
0.0
Total items which will not be reclassified to income statement in the future
0.0
0.0
Total comprehensive income
-1,040.6
-3.5
-1,040.6
-3.5
0.0
0.0
Consolidated Statement of Comprehensive Income
in TEUR
Net profit
Items which will not be reclassified to the income statement in the future
164
Consolidated balance sheet
in TEUR
Notes
30 April 2014
30 April 2013
1 May 2012
6.1
2,631,573.5
0.0
0.0
6.2
10,926.1
0.0
0.0
6.3
7,859.9
0.0
0.0
Intangible assets
6.4
1,699.3
0.0
0.0
6.5
1,007.6
0.0
0.0
6.6
17,078.0
0.0
0.0
Deferred tax assets
6.7
1,456.4
0.0
0.0
2,671,600.8
0.0
0.0
379,144.6
0.0
0.0
Non-current assets
6.5
Income tax receivables
6.8
1,446.0
0.4
0.0
6.9
15,036.0
0.0
0.0
Inventories
6.10
155,117.3
0.0
0.0
6.11
132,947.4
2.3
0.6
683,691.4
2.7
0.6
3,355,292.2
2.7
0.6
Current assets
ASSETS
Share capital
Capital reserves
Accumulated other equity
Retained earnings
Non-controlling interests
99,613.5
17.5
17.5
1,445,989.3
0.0
0.0
-373.7
0.0
0.0
-1,064.3
-23.6
-20.0
1,544,164.8
-6.1
-2.5
7,938.5
0.0
0.0
1,552,103.3
-6.1
-2.5
Equity
6.12
6.13
247,824.3
0.0
0.0
6.14
1,036,854.4
0.0
0.0
6.15
52,198.9
4.0
0.0
Provisions
6.16
2,170.0
0.0
0.0
6.7
124,042.4
0.0
0.0
1,463,090.0
4.0
0.0
Deferred tax liabilities
Non-current liabilities
6.13
124.7
0.0
0.0
6.14
99,176.4
0.0
0.0
6.15
208,433.0
0.7
0.3
Tax liabilities
6.17
14,260.1
1.8
2.6
Provisions
6.16
10,744.3
2.3
0.2
6.9
7,360.4
0.0
0.0
340,098.9
4.8
3.1
3,355,292.2
2.7
0.6
Current liabilities
LIABILITIES
165
Consolidated Statement of Cash Flow
in TEUR
Notes
Earnings before tax
Depreciation of tangible assets
Income taxes paid
Net interest
Gross cash flow
1 May 2013–
30 April 2014
1 May 2012–
30 April 2013
-1,047.6
-3.1
6.5
0.0
-1.3
-1.7
28.7
0.0
-1,013.7
-4.8
41.7
0.0
Trade liabilities
143.6
0.3
Provisions
939.4
2.1
Other liabilities
563.5
4.0
674.5
1.6
Acquisition of other tangible assets
-19.5
0.0
-19.5
0.0
Receivables and other assets
Additions to cash and cash equivalents from common control transactions
Cash outflows for transaction costs for convertible bond
132,445.7
0.0
-155.4
0.0
132,290.2
0.0
132,945.3
1.7
Change in cash and cash equivalents
7
Cash and cash equivalents at the beginning of the period
7
2.3
0.6
Cash and cash equivalents at the end of the period
7
132,947.5
2.3
7
132,945.2
1.7
Statement of Changes in Equity
in TEUR
Notes
Balance on 1 May 2012
Period result
Share capital
Capital reserves
17.5
0.0
0.0
0.0
0.0
0.0
Balance on 30 April 2013
17.5
0.0
Capital increase
52.5
0.0
99,543.5
1,436,939.0
Issue of convertible bonds
0.0
9,020.3
Contributions from shareholders
0.0
30.0
99,596.0
1,445,989.3
Period result
0.0
0.0
Other income
0.0
0.0
0.0
0.0
99,613.5
1,445,989.3
Common control transaction additions
Transactions with owners
166
6.12
Accumulated other
equity IAS 19r
Retained earnings
Total
Non-controlling
interests
Total equity
0.0
-20.0
-2.5
0.0
-2.5
0.0
-3.6
-3.6
0.0
-3.6
0.0
-3.6
-3.6
0.0
-3.6
0.0
-23.6
-6.1
0.0
-6.1
0.0
0.0
52.5
0.0
52.5
-373.7
0.0
1,536,108.7
7,938.5
1,544,047.2
0.0
0.0
9,020.3
0.0
9,020.3
0.0
0.0
30.0
0.0
30.0
-373.7
0.0
1,545,211.5
7,938.5
1,553,150.0
0.0
-1,040.6
-1,040.6
0.0
-1,040.6
0.0
0.0
0.0
0.0
0.0
0.0
-1,040.6
-1,040.6
0.0
-1,040.6
-373.7
-1,064.2
1,544,164.8
7,938.5
1,552,103.3
167
1.General Information on the
Consolidated Financial Statements
1.1
General Principles
BUWOG AG was founded as a limited liability company (Gesellschaft mit beschränkter Haftung) under the
name of Artemis Immobilien GmbH by a subsidiary of IMMOFINANZ AG through a declaration of establishment
dated 7 July 2010. The initial share capital totalled EUR 35,000.00. In accordance with a resolution passed at
the Annual General Meeting on 27 November 2013, the share capital was increased from EUR 35,000.00 to
EUR 70,000.00 and Artemis Immobilien GmbH was transformed into BUWOG AG, which included a change
in legal form, with a conversion date of 31 October 2013. The entry in the commercial register took place on
17 December 2013.
In order to give BUWOG Group, with BUWOG AG as the parent company, a structure that would be suitable
in the capital markets, IMMOFINANZ AG, as the ultimate parent company at that time, carried out several
preparatory internal corporate restructurings – without the involvement of third parties. These reorganisation
measures resulted in the separation of the former BUWOG GmbH business from IMMOFINANZ AG, the
bundling of this business under BUWOG AG and a standalone stock exchange listing of BUWOG AG.
In a first step, pursuant to the contribution in kind and the contribution agreement (Sacheinlage- und
Einbringungsvertrag) dated 30 January 2014, IMMOFINANZ AG transferred its 100% stake in Parthica
Immobilien GmbH to BUWOG AG as a contribution in kind. As compensation for the contribution, BUWOG
AG issued 43,095,844 BUWOG shares to IMMOFINANZ AG by increasing its share capital by EUR 43,095,844.00.
With this step, BUWOG AG indirectly acquired a 5.1% stake in BUWOG – Bauen und Wohnen Gesellschaft
mbH (in short: BUWOG GmbH).
In the next step, the 94.9% of BUWOG GmbH held by IMMOEAST Immobilien GmbH was transferred to
GENA SECHS Immobilienholding GmbH (in short: GENA SECHS) as the receiving company on the basis of
a spin-off and takeover contract (Spaltungs- und Übernahmevertrag) of 22 January 2014. Before the spinoff of BUWOG GmbH to GENA SECHS, GENA SECHS was owned by BUWOG AG (40.29%) and by
IMMOFINANZ AG (59.71%). As a result of this reorganisation measure, BUWOG AG acquired an indirect
interest of 38.23% in BUWOG GmbH.
Since the spin-off of BUWOG GmbH to GENA SECHS took effect, BUWOG AG has indirectly held a total
stake of 43.33% in BUWOG GmbH.
The corporate restructuring was completed by a decision of the Executive Board of IMMOFINANZ AG on
12 February 2014, which was approved by the Supervisory Board. This decision involved a proposal to the
IMMOFINANZ shareholders at the Extraordinary General Meeting on 14 March 2014 to spin off the 59.71%
stake in GENA SECHS, which in turn holds 94.4% of BUWOG GmbH, to BUWOG AG, as the receiving
company, and to grant shares (“spin-off”) of BUWOG AG to the shareholders of IMMOFINANZ AG at an
exchange ratio of 20 IMMOFINANZ shares for one BUWOG share.
For the purpose of carrying out the spin-off and acquisition, an increase of EUR 56,447,635.00 in the share
capital from EUR 43,165,844.00 to EUR 99,613,479.00 in exchange for the transfer of spin-off assets to
GENA SECHS was approved by the Annual General Meeting of BUWOG AG on 14 March 2014.
Since the spin-off took effect on 26 April 2014, BUWOG AG has indirectly held 100% of the shares in BUWOG
GmbH and therefore also in its direct and indirect subsidiaries (BUWOG GmbH business).
Immediately after the spin-off took effect, all BUWOG AG shares were admitted for trading on the Prime
Standard market of the Frankfurt Stock Exchange and the Prime Market of the Vienna Stock Exchange, as
well as on the Main Market (Rynek podstawowy) of the Warsaw Stock Exchange. The first stock exchange
listing of the shares (ISIN AT00BUWOG001) took place on 28 April 2014 on the Frankfurt Stock Exchange
and Vienna Stock Exchange, and on 29 April 2014 on the Warsaw Stock Exchange.
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In economic terms, IMMOFINANZ Group held 49% of the share capital of BUWOG AG on 30 April 2014. The
other 51% of the share capital is held in free float.
With the spin-off having taken effect and with the granting of shares of BUWOG AG in compensation,
IMMOFINANZ Group, with its remaining activities and BUWOG Group are two independent corporations
within the meaning of IAS 27. As BUWOG AG has not yet prepared consolidated financial statements, the
present IFRS consolidated financial statements of BUWOG AG fall within the scope of IFRS 1.
As the above internal restructuring of BUWOG AG was carried out without the participation of non-Group
companies, a business combination within the meaning of IFRS 3 did not take place; instead it was a
transaction under common control of IMMOFINANZ AG (common control transaction).
The IFRS contain no rules for presenting common control transactions. Under the rules of IAS 8.11 and 8.12,
the management of BUWOG Group took the discretionary decision to carry forward the transferred assets
and liabilities of BUWOG GmbH business at the carrying amount, previously recognised in the IFRS
consolidated financial statements of IMMOFINANZ AG, provided that no other accounting and valuation
principles apply under IFRS 1.
BUWOG AG is an Austrian residential property investor and developer whose core markets are Austria and
Germany, with headquarters at A-1130 Vienna, Hietzinger Kai 131. BUWOG AG is the ultimate parent
company of the BUWOG group (in short: BUWOG Group). The business activities of BUWOG Group include
the following areas
- Asset Management (portfolio management and administration)
-Property Sales (sale of individual apartments and portfolios) and
-Property Development (planning and construction of new buildings with a focus on Vienna and Berlin).
The present consolidated financial statements of BUWOG Group were prepared as of 30 April 2014 in
accordance with Section 245a (1) of the Austrian Commercial Code (UGB, Unternehmensgesetzbuch) in
compliance with International Financial Reporting Standards (IFRS) as adopted by the European Union
(EU). The consolidated financial statements are presented in thousands of Euros (“TEUR”, rounded).
The consolidated financial statements of BUWOG Group consist of the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated cash
flow statement, the consolidated changes in equity and the notes. The use of automatic data processing
equipment can lead to rounding differences in the addition of rounded amounts and percentages.
1.2Conformity with IFRS
1.2.1Statement of compliance with IFRS
The preparation of the consolidated financial statements of BUWOG Group as of 30 April 2014 is being
carried out for the first time in accordance with International Financial Reporting Standards (IFRS) as
adopted by Regulation no. 1606/2002 of the European Parliament and of the Council on the application of
international accounting standards in the EU.
The IFRS include the International Accounting Standards (IAS), the International Financial Reporting
Standards (IFRS), and the interpretations of the Standing Interpretations Committee (SIC) and the IFRS
Interpretations Committee (IFRIC).
1.2.2Application of IFRS 1 and description of the common control transaction
With the restructuring having taken effect at the end of April 2014 and the subsequent granting of shares
of BUWOG AG and the conclusion of the de-domination agreement, IMMOFINANZ Group, with its remaining
activities, and BUWOG Group are two independent entities within the meaning of IAS 27 Consolidated and
Separate Financial Statements. As BUWOG AG has not yet prepared consolidated financial statements, the
present IFRS consolidated financial statements of BUWOG AG fall within the scope of IFRS 1 First-time
Adoption of International Financial Reporting Statements. The date of the transition to IFRS is 1 May 2012.
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As the restructuring met the requirements for a common control transaction as defined in IFRS 3 Business
Combinations, IFRS 3 was not applied.
The currently applicable IFRS contain no rules for presenting common control transactions. Under the rules
of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, the management of BUWOG
Group took the discretionary decision to carry forward the transferred net assets of BUWOG GmbH as well
as its directly and indirectly held subsidiaries (BUWOG GmbH business) at the carrying amount, previously
recognised in the IFRS consolidated financial statement of IMMOFINANZ AG, provided that no other
accounting and valuation principles apply under IFRS 1. The IFRS also make no statement with respect to
the timing of the inclusion. The management of BUWOG Group took the discretionary decision to establish
the inclusion date as the effective date of the spin-off, i. e. at the end of April 2014.
Therefore only the income and expenses or cash flows of BUWOG AG are presented in the current
consolidated income statement, the consolidated statement of cash flows and in the comparative periods.
Please refer to the additional information provided in section 8 Notes to pro forma disclosures of BUWOG
Group (unaudited).
The carrying amounts recognised in the consolidated balance sheet of BUWOG Group were taken over
unchanged from the IFRS consolidated financial statements of IMMOFINANZ Group, as no other accounting
and valuation standards apply under IFRS 1.
Other carrying amounts were chosen in the following cases:
Low-interest government loans were recognised at fair value through profit or loss. Properties financed with
low-interest loans in accordance with the Austrian Act on Non-Profit Housing (“Wohnungsgemeinnützig
keitsgesetz”, WGG) or the laws governing residential construction subsidies are subject to restrictions on
the rent that can be charged. As a result, the cash flows from the rental income are lower than if market
rents were charged and therefore the fair value of the property is reduced. To eliminate the incongruity in
the carrying amount of the property and the financial liability on initial recognition, IFRS 1 allows financial
liabilities to be designated at fair value through profit or loss on the date of transition to IFRS. The
management of BUWOG Group has taken the discretionary decision to classify below-market loans at fair
value through profit or loss on the date of initial recognition to eliminate this incongruity.
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1.2.3Standards and interpretations adopted by the EU, but not yet applied
The following amendments to standards and interpretations had been adopted by the EU as of the balance
sheet date, but did not require mandatory application for the financial year ended 30 April 2014 and were
not applied prematurely by BUWOG Group:
Standards and interpretations adopted by the EU, but not yet applied
Standard
Content
Published by the IASB
(adopted by the EU)
Mandatory
application for BUWOG
New standards and interpretations
IFRS 10
Consolidated Financial Statements
12 May 2011
(11 December 2012)
1 May 2014
IFRS 11
Joint Arrangements
12 May 2011
(11 December 2012)
1 May 2014
IFRS 12
Disclosure of Interests in Other Entities
12 May 2011
(11 December 2012)
1 May 2014
Changes to standards and interpretations
IAS 27
Separate Financial Statements
12 May 2011
(11 December 2012)
1 May 2014
IAS 27, IFRS 10, 12
Investment Entities
31 October 2012
(20 November 2013)
1 May 2014
IAS 28
Investments in Associates and Joint
Ventures
12 May 2011
(11 December 2012)
1 May 2014
IAS 32
Requirements for Offsetting Financial
Assets and Financial Liabilities
12 May 2011
(13 December 2013)
1 May 2014
IAS 36
Disclosures: Recoverable Amount
Disclosures for Non-Financial Assets
29 May 2013
(19 December 2013)
1 May 2014
IAS 39
Novation of Derivatives and Continuation
of Hedge Accounting
27 June 2013
(19 December 2013)
1 May 2014
IFRS 10,11,12
Transition Guidance
28 June 2012
(11 December 2012)
1 May 2014
IFRIC 21
Levies
20 May 2013
(13 June 2014)
1 May 2015
IFRS 10 Consolidated Financial Statements
The accounting requirements for consolidated financial statements in IAS 27 Consolidated and Separate
Financial Statements and SIC 12 Consolidation – Special Purpose Entities are replaced by IFRS 10; in the
future IAS 27 Separate Financial Statements will govern only the accounting of (shares in) subsidiaries, joint
ventures and associates in separate financial statements in accordance with IFRS. IFRS 10 redefines the
concept of control in terms of content and makes it uniform for all companies, including special purpose
entities. According to IFRS 10, a parent company controls an associated company when it has the right to
receive or is exposed to variable returns from investing in the associate, and it has the ability to affect the
amount of these returns. Furthermore, IFRS 10 contains detailed guidance on the assessment and evaluation
of potential voting rights, co-decision or third party rights, and situations involving delegated or retained
decision rights or de facto control. In the future, determining whether control exists will increasingly require
a comprehensive (and thus more subject to judgement) assessment of the economic influence of the parent
on the associate. Despite the application of the new standard in the 2014/15 financial year, the group
companies that were previously included in the consolidated financial statements of BUWOG Group through
full consolidation will remain unchanged.
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities – Non-Monetary
Contributions by Venturers. It regulates the accounting treatment of joint arrangements, whereby
classification is based on the type of rights and obligations arising from the arrangement instead of the legal
form. This standard requires mandatory application by all companies that are parties to a joint arrangement.
IFRS 11 classifies joint arrangements into two categories: joint operations and joint ventures. A joint
operation is a joint arrangement that gives the partner companies rights to the assets and obligations for
the liabilities relating to the arrangement. A joint venture is a joint arrangement that gives the partner
companies rights to the net assets of the arrangement. In accordance with IFRS 11, a partner company to a
joint operation must recognise and measure the respective assets, liabilities, income and expenses in relation
to its interest in the joint operation. A partner company in a joint venture must recognise and measure its
investment by applying the equity method in accordance with IAS 28 Investments in Associates and Joint
Ventures. Only fully consolidated companies are currently included in the consolidated financial statements
of BUWOG Group; IFRS 11 thus does not result in any changes.
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IFRS 12 Disclosure of Interests in Other Entities
Under IFRS 12, the disclosures on investments in subsidiaries, joint ventures and associates, and structured
entities are summarised in a comprehensive standard. The disclosures currently required under IAS 27,
IAS 28 and IAS 31 are extended in particular to include disclosures on the key assumptions and judgments
in determining the scope of consolidation. This is not expected to have any impact on the consolidated
financial statements of BUWOG Group.
IAS 27 Separate Financial Statements, IAS 28 Investments in Associates and Joint Ventures
As part of the adoption of IFRS 10, the regulations for the control principle and the requirements for the
preparation of consolidated financial statements were removed from IAS 27 and are now treated exhaustively
in IFRS 10. As a result, in the future IAS 27 will contain only the requirements for the accounting of
subsidiaries, joint ventures and associates in separate financial statements in accordance with IFRS.
With the adoption of IFRS 11 there were also amendments made to IAS 28. IAS 28 now (as before) governs
the application of the equity method. The scope of IAS 28, however, is significantly expanded by the
adoption of IFRS 11, as in the future investments in both associated companies and joint ventures will be
accounted for using the equity method.
Another revision to the standard relates to accounting in accordance with IFRS 5 Non-Current Assets Held
for Sale and Discontinued Operations, if only a part of an investment in an associate or a joint venture is
intended for sale. IFRS 5 will apply to the portion intended for sale, while the “retained” portion continues
to be accounted for under the equity method until the sale of the first portion.
The initial application is not expected to have any effect on the consolidated financial statements of BUWOG
Group.
IFRS 10, IFRS 12 and IAS 27 Investment Entities
The amendments to the standards include a definition of terms for investment companies and the removal
of such undertakings from the scope of IFRS 10 Consolidated Financial Statements. Accordingly, investment
companies do not consolidate the companies they control in their consolidated financial statements in
accordance with IFRS; this exception to the general principles, however, is not to be understood as optional.
Instead of full consolidation, these companies value the holdings held for investment purposes at fair value
and recognise the periodic changes in value through profit or loss. The initial application of the revised
standard is not expected to have any impact on the consolidated financial statements of BUWOG Group.
IAS 32 Requirements for Offsetting Financial Assets and Liabilities/
IFRS 7 Disclosure of Requirements for Offsetting Financial Assets and Liabilities
The amendments to IAS 32 clarify and supplement the requirements for offsetting financial instruments. It
will continue to be possible to offset financial assets and financial liabilities only if there is a legally
enforceable right to set off the recognised amounts against each other and it is intended to settle the
financial instruments net or to settle the relevant financial liability simultaneously with the recognition of the
associated financial asset. The amendments to the standard complement and clarify the application
guidelines in regard to the terms “current” and “simultaneous”. Also related to this is the amendment to
IFRS 7, which in the future provides for additional disclosures for offset financial instruments and for financial
instruments which have not been offset but are subject to a global offsetting agreement or similar agreement.
The initial application of the revised standard is not expected to have any material effect on the consolidated
IAS 36 Recoverable Amount Disclosures for Non-Financial Assets
Under a subsequent revision to IFRS 13, the disclosure requirements in IAS 36 were amended with respect
to the assessment of the recoverable amount of impaired assets. This revision to the standard could result
in additional or amended disclosures in the consolidated financial statements of BUWOG Group.
IAS 39 Novation of Derivatives and Continuation of Hedge Accounting
This change defines the accounting treatment of derivatives as hedging instruments after novation. As
BUWOG Group currently does not apply hedge accounting, this change to the standard will not affect the
consolidated financial statements of BUWOG Group.
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IFRIC 21 Levies
IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. It addresses
in particular the issue of when a present obligation arises when levies are imposed by public authorities and
a provision or liability must be recognised. Fines and levies resulting from public contracts or that fall within
the scope of other standards (e.g. IAS 12 Income Taxes) do not fall within the scope of the interpretation.
Under IFRIC 21, a liability is recognised for levies when the event triggering the tax liability occurs. The
triggering event that gives rise to the obligation derives in turn from the wording of the underlying legislation.
