Quarterly Report • Mar 28, 2019
Quarterly Report
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ASSETS In thousands of euros
| Note | 31/12/2018 | 31/12/2017 |
|---|---|---|
| 253,289 | 252,504 | |
| 3,048 | 0 | |
| 256,337 | 252,504 | |
| 2 | ||
| 0 | 29,527 | |
| 136 | 4 | |
| 2,832 | 5,295 | |
| 2,968 | 34,826 | |
| 3 | 27,267 | 4,440 |
| 286,572 | 291,770 | |
LIABILITIES In thousands of euros
| Note | 31/12/2018 | 31/12/2017 | |
|---|---|---|---|
| A. Equity | 4 | ||
| I. Subscribed capital | 36,988 | 8 | |
| II. Capital reserves | 198,874 | 85,354 | |
| III. Profit carried forward | 10 | – 11,939 | |
| IV. Net loss | – 24,414 | – 377 | |
| 211,458 | 73,046 | ||
| B. Provisions | |||
| 1. Provisions for pensions and similar obligations | 5 | 472 | 496 |
| 2. Tax provisions | 6 | 3,098 | 2,758 |
| 3. Other provisions | 6 | 4,480 | 28,663 |
| 8,050 | 31,917 | ||
| C. Liabilities | |||
| 1. Trade payables, of which with a remaining term of up to one year: €1,771 thousand (previous year: €3,919 thousand) |
7 | 1,771 | 3,919 |
| 2. Liabilities to shareholders of which with a remaining term of up to one year: €0 thousand (previous year: €55,200 thousand) |
8 | 0 | 55,200 |
| 3. Liabilities to affiliated companies of which with a remaining term of up to one year: €29 thousand (previous year: €97,554 thousand) of which with a remaining term of more than one year: €63,525 thousand (previous year: €13,824 thousand) |
9 | 63,554 | 111,377 |
| 4. Other liabilities of which with a remaining term of up to one year: €1,739 thousand (previous year: €340 thousand) of which with a remaining term of more than one year: €0 (previous year: €653 thousand) |
|||
| of which for taxes: €989 thousand (previous year: €340 thousand) | 10 | 1,739 | 993 |
| 67,064 | 171,489 | ||
| D. Deferred tax liabilities | 11 | 0 | 15,318 |
| 286,572 | 291,770 | ||
| Note | 2018 | 2017 | |
|---|---|---|---|
| Revenue | 12 | 1,406 | 155 |
| Other operating income | 13 | 6,016 | 22 |
| Staff costs | 14 | ||
| Wages and salaries | – 4,407 | – 8,686 | |
| Social security contributions and expenses for pensions and other employee benefits of which for pensions: €398 thousand (previous year: €9 thousand) |
– 428 | – 14 | |
| – 4,835 | – 8,700 | ||
| Other operating expenses | 15 | – 22,973 | – 12,012 |
| Income from equity investments | 0 | 22,582 | |
| of which from affiliated companies: €0 thousand (previous year: €22,508 thousand) | |||
| Income from other securities and loans of the financial assets | 16 | 52 | 0 |
| of which from affiliated companies: €52 thousand (previous year: €0 thousand) | |||
| Other interest and similar income | 16 | 140 | 0 |
| of which from affiliated companies: €0 thousand (previous year: €0 thousand) | |||
| Interest and similar expenses | 16 | – 4,639 | – 17,342 |
| of which from affiliated companies: €–3,997 thousand (previous year: €–10,473 thousand) | |||
| of which from the compounding of provisions: €–200 thousand (previous year: €5 thousand) | |||
| Taxes on income and earnings | 17 | 419 | – 3,433 |
| Earnings after tax | – 24,414 | – 18,728 | |
| Net loss | – 24,414 | – 18,728 | |
At the shareholders' general meeting of 13 February 2018, it was decided that Instone Real Estate Group B.V., with its registered office in Amsterdam, the Netherlands and administrative headquarters at Baumstraße 25, 45128 Essen, Germany, would be converted into a stock corporation under Dutch law (naamloze vennootschap: N.V.), the company Instone Real Estate Group N.V.
The conversion became legally effective upon registration of Instone Real Estate Group N.V. under number 60490861 on 13 February 2018 at the Dutch Chamber of Commerce and Industry, registered as a German branch at the Essen District Court under HRB 26426 on 14 May 2018.
The first annual general meeting on 29 June 2018 in Amsterdam, the Netherlands, resolved to undertake a cross-border transfer to Essen, Germany, while preserving its legal identity. The transfer of the office was registered at the Essen District Court under HRB 29362 on 28 August 2018.
Since then, the Company has been trading under the name Instone Real Estate Group AG (hereinafter also referred to as the "Company" or "Instone Real Estate"). It is the top level domestic parent company of the Instone Group.
The Company holds interests in subsidiaries whose principal activity is the acquisition, development, construction, leasing, management and sale or other use of land and buildings, as well as equity investment in other companies active in the sector.
