Performance
at a Glance
Key performance indicators
2013 2012 Change
Rental income € mn 227.3 188.1 20.8%
Proceeds from sale of properties € mn 273.9 409.7 -33.1%
Revenues from property services € mn 15.2 27.3 -44.2%
Total revenues € mn 516.4 625.1 -17.4%
EBITDA € mn 116.8 97.2 20.2%
EBIT € mn 123.4 (58.5)
-EBT € mn 48.7 (154.6)
-Funds from operations before sales income and one-off items (FFO I)*)
€ mn 36.2 22.4 61.6%
Funds from operations after sales income (FFO II)**) € mn 52.1 42.5 22.6%
Net rental income (NRI) € mn 141.4 110.5 28.0%
Cash profit***) € mn 43.3 37.6 15.2%
Equity € mn 1,128.6 1,025.0 10.1%
Equity ratio % 35.7 35.7
-Gearing % 154.2 148.9 5.0%
*) FFO I: Earnings before tax (EBT) - difference between sales and carrying amount of sold properties + operating expenses of sales income -/+ revaluation gains/losses + depreciation and value adjustments + non-cash components of financial income and other non-cash costs not including non-controlling interests + restructuring costs/one-off costs **) FFO II: FFO I + difference between sales and carrying amount of properties sold – operating expenses of sales income ***) Cash profit: FFO II – actual income tax
Stock exchange indicators
2013 2012 Change
Basic earnings/share € 0.09 (2.06)
-Diluted earnings/share € 0.18 (1.47)
-Basic EPRA NAV/share € 15.40 15.79 -2.5%
FFO I/share € 0.44 0.27 63.0%
Property indicators
31/12/2013 31/12/2012 Change
Rental units No. 32,120 20,479 56.4%
Parking spaces No. 14,187 10,795 31.4%
Total usable space 1,000 sqm 2,603.5 1,924.4 35.3%
Property assets € mn 2,868.1 2,510.7 14.2%
Austria Germany
Other countries Group
Property assets € mn 968.2 1,795.2 104.7 2,868.1
Property assets - residential*) €/sqm 1,639.5 864.7 1,068.0 956.0 Property assets - commercial*) €/sqm 1,696.3 1,289.7 1,376.4 1,510.8
Contractual rent - residential €/sqm/m 5.40 5.31 5.98 5.33
Contractual rent - commercial €/sqm/m 8.53 7.59 8.57 8.12
Total vacancies - residential % 5.8 8.6 31.2 8.7
Total vacancies - commercial % 13.6 10.8 35.8 14.1
Key performance indicators by segment
*) Fair value allocation to commercial or residential based on the predominant usage type of the building in terms of usable space
FFO I (before sales income and one-off items)
(in € mn) 2012 2013 2011 16.8 36.2 22.4
FFO II (after net finance income/costs) (in € mn) 2012 2013 2011 44.8 52.1 42.5 EBITDA (in € mn) 2012 2013 2011 124.8 116.8 97.2 Capex Hold-Portfolio (in €/øsqm) 2012 2013 2011 28.9 14.25 16.93
Usable space by usage type
(in %)
70.1% Residential
Content
2–5 Introduction
2 Foreword by the Executive Board
4 Foreword by the Chair of the Administrative Board
6–23 Company
8 Company Overview 9 2013 Milestones 10 Markets
11 The conwert Portfolio in Figures 12 Segment Report
18 Investor Relations
24–51 Corporate Governance & CSR
26 Corporate Bodies
27 Corporate Governance Report
35 Statement by the Internal Audit Committee 36 Administrative Board Report
38 Corporate Social Responsibility 50 Independent Assurance Report CSR
52–81 Management Report
54 Operating Environment 56 Business Performance 63 Financial Position and Assets 67 Risk Report
72 Internal Control and Risk Management System 73 Organisation and Corporate Structure 74 Personnel
75 Research and Development
76 Disclosure as per Art. 243a, Sec. 1, Austrian Commercial Code 78 Outlook
80 Outlook for conwert in 2014 81 Events after the Reporting Period
82–139 Financial Statements
88 Notes
138 Auditors’ Report 139 Responsibility Statement
140–148 Appendix
142 GRI Content Index 146 Glossary
147 5-year Overview 148 Financial Calendar
Numerous amounts and percentage rates were rounded and the addition of these individual figures can therefore produce results that differ from the totals shown.
2
Foreword by
the Executive Board
Dear shareholders,
The focus of 2013 was on developing conwert into a property group with a long-term portfolio of residential properties in the core markets in Germany and Austria, an approach which has yielded considerable success.
In the 2013 business year, conwert achieved extremely solid earnings before tax (EBT) of €48.7 mn (2012: €(154.6) mn). In the last twelve months conwert also secured important improvements in other key performance indicators, which are plain to see. Operating cash income (FFO I: Funds from operations before sales income and one-off items) rose to €36.2 mn (2012: €22.4 mn), an increase of 61.6%. This marks the achievement of the goal announced at the start of 2013 to generate FFO I of €25 mn, which was increased to €36 mn less €3-5 mn upon publication of the 2013 half-year results. Rental income in 2013 rose by 20.8% from €188.1 mn to €227.3 mn. This increase reflects the consistent strategic goal of focusing on residential properties, which was further strengthened in 2013 with the takeover of KWG Kommunale Wohnen AG (KWG) and the GE Capital Real Estate Germany (GE) portfolio . In the same period conwert achieved an increase in the Net Rental Income (NRI) margin, thereby increasing the management efficiency of the property portfolio from 58.7% to 62.2%.
In 2013 conwert sold properties with a total value of €273.9 mn (2012: €409.6 mn), achieving the target set. The margins generated were on average 11% above the IFRS carrying amount and thereby also above the 7% to 9% target range specified for 2013. These figures reflect the sustainable value and conservative management of our portfolio. With a total of €103.4 mn, around 38% of total proceeds from sale in 2013 were accounted for by commercial property. Particularly noteworthy sales included the disposal of two ECO commercial properties in Vösendorf and Graz with a total area of 33,407 sqm and a vacancy rate of around 50%.
A look at the entire portfolio shows that conwert reduced vacancy rates for the fifth year in a row. At the end of 2013 the vacancy rate for the whole portfolio was 10.1% (31/12/2012: 10.7%). The concentration on the core residential business and the subsequent sale of commercial properties has also played a decisive role here.
With regard to service provision for third parties, the range of services was streamlined in the past year and conwert narrowed its focus to selected service mandates. Revenue from property services therefore declined by 44.3% from €27.3 mn to €15.2 mn.
Total revenues for the full year 2013 thus amounted to €516.4 mn (2012: €625.1 mn). One main reason for this decrease of around €100 mn on the previous year is the planned reduction in sales revenue.
Clemens Schneider
Executive Director - CEO
Thomas Doll
Executive Director - CFO
At 31 December 2013 the total value of the conwert portfolio amounted to €2,868.1 mn (31/12/2012: €2,510.7 mn), consisting of a total of 32,120 rental units (31/12/2012: 20,479 rental units) and 14,187 parking spaces (31/12/2012: 10,795 parking spaces) with total usable space of 2.6 mn sqm (31/12/2012: 1.9 mn sqm). In the last business year there was a strong increase in the presence in Germany; for a total of €178.8 mn including capex of around €33 mn for the next three years, conwert acquired the GE portfolio with 4,016 units, primarily in the core markets of Berlin, Leipzig and North-Rhine Westphalia.
The integration of KWG and the GE portfolio, along with the related restructuring measures, led to an 8.2% decrease in other operating expenses from €49.0 mn (including KWG on a pro forma basis) to €45.0 mn. conwert achieved an even more significant improvement in personnel expenses of 17% from €38.8 mn (including KWG on a pro forma basis) to €32.3 mn, thereby surpassing the planned figures. The focus of the measures is on streamlining structures and processes in order to improve efficiency and make the most of previously untapped synergies. Our goal of reducing personnel to around 550 employees, primarily by eliminating dual functions, had already been achieved in the third quarter 2013 and was undercut in the fourth quarter. Furthermore, we have successfully adjusted the site structure to meet the current market conditions and the actual needs of our customers. The subsequent reduction in branch offices from 47 to 35 was largely completed in 2013.