The formulation of the underlying legislation is crucial for the accounting process. BUWOG Group is currently
in the process of determining the impact of this interpretation, in particular on property-related levies and
taxes. However, this interpretation is not expected to have a short-term material impact on the consolidated
1.2.4Standards and interpretations announced, but not yet adopted by the EU
The following changes or revisions to standards and interpretations had been announced as of the balance
sheet date, but have not yet been adopted by the EU and are therefore not applicable:
Standards and interpretations announced, but not yet adopted by the EU
Standard
Content
Published by the IASB
Expected mandatory
application for BUWOG
New standards and interpretations
IFRS 9
Financial Instruments, amendments to
IFRS 9 and IFRS 7, Mandatory Effective Date
and Transition Disclosures, and amendments
to IFRS 9, IFRS 7 and IAS 39, Hedge Accounting
12 November 2009
(16 December 2011)
1 May 2018
IFRS 14
IFRS 15
Regulatory Deferral Accounts
30 January 2014
1 May 2016
Revenue from Contracts with Customers
30 January 2014
1 May 2017
6 May 2014
1 May 2016
12 May 2014
1 May 2016
Changes to standards and interpretations
IFRS 11
Accounting for Acquisitions of Interests in Joint
Operations
IAS 16, 38
Clarification of Acceptable Methods of
Depreciation and Amortisation
IAS 16, 41
Agriculture: Bearer Plants
21 November 2013
1 May 2016
IAS 19
Defined Benefit Plans: Employee Contributions
21 November 2013
1 May 2015
Various standards
Annual Improvements to IFRSs 2010–2012 Cycle
21 November 2013
1 May 2015
Various standards
Annual Improvements to IFRSs 2011–2013 Cycle
21 November 2013
1 May 2015
IFRS 9 Financial Instruments
The accounting treatment and the valuation of financial instruments under IFRS 9 is intended to replace
IAS 39. In the future, financial assets will only be classified and valued in two groups: at amortised cost and
at fair value. The group of financial assets accounted for at amortised cost consists of those financial assets
that only have a right to interest and principal payments at predetermined times and which are also held as
part of a business model whose objective is to hold assets. All other financial assets are recognised at fair
value. Under certain conditions, financial assets which would generally be accounted for at amortised cost
may be designated for fair value accounting (fair value option). Changes in the value of financial assets
carried at fair value are recognised in profit or loss. For certain equity instruments, however, use can be
made of the option to recognise changes in value in other comprehensive income; dividends claimed from
these assets are, however, recognised in profit or loss. The requirements for financial liabilities are essentially
being transferred from IAS 39. The main difference relates to the recognition of changes in the value of
financial liabilities carried at fair value. In the future, these will be split. The part attributable to the company’s
own credit risk is recognised in other comprehensive income, whereas the remaining part of the change in
value is recognised in profit or loss. The initial application date of IFRS 9 is still not fixed, but is not expected
before 1 January 2018.
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IFRS 14 Regulatory Deferral Accounts
IFRS 14 allows first-time adopters of IFRS operating in a price-regulated environment – with limited
restrictions – to continue to recognise amounts related to rate regulation using the accounting principles
previously applied in their financial statements. This standard is not applicable to BUWOG Group.
IFRS 15 Revenue from Contracts with Customers
As part of a convergence project, the IASB and the FASB jointly developed and published a standard related
to revenue recognition. The new IFRS 15 Revenue from Contracts with Customers will replace the previous
standards IAS 18 Revenue, IAS 11 Construction Contracts and their related interpretations. The objectives
include the standardisation of existing revenue recognition between the standard setters and the elimination
of inconsistencies between IAS 18 and IAS 11.
The basis of the new standard includes a comprehensive model for the recognition of revenue from contracts
with customers. According to this model, an entity recognises revenue in the amount of compensation
expected for the assumed performance obligation(s), the transfer of goods or provision of services.
BUWOG Group is currently in the process of determining the impact of this standard on its consolidated
financial statements.
IFRS 11 Accounting for Acquisitions of Interests in Joint Operations
Under this amendment to IFRS 11, the acquirer of interests in a joint operation which represents a business
activity must apply IFRS 3 Business Combinations and other IFRS, unless they are contrary to the guidelines
of IFRS 11.
IAS 16, 38 Clarification of Acceptable Methods of Depreciation and Amortisation
The amendments to IAS 16 and IAS 38 supplement the guidelines on the applicability of certain depreciation
methods for property, plant and equipment, and intangible assets. According to these amendments,
revenue-based write-downs are not permitted. This change in standards will not have any effect on the
consolidated annual financial statements of BUWOG Group.
Annual Improvements to the IFRS – Cycle 2010–2012
Amendments were made to seven standards as part of the annual improvements to the IFRS. The wording
of individual IFRS was adapted in order to clarify the existing rules. In addition, there are changes that affect
the disclosures. These relate to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38.
The amendments are – subject to their adoption by the EU into the European Union body of law – effective
for financial years beginning on or after 1 July 2014, and the amendment to IFRS 2 is effective for sharebased payments granted on or after 1 July 2014.
Annual Improvements to IFRS – Cycle 2011–2013
Amendments were made to four standards as part of the annual improvements to the IFRS. The wording
of individual IFRS was adapted in order to clarify existing rules. These relate to IFRS 1, IFRS 3, IFRS 13 and
IAS 40.
The amendments are – subject to their adoption by the EU into the European Union body of law – effective
for financial years beginning on or after 1 July 2014.
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2.Accounting Policies
The consolidated financial statements of BUWOG Group were prepared in compliance with the International
Financial Reporting Standards (IFRS) as adopted by the European Union (EU).
2.1
Basis of Preparation of the Financial Statements
The consolidated financial statements were prepared on a historical cost basis (see section 1.2.2). The
exceptions to this are certain properties and financial instruments that are carried at fair value at the balance
sheet date. Information on this is provided under the respective accounting policies.
Historical costs are generally based on the fair values determined for the consideration paid in exchange for
the asset on the acquisition date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants on the measurement date. This applies regardless of whether the
price was directly observable or estimated using a valuation method.
The fair value is not always available as a market price. It often has to be determined on the basis of various
valuation parameters. Fair value is categorised into different levels in the fair value hierarchy, depending on
the availability of observable parameters and the importance of these parameters in determining fair value
in its entirety:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: Valuation parameters which are not quoted prices as described in Level 1 but which are observable
either directly as a quoted price or indirectly derived from quoted prices for the asset or liability.
- Level 3: Valuation parameters for assets or liabilities that are not based on observable market data.
2.2Consolidation methods
2.2.1Basis of consolidation
The financial statements of all major domestic and foreign companies included in the consolidated financial
statements (see section 2.2.2 Fully consolidated companies) were converted to IFRS and, in the case of
business combinations, revalued (see section 2.2.3 Mergers (initial consolidations)). As first-time adopters
of IFRS 1, BUWOG Group did not apply the option for retrospective application of IFRS 3 to business
combinations that took place prior to 1 May 2012. The accounting and valuation principles applied by all
companies included in the consolidated financial statements were standardised and adjusted to conform to
the options elected by BUWOG Group. The balance sheet date for the consolidated financial statements is
30 April, which is the balance sheet date of the parent company. The annual financial statements of all
companies included in the full consolidation were prepared on the same balance sheet date as the
consolidated financial statements.
All receivables and liabilities, revenues, other income and expenses from the provision of goods and services
between companies included through full consolidation were eliminated. Interim profits that arise primarily
from the transfer of stakes in other companies and properties between member companies of the group
were eliminated.
2.2.2Fully consolidated companies
A subsidiary is an entity that is controlled by a parent company. Subsidiaries are included in the consolidated
financial statements of BUWOG Group through full consolidation. The control concept standardised in
IAS 27 forms the basis for deciding when a company must be classified as a subsidiary. Control is understood
to mean the power to govern the financial and operating policies of an entity so as to obtain benefits from
its activities. The possibility of exercising control is sufficient for this classification, while actual control is
less important. Control is presumed to exist where there is direct or indirect control over more than 50% of
the voting rights in an entity. Control may also be gained through voting agreements, corporate contractual
arrangements, such as those for determining the majority of the members of the management or supervisory
bodies, and the like. Inclusion in the consolidated financial statements begins at the date control is obtained
and ends with the loss of control.
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2.2.3Business combinations (initial consolidations)
If BUWOG Group acquires property companies (share deals) or assets, including investment properties and
debt (asset deals), in accordance with IFRS 3 these acquisitions are accounted for as business combinations
using the acquisition method if they meet the definition criteria of a business. Otherwise, the acquisition
costs are allocated to the identifiable assets and liabilities in accordance with their fair values at the
acquisition date. Transactions that are not classified as business combinations do not result in the recognition
of goodwill.
BUWOG Group often views the property companies or assets and liabilities acquired as constituting a
business. Assessing whether investment properties constitute a business as defined in IFRS 3 is discretionary
and regularly requires a detailed analysis of the acquired operations and structures, particularly with regard
to property management.
In a business combination, BUWOG Group obtains control over one (or more) business(es) as part of an
asset deal or share deal. The acquisition method is used to account for these transactions. The consideration
transferred in the form of the acquisition costs is set against the proportionate fair value of the identifiable
net assets acquired in order to identify whether there is any difference. If this is positive, it is treated as
goodwill; if it is negative, the acquirer must reassess whether it has correctly identified all of the assets
acquired and all of the liabilities assumed and recognise any additional assets or liabilities identified in that
review. If a negative difference remains after the review, it is recognised in profit or loss. In this process, noncontrolling interests are valued only with the proportional share of revalued net assets. When property
companies are acquired, the use of the acquisition method (might) lead(s) to goodwill because of the
obligation to record deferred tax liabilities on the difference between the fair value and the tax base of the
investment property acquired. Goodwill normally results as a technical figure.
2.2.4Structural changes
BUWOG Group considers a change of ownership interests between shareholder groups, i.e. between
BUWOG Group (the shareholders) and the non-controlling shareholders, without control being obtained or
lost as a structural change. Such increases or decreases in ownership interests that maintain control over the
subsidiary are accounted for as equity transactions between shareholders. The carrying amounts of assets
and liabilities, including goodwill initially recorded, remain unchanged; the structural changes have no effect
on the income statement or on the statement of comprehensive income. Differences between the
proportional carrying amount of the respective equity, which corresponds to the transfer of interests in the
subsidiary that results in a structural change, and the fair value of the consideration are recognised directly
in equity.
2.2.5Deconsolidations
When a subsidiary is sold or BUWOG Group otherwise loses control, the entity may no longer be included
in the consolidated financial statements. The income and expenses of the deconsolidated subsidiary are
included in the consolidated financial statements of BUWOG Group up to the date on which control is lost.
In the deconsolidation, the disposed assets and transferred liabilities are set against the fair value of the
consideration received; this produces the deconsolidation result, which is reported in the results of Property
Sales.
Any retained interest in the former subsidiary is measured at fair value at the date when control is lost.
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2.3Currency translation
2.3.1Functional currency
The Group reporting currency is the Euro. As BUWOG Group operates exclusively in the Euro zone, the
functional currency of all subsidiaries of BUWOG Group is also the Euro.
2.3.2Foreign currency transactions
The individual Group companies record foreign currency transactions at the average exchange rate in effect
on the date of the event. Foreign currency monetary assets and liabilities are translated at the average
exchange rate in effect on the balance sheet date. Any resulting foreign exchange gains and losses are
recognised in profit or loss for the financial year.
2.4
Specific Accounting Policies
2.4.1Revenue realisation
Asset Management includes the traditional rental business of BUWOG Group. The main source of revenue is
rental income from BUWOG Group’s portfolio of residential property in Austria and Germany.
Revenues from Asset Management consist of rental income for residential property and other rental income,
operating costs passed on to tenants and other revenues. Rental income arises from the rents agreed in the
underlying rental agreements for residential properties and from other rental income resulting from the
rental of office space, retail space and parking spaces. Operating costs passed on to tenants include costs
for purchased services directly attributable to tenants such as waste disposal, electricity costs, insurance
costs, taxes, fees and other costs for common areas and equipment such as lifts and gardens. BUWOG
Group is accountable to the tenants for the selection of suppliers and acts as principal to the suppliers.
Therefore, both the revenues and expenses from operating costs are shown as gross amounts.
Revenues from property rentals are recognised during the period defined by the underlying rental agreement.
In Austria, financial contributions are collected from the tenants in subsidised apartments; these
contributions, less a usage-related deduction, are returned at the end of the lease. One percent of the
financial contributions received is recognised in profit or loss annually as rental income.
To finance the cost of maintenance work and useful improvements, a maintenance and improvement
contribution (Erhaltungs- und Verbesserungsbeitrag; EVB) is levied. Depending on the age of the building,
an additional maintenance and improvement contribution (EVB II) is levied for identifiable maintenance
work needed in the foreseeable future, which must be used within 10 years from the time it is levied for
maintenance or improvement work, otherwise it must be reimbursed to the tenants. The EVB II is reported
under other financial liabilities and interest is paid on it. The carrying out of maintenance and improvement
work reduces other financial liabilities and is reported as rental income.
Property Sales involve the sale of individual apartments and the sale of complete individual properties and
property portfolios (Block Sales) to private and institutional investors. The revenue from Property Sales
represents the fair value of the properties at the time of the transaction, offset against an equal reduction
in the carrying amount.
Revenue from the sale of individual apartments and portfolios is recognised when the amount can be
estimated reliably and it is likely that the sale will result in an economic benefit to the company and the
related costs can be reliably estimated. The date of the transfer of beneficial ownership represents the date
of realisation. The transfer of beneficial ownership is defined by the transfer of the significant risks and
opportunities and of control.
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The other expenses allocated to the results of Property Sales are recognised on an accrual basis and include
all personnel and material expenses that are directly related to the sale process for a property or property
company.
In addition, adjustments to the fair value of property sold in the financial year and investment properties
held for sale are reported in results of Property Sales.
The revenue from the sale of inventories and the disposal of the related costs is reported in the results of
Property Development, with the transfer of beneficial ownership representing the date of realisation (see
section 2.4.13 Inventories). The transfer of beneficial ownership takes place at the time of the transfer of the
significant risks and opportunities of ownership and of control. Sales contracts relating to inventories that are
sold “off plan” or even during the construction stage fall under IAS 18, if the criteria of IFRIC 15 are met.
The other expenses allocated to the results of Property Development are recognised on an accrual basis and
include all personnel and material expenses that are directly related to the sale process for a property or
property company.
In addition, adjustments to the fair value of properties under construction and impairment of inventories
during the financial year are reported in the results of Property Development.
2.4.2Impairment
In accordance with IAS 36, impairment tests are performed when there are indications that an asset may be
impaired. Independent of this practice, goodwill and intangible assets with an indefinite useful life must be
tested annually for signs of impairment. The impairment test is performed at the cash-generating unit level
if cash inflows cannot be directly allocated to a specific asset and individual valuation is therefore not
possible. Cash-generating units represent the smallest group of assets to which independent cash inflows
can be allocated. A cash-generating unit may not be larger than an operating segment defined in accordance
with IFRS 8. IAS 36 defines the recoverable amount as the relevant benchmark for the impairment test. The
recoverable amount equals the higher of fair value less costs to sell and the value in use.
Fair value less costs to sell represents the amount obtainable from the sale of an asset or cash-generating
unit in an arm’s length transaction at normal market conditions between knowledgeable and willing parties,
less the costs to sell; the costs to sell are incremental costs directly attributable to the sale of an asset or
cash-generating unit.
Value in use represents the present value of estimated future cash flows that are expected to arise from the
continuing use of an asset or cash-generating unit. Cash flows relevant to the valuation must be based on
reasonable and justifiable assumptions. As a rule, value in use is determined by using the net present value
method; the discounted cash flow (DCF) method is used here.
If the carrying amount of an asset or cash-generating unit exceeds the recoverable amount, the difference
is recognised as an impairment loss. An impairment loss calculated in accordance with the above principles
must then be allocated to the assets in the cash-generating unit as follows: first, the carrying amount of
goodwill of the cash-generating unit is written down; any remaining difference is allocated to the other
assets in the cash-generating unit in proportion to their carrying amount. An impairment loss is not allocated
to an individual asset if a separate fair value less costs to sell would fall below a separately determined value
in use or zero.
If there is an indication that the reasons for impairment no longer exist or have decreased, the impairment
loss is reversed to the carrying amount that would have been determined (net of amortisation or depreciation)
if the impairment loss had not been recognised in prior years; no reversal is permitted for goodwill.
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When companies are acquired as part of a share deal, the accounting rules in accordance with IFRS 3
Business Combinations are applied (see section 2.2.3 Business combinations (initial consolidations)). The
use, if necessary, of the acquisition method leads to goodwill as a technical figure because of the obligation
to record deferred tax liabilities on the difference between the fair value and the tax base of the investment
property acquired. This goodwill must be tested annually for indications of impairment. The cash-generating
units primarily represent individual properties, property portfolios, or groups of cash-generating units that
benefit from synergies resulting from the combination.
2.4.3 Investment properties
Investment properties include sites, buildings or parts of buildings that are held to generate rental income
or to realise a long-term increase in value, and are not used in production or for other administrative
purposes or sold as part of the company’s ordinary business activities. Land purchased as a site for the
construction of investment property is classified as investment property on the date of acquisition.
In accordance with IAS 40, investment properties are measured at cost at the time of recognition; subsequent
valuation takes place using the fair value model.
Valuation process
The valuation of investment property using the fair value model requires regular revaluation. In BUWOG
Group this is performed by independent experts in accordance with the recommendations of the European
Public Real Estate Association (“EPRA’s Best Practices Policy Recommendations”).
For the IFRS consolidated financial statements as of 30 April 2014, BUWOG Group engaged the appraiser
CBRE with the preparation of a valuation report.
The external appraiser performs the valuation of the properties based on market knowledge, by inspecting
properties and on the basis of information provided by BUWOG Group such as inventory data, rent lists,
rental agreements, land register extracts and investment budgets. The data are reviewed by the appraiser
and checked for plausibility by comparison with market data. In addition, among other activities, the
appraiser makes assessments of capacity utilisation rates, future rental income, investment measures to be
implemented and expected returns.
In BUWOG Group, an expert appraisal of the properties is carried out for the purposes of preparing the
consolidated financial statements as of 30 April and the interim consolidated financial statements as of
31 October.
Valuation methods
CBRE carried out the valuation in accordance with the valuation requirements of the Royal Institute of
Chartered Surveyors (RICS Valuation − Professional Standards, 9th edition − Red Book).
The valuation of the standing investments is based on the discounted cash flow method (DCF method). The
method is based on dynamic investment calculation, making it possible to explicitly take into account
valuation assumptions and thus ensuring the transparent calculation of market value.
A standardised DCF method is used for the German standing investments. The DCF method takes account
of the future cash inflows and cash outflows connected to the respective properties over a detailed analysis
period of 10 years and a terminal value that corresponds to the capitalised rental income with a growthimplicit capitalisation rate in year 11.
CBRE uses a DCF model to appraise the Austrian standing investments which was developed to take
account of the special features of the Austrian Act on Non-Profit Housing (Wohnungsgemeinnützigkeitsgesetz,
WGG) (in particular cost-covering rent and Burgenland benchmark -30%) and the sale of individual
apartments. In order to take full account of additional specific requirements (such as long-term subsidy
terms, interest rate hikes or long-term achievable revenues from individual apartments) in the Austrian
standing investments, detailed cash flows for a period of 80 years were used in the present appraisal report.
The cash flows calculated over the analysis period are discounted annually in arrears at the discount rate on
the valuation date. The determined discount rate takes into account the market situation or the expected
return of a potential investor and the uncertainty of the forecasted future cash flow. If the sale of apartments
in a property is economically the most attractive option, for such a property an individually estimated rate
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of sale is used in the valuation of this property. The recoverable revenue is determined using the sales
comparison approach and is included respectively in the DCF model.
The valuation of properties with building rights (standing investments on third-party sites) is also carried
out using the DCF model. The fact that the property is a property with building rights is taken into account
by adding an appropriate premium to the discount rate and, if necessary, adjusting the analysis period.
In the valuation of undeveloped sites or sites that can be developed beyond their existing status, the value
of the site is primarily determined on the basis of the value of the optimal building that could be constructed
and for which a construction permit would be granted. In these cases, the value of the property is calculated
using the sales comparison approach or, if a specific construction plan exists, using the residual value
method. In the residual value method, the first part of the calculation involves estimating the probable sale
proceeds (development value) of the completed project based on a DCF calculation. In the second step, all
costs incurred in connection with the preparation or the completion of the remaining project are deducted
from this development value. These possible costs include, for example, demolition costs, all construction
costs, ancillary building costs, fees, financing costs, sales and marketing costs as well as an item for
unforeseen expenses. In addition, the developer’s profit is deducted, and is recorded either as a percentage
of the development value or at the total development costs. The financing costs for the construction costs
incurred during the construction period are often roughly calculated by adding interest to the total
construction costs over half the construction period. A clear development plan is a fundamental prerequisite
for determining the project costs. In the case of the sales comparison approach, square meter prices are
derived from market transactions.
All changes in the fair value of investment properties, investment properties under construction, and sold
investment properties held for sale are recognised in the income statement. These items are reported under
the adjustments to the fair value of investment properties, properties under construction and sold investment
properties held for sale (revaluation result).
Due to the input factors taken into account in the property valuation that are not directly or indirectly
observable in the market, all investment property is allocated to Level 3 of the fair value hierarchy.
The following table shows the weighted averages for input factors that are used for the valuations and that
are not observable in the market and refers to standing investments.
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Input parameter Standing investments
Unit
Vienna
Austria
other
Berlin
Germany
other
Current rent
EUR p.a.
36,074,612
56,995,067
19,025,079
10,487,875
Market rent1)
EUR p.a.
55,844,246
81,600,101
22,942,119
12,536,247
74.90%
96.06%
2.06%
0.00%
Proportion of portfolio publicly subsidised, by rentable space2)
Current rent
EUR/sqm
5.05
3.68
5.80
4.86
Market rent
EUR/sqm
7.53
4.88
6.77
5.28
0.86%
Market rent increase
p.a.
Current vacancy rate residential space3)
Structural vacancy rate4)
Maintenance costs
-
-
0.97%
3.00%
5.60%
2.60%
5.40%
-
-
1.00%
1.84%
EUR/sqm p.a.
9.64
9.80
10.40
9.95
Re-letting costs5)
EUR/sqm
-
-
140.00
93.00
Administrative costs
EUR/unit
-
-
205.00
245.00
5.22%
6.32%
6.11%
6.19%
-
-
5.41%
5.37%
77.76%
41.91%
-
-
1,801
1,255
-
-
Discount rate
Capitalisation rate
Proportion of individual apartments held for sale, by area
Sales price potential6)
EUR/sqm
1) A hypothetical market rent is used for the publicly subsidised units in the standing investments (which in Austria comprises the entire WGG portfolio)
2)Including commercial areas; excluding garages and parking spaces
3)The vacancy rate in Vienna includes mostly units from the portfolio of apartments offered for sale, and which are offered for sale as vacant units (Unit Sales)
4)No structural vacancy rate is included in the DCF model for the Austrian portfolio. Instead, the actual vacancy rate in 2, 3 or 10 years is reduced, depending on the type of vacancy
5)In the DCF model for the Austrian portfolio, EUR 25/sqm to EUR 500/sqm is calculated for the conversion of cost-covering rent to an appropriate rental rate and EUR 35/sqm
for the re-letting of space with reasonable rental rates and free rental rates
6)Approach used only for units in the portfolio of apartments offered for sale (Unit Sales)
An increase in rents per square meter would lead to an increase in fair value, whereas a reduction would lead
to a decrease in fair value.
A reduction in the (structural) vacancy rate, the discount rate, the capitalisation rate, the maintenance costs
per square meter, the re-letting costs per square meter and the administrative costs per unit would result in
an increase in fair value. Conversely, an increase in these input parameters would lead to a decrease in fair
value.