The annual financial statements of Instone Real Estate Group AG have been prepared according to the accounting standards currently applicable to corporations as per the German Commercial Code (Sections 242 et seqq. and 264 et seqq. HGB), taking into account the specific legal form statutory provisions of the German Stock Corporation Act (AktG). As a listed company, the Company is a large corporation within the meaning of Section 267 (3) HGB and Section 264d HGB.
The previous year's annual financial statements of the Company were prepared in accordance with the provisions of the International Financial Reporting Standards (IFRS) as this was permitted for a company under Dutch law. Therefore, the previous year's figures are based on the IFRSs.
As a result of the cross-border conversion of legal form in August 2018, the first-time application of the commercial law provisions took place on 1 January 2018. As a rule, the book values were carried over.
In contrast to the previous year, the provisions for pensions and similar obligations as at the reporting date were valued according to the German commercial law regulations, and not according to IFRS. Under Section 253 (1) HGB, pension provisions are to be recognised in the necessary settlement value according to a reasonable commercial assessment. The binding rate for discounting is regularly set by the Deutsche Bundesbank on the basis of a 10-year average. According to IFRS standard IAS 19, however, an expense-based approach is used. With an expense-based approach, expenses are determined right at the beginning of the year, the pension provisions are calculated, among other things, by adding the expenses to the previous year's value. The discount factors in the IFRS are derived from the so-called Mercer Pension Discount Yield Curve (MPDYC) approach, which takes into account the duration of the pension obligations for the Company.
The expenses incurred up to 31 December 2017 in connection with the going public were treated according to IFRS and were not recognised in the income statement under other assets. Based on the German commercial law provisions, all costs incurred in the financial year in connection with the going public were recognised in the income statement.
In comparison to financial year 2017, no deferred taxes were recognised as there are no taxable temporary differences on the balance sheet date.
As a result of the changeover to the German commercial law provisions, as of 1 January 2018, €12,327 thousand were directly recognised in equity. This effect relates to the deferred taxes, costs in connection with the going public and valuation differences for the liabilities.
The income statement has been prepared according to the nature of expense method pursuant to Section 275 (2) HGB. In order to improve the clarity of the presentation, individual items in the statement of financial position and income statement have been grouped together. These items are shown and explained separately in the notes.
In the interests of clarity, some items in the balance sheet and income statement have been grouped together and shown separately in the notes.
All amounts are stated in thousands of euros (€ thousand) unless otherwise stated. Commercial rounding may lead to immaterial rounding differences in the totals.
Financial assets include interests in affiliated companies and are valued at acquisition cost. Unscheduled depreciation and amortisation takes place in the case of permanent impairment. If impairment losses were recognised in previous years and the reasons for the impairment have been partially or completely eliminated in the meantime, the impairment is reversed up to a maximum of the acquisition cost.
Non-interest bearing and low interest-bearing loans are recognised at their present value; otherwise, the loans are recognised at nominal value.
As at 31 December 2017, the Company recognised receivables/ liabilities to/from the shareholder(s). As a result of the going public, a large portion of the receivables/liabilities to/from the shareholder(s) was netted out.
As at 31 December 2018, there are still receivables from the former majority shareholder and these are reported in other assets.
Receivables and other assets are recognised at acquisition cost. For the valuation of receivables and other assets, the foreseeable risks are taken into account through appropriate value adjustments (impairment). The amount of the impairment is based on the probable default risk. The other receivables have a residual maturity of up to one year.
Deferred taxes arise due to temporary differences between the balance sheet prepared according to the German Commercial Code (HGB) and the tax balance sheet.
Deferred tax assets are also recognised for tax refund claims arising from the anticipated utilisation of existing tax loss carryforwards in subsequent years. Deferred tax liabilities must be capitalised if it can be assumed with sufficient certainty that the affiliated economic benefits can be claimed. Their amount is calculated on the basis of the tax rates which apply or are expected to apply at the time of adoption. For all other purposes, deferred tax liabilities are measured on the basis of the tax regulations in force or enacted at the time of reporting.
Cash and cash equivalents are in the form of bank deposits.
Provisions for pensions and similar obligations include obligations by the Company with respect to current and future benefits for eligible current and former employees and their survivors. These obligations largely relate to pension benefits. The individual commitments are determined on the basis of the length of service and the salaries of the employees. The measurement of provisions for defined benefit plans is based on the actuarial value of the respective obligation. This is determined using the projected unit credit method. This projected unit credit method not only includes pensions and accrued benefits known as of the reporting date but also wage increases and pension increases expected in the future. The calculation is based on actuarial reports using biometric calculation methods ("Richttafeln 2018 G" (guideline tables) of Professor Dr Klaus Heubeck). Direct pension obligations are valued in accordance with the provisions of Section 253 (1) and (2) HGB.
In the determination of the actuarial interest rate, the option under Section 253 (2) sentence 2 HGB was used. Provisions for pension obligations or comparable long-term obligations may therefore be discounted as a lump sum with the average market interest rate resulting for an assumed residual term of 15 years. The underlying actuarial interest rate for discounting pension obligations amounted to 3.21% (previous year: 1.90%).
