51
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
GROUP
MANAGEMENT
REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
PRELIMINARY REMARKS
The management report and consolidated financial statements of Corestate
Capital Holding S.A. (hereinafter “Corestate” or “the Company”) cover the
reporting period from 01 January 2021 until 31 December 2021, unless otherwise
indicated. Information on market and product offering developments pertains to
2021 as well, unless otherwise indicated.
The 2021 financial statements have been subject to an external audit by
Ernst & Young Luxembourg. Certain statements contained herein may be
statements of future expectations and/or other forward-looking statements
that are based on our current views and assumptions. These involve known
and unknown risks and uncertainties that may cause actual results, performance
or events to differ materially from those expressed or implied in such
statements. Corestate does not intend and does not undertake any obligation to
revise these forward-looking statements.
CORESTATE –
ANNUAL REPORT
2021
52
TO OUR SHAREHOLDERS
COMPANY BACKGROUND
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Corestate is a public limited liability company (Société Anonyme) incorporated under
Luxembourg law, with registered office at 4, rue Jean Monnet, L-2180 Luxembourg,
Grand Duchy of Luxembourg. The Company was registered with the Luxembourg
Register of Commerce and Companies (Registre de Commerce et des Sociétés)
under B 199 780 on 07 September 2015 and was originally established on 21 August
2015. Corestate Capital Holding S.A., Luxembourg does not have any branches.
all based on an experienced real estate management team‘s in-depth
understanding of each deal and its underlying assets. This business provides
commercial and technical property management services including service
charge accounting to their clients. The asset management services also
include ongoing financial and real estate reporting for clients and banks.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
It is part of our real estate management services to continuously observe the market
and to seek out and execute exit opportunities as far as they are in line with the
clients‘ investment requirements. The sales team is responsible for monitoring
favorable sale and exit opportunities.
Corestate is one of the leading listed investment managers for real estate equity
and debt in Germany and selected other European countries, with in total
€ 27.4bn in assets under management as at 31 December 2021, thereof around
€ 19bn asset under management in the core business. The market focus is
predominantly on Continental Europe and the UK covering the entire lifecycle of
investments in real estate. In our fully integrated business model, we are active as
co-investor and manager for our clients applying our experience and expertise to
a wide range of real estate investment product offerings. We combine proven real
estate expertise, good market knowledge and the understanding of mega trends
and environment, social affairs and corporate governance principles for optimal
product performance and sustainable returns for our customers. Our business
reporting is divided into three segments: (i) “Real Estate Equity”, (ii) “Real Estate
Debt” and (iii) “Other”.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
As at 31 December 2021, our asset management activities covered
2.67 million m2 of managed space with more than 28,000 micro living units under
management. Moreover, we had more than 114 funds under management as at 31
December 2021.
(ii) The Real Estate Debt Segment contains structures and implements
investment products via Corestate Bank. Furthermore, with our Group
subsidiary HFS (Helvetic Financial Services) we offer mezzanine financing (i.e.
financing that ranks below senior loans and above ordinary shareholders‘ equity)
for residential and commercial real estate developments in Germany, Austria,
Switzerland as well as Spain and seek to gain cross-selling opportunities from being
involved in our clients‘ development from a very early stage.
(i) The Real Estate Equity Segment encompasses the sourcing and acquisition
of relevant real estate opportunities and investments. It covers ongoing and
day-to-day asset and property management and other related services as well
as project monitoring over the holding period with the aim of actively enhancing
value and optimizing the relevant assets. It also encompasses management of
the realization of the value of investment products through multiple eligible exit
channels (e.g. asset-by-asset sales, portfolio sales, auctions). The products can be
held in separate vehicles established by respective clients together with Corestate.
Revenues are generated through acquisition fees, asset management fees, property
management fees (in equity products) and sales and promote fees.
The core business is to act as an initiator focusing on investments via debt securities.
The fund capital is used to acquire bonds which are issued by the bond issuer,
typically a real estate development company, for the early stages of a real estate
development, usually as equity-replacing bridge financing until certain milestones
(e.g. the building permit or construction progress) have been achieved and the
follow-on financing for the entire project has been secured.
In summer 2021 HFS launched a new senior fund Stratos VI and now the Company
is able to provide senior and subordinated loans. The Stratos VI real estate bond
fund has been set up as a special AIF (German special fund) and is targeted at
professional and semi-professional investors.
The asset and property management services that we provide during the holding
period support the investment strategy deployed from the early sourcing phase
through business planning. Such early involvement allows e.g. for an efficient
implementation of value enhancing measures such as capex investment, rent
increases, vacancy reductions and operational cost optimization programmes,
CORESTATE –
ANNUAL REPORT
2021
53
It will finance high-return development and existing properties from the residential
and commercial real estate segment. HFS intends to increase the fund volume to
approximately € 1bn in the next two years.
This substantially builds trust and related long-term relationships with the respective
client group.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
In respect of the properties held for warehousing purposes, Corestate signed a
contract with a regional investor group for the sale of the local shopping centre
“neustädter“ (Tor) in Giessen at the end of December 2021. The purchase agreement
is subject to customary conditions precedent with rights of rescission until the formal
due diligence has been completed. The closing of the transaction is expected to
take place in the first half of 2022.
As at 31 December 2021, the total committed fund volume amounted to
approximately € 1.2bn, covering about 45 financed projects with an average size of
mezzanine financing between € 25m and € 30m. The investor base of HFS included
approximately 70 institutional investors, such as pension funds, investment funds,
insurers and pension schemes.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
With the decision to spin-off CRM and Capera made in 2021, the Corestate Group
will be able to concentrate even more on the profitable asset management-related
activities in the real estate equity sector in the future. Capera is a property manager
for residential and commercial real estate in Germany and CRM is a leading operator
of student accommodation in the UK. At the time the report was prepared, the
spin-off initiated in 2021 is still ongoing. Therefore, both business units are recognized
as discontinued operations in the annual financial statements.
Our integrated business model enables us to cover the entire lifecycle of
investments in real estate equity and debt. We are a one-stop shop providing
the full range of asset, fund and property management services and related
investment products (managed accounts, open-ended and closed-ended funds,
club deals, alternative investment funds and individual mandates), and financial
investment structuring and advisory services, covering all major real estate asset
classes and all relevant investment vehicles. Our diversified product offering covers
a broad range of asset classes with different risk-return profiles (from value-add/
opportunistic to core and core+), including office, residential, micro living/purpose
built student accommodation, city quarters, retail, hotel, logistics, debt and
mezzanine financing services, which enables us to target a broad range of clients,
cross-sell our products and address the specific needs of different client types
(institutional, semi-professional and private). The focus of our business strategy
is on core and core+ investments. The diversification offers additional business
opportunities while mitigating business risks at the same time.
FURTHER INFORMATION
(iii) The Other Segments comprise alignment capital management activities as well as
real estate operations and assets held for warehousing purposes, i.e. assets which we
acquire on our own balance sheet for a certain short-term period in order to convert
them into investment products and – to a lesser extent – assets owned by non-client
third parties, with the aim of actively value-enhancing and optimizing the assets and,
ultimately, structuring the exit from such real estate investments.
An integral part of this business is to co-invest alongside our clients through our
alignment capital investments. This means that we invest our own funds into the
same products as our clients. As at 31 December 2021, we have invested € 145.9m
(equity and loans) through our alignment capital investments. Typically, alignment
capital investments range between approximately 5% and 10% of the total equity,
depending on our clients‘ requirements and product structuring.
To further expand and diversify our real estate debt products and services, improve
our access to new sources of capital, extend our client base and capitalize on
significant cross-selling potential, the Company entered into a business combination
agreement with the shareholders of Aggregate Financial Services GmbH (“AFS“)
to acquire all shares. AFS is a German debt platform and fully licensed securities
trading bank and now operates under the brand Corestate. The acquisition was part
of the strategy to significantly expand our position in the real estate development
financing market as well as the wider real estate sector by providing additional
financial investment structuring and advisory services. The takeover took place
as a capital increase against contributions in kind by issuance of 8.5m new
Corestate shares as well as payment of a cash component in the amount of
€ 5.0m. This transaction was signed in January 2021 and closed in May 2021.
As a result, we also participate in the performance of the investment products
through dividend payments and we realize capital gains upon successful exit from
alignment capital investments. Through our alignment capital we “buy into“ the risks
and rewards of the underlying transaction and assume responsibility far beyond the
role of just an investment manager.
CORESTATE –
ANNUAL REPORT
2021
54
The following chart illustrates Corestate’s integrated business model.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
EQUITY PRODUCT RANGE
DEBT PRODUCT RANGE
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
German &
European
Investment
Products
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Residential
Micro Living
City Quarters
Office
Logistics
Mezzanine
Senior Loan
Debt Advisory &
Structuring
FURTHER INFORMATION
SALES
Equity Raising | Client Relations
Integrated
Real Estate
Management
Platform
BUSINESS FUNCTIONS
Investment Management | Asset Management | Fund Management
CORPORATE FUNCTIONS
Risk Management | Compliance | Digitalization | ESG
National &
International
Clients/Investors
Semi-Professional
Institutional
Retail
(~200)
(~100)
(~48,000)
CORESTATE –
ANNUAL REPORT
2021
55
With a combined approach and a unique real estate platform we are targeting
primarily institutional, but also semi-institutional clients as well as private clients
and providing real estate equity and debt products to each group. Our private
and semi-institutional clients include family offices and ultra-high net-worth
individuals. National and international institutional clients include investment
funds, sovereign wealth funds, pension schemes and insurance companies.
TO OUR SHAREHOLDERS
CONTROL SYSTEM
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The Company‘s control system is geared toward the corporate strategy and
is therefore consistently aligned with the Group’s short to medium-term
objectives. The Management Board is responsible for overall planning and
thus for achieving the stated objectives as part of the strategic corporate
development.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Our institutional and semi-institutional investor base comprised more than 300
client contacts as at 31 December 2021. Furthermore, through Hannover Leasing
together with its subsidiaries (the “HL Group“) approximately 48,000 retail clients
have invested with us. In particular, through the STAM acquisition in 2020, we
expanded our investor base considerably and improved our access to financing
and opportunities for new business, especially with international institutional
investors.
ANNUAL ACCOUNTS
With the involvement of the Executive Committee (ExCom), the Management
Board uses a strategy process to steer the development of the business
segments and monitors the implementation of defined measures. On the
basis of global trends, growth paths are defined, opportunities and risks are
evaluated, portfolio decisions are made, and the focus of in-house market
research is determined at annual strategy meetings. Strategy and planning
meetings provide a planning basis for the following year and in medium-term
group planning.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
We have, historically, concentrated on the DACH region. Germany is and will remain
the main market for Corestate. However, we are also selectively looking at other
attractive real estate markets in Europe such as Austria, Switzerland, France, the
UK, Spain and the Benelux countries. Corestate operates principal offices in
Germany, Switzerland, Spain, France and the UK, as well as a German network of
branch offices of its property management platform Capera. As at 31 December
2021, the Group employed about 811 FTEs (previous year: 757 FTEs).
A planning forecast for the coming year and a five-year period is made annually
based on the corporate strategy and based on the market-driven strategic
planning in the segments. The “counter flow method” is used for planning
(bottom up – top down). In the course of a year, the planning for that period is
updated in several forecast cycles.
Some changes to the Management Board occurred in the financial year 2021.
As part of the AFS transaction, in January 2021, both founders and shareholders
Sebastian Ernst and Johannes Märklin were appointed as members of the
Management Board of Corestate for a term of three years. On 01 August
2021, Udo Giegerich was appointed Chief Financial Officer of the Group by
the Supervisory Board for a three-year term. His predecessor, Lars Schnidrig,
left the Company on 30 May 2021 at his own request for personal reasons. In
July and August 2021 CIO Nils Hübener and Chief Legal & HR Officer (CLHRO)
Daniel Löhken stepped down from the Management Board. Both gentlemen are
departing at their own request, for personal reasons and on the best of terms.
Weekly Board meetings are used for operational control. There the division
heads report to the Management Board on the development of transactions
and customer relationships, the competitive situation and any exceptional
business transactions. They employ standardized reporting methods largely
involving performance indicators, information variables and qualitative
assessments, which are then used to define further operating and strategic
measures to achieve the objectives in the event of planning deviations. The
internal reports – which are prepared monthly – provide aggregated financial and
non-financial information for the segments and the holding company, which is
used as a basis to allocate resources in a targeted manner, and pass resolutions on
the Management Board.
On the 08 February 2022 Johannes Märklin and Sebastian Ernst left the
Company. The Supervisory Board resolved shortly before to remove both members
from the Management Board of Corestate Capital Holding S.A. and released
them from all other group functions.
CORESTATE –
ANNUAL REPORT
2021
56
TO OUR SHAREHOLDERS
Explanation of the key indicators
TARGETS AND STRATEGIES
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Corestate is mainly managed based on the aggregated revenue & gains
and EBITDA (on adjusted and reported basis). Furthermore, assets under
management, fund volume, investment return, net profit, earnings per share,
cash flow, net financial debt as well as specific financial ratios associated to
the key performance indicators are usually used by management to measure
operating performance and for steering the Company. We use these metrics as
a basis for strategic planning and forecasting, and they represent measures that
we believe are widely used by certain investors, securities analysts and other
parties as supplemental measures of operating and financial performance.
In the past financial year Corestate undertook a change of perspective following
a structured strategy process across the entire group. In the future, the Company
will see itself as a manager of this value chain – from project to sale. To safeguard
the implementation process and to react immediately to the changed market
conditions during 2021, one of the first strategic measurements was to bundle
and strengthen the sales force. Furthermore, the consistent focus of the
investment portfolio on sustainable, future-proof asset classes was initiated as
another cornerstone of Corestate’s new strategy.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Nevertheless, the real core of the corporate strategy is to focus on investors and
clients. Following the definition of the overarching goals – such as the new corporate
vision, performance profiles and authentic ESG targets – we will use the strategy
framework as the centrepiece to set out exactly how we are going to move forward.
FURTHER INFORMATION
Corestate’s non-financial performance indicators include maturity profile,
attrition rate as well as asset allocation and ESG-related performance measures.
Furthermore, Corestate utilizes planning tools such as corporate planning as
well as rolling liquidity planning, which are used to steer operational business
development.
To implement the growth strategy, we are
− striving to enlarge our business volume, in terms of AuM
− continuing to expanding our customer base in our priority regions
− expanding our fund product and real estate debt service offerings
− reorganizing and simplifying our corporate structure
RESEARCH AND DEVELOPMENT
As part of its business purpose, Corestate has no technological research
and development activities and is not dependent on licenses and patents.
− actively managing our business portfolio with selective divestitures
− driving an active cultural change and open mind-set within the Company
− continuing to steadily strengthen our financial resources to reduce our debt
We have set a clear timetable for 2022 and beyond. Throughout the
implementation period, all stakeholders will be updated continuously and
transparently on the status, progress and successful implementation of the
timetable.
CORESTATE –
ANNUAL REPORT
2021
57
TO OUR SHAREHOLDERS
MARKET DEVELOPMENT
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The market environment for Corestate‘s business developed positively in 2021.
The German investment market closed 2021 with a record total transaction
volume of € 110.7bn, up 35.7% on 2020.1 € 76.6bn worth of real estate changed
hands in the second half of the year alone. This means that the third and fourth
quarters made up almost 70% of the annual transaction volume.
The real estate private debt market in Europe in 2021 showed a volume of
about € 80.0bn. In particular, demand for financing from both the residential
and commercial real estate sectors has been buoyant. COVID-19 has had little
impact on the demand for financing throughout the pandemic, with pricing
holding up strongly as well, debt lenders seem to agree.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
This development was driven in particular by the market for residential real estate
investments (incl. nursing homes and student accommodation) with a share of
47%, which is also heading for a new record. Both the number of apartments and
apartment prices rose significantly and are expected to reach over € 52.2bn for
the first time in the full year. Office properties follow with a share of almost 25%
(€ 27.5bn) and an increase of no less than 12% compared to 2020. The bottom of
the market seems to have been reached and 2021 delivered the third best result
of the past ten years. Logistic properties have continued to develop dynamically
in the shadow of the two dominant real estate segments. With a total of € 10.2bn
(share of 9.3%), more capital than ever before has flowed into distribution,
production and warehousing facilities. While this record figure demonstrates the
attractiveness of the German market across all segments, it is still evidence of a
lack of higher-yielding alternatives.
The alternative lending sector is still growing because banks cannot - and are
not willing to - cover the demand for financing, due to the sheer volume of
development taking place, on the one hand, and on the other because of much
tighter regulation and more restrictive policies in their credit approval processes.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
The whole debt lending sector has become highly dynamic in 2021, and shows
no sign of slowing down, with so many new financing opportunities opening
up across all levels of the capital stack. Germany is retaining its position as the
dominant real estate market in Europe, therefore new foreign capital from North
America and Asia is looking for more opportunities here.
With the ongoing retreat of the traditional lending banks from financing anything
but rock-solid and blue-chip projects, a further wave of new alternative lenders
have been eyeing up prospects in the European lending markets, with the
announcement recently of several new providers looking to move into the space.
1 JLL, Investment Market Overview,
04 January 2022
CORESTATE –
ANNUAL REPORT
2021
58
TO OUR SHAREHOLDERS
BUSINESS AND PRODUCT OFFERING DEVELOPMENT
In 2021, Corestate and the market it operates in was still impacted by the
COVID-19 pandemic. This led – especially in the first months of the year – to an
ongoing shift in clients‘ focus towards reduced risk/return profiles.
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
At the end of December 2021, Corestate had total assets under management
of € 27.4bn. Real estate AuMs stood at € 24.3bn, thereof € 12.4bn (2020:
€ 12.8bn) in real estate equity and € 6.6bn (2020: € 6.5bn) in real estate debt.
This reflects our core business. The remaining € 5.4bn (2020: € 5.3bn) are based
on third-party property management contracts. The slight reduction in real estate
equity AuMs in 2021 is mainly driven by the planned maturity of a property
management portfolio in the UK, the termination of a micro living fund and a
commercial portfolio.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
At the same time the main transactions and investments affecting real estate
debt and equity AuMs in the reporting period were as follows:
− Corestate sold Warnow Park in Rostock from its Highstreet VIII retail
fund – a hybrid shopping center with a net floor space of approx.
40,000 m²
− Corestate Bank managed the complex project financing for the
purchase and development of the “FÜRST” project in Berlin – one of
the largest real estate transactions of the year with a volume of more
than € 1bn
− The Group sold a top property, the Deutsche Bahn AG operations
centre in Berlin, consisting of two building sections with a lettable
area of 23,062 m2
− Corestate sold the Limes Park in Sulzbach near Frankfurt – an ensemble
of six buildings with total of approximately 22,300 m² of rental space
− STAM Europe acquired three residential buildings for its OPERA Fund
in Paris totaling 4,800 m2 and three light industrial parks with more
than 15,000 m2 in the Paris region on behalf of the Highlands II joint
venture
− Hannover Leasing markets Alter Domus head office in Luxembourg
to Generali
− Hannover Leasing acquired the project development “Weitblick 1.7”
in Augsburg Innovation Park for a special AIF
− Corestate acquired the VISION ONE office campus with a lettable
area of 25,000 m2 in the Stuttgart metropolitan region (Leinfelden-
Echterdingen), for a closed-end special AIF
− Corestate set up the open-end special AIF “Stadtquartiere 1” –
the first of its kind in Germany for institutional investors
− HFS launched the new senior fund Stratos VI. The AIF will finance
high-return development and existing properties from the residential
and commercial real estate segment in the DACH region.
CORESTATE –
ANNUAL REPORT
2021
59
€ million
2021
9.7
20201
15.1
37.3
3.9
TO OUR SHAREHOLDERS
RESULTS OF OPERATIONS
Unless otherwise stated, only information on continuing operations is provided
in the following sections.
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Revenue from Acquisition Fees
Revenue from Asset Management Fees
Revenue from Property Management Fees
Revenue from Sales and Promote Fees
Revenue from Development Fees
Total Revenue from Real Estate Equity Segment
Revenue from Underwriting and Structuring Fees
Revenues from Performance Fees
Income from Mezzanine Loans
37.0
5.3
CONSOLIDATED
FINANCIAL STATEMENTS
Generally, the real estate transaction market regained momentum in the second
half of the year. Especially in the last couple of weeks, asset valuations have
become more stable, including in those classes that were hit the most during the
pandemic such as retail, micro living and hotels.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
23.0
2.5
4.9
ANNUAL ACCOUNTS
9.1
NOTES TO THE
ANNUAL ACCOUNTS
The total aggregated revenues and gains of Corestate including revenue from
the discontinued operations of CRM and Capera in 2021 amounted to € 245.5m,
a significant increase of 28.3% (previous year: € 191.4m).
77.6
36.0
49.5
18.1
17.3
1.0
70.4
18.8
44.3
10.3
19.9
-
FURTHER INFORMATION
The Group’s aggregated revenue and gains from continuing operations (including
the revenue from real estate equity, real estate debt and income from the Other
Segment) grew considerably by 33.0% to € 215.4m (previous year: € 162.0m).
Revenue from Asset Management Fees
Income from Trading Activities
Total Revenue from Real Estate Debt Segment
Total Income from Other Segment
Aggregated Revenue and Gains
121.9
15.9
215.4
93.3
(1.8)
162.0
1 The statement is adjusted in line with
IFRS 5 Discontinued Operations for
the financial years 2021 and 2020.
For further information see Note
B.2.3 to the consolidated financial
statements.
CORESTATE –
ANNUAL REPORT
2021
60
TO OUR SHAREHOLDERS
REAL ESTATE EQUITY
EARNINGS POSITION
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The Real Estate Equity Segment generated revenue of € 77.6m, clearly
above the prior year’s level of € 70.4m. The asset and property management
fees in this segment were up slightly from 41.2 million euros to 42.3 million
euros. Acquisition fees in this segment went down considerably from € 15.1m
in 2020 to € 9.7m, due to the lower transaction volume on the purchase
side and a slightly reduced fee rate. Revenue from sales and promote fees
showed a significant increase from € 4.9m to € 23.0m in the reporting
period, which was mainly driven by an upswing of projects sold with an
improved fee rate. The revenue from development fees came to € 2.5m, from
€ 9.1m in the previous year which is due in particular to the increased focus on
forward purchases in cooperation with general contractors.
G&A and other expenses in the reporting period went up to € 59.5m (previous
year: € 45.4m), particularly due to one-off expenses in the context of the
strategic acquisition of AFS and due to integration and transformation measures,
provisioning for the planned efficiency enhancement programme as well as
severance payments for management board members.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Despite the comprehensive risk provisioning and the corresponding impairments
on financial assets and receivables in particular, the Group EBITDA from continued
operations of the reporting period showed an improvement and came to € 26.4m
compared to € 16.2m in 2020. Adjusted by € 17.4m one-off effects split in € 7.7m
direct M&A expenses, € 3.2m for integration and transformation measures and
€ 6.5m provisioning for the 2022 efficiency program. Thus, the adjusted EBITDA
stood at € 43.8m. The adjusted EBITDA margin improved to 20.3% (previous
year: 10.0%).
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
REAL ESTATE DEBT
Depreciation and amortisation went up significantly to € 214.3m from € 50.6m,
mainly driven by impairment of the goodwill of the HFS in an amount of € 174.8m.
Furthermore this position also includes purchase price allocations from acquisitions.
The consolidation of Corestate Bank makes it more difficult to compare the
figures of the Real Estate Debt Segment with the previous year. Total revenue
from real estate debt went up significantly by 30.6% to € 121.9m (previous year:
€ 93.3m) underlining the leading position in a very prospering market. In 2021
revenue from underwriting and structuring fees almost doubled from € 18.8m to
€ 36.0m, mainly driven by the consolidation of Corestate Bank. Income from
bridge loans grew to € 18.8m from € 10.3m, driven by the peak in lending over the
year. Revenue from asset management fees slightly decreased from € 19.9m to
€ 17.3m. Revenue from performance fees, including coupon participation fees,
was up at € 49.5m (previous year: € 44.3m). This increase was chiefly attributable
to higher risk discounts in 2020 and the revaluation of individual funds in 2021.
€ million
2021
24.7
26.4
42.1
43.8
2020
16.6
16.2
16.6
16.2
EBITDA
EBITDA from continued Operations
Adjusted EBITDA
Adjusted EBITDA from continued Operations
Net Profit
(200.1)
(192.8)
17.6
(68.9)
(65.1)
(47.5)
(45.4)
Net Profit from continued Operations
Adjusted Net Profit
Adjusted Net Profit from continued Operations
23.7
CORESTATE –
ANNUAL REPORT
2021
61
The financial result came to minus € 18.3m (previous year: minus € 23.8m) and
TO OUR SHAREHOLDERS
ASSET POSITION
Balance sheet
the result from income tax were € 13.4m (previous year: expenses € 6.9m).
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Corestate’s net profit from continued operations decreased from minus
€ 65.1m in the previous year to minus € 192.8m in the current reporting period,
which translates into earnings per share of minus € 6.29 (previous year: minus €
2.87). Adjustments at net profit level comprises € 174.8m impairment of goodwill, €
7.7m in direct M&A expenses, € 3.2m in transformation and integration measures,
€ 6.5m in provisioning for efficiency program, € 33.2m in effects from ‘Purchase
Price Allocation’ and minus € 8.8m in deferred tax liabilities. Adjusted net profit
from continued operations ended up at € 23.7m (previous year: minus € 45.4m) .
€ million
2021
2020
CONSOLIDATED
FINANCIAL STATEMENTS
Non-Current Assets
Current Assets
990.9
399.2
1,056.6
408.5
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Total Assets
1,413.6
626.2
1,465.0
688.5
NOTES TO THE
ANNUAL ACCOUNTS
Total Equity
FURTHER INFORMATION
Earnings Development in €m, EPS in € (continued Operations)
Non-Current Liabilities
Current Liabilities
Total Equity and Liabilities
349.1
548.8
429.4
227.6
1,413.6
1,465.0
Adjusted EBITDA
Adjusted Net Profit
Earnings per Share
As at 31 December 2021, total assets amounted to € 1,413.6m, a slight decrease
of 3.5% compared to the previous year figure (2020: € 1,465.0m).
43.8
Total non-current assets amounted to € 990.9m (2020: € 1,056.6m), by far the
largest component of which is the goodwill position created mainly in association
with the acquisition of HFS, HL, STAM, CRM and Corestate Bank, standing at
€ 487.2m (2020: € 577.7m); the variation results from the impairment
23.7
16.2
of HFS with
€
174.8m, the addition of AFS with
€
94.6m and
–2.87
-6.29
2020
2021
the reclassification of
CRM’s goodwill position in the amount of
€ 10.3m due to the intended disposal in accordance with IFRS 5. Investment in
associates and joint ventures increased in the course of 2021 to € 145.9m (2020:
€ 120.8m). A significant enhancement of € 22.5m results from the project Vision
One in the Stuttgart metropolitan area.
–45.4
CORESTATE –
ANNUAL REPORT
2021
62
Total current assets were at € 399.2m versus € 408.5m as at 31 December 2020.
Inventories, i.e. assets held for warehousing, went up from € 73.8m to € 100.0m in
particular related to CAPEX measures at the Giessen property. Trade receivables
were up by 42.8% from € 33.0m at the end 2020 to € 47.2m as at 31 December
2021, primarily related to sales and promote fees recognized at the year-end.
TO OUR SHAREHOLDERS
CASH FLOW ANALYSIS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Cash flows from operating activities turned positive from minus € 63.4m in the
previous year to € 31.0m in the reporting period. The operating cash flow was
primarily affected by higher depreciation and changes in working capital. In
2021, cash flows from investing activities amounted to € 9.8m (previous year:
minus € 30.1m). Over the reporting period 2020, they were still largely influenced
by higher payments for acquisitions and the purchase of other financial
instruments. Cash flows from financing activities fell to minus € 56.2m in 2021
(previous year: € 79.4m). In 2020 the financing cash flow was mainly positive due
to the proceeds from the capital increase and from loans and borrowings, while
in 2021 Corestate showed higher repayments for loans and borrowings and
fewer outflows for finance expenses.
CONSOLIDATED
FINANCIAL STATEMENTS
Cash and cash equivalents as well as restricted cash decreased mainly due to the
contractually committed capex expenditure for the warehousing asset (Giessen)
from € 91.2m in 2020 to € 75.7m.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Total equity, driven by the capital increase contributed in kind as part of the
Corestate Bank acquisition and against the backdrop of the negative earnings
after tax, reduced to € 626.2m at the end of the reporting period (2020: €
688.5m). The equity ratio of Corestate therefore dropped to 44.3% at the end
2021, compared with 47.0% on 31 December 2020.
FURTHER INFORMATION
Due to higher cash flows from operating activities before taxes, the free cash flow
came to € 58.0m (previous year: minus € 51.8m). The free cash flow is calculated
as the cash flow from operating activities before payments for income tax in the
amount of € 57.3m (previous year: minus € 48.3m), less capital expenditure in
and income from the sale of PPE and intangible assets.
Total liabilities were relatively stable at € 778.5m in comparison with prior year
(2020: € 776.6m). While non-current liabilities went down by € 199.7m to € 349.1m,
current liabilities increased by € 201.7m to € 429.4m. The main reason for this
was solely the reclassification of the financial liabilities from bonds due to their
maturity. Other non-current financial liabilities were reduced from € 29.3m to
€ 19.9m, mainly due to the reassessment of an existing long-term office lease
agreement.
The cash conversion rate (free cash flow to EBITDA), adjusted for continued
operations and for one-off effects and M&A-related expenses, came to 132.4%.
Total financial liabilities stood at € 622.0m at the end of the reporting period
(2020: € 635.6m). Net financial debt (including cash and cash equivalents as well
as restricted cash and adjusted by lease liabilities) was slightly down at € 526.5m
(2020: € 531.4m). This amounts to improved financial leverage on 31 December
2021 of about 12.0 versus 32.8 at the end of the comparative period (adjusted
EBITDA for continued operations).
CORESTATE –
ANNUAL REPORT
2021
63
TO OUR SHAREHOLDERS
MATERIAL EVENTS AFTER THE REPORTING DATE
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
In connection with the changes in the shareholder base of Corestate at the end
of 2021, Mr. Stavros Efremidis and Dr Bertrand Malmendier were appointed
as new members of the Supervisory Board with effect from 01 January 2022.
Mr. Friedrich Munsberg and Prof. Dr Hermann Wagner stepped down from the
Supervisory Board correspondingly as at 31 December 2021.
The former CEO René Parmantier left the Group’s Management Board to fully
focus his activities on Corestate’s Real Estate Debt business, incl. HFS and
Corestate Bank. In addition, the Group’s Management Board was extended
to four members by Izabela Danner as Chief Operating Officer (COO) and
Ralf Struckmeyer as Chief Investment Officer (CIO). The new members of the
Management Board are appointed for a term of three years. On Supervisory
Board level, the former Deputy Chairman Dr Bertrand Malmendier took over as
Chairman of the Supervisory Board. As a new member Dr Roland Folz joined the
Supervisory Board on 07 March 2022.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
The Supervisory Board of Corestate resolved on 07 February 2022 to remove
Johannes Märklin and Sebastian Ernst from the Management Board of
Corestate Capital Holding S.A. and all further group functions. On 08 February
2022, the Group announced that René Parmantier will assume full responsibility
for the Real Estate Debt segment in addition to his role as CEO of Corestate, and
thus also the management of Corestate Bank.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
On 04 February 2022, Hannover Leasing placed out an additional share
amounting to € 12.5m (12.5%) in its project VISION ONE. By doing so, the
investment of Hannover Leasing decreased to € 10.1m and is therefore
reclassified from joint ventures and associates to other financial instruments
accordingly as at the aforementioned date.
The invasion of Ukraine by the Russian Federation on 23 February 2022 and the
resulting sanctions with regard to Russian state-owned companies and Russian
individuals could also result in restrictions on investments in which Corestate is
involved as a co-investor. Corestate has set up a task force to analyse and closely
monitor both compliance with the sanction restrictions and their impact on
Corestate‘s operating business. Risks would not directly concern the operating
business of the underlying investment structures but potentially the restrictions
on financing and distributions of cash. A final assessment of the consequences
of this situation for the group is not yet possible at the time of finalisation of the
financial statements.
On 07 March 2022 the Supervisory Board decided to strengthen the governance
structure and resolved to appoint the former Chairman of the Supervisory Board
Stavros Efremidis as CEO with immediate effect.
CORESTATE –
ANNUAL REPORT
2021
64
OUTLOOK
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
In 2020, Corestate took the decision not to pay a dividend to the shareholders.
However, the future aim of the Management Board is not only to finance the
continued growth of the Company but to also maintain the continuity of its
dividend policy. Therefore, the Company intends to return to its regular dividend
policy and would like to pay its shareholders a dividend of at least € 0.50 from
the 2022 consolidated result in the financial year 2023. In addition, the
Management Board believes that it is crucial for the Company to maintain stable
capital resources in order to achieve sustainable organic growth and increase
enterprise value for its shareholders, while also exploiting opportunities for
acquisitions.
All the issues that were sources of uncertainty in the market in 2021, including
coronavirus, supply bottlenecks, rising inflation, sustainability, and the future
of work, remain unresolved in 2022. Overall, investors are continuing to focus
on safe core properties in the face of high investment pressure and are taking
ESG criteria into account. As a result, declining yields will contribute to a market
revival in the non-core segment in the long term. At the same time, the European
Central Bank is expected to change its policy of low interest rates, provided
inflation remains at a permanently higher level. Nevertheless, the environment
for real estate transactions is likely to remain positive.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Corestate will continue to pursue its strategic agenda rigorously and sustainably.
The Management Board’s focus remains on net debt reduction and profitable
growth in all segments. In addition to revenue growth, economies of scale and
higher margins from an optimized product mix and improved cost discipline
should lead to an increase in results. This will be aided by an improvement in the
overall economic conditions, too.
The Group expects organic AuM growth in the mid term between 5-10%.
For 2022 the Management Board anticipates also aggregate revenue and gains,
to come in between € 210m and € 230m in the financial year 2022. The Real
Estate Equity and Real Estate Debt Segments should contribute towards this
growth in revenue during the current year. Although at the time of reporting
there are no plans for larger acquisitions, smaller takeovers are not ruled out.
