Interim Report. as of 30th June JK Wohnbau AG

Transcription

1 Interim Report as of 30th June 2011 JK Wohnbau AG

2 JK Wohnbau AG Munich Foreword The quarterly report as of September 30th 2011 was already published as a voluntarily audited interim report. The reports of the two previous quarters are now being published simultaneously. Because of the lack of relevance for our shareholders and business partners, we have allowed us to simplify the design of these reports. All three interim management reports are created with the date of February 13th The information in the risk and opportunity report, in the report on events subsequent to the reporting date (with exception of deferred real estate acquisitions) as well as in the forecast, is therefore identical and so far already published in the current report as of September 30th We like to refer to our detailed foreword in this report. The Executive Board The English version of the interim report is a translation of the German version of the interim report. The German version of this interim report is legally binding.

3 INTERIM CONSOLIDATED MANAGEMENT REPORT FOR THE FIRST SIX MONTHS OF THE FINANCIAL YEAR 2011 Business activity and economic environment I. Business activity and economic environment The JK Wohnbau Group is a project developer of residential property in the Munich region. The Group buys land in attractive locations via independent project companies/subsidiaries, plans residential properties there, builds them and then sells them. In addition, the JK Wohnbau Group is active in revitalising existing properties. Building activity, products and sales of the JK Wohnbau Group The aim of the JK Wohnbau Group is to offer for sale high-quality apartments in attractive locations in the Munich region. The Group sets the highest standards in respect of architecture, style, design and building materials and technology. The Selectio Wohnen nach Wahl (Choice Living) concept, for example, was awarded the Property Market Award by the trade journal Immobilienwirtschaft. Sales are handled by long-standing freelance sales representatives who earn commission. Sales staff are given specific training for each project and are there to provide customer care after the contract has been signed. In addition, project-specific sales offices and show flats or houses are available. Sales support is also provided in the form of a wide range of marketing material such as exposés or architectural models. All after-sales services are provided by the sales representatives. Sales staff look after customers throughout the entire construction phase until the handover. The JK Wohnbau Group attaches great importance to providing customer support through sales representatives, communicating construction progress and ensuring the incorporation and implementation of individual requirements until the handover. Group projects of JK Wohnbau Project Property company Location Total number of residential units Completion of first residential segments (planned) Isar Stadt Palais/Isar Living JK Wohnbau AG & Co. Objekt Maistraße KG Munich-Isarvorstadt /10 Ars Vivendi J.K. Wohnbaugesellschaft mbh & Co. Objekt Defreggerstraße KG Munich-Alt Harlaching 5 06/11 Isar de Luxe JK Wohnbau GmbH & Co. Objekt Waltherstraße KG Munich-Isarvorstadt 54 07/11 La Provence JK Wohnbau Objekt Stahlstraße GmbH Munich-Obermenzing 55 08/11 Partnachgärten GINDIWO Gesellschaft für individuelle Wohnungsprivatisierung mbh Munich-Sendling 55 08/11 St. Bonifatius gindiwo Gesellschaft für individuelle Wohnungsprivatisierung Objekt St. Bonifatius Straße mbh Munich-Giesing 45 10/11 Selectio J.K. Wohnbaugesellschaft mbh & Co. Objekt Hohenwaldeck KG Munich-Giesing /11 Nido JK Wohnbau Objekt Karlsfeld 1 GmbH JK Wohnbau AG & Co. Objekt Karlsfeld 2 KG Karlsfeld am Prinzenpark /11 JK Wohnbau AG & Co. Objekt Karlsfeld 3 KG Schillerstraße gindiwo Gesellschaft für individuelle Wohnungsprivatisierung Objekt Schillerstraße mbh Munich City /12 Driem JK Wohnbau Objekt Willy-Brandt-Allee GmbH Munich-Riem /12 Vogelweidestraße JK Wohnbau Objekt Vogelweidestraße GmbH Munich-Bogenhausen /12 Am Mönchsfeld JK Wohnbau Objekt Am Mönchsfeld GmbH Munich-Allach /15 The JK Wohnbau Group expects the projects listed to lead to a significant increase in sales revenue in financial years 2011, 2012 and later, compared to The "Hirschpark Terrassen" and "Neue Hirschpark Terrassen" projects, which are not listed in the table, are being undertaken in cooperation with Corpus Sireo Projektentwicklung Wohnen GmbH and are allocated to companies stated at equity in the consolidated financial statements. Details on the progress of projects and land purchases in 2011 can be found in the following section headed "Project developments" and in the report on events subsequent to the reporting date. Page 2 of 23

