Semi-annual report 2010

Transcription

1 Semi-annual report 21

2 Contents

3 2 3 Contents Contents page 3 KWG overview KWG key datas KWG information page 4 page 5 Board of Directors foreword page 6 KWG shares on the capital market page 12 Case study VEILCHENGRUND starts to blossom report on our modernisation project in Celle-Vorwerk page 14 Group interim financial statements Group balance sheet Statement of the overall Group result Group cash flow statement Statement of changes in Group equity capital Notes page 21 page 22 page 23 page 24 page 26 Certificate after examination by the auditor page 44 Financial Calendar/Imprint page 45

4 KWG key datas KWG key datas Total apartments Commercial units Turnover in million EBITDA in million EBIT in million EBT in million Group interim result (EAT) in million Operating income* in million 1. half year 21 4, half year 29 4, Total apartments Commercial units Parking spaces and garages Total floor space in sq. m Group result in million Gross indebtedness in million Liquid assets in million Total assets in million Economic equity in million Equity ratio in % NAV per share in Total assets in /sq. m , , , ,93 283, * EBT before valuation effect

5 4 5 KWG information KWG share Cusip number ISIN Symbol Stock exchanges DE BIW Frankfurt, Berlin, Düsseldorf, München, Stuttgart, XETRA Registered capital 9,822,481 Number of shares 9,822,481 Nominal value 1, Supervisory Board Prof. Dr. Peer Witten (Chairman of the Supervisory Board) Franz-Josef Gesinn (Deputy Chairman) Thies-Martin Brandt Björn Engholm Hans-Michael Porwoll Sy Schlüter (until end of March 21) Board of Directors Stavros Efremidis Torsten P. Hoffmann (since 15th june 21)

6 Board of Directors foreword Thus the Group is well-positioned and covers almost the entire value chain. However, KWG s core competences in purchasing and in asset and property management continue to be the focus of its activities. The continual increase in value of our portfolio by reducing vacancies, adjusting rents and performing renovation and modernisation work forms the basis of our business model. Torsten P. Hoffmann and Stavros Efremidis, Board of Directors KWG AG

7 6 7 Dear Shareholders, We are very happy to announce that in the first half of 21 the company achieved a positive result solely from its operations as an owner of apartments for the first time in its 4-year history. Even though the total surface area let declined slightly, we were able to increase turnover from 9.5 to 9.8 million euros. The turnover is derived solely from rental income. A number of different factors contributed to the improved income situation. On the one hand, rent adjustments and reduced vacancy rates had a positive effect: in our core portfolio, we were able to cut vacancies further in the first half of 21 from 6.6% to 6.4%. And on the other hand we also managed to reduce materials expenditure significantly from 4.1 million euros in the first half of 29 to 3.1 million euros in the first half of 21; this is equivalent to a reduction of 22.64%. The materials expenditure includes operating costs, an item which in turn includes the heating costs. Despite the harsh winter, we were able to cut heating costs by.5 million euros or 34.15% thanks to energy-efficient maintenance and modernisation work and to other supporting measures. New property management firm A contribution to the improved result was also made by our new property management firm, KWG Wohnwert GmbH, which is a subsidiary of the KWG Group. KWG Wohnwert started business at the beginning of 21 with the management of 2,632 apartments in Saxony, Thuringia and Berlin, equivalent to 54% of KWG s total portfolio. Our expectations of increased efficiency and reduced costs and taxes have already been fulfilled. This is particularly evident in the case of our Berlin properties, where the vacancy rate in the 384 apartments went down from 8.3% on 31st December 29 to 4.4% on 3th June 21. In the same period, actual rent per square metre rose from 4.49 euros to 4.59 euros. We see these figures as confirmation of our decision to incorporate the property management into the KWG Group.

8 Board of Directors foreword Thus the Group is well-positioned and covers almost the entire value chain. However, KWG s core competences in purchasing and in asset and property management continue to be the focus of its activities. The continual increase of the value of our portfolio by reducing vacancies, adjusting rents and performing renovation and modernisation work forms the basis of our business model. From the moment when we consider a purchase, we examine closely the property s potential for increases in value. Depending, of course, on other factors, we see properties with a backlog of maintenance and renovation work and a high vacancy rate as an opportunity to achieve good returns. Modernisation work As already outlined in our Annual Report for 29, two major projects dominate the horizon in 21. In the first half of the year we began building work on our apartment blocks in Celle and Gelsenkirchen. 315 flats with high vacancy rates and a renovation backlog are being fully modernised to bring them into line with today s energy standards, while the empty apartments are being redecorated and equipped with high-quality fittings in accordance with their segment. Once again, we d like to highlight one of our projects for you in this report. Starting on page 14 you can read how Celle s Veilchengrund development is starting to blossom. Group result The result of ordinary operations was.9 million euros, without special factors and increases in the value of real estate held as an investment. In 29, this item included value increases to the tune of 2.1 million euros, which in turn led to a result of 1.7 million euros. The Group result for the period ending on 3th June 21 was.5 million euros as against 1.2 million euros for the same period in 29.