Luxembourg, 20 April 2022
Stavros Efremidis
Chief Executive Officer
Udo Giegerich
Chief Financial Officer
Izabela Danner
Chief Operating Officer
Ralf Struckmeyer
Chief Investment Officer
Following a further improvement in the quality of earnings, the Group expects
a normalised EBITDA of between € 90m and € 110m for 2022.
CORESTATE –
ANNUAL REPORT
2021
65
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
NON-FINANCIAL
STATEMENT1
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Through our business operations, we create long-term value while seeking to
balance environmental, social and business aspects – for our Company, for our
stakeholders and for society. Hence, sustainability is an essential component
of our Group strategy. The mandatory non-financial statement for the financial
year 2021 will be part of our ESG Report 2022, which will be available on our
website www.corestate-capital.com from 30 June 2022.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
OUR UNDERSTANDING OF THE IMPORTANCE OF
SUSTAINABILITY FOR OUR BUSINESS
Our understanding of sustainability is based on the conviction that the holistic
integration of environmental, social and governance aspects, so called ESG
indicators, into the whole real estate investment cycle offers substantial benefits
for our clients and partners – as well as society as a whole. Long-term profitability
in the real estate sector will depend on responsible behaviour towards the
environment and society in the future. Therefore, and in order to safeguard
and enhance our growth prospects, the ESG department directly reports to the
CEO and regularly informs the Management and Supervisory Boards. Every-
day and operational tasks are coordinated through a monthly ESG Committee
compromising the Management Board and senior management members with
ESG-relevant responsibilities.
1 The mandatory non-financial
statement 2021 will be included
in part of the ESG Report 2022.
CORESTATE –
ANNUAL REPORT
2021
66
TO OUR SHAREHOLDERS
OUR ESG GOALS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Corestate is committed to maintaining high standards of ESG management
across the portfolio. On this basis we have developed and committed to
12 corporate ESG targets that we report on annually to track our ESG
management objectives.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Reduce CO2 Emissions1 by
Increase energy efficiency1 by
Reduce water consumption1 by
Reduce non-recyclable waste1 by
2% annually
20% by 2025
5% annually
30% by 2025
2% annually
20% by 2025
2% annually
20% by 2025
Increase ratio of
female Management by
Develop at least
5 ESG tenant partnerships
Publish
employee well-being policy
Support Corestate charity
incl. solidarity days
5% annually
30% by 2025
by 2025
review every 12 months
annually from 2020
1 Based on metre data given for
assets
2 Will address changes from the
coronavirus crisis by including new
work topics
3 Postponed until next year
due to coronavirus crisis, not
communicated as annual target
Provide
investor transparency
Hold
Conduct mandatory
compliance & governance trainings
Ensure that each
employee signs an
12 ESG committees
continuously
to ensure set targets
annually from 2019
for all employees,
annually from 2019
Ethics Declaration
annually from 2020
CORESTATE –
ANNUAL REPORT
2021
67
EMPLOYEE NETWORKS
TO OUR SHAREHOLDERS
CORESTATE AS AN EMPLOYER
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Along with our ESG goals we were happy to introduce the Corestate Women
network. Corestate Women, the women‘s network founded in November 2019 by
Corestate Capital Holding S.A., promotes the exchange of experience, inspiration,
cooperation and the fair participation of women, to foster personal potential and
careers through professional development. Our key initiatives include regional and
group-wide networking events – often with guest speakers from the real estate
industry, a mentoring programme and regular updates via newsletters. Corestate is
sponsoring the ”Fondsfrauen“ career network and has organized joint events with
the network. Fondsfrauen is an association with over 2,000 women as members,
many of them in management positions in the financial sector.
Our employees are one of the most valuable cornerstones and the key to the
successful development of our Company. Consequently, we want our employees
to be motivated and to find themselves in a working environment that is
constantly evolving. Our ambitious goals can only be achieved with employees
who also set the highest standards of quality for themselves. At Corestate our
aim is to support equal opportunities, motivate and develop our employees.
Therefore, it is important that we provide a professional working environment
that keeps work and life in balance.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
EQUAL OPPORTUNITIES
We attach great importance to increasing the proportion of women in management
positions. However, diversity encompasses much more than gender. For this reason,
we have created the “Corestate Capital Pride Network” (CCPN), Corestate‘s
LGBTQ+ diversity group. Our CCPN was launched on 28 June 2021 in celebration
and recognition of international Pride day which marks the date of the Stonewall
riots in 1970 (the riots are widely considered to constitute one of the most important
events leading to the LGBTQ+ liberation movement). Our goal and commitment to
this network is to encourage the recruitment, retention and recognition of talented,
high performing LGBTQ+ individuals, raise awareness of social and professional
challenges within the financial community that impact LGBTQ+ individuals and
build an inclusive community to promote networking, growth and cross-company
collaboration.
Corestate Capital Group is an equal opportunity employer and is proud to
employ individuals from varying backgrounds and with different life experiences.
We will not tolerate any discrimination whether based on colour, religion,
sex, medical condition, age, national origin or ancestry, physical or mental
disability, marital status, medical condition, sexual identity, military service
status, gender identity, gender expression or any other consideration protected
by applicable local laws. We understand that, as Corestate employees, we
should behave in a discriminatory manner and that unlawful discrimination
by any employee, regardless of their title and level, will not be tolerated.
Corestate’s commitment to equal opportunity employment applies to all persons
involved in any of the business areas of the organization.
CORESTATE –
ANNUAL REPORT
2021
68
We place great importance on workplace learning and a feedback culture. We
are committed to providing all our employees with the opportunity to grow and
to perform their roles to the highest standards, as well as encouraging them to
develop to their future potential.
PERSONAL CONDUCT
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
It is important that our employees represent the interests of the business at all
times. This means that we always act in a professional and respectful matter
towards our colleagues, clients and customers. We expected our staff to uphold
the Company‘s values of integrity, team spirit, professionalism, respect and
sustainability both during and outside working hours.
CONSOLIDATED
FINANCIAL STATEMENTS
We recognize that learning and development activities take several individual forms.
Therefore, it is our commitment to:
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
HR SOFTWARE
NOTES TO THE
ANNUAL ACCOUNTS
− Communicate the organization’s objectives and values
With the launch of our People Software rexx HR we set the milestone for our
group-wide digitalization strategy. The HR software allows our HR data to
be connected group-wide. In addition, the changeover now enables the
maintenance of a digital employee file, a better overview for time management
and the rapid processing of sick leave and holiday requests. Furthermore, the
new software helps us to significantly harmonise and speed up our work
processes at local and group level.
FURTHER INFORMATION
− Work with the employees to identify their developmental
needs and link these to the Corestate Capital Group objectives
− Work with employees to identify solutions to their learning needs
− Encourage employees to undertake and make use
of learning and development activities
Workflows can now be displayed and performed by one tool. Recruitment,
onboarding, management and offboarding can all be performed easily.
− Evaluate the impact of learning and development
for individuals and the organization
SUCCESS MANAGEMENT
Employees are encouraged to:
Our success management was implemented in 2020 and has been rolled out group-
wide. This holistic process is also mapped and executed via our HR software rexx.
− Bring up learning and development needs and opportunities
We have made a significant step towards a more open and constructive
conversation between managers and employees with the focus on strengths
and areas of individual development. Our success management system provides
a clear and comprehensive approach to the discussion and definition of annual
goals. Biannual appraisals involving managers and employees have improved the
performance management culture and expectation management.
with their line manager
− Participate in learning and development activities
− Provide feedback on learning undertaken and its contribution
to their personal development and that of the organization.
Each Corestate Capital employee also has clear development objectives and will
be supported in achieving these to improve and increase our retention rate on a
group-wide basis.
CORESTATE –
ANNUAL REPORT
2021
69
COVID-19
ADVANCED LEADERSHIP TEAM
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Like many companies, Corestate was heavily affected by the COVID-19 pandemic
in 2021. COVID-19 has presented us with completely new challenges also in terms
of working together. The major steps we have taken in digitalising our daily tasks
and projects within the entire group have helped us here tremendously. We
complied at all times with the restrictions imposed at our operating locations to
protect health and promote hygiene. Our employees were fully able to continue
working despite various regulations and restrictions.
In 2021, we began the second round of our Advanced Leadership Team
(ALT) programme, which was launched in the previous year as an employee
development project. We once again delivered this international programme
virtually with around 20 participants and provided different training sessions
(Leadership, Agile Work and Communication, Presentation) and development
opportunities.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
This intense interactive programme for high performers and future senior
employees has been designed for our highly motivated and committed
employees to encourage their high work ethic and develop their professional
and personal skills.
NOTES TO THE
ANNUAL ACCOUNTS
The COVID-19 pandemic has underlined how important our employees are to us.
The immediate adaptation of their working methods to the exceptional situation
reinforces the commitment our employees put into their daily work.
FURTHER INFORMATION
As an employer, we see ourselves as having a duty of care. To this day, we have
taken all necessary measures regarding hygiene and health regulations to protect
our employees. We communicated all updates and news on a regular basis, issued
face masks on several occasions, delivered tests and put up warning signs at all our
business premises and supplied additional hygiene articles.
In addition to receiving training, the members of the ALT worked in group-wide
teams together and were mentored by a senior leader of the organization. In this
programme, too, we pursue the approach of connecting our entities through
joint tasks.
The various projects carried out by the groups independently and the success
of the output at the beginning of November 2021 showed the relevance of the
program and the commitment of the participants.
We continued with our virtual training courses to inform our employees on the latest
hygiene measures and regulations and formed a Pandemic Risk Steering Committee
comprising the responsible senior members of the Management Board, the Risk
department HR and Communication.
CORESTATE –
ANNUAL REPORT
2021
70
CORE AWARD
DEVELOPMENT OF EMPLOYEE NUMBERS
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Our performance management system (success management) of the Group is based
on four areas of success. With the CORE AWARD our aim is to recognize particularly
outstanding achievements in one of the four dimensions. It is of great value to ensure
our employees’ efforts are seen, appreciated and rewarded.
EMPLOYEES BY REGION IN FTEs
2021
2020
583.3
21.0
1.0
CONSOLIDATED
FINANCIAL STATEMENTS
Germany
France
622.6
21.0
-
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
The CORE AWARD acknowledges the work of individual employees, teams as
well as entire departments in a group-wide manner. Participants are nominated for
their outstanding projects or achievements and finally reviewed and chosen by the
Management Board.
ANNUAL ACCOUNTS
Italy
NOTES TO THE
ANNUAL ACCOUNTS
Luxembourg
Austria
21.0
11.4
3.0
18.1
7.0
FURTHER INFORMATION
The nominations and winners were revealed in two virtual ceremonies which took
place in spring and autumn of 2021 with a focus on the dimensions “Creation” and
“Collaboration”. With the CORE AWARD we were able to underline the importance
of transparency in our daily work. We are delighted with the number of nominations
and the feedback we received from the entire organization.
Poland
3.0
Switzerland
Spain
16.0
7.7
6.8
7.7
United Kingdom
Total
108.4
811.3
109.2
757.1
As at 30 December 2021, the number of full-time employees (FTEs) increased by
7.2% to 811.3 (31 December 2020: 757.1 FTEs). The increase is attributable to
organic growth throughout the Group, the opening of our JOYN serviced apartments
in Switzerland and Germany, and the acquisition of AFS (“Corestate Bank”). At
the end of the year 2021, 188.5 FTEs were employed at the foreign locations
(31 December 2020: 173.8 FTEs) and the Company had a total of 29 trainees
(31 Dec 2020: 27 trainees). The total number of employees shown in the table
above includes also the Capera Immobilien Service GmbH and CRM students Ltd.
together with CRM Micro Living Italy S.r.l, which are held for sale and declared as
discontinued operations in accordance with IFRS 5. These companies employed
268.7 and 106.4 FTEs respectively in the past financial year.
CORESTATE –
ANNUAL REPORT
2021
71
GROUP AGE DISTRIBUTION IN %
TO OUR SHAREHOLDERS
2021
15.9
33.6
25.8
20.3
4.4
2020
17.4
34.0
25.3
19.3
4.0
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Under 30
30-39
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
40-49
50-59
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Over 60
FURTHER INFORMATION
SHARE OF FEMALE MANAGEMENT POSITIONS IN %
Management Level
2021
-
2020
-
Top Management Level (Board of Directors)
1st Management Level (MD, ED & SLT Member)
2nd Management Level (Department Leader & ALT)
3rd Management Level (Team Leader)
Total
14.8
39.3
58.6
40.3
13.9
40.9
63.3
44.3
CORESTATE –
ANNUAL REPORT
2021
72
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
RISK
REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
RISK MANAGEMENT
NOTES TO THE
ANNUAL ACCOUNTS
RISK MANAGEMENT SYSTEM
FURTHER INFORMATION
Corestate has established a risk management system at Group level which
considers the risks of the holding company as well as the risks of the subsidiaries.
For this purpose, Corestate has appointed a Group Chief Risk Officer, to whom a
team is assigned, but who can also draw on dedicated persons in all subsidiaries
of Corestate. In accordance of the ”three lines of defense“ theory, the risk
management department operates within the second line of defense.
DEFINITION OF RISK
Risks are related to specific causes and result from the uncertainty of future
events and a mostly incomplete level of information. In terms of impact, a risk is
(mostly) reflected in a negative deviation from a defined target value.
CORESTATE –
ANNUAL REPORT
2021
73
CONCEPT, OBJECTIVE AND FUNDAMENTAL ORIENTATION OF RISK
MANAGEMENT
TO OUR SHAREHOLDERS
These are in particular:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Risk management is seen as the totality of all organizational regulations and
measures for identifying and handling risks. The term risk management thus
encompasses all methods, systems and systematic measures for identifying,
analyzing, assessing, controlling and monitoring significant risks that affect the
objectivesandexpectationsoftheGroup. Italsoincludesthefurtherdevelopment
of risk management instruments and cross-process monitoring and control.
CONSOLIDATED
FINANCIAL STATEMENTS
− risks resulting from actions that violate applicable laws (laws,
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ordinances, regulations);
ANNUAL ACCOUNTS
− risks resulting from actions that violate the internal guidelines
of the Group or, at the level of individual companies, also the
internal guidelines of the respective individual subsidiary;
NOTES TO THE
ANNUAL ACCOUNTS
The aim of risk management is, on the one hand, to sustainably secure or increase
the value of the Company, to secure the strategic and operative corporate
objectives, to secure the future success of the Company and to optimize the
medium and long-term risk costs by dealing with risks appropriately.
FURTHER INFORMATION
− risks resulting from actions that cannot be reconciled with market
practices in markets where Corestate operates and therefore entail
a not inconsiderable reputational risk;
Only by recording all the risks to which the Company is exposed can the
necessary level of transparency be achieved. Prior to a business transaction or
implementing any new process, all potentially inherent risks are assessed and
evaluated. However, there are risks that are not acceptable to the Group as a
matter of principle.
− risks resulting from actions that could endanger the continued
existence of Corestate or individual companies of Corestate.
The Group ensures that all other risks are within the limits set by the
Management Board of Corestate and, if applicable, by downstream
management bodies.
CORESTATE –
ANNUAL REPORT
2021
74
RISK CONCENTRATIONS AND DIVERSIFICATION
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Concentrations of risk (e.g. concentration exclusively on the real estate market
of a single city) are avoided at all levels wherever possible. Where this is not
possible, special attention is paid to such concentrations, and measures to
reduce such concentrations are continuously reviewed and – where appropriate –
implemented.
The main functions involved in this process are as follows:
CONSOLIDATED
FINANCIAL STATEMENTS
Function
Duty
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Identification and assessment of risks
Mitigation of risks
ANNUAL ACCOUNTS
Risk diversification, e.g. spreading the investments across various asset classes,
markets or addressing different groups of investors (family offices, institutional
investors, investors from the DACH region, from Asia, Africa, the Americas), is
implemented where possible to keep dependencies as low as possible.
Process Owners
NOTES TO THE
ANNUAL ACCOUNTS
Risk control
FURTHER INFORMATION
Risk monitoring
Review and analysis of risks and risk assessments
Risk reporting
RISK MANAGEMENT AND CONTROLLING PROCESS
Risk Management
To ensure effective risk management, appropriate risk management and
controlling processes have been set up in all individual companies to identify,
assess, manage, monitor and communicate material risks and associated risk
concentrations.
Review of risk control and risk monitoring performed
by risk owners
Review on group risks and according mitigation
measures
Group Risk Committee
The risk management and controlling processes ensure that the material
risks – including those of outsourced activities and processes – are identified
at an early stage, fully recorded and presented in an appropriate manner.
Management Board
Audit Committee
Supervisory Board
Final assessment of group risks
Evaluation of material group risks
The following sub-processes exist for Corestate in the area of risk management
and risk controlling activities:
Risk
Risk
Risk reporting/
communication
Risk
Risk
indentification
assessment
control
monitoring
CORESTATE –
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The risk management and controlling processes are adjusted promptly to
changing conditions as required. Accordingly, the documentation specifying the
risk process is updated at least annually, more frequently if necessary.
Market price risks relate to the possibility of negative changes in value due to
unexpected changes in the underlying market parameters. The term market price
risk therefore covers risks that arise because investments initiated by Corestate
do not develop as forecast. This directly affects investments made by a group
company itself, i.e. separate investment funds are out of scope (see below).
These investments can be used to be sold into an investment fund later (so-called
warehousing). Risks of investments of investment funds do not affect individual
companies or Corestate per se. These risks only have relevance beyond the
investment assets if they radiate to the companies of Corestate, e.g. via damage
to reputation or lost legal disputes. In these cases, the radiance to Corestate
is usually accompanied by a previous product, system or process deficiency or
by human error within Corestate. Consequently, such risks are included in the
category “operational risk“.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Risks are also regularly reviewed to determine whether they are acceptable in the
context of the respective business. In case of doubt, the responsible member of
the management body or group risk management is consulted.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Risks that are within unacceptable limits are examined to see whether they can
be reduced or whether the risk acceptance needs to be changed. If neither of
these is the case, it is examined whether the transaction based on such a risk can
be continued or should be terminated.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
RISK IDENTIFICATION
Market price risks can comprise all investment classes (i.e. real estate, other real
assets, equities, commodities, fixed income and credit). They therefore include
interest rate risks.
Risk identification is an ongoing process and deals with the question of what risks
exist.
Within market price risks, general market risk must be distinguished from
investment-specific risks (specific market risk and event risk). General market
risk is the risk arising from the development of the market in which Corestate
operates.
The following risk type scheme, which is based on the regulatory minimum
requirements for the regulated subsidiaries and is therefore also applied at
Group level, serves as the identification grid. Accordingly, a distinction is made
between the following types of risk, which are defined for Corestate as shown
below. All identified risks are meaningfully sorted into one of the following four
risk categories.
Specific market risk and event risk relates to developments in individual
companies or assets or sub-groups of companies or assets.
CORESTATE –
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Counterparty default risks are defined as risks that involve the danger of
partial or complete default of contractually agreed payments. They include
counterparty risk.
Operational risks (including compliance risks) are defined as the risk of losses
caused by the inadequacy or failure of technology and infrastructure, employees,
internal processes or external influences. The definition includes legal risks,
because the business activities of Corestate are subject to the general conditions
of tax, environmental, investment, rental and construction law, among others.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
As with market price risks, counterparty default risks in the investment assets
(e.g. default of tenants in commercial properties or lessees of moveable assets)
do not affect Corestate per se for the time being. Only if there are suspected
spillover effects on Corestate are corresponding risks included in this category
CONSOLIDATED
FINANCIAL STATEMENTS
Operational risk generally consists of many possible risk scenarios that are
attributable to very different failure aspects of individual risk causes, or several of
those at the same time.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Liquidity risks are dangers that arise from the lack of sufficient financial
resources. On the one hand, this includes liquidity risk in the narrower sense,
which consists of the risk that Corestate companies will not be able to meet their
current and future payment obligations in full or on time (e.g. due to the loss of
existing sources of financing). On the other hand, it contains risks resulting from
the increase in the cost of financing sources (funding risk).
NOTES TO THE
ANNUAL ACCOUNTS
A sub-risk is so-called compliance risk. This involves the risk of violation or
infringement of internal or external rules. Risk consequences can be:
FURTHER INFORMATION
− monetary losses resulting from inadequate procedures or processes
(e.g. fines or loss of licenses and approvals)
Here, too, a corresponding distinction is made between risks of the investment
assets and risks of Corestate, as already mentioned.
− damage to reputation (e.g. because companies of Corestate
are subject of official investigation proceedings).
RISK ASSESSMENT
Risk assessment is of crucial importance for risk management measures. It
describes the importance of the individual risks and is determined from the
probability of occurrence (measure of the probability of the risk occurring), the
impact (potential damage before measures are taken) and the measures already
implemented and planned (control options). It thus represents the basis for
planning and controlling risks.
Procedure for identifying sub-risk types and individual risks – The existence
and exact nature of the risk types described above and the sub-risks to be
subsumed under them are checked by means of risk identification. As part of risk
identification, the causes and effects of the risk are described in each case.
Not only currently known but also potential future risks are considered. In
addition, it is ensured that all material risks are fully recorded and appropriately
presented.
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77
Classification of ESG risks – In accordance with various supervisory bodies that
provide guidance on managing ESG risks, Corestate considers these risks within
the framework of the existing risk landscape and risk inventory, as well as in case
of new risks as a part of these. Only in those cases where the risks are purely ESG
risks and there is no relation to existing risks are these risks newly and separately
registered and integrated into the existing risk landscape using the existing risk
categories.
Corestate also manages a high number of malls and high street assets. During
the pandemic, malls, shops, bars and restaurants were ordered to close several
times, and sometimes for a longer period. In addition, access to such malls and
shops was restricted by government measures (e.g. access only for vaccinated or
recovered persons). The revenues of the malls and shops dropped accordingly,
as tenants were not always able to pay full rents, or they terminated contracts
partially or completely.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
This all led to the situation that the annual valuation of these assets was lower
than before, which made it very difficult (if not impossible) to sell them at the
originally expected price. Investors refrained also from investing in such asset
classes, resulting in less opportunities to initiate new projects.
RISKS RELATED TO THE COVID-19 PANDEMIC
NOTES TO THE
ANNUAL ACCOUNTS
Risks that relate to the COVID-19 pandemic are incorporated in the given risk
framework either by considering such risks in existing risks or by adding newly
identified risks to the risk inventory.
FURTHER INFORMATION
In addition, Corestate is usually remunerated based on the value of the assets
managed. Therefore, the lower valuations resulted in lower fee income.
The main risks due to the COVID-19 pandemic are on the market and on the
liquidity side.
While occupancies started to increase in summer 2021, and shops and malls
were mainly allowed to stay open, having more turnover, it is expected that the
next valuation will show higher values for such assets.
Corestate is one of the main managers of student apartments and the temporary
letting of micro-apartments, which are usually rented by long-distance commuting
professionals and their employers.
Loss event database – Incidents of damage that have occurred can provide a
basis for identifying and assessing risks. Claims are therefore recorded. A loss
event is the occurrence of an operational risk (no matter whether or not already
registered) which is claimed in the form of a loss.
During the COVID-19 pandemic, universities tend to offer mostly distance
learning, which led to demand for student apartments falling sharply. Travel
was restricted, so international students could not travel to their universities.
In addition, the government in Germany, but also in other countries instructed
people to work from home wherever possible to reduce contacts during
commuting and in offices. Many countries also ordered the closure of hotels and
similar accommodation. This caused demand for micro-apartments and other
similar facilities to drop to nearly zero.
Known loss events above a certain amount are considered when assessing
operational risks. In addition to the costs incurred, opportunities in the form of
additional internal expenses and measures to limit or avoid damage are also
recorded.
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Entry and update cycle – The initial recording of a risk is carried out ad hoc
when it is identified. An update must be carried out no later than twelve months
after the date of its entry or last update. If necessary, the data is entered or
updated ad hoc.
Quantitative risk assessment – The quantitative risk assessment requires
precise figures for the amount of loss (impact) in the respective currency (e.g. €,
USD) and the probability of occurrence in % for the basic data.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Individual risks are assessed based on their probability of occurrence and the
impact/loss they cause. Wherever possible, historical values or planned figures
and relevant indicators are used for this purpose. In cases where no corresponding
data basis is available, the best educated guesses of the decentralized risk
managers are used. If a single risk event can occur more than once or in several
cases, this circumstance is appropriately considered in the probability of
occurrence and the amount of loss, using the Poisson distribution.
CONSOLIDATED
FINANCIAL STATEMENTS
In the event of a significant change in the risk situation, a written ad hoc report is
submitted to the risk management of Corestate.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
General valuation rules
– Risks are assessed net, i.e. considering
measures that have been implemented. To determine an expected loss, the
formula
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
− Damage equals probability of occurrence
Quantification via qualitative risk assessment – Qualitative assessment is used
if it is not possible to quantify a risk objectively or “subjectively“ in a reliable
manner. A grid was developed for the probability of occurrence and extent of
damage in these cases which enables those responsible for risk to determine
appropriate quantitative values for this purpose.
− multiplied by the expected loss frequency in the event
of a loss according to the Poisson distribution
− multiplied by the average amount of damage
is applied. In the case of risks that can only occur individually, the factor for the
expected frequency of losses in the event of a claim is always 1, in order to rule
out overestimation of risks.
Combination of quantitative and qualitative risks – If risks are assessed both
qualitatively and quantitatively, the highest category of both assessments must
be used for the overall risk categorization.
CORESTATE –
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79
Control priorities – All risks are depicted on a 5x5 matrix in a standardized
manner regarding the extent of damage and probability of occurrence. The
matrix itself is structured as follows:
This matrix reflects the following with regard to the management priorities of
risks:
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Likelihood of occurrence: This is divided into class 1 to class 5 with the following
CONSOLIDATED
FINANCIAL STATEMENTS
ranges:
5
4
3
2
1
Likelihood of occurrence
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Class
Meaning
very low
low
from more than
up to including
NOTES TO THE
ANNUAL ACCOUNTS
1
2
3
4
5
0%
1%
1%
5%
FURTHER INFORMATION
medium
high
5%
50%
95%
100%
50%
95%
very high
Impact: This is also divided into class 1 to class 5 with the following ranges:
Class
1
2
3
4
5
amount of damage
Likelihood of occurence
Class
Meaning
very low
low
from
€ 1
up to including
€ 50 000
1
2
3
4
5
White fields represent negligible control priorities, light green fields low control
priorities, medium green fields medium control priorities and dark green fields
high control priorities.
€ 50 001
€ 450 000
medium
high
€ 450 001
1.5% of EBITDA
5% of EBITDA
1.5% of EBITDA
5% of EBITDA
very high
CORESTATE –
ANNUAL REPORT
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80
RISK MANAGEMENT
TO OUR SHAREHOLDERS
RISK REPORTING
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Risk management comprises the timely, situation-dependent, appropriate and
efficient selection and implementation of risk management tools.
REGULAR REPORTING
CONSOLIDATED
FINANCIAL STATEMENTS
Corestate applies various management approaches in dealing with risks, namely
avoiding, spreading, limiting, minimizing/reducing, passing on and accepting
the respective risk.
Reports on the risk situation are submitted to the Management Board at least
quarterly. This includes the top risks as well as the significant risks, for which a
detailed risk description is provided, including changes to the last report.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
The Supervisory Board is informed about the risk situation at least every quarter.
This report also includes the top risks as well as the significant risks, for which a
detailed risk description is provided, including changes to the last report.
NOTES TO THE
ANNUAL ACCOUNTS
Major risks – At Group level, risks are considered material if they have a
high control priority, although non-substantial risks are of course also included
in the risk management process.
FURTHER INFORMATION
AD-HOC REPORTING
MITIGATION OF RISKS
Both significant risks identified outside the reporting dates and known risks
whose assessment changes after a reporting date in such a way that the risk is
classified as “material“ are reported ad hoc to the Management Board and, if
applicable, to the Supervisory Board.
Risks are mitigated by way of:
−
risk avoidance, e.g. planned activities are ultimately not carried
out because the risk/reward profile is not positive;
− risk reduction, e.g. on process level by automating processes or
observing dual control principles; process changes are analyzed
and implemented usually by the process owners;
− risk transfer, usually by taking out appropriate insurance policies;
this process is usually initiated by the relevant process owner in
consultation with Group Corporate Insurance to ensure that similar
policies are not taken out multiple times to avoid unnecessarily
high prices, that insurance policies cover all relevant departments
and companies and that such policies are in line with the Group‘s
corporate insurance approach;
− risk diversification, e.g. by avoiding risk accumulations and not being
dependent on only a few customers, markets, assets, etc., and by
identifying new markets. This is usually done by the Management
Board and division heads.
CORESTATE –
ANNUAL REPORT
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81
ORGANIZATIONAL MEASURES
TO OUR SHAREHOLDERS
DESCRIPTION OF THE MAIN FEATURES OF THE
INTERNAL CONTROL SYSTEM
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Organizational security measures are carried out by automated facilities. They
comprise error-preventing measures that are integrated into both the structural
and procedural organization of the companies and are intended to guarantee a
specified level of security (e.g. separation of functions, access restrictions in the
IT area, payment guidelines).
ELEMENTS OF THE CONTROL SYSTEM
CONSOLIDATED
FINANCIAL STATEMENTS
The internal control system (ICS) consists of regulations for managing the activities
of Corestate (internal management system) and regulations for monitoring
compliance with these regulations (internal monitoring system). It is structured
as required by management and set up by the responsible departments and
process owners. Its functionality and effectiveness are periodically reviewed
and adjusted. The internal monitoring system includes process-integrated
(organizational security measures, controls) and process-independent monitoring
measures, which are primarily carried out by Internal Audit.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
− When processing business transactions with the help of IT, significant asset
items can be accessed. In addition to access authorizations/restrictions and
data protection measures, work instructions for data entry, input control and
the handling of incorrect entries are necessary in the IT area.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
− Work instructions contain precise descriptions of the work, their assignment
to the relevant staff (structure, function, role and position) and, if applicable,
regulations for their execution. They ensure that operational processes
that occur in large quantities are handled uniformly.
By defining objectives and controls to provide assurance, management can
gradually explore the overall need for controls.
− The internal document system, including the defined process flows, is
used for the identical processing of similar business transactions and
the complete recording of data in the operational accounting system.
Its organization includes measures for the design of the documents, the
organization of the document flow and the securing of the document
storage.
Internal Control
System
Internal Management
System
Internal Monitoring
System
Process-integrated
Monitoring System
Process-integrated
Control System
Organizational
Safeguards
Controls
Internal
Audit
Officers and
(pre, current, post)
Line Managers
CORESTATE –
ANNUAL REPORT
2021
82
CONTROLS
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Controls are carried out by means of measures that are embedded as a
process in the work and operating procedures of the Corestate companies,
i.e. integrated into the workflow, because operations involving the risk of loss
of assets, information or value or the risk of errors when dealing with external
parties (clients and suppliers) should not remain uncontrolled. Controls by
managers and employees are intended to ensure that existing risks are identified
and managed. They are also intended to ensure that the unit concerned (e.g.
department, group, company in the group) achieves its objectives in the context
of fulfilling its tasks.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Checks may be carried out before, during or after the operation to be checked.
They can be carried out both by process-dependent persons and by automatic
facilities, especially by IT (e.g. plausibility checks). The control associated with the
work process has the aim of finding and preventing errors, if possible before the
work process (or parts of it) is completed. As far as possible, upstream controls
should therefore be preferred to downstream controls.
CORESTATE –
ANNUAL REPORT
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83
BASIC ELEMENTS AND PRINCIPLES
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The basic elements of Corestate‘s ICS include:
CONSOLIDATED
FINANCIAL STATEMENTS
− process descriptions that define standardized procedures and clear
− dual control principle: No essential process is possible without
counterchecking. These cross-checks are established through the
implementation of the dual control principle, but also automatically,
e.g. through IT-supported system checks.
responsibilities for the core business processes
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
− the documentation of processes and controls to make the actions
ANNUAL ACCOUNTS
traceable and verifiable
NOTES TO THE
ANNUAL ACCOUNTS
− separation of functions: The separation of functions considers the
incompatibility of functions and tasks or the subdivision of work processes.
One and the same person or unit (e.g. job group or department) can
never carry out and control all phases of a business transaction alone
without another person or unit intervening in the business transaction.
If the separation of functions is removed (e.g. in dialogue applications),
an equivalent takes its place, e.g. an automatic sampling procedure
and/or random downstream checks.
− functional segregation, which ensures relevant and risk-oriented measures
and that decision-making, execution and control are not exclusively
in the hands of one person or sub-organizational unit;
FURTHER INFORMATION
− the dual control principle for sensitive transactions; as well as rules on
bias and incompatibility; detailed rules for dealing with potential conflicts
of interest are laid down in further Group guidelines.
− updates and further development of the ICS to enable an analysis
− minimum rights: The principle of minimum rights means that employees
should only have access to the information they need for their work. This
also includes the corresponding security measures for IT systems, i.e. access
and access authorizations adequate to the tasks and responsibilities are
adequately restricted. Furthermore, only those authorizations for sensitive
data are granted that are necessary for the fulfilment of the tasks.
of and reaction to deficiencies and the need for adjustments.
− transparency: Target concepts have been defined and set up for the
processes, which contain clear, detailed and comprehensible regulations for
the workflows (documents and activities) and are documented in written form.
CORESTATE –
ANNUAL REPORT
2021
84
DOCUMENTATION OF THE CONTROLS
OVERALL RISK SITUATION OF THE GROUP
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The controls are defined, established and documented in the processes. As part
of risk management, the decentralized risk managers identify, record, assess,
regularly review and update risks in a regular process and in cooperation with
the respective specialist departments. The risks are regularly recorded by the
decentralized risk managers. Regular reports on the risks are provided.
The overall risk situation of the entire Group as at 31 December 2021 is
“low-medium” (31 December 2020: “low-medium”). The following tables
show the risk situation for Corestate’s boutiques and the Group. The risk positions
for risks that do not belong to a specific boutique but to more than one are
summarized under “Across Boutiques”.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
In 2018 Corestate Capital Holding S.A. initiated a project concerning the
implementation of an efficient and comprehensive group-wide Internal Audit
function.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
This role is performed by the experienced and well-established Internal Audit
function of HANNOVER LEASING GmbH & Co. KG. Throughout 2021, the
group-wide Internal Audit function has served as a “third line of defense” and
integral part of Corestate’s internal control system. Special focus has been put
on the regulated entities of the Corestate Group while at the same time a best-
practice risk-based audit plan for all entities has been worked out.