4 Significant events in the reporting period Project developments On 21 January 2011, sales were launched in House B of the "driem" project in Munich-Riem. The first residential units are expected to be handed over at the end of A total of 181 residential units with a sales volume of around 54 million are under construction in three buildings. The "Hirschpark Terrassen" show flat was opened for viewing on the former post office site in Munich- Nymphenburg on 28 January residential units with a sales potential of around 65 million are under construction on the Nymphenburg site. In March 2011, the JK Wohnbau Group purchased another parcel of land in the Munich suburb of Allach. The Group thereby reaffirmed its business strategy of making further investments. The project volume is around 166 million and approximately 60,000 m² of floor space is to be built on the roughly 71,000 m² site in Georg-Reismüller-Strasse. On 25 June 2011 the show flat was opened at the "La Provence" project in Stahlstrasse, Munich- Obermenzing. The project consists of 55 residential units with a sales potential of around 23 million. In the second quarter of 2011, important steps were taken in preparation for the acquisition of further sites in the second half of For details, please see the report on events subsequent to the reporting date. Personnel changes on the Management Board In the first quarter of 2011, Johann Haberstock stepped down from the Management Board. As of 30 June 2011, the Management Board of JK Wohnbau AG then consisted of Dr Josef L. Kastenberger, CEO, and Christian Dunkelberg, COO. Dr Kastenberger left the Company's Management Board after the reporting date. With effect from 1 February 2012, Michael Haupt was appointed by the Supervisory Board as the new CEO and Speaker of the JK Wohnbau AG Management Board. Increase in free float To increase the share's free float and meet the continued demand by institutional investors for larger equity stakes in the Company, JK Wohnbau AG and Helvetic Private Investment AG asked quirin bank AG for a partial waiver of the so-called soft lock-up (ban on the sale of shares except with a certificate of exemption) agreed upon when the share went public for the existing shareholder Helvetic Private Investment AG, who was willing to sell. quirin bank AG agreed to the waiver and sold the shareholding to institutional investors on 27 January 2011 at a price that was close to the market price. II. Macroeconomic development As expected, after a brisk start to 2011, the German economy progressed more slowly. The economic position of companies continues to be rated exceptionally good, but the highly confident business expectations of the winter months have been scaled down a little. The influx of new orders has been characterised by a sideways movement since the beginning of the year. In April, seasonally adjusted industrial production only slightly exceeded the average for the first quarter. Seasonally adjusted, construction industry output fell well below its first-quarter performance, which was characterised by catch-up effects. Exports more or less maintained the previous quarter's high level. The situation in the employment market continued to improve, but at a slower pace. 1 Source: 1 Deutsche Bundesbank, Monthly Report for June 2011 Page 3 of 23

5 III. Development of property markets in Germany and Munich The market for project developers in Germany The market for project developers in A-rated German cities amounted to an overall project volume of around 22.1 million m 2 at the end of The housing construction segment achieved a growth rate of 25.9% within the overall project volume. 1 According to the BulwienGesa market research company, A-rated cities for property in Germany are Munich, Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Cologne and Stuttgart. Source: 1 BulwienGesa 2011, The Market for Project Developments in Munich 2011 The market for project developers in Munich According to BulwienGesa, Munich ranked third amongst German cities with a project volume of 3.95 million m 2 in 2010 after Berlin (4.80 million m 2 ) and Hamburg (4.06 million m 2 ). Volumes by segment in Munich were as follows: residential 2.01 million m 2, office 1.27 million m 2 retail 0.37 million m 2 and hotels 0.21 million m 2. For special residential developments, the segment in which the JK Wohnbau Group is active, Munich tops the list, as it has done for many years. 1 For project volumes in monetary terms, Munich also leads the field of German cities with 17.2 billion. In Munich the residential (approx. 50%) and office (approx. 35%) segments are the largest in terms of monetary project volume and illustrate the persistently high demand for housing in the city. 1 Source: 1 BulwienGesa 2011, The Market for Project Developments in Munich 2011 The market for residential space in Munich The market for residential space amounted to an overall project volume of around 2.01 million m 2 at the end of Within this overall project volume, 883,000 m 2 of living space was completed in the course of 2010; a further 390,000 m 2 was under construction and 741,000 m 2 was at the planning stage. 1 If the providers on the market are rated in terms of overall project volume, consisting of finished projects, projects in progress and projects at the specific planning stage, the top three project developers for residential property on the Munich market are Baywobau, JK Wohnbau and Bayerische Hausbau. 2 Sources: 1 BulwienGesa 2010, The Market for Project Developments in A-rated German Cities; 2 BulwienGesa 2011, The Market for Project Developments in Munich 2011 The housing market in Munich The Munich housing market is a growth market. The city's population (1.37 million) continued to increase (+1.3%) in A further increase was anticipated for According to the Munich Statistical Office, the city's population grew by a further 1.2% in the first half of By 2025, the population of Munich is forecast to buck the nationwide socio-demographic trend with a net increase of around 10,000 inhabitants. 2 At the same time, the Federal Institute for Research on Building, Urban Affairs and Spatial Development forecasts a 14% overall increase in demand for living space by In 2009, not even 50% of housing demand was met. 4 Accordingly, the price level developed well above the national average. According to a survey by the property portal Immowelt, the purchase price for flats in Munich averaged at 3,396 per m 2 (224% of the national average) and house prices averaged at 739,472 (295% of the national average). Even in Munich's outer suburbs, the so-called commuter belt, the average purchase price for flats is for the most part more than 3,500 per m 2, or well above the national average of about 1,500 per m 2. Page 4 of 23