In accordance with Section 253 (6) sentence 3 HGB, the difference between the recognition of provisions in accordance with the corresponding average market interest rate from the past ten years and the recognition of the provisions in accordance with the corresponding average market interest rate from the past seven financial years is to be determined in each financial year.
The difference arising from the change of the annual average interest rate due to the extension of the period from seven to ten years is determined as follows:
| Provision derived | in Euro |
|---|---|
| using the 10-year average interest rate | 1,368,783.00 |
| using the 7-year average interest rate | 1,675,414.00 |
| Difference according to Section 253 (6) HGB | 306,631.00 |
| Of which, subject to a distribution block in accordance with Section 253 (6) sentence 1 HGB |
306,631.00 |
The previous year's value is not stated, because a valuation according to IFRS was carried out on 31 December 2017.
The liabilities from pension obligations are primarily covered by assets which are used exclusively for meeting pension obligations and cannot be accessed by other creditors (cover fund). These include assets which are invested in trust as part of a Contractual Trust Arrangement (CTA), reinsurances pledged to employees and fund units acquired from deferred compensation. They are measured at fair value. This value is derived, depending on the nature of the cover fund, from market prices, bank statements and insurance information. If the fair value is greater than the acquisition cost, a dividend block is observed. According to Section 246 (2) sentence 2 HGB, the fair value of the cover fund is to be offset against the covered pension obligations, as are the associated income and expenses.
The tax provisions and the other provisions are made according to a reasonable commercial assessment, taking the legal assessment as a basis, where applicable. In the determination of the settlement value of the other provisions, price and cost increases expected in future (of 2.0% to 3.0%) are taken into account. Provisions with a residual maturity of over one year are each discounted with the average market interest rate of the past seven years with matching maturities calculated and announced by the Bundesbank.
The liabilities are recognised at the settlement value.
The preparation of the financial statements requires estimates and assumptions that may affect the application of the Company's accounting principles, recognition and measurement. Estimates are based on past experience and other knowledge of the transactions to be posted. Actual amounts may differ from these estimates.
Estimates are in particular required for the valuation of inventories and trade receivables for contract work, the allocation of purchase prices, the recognition and measurement of deferred tax assets and the recognition of provisions for pensions and other provisions.
The development of the non-current assets is shown in the following overview.
ASSETS SCHEDULE In thousands of euros 2018 2017 Acquisition costs As at 1 January 252,504 252,504 Additions 1,272 0 Disposals – 487 0 As of 31 December 253,289 252,504 Cumulative depreciation and amortisation As at 1 January 0 0 Additions 0 0 Disposals 0 0 As of 31 December 0 0 Book values 31 December 253,289 252,504 The shares in affiliated companies relate mainly to Instone Real Estate Development GmbH in the amount of €181,821 thousand (previous year: €181,796 thousand) And Instone Real Estate Leipzig GmbH in the amount of €71,190 thousand (previous year: €70,387 thousand).
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Shares in affiliated companies included in the consolidated financial statements |
||
| Instone Real Estate Development GmbH |
181,821 | 181,796 |
| Instone Real Estate Leipzig GmbH | 71,190 | 70,387 |
| GRK REVION Hamburg GmbH | 0 | 156 |
| OPUS Wohnbau GmbH | 115 | 115 |
| Instone Real Estate Landmark GmbH |
25 | 25 |
| 253,151 | 252,479 | |
| Shares in affiliated companies | ||
| Instone Real Estate Assets GmbH | 0 | 25 |
| Westville 1 GmbH | 138 | 0 |
| 138 | 25 | |
| 253,289 | 252,504 | |
Loans to affiliated companies relate to Instone Real Estate Landmark GmbH in the amount of €3,048 thousand (previous year: €0 thousand).
| 31/12/2017 | |
|---|---|
| 3,048 | 0 |
| 3,048 | 0 |
There are no more receivables from shareholders (previous year: €29,527 thousand).
In thousands of euros
| 31/12/2018 | 31/12/2017 |
|---|---|
| 0 | 17,605 |
| 0 | 2,081 |
| 0 | 9,841 |
| 0 | 29,527 |
Receivables from affiliated companies primarily result from levies for services.
In thousands of euros
| 31/12/2018 | 31/12/2017 |
|---|---|
| 80 | 0 |
| 56 | 0 |
| 4 | |
| 136 | 4 |
Other receivables and other assets include receivables from former minority shareholder Hochtief Solutions AG, Essen originating from an agreement on the reimbursement of real estate transfer tax liabilities in the amount of €2,758 thousand (previous year: €2,758 thousand). Furthermore, they contain claims from tax refunds in the amount of €32 thousand (previous year: €0 thousand) as well as from former shareholders in the amount of €42 thousand (previous year: €0 thousand).
| In thousands of euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Other receivables and other assets |
||
| Receivable tax exemption Hochtief Solutions AG |
2,758 | 2,758 |
| Receivables from tax authorities from offsettable taxes |
32 | 0 |
| Coöperatieve Activum SG Fund III Investments U.A. |
25 | 0 |
| Coöperatieve Formart Investments U.A. |
14 | 0 |
| Coöperatieve Activum SG Fund V Investments U.A. |
3 | 0 |
| Receivables from transaction costs passed on |
0 | 2,533 |
| Input tax surplus | 0 | 4 |
| 2,832 | 5,295 | |
These primarily relate to balances at credit institutions; as in the previous year, they are not subject to drawing restrictions.