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10 Board of Directors foreword Company equity rose from 64.7 million euros on 31st December 29 to 65.1 million euros on 3th June 21, which represents an increase in the capital ratio from 34.5 to 34.8%. The value of our properties went up in the period under review from 611 euros to 618 euros per square metre, while net asset value rose from 6.59 euros at year s end 29 to 6.63 euros per share as at 3th June 21. Moreover, we were able to earn a positive cash flow amounting to.6 million euros from ongoing portfolio operations in the first half of 21. Other developments There were also changes to KWG s share listing in the first half of 21. The company s share has been listed in the Entry Standard segment of the German stock market since 8th March. With effect from June 21, the Supervisory Board appointed Torsten P. Hoffmann as the company s Director of Finance. Thus the Board of Directors once again has two members, placing KWG in a good position for its further development. A new member has also been added to the Supervisory Board: Patrick Zeigherman was appointed to the Supervisory Board at our annual general meeting on 5th July 21. Outlook The company completed the first half of 21 successfully. But we shouldn t and don t intend to rest on our laurels. We will be bringing our modernisation project in Gelsenkirchen to an end in the second half of the year, while work at the Veilchengrund development in Celle will continue. We are also planning to transfer the property management of our apartments in western Germany to our own internal property management firm, KWG Wohnwert. We anticipate an increase in turnover for 21 as a whole, and are eagerly looking forward to the company s further development.

11 1 11 We would like to offer you, dear shareholders, our warm thanks for your confidence in the company. By the same token, we are grateful to both our tenants and our staff for their support. Hamburg, August 21 With best wishes, Stavros Efremidis CEO Torsten P. Hoffmann CFO

12 The KWG share on the capital market The KWG share on the capital market Stock market The stock markets remained stable in the first half of 21. The German share index DAX closed at 5,965 points on 3th June, equivalent to a fall of 1.4% in the first six months of the year. However, it rose 24% from its level on 3th June 29, reflecting the marked recovery of the overall economy. The smallcap index SDAX went up by 1.% in the first half of 21. The real estate index DIMAX, which includes German property stocks from all segments and in which KWG has been listed since the end of 27, gained 2.6% in value during the half-year. Compared with its level a year earlier, the DIMAX rose by 19.9%. However, the shares of companies whose main business is in the German housing market fell slightly in the first half of 21. After a mini-crash in May, which affected the stock market as a whole, property shares returned to their growth curve towards the end of the half-year. Development of the KWG share KWG stock changed hands on Xetra at the outset of 21 for 4.68 euros, and closed at 4 euros on 3th June 21. Compared with the closing price of 3.85 euros on 3th June 29, this represents an increase of 3.9%. KWG shares developed along similar lines to those of other listed German real estate companies. In the first half of 21, the KWG share reached its highest level of 4.99 euros on 14th, 15th and 18th January. In the period under review, the company s stock traded at its all-time low of 4 euros between 23rd and 3th June 21.

13 12 13 KWG percent DIMAX Jan. 8 Mar. 8 May 8 Jul. 8 Sep. 8 Nov. 8 Jan. 9 Mar. 9 Mai 9 Jul. 9 Sep. 9 Nov. 9 Jan. 1 Mar. 1 May 1 Jul. 1 Development of KWG-shares vs. Deutscher Immobilienaktienindex (DIMAX) In the first half of 21 a total of 175,42 KWG shares was traded on Xetra and a further 23,83 at the Frankfurt stock exchange. In addition to the Xetra und Frankfurt exchanges, the company s shares are also listed on the OTC markets of the Berlin, Munich, Düsseldorf and Stuttgart stock exchanges. At the end of the first half of 21, the company s authorised capital was unchanged at 9,822,481 euros, divided into the same number of no-par shares. The annual general meeting of KWG Kommunale Wohnen AG was held in Hamburg on 5th July 21. The items on the agenda were all passed by nearly unanimous agreement. Change of segment The first half of 21 brought a change of stock market segment for the KWG share. Deutsche Börse AG approved our application to switch to the Entry Standard segment with effect from 8th March 21. Our listing partner is Close Brothers Seydler Bank in Frankfurt am Main. Compared with the Open Market segment, a listing in the Entry Standard involves stricter transparency and publicity requirements; however, KWG actually fulfilled most of these prior to the change of segment. Investor Relations KWG Kommunale Wohnen AG is in ongoing dialogue with journalists, analysts and investors. The company also presented itself in the first half of 21 at roadshows and capital market conferences such as the DVFA and the Entry & General Standard Conference. Analyst s studies published by SES Research, Close Brothers Seydler Research, SRC Research and GBC Investment Research gave the KWG share a Buy recommendation.