6 Management consultants PricewaterhouseCoopers see Munich as having the most development potential of all European cities in the short and medium term. 6 Sources: 1 Munich Statistical Office, 2011; 2 City of Munich, Board of Governors, Statistical Pocketbook 2009, as of June 2009; 3 BBSR Changing Housing Markets, January 2010; 4 Munich Statistical Office Completion of apartments in 2010; 5 Immowelt Munich Market Report, Q1 2010; 6 PricewaterhouseCoopers Emerging Trends in Real Estate Europe, Notes on the results of operations, net assets and financial positions Due to the state of progress in individual projects, the number of notarised sales in the first half of 2011 (87 residential units) was lower than the 182 units sold in the same period the previous year. Further purchases to expand the project pipeline were accelerated in the second quarter of 2011 and completed in the second half of the year. In the published consolidated financial statement as of 31 December 2009 certain matters were not fully covered or such were assessed incorrectly.the resulting effects on the published consolidated interim financial statements as of 30 June 2010 are stated in the Notes under (3) " Change in the reporting and adjustment of figures for the previous year according to IAS 8". In addition, previous year's figures as of 31 December 2010 are adjusted in these consolidated interim financial statements according to IAS 8 in relation to the published consolidated financial statements as of 31 December These adjustments are retrospective corrections of errors in the consolidated financial statements as of 31 December The resulting effects are also stated in the Notes under (4) "Change in the reporting and adjustment of figures for the previous year according to IAS 8". I. Results of operations Consolidated earnings after taxes were million in the second quarter and million in the first half of 2011 (previous year: million and million respectively). The main counter-trends to the increase in gross yield (total operating performance less cost of materials) to million in the second quarter of 2011 and million in the first half of 2011 (previous year: million and million respectively) was the increase in financial expenditure to million (previous year: million) in the second quarter of 2011 and to million (previous year: million) in the first half of Sales volume (revenue from the sale of property units and from property management) totalled million in the second quarter of 2011 and million in the first half of 2011 (previous year: million and million respectively) and was due mainly to the proceeds of residential units handed over during the period in question. In the second quarter of 2011, this mainly concerned handovers for the projects "Isar de Luxe" (JK Wohnbau GmbH & Co. Objekt Waltherstraße KG), "Selectio" (JK Wohnbau GmbH & Co. Objekt Hohenwaldeck KG), "La Provence" (JK Wohnbau GmbH & Co. Objekt Stahlstraße KG), "nido" (JK Wohnbau Objekt Karlsfeld 1 GmbH) and "Wohnidylle St. Bonifatius" (gindiwo Objekt St. Bonifatius Straße mbh). The large number of residential unit handovers led to a million reduction in value of the number of units held for sale in the second quarter of 2011 (previous year: an million increase). This resulted in an million increase in the first half of 2011, which was however lower than the previous year's million. In line with the growth in project volume, the cost of materials increased to million in in the second quarter of 2011 and was significantly higher than previous year at million. This resulted in a million increase in the cost of materials in the first half of 2011 to million (previous year: million). Personnel expenses amounted to million in the second quarter of 2011 and million in the first half of 2011, i.e. slightly higher than the previous year at million and million respectively in absolute terms, but down in relation to total output. As of 30 June 2011, the JK Wohnbau Group had 39 employees (30 June 2010: 42). Page 5 of 23

7 Other operating expenses in the second quarter of 2011 rose in accordance with the increase in total output to million (previous year: million). In the first half of 2011, other operating expenses amounted to million (previous year: million), which was also down in relation to total output. While legal and consulting expenses and sales commission declined significantly in the second quarter of 2011 in keeping with other operating expenses, acquisition and auditing costs and expenses for guarantees were higher than in the previous quarter. Earnings before interest and taxes (EBIT) improved significantly on the previous year to million in the second quarter of 2011 (Q2 2010: 0.268). In the first half of 2011, EBIT was also clear positive at million (previous year: ). The financial result in the second quarter of 2011 was million and in the first half of million and was therefore down on the previous year's million and million respectively. Financial income showed a slight year-on-year increase in the second quarter of 2011 to million (previous year: million). In the first half of 2011, financial income rose to million compared with 0.173million in the first half of Financial expenses rose significantly in the second quarter of 2011 to million (previous year: million). In the first half of the financial year, financial expenses totalled million (previous year: million). The high level of financial expenses in 2011 was due mainly to the increased use of alternative refinancing instruments via JK Wohnbau Fonds I Beteiligungs GmbH & Co. KG (JK Fonds) and to the bonds issued for interim financing of construction projects. The result of associated companies showed an increase on the second quarter of 2010 from million to million in the reporting quarter. In the first six months of the financial year, the result of associated companies was million (first half-year 2010: million). II. Assets position The balance sheet total as of 30 June 2011 was million, or million lower than the 2010 year-end total of million. Non-current assets as of the reporting date were million, up million on the 31 December 2010 total of million. This was mainly due to the increase of associated companies, which rose by million from million as of 31 December 2010 to million as of 30 June Current assets totalling million as of 30 June 2011 were down by million on the 31 December 2010 total of million. This was mainly influenced by the decline in other receivables and financial assets from million as of 31 December 2010 to million as of 30 June 2011, which in turn was due mainly to the reduction in fixed-term deposits. Cash and cash equivalents held also declined significantly by million from million as of 31 December 2010 to million as of 30 June This decline in liquid assets was due mainly to payments made as construction projects progressed and to the reduction in liabilities. In contrast, land and similar rights with uncompleted buildings increased due to the purchase of new sites and progress on existing projects, increasing in value from million as of 31 December 2010 to as of 30 June Accounts receivable from land sales were down by million from million as of 31 December 2010 to million as of 30 June III. Financial position The million decline in equity from million as of 31 December 2010 to million as of the reporting date is a result of the negative Group result of million in the first half of 2011 and of million in allocations to revenue reserves from the guarantees granted to the Group in the first half-year of 2011 by Dr Josef L. Kastenberger and JK Holding GmbH. The equity ratio was thereby reduced from 5.3% as of 31 December 2010 to 3.4% as of 30 June Page 6 of 23