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Bank balances | ||
| 152000 DZ Bank Düsseldorf | 27,267 | 4,361 |
| 150200 ABN AMRO 0457192313 | 0 | 1 |
| 150300 ABN AMRO 0404689264 | 0 | 78 |
| 27,267 | 4,440 | |
The share capital of the Company as at 31 December 2018 was €36,988 thousand (previous year: €8 thousand) and is fully paid up. It is divided into 36,988,336 no-par value shares.
The annual general meeting decided on 29 June 2018 to create new authorised capital. The Management Board is authorised to increase the share capital of the Company by up to €18,450 thousand in the period until 28 June 2023 through the issue of up to 18,450,000 newshares. The authorised capital became effective upon the registration of the Company in the commercial register of the Local Court of Essen during the cross-border conversion of legal form on 28 August 2018.
The increase in the capital reserves by €113,520 thousand to €198,874 thousand (previous year: €85,354 thousand) is mainly due to the going public on 15 February 2018 and the associated issue of new shares in connection with the listing of the Company on the Frankfurt Stock Exchange for the first time.
The liabilities from defined benefit plans of Instone Real Estate are listed in the following table:
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Provisions for pensions and similar obligations |
||
| Settlement value of the pensions and similar obligations |
1,369 | 1,203 |
| Fair value of the cover fund | – 897 | – 707 |
| Net value of the provision for pensions and similar obligations |
472 | 496 |
| Acquisition costs of the plan assets | 946 | 709 |
The fair value of the cover fund is broken down as follows:
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Listing in an active market: | ||
| CTA assets | ||
| DE000A0ER3J5 HI-Absolute-Return-Fonds |
443 | 341 |
| DE0005111025 Hi-Corporate-Bonds 1-Fonds |
236 | 184 |
| DE000A0DNV33 HI-DividendenPlus-Europa-Fonds |
61 | 73 |
| DE000A1W2UC7 HI-EM-Credits-Short-Term-Fonds |
67 | 71 |
| DE0002544483 HI-DividendenPlus-Fonds |
27 | 0 |
| DE000A14UTY4 HI-Aktien Low Risk Euroland |
27 | 0 |
| 861 | 669 | |
| DC assets | ||
| LU1480268660 AGIF-All.Gl.Multi Asset Credit |
36 | 38 |
| 36 | 38 | |
| 897 | 707 | |
Provisions include provisions for taxes in the amount of €3,098 thousand (previous year: €2,758 thousand). Other provisions relate primarily to provisions for stock options in the amount of €1,322 thousand (previous year: €28,663 thousand), premiums in the amount of €1,103 thousand (previous year: €0 thousand) and indirect personnel expenses in the amount of €1,792 thousand (previous year: €0 thousand).
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Tax provisions | 3,098 | 2,758 |
| Provision for outstanding leave | 120 | 0 |
| Provision for share-based remuneration/stock options |
1,322 | 28,663 |
| Provision for premiums | 1,103 | 0 |
| Provision for external costs for the annual financial statements |
143 | 0 |
| Provision for indirect personnel costs |
1,792 | 0 |
| 4,480 | 28,663 | |
| 7,578 | 31,421 |
On the balance sheet date, there are liabilities of €1,771 thousand (previous year: €3,919 thousand).
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Trade payables | ||
| Outstanding invoices | 1,510 | 490 |
| Accounts payable to creditors | 261 | 3,429 |
| 1,771 | 3,919 | |
There are no more liabilities to shareholders (previous year: €55,200 thousand).
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Liabilities to shareholders | ||
| Coöperatieve Activum SG F und III Investments U.A. |
0 | 36,882 |
| Coöperatieve Formart Investments U.A. |
0 | 18,318 |
| 0 | 55,200 | |
Liabilities to affiliated companies amount to €63,554 thousand (previous year: €111,377 thousand) result mainly from liabilities from loans.
| COMPANIES |
|---|
| In thousands of euros |
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Liabilities to affiliated companies |
||
| Instone Real Estate Leipzig GmbH | 48,556 | 32,895 |
| Instone Real Estate Development GmbH |
14,998 | 78,482 |
| 63,554 | 111,377 |
Other liabilities consist of liabilities from taxes in the amount of €988 thousand (previous year: €0 thousand) and from Supervisory Board bonuses in the amount of €751 thousand (previous year: €0 thousand).