The key operating figures and the overall balanced revaluation results underline conwert’s profitability and efficiency. Net financial income improved by 22.3% on 2012 to €74.7 mn (2012: €96.1 mn). One key reason for this was the positive change in ineffective swaps as well as the hedging portfolio restructuring at the beginning of last year. Group profits after tax amounted to €13.3 mn (2012: €(172.1) mn).
Further adjustments to simplify our financing structure led to a loan-to-value (LTV) ratio of 55.9% at the end of 2013, which was thereby just slightly above the target range of 50 to 55%. The equity ratio remained practically unchanged at 35.7% (31/12/2012: 35.7%).
In light of the 2013 results, together with the Administrative Board we will propose to pay out a dividend of €0.10 per share to shareholders at the next ordinary Annual General Meeting on 7 May 2014.
Looking forward to the current business year 2014, the successful conclusion of the integration of KWG and the GE portfolio is a top priority. In line with our strategy of being a long-time holder of high-value residential property, conwert is aiming for further optimisation of the portfolio in 2014 and subsequent sales proceeds of €150 to €200 mn. The goal is to continue to reduce vacancy rates in the core portfolio in Germany and Austria.
At this point we would like to thank all of the conwert Group employees for their unwavering dedication in the past business year. It is only through their tireless efforts and hard work that we have succeeded in achieving the most important milestones in the last year. Our thanks also go to all shareholders, partners, tenants and customers for the high levels of trust and dedication they have shown to our company.
Your Executive Board,
Clemens Schneider CEO
Thomas Doll CFO
4
Foreword by the Chair
of the Administrative Board
Dear shareholders,
Following the successful conclusion of our strategic repositioning, conwert achieved its best ever operating results in the 2013 business year. The focus on generating sustainable earnings from the long-term management of residential properties has paid off. The result of this stable growth is that conwert is now more robust and profitable than ever before.
With our long-term portfolio of residential properties, we have concentrated our activities on properties with higher yields in major German cities in addition to our Austrian portfolio. We have significantly strengthened our presence in Germany and have made decisive progress over the past twelve months in integrating our acquisitions, particularly KWG and the comprehensive GE portfolio with 4,600 units. By primarily focusing on residential property portfolios in major cities, we have already made a significant contribution to conwert’s profitability.
In addition to this, we have streamlined conwert from the ground up to make it much more efficient and compact. We conducted a fundamental examination of the existing processes and personnel structures and adapted them to meet the actual needs of our customers. The reduction of duplicate functions and concentration on the key central locations for conwert will have a positive impact on earnings, which will mainly be seen in the current business year. Since the realignment began three and a half years ago, rental income has gone up by over 20% at the same time as the NRI margin has increased from 55.4% to its most recent level of 62.2%. This positive development has been accompanied by a steady 33.1% reduction in vacancy rates from 15.1% to 10.1%. Our portfolio vacancy rate is at a historic low and at the end of 2013 it was below the 5% target in the core regions of our property portfolio. The average portfolio yield has risen by around 20% and reflects the efficient management of our property portfolio.
Johannes Meran
Chair of the Administrative Board
At the same time we have consistently optimised the portfolio in line with our strategic goals through a targeted sales programme. In the last twelve months we also managed to make key progress here. Last year conwert sold properties which were not part of the core business worth €274 mn, with a positive margin of 11.1% on average. At 31 December 2013 the combined residential segment in Austria and Germany accounted for 71.1%, marking a major step towards our target ratio of 80% residential to 20% commercial. At the end of 2012 the residential/commercial ratio was still at 58.5% to 41.6%.
The performance of the conwert share did not yet fully reflect the positive operational achievements of the past months. The gap between the share price and NAV only started to decrease in the second half of 2013, when the share price increased significantly.
The new strategic repositioning has also led to an important change in personnel at conwert. Clemens Schneider has taken up his new post as conwert’s Chief Executive Officer in February. I will give him my close support in this transitional period before I step down as Chair of the Administrative Board, at the 13th ordinary Annual General Meeting on 7 May 2014 at the latest.
On behalf of the entire Administrative Board, I would like to extend my sincere thanks for the trust you have placed in us over the past years. We have ensured that conwert has the solid foundation of a sustainable strategy for increasing value, the success of which is plain to see from the latest figures. The entire Administrative Board, the management and every conwert employee will continue to work hard in the future to maximise conwert’s full potential.
Sincerely,
Johannes Meran
“Dresden is just as vibrant as us.
Our apartment provides a balance,
a place where we can relax.”
Caroline P. & Nicholas E.,
conwert tenants in Dresden
8
conwert was founded in 2001 and has been listed on the Vienna Stock Exchange since 2002. Today conwert is one of the leading property companies in the German-speaking world. The company focuses on Austria and Germany but also holds smaller portfolios in the Czech Republic, Slovakia and Hungary. In addition, the company has individual properties in Luxembourg and the Ukraine. conwert’s main focus is on the residential property market in Germany and Austria and the Group intends to make further reductions to properties in other countries and the commercial property portfolio in the coming years.
All conwert properties are held by separate property companies in their respective countries. These property companies are managed by management companies which are wholly owned conwert subsidiaries.
Since 2007 the conwert Group has been a single-tier Societas Europaea (SE), managed by the Administrative Board together with the Executive Board. In recent years the company has implemented a comprehensive strategic reorganisation. Following on from the decisive optimisation of the whole portfolio in the 2011 and 2012 business years, characterised by the profitable sale of low-margin properties and the restructuring of the rapidly growing company, 2013 saw further portfolio optimisation in Austria and Germany, dominated by the restructuring of all Group activities in Germany. Primary factors here were the integration of KWG Kommunale Wohnen AG and the acquisition of the residential property portfolio of GE Capital Real Estate Deutschland (GE portfolio) in the second half of 2013 with around 4,000 units, mostly located in the core markets of Berlin, Leipzig and North Rhine-Westphalia. Further increases in conwert’s efficiency and earning power were also achieved. The result of these measures has been a fall in portfolio vacancy rates coupled with a marked improvement in cost structures. conwert is committed to sustainable growth and optimisation of the portfolio. At year end 2013 residential property accounted for 73.7% and commercial property made up 26.3% of the portfolio. conwert aims to increase the share of residential property in the portfolio and continue to reduce commercial property in 2014.
conwert – a well-positioned property company
Company Overview
Portfolio Sales Services
+ Purchasing properties + Residential and commercial
property development + Letting residential and
commercial property
+ Selling apartments, properties and portfolios
+ Asset management + Property management + Property brokerage and
privatisation + Property marketing + Property development and
construction management
conwert business areas
Portfolio Sales Services
+ Purchasing properties + Residential and commercial
property development + Letting residential and
commercial property
+ Selling apartments, properties and portfolios
+ Asset management + Property management + Property brokerage and
privatisation + Property marketing + Property development and
construction management
Majority stake in KWG Kommunale Wohnen AG acquired
The consolidation of KWG in the first quarter 2013, in which conwert now holds almost 77%, has enabled conwert to expand its German portfolio by around 9,700 units with total space of 605,000 sqm. This purchase allowed conwert to increase its German portfolio by around 66% to almost 24,500 units. The KWG residential portfolio is mainly concentrated on North-Rhine Westphalia, Berlin, Saxony, Lower Saxony and Thuringia. This new portfolio is a complementary expansion to the existing one.
Purchase of a residential property portfolio from GE Capital in Germany
In August 2013 conwert acquired an additional residential portfolio from GE Capital Real Estate Deutschland with around 4,000 units or 260,000 sqm, which is primarily focused on major German cities, with the majority of properties located in conwert’s established core regions. 80% of the portfolio is in Berlin, Saxony (Leipzig) and North-Rhine Westphalia. The portfolio was first included in the consolidated group in the fourth quarter. This acquisition increased conwert’s German portfolio by around 19%.