CORESTATE –
ANNUAL REPORT
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85
DETAILED TOP 10 RISK REPORTING
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
As at 31 December 2021, the top 10 risks were allocated as follows:
Risk Category
Description
CONSOLIDATED
1
2
7
FINANCIAL STATEMENTS
Liquidity Risk
This reflects the risk of delayed returns from deinvestments
1
2
4
3
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
5
4
3
2
This reflects the risk of delayed repayments
of loans granted by Corestate
6
5
Liquidity Risk
ANNUAL ACCOUNTS
This reflects the risk of less turnover and revenues
NOTES TO THE
ANNUAL ACCOUNTS
3
Market Price Risk
Counterparty Default Risk
Operational Risk
Operational Risk
Operational Risk
Operational Risk
Operational Risk
Operational Risk
8
due to changing market environments
9
FURTHER INFORMATION
This reflects the risk of non-foreseeable counterparty default events
This reflects a litigation risk
4
10
5
This reflects a placement risk of a fund
due to the COVID-19 pandemic
6
This reflects a litigation risk
7
This reflects a risk of increased litigation due to underperformances
of funds managed by Corestate caused by the COVID-19 pandemic
8
1
This reflects a litigation risk
9
Class
1
2
3
4
5
This reflects a risk related to a tax audit
Likelihood of occurence
10
The risk inventory shows that all relevant risks have been properly identified and
assessed. Risks are managed accordingly. Material risks are appropriately examined
by both the Management Board and the Supervisory Board, and measures taken
are reviewed regularly. The risk matrix shows that, in view of the current assessment
and measures taken, there are no risks that endanger the continued existence of
the Group.
CORESTATE –
ANNUAL REPORT
2021
87
TO OUR SHAREHOLDERS
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
€ million
Notes
31 Dec 2021
31 Dec 2020
ANNUAL ACCOUNTS
FURTHER INFORMATION
IMPRINT
Non-Current Assets
Goodwill
E.1
E.2
Other Intangible Assets
Investment in Associates and Joint Ventures
Other Financial Instruments
Property, Plant and Equipment
Non-Current Receivables
Non-Current Loans to Associated Entities
Deferred Tax Assets
E.3
E.4
E.5/E.6
E.7
E.8
D.10
Total Non-Current Assets
Current Assets
Inventories
E.9
E.10
E.11
Trade Receivables
Contract Assets
Receivables from Associated Entities
Other Current Financial Assets
Other Current Assets
E.12
E.13
Current Income Tax Assets
Restricted Cash
E.14
E.14
-
Cash and Cash Equivalents
Total Current Assets
Assets Held for Sale from Discontinued Operations
TOTAL ASSETS
B.2.3
CORESTATE –
ANNUAL REPORT
2021
88
TO OUR SHAREHOLDERS
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
€ million
Notes
31 Dec 2021
31 Dec 2020
€ million
Notes
31 Dec 2021
31 Dec 2020
ANNUAL ACCOUNTS
FURTHER INFORMATION
IMPRINT
Equity
Current Liabilities
Share Capital
E.15
(201.1 )
(69.1 )
Current Financial Liabilities from Bonds
Other Current Provisions
E.20
E.21
E.22
-
Other Reserves
E.15.3
Net Profit/(Loss) for the Period
Equity attributable to Shareholders of Parent Company
Non-controlling Interests
Other Current Financial Liabilities to Banks
Current Liabilities to Associated Entities
Trade Payables
E.23
Total Equity
Current Income Tax Liabilities
Other Current Financial Liabilities
Other Current Liabilities
Non-Current Liabilities
E.24
E.25
Non-Current Financial Liabilities from Bonds
Non-Current financial Liabilities to Banks
Other Non-Current Financial Liabilities
Other Non-Current Provisions
Other Non-Current Liabilities
Deferred Tax Liabilities
E.16
E.17
E.18
E.19
Total Current Liabilities
-
Liabilities Held for Sale from Discontinued Operations
TOTAL EQUITY AND LIABILITIES
B.2.3
D.10
Total Non-Current Liabilities
CORESTATE –
ANNUAL REPORT
2021
89
TO OUR SHAREHOLDERS
CONSOLIDATED STATEMENT
OF PROFIT AND LOSS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
01.01.2021-
31.12.2021
01.01.2020-
31.12.20201
01.01.2021-
31.12.2021
01.01.2020-
31.12.20201
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
€ million
Notes
€ million
Notes
ANNUAL ACCOUNTS
FURTHER INFORMATION
IMPRINT
Revenue from Acquisition Fees
D.2.1
Other Income
D.5
Revenue from Asset Management Fees
Revenue from Property Management Fees
Revenue from Sales and Promote Fees realised
Revenue from Development Fees
D.2.2
D.2.2
D.2.3
D.2.3
D.2
G&A and Other Expenses
D.6
(59.5 )
(45.4 )
Earnings before Interest, Taxes,
Depreciations and Amortisation (EBITDA)
Depreciation, Amortisation and Impairment
Earnings before Interest and Taxes (EBIT)
Financial Income
D.7
(214.3 )
(187.9 )
(50.6 )
(34.4 )
Total Revenue from Real Estate Equity Segment
Total Expenses from Real Estate Equity Segment
Total Earnings from Real Estate Equity Segment
Revenue from Underwriting and Structuring Fees
Revenues from Performance Fees
(71.4 )
(78.9 )
(8.5 )
-
D.8
D.9
D.2.4
Financial Expenses
(25.6 )
(206.2 )
(29.0 )
(58.1 )
(6.9 )
Earnings before Taxes (EBT)
Income Tax Expense
D.3.1
D.3.2
D.3.3
D.3.4
D.3.5
D.3
D.10
Net Profit/(Loss) for the Period
from continued Operations
Net Profit/(Loss) for the Period
from discontinued Operations
(192.8 )
(65.1 )
Income from Mezzanine Loans
B.2.3
(7.2 )
(200.1 )
(201.1 )
(3.8 )
(68.9 )
(69.1 )
Revenue from Asset Management Fees
Income from Trading Activities
Net Profit/(Loss) for the Period
of which attributable to Equity Holders
of Parent Company
Total Revenue from Real Estate Debt Segment
Total Expenses from Real Estate Debt Segment
Total Earnings from Real Estate Debt Segment
Income from Rental Income and Service Charges
Net Results from Property Holding Warehousing Exists
Share of Profit or Loss from Associates and Joint Ventures
Dividends from other Alignment Capital
(66.1 )
(9.1 )
1 the statement of profit and loss
is adjusted in line with IFRS 5
Discontinued Operations for the
financial years 2021 and 2020
(see note B.2.3)
D.3.6
of which attributable to non-controlling Interests
D.4.1
D.4.2
D.4.3
D.4.4
Total Revenues2
Total Expenses3
2 not including: Share of Profit or
Loss from Associates, Net Gain
from Selling Warehousing Assets,
Dividends from other Alignment
Capital and Gains/losses from fair
value measurement of financial
instruments related to real estate
(2.7 )
(0.8 )
(9.3 )
(204.5 )
(156.3 )
Earnings per Share based on Net
Profit/Loss attributable to Equity
Holders of Parent Company (in €):
Gains/losses from fair Value Measurement
of Financial Instruments related to Real Estate
D.4.5
(2.9 )
(6.8 )
3 excluding Financial Expenses and
Depreciation and Amortisation
and Impairment / including
impairment losses determined in
accordance with Section 5.5 of
IFRS 9 (for further information
see Notes E.10 and F.4.2)
Earnings per Share from Continued Operations
D.11
D.11
(6.29 )
(2.87 )
(0.17 )
Total Income from Other Segments
Total Expenses from Other Segments
Total Earnings from Other Segments
D.4
(7.5 )
(1.8 )
(22.9 )
(24.7 )
Earnings per Share from Discontinued Operations
(0.23 )
D.4.6
CORESTATE –
ANNUAL REPORT
2021
90
TO OUR SHAREHOLDERS
CONSOLIDATED STATEMENT
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
OF OTHER COMPREHENSIVE INCOME
CONSOLIDATED
FINANCIAL STATEMENTS
01.01.2021-
31.12.2021
01.01.2020-
31.12.2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
€ million
ANNUAL ACCOUNTS
FURTHER INFORMATION
IMPRINT
Net Profit/(Loss) for the Period
(200.1 )
(68.9 )
Other Comprehensive Income
Other Comprehensive Income to be Reclassified
to Profit or Loss in Subsequent Periods (Net of Tax):
Exchange Differences on Translation of foreign Operations
thereof recycled
-
(1.7 )
-
Other differences
Net Other Comprehensive Income to be Reclassified
to Profit or Loss in Subsequent Periods
(1.1 )
Other Comprehensive Income not to be Reclassified
(0.1 )
-
to Profit or Loss in Subsequent Periods
Deferred Tax Effect
Other Comprehensive Income/(Loss)
for the Period, Net of Tax
(0.9 )
Total Comprehensive Income for the Period, Net of Tax
of which attributable to Equity Holders of Parent Company
of which attributable to non-controlling Interests
(194.7 )
(195.7 )
(69.8 )
(70.0 )
CORESTATE –
ANNUAL REPORT
2021
91
TO OUR SHAREHOLDERS
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
FURTHER INFORMATION
IMPRINT
€ million
Closing Balance of Equity Accounts
as at 31 December 2019
(3.3 )
Profit for the Period
-
-
-
-
-
-
-
(69.1 )
-
(69.1 )
(0.9 )
-
-
-
-
(68.9 )
(0.9 )
Other comprehensive Income
-
-
-
(0.9 )
(0.9 )
Total comprehensive Income
for the Period
-
-
-
-
(0.9 )
(0.9 )
(69.1 )
(70.0 )
-
(69.8 )
Issue of New Capital
-
-
-
-
-
-
(0.8 )
-
-
-
-
-
-
-
Repurchase of own Shares
Share issuance Expense
Equity-settled share-based Payment
Reclassification/Others
-
-
-
-
-
-
-
-
-
-
(0.8 )
-
-
(0.8 )
-
-
-
-
-
-
(0.8 )
-
(2.4 )
(108.5 )
(3.1 )
(0.1 )
(0.3 )
(0.4 )
(3.5 )
Closing Balance of Equity Accounts
as at 31 December 2020
(6.6 )
(69.1 )
Profit for the Period
-
-
-
-
-
-
-
-
-
-
(201.1 )
-
(201.1 )
-
-
-
-
(200.1 )
Other comprehensive Income
Total comprehensive Income
for the Period
-
-
-
-
(201.1 )
(195.7 )
-
(194.7 )
Issue of New Capital
-
-
-
-
-
-
-
(0.0 )
-
-
-
(0.0 )
-
(0.0 )
Acquisition of non-controlling Interests
Equity-settled share-based Payment
Reclassification/Others
-
-
-
-
-
(0.4 )
-
-
-
-
-
-
-
-
-
-
(69.2 )
(69.1 )
(0.5 )
(0.2 )
(0.7 )
(0.7 )
Closing Balance of Equity Accounts
as at 31 December 2021
(1.6 )
(201.1 )
CORESTATE –
ANNUAL REPORT
2021
92
TO OUR SHAREHOLDERS
CONSOLIDATED STATEMENT
OF CASH FLOWS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
01.01.2021-
31.12.2021
01.01.2020-
31.12.20201
01.01.2021-
31.12.2021
01.01.2020-
31.12.20201
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
€ million
€ million
ANNUAL ACCOUNTS
FURTHER INFORMATION
IMPRINT
Earnings before Interest and Taxes (EBIT)
(187.9 )
(34.4 )
Proceeds from Issuance of New Share Capital
-
Depreciation/Write-ups of non-current Assets
Equity-settled share-based Payment
Repayment of Lease Liabilities
(5.1 )
(3.5 )
Proceeds from Loans and Borrowings
Repayment of Loans and Borrowings
Finance Expenses
Net Loss/(Gain) on Disposal of non-current Assets
Changes in Provisions
(39.5 )
(14.6 )
(3.1 )
(2.8 )
(23.8 )
Share of Results from Associates and Joint Ventures
Finance Income
Changes from Purchase and Sale
Net Cash Flows (used in)/from Financing Activities
Cash and Cash Equivalents at Beginn of Period
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at end of Period
(56.2 )
(15.5 )
(14.2 )
(18.6 )
(12.2 )
(74.4 )
of Inventories and advanced Payments
Changes in Receivables and other Assets
that are not attributable to Investing Activities
Changes in Liabilities that are
not attributable to Financing Activities
Income Taxes received/(paid)
(26.3 )
(15.1 )
(63.4 )
(24.0 )
(16.4 )
Net Cash Flows from operating Activities
Acquisition of Subsidiaries
Outflow for Alignment Capital Investments
(1.7 )
Inflow from repayment of Alignment
Capital Investments
Payments for Acquisition of PPE
Proceeds from Sale of PPE
(0.4 )
(0.5 )
-
(1.5 )
Payments for Acquisition of Intangible Assets
Purchase of other Financial Instruments
Sale of other Financial Instruments
(2.3 )
(6.3 )
1 the statement of Cash Flows
is adjusted in line with IFRS 5
Discontinued Operations for the
financial years 2021 and 2020
(see note B.2.3)
Net Cash Flows generated from/(used in)
Investing Activities
(30.1 )
CORESTATE –
ANNUAL REPORT
2021
94
TO OUR SHAREHOLDERS
A. CORPORATE
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
INFORMATION &
BASIS OF PREPARATION
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
A.1 CORPORATE INFORMATION
FURTHER INFORMATION
Company”) is a limited liability company (
Société Anonyme
) incorporated under
Luxembourg law, with registered office at
4, Rue Jean Monnet, L-2180 Luxembourg
,
Grand Duchy of Luxembourg . The Company was registered with the
Luxembourg
Register of Commerce and Companies (Registre de Commerce et des Sociétés)
under number B 199 780 on 07 September 2015.
on Core and Core+ investments, whereas Core investments are located in major
cities with highly creditworthy tenants on a long-term basis and Core+ investments
have a slightly more risk-oriented alignment.
As at 31 December 2021, the Group employed 811 FTEs (2020: 757 FTEs) across
42 offices in 11 countries, providing direct access to local markets. Of those, 375
FTEs are related to the discontinued operations. These employees are mainly
based in Germany and the United Kingdom.
Since 2017 the Company’s shares have been traded on the regulated market
segment (Regulierter Markt) of the Frankfurt Stock Exchange (Frankfurter
Wertpapierbörse).
The consolidated financial statements of Corestate Capital Holding S.A. and its
subsidiaries (the Group) for the year ended 31 December 2021 were authorized
for issue in accordance with a resolution of the Management Board and the
Supervisory Board on 07 March 2022. The consolidated financial statements are
subject to approval by the annual general meeting.
fully integrated business model, are active as a co-investor and asset and property
manager and are focused on residential and commercial (primarily office, mixed
use and retail) real estate as well as micro-living projects. Geographically, the Group
primarily concentrates on the German market but is also selectively active in other
attractive markets in Europe such as France, the UK, Austria, Switzerland, Poland
and Spain. Its investment product offering covers the full range of the risk/return
curve, i.e. from value-add/opportunistic to core, and, in each case, is tailor made
to the specific requirements of its clients. As a key element of its business model,
the Group is actively warehousing certain real estate in order to seize opportunities
both in competitive situations as well as in order to establish seed portfolios for
institutional products. The key focus of the business strategy in the future will be
The consolidated financial statements of Corestate Capital Holding S.A. are
published according to the provisions of the Luxembourg Law and the exchange
rules of the Frankfurt Stock Exchange. They will be available on the Company’s
website and at the Company’s offices at 4, Rue Jean Monnet, L-2180
Luxembourg
,
Grand Duchy of Luxembourg.
In accordance with Luxembourg Company Law, the annual financial statements (in
accordance with Luxembourg GAAP) of the Company will also be filed with the
Companies Register and an extract will be published in the Recueil Electronique
des Sociétés et Association.
CORESTATE –
ANNUAL REPORT
2021
95
A.2 BASIS OF PREPARATION
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The consolidated financial statements of the Group have been prepared in
compliance with International Financial Reporting Standards (“IFRS”) adopted
by the European Union (“EU”) for the year ended 31 December 2021.
All other assets and liabilities are classified as non-current, incl. deferred tax
assets and liabilities.
CONSOLIDATED
FINANCIAL STATEMENTS
The consolidated financial statements have been prepared on a going concern
basis. In assessing the Group‘s ability to continue as a going concern, the
Management Board has considered the expected future proceeds from
divestments and freeing up capital initiatives as the basis for refinancing the two
major debt instruments. Accordingly, the refinancing strategy is to initially repay
the convertible bond amounting to € 190.9m as of 31 December 2021 from
net operating cash flows and from the repayment, settlement and placement
of various balance sheet assets, while the senior bond amounting to € 298.0m
as of 31 December 2021 maturing in April 2023 is to be refinanced through
the issuance of one or more new debt instruments. Together with investors and
advising banks, it is also being considered to refinance the convertible bond and
the senior bond together in the course of 2022 by simultaneously issuing a new
senior bond and using the accumulated cash. Management is confident in its
ability to execute its refinancing plan. However, the Group’s ability to complete its
refinancing strategy depends on the timing of and amounts from the realization
of the balance sheet assets, the capital market situation and the performance
of the Group which together indicate that a material uncertainty exists that may
cast significant doubt on the Group’s ability to continue as a going concern.
The consolidated financial statements have been prepared on a historical cost
basis, except for certain financial assets and liabilities that have been measured
at fair value. The consolidated financial statements are presented in euros, which
is the presentation currency of the Group and the functional currency of the
parent company. The Group determines the functional currency for each entity,
and the items included in the financial statements of each entity are measured
using the functional currency. The group uses the direct method of consolidation
and on disposal of a foreign operation, the gain or loss that is reclassified to
profit or loss reflects the amount that arises from using this method. All values are
rounded to the nearest million (€m), except when otherwise indicated. Due to
rounding, numbers presented may not add up precisely to totals provided. The
consolidated financial statements provide comparative information in respect of
the previous period.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
The Group presents assets and liabilities in its statement of financial position
based on current/non-current classification. Assets and liabilities are classified as
current when
− the Group expects them to be realized or settled in the normal operating
Financial information presented in parentheses denotes the negative of such
number presented. In respect of financial data set out in these consolidated
financial statements, a dash (“–”) signifies that the relevant figure is not available,
while a zero (“0”) signifies that the relevant figure is available but has been
rounded to or equals zero.
cycle (e.g. inventories from warehousing or other current financial assets),
− the Group holds the asset or liability primarily for the purpose of trading,
− the Group expects them to be realized or settled within twelve months
after the reporting date (e.g. trade receivables/payables), or
− the asset is cash or cash equivalent.
CORESTATE –
ANNUAL REPORT
2021
96
A recovery of the economy is expected for all future outlooks relevant to the
valuation, that the parameters included in the valuation (i.e. cash flows, interest
rates) give a more positive outlook than expected in the current reporting period.
A.3 GENERAL REMARKS ON EFFECTS RESULTING
FROM THE COVID-19 PANDEMIC
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The outbreak of the Coronavirus (COVID-19), declared by the World Health
Organization as a “Global Pandemic” on the 11 March 2020, continued to impact
many aspects of daily life and the global economy in 2021 – with most real estate
markets experiencing lower levels of transactional activity and liquidity.
Hence, Corestate’s management expects an improved outlook for the coming
years. This is reflected in the planning periods of nearly all of the Group’s “cash-
generating units“ (CGUs; for goodwill and impairment test issues see Note E.1).
Here, a positive outlook as well as a fast recovery of the economy is expected
during the next reporting period.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Given the unknown future impact that COVID-19 might have on the real estate
market and the difficulty in differentiating between short-term impacts and
long-term structural changes, some valuations of investment properties held by
associates under joint ventures and co-investment agreements are subject to the
material valuation uncertainty declaration as set out in the RICS Valuation – Global
Standards. This uncertainty adversely affects demand, with marketing voids
increasing and rental levels under pressure. But for the avoidance of doubt, the
inclusion of the ‘material valuation uncertainty’ declaration does not mean that
the valuation cannot be relied upon. Rather, the declaration has been included to
ensure transparency of the fact that – in the current extraordinary circumstances –
less certainty can be attached to the valuation than would otherwise be the case.
NOTES TO THE
ANNUAL ACCOUNTS
In addition, the large-scale business disruptions caused by COVID-19 may give
rise to (temporary) liquidity issues for some entities within product structures.
Deterioration in credit quality of loan portfolios and trade receivables (amongst
other items) as well as the uncertainty caused by COVID-19 may have a non-
negatable impact on the fair value measurements explicit for all financial
instruments and for all impairment testing assets in the Group. The main impact
of COVID-19 in the Group’s consolidated statement of financial position and
statement of profit or loss are shown in Notes, D.4.3 and D.4.5 as well as E.1,
E.3, E.4 and E.15.3.
FURTHER INFORMATION
The different types of lockdown in nearly all countries due to COVID-19 in 2020
and throughout different phases in 2021 severely impacted the markets for
hotels, service apartments, retail and shopping centers in particular. In contrast,
business involving residential assets and offices with long-running rental
contracts proved to be very resilient. To curb further “waves” of COVID-19,
travel, movement and operational restrictions have been implemented by many
countries, which currently remain unchanged. Due to these ongoing restrictions
on business activities, it might be likely that there could be significant rental
defaults leading to voids and a resulting shortfall in income for the respective
asset classes of the Company. This could lead to further write-downs on various
asset classes due to lower profitability.
A.4 NEW STANDARDS, INTERPRETATIONS AND
AMENDMENTS ADOPTED AND TO BE ADOPTED
BY THE GROUP
There are no new standards, interpretations or amendments in 2021 that are not
yet effective but would be expected to have a material impact on the Group in
the current or future reporting periods and on foreseeable future transactions.
The same applies for all standards, interpretations and amendments that
became effective in 2021. This includes the amendment to IAS 1 “Classification
of Liabilities as Current or Non-Current”.
Despite all the uncertainty caused by the pandemic, all future considerations have
been made in the expectation that the pandemic will end within a reasonable
time after the reporting period. The assessment of a gradual recovery is based
on the progress made in the production and distribution of a COVID-19 vaccine,
including timely national distribution strategies.
CORESTATE –
ANNUAL REPORT
2021
97
TO OUR SHAREHOLDERS
B. SCOPE OF
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Seat and Country
of Incorporation
CONSOLIDATION
AND BUSINESS
COMBINATIONS
Name
CONSOLIDATED
FINANCIAL STATEMENTS
AF ATHENA GmbH
Frankfurt on Main / Germany
Neu-Isenburg / Germany
Frankfurt on Main / Germany
Baar / Switzerland
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Capera Immobilien Service GmbH
CE Bad Honnef Betriebsgesellschaft mbH
Corestate CAPITAL AG
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Corestate Capital Foundation gGmbH
Corestate Capital Group GmbH
Corestate Capital Advisors GmbH
Corestate Capital Investors (Europe) GmbH
Corestate Capital Partners GmbH
Corestate Capital Transactions AG
Corestate Capital CIV GmbH
Corestate FIF I Portfolio Verwaltung GmbH
Corestate Marketing GmbH
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Zurich / Switzerland
B.1 SCOPE OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of
CCH SA and its subsidiaries as at 31 December 2021. Control is achieved when
the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the
investee. The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three elements
of control. Consolidation of a subsidiary begins when the Group obtains control
over the subsidiary and ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated financial statements from the date
the Group gains control until the date the Group ceases to control the subsidiary.
Baar / Switzerland
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Leipzig / Germany
Corestate Capital Beteiligungs Verwaltungs GmbH
Court HoldCo GmbH
Profit or loss and each component of other comprehensive income (OCI) are
attributedtotheequityholdersoftheparentoftheGroupandtothenon-controlling
interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries
to bring their accounting policies into line with the Group‘s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the Group are eliminated in full on
consolidation. A change in the ownership interest of a subsidiary, without a loss of
control, is accounted for as an equity transaction. If the Group loses control over a
subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-
controlling interest and other components of equity while any resultant gain or loss
is recognized in profit or loss. Any investment retained is recognized at fair value.
GENOST Consulting GmbH
UPARTMENTS Real Estate GmbH
Leipzig / Germany
For the entities shown in the table on the right, CCH SA applies the exemption
under §264 lit. 3 HGB and corresponding local legislation in the country of
incorporation (for CCH SA’s equity interest in each company please refer to Note
F.7 to the statutory financial statements).
CORESTATE –
ANNUAL REPORT
2021
98
2020
123
55
First-time consolidation
Deconsolidation
Merger
2021
118
55
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Consolidated Entities
thereof Germany
8
4
4
7
-
6
4
2
CONSOLIDATED
FINANCIAL STATEMENTS
thereof Other Countries
68
7
63
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
2020
103
18
Additions
Disposals
Merger
2021
98
NOTES TO THE
ANNUAL ACCOUNTS
Associated Entities
thereof Germany
2
1
1
7
2
5
-
-
-
FURTHER INFORMATION
17
thereof Other Countries
85
81
Four additions to the consolidated entities are part of the newly acquired
business of Corestate Bank in May 2021 (see also Note B.2.2). As a result of the
sale of assets or the termination of joint venture and co-investment agreements
(JVCIA), seven companies left the Group during the reporting period.
The changes in the scope of consolidation affect the following companies:
Equity
Seat and Country
of Incorporation
Name of Acquired Companies
Aggregate Debt Advisory GmbH
Aggregate Debt GP S.à r.l.
Aggregate Debt Fund S.C.A. SICAV-RAIF
Corestate Bank GmbH
Interest
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Frankfurt on Main / Germany
Luxembourg
Overall, the Group acquired a total of net assets amounting to € 40.0m (2020:
€ 9.6m) through first-time consolidation of eight entities presented above. These
entities account for a total revenues of € 27.1m (2020: € 6.2m) and net results of
€ -4.4m (2020: € -0.3m).
Luxembourg
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Warsaw / Poland
The deconsolidation of seven formerly full-consolidated entities presented
above led to a total net result of € 0.0m (2020: € -1.0m).
Livision GmbH
Mariggo Investments sp.z.o.o.
SUBSTANTIA Verwaltungsgesellschaft
mbH & Co. Vermietungs KG
Pullach / Germany
94.90%
Urban Micro Estate Spain
Spain
100.00%
CORESTATE –
ANNUAL REPORT
2021
99
Equity
Interest
TO OUR SHAREHOLDERS
B.2 BUSINESS COMBINATIONS
Seat and Country
of Incorporation
Name of Deconsolidated Companies
ATOS Property Management GmbH
Corestate Capital Dept Advisory GmbH
Corestate ZGE Feeder GmbH & Co. KG
Design Center AIF S.à r.l.
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
B.2.1 PRINCIPLES OF BUSINESS COMBINATION
Hamburg / Germany
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Luxembourg
merged
merged
merged
merged
merged
merged
Business combinations are accounted for using the acquisition method. The cost
of an acquisition is measured as the aggregate of the consideration transferred
measured at acquisition-date fair value and the amount of any non-controlling
interests in the acquisition. The Group as acquirer measures the identifiable assets
acquired and the liabilities assumed (including contingent liabilities) at their
acquisition-date fair values. For each business combination, the Group measures
the non-controlling interests in the acquisition at the proportionate share of the
acquiree‘s identifiable net assets. Acquisition-related costs are expensed as
incurred and included in general and administrative expenses or management
expenses. The Group as acquirer recognises goodwill as at the acquisition date
measured as the excess of (a) the aggregate of the consideration transferred and
the amount of any non-controlling interest in the acquiree over (b) the net of the
acquisition-date amounts of the identifiable assets acquired and the liabilities
assumed measured in accordance with IFRS 3.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
HANNOVER LEASING Automotive GmbH
STAM RE III S.à r.l.
Pullach / Germany
NOTES TO THE
ANNUAL ACCOUNTS
Paris / France
FURTHER INFORMATION
Ardville Invest S.L.
Madrid / Spain
liquidated
liquidated
liquidated
liquidated
liquidated
liquidated
liquidated
Bagley Invest S.L.
Madrid / Spain
Highstreet IX TopCo Ltd.
Iberian HoldCo II S.L.
Iberian PropCo II S.L.
Marburg TopCo Ltd.
MicroLiving Service zwei GmbH
Guernsey / United Kingdom
Madrid / Spain
Madrid / Spain
If the acquisition involves an asset or a group of assets that does not constitute
a business, the acquirer must identify and recognise the individual identifiable
assets acquired (including those assets that meet the definition of, and
recognition criteria for, intangible assets in IAS 38 Intangible Assets) and liabilities
assumed. The cost of the group is allocated to the individual identifiable assets
and liabilities based on their relative fair values at the date of purchase. Such a
transaction or event does not give rise to goodwill.
Guernsey / United Kingdom
Vienna / Austria
When the Group acquires a business, it assesses the assets and liabilities assumed
for appropriate classification and designation in accordance with the contractual
terms, economic circumstances and pertinent conditions as at the acquisition
date.
CORESTATE –
ANNUAL REPORT
2021
100
Any contingent consideration to be transferred by the acquirer will be recognized
at fair value at the acquisition date. Contingent consideration classified as equity
is not remeasured and its subsequent settlement is accounted for within equity.
Contingent consideration classified as a liability that is a financial instrument and
within the scope of IFRS 9 Financial Instruments is measured at fair value, with
the changes in fair value recognized in the statement of profit or loss. Other
contingent consideration that is not within the scope of IFRS 9 is measured at
fair value at each reporting date, with changes in fair value recognized in profit
or loss.
B.2.2 ACQUISITION OF CORESTATE BANK
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
On 15 January 2021 the Company signed an agreement for the acquisition of
Corestate Bank GmbH (formerly registered as: Aggregate Financial Services
GmbH, Frankfurt am Main (‘AFS’), a securities trading institute regulated by
the German Federal Financial Supervisory Authority (BaFin) that is licensed to
provide a range of real estate structuring and financing advisory services including
regulated services under § 15 WpIG (Wertpapierinstitutsgesetz; Investment Firm
Act).
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
The closing of the transaction took place on 25 May 2021 after all closing
conditions were met, including the approvals of all relevant authorities. With this
acquisition, the Group is expanding its market-leading position in private debt
in the real estate sector. Furthermore, the acquisition of Corestate Bank enables
the Group to provide services of a securities trading bank in combination with
a broad product offering for tailor-made financing solutions to the real estate
sector.
Contingent liabilities recognized in a business combination
FURTHER INFORMATION
As set out above, contingent liabilities recognised in a business combination
are initially measured at fair value. After initial recognition and until the liabilities
are settled, cancelled or expired, these liabilities are measured at the higher of
(a) the amount that would be recognised in accordance with IAS 37; and (b) the
amount initially recognised less, if appropriate, the cumulative amount of income
recognised in accordance with the principles of IFRS 15 Revenue from Contracts
with Customers.
The consideration transferred amounts to € 134.6m and comprises the following
elements:
(1) Fixed amount of cash (€ 5.0m)
(2) 8,500,000 shares of Corestate Capital Holding S.A. (€ 110.2m) – measured
at the XETRA stock price of € 12.96 at the closing date per share – reflecting
the acquisition-date fair value of the contributed shares of Aggregate Financial
Services GmbH
(3) 1,500,000 shares of Corestate Capital Holding S.A. (€ 19.4m) – measured at
the XETRA stock price of € 12.96 at the closing date per share – as an earn-out
component
CORESTATE –
ANNUAL REPORT
2021
101
The earn-out component (contingent consideration) is capped at 1,500,000 shares
of Corestate Capital Holding S.A. dependent on a certain level of Corestate Bank’s
EBITDA for FY 2021 to 2023 that must exceed ascending hurdle rates per each year.
Based on the mid-term forecast and information received during the due diligence
the Company expects Corestate Bank to achieve its full earn-out potential.
Fair Value of Net Assets
and Liabilities recognized
Corestate Bank GmbH
TO OUR SHAREHOLDERS
(in €m)
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Acquisition Date
25 May 2021
134.6
5.0
Total Cost of the Combination
thereof Cash
CONSOLIDATED
FINANCIAL STATEMENTS
Based on mandate-related information gathered since closing date, some of the
provisional PPA amounts presented in the Group’s 2021 half-year financials had to
be adjusted in line with IFRS 3.45. Initially, on 25 May 2021 provisional customer
relationships of € 64.0m were identified that led to a cumulative depreciation
amounting to € 4.1m until year-end 2021. Also, a provisional order backlog of
€ 12.9m was recognized on 25 May 2021 which led to cumulative depreciation of
€ 1.9m until year-end 2021. Both were derecognized and the cumulative
depreciation was reversed accordingly based on management’s reassessment of
the ability to generate future economic benefits from the underlying customer
relationships and expected mandates during the measurement period.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
thereof Contribution in kind
thereof equity-settled Earn-Out
Voting Rights acquired (%)
Property, Plant & Equipment
Intangible Assets – Order Backlog
Intangible Assets – Customer Relationships
Receivables
110.2
19.4
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
100%
1.1
FURTHER INFORMATION
11.2
25.5
3.5
As part of the purchase price allocation using a multi-period excess earnings (MEEM)
approach,customercontractsequivalentto€11.2mwereidentifiedasorderbacklog
and represent CORESTATE Bank’s product pipeline in exclusivity at closing date.
The order backlog included a single large project that was already depreciated in
an amount of € 7.8m until 30 June 2021. Hence, € 9.0m in order backlog has already
been written off as at 31 December 2021. Additionally, customer relationships
amounting to € 25.5m were identified as CORESTATE Bank’s future business
with a selected portfolio of customers. At year-end, the customer relationships
were reassessed and in consequence management reduced its assessment of the
future business potential with this portfolio of customers. This assumption led to
an impairment of the customer relationships in the amount of EUR 12.9m. Hence,
€ 16.6m of initially recognized € 25.5m in customer relationships have already
been written off as at 31 December 2021.