In thousands of euros
| 31/12/2018 | 31/12/2017 |
|---|---|
| 988 | 0 |
| 751 | 0 |
| 0 | 653 |
| 0 | 340 |
| 1,739 | 993 |
There are no deferred tax liabilities as of the balance sheet date (previous year: €15,318 thousand).
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Deferred tax liability | ||
| Deferred tax liability | 0 | 15,318 |
| 0 | 15,318 | |
Revenues in the amount of €1,406 thousand (previous year: €155 thousand) relate primarily to revenues from affiliated companies. Of this, €964 thousand is attributable to Instone Real Estate Development GmbH, €440 thousand to Instone Real Estate Leipzig GmbH and €2 thousand to other revenues.
| In thousands of euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Sales revenue | ||
| Proceeds from other receivables – Germany |
1,404 | 0 |
| Proceeds from other receivables | 2 | 155 |
| 1,406 | 155 |
Other operating income of €6,016 thousand (previous year: €22 thousand) consists primarily of charges passed on to the former shareholder in the amount of €5,584 thousand (previous year: €0 thousand). In addition, income was generated from the reversal of provisions in the amount of €430 thousand (previous year: €0 thousand).
| In thousands of euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Other operating income | ||
| Other operating income | 5,584 | 0 |
| Income from the reversal of other provisions |
430 | 0 |
| Income from retrospective capitalisation – financial assets |
1 | 0 |
| Other income | 1 | 22 |
| 6,016 | 22 | |
Staff costs are due to salary payments in the amount of €4,407 thousand (previous year: €8,686 thousand) and social security benefits in the amount of €30 thousand (previous year: €5 thousand) as well as revised pension provisions in the amount of €398 thousand (previous year: €9 thousand).
As in the previous year, apart from Management Board members, the Company employed no other members of staff.
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Staff costs | ||
| Salaries | – 4,407 | – 8,686 |
| – 4,407 | – 8,686 | |
| Social security contributions/ expenses for pensions |
||
| Social security contributions | – 30 | – 5 |
| Changes in pension provisions | – 398 | – 9 |
| – 428 | – 14 | |
| – 4,835 | – 8,700 | |
Other operating expenses primarily include consulting costs, non-deductible input tax, utilisation of provisions, costs for the commercial management, severance pay and individual value adjustments.
Sundry other operating expenses not recognised elsewhere primarily include administration expenses.
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Other operating expenses | ||
| Organisational consulting expenses |
– 11,155 | – 3,854 |
| Charges passed on from an exemption agreement |
0 | – 9,116 |
| Non-deductible input tax | – 1,948 | 0 |
| Addition to the LTIP provision | – 1,845 | 0 |
| Commercial management | – 1,806 | – 60 |
| Severance payments | – 1,500 | 0 |
| Devaluation of receivables | – 1,062 | 0 |
| Court costs, attorneys' and notaries' fees |
– 925 | – 627 |
| Costs of insurance premiums | – 845 | – 84 |
| Supervisory Board bonuses | – 414 | 0 |
| Travel costs | – 162 | 0 |
| Reduction in proceeds from dispos als of affiliated companies not in cluded in the consolidated financial |
||
| statements | – 155 | 0 |
| Rents, leases, usage fees | – 136 | – 2 |
| Other expenses | – 1,020 | 1,730 |
| – 22,973 | – 12,012 | |
No income from equity investments was generated in 2018 (previous year: €22,582 thousand).
The income from loans of financial assets amounts to €52 thousand (previous year: €0 thousand).
Financial income is mainly comprised of interest income for loans to affiliated companies in the amount of €48 thousand (previous year: €0 thousand). And the discounting of other provisions made for the first time in this financial year in the amount of €92 thousand (previous year: €0 thousand).
Financial expenditure consists mainly of interest expenses for loans from affiliated companies in the amount of €3,997 thousand (previous year: €10,473 thousand)as well as from interest and similar expenses in the amount of €641 thousand (previous year: €6,572 thousand).
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Income from equity investments | ||
| of which, from affiliated companies |
||
| Instone Real Estate Development GmbH |
0 | 22,582 |
| 0 | 22,582 | |
| Income from other securities and loans of financial assets |
52 | 0 |
| Other interest and similar income |
||
| Interest income from affiliated companies |
48 | 0 |
| Interest income from other provisions |
92 | 0 |
| 140 | 0 | |
| Interest and similar expenses | ||
| Interest paid to affiliated companies |
– 3,997 | – 10,473 |
| Interest and similar expenses |
– 641 | – 6,572 |
| Interest expenses from other provisions |
0 | – 297 |
| – 4,639 | – 17,342 | |
| Financial result | – 4,447 | 5,240 |
This item contains the following taxes:
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Taxes on income and earnings |
||
| Corporation tax | – 629 | – 52 |
| Solidarity surcharge | – 35 | – 3 |
| Trade income tax | – 47 | 0 |
| Deferred tax | 1,130 | – 3,378 |
| 419 | – 3,433 | |
The calculation of deferred taxes continues to be carried out – as in the previous year – on the basis of a combined income tax rate of 32.63%.