The two acquisitions in 2013 led to an overall rise of around 85% in the German portfolio against year-end 2012.
Special dividend and comprehensive information for conwert shareholders
In April conwert paid out a special dividend of €0.15 per share following the capital reduction passed at the Annual General Meeting in May 2012.
conwert’s new website went online in August. The site www.conwert.com offers comprehensive information about the company on a modern, user-friendly platform.
Sustainability reporting to GRI standards
As part of the 2013 Annual Report, conwert has adopted the Global Reporting Initiative standards (GRI 4 Core) for sustainability reporting for the first time.
In addition, the sustainability report was subjected to an external audit. conwert has thereby fulfilled a key requirement for investors who are committed to sustainable investments.
10
Markets
Annual Report 2013 | Company | Markets / The conwert Portfolio in Figures
Vienna Usable space: 367,499 sqm Vacancy rate: 9.1% Yield: 4.3% Rental income: €6.53/sqm/m Dresden Usable space: 56,276 sqm Vacancy rate: 16.2% Yield: 6.5% Rental income: €5.77/sqm/m Berlin Usable space: 356,919 sqm Vacancy rate: 3.6% Yield: 6.0% Rental income: €5.82/sqm/m Potsdam Usable space: 119,395 sqm Vacancy rate: 1.4% Yield: 5.2% Rental income: €6.68/sqm/m Leipzig Usable space: 335,284 sqm Vacancy rate: 5.4% Yield: 7.8% Rental income: €5.09/sqm/m Core-NRW Usable space: 263,337 sqm Vacancy rate: 12.3% Yield: 8.4% Rental income: €5.22/sqm/m Core markets Other markets
€2,868.1
MNPROPERTY ASSETS
2.6
MN
SQM
USABLE SPACE
The conwert Portfolio in Figures
32,120
RENTAL UNITS
14,187
PARKING SPACES
Property portfolio by region as of 31 December 2013 Austria
Rental units No. 4,540 Parking spaces No. 4,781 Total usable space 1,000 sqm 578.0 Strategic vacancies % 3.9 Actual vacancies % 6.8 Total vacancies % 10.7 Property assets € mn 968.2
Germany
Rental units No. 26,569 Parking spaces No. 8,463 Total usable space 1,000 sqm 1,941.3 Strategic vacancies % 0.7 Actual vacancies % 8.2 Total vacancies % 8.9 Property assets € mn 1,795.2
Other countries
Rental units No. 1,011 Parking spaces No. 943 Total usable space 1,000 sqm 84.2 Strategic vacancies % 5.6 Actual vacancies % 28.3 Total vacancies % 28.3 Property assets € mn 104.7
Total
Rental units No. 32,120 Parking spaces No. 14,187 Total usable space 1,000 sqm 2,603.5 Strategic vacancies % 1.6 Actual vacancies % 8.5 Total vacancies % 10.1 Property assets € mn 2,868.1
12
Segment Report
The conwert segment report for 2013 is based for the first time on a regional division, split into the segments Austria, Germany and other countries, in order to give a clearer overview of the business performance and Group structures. The former division into the segments portfolio, sales and services is no longer applied.
At the end of the 2013 business year conwert held 32,120 rental units and 14,187 parking spaces. Total usable space amounted to around 2,603,466 sqm; when broken down by the main usage type of the respective property, 73.7% was used as residential and 26.3% as commercial. As of the reporting date, the vacancy rate stood at 10.1% and was thereby lower than at the end of the previous year (31/12/2012: 10.7%); strategic vacancies accounted for 1.6%. The largest share of conwert’s property portfolio is in Germany, both in terms of value and when measured by the number of rental units and rentable space.
At 31 December 2013 conwert’s property assets amounted to €2,868.1 mn and were thereby significantly higher than in the previous year (31/12/2012: €2,510.7 mn). One particular reason for this is the strong growth in the Germany segment of the portfolio; worth €1,795.2 mn, this segment now accounts for 62.6% of total property assets. A total of €1,835.5 mn or 64.0% of conwert’s property assets were residential and €1,032.6 mn or 36.0% involved commercial properties.
Like-for-like
On the basis of a hold portfolio unchanged against the previous year (like-for-like), the vacancy rate decreased by 6.0% as a result of newly let properties. Average rent was up slightly to €6.70/sqm/m, leading to a small increase in rental income to €9.88 mn/m (31/12/2012: €9.75 mn/m).
Hold portfolio (like-for-like)
2013 2012 Change Austria Average rent €/sqm/m 7.95 7.87 1.0% Vacancy rate % 9.7 9.9 -2.0% Rental income € mn/m 3.3 3.3 -Germany Average rent €/sqm/m 6.15 6.07 1.3% Vacancy rate % 5.2 5.5 -5.5% Rental income € mn/m 6.2 6.1 1.6% Other countries Average rent €/sqm/m 7.82 8.69 -10.0% Vacancy rate % 33.6 39.8 -15.6% Rental income € mn/m 0.4 0.4 -Total Average rent €/sqm/m 6.70 6.65 0.8% Vacancy rate % 7.8 8.3 -6.0% Rental income € mn/m 9.9 9.8 1.0%
Vacancy rates in Austria (in sqm) (26,626) Sold 3,760 Organic +/-3.9 10.7 5.0 84,762 61,897 12.9
Strategic vacancy rate (in %) Total vacancy rate (in %) 31/12/2012 31/12/2012
Austria segment – income statement overview
(in € mn)
2013 2012 Change
Revenues 237.3 397.7 -40.3%
Rental income 65.9 76.2 -13.5%
Proceeds from the disposal of properties 148.7 288.0 -48.4%
Revenues from property services 22.7 33.4 -32.0%
EBIT 43.3 (58.2)
-EBT 20.0 (138.8)
-Segment Austria
Revenues and earnings
In 2013 total revenues in Austria declined to €237.3 mn, after reaching €397.7 mn in the previous year. A particular reason for this was the sharp fall in proceeds from the disposal of properties, which were down by 48.4% on the previous year at €148.7 mn (2012: €288.0 mn). There were also significant reductions in rental income – primarily caused by the decrease in rental space due to the sale of properties – and in revenues from property services. While rental income declined by 13.5% to €65.9 mn (2012: €76.2 mn), revenues from property services amounted to €22.7 mn and were therefore down by 32.0% on the previous year (2012: €33.4 mn). Leaving aside the reduction in revenue, the results for the Austria segment improved significantly. The main reason for this was the sharp year-on-year reduction in depreciation, amortisation and other impairment charges, which now only amounted to €0.1 mn after totalling €92.3 mn in 2012, and net gains from fair value adjustments of €1.9 mn (2012: €(10.1) mn). There was also a fall in other operating expenses and personnel expenses. EBIT for the Austria segment totalled €43.3 mn in 2013, while in the previous year it had lagged at €(58.2) mn. In the year under review net finance costs stood at €(23.3) mn, after €(80.6) mn in the previous period.
Property portfolio
In Austria, conwert held residential property with a total of 2,796 rental units and 889 parking spaces, as well as commercial property composed of 1,744 rental units and 3,892 parking spaces as of 31 December 2013. Total usable space amounted to 578,018 sqm, of which 37.5% was residential and 62.5% commercial. The company managed to sharply reduce the vacancy rate in comparison to the previous year and as of the reporting date it stood at 5.8% for residential (31/12/2012: 7.9%) and 13.6% for commercial (31/12/2012: 15.8%). The strategic vacancy rate was 1.8% for residential and 5.2% for commercial space.
14
At 31 December 2013 total property assets in Austria amounted to €968.2 mn (31/12/2012: €1,095.1 mn). The decrease on the previous year is mainly due to the properties sold during the period. €355.2 mn or 36.7% of property assets relate to residential properties, while €613.0 mn or 63.3% were commercial properties.