Other Assets
0.7
Income Tax Assets
0.0
Cash and Cash Equivalents
Total Assets
12.8
54.8
(11.7)
(0.2)
Deferred Tax Liability
Current Tax Liability
1 On a pro-forma basis, CORESTATE
Capital Group and AFS including
its subsidiaries would have
generated revenues of € 208.5m
and a profit/loss of € -200.2m if
the acquisition date had been
01 January 2021.
Trade Payables
(0.1)
Other (Financial) Liabilities
Total Liabilities
(2.9)
(14.9)
40.0
94.6
The table opposite states the fair value of identified net assets and liabilities
recognized at acquisition. The goodwill of € 94.6m reflects the expected synergies
arising from the acquisition with particular focus on the cross-selling opportunities
of the business models of CORESTATE Bank and HFS and market potential of
CORESTATE Bank. Hence, the goodwill is fully allocated to the Real Estate Debt
Segment. Direct transaction costs amounting to € 6.1m are included in the statement
of profit and loss within general and administrative costs.
Fair Value of net Assets acquired
Recognized Goodwill
Revenues generated since Acquisition Date1
27.3
(7.7)
Profit/Loss since Acquisition Date1
CORESTATE –
ANNUAL REPORT
2021
102
B.2.3 DIVESTMENT IN CAPERA AND CRM
The loss from discontinued operations is fully attributable to the equity holders
of Corestate Group.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
In November 2021, the decision was made to sell the property management
business of CRM and Capera. With the intention to sell, the respective assets
and liabilities are reported separately as discontinued operations because of
management’s judgement that these businesses represent separate major lines
of business and the completion of their sales within 2022 is highly probable.
The assets and liabilities of the discontinued operations are reclassified
and measured at fair value less costs to sell. The fair value was determined
based on the expected selling prices. This did not result in any impairment
requirement for the assets held for sale at the time of classification as a
disposal group within the meaning of IFRS 5. In the course of the
ongoing review of the measurement of the assets and liabilities of the
discontinued operations, an impairment requirement of € 2.6m arose as at
31 December 2021.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
The potential divestment of the two business areas is the consequence of the
strategic realignment of Corestate towards a pure-play investment and asset
manager in the real estate equity segment.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
The net loss for the period from both discontinued operations is derived as follows:
The revalued assets and liabilities comprise the following:
01.01.2021-
31.12.2021
01.01.2020-
31.12.2020
31 Dec
2021
€ million
Capera
18.1
CRM
12.0
€ million
Capera
CRM
Total Income from Real
Estate Equity Segment
Non-Current Assets
30.1
(32.6)
(2.5)
29.5
(29.7)
(0.2)
Goodwill
-
1.6
-
8.3
1.1
0.1
1.2
-
8.3
2.8
Total expenses from Real
Estate Equity Segment
(17.8)
(14.8)
Other Intangible Assets
Investment in Associates and Joint Ventures
Property, Plant and Equipment
Deferred Tax Assets
0.1
Total Earnings
from Real Estate Equity
0.3
(2.8)
2.5
0.0
4.1
3.7
Total Earnings
from Other Segments
(0.0)
-
(0.0)
0.1
0.0
Total Non-Current Assets
Current Assets
10.8
14.9
Other Income
(0.1)
0.8
0.7
0.7
Earnings before Interest,
Taxes, Depreciation and
Amortisation (EBITDA)
0.3
(2.0)
(1.7)
0.6
Contract Assets
0.3
2.1
0.3
0.0
0.0
0.2
2.9
7.0
-
1.8
-
0.3
3.9
Trade Receivables
Depreciation
and Amortisation
(1.2)
(4.5)
(5.7)
(4.2)
Receivables from Associated Entities
Other Current Financial Assets
Other Current Assets
0.3
* On a pro-forma basis, Corestate
Capital
Group
and
AFS
Financial gain/losses
Earnings before Taxes (EBT)
Income Tax Expense
(0.1)
(1.1)
0.1
(0.1)
(6.6)
0.3
(0.2)
(7.6)
0.4
(0.1)
(3.7)
(0.1)
-
0.0
including its subsidiaries would
have generated revenues of
€216.4mandalossof€-200.2m
if the acquisition date had been
01 January 2021.
1.7
2.2
5.7
16.5
1.7
Cash and Cash Equivalents
Total Current Assets
2.4
Net Profit/(Loss) for the
Period from discontinued
operations
8.6
23.5
(1.0)
(6.3)
(7.2)
(3.8)
TOTAL ASSETS HELD FOR SALE
CORESTATE –
ANNUAL REPORT
2021
103
31 Dec
2021
The following table shows the net cash flows generated by both discontinued
TO OUR SHAREHOLDERS
€ million
Capera
CRM
operations:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Non-Current Liabilities
Other non-current financial liabilities
Other Non-Current Provisions
Deferred Tax Liabilities
01.01.2021-
31.12.2021
01.01.2020-
31.12.2020
1.1
0.0
-
0.6
-
1.7
0.0
0.3
2.0
€ million
Capera
0.9
CRM
0.3
CONSOLIDATED
FINANCIAL STATEMENTS
Net cash flows from
operating activities
1.1
3.3
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
0.3
0.9
Net cash flows generated
from/(used in) investing
activities
ANNUAL ACCOUNTS
Total Non-Current Liabilities
Current Liabilities
1.1
(0.8)
(1.1)
(0.6)
(0.2)
(1.4)
(2.7)
NOTES TO THE
ANNUAL ACCOUNTS
Net cash flows
generated from/(used in)
financing activities
Other Current Provisions
Trade Payables
0.0
0.6
-
-
0.3
0.2
0.2
3.7
4.3
5.2
0.0
0.8
0.2
1.2
4.8
6.9
8.9
FURTHER INFORMATION
(1.2)
(1.0)
Current Income Tax Liabilities
Other Current Financial Liabilities
Other Current Liabilities
Total Current Liabilities
TOTAL LIABILITIES HELD FOR SALE
Cash and Cash Equivalents
at begin of period
1.2
(1.0)
0.2
2.7
(0.5)
2.2
3.9
(1.5)
2.4
4.3
(0.4)
3.9
1.0
1.1
2.6
3.8
Net increase in Cash
and Cash Equivalents
Cash and Cash Equivalents
at end of period
CORESTATE –
ANNUAL REPORT
2021
104
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
C. SIGNIFICANT
ACCOUNTING &
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
VALUATION POLICIES
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Business Combinations
C.1 SIGNIFICANT ACCOUNTING JUDGEMENTS,
FURTHER INFORMATION
ESTIMATES AND ASSUMPTIONS
In a business combination, all identifiable assets, liabilities and contingent
liabilities acquired are recorded at the date of acquisition at their respective fair
value. One of the most significant estimates relates to the determination of the
fair value of these assets and liabilities. Land, buildings and equipment are usually
independently appraised while marketable securities are valued at market price.
If any intangible assets are identified, depending on the type of intangible asset
and the complexity of determining its fair value, the Group either consults with
an independent external valuation expert or determines the fair value internally,
using an appropriate valuation technique which is generally based on a forecast
of the total expected future net cash flows. These valuations are linked closely to
the assumptions made by the Group’s management regarding the future
performance of the assets concerned and any changes in the discount rate applied
(see Note E.1).
The preparation of the Group‘s consolidated financial statements requires
management to make judgements, estimates and assumptions that affect
the reported amounts of revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty
about these assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of assets or liabilities affected in future
periods.
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial
year are described below. The Group based its assumptions and estimates on
parameters available when the consolidated financial statements were prepared.
Existing circumstances and assumptions about future developments, however,
may change due to market changes or circumstances arising beyond the control
of the Group. Such changes are reflected in the assumptions when they occur.
Recoverability of Goodwill and Brand Names
The Group tests annually and, in addition, if any internal or external indicator
exists, whether goodwill and brand names with indefinite useful lives need to be
impaired. If an indicator prevails, the recoverable amount of the affected cash-
generating unit(s) has to be estimated which is determined as the greater of the fair
value less costs to sell and the value in use. The determination of the recoverable
amount involves making judgements and estimates related to the projection and
discounting of future cash flows.
In the process of applying the Group‘s accounting policies, management has
made the following judgements and estimates, which have significant effect on
the amounts recognized in the consolidated financial statements:
CORESTATE –
ANNUAL REPORT
2021
105
Although the Group’s management believes the assumptions used to calculate
recoverableamountsareappropriate,anyunforeseenchangesintheseassumptions
could result in an impairment to goodwill or brand names in the future which could
adversely affect the future financial position and operating results (see Note E.1).
Assessing significant influence on Associates and Joint Ventures
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Generally, entities are classified as associates if the Group holds more than 20%
and less than 50% of the voting rights. However, the Group also classifies entities
as associates if it considers that it has a significant influence on such entities based
on the underlying investment documentation. Significant influence is usually
evidenced in one or more of the following ways:
CONSOLIDATED
FINANCIAL STATEMENTS
Expected Credit Loss
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
For financial assets measured at amortised cost a provision for expected credit losses
(ECLs) is recognised. The determination of the ECL follows a 3-step approach:
− Representation on the Board of directors or equivalent governing body of
the investee,
NOTES TO THE
ANNUAL ACCOUNTS
− For credit exposures for which there has not been a significant increase
in credit risk since initial recognition, ECLs are provided for credit losses
that result from default events that are possible within the next 12-months (ECL
Step 1)
− Participation in policy-making processes, including participation in decisions
FURTHER INFORMATION
about dividends or other distributions,
− Material transactions between the entity and its investee,
− Interchange of material personnel,
− For those credit exposures for which there has been a significant increase in
credit risk since initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of the timing
of the default (ECL Step 2) – this step also applies to trade receivables,
for which a simplified approach starting with ECL Step 2 is applied
− Provision of essential technical information.
With regard to providing real estate investment management services, the Group
regularly enters into asset management agreements with all parties involved. A
significant part of these asset management services is to provide the investee
with the Group‘s expertise, which also involves technical services, i.e. market
information, asset management and business plan expertise. Hence, the provision
of technical services through an asset management agreement to associated
entities as investees is considered a supplementary indicator (see Note E.3).
− If the financial asset’s credit risk increases to the point where it is considered
credit-impaired, a loss allowance is still required for credit losses expected over
the remaining life of the exposure, however, interest revenue is then calculated
based on the loan’s amortised cost (ECL Step 3)
The provision rates are based on multiple inputs (i.e., depending on geographical
region, product type, customer type and rating, and collateral). The calculation of
the provision reflects the probability-weighted outcome, the time value of money
and reasonable and supportable information that is available at the reporting date
about past events, current conditions and forecasts of future economic conditions.
In particular for financial assets that are considered credit impaired (ECL Step 3) the
determination of the provision of ECL is subject to significant estimation uncertainty
relating to assumptions on the expected timing of cash flows and the value of credit
enhancements (such as collateral). The maximum exposure to credit risk at the
reporting date is the carrying value of each class of financial assets disclosed in Note
F.4.2. (see Notes D.2.4, D. 3.6, E.4, E.10, E.12, F.4.2).
Valuation of Investment properties of Associates and Joint Ventures
The fair value of investment property as the main assets of the associates is
determinedbyusingrecognisedvaluationtechniques. Suchfairvaluemeasurement
has a significant impact on the Group‘s investment in associates. The valuation
technique comprises mainly the income method (based on discounted cash
flow (DCF)). Under the DCF method, a property‘s fair value is estimated using
explicit assumptions regarding the property’s cash inflows and outflows over its life
including estimated rental income and an exit or terminal value.
CORESTATE –
ANNUAL REPORT
2021
106
This involves the projection of future cash flows which are discounted by a
market-derived discount rate in order to determine the property‘s fair value. For
the purpose of IFRS 13, the fair value measurement of investment property is
considered to be a Level 3 method (see Note C.2).
Promote and Coupon Participation Fee
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
In some projects, the Group is entitled to receive a success fee (“Promote fee”)
equalling approx. 15% to 20% of the net project returns. The entitlement to the
Promote fee is only recognised when the relevant transaction documentation
resulting in a net project return has been validly entered into (signing). At this time,
the Group considers it highly probable that the Promote fee will flow to the Group
and that for variable consideration no significant reversal will occur.
CONSOLIDATED
FINANCIAL STATEMENTS
The key input parameters used in the DCF models include
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
− Discount rate
− Cap rate
− Vacancy rate (current/long-term) − Maintenance costs
ANNUAL ACCOUNTS
Promote fees represent compensation for the Group’s investment management
servicesrenderedinrelationtothesaleofaparticularinvestment,andpredominantly
form part of the fee schedule for investment products for private clients. If certain
amounts of the net project return are withheld at closing of a transaction for escrow
purposes, the payment of the pro-rated Promote fee is also deferred until the
amounts in escrow are released (see also D.2.3).
NOTES TO THE
ANNUAL ACCOUNTS
− Fluctuation rate
− Inflation rate
− Costs to sell
FURTHER INFORMATION
− Market rents
− Annual rent adaptation
The net cash flow for the planning period is discounted to the valuation date
using an appropriate discount rate for each property. The capitalization rate is
used to forecast future cash flows into perpetuity following the ten-year planning
period (as it is assumed that properties are held for a ten-year period). Key input
parameters may vary depending on the real estate property usage (i.e. commercial
or residential building, student accommodation and developments), on the
location and condition of the property and the current market trends.
Coupon Participation Fees are generated through sustainable and significant
excess returns of HFS products (mezzanine financing) above a certain pre-agreed
hurdle rate. The Group’s contracts with customers for these types of services
generally include one performance obligation. The Group has concluded that
revenue from Coupon Participation Fees should be recognized over time when the
services are provided because the Group’s performance does not create an asset
with an alternative use to the Group and the Group has an enforceable right to
payment for performance completed to date. The Group uses an output method
to measure progress towards complete satisfaction of the return on investment
of the HFS funds based on monthly fair value measurement of the mezzanine
financing (see Note D.3.2 to D.3.4).
If the property market or general economic situation develops negatively, there is
a risk that the measurements might have to be adjusted. If the real estate assets
have to be impaired, this would have a negative effect on the Group‘s Investment
in Associates and Joint Ventures, Loans to Associates and Joint Ventures and
Receivables from Associates or Joint Ventures (for further information see Note
A.3 and a sensitivity analysis of the effect of changes in the value of the Associates
and Joint Ventures see Note E.3).
C.2 FAIR VALUE MEASUREMENT
The Group measures some financial instruments such as derivatives and some
non-financial assets such as investment properties in associates at fair value at
each balance sheet date. Fair value related disclosures for financial instruments
and non-financial assets that are measured at fair value or where fair values are
disclosed are summarized in the following Notes:
CORESTATE –
ANNUAL REPORT
2021
107
Fair Value Measurement
All assets and liabilities for which fair value is measured or disclosed in the
financial statements are categorized within the fair value hierarchy, described
as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Disclosures regarding Valuation Methods, Significant Estimates and Assumptions
Disclosures regarding Fair Value Measurement Hierarchy
Investment Properties
Note F
Note F
Note C.10
Note F
Note F
CONSOLIDATED
FINANCIAL STATEMENTS
− Level 1 – quoted (unadjusted) market prices in active markets for identical
assets or liabilities,
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Investments in unquoted Equity Shares
ANNUAL ACCOUNTS
− Level 2 – valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly observable
(comparable transactions),
Financial Instruments (including those carried at Amortized Cost)
NOTES TO THE
ANNUAL ACCOUNTS
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
FURTHER INFORMATION
− Level 3 – valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable (valuation models).
For assets and liabilities that are measured at fair value on a recurring basis in
the financial statements, the Group determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorization (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end
of each reporting period.
− In the principal market for the asset or liability, or
− In the absence of a principal market, in the most advantageous market
for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The Group‘s Executive Management (“Group’s management”) determines the
policies and procedures for recurring fair value measurement, such as investment
properties and certain financial assets.
The fair value of an asset or a liability is measured using the assumptions that
market participants would use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
At each reporting date, the Group’s management analyses the movements in the
values of assets and liabilities which are required to be re-measured or re-assessed
as per the Group‘s accounting policies. For this analysis, the Group’s management
verifies the major inputs applied in the latest valuation by agreeing the information
in the valuation computation to contracts and other relevant documents.
A fair value measurement of a non-financial asset takes into account a market
participant‘s ability to generate economic benefits by using the asset in its highest
and best use or by selling it to another market participant that would use the asset
in its highest and best use.
Generally external valuers are involved for valuation of significant assets, such as
investment properties. Involvement of external valuers is determined annually
by the Group’s management. Selection criteria include market knowledge,
reputation, independence and whether professional standards are maintained.
For the purpose of fair value disclosures, the Group has determined classes of
assets and liabilities based on the nature, characteristics and risks of the asset or
liability and the level of the fair value hierarchy as explained above.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximizing the
use of relevant observable inputs and minimizing the use of unobservable inputs.
CORESTATE –
ANNUAL REPORT
2021
108
TO OUR SHAREHOLDERS
C.3 FOREIGN CURRENCIES
C.4 GOODWILL
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Goodwill is initially measured at cost (being the excess of the aggregate of
the consideration transferred and the amount recognized for non-controlling
interests and any previous interest held over the net identifiable assets acquired
and liabilities assumed).
The Group‘s presentation currency is the Euro (€), which is the presentation
currency of the Group and the functional currency of the parent company and
for the majority of the subsidiaries which are fully consolidated. The Group‘s
performance and its liquidity management is measured in Euros. Therefore, the
Euro is considered as the currency that most faithfully represents the economic
effects of the underlying transactions, events and conditions. As the sole
exception, for CRM the functional currency is the British Pound (GBP).
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired
in a business combination is, from the acquisition date, allocated to each of the
Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquisition are assigned
to those units.
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Transactions in foreign currencies are initially recorded by the Group‘s entities
at their respective functional currency spot rates at the date the transaction first
qualifies for recognition. Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of exchange at
the reporting date. Differences arising on settlement or translation of monetary
items are recognized in profit or loss. Non-monetary items that are measured in
terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions.
FURTHER INFORMATION
C.5 INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at
cost. Following initial recognition, intangible assets are carried at cost less any
accumulated amortization and accumulated impairment losses.
On consolidation, the assets and liabilities of foreign operations (i.e. CRM) are
translated into Euros at the rate of exchange prevailing at the reporting date and
their statements of profit or loss are translated at the exchange rates prevailing
at the dates of the transactions. The exchange differences arising on translation
for consolidation are recognized in OCI. On disposal of a foreign operation, the
component of OCI relating to that foreign operation is reclassified to profit or
loss.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful economic life and
assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortization period and the amortization method for an
intangible asset with a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are considered
to modify the amortization period or method, as appropriate, and are treated as
changes in accounting estimates.
Any goodwill arising on the acquisition of a foreign operation and any fair
value adjustments to the carrying amounts of assets and liabilities arising on
the acquisition are treated as assets and liabilities of the foreign operation and
translated at the spot rate of exchange at the reporting date.
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Amortization is calculated on a straight-line basis over the estimated useful lives
Goodwill relating to the Associate or Joint Venture is included in the carrying amount
TO OUR SHAREHOLDERS
of the intangible assets with a finite life, as follows:
of the investment and is not tested for impairment individually.
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
− Software 3 to 5 years
− Asset Management Agreements 2 to 17 years
− Order Backlog up to 2 years
− Customer Relationships 4 years
− Corporate Brand ‘YOUNIQ’ 14 years
The Statement of Profit or Loss reflects the Group‘s share of the results of operations
of the Associate or Joint Venture. Any change in OCI of those investees is presented
as part of the Group‘s OCI. In addition, when there has been a change recognized
directly in the equity of the Associate or Joint Venture, the Group recognizes its share
of any changes, when applicable, in the statement of changes in equity. Unrealized
gains and losses resulting from transactions between the Group and the Associate
or Joint Venture are eliminated to the extent of the interest in the Associate or Joint
Venture.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Intangible assets with indefinite useful lives relate to goodwill and brand names.
Goodwill and brand names are not amortized but are tested for impairment
annually at the cash-generating unit level.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
The aggregate of the Group‘s share of profit or loss of an Associate or a Joint Venture
is shown in Share of Profit or Loss from Associates or Joint Ventures on the face of
the consolidated statement of profit and loss. All balance sheet items and line items
in the Consolidated Statement of Comprehensive Income that are related to the
associated entities belong to the Alignment Capital segment.
Gains or losses arising from de-recognition of an intangible asset are measured as the
difference between the net disposal proceeds and the carrying amount of the asset
and are recognized in the statement of profit or loss when the asset is derecognized.
The financial statements of the Associate or Joint Venture are prepared for the same
reporting period as the Group. When necessary, adjustments are made to bring the
accounting policies in line with those of the Group. Typically, adjustments are made
to account for the investment properties held by the Associates or Joint Ventures at
fair value rather than at cost (see below).
C.6 INVESTMENTS IN ASSOCIATES & JOINT VENTURES
Recognition and subsequent measurement
An Associate is an entity over which the Group has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of
the investee but is not control or joint control over those policies.
After application of the equity method, the Group determines whether it is necessary
to recognize an impairment loss on its investment in its Associate or Joint Venture.
At each reporting date, the Group determines whether there is objective evidence
that the investment in the Associate or Joint Venture is impaired. If there is such
evidence, the Group calculates the amount of impairment as the difference between
the recoverable amount of the Associate or Joint Venture and its carrying amount,
and then recognizes the loss as Share of profit/(loss) of an Associate or Joint Venture
in the statement of profit and loss.
A Joint Venture is a type of joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities require the unanimous consent of
the parties sharing control.
The Group‘s investments in its Associates and Joint Venture are accounted for using
the equity method. Under the equity method, the investment in an Associate or a
Joint Venture is initially recognized at cost. The carrying amount of the investment is
adjusted to recognize changes in the Group‘s share of net assets of the Associate or
Joint Venture since the acquisition date.
Upon loss of significant influence over the Associate or joint control over the Joint
Venture, the Group measures and recognises any retained investment at its fair
value. Any difference between the carrying amount of the Associate or Joint Venture
upon loss of significant influence or joint control and the fair value of the retained
investment and proceeds from disposal is recognised in profit or loss.
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Investment properties
In order for a financial asset to be classified and measured at amortized cost
or fair value through OCI, it needs to give rise to cash flows that are ”solely
payments of principal and interest (SPPI)” on the principal amount outstanding.
This assessment is referred to as the SPPI test and is performed at an instrument
level.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Associates invest in investment properties. Investment properties are measured
initially at cost, including transaction costs.
CONSOLIDATED
FINANCIAL STATEMENTS
Subsequent to initial recognition, investment properties are stated at fair value,
which reflects market conditions at the reporting date. Gains or losses arising from
changes in the fair values of investment properties are included in profit or loss in
the period in which they arise, including the corresponding tax effect. Fair values
are determined based on a periodic evaluation performed by an accredited
external independent valuer applying a valuation model recommended by the
International Valuation Standards Committee (Red Book).
The Group’s business model for managing financial assets refers to how it
manages its financial assets in order to generate cash flows. The business model
determines whether cash flows will result from collecting contractual cash flows,
selling the financial assets, or both.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Purchases or sales of financial assets that require delivery of assets within a time
frame established by regulation or convention in the marketplace (regular way
trades) are recognized on the trade date, i.e. the date that the Group commits
to purchase or sell the asset.
FURTHER INFORMATION
Investment properties are derecognized when they are sold. The difference
between the net disposal proceeds and the carrying amount of the asset is
recognized in profit or loss.
Subsequent measurement
C.7 FINANCIAL ASSETS
For purposes of subsequent measurement, the Group’s financial assets are
classified in the following categories:
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured
at amortized cost, fair value through other comprehensive income (OCI) and fair
value through profit or loss.
− Financial assets at amortized cost (debt instruments)
− Financial assets at fair value through profit or loss
The classification of financial assets at initial recognition depends on the financial
asset’s contractual cash flow characteristics and the Group’s business model for
managing them. With the exception of trade receivables that do not contain a
significant financing component or for which the Group has applied the practical
expedient, the Group initially measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through profit or loss, transaction
costs. Trade receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient are measured at the
transaction price determined under IFRS 15.
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Financial assets at amortized cost (debt instruments)
Financial assets at fair value through profit or loss are carried in the statement
of financial position at fair value with net changes in fair value recognized in the
statement of profit or loss.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The Group measures financial assets at amortized cost if both of the following
conditions are met:
This category includes long-term receivables, other financial instruments and
loans to associates.
CONSOLIDATED
FINANCIAL STATEMENTS
− The financial asset is held within a business model with the objective to hold
financial assets in order to collect contractual cash flows, and
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
− The contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding
De-recognition
NOTES TO THE
ANNUAL ACCOUNTS
A financial asset is derecognised when the rights to receive cash flows from
the asset have expired or when a financial instrument is written off. Therefore,
a financial asset is derecognised when there is no reasonable expectation of
recovering the contractual cash flows.
FURTHER INFORMATION
Financial assets at amortized cost are subsequently measured using the effective
interest (EIR) method and are subject to impairment. Gains and losses are
recognized in profit or loss when the asset is derecognized, modified or impaired.
The Group’s financial assets at amortised cost include trade receivables, other
receivables and cash and cash equivalents.
Impairment of financial assets
Further disclosures relating to impairment of financial assets are also provided
in Note C.1.
Financial assets at fair value through profit or loss
The Group recognizes an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss. ECLs are based on
the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted at an
approximation of the original effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
Financial assets at fair value through profit or loss include financial assets
designated upon initial recognition at fair value through profit or loss, or financial
assets mandatorily required to be measured at fair value. Financial assets are
classified as fair value through profit or loss if they are acquired for the purpose
of selling or repurchasing in the near term. Derivatives, including separated
embedded derivatives, are also classified as fair value through profit or loss unless
they are designated as effective hedging instruments. Financial assets with cash
flows that are not solely payments of principal and interest are classified and
measured at fair value through profit or loss, irrespective of the business model.
Notwithstanding the criteria for debt instruments to be classified at amortized
cost or at fair value through OCI as described above, debt instruments may be
designated at fair value through profit or loss on initial recognition if doing so
eliminates, or significantly reduces, an accounting mismatch.
For credit exposures for which there has not been a significant increase in credit
risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL).
For those credit exposures for which there has been a significant increase in
credit risk since initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of the timing
of the default (a lifetime ECL). The Group determines that a debt instrument
has significantly increased in credit risk when its contractual cash flows and the
underlying contractual agreements are amended adversely.
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For trade receivables and contract assets, the Group applies a simplified
approach in calculating ECLs. Therefore, the Group does not track changes in
credit risk, but instead recognises a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix for mass business
transactions that is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment as
well as supportable information that is available at the reporting date about past
events, current conditions and forecasts of future economic conditions. Trade
receivables relating to one single debtor that constitute more than ten percent
of the total balance as at 31 December are separated and evaluated either on
individual credit ratings if available or based on corresponding sector indices.
TO OUR SHAREHOLDERS
C.8 PROPERTY, PLANT AND EQUIPMENT
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Property, plant and equipment is recognized at cost, net of accumulated
depreciation and accumulated impairment losses, if any. Depreciation is
calculated on a straight-line basis over the estimated useful lives of the assets,
as follows:
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
− Owner-occupied buildings 33 to 50 years,
− Cars 3 to 5 years,
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
− IT equipment 2 to 3 years,
FURTHER INFORMATION
The provision matrix is initially based on the Group’s historical observed
default rates. The Group calibrates the matrix to adjust the historical credit loss
experience with forward-looking information.
− Office equipment 3 to 10 years.
An item of property, plant and equipment is derecognized upon disposal or
when no future economic benefits are expected from its use or disposal. Any
gain or loss arising on sale of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is presented net in
the statement of Profit and Loss.
For instance, if forecast economic conditions (e.g. gross domestic product)
are expected to deteriorate over the next year, which can lead to an increased
number of defaults in the sector where the Group operates, the historical default
rates are adjusted. At every reporting date, the historical observed default rates
are updated and changes in the forward-looking estimates are analysed. The
assessment of the correlation between historical observed default rates, forecast
economic conditions and ECLs is a significant estimate. The amount of ECLs is
sensitive to changes in circumstances and of forecast economic conditions. The
Group’s historical credit loss experience and forecast of economic conditions
may also not be representative of a customer’s actual default in the future. The
Group considers a financial asset in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group. Credit assessment is performed on a regular basis both by the accounting
department as well as fund and asset management in consultation with
executive management.
The residual values, useful lives and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.
C.9 LEASES
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. The determination of
whether an arrangement is (or contains) a lease is based on the substance of the
arrangement at the inception of the lease. Corestate does not apply IFRS 16 to
leases of intangible assets.
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C.9.1 GROUP AS A LESSEE
exercising the option to terminate. Variable lease payments that do not depend
on an index or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition that triggers
the payment occurs.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The Group applies a single recognition and measurement approach for all leases,
except for short-term leases and leases of low-value assets. The Group recognises
lease liabilities to make lease payments and right-of-use assets representing the
right to use the underlying assets.
CONSOLIDATED
FINANCIAL STATEMENTS
In calculating the present value of lease payments, the Group uses its incremental
borrowing rate at the lease commencement date because the interest rate
implicit in the lease is not readily determinable. After the commencement date,
the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in the lease term, a
change in the lease payments (e.g. changes to future payments resulting from a
change in an index or rate used to determine such lease payments) or a change
in the assessment of an option to purchase the underlying asset.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Right-of-use assets
NOTES TO THE
ANNUAL ACCOUNTS
The Group recognises right-of-use assets at the commencement date of the
lease (i.e. the date the underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities.
FURTHER INFORMATION
The cost of right-of-use assets includes the amount of lease liabilities recognized,
initial direct costs incurred and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets. If ownership of the leased asset transfers
to the Group at the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated useful life of the
asset. The right-of-use assets are also subject to impairment.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term
leases of machinery and equipment (i.e. those leases that have a lease term of
12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption to
leases of office equipment that are considered to be low value. Lease payments
on short-term leases and leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.
The Group’s right-of-use assets are included in tangible assets, i.e. in the same
line item as that within which the corresponding underlying assets would be
presented if they were owned.
C.9.2 GROUP AS A LESSOR
Lease liabilities
Leases in which the Group does not transfer substantially all the risks and rewards
incidental to ownership of an asset are classified as operating leases. Rental
income arising is accounted for on a straight-line basis over the lease terms and is
included in revenue in the statement of profit or loss due to its operating nature.
Initial direct costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognised over the lease
term on the same basis as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating the lease, if the lease term reflects the Group
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C.10 INVENTORIES
C.12 CASH AND CASH EQUIVALENTS
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Inventories are primarily related to the Group’s warehousing activities and
comprise real estate acquired with the intention of selling it within the normal
business cycle in the normal course of our warehousing business. In this respect,
the “normal business cycle“ may be a period of up to three years.
Cash and cash equivalents in the statement of financial position comprise cash
at banks and on hand and short-term deposits with a maturity of three months
or less, which are subject to an insignificant risk of changes in value and are
classified as financial assets at amortised cost.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Inventories are valued at the lower of cost and net realizable value. The costs
include freehold and leasehold rights for land, amounts paid to contractors
for construction, borrowing costs, planning and design costs, costs of site
preparation, professional fees for legal services, property transfer taxes,
construction overheads and other related costs. Non-refundable commissions
paid to sales or marketing agents on the sale of real estate units are expensed
when paid. Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and the estimated costs
necessary to make the sale.
For the purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits as defined above, net of
outstanding bank overdrafts as they are considered an integral part of the
Group‘s cash management.
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
C.13 DISCONTINUED OPERATIONS
The Group classifies all subsidiaries as a discontinued operation when the entity
either has been disposed of or met the requirements as held for sale and represents
a separate major business line or a geographical area of operation. The criteria
for classification of assets and liabilities as held for sale are met if their carrying
amounts will be recovered principally through a sale transaction than through
continuing use. Such assets and liabilities are measured at the lower of their
carrying amount and fair value less cost to sell, which comprise the incremental
costs directly attributable to the disposal, excluding finance costs and income tax
expense.
C.11 CONTRACT BALANCES
Contract assets
A contract asset is the right to consideration in exchange for goods or services
transferred to the customer. If the Group performs by transferring goods or
services to a customer before the customer pays consideration or before
payment is due, a contract asset is recognized for the earned consideration
that is conditional. Contract assets are predominantly related to the Coupon
Participation Fee of HFS.
For classification as discontinued operation the distribution of the underlying
entity is highly probable, and it is available for immediate distribution in its present
condition. Actions required to complete the sale should indicate that it is unlikely
that significant changes to the sale will be made or that the decision to sell will be
withdrawn. Management must be committed to the sale expected within one year
from the date of classification.
Contract liabilities
A contract liability is an entity’s obligation to transfer goods or services to a
customer for which the Group has received consideration. If a customer of the
Group pays consideration or has a right to an amount of consideration that is
unconditional, before the Group transfers its goods or services to the customer,
a contract liability is recognized.
Property, plant and equipment as well as intangible assets are not depreciated or
amortised once classified as held for sale.
All assets and liabilities classified as held for sale are presented separately as
current items in the statement of financial position.
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C.14 SHARE-BASED PAYMENTS
Equity-settled transactions
the employee. Where an award is cancelled by the entity or by the counterparty,
any remaining element of the fair value of the award is expensed immediately
through profit or loss.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The cost of equity-settled transactions is determined by the fair value at the date
when the grant is made using an appropriate valuation model.
The dilutive effect of outstanding options is reflected as additional share dilution
in the computation of diluted earnings per share (further details are given in
Notes D.11 and F.6.3).
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
That cost is recognised in employee benefits expense, together with a
corresponding increase in equity (other reserves), over the period in which
the service and, where applicable, the performance conditions are fulfilled
(the vesting period). The cumulative expense recognized for equity-settled
transactions at each reporting date until the vesting date reflects the extent
to which the vesting period has expired and the Group’s best estimate of the
number of equity instruments that will ultimately vest. The expense or credit in
the statement of profit or loss for a period represents the movement in cumulative
expense recognized as at the beginning and end of that period.
ANNUAL ACCOUNTS
Cash-settled transactions
NOTES TO THE
ANNUAL ACCOUNTS
A liability is recognised for the fair value of cash-settled transactions. The fair
value is measured initially and at each reporting date up to and including the
settlement date, with changes in fair value recognized in employee benefits
expense. The fair value is expensed over the period until the vesting date with
recognition of a corresponding liability.
FURTHER INFORMATION
Service and non-market performance conditions are not taken into account when
determiningthegrantdatefairvalueofawards, butthelikelihoodoftheconditions
being met is assessed as part of the Group’s best estimate of the number of
equity instruments that will ultimately vest. Market performance conditions are
reflected within the grant date fair value. Any other conditions attached to an
award, but without an associated service requirement, are considered to be non-
vesting conditions. Non-vesting conditions are reflected in the fair value of an
award and lead to an immediate expensing of an award unless there are also
service and/or performance conditions.