The Management Board consists of the following four members:
Former members of the Management Board as at 31 December 2018:
The Supervisory Board consisted of five members from 13 February 2018 to 31 December 2018. With effect from 31 December 2018, two members have left the Supervisory Board meaning that the Supervisory Board now consists of the following three members.
Stefan Brendgen, born in 1964 in Mönchengladbach, acts as Chairman of the Supervisory Board and is Chairman of the nomination committee.
In addition to his role as a member of the Supervisory Board of the Company, Mr Brendgen is a member of executive, management or supervisory bodies and/or a partner in the following companies which do not belong to Instone Real Estate:
Dr Jochen Scharpe, born in 1959 in Werdohl, Germany, is Deputy Chairman of the Supervisory Board and is Chairman of the audit committee.
In addition to his function as a member of the Supervisory Board of the Company, Dr Scharpe is a member of management or supervisory bodies and/or partner in the following companies which do not belong to Instone Real Estate:
Marija Korsch, born in 1948 in Zadar, Croatia, is a member of the Supervisory Board and Chairperson of the remuneration committee.
In addition to her role as a member of the Supervisory Board of the Company, Ms Korsch is a member of executive, management or supervisory bodies and/or a partner in the following companies which do not belong to Instone Real Estate:
Former members of the Supervisory Board as at 31 December 2018:
Stefan Mohr, born in 1967 in Frankfurt am Main, Germany, was Deputy Chairman of the Supervisory Board (left on 31 December 2018).
→ Head of Corporate Real Estate at Activum SG Advisory GmbH
Richard Wartenberg, born in 1968 in Stuttgart, Germany, acted as a member of the Supervisory Board and was Chairman of the remuneration committee (left on 31 December 2018).
→ Managing Director at Activum SG Advisory GmbH
The remuneration of the members of the Management Board in 2018 consisted of
→ The fixed remuneration is paid in equal monthly instalments.
→ Fringe benefits consist of taxable monetary benefits, such as the private use of company cars or other benefits-in-kind.
A component under a long-term incentive plan consisting of two components:
→ The one-year variable compensation in the form of an STI is based on the economic performance or productivity of the Instone Group in the underlying financial year and the personal targets set for the individual members of the Management Board.
The total remuneration granted to the members of the Management Board totalled €5.1 million for the 2018 financial year (min.: €3.8 million, max.: €6.7 million) (previous year: €10.8 million). Of which, €1.2 million (previous year: €1.1 million) was attributable to fixed, non-performance-related components, €1.3 million (min: €0 million, max.: €2.9 million) (previous year: €9.9 million) was attributable to variable, one-year and multi-year performance-related remuneration components, €0.7 million (previous year: €0.2 million) to performance-related benefits-in-kind and other services, €1.5 million (previous year: €0 million) to severance payments and €0.4 million (previous year: €–0.4 million) to pension expenses in accordance with IFRS. The value of fringe benefits was measured at the amount determined for tax purposes.
The total remuneration received/earned by the members of the Management Board totalled €25.1 million for the 2018 financial year (previous year: €1.3 million). Of which, €1.2 million (previous year: €1.1 million) for fixed, performance–related components, €21.3 million (previous year: €0.4 million) for variable, one-year and multi-year performance-related remuneration components, €0.7 million (previous year: €0.2 million) to performance-related benefits-in-kind and other services, €1.5 million (previous year: €0 million) to severance payments and €0.4 million (previous year: €–0.4 million) to pension expenses in accordance with IFRS. The value of fringe benefits was measured at the amount determined for tax purposes.
In the year under review, no advances were paid to members of the Management Board and no loans were made.
The total remuneration of the Supervisory Board in the 2018 financial year was €406 thousand. Of which €343 thousand was remuneration for work on the General Committee. Remuneration for work on committees amounted to €63 thousand.
In the 2018 financial year, the Companies of the Instone Group did not pay or grant any remuneration or other benefits to members of the Supervisory Board for services rendered in a personal capacity, in particular advisory and agency services. Nor were members of the Supervisory Board granted any advances or credits.
For a detailed description of the remuneration of the Management Board and Supervisory Board, we refer to the statements in the compensation report of the combined management report as at 31 December 2018.
The full fee invoiced by Deloitte GmbH, Munich, Germany, Dusseldorf branch for the services it provided was charged as follows:
In thousands of euros
| 31/12/2018 | 31/12/2017 | |
|---|---|---|
| Annual audit | 105 | 489 |
| Other auditing services | 105 | 270 |
| Other confirmation services | 0 | 0 |
| 210 | 759 | |
The auditor performed other certification services for the Company, such as audits for the formation of companies on the basis of benefits-in-kind, audits pursuant to Section 16 German law MaBV, investigative actions pursuant to ISRS 4400 and audits pursuant to IDW PS 981.
There were no events of particular significance to report after the balance sheet date on 31 December 2018.