Selected portfolio indicators for Austria segment
(as of 31/12) 2013 Vienna 2013 Residential Austria 2013 Commercial Austria 2013 Austria 2012 Austria Rental units No. 3,515 2,796 1,744 4,540 5,059 Parking spaces No. 2,597 889 3,892 4,781 4,877 Total usable space 1,000 sqm 367.5 216.6 361.4 578.0 658.4 Total vacancy rate % 9.1 5.8 13.6 10.7 12.9 Strategic vacancy rate % 3.1 1.8 5.2 3.9 5.0 Initial yield % 4.3 4.1 5.6 5.1 5.0 Average rent €/sqm/m 6.53 5.75 8.59 7.46 7.47 Property assets € mn 661.4 355.2 613.0 968.2 1,095.1 Rent p.a. € mn 28.1 14.7 34.3 49.0 54.3
Germany segment
Revenues and earnings
Revenues in Germany rose sharply in the year under review from €277.1 mn in 2012 to €311.4 mn in 2013. Particular contributors here included the significant rise in rental income, which increased by 47.4% to €155.7 mn (2012: €105.6 mn). This rise was mostly due to the integration of KWG Kommunale Wohnen AG (KWG) and the acquisition of the portfolio owned by GE Capital Real Estate Deutschland (GE portfolio). The increase in rental income compensated for the declines in proceeds from sale and revenues from property services. While proceeds from the sale of properties slipped back by 1.2% to €118.8 mn (2012: €120.2 mn), revenues from property services generated €36.9 mn, representing a 28.1% decline on 2012 (€51.3 mn); this was primarily caused by concentrating on selected mandates in the service sector. EBIT for the Germany segment shot up by 148.7% in the year under review to €93.5 mn, following on from €37.6 mn the previous year. Net finance costs amounted to €(43.3) mn in the reporting period against €(14.0) mn in the previous period.
Germany segment – income statement overview
(in € mn)
2013 2012 Change
Revenues 311.4 277.1 12.4%
Rental income 155.7 105.6 47.4%
Proceeds from the disposal of properties 118.8 120.2 -1.2%
Revenues from property services 36.9 51.3 -28.1%
EBIT 93.5 37.6 >100%
EBT 50.1 23.6 >100%
Annual Report 2013 | Company | Segment Report
Property portfolio
At 31 December 2013 the property portfolio in the Germany segment contained residential property consisting of 25,684 rental units and 6,317 parking spaces, as well as commercial property with 885 rental units and 2,146 parking spaces. Total rentable space amounted to around 1,941,300 sqm, of which 85.9% was residential and 14.1% commercial. At the reporting date, the vacancy rate was 8.6% for residential (31/12/2012: 6.9%) and 10.8% for commercial space (31/12/2012: 8.0%). The increase in vacancy rates reflects the purchase of properties with a vacancy rate above the average of the conwert portfolio, and which therefore offer considerable potential for optimisation and value add. The strategic vacancy rates for residential and commercial space were 0.8% and 0.2% respectively.
Selected portfolio indicators for Germany segment (as of 31/12) 2013 Residential Germany 2013 Commercial Germany 2013 Germany 2012 Germany Rental units No. 25,684 885 26,569 14,329 Parking spaces No. 6,317 2,146 8,463 4,970 Total usable space 1,000 sqm 1,667.2 274.1 1,941.3 1,178.3 Total vacancy rate % 8.6 10.8 8.9 7.2 Strategic vacancy rate % 0.8 0.2 0.7 1.6 Initial yield % 6.9 6.7 6.9 6.4 Average rent €/sqm/m 5.37 7.68 5.69 6.07 Property assets € mn 1,441.7 353.5 1,795.2 1,288.3 Rent p.a. € mn 99.8 23.4 123.2 81.4 Two major portfolios acquired in 2013
In 2013 conwert increased the portfolio in the Germany segment by a total of around 85%, achieved in two steps. This has significantly strengthened conwert’s presence in the attractive German residential market, which is also stable compared to other countries. At the same time, the portfolio expansion reflects conwert’s strategic positioning as a residential portfolio manager with a long-term approach.
Majority stake in KWG Kommunale Wohnen AG
At the beginning of 2013 conwert purchased a majority stake of 60% in the listed company KWG, before increasing its share to 76% in March 2013. At year end 2013 conwert held almost 77% in KWG. The first package was acquired with an implied initial yield of around 8.4% (factor 11.9x) at a price of €620/sqm. The transaction was financed in almost equal measure from cash and treasury shares (implied transaction value of €13.94 per treasury share). The purchase had already been consolidated by the end of the first quarter 2013.
The majority stake in KWG has not only enabled conwert to decisively consolidate its position in Germany, but has also Property assets in the Germany segment totalled €1,795.2 mn (31/12/2012: €1,288.3 mn) as of 31 December 2013. The sharp year-on-year increase is predominantly due to the consolidation of KWG and the purchase of the GE portfolio. €1,441.7 mn or 80.3% of property assets in the Germany segment relate to residential properties, the remaining €353.5 mn or 19.7% is commercial space. 119,087 Purchased (21,202) Sold (9,613) Organic +/-0.7 8.9 1.6 84,485 172,757
Vacancy rates in Germany
(in sqm)
7.2
Strategic vacancy rate (in %) Total vacancy rate (in %) 31/12/2012 31/12/2013
16
Following strong growth, KWG currently manages around 9,500 units in Germany with an area of around 587,000 sqm. KWG’s portfolio consists of high-return residential properties with an overall vacancy rate of around 12.5% and is mainly concentrated in North-Rhine Westphalia and Berlin, Saxony, Lower Saxony and Thuringia.
With its own asset and property management business, KWG has comprehensive expertise in the German market and in the long-term increase in the value of residential property. The transaction increased the profitability of the entire portfolio and FFO by €3 mn in the last financial year.
Portfolio purchase from GE Capital Real Estate Deutschland
A second expansion step saw conwert purchase a portfolio for a total of €178.8 mn (including related transaction costs and planned investment of €32.9 mn over the next three years), which contains 4,016 residential units in total, most of which are located in the core markets of Berlin, Leipzig and North-Rhine Westphalia. The portfolio purchased has rentable space totalling 265,815 sqm and was formerly owned by GE Capital Real Estate Deutschland, a division of US conglomerate General Electric, which sold off its entire residential property portfolio in Germany on strategic grounds in the course of this transaction. Rental income from the properties currently amounts to around €13.5 mn, which will be increased consistently through the investment programme of around €33 mn over the next three years. The portfolio yield after investment is 8.7%, representing a factor of 11.6x.
The properties have been seamlessly integrated into conwert’s Germany portfolio. Growth in the core German markets will allow the existing management structures to be exploited even more efficiently.