C.15 FINANCIAL LIABILITIES
Initial recognition and measurement
At initial recognition, financial liabilities are classified as
− Financial liabilities at fair value through profit or loss
(financial liabilities at FVTPL)
No expense is recognized for awards that do not ultimately vest because non-
market performance and/or service conditions have not been met. Where awards
include a market or non-vesting condition, the transactions are treated as vested
irrespective of whether the market or non-vesting condition is satisfied, provided
that all other performance and/or service conditions are satisfied.
− Financial liabilities at amortized cost, or
− Derivatives designated as hedging instruments in an effective hedge.
All financial liabilities are recognized initially at fair value and, in the case of
financial liabilities at amortized cost, net of directly attributable transaction costs.
When the terms of an equity-settled award are modified, the minimum expense
recognised is the grant date fair value of the unmodified award, provided the
original terms of the award are met. An additional expense, measured as at the
date of modification, is recognised for any modification that increases the total
fair value of the share-based payment transaction, or is otherwise beneficial to
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The Group‘s financial liabilities include mainly:
Financial liabilities designated upon initial recognition at fair value through profit
or loss are designated at the initial date of recognition, and only if the criteria in
IFRS 9 are satisfied.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
− Long-term and short-term financial liabilities to banks,
− Other long-term and short-term liabilities (mainly bonds and convertible bonds),
− Trade payables,
De-recognition
CONSOLIDATED
FINANCIAL STATEMENTS
A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or expires. When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the de-
recognition of the original liability and the recognition of a new liability. The difference
in the respective carrying amounts is recognized in the income statement.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
− Other non-current and current liabilities (mainly loans)
NOTES TO THE
ANNUAL ACCOUNTS
Subsequent measurement
FURTHER INFORMATION
The measurement of financial liabilities depends on their classification, as
described below:
C.16 PROVISIONS
General
Financial Liabilities at amortized cost
This is the category most relevant to the Group. After initial recognition, the
respective liabilities (e.g. interest-bearing payables, loans and other liabilities,
e.g. convertible bonds) are subsequently measured at amortized cost using the
EIR method. Gains and losses are recognized in profit or loss when the liabilities
are derecognized as well as through the EIR amortization process.
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. When the Group
expects some or all of a provision to be reimbursed, for example, under an
insurance contract, the reimbursement is recognised as a separate asset, but only
when the reimbursement is virtually certain. The expense relating to a provision
is presented in the statement of profit and loss net of any reimbursement.
Amortized cost is calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortization is included as finance costs in the statement of profit or loss.
If the effect of the time value of money is material, provisions are discounted
using a current pre-tax rate that reflects, when appropriate, the risks specific to
the liability. When discounting is used, the increase in the provision due to the
passage of time is recognized as a financial expense.
Financial liabilities at FVTPL
Financial liabilities at FVTPL are subsequently measured at fair value through
profit or loss. Financial liabilities are classified as fair value through profit or loss if
they are incurred for the purpose of repurchasing in the near term. This category
also includes derivative financial instruments entered by the Group that are not
designated as hedging instruments in hedge relationships as defined by IFRS 9.
Separated embedded derivatives are also classified as fair value through profit or
loss unless they are designated as effective hedging instruments.
CORESTATE –
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Restructuring provisions
Asset Management Fees are determined in a range of 0.35% and 0.60% of the
value of the real estate assets of the projects and third-party assets managed and
differ between investment products offered to private clients and those offered to
institutional clients. Property Management Fees are derived from the provision of
property management services.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Restructuring provisions are recognised only when the Group has a constructive
obligation, which is when a detailed formal plan identifies the business or part
of the business concerned, the location and number of employees affected, a
detailed estimate of the associated costs, and an appropriate timeline, and the
employees affected have been notified of the plan’s main features.
CONSOLIDATED
FINANCIAL STATEMENTS
The Group’s contracts with customers for these types of services generally include
one performance obligation. The Group has concluded that revenue from these
services should be recognized over time when the services are provided because
the customer simultaneously receives and consumes the benefits provided by the
Group’s performance as the Group performs. As the Group’s efforts and inputs
are expended evenly throughout the performance period, the Group recognizes
revenues on a straight-line basis.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
C.17 REVENUE FROM REAL ESTATE EQUITY SEGMENT
NOTES TO THE
ANNUAL ACCOUNTS
Revenues from Real Estate Equity segment result from fees from the operating
equity business of the Group, such as:
FURTHER INFORMATION
− Acquisition Fees,
Development Fees are generated by providing development services for the
construction of new or the repositioning of an existing property. This includes services
like planning, coordination, technical management and economical administration
as well as supervising work. The Group’s contracts with customers for these types of
services typically include one performance obligation that is predominantly fulfilled
over time. Development fees are usually a percentage based on construction costs
of the property paid conducting the above-mentioned services.
− Asset and Property Management Fees,
− Development Fees,
− Sales Fees,
− Promote Fees
In certain transactions, the Group is entitled to receive a Promote fee (regularly up
to 20% depending on the boutique) of the net project returns at the end of the life
of a fund or deal structure if the overall return of the transaction surpasses a certain
hurdle rate.
and are recognized with reference to the relevant individual contractual terms and
on accrual basis.
Acquisition Fees and Sales Fees relate to fees earned in relation to the acquisition
or divestment of real estate assets by the Associates or third parties. Acquisition
related fees amount to 0.8% and 1.5% of the purchase price of the underlying
assets of the portfolio, and in certain situations also a lump-sum on-boarding fee
amounting to up to € 0.5m is agreed with the clients. These fees are paid for sourcing
and structuring of the transaction, conducting the due diligence, administrating and
supervising the step-by-step acquisition of the real estate asset or the establishment
of real estate products and are typically received and paid at the conclusion of the
transaction documentation. The Group’s contracts with customers for these types of
services generally include one performance obligation. Revenue from Acquisition
related Fees and Sales Fees is recognized at a point in time when the services are
provided because none of the criteria in IFRS 15.35 is met.
Net project returns are defined as operating income, aggregate proceeds from
sales and refinancing proceeds, in each case net of all principal repayments, working
capital requirements and after any debt service, and irrespective of whether these
will be paid by way of capital repayment, dividends or by any other means to the
investors (the Promote fee is basically being paid out as a disproportional profit
allocation).
The Group’s contracts with customers for these types of services generally include a
single performance obligation.
CORESTATE –
ANNUAL REPORT
2021
118
C.18 REVENUE FROM REAL ESTATE DEBT SEGMENT
a promissory note loan is generated for a customer and is recognized as financial
asset at Corestate Bank. After successful issuance, the sale of the financial asset
to the customer takes place. The delta between the amount of the financial
instrument on inception date and the amount of the financial instrument on date
of sale is recognized as trading income. The measurement of the financial assets
as well as the recognition of the trading income follows according to IFRS 9.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Revenues from Real Estate Debt segment result from fees from the operating
equity business of the Group, such as:
CONSOLIDATED
FINANCIAL STATEMENTS
− Performance (Coupon Participation) Fees,
− Underwriting & Structuring Fees,
− Asset Management Fees (see Note C.18),
− Income from Mezzanine Loans,
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
C.19 EARNINGS FROM ALIGNMENT CAPITAL MANAGEMENT
NOTES TO THE
ANNUAL ACCOUNTS
Share of Profit or Loss from Associates and Joint Ventures
FURTHER INFORMATION
Share of Profit or Loss from Associates and Joint Ventures relates to the Group’s
alignment capital investments and comprises the Group‘s share of the results
of operations of the Associates using the equity method as well as gains and
losses from the disposal of shares in Associates (see D.4.3). The periodic results
of operations of the Associates typically includes the recurring result from rental
operations as well as results from sales of real estate assets and potential fair
value adjustments of the underlying properties, net of costs, financial expenses
and taxes.
− Income from Trading Activities
Coupon Participation Fees are generated through sustainable and significant
excess returns of mainly HFS products (mezzanine financing) above a certain
pre-agreed hurdle rate. The Group’s contracts with customers for these types of
services generally include one performance obligation.
Underwriting & structuring fees are determined in a range of 0.5% and 2.5% of
the value of the real estate debt financing product. The fees are recognized at
a point in time when the debt financing product is issued to the customer. The
service of structuring real estate debt financing products is offered to institutional
as well as private clients.
Dividends from other Alignment Capital reflect the Group‘s share of the cash
distribution of the investment and are recognized in the statement of profit or
loss when the right of payment has been established. This is generally when
shareholders approve the dividend.
Income from mezzanine loans comprises the interest income from short-term
bridging activities of mezzanine loans to Real Estate Development Companies
in the German-speaking region. Such loans are intended to be transferred to the
Mezzanine Funds managed by the Group as soon as a corresponding cash return
or equity contribution in the funds takes place. The income from mezzanine loans
is recognized according to IFRS 9. The disclosure as revenue is made because
granting of mezzanine loans and the resulting interest income is a core business
of Corestate.
C.20 REVENUE AND OTHER EARNINGS FROM REAL ESTATE
OPERATIONS AND WAREHOUSING
Rental income
Rental income arising from operating leases on investment property is accounted
for on a straight-line basis over the lease terms. Contingent rental income is
recognized when it arises. Tenant lease incentives are recognized as a reduction
of rental revenue on a straight-line basis over the term of the lease.
Income from trading activities is recognized from Corestate Bank’s underwriting
business and proprietary trading. In the underwriting business, a bearer bond or
CORESTATE –
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119
Income arising from expenses recharged to tenants (Revenue from Service
Charges) is recognized in the period in which the respective services are
rendered. Service and management charges and other such receipts are recorded
separately gross of the related costs, as the directors concluded that the Group
acts as a principal in this respect.
C.22 INCOME TAXES
Current income taxes
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Current income tax assets and liabilities are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively
enacted, at the reporting date in the countries where the Group operates and
generates taxable income. Management periodically evaluates positions taken
in the tax returns with respect to situations in which applicable tax regulations are
subject to interpretation and establishes provisions where appropriate.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Net Results from Property Holding and Warehousing Exits
ANNUAL ACCOUNTS
Net Results from Property Holding and Warehousing Exits comprise the
proceeds from selling real estate holding companies/inventories, less selling
costs, less carrying amount of the assets and liabilities.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Deferred tax
Such real estate holding companies were established to purchase investment
property for the sale in the ordinary course of business in the course of the
Group’s warehousing activities.
Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
The net gain/loss is recognized when control over the relevant real estate holding
company is transferred to the buyer.
Deferred tax liabilities are recognized for all taxable temporary differences,
except:
C.21 FINANCIAL INCOME AND FINANCIAL EXPENSES
− When the deferred tax liability arises from the initial recognition of
goodwill or an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
Financial Income comprises interest income from bank balances and loans
granted and gains on the disposal of financial assets as well as foreign currency
gains and losses. Interest income is recognized as it accrues in profit or loss,
using the effective interest rate method (EIR-method).
− In respect of taxable temporary differences associated with investments
in subsidiaries, associates and interests in joint arrangements, when the
timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the
foreseeable future.
Financial Expenses mainly comprise interest expenses on financial liabilities, fees
incurred in connection with the arrangement of debt facilities, foreign currency
gains and losses, impairment losses recognized on financial assets (other than
trade receivables) and financial expenses attributable to partnership NCIs.
Deferred tax assets are recognized for all deductible temporary differences,
the carry forward of unused tax credits and any unused tax losses. Deferred tax
assets are recognized to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilized, except:
CORESTATE –
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2021
120
− When the deferred tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
− In respect of deductible temporary differences associated with investments
in subsidiaries, Associates and interests in joint ventures, deferred tax assets
are recognized only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be
available against which the temporary differences can be utilized. Deferred
tax assets and liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realized or the liability is settled, based
on tax rates (and tax laws) that have been enacted or substantively enacted
at the reporting date.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting date and are
recognized to the extent that it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognized outside profit or loss is recognized
outside profit or loss. Deferred tax items are recognized in correlation to the
underlying transaction either in OCI or directly in equity.
The Group offsets deferred tax assets and deferred tax liabilities if and only if
it has a legally enforceable right to set off current tax assets and current tax
liabilities and the deferred tax assets and deferred tax liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities which intend either to settle current tax liabilities
and assets on a net basis, or to realize the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred
tax liabilities or assets are expected to be settled or recovered.
CORESTATE –
ANNUAL REPORT
2021
121
TO OUR SHAREHOLDERS
D. NOTES TO THE
STATEMENT OF
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
PROFIT AND LOSS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
At the beginning of 2021, the Group has changed its segmentation. As at 2021
the presented segments Real Estate Equity and Real Estate Debt (that were
previously combined as Real Estate Investment Management) are shown as
individual segments. By contrast, the remaining segments Alignment Capital and
Warehousing/Real Estate Operations (which were previously presented separately)
have been combined as Other Segments.
All disclosure to the statement of profit and loss are adjusted in line with IFRS 5
Discontinued Operations for the financial years 2021 and 2020.
CORESTATE –
ANNUAL REPORT
2021
122
TO OUR SHAREHOLDERS
D.1 TOTAL EARNINGS BY INCOME LINE
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The total earnings by income line comprise both revenues and other income
items including corresponding expenses to provide comprehensive insight in the
respective earnings for Real Estate Equity, Real Estate Debt and Other Segments.
The following revenues and income types determine the segments’ top line
(for further information regarding the Group’s segment reporting please refer to
Note F.1).
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Recognition of Revenues,
Other Income, and Gains and Losses
Revenue stream
Description
ANNUAL ACCOUNTS
Real Estate Equity
Acquisition Fees
NOTES TO THE
ANNUAL ACCOUNTS
fees are earned upon successful acquisition of assets
point in time (IFRS 15)
FURTHER INFORMATION
fees are earned over the holding period of the respective asset for providing both asset and property management
services (series of distinct services), including success fees earned from managed equity funds above a certain hurdle rate
Asset & Property Management Fees
Sales / Promote Fees
over time (IFRS 15)
point in time (IFRS 15)
over time (IFRS 15)
sales fee is a percentage of the asset value upon sale (net project returns);
promote fees are gained once the overall return surpasses a certain hurdle rate
Fees are earned by providing technical expertise with regard to (re-)positioning real estate estates,
including refurbishment, change in asset class, or other measures
Development Fees
Real Estate Debt
Underwriting & Structuring Fees
Asset Management Fees
fees are earned upon successful structuring [placement] of real estate debt financing products
point in time (IFRS 15)
over time (IFRS 15)
fees are earned over the holding period of the respective asset for providing asset management services
success fee that allows the company to participate in the performance of its managed debt funds above
a certain hurdle rate (coupon participation fee)
Performance Fee
over time (IFRS 15)
Income from Mezzanine Loans
Income from Trading Activities
Other Segments
interest income yielding from short-term bridge financing via mezzanine loans for development companies
margin income resulting from short-term trading activities of financing tranches
measurement of financial assets (IFRS 9)
measurement of financial assets (IFRS 9)
Income from Rental Income
and Service Charges
income resulting from acting as lessor for assets that are in a warehousing structure
lease income (IFRS 16)
measurement of gain or loss on
deconsolidation (IFRS 10);
measurement of financial assets (IFRS 9)
Net results from Property Holding and
Warehousing Exits
occasional income/expense that results from sale of warehousing structures in share deals,
liquidation of property holding structures after asset deals, and similar transactions
Share of Profit or Loss from Associates
income results from the subsequent measurement of Corestate’s share in the net profit of its associated entities
income results from dividends paid by Corestate’s associated entities
share of net profit (IAS 28)
Dividends from other Alignment Capital
dividends (IAS 28)
Gains & Losses from fv Measurement
of Financial Instruments
changes in fair value of Corestate’s other financial instruments that are measured at fair value
in line with the eligible IFRS 9 categories
measurement of financial assets (IFRS 9)
CORESTATE –
ANNUAL REPORT
2021
123
D.2.3 REVENUE FROM SALES/PROMOTE AND DEVELOPMENT FEES
TO OUR SHAREHOLDERS
D.2 TOTAL REVENUES FROM REAL ESTATE EQUITY
SEGMENT
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Revenue from sales and promote fees increased to € 23.0m (2020: € 4.9m)
primarily due to the signing for the sale of a Core+ office building located in
Berlin amounting to € 9.8m. Also, the signing occurred for the sale of a Leipzig-
based fund yielding a performance fee of € 9.3m. Closing for both transactions is
expected for the first half of 2022.
€ million
2021
9.7
2020
15.1
37.3
3.9
CONSOLIDATED
FINANCIAL STATEMENTS
Revenue from Acquisition Fees
Revenue from Asset Management Fees
Revenue from Property Management Fees
Revenue from Sales and Promote Fees realised
Revenues from Development Fees
Total
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
37.0
5.3
ANNUAL ACCOUNTS
In contrast, the revenue from development fees decreased to € 2.5m (2020:
€ 9.1m) due to a lower volume of services performed in project management
and development coordination.
NOTES TO THE
ANNUAL ACCOUNTS
23.0
2.5
4.9
FURTHER INFORMATION
9.1
D.2.4 TOTAL EXPENSES FROM REAL ESTATE EQUITY SEGMENT
77.6
70.4
Expenses from Real Estate Equity Segment of € 71.4m (2020: € 78.9m) include
both personnel and overhead expenses (e.g. rent and leasing expenses, IT and
telecommunication expenses, travel expenses, provisions for expected credit losses,
legal and other advisory fees) relating to the Group‘s Real Estate Equity activities.
D.2.1 REVENUE FROM ACQUISITION FEES
The revenues from acquisition fees in 2021 amount to € 9.7m (2020: € 15.1m). The
decline in revenue from acquisition fee is caused by a lower level of transaction
volume.
The decrease in 2021 is mainly due to the first results of the re-organisation of
Corestate’s real estate equity business with particular focus on the sales team.
D.2.2 REVENUE FROM ASSET AND PROPERTY MANAGEMENT FEES
The revenues from asset management fees amounting to € 37.0m (2020: € 37.3m)
are comparable to prior year’s level. The increase in property management fees
of the remaining property management business from € 3.9m to € 5.3m in 2021
is mainly due to higher occupancy rates in student housing.
CORESTATE –
ANNUAL REPORT
2021
124
D.3.3 INCOME FROM MEZZANINE LOANS
TO OUR SHAREHOLDERS
D.3 TOTAL REVENUES FROM REAL ESTATE DEBT
SEGMENT
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Increased income from mezzanine loans of € 18.1m (2020: € 10.3m) parallels the
interest income from short-term bridging activities through mezzanine loans to
Real Estate developers. The increase is driven by a constant higher level of short-
term bridge loans partially securing the project pipeline for the Stratos funds
which is expected to be significantly reduced in the first half of 2022.
In 2020, the revenues and expenses in the Real Estate Debt segment were
exclusively generated by HFS as Corestate Bank was only acquired in May 2021.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
€ million
2021
36.0
49.5
18.1
17.3
1.0
2020
18.8
44.3
10.3
19.9
-
ANNUAL ACCOUNTS
Revenue from Underwriting and Structuring Fees
Revenue from Performance Fees
Income from Mezzanine Loans
Revenue from Asset Management Fees
Income from Trading Activities
Total
D.3.4 REVENUES FROM ASSET MANAGEMENT FEES
NOTES TO THE
ANNUAL ACCOUNTS
Revenues from asset management fees in the real estate debt segment stood at
€ 17.3m (2020: € 19.9m) and are slightly below prior year corresponding to reduced
fund volumes throughout 2021.
FURTHER INFORMATION
D.3.5 INCOME FROM TRADING ACTIVITIES
121.9
93.3
Income from trading activities is exclusively generated by Corestate Bank and its
proprietary trading of real estate debt financing products. Since the integration of
Corestate Bank in May 2021 the income from trading activities amounted to € 1.0m.
D.3.1 REVENUE FROM UNDERWRITING AND STRUCTURING FEES
The underwriting and structuring fees increased significantly by € 17.2m to € 36.0m
(2020: € 18.8m) due to the additional project volumes at Corestate Bank with
corresponding fee income, as well as higher underwriting fees at HFS mirroring
the increased turnover in mezzanine bonds on Stratos funds’ level.
D.3.6 TOTAL EXPENSES FROM REAL ESTATE DEBT SEGMENT
Expenses from real estate debt segment of € 66.1m (2020: € 9.1m) include
both personnel and overhead expenses (e.g. rent and leasing expenses, IT
and telecommunication expenses, travel expenses, provisions for expected
credit losses, legal and other advisory fees) relating to the Group‘s Real Estate
Debt activities.
D.3.2 REVENUE FROM PERFORMANCE FEES
In 2021, the coupon participation fee amounts to € 49.5m (2020: € 44.3m) which was
essentially contributed by HFS due to comparatively higher turnover in bonds on the
funds’ level.
The significant increase in costs by € 57.0m is due to the addition of Corestate
Bank as at May 2021, which led to higher personnel and non-personnel costs in
this segment, and provisions for expected credit losses.
CORESTATE –
ANNUAL REPORT
2021
125
In 2021, the loss from warehousing activities amounted to € -2.7m (2020: € -0.8m),
which mainly results from an adjustment to the net realizable value on a warehousing
asset that will be sold in the first half of 2022.
TO OUR SHAREHOLDERS
D.4 NET INCOME FROM OTHER SEGMENTS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Overall, net income from other segments came in at € 15.9m (2020: € -1.8m).
The main difference results from a significantly improved share of profit/loss from
associates which was particularly affected by negative valuation impacts from
COVID-19 in 2020, higher dividends from alignment capital, and positive effects
of the disposal from alignment capital.
CONSOLIDATED
FINANCIAL STATEMENTS
D.4.3 SHARE OF PROFIT/LOSS FROM ASSOCIATES
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Share of profit/loss for the year of € 2.4m (2020: € -9.3m) comprises the Group‘s
share of the results of operations of the Associates or the Joint Ventures using the
equity method as well as gains and losses from the disposal of shares in Associates
or Joint Venture.
ANNUAL ACCOUNTS
€ million
2021
6.2
2020
6.4
NOTES TO THE
ANNUAL ACCOUNTS
Income from Rental Income and Service Charges
Net Result from Property Holding and Warehousing Exits
Share of Profit/Loss from Associates and Joint Ventures
Dividends from other Alignment Capital
FURTHER INFORMATION
In 2020, the COVID-19 pandemic situation had a visible negative impact on the
Group’s share of profit/loss from Associates. Major investments of the Associates
are related to shopping malls and retail outlets that were significantly affected by
the imposed lockdowns. Hence, these assets were mainly causing the negative
valuation effect.
(2.7)
2.4
(0.8)
(9.3)
8.8
12.8
Gains/Losses from Fair Value Measurement
of Financial Instruments related to Real Estate
(2.9)
(6.8)
Due to the breakthrough in COVID-19 vaccines, the situation for these asset
classes has normalized to some extent in 2021, which is reflected in the significantly
improved share of profit/loss from associates which also includes some valuation
gains.
Total
15.9
(1.8)
D.4.1 INCOME FROM RENTAL INCOME AND SERVICE CHARGES
D.4.4 DIVIDENDS FROM OTHER ALIGNMENT CAPITAL
Net rental income of € 6.2m (2020: € 6.4m) primarily relates to income from one
operational asset held as inventory. In 2021, a higher volume of service charge
income was generated, which correspondingly led to higher expenses from other
segments resulting in a slightly overall decrease.
Dividends from other alignment capital amounting to € 12.8m (2020: € 8.8m)
showed a rather stable development and are mainly driven by dividend payments
from several funds of Hannover Leasing.
D.4.2 NET RESULT FROM WAREHOUSING EXITS
The net result from warehousing exits reflects primarily the realized margin from the
Group’s warehousing activities, eventual adjustments to the net realizable value to
warehousing assets under development, and costs incurred in connection with the
liquidation of previously used structures.
CORESTATE –
ANNUAL REPORT
2021
126
D.4.5 GAINS & LOSSES FROM FV MEASUREMENT OF FINANCIAL
INSTRUMENTS RELATED TO REAL ESTATE
Costs rose in particular as a result of the increase in the number of employees and
the severance payments for the changes in Management Board positions as well
as the costs for the acquisition of Corestate bank.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Gains/losses from fair value measurements of financial instruments related to real
estate cumulated to € -2.9m (2020: € -6.8m) and comprise the Group’s results
of operations that are allocated to financial instruments measured at fair value
through profit and loss.
In addition, € 6.5m were recognized as provision for the transformation of the
Group’s organizational structures and formal plan to reduce double-structures.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
The overall loss results primarily from negative valuation effects on Corestate’s
Opportunity Fund amounting to € 9.8m, which was partially offset by positive
valuation effects related to the Stratos funds shares.
D.7 DEPRECIATION, AMORTIZATION AND IMPAIRMENT
NOTES TO THE
ANNUAL ACCOUNTS
€ million
2021
(174.8)
(16.6)
(9.0)
2020
(21.7)
-
FURTHER INFORMATION
Goodwill
D.4.6 EXPENSES FROM OTHER SEGMENTS
Intangible Assets from Customer Relationships
Intangible Assets from Oder Backlog
Other Intangible Assets
Property, Plant and Equipment
Rights of Use
Expenses from other segments totalled to € 7.5m (2020: € 22.9m) and include
direct expenses in relation to the operation of the assets as a concurrent effect with
the development of rental income as well as personnel and overhead expenses
allocated to the Management of Associates.
-
(9.1)
(23.9)
(1.0)
(3.1)
(1.0)
(50.6)
(0.8)
(3.3)
D.5 OTHER INCOME
Others
(0.8)
Other income increased to € 15.5m (2020: € 10.6m). The increase mainly results
from two items on Hannover Leasing and HFS level. First, on Hannover Leasing
level, a reversal of risk provisions amounting to € 2.8m in relation to receivables
from two aircraft funds that had previously been fully written off. Second, on HFS
level, fund-related expenses amounting to € 2.6m regarding a guaranteed interest
have been refunded due to the sale of the underlying assets in 2021.
Total
(214.3)
The main portion of depreciation is due to asset management contracts and
order backlog as well as customer relationships that have been recognized as
part of business combinations amounting to € 33.2m (2020: € 22.6m).
The increase in depreciation of recognized Intangible Assets as part of business
combinations compared to prior year results from the recognition of customer
relationships and order backlog in course of the acquisition of CORESTATE Bank
(see Note B.2.2 for more information of the recognized order backlog and customer
relationships).
D.6 GENERAL AND ADMINISTRATIVE EXPENSES
General and Administrative Expenses of € 59.5m (2020: € 45.4m) include both
personnel and overhead expenses not allocated to the segments Real Estate
Equity, Real Estate Debt Segment or Other Segments.
The impairment of HFS goodwill is related to the segment Real Estate Debt
segment (see Note E.1).
CORESTATE –
ANNUAL REPORT
2021
127
TO OUR SHAREHOLDERS
D.8 FINANCIAL INCOME
D.10 INCOME TAX
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
In 2021, financial income increased by € 2.1m to € 7.3m (2020: € 5.2m). Income
from currency translation effects increased by € 2.8m and relates to a beneficial
development of exchange rates. In contrast, interest income stood nearly
unchanged at € 3.7m compared to prior year.
€ million
2021
2020
CONSOLIDATED
FINANCIAL STATEMENTS
Current Income Tax Expense
Deferred Taxes
Total
(14.3)
27.7
(14.9)
7.9
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
€ million
2021
3.7
2020
3.1
13.4
(6.9)
NOTES TO THE
ANNUAL ACCOUNTS
Interest Income
Foreign Currency Income
Other Financial Income
Total
Income from deferred taxes mainly results from capitalized tax loss carry-forwards
related to the Corestate Capital Group GmbH, which is in process of integrating
Corestate Bank GmbH into its fiscal unity. This integration will allow setting off
future profits generated within Corestate Bank GmbH with existing tax loss carry-
forwards. Further, the deferred tax income is partly being offset by expenses from
deferred taxes, which are mainly due to changes in both temporary valuation
differences and higher valuation allowances for deferred tax assets on tax loss
carry-forwards related to the sub-group Hannover Leasing.
FURTHER INFORMATION
3.6
0.8
0.0
1.3
7.3
5.2
D.9 FINANCIAL EXPENSES
Financial expenses decreased in 2021 by € 3.4m to € 25.6m (2020: € 29.0m).
Interest expenses are mainly related to the two corporate bonds issued in 2017
and 2018 that amount to interest expenses of € 17.6m (2020: € 17.6m). Expenses
from currency translation were € 1.3m lower than in the previous year. Other
financial expenses mainly comprise bank charges.
€ million
2021
(23.2)
(0.2)
2020
(24.3)
(0.1)
Interest Expenses
Profit or Loss Attributable to NCIs
Foreign Currency Expenses
Other Financial Expense
Total
(1.7)
(3.0)
(0.5)
(1.6)
(25.6)
(29.0)
CORESTATE –
ANNUAL REPORT
2021
128
Tax rate reconciliation
€ million
2021
26.1
2.4
2020
7.4
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
from Tax Loss Carry-Forwards
The tax reconciliation statement below describes the relationship between the
effective tax expense/benefit as recorded in the Group’s Income Statement and
the originally expected tax expenses based on the consolidated Earnings before
Taxes (EBT) according to IFRS by applying the statutory income tax rate of 24.94%
(2020: 24.94%) for CCH SA in Luxembourg.
from temporary Differences on Accruals
from temporary Differences on Liabilities
from temporary Differences on Shares in Subsidiaries
from temporary Differences on Properties
from temporary Differences on Intangible Assets
from temporary Differences on Financial Assets
from temporary Differences on Receivables
from Valuation of Other Assets
1.6
CONSOLIDATED
FINANCIAL STATEMENTS
0.9
0.4
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
8.5
8.3
ANNUAL ACCOUNTS
0.0
1.8
€ million
2021
(206.2)
24.94%
(51.4)
1.7
2020
(61.9)
24.94%
(15.4)
2.8
NOTES TO THE
ANNUAL ACCOUNTS
1.0
0.1
Consolidated Earnings before Taxes (EBT)
Luxembourg Statutory Income Tax Rate for CCH SA
Projected Income Tax (Gain)/Burden
Adjustments in Respect of income Tax of previous Years
Effect from Changes in Tax Rates
FURTHER INFORMATION
4.2
4.3
1.0
0.7
0.3
0.0
from temporary Differences on Financial Liabilities
Set-off of Deferred Tax Liabilities
Total
3.8
7.1
0.0
(0.2)
(7.4)
41.5
(11.0)
20.7
Current Tax Losses for which no
deferred Tax Asset has been recognised
1.4
16.3
Effect from Permanent Differences
24.8
11.9
6.8
Effect from different Tax Rates
(2.0)
Effect from Dividends and
Other Income Exempt from Taxation
(1.6)
(1.1)
Other Differences
0.2
(13.4)
6.5%
(0.2)
6.9
Income Tax Reported in the Group’s Income Statement
Effective Tax Rate
11.30%
CORESTATE –
ANNUAL REPORT
2021
129
€ million
Prior year’s deferred tax assets from temporary differences on other assets in
the amount of € 0.1m have been separated into an own disclosure line item for
deferred tax assets from temporary differences on intangible assets.
2021
6.2
2020
5.6
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
from temporary Differences on Financial Assets
from at-equity Valuation of Associates
from temporary Differences on Liabilities
from temporary Differences on Receivables
from temporary Differences on Accruals
from temporary Differences on Properties
from temporary Differences on Intangible Assets
from temporary Differences on Other Assets
Set-off of deferred Tax Assets
0.2
0.1
No deferred tax assets have been recognized on tax loss carry-forwards related to
German corporate taxes of € 23.3m (2020: € 57.9m), German trade tax on income
of € 83.6m (2020: € 113.9m) and other income taxes of € 129.3m (2020: € 76.8m).
These tax loss carry-forwards are indefinitely available with the exception of those
related to other income taxes in an amount of € 4.4m expiring after seven years
and in an amount of € 84.2m which expire after 17 years.
CONSOLIDATED
FINANCIAL STATEMENTS
1.2
1.5
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
0.1
0.1
ANNUAL ACCOUNTS
1.8
0.4
NOTES TO THE
ANNUAL ACCOUNTS
1.8
6.6
Deferred taxes on tax loss carry-forwards and temporary differences are recognized
only to the extent that sufficient future taxable income is expected to be generated
against which the losses and temporary differences can be utilized. The total
amount of accordingly unrecognized deferred tax assets is € 39.9m (2020: € 38.0m).
FURTHER INFORMATION
12.1
1.5
9.0
0.7
(7.4)
17.5
(11.0)
13.0
The benefit arising from previously unrecognized tax loss that is used to reduce
deferred tax expense amounts to € 13.0m (2020: € 0.0m). Deferred tax expense
arising from the write-down of a deferred tax asset amounts to € 2.7m (2020:
€ 3.5m).