The following table shows the input factors for properties (undeveloped sites and vacant buildings), which
were valued using the sales comparison approach:
Input parameter undeveloped land
Austria
Germany
Total
Size of land
in sqm
Land value/
sqm in EUR
Total
338,906
285.97
Min
422
21.33
Max
20,564
1,437.17
Total
72,037
326.86
Min
429
158.51
Max
62,702
339.70
Total
410,943
293.14
Min
422
21.33
Max
62,702
339.70
Values based on the size and corresponding value per sqm of the particular piece of land.
An increase in the price per square meter would lead to an increase in fair value, whereas a decrease would
lead to a decrease in fair value.
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2.4.4Leasing
In accordance with IAS 17, the classification of a leased asset is based on the extent to which the risks and
rewards incidental to the ownership of the leased asset lie with the lessor or lessee.
Under an operating lease, the economic ownership of the lease asset remains with the lessor. The lessee
recognises the lease payments as an expense on a straight-line basis over the term of the lease.
BUWOG Group is lessee and lessor under operating leases.
2.4.5Government grants
Government grants represent assistance or subsidies or public grants provided to an entity through the
transfer of resources in return for past or future compliance with certain conditions related to the entity’s
operating activities.
In some cases, BUWOG Group receives low-interest loans to finance development projects. These lowinterest loans are related to public sector subsidies for the respective properties and are generally connected
with obligations to meet specific requirements (e.g. rent control). As only the cash flows from the lower
rental income are used in calculating the fair value of the properties, the latter is impaired compared to the
market rental income otherwise applied. In order to avoid any incongruity between the recognition and the
valuation of the investment property and the financial liability in accordance with IAS 39. 9 b (i), the
management of BUWOG Group has taken the discretionary decision to classify below-market rate loans in
the valuation category “at fair value through profit and loss” (fair value option) on initial recognition in order
to eliminate any incongruity arising from the interest rate advantage on the government grant resulting
from the below-market interest rate on the loan (IAS 20.10A). The present value of the interest rate
advantage is recognised when incurred, in other valuation results. The subsequent valuation of the financial
liability is recognised in financial results.
Current interest subsidies from public sources are, however, recognised to profit or loss in the financial year
in which interest accrues from the subsidised financing.
2.4.6Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of assets whose
acquisition or development requires a significant amount of time are generally capitalised as part of the
cost. Under IAS 23, this accounting rule must not be applied if the acquired or developed assets are
measured at fair value. As BUWOG Group has selected the fair value model for subsequent measurement of
investment properties, the interest on construction is not capitalised for properties recognised pursuant to
IAS 40. In the area properties under development, however, the interest on construction is capitalised on the
basis of the actually incurred interest expense.
2.4.7Other tangible assets
In accordance with IAS 16, tangible assets not covered by IAS 40 are carried at cost less accumulated
depreciation and recognised impairment losses. Acquisition or production cost includes all expenses
incurred to bring the asset to the location and condition necessary for it to be capable of operating in the
intended manner.
Depreciation is calculated on a straight-line basis beginning in the month of acquisition.
Ordinary straight-line depreciation on depreciable tangible assets is based on the following useful lives:
Useful life in years
Administrative buildings (own use)
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50
4–10
The useful lives of the various assets and the depreciation method are reviewed regularly in agreement with
IAS 16 to ensure they reflect the expected development of the economic value in use of the tangible asset.
2.4.8Other intangible assets
Intangible assets represent identifiable, non-monetary assets without physical substance that can be
expected to generate a future economic benefit. In accordance with IAS 38, intangible assets are carried at
cost less amortisation.
With the exception of goodwill, all intangible assets held by BUWOG Group have a finite useful life and are
amortised on a straight-line basis over their useful lives (pro rata temporis).
Ordinary straight-line amortisation is based on the following useful lives:
Useful life in years
Other intangible assets
3–5
In addition, other intangible assets are tested for impairment in accordance with IAS 36.
BUWOG Group has no internally generated intangible assets or capitalised trademarks.
2.4.9Trade and other receivables
Receivables and other financial assets are generally classified as loans and receivables (L&R) in accordance
with IAS 39 and carried at amortised cost. Recognisable individual risks are reflected in corresponding
valuation adjustments.
Information on the distinction between financial and non-financial assets is provided under the definition of
financial instruments in section 9.1.
2.4.10Other financial assets
The other non-current financial assets mainly comprise loans and positive fair values of derivative financial
instruments.
Originated loans are classified as loans and receivables (L&R) in accordance with IAS 39 and are generally
carried at cost.
Derivatives are recognised as independent transactions. These financial instruments are used to reduce the
risks associated with interest rate fluctuations. Derivative transactions are only concluded with financial
institutions that have solid credit standings. Derivatives with a positive fair value are assigned to the category
“held for trading” (HFT) and valued through profit or loss at the market value applicable on the balance
sheet date. The accounting rules for hedge accounting are currently not applied by BUWOG Group.
Information on the conditions and market values of derivatives is provided under section 9.2.5 Interest rate
risk.
2.4.11Income taxes
Income taxes comprise both current and deferred taxes. Current and deferred taxes are recognised in the
income statement, unless they are related to items that are recognised either in other comprehensive
income or directly in equity. In this case the current and deferred taxes are also recognised in other
comprehensive income or directly in equity. If current or deferred taxes result from the initial recognition of
a business combination, the tax effects on the accounting for the business combination are included.
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The current tax expense is determined on the basis of taxable income for the year. Taxable income differs
from net income in the consolidated statement of comprehensive income due to expenses and income that
are only taxable in later years or are never taxable, or that are tax deductible. The reconciliation of income
taxes to the theoretical tax expense is presented in section 5.4 Income taxes.
Deferred taxes are recognised for existing differences between the carrying amounts of assets and liabilities
in the IFRS consolidated financial statements and the corresponding valuations for tax purposes. Deferred
tax liabilities are generally reported for all taxable temporary differences; deferred tax assets are only
recognised when it is probable that positive taxable income will be available for which the deductible
temporary differences can be used. Such deferred tax assets and deferred tax liabilities are not recognised
if the temporary differences arise from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor net
income.
For taxable temporary differences arising from investments in subsidiaries, deferred tax liabilities are
recognised unless BUWOG Group is able to control the reversal of the temporary differences and it is
probable that the temporary differences will not be reversed in the foreseeable future.
The carrying amount of the deferred tax assets is reviewed each year at the balance sheet date and reduced
in value if it is no longer probable that sufficient taxable income will be available to realise the claim in whole
or in part.
Deferred taxes are measured using the tax rates that are expected to apply to temporary differences when
they are reversed, and using tax rates that have been enacted or substantively enacted at the balance sheet
date.
The measurement of deferred taxes reflects the tax consequences that arise from the expectation of
BUWOG Group with regard to the manner of realisation of the carrying amounts of assets or the settlement
of liabilities at the reporting date.
Deferred tax assets and deferred tax liabilities are offset when taxes are levied by the same authority and a
legal claim exists for offsetting current tax assets against current tax liabilities.
2.4.12Properties held for sale and disposal groups
IFRS 5 classifies all properties held for sale and disposal groups as held for sale if they can be sold in their
present condition and their sale is highly probable due to a corresponding intention to sell them within 12
months. If the relevant criteria for being classified as properties held for sale are no longer met, the assets
or disposal groups are reclassified back under the original balance sheet items.
Properties held for sale or disposal groups are valued at the lower of the carrying amount and fair value less
costs to sell. However, investment properties which are valued in accordance with the fair value model
represent an exception to the valuation requirements set forth in IFRS 5; the exceptions to this are financial
assets and deferred taxes. For these non-current assets, only the provisions for separate disclosure under
IFRS 5 apply. If a write-down that is necessary in a disposal group, for example due to the need to deduct
the expected costs to sell from the fair value, cannot be allocated to assets that are included in the valuation
requirements in IFRS 5, the carrying amount of the investment property is reduced.
2.4.13Inventories
Inventories represent assets that are held for sale during the ordinary course of business, or are in the
process of production for such sale, or take the form of materials or supplies to be consumed in the
production process or in the rendering of services.
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The business activities of BUWOG Group as a property company comprises the acquisition and rental as
well as the best possible commercial utilisation of assets to optimise Asset Management. The properties
held for sale by BUWOG Group do not fall within the scope of application of IAS 40 (Investment properties),
and are therefore treated as inventories in accordance with IAS 2.
Inventories are capitalised at cost, including interest on borrowings, and measured at the lower of carrying
amount and net realisable value as of the balance sheet date. The acquisition or production cost of
inventories includes all purchase and processing costs as well as other expenses incurred to bring the asset
to the current location and condition. Net realisable value is determined as the estimated selling price less
any outstanding production costs and costs to sell.
Income from sales of inventories is reported under the results of Property Development, whereby revenue
is realised when the significant opportunities and risks of ownership are transferred. In the event of a sale,
the relevant production costs are recorded as a disposal under the production cost of sold inventories.
Production costs are compared to the net realisable value as determined in part by an expert opinion. If the
net realisable value is below the production cost, an impairment must be recognised.
2.4.14Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, funds in transit and deposits with financial institutions
with a term of up to three months. These items are carried at the value applicable on the relevant balance
sheet date.
2.4.15Compound financial instruments (convertible bonds)
In accordance with the economic substance of the agreement and the definitions, the components of a
compound instrument issued by the company (convertible bonds) are recorded separately as a financial
liability and an equity instrument. A conversion option which is only settled by exchanging a fixed amount
of cash or another financial asset for a fixed number of the company’s own equity instruments is an equity
instrument.
The liability component of a compound financial instrument is initially recognised at the fair value of a
similar liability that does not include the option of conversion to equity. When initially measured, the equity
component is recognised as the difference between the fair value of the compound financial instrument and
the fair value of the liability component. Directly attributable transaction costs are allocated in proportion
to the carrying amounts of the debt and equity components of the financial instrument at the time of initial
recognition. The equity component is recognised net of tax and is subject to no further valuation. For other
embedded derivative components, a review is conducted to determine whether they are closely related to
the main contract or should be valued and reported separately.
In the subsequent valuation, the liability component of the compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of the compound financial
instrument is carried at the value established on initial recognition.
2.4.16Financial liabilities, trade and other liabilities
Financial liabilities are generally classified as financial liabilities measured at amortised cost (FLAC) in
accordance with IAS 39. These items are carried at amortised cost using the effective interest method. With
regard to the low-interest government loans and financial liabilities to banks with annuity subsidies that are
related to the subsidies for properties, management has taken the decision to classify them in the valuation
category at fair value through profit and loss (fair value option).
Non-financial liabilities are also carried at amortised cost.
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Financial liabilities are recorded when incurred at their fair value less directly attributable transaction costs.
The fair value generally corresponds to the amount of funds received. Any difference (premium, discount or
other difference) between the amount received and the repayment amount is allocated over the term of the
financing according to the effective interest rate method and recorded under financial results.
Derivatives with a negative fair value as well as derivatives with a positive fair value are classified as held for
trading (HFT). These items are carried at current market value through the income statement as of the
balance sheet date.
2.4.17Provisions
In accordance with IAS 37.14, an obligation arising from a past event whose timing or amount is uncertain
is recorded as a provision when it becomes probable that an outflow of resources will be required to settle
this obligation and when the amount can be reliably estimated.
The provision is based on the best estimate at the time the consolidated financial statements are prepared.
The best estimate of the amount required to meet the present obligation is the amount the entity would
rationally pay to settle the obligation at the balance sheet date or to transfer the obligation to a third party
at that time.
The risks and uncertainties that inevitably surround many events and circumstances must be taken into
account in determining the best estimate. The expected cash flows must be discounted to their present
value if the time value of money is material.
In cases where some or all of the expenditure required to settle an obligation is expected to be reimbursed
by another party, the reimbursement may only be recognised when it is virtually certain that this
reimbursement will be received if the entity settles the obligation. This reimbursement must be treated as a
separate asset. The amount recognised for the reimbursement may not exceed the amount of the provision.
Provisions must be reviewed and adjusted at each balance sheet date. If an outflow of resources is no longer
probable, the provision must be derecognised through the income statement.
2.4.18Employee benefits
Provisions for severance payments are determined using the projected unit credit method, whereby an
actuarial valuation is carried out on each balance sheet date. The actuarial gains and losses – are also
referred to as revaluations – are recognised in other comprehensive income. Revaluations recognised in
other comprehensive income are part of equity and are not subsequently reclassified to the income
statement. The service cost and net interest expense are recognised in the income statement. The calculation
of severance provisions was based on assumptions and estimates as of the balance sheet date. The following
actuarial assumptions were used for the main influencing factors:
Personnel-related provisions, parameters
30 April 2014
Discount rate
3.00%
Salary increases
2.00%
Turnover (salaried employees)
Turnover (wage employees)
Residual life expectancy according to
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7.40%
13.00%
Pagler & Pagler AVÖ 2008-P mortality table
In Austria, appropriate provisions for severance payments for employees are recognised. Due to statutory
employment obligations in Austria, employees whose service began prior to 1 January 2003 are entitled to
severance compensation at termination or at the time of retirement. The amount of the payment depends
on the length of service and the relevant salary or wage at the time of departure from the company. BUWOG
Group is exposed to risks that may affect the amount of the severance provisions in the future. However,
these risks are classified as non-material with regard to the amount of the severance provisions. There are
no plan assets for severance provisions. The obligations are financed through the use of future cash flows.
2.5
Judgments and estimation uncertainty
The preparation of consolidated financial statements in agreement with IFRS requires the use of judgments
and assumptions for future developments by the management of BUWOG AG. These judgments and
assumptions can have a significant influence on the recognition and value of assets and liabilities, the
disclosure of other obligations as of the balance sheet date and the reporting of income and expenses for
the financial year.
-IFRS contains no rules for presenting common control transactions. In accordance with IAS 8.11 and 8.12,
the management of BUWOG Group took the discretionary decision to carry forward the transferred net
assets of BUWOG GmbH as well as its directly and indirectly held subsidiaries (BUWOG GmbH business)
at the carrying amounts previously recognised in the IFRS consolidated financial statements of
IMMOFINANZ AG, to the extent that no other accounting and valuation principles apply under IFRS 1. The
IFRS also make no statement with respect to the timing of the inclusion. The management of BUWOG
Group took the discretionary decision to establish the inclusion date as the effective date of the spin-off
at the end of April 2014.
-Accounting for business combinations using the acquisition method standardised in IFRS 3 is dependent
on whether business operations are acquired. Assessing whether acquired investment properties
constitute a business as defined in IFRS 3 is discretionary and regularly requires a detailed analysis of the
acquired operations and structures, particularly with regard to the property management. If the acquisition
method is applied, the transaction costs are recognised as expenses, the tax liabilities on temporary
differences between the fair value of the acquired property asset and its tax base are recognised in full,
and the resulting goodwill is reviewed annually for impairment. The acquisition method cannot be applied
if there is no business operation. In this case, the acquisition costs, including transaction costs, are
allocated to the assets acquired and liabilities assumed in accordance with their fair values, no tax liabilities
are recognised (“initial recognition exemption”) and there is no goodwill.
-In some cases, BUWOG Group receives low-interest loans to finance development projects. These lowinterest loans are related to public sector subsidies for the respective properties and are generally
connected with obligations to meet specific requirements (e.g. rent control). As only the cash flows from
the lower rental income are used in determining the fair value of the properties, the latter is impaired
compared to the market rental income otherwise applied. In order to avoid any incongruity between the
recognition and the valuation of the investment property and the financial liability in accordance with
IAS 39.9 (b) (i), the management of BUWOG Group has taken the discretionary decision to classify belowmarket rate loans on initial recognition in the valuation category “at fair value through profit and loss” (fair
value option) in order to eliminate any incongruity arising from the interest rate advantage on the
government grant resulting from the below-market interest rate on the loan (IAS 20.10A).
The following assumptions carry a significant risk that may lead to a material adjustment in the value of
assets and liabilities during the next financial year:
-The fair value of the investment properties, investment properties under construction and investment
properties held for sale recognised by BUWOG Group and the net realisable value of inventories is
determined on the basis of appraisals prepared by independent property experts. Most of these appraisals
are prepared on the basis of discounted cash flow (DCF) models, specifically by discounting the expected
future cash flows from the respective properties. The preparation of these appraisals involves the use of
assumptions, e.g. for the applied discount rate, expected occupancy, outstanding construction costs or
future development of rental prices. One characteristic of discounted cash flow models is their sensitivity
to the underlying assumptions and parameters. For example, a reduction in the applied discount rate
without any changes to the other assumptions or parameters will lead to an increase in the value of the
respective property. In contrast, a reduction in the expected occupancy rate or the expected rental prices
187
without any changes to the other assumptions or parameters will lead to a decline in the value of the
respective property. The assumptions and parameters relevant to the valuation are determined through a
careful process as of each balance sheet date based on the best possible estimates of the current market
environment by management and the appraisers. These estimates are updated as of every balance sheet
date, which can lead to substantial fluctuations in the fair value of the properties.
-The net realisable value of inventories is calculated in part on the basis of the expected sale proceeds
minus the estimated costs for completion and sale. These calculations are updated at every valuation
date, which can lead to substantial fluctuations in the net realisable value of the properties.
-The impairment testing of intangible assets, goodwill and tangible assets is based on forward-looking
assumptions. The determination of the recoverable amount or value in use of an asset for an impairment
test involves the use of numerous assumptions, e.g. concerning future surplus cash flows and the discount
rate. These surplus cash flows reflect the latest estimates available at the time the financial statements are
prepared (see section 2.4.3 Investment properties, section 6.3 Other tangible assets and section 6.4
Intangible assets).
-Alternative financial valuation methods are used in the valuation of financial instruments for which there
is no active market. The parameters relevant to the valuation which are used to establish fair value are
based in part on forward-looking assumptions.
-The valuation of existing severance payment obligations includes the use of assumptions for the interest
rate, retirement age, life expectancy, employee turnover and future pay increases (see section 2.4.18
Employee benefits).
-The recognition of deferred tax assets, in general, and of tax assets on tax loss carryforwards in particular,
is based on expectations of the management of BUWOG Group concerning the availability of sufficient
future taxable income. The accounting decision on the recognition or impairment of deferred taxes is
based on assumptions about the timing of the reversal of deferred tax liabilities and on the latest
taxplanning data in a five-year planning period (see section 6.7 Deferred tax assets and liabilities).
-The valuation of provisions is based on best estimates, which are in part made by experts. The valuation
of provisions is based in particular on past experience, the probable outcome of legal disputes and tax
litigation, future cost trends, interest rate assumptions, etc.
-The contingent liabilities not recognised in the balance sheet of BUWOG Group arising from sureties,
guarantees and other liabilities are regularly assessed for their probability of occurrence. If an outflow of
resources embodying economic benefits is neither sufficiently probable to make a provision necessary,
nor improbable, the relevant obligations are recorded as contingent liabilities. Management makes best
estimates of these liabilities (see section 9.3.1 Contingent liabilities and guarantees).
-In connection with the initial recognition of convertible bonds, the fair value of the liability component is
calculated in accordance with IAS 32.32 based on applicable swap rates with similar terms in effect at that
time and on the average risk premiums for financing obtained by BUWOG Group.
-The valuation at fair value of financial liabilities related to put options of non-controlling interests is based
on the best estimate of management.
The estimates and the underlying assumptions and parameters are reviewed regularly. Actual values may
vary from these estimates when the development of the general parameters is different to expectations on
the balance sheet date. Changes are made when more accurate information is available, and the presentation
of the assumptions and parameters relevant to the valuation are adjusted accordingly.
188
3. Scope of consolidation
3.1Development of the scope of consolidation
The changes in the scope of consolidation during the reporting period are shown in the following table:
Scope of consolidation
Full consolidation
1
88
89
An overview of BUWOG Group companies is presented at the end of the notes.
3.2
Fully Consolidated Companies
In addition to BUWOG AG, the consolidated financial statements as of 30 April 2014 include 35 domestic
and 53 foreign companies in which BUWOG Group holds the majority of voting rights or can exercise legal
or actual control.
3.3Common control transaction
The creation of BUWOG Group consisting of BUWOG AG and BUWOG GmbH business is described in
section 1. The entire BUWOG GmbH business consisting of BUWOG GmbH and all of the direct and indirect
subsidiary companies were combined under BUWOG AG by means of multiple internal company
restructurings which were carried out under common control by IMMOFINANZ AG at the end of April 2014.
189
As part of this common control transaction, the following consideration was transferred for the acquired
assets and liabilities:
Common control transaction
in TEUR
BUWOG GmbH business
Issued equity instruments
99,543.5
Premium on issued equity instruments
1,436,565.2
Total amount of consideration transferred
1,536,108.7
2,631,573.4
Intangible assets
Inventories
Trade receivables and other assets
Deferred tax assets
Trade liabilities
Tax liabilities
Provisions
Acquired assets and liabilities
Total amount of consideration transferred
Acquired assets and liabilities
Income from common control transaction
190
10,926.0
7,846.8
1,699.3
155,117.4
17,063.9
122,011.5
1,456.4
132,445.7
15,036.0
-1,136,031.0
-260,462.6
-14,260.1
-11,972.7
-121,042.6
-7,360.4
-7,938.3
1,536,108.7
1,536,108.7
-1,536,108.7
0.0
4. Segment reporting
4.1Internal reporting
BUWOG Group was controlled by IMMOFINANZ AG via the Executive Board of IMMOFINANZ AG until the
spin-off of BUWOG GmbH business from IMMOFINANZ AG took effect. Since the spin-off, the Executive
Board of BUWOG AG has been the central decision maker for BUWOG Group as a collegial body. Internal
reporting to the Executive Board takes place based on a division into two designated core markets, Austria
and Germany, according to regional characteristics.
The presentation of the segment information follows the financial reporting of the origin of BUWOG Group
(see section 1.2.2). Accordingly only the results as per the consolidated income statement are presented
with regard to the results of operations. No segment investments are reported. With regard to retrospective
information concerning BUWOG GmbH business, reference is made to section 8 Notes to the pro forma
information on BUWOG Group (unaudited).
Group management of results of operations takes place starting from the take-over using rental revenues,
results of Asset Management, results of Property Sales, results of Property Development and the results of
operations (EBIT). Segment assets consist primarily of investment properties, properties under construction,
and properties held for sale and inventories. Segment liabilities are not allocated.
The results of Asset Management and the results of business operations (EBIT) are used to assess earning
power and to allocate resources. The development of financial results and taxable results in the Group is
centrally controlled; internal reporting at the operating segment level is not performed. The accounting
policies and valuation methods of the reportable segments correspond to the accounting policies and
valuation methods described in section 2.
The allocation of non-current assets to the individual regions is based on the location of the property/real
estate separated into Austria and Germany.
BUWOG Group had no individual customers who were responsible for 5.00% or more of Group revenues in
the reporting year or the previous year.
4.2
Segment report
The reportable BUWOG Group segments are broken down on a regional basis according to the respective
location of the properties. The presentation of the results of operations contained in the segment reporting
for the 2013/14 financial year follows the recognition of the creation of BUWOG Group and thus only
contains figures for the expenses and income of BUWOG AG. The following table shows the segment assets
broken down on a regional basis as of 30 April 2014.