The acquisitions in 2013 have enabled conwert to expand its presence on the core markets, which now also include North-Rhine Westphalia. (as of 31/12) 2013 Berlin 2012 Berlin 2013 Potsdam 2012 Potsdam 2013 Dresden 2012 Dresden 2013 Leipzig 2012 Leipzig 2013 Core NRW*)
Rental units No. 5.244 3,721 1,671 1,671 757 818 4,826 4,756 3,769 Parking spaces No. 1,128 808 935 935 179 146 568 509 1,209 Property assets € mn 410.2 332.8 185.9 184.0 50.7 51.8 256.9 249.8 177.1 Usable space 1,000 sqm 356.9 269.3 119.4 119.4 56.3 60.8 335.3 329.5 263.3 Share of entire portfolio
(by space) % 13.7 14.0 4.6 6.2 2.2 3.2 12.9 17.1 10.1 Usable space - residential 1,000 sqm 321.5 246.1 113.7 113.7 44.5 48.1 303.6 294.5 229.5 Residential share**) % 90.1 91.4 95.2 95.2 79.0 79.1 90.6 89.4 87.2
Commercial share**) % 9.9 8.6 4.8 4.8 21.0 20.9 9.4 10.6 12.8
Total vacancy rate % 3.6 4.3 1.4 1.4 16.2 18.7 5.4 9.3 12.3 Strategic vacancy rate % 0.4 2.3 - - 12.1 14.2 0.1 0.8 0.2 Average rent €/sqm/m 5.82 6.01 6.68 6.47 5.77 5.53 5.09 4.87 5.22 Rent p.a. € mn 24.4 18.9 9.7 9.4 3.3 3.3 19.6 17.6 14.9 Initial yield % 6.0 5.9 5.2 5.1 6.5 6.5 7.8 7.2 8.4
conwert‘s core markets in Germany segment
*) became a core market in the course of the KWG consolidation in the first quarter 2013; core NRW includes the cities Wuppertal, Düsseldorf, Ennepetal, Hagen, Cologne, Mühlheim, Remscheid, Solingen, Velbert, Wülfrath **) based on sqm
Other countries segment
Revenues and earnings
Revenues in other countries rose from €9.4 mn in the previous year to €16.0 mn in 2013. One major factor in this rise was the planned increase in proceeds from the disposal of properties of €6.4 mn in the year under review, after the decrease in 2012 to €1.5 mn. Tenancy agreements concluded in the interim period led to a rise in rental income to €8.4 mn (2012: €6.6 mn), while revenues from property services declined from €1.3 mn to €1.2 mn. EBIT for the other countries segment was once again negative at €(13.3) mn, although it marked an improvement on the previous year’s figure of €(37.9) mn. EBT amounted to €(21.4) mn in 2013 against €(39.4) mn in the previous year.
Other countries segment - income statement overview
(in € mn)
2013 2012 Change
Revenues 16.0 9.4 70.2%
Rental income 8.4 6.6 27.3%
Proceeds from the disposal of properties 6.4 1.5 >100%
Revenues from property services 1.2 1.3 -7.7%
EBIT (13.3) (37.9) -64.9%
EBT (21.4) (39.4) -45.7%
Property portfolio
At 31 December 2013 conwert held residential property in the other countries segment with 563 rental units and 360 parking spaces, as well as commercial property with 448 rental units and 583 parking spaces. Total rentable space amounted to 84,154 sqm, of which 42.9% was residential and 57.1% commercial space. As of the reporting date, the vacancy rate stood at 31.2% for residential space (31/12/2012: 31.9%) and 35.8% of commercial space (31/12/2012: 47.6%). The strategic vacancy rate for both residential and commercial space was 5.6%.
As of the reporting date, total property assets in other countries amounted to €104.7 mn (31/12/2012: €127.3 mn). Of the total property assets, €38.6 mn or 36.9% were residential property and €66.1 mn or 63.1% was commercial space. conwert plans to sell off the properties held in other markets and conclude its activities in these markets, in order to focus exclusively on the two core markets of Austria and Germany.
(3,095) Sold (4,284) Organic +/-5.6 33.8 6.2 35,861 28,482
Vacancy rates in other countries
(in sqm)
40.9
Strategic vacancy rate (in %) Total vacancy rate (in %) 31/12/2012 31/12/2012
18
Investor Relations
Developments on the stock exchangeFollowing on from a good performance in 2012, the Vienna Stock Exchange was slightly less dynamic in 2013. ATX, the leading Austrian index, rose by 6.1% over the course of the year. In the second half of the year trading turnover was up by 20% to 30% on the same period 2012. Austrian companies carried out eight capital increases, bringing a total of €1.6 bn in fresh equity onto the stock market. Furthermore, interest from corporations and investors in corporate bonds remained strong. During the year under review, 29 new bonds were released on the Vienna Stock Exchange as well as three capital increases with a total volume of €5.2 bn. The IATX, the Austrian property trading index, performed well in 2013 and its 9.2% growth was significantly higher than the ATX.
conwert shares in 2013
The price of conwert shares declined by 7.3% in the period under review. At the start of the year they were up at over €10 and reached their year-high on 4 January at €10.43. They then fell to below €8 by the middle of the year and hit their year-low of €7.44 on 3 July. The shares did manage to broadly recover throughout the second half of the year and closed on 30 December 2013 at €9.33. The discount to the NAV/share compared to the year-end price was 39.4%.
Stock market listing
conwert is one of the largest listed property companies in Austria. First quoted on 28 November 2002 in Vienna, conwert shares were admitted to the prime market segment in June 2006. The high trading volumes and a change in conditions led the shares to be listed on the ATX in March 2011. At 31 December 2013 conwert shares had a 1.6% weighting on the ATX and 21.3% on the IATX. On international exchanges, the share was listed on the GPR 250 (0.08% weighting), GPR 250 Europe (0.62% weighting) and FTSE-EPRA/NAREIT Developed Europe (0.49% weighting) at year end 2013.
75.6
%
FREE FLOAT15.40
€
NAV / SHARE Dec 120 100 80 Jan JunShare price development since 01/2013
conwert ATX
FTSE EPRA/NAREIT Developed Europe Index
At the end of the reporting period conwert’s market capitalisation was €772.3 mn. An average of 324,688 conwert shares (double counting) per trading day were traded on the stock exchanges (2012: 251,168 shares). Average daily trading volumes, also applying double counting, were €2.9 mn (2012: €2.2 mn). In 2013 conwert ranked 12th in terms of annual trading volumes of ATX companies on the Vienna Stock Exchange. The company was 17th in terms of free float market capitalisation.
Shareholder structure
The Haselsteiner Family Private Foundation is a longstanding core shareholder in conwert with 24.4% of shares. The investment company EARNEST Partners, LLC, holds over 5.0% in conwert, and an additional 4.7% of shares were owned by Barclays Plc at the end of 2013. At the end of January 2014 FIL Limited (Fidelity) announced that it held more than 4.0% of shares. To the best of the company’s knowledge, 52.3% of shares belonged to institutional investors at year end 2013. Small and private investors held 20.3% of the company, most of these investors were from Austria. Treasury shares held by conwert stood at 3.0%. 62.7% of institutional investors were from Europe, 36.0% of shareholders were based in North America and 1.3% in the rest of the world.
Performance 2013 conwert (7.3)% ATX 6.1% IATX 9.2% DAX 25.5% FTSE EPRA/NAREIT
Developed Europe Index
6.8%
conwert shareholders Institutional investors by region
36.0% Institutional investors 24.4% Haselsteiner Family Private Foundation 21.6% Retail 5.0% EARNEST Partners, LLC 5.0% Barclays Plc.
5.0% FIL Limited (Fidelity)
3.0% Treasury shares
36.0% North America
26.5% Continental Europe
23.7% Austria
12.5% United Kingdom and Ireland
20
AGM resolutions
The 12th Annual General Meeting of conwert was held on 8 May 2013. The AGM passed a resolution to authorise the Administrative Board to increase the share capital by up to 20% (authorised capital 2013) within the next five years by up to an additional €213,398,180.00 through the issue of up to 42,679,636 new no-par value bearer shares in exchange for cash or non-cash contributions. In the case of a capital increase in return for non-cash contributions, it was resolved that the pre-emptive rights of current shareholders will be excluded.
Stock market indicators
2013 2012
No. of shares on last trading day less treasury shares No. 82,782,809 81,495,30 Average no. of shares less treasury shares No. 82,879,175 81,495,713 Share price at start of yea € 9.77 8.55 Share price at end of year € 9.33 9.77 Share price – high € 10.43 9.77 Share price – low € 7.44 7.95 Market capitalisation € mn 772.3 796.2
Share buyback programme and sale of treasury shares
At the Annual General Meeting of 31 May 2012 the shareholders authorised the conwert Administrative Board to purchase treasury shares and sell repurchased shares; the Administrative Board exercised this right three times in the 2013 business year.
In the meeting on 21 December 2012 the Administrative Board ruled on the seventh share buyback programme, to run from 4 January 2013 to 31 March 2013. The programme came to an end on 20 March 2013 after the purchase of 2,500,000 shares in total. There are plans to use the shares primarily as acquisition currency for purchasing companies and properties, although it is permitted to use them for any other purpose in line with Article 65 Section 1 Line 8 of the Austrian Stock Corporation Act.