Total
CORESTATE –
ANNUAL REPORT
2021
130
D.11 EARNINGS PER SHARE
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Basic earnings per share amounts are calculated by dividing net profit for the year
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year. The weighted average
number of ordinary shares outstanding is calculated as follows:
The effect from potential ordinary shares from the conversion of convertible
bonds was ignored for determining dilutive EPS as the conversion price set out in
the terms and conditions for the convertible bond is fixed at € 61.958 per share
(only subject to anti-dilution adjustments), which is significantly higher than the
average market price of Corestate’s shares during 2021. The Group’s management
therefore considered the convertible bonds to be anti-dilutive as it is very unlikely
that the bond could be converted into ordinary shares.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
31 Dec 2021
Number
of Shares
31 Dec 2020
ANNUAL ACCOUNTS
Number
of Shares
Days
Days
365
NOTES TO THE
ANNUAL ACCOUNTS
Earnings per share, both diluted as well as undiluted are calculated as follows:
Calculation of undiluted Shares
FURTHER INFORMATION
Shares at the Beginning
of the Period
2021
2020
25,666,025
365
21,179,449
Issue of new Shares on 25 May 2021
8,500,000
27,783
221
178
Loss attributable to Ordinary Equity Holders of the Parent:
Issue of new Shares on 07 July 2021
Continued Operations (€m)
Discontinued Operations (€m)
(193.8)
(7.2)
(65.3)
(3.8)
Reactivated Shares
from Repurchasing Program
174,968
125,226
352
Loss attributable to Ordinary Equity Holders
of the Parent for basic Earnings
(201.1)
(69.1)
Issue of new Shares on 15 Jan 2020
352
112
Weighted Average Number of Ordinary Shares (undiluted):
Share Capital
Issue of new Shares on 11 Sep 2020
4,186,382
30,840,325
22,753,540
Shares at the End of the Period
34,193,808
30,840,325
25,666,025
Weighted Average Number of Ordinary Shares (Total)
30,840,325
22,753,540
Weighted Average Number of
Shares for the Period
22,753,540
Earnings per Share from discontinued Operations
Earnings per Share from continued Operations
Earnings per Share
(0.23 €)
(6.29) €
(6.52) €
(0.17 €)
(2.87 €)
(3.04 €)
Calculation of Diluted Shares
Issue of new Shares on 15 Jan 2020
54,037
352
Weighted Average Number of
Shares for the Period (diluted)
30,840,325
22,805,562
CORESTATE –
ANNUAL REPORT
2021
131
TO OUR SHAREHOLDERS
E. NOTES TO THE
CONSOLIDATED
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
STATEMENT OF
ANNUAL ACCOUNTS
FINANCIAL POSITION
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
E.1 GOODWILL
As at 31 December 2021 the Goodwill of € 487.2m (2020: € 577.7m), which was
allocated to multiple CGUs within both the Real Estate Equity and Real Estate
Debt segment, comprises the following individual positions:
On 25 May 2021, Corestate acquired Corestate Bank (see Note B.2.2), which
led to an increase in Goodwill from business combination amounting to € 94.6m
(see Note B.2.2).
€ million
2021
2020
With the intention to sell the CGU CRM in November 2021, goodwill on CRM
Students Ltd of € 10.3m was reclassified and reported as assets held for sale in
accordance with IFRS 5 (see Note B.2.3). Therefore, any disclosures on CRM are
no longer provided.
Real Estate Debt
HFS Helvetic Financial Services AG
Corestate Bank GmbH
Real Estate Equity
345.4
94.6
520.1
-
The recoverable amount (value in use) of HFS was below the carrying value.
Therefor the goodwill had to be impaired by € 174.8m.
STAM Europe
32.2
15.0
-
32.2
15.0
HANNOVER LEASING GmbH & Co. KG
CRM Students Ltd.
10.3
Total
487.2
577.7
CORESTATE –
ANNUAL REPORT
2021
132
Goodwill
The following major assumptions have been applied for determining value in use:
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
€ million
2021
2020
2021
2020
Acquisition Cost
CGU HFS Helvetic Financial Services AG
Discount Rate (before Tax)
Growth Rate after Year 5
CGU Hannover Leasing GmbH & Co. KG
Discount Rate (before Tax)
Growth Rate after Year 5
CGU STAM
CONSOLIDATED
FINANCIAL STATEMENTS
As at 01 January
599.4
84.3
94.6
-
567.1
32.3
32.2
(0.1)
-
8.9%
1.0%
8.1%
1.0%
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Changes in Scope of Consolidation
Additions
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Currency translation effects
Disposals/Reclassification
As at 31 December
Amortisation and Impairment Losses
As at 01 January
7.0%
1.0%
6.4%
1.0%
FURTHER INFORMATION
(10.3)
683.7
599.4
Discount Rate (before Tax)
Growth Rate after Year 5
CGU Corestate Bank
7.5%
1.0%
5.6%
1.0%
21.7
174.8
196.5
487.2
-
21.7
Impairment for the year
As at 31 December
Total (Carrying Amount)
21.7
Equity Costs
9.1%
1.0%
-
-
577.7
Growth Rate after Year 5
The Group performed its annual impairment test at year-end. The Group
determines whether goodwill and other intangible assets with indefinite useful
lives are impaired at least on an annual basis. Since brand names do not generate
independent cash flows they form part of the assets within the respective CGUs
which are tested for impairment.
The Group’s most recent budget and forecast as well as extrapolations for
periods beyond budgeted projections include a detailed budget for 2022 as
well as a medium-term projection of 4 years for each CGU until 2026. The last
year depicts the perpetual annuity that includes the last year of the medium-
term projection with an additional growth rate of 1.0% for all CGUs. Due to the
ongoingCOVID-19implications, thebudgetassumptionsfor2022andforecasted
projections were still subjected to a lower transaction volume compared to pre-
COVID-19 periods.
CORESTATE –
ANNUAL REPORT
2021
133
The Group expects the number of transactions to normalize to a pre-pandemic
level across all asset classes in the following years. Therefor the planning
assumptions for the medium-term projections show a higher transaction volume
compared to both 2020 and 2021 as well as an improved long-term profitability.
EBITDA
2021
WAAC Post Tax
Growth Rate
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CGU
2020
2021
2020
2021
2020
HFS
-
-40.8%
-56.4%
-36.6%
-20.6%
-
10.3%
-
-
-3.3%
-
CONSOLIDATED
FINANCIAL STATEMENTS
The impairment of HFS is mainly caused by an expected significant lower fund
volume in Stratos funds in 2022. Management expects a strong recovery of the
funds’ volume close to prior years’ level in the mid-term perspective. In case the
recovery of the funds‘ volume does not occur at all the goodwill on HFS would
be reduced by another 44.8%.
Corestate Bank
-
-38.3%
-59.4%
13.1%
11.3%
9.4%
-4.9%
-7.0%
-3.6%
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
HL
9.1%
9.4%
-3.5%
-6.6%
ANNUAL ACCOUNTS
STAM
NOTES TO THE
ANNUAL ACCOUNTS
For HL, the Group expects a continued focus on business with semi-institutional
investors and expects the budgeted sales to be on a level of the year 2021.
FURTHER INFORMATION
E.2 OTHER INTANGIBLE ASSETS
For STAM, the Group expects – after two years which were negatively affected
by COVID-19 – a solid transaction volume given the focus on Core/Core+ and
logistic assets which is expected to further accelerate over the planning period
resulting in a sales development averaging double-digit growth. At CORESTATE
Bank, the Group assumes a solid growth of the underlying business as well
as a strong demand of the trading activities over the planning period. These
assumptions result in a moderate sales growth.
As a result of the purchase price allocation of CORESTATE Bank an amount of
€ 11.2m and € 25.5m was identified as order backlog respectively as customer
relationships. The order backlog and the customer relationships are subject to
scheduled amortization based on useful lives of 19 months (order backlog) and
of 4 years (customer relationship). At year-end 2021, the majority of the backlog
has already been amortized, as this portion was related to one major real estate
financing transaction that has already been completed. In addition, an impairment
was recognized on the customer relationships in the amount of € 12.9m at the end
of the year, due to management reassessment of the future businesses with the
customers included in the recognized customer relationships (for more details of
the business combination of CORESTATE Bank see Note B.2.2).
Mid-term and long-term assumptions that are reflected in the respective budgets
for these CGU did not materially change compared to prior year. A sensitivity
analysis was performed on the major assumptions for the impairment test. The
following table shows an analysis at what percentage these assumptions must
change to reach a headroom of zero; for newly acquired Corestate Bank only
2021 igures are listed.
The remaining other intangible assets include mainly brand names and acquired
asset management contracts. These contracts have remaining useful lives between
1 and 16 years. The brand names have indefinite useful lives.
As at 31 December 2021, brand names amounting to € 46.7m (2020: € 47.1m)
were tested for impairment as part of the annual impairment testing of CGUs of
real estate equity segment resulting in no need for impairment (see Note E.1).
The reclassifications of acquired asset management contracts and other intangible
assets include the relevant assets of CRM and Capera, which were reclassified and
reported as assets held for sale in accordance with IFRS 5 (see Note B.2.3).
CORESTATE –
ANNUAL REPORT
2021
134
€ million
Brand Names
Acquired Management Contracts
Customer Relationships
Order Backlog
Other intagible Assets
31 Dec 2021
31 Dec 2020
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Acquisition cost
As at 01 January
47.3
125.3
-
-
9.0
-
181.6
36.7
-
179.8
9.2
CONSOLIDATED
FINANCIAL STATEMENTS
Additions from Business Combinations
Currency Changes
-
-
25.5
11.2
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
-
-
-
-
-
-
0.1
ANNUAL ACCOUNTS
Additions
-
-
-
-
-
-
0.2
(1.6)
7.6
0.2
2.7
NOTES TO THE
ANNUAL ACCOUNTS
Disposals / Reclassifications
As at 31 December
(11.7)
113.6
(13.3)
205.2
(10.1)
181.6
FURTHER INFORMATION
47.3
25.5
11.2
Amortisation and Impairment Losses
As at 01 January
0.2
0.5
-
90.0
5.6
-
3.7
-
9.0
-
3.6
1.4
-
93.8
20.2
70.2
26.2
-
Additions to cumulative Amortization
Impairment
1.6
12.9
-
14.5
Disposals / Reclassifications
As at 31 December
-
(7.9)
89.3
-
(0.2)
4.8
(8.0)
(2.6)
93.8
0.7
16.6
9.0
120.4
Total (Carrying Amount)
46.7
24.3
8.9
2.2
2.8
84.8
87.8
CORESTATE –
ANNUAL REPORT
2021
135
TO OUR SHAREHOLDERS
E.3 INVESTMENT IN ASSOCIATES AND JOINT
VENTURES
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The table below shows the key financial information of the Group’s five major
investments in main associates and joint ventures:
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
€ million
Vision One
158.2
0.3
Liver
97.8
2.5
Quartier West
Highstreet VIII
228.9
16.6
Echo
69.6
1.1
Other1
1,074.7
72.8
ANNUAL ACCOUNTS
Other non-current Assets
Cash (restricted and free Cash)
Other current Assets
31.8
0.1
-
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
10.2
(81.4)
-
4.0
12.3
0.8
45.3
Non-current financial Liabilities
Other non-current Liabilities
Current financial Liabilities
Other current Liabilities
Equity
(36.1)
(1.1)
-
-
(142.0)
(43.4)
(4.2)
-
(295.5)
(94.3)
(228.2)
(33.6)
541.2
43.0
-
(1.0)
(38.8)
(6.3)
26.4
2.3
(47.0)
(1.7)
38.7
0.0
-
(1.1)
66.0
6.7
(0.0)
31.9
0.3
-
(12.2)
56.1
18.2
Revenues
Interest Income
0.0
-
-
-
0.0
Interest Expenses
(0.2)
-
(1.2)
2.6
(0.0)
-
(4.0)
(0.6)
0.1
(10.3)
(3.8)
Income Tax Expense or Income
Profit / (Loss) from continuing Operations
Total comprehensive Income
0.5
(1.5)
(1.5)
6.3
6.3
(0.2)
(0.2)
1.6
0.0
0.0
73.1
1 Others include investments
< € 15m carrying value
1.6
(73.4)
CORESTATE –
ANNUAL REPORT
2021
136
The table below shows the key financial information of the Group‘s major
TO OUR SHAREHOLDERS
investments in associates and joint ventures as at 31 December 2020:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
€ million
Highstreet VIII
Liver
Quartier West
Echo
Other1
CONSOLIDATED
FINANCIAL STATEMENTS
Other non-current Assets
Cash (restricted and free Cash)
Other current Assets
227.7
17.7
79.7
1.9
31.3
60.2
2.3
911.9
60.7
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
0.1
ANNUAL ACCOUNTS
11.9
0.8
-
1.4
9.0
NOTES TO THE
Non-current financial Liabilities
Other non-current Liabilities
Current financial Liabilities
Other current Liabilities
Equity
(146.0)
(47.1)
(3.0)
(34.0)
1.4
-
(29.0)
(1.7)
0.0
(355.4)
(38.7)
(137.0)
(39.2)
411.3
34.4
ANNUAL ACCOUNTS
FURTHER INFORMATION
-
0.0
-
(11.6)
49.7
19.5
(1.3)
48.5
5.3
(0.0)
(6.0)
27.3
2.0
31.4
Revenues
-
Interest Income
0.0
0.0
-
(0.2)
-
-
0.0
Interest Expenses
(4.2)
(1.0)
1.5
(0.5)
0.0
(6.6)
Income Tax Expense or Income
Profit / (Loss) from continuing Operations
Total comprehensive Income
1.6
2.1
(10.6)
(10.6)
(6.4)
(6.4)
(1.0)
-
(5.6)
(5.6)
(35.7)
(35.7)
1 Others include investments
< € 15m carrying value
CORESTATE –
ANNUAL REPORT
2021
137
Investment properties held by the associates are measured at fair value in line
with IAS 40, which includes assumptions on macro and micro economic
developments in the future. Developments held as inventory by the investments
are valued at cost or net realizable value.
In addition, the profit share for the period rose to € 3.7m, which can be primarily
linked to positive valuation results for the projects LIVER, TEMPELHOF TWINS,
and TURICUM.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The following table shows the participation quote and the movements in Group’s
investments in associates and joint ventures:
CONSOLIDATED
FINANCIAL STATEMENTS
A significant addition of € 22.5m results from the project VISION ONE while the
other additions essentially represent capital increases.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
In contrast to the year 2020, which was strongly characterized by COVID-19
restrictions, in 2021 a recovery and stabilization of the hotel/serviced living assets
managed by the Group was observed.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Dividends and
Participation Quote
01 Jan 2021
Participation Quote
31 Dec 2021
01 Jan
2021
Additions/
Transfers
Share of Profit/
(Loss) for the Period
Capital Repayments
received in Cash
Disposals/
Transfers
Currency Translation
Adjustments
31 Dec
2021
Project
VISION ONE
LIVER
-
35.1%
31.7%
21.6%
38.1%
10.1%
48.5%
6.0%
21.5%
35.1%
31.7%
21.6%
38.1%
10.1%
48.5%
6.0%
-
17.8
13.7
10.1
11.3
6.5
22.5
-
1.8
-
-
-
22.5
20.7
13.3
10.4
10.4
8.1
-
-
-
1.1
QUARTIER WEST
HIGHSTREET VIII
ECHO
-
(0.3)
0.3
-
(0.1)
-
-
-
-
-
0.3
(1.2)
1.6
-
(0.0)
(0.0)
-
-
-
TEMPELHOF TWINS
TABLAS
0.1
-
-
6.6
-
(0.1)
3.0
-
-
6.5
TURICUM
2.6
-
-
-
5.6
HIGHSTREET VI
PALLARS
10.0%
48.6%
10.0%
35.5%
10.5%
10.0%
48.6%
10.0%
26.6%
10.5%
4.9
-
-
0.2
-
-
-
5.0
5.1
(0.3)
(0.1)
0.3
(0.0)
-
-
-
-
4.8
HIGHSTREET PII
NEUSS
3.9
0.1
-
-
-
3.9
5.0
-
(1.8)
-
3.5
OLYMPIC
3.3
0.2
23.2
(0.0)
5.2
(0.0)
(0.1)
-
3.4
Associates, Subtotal
90.8
(1.9)
1.1
118.2
CORESTATE –
ANNUAL REPORT
2021
138
Dividends and
Capital Repayments
received in Cash
TO OUR SHAREHOLDERS
Participation Quote
01 Jan 2021
Participation Quote
31 Dec 2021
01 Jan
2021
Additions/
Transfers
Share of Profit/
(Loss) for the Period
Disposals/
Transfers
Currency Translation
Adjustments
31 Dec
2021
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Project
Associates, Subtotal
PLUTOS
90.8
2.8
23.2
5.2
0.0
(0.1)
(1.9)
1.1
118.2
2.7
2.6
1.8
1.7
1.5
1.3
1.3
1.0
1.0
0.8
0.3
0.2
0.1
0.0
-
CONSOLIDATED
FINANCIAL STATEMENTS
11.5%
10.0%
10.1%
10.5%
11.1%
11.0%
10.3%
10.4%
5.1%
11.5%
10.0%
10.1%
10.5%
11.1%
11.0%
10.3%
10.4%
5.1%
-
(0.1)
-
-
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
BAIN
2.2
0.5
(0.1)
(0.2)
0.0
-
-
-
BOCHUM
CONDOR
ISABELA
1.8
0.2
-
-
-
ANNUAL ACCOUNTS
1.4
0.2
-
-
-
NOTES TO THE
ANNUAL ACCOUNTS
1.5
0.0
(0.0)
(0.1)
(0.0)
(0.3)
0.2
-
-
-
FURTHER INFORMATION
CASSANDRA
ANNAPURNA
POSEIDON
DONALD
1.3
0.2
(0.0)
-
-
1.3
-
-
-
-
1.4
-
(0.0)
-
-
0.8
-
(0.0)
-
-
VENLOER4711
ACROSS
10.1%
12.3%
5.4%
10.1%
5.5%
0.7
-
0.1
-
-
-
1.0
-
(0.8)
0.0
-
-
-
ROSE
5.4%
0.1
-
-
-
-
-
-
HABANA
49.0%
10.6%
26.0%
49.0%
10.6%
-
0.1
0.0
-
-
-
KING
0.5
-
(0.5)
-
-
-
-
FLIGHT 47
Associates, Total
0.4
0.0
24.2
(0.4)
(2.3)
-
108.0
3.7
(0.2)
1.1
134.5
MOVIESTAR
RAW
18.0%
50.0%
50.0%
50.0%
50.0%
18.0%
45.0%
50.0%
50.0%
50.0%
10.4
2.3
-
(0.1)
-
(0.2)
(1.1)
0.1
-
-
-
-
-
-
-
-
10.2
1.1
0.1
-
-
-
-
-
SCORE
0.0
SANTES FAIR
ACCONTIS EXPORO
Joint Venture, Total
0.0
0.0
-
0.1
-
(0.1)
-
0.0
(0.0)
(1.2)
(0.0)
(0.0)
0.0
11.4
12.8
(0.1)
(0.1)
Total
120.8
24.1
2.5
(0.2)
(2.5)
1.1
145.9
CORESTATE –
ANNUAL REPORT
2021
139
The following table shows the participation quote and the movements in Group’s
TO OUR SHAREHOLDERS
investments in associates and joint ventures in 2020:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Dividends and
Capital Repayments
received in Ccash
Participation Quote
01 Jan 2020
Participation Quote
31 Dec 2020
01 Jan
2020
Additions/
Transfers
Share of Profit/
(Loss) for the Period
Disposals/
Transfers
Currency Translation
Adjustments
31 Dec
2020
Project
CONSOLIDATED
FINANCIAL STATEMENTS
LIVER
34.6%
37.3%
37.7%
21.1%
42.7%
11.0%
42.4%
-
35.1%
31.7%
38.2%
21.6%
42.7%
11.0%
42.4%
35.5%
10.0%
10.0%
10.5%
13.0%
6.0%
20.8
12.6
13.0
11.3
5.8
-
(1.8)
(0.3)
(1.8)
(0.9)
(0.8)
0.4
-
-
(1.2)
17.8
13.7
11.3
10.1
6.6
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
QUARTIER WEST
ECHO
3.4
-
(2.0)
-
ANNUAL ACCOUNTS
-
-
-
-
NOTES TO THE
ANNUAL ACCOUNTS
HIGHSTREET VIII
TABLAS
-
1.6
0.2
4.1
5.0
-
(0.3)
-
-
-
-
-
FURTHER INFORMATION
Tempelhof Twins
PALLARS
5.9
-
-
-
6.5
1.3
(0.3)
-
-
-
-
5.1
Neuss
-
-
-
-
5.0
HIGHSTREET VI
HIGHSTREET PII
OLYMPIC
10.0%
10.0%
10.0%
10.2%
5.5%
5.0
(0.2)
(0.3)
(2.2)
0.3
-
-
-
4.9
4.2
-
-
-
-
3.9
5.3
0.2
-
-
-
-
3.3
PLUTOS
2.5
-
-
-
2.8
TURICUM
2.7
-
(0.1)
(0.2)
(0.0)
0.8
-
-
-
2.6
BAIN
10.0%
10.1%
10.5%
10.0%
10.1%
10.3%
10.5%
10.0%
10.1%
11.7%
10.5%
10.7%
10.3%
11.0%
0.8
1.7
-
-
-
-
-
2.2
BOCHUM
1.8
-
-
1.8
ISABELA
0.5
0.1
0.1
-
-
-
-
1.5
CONDOR
1.8
(0.5)
(0.0)
(0.2)
(0.0)
(8.1)
(0.1)
(0.8)
(1.5)
-
-
-
1.4
POSEIDON
ANNAPURNA
CASSANDRA
Associates, Subtotal
2.2
-
-
1.4
3.1
-
-
-
-
-
1.3
1.3
-
1.3
102.0
16.4
(2.7)
(2.0)
(1.2)
104.3
CORESTATE –
ANNUAL REPORT
2021
140
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Dividends and
Capital Repayments
received in Ccash
Participation Quote
01 Jan 2020
Participation Quote
31 Dec 2020
01 Jan
2020
Additions/
Transfers
Share of Profit/
(Loss) for the Period
Disposals/
Transfers
Currency Translation
Adjustments
31 Dec
2020
Project
CONSOLIDATED
FINANCIAL STATEMENTS
Associates, Subtotal
ACROSS
102.0
1.1
16.4
(8.1)
(0.1)
(0.0)
(0.0)
-
(2.7)
(2.0)
(1.2)
104.3
1.0
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
10.0%
5.1%
12.3%
5.1%
-
-
-
-
ANNUAL ACCOUNTS
DONALD
0.9
-
(0.0)
-
-
0.8
NOTES TO THE
ANNUAL ACCOUNTS
KING
10.0%
24.7%
10.1%
46.5%
5.4%
10.6%
26.0%
10.1%
49.0%
5.4%
0.6
-
-
-
-
0.5
FLIGHT 47
Venloer4711
HABANA
0.4
-
-
-
-
-
0.4
FURTHER INFORMATION
1.1
-
(0.5)
0.0
-
-
0.7
0.1
0.0
-
-
-
0.1
ROSE
0.2
-
35.8
-
(0.0)
(0.1)
(0.0)
-
-
-
-
0.1
HIGHSTREET VII
VOLARE
40.8%
94.9%
0.0%
41.1%
100.0%
Merged
6.7
(42.2)
(0.2)
(0.1)
(0.0)
(2.3)
-
0.0
0.1
-
-
-
-
0.0
ENERGY
0.0
-
0.0
Associates, Total
113.2
52.1
(8.9)
(44.9)
(1.2)
108.0
Moviestar
18.0%
50.0%
50.0%
50.0%
47.5%
18.0%
50.0%
50.0%
50.0%
50.0%
10.4
2.9
-
-
-
-
-
-
-
(0.5)
(0.0)
(0.0)
(0.0)
(0.5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10.4
2.3
RAW
SCORE
0.0
0.0
Santes Fair
Accontis Exporo
Joint Venture, Total
0.0
0.0
0.0
0.0
13.4
12.8
Total
126.5
52.1
(9.4)
(44.9)
(2.3)
(1.2)
120.8
CORESTATE –
ANNUAL REPORT
2021
141
The following sensitivity analysis shows how the Group‘s Investment in
Associates and Joint Ventures and Loans to Associates and Joint Ventures
(carrying amount) would have been affected if the relevant property value
of the Associates and Joint Ventures increased / decreased by 5% and
10% (as a result of changes in the main key input parameters stated above):
The following overview shows the amount of the major positions of Group’s other
financial instruments:
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
€ million
2021
48.6
37.5
7.5
2020
58.4
35.6
9.8
CONSOLIDATED
FINANCIAL STATEMENTS
Opportunity Fund
Stratos Funds
Private Invest
Bel Air
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Property
Value (10%)
Property
Value (5%)
Carrying
Value
Property
Value (-5%)
Property
Value (-10%)
ANNUAL ACCOUNTS
€ million
2021
NOTES TO THE
ANNUAL ACCOUNTS
7.4
7.6
163.3
138.4
154.8
129.7
145.9
120.8
137.0
111.8
127.5
102.0
FURTHER INFORMATION
Weitblick Augsburg
Covent Garden
Johannis Quartier Chemnitz
Herschel
5.0
-
2020
4.9
4.8
3.9
-
E.4 OTHER FINANCIAL INSTRUMENTS
3.2
1.4
The major positions for 2021 relate to Corestate’s Opportunity Fund and the
Stratos funds managed by HFS. Both funds are treated as equity instruments
designated at fair value through profit and loss (a sensitivity analysis of the
Level 3 fair value measurement is presented in Note F.5).
HeWiPPP
2.3
2.6
Nigresco
2.3
2.4
Other Instruments
Total
28.8
151.5
31.3
153.9
The remaining financial instruments predominantly contain minority shares in
partnership structures managed by HL, which are invested in real estate. Since
shares in partnerships are treated as debt instruments, valuation changes are
recognized in profit and loss.
The other financial instruments amount to € 151.5m (2020: € 153.9m) whereas
movement is mainly caused by two equity placements within the fund portfolio
of Hannover Leasing, in an amount of € 8.8m, and a negative valuation effect in
Opportunity Fund amounting to € -9.8m. In contrast to the negative valuation effect,
the Stratos Funds and the HL portfolio ‘Herschel’ had a positive valuation effect
totalling to € 3.7m.
CORESTATE –
ANNUAL REPORT
2021
142
TO OUR SHAREHOLDERS
E.5 PROPERTY, PLANT AND EQUIPMENT,
RIGHT-OF-USE ASSETS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
€ million
Land and Buildings
Office and other Equipment
2021
2020
CONSOLIDATED
FINANCIAL STATEMENTS
Acquisition Cost
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
As at 01 January
24.4
0.6
-
13.7
0.6
-
38.1
1.2
32.2
0.4
ANNUAL ACCOUNTS
Changes in Scope of consolidated Companies
Currency Changes
NOTES TO THE
ANNUAL ACCOUNTS
-
(0.1)
9.3
FURTHER INFORMATION
Additions
1.8
(7.4)
19.4
0.5
(6.9)
7.9
2.3
Disposals / Reclassifications
As at 31 December
(14.3)
27.2
(3.7)
38.1
Depreciation and Impairment Losses
As at 01 January
6.1
-
9.7
0.1
-
15.8
0.1
8.0
0.3
Changes in Scope of consolidated Companies
Currency translation effects
Additions to cumulative Depreciation
Disposals / Reclassifications
As at 31 December
-
-
(0.0)
8.9
3.1
(1.3)
7.9
11.4
1.0
(4.9)
5.9
2.0
4.1
(6.2)
13.8
13.4
(1.2)
15.8
22.3
Total (Carrying Amount)
Changes in scope of consolidated companies contain the assets acquired from the
purchase of Corestate Bank.
The respective reclassifications of land and buildings and office and other
equipment include the assets of CRM and Capera, which were reclassified and
reported as assets held for sale in accordance with IFRS 5. In addition, a disposal
in land and buildings is due to the shortening of the lease term for the office
building in Frankfurt on Main (see Note E.6).
The addition of € 2.3m mainly relates to new and extended lease contracts as well as
new office and other equipment in Corestate Capital Advisors GmbH and Corestate
Bank.
CORESTATE –
ANNUAL REPORT
2021
143
TO OUR SHAREHOLDERS
E.6 LEASED ASSETS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The Group acts as a lessee of office premises, office and other equipment, and
cars. Office premises have lease terms between one and 17 years, whilst cars and
office equipment have lease terms mostly between 2 and 5 years. Generally, the
Group is restricted from assigning and subleasing the leased assets.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
The Group also has certain leases with lease terms of 12 months or less and
leases of office equipment with low value. The Group applies the ‘short-term
lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Set out below are the carrying amounts of right-of-use assets recognised and the
movements during the period:
FURTHER INFORMATION
€ million
Office Premises
Cars
Office Equipment
Other Assets
Total
As at 01 January 2021
Additions
18.2
1.3
0.3
0.3
0.1
0.0
0.3
0.0
19.0
1.4
Disposals / Reclassification
Depreciation
(4.9)
(3.2)
11.4
(0.2)
(0.1)
0.3
(0.0)
(0.0)
0.0
(0.1)
(0.1)
0.1
(5.2)
(3.4)
11.8
As at 31 December 2021
CORESTATE –
ANNUAL REPORT
2021
144
Set out below are the carrying amounts of lease liabilities (included in other
financial liabilities) and the movements during the period:
The following table shows the amounts recognised in profit or loss (the disclosure
to the statement of profit and loss is adjusted in line with IFRS 5 Discontinued
Operations for the financial years 2021 and 2020):
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
€ million
2021
27.4
1.5
2020
21.0
11.0
-
€ million
2021
(3.3)
-
2020
(3.1)
2.7
CONSOLIDATED
FINANCIAL STATEMENTS
As at 01 January
Additions
Depreciation Expense of right-of-use Assets
Income of Subleasing recognized at Inception Date
Interest Expense on Lease Liabilities
Interest Income on Lease Receivables
Expense relating to Leases of low-value Assets
Expense relating to short-term Leases
Total Amount recognised in Profit or Loss
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Disposals / Reclassification
Accretion of Interest
Payments
(5.3)
0.8
(0.9)
0.3
(1.0)
0.3
NOTES TO THE
ANNUAL ACCOUNTS
1.1
FURTHER INFORMATION
(4.9)
19.5
(5.7)
27.4
(0.2)
(0.0)
(4.1)
(0.2)
(0.0)
(1.3)
As at 31 December
In 2021, a remeasurement of the lease contract for Corestate’s headquarter
in Frankfurt was made after the decision for moving into new facilities at the
end of 2022; this resulted in a reduction of the right of use assets amounting
to € 4.1m and of the lease liability of € 4.6m (see also Note E.18). The
maturity analysis of lease liabilities is disclosed in Note F.4.1 Liquidity risk.
Corestate had total cash outflows for leases of € 5.1m (2020: € 5.9m).
CORESTATE –
ANNUAL REPORT
2021
145
The carrying amount of non-current loans to associates has been reduced by a
provision for expected credit losses in an amount of € 9.5m (2020: € 7.5m; for
further details of the credit risk see Note F.4.2).
TO OUR SHAREHOLDERS
E.7 NON-CURRENT RECEIVABLES
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
€ million
2021
34.2
8.0
2020
33.6
8.5
Non-current Loans to Third Parties
Non-current Loans to former Majority Shareholder of HL
Non-current Loans Other
CONSOLIDATED
FINANCIAL STATEMENTS
E.9 INVENTORIES
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Inventories comprise real estate properties in “Real Estate Operations and
Warehousing” as part of the other segments which are deemed to be converted
into investment products by way of selling them into independent investment
structures.
9.5
11.6
53.7
ANNUAL ACCOUNTS
Total
51.7
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Non-current receivables remain nearly unchanged to previous year. The other non-
current loans mainly included leasing receivables in an amount of € 9.0m (2020: € 11.1m).
At the end of 2021, inventories totalling € 100.0m (2020: € 73.8m) are primarily
related to the Projects Highstreet Giessen and Wallhalla, a micro-living asset
development located in Bremen. Two development assets located in Spain
complete the inventories.
The carrying amount of non-current receivables has been reduced by a provision for
expected credit losses in an amount of € 0.1m (2020: € 0.2m; for further details of
the credit risk see Note F.4.2).
The increase in inventories is predominantly the result of ongoing CAPEX-measures
at the Highstreet Giessen project at around € 10.2m and the transitory acquisition
of Wallhalla, which will be sold to an institutional investor in the first half of 2022.
E.8 NON-CURRENT LOANS TO ASSOCIATES
According to the underlying business plan, all real estate assets classified as
inventories are expected to be sold in the normal business cycle (up to three years).
€ million
2021
3.0
2020
7.0
€ million
2021
2020
HL Invest Neuss GmbH
Kanada Haus KG
Pallars AIF HoldCo Sarl
Others
Highstreet Giessen PropCo S.à r.l.
(Property located in Giessen)
75.7
65.4
5.6
5.6
1.9
1.9
Wallhalla PropCo S.à r.l. (Property located in Bremen)
Bego PropCo I S.L. (Property located in Spain)
14.9
5.4
-
4.4
5.1
4.6
Total
14.9
19.6
Thorfin Invest S.L. in future Gabriela PropCo S.L.
(Property located in Spain)
4.0
3.7
Total
100.0
73.8
CORESTATE –
ANNUAL REPORT
2021
146
TO OUR SHAREHOLDERS
E.10 TRADE RECEIVABLES
E.12 OTHER CURRENT FINANCIAL ASSETS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Trade receivables of € 47.2m (2020: € 33.0m) result from various fee income
streams generated by the Group’s Real Estate Equity and Debt Business with
third-party clients and receivables from renting activities.
Other current financial assets amounted to € 86.5m (2020: € 126.7m) and are
mainly defined by loans granted for warehousing activities as well as one finance
lease receivable at the level of CE Bad Honnef Betriebsgesellschaft mbH.
CONSOLIDATED
FINANCIAL STATEMENTS
The increase at year-end results primarily from the sale of a Leipzig-based
object by HFS resulting in a promote fee of € 9.3m. In addition, receivables
of € 11.7m from the sale of Berlin-based project Herschel are recognised at
Hannover Leasing.
The net amount of loans granted by Corestate Capital Services GmbH (CCS) for
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
bridge financing activities is € 60.5m (2020: € 107.1m).
ANNUAL ACCOUNTS
The carrying amount of other current financial assets has been reduced by a
provision for expected credit losses in an amount of € 41.9m (2020: € 3.0m). The
increase in risk provisions mirrors mainly the fact that for certain loans granted
by CCS management has carried out an assessment of the recoverability and
concluded that the collectability is at risk (for further details of the credit risk see
note F.4.2).
NOTES TO THE
ANNUAL ACCOUNTS
The table below shows the risk provision for financial assets at amortised cost
(within the simplified approach) showing cumulative expected credit losses of
€ 10.5m (2020: € 1.3m) that are recognised for doubtful accounts:
FURTHER INFORMATION
Step 2 Simplified
Step 3 Simplified
€ million
Approach
Approach
Total
1.3
01 January 2021
0.5
1.3
1.7
0.8
8.0
8.8
E.13 OTHER CURRENT ASSETS
Provision for expected Credit Losses
31 December 2021
9.2
Other current assets, predominantly consisting of other tax receivables, amount
to € 12.1m (2020: € 16.6m) and remain relatively stable.
10.5
A detailed overview of the expected credit losses recognized is shown in Note
F.4.2.
E.14 RESTRICTED CASH, CASH AND CASH
EQUIVALENTS
Restricted cash (€ 12.9m; 2020: € 23.0m) mainly relates to the CAPEX loan drawn
in 2020 for improvement measures performed at the project Highstreet Gießen
(see Note E.9) which therefore also explains the consumption-driven decline.