Segment Reporting
in TEUR
Austria
2013/14
Germany
2013/14
Total reportable
segments
2013/14
Holding company/
Transition to
consolidated
financial statements
2013/14
BUWOG
GROUP
2013/14
0.0
0.0
0.0
7.2
7.2
0.0
0.0
0.0
-1,026.0
-1,026.0
Results of operations = Earnings before
interest and tax (EBIT)
0.0
0.0
0.0
-1,018.8
-1,018.8
Financial results
-28.8
-1,047.6
7.0
Net profit
-1,040.6
30 April 2014
30 April 2014
30 April 2014
30 April 2014
30 April 2014
2,208,613.7
422,959.8
2,631,573.5
0.0
2,631,573.5
10,926.1
0.0
10,926.1
0.0
10,926.1
Properties held for sale
15,036.0
0.0
15,036.0
0.0
15,036.0
100,423.8
54,693.5
155,117.3
0.0
155,117.3
2,334,999.5
477,653.4
2,812,652.9
0.0
2,812,652.9
Inventories
Segment assets
No non-current assets were reported as of 30 April 2013.
191
5. notes to the consolidated
income statement
Based on a judgmental decision, the management of BUWOG Group set the date of inclusion for the
BUWOG GmbH business that was transferred as part of common transactions after the spin-off took effect
at the end of April 2014. Therefore, the consolidated income statement for the reporting year and the
comparative period include only the income and expenses of BUWOG AG.
5.1Other operating income
Other operating income of TEUR 7.2 (2012/13: TEUR 0.0) entirely pertains to miscellaneous other operating
income.
5.2Expenses not directly attributable
The expenses not directly attributable comprise the following:
in TEUR
Legal, auditing and consulting fees
Advertising
Personnel expenses
Impairment of other tangible assets
Miscellaneous
Total
2013/14
2012/13
-696.3
-3.0
-69.1
0.0
-118.5
0.0
-6.5
0.0
-135.7
-0.2
-1,026.1
-3.2
Legal, audit and consulting fees primarily relate to expenses for preparing and auditing the consolidated
and individual financial statements of BUWOG AG as well as notary and legal advising costs.
Personnel costs contained in expenses not directly attributable primarily consist of Executive Board
remuneration including ancillary expenses. The Executive Board included two members, on average, for the
reporting year. The company did not have its own personnel in the previous year, but 68 wage employees
and 336 salaried employees were taken over with BUWOG GmbH business by means of the common control
transaction. The average workforce employed by the subsidiaries included in the consolidated financial
statements amounted to 406 full-time employees (FTE) as of 30 April 2014.
The remaining expenses which are not directly allocated primarily relate to expenses for publications and
other taxes and fees.
5.3
Financial results
Financial results (2013/14: TEUR -28.8; 2012/13: TEUR 0.1) for the reporting year consist primarily of the
interest expense from the convertible bond, which was calculated in accordance with the effective interest
method. This interest expense was reduced by the interest income from the convertible bond deferment
agreement with IMMOFINANZ AG (see section 9.4.4).
5.4Income taxes
This item includes income taxes paid or owed as well as provisions for deferred taxes.
192
Income tax expenses
in TEUR
2013/14
2012/13
Income tax expenses
0.0
-0.4
7.0
0.0
Total
7.0
-0.4
The difference between calculated income tax expenses and the actual income tax expenses shown on the
consolidated income statement is attributable to the following factors:
Tax reconciliation
in TEUR
2013/14
Income tax expense at 25% tax rate
Loss carryforwards
Effective tax rate
%
-1,047.6
2012/13
%
-3.1
261.9
25.0%
0.8
25.0%
-254.9
-24.3%
-1.2
-38.7%
7.0
0.7%
-0.4
-12.9%
The deferred taxes which were not recognised in 2013/14 and 2012/13 consist entirely of deferred tax
assets on tax loss carryforwards whose utilisation is not sufficiently probable.
5.5Earnings per share
In accordance with IAS 33, earnings per share are calculated by dividing net profit for the period by the
weighted average number of shares outstanding in the 2013/14 business year.
Earnings per share (EPS)
2013/14
Weighted average number of shares
Net profit excl. non-controlling interests in EUR
7,848,540
-1,040,600
Basic earnings per share in EUR
-0.13
Diluted earnings per share in EUR
-0.13
Diluting effects could be created by the potential common shares from the issue of the BUWOG convertible
bond 2014–2019. In accordance with IAS 33.41 et seq, these kinds of diluting effects may only be included
if they reduce earnings per share or increase the loss per share.
193
6.Notes to the Consolidated
Balance Sheet
6.1Investment properties
6.1.1Fair value
All of BUWOG Group’s investment properties were transferred at the end of April 2014 as part of a common
control transaction and were measured at the transferred carrying amount, which is the fair value. See
section 2.4.3 Investment properties for relevant recognition parameters (input factors) and the fair value
hierarchy pursuant to IFRS 13.
The development of the fair value of investment properties is shown below:
in TEUR
0.0
2,631,573.5
2,631,573.5
The carrying amount of investment properties pledged as collateral for long-term financing amounted to
TEUR 2,286,300.5. The corresponding secured liabilities amounted to TEUR 1,014,336.4.
6.1.2Leasing
The investment properties owned by the BUWOG Group consist primarily of apartments that are rented to
third parties. The BUWOG Group also rents a limited amount of space for offices, retail facilities and parking.
The revenues generated by leases are presented under section 2.4.1 Revenue realisation.
The real estate portfolio generally comprises residential properties in Austria and Germany, and the leasing
agreements are therefore relatively homogeneous. Rental-purchase options were concluded in accordance
with local residential construction subsidy laws. Extension and price adjustment clauses are negotiated on
an individual basis with each lessee.
All leases in which BUWOG Group serves as the lessor are classified as operating leases. Therefore, all
leased investment properties are carried on the BUWOG Group balance sheet.
Rental prices are determined in accordance with the applicable legal framework, whereby the location and
features of the specific property form the basis for defining an individual upper limit that differs from the
customary local rent for comparable properties. The determination of the market rent for new rentals is
based on published rental statistics (Mietspiegel) and the offering of comparable properties as well as
current rentals. Similar to the development of rents, the development of vacancies is based on average local
statistics and was adjusted, where necessary, to reflect the location and features of the specific property.
Almost all of the Group’s real estate portfolio in Austria is subject to restrictive rent limitations under
Austrian laws. Particularly, a majority of the Group’s portfolio is subject to the Austrian Act on Non-profit
Housing (Wohnungsgemeinnützigkeitsgesetz; WGG) because BUWOG GmbH and ESG were non-profit
housing companies until April 2001. Under the cost covering WGG category, the monthly rent that can be
charged may not be higher, or lower, than what arises through production cost, its financing, ongoing
facility management costs and various other components.
For certain rental relationships, the WGG provides for portfolio rents that are limited by the statutory
benchmark rents for the Province of Burgenland, minus a discount of 30%. The portfolio rents are adjusted
annually and include the offsetting of contributions to maintenance and improvement. Administrative costs
and imputed interest for the funds invested by the company to finance the land purchase can also be offset.
Due to the WGG’s restrictions, rental revenues in Austria will not significantly increase in the coming years.
194
The rental agreements concluded by BUWOG Group for residential properties can generally be cancelled by
the tenants on three months’ notice at the end of each month. Based on the contracts in effect as of 30 April
2014, EUR 29.8 million in rental income was earned in the first three months of the 2014/15 financial year.
6.2Investment Properties under construction
All of BUWOG Group’s properties under construction were transferred at the end of April 2014 as part of a
common control transaction by IMMOFINANZ AG with TEUR 10,926.1.
6.3Other tangible assets
The following table shows the development of other tangible assets in the financial year 2013/14.
Development of other tangible assets
in TEUR
Cost as of 1 May 2013
0.0
18,896.0
Additions
19.5
Cost as of 30 April 2014
18,915.5
Accumulated depreciation as of 1 May 2013
0.0
-11,049.1
Depreciation for the year
-6.5
Accumulated depreciation as of 30 April 2014
-11,055.6
Carrying amount as of 30 April 2014
7,859.9
The other tangible assets consist primarily of an office building used by BUWOG Group.
6.4Intangible assets
The following table shows the intangible assets added in 2013/14 as part of the common control transaction.
Intangible assets
in TEUR
30 April 2014
239.7
Goodwill
Other intangible assets
1,459.6
Total
1,699.3
Please refer to section 2.2.3 Business Combination (initial consolidations) and 2.4.2 Impairment regarding
accounting policies and valuation methods applied to goodwill.
195
6.5Trade and other Receivables
The following tables show the remaining terms of trade receivables, other financial and non-financial
receivables:
in TEUR
30 April 2014
Thereof
remaining term
under 1 year
Thereof remaining
term between
1 and 5 years
Thereof
remaining term
over 5 years
Rents receivable
4,582.0
4,582.0
0.0
0.0
Miscellaneous
3,339.0
2,936.3
402.7
0.0
Total trade accounts receivable
7,921.0
7,518.3
402.7
0.0
Restricted funds
10,157.0
10,157.0
0.0
0.0
Outstanding purchase price receivables - sale of properties
53,693.2
53,693.2
0.0
0.0
260,129.4
260,129.4
0.0
0.0
DGAG deposit
20,000.0
20,000.0
0.0
0.0
Miscellaneous
26,288.4
25,683.5
282.8
322.1
370,268.0
369,663.1
282.8
322.1
Tax authorities
1,963.2
1,963.2
0.0
0.0
Total other non-financial receivables
1,963.2
1,963.2
0.0
0.0
380,152.2
379,144.6
685.5
322.1
Trade accounts receivable
Other financial receivables
Receivable from convertible bond
Total other financial receivables
Other non-financial receivables
Total
There were no trade receivables or other receivables in the comparative periods presented.
Receivables from IMMOFINANZ Group include the trade receivables of TEUR 180.6 with a remaining term
of less than one year and other financial receivables of TEUR 274,337.5 with a remaining term of less than
one year. The other financial receivables include the BUWOG AG’s convertible bond, TEUR 260,129.4, which
was not paid by IMMOFINANZ AG as of 30 April 2014 based on the concluded deferral agreement (see
section 9.4.4).
The outstanding purchase price receivables from the sale of properties are attributable primarily to the
Austria segment and generally reflects the lengthy time required for the registration of real estate sales in
the land register.
IFRS 7.37 requires an analysis of the contractual maturity of financial instruments that are past due but not
impaired as of the reporting date as well as an analysis of the individual financial instruments that are
considered to be impaired as of the reporting date. This analysis is shown below:
196
Analysis of age structure of assets by class
in TEUR 2013/14
Carrying
amount
30 April 2014
Thereof not
overdue
Thereof
overdue but
not impaired
Thereof
overdue and
impaired
Impairment
loss/value
allowance
-2,386.9
Rents receivable
4,582.0
2,956.7
1,601.3
2,410.9
Miscellaneous
3,339.0
3,339.0
0.0
0.0
0.0
370,268.0
370,268.0
0.0
0.0
0.0
Other financial receivables
Other non-financial receivables
Total
1,963.2
1,963.2
0.0
0.0
0.0
380,152.2
378,526.9
1,601.3
2,410.9
-2,386.9
Overdue
up to
3 months1)
Overdue
between 3 and
6 months
Financial instruments past due but not impaired
in TEUR 2013/14
Carrying
amount
30 April 2014
Overdue
between 6 and Overdue more
12 months than 12 months
Rents receivable
1,601.3
1,514.9
86.4
0.0
0.0
Total
1,601.3
1,514.9
86.4
0.0
0.0
1) The column “overdue up to 3 months” also includes receivables that are due immediately
The risk associated with accounts receivable due from tenants/customers is low because the respective
credit standings are monitored on a regular basis and no single contract partner is responsible for more than
5.00% of total receivables. Furthermore, the lessee is generally required to provide a deposit of one to five
months’ rent or a bank guarantee in the appropriate amount, or financing contributions exist. A valuation
adjustment is recognised for receivables that carry a risk of default. Thus, a valuation adjustment was made
for all doubtful and non-collectable receivables as of the balance sheet date. These valuation adjustments
are included in the results of Asset Management.
With respect to the trade accounts receivable that were neither impaired nor overdue as of the balance
sheet date, there are no signs that the debtors will be unable to meet their payment obligations.
In the 2013/14 financial year, individual valuation adjustments were made to the rents receivable contained
in the trade accounts receivable. Therefore, the balance sheet only includes these receivables at the
expected collection amount.
The valuation adjustments consist solely of individual allowances.
6.6Other financial assets
The other non-current financial assets were transferred at the end of April 2014 as part of the common
control transaction and are structured as follows:
in TEUR
30 April 2014
46.7
Securities
Originated loans
17,031.3
Total
17,078.0
The originated loans consist primarily of loans to buyers of BUWOG GmbH apartments, whereby 97% of
these loans are secured by mortgages. The respective interest rates range from 1% to 6%, and principal
payments are made semi-annually.
6.7Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities as of 30 April 2014 resulted from the following temporary
differences between the carrying amount in the IFRS consolidated financial statements of BUWOG Group
and the respective tax base:
197
in TEUR
30 April 2014
Assets
30 April 2014
Equity and
liabilities
2,576.3
169,000.2
Other financial assets and miscellaneous assets
38,713.6
1,887.3
Total
41,289.9
170,887.5
1,657.7
8,634.5
12,900.7
10,285.4
Total
14,558.4
18,919.9
Tax loss carryforwards
11,373.1
0.0
Deferred tax assets and deferred tax liabilities
67,221.4
189,807.4
Other liabilities and provisions
Offset of deferred tax assets and deferred tax liabilities due to the same taxation authority
Net deferred tax assets and deferred tax liabilities
-65,765.0
-65,765.0
1,456.4
124,042.4
Deferred tax assets were created for tax loss carryforwards in cases where it is probable that sufficient
taxable income will be available to utilise these tax loss carryforwards in the foreseeable future (within five
years). Deferred tax assets were also recorded in cases where an equal amount of deferred tax liabilities had
been recognised and these obligations relate to the same tax subject and taxation authority, and the
deferred tax assets and deferred tax liabilities will offset in the same financial year.
The realisation of deferred tax assets by group companies that recorded losses for the reporting period is
dependent on future taxable profits, which are higher than the earnings effects from the reversal of existing
taxable temporary differences. These deferred tax assets amount to TEUR 1,329.1.
For temporary differences arising from shares in subsidiaries (“outside-basis differences”), no deferred
taxes were recognised, since BUWOG Group is able to control the timing of reversal of the temporary
differences and it is probable that the temporary differences will not be reversed in the foreseeable future.
The deferred taxes directly recognised in equity as of 30 April 2014 total TEUR 2,999.8 and pertain to the
equity components of the convertible bonds. Tax effects in conjunction with actuarial gains and losses from
defined benefit plans for employee severance compensation benefits were included under other compre
hensive income at the amount of TEUR 124.6.
Deferred taxes were not recognised for loss carryforwards of TEUR 23,343.2 (2012/13: TEUR 1.2). These
loss carryforwards have an indefinite term.
In a group and tax assessment agreement, ESG Wohnungsgesellschaft mbH Villach (group leader) and 17
additional Austrian companies (group members) included in the consolidated financial statements have
joined together into a corporate group pursuant to Section 9 of the Austrian Corporate Tax Act
(Körperschaftsteuergesetz, KStG). The group formation took effect in the 2013/14 financial year.
The group and tax assessment agreement regulates tax settlements between the head of the corporate
group and the members of the tax group. In case of a positive result, the member of the tax group must pay
a positive tax charge equal to 25.00% of taxable earnings to the head of the corporate group. If a member
of the tax group records a tax loss in a financial year, this loss is registered and can be offset in full against
taxable profit recorded by the respective member in subsequent years. Insofar as tax losses are offset, there
is no need for a tax assessment payment. If there are losses registered when the group is terminated, or
when a group member withdraws, ESG Wohnungsgesellschaft mbH Villach, as head of the tax group, is
obligated to make a compensatory payment to the group member in the amount of the cash value of the
(fictitious) future tax relief.
The calculation of deferred taxes for Austrian companies is based on a tax rate of 25.00%. The applicable
local tax rate is used for foreign companies.
198
The tax rates used to value deferred taxes in the individual countries are listed below:
Tax rates
in %
Country
Applicable tax rate 2013/14
Applicable tax rate 2012/13
15.83%–31.925%
-
Luxembourg
29.22%
-
Netherlands
25.00%
-
Austria
25.00%
25.00%
Germany1)
1) The tax rate in Germany can vary and is dependent on the company’s headquarters and liability under trade tax.
6.8Tax Refund Claims
The tax refund claims (30 April 2014: TEUR 1,446.0; 30 April 2013: TEUR 0.4) in the current financial year
relate mainly to repayment claims for capital gains tax.
6.9Non-current assets and non-current liabilities held for sale
The classification of investment properties as held for sale assumes a high probability of sale as of the
balance sheet date. In other words, the contract is expected to be signed immediately after the balance
sheet date or has already been signed and the closing is scheduled immediately thereafter.
Non-current assets classified as held for sale amount to TEUR 15,036.0 as of 30 April 2014. The liabilities
classified as held for sale amount to TEUR 7,360.4 as of 30 April 2014.
6.10Inventories
All inventories were transferred as of the balance sheet date as part of a common control transaction. The
carrying amount of inventories totalled TEUR 155,117.3 as of the balance sheet date.
6.11Cash and cash equivalents
As of 30 April 2014 cash and cash equivalents of TEUR 132,947.4 (30 April 2013: TEUR 2.3; 1 May 2012:
TEUR 0.6) are presented in the balance sheet. In addition, bank deposits whose use is restricted (“restricted
funds”) are classified as other financial receivables (see section 6.5 trade and other receivables).
6.12Equity
The development of equity in BUWOG AG during the 2013/14 and 2012/13 financial years is shown on the
Statement of Changes in Equity, which represents an integral part of the consolidated financial statements
as of 30 April 2014.
With the contribution in kind having taken effect by the end of April 2014 and with the granting of shares
of BUWOG AG in compensation, as well as the de-domination agreement coming into effect, IMMOFINANZ
Group with its remaining activities and BUWOG Group are two independent entities within the meaning of
IAS 27 Consolidated and Separate Financial Statements.
According to IAS 8, the management of BUWOG Group took the discretionary decision to carry forward the
transferred net assets of BUWOG GmbH as well as its directly and indirectly held subsidiaries (BUWOG
GmbH business) at the carrying amount, previously recognised in the IFRS consolidated financial statements
of IMMOFINANZ AG. Furthermore the management of BUWOG Group took the discretionary decision to
establish the inclusion date at the end of April 2014 (see section 1.2.2). The share capital increase resulting
from the common control transactions amounts to TEUR 99,543.5; the residual amount between the
assumed net assets of BUWOG GmbH business and the increase of share capital is presented as capital
premium in the amount TEUR 1,436,949.0 under capital reserves and as other comprehensive income
(IAS 19r) in the amount of TEUR -373.7.
199
The share capital of BUWOG AG totalled EUR 99,613,479.00 as of 30 April 2014 and is divided into 99,613,479
zero par value shares. All shares are fully paid.
All BUWOG AG shareholders have one vote per share at the company’s Annual General Meetings. A
de-domination agreement was concluded between BUWOG AG and IMMOFINANZ AG as of 26 April 2014,
which establishes limitations on voting rights for the BUWOG shares held by IMMOFINANZ AG. This
agreement requires IMMOFINANZ AG to abstain from voting on issues related to management, the release
from liability of the members of the Supervisory and Executive Boards, the dismissal of Supervisory Board
members and the election of the auditors for the separate and consolidated financial statements as well as
the approval of the annual financial statement if the Supervisory Board declines to authorise these financial
statements and decides on approval by the Annual General Meeting (see section 9.5 Relations to Related
Companies and Persons).
See section 6.13 regarding explanations about conditional capital and see section 9.2.6 regarding capital
management.
The Executive Board will propose a dividend distribution of EUR 0.69 per share for the 2013/14 financial
year to the Annual General Meeting on 14 October 2014.
6.13Liabilities from convertible bonds
Convertible bond
in TEUR
Convertible bond 2014–2019
30 April 2014
Thereof
remaining term
under 1 year
Thereof remaining
term between
1 and 5 years
Thereof
remaining term
over 5 years
247,949.0
124.7
247,824.3
0.0
Based on an authorisation of the Annual General Meeting on 7 March 2014, BUWOG AG issued convertible
bonds (ISIN AT0000A17CA5) on 25 April 2014. These convertible bonds have a total nominal value of
EUR 260.0 million and a term ending on 25 April 2019. According to the Annual General Meeting resolution
on 7 March 2014, authorised capital (Section 159 Austrian Stock Corporation Act) of up to EUR 14,218,275.00
is available to service conversion rights from the convertible bonds 2019. The convertible bonds were fully
subscribed by IMMOFINANZ AG. Based on the current conversion price of EUR 18.93, the outstanding
convertible bond is entitled to a conversion into a total of 13,734,812 shares of BUWOG AG.
The convertible bond consists of a liability component and an equity component. The equity component is
presented in equity under capital reserves. The effective interest rate of the convertible bond amounts to
4.62%.
200
Convertible bond
in TEUR
30 April 2014
260,000.0
Issue amount of convertible bond 2014–2019
-177.0
Transaction costs
Net amount
259,823.0
Amount classified as equity (less transaction costs of TEUR 8; plus tax effect of TEUR 2)
-12,027.1
153.2
Interest growth using the effective interest rate method
Carrying amount on 30 April 2014
247,949.0
Derivative components were identified for the call option of BUWOG AG and the put option of the
bondholders. However, since the exercise price for the call options approx. equals the amortised cost of the
convertible bond, the embedded call options are closely connected with the convertible bond and are not
recorded separately. The bondholders’ put options can be exercised only in very rare, extremely unusual and
very unlikely circumstances and therefore no separate evaluation is made.
6.14
The following table shows the composition and classification of financial liabilities by remaining term as the
balance sheet date:
in TEUR
30 April 2014
Thereof Thereof remaining
remaining term
term between
under 1 year
1 and 5 years
Thereof
remaining term
over 5 years
690,950.5
77,277.6
180,144.3
433,528.6
thereof secured by collateral
569,348.2
62,285.6
160,746.2
346,316.4
thereof not secured by collateral
121,602.3
14,992.0
19,398.1
87,212.2
444,988.2
21,806.7
86,643.2
336,538.3
Amounts due to financial institutions
Amounts due to local authorities
Other financial liabilities
Total
92.1
92.1
0.0
0.0
1,136,030.8
99,176.4
266,787.5
770,066.9
Of the total amount due to financial institutions, EUR 24.2 million are due in the first quarter of 2014/15.