In January 2013 the Administrative Board sold a total of 3,775,000 treasury shares; these were sold OTC on 18 January and 21 January in two tranches of 2,548,600 and 1,226,400 shares. The sale price was the current share price on the relevant day and amounted to €9.75 and €9.80 per ordinary share. The sale was carried out in order to use the shares as acquisition currency for purchasing a majority stake in KWG Kommunale Wohnen AG.
In July 2013 the Administrative Board resolved to use 12,500 treasury shares as acquisition currency for the indirect purchase of a minority stake in Pd sk bratislava s.r.o., an indirect subsidiary of conwert Immobilien Invest SE. The sale was also OTC; the sale price was €12.50 per ordinary share. This corresponds to a premium of 51.2% on the closing price of ordinary shares on 18 April 2013.
At year end 2013 there were 2,576,464 treasury shares.
Convertible bonds – adjusting conversion prices
Because of the payout to shareholders in conwert Immobilien Invest SE of €0.15 per share in the course of the capital reduction, the conversion prices of convertible bonds with conversion rights into no-par value bearer shares in conwert were adjusted as follows with effect from 2 April 2013: the conversion price of the 1.5% conversion bonds due in 2014 with the code ISIN AT0000A07PZ5 was adjusted from €13.61 to €13.39. The conversion prices of the 5.25% conversion bonds due in 2016 with the code ISIN AT0000A0GMD6 and the conversion bonds due in 2018 with the code ISIN AT0000A0WMQ5 were adjusted from €11.01 to €10.83 and from €11.59 to €11.40 respectively.
22
Investor Relations activities in 2013
In 2013 all of conwert’s IR activities focused once again on transparency, Corporate Governance and providing a reliable service for investors, analysts and anyone else with an interest in the company.
In addition to the 16 road shows with leading investment banks at top stock market cities in Europe and the USA – including Atlanta, Amsterdam, Brussels, Frankfurt, Geneva, London, Milan, New York, Paris, Prague, Warsaw and Zurich – the conwert management also took part in eight investment conferences in foreign European countries and two conferences in Austria (Salzburg and Zürs). In addition, numerous investors and analysts visited the company headquarters in Vienna.
Two press conferences were held for the publication of the 2012 full-year results and the 2013 half-year results. Furthermore, a business lunch with presentations was organised for institutional investors from Austria. Conference calls with analysts and major international investors were held on the days that the 2013 quarterly results were announced. A conwert IR hotline is also available around the clock for enquiries from investors and analysts.
Another key focus of the IR activities was numerous talks with international investment analysts. The conwert share is currently assessed by eleven analyst institutes, which are in regular contact with the company.
As in 2012, conwert also participated in the EXPO Real in Munich in 2013, Europe’s most important property fair. The company met a range of German and international investors, property buyers and sellers, as well as asset managers from property funds, establishing new contacts and cultivating existing ones.
Investor Relations online
The conwert website is the company’s most important communication platforms, particularly as regards investor relations activities. In August conwert relaunched the website to provide users with better functionality by improving the structure and introducing intuitive navigation. The conwert website can also now be used seamlessly across all mobile devices.
The IR section of the website is home to ad hoc announcements, IR news and financial reports, as well as presentations from the most important road shows and capital market conferences attended by conwert in 2013; these are all available for download. Conference calls on the quarterly results are recorded and are uploaded as webcasts on the site. The conwert website can be found at www.conwert.com in German and English.
Social media is another way in which conwert provides comprehensive information to institutional investors, private shareholders, analysts, journalists and other people and companies interested in the conwert share, thereby guaranteeing transparency and the most up-to-date information. One of these platforms is the company’s facebook page.
Analysts‘ assessments
Eleven analyst groups had covered the conwert share by the end of 2013, making the company one of the most frequently analysed property companies in the German-speaking world. At year end 2013 seven analysts gave a “buy” recommendation for conwert shares, while there were four “hold” recommendations and one to sell. The average 12-month price target was €10.28 with a
range of €8.60 to €11.50.
The conwert share was rated by analysts from the following institutes at the reporting date 31 December 2013:
+ Baader Bank AG/Helvea SA
+ Close Brothers Seydler Research AG
+ Erste Group Bank AG
+ Goldman Sachs International
+ HSBC Trinkaus & Burkhardt AG
+ J.P. Morgan Securities Plc.
+ Kempen & Co N.V.
+ Kepler Cheuvreux
+ KochBank GmbH Wertpapierhandelsbank
+ Raiffeisen Centrobank AG
+ SRC-Scharff Research & Consulting GmbH
Information on conwert shares
Investor Relations Manager Clemens Billek
Shareholder Hotline +43/1/521 45-700
Email [email protected]
Website www.conwert.com
Vienna Stock Exchange CWI
Bloomberg CWI AV
Reuters CONW.VI
ISIN AT0000697750
Type of shares Ordinary shares
No. of shares incl. treasury shares 85,359,273
Issued capital €426.79 mn
Segment Vienna Stock Exchange, Official Trading
Indices ATX, ATX-Prime, IATX, FTSE EPRA/NAREIT Europe Index
Specialist Close Brothers Seydler Bank AG
Market Maker Baader Bank AG, Erste Group Bank AG, Kepler Capital Markets S.A., KochBank GmbH Wertpapierhandelsbank, Raiffeisen Centrobank AG, Spire Europe Ltd.,Virtu Financial Ireland Ltd.
Shareholder structur at 31 December 2013*)
Haselsteiner Family Private Foundation 24.4%;
EARNEST Partners, LLC 5.0%; Barclays Plc 4.7%**);
total institutional investors 52.3%; retail 20.3%; treasury shares 3.0%
*) FIL Limited (Fidelity) announced that it holds more than 5.0% of shares in March 2014. **) Barclays Plc announced that it holds more than 5.0% of shares at the end of February 2014.
“Life at home can be quite chaotic – this
makes us appreciate the reliable property
management even more.”
Anne & Niki K.,
Corpor
at
e Go
vernanc
26
Corporate Bodies
Administrative Board Johannes Meran
Chair of the Administrative Board Alexander Tavakoli
Deputy Chair of the Administrative Board Kerstin Gelbmann
Member of the Administrative Board Eveline Steinberger-Kern
Member of the Administrative Board
Details regarding the Corporate Bodies can be found in the Corporate Governance Report.
Executive Board Clemens Schneider
Chief Executive Officer (since February 2014)
Business divisions: Portfolio, Asset and Property Management | Acquisitions and Sales | Property Services | Investor Relations and Corporate Communications
Thomas Doll Chief Financial Officer
Business divisions: Finance | Controlling and Risk Management | Corporate Accounting and Taxes | Legal Matters and Corporate Shareholdings | IT | Human Resources and Group Organisation
Corporate Governance Report
The Administrative and Executive Boards of conwert consider transparent corporate communication to be a key pillar in sustainable value creation. conwert voluntarily committed to compliance with the Austrian Code of Corporate Governance (ACCG) as early as 2005, making it the first Austrian property company to do so. The ACCG provides all listed Austrian companies and listed European companies who are registered in Austria with a framework for the management and control of enterprises; the Code also incorporates international standards for good corporate management. The latest version of the ACCG is available at www.corporate-governance.at.
The July 2012 version of ACCG is applicable for the 2013 financial year and contains a total of 90 rules, divided into L, C and R Rules. L Rules (Legal Requirement) are based on mandatory legal requirements; C Rules (Comply or Explain) are internationally accepted standards. Non-adherence or deviations must be explained and justified. In addition, the ACCG also contains R Rules (Recommendation), which serve as guidelines. conwert has had its compliance with the ACCG Rules externally evaluated by Univ. Prof. DDr. Waldemar Jud Corporate Governance Forschung CGF GmbH.