8 Non-current liabilities totalling million as of 30 June 2011 were down by million on the 31 December 2010 total of million. This decline was due mainly to non-current financial liabilities from silent participations, shareholder loans and other forms of capital provision arising from scheduled redemption of million in loans as of 31 December 2010 to HANSAINVEST Hanseatische Investment GmbH's STRATOS Mezzanine Fund, taking the amount outstanding down from million to million as of the reporting date. Current liabilities fell sharply from million as of 31 December 2010 by million to million as of the reporting date. This was mainly due to a reduction in liabilities from payments made on account from million as of 31 December 2010 to million as of 30 June 2011 in connection with residential unit handovers to buyers in Current financial liabilities from silent participations, shareholder loans and other forms of capital provision declined, due to scheduled redemption of loans by HANSAINVEST Hanseatische Investment GmbH's STRATOS Mezzanine Fund, from million as of 31 December 2010 to million as of the reporting date. Trade accounts payable fell from million as of 31 December 2010 to million as of 30 June In contrast, current liabilities to banks rose as a result of the increased number of ongoing projects from million as of 31 December 2010 to million as of the reporting date. The compensation liabilities to shareholders in general partnership increased from million as of 31 December 2010 to million as of the reporting date. This is mainly due to an increase of compensation liabilities to investors in the JK Wohnbau Fund. Other liabilities rose from million as of 31 December 2010 to million as of 30 June With regard to the Group's liquidity, cash and cash equivalents held as of 30 June 2011 were down by million on the 31 December 2010 total of million to million. Cash flow from operating activities totalling million is due mainly to negative consolidated earnings before income taxes ( million) plus the financial result ( million), the million fall in trade payables, the million rise in unfinished building activity, the million increase in receivables and to value adjustments on receivables totalling million. Cash flow from investment activities totalled million and was due mainly to payments received from the disposal of financial assets. This concerns the reduction in fixed-term deposits totalling million. Cash flow from financing activities totalling million in the reporting period was due to the assumption of million in financial liabilities for construction projects and to financial liabilities redeemed in connection with successfully developed projects in the process of disposal totalling million. Interest expenses in the first half of 2011 totalled million. Report on risks and opportunities The capital market risks and financial risks on account of the delay in publishing the consolidated financial statements according to IFRS and the 2010 annual financial statements according to HGB [German Commercial Code] and of the adjustments necessitated by errors in previous years in the annual and consolidated financial statements were evaluated legally within the scope of risk management by a specialist law firm. It came to the conclusion that claims by third parties against the JK Wohnbau Group on account of this cannot be excluded but such claims are considered to be unlikely. The management board agrees with these opinions. Current business operations and the financing of new projects require fresh funds to be successfully raised in To redeem previous loans totalling 49.2 million that will be due for repayment between 31 May and 1 August 2012 and to meet a further financing requirement amounting to about 34.0 million to fund contractual commitments to pay agreed purchase prices arising from the acquisition of land and raise the equity required by the financing banks, we plan to place a 100 million corporate bond by June If we are unable to place this bond as planned Page 7 of 23