E.11 CONTRACT ASSETS
Contract assets of € 58.5m (2020: € 51.0m) are mainly driven by the recognition
of the coupon participation fees for the Stratos Funds at the level of HFS.
Cash and Cash Equivalents (€ 62.8m; 2020: € 68.2m) in the consolidated
Statement of Financial Position comprise cash at banks and on hand as well as
short-term deposits with a maturity of three months or less.
The coupon participation fees are calculated by an external investment fund
manager on a monthly basis but are chargeable by HFS generally every six
months. For contract assets an expected credit loss amounting to € 3.2m
(2020: € 0.0m) is recognized (detailed information are shown in Note F.4.2)
The Group has included restricted cash as well as cash and cash equivalents as
they are considered an integral part of the Group’s cash management.
CORESTATE –
ANNUAL REPORT
2021
147
E.15.2 AUTHORIZED CAPITAL
TO OUR SHAREHOLDERS
E.15 SHARE CAPITAL
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
E.15.1 SHARE CAPITAL
The Management Board may withdraw or limit the preferential subscription rights
of the shareholders under the authorized capital in accordance with the Articles of
Association.
€ million
2021
2020
CONSOLIDATED
FINANCIAL STATEMENTS
As at 01 January
1.9
0.6
0.0
2.6
1.6
0.3
0.0
1.9
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
In 2020, 4,311,608 shares representing a share capital increase of € 336,493 have
been issued by the Management Board out of the authorized capital.
Issue of Share Capital (contribution in Cash)
Equity-settled share-based Payments
As at 31 December
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Additionally, 8,527,783 shares representing a share capital of € 639,584 have been
issued by the Management Board out of the authorized capital in 2021.
FURTHER INFORMATION
In the first six months of 2021, the Group issued 8,500,000 new shares out of
its authorized capital that have been transferred as part of the consideration
transferred for the acquisition of Corestate Bank GmbH (see Note B.2.2). Hence,
the share capital increased by € 637,500 to € 2,562,452.
Since the annual general meeting in 2021, the authorized capital represented by
a maximum of 30,000,000 shares without nominal value of in the Company in an
amount of € 2,250,000 was given.
In July 2021, 27,783 shares were granted as part of the long-term incentive
payments for several Board Members (see Note F.6.3) as well as for earn-out
compensation payments due to an additional purchase price portion of the 2019
acquired UK located subsidiary CRM.
E.15.3 OTHER RESERVES
The other reserves increased by € 68.8m to € 821.7m (2020: € 752.9m) mainly
relating to the contributed shares of € 109.6m and the earn-out component of
€ 19.4m within the acquisition of Corestate Bank GmbH (see Note B.2.2), and
an increase of € 3.5m (2020: € 1.2m) resulting from this year’s LTI tranches as well
as the transfer of the prior year’s group net loss amounted to € -69.1m.
Overall, the Company’s share capital as at 31 December 2021 is set at € 2,562,452
(2020: € 1,924,953) represented by 34,193,808 (2020: 25,666,025) shares. All
shares are dematerialized shares without a par value. The shares are freely
transferable in accordance with the legal requirements for shares in dematerialized
form, that is, through book-entry transfers. There are no prohibitions on disposals
or restrictions with respect to the transferability of the shares. All shares are subject
to and governed by Luxembourg law.
The composition and development of the other reserves is shown in the
consolidated Statement of Changes in Equity.
The shareholders’ share of profits is determined based on their respective interests
in the Company’s share capital. In a Luxembourg public limited liability company
(société anonyme), resolutions concerning the distribution of dividends for a given
financial year, and the amount thereof, are adopted by the annual general meeting
of shareholders related to such financial year. The annual general meeting of
shareholders decides on the allocation of the annual profit, if any.
Each share carries one vote at the Company’s shareholders’ meeting. There are no
restrictions on voting rights.
All shares carry the same dividend rights. In the event of the Company’s liquidation,
any proceeds will be distributed to the holders of the shares in proportion to their
interest in the Company’s share capital.
CORESTATE –
ANNUAL REPORT
2021
148
In accordance with the Company’s Articles of Association, every year at least 5%
of the annual net income (based on the local statutory financial statements) of
the Company has to be set aside in order to build up the “legal reserve until the
amount of the legal reserve has reached an amount of one tenth of the Share
Capital.”
The table below shows the amounts of the Group’s non-current financial liabilities
TO OUR SHAREHOLDERS
from bonds:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
€ million
2021
2020
CONSOLIDATED
FINANCIAL STATEMENTS
Senior unsecured Bonds
Convertible Bonds
Total
298.0
-
296.5
194.5
491.0
The remaining balance of the net profit is at the disposal of the annual general
meeting of shareholders. The general meeting of shareholders may also allocate
net profits to reserves other than the legal reserve, and, subject to compliance with
all legal requirements, such reserves are available for distribution by a decision of
the general meeting of shareholders.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
298.0
NOTES TO THE
ANNUAL ACCOUNTS
The convertible bond has been classified as current financial liabilities from bonds
due to the maturity date in November 2022 (see Note E.20).
FURTHER INFORMATION
No dividend distribution may be decided by the annual general meeting of
shareholders when, on the closing date of the last financial year, the net assets as
set out in the annual accounts are, or following such distribution would become,
lower than the amount of the subscribed share capital plus the legal reserve or any
other reserves that may not be distributed by virtue of the Articles of Association.
E.17 NON-CURRENT FINANCIAL LIABILITIES TO BANKS
Financial liabilities to banks of € 3.5m (2020: € 4.6m) presented a remaining term
of more than one year. These liabilities are predominantly presented in project
structures of Hannover Leasing.
E.16 NON-CURRENT FINANCIAL LIABILITIES
FROM BONDS
Senior unsecured Bonds
E.18 OTHER NON-CURRENT FINANCIAL LIABILITIES
The Company has issued senior unsecured bonds in the aggregate principal
amount of € 300m. The bonds are issued in denomination with a principal
amount of € 100,000 each, which rank pari passu among themselves. The Group
used the net proceeds for the refinancing of existing debt as well as for general
corporate purposes.
Other non-current financial liabilities of € 19.9m (2020: € 29.3m) mainly consist
of lease liabilities (2021: € 15.0m; 2020: € 22.9m) resulting from procurement
leases, particularly offices and cars. Due to the upcoming relocation to a new
office building in Frankfurt on Main at the end of 2022, the existing office lease
agreement was not extended and the previously included extension option was
reduced by 5 years.
The bonds with a maturity of 5 years were issued at 98,857% and will be
redeemed at 100%. The bonds were placed with a coupon of 3.5% per annum,
payable semi-annually in arrears. The issuance of the bonds took place on
23 March 2018.
CORESTATE –
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2021
149
The convertible bonds have both an equity and debt component. The equity
component has an amount of € 9.7m and reflects the value of the conversion
right (written call option).
TO OUR SHAREHOLDERS
E.19 OTHER NON-CURRENT PROVISIONS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Other Non-Current Provisions include different forms of guarantees and other
commitments that typically arise from Corestate’s warehousing or product
placement activities. As at 31 December 2021, sundry other non-current
provisions mainly include pension-related and similar obligations.
The Company being the issuer may, on giving not less than 30 nor more than
60 days‘ prior notice to the bondholders, redeem all, but not some only, of the
outstanding bonds with effect from the redemption date (which shall be no
earlier than 19 December 2020). However, such notice may only be given if the
share price on each of not less than 20 trading days during an observation period
of 30 consecutive trading days is equal to or exceeds 130% of the conversion
price in effect on each such trading day.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
01 Jan
2021
31 Dec
2021
ANNUAL ACCOUNTS
€ million
Reversals
Additions
Utilization
NOTES TO THE
ANNUAL ACCOUNTS
Guarantees and
other Commitments
0.5
(0.1)
-
-
0.4
FURTHER INFORMATION
Sundry other non-
current Provisions
The issuer grants to each bondholder the right (the “conversion right”) to convert
each bond in whole, but not in part, at the conversion price into settlement
shares on any business day during the conversion period (period from 8 January
2018 to the earlier of the following days: the 35th Business Day prior to the
maturity date or if the bonds are redeemed by the issuer the 10th business day
prior to the redemption date).
1.3
(0.7)
0.7
(0.5)
0.8
Total
1.8
(0.8)
0.7
(0.5)
1.2
At year-end 2021, pro-rata redemptions of the convertible bond were made
under par via market research, resulting in a reduction of the outstanding amount
of € 6.5m and interest income of € 0.2m. This reduction results in an amount of
current liabilities to bonds of € 190.9m.
E.20 CURRENT FINANCIAL LIABILITIES TO BONDS
Convertible bonds
The Company has issued unsubordinated and unsecured convertible bonds in the
aggregate principal amount of € 200m. The convertible bonds are issued in bearer
form with a principal amount of € 100,000 each, which rank pari passu among
themselves. The Group used the net proceeds for the refinancing of existing debt as
well as for general corporate purposes.
The convertible bonds with a maturity of 5 years were issued at 100% and will be
redeemed at 100% of their principal amount, unless previously converted or
repurchased and cancelled. The bonds were placed with a coupon of 1.375% per
annum, payable semi-annually in arrear and the conversion price was set to € 61.9580,
representing a premium of 27.5% above the reference share price at the bond issue
date. The settlement of the bonds took place around 28 November 2017.
CORESTATE –
ANNUAL REPORT
2021
150
TO OUR SHAREHOLDERS
E.21 OTHER CURRENT PROVISIONS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The table below shows the detailed composition of the current provisions:
CONSOLIDATED
FINANCIAL STATEMENTS
€ million
01 Jan 2021
Additions from Business Combinations
Utlilization
(0.5)
Reversals
(0.5)
Transfer
Additions
31 Dec 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Litigation Costs
Restructuring
Rental Guarantees
Sundry
3.1
1.2
-
-
-
-
0.4
7.0
-
2.5
7.5
ANNUAL ACCOUNTS
(0.6)
(0.1)
NOTES TO THE
ANNUAL ACCOUNTS
0.9
-
(0.6)
-
-
0.3
FURTHER INFORMATION
4.9
0.1
0.1
(1.2)
(0.6)
(0.6)
(0.6)
0.8
8.1
3.3
Total
10.1
(2.9)
(1.1)
13.6
The increase of other current provisions by € 3.5m is mainly due to a restructuring
provision for the transformation of the real estate equity segment. Vice versa,
offsetting effects come from utilization of provisions for restructuring and rental
guarantees of each € 0.6m. Provisions for litigation costs decreased in total by
€ 0.6m and the sundry provision even by a total of € 1.6m.
E.22 OTHER CURRENT FINANCIAL LIABILITIES
TO BANKS
The other current financial liabilities to banks of € 68.3m (2020: € 68.7m) mainly
comprise warehousing-related debt, including a senior loan as well as a CAPEX
loan for improvement measures performed at the project Highstreet Gießen
(see also Note E.14).
E.23 TRADE PAYABLES
Trade payables (€ 27.6m; 2020: € 13.1m) mostly consist of amounts due to
utilized services and are not interest-bearing. The payment of trade payables is
settled in accordance with normal business practice.
The increase is mainly driven by a purchase price obligation in Wallhalla, which is
one of the Group’s warehousing projects (see Note E.9).
CORESTATE –
ANNUAL REPORT
2021
151
TO OUR SHAREHOLDERS
E.24 OTHER CURRENT FINANCIAL LIABILITIES
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Other current financial liabilities amount to € 41.4m (2020: € 42.0m). In 2020,
the position still included the HFS Bond amounting to € 30.5m which was due in
Q4 2021 and repaid accordingly.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
E.25 OTHER CURRENT LIABILITIES
NOTES TO THE
ANNUAL ACCOUNTS
€ million
2021
14.8
9.3
2020
16.9
5.8
FURTHER INFORMATION
Liabilities from Employee Benefits
Liabilities from other Taxes (VAT, Stamp Duty)
Deferred Income
Sundry
0.2
3.5
15.7
40.0
22.3
48.5
Total
The decrease of other current liabilities are mainly due to lower liabilities from
employee benefits as well as lower ‘sundry’ liabilities. In 2020, severance
payments amounting to € 3.6m were recognized as liabilities from employee
benefits. The position ‘sundry’ includes liabilities for social security as well as
deposits received.
CORESTATE –
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2021
152
Aiming to mirror the increased significance of the Real Estate Debt business,
starting from 01 January 2021 management has changed the structure of its internal
organisation by disaggregating the former Real Estate Investment Management
(REIM) segment into the two segments Real Estate Equity and Real Estate Debt.
TO OUR SHAREHOLDERS
F. OTHER
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
INFORMATION
CONSOLIDATED
FINANCIAL STATEMENTS
“Real Estate Equity” now encompasses the revenues from acquisition fees, from
asset management fees, from property management fees and from sales and
promote fees realized.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
F.1 SEGMENT INFORMATION
The “Real Estate Debt” segment summarizes the revenue streams underwriting
and structuring fees, asset management fees, performance fees, income from
bridge loans and trading income. Hence, this segment comprises the HFS and
genost business as well as the Corestate Bank business.
NOTES TO THE
ANNUAL ACCOUNTS
F.1.1 OPERATING SEGMENTS & CHIEF OPERATING DECISION MAKER
(CODM)
FURTHER INFORMATION
For management purposes, the Group is organized into business units based on
its assets and services and therefor reports the three following segments:
The “Other Segments” incorporate all line items from the until 2020 separately
presented segments “Alignment Capital Management” and “Real Estate
Operations and Warehousing”.
− Real Estate Equity,
− Real Estate Debt, and
The Group’s revenues comprise the revenues from its segments Real Estate Equity
and Real Estate Debt as well as the net rental income and the revenues from
service charges from Real Estate Operations/ Warehousing.
− Other segments, comprising the Group’s business in Alignment Capital
Management and Real Estate Warehousing and Operations.
The corresponding items of segment information and their segment allocation
for the comparative period have been restated due to the changed segment
allocation at the beginning of 2021; in addition, the 2020 P&L has been restated
due to the designation of Capera and CRM as discontinued operations in line with
IFRS 5.
ThesegmentdefinitionandreportingintheGroupcorrespondstointernalreporting
to the chief operating decision-maker and is based on operating business divisions
(„management approach“). The chief operating decision-maker (“CODM”) is the
Group’s Management Board.
The Group’s management monitors the operating results of its business units
separately for the purpose of making decisions about resource allocation and
performance assessment. Segment performance is evaluated based on EBITDA
and is measured consistently with profit or loss in the consolidated financial
statements. The Group‘s General and Administrative Expenses, other income and
Income Taxes (including Deferred and Current Taxes) are managed on a Group
basis and are not allocated to operating segments.
The following tables present information on the Group’s operating segments for
2021 and 2020, respectively. Operating results are monitored for the purpose of
making decisions about resource allocation and performance assessment by the
CODM.
The Group‘s General and Administrative Expenses, Financial Result (including
Financial Income and Expenses) and Income Taxes (including Deferred and Current
Taxes) are primarily managed on a Group basis and are not allocated to operating
segments.
CORESTATE –
ANNUAL REPORT
2021
153
F.1.2 SEGMENT INFORMATION
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Segment Information for the period from 01 January to 31 December 2021
Real Estate
Equity Segment
Real Estate Debt
Other
Segments
Total
Segments
Overhead
(not allocated)
Consolidated Financial
Statements1
CONSOLIDATED
FINANCIAL STATEMENTS
€ million
Segment
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Revenues
Total Revenues
77.6
121.9
6.2
205.8
-
205.8
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Income/Expenses
Expenses from Real Estate Equity Segment
Expenses from Real Estate Debt Segment
Net Gain from Selling Warehousing Assets
Share of Profit or Loss from Associates and Joint Ventures
Dividends from other Alignment Capital
(71.4)
-
-
-
(71.4)
(66.1)
(2.7)
2.4
-
-
-
-
-
(71.4)
(66.1)
(2.7)
2.4
FURTHER INFORMATION
-
-
-
-
(66.1)
-
-
-
(2.7)
2.4
12.8
12.8
12.8
Gains/Losses from Fair Value Measurement
of Financial Instruments related to Real Estate
-
-
(2.9)
(2.9)
-
(2.9)
Expenses from Other Segments
Total Earnings
-
-
(7.5)
(7.5)
-
-
(7.5)
70.4
6.2
55.8
8.4
70.4
General and Administrative Expenses
Other Income
-
-
-
-
(59.5)
15.5
(44.0)
(6.7)
7.3
(59.5)
15.5
-
-
-
8.4
-
70.4
(207.7)
-
EBITDA
6.2
55.8
26.4
Depreciation & Amortisation
Financial Income
(5.1)
(202.5)
(0.1)
-
(214.3)
7.3
-
-
Financial Expenses
-
-
-
-
-
-
(25.6)
13.4
(55.5)
27.9
31.2
-
(25.6)
13.4
Income Tax Expense
-
-
1
Segment Net Profit/(Loss)
Total Assets (31 December 2021)
Total Liabilities (31 December 2021)
Investment in Associates and Joint Ventures
1.1
(146.7)
712.7
434.0
-
8.3
(137.3)
1,362.2
747.3
145.9
(192.8)
1,390.1
778.5
145.9
the statement of comprehensive
income is adjusted in line with IFRS
5 Discontinued Operations for the
financial years 2021 and 2020 (see
Note B.2.3)
214.3
107.0
-
435.2
206.3
145.9
CORESTATE –
ANNUAL REPORT
2021
154
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Segment Information for the period from 01 January to 31 December 2020
Real Estate
Equity Segment
Real Estate Debt
Other
Segments
Total
Segments
Overhead
(not allocated)
Consolidated Financial
Statements1
CONSOLIDATED
FINANCIAL STATEMENTS
€ million
Segment
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Revenues
Total Revenues
70.4
93.3
6.4
170.2
-
170.2
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Income/Expenses
Expenses from Real Estate Equity Segment
Expenses from Real Estate Debt Segment
Net Gain from Selling Warehousing Assets
Share of Profit or Loss from Associates and Joint Ventures
Dividends from other Alignment Capital
(78.9)
-
-
-
(78.9)
(9.1)
(0.8)
(9.3)
8.8
-
-
-
-
-
(78.9)
(9.1)
(0.8)
(9.3)
8.8
FURTHER INFORMATION
-
-
-
-
(9.1)
-
-
-
(0.8)
(9.3)
8.8
Gains/Losses from Fair Value Measurement
of Financial Instruments related to Real Estate
-
-
(6.8)
(6.8)
-
(6.8)
Expenses from Other Segments
Total Earnings
-
-
(22.9)
(22.9)
-
-
(22.9)
51.0
(8.5)
84.2
(24.7)
51.0
General and Administrative Expenses
Other Income
-
-
-
-
(45.4)
10.6
(34.8)
(6.1)
5.2
(45.4)
10.6
-
-
-
-
51.0
(44.5)
-
EBITDA
(8.5)
84.2
(24.7)
16.2
Depreciation & Amortisation
Financial Income
(25.7)
(18.8)
-
-
(50.6)
5.2
-
-
Financial Expenses
-
-
-
-
-
-
(29.0)
(6.9)
(71.6)
154.9
23.6
-
(29.0)
(6.9)
Income Tax Expense
-
-
1
Segment Net Profit/(Loss)
Total Assets (31 December 2020)
Total Liabilities (31 December 2020)
Investment in Associates and Joint Ventures
(34.2)
93.0
51.0
-
65.5
762.9
488.9
-
(24.7)
427.1
203.6
120.8
6.5
(65.1)
1,437.8
767.2
120.8
the statement of comprehensive
income is adjusted in line with
IFRS 5 Discontinued Operations for
the financial years 2021 and 2020
(see Note B.2.3)
1,283.0
743.5
120.8
CORESTATE –
ANNUAL REPORT
2021
155
F.1.3 GROUP-WIDE DISCLOSURES
Geographical Segment Information (Secondary Segments)
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The Group operates currently with a focus on Germany, Austria, United Kingdom,
Switzerland, France, Spain and Poland. The Group has segmented its capital
allocation by geographical area based on the location of the properties in its Real
Estate Equity, Real Estate Debt as well as Real Estate Operations/Warehousing
business. The Group generates a major part of its revenues and income in Germany,
because the Group and/or its associates are focused on the German real estate
market.
€ million
Capital Allocation
Germany
UK
2021
2020
227.7
174.9
18.4
19.3
10.9
1.5
284.2
229.2
21.0
25.1
2.7
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Spain
NOTES TO THE
ANNUAL ACCOUNTS
The following table sets forth the Group’s capital allocation (comprising Investment
in Associates or Joint Ventures, Long-term Loans to Associates, Receivables from
Associates or Joint Ventures and Inventories) and revenues by geography for the
periods indicated.
Poland
FURTHER INFORMATION
Switzerland
Austria
6.1
-
2.6
One of the Group‘s customers accounts for more than 10% of consolidated revenue
as same like in the previous year. These revenues of € 61.9m (2020: € 58.4m) are
predominantly related to the coupon participation fee and exclusively recognized
in the Real Estate Debt segment.
Portugal
Revenues
Germany
UK
0.1
-
205.8
179.0
0.8
170.2
144.3
0.8
Spain
1.6
1.8
Austria
6.0
5.9
USA
5.4
5.1
Benelux
Switzerland
Asia
5.3
4.7
0.7
0.8
0.9
0.8
France
6.0
5.7
CORESTATE –
ANNUAL REPORT
2021
156
can be met is 01 October 2022 and no later than 31 December 2023. The final
purchase price depends on the rental terms and conditions at closing date which
is currently expected to be around € 320.0m. The sales process to (semi-)institu-
tional clients has been started in the beginning of 2022.
F.2 COMMITMENTS AND CONTINGENCIES
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The Corestate Group’s contingent liabilities and other obligations are primarily
potential future payment obligations of the Group attributable to guarantees
that have been provided. The figures shown reflect potential liabilities that the
guarantees are called upon.
CONSOLIDATED
FINANCIAL STATEMENTS
F.3 CAPITAL MANAGEMENT
The Group‘s policy is to maintain a strong capital base in order to maintain investor,
creditor, and general capital markets confidence, and to support the ongoing
development and growth of the Group for further maximizing shareholder value.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Contingent Liabilities
ANNUAL ACCOUNTS
€ million
2021
29.8
2020
13.4
44.1
8.5
NOTES TO THE
ANNUAL ACCOUNTS
Loan Commitment
For the Group‘s capital management, capital includes share capital and all
other equity reserves attributable to the shareholders of the parent. The Group
proactively manages its capital structure and makes necessary adjustments by
either changing dividend pay-outs, returning capital to shareholders, or issuing
new shares. No changes were made in the objectives, policies, or processes for
managing capital during the year ended 31 December 2021.
FURTHER INFORMATION
Placing and Takeover Obligations
Obligations under Guarantees and Warranty Agreements
Total Loss Contingencies
36.1
45.3
111.2
66.0
The increase in contingent liabilities are mainly the result of the Hannover Leasing
projects “Vision One (HL Vision One KG)”, “Augburg Office (HL Augsburg Office
KG)” and “Hessen Agentur (CLEMITA KG)”. For the projects “Augsburg Office”
and “Vision One”, Hannover Leasing acts as the placement warrantor with an
obligation of up to 24.6m and 11.0m, respectively. Compared to 2020, the pro-
ject “Weitblick Augsburg” has now been fully placed, the placing and takeover
obligations are reduced by € 43.9m accordingly. The increase in the obligations
under guarantees and warranty agreements is almost entirely due to the project
“Hessen Agentur” (€ 40,3m). The loan commitments mainly relate to HL Invest
Neuss KG in the amount of € 11.1m (2020: € 7.1m) and HL Vision One KG in the
amount of € 11.6m (2020: € 0.0m).
F.4 FINANCIAL RISK MANAGEMENT OBJECTIVES
AND POLICIES
The Group‘s principal financial liabilities comprise loans, trade and other payables
with the main purpose of financing the Group‘s operations. Vice versa, the Group
has loan, trade and other receivables, as well as cash and cash equivalents directly
resulting from its operations. The Group also holds other financial instruments and
enters into derivative transactions if necessary. The Group is exposed to credit
risk, liquidity risk, and interest rate risk.
The overarching risk management system, which is designed in line with the
size and operations of the Group, is geared towards the unpredictable nature of
developments on the financial markets and aims to minimize potential negative
effects on the Group‘s financial position. The Group identifies measures at regular
intervals. In addition, the Group has a system of controls in place to create an
acceptable balance between the cost of risks occurring and the cost of managing
the risk. The Group‘s management oversees the administration of these risks to
ensure that an appropriate balance between risk and control is achieved. The
Group‘s management reviews and agrees policies for managing each of these risks
which are summarized below.
The Group is exposed to legal disputes or conflicts with its clients, customers,
and other counterparties. The company estimated the financial risks resulting
from such possible disputes to be remote and concluded that no provisions are
required for these risks in 2021.
In addition, on 17 December 2021 the Group signed a forward contract for the
Cologne-based Laurenz Carré which is contingent on the creation of the building
components’ permits. The earliest point in time where the conditions precedent
CORESTATE –
ANNUAL REPORT
2021
157
F.4.1 LIQUIDITY RISK
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The Group monitors its risk of a shortage of funds using a continuous liquidity
planning on a monthly basis. For short-term liquidity risks an efficient net working
capital management is in place. The table below summarizes the maturity profile
of the Group‘s financial liabilities based on contractual undiscounted payments.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Maturities of financial liabilities (2021)
Maturities of financial liabilities (2020)
NOTES TO THE
ANNUAL ACCOUNTS
Closing
Balance
Closing
Balance
FURTHER INFORMATION
€ million
31 Dec 2021
< 1 year
68.3
1 to 5 years
3.5
> 5 years
€ million
31 Dec 2020
< 1 year
72.2
1 to 5 years
4.7
> 5 years
Financial Liabilities to Banks
Other Financial Liabilities
thereof lease liabilities
71.8
-
8.0
5.8
Financial Liabilities to Banks
Other Financial Liabilities
thereof lease liabilities
73.3
-
9.9
9.9
550.2
232.1
4.5
324.6
9.2
562.3
60.1
530.7
19.5
27.4
4.5
13.0
Current liabilities
to Associates
Current liabilities
to Associates
18.1
18.1
-
-
9.3
9.3
-
-
Trade Payables
27.6
27.6
-
-
Trade Payables
13.1
13.1
-
-
Total Financial Liabilities
667.8
346.2
328.1
8.0
Total Financial Liabilities
658.0
154.7
535.4
9.9
F.4.2 CREDIT RISK
Credit risk is the risk that a counterparty will not meet its obligations under a
financial instrument or a customer contract, eventually leading to a financial loss.
The Group is exposed to credit risk from its operating activities which, in turn, are
dependent on the operating performance of the underlying investments. Such
operating performance is very closely monitored by the Group‘s asset, property
and finance management teams.
The carrying amount of the Group‘s financial assets represents the maximum credit
exposure. The expected credit loss for trade receivables is assessed using a matrix
to determine the maturity of these receivables (simplified approach). The credit
risk of other receivables (general approach) is qualified by allocating debtors to a
corresponding industry. The main focus is on the real estate industry.
CORESTATE –
ANNUAL REPORT
2021
158
The table below shows all recognized expected credit losses per asset class for all
TO OUR SHAREHOLDERS
financial assets designated at amortized costs:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Net carrying amount as amortized cost
Total ECL
CONSOLIDATED
FINANCIAL STATEMENTS
€ million
31 December 2021
ECL Step I
ECL Step II
ECL Step III
31 December 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Other Financial Instruments
Non-Current Receivables
Non-Current Loans to Associates
Other Current Financial Assets
Contract Assets
4.9
16.1
4.1
-
0.1
0.1
0.1
0.1
-
-
-
-
-
-
0.1
9.5
38.5
3.2
6.3
10.5
-
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
-
9.4
38.2
3.1
5.8
8.8
-
FURTHER INFORMATION
84.4
58.5
16.8
47.2
12.9
62.8
307.6
0.1
-
Receivables from Associates
Trade Receivables
0.5
1.7
-
-
Restricted Cash
-
Cash and Cash Equivalents
Total Financial Assets / ECL
-
-
-
-
0.5
2.3
65.3
68.1
CORESTATE –
ANNUAL REPORT
2021
159
In the following a detailed overview of the recognized expected credit losses
TO OUR SHAREHOLDERS
divided into the simplified and general approach is shown:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Carrying amount as amortized cost
Total ECL
CONSOLIDATED
FINANCIAL STATEMENTS
€ million
31 December 2020
ECL Step I
ECL Step II
ECL Step III
31 December 2020
NOTES TO THE CONSOLIDATED
Other Financial Instruments
Non-Current Receivables
Non-Current Loans to Associates
Other Current Financial Assets
Contract Assets
5.0
15.6
-
-
-
-
-
-
0.2
7.5
3.0
-
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
0.2
NOTES TO THE
ANNUAL ACCOUNTS
13.2
-
-
7.5
2.8
-
FURTHER INFORMATION
124.7
51.0
0.1
0.1
-
-
Receivables from Associates
Trade Receivables
13.6
-
0.1
0.5
-
1.5
7.4
-
1.7
7.9
-
33.0
-
-
Restricted Cash
23.0
Cash and Cash Equivalents
Total Financial Assets / ECL
68.2
-
-
-
-
347.3
0.3
0.7
19.3
20.3
CORESTATE –
ANNUAL REPORT
2021
160
Trade Receivables (simplified approach)
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The table below shows the default ratios per aging item for trade receivables as at
31 December 2021:
CONSOLIDATED
FINANCIAL STATEMENTS
€ million
Not yet due
Past-due - 1 to 90 days
Past-due - 91 to 180 days
Past-due - 181 to 360 days
Past-due - from 361 days
Total
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Default Ratio
0.4%
0.5%
7.7%
10.0%
14.7%
3.6%
ANNUAL ACCOUNTS
Gross Carrying Amount of Trade
24.1
0.1
10.5
0.1
2.5
0.2
7.2
0.8
2.8
0.5
47.2
1.7
Receivables as at 31 December 2021
NOTES TO THE
ANNUAL ACCOUNTS
Expected Credit Loss Step 2
FURTHER INFORMATION
The table below shows the default ratios per aging item for trade receivables as at
31 December 2020:
€ million
Not yet due
Past-due - 1 to 90 days
Past-due - 91 to 180 days
Past-due - 181 to 360 days
Past-due - from 361 days
Total
Default Ratio
0.4%
0.5%
1.5%
4.2%
10.3%
1.7%
Gross Carrying Amount of Trade
1.1
0.0
21.5
0.1
4.3
0.1
2.0
0.1
2.5
0.3
31.4
0.5
Receivables as at 31 December 2020
Expected Credit Loss Step 2
The table below shows the movements of impairment losses for all financial assets
amortised at cost, except trade receivables, within the period 2021:
The table below shows the movements of impairment losses within the period
2020:
€ million
€ million
01 January 2021
19.1
(8.5)
51.4
(0.7)
61.4
01 January 2020
Additions
18.3
2.1
Change of Scope of Consolidation
Additions
Impairment Reversal
31 December 2020
(1.3)
19.1
Impairment Reversal
31 December 2021
CORESTATE –
ANNUAL REPORT
2021
161
Other Receivables (general approach)
F.4.3 FOREIGN CURRENCY RISK
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The table below shows the effect of expected credit losses (ECLs) on financial
Foreign currency risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in foreign exchange rates. Except for
a minor portion of its cost base, which is denominated in CHF and USD as well
as GBP, the Group does not have any foreign currency risk relating to financial
instruments. The following tables demonstrate the sensitivity to a reasonably
possible change in USD, GBP and CHF exchange rates, with all other variables
held constant.
assets as at 31 December 2021:
CONSOLIDATED
FINANCIAL STATEMENTS
Gross Carrying
Amount
Expected
Credit Loss
€ million
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Financial Assets - Real Estate Industry
Financial Assets - Others
Total Other Receivables
179.8
26.1
53.6
7.8
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Change in
FX rate
Effect on
EBIT 2021
Effect on
EBIT 2020
205.9
61.4
€ million
FURTHER INFORMATION
+10%
- 10%
+10%
- 10%
+10%
- 10%
€ 1.7m
€ -2.1m
€ 1.7m
€ -2.1m
USD
The table below shows the effect of ECLs on financial assets as at 31 December
2020:
< € 0.1m
<€ -0.1m
<€ 0.1m
< € -0.1m
< € 0.1m
<€ -0.1m
<€ 0.1m
< € -0.1m
GBP
Gross Carrying
Amount
Expected
Credit Loss
€ million
Financial Assets - Real Estate Industry
Financial Assets - Others
Total Other Receivables
169.0
33.1
16.0
3.1
CHF
202.0
19.1
CORESTATE –
ANNUAL REPORT
2021
162
F.4.4 INTEREST RATE RISK
F.5 FAIR VALUE OF ASSETS AND LIABILITIES
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Group‘s
exposure to the risk of changes in market interest rates relates primarily to the
Group‘s short and long-term debt obligations with floating interest rates.
IFRS 13 requires disclosures related to fair value measurements using a three-
level fair value hierarchy. The availability of input factors determines the level of
fair value hierarchy.
CONSOLIDATED
FINANCIAL STATEMENTS
Hence, the Group uses the following Fair Value Hierarchies:
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
In the case of variable-rate (loan) liabilities, there is an interest rate risk insofar as
the interest rate for the loans raised is usually linked to the EURIBOR (European
Interbank Offered Rate) reference rate.
ANNUAL ACCOUNTS
− Level 1: Quoted (unadjusted) market prices in active markets for identical
assets or liabilities
NOTES TO THE
ANNUAL ACCOUNTS
All of the Group’s financial assets – with the exception of loans to associates – are
even non-interest bearing or partly with fees of 40–50 basis points.
− Level 2: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly observable
(comparable transactions)
FURTHER INFORMATION
The following table provides the sensitivity to a reasonably possible change in
interest rates on that portion of loans and borrowings affected. With all other
variables held constant, the Group‘s earnings before tax (EBT) would be affected
through the impact on floating rate financial instruments, as follows:
− Level 3: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable (valuation models)
As in the previous year the Group‘s fair value measurements of assets are mainly
within Level 3, whereas the fair value measurement of financial liabilities is used
within Level 1 due to both corporate bonds being traded on the regulated market.