14 Case study Celle-Vorwerk VEILCHENGRUND starts to blossom report on our modernisation project in Celle-Vorwerk KWG continues to pursue its declared business model of increasing the value of properties bought at attractive prices via tailor-made improvement packages, coordinated and implemented by property and asset management working in close cooperation. KWG s projects are becoming more and more extensive as the company goes on developing. Examples of this are the two major renovation projects launched in 21 in the towns of Gelsenkirchen and Celle. In Gelsenkirchen-Schalke we are renovating a housing scheme dating from the 192 s which is listed as a historical monument, while in Celle we are completely modernising a set of postwar apartments in a challenging environment to bring them into line with today s energy standards. Please read on for details of the Celle project: KWG bought the apartments in Celle in Lower Saxony in 28. The 174 flats are spread over a total of 36 two- and three-storey buildings on an area of some 48, square metres in the Vorwerk suburb of Celle. The development was originally built in the 196 s for British soldiers and their families: the British army maintains a large base in Celle. Later on the apartments were sold, and this resulted in a change in the occupant structure. When KWG bought the properties two years ago, there was a backlog of redecoration and modernisation work that needed doing, and vacancy rates were high. However, we realised that these apartments have considerable potential, located as they are in a part of town with a varied infrastructure. LASTING EFFECT After plans for the redecoration and modernisation had been drawn up in 29, work began in the spring of 21. When the project is completed, the entire development will comply with the energy standards applicable to new buildings according to EnEV 29. KWG is investing a total of 4.2 million euros here. (For details, see box.) By this time, the vacancy rate had risen to almost 5%. With a view to the major construction work planned, we decided not to actively let the apartments.

15 14 15 Consumption of heating energy cut by 75 % - 75 % The development in Celle did not have a good reputation, so that KWG needed to do a good deal more PR work than had been the case with our previous larger-scale modernisation projects. Continual, open communication with local politicians and representatives of the town or the Vorwerk district, likewise with the occupants and with people interested in moving into the apartments, helped make KWG better-known as the new owner, creating an atmosphere of trust and thus backing up the revitalisation process. In this case, KWG has even gone a step further, giving the development a new name Veilchengrund with a logo and its own homepage ( The idea is to help develop a new identity and a new image for the development. ENERGY-EFFICIENT The modernisation work is geared in every respect to the efficient use of resources and energy. By using innovative building materials and installing modern heating and power plants, the consumption of heating energy in the buildings can be cut by as much as 75%, obviously depending on the tenants future consumption. MODERN Modern is the word to describe not only the structure, but the appearance as well. The warm earth-tones and the rounded-off corners as a special construction element give the apartment blocks a welcoming look. Based on positive experiences with previous projects, here too we are giving new tenants the chance to have a say in how their apartment is decorated. The individual decoration concepts and many available options are on display in six different show apartments, all named after towns with which Celle is twinned.

16 Case study Celle-Vorwerk The development of the rents Lasting, energy-efficient and modern that describes in a nutshell KWG s apartments in Celle-Vorwerk. The flats available to new tenants are far above the general market level in terms of decoration standards, fittings and future heating costs. There is nothing comparable currently available on the Celle housing market. Both with new tenancies and when adjusting the rent paid by existing tenants, the positive effect for KWG lies in higher cold rent, while the warm rent remains almost unchanged, or in line with the market level, thanks to lower heating costs: these in turn mean that the ancillary costs that constitute the different between cold and warm rent are kept low. In fact, the lower heating costs make up for the increase in cold rent by nearly 7%. This means that KWG can implement higher rents for tenants that are still socially acceptable. Thanks to the reduction of vacancies and the increase in cold rents over the period , total rental income from the Veilchengrund development should go up by more than 15%. The first step towards letting the vacant apartments was an open day held on 3th May 21, when the show house was opened to visitors. Some 25 people came to see what was on offer, and the response was completely positive, with the first leases being signed. Investment The Veilchengrund project is being funded by a mix of equity and borrowed capital. Here, KWG has been able to borrow capital from the KfW bank (Reconstruction Loan Corporation) which makes loans available at attractive terms for energy-efficient improvements and modernisation projects. KWG was able to secure the funds at an average interest rate of 2.42% for 1 years. We expect the project to yield a return on equity of more than 15%.

17 16 17 Actual annual net portfolio rent (without building activity) estimated rent in euro thousand Rent increase by letting vacant apartments Rent increase, allocation of nrenovation 1, /sqm year The first phase of the project will soon be completed, and all the work should be finished by mid-211. Not least thanks to strong support from both the Celle local council and the occupants themselves, things are already improving. Veilchengrund is starting to blossom! Construction project: 2 project phases; time need to modernise one building: 6-9 weeks. Building - Insulation of façade using thermal insulation composite system - Insulation of attics and cellar ceilings - Renewal of roofing using ClimaLife tiles - Refurbishment of balconies - New heating system - Redecoration of entrance areas and stairwells, including new lighting - Installation of two-way intercom Apartments - New heating pipes and radiators - New, triple-glazed windows Additional work in empty apartments: - Changes to floor plan - New bathrooms - Soundproof inside doors - New electrical installations - Laminate in the living rooms, new tiles in kitchen & bathroom - Repainting

18 Case study Celle-Vorwerk Modernisation of buildings and apartments November 28 The rounded corners are a special design feature. 36 buildings are being completely modernised in 2 steps to bring them into line with today s energy standards. June 21

19 18 19 Tenants can choose between 3- and 4-room apartments. June 21 New tenants can choose between six different configurations.