The conditions of the major financial liabilities in the 2013/14 financial year are as follows:
Conditions of financial liabilities 2013/14
Currency
Interest rate
fixed/floating
Average
interest rate
Remaining
liability per
company in
TEUR
EUR
fix
3.02%
122,539.6
(loans and advances)
EUR
floating
1.45%
594,269.3
Total amounts due to financial institutions
EUR
fix
1.37%
Balance
in TEUR1)
716,808.9
690,950.5
527,350.4
444,988.2
Other
92.1
Total
1,136,030.8
1) Includes accumulated amortisation on the difference between the original amount and the amount due at maturity (transaction costs)
The fair value of the financial liabilities shown in the above table amounts to TEUR 1,140,929.5.
201
The present value calculation was based on the following discount rates, which reflect market interest rates
as of 30 April 2014.
Discount rates
in %
Until 31 October 2015
1.744%
1.794%
2.081%
2.441%
2.774%
Until 30 April 2025
3.052%
3.740%
From 1 November 2031
3.903%
The BUWOG Group did not break any financial covenants connected with bank financing during the
reporting period.
6.15Trade and other Liabilities
in TEUR
30 April 2014
Trade liabilities
27,716.1
remaining term
term between 1
under 1 year
and 5 years
Thereof
remaining term
over 5 years
27,678.5
37.6
0.0
27,867.6
91.6
5,555.8
22,220.2
2,341.1
2,341.1
0.0
0.0
Deposits and guarantees received
10,196.3
10,196.3
0.0
0.0
Prepayments received on apartment sales
28,276.5
28,276.5
0.0
0.0
Maintenance and improvement amounts received
26,004.9
5,207.0
15,022.4
5,775.5
0.0
Fair value of derivative financial instruments (liabilities)
Property management
Outstanding purchase prices (share deals)
Liabilities from financial contributions
Miscellaneous
Total financial liabilities
2,122.6
2,122.6
0.0
110,970.1
110,970.1
0.0
0.0
19,083.4
15,496.0
2,321.7
1,265.7
226,862.5
174,701.2
22,899.9
29,261.4
5,320.1
5,320.1
0.0
0.0
733.2
733.2
0.0
0.0
6,053.3
6,053.3
0.0
0.0
260,631.9
208,433.0
22,937.5
29,261.4
remaining term
term between
under 1 year
1 and 5 years
Thereof
remaining term
over 5 years
Other non-financial liabilities
Tax authorities
Rental and lease prepayments
Total non-financial liabilities
Total
30 April 2013
Trade liabilities
0.7
0.7
0.0
0.0
Miscellaneous
4.0
0.0
0.0
4.0
Total financial liabilities
4.0
0.0
0.0
4.0
Total
4.7
0.7
0.0
4.0
remaining term
term between
under 1 year
1 and 5 years
Thereof
remaining term
over 5 years
1 May 2012
Trade liabilities
0.3
0.3
0.0
0.0
Total
0.3
0.3
0.0
0.0
202
The amounts due to IMMOFINANZ Group as of 30 April 2014 include trade liabilities of TEUR 19.5 with a
remaining term of less than one year and other miscellaneous financial liabilities of TEUR 3,330.4 with a
remaining term of less than one year.
Maintenance and improvement fees collected from the tenants are recognised to profit or loss at the time
when maintenance and improvement work is carried out.
In Austria, financial contributions are collected from the tenants in subsidised apartments; these
contributions, less a usage-related deduction, are returned at the end of the lease. These leases are generally
open-ended, but can be cancelled by the tenant at any time. These liabilities are therefore recognised at
their nominal value and reported as current liabilities.
6.16Provisions
The following table shows the development of provisions in the reporting year:
Provisions
in TEUR
Obligations to
employees
Other
current
provisions
0.0
2.3
2,170.0
9,781.7
Additions
0.0
962.6
Usage
0.0
-2.3
2,170.0
10,744.3
Other provisions consist mainly of provisions for guarantee claims, special payments and bonus, legal
proceedings and legal consulting as well as auditing and appraisal costs. All of these other provisions are
classified as current.
The present value of the employee-related defined benefit obligations was transferred as part of the
common control transaction, and amounts to EUR 2.2 million as of 30 April 2014. The actuarial gains/losses
of TEUR -498.3 are recorded less deferred taxes of TEUR 124.6 in other comprehensive income.
The actuarial expert opinion to determine the defined benefit obligation as of 30 April 2014 was prepared
by AKTUAR Versicherungsmathematik GmbH.
As of 30 April 2014, the average term of the severance obligations equals 6.5 years. The amount of the
severance provisions is significantly influenced by the selection of actuarial parameters. The following
sensitivity analysis describes the results of changes in one parameter, when all other parameters are held
constant. However, a complete lack of correlation between these factors is unlikely. The determination of
the changed obligation, similar to the determination of the actual obligation, is based on the projected unit
credit method defined by IAS 19. A change of +/- 0.5% percentage points in the discount rate would lead to
a change of TEUR -66/TEUR 70. A change of +/- 0.5% percentage points in the salary trend would lead to a
change of TEUR 65/TEUR -62 in the severance provisions.
6.17Tax liabilities
The current tax liabilities (30 April 2014: TEUR 14,260.1; 30 April 2013: TEUR 1.8) mainly relate to corporate
income tax obligations.
203
7.Notes to the Consolidated Cash Flow
Statement
The consolidated cash flow statement of BUWOG Group shows the changes in cash and cash equivalents
resulting from the inflow and outflow of funds during the reporting year. The cash flow statement
distinguishes between cash flows from operating activities, investing activities and financing activities.
Cash flow from operating activities is calculated using the indirect method in accordance with IAS 7.18 (b).
The cash flow statement includes all disclosures required by IAS 7.
Cash and cash equivalents comprise liquid funds of TEUR 132,947.4 (2012/13: TEUR 2.3; 2011/12:
TEUR 0.6).
204
8.Explanatory notes to pro forma
information of BUWOG Group
(unaudited)
Introduction
The following explanations and representations relate to the consolidated balance sheet as of 30 April 2014
included in these consolidated financial statements, the unaudited pro forma consolidated balance sheet of
BUWOG Group as of 30 April 2013, the unaudited pro forma consolidated income statement of BUWOG
Group for the financial year from 1 May 2013 to 30 April 2014, and unaudited information concerning the
pro forma cash flow statement of BUWOG Group for the financial year from 1 May 2013 to 30 April 2014
(hereinafter referred to as “pro forma financial information”).
Underlying assumptions
The following pro forma financial information assumes hypothetically that BUWOG Group in its existing
form at the end of April 2014 (thus after the spin-off of BUWOG GmbH and its direct and indirect subsidiaries
(“BUWOG GmbH business”)) already existed on 30 April 2013 and throughout the financial year from 1 May
2013 to 30 April 2014.
For a detailed presentation of the spin-off see section 1.1. General principles of the consolidated financial
statements.
The pro forma financial information was prepared in accordance with the IDW Accounting Practice Statement
“Preparation of pro forma financial information” (IDW RH HFA 1.004). They include the aforementioned
components. The preparation of a pro forma consolidated balance sheet as of 30 April 2014 is not required,
since the spin-off of BUWOG GmbH business is already reflected in the consolidated balance sheet of
BUWOG Group as of 30 April 2014.
The pro forma Financial Information was prepared for illustrative purposes only and, because of its nature,
addresses a hypothetical situation and neither reflect the historical situation nor is an indicator of how the
balance sheet, earnings and the cash flow position of BUWOG Group will develop.
As for the accounting policies used in the pro forma financial information, reference is made to the
explanations in section 2 – “Significant Accounting Policies” of the notes to the consolidated financial
statements.
The pro forma financial information was prepared on the basis of the following historical financial information:
1)Audited consolidated financial statements of BUWOG Group for the financial year ending on 30 April
2014.
2)The unaudited consolidated balance sheet as of 30 April 2013, the unaudited consolidated income
statement for the financial year from 1 May 2013 to 30 April 2014, and unaudited information regarding
the pro forma cash flow statement for the business year from 1 May 2013 to 30 April 2014 of BUWOG
GmbH business (“unaudited consolidated financial data of BUWOG GmbH business”).
The unaudited consolidated financial data of BUWOG GmbH business were compiled in accordance with
the International Financial Reporting Standards (IFRS) as applied according to Regulation no. 1606/2002 of
the European Parliament and the European Council on the application of international accounting standards
in the European Union (EU), and with the corresponding accounting policies and valuation methods of
BUWOG Group.
Pro forma adjustments
Pro forma adjustments were required exclusively in the pro forma cash flow statement for the financial year
from 1 May 2013 to 30 April 2014 of BUWOG Group: In this way, the effects (“access to cash and cash
equivalents”) from the spin-off of BUWOG GmbH business amounting to EUR 132.4 million (presented in
the BUWOG AG consolidated financial statement in cash flow from financing activities) were eliminated.
205
Pro forma Consolidated Income Statement
in TEUR
BUWOG Group
(consolidated,
audited)
1 May 2013–
30 April 2014
BUWOG GmbH
(consolidated,
unaudited)
1 May 2013–
30 April 2014
BUWOG Group
(pro forma,
unaudited)
1 May 2013–
30 April 2014
110,083.2
Residential rental income
0.0
110,083.2
Other rental income
0.0
6,435.5
6,435.5
Rental revenues
0.0
116,518.7
116,518.7
65,091.6
Operating costs charged to tenants
0.0
65,091.6
Other revenues
0.0
4,561.1
4,561.1
Revenues
0.0
186,171.4
186,171.4
Expenses directly related to investment properties
0.0
-43,374.5
-43,374.5
Operating expenses
0.0
-63,844.8
-63,844.8
Third-party property management costs
0.0
-3,034.0
-3,034.0
0.0
75,918.1
75,918.1
Sale of properties
0.0
121,455.2
121,455.2
Carrying amount of sold properties
0.0
-121,455.2
-121,455.2
Gains/losses from deconsolidation
0.0
1,961.5
1,961.5
Other expenses from Property Sales
0.0
-2,921.0
-2,921.0
Adjustment to fair value of investment properties sold and held for sale
0.0
34,957.7
34,957.7
0.0
33,998.2
33,998.2
Sale of real estate inventories
0.0
96,444.7
96,444.7
Cost of goods sold
0.0
-80,625.6
-80,625.6
Other expenses from sale of real estate inventories
0.0
-4,372.6
-4,372.6
Other development expenses
0.0
-5,905.8
-5,905.8
Adjustment to fair value of investment properties under construction
0.0
-639.5
-639.5
0.0
4,901.2
4,901.2
7.2
4,136.6
4,143.8
-1,026.0
-20,666.7
-21,692.7
-1,018.8
98,287.4
97,268.6
42,684.4
Adjustment to fair value for investment properties
0.0
42,684.4
Negative differences recognised through profit or loss
0.0
727.1
727.1
Other revaluation results
0.0
43,411.5
43,411.5
-1,018.8
141,698.9
140,680.1
-28,570.6
Operating profit (EBIT)
-28.8
-28,541.8
Financing income
Financing costs
0.0
5,629.6
5,629.6
Other financial results
0.0
13,727.9
13,727.9
-28.8
-9,184.3
-9,213.1
-1,047.6
132,514.6
131,467.0
Financial results
Income tax expenses
0.0
-736.2
-736.2
7.0
-18,978.1
-18,971.1
Net profit
-1,040.6
112,800.3
111,759.7
-1,040.6
111,829.4
110,797.8
0.0
970.9
961.9
206
(Pro forma) Consolidated balance sheet
in TEUR
BUWOG Group
(consolidated,
audited)
30 April 2013
BUWOG GmbH
(consolidated,
unaudited)
30 April 2013
BUWOG Group
(pro forma,
unaudited)
30 April 2013
BUWOG Group
(consolidated,
audited)
30 April 2014
0.0
2,527,946.6
2,527,946.6
2,631,573.5
0.0
12,832.0
12,832.0
10,926.1
0.0
8,437.7
8,437.7
7,859.9
Intangible assets
0.0
1,698.2
1,698.2
1,699.3
0.0
4,275.8
4,275.8
1,007.6
0.0
19,492.7
19,492.7
17,078.0
Deferred tax assets
0.0
9,784.3
9,784.3
1,456.4
Non-current assets
0.0
2,584,467.3
2,584,467.3
2,671,600.8
0.0
160,691.6
160,691.6
379,144.6
Income tax receivables
0.4
51.5
51.9
1,446.0
0.0
63,682.7
63,682.7
15,036.0
Inventories
0.0
126,182.3
126,182.3
155,117.3
2.3
46,332.7
46,335.0
132,947.4
Current assets
2.7
396,940.8
396,943.5
683,691.4
ASSETS
2.7
2,981,408.1
2,981,410.8
3,355,292.2
-6.1
1,423,372.5
1,423,366.4
1,544,164.8
0.0
3,500.0
3,500.0
7,938.5
-6.1
1,426,872.5
1,426,866.4
1,552,103.3
Equity before non-controlling interests
Equity
0.0
0.0
0.0
247,824.3
0.0
975,252.8
975,252.8
1,036,854.4
4.0
62,284.7
62,288.7
52,198.9
Provisions
0.0
2,758.7
2,758.7
2,170.0
0.0
107,777.0
107,777.0
124,042.4
Non-current liabilities
4.0
1,148,073.2
1,148,077.2
1,463,090.0
0.0
0.0
0.0
124.7
0.0
98,505.9
98,505.9
99,176.4
0.7
285,283.2
285,283.9
208,433.0
Income tax liabilities
1.8
1,784.3
1,786.1
14,260.1
Provisions
2.3
8,305.4
8,307.7
10,744.3
Liabilities held for sale
0.0
12,583.6
12,583.6
7,360.4
Current liabilities
4.8
406,462.4
406,467.2
340,098.9
LIABILITIES
2.7
2,981,408.1
2,981,410.8
3,355,292.2
207
Pro Forma Consolidated Cash Flow Statement
in TEUR
BUWOG Group
(consolidated,
audited)
1 May 2013–
30 April 2014
Gross cash flow
BUWOG GmbH
(consolidated,
unaudited)
1 May 2013–
30 April 2014
Total
1 May 2013–
30 April 2014
Pro forma
adjustments
Pro forma
BUWOG Group
(unaudited)
1 May 2012–
30 April 2013
-1,013.7
69,210.4
68,196.7
0.0
68,196.7
674.5
56,840.6
57,515.1
0.0
57,515.1
-19.5
59,844.1
59,824.6
0.0
59,824.6
132,290.2
-30,571.7
101,718.5
-132,445.7
-30,727.2
132,945.3
86,113.0
219,058.3
-132,445.7
86,612.6
Cash and cash equivalents at the beginning
of the period
2.3
46,332.7
46,335.0
0.0
46,335.0
Cash and cash equivalents at the end of the period
132,947.5
132,445.7
265,393.2
-132,445.7
132,947.5
132,945.2
86,113.0
219,058.2
-132,445.7
86,612.5
208
9.Other Information
9.1Information on financial instruments
Financial instruments is a collective term used to represent financial assets and financial liabilities. A financial
instrument is defined as a contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. One or more companies may serve as the contract partner. This
definition covers securities, receivables, liabilities, equity instruments and derivatives, regardless of whether
the obligation is conditional or unconditional.
9.1.1Classes and categories of financial instruments
IFRS 7.6 requires the breakdown of financial instruments by classes as well as the reconciliation of these
classes with the line items shown on the balance sheet. Since the reporting company is entitled to define
these classes, they generally differ from the categories defined by IAS 39 for the measurement of financial
instruments.
Accordingly, similar financial instruments are grouped together in a single class. The classes are also defined
to facilitate reconciliation with the line items shown on the balance sheet. These factors led to the definition
of the following classes in these consolidated financial statements: trade accounts receivable, financing
receivables, other receivables, other financial assets, miscellaneous other financial instruments and cash
and cash equivalents (asset classes) as well as liabilities arising from convertible bonds, liabilities with
financial institutions, other financial liabilities, trade accounts payable, derivative financial liabilities and
miscellaneous other liabilities (liability classes).
In addition to the assignment of financial instruments to classes, IFRS 7 requires disclosure of the carrying
amount of the financial assets and financial liabilities in accordance with the categories in IAS 39. The
following table shows the carrying amount and fair value of each class of financial assets and liabilities as
well as each IAS 39 category and reconciles these amounts to the appropriate balance sheet line items.
Since the balance sheet positions “trade and other receivables” and “trade and other liabilities” can contain
both financial instruments and non-financial assets/liabilities (e.g. tax receivables), the column “Non-FI”
allows for a full reconciliation with the balance sheet line items.
209
Allocation of financial instruments to IAS 39 categories
in TEUR
FA@FV/P&L
Assets
AFS
Fair value
not recognised
in profit or loss
Fair value option
Fair value
recognised
in profit or loss
HFT
Fair value
recognised in
profit or loss
0.0
0.0
0.0
Trade accounts receivable
0.0
0.0
0.0
Other receivables
0.0
0.0
0.0
46.7
0.0
0.0
Securities
46.7
0.0
0.0
Originated loans
0.0
0.0
0.0
0.0
0.0
0.0
46.7
0.0
0.0
TOTAL ASSETS
FL@FV/P&L
Fair value option
Fair value
recognised
in profit or loss
LIABILITIES
HFT
Fair value
recognised in
profit or loss
0.0
0.0
524,411.2
0.0
106,603.3
0.0
417,807.9
0.0
27,867.6
0.0
Trade liabilities
0.0
0.0
Derivatives
0.0
27,867.6
Miscellaneous other liabilities
0.0
0.0
524,411.2
27,867.6
TOTAL LIABILITIES
Allocation of financial instruments to IAS 39 categories – previous year
in TEUR
FA@FV/P&L
AFS
Fair value
not recognised
in profit or loss
Fair value option
Fair value
recognised
in profit or loss
HFT
Fair value
recognised in
profit or loss
0.0
0.0
0.0
TOTAL ASSETS
0.0
0.0
0.0
Assets
FL@FV/P&L
LIABILITIES
Fair value option
Fair value
recognised
in profit or loss
HFT
Fair value
recognised in
profit or loss
0.0
0.0
Trade liabilities
0.0
0.0
Miscellaneous other liabilities
0.0
0.0
TOTAL LIABILITIES
0.0
0.0
210
L&R
Amortised
cost
Non-Fl
not within
the scope of IFRS 7
Carrying amount
on 30 April 2014
Fair value
on 30 April 2014
378,189.0
1,963.2
380,152.2
380,152.2
7,921.0
0.0
7,921.0
7,921.0
370,268.0
1,963.2
372,231.2
372,231.2
17,031.3
0.0
17,078.0
23,171.2
0.0
0.0
46.7
46.7
17,031.3
0.0
17,031.3
23,124.5
132,947.4
0.0
132,947.4
132,947.4
528,167.7
1,963.2
530,177.6
536,270.8
FLAC
Amortised
cost
Non-Fl
not within
the scope of IFRS 7
247,949.0
0.0
247,949.0
247,974.5
611,619.6
0.0
1,136,030.8
1,140,929.5
Carrying amount
on 30 April 2014
Fair value
on 30 April 2014
584,347.2
0.0
690,950.5
696,828.8
27,272.4
0.0
445,080.3
444,100.7
226,711.0
6,053.3
260,631.9
260,631.9
27,716.1
0.0
27,716.1
27,716.1
0.0
0.0
27,867.6
27,867.6
198,994.9
6,053.3
205,048.2
205,048.2
1,086,279.6
6,053.3
1,644,611.7
1,649,535.9
L&R
Amortised
cost
Non-Fl
not within
the scope of IFRS 7
Carrying amount
on 30 April 2014
Fair value
on 30 April 2014
2.3
0.0
2.3
2.3
2.3
0.0
2.3
2.3
FLAC
Amortised
cost
Non-Fl
not within
the scope of IFRS 7
Carrying amount
on 30 April 2014
Fair value
on 30 April 2014
4.7
0.0
4.7
4.7
0.7
0.0
0.7
0.7
4.0
0.0
4.0
4.0
4.7
0.0
4.7
4.7
AFS: available for sale
FA@FV/P&L: financial assets at fair value through profit or loss
FL@FV/P&L: financial liabilities at fair value through profit or loss
HFT: held for trading
L&R: loans and receivables
HTM: held to maturity
FLAC: financial liabilities measured at amortised cost
Non-FI: non-financial assets/liabilities
211
The fair values shown in the table are determined by applying recognised valuation methods (see section
9.1.3 Hierarchy of fair values of financial instruments).
Trade accounts receivable are generally considered to be current or are carried net of any necessary
valuation adjustments and, for this reason, fair value reflects the carrying amount. The same applies to cash
and cash equivalents.
The fair value of other receivables similarly corresponds approx. to the carrying value, since any necessary
impairment losses have already been deducted.
The carrying amount of the loans included in other financial assets correspond to the amortised cost. The
fair value is the present value.
The liabilities from convertible bonds are valued at amortised cost. The fair value of the convertible bonds
is determined as the present value of the future interest and principal payments.
Financial liabilities to banks generally correspond to the amortised cost. Liabilities to banks with annuity
subsidies are measured at fair value through profit or loss.
Other financial liabilities consist primarily of liabilities with local authorities. They are measured at fair value
through profit or loss (see section 2.4.5 Government grants) or in the case of market-based financing at
amortised cost.
The fair value of miscellaneous other financial liabilities and trade accounts liabilities corresponds mainly to
the carrying amount.
The accounting and valuation methods are described in section 2.
9.1.2Net gains and losses
IFRS 7.20 (a) requires the disclosure of net gains and losses for each category of financial instrument
defined in IAS 39.9. For BUWOG Group corresponding net gains and losses were not recorded in the
statement of comprehensive income either in the financial year or in the comparative period.
Information on interest expense and interest income is provided in section 5.3 Financial results.
9.1.3Hierarchy of fair values of financial instruments
The following section includes an analysis of the financial instruments carried at fair value. A hierarchy was
developed for this analysis, which reflects the input factors used for valuation: This comprises three levels:
–Level 1: Quoted prices for identical assets or liabilities on an active market (without any adjustments)
–Level 2: Inputs that can be derived directly (e.g. as prices) or indirectly (e.g. based on prices) for the
individual assets or liabilities, and cannot be classified under Level 1
–Level 3: Inputs for assets or liabilities that are not based on observable market data.
Hierarchy of financial instruments carried at fair value
in TEUR
Level 1
Level 2
Level 3
Total
0.0
0.0
46.7
46.7
0.0
0.0
106,603.3
106,603.3
0.0
0.0
417,807.9
417,807.9
0.0
0.0
27,867.6
27,867.6
30 April 2014
Financial assets available for sale
Financial liabilities at fair value through profit or loss
Fair value option
Held for trading
Derivatives
212
The following table shows the reconciliation of the opening and closing balances of the financial instruments
classified under level 3:
Other financial
assets
in TEUR
Derivatives
0.0
0.0
0.0
46.7
27,867.6
524,411.2
46.7
27,867.6
524,411.2
Valuation procedures and input factors used to determine the fair values of financial instruments:
Valuation methods and input factors
Level
Financial instruments
Valuation method
Significant input factors
3
Derivatives
(interest-rate swaps)
Net present value
method
Interest rate curves observable in the
market, probability of default, default
rate, exposure at time of default
3
Convertible bond
Net present value method,
option pricing model
Risk-free interest rate, credit spread,
call option value added
3
Loans and financial liabilities
@ FV
Net present value
method
Interest rate curves observable in the
market, probability of default
BUWOG Group calculates the fair value of low-interest government loans, and financial liabilities due to
credit institutions with annuity subsidies that are associated with the funding of real estate by discounting
the future cash flows according to a net present value method.