As conwert is managed as a single-tier Societas Europaea (SE), all of the ACCG Rules relating to the Management Board and Supervisory Board are applied to the Executive Board and Administrative Board in the spirit of the Code. Here, the following additional principles are considered when applying the ACCG to conwert:
+ The application of individual rules relating to the Administrative Board and/or Executive Board must reflect the purpose of the Code, which is applied on the basis of division of responsibilities within the bodies of the SE.
+ The ACCG rules of conduct for the Supervisory Board must generally be observed by the Administrative Board.
+ In principle, the ACCG rules of conduct for the Management Board must be observed by the Executive Board, whereby the Administrative Board is accountable for any responsibilities assigned to it by law or through the Articles of Association.
In the 2013 business year all L Rules were upheld; three explanations were given regarding the C Rules: Explanation regarding C Rules 16 and 17 of the ACCG:
During the period February to September 2013, the Executive Board consisted of two Executive Directors with equal rights and without an appointed Chair or CEO, whereby under the single-tier system resolutions are referred to the Administrative Board in any instances where a vote is tied.
Stavros Efremidis was the company’s Executive Director from February to September 2013. Thomas Doll was the single Executive Director from the termination of Stavros Efremidis until Clemens Schneider took on the role of Executive Director and CEO in February 2014. During the period of strategic repositioning, the important communication tasks were handled by the Administrative Board in order to ensure continuous lines of communication with all stakeholders. The provisions of C Rules 16 and 17 are considered to have been met, as the Administrative Board has far greater influence over the company’s operational affairs in a single-tier SE such as conwert.
Explanation regarding C Rule 27 of the ACCG:
Compensation of the Executive Directors was once again tied to sustainable, long-term performance criteria in 2013. However, owing to the major changes in the composition of the portfolio, multi-year performance criteria were not applied in 2013. Multi-year remuneration has once again been adopted for the coming years and applies to the remuneration of the new Executive Director, Clemens Schneider.
28
Shareholders and Annual General Meeting
conwert’s shareholder base is highly diverse. On the basis of the share notification of April 2012, the Haselsteiner Family Private Foundation owns 24.4% of the shares. In October 2013 EARNEST Partners, LLC, announced that it held more than 5% of the shares. In January 2014 FIL Limited (Fidelity) announced that it held more than 4% of shares and as of the announcement in February 2014, Barclays Plc owned a 5.9% stake. As of the reporting date, 3.0% were treasury shares. conwert supports its shareholders in participation at the AGM, so that they are able to exercise their rights as shareholders. In line with the Austrian Stock Corporation Act and the ACCG, general meetings are announced at least four weeks before the AGM and three weeks before an extraordinary general meeting. In 2013 the only general meeting was the AGM on 8 May. Wherever possible, all documents related to the AGM are published on the website at the latest three weeks before the AGM; these and the voting results on the individual agenda items are also available to investors after the AGM.
Cooperation between the Executive Board and the Administrative Board
The Executive Directors and the Administrative Board are involved in open and constructive dialogue both in the course of the regular Executive and Administrative Board meetings and outside these meetings. The Executive Directors report to the entire Administrative Board once a month at the Administrative Board meetings; discussions between the Executive Bodies also take place outside of the meetings, particularly on topics related to profitability and liquidity.
Executive Directors
Thomas Doll and Stavros Efremidis were Executive Directors in 2013. In February 2013 the Administrative Board prematurely extended Thomas Doll’s contract as Executive Director and CFO until the end of June 2017. Stavros Efremidis was appointed as Executive Director and COO for the German business, as well as procurement and sales management, in February 2013. In the course of the takeover of KWG Kommunale Wohnen AG (KWG), he moved from the KWG Executive Board to the conwert Executive Board. After KWG was integrated into the Group, the Administrative Board unanimously terminated the contract with Stavros Efremidis and removed him as Executive Director. The agreement reached reflects the circumstances of the termination as well as the company’s economic state and settles any claim to fixed, variable and other remuneration. Effective 1 February 2014, Clemens Schneider has been appointed Executive Director and CEO. The responsibilities of Stavros Efremidis were assumed by Thomas Doll for the interim period.
Executive Board Responsibilities First appointed End of term
Other functions on Super-visory or Administrative Boards or comparable roles in Austrian or foreign companies not included in the consolidated financial statements
Thomas Doll dob 27/12/1965
Finance, controlling / risk management / ICS, Group accounting and tax, legal affairs and investments, IT and HR; portfolio management, services and sales in Austria and other countries (also for the responsibilities of Stavros Efremidis before and after his term)
September 2010 June 2017 None
Stavros Efremidis dob 27/09/1968
Portfolio management, services, acquisitions and sales in Germany, sales management, procurement
February 2013 September 2013 None
business year.
In 2013 the profit-sharing scheme consisted of the following components and is tied in particular to sustainable, long-term criteria:
Fixed component Variable component Severance Remuneration in kind Total
Thomas Doll 237,650.00 216,500.00 - 7,374.36 461,524.36 Stavros Efremidis
(left in September 2013)
236,041.60 - 245,000.00 12,868.50 493,910.10
Total 473,691.60 216,500.00 245,000.00 20,242.86 955,434.46
Remuneration of the Executive Board in 2013 (in €)
+Severance pay upon premature termination:
Executive Directors are entitled to a maximum of two gross yearly salaries in the case of premature termination, whereby this must be made as a one-off payment without a discount and paid to the terminated Executive Director on the date of leaving the Board. Should an Executive Director leave the Board prematurely by choice, the Director has no claim to severance pay. Special severance rules apply to instances where there is a change of control. Agreements resulting from the premature termination of an Executive Director with regard to severance pay reflect the circumstances of the termination and the economic state of the company. The severance settlement for Stavros Efremidis amounted to €245,000.00, whereby the variable salary component for 2013 and any other claims have been settled in full.
+Severance pay when a contract is not renewed or upon retirement:
In cases where an Executive Director’s term on the Board ends because the Administrative Board has not renewed
Procedures for the Executive Directors
The Executive Directors conduct the business of the company in line with the law, Articles of Association, and Rules of Procedure and, along with the Administrative Board, represent the company externally. There were two Executive Directors for the majority of 2013 – Thomas Doll and Stavros Efremidis. All of Stavros Efremidis’ responsibilities were assumed on an interim basis by Thomas Doll before and after Stavros Efremidis’ appointment and termination until Clemens Schneider took up the post of Executive Director and CEO on 1 February 2014. The Rules of Procedure for the Executive Directors include information and reporting obligations to the Administrative Board as well as cataloguing all measures which require the approval of the Administrative Board. The regular Executive Board meetings in particular serve to ensure the exchange of information and decision making for all corporate affairs which require the approval of the Executive Board.
Remuneration of the Executive Board
The remuneration system for members of the Executive Board involves fixed and variable salary components. No provisions are made for stock options or pensions.
Total remuneration is divided into a fixed salary and a variable component, or profit-sharing plan. A range of qualitative and quantitative criteria is applied to determining the performance-linked component due.
Depending on the extent to which the criteria are met, the variable component can amount to up to €225,000.00 per
(1) Achieving EBT targets (50% profit sharing),
(2) Achieving cross-divisional targets (30% profit sharing),
(3) Achieving individual targets defined by the Administrative Board (20% variable profit sharing)
These variable, performance-linked salary components were re-evaluated in 2011 and were applied in the 2013 business year to the two Executive Directors, Thomas Doll and Stavros Efremidis. The breakdown of the total remuneration of the two Executive Directors is shown in the following table:
30
+ The Administrative Board member should not have a business relationship to the company or any of its subsidiaries, the scope of which is considered material, either at present or in the previous business year. This also applies to business dealings with companies in which the Administrative Board member has a significant economic interest. This does not apply to instances where the existence of such a business relationship has been disclosed prior to the member’s appointment. Administrative Board approval of individual transactions as per Article 95 Section 5 Line 12 of the Austrian Stock Corporation Act does not automatically lead to classification as non-independent.
+ The Administrative Board member must not have audited the company in the past three years, nor been a share-holder or employee of the company’s current audit firm.