20 Group interim financial statements

21 2 21 Group balance sheet of KWG Kommunale Wohnen AG at 3th June 21 in accordance with International Financial Reporting Standards (IFRS) Assets Notes Long-term assets Intangible assets Tangible assets Real Estate held as a financial investment Deferred tax receivables Long-term assets, total Short-term assets Inventories Trade receivables Claims for tax refunds Other receivables and assets Liquid funds Short-term assets, total Assets, total 5.1, , , , , ,411, ,685, ,574, , , ,4, ,87, ,321, ,896, , , ,579,. 3,53, ,449, , , , ,144, ,261, ,9, ,458,98.38 Liabilities Equity capital Group share capital Reserves Revenue reserves Reserve for market valuation Group net income Equity capital without minority interests Third party shares in equity Equity capital, total Long-term outside capital Long-term debts Deferred tax liabilities Long-term outside capital (minority interests in trading partnerships) Long-term outside capital, total Short-term outside capital Short-term debts Trade payables Short-term tax liabilities Other Short-term liabilities Short-term outside capital, total Liabilities, total ,822,481. 4,5, , , ,349, ,74, , ,76, ,826, ,541, , ,416,51.1 4,98, ,42, , ,422, ,43, ,896, ,822,481. 4,5, , , ,821, ,734, , ,737, ,385, ,288, , ,762, ,396, ,184, , ,338, ,959, ,458,98.38

22 Group interim financial statements Statement of the overall Group result of KWG Kommunale Wohnen AG 1st January - 3th June 21 in accordance with International Financial Reporting Standards (IFRS) Notes Turnover (sales revenue) 9,827, ,51, Result of the fair value valuation of the real estate held as an investment ,94, Other operating income , ,492.5 Expenditure on materials 4.3-3,142, ,62, Personnel expenditure a) Wages and salaries , , b) Social security contributions and pension provisions , ,723.4 Depreciation on intangible and tangible assets , ,46.6 Expenditure on investment properties 4.6-1,229, ,61,21.18 Other operating expenditure , , Other interest and similar income 3, ,399.4 Interest and similar expenditure -2,927, ,886, Shares of partners in the result 4.8-1, Result of ordinary operations 876, ,736,89.97 Taxes on income and earnings , , Other taxes , ,88.9 Group interim result 526, ,249, Changes in value of hedging instruments -222, ,433. Income tax on the expenditure included in equity , , Sum total of the income and expenditure included in equity -187, ,91.73 Overall interim result 339, ,226, Group annual net income allocates to: Minority interests Shareholders of the parent company 527, ,249, Overall interim result allocates to: Minority interests Shareholders of the parent company 339, ,226, Result per share (diluted and undiluted)

23 22 23 Group cash flow statement of KWG Kommunale Wohnen AG 1st January - 31st December 29 in accordance with International Financial Reporting Standards (IFRS) Notes Group result before tax 2. Depreciation on long-term assets 3. Profit (-)/ Loss (+) from the disposal of properties held as investments 4. Interest and similar income 5. Interest expenditure 6. Profit (+)/ loss (-) from the valuation of properties held as investments at their current market value 7. Increase (-)/ decrease (+) in inventories consisting of trade receivables payments, derivatives and other assets not assignable to investment or financing activities 8. Increase (+)/ decrease (-) in trade payables, derivatives and other liabilities that are not assignable to investment or financing activities 9. Interest paid in 1. Interest paid out 11. Cashflow from current operations 12. Income from the sale of tangible assets Payments made for investments in the properties held as a financial investment (+) 13. Payments made vor the purchase of parts of the subsidiary KWG Grundbesitz I GmbH & Co. KG (-) 14. Invest in intangible und tangible assets (-) 15. Invest in properties held as investments (-) 16. Cashflow from investment activity/purchase 17. Income from loans taken out (+) 18. Payments from redemption of loans (-) 19. Cashflow from Financing activity 2. Changes in the financial resource fund affecting payments 21. Financial resource fund at the beginning of the period 22. Financial resource fund at the end of the period T , , ,875-2,54-1,45-1,45-2,453 7,261 4,88 T 1, ,885-2, , ,866-2,961 1, ,741-2,181 2,769-2, ,332 7,8 2,468

24 Group interim financial statements Statement of changes in Group equity capital of KWG Kommunale Wohnen AG 1st January - 3th June 21 in accordance with International Financial Reporting Standards (IFRS) in T Notes 5.7 Subscribed capital Capital reserve Revenue reserves As at ,6 37,97 2 Result for the period (H1 29) Value changes included in equity Overall result As at ,6 37,97 2 Proceeds from issue of unit shares 1,222 4,279 Result for the period (H2 29) Value changes included in equity Overall result Withdrawals for transaction costs -152 Payments from minorities Withdrawals from reserves -1,596 Stand zum ,822 4,51 2 Result for the period (H1 21) Value changes included in equity Overall result As at ,822 4,51 2

25 24 25 Reserves for market valuation Group net profit/ loss für the year Equity without minority interests Minority interests Group equity ,95 56,143 56,143 1,249 1,249 1, ,249 1,226 1, ,154 57,369 57,369 5,51 5,51 2,72 2,72-1 2, ,72 2,17-1 2, , ,822 64, , ,349 65, ,76