The discount rate is based on the BUWOG Group interest conditions and is composed of a reference interest
curve and a credit spread specific to the BUWOG Group. The discount rates correspond to an interest curve
on the basis of a Euro interest rate swap curve, which extends over terms of up to 60 years. Based on the
applicable discount rate, a credit spread matching the maturity is added as a premium. The credit spread
corresponds to the premium that the borrower has to pay in excess of the reference interest rate and also
includes the creditworthiness of the borrower taking into account the probability of default (debt value
adjustment). The credit spreads were derived from the current financing on offer to BUWOG Group. In the
hierarchy according to IFRS 13 these input factors correspond to level 3. See section 6.14 Financial liabilities
with regard to the discount rates applied.
In case of the net present value method, an increase in the discount interest rate or the credit spread results
in a decrease in the fair value, while a decrease in these input factors increases the fair value.
BUWOG Group calculates the fair value of derivatives by discounting future cash flows based on a net
present value method. The interest rates used to discount future cash flows are determined using an
observable market interest rate curve. To calculate the Credit Value Adjustment (CVA) and the Debt Value
Adjustment (DVA) the following three parameters are required: Probability of Default (PD), Loss Given
Default (LGD) and Exposure at Default (EAD). Probability of Default is derived from the Credit Default Swap
spreads (CDS spreads) of the relevant counterparty. Derivatives with a positive fair value represent
receivables for BUWOG Group; and in this case, a CVA calculation is carried out to calculate the amount of
the receivable. The probability of default of the counterparties is required for this calculation. Observable
market CDS spreads are available for a large number of financial institutions. In exceptional cases, average
branch benchmarks are used as a substitute for unavailable spreads. These benchmarks represent level 1
and 2 input factors in the fair values measurement hierarchy. Derivatives with a negative fair value represent
a liability for BUWOG Group; in this case a DVA calculation is carried out to calculate the amount of the
liability. In this case the company’s own probability of default must be determined. BUWOG Group generally
concludes derivatives at the level of the property company that manages a particular property. For these
property companies neither observable market CDS spreads, nor benchmarks are available credit margins
are used to estimate CDS spreads, these are used to derive the probability of default. The credit margins for
BUWOG Group are determined in two steps. In the first step an average margin based on previously
concluded credit agreements and term sheets is calculated. The timeframe for the applied margins is twelve
months. In the second step indicative credit margin offers are obtained from banks and these values are
averaged with the credit agreement and term sheet values. These offers are grouped by country. In the
hierarchy according to IFRS 13 these input factors represent level 3. Loss Given default (LGD) is the relative
213
value which is lost at the time of the default. BUWOG Group used a standard market LGD to calculate the
CVA and DVA. The Exposure at Default (EAD) represents the expected amount of the asset or liability at the
time of default. EAD is calculated using a Monte Carlo simulation.
For net present value methods, an increase in the discount rate, exit yield or credit spread results in a
decrease in fair value, while a decrease in these input factors results in an increase in fair value.
For the valuation of derivates, the estimation of the default risk includes assumptions for the probability of
default, loss rate and the outstanding amount at the time of expected default. An increase in the probability
of default and the loss rate will reduce the fair value of a derivate with a positive exposure (receivable) and
reduce the liability for a derivative with a negative outstanding amount (liability); a decrease in the
probability of default and loss rate leads to the opposite effect.
9.1.4Collateral
IFRS 7.14 requires the disclosure of collateral. The individual companies normally provide collateral for loans
related to financing. Every company or property is responsible for the related debt service. As a general rule
there are no rights of recourse of any kind against individual companies of BUWOG Group. As security for
the loan, the lending bank receives a package of collateral that can be used to satisfy the receivable in the
event a loan is called. This package can include the following types of collateral:
– Mortgage on the land or the land and building
–Pledge of shares in the respective company
–Pledge of receivables from rental agreements
–Pledge of bank accounts
The conditions, type and scope of collateral is defined on an individual basis (for each company and
property) and is dependent on the project volume and the amount and term of the loan. Additional
information on collateral is provided in section 9.2.3. Capital market and financing risk.
On the balance sheet date all shares in BUWOG GmbH were pledged in favour of Raiffeisenlandesbank
Oberösterreich to secure a loan granted to an IMMOFINANZ company for the original purchase of BUWOG
GmbH. As of 30 April 2014, approx. EUR 201.0 million of this loan was still outstanding. As of 30 April 2014,
the borrower had available corporate law equity of approx. EUR 840 million. The borrower and lender are in
talks to replace the pledge of the BUWOG GmbH shares with other collateral. BUWOG Group charges
IMMOFINANZ Group a standard market guarantee commission for granting collateral by pledging shares.
Similarly under the purchase of BUWOG GmbH by IMMOFINANZ Group, there is a second ranking pledge
of the BUWOG GmbH shares in favour of the Republic of Austria to secure fixed term purchase price
adjustments to July 2014 which are contractually agreed and tied to specific conditions.
At the same time, IMMOFINANZ AG and IMBEA IMMOEAST Beteiligungsverwaltung GmbH, indirectly a
100% – subsidiary of IMMOFINANZ AG, issued comfort letters for obligations of BUWOG GmbH towards
Oberbank AG under a credit facility. As of 30 April 2014 an amount of approximately EUR 67.3 million is
outstanding under this facility. Further, IMMOFINANZ AG issued a guarantee of EUR 200 million to
BerlinHyp AG in connection with the refinancing of the DGAG acquisition. BUWOG Group and IMMOFINANZ
Group are in negotiations to dissolve the currently existing reciprocal relationships.
214
9.2
Financial risk management
9.2.1General information
IFRS 7.31 requires the disclosure of information that enables the users of financial statements to evaluate
the nature and extent of risks arising from financial instruments to which the company is exposed as of the
balance sheet date.
As a property investor and developer, BUWOG Group is exposed to a variety of risks. A continuous risk
management process ensures the timely identification of developments that could endanger the achievement
of strategic and operating goals, and allows this information to be included in decision-making processes.
BUWOG Group, with the support of the present management structure of BUWOG GmbH, established and
implemented an active risk management system in its operating processes and reporting paths over the
course of the 2013/14 financial year.
This system enables the early detection of risks and rapid implementation of measures to counter risk and
also has a direct impact on strategic decisions and operating processes. Internal guidelines, reporting
systems and control measures are installed throughout the company to support the monitoring, evaluation
and control of risks related to the operating business. Risks are managed at all levels in BUWOG Group. The
ultimate responsibility for risk management lies with the Executive Board, which is involved in all riskrelated decisions. In addition, BUWOG Group further optimised its internal control system (ICS) to support
the early identification and monitoring of risk. A description of the ICS is provided in the management
report.
The risk process identifies and analyses the risks at the company level and in the operating units on an
ongoing basis. The likelihood of occurrence and discovery, as well as the potential damage, are assessed for
each risk and a risk priority figure is derived. Measures to mitigate the risks and/or minimise the damage are
taken jointly with the risk manager and the risk owner in the relevant area.
The most significant risk factors are financial risks and market/property-specific risks. Further details can
be found on market- and property-specific risks in the management report. The major financial risk factors
stem from fluctuations in interest rates and negative changes in the credit standing and solvency of
customers and business partners.
According to IAS 32 and IAS 39, a distinction is made between primary and derivative financial instruments
(see sections 6.14 Financial liabilities and 6.15 Trade and other liabilities).
Primary financial instruments reported under assets consist primarily of trade accounts receivable, financing
receivables, loans and other receivables, miscellaneous other financial instruments and cash and cash
equivalents. Financial assets available for sale are stated at fair value, and other financial assets at amortised
cost. Fair values are determined based on recognised valuation methods. On the liability side the primary
financial instruments mainly include the financial liabilities in the valuation categories at amortised cost and
through profit or loss at fair value (fair value option) as well as trade liabilities.
Derivative financial instruments are used to hedge financing risk (see section 9.2.5 Interest rate risk).
9.2.2Default/credit risk
In accordance with IFRS 7.36, an entity must disclose the following information for each class of financial
instruments: the maximum exposure to credit risk as of the balance sheet date, excluding any credit
enhancements; a description of the collateral received and any credit enhancements; and information on
the carrying amount of the financial assets whose contract terms were amended and which would have
been classified as past due or impaired under the previous contract terms. According to IFRS 7.B9, the
impairments losses recognised in accordance with IAS 39 must be deducted from the gross carrying amount
of the financial assets. The remaining amount represents the maximum credit risk. Collateral and other
credit enhancements are not included in this calculation, but only disclosed separately (IFRS 7.36(b)).
215
Default/credit risks arise from the possibility that the counterparty to a transaction could fail to meet the
related obligations, and BUWOG Group incurs financial damages as a result. This risk is minimised by
regularly monitoring overdue balances, using custodians to handle purchase price payments and, in some
cases, through the provision of (mortgage) collateral to the company. Default risks are reflected in
appropriate valuation adjustments.
The risk of default on receivables due from tenants is low because tenants are generally required to provide
security deposits (for residential properties: cash deposits). The default risk associated with receivables due
from banks is also considered to be low because all financing transactions are concluded with financial
institutions that have excellent credit ratings. Despite the high quality of its financing partners, BUWOG
Group will increase its monitoring of their credit standing in the future. This approach reflects the significant
volumes of funds invested with banks due to the Group’s business model, as well as the regulatory changes
planned for the banking sector in the EU.
9.2.3Capital market and financing risk
The ability to obtain refinancing on the capital markets is an important strategic factor for BUWOG Group.
Significant fluctuations on these markets can limit the availability of equity and/or debt. In order to minimise
the refinancing risk, BUWOG Group works to maintain a balance between equity and debt and distributes
bank financing over various terms, thus ensuring a balanced maturity profile.
In order to receive or continue the use of funds, BUWOG Group must meet certain agreed obligations
(covenants). BUWOG Group continuously monitors compliance with these covenants and remains in close
contact with the lending institutions. If these obligations are not met, the lender may cancel the loan
agreement under certain circumstances. At the present time BUWOG Group is not aware of and does not
expect a breach of any major covenants that could negatively influence its business activities.
BUWOG Group had unutilised credit lines of TEUR 21,661.5 as of 30 April 2014.
In order to eliminate the risks arising from non-compliance with capital market regulations, BUWOG Group
issued a compliance policy following its public listing. This policy is designed to ensure fulfilment of all
capital market obligations and, above all, to prevent the misuse or distribution of insider information.
Measures implemented for this purpose included establishing a compliance organisation, and defining
authorities and duties for the compliance officer. Permanent and, where necessary, temporary areas of
confidentiality were established, and blackout periods and/or trading bans specified and notified to people
working in these areas.
9.2.4Liquidity risk
Liquidity risks are minimised by the preparation of a medium-term (five-year) plan, an annual budget with
monthly segmentation, and monthly revolving liquidity reports that include variance analyses. Day to day
cash management, combined with regular extensive reporting to the management of BUWOG Group,
ensures that the operating obligations are met, funds are optimally invested and there is still flexibility for
short-term acquisition opportunities.
BUWOG Group also uses long-term financing where the financial capability of the properties (interest
coverage ratio or debt service coverage ratio) and their market values (loan-to-value ratio) are taken into
account (see section 9.2.6 Capital management). To avoid cost overruns and the resulting excess outflow of
liquidity BUWOG Group routinely monitors budgets and the progress of construction on all development
projects and maintenance work.
With regard to the term structure of liabilities, see sections 6.13 Liabilities from convertible bonds, 6.14
Financial liabilities and 6.15 Trade and other liabilities.
216
Imminent outflows of funds from legal risks are continuously monitored by the legal department in
consultation with the operating units and financial management.
The following table shows a term analysis of non-derivative and derivative financial liabilities based on
contractually provided nominal (not discounted) outflows of funds.
outflow of funds
in TEUR
Outflows of funds
under 1 year
Convertible bond 2014–2019
Outflows of funds
between Outflows of funds
1 and 5 years
over 5 years
9,100.0
296,424.9
0.0
76,618.6
186,072.0
454,118.2
thereof secured by collateral
62,881.2
166,720.9
361,709.8
thereof not secured by collateral
13,737.4
19,351.2
92,408.4
15,421.3
65,281.3
446,647.8
Miscellaneous
202,380.2
17,381.7
7,041.2
Total non-derivative financial liabilities
303,520.1
565,160.0
907,807.2
Derivative financial instruments (liabilities)
8,671.2
29,861.8
16,876.7
Total derivative financial liabilities
8,671.2
29,861.8
16,876.7
312,191.3
595,021.8
924,683.9
Total
Other financial liabilities include financing contributions of EUR 111.0 million. These are repaid to the tenant
at the end of the rental relationship and are collected again from the next tenant.
The generation of liquidity from the operating business represents a central element of BUWOG Group’s
strategy. Processes to evaluate opportunities for optimisation or a further reduction in operating costs are
expanded and improved continuously. Internal procurement guidelines for the operating businesses, above
all in the area of property services, and construction and facility management, form an important part of
these cost reduction and optimisation measures.
9.2.5Interest rate risk
BUWOG Group is exposed to the risk of interest rate changes in German-speaking regions. Interest rates
increases can have a negative impact on Group earnings by raising the cost of existing floating rate loans.
A change in interest rates will have a direct influence on the company’s financial results through its impact
on floating rate loans. BUWOG Group uses fixed interest rate financing contracts and derivative financial
instruments (swaps) to limit the risk associated with rising interest rates – which would lead to higher
interest expenses and adversely impact financial results. Since these derivatives are recognised as standalone
(rather than hedging) transactions at fair value in the accounts, any changes in the fair value directly impact
the financial result. Fair value hedge accounting and cash flow hedge accounting as defined in IAS 39.71 et
seq are not applied since the requirements are not met.
In addition, the cost-covering rent stipulated for the predominant, but decreasing, part of the residential
portfolio reduces interest rate risk because these interest changes can be offset via the WGG (non-profit
Austrian housing regulations) rent.
Derivative financial instruments are shown in the balance sheet at fair value. Derivative financial instruments
with a positive fair value are recorded in the consolidated balance sheet under other financial assets.
Derivative financial instruments with a negative fair value are recorded in the consolidated balance sheet
under other financial liabilities (see section 6.15 Trade and other liabilities). Changes in fair values of
derivatives are recognised through profit or loss in the financial results.
217
The classification of financial liabilities by type of interest rate is shown in the following table:
Fixed/floating interest rate
in TEUR
30 April 2014
810,061.3
Fixed interest financial liabilities
573,826.4
Floating interest financial liabilities
Total interest-bearing financial liabilities
1,383,887.7
On 30 April 2014, fixed interest financial liabilities included the issued convertible bond payment of which
had not yet been made as of the closing date (see section 6.13 Liabilities arising from convertible bonds and
section 9.4.4 Convertible bond).
The following table shows the market values and conditions of all derivative financial instruments that were
purchased and still held at the balance sheet date to hedge interest rate risk:
Derivatives
Market value incl.
Reference
interest as of
value as
Variable
30 April 2014 of 30 April 2014
element
in EUR
in EUR
Fixed
interest rate
Maturity
Interest rate of 0.5%–3%
Interest rate swap (Deka Bank)
3-M-Euribor
-338,542
21,489,000
1.39
31 Dec 2021
Interest rate swap (Deka Bank)
3-M-Euribor
-61,146
3,880,000
1.39
31 Dec 2021
31 Aug 2015
Interest rate swap (LBB)
3-M-Euribor
-1,361,964
59,312,500
1.90
Interest rate swap (HVB)
3-M-Euribor
-835,590
13,858,000
2.13
29 Sep 2023
Interest rate swap (RLB NÖ-Wien)
6-M-Euribor
-1,587,806
23,900,000
2.41
30 Nov 2036
Interest rate swap (Hypo Steiermark)
6-M-Euribor
-1,495,133
23,000,000
2.50
31 Dec 2036
Interest rate swap (Bank Austria)
6-M-Euribor
-1,922,164
28,680,000
2.51
28 Nov 2036
6-M-Euribor
-2,022,944
28,680,000
2.54
30 Nov 2036
Interest rate swap (BAWAG)
6-M-Euribor
-1,267,352
12,750,000
2.85
31 Dec 2030
6-M-Euribor
-1,851,089
15,635,000
2.99
30 Sep 2039
-12,743,729
231,184,500
Number of derivatives: 10
Interest rate of 3%–4.5%
6-M-Euribor
-982,813
8,159,000
3.01
30 Sep 2039
6-M-Euribor
-3,110,454
25,993,000
3.09
30 Sep 2031
6-M-Euribor
-6,007,790
49,534,000
3.11
30 Sep 2031
6-M-Euribor
-3,304,304
27,244,000
3.11
30 Sep 2031
6-M-Euribor
-55,987
1,478,000
3.22
30 Sep 2015
6-M-Euribor
-139,679
4,980,000
3.26
30 Dec 2014
6-M-Euribor
-144,988
3,342,000
3.37
30 Sep 2015
-13,746,015
120,730,000
4.58
30 Jun 2018
Interest rate above 4.5%
Interest rate swap (Hypothekenbank Frankfurt)
Total derivatives: 18
3-M-Euribor
-4,239,945
25,900,000
-4,239,945
25,900,000
-30,729,690
377,814,500
2.67
The reference value forms the basis value for derivatives outstanding as of the balance sheet date. The
market value represents the amount that the respective company would receive or be required to pay if the
transaction were terminated as of the balance sheet date.
A change in the market interest rate impacts the valuation of interest derivatives and financial liabilities
which are associated with the subsidisation of properties and are recognised at fair value. In the DCF model,
which also applies to the valuation of derivatives and financial liabilities, market value is determined by
discounting future cash flows with current interest rate curves. Rising interest rates result in a higher discount
factor and hence in a reduction in the cash value of the derivatives or financial liabilities.
218
Sensitivity analyses are used to illustrate the risk associated with interest rate fluctuations. They show the
effects of changes in the market interest rates on market values, interest payments, interest income and
interest expenses.
The following sensitivity analysis shows the impact of a change in the interest level on the market values of
interest derivatives (interest swaps). A change in the interest level by 10, 25 or 50 basis points is assumed.
The market values are shown including accrued interest and excluding a credit risk adjustment.
Interest rate risk for derivatives
in TEUR
Interest rate scenarios
Market value
30 April 2014
+/- 10 BP
+/- 25 BP
+/- 50 BP
Change in negative market value on increase in interest rate
30,729.7
+3,916.7
+7,566.8
+14,880.4
Change in negative market value on decrease in interest rate
30,729.7
-2,939.6
-8,203.1
-17,214.4
Sensitivity analysis 2013/14
An additional sensitivity analysis shows the effect of a change in the interest level on the market values of
the financial liabilities valued at fair value and recognised through profit or loss. A change in the interest
level by 50 or 100 basis points is assumed. The market values are shown including interest accrued and
including a debt value adjustment.
Interest rate risk for financial liabilities
in TEUR
Interest rate scenarios
Sensitivity analysis 2013/14
Change in negative market value on increase in interest rate
Market value
30 April 2014
524,411.2
+/- 50 BP
+/- 100 BP
+/- 25,271.0
+/- 48,342.3
Details on the conditions of financial liabilities are provided in section 6.14 Financial liabilities.
In addition to financial liabilities, securities and other receivables – above all financing receivables (loans
granted to third parties) – can be sensitive to interest rate changes. The financing receivables generally
carry fixed interest rates, and the Group is therefore exposed to no risk or only limited risk from these items.
9.2.6Capital management
The goal of BUWOG’s Executive Board is to protect the Group’s liquidity in the short-term, medium-term
and long-term. In addition, interest rate hedging instruments such as swaps are used to manage liquidity,
above all when interest rates are low. The aim is to achieve a balanced ratio of equity and debt, respectively
an LTV (loan-to-value) ratio of 50-55%.
Capital management
in TEUR
30 April 2014
Equity
1,552,103.3
Debt
1,803,188.9
Capital structure
86.1%
219
The following table shows the calculation of the loan-to-value ratio:
Loan-to-value
in TEUR
30 April 2014
Long-term financial liabilities
1,036,854.4
Short-term financial liabilities
99,176.4
7,360.4
Financing held for sale
-132,947.4
Less cash and cash equivalents
Total net financial liabilities
1,010,443.8
2,631,573.5
10,926.1
15,036.0
155,117.3
Inventories
Total investment properties
2,812,652.9
LTV
35.9%
The company is not subject to any minimum capital requirements defined by external sources.
9.2.7 Property valuation risk
As is customary in the real estate sector, BUWOG Group uses the fair value model as defined in IAS 40.
Accordingly, properties are recognised at fair value in the balance sheet. The properties owned by BUWOG
Group are valued semi-annually by external appraisers. The values determined in the property valuation are
heavily dependent on the calculation method and the underlying assumptions (input factors – see section
2.4.3 Investment properties). A change in the underlying valuation assumptions can therefore lead to major
fluctuations in value. If, for example, the assumed valuation of the location and quality of the properties, the
amount of the rental income that can be generated, or the privatisation sale prices of a property should
change, this directly impacts the earnings or fair value of the property. Therefore, it is important to note that
the derived fair values are directly related to the value assumptions and the selected calculation model.
Even minor changes to the economic or property-specific assumptions used for these valuations can have
a significant influence on the consolidated results reported by BUWOG Group.
The table shows the reconciliation with the balance sheet values and the values included in the sensitivity
calculation.
Basis for 2014 sensitivity analysis for investment properties
in TEUR
Less undeveloped land (pipeline projects)
Plus fair value of investment properties held for sale
Basis for sensitivity analysis
Austria
Germany
Total
2,208,613.7
422,959.7
2,631,573.5
-96,917.0
-23,546.0
-120,463.0
15,036.0
0.0
15,036.0
2,126,732.7
399,413.7
2,526,146.5
If the input parameters for the undeveloped land (see section 2.4.3 Investment Properties) were to change,
the carrying value would change accordingly.
The following table shows the percent change in the value of investment properties based on the values
included in the sensitivity analysis as a result of changes in the parameters.