9 by June 2012, the Company will seek to prolong existing loans, which it has successfully done in the past. The prolongation of existing loans and the underlying interest payments will not permit us to reduce the Company's financing costs as planned. If a prolongation of the term of existing loans is not possible or not possible to the full extent, and if funding from other, alternative refinancing options cannot be raised in sufficient quantity to ensure purchase price payments and secure the equity required for financing by the banks, it will not be possible to maintain business operations as planned. If the planned or alternative financing measures cannot be realised, the Group's continued existence as a going concern will be under threat. Because of the 2010 annual result (according to HGB) and the 2010 consolidated annual financial result (as per IFRS), as well as the declaimer of opinion on these financial statements increasing borrowing costs for construction financing by means of loans have to be expected. In spite of the delay in the publication of the 2010 financial statements and the 2011 interim financial statements and the loss for the 2010 financial year (which had already been communicated in advance), no terminations or threats of terminations of bank loan agreements concluded have been received. Since bank financings have already been taken out successfully in the financial year 2011 the Company assumes that granting of loans for existing and new construction projects through bank loans is safeguarded for the future. With regard to other risks and opportunities faced by the JK Wohnbau Group, please refer to the consolidated management report for financial year In principle, the risks and opportunities outlined in the management report also apply as of this consolidated management report. Report on events subsequent to the reporting date In July 2011 another parcel of land was purchased in the south of Munich. The project volume amounts to around 147 million and approximately 37,000 m² of floor space is to be built on the site. Another plot was purchased in Landsberger Strasse in August The project volume is approximately 45 million and the floor space is around 13,500 m². In October 2011 further plots of land were acquired for construction projects. In these two projects 820 housing units are to be built with a total volume of around 200 million. The plan is to place 280 housing units by means of global marketing. On 11 October 2011, an ad hoc announcement stated that JK Wohnbau AG had reached an advanced stage of strategic talks with the Grand City Property Group that could lead to the takeover of a majority stake in JK Wohnbau AG by the Grand City Property Group. A majority of the Grand City Property Group is owned by a group of Israeli investors led by the Israeli entrepreneur Yakir Gabay. Grand City is investing heavily in German property and currently holds a property portfolio with a volume of more than 2 billion. As announced on 22 December 2011, JK Wohnbau AG sold 203 apartments in the Schillerstrasse project to an institutional investor by way of a global sale. The transaction volume amounts to around 40 million. As reported in an ad hoc announcement dated 23 December 2011, the previous Management Board chairman Dr Josef L. Kastenberger left the Company in December The Supervisory Board appointed Michael Haupt as the new Speaker (CEO) of the JK Wohnbau AG Management Board with effect from 1 February Outlook Taking into account the quarterly results for 2011, the financial year 2011 is expected to end with a positive EBIT. Due to the delay in publication of the financial statements for 2010, a refinancing on more favourable terms planned for the financial year 2011 has not yet been possible as envisaged. In view of the Company's dynamic development, however, additional mezzanine capital had therefore to be raised for a limited period, leading to correspondingly higher financial costs in This will have a negative effect on the result for the financial year In contrast to the forecast given in its consolidated management report as of 31 December 2010, the Company Page 8 of 23

10 anticipates a positive result only for the fourth quarter of 2011 and will therefore be able to report positive equity capital once more as of 31 December 2011 again. Due to the global sale of the Schillerstrasse project it must also be assumed that the volume of notarised sales in 2011 is likely to be higher than in the previous year. On the basis of current planning, a significantly positive sales and earnings trend is to be expected in the medium to long term. Munich, 13th February 2012 Michael Haupt Chairman of the Board/CEO Christian Dunkelberg Director/COO Page 9 of 23

11 JK Wohnbau AG Munich Interim Consolidated Financial Statements as of 30 June 2011 Page 10 of 23

12 JK Wohnbau AG, Munich Consolidated Income Statement from 1 January to 30 June /01 30/06 01/01 30/06 01/04 30/06 01/04 30/ * * Sales revenue a) From the sale of property units 59,188 22,930 47,033 6,246 b) From property management Changes in inventories of land with completed or uncompleted buildings held for sale 11,755 13,069-6,176 18,438 Total output 71,213 36,372 40,983 24,878 Cost of materials 60,304 32,200 33,844 21,913 Gross profit 10,909 4,172 7,138 2,965 Personnel expenses 1,823 1, Depreciations/amortisation/impairment charge Other operating income Other operating expenses 4,571 3,406 2,393 1,732 EBIT 4, , Financial income Financial expenses 12,423 6,860 6,646 2,900 Result of associated companies 2, , Consolidated result before taxes on income -5,400-8, ,826 Income tax expenses Consolidated earnings after taxes on income -6,209-8, ,189 of which attributable to JKW partners -6,480-8,543-1,038-3,276 of which attributable to non-controlling interests Results stated directly under equity Consolidated overall result -6,209-8, ,189 of which attributable to JKW partners -6,480-8,543-1,038-3,276 of which attributable to non-controlling interests Earnings per share in Undiluted n/a n/a Diluted n/a n/a * See Note (4) Change in the reporting and adjustment of figures for the previous year according to IAS 8 Page 11 of 23