26 Group interim financial statements Additional notes on the Half-Yearly Report for the period 1st January 3th June 21 (1.) General comments KWG Kommunale Wohnen AG (hereinafter referred to as KWG ) with its head office in Hamburg/Germany (up to 16th August 29 in Bremerhaven/Germany) is the parent company of the KWG Group. It is a limited stock corporation according to German law and is listed on the Frankfurt Stock Exchange (up to 7th March 21 in the Open Market segment, since 8th March in the Entry Standard segment). The KWG Group s business activities consist principally of the purchase, construction and sale, also the letting and management of its own apartment buildings. The letting out of the company s apartments is not subject to any significant seasonal fluctuations or to fluctuations caused by the economic situation. KWG s abbreviated interim Group financial statements as at 3th June 21 have been produced according to the International Financial Reporting Standards (IFRS) in accordance with IAS 34 (Interim reporting). These interim financial statements should be read in the context of the IFRS Group financial statements published by the company for the business year 29. Certain information is either omitted or shown in abbreviated form in the interim financial statements. However it is our opinion that these interim financial statements provide an accurate picture of the Group s asset, financial and income situation if they are read with the help of the Group financial statements as at 31st December 29. The abbreviated interim Group financial statements have been checked by an auditor. The euro () is both the currency used for this report and the functional currency. No currency conversion was necessary for the Group companies, which conduct their business solely within Germany. All figures in this report are shown either in euros () or in thousands of euros (T). In some instances, estimates or assumptions have been made in these interim Group financial statements that have an effect on the amount and the presentation of balance-sheet assets, debts, income, expenditure and contingent

27 26 27 liabilities. Actual values may deviate from these estimates. Changes will be taken into account at a time when we have better information. The results achieved in the first six months of the business year 21 do not necessarily provide any indication of how business will develop in the second half of the year. (2.) Group consolidation In the interim financial statements, all companies are fully consolidated where KWG has a direct or indirect controlling influence over a subsidiary as set out in IAS The controlling influence over a subsidiary is exercised in all cases by means of a voting majority. On 3th June 21 KWG AG had 16 domestic subsidiaries, one more than on 3th June 29: KWG Grundbesitz I Verwaltungs GmbH, Hamburg KWG Grundbesitz I GmbH & Co. KG, Hamburg KWG Grundbesitz II GmbH & Co. KG, Hamburg KWG Grundbesitz III GmbH, Hamburg KWG Grundbesitz III GmbH & Co. KG, Hamburg KWG Grundbesitz IV GmbH, Hamburg KWG Grundbesitz V GmbH, Hamburg KWG Grundbesitz VI GmbH, Hamburg KWG Grundbesitz VII GmbH, Hamburg KWG Grundbesitz VIII GmbH, Hamburg KWG Grundbesitz IX GmbH, Hamburg KWG Grundbesitz X GmbH, Hamburg KWG Immobilien GmbH, Hamburg KWG Wohnwert GmbH, Glauchau Siedlungs- und Wohnhausgesellschaft Sachsen Gesellschaft mit beschränkter Haftung, Glauchau Hainichener Wohnungsgesellschaft mit beschränkter Haftung, Hainichen Subscr. capital/ lim. liab. cap. 25,. 35,3. 5,. 25,. 6,. 25,. 25,. 25,. 25,. 25,. 25,. 25,. 25,. 3,. 565,. 3,4,91.1 % of capital

28 Group interim financial statements There were no significant purchases of companies either in the first half of 21 or in the same period of the previous year. The company KWG Wohnwert GmbH, Glauchau, which was newly founded in November 29, led to capital being paid in by outside shareholders to the amount of 3, euros; the purchase of a further limited partner s share in KWG Grundbesitz I GmbH & Co. KG, Hamburg, in January 21 (equivalent to 1.9% of the limited liability capital) led to 29, euros being paid out. The reporting date for the interim financial statements of the consolidated companies is the same in all cases as the reporting date for the Group interim financial statements, namely 3th June. (3.) Principal methods of consolidation, accounting and valuation The half-year s financial statements of the consolidated companies are based on uniform consolidation, accounting and valuation methods. The consolidation, accounting and valuation methods used correspond in all aspects to those used for the Group financial statements for 29. A detailed description of the methods used can be found in the appendix to the Group financial statements for 29. Since the beginning of the business year 21, new or revised international accounting criteria that must be used according to IFRS represent deviations from the previous year s interim financial statements. With the exception of IAS 1 Presentation of the financial statements, where a Group profit-&-loss account is replaced by a Statement of the overall Group result, the new regulations do not have any significant effect on the consolidation, accounting and valuation methods. (4.) Comments on selected items in the Statement of the overall Group result (4.1) Result of the fair value valuation of real estate held as a financial investment. ( : 2,94,178.93) The valuation of the real estate held as a financial investment did not affect the Group result as at 3th June 21. We draw attention in this context to the comments on the Group balance sheet under 5.3. In 29, the increase in value was shown under the item Other operating income (2,627, euros), while the decline in value was shown under the