220
Sensitivity analysis: Austria
Parameter
Discount rate
Sale price potential
Original value
Change in %
points/in %
Change in value
Fair value after
change in value
2,126,732.7
+25
-3.3%
2,057,040.5
-25
3.5%
2,200,993.9
+10%
4.6%
2,224,202.6
-10%
-4.5%
2,030,070.6
Original value
Change in %
points/in %
Change in value
Fair value after
change in value
399,413.7
+25
-4.7%
380,504.1
-25
5.3%
420,456.1
+25
-0.6%
396,915.5
-25
0.6%
401,998.7
+10%
12.7%
450,191.5
-10%
-10.7%
356,615.3
+25
5.7%
422,368.0
-25
-5.2%
378,679.1
2,126,732.7
Sensitivity analysis: Germany
Parameter
Discount rate/exit cap rate
Inflation
Market rent
Market rent increase
399,413.7
399,413.7
399,413.7
Notes on the parameters used:
Discount rate/exit cap rate: No exit cap rate is applied in the DCF model for the Austria portfolio. Therefore
only the discount rate varies. In the DCF model for the Germany portfolio the discount rate and the exit cap
rate are similarly adjusted.
Sale price potential: In BUWOG Group’s German portfolio there is no sales strategy for individual apartments.
The only exceptions are three late 19th century Gründerzeit period houses in Berlin. Therefore there is no
simulation of sale price potential.
Inflation: No simulation was made of the inflation rate in the Austria portfolio. The reasons for this are: 1) In
the Austria portfolio cost-covering rent is estimated to make up around 70% of rental income; with
maintenance costs (maintenance and improvement contribution II) as a key cost factor being a component
of the rent and a transitory item. 2) In the case of the cost-covering rent only the maintenance and
improvement contribution I (EUR 0.41/sqm) is pegged to inflation as a rental component, i.e. a 25 basis
point change in the inflation rate results in only a marginal change in value.
There is a 2.0% increase in market rent for the rental areas with appropriate and free rental rates as well as
commercial space. This affects around 10% of the total rental income.
Recognition of market rent: Approx. 90% of the rental income in BUWOG Group‘s Austria portfolio is
publicly subsidised (cost-covering rent and Burgenland benchmark -30%). The rental level for new leases is
not freely negotiable. Therefore, there was no simulation of market rents for the Austria portfolio. In the
Germany portfolio all rentals – residential, commercial and parking spaces – are simulated.
Increase in market rent: Around 90% of the rental income in the Austria portfolio of BUWOG Group is publicly
subsidised (cost-covering rent and Burgenland benchmark -30%). For the Austria portfolio, therefore, there is no
simulation of the increase in market rent. In CBRE’s DCF model for the Germany portfolio, the market rents for
residential space are increased not by inflation but by a special market rent factor. This is set annually for all 402
urban areas and districts using socio-demographic, economic and property market indicators at between 0%
and 2% and a standardised adjustment is made for the individual micro regions and property qualities.
Maintenance costs: In the Austria portfolio cost-covering rent is estimated to make up around 70% of rental
income; with maintenance costs (maintenance and improvement contribution II) as a key cost factor being
a component of the rent and a transitory item. The simulation of the maintenance costs in the DCF model
for the German portfolio is generally less sensitive. There is therefore no simulation of maintenance costs.
221
9.3
Financial obligations
9.3.1Contingent liabilities and guarantees
Contingent liabilities represent possible or existing obligations arising from past events, in cases where it is
not probable that an outflow of resources will be required to settle the obligation. In accordance with
IFRS 3, contingent liabilities are only recorded on the balance sheet if they are assumed in connection with
the acquisition of a company and the fair value on the acquisition date can be measured with sufficient
reliability. In subsequent years, contingent liabilities and guarantees are measured through profit or loss at
the higher of the expected value determined in accordance with IAS 37 (see section 2.4.17 Provisions) and
the initially recognised amount less accumulated amortisation in accordance with IAS 18. For practical
reasons the information concerning the uncertainty of the amount and the maturity breakdown according
to IAS 37.86.b was omitted.
9.3.2Outstanding construction costs
The following table shows outstanding construction costs by segment for all real estate projects where the
start of construction has already been set. In these cases, the expert opinions are prepared using the residual
value method. The outstanding construction costs were taken from the expert opinion and therefore reflect
the appraiser’s estimate of the expected costs required to complete the relevant project. The appraisals for
the real estate projects without a scheduled starting date were based only on the land and reflect the use
of the comparative method. No outstanding construction costs were included for these projects.
Outstanding construction costs
Number of
properties
Austria
Germany
Total
Carrying amount
in TEUR
Carrying amount
Outstanding
construction
costs
in TEUR
Planned
rentable/sellable
space
in sqm
Expected
fair value after
completion
in TEUR
106,100.0
10
73,761.9
72.9%
12,612.0
31,190
3
27,485.7
27.1%
49,981.4
23,798
97,303.0
13
101,247.6
100.0%
62,593.4
54,988
203,403.0
9.3.3Other financial obligations
The future minimum lease payments arising from operating rental and leasing agreements are as follows:
Future minimum lease payments
in TEUR
30 April 2014
Less than 1 year
1,227.1
Between 1 and 5 years
4,908.3
9.4
Subsequent events
9.4.1Acquisitions of participations and real estate portfolios
BUWOG Group successfully completed several transactions after the balance sheet date on 30 April 2014
that will have a significant effect on its dimensions and future development. These transactions are disclosed
in the following.
9.4.1.1Acquisition of the DGAG portfolio and the DGAG management platform (“DGAG transaction”)
BUWOG Group successfully completed the acquisition of the DGAG real estate portfolio by closing on
27 June 2014. The acquisition of residential and commercial units was executed through several share deals
and led to the takeover of 19 companies held by Prelios DGAG Deutsche Grundvermögen GmbH, Kiel, Solaia
Real Estate B.V., Amsterdam, G.O.II - Luxembourg One S.à.r.L., Luxemburg and Prelios S.p.A., Milan.
222
The acquired residential property portfolio comprises around 18,000 units with approx. 1.09 million sqm of
lettable space. The portfolio is mainly located in the federal states of Schleswig-Holstein (approx. 990,000
sqm) and Lower Saxony (approx. 85,000 sqm) and is therefore in BUWOG Group’s preferred growth region
in North-Western Germany. Around 40% of the housing stock in the portfolio is supported by government
subsidies.
Economically connected with the acquisition of the DGAG portfolio, BUWOG Group closed the acquisition
of the residential asset and property management business from Jamesmail B.V., Amsterdam, with around
300 employees (so-called “Management Platform”) as planned. Thus, BUWOG Group ensures a smooth
transition of the DGAG portfolio and benefits from a highly qualified and experienced team of real estate
experts who will administer and manage the entire German portfolio of BUWOG Group in the medium-term
and support the existing administrative structures of BUWOG Group. In this way, synergy effects can be
realised, and further cost-effective growth in the preferred regions in Germany can be ensured. The
management of approx. 33,000 German residential units owned by third parties through by the acquired
management platform, in particular in asset and property management, will also be integrated in BUWOG
Group.
94.9% of the shares of these property companies were acquired. The remaining 5.1% of the shares were
transferred to S-A-H Holding GmbH. S-A-H Holding GmbH is an independent third party and not affiliated
with BUWOG Group. The 5.1% share of the non-controlling shareholders will be presented as a liability in the
future, due to the existing mutual cancellation rights of both shareholders (“puttable instrument”) and fixed
annual compensatory payments to the non-controlling shareholders. Therefore, the non-controlling interests
are not shown separately in the presentation below. The preliminary purchase price paid by the minority
shareholders for their 5.1% share amounts to EUR 16.8 million.
In accordance with IFRS 3, the acquisition of the real estate portfolio and the simultaneous acquisition of
the residential asset and property management business will be shown, upon initial consolidation, as a
business combination in the first quarter of 2014/15. Since not all the information necessary for a final
presentation of the transaction is available, preliminary values were incorporated into the purchase price
allocation.
According to preliminary figures, the assets and liabilities shown below were acquired as part of the DGAG
transaction as of the acquisition date. Preliminary goodwill is shown as the difference between the
preliminary purchase price and the fair value of the net assets acquired. This goodwill (as a technical figure)
results primarily from the mandatory recognition of deferred taxes, based on the difference between the fair
value and the tax base of the acquired real estate assets.
The following table presents the preliminary determination of the fair values of the DGAG transaction:
DGAG
in TEUR
922,677.1
498.4
Deferred tax assets
Receivables
Liabilities
Provisions
627.3
29,049.4
156,502.0
-747,523.1
-6,586.3
-29,913.7
Fair value of net assets acquired
325,349.1
Goodwill
Purchase price
5,450.2
330,799.3
Less cash and cash equivalents
-29,049.4
Net purchase price
301,749.9
223
The valuation of real estate assets was carried out by an independent property appraiser (CBRE). The fair
value of cash and cash equivalents corresponds to the carrying amount as of the acquisition date. In case
of current assets and current liabilities, there is also no difference between the carrying amount and the fair
value. The receivables acquired are substantially recoverable. The fair value of low interest liabilities was
determined by a net present value calculation in consideration of current market conditions. The deferred
tax liabilities were calculated based on a tax rate of 15.8%. For contingent liabilities of EUR 4.5 million,
provisions were recognised. The net rental income of the acquired real estate portfolio amounts to approx.
EUR 67.6 million for the months from April 2013 to March 2014. The results of Asset Management for this
period amount to approx. EUR 42.6 million.
9.4.1.2Acquisition of the Apollo portfolio
The acquisition of the Apollo portfolio was agreed upon on 13 November 2013 and concluded on 1 July 2014.
The preliminary sale price was approx. EUR 50 million. The portfolio consists of 1,206 units with a total area
of 79,553 sqm, mostly in Berlin-Kaulsdorf with 614 units, and with 529 units in the city of Strausberg about
15 km east of Berlin.
9.4.2Sale of BUWOG Facility Management GmbH
By selling the property management company BUWOG Facility Management GmbH (BUWOG FM) to the
Austrian property service provider EHL Immobilien, BUWOG has taken another step towards focusing on
the strategic residential core business. This transaction was signed on 26 June 2014 as part of a share deal.
The deal did not involve the transfer of any non-current financial liabilities or non-current assets (specifically
properties).
9.4.3Extraordinary General Meeting
On 15 May 2014 BUWOG AG held an Extraordinary General Meeting. In addition to appointments to the
Supervisory Board, the agenda included a resolution authorising a share buyback programme.
The Extraordinary General Meeting held on 15 May 2014 authorised the Executive Board, with the consent
of the Supervisory Board, to repurchase the company’s shares in accordance with § 65 (1) no. 8 and (1a)
and (1b) of the Austrian Stock Corporation Act at an amount equalling up to 10% of the company’s share
capital. This authorisation is valid for a period of 30 months. The shares may be purchased over the stock
exchange or over the counter, including repeated utilisation of the 10% limit and excluding the subscription
rights of shareholders.
9.4.4 Convertible bond
On 25 April 2014, BUWOG AG issued a convertible bond with a nominal value of EUR 260.0 million, a
nominal interest rate of 3.5% and a term ending in 2019. The bond was fully subscribed by IMMOFINANZ
Group. The issue proceeds were used by BUWOG Group to purchase the DGAG property portfolio with
roughly 18,000 units and approx. 1.09 million square meters in Northern Germany. The funding of the
subscribed amount was postponed until the closing of the DGAG portfolio acquisition. Thus, the payment
by IMMOFINANZ Group was made on 6 June 2014, while the closing of the DGAG portfolio acquisition took
place as of 30 June 2014.
9.4.5 Expired pledge of shares
The Republic of Austria did not register any claims to the shares in BUWOG GmbH, which were used as a
second rank pledge up to July 2014 to secure fixed term, contractually agreed, conditional purchase price
adjustments from the acquisition of BUWOG GmbH by IMMOFINANZ Group (see section 9.1.4).
9.4.6Other
The BUWOG AG shares were included in the FTSE EPRA/NAREIT Development Europe Index as of 14 May 2014.
224
9.5Transactions with related parties
Related parties as defined in IAS 24 are understood to mean all companies included in the consolidated
financial statements. In addition to persons who have a significant influence over BUWOG Group, related
parties include the members of the Executive Board and Supervisory Board of BUWOG AG and their close
family members. BUWOG Group was controlled until the spin-off from IMMOFINANZ on 26 April 2014 by
the Executive Board of IMMOFINANZ AG. Hence for this financial year related parties also include the
Executive Board and Supervisory Board of IMMOFINANZ AG and their close family members.
The corporate bodies of IMMOFINANZ AG are:
Executive Board
– Eduard Zehetner – Chief Executive Officer
– Birgit Noggler – Member
– Daniel Riedl – Member (until 25 April 2014)
– Dietmar Reindl – Member (since 1 May 2014)
Supervisory Board
– Michael Knap – Chairman (since 2 October 2013), Vice-Chairman until 2 October 2013
– Rudolf Fries – Vice-Chairman (since 2 October 2013), Member until 2 October 2013
– Christian Böhm – Member
– Nick J. M. van Ommen – Member
– Herbert Kofler – Chairman (until 2 October 2013), Member (until 30 January 2014)
– Vitus Eckert – Member (until 25 April 2014)
– Klaus Hübner – Member (until 25 April 2014)
Works council members of the Supervisory Board
The works council of IMMOFINANZ AG was formed on 9 September 2013 and appointed the following
works council members to the Supervisory Board:
–
–
–
–
Nikolaus Obermair, (works council delegate since 9 October 2013)
Mark Anthony Held (works council delegate since 9 October 2013)
Philipp Obermair (works council delegate from 9 October 2013 to 30 January 2014)
Siegfried Burger-Schattauer (works council delegate from 9 October 2013 to 25 April 2014)
9.5.1 Related party transactions
All transactions carried out with related parties during the reporting year reflected arm’s length conditions.
For the sake of improved transparency, the values for 2013/14 and the previous year are stated as including
BUWOG GmbH business although the transfer of BUWOG GmbH and its direct or indirect subsidiaries did
not take effect until the end of April 2014.
The properties owned by Arsenal Immobilien Development GmbH are managed by one BUWOG GmbH
subsidiary (BUWOG Facility Management) which was sold after the closing date. Rudolf Fries (ViceChairman of the Supervisory Board of IMMOFINANZ AG) is the managing director of this company and the
Dr. Rudolf FRIES Familienprivatstiftung (private family foundation) is an (indirect) shareholder in this
company. The property management fees reflect standard market rates. In the 2013/14 financial year, these
fees totalled EUR 418,601.80.
Supervisory Board members Vitus Eckert and Rudolf Fries (Vice-Chairman of the Supervisory Board of
IMMOFINANZ AG) are shareholders in the law firm of Eckert Fries Prokopp Rechtsanwälte GmbH, Baden
near Vienna. This law firm charged fees of EUR 46,885.00 for legal advice to BUWOG Group companies in
the financial year 2013/14. The terms of these fees, especially the hourly rates, reflect standard market
conditions.
One Executive Board member of IMMOFINANZ AG and former member of the Supervisory Board of
BUWOG AG rented a BUWOG Group apartment on standard market conditions and, in 2013/14, purchased
a BUWOG GmbH apartment on standard market conditions.
225
For one Executive Board member of BUWOG AG, payments were made to APK Pensionskasse AG during
the 2013/14 financial year as part of that member’s remuneration. These payments are related to a company
pension for the Executive Board member and reflect standard market conditions. These payments were
made through IMMOFINANZ AG. A Supervisory Board member of IMMOFINANZ AG, Christian Böhm, is an
Executive Board member of APK Pensionskasse AG.
9.5.2De-domination agreement and other information
To ensure BUWOG Group’s long-term independence, IMMOFINANZ AG and BUWOG AG entered into a
de-domination agreement which defined restriction on the voting rights connected with the shares held by
IMMOFINANZ Group in BUWOG AG. The de-domination agreement limits the number of Supervisory Board
members in whose election voting rights attached to the shares of IMMOFINANZ AG can be exercised so
that even when the number of Supervisory Board members changes, no majority decisions can be made by
the Supervisory Board members in whose election voting rights attached to the shares of IMMOFINANZ AG
could have been exercised. At present the Supervisory Board of BUWOG AG consists of five members;
IMMOFINANZ AG exercises its voting rights in the election of the Supervisory Board members Eduard
Zehetner and Vitus Eckert. In addition, IMMOFINANZ AG is obligated not to exercise its voting right at the
Annual General Meeting of BUWOG AG when resolutions are to be made concerning the discharge of
Executive Board or other Supervisory Board members, the dismissal of another Supervisory Board member,
or any management matters which are submitted to the Annual General Meeting by the Executive Board or
Supervisory Board for a decision. The de-domination agreement may only be terminated by IMMOFINANZ
AG or BUWOG AG for good cause. The de-domination agreement ends on 29 April 2020; if IMMOFINANZ
AG does not object, the term of the de-domination agreement is renewed automatically. Compliance with
the de-domination agreement may be obtained by shareholders of BUWOG AG, who on their own or jointly
represent 5% of the share capital, and by any Executive Board member of BUWOG AG. After the spin-off,
IMMOFINANZ AG has no controlling influence on the business and financial policy decisions of BUWOG
Group. Following the spin-off, IMMOFINANZ Group and BUWOG Group are two independent groups.
Since the spin-off of BUWOG, IMMOFINANZ AG has had a holding of 49%.
Prior to the spin-off on 25 April 2014, based on an authorisation of the Annual General Meeting of 7 March
2014, BUWOG AG issued a 3.5% convertible bond with a total nominal value of EUR 260.0 million and a term
ending on 25 April 2019. Under the acquisition agreement of 25 April 2014 the convertible bond was fully
subscribed by IMMOFINANZ AG. Under the terms of the issue, the initial conversion price was set at
EUR 18.93 – which represents a premium of 40% on the arithmetic average of the XETRA closing price of
BUWOG AG shares during the first five trading days (28 April 2014 to 5 May 2014). The conversion right may
be exercised during the conversion period from 28 January 2015 to 25 April 2019. The conversion rights can
be serviced by authorised capital as per § 159 (2) no. 1 Austrian Stock Corporation Act in accordance with
the resolution of the Annual General Meeting of 7 March 2014. Prior to 27 January 2015, BUWOG AG is
entitled to call the entire conversion bond with at least 30 days’ notice and to repay it at 101% of the nominal
value plus accrued interest. The issue proceeds were used by BUWOG Group to purchase an apartment
portfolio in Northern Germany with around 18,000 units and a total rental area of approx. 1.09 million sqm.
The payment of the issue proceeds by IMMOFINANZ Group was postponed until the closing of the DGAG
portfolio acquisition. Interest agreed is on standard market terms. The deferment arrangement ended in
June 2014 (see section 9.4.4 Convertible bond and section 6.13 Liabilities arising from convertible bonds).
As of the balance sheet date, there are still a number of reciprocal guarantees between BUWOG Group and
IMMOFINANZ Group arising from various purchase financing for property companies in the past or from a
placement guarantee associated with the purchase of the DGAG portfolio by BUWOG Group. The guarantee
provisions charged are on standard market terms.
Since the spin-off took effect on 26 April 2014, IMMOFINANZ AG has been assisting BUWOG Group in the
provision of typical administrative functions such as IT, taxes, Group-wide accounting and consolidation.
This support is particularly due to the physical availability of data at IMMOFINANZ AG. The organisational
structures, technical components and system requirements for full independent assumption of these Group
functions are currently still in the development stage at BUWOG AG. IMMOFINANZ AG is temporarily acting
as a pure service provider who must follow the instructions of BUWOG AG’s management. For this purpose
there are service agreements which precisely define the scope of services to be provided by IMMOFINANZ AG
and define standard market prices for these services.
226
With regard to receivables and liabilities relating to IMMOFINANZ Group companies, refer to section 6.5
Trade and other receivables, 6.13 Liabilities from convertible bonds, 6.14 Financial liabilities and 6.15 Trade
and other liabilities.
Transactions between fully consolidated subsidiaries are eliminated during the consolidation and are not
explained in detail.
9.5.3Information on corporate bodies and remuneration
Prior to the spin-off IMMOFINANZ AG appointed Supervisory Board members to the BUWOG AG Supervisory
Board for a term of office lasting until the end of the first Extraordinary General Meeting of BUWOG AG after
the spin-off.
The corporate bodies of BUWOG AG (formerly Artemis Immobilien GmbH) during 2013/14:
Executive Board/Management
– Daniel Riedl (since 27 November 2013, chairman since 15 April 2014)
– Ronald Roos (since 17 February 2014)
– Josef Mayer (until 17 February 2014)
– Eduard Zehetner (until 27 November 2013)
– Gerold Hellmich (until 27 November 2013)
Artemis Immobilien GmbH was converted to a joint stock corporation and its name changed to BUWOG AG
upon registration in the Commercial Register on 17 November 2013.
Supervisory Board
– Vitus Eckert – Chairman (since 27 November 2013)
– Eduard Zehetner – Vice-Chairman (since 27 November 2013)
– Klaus Hübner – Member (since 7 March 2014)
– Jutta Dönges – Member (since 15 May 2014)
– Volker Riebel – Member (since 15 May 2014)
– Birgit Noggler – Member (from 27 November 2013 to 26 April 2014)
On 2 June 2014 three works council members, Elisabeth Bulis (through the wage employees’ works council),
Markus Sperber and Raphael Lygnos (through the salaried employees’ works council) were additionally
appointed to the Supervisory Board. Their appointment was notified to the chairman of the Supervisory
Board on 12 June 2014 and confirmed by the latter.
Executive Board remuneration of BUWOG AG
The total Executive Board remuneration (fixed/variable) for the reporting year is as follows (for reasons of
improved transparency, annual remuneration is also stated):
Executive board remuneration
in TEUR
Fix1)
Daniel Riedl2)
Ronald Roos3)
Josef Mayer4)
Total
Variable
Total
5.2
2.0
7.3
(720)
(270)
(990)
49.7
50.7
100.3
(250)
(250)
(500)
0.0
0.0
0.0
54.9
52.7
107.6
(970)
(520)
(1,490)
1) Incl. benefits in kind
2) Since 28 April 2014; salary previously paid by Immofinanz AG
3) Since 17 February 2014
4) Until 17 February 2014, no separate remuneration for membership of the BUWOG AG Executive Board
227
Daniel Riedl received fixed annual remuneration of TEUR 841.0 and variable remuneration of TEUR 230.0
during the financial year 2013/14 as a member of the IMMOFINANZ AG Executive Board.
Incentive programme for the Executive Board members of BUWOG AG
A long-term incentive programme for the Executive Board members is currently being prepared. This longterm incentive programme is expected to be presented at the next ordinary Annual General Meeting.
Supervisory Board remuneration of BUWOG AG
The members of the Supervisory Board received no remuneration in 2013/14. No decision concerning the
remuneration of the Supervisory Board was made in the Annual General Meeting during the reporting year
since there was no Supervisory Board in 2012/13. The remuneration for the relevant Supervisory Board
members for the 2013/14 financial year will be decided on by the ordinary Annual General Meeting on
14 October 2014.
9.6
auditor’s fees
In order to improve transparency, the amounts for 2013/14 and the previous year are stated as including
BUWOG GmbH business although the transfer of BUWOG GmbH and its direct or indirect subsidiaries did
not take effect until the end of April 2014. The fees charged by Deloitte Austria during the 2013/14 financial
year comprise TEUR 351.0 (2012/13: TEUR 0.0) for the audit of the individual and consolidated financial
statements, TEUR 119.8 (2012/13: TEUR 119.0) for other assurance services, TEUR 15.0 (2012/13: TEUR
0.0) for other consultancy services.