+ The Administrative Board member should not serve on the Management Board or Executive Board of another company in which a member of conwert’s Executive Board is on the Supervisory or Administrative Board.
+ The Administrative Board member should not be closely related to a member of the Executive Board (direct descendant, spouse, live-in partner, parent, uncle, aunt, sibling, niece, nephew) or to any person who holds one of the aforementioned positions.
Independence of the Administrative Board members
In accordance with ACCG Rule 53, conwert Immobilien Invest SE has specified the following guidelines for the independence of the Administrative Board members:
A member of the Administrative Board is considered to be independent when he/she has no business or personal relationship to the company or its Executive Board which constitutes a material conflict of interest and is therefore likely to influence the behaviour of the member. The Administrative Board should also adhere to the following guidelines when determining the criteria for evaluating the independence of its members:
Administrative Board Function
First
appointed End of term
Other functions on Supervisory or Administrative Boards or comparable roles in Austrian or foreign companies
Johannes Meran dob 22/02/1972
+ Chair of the Administrative Board + Deputy Chair of the Audit Committee
October 2010 o. AGM 2015*) + Chair of the Supervisory Board of
ECO Business-Immobilien AG + Member of the Supervisory Board
of KWG Kommunale Wohnen AG + Deputy Chair of the Supervisory Board of TPI Tourism Properties Invest AG
Franz Pruckner dob 20/05/1956
+ Deputy Chair of the Administrative Board (until end 2013)
+ Chair of the Audit Committee (until end 2013)
+ Finance expert
+ Representative of free float shareholders
October 2010 o. AGM 2015**) + Deputy Chair of the Supervisory
Board of ECO Business-Immobilien AG (until end 2013)
Alexander Tavakoli dob 06/08/1969
+ Deputy Chair of the Administrative Board (since 2014)
+ Member of the Audit Committee
May 2011 o. AGM 2016 + Deputy Chair of the Supervisory Board of ECO Business-Immobilien AG (since 2014) Kerstin Gelbmann
dob 30/05/1974
+ Member of the Administrative Board + Chair of the Audit Committee
(since 2014) + Finance expert
May 2011 o. AGM 2016 + Member of the Supervisory Board of ECO Business-Immobilien AG + Member of the Supervisory
Board of STRABAG SE + Member of the Supervisory
Board of TPI Tourism Properties Invest AG
Eveline Steinberger-Kern dob 27/01/1972
+ Member of the Administrative Board + Member of the Audit Committee + Representative of free float shareholders
May 2011 o. AGM 2016 + Member of the Supervisory Board of ECO Business-Immobilien AG
*) At the end of November 2013 Johannes Meran announced that he would leave the Administrative Board at the 13th Annual General Meeting on 7 May 2014 and renounce his mandate. **) Franz Pruckner left the Administrative Board at the end of 2013 for personal reasons.
Annual Report 2013 | Corporate Governance & CSR | Corporate Governance Report
The members of the Administrative Board have committed to ACCG Rule 53 and the guidelines stated above as criteria for their independence. In accordance with this Rule and the ACCG guidelines, the following Administrative Board members have declared themselves to be independent:
+ Johannes Meran
+ Franz Pruckner
+ Alexander Tavakoli
+ Kerstin Gelbmann
+ Eveline Steinberger-Kern
Administrative Board procedures and committees
The Administrative Board manages the company and rules on the affairs accorded to it by the law, Articles of Association, and Rules of Procedure. In 2013 the Administrative Board consisted of five members, who were appointed by the Annual General Meeting. During 2013 the Administrative Board held twelve ordinary and seven extraordinary meetings. Franz Pruckner left the Administrative Board for personal reasons at the end of 2013. Alexander Tavakoli was elected as the new Deputy Chair of the Administrative Board and Kerstin Gelbmann was elected as the new Chair of the Audit Committee.
In addition to the Audit Committee, which is mandatory by law and which all of the Administrative Board sit on, two further committees were formed – a Personnel Committee and an Internal Audit Committee.
Audit Committee
In 2013 all of the Administrative Board members sat on the Audit Committee.
The Audit Committee discusses the consolidated financial statements and oversees the accounting process and the audit of the individual and consolidated financial statements. It checks and oversees the independence of the auditors and furthermore examines the individual and consolidated financial statements, the management report and group management report, the Executive Board’s proposal for the appropriation of net profit and the corporate governance report. It prepares the approval of the financial statements and informs the Administrative Board of its findings in an audit report, even though the Administrative Board and Audit Committee of conwert comprised exactly the same people in 2013. Furthermore, the Audit Committee prepares the proposal for the appointment of the auditors of the individual and consolidated financial statements.
Personnel Committee
The Personnel Committee was composed of Franz Pruckner as Chair, Eveline Steinberger-Kern as Deputy Chair, and Kerstin Gelbmann and Alexander Tavakoli as members.
The Personnel Committee was formed in July 2013 for the selection process to appoint a new Executive Director with the function of CEO. The Personnel Committee made regular reports on its activities to the entire Administrative Board. The Personnel Committee was disbanded at the end of November 2013 following the conclusion of a structured selection process, which was conducted in collaboration with an international recruitment consulting company.
Internal Audit Committee
The Internal Audit Committee was composed of Alexander Tavakoli as Chair, Eveline Steinberger-Kern as Deputy Chair, and Franz Pruckner and Kerstin Gelbmann as members.
The Internal Audit Committee was formed in September 2013 in the course of the internal audit in order to evaluate the public allegations against the company and the Chair of the Administrative Board. This process was supported by Audit Partner and external auditors. Audit Partner reached the conclusion that the conwert Boards and Committees and the Chair of the Administrative Board had behaved appropriately. This was also confirmed by the legal firms Dorda Brugger Jordis and P+P Pöllath + Partners. The Internal Audit Committee made regular reports on its activities to the entire Administrative Board. The Internal Audit Committee was dissolved following the conclusion of the audits and evaluations at the end of November 2013.
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Number of meetings of the Administrative Board and its committees and activities in 2013
The Administrative Board held 19 meetings in the 2013 financial year. In 2013 the Administrative Board dealt with all affairs which are within its scope of responsibility and which require the approval of the Administrative Board in addition to that of the Executive Board. There was a particular focus on the Administrative Board’s activities related to property transactions which fell under its remit, as well as approving the budget and overseeing adherence to the corporate strategy and compliance.
In addition to the resolutions passed at the meetings, several Administrative Board resolutions under the aforementioned scope of responsibility were passed using a circular system which does not require Administrative Board members to meet in person.
Beyond that, there were three active committees in 2013. A Personnel Committee and an Internal Audit Committee were formed in 2013 in addition to the Audit Committee; these committees regularly reported to the Administrative Board at the Administrative Board meetings. The Audit Committee and the Internal Audit Committee held three meetings in the 2013 financial year; the Personnel Committee met six times.
Further information on the activities of the Administrative Board and the Audit Committee can be found in the Administrative Board Report and in the notes to the consolidated financial statements.
Remuneration of the Administrative Board
The Annual General Meeting on 26 May 2009 adopted a remuneration system for the Administrative Board; this system was also applied in the 2013 financial year.
Overall every member of the Administrative Board is permitted to draw a maximum surcharge of 50% per business year for participating in committees in addition to his/her fixed remuneration.
Remuneration of the Administrative Board per year (in €)
Function Fixed Attendance fee per meeting
Chair 50,000.00 2,500.00 Deputy Chair 25,000.00 2,500.00 Member 15,000.00 2,500.00
Committee Chair Member Attendance fee per meeting*) in €
Audit Committee 50% of fixed remuneration
25% of fixed remuneration
2,500.00
Remuneration of the Audit Committee
*) unless held on the same day as a plenary meeting of the Administrative Board
Committee Chair Member Attendance fee per meeting*) in €
Per committee 25% of fixed remuneration
12.5% of fixed remuneration
2,500.00
Remuneration of the other committees
*) unless held on the same day as a plenary meeting of the Administrative Board