29 28 29 item Other operating expenditure (533, euros). In the interest of greater clarity, the result of the fair value valuation of the real estate held as a financial investment has been shown as a separate item, and the relevant item from last year has been adjusted accordingly. The adjustments have no effect on either the Group result for the period or on the overall result for the period. (4.2) Other operating income 214, ( : 793,492.5) The other operating income consists for the most part of income from the dissolution of provisions to the amount of 116, euros (previous year: 3, euros), from income from payments in kind amounting to 19, euros (previous year: 13, euros) and income from claims written off to the amount of 1, euros (previous year: euros). (4.3) Expenditure on materials -3,142, ( : -4,62,749.94) The expenditure on materials consists of maintenance fees in accordance with the Law on Apartment Ownership (436, euros; 29: 389, euros) and of energy costs and other running costs incurred by the real estate held as a financial investment. These costs consist for the most part of heating costs (1,18, euros; 29: 1,546, euros), refuse collection charges (281, euros; 29: 288, euros), sewage disposal charges (272, euros; 29: 258, euros), mains water (235, euros; 29: 326, euros), payments for outside janitor services (161, euros; 29: 132, euros) and insurance premiums (69, euros; 29: 122, euros). (4.4) Personnel expenditure -928, ( : -78,97.41) On 3th June 21, the company had 36 employees on its payroll, eight of whom work part-time. On 3th June 29, the company s staff numbered 23, four of whom had part-time contracts.

30 Group interim financial statements (4.5) Depreciation on intangible and tangible assets -79,31.65 ( : -4,46.6) This item consists solely of scheduled depreciation on immaterial assets (43, euros; 29: 15, euros) and tangible fixed assets (36, euros; 29: 25, euros). (4.6) Expenditure on investment properties -1,229, ( : -2,61,21.18) The expenditure on investment properties involves non-allocatable costs directly attributable to properties, such as renovation expenditure (88, euros; 29: 628, euros), ongoing maintenance expenditure (541, euros; 29: 634, euros), administrative fees (318, euros; 29: 486, euros) and leasing commission (74, euros; 29: 7, euros). (4.7) Other operating expenditure -86, ( : -896,955.68) The other operating expenditure consists for the most part of expenditure on investor relations (116, euros; 29: 57, euros), legal and consultant costs (1, euros; 29: 68, euros), cost of renting premises (91, euros; 29: 112, euros), expenditure in connection with financing (79, euros; 29: 41, euros), travelling expenses (69, euros; 29: 3, euros), vehicle costs (41, euros; 29: 48, euros), costs of producing the financial statements and audit costs (23, euros; 29: 79, euros) and trade fair costs (19, euros; 29: 6, euros). (4.8) Shares of other partners in the result -1,5.3 ( : ) This is the share in the result that is allotted to the minority interests in trading partnerships.

31 3 31 (4.9) Taxes on income and earnings -15, ( : -238,647.31) The taxes on income and earnings in the period under review consist of deferred taxes (16, euros, 29: 238, euros). They are determined based on the expected income tax rate for the year as a whole. The deferred income taxes amounting to -16, euros (29: -238, euros) are derived as follows from expected income tax expenditure that would have resulted from application of the statutory income tax rate of the parent company to the result before income tax. A corporate income tax rate of 15% plus 5.5% solidarity surcharge and a trade tax rate of 14% (average assessment rate: 4%) were used in these calculations. The reconciliation is shown in the following table: Result before income tax Expected income tax demand (Tax rate 29,825 %) Disparity arising from the difference between the actual tax rates and the expected tax rate (trade tax exemption of real estate companies) Remaining differences T T (4.1) Other taxes -243, ( : -248,88.9) The other taxes primarily involve real estate taxes incurred (242, euros; 29: 244, euros) for the properties held as financial investments.

32 Group interim financial statements (4.11) Changes in value of hedging instruments -222, ( : -27,433.) To hedge against fluctuations in future flows of payments, the company has taken out an interest rate hedge. The fluctuations in value arising therefrom will be offset directly in equity. (5.) Comments on selected items in the Group balance sheet (5.1) Intangible assets 155, ( : 189,982.63) The additions (9, euros) are connected with the newly-designed website of KWG Wohnwert GmbH, Glauchau. (5.2) Tangible assets 321,14.11 ( : 177,69.99) The additions (181, euros) are connected with the purchase of a car (1, euros), office furnishings (126, euros) and low-value assets (45, euros). (5.3) Real estate held as a financial investment 175,411, ( : 173,579,.) The development of the real estate held as a financial investment is shown in the statement of changes in assets. The properties are subject to restrictions on disposal in the form of property charges to the amount of the short- and long-term borrowings shown. The real estate held as a financial investment consists almost entirely of rented residential properties.