9.7Release of the consolidated financial statements
The consolidated financial statements were completed and signed by the Executive Board of BUWOG AG
on 29 August 2014 and subsequently distributed to the Supervisory Board. The Supervisory Board is
responsible for examining the consolidated financial statements and informing the Executive Board as to
whether there are any grounds for material objections. Furthermore, the Supervisory Board must report its
findings to the Annual General Meeting.
228
Group companies of BUWOG AG
The following list of Group companies prepared pursuant to § 245a (1) Austrian Commercial Code in
conjunction with § 265 (2) Austrian Commercial Code includes the subsidiaries of BUWOG AG.
Annex 1 Group companies of BUWOG
BUWOG AG
AT
Vienna
99,613,479
EUR
Baslergasse 65 Errichtungsges.m.b.H.
AT
Vienna
17,500
EUR
F
99.98%
F
BUWOG - Seefeld GmbH & Co. KG
DE
Berlin
500
EUR
90.00%
F
BUWOG - Seefeld Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Berlin GmbH
AT
Vienna
17,500
EUR
100.00%
F
BUWOG - Breitenfurter Straße 239 GmbH
AT
Vienna
17,500
EUR
99.98%
F
BUWOG - Brunnenstraße GmbH & Co. KG
DE
Berlin
500
EUR
90.00%
F
BUWOG - Brunnenstraße Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Chausseestraße 88 GmbH & Co. KG
DE
Berlin
1,000
EUR
90.00%
F
BUWOG - Chausseestraße 88 Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Deutschland GmbH
AT
Vienna
35,000
EUR
100.00%
F
BUWOG - Gerhard Bronner Straße GmbH
AT
Vienna
17,500
EUR
99.98%
F
BUWOG - Gervinusstraße GmbH & Co. KG
DE
Berlin
500
EUR
90.00%
F
BUWOG - Gervinusstraße Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Gombrichgasse GmbH
AT
Vienna
17,500
EUR
99.98%
F
BUWOG - Humboldt Palais GmbH & Co. KG
DE
Berlin
1,000
EUR
90.00%
F
BUWOG - Lindengasse 62 GmbH
AT
Vienna
17,500
EUR
99.98%
F
BUWOG - Lindenstraße GmbH & Co. KG
DE
Berlin
500
EUR
90.00%
F
BUWOG - Lindenstraße Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Meermann GmbH
DE
Berlin
250,000
EUR
90.00%
F
BUWOG - Palais/Scharnhorststraße Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Penzinger Straße 76 GmbH
AT
Vienna
17,500
EUR
99.98%
F
BUWOG - Projektholding GmbH
AT
Vienna
17,500
EUR
99.98%
F
BUWOG - PSD Holding GmbH
AT
Vienna
73,000
EUR
99.98%
F
BUWOG - Regattastraße GmbH & Co. KG
DE
Berlin
1,000
EUR
90.00%
F
BUWOG - Regattastraße Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Scharnhorststraße 26-27 GmbH & Co. KG
DE
Berlin
1,000
EUR
90.00%
F
BUWOG - Scharnhorststraße 26-27 Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Scharnhorststraße 4 Townhouse GmbH & Co. KG
DE
Berlin
1,000
EUR
90.00%
F
BUWOG - Scharnhorststraße 4 Verwaltungs GmbH
DE
Berlin
25,000
EUR
90.00%
F
BUWOG - Scharnhorststraße 4 Wohnbauten GmbH & Co. KG
DE
Berlin
1,000
EUR
90.00%
F
BUWOG - Universumstraße GmbH
AT
Vienna
17,500
EUR
99.98%
F
BUWOG Bauen und Wohnen Gesellschaft mbH
AT
Vienna
18,894,937
EUR
100.00%
F
Rakete Beteiligungsverwaltungs GmbH in Liqu.
AT
Vienna
70,000
EUR
100.00%
F
BUWOG Immobilien Beteiligungs GmbH & Co KG
AT
Vienna
10,000
EUR
94.00%
F
BUWOG - High-Deck GmbH
DE
Berlin
25,000
EUR
90.06%
F
BUWOG - High-Deck Residential GmbH & Co. KG
DE
Berlin
104
EUR
94.65%
F
ESG Wohnungsgesellschaft mbH Villach
AT
Villach
5,087,098
EUR
99.98%
F
BUWOG Holding Niederlande B.V.
NL
Amsterdam
18,000
EUR
94.90%
F
G2 Beta Errichtungs- und Verwertungs GmbH
AT
Vienna
17,500
EUR
99.98%
F
G2 Beta Errichtungs- und Verwertungs GmbH & Co KG
AT
Vienna
176,400
EUR
99.98%
F
Heller Beteiligungsverwaltung GmbH
AT
Vienna
17,500
EUR
99.98%
F
Heller Fabrik Liegenschaftsverwertungs GmbH
AT
Vienna
72,000
EUR
99.98%
F
Heller Geriatrie GmbH
AT
Vienna
17,500
EUR
99.98%
F
BUWOG Demophon Immobilienvermietungs GmbH
AT
Vienna
35,000
EUR
99.98%
F
Immowest Lux I S.à.r.l.
LU
Esch-sur-Alzette
12,500
EUR
94.00%
F
Immowest Spandau 1 GmbH & Co. KG
DE
Frankfurt
0
EUR
94.00%
F
DE
Frankfurt
100
EUR
94.00%
F
DE
Frankfurt
0
EUR
94.00%
F
229
lagebericht
Headquarters
Konzernabschluss
Country
Type of
consolidation
Einzelabschluss
Company
Nominal
Interest in
capital Currency
capital
Annex 1 Group companies of BUWOG
Company
Nominal
Interest in
capital Currency
capital
Type of
consolidation
Country
Headquarters
Immowest Spandau Primus GmbH
DE
Frankfurt
25,000
EUR
94.00%
F
REVIVA Immobilien GmbH
AT
Vienna
8,760,000
EUR
99.98%
F
Rosasgasse 17 Projektentwicklungs GmbH
AT
Vienna
200,000
EUR
99.98%
F
Tempelhofer Feld GmbH für Grundstücksverwertung
DE
Berlin
1,280,000
EUR
94.54%
F
Zieglergasse 69 Immobilienprojekt Gmbh
AT
Vienna
35,000
EUR
99.98%
F
C-I-D RealEstate GmbH
AT
Vienna
35,000
EUR
99.98%
F
P&U Büro- und Wohnparkerrichtungsges.m.b.H.
AT
Vienna
726,800
EUR
99.98%
F
BUWOG - Facility Management GmbH
AT
Vienna
35,000
EUR
100.00%
F
AEDIFICIO Liegenschaftsvermietungs- und
Beteiligungsgesellschaft m.b.H & Co Kaiserstraße 57-59 KG
AT
Vienna
1,000
EUR
99.98%
F
Quinta Immobilienanlagen GmbH
AT
Vienna
17,500
EUR
100.00%
F
BUWOG Missindorfstr. 5 GmbH
AT
Vienna
17,500
EUR
99.98%
F
Parthica Immobilien GmbH
AT
Vienna
17,500
EUR
100.00%
F
GENA ZWEI Immobilienholding GmbH
AT
Vienna
17,500
EUR
100.00%
F
GENA SECHS Immobilienholding GmbH
AT
Vienna
35,000
EUR
100.00%
F
BUWOG - Syke GmbH
DE
Berlin
25,000
EUR
94.90%
F
BUWOG - Lüneburg GmbH
DE
Berlin
25,000
EUR
94.90%
F
BUWOG Betriebs GmbH
AT
Vienna
5,000
EUR
100.00%
F
BUWOG - Kassel I GmbH & Co. KG
DE
Berlin
500
EUR
94.90%
F
BUWOG - Kassel II GmbH & Co. KG
DE
Berlin
500
EUR
94.90%
F
BUWOG - Kassel Verwaltungs GmbH
DE
Berlin
25,000
EUR
100.00%
F
BUWOG - Management GmbH
DE
Berlin
25,000
EUR
100.00%
F
BUWOG - Kiel I GmbH & Co. KG
DE
Berlin
500
EUR
94.90%
F
BUWOG - Berlin I GmbH & Co KG
DE
Berlin
500
EUR
94.90%
F
BUWOG - Bremen I GmbH & Co KG
DE
Berlin
500
EUR
94.90%
F
BUWOG - Bremen II GmbH & Co KG
DE
Berlin
500
EUR
94.90%
F
BUWOG - Westendpark GmbH & Co KG
DE
Berlin
12,500
EUR
90.00%
F
BUWOG - Norddeutschland GmbH
AT
Vienna
12,500
EUR
100.00%
F
BUWOG - NDL I GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL II GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL III GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL IV GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL V GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL VI GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL VII GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL VIII GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL IX GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL X GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL XI GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL XII GmbH
DE
Berlin
12,500
EUR
100.00%
F
BUWOG - NDL XIII GmbH
DE
Berlin
12,500
EUR
100.00%
F
F = Full consolidation
230
Statement by the
Executive Board
We confirm to the best of our knowledge that the consolidated financial statements of BUWOG provide a
true and fair view of the assets, liabilities, financial position and profit or loss of the group as required by the
applicable accounting standards and that the BUWOG group management report provides a true and fair
view of the development and performance of the business and position of the group, together with a
description of the principal risks and uncertainties faced by the group.
We confirm to the best of our knowledge that the individual financial statements provide a true and fair view
of the assets, liabilities, financial position and profit or loss of the parent company as required by the
applicable accounting standards and that the management report provides a true and fair view of the
development and performance of the business and position of the company, together with a description of
the principal risks and uncertainties faced by the company.
The consolidated financial statements were completed and signed by the Executive Board of BUWOG AG
on 29 August 2014 and approved for subsequent distribution to the Supervisory Board. The Supervisory
Board is responsible for examining the consolidated financial statements and informing the Executive Board
as to whether there are any grounds for material objections. Furthermore, the Supervisory Board must
report its findings to the Annual General Meeting.
The Executive Board of BUWOG AG
Daniel Riedl
Ronald Roos
231
Auditor’s Report
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of BUWOG AG (formerly Artemis
Immobilien GmbH), Vienna, for the fiscal year from May 1, 2013 to April 30, 2014. These consolidated
financial statements comprise the consolidated balance sheet as of April 30, 2014, the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated statement of cash flow
and the consolidated statement of changes in equity for the fiscal year ended April 14, 2014, and the notes
with the exception of Chapter 8. „Explanatory notes to pro forma information of BUWOG Group (unaudited)“.
Management’s Responsibility for the Consolidated Financial Statements and for the Accounting System
The Company’s management is responsible for the group accounting system and for the preparation and
fair presentation of the consolidated financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU, and the additional requirements under Section 245a
UGB. This responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;
making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility and Description of Type and Scope of the Statutory Audit
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with laws and regulations applicable in Austria and in accordance
with International Standards on Auditing (ISAs) issued by the International Auditing and Assurance
Standards Board (IAASB) of the International Federation of Accountants (IFAC). Those standards require
that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable
assurance whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
Group’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable
basis for our audit opinion.
232
Opinion
Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the
consolidated financial statements comply with legal requirements and give a true and fair view of the
financial position of the Group as of April 30, 2014 and of its financial performance and its cash flows for the
fiscal year from May 1, 2013 to April 30, 2014 in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the EU.
Without qualifying our opinion we draw attention to Chapter 9.1.4 of the notes regarding the pledge of all
shares in BUWOG GmbH.
Comments on the Management Report for the Group
Pursuant to statutory provisions, the management report for the Group is to be audited as to whether it is
consistent with the consolidated financial statements and as to whether the other disclosures are not
misleading with respect to the Company’s position. The auditor’s report also has to contain a statement as
to whether the management report for the Group is consistent with the consolidated financial statements
and whether the disclosures pursuant to Section 243a UGB (Austrian Commercial Code) are appropriate.
In our opinion, the management report for the Group is consistent with the consolidated financial statements.
The disclosures pursuant to Section 243a UGB (Austrian Commercial Code) are appropriate.
Vienna, August 29, 2014
Deloitte Audit Wirtschaftsprüfungs GmbH
Marieluise Krimmel pp Eveline Schramm
(Austrian) Certified Public Accountant(Austrian) Certified Public
Accountant
This English translation of the audit report was prepared for the client‘s convenience only. It is no legally relevant translation of the German audit report. Publishing or
transmitting of the consolidated financial statements including our audit opinion may only take place in conformity with the audit version above.
Section 281 para 2 ACC has to be applied for differing forms.
233
GlossarY
Acquisition cost method. A method to account for
investment properties, based on the respective
acquisition or production costs less the accumulated
depreciation (also see IAS 40 and fair value method)
Ad-hoc press releases. Corporate press releases that
could influence the share price. These corporate press
releases are published by stock corporations in the
form of ad-hoc press releases as required by § 48d of
the Austrian Stock Corporation Act and are designed
to ensure that all market participants are provided
with the same information.
Amount in dispute. An expression used in legal
proceedings, referring to the monetary value of the
matter in dispute
Asset Management. The administration, rental and
maintenance of standing investments. Asset
Management services represent a business area of
BUWOG Group.
ATX (Austria Traded Index). Leading index of the
Vienna Stock Exchange
Benchmark. A comparative analysis e.g. of companies
or shares in the investment property (standing
investments)
Block Sales. The sale of entire properties or property
portfolios from the existing portfolio
Book value. The value of an asset or liability on the
balance sheet
Bp (Basis point). A unit equal to one hundredth of a
percentage point
Business segment. Group sub-division; in the
BUWOG Group the segments Austria and Germany
CAPEX. Abbreviation for capital expenditure;
capitalisable, value-increasing property investments
Cash flow. This figure represents the inflows and
outflows of liquid funds during a reporting period.
Closing price/End-of-year price. The final trading
price of an investment in a specific period
Commercial Code (Unternehmensgesetzbuch).
The Austrian commercial code
Compliance rules. Compliance rules ensure
compliance with legal, regulatory and voluntary
regulations.
234
Contingent liabilities. A obligation whose existence
or amount is not yet known on the balance sheet date
Convertible bond (Convertible debt security).
A financial instrument that establishes financial
liability for a company and guarantees the owner the
right to convert the bond into a fixed number of
common shares in the company
Corporate governance. Corporate governance is the
general term for any kind of corporate management
(e.g. management and control).
Coupon. Entitles the holder to receive dividends or
interest
Coverage. The analysts who analyse and assess the
company
DAX (Deutscher Aktienindex). German share index
Debt service coverage. An indicator that compares
income to interest and principal payments
De-domination agreement. With the spin-off of
BUWOG AG from IMMOFINANZ AG, IMMOFINANZ
surrendered the management of the business and
negotiated a de-domination agreement. This
agreement restricts IMMOFINANZ from practising
its right to vote on BUWOG shares and guarantees
BUWOG Group’s independence.
Deferred taxes. A balance sheet item balancing
taxable valuation discrepancies between the annual
financial statements prepared according to IFRS and
the financial statements prepared for tax purposes
Development. Development and new construction
projects cover property developed and constructed
by BUWOG Group
Discounted cash flow method. See explanatory note
in the consolidated annual financial statements on
page 179
Discount rate. The interest rate used to discount
future cash flow (also see discounted cash flow
method)
Diversification. Distribution of real estate investments
over various types of use and geographical regions to
minimise risks
Dividend. A distribution by the company to its share
holders
Glossary
Earnings per share. Net profit divided by the average
number of shares issued and outstanding
EBITDA. Earnings before interest, tax, depreciation
and amortisation (on tangible and intangible assets)
Fair value. The amount that an asset can be
exchanged for or a debt settled with (the fair value of
a debt) between knowledgeable willing parties and
independent business partners
Fair value method. IAS valuation approach for
property accounting, reflects the actual values to be
realised on the market
Adjusted EBITDA
2013/14
in EUR million
97.3
Adjustment to fair value of investment properties
under construction
0.6
Adaption IFRS 5 FY 2012/13
5.6
Adaption IFRS 5 FY 2013/14
1.5
Adjustment to fair value of investment property sold
and held for sale, thereof result held for sale
7.1
Calculated EBITDA (as cash EBITDA)
=adjusted EBITDA
105.0
EBIT. Earnings before interest and tax
FFO (Funds from Operations). An operating figure
that, particularly in the real-estate sector, is an
indicator of the profitability of a company. A group’s
profit or loss is adjusted on the basis of the FFO to
account for non-cash effects. Cf. calculation,
page 139
Free float. Shares owned by a large number of
investors that are in circulation on the market
Full consolidation. A consolidation method under
which the assets and liabilities of a subsidiary
company are incorporated into the Group financial
statements in their entirety
EBT. Earnings before tax
ECB. European Central Bank
IAS. International Accounting Standards
Enterprise value (EV). The value of a company
Enterprise Value / adjusted EBITDA
30 April 2014
13.20
Share price in EUR
Shares outstanding (excl. company’s shares)
Market capitalisation in EUR million
99,613,479
1,314.9
Net financial liabilities in EUR million
1,010.4
Market capitalisation plus net financial liabilities in EUR million
2,325.3
Adjusted EBITDA in EUR million
105.0
Enterprise value/adjusted EBITDA
22.1
EPRA. European Public Real Estate Association
EPRA Best Practice Policy. Recommendations made
by the EPRA to increase transparency
EPRA/NAREIT. Developed European share index
category
EPRA NAV. The BUWOG Group book value calculated
according to EPRA basic principles (see comments)
adjusted by the value of minority shareholdings,
derivatives and deferred taxes, see page 141 for the
calculation.
Equity. The amount of company assets remaining
after the deduction of all liabilities
EuroStat. Statistics agency of the European Union.
Euro Stoxx 50. Stock index of the 50 largest listed
companies in Europe
IAS 40. The International Accounting Standard that
regulates the accounting and valuation of investment
properties, providing an option to choose between
the fair value method and the acquisition cost
method (also see acquisition and fair value models)
IATX. Sectoral index for property values in the ATX
ICS. Internal control system
IFRIC (International Financial Reporting
Interpretations Committee). Sub-group of the
International Accounting Standards Committee
Foundation (IASCF) that deals with the interpretation
of IFRS and IAS accounting standards
IFRS (International Financial Reporting Standards).
International accounting standards
In-place rent. Rental income excluding utilities, also
referred to as net cold rent
Interest coverage ratio. Indicator comparing earnings
to interest payments
Investment properties. See explanatory notes in the
consolidated financial statements under 6.1
ISDA. Standard framework agreement conditions.
Standard framework agreement of the International
Swaps and Derivatives Association (ISDA) for
international trade with over-the-counter derivatives
ISIN. International Security Identification Number
235
IVA (Österreichischer Interessenverband für Anleger).
Austrian Shareholders Association
Like-for-like approach. The variation of rental
income adjusted for new acquisitions, sales and
vacancies in the reference period
LTV (Loan-to-value). The book value of financial
obligations less liquid funds in relation to the book
value of real estate assets.
Market capitalisation. Market value of a stock
corporation (share price x number of shares)
Property valuation. Property value assessment
carried out by external experts. The BUWOG Group
properties are assessed by external experts on
30 April and 31 October.
Recurring FFO. Sustainable FFO (see comments)
with contributions from Asset Management division,
apartment sales and Property Development,
see page 139
Risk management. Active measures to provide
protection against risks
Market value. (see fair value)
Scope of consolidation. The term for companies
included in the consolidated financial statements
NAV (net asset value). For the calculation of net
asset value, see page 141
Share capital. The total nominal value of all shares
issued
NAV per share. NAV divided by the number of shares
as of the reporting date
Share price. The price at which a share trades on the
stock exchange
Net profit. The after-tax results recorded by a
company during a reporting period
Spin-off. Separation of approx. 51% of BUWOG AG
shares from the Group’s former parent company,
IMMOFINANZ AG
Net Rental Yield. The yield of annualised rental
income in relation to fair value of the properties
ÖCGK (Österreichischer Corporate Governance
Kodex). The Austrian Corporate Governance Code
ÖGNI (Österreichische Gesellschaft für Nachhaltige
Immobilienwirtschaft). Austrian Sustainable Building
Council
Operating costs. Costs that normally arise in
connection with the use of a property (e.g. building
management). These costs are charged to the
tenants
Property Development. This covers the acquisition of
real property as well as the development and
construction of marketable properties. Property
Development services represent a business area of
BUWOG Group
Property Management. Organisational unit for the
management, administration and supervision of
properties
Property portfolio. All investment properties held,
see page 57
Property Sales. Property Sales/trade covers the sale
of properties. Property Sales services represent a
business area of BUWOG Group.
236
Stock performance. The development of a share
price within a specific period
Unit Sales. Sale of individual apartments to third
parties or tenants
Voting right. The right to vote at the annual general
meeting
Yield. The relationship between the return on an
investment and the amount of the investment
Calendar of financial events
29 Aug 2014
Publication of the 2013/14 annual report
23–25 Sept 2014
Goldman Sachs/Berenberg Conference in Munich
23–25 Sept 2014
Baader Bank Conference in Munich
24–25 Sept 2014
EPRA Annual Conference in London
29 Sept 2014
Publication of the quarterly report for the period from 1 May–31 July 2014
7–8 Oct 2014
Erste Bank Conference in Stegersbach
14 Oct 2014
1st Annual General Meeting
15 Oct 2014
Ex-dividend date
23 Oct 2014
Dividend payment date
22 Dec 2014
Publication of the six-monthly report for the period 1 August–31 October 2014
31 Mar 2015
Publication of the quarterly report for the period
from 1 November 2014 to 31 January 2015
IMPRint
BUWOG AG
Hietzinger Kai 131
1130 Vienna, Austria
Tel.: +43 (0)1/878 28-1130
Fax: +43 (0)1/878 28-5299
www.buwog.com
office@buwog.com
Consulting, Concept and Design
Mensalia Unternehmensberatungs GmbH, www.mensalia.at
Photos
BUWOG Group, Martin Stöbich, Stephan Huger, Tomek Kwiatosz, Martina Draper
PEFC
Zertifizierung
Disclaimer
We have prepared this report and verified the data herein with the greatest possible caution. However,
errors arising from rounding, transmission, typesetting or printing cannot be excluded. This report contains
assumptions and forecasts that were based on information available at the time this report was prepared. If
the assumptions underlying these forecasts are not realised, actual results may differ from the results
expected at the present time. Automatic data processing can lead to apparent mathematical errors in the
rounding of numbers or percentage rates. This report is published in German and English, and can be
downloaded from the investor relations section of the BUWOG website. In case of doubt, the German text
represents the definitive version. This report does not represent a recommendation to buy or sell shares in
BUWOG AG.
237

Annual Report 2013/14

Transcription

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