13 JK Wohnbau AG, Munich Consolidated Balance Sheet as of 30 June /06/ /12/2010* 01/01/2010* 30/06/ /12/2010* 01/01/2010* Assets Equity and Liabilities I. Non-current assets 22,313 20,001 11,846 I. Equity 7,050 12,358-48, Intangible assets Subscribed capital 20,764 20,764 4, Properties held as financial investments 15,622 15,788 10, Reserves 129, ,331 5, Fixed assets Balance sheet loss -143, ,592-58, Financial assets Group equity of majority partners 6,924 12,503-48,924 a) Interest-bearing loans 2,940 2, Non controlling interests b) Associated companies 3, II. Non-current liabilities 61,377 70,826 40, Compensation liabilities to shareholders in general partnerships 36,449 36,185 22, Financial liabilities from silent participations, shareholder II. Current assets 183, , ,294 loans and other forms of capital provision 18 10,809 5, Land and other inventories held for sale 3. Financial debts owed to banks 22,184 21,278 10,079 a) Land and similar rights with uncompleted buildings 158, ,518 98, Deferred tax liabilities 1,435 1,369 8 b) Land and similar rights with completed buildings , Other provisions 1,291 1,184 2, Receivables from property sales 3,534 3, Tax refund entitlements III. Current liabilities 137, , , Compensation liabilities to shareholders in general 4. Other receivables and financial assets 5,370 28,431 3,593 partnerships 12,837 10,236 1, Financial liabilities from silent participations, shareholder 5. Cash and cash equivalents 16,395 35,331 2,758 loans and other forms of capital provision 32,490 40,734 29, Financial liabilities to banks 35,050 24,115 38, Trade accounts payable 6,775 12,629 19, Liabilities from payments made on account 35,997 52,135 33, Actual tax debts 2,395 1, Other provisions 3,425 3, Other liabilities 8,592 5,747 8,537 Total assets 205, , ,140 Total equity and liabilities 205, , ,140 * See Note (4) Change in the reporting and adjustment of figures for the previous year according to IAS 8 Page 12 of 23

14 JK Wohnbau AG, Munich Statement of Changes in Consolidated Equity from 1 January to 30 June 2011 Subscribed capital Reserves Balance sheet loss Majority shareholders' consolidated equity Noncontrolling interests Total consolidated equity Adjusted at 1 January 2010** 4,000 5,338-58,262-48, ,922 Comprehensive income* -8,543 * -8, * -8,499 Financial guarantees given by Dr Josef L. Kastenberger/JK Holding GmbH* 873 * Adjusted at 30 June ,000 6,211-66,804-56, ,548 As reported at 1 January , , ,668 15, ,457 Errors adjusted as per IAS 8* -2,924-2, ,099 Adjusted at 1 January 2011* 20, , ,592 12, ,358 Comprehensive income -6,480-6, ,209 Financial guarantees given by Dr Josef L. Kastenberger/JK Holding GmbH At 30 June , , ,072 6, ,050 * See Note (4) Change in the reporting and adjustment of figures for the previous year according to IAS 8 ** See consolidated financial statements as of 31 December 2010 for adjustment of previous year's figures to 31 December 2009 Page 13 of 23

15 JK Wohnbau AG, Munich Consolidated Cash Flow Statement from 1 January to 30 June /01 31/06/ /01 31/06/2010* Consolidated result before taxes on income (5,400) (8,032) Depreciation/ amortisation/impairment charges Value allowences 1, Financial result 10,074 7,201 Decrease (+) and increase (-) in properties held for sale and other inventory (13,493) (13,917) Decrease (+) and increase (-) in receivables from land sales and other trade receivables and financial assets (2,292) (1,849) Increase (+) and decrease (-) in trade payables and other current liabilities (21,892) (4,577) Increase (+) and decrease (-) in other provisions Income tax paid (299) (297) Cash flow from operating activities (31,117) (20,317) Purchase of fixed assets (4) (20) Proceeds of asset disposals 25,000 0 Interest payments received Cash flow from investment activities 25,199 (12) Proceeds from borrowings 31,859 46,583 Repayment of borrowings (38,471) (20,278) Interest paid (6,406) (2,396) Cash flow from financing activities (13,018) 23,908 Consolidation entity related changes in cash and cash equivalents without corporate mergers as per IFRS Net change in cash and cash equivalents (18,936) 3,630 Initial total cash and cash equivalents held 35,331 2,758 Final total cash and cash equivalents held 16,395 6,389 Net change in cash and cash equivalents held (18,936) 3,630 * See Note (4) Change in the reporting and adjustment of figures for the previous year according to IAS 8 Page 14 of 23