33 32 33 An internal valuation of the real estate held as a financial investment was carried out as per 3th June 21. The status on this date revelead no significant differences in value from the fair values of the properties valued according to IAS as ascertained by an outside expert as per 31st December 29. Scheduled depreciation on the buildings subject to wear & tear is more or less balanced out by value increases due to inflation, modernisation and maintenance carried out in the first half of 21. and a reduction in vacancies. There may be small deviations resulting from inaccuracies of valuation; these have not been taken into account in a revaluation. Thus no changes affecting the result arise from the revaluation of the real estate held as a financial investment. The extensive modernisation projects at our properties in Celle and Gelsenkirchen have led in each case to a substantial improvement upon the original condition. The construction costs incurred here (1,875, euros) are shown as additions in the period under review. The book value of the real estate held as a financial investment developed as follows: Start of period (1st January) Addition from portfolio acquisition and others additions Disposals from sales Net gain from adjustment to the fair value Net loss from adjustment to the fair value Value of real estate after valuation 173,579,. 1,875, , ,411, ,641, ,95, ,118, ,851, , ,579,. The withdrawals result from the sale of a property made to clear up the portfolio of the Hainichener Wohnungsgesellschaft, Hainichen. For the real estate held as heritable building rights, long-term heritable building right contracts exist that run until the year 227.

34 Group interim financial statements (5.4) Deferred tax receivables 3,685,761.9 ( : 3,53,22.3) The deferred tax receivables arise mainly from the creation of deferred taxes on tax loss carryovers. (5.5) Receivables and other assets 2,514,36.44 ( : 2,732,251.35) All receivables and other assets are shown in the balance sheet at their nominal value. The miscellaneous short-term receivables to the amount of 1,633, euros (29: 1,813, euros) conists of advance payments made on running costs. (5.6) Cash and cash equivalents 4,87,583.7 ( : 7,261,151.69) Liquid funds consist solely of cash and bank balances. All of them have a remaining term of less than three months at the time of acquisition or deposit. The development of the liquid funds, which constitute the financial resources according to IAS 7, is depicted in the cash flow statement. (5.7) Equity capital 65,76,37.24 ( : 64,737,16.79) The development of the item Equity capital has been depicted as part of the statement of changes in Group equity capital. Group share capital is 9,822, euros (29: 9,822, euros). This is subdivided into 9,822,481 (29: ) no-par shares made out to the bearer, each with a proportional amount of 1. euro per share. Each share represents one vote and is fully entitled to a share in the profits. The no-par shares are fully subscribed. The number of shares in circulation at the end of the period was (29: ).

35 34 35 The reserves involve premiums (4,5, euros; 29: 4,5, euros), a reserve for hedge accounting (-599, euros; 29: -412, euros), and statutory reserves of the parent company (2, euros, 29: 2, euros). KWG does not hold any of its own shares. As at 3th June 21. changes in the fair market values of the derivative financial instruments ( 599, euros; 29: 412, euros) are shown directly in equity, taking deferred tax claims into account. The fair market value (mark-tomarket value) on 3th June 21 amounts to 712, euros. Group net profit as at 3th June 21 was as follows: Group interim result assignable to shareholders of the parent company Withdrawals from the capital reserve Profit brought forward Group net profit T ,822 15, T 3,321 1,596 9,95 14,822 (5.8) Long-term debts 11,826,538.5 ( : 114,385,964.56) In order to ensure that the individual financing deadlines are met, long-terms loans have been taken out in connection with the properties shown under 5.3. The maximum term of these loans is until the end of January 238. (5.9) Deferred tax liabilities 2,541, ( : 2,288,52.77) The deferred tax liabilities are the result of different valuations of the properties carried in the balance sheet according to international accounting standards (IFRS) and valuation regulations according to national tax law.

36 Group interim financial statements (5.1) Long-term outside capital (minority interests in trading partnerships) 48,395.3 ( : 88,248.59) The amount shown involves the liabilities to third parties with interests in the consolidated trading partnerships. (5.11) Short-term outside capital 8,43, ( : 5,959,31.67) The other short-term liabilities involve, among other things, payments received for operating costs totalling 1,525, euros (29: 1,599, euros) and liabilities for derivative financial instruments amounting to 712, euros (29: 489, euros). The liabilities have a remaining term of up to one year. (5.12) Contingencies and other obligations On 1st March 21 the company moved into new office premises at Alstertor 9, Hamburg. The fixed-term lease signed for a period of 6 months involves liabilities totalling some 68, euros. In addition, there are standard leasing agreements that are classified in accordance with IAS 17.8 as so-called operate leases. The leasing objects are capitalised by the lessor, and not by the lessee. Liabilities for leases that expire in the current business year come to a total of 8, euros. (6.) Risk report There have not been any significant changes regarding the future development of our business since the beginning of the business year. We do not anticipate any risks that could endanger the Group s portfolio. Thus the information provided in the risk report in the Group financial statements as at 31st December 29 is still valid.

37 36 37 (7.) Result per share The undiluted result per share (basic earnings per share) has been calculated by dividing the result to be credited to owners of no-par shares by the weighted average of the shares issued for the time period. Because the company has not issued any options or convertible bonds, the undiluted result per share is the same as the diluted result per share. In calculating the earnings per share, the Group results allotted to the shareholders of the parent company (527,68.88 euros; 29: 1,249, euros) have been taken as a basis. The average number of shares issued (9.822,481; first half of 29: 8,6,) is no different from the total number of ordinary shares in circulation at the end of the half-year concerned. The undiluted and the diluted result per share for the period 1st January through 3th June 21 was.5 euros (1st January 3th June 29 :.15 euros). (8.) Miscellaneous; events after the balance-sheet date With effect from 15th June 21, the KWG Supervisory Board appointed Mr Torsten P. Hoffmann of Hamburg as the company s Director of Finance. At the annual general meeting on 5th July 21, Mr Patrik Zeigherman was appointed to the KWG Supervisory Board. (9.) Relationships to companies and persons close to the company In the first six months of the 21 business year there were no significant transactions between the company and members of the Board of Directors or Supervisory Board. With the exception of the changes in the composition of the Board of Directors and the Supervisory Board, there have been no significant changes in the relationships to companies and persons close to the company since 31st December 29.