The Management Board and Supervisory Board of Instone Real Estate Group AG issued a declaration of compliance in line with the recommendations of the German Government Commission on the German Corporate Governance Code pursuant to Section 161 of the German Stock Corporation Act (AktG) for the 2018 financial year in December 2018.
The declaration of compliance was made permanently available to the shareholders by a link on the Company's website at Instone Website.
| Share of capital in % |
Equity In thousands of euros |
Annual result In thousands of euros |
|
|---|---|---|---|
| I. Affiliated companies consolidated in the separate financial statements | |||
| Instone Real Estate Development GmbH, Essen, Germany | 100.0 | 178,571 | 7,909 |
| Durst-Bau GmbH, Vienna, Austria | 100.0 | 845 | 284 |
| formart Immobilien GmbH, Essen, Germany | 100.0 | 701 | 23 |
| formart Luxembourg S. à r. l., Luxembourg, Luxembourg | 100.0 | 1,976 | 1,262 |
| Projekt Wilhelmstraße Wiesbaden GmbH & Co. KG, Frankfurt am Main, Germany | 70.0 | 13,935 | 9,192 |
| west.side GmbH, Cologne, Germany | 100.0 | 8,009 | 7,509 |
| Instone Real Estate Leipzig GmbH, Leipzig, Germany | 94.0 | 26,328 | – 2,129 |
| Instone Real Estate Landmark GmbH, Leipzig, Germany | 100.0 | 513 | 640 |
| II. Investments recognised at equity | |||
| Projektentwicklungsgesellschaft Holbeinviertel mbH & Co. KG, Frankfurt am Main, Germany | 50.0 | 383 | 358 |
| Wohnpark Gießener Straße GmbH & Co. KG, Frankfurt am Main, Germany | 50.0 | 271 | 246 |
| III. Other participations | |||
| Westville 1 GmbH, Frankfurt am Main, Germany | 100.0 | 25 | 0 |
Minimum lease payments due in the future are comprised as follows:
In thousands of euros
| 31/12/2018 | 31/12/2017 |
|---|---|
| 46 | 22 |
| 88 | 41 |
| 0 | 0 |
| 135 | 63 |
Instone Real Estate Group AG has concluded long-term contracts for company vehicles as the lessee.
The Management Board and Supervisory Board of Instone Real Estate Group AG issued a declaration of compliance in line with the recommendations of the German Government Commission on the German Corporate Governance Code pursuant to Section 161 of the German Stock Corporation Act (AktG) for the 2018 financial year in December 2018.
The declaration of compliance was made permanently available to the shareholders by a link on the Company's at Instone Declaration of Compliance .
Essen, 22 March 2019
The Management Board
Kruno Crepulja Dr. Foruhar Madjlessi
Andreas Gräf Torsten Kracht
We have audited the annual financial statements of Instone Real Estate Group AG, Essen/Germany, which comprise the balance sheet as at 31 December 2018, and the statement of profit and loss for the financial year from 1 January to 31 December 2018, and the notes to the financial statements, including the presentation of the recognition and measurement policies. In addition, we have audited the combined management report on the Group and the Company of Instone Real Estate Group AG, Essen/Germany, for the financial year from 1 January to 31 December 2018. In accordance with the German legal requirements, we have not audited the content of the statement on corporate governance pursuant to Sections 289f and 315d German Commercial Code (HGB) included in section "Corporate Governance Statement and Corporate Governance Report" of the combined management report.
In our opinion, on the basis of the knowledge obtained in the audit,
→ the accompanying annual financial statements comply, in all material respects, with the requirements of German commercial law applicable to business corporations and give a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2018 and of its financial performance for the financial year from 1 January to 31 December 2018 in compliance with German Legally Required Accounting Principles, and
→ the accompanying combined management report as a whole provides an appropriate view of the Company's position. In all material respects, this combined management report is consistent with the annual financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development. Our audit opinion on the combined management report does not cover the content of the statement on corporate governance referred to above.
Pursuant to Section 322 (3) Sentence 1 German Commercial Code (HGB), we declare that our audit has not led to any reservations relating to the legal compliance of the annual financial statements and of the combined management report.
We conducted our audit of the annual financial statements and of the combined management report in accordance with Section 317 German Commercial Code (HGB) and the EU Audit Regulation (No. 537/2014; referred to subsequently as "EU Audit Regulation") and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW). Our responsibilities under those requirements and principles are further described in the "Auditor's Responsibilities for the Audit of the Annual Financial Statements and of the Combined Management Report" section of our auditor's report. We are independent of the Company in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance with Article 10 (2f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the annual financial statements and on the combined management report.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the annual financial statements for the financial year from 1 January to 31 December 2018. These matters were addressed in the context of our audit of the annual financial statements as a whole and in forming our audit opinion thereon; we do not provide a separate audit opinion on these matters.
In the following we present the key audit matter we have determined in respect of the accounting for interests in affiliated companies.