16 JK Wohnbau AG, Munich Selected Notes to the condensed Consolidated Interim Financial Statements as of 30 June 2011 (1) Principles for the preparation of the interim financial statements The interim financial statements for the period 1 January to 30 June 2011 were prepared in accordance with IAS 34 Interim Financial Reporting as abridged consolidated interim financial statements. These consolidated interim financial statements do not contain all of the information required for annual financial statements and must be read in conjunction with the consolidated financial statements as of 31 December The accounting and valuation methods used to prepare the consolidated interim financial statements correspond to the methods used for the consolidated financial statements as of 31 December The consolidated interim financial statements as of 30 June 2011 are drawn up in accordance with IFRS as applied in the EU. First-time application of the following standards and interpretations was required for the consolidated interim financial statements: Mandatory Adopted by the Standard/Interpretation application EU Commission Revised IAS 32 Financial Instruments: Presentation, Classification of Subscription Rights 1/2/ /12/2009 Various: Improvements in International Financial Reporting Standards /7/ /2/2011 Amendment to IFRS 1 Limited Exemption from Comparative IFRS 7 Figures for First-Time Adopters 1/7/2010 1/7/2010 IFRIC 19 Redemption of Financial Liabilities by Means of Equity Instruments 1/7/ /7/2010 Revised IAS 24 Related Parties 1/1/ /7/2010 Revised IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction 1/1/ /7/2010 Various: Improvements in International Financial Reporting Standards (AIP) /1/ /2/2011 The first-time adoption of standards and interpretations did not have any effect on the accounting methods used and the presentation of the Group's assets, financial and earnings position. (2) Changes in the scope of consolidation By the terms of a contract dated 1 June 2011, JK Wohnbaugesellschaft mbh & Co. Objekt Westpark KG was merged with the parent company JK Wohnbau AG. The resulting effects were eliminated as an intra-group transaction. In addition to JK Wohnbau AG, 24 subsidiaries (31 December 2010: 25) were included in the consolidated financial statements as of 30 June 2011, as were three associated companies (unchanged as of 31 December 2010). (3) Change in the reporting and adjustment of figures for the previous year according to IAS 8 Change in the comparative period 1 January 2010 to 30 June 2010 In the consolidated financial statements for 2010, retrospective corrections were made as per IAS 8 relating to comparative figures for previous periods. For further, more detailed explanations of the individual circumstances please see, in addition to the following overview in these interim consolidated financial statements, the published consolidated financial statements as of 31 December 2010 and the published interim consolidated financial statements as of 30 September The corrections undertaken had the following effects on the consolidated statement of comprehensive income for the adjusted comparative period from 1 January to 30 June The Page 15 of 23

17 previous year's figures were adjusted as per IAS 8 in these interim consolidated financial statements. The following overview shows the effects of the different corrections on the adjusted consolidated comprehensive income statement for the comparative period. Consolidated comprehensive income statement 01/01 Inventory valuation/project Financial instruments Subtotal 30/06/2010 provision as reported Number of Note explaining adjustment 000 1) 2) 3) 4) 5) 6) 7) 8) 9) 000 Increase or decrease in land held for sale with finished or unfinished buildings 11,438-1,036 1, ,909 Cost of materials 30,251 1,948 32,200 Depreciation Other operating income Other operating expenses 3, ,403 Financial income 4,031-1,041-2, Financial expenses 3, ,633 6,651 Result of associated companies Income tax expenses , ,670 Non controlling interests Consolidated income 1,472-1, , , ,350 Consolidated comprehensive income statement scope of consolidation/ Subtotal Deferred taxes Minorit corporate aquisitions ies Number of Note explaining adjustment ) 11) 12) 13) 14) 15) 16) Increase or decrease in land held for sale with finished or unfinished buildings 12, Cost of materials 32,200 Depreciation 304 Other operating income Other operating expenses 3,403 3 Financial income 173 Financial expenses 6, Result of associated companies Income tax expenses -2, , Non controlling interests Adjustment as per IAS 8 Total 000 1,632 1, ,858 3, , /01 30/06/2010 after adjustment ,069 32, , , Consolidated income -4, , The retrospective corrections in accordance with IAS 8 as described also lead to corresponding adjustments in the consolidated statements of changes in equity and cash flow and the segment reporting for the previous year's figures, all of which are incorporated in these interim consolidated financial statements. -10,015-8,543 The adjustments described above led to adjustments to the consolidated statement of comprehensive income for the comparative period for the first half-year from 1 January to 30 June 2010 (six-month period). The changes in inventory now amount to million (previously: million), in the cost of materials to million (previously: million), in depreciation to million (previously: million), in other operating income to million (previously: million), in other operating expenditure to million (previously: million), in financial income to million (previously: million), in financial expenditure to million (previously: million), in the result of associated companies to million (previously: million), in income tax expenses to million (previously: million) and in earnings after taxes to million (previously: million), of which attributable to shareholder of JK Wohnbau AG million (previously: million) and attributable to non-controlling interests million (previously: million). Adjustments to the comparative period also led to changes in the capital flow statement for the period 1 January to 30 June Cash flow from operating activities now totals million (previously: million). Consolidated earnings before income taxes now amount to million (previously: million), depreciation to million (previously: million), value adjustments to million (previously: million), the financial result to million (previously: million), the change in land and other inventories held for sale to million (previously: million), changes in other current receivables and financial assets to million (previously: million), changes in trade accounts payables and other current liabilities to million (previously: million), changes in other provisions to million (previously: million) and other changes to 0 (previ- Page 16 of 23