38 Group interim financial statements (1.) Explanations of the Group cash flow statement The cash corresponds to the definition of cash and cash equivalents provided in the explanations of the main principles of valuation. The cash flow statement has been created in line with IAS 7, and subdivides the changes in liquid funds according to payment flows from business, investment and financing activities. The cash flow statement is depicted using the indirect method. Interest payments are shown at their full value in the cash flow from current operations.

39 38 39

40 Group interim financial statements Statement of changes in Group assets as at 3th June 21 Purchase / production costs Change Additions IAS 4 Disposals I. Intangible assets Concessions, industrial Property rights and similar rights and assets, also licences to such rights and assets 251, , , II. Tangible assets 1. Other assets, operating and business equipment 374, , , Technical systems and machinery 11, , , , , III. Real estate held as a financial investment 173,579,. 1,875, , ,411, ,215, ,64, , ,237,759.22

41 4 41 Depreciation Book values Additions 42, , , , , , , , , , , , ,579,. 173,946, , , , , ,81.99 Disposals , , , ,411, ,888,778.58

42 Group interim financial statements Statement of changes in Group assets as at 3th June 29 Purchase / production costs Change Additions IAS 4 Disposals Transfers I. Intangible assets 1. Concessions, industrial Property rights and similar rights and assets, also licences to such rights and assets 26, , , , Pre-payments made 159, , , , , , , II. Tangible assets 1. Other assets, operating Maschinen 341, , , Technical systems and machinery 11, , , , , III. Real estate held as a financial investment 17,641, , ,94, ,789, ,828, ,18, ,1.44 2,94, , ,418,8.19

43 42 43 Depreciation Book values , , , , , ,535.6 Disposals , , , , , ,828, ,211, Additions 14, , , , , , , , , , , , , , , , , ,641, ,14,384.85

44 Certificate after examination by the auditor Certificate after examination by the auditor To: KWG Kommunale Wohnen AG, Hamburg In our capacity as auditors, we have examined the abbreviated interim Group financial statements consisting of the Group balance sheet, the Group statement of income and accumulated earn, the statement of changes in equity, the Group flow of funds analysis and selected explanations in the appendix of KWG Kommunale Wohnen AG, Hamburg, for the period 1st January through 3th June 21, which form part of the company s half-yearly report. Responsibility for producing the abbreviated interim Group financial statements in accordance with the IFRS regulations for interim reporting, to be used within the EU, lies with the company s legal representatives. Our task is to issue a certificate based on our examination as auditors of the abbreviated interim Group financial statements. We have carried out our auditor s examination of the abbreviated interim Group financial statements taking into account the German principles applying to auditor s examinations of financial statements as set out by the German Institute of Public Auditors (IDW). These principles require for an auditor s examination to be planned and executed in such a way that, in a critical assessment, we can rule out with a fair degree of certainty that the abbreviated interim Group financial statements are in any significant respects not in keeping with the IFRS regulations for interim reports to be used within the EU. An auditor s examination is limited principally to questioning company employees and to analytical evaluations, and thus does not provide the level of certainty attained by a proper audit of the annual financial statements. As such audit was not part of our brief, we cannot issue a certificate of audit. Based on our auditors examination, we have not become aware of any circumstances that lead us to assume that the abbreviated interim Group financial statements are in any significant respects not in keeping with the IFRS regulations for interim reports to be used within the EU. The performance of our auditor s examination and our responsibility, also with respect to third parties, are governed by the General Conditions of Contract for Auditors & Accountants in the version of 1st January 22. By perusal and use of the information contained in our report, the recipient confirms that he is aware of the regulations set out in said Conditions of Contract, including the regulation on liability contained in 9 thereof), and recognises their validity with regard to us. Hamburg, 6th August 21 FIDES Treuhandgesellschaft KG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft gez. Hansen Wirtschaftsprüfer gez. Mackedanz Wirtschaftsprüfer

45 Financial Calendar/Imprint Financial Calendar: 31st August SCC Small Cap Conference, Frankfurt 14th September 21 - SRC Forum Financials & Real Estate 21, Frankfurt 4-6th October 21 - Expo Real, München 22nd-24th November 21 - Deutsches Eigenkapitalforum, Frankfurt As at 2/8/21. Subject to alterations. You will find the current financial calendar here: Imprint: KWG Kommunale Wohnen AG Alstertor 9 D-295 Hamburg phone fax Internet: ir@kwg-ag.de Design: comix mediapool gmbh, Berlin Photos: Tobias Kiebler, Hamburg