Our presentation of these key audit matters has been structured as follows:
a. In the annual financial statements of Instone Real Estate Group AG, Essen/Germany, for the year ended 31 December 2018, interests in affiliated companies of kEUR 253,289 (88.4% of the balance sheet total) are reported. These are measured at acquisition cost or – where impairment is expected to be of permanent nature – at the lower of fair value.
The material construction projects of the Instone Group are accounted for on the part of the two affiliated companies Instone Real Estate Development GmbH, Essen/Germany, and Instone Real Estate Leipzig GmbH, Leipzig/Germany. As at the balance sheet date, the executive directors of Instone Real Estate Group AG, Essen/Germany, have examined the recoverability of these investments by performing internal business valuations. The fair value of the investments in these affiliated companies was established as the present value of the future cash flows using the discounted cash flow method. The underlying cash flows are based on the corporate planning, which includes the expectations of the executive directors of the two subsidiaries with regard to the future development of the projects. The cash flows are discounted on the basis of the weighted average costs of capital.
As regards the sundry investments in affiliated companies, the book value of the respective investment as at the balance sheet date is assessed by the executive directors as to indications of required write-downs. Should the analysis indicate that related write-downs might be required, a detailed business valuation will be performed on the basis of the corporate planning using the discounted cash flow method.
We classified the accounting for the investments in affiliated companies as a key audit matter since these are highly contingent on discretionary estimates and assumptions made by the executive directors.
The disclosures of the executive directors on the investments in affiliated companies are included in the "Accounting and Measurement Principles" section of the notes to the financial statements.
b. In auditing the fair values of the investments in affiliated companies, we verified the business valuations performed using the discounted cash flow method as to their methodological approach and accuracy of the figures, involving our valuation specialists. In addition, we examined the determination of the costs of capital. We examined the underlying corporate planning with professional scepticism, cross-checking the parameters used with, inter alia, industry-specific market expectations, and conducted surveys among the executive directors on value drivers underlying the corporate planning.
The executive directors are responsible for the other information. The other information comprises:
Our audit opinions on the annual financial statements and on the combined management report do not cover the other information, and consequently we do not express an audit opinion or any other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information
The executive directors are responsible for the preparation of the annual financial statements that comply, in all material respects, with the requirements of German commercial law applicable to business corporations, and that the annual financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Company in compliance with German Legally Required Accounting Principles. In addition, the executive directors are responsible for such internal control as they, in accordance with German Legally Required Accounting Principles, have determined necessary to enable the preparation of annual financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the annual financial statements, the executive directors are responsible for assessing the Company's ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting, provided no actual or legal circumstances conflict therewith.
Furthermore, the executive directors are responsible for the preparation of the combined management report that as a whole provides an appropriate view of the Company's position and is, in all material respects, consistent with the annual financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a combined management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the management report.
The supervisory board is responsible for overseeing the Company's financial reporting process for the preparation of the annual financial statements and of the combined management report.
Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether the combined management report as a whole provides an appropriate view of the Company's position and, in all material respects, is consistent with the annual financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor's report that includes our audit opinions on the annual financial statements and on the combined management report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Section 317 German Commercial Code (HGB) and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual financial statements and this combined management report.
We exercise professional judgment and maintain professional scepticism throughout the audit. We also
→ identify and assess the risks of material misstatement of the annual financial statements and of the combined management report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
in compliance with German Legally Required Accounting Principles.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the relevant independence requirements, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.
Further Information pursuant to Article 10 of the EU Audit Regulation
We were elected as auditor by the shareholders' general meeting on 29 June 2018. We were engaged by the supervisory board on 20 December 2018. We have been the auditor of Instone Real Estate Group AG, Essen/Germany, since the financial year 2018.
We declare that the audit opinions expressed in this auditor's report are consistent with the additional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
The German Public Auditor responsible for the engagement is André Mathew.
Düsseldorf/Germany, 22 March 2019
Wirtschaftsprüfungsgesellschaft
Signed: Rolf Künemann Signed: André Mathew
Wirtschaftsprüfer Wirtschaftsprüfer
[German Public Auditor] [German Public Auditor]
To the best of our knowledge and in accordance with the applicable accounting principles, the annual financial statements give a true and fair view of the net assets, financial position and results of operations of the Company. Furthermore, the management report of the Company includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal opportunities and risks associated with the expected development of the Company.
Essen, 22 March 2019
The Management Board
Kruno Crepulja Dr. Foruhar Madjlessi
Andreas Gräf Torsten Kracht
Grugaplatz 2 – 4 45131 Essen Germany
Telephone: +49 201 45355-0 Fax: +49 201 45355-934 Email: [email protected]
| Kruno Crepulja (Chairman/CEO), |
|---|
| Dr Foruhar Madjlessi, |
| Andreas Gräf, |
| Torsten Kracht |
Stefan Brendgen
Registered in the Commercial Register of the Essen Local Court under HRB 29362
Sales tax ID number DE 300512686
MPM Corporate Communication Solutions, Mainz, Düsseldorf mpm.de
Grugaplatz 2-4 45131 Essen, Germany
Email: [email protected]
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