18 ously: million). Cash flow from investment activities now totals million (previously: million). The change to interest-bearing loans to related parties is 0 (previously: million) and the change to the acquisition of subsidiaries less cash and cash equivalents acquired is also 0 (previously: million). Cash flow from financing activities now totals million (previously: million). Payments made to redeem financial debts now total million (previously: million). In addition, consolidation entity related changes in cash and cash equivalents excluding mergers as per IFRS 3 are now stated at million (previously: 0). Finally, the revised initial and closing cash and cash equivalent totals are now million (previously: million) and million (previously: million) respectively. Adjustment of figures for the previous year as of 31 December 2010 A number of figures for the previous year as of 31 December 2010 were adjusted in relation to the published consolidated financial statements as of 31 December 2010 in accordance with IAS 8.41 ff in these consolidated interim financial statements. These adjustments are retrospective corrections of errors in the consolidated financial statements as of 31 December These corrections are in the areas of revenue recognition and valuation of inventories (property projects). The adjustments made have the following effect on the financial statements as of 31 December 2010: Consolidated balance sheet 31/12/2010 Adjustment Adjustments as 31/12/2010 as reported 1) Revenue 2) Inventory per IAS 8* after adjustment 000 recognition valuation Assets Land and similar rights with uncompleted buildings 147,730 1,782-2,995-1, ,518 Receivables from property sales 4, ,707 Total assets 235,658 1,430-2,995-1, ,093 Equity and liabilities Balance sheet loss -133, ,845-2, ,592 Non-controlling interests Liabilities from payments on account 50,601 1, ,534 52,135 Total equity and liabilities 235,658 1,430-2,995-1, ,093 Consolidated comprehensive income statement 01/01 31/12/2010 Adjustment Adjustments as 01/01 31/12/2010 as reported 1) Revenue 2) Inventory per IAS 8* after adjustment 000 recognition valuation Sales revenues from the sale of property units 76,321-1, ,886 74,435 Changes in inventories of land with completed or uncompleted buildings held for sale 3,100 1,782-2,995-1,213 1,887 Non-controlling interests Consolidated annual income -75, ,845-2,924-78,330 1) Revenue recognition In the area of revenue recognition an error was identified in defining the time of revenue recognition regarding three residential units for which final acceptance by the buyers and the transfer of material opportunities and risks of ownership of the property to the buyer only took place after the balance sheet date on 31 December Revenue recognition did not therefore take place until the financial year As a result, revenue from the sale of property units was overstated by million and Group equity was overstated by the consolidated financial statements as of 31 December Further effects on consolidated balance sheet items arising from this correction are shown in the explanation above. 2) Inventory valuation The retroactive correction of the error in the area of inventory valuation initially concerned an inaccurate definition of the manufacturing costs for land and leasehold rights and uncompleted buildings. Manufacturing costs totalling million were allocated to acquisition and manufacturing costs that should not have been stated as expenses until the financial year Furthermore, inventories were reduced by million with regard to the net sales proceeds for indi- Page 17 of 23

19 vidual residential segments of the same property company. The reduction was necessitated by a shortfall in the project expenses planned for the residential segments in question, which already existed when the consolidated financial statements for 2010 were being prepared. In the course of these adjustments, as explained above, the balance sheet items "Land and similar rights with uncompleted buildings" and "Group equity" were reduced by million and million respectively as of 31 December Finally, in the consolidated balance sheet stated in these consolidated interim financial statements "Land and similar rights with uncompleted buildings" and " Trade accounts payable" were each increased by million to million (previously: million) and million (previously: million) respectively. In contrast to the previous balance sheet in the published consolidated financial statements as of 31 December 2010, the transfer of risks and opportunities in connection with a land acquisition occurred, in accordance with the contractual provisions, on 31 December 2009 or 1 January (4) Significant events Significant statements on inventories Value adjustments on land and leasehold rights with unfinished buildings totalling million (previous year: million) were undertaken during the reporting period. The carrying amount of these inventories, to be stated at current fair value less costs of disposal, is million (31 December 2010: million). Page 18 of 23

20 (5) Segment reporting JK Wohnbau Revitalisation (formerly gindiwo) Other Consolidation/ Reconciliation Sales revenue external 01/01 30/06/ ,071 1, ,457 01/01 30/06/ ,968 2, ,302 Sales revenue internal 01/01 30/06/ /01 30/06/ Change in inventories 01/01 30/06/ ,898 28, ,755 01/01 30/06/2010 9,882 3, ,069 Total output 01/01 30/06/ ,175 29, ,213 01/01 30/06/ ,851 5, ,372 Group EBIT 01/01 30/06/2011 4, ,675 01/01 30/06/2010-1, Financial expenses 01/01 30/06/ ,603 1, ,423 01/01 30/06/2010 5, ,860 Financial income 01/01 30/06/ /01 30/06/ Depreciation/amortisation/impairment charges 01/01 30/06/ /01 30/06/ Associated companies 01/01 30/06/2011 2, ,057 01/01 30/06/ Income tax expenses 01/01 30/06/ /01 30/06/ Earnings after taxes 01/01 30/06/2011-4, ,209 01/01 30/06/2010-8, ,499 (6) Liabilities, contingent liabilities and other financial obligations For liabilities, contingent liabilities and other obligations, please see the presentation in the Notes to the consolidated financial statements for 2010, which mainly continued to apply as of 30 June 2011 with the following exception: As of 30 June 2011, financial obligations in connection with land acquisitions not yet completed totalled million (31 December 2010: million). (7) Significant transactions with related parties The JK Wohnbau Group's related parties and the extent of business transacted with them remained largely unchanged on the consolidated financial statements as of 31 December In this connection please see the outline in the Notes to the consolidated financial statements for Page 19 of 23