Increase/ Decrease
Effect on Financial Result
2021
Effect on Financial Result
2020
in Basis Points
The Group’s management considers the appropriateness of the valuation methods
and inputs and may request that alternative valuation methods are applied to
support the valuation arising from the method chosen. Any changes in valuation
methods are discussed and agreed with the Group‘s Management Board.
+50%
-50%
<€ -0.1m
<€ 0.1m
<€ -0.1m
<€ 0.1m
CORESTATE –
ANNUAL REPORT
2021
163
The table below summarizes the financial instruments that the Group holds
and compares the carrying amount with the fair value of each class of financial
instrument as at 31 December 2021:
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
Measurement in Accordance with IFRS 9
€ million
Carrying Amount 31 December 2021
Amortized Cost
Fair Value recognised through Profit and Loss
not applicable
Fair value 31 December 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Other Financial Instruments
Non-Current Receivables
151.5
51.7
14.9
86.5
58.5
16.8
47.2
12.9
62.8
502.7
3.5
4.9
16.1
4.1
146.6
-
151.5
34.7
14.9
84.4
58.5
16.8
47.2
12.9
62.8
483.6
3.5
ANNUAL ACCOUNTS
18.6
17.1
NOTES TO THE
ANNUAL ACCOUNTS
Non-Current Loans to Associates
Other Current Financial Assets
Contract Assets
10.8
-
FURTHER INFORMATION
84.4
58.5
16.8
47.2
12.9
62.8
307.6
3.5
-
2.0
-
-
Receivables from Associates
Trade Receivables
-
-
-
-
Restricted Cash
-
-
Cash and Cash Equivalents
Total Financial Assets
-
-
176.0
19.1
Non-Current Financial Liabilities to banks
Non-Current Financial Liabilities from bonds
Other non-current liabilities
Current Financial Liabilities from bonds
Current Financial Liabilities to banks
Other Current Financial Liabilities
Current Liabilities to Associates
Trade Payables
-
-
-
-
-
-
-
-
-
-
298.0
19.9
190.9
68.3
41.4
18.1
27.6
667.8
298.0
4.9
-
259.5
4.9
15.0
190.9
68.3
36.8
18.1
27.6
648.2
-
155.9
68.3
36.8
18.1
27.6
574.7
-
4.5
-
-
Total Financial Liabilities
19.5
CORESTATE –
ANNUAL REPORT
2021
164
The table below summarizes the financial instruments’ fair values and provides
comparison with the carrying amount as at 31 December 2020:
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
Measurement in Accordance with IFRS 9
€ million
Carrying Amount 31 December 2020
Amortized Cost
Fair Value recognised through Profit and Loss
not applicable
Fair value 31 December 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Other Financial Instruments
Non-Current Receivables
153.9
53.7
19.6
126.7
13.6
33.0
23.0
68.2
491.7
4.6
5.0
15.6
13.2
124.7
13.6
33.0
23.0
68.2
148.9
18.5
6.4
153.9
34.1
19.6
124.7
13.6
33.0
23.0
68.2
470.1
5.9
ANNUAL ACCOUNTS
19.6
2.0
NOTES TO THE
ANNUAL ACCOUNTS
Non-Current Loans to Associates
Other Current Financial Assets
Receivables from Associates
Trade Receivables
FURTHER INFORMATION
Restricted Cash
Cash and Cash Equivalents
Total Financial Assets
Non-Current Financial Liabilities to banks
Non-Current Financial Liabilities from bonds
Other non-current liabilities
Current Financial Liabilities to banks
Other Current Financial Liabilities
Current Liabilities to Associates
Trade Payables
4.6
491.0
6.4
491.0
29.3
68.7
42.0
9.3
404.3
6.4
22.9
4.5
68.7
37.6
9.3
68.7
37.6
9.3
13.1
658.0
13.1
13.1
545.3
Total Financial Liabilities
CORESTATE –
ANNUAL REPORT
2021
165
Assets and liabilities designated as non-applicable mainly relate to lease
receivables (€ 11.1m; 2020: € 13.0m) and corresponding lease payables (€ 19.5m;
2020: € 27.4m). Furthermore, non-current receivables include a receivable under
a contingent contract (€ 8.0m; 2020: € 8.5m) that is not considered a financial
instrument within the meaning of IFRS 9.
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
The table below shows which level of the fair value hierarchy, for Assets and
Liabilities, as at 31 December 2021 is used to measure fair value:
The table below shows the fair value hierarchy allocation for Financial Assets and
Liabilities as at 31 December 2020:
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Fair value measurement using
Fair value measurement using
NOTES TO THE
ANNUAL ACCOUNTS
€ million
Total
Level 1
Level 2
Level 3
€ million
Total
Level 1
Level 2
Level 3
FURTHER INFORMATION
Assets measured at Fair Value and
for which Fair Values are disclosed
Assets measured at Fair Value and
for which Fair Values are disclosed
Other Financial Instruments
151.5
34.7
14.9
-
-
-
4.9
34.7
14.9
146.6
Other Financial Instruments
153.9
34.1
19.6
-
-
-
5.0
34.1
19.6
148.9
Non-Current Receivables
-
-
Non-Current Receivables
-
-
Non-Current Loans to Associates
Liabilities for which Fair Values are disclosed
Non-Current Financial Liabilities from Bonds
Current Financial Liabilities from Bonds
Non-Current Loans to Associates
Liabilities for which Fair Values are disclosed
Non-Current Financial Liabilities from Bonds
Current Financial Liabilities from Bonds
259.5
155.9
259.5
155.9
-
-
-
-
5.9
-
5.9
6.3
-
-
410.7
404.4
CORESTATE –
ANNUAL REPORT
2021
166
The table below reconciles Level 3 financial instruments from the opening balance
The table below reconciles Level 3 financial instruments from the opening balance
TO OUR SHAREHOLDERS
to the closing balance for 2021:
to the closing balance for 2020:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Other Financial
Instruments
Non-Current Loans
to Associates
€ million
Other Financial Instruments
€ million
CONSOLIDATED
FINANCIAL STATEMENTS
Fair Value as at 01 January 2020
166.9
5.8
Fair Value as at 01 January 2021
Additions / Disposals
148.9
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Additions / Disposals
(9.9)
(0.5)
5.8
ANNUAL ACCOUNTS
Changes in the Fair Value Valuation
through Profit and Loss
NOTES TO THE
ANNUAL ACCOUNTS
Changes in the Fair Value Valuation
through Profit and Loss
(7.2)
1.1
(8.9)
FURTHER INFORMATION
Gains/Losses from Exchange Rate Differences
Transfer to Level 2
(0.9)
-
-
(6.4)
-
Gains/Losses from Exchange Rate Differences
0.7
Fair Value as at 31 December 2021
146.6
Fair Value as at 31 December 2020
148.9
Changes in the fair value valuation through profit and loss are recognized in
“Gains/losses from fair value measurement of financial instruments related to real
estate”. Gains/losses from exchange rate difference are recognized in “Other
income” and are primarily related to a USD financial asset.
For the major positions of “Other Financial Instruments” the Group uses third-
party pricing information. The remaining positions (€ 19.2m) are calculated by
applying DCF computations. Forecasts of future cash flows are prepared by the
asset management department whereas for the discount factor, equity costs are
derived from a capital asset pricing model.
In addition, the Group performed a sensitivity analysis by changing relevant input
parameters in a reasonable way (i.e. forecasts -/+ 10%; discount rate +/- 100 bp).
In these scenarios, the fair value would differ within a range of € -1.6m to € +1.8m.
CORESTATE –
ANNUAL REPORT
2021
167
The table below provides a summary per IFRS 9 category for the net gains and
The table below summarizes per IFRS 9 category the net gains and losses resulting
TO OUR SHAREHOLDERS
losses resulting from financial instruments as at 31 December 2021:
from financial instruments as at 2020:
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
At Amortized Cost
FVtPL
At Amortized Cost
FVtPL
CONSOLIDATED
FINANCIAL STATEMENTS
€ million
Financial Assets
Financial Liabilities
Financial Assets
€ million
Financial Assets
Financial Liabilities
Financial Assets
NOTES TO THE CONSOLIDATED
Net Results from Disposal
-
3.6
-
(1.7)
-
(0.1)
Net Results from Disposal
-
0.8
-
(3.0)
-
(1.2)
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Net Measurement Effects
Impairment Gain/Loss
Effective Interest Rate Income
Effective Interest Rate Expenses
Total
-
(12.7)
1.4
Net Measurement Effects
Impairment Gain/Loss
Effective Interest Rate Income
Effective Interest Rate Expenses
Total
0.2
(6.8)
0.7
NOTES TO THE
ANNUAL ACCOUNTS
(60.0)
1.9
(5.6)
2.0
FURTHER INFORMATION
-
-
-
(22.3)
(24.0)
-
-
(23.3)
(26.3)
-
(54.5)
(11.4)
(2.8)
(7.0)
The Group’s liabilities arising from financing activities mainly relate to the senior
unsecured and convertible bond as well as lease liabilities. The bonds do not
change significantly during their term and the lease liabilities are initially not cash
effective. In 2021, the main cash effective change in liabilities from financing
activities is driven by the repayment of the HFS bond amounting to € 30.5m
and the partial repayment of the convertible bonds in an amount of € 6.5m
(see Note E.20).
CORESTATE –
ANNUAL REPORT
2021
168
F.6 RELATED PARTY INFORMATION
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CCH SA has identified all Group companies as well as the following entities and
persons as related parties:
CONSOLIDATED
FINANCIAL STATEMENTS
Related Parties as at 31 December 2021
related to/as
Former Related Parties as at 31 December 2021
related to/as
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Friedrich Munsberg
Supervisory Board
Lars Schnidrig
Management Board until 2021
ANNUAL ACCOUNTS
NOTES TO THE
Prof. Dr Hermann Wagner
Dr Friedrich Oelrich
Supervisory Board
Nils Hübener
Daniel Löhken
Management Board until 2021
Management Board until 2021
ANNUAL ACCOUNTS
FURTHER INFORMATION
Supervisory Board
René Parmantier
Management Board
Johannes Märklin
Management Board
Sebastian Ernst
Management Board
Udo Giegerich
Management Board
RP Verwaltungsgesellschaft mbH
RP Vermögensverwaltungsgesellschaft mbH
Meiyo Capital Partners AG
Leonis Capital Management GmbH
Leonis Real Estate GmbH
DACH Finance GmbH
Management Board (R. Parmantier)
Management Board (R. Parmantier)
Management Board (R. Parmantier)
Management Board (J. Märklin)
Management Board (J. Märklin)
Management Board (J. Märklin & S. Ernst)
Management Board (J. Märklin & S. Ernst)
Management Board (S. Ernst)
DACH Real Estate GmbH
Feldmannhof Capital GmbH
CORESTATE –
ANNUAL REPORT
2021
169
CCH SA Key Management Personnel
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
On 31 May 2021, Lars Schnidrig stepped down as Chief Financial Officer and
left the company on 31 July 2021. Nils Hübener as Chief Investment Officer and
Daniel Löhken as Chief Legal & HR Officer stepped down on 31 July 2021 and left
the Company on 31 August 2021, too.
The Supervisory Board led by Friedrich Munsberg was appointed on
29 November 2020 and was confirmed on the annual general meeting on
28 June 2021:
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Hence, the Management Board in 2021 is formed by the following personnel:
Members of the Supervisory Board
ANNUAL ACCOUNTS
NOTES TO THE
Udo Giegerich
Chief Financial Officer – since 01 Aug 2021
Friedrich Munsberg
Chairman – 29 Nov 2020 until 31 December 2021
ANNUAL ACCOUNTS
FURTHER INFORMATION
René Parmantier
Chief Executive Officer - 01 Dec 2020 until 07 Mar 2022
Prof. Dr Hermann Wagner
Deputy Chairman – 29 Nov 2020 until 31 December 2021
Sebastian Ernst
Chief Debt Investment Officer – 14 Jan 2021 until 7 Feb 2022
Dr Friedrich Oelrich
Member – since 29 November 2020
Johannes Märklin
Chief Debt Financing Officer – 14 Jan 2021 until 7 Feb 2022
Prof. Dr Wagner heads the Audit Committee and is considered the independent
financial expert.
Nils Hübener
Friedrich Munsberg and Prof. Dr Hermann Wagner stepped down from the Board
on 31 December 2021 in the light of the change in the Group’s shareholder base
at the end of November 2021. Stavros Efremidis and Dr Bernard Malmendier were
appointed as new members of the Supervisory Board, effective as at 01 January
2022. Mr Efremidis was elected Chairman at the first constitutional Supervisory
Board meeting on 05 January 2022, and Dr Malmendier was elected as his deputy.
With effect of 07 March 2022 Stavros Efremidis succeed René Parmantier as CEO
of the Group and Dr Bernard Malmendier took over as Chairman of the Supervisory
Board. As a new member Dr Roland Folz joined the Supervisory Board on 07 March
2022. Dr Friedrich Oelrich will remain member of the Supervisory Board (for further
information see Note F.9).
Chief Investment Officer – 01 April 2020 until 31 July 2021
Daniel Löhken
Chief Legal & HR Officer – 01 Nov 2020 until 31 July 2021
Lars Schnidrig
Chief Financial Officer – 01 Dec 2020 until 31 May 2021
In addition to the individually agreed base salary, annual bonus payments,
and long-term share-based incentives, under their service agreements, the
Management Board members are entitled to ancillary benefits that include,
among other things, continued payment of remuneration in case of sickness or
death for a certain period, contributions to private health insurance as well as
D&O and E&O insurance coverage at usual market terms. The Company also
reimburses all travelling costs and incidental expenses.
CORESTATE –
ANNUAL REPORT
2021
170
F.6.1 TRANSACTIONS WITH SHAREHOLDERS AND SHAREHOLDER-
RELATED ENTITIES
€ million
2021
(3.9)
2020
(1.4)
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Basic Remuneration
Fixed Remuneration
STI
The following table sets out all payments made to shareholders and shareholder-
related entities made by the Group in the period 01 January through 31 December
2021. Hence, such amounts do not necessarily reconcile with the statement of
Profit and Loss for the financial year 2021.
(3.9)
(1.7)
(1.4)
(0.8)
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
LTI
(3.7)
(2.7)
ANNUAL ACCOUNTS
€ million
2021
2020
Variable Remuneration
Compensation/Termination Payments
Total Remuneration
(5.4)
(2.6)
(3.5)
(8.0)
NOTES TO THE
Fees paid to Realty Corporation Ltd. (John Lurie)
under consultancy agreements
ANNUAL ACCOUNTS
-
(1.2)
FURTHER INFORMATION
Transaction fee Gateway AG
-
-
-
2.7
(0.3)
(0.1)
(11.9)
(12.8)
Remuneration N. Ketterer as Chairman
of the Board of Directors of HFS
In May 2021, Lars Schnidrig‘s mandate as CFO was terminated by mutual
agreement. Lars Schnidrig received a severance payment in the amount of € 0.9m
(including cash-settled LTI payments amounting to 0.5m EUR). All contractual
payment claims were settled with the compensation.
Rental Costs to Vicenda
F.6.2 TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
In July 2021, Daniel Löhken’s mandate as Chief Legal & HR Officer as well as Nils
Hübner’s mandate as CIO were terminated by mutual agreement. Both received a
severance payment in the amount of € 1.9m (Nils Hübner: € 0.4m; Daniel Löhken
€ 1.5m). All contractual payment claims were settled with the compensation.
The total remuneration of the Management Board consists of the basic
remuneration as well as a short-term incentive and a long-term incentive
component.
The basic remuneration relates to the annual base salary agreed under the service
agreements with each member of the Group‘s Management Board.
The total remuneration of the Supervisory Board Members amounted to € 0.5m in
2021 (2020: € 0.8m). No advances or loans were granted.
The short-term incentive (STI) is a cash bonus component that depends on
certain Group-related and individually agreed targets as described in the entities
remuneration policy.
The long-term incentive (LTI) is a share-based programme that either grants or give
the option of equity-settled shares or phantom shares, which are settled in cash.
CORESTATE –
ANNUAL REPORT
2021
171
F.6.3 SHARE-BASED PAYMENTS
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
In 2021, the Management Board was reduced to four members. All Management
Board Members have been granted long-term equity-settled share-based
payment awards which will be transferred after a vesting period of four years:
If the service agreement starts or ends during the course of a fiscal year, the amount
shall be calculated on a pro-rata basis. From this point on, the shares are subject to
a contractual holding period of four years.
CONSOLIDATED
FINANCIAL STATEMENTS
Equity-settled LTI-Plans
− René Parmantier is entitled to an amount of € 2,400,000 in LTI options that
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
are granted in three tranches of shares in an amount of € 800,000 each.
ANNUAL ACCOUNTS
René Parmantier, Johannes Märklin, Sebastian Ernst and Udo Giegerich are
granted equity-settled long-term incentive (LTI) options. Each of the four Board
Members are granted LTI options in three tranches, one third each year of being
appointed to the Group’s Management Board. The number of share-based
payments for each tranche depends on the individual achievement of the Board
Members’ agreed targets. Therefor the targets are not only based on financial KPIs
but also on non-financial aspects (e.g. ESG). If a Board Member achieves 50% or
lessoftheannualtargets, noLTIsharesaretransferred. IfaBoardMemberachieves
between 51% and 100% of targets, this leads to a proportional allocation of the
yearly LTI options and the calculated number of LTI shares (gross) will immediately
be transferred, if necessary, after issuing new shares, at the end of the respective
performanceperiodtothedepositoftheBoardMember.Fromthedateoftransfer,
each annual tranche of LTI shares is subject to a contractual holding period of
four years.
− Johannes Märklin and Sebastian Ernst, both are entitled to an
amount of € 2,430,000 each in LTI options that are distributed in three
tranches of € 810,000 shares.
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
− Udo Giegerich is entitled to an amount of € 1,470,000 in LTI options that are
distributed in three tranches of € 490,000 shares each.
The former Board Member Daniel Löhken, who left the Management Board of
Corestate Capital Holding S.A. As at July 2021, contractually received a share
package for the years 2021-2023. This contractual payment claim was settled
in cash with the compensation at the end of his contractual agreement with the
Group.
In 2021, the expenses recognized for the share packages of the Board Members
amounted to € 3.9m (2020: € 0.2m).
CORESTATE –
ANNUAL REPORT
2021
172
Cash-settled LTI-plans
The increase in the stock market price as the key performance target is calculated
by dividing the “transfer price” by the closing price. The transfer price is defined
as the arithmetic mean of the closing prices of the last 12 trading months prior
to 31 December of the respective year of the performance period. As said, the
performance target is deemed to have been achieved if the cumulative transfer
price increased by at least 10% each year compared with the closing rate (annual
performance target).
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The former Board Members Lars Schnidrig as well as Nils Hübener, who both left
the Management Board of Corestate Capital Holding S.A., contractually received
a share package for the years 2021-2023 as cash-settled LTI-plans.
CONSOLIDATED
FINANCIAL STATEMENTS
With their severance payments all contractual payment claims were settled. In
2021, the total of € 0.5m (2020: € 0.6m) expenses were recognized up to the date
of termination of the contracts.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
The fair value of the synthetic stock options is measured using a Monte Carlo
option pricing model considering the terms and conditions upon which the
options were granted. The beneficiary may exercise the options between the end
of the waiting period and the end of the term of the option on the condition that
the employment contract has not been terminated and neither the beneficiary nor
the company has notified in writing the termination of the employment contract
by that date.
NOTES TO THE
ANNUAL ACCOUNTS
Currently, the group no longer has any active cash-settled LTI-plans.
FURTHER INFORMATION
Corestate Capital Holding S.A. Share Programme
In 2019, Corestate started a Performance Share Program for important senior
managers and high performer as well as for new hires who joined the Group
after 01 January 2019. At the beginning of the performance period in 2019 or
if the participant is entering one or more years later, all participants receive an
individualized grant letter in which the individual target value of the performance
shares in Euros (“target value”) is set out. The grant letter contains the number
of virtual performance shares granted. Performance shares are not linked to
any administrative, voting or dividend rights or rights to other distributions.
They merely represent a calculation item for determining the future conditional
entitlement to Corestate shares to be issued and transferred (real shares).
Performance shares are transferred to the participants in annual tranches in the
form of real shares from the third year onwards or if the participants join the
program later from their third year on based on their start date in the program
(it requires a waiting period of two years in which no real shares are transferred).
The transfer takes place in four or less equivalent tranches (25% or 33,33% or
50% of the total number of performance shares each, depending on the start
of the participant in the program) – subject to the achievement of the relevant
performance target, which is an annually increase of the share price of 10% each
year.
For the stock option valuation, the contractual life of the options and the possibility
of early exercise were considered in the Monte Carlo simulation. The risk-free
interest rate is the implied yield currently available on Luxembourg government
issues with a remaining term equal to the term of the options. The future volatility
for the lives of the options was estimated based on historical volatilities also
considering the management’s expectation of future market trends.
The Performance Share Program was classified as equity-settled plan and the
resulting expenses are recognized during the vesting period on a pro-rata basis
with a corresponding increase in equity (other reserves). Furthermore, the amount
recognized is based on the best available estimate of the number of options
expected to vest and is revised if subsequent information indicates that the
number of options expected to vest differs from previous estimates.
The total fair value of the awards granted in 2019 amounted to € 3.7m. In 2020,
expenses in the amount of € 1.1m were recognized. In contrast, in 2021, due to
changes in the number of beneficiaries, expenses in the amount of € 0.4m were
reversed.
CORESTATE –
ANNUAL REPORT
2021
173
F.6.4 TRANSACTIONS WITH ASSOCIATED ENTITIES (CO-INVESTMENTS &
JOINT VENTURES)
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
The terms and conditions agreed with associates for the services of the Group are
negotiated and set out in the underlying documentation for each investment with
the respective investor (JVCIA, AMA, etc.). Such terms and conditions are at arm‘s
length.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
Transactions with Associates (Co-Investments)
Balance with Associates (Co-Investments)
NOTES TO THE
ANNUAL ACCOUNTS
€ million
2021
2020
€ million
2021
2020
FURTHER INFORMATION
Revenue from Acquisition Related Fees
-
(0.0)
Receivables from Associates
37.9
33.2
Revenue from Asset Management Fees
Revenue from Property Management Fees
Revenue from Development Fees
6.5
-
5.6
0.1
5.9
(1.5)
(9.3)
(0.8)
(1.1)
-
Receivables from Affiliated Companies
Non-current Trade Receivables
Other Current Receivables
4.1
0.5
4.1
15.2
0.4
1.9
-
0.4
Management Expenses
Non-current Loans to Associates
Loans granted from Associates
Liabilities to Associates
17.6
(0.1)
(18.1)
(3.3)
19.6
-
Share of Profit or Loss from Associates and Joint Ventures
Gains/losses from Selling Property Holding Companies
General and Administrative Expenses
Other Income
2.4
(2.7)
(0.0)
0.0
1.3
(0.3)
(9.3)
(3.7)
Liabilities from Affiliated Companies
Interest Income from Associates
0.6
-
Interests Expenses from Associates
CORESTATE –
ANNUAL REPORT
2021
174
F.7 GROUP ENTITIES
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CCH SA is the parent company of the Group. The consolidated financial statements
include all companies which the Group controls, i.e. for which particularly CCH
SA owns, directly or indirectly through subsidiaries, more than half of the voting
rights. There are no restrictions regarding cash or dividend payments from such
subsidiaries. The following overview shows the Group‘s shareholdings.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
During 2021, changes in equity interests in some subsidiaries occurred that did
not change the consolidation status:
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Name
Seat and Country of Incorporation
Luxembourg
Equity Interest 2021
Parent Company
Equity Interest 2020
Parent Company
Corestate Capital Holding S.A.
AF ATHENA GmbH
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Luxembourg
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
n/a
Aggregate Debt Advisory GmbH
Aggregate Debt GP S.á r.l.
Aggregate Debt Fund S.C.A. SICAV-RAIF
Bayreuth Student Home AcquiCo II S.à r.l.
Bego HoldCo I S.L.
n/a
Luxembourg
n/a
Luxembourg
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
n/a
Madrid / Spain
Bego HoldCo S.à r.l.
Luxembourg
Bego PropCo I S.L.
Madrid / Spain
BER REV HoldCo S.à r.l.
Luxembourg
Capera Immobilien Service GmbH
CE Bad Honnef Betriebsgesellschaft mbH
Cisnes e Silhuetas Unipessoal Lda
Corestate Bank GmbH
Neu-Isenburg / Germany
Frankfurt on Main / Germany
Lisbon / Portugal
Frankfurt on Main / Germany
CORESTATE –
ANNUAL REPORT
2021
175
Name
Seat and Country of Incorporation
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Baar / Switzerland
Equity Interest 2021
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Equity Interest 2020
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Corestate Ben HoldCo GmbH & Co. KG
Corestate Capital Advisors GmbH
Corestate CAPITAL AG
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Corestate Capital Beteiligung Verwaltung GmbH
Corestate Capital Group GmbH
Corestate Capital France HoldCo SAS
Corestate CAPITAL Fund Management S.à r.l.
Corestate Capital International S.à r.l.
Corestate Capital Investors (Europe) GmbH
Corestate Capital Italy S.R.L.
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Paris / France
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Luxembourg
Luxembourg
Frankfurt on Main / Germany
Milan / Italy
Corestate Capital Partners GmbH
Corestate Capital Partners UK Ltd.
Corestate Capital Sales Holding S.à r.l.
Corestate Capital Services GmbH
Corestate Capital Transactions AG
Corestate CIV GmbH
Zurich / Switzerland
London / United Kingdom
Luxembourg
Wollerau / Switzerland
Baar / Switzerland
Frankfurt on Main / Germany
Hamburg / Germany
Frankfurt on Main / Germany
Corestate FIF I Portfolio Verwaltung GmbH
Corestate Marketing GmbH
CORESTATE –
ANNUAL REPORT
2021
176
Name
Seat and Country of Incorporation
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Luxembourg
Equity Interest 2021
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Equity Interest 2020
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Corestate MCIF GmbH & Co. KG
Corestate MCIF Germany GmbH & Co. KG
Corestate Shelf 11 S.à r.l.
Corestate Shelf 15 S.à r.l.
Corestate Student Home Holding S.à r.l.
Court HoldCo GmbH
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Luxembourg
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Luxembourg
Frankfurt on Main / Germany
Luxembourg
FURTHER INFORMATION
Court PropCo S.à r.l.
CRM Micro Living Services Italy S.R.L.
CRM Students Ltd.
Milan / Italy
Oxford / United Kingdom
Luxembourg
Dedan AIF S.à r.l.
DONALD HoldCo S.à r.l.
Echo HoldCo S.à r.l.
Luxembourg
Luxembourg
Frankfurt Student Home AcquiCo II S.à r.l.
Gabriela HoldCo S.à r.l.
Gabriela HoldCo S.L.
Luxembourg
Luxembourg
Madrid / Spain
Gabriela PropCo S.L.
Madrid / Spain
GENOST Consulting GmbH
Ginova AIF S.à r.l.
Leipzig / Germany
Luxembourg
CORESTATE –
ANNUAL REPORT
2021
177
Name
Seat and Country of Incorporation
Luxembourg
Equity Interest 2021
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
89.58%
Equity Interest 2020
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
n/a
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Ginova PropCo S.à r.l.
Grindel AcquiCo II S.à r.l.
Luxembourg
CONSOLIDATED
FINANCIAL STATEMENTS
Hannover Leasing Verwaltungsgesellschaft mbH
HARBOUR AcquiCo 1 AIF S.à r.l.
Hartly Invest S.L.U.
Pullach / Germany
Luxembourg
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Madrid / Spain
HFS Helvetic Financial Services AG
Iberian HoldCo II S.à r.l.
Wollerau / Switzerland
Luxembourg
FURTHER INFORMATION
Iberian Investment II HoldCo S.à r.l.
JOYN Vermietungsgesellschaft mbH
Livision GmbH
Luxembourg
Frankfurt on Main / Germany
Frankfurt on Main / Germany
Pullach / Germany
Luxembourg
LOMBARDO Verwaltungsgesellschaft mbH
Madison HoldCo S.à r.l.
89.58%
100.00%
100.00%
100.00%
77.67%
100.00%
100.00%
n/a
Mainz Student Home AcquiCo II S.à r.l.
Mariggo Investments sp.z.o.o.
Monet S.à r.l.
Luxembourg
Warsaw / Poland
Luxembourg
77.67%
Palmyra Verwaltungsgesellschaft mbH & Co. Vermietungs KG i.L.
Palmyra Verwaltungsgesellschaft mbH & Co. Vermietungs KG S.e.n.c.
Paolia sp.z.o.o.
Pullach / Germany
Luxembourg
89.58%
89.58%
84.92%
84.92%
Warsaw / Poland
100.00%
100.00%
CORESTATE –
ANNUAL REPORT
2021
178
Name
Seat and Country of Incorporation
Luxembourg
Equity Interest 2021
100.00%
100.00%
100.00%
100.00%
100.00%
77.67%
Equity Interest 2020
100.00%
100.00%
100.00%
100.00%
100.00%
77.67%
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Plutos HoldCo S.á r.l.
Potsdam Student Home AcquiCo II S.à r.l.
Projekt AcquiCo III S.à r.l.
Luxembourg
CONSOLIDATED
FINANCIAL STATEMENTS
Luxembourg
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Rose HoldCo S.à r.l.
Luxembourg
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Stadttor Düsseldorf AcquiCo S.à r.l.
STAM Co-Invest
Luxembourg
Luxembourg
FURTHER INFORMATION
STAM Europe SAS
Paris / France
Paris / France
Paris / France
Luxembourg
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
n/a
STAM France Investment Managers SAS
STAM Property Management SAS
Tempelhof Twins HoldCo S.à r.l.
Tempelhof Twins TopCo S.à r.l.
UPARTMENTS Real Estate GmbH
Urban Micro Estate Immobilienverwaltungs GmbH
Urban Micro Estate Poland (prev. CRM Poland sp.z.o.o.)
Urban Micro Estate Spain
Luxembourg
Leipzig / Germany
Vienna / Austria
Warsaw / Poland
Spain
Urban Micro Estate Swiss Immobilienverwaltungs GmbH
Wallhalla HoldCo S.á r.l.
Zurich / Switzerland
Luxembourg
100.00%
100.00%
100.00%
Wallhalla PropCo S.á r.l.
Luxembourg
CORESTATE –
ANNUAL REPORT
2021
179
Name
Seat and Country of Incorporation
Pullach / Germany
Frankfurt on Main / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Equity Interest 2021
94.90%
94.90%
94.90%
85.30%
94.90%
85.30%
94.90%
94.90%
94.90%
94.90%
86.43%
94.90%
94.90%
94.90%
94.90%
85.30%
92.57%
Equity Interest 2020
94.90%
94.90%
89.21%
94.90%
94.90%
94.90%
94.90%
94.90%
62.63%
94.59%
86.43%
94.90%
94.90%
94.90%
94.90%
94.90%
86.60%
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
HANNOVER LEASING GmbH & Co. KG
Accontis GmbH Finanzanlagen und Beteiligungen
AKANTHUS Verwaltungsgesellschaft mbH
BERYTOS Verwaltungsgesellschaft mbH
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
Delta Vermietungsgesellschaft mbH
DIRAN Verwaltungsgesellschaft mbH
FURTHER INFORMATION
DIV Deutsche Immobilienfonds GmbH
Freizeitgeräte Leasing GmbH i. L.
FRICTION Verwaltungsgesellschaft mbH
GALENA Verwaltungsgesellschaft mbH & Co. Vermietungs KG
GELIMER Verwaltungsgesellschaft mbH & Co. Vermietungs KG
GORDION Verwaltungsgesellschaft mbH
HANNOVER LEASING Belgien Beteiligungs GmbH & Co. KG
HANNOVER LEASING Beteiligungs GmbH & Co. KG
HANNOVER LEASING Investment Beteiligungs GmbH
HANNOVER LEASING Investment GmbH
HANNOVER LEASING Private Invest Beteiligungs GmbH
CORESTATE –
ANNUAL REPORT
2021
180
Name
Seat and Country of Incorporation
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Pullach / Germany
Equity Interest 2021
92.57%
Equity Interest 2020
86.60%
94.90%
94.90%
94.90%
94.90%
62.63%
94.90%
62.63%
94.90%
94.90%
94.90%
94.90%
62.63%
n/a
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
HANNOVER LEASING Private Invest II GmbH & Co. KG
HANNOVER LEASING Treuhand GmbH
94.90%
CONSOLIDATED
FINANCIAL STATEMENTS
HANNOVER-LEASING Treuhand-Vermögensverwaltung GmbH
HANNOVER LEASING Wachstumswerte Europa Beteiligungsgesellschaft mbH
HANNOVER LEASING Wachstumswerte Europa VI GmbH & Co. KG i.L.
HERSCHEL Verwaltungsgesellschaft mbh
94.90%
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
94.90%
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
94.90%
94.90%
FURTHER INFORMATION
IKARIA Verwaltungsgesellschaft mbH & Co. Vermietungs KG
KERA Verwaltungsgesellschaft mbH
94.90%
94.90%
MANCALA Verwaltungsgesellschaft mbH & Co. Vermietungs KG
NIGRESCO Verwaltungsgesellschaft mbH
94.90%
94.90%
NOVELLINO Geschäftsbesorgungs GmbH & Co. Verwaltungs KG
ORION Verwaltungsgesellschaft mbH & Co. Beteiligungs KG
SINGULI Verwaltungsgesellschaft mbH
94.90%
94.90%
94.90%
SUBSTANTIA Verwaltungsgesellschaft mbH & Co. Vermietungs KG
VANESSA Verwaltungsgesellschaft mbH & Co. Vermietungs KG
94.90%
94.90%
94.90%
CORESTATE –
ANNUAL REPORT
2021
181
F.8 REPORT ON BUSINESS RELATIONSHIPS WITH
STRUCTURED ENTITIES
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
Disclosures on unconsolidated structured entities
CONSOLIDATED
FINANCIAL STATEMENTS
The fund business and other operating activities of the Group‘s companies give
rise to various business relationships with structured entities within the meaning
of IFRS 12. A structured entity is an entity that has been designed so that the
exercise of voting or similar rights under company law is not the dominant factor in
deciding who controls the entity as defined by IFRS 10.
The non-consolidated structured entities with which Corestate has business
relationships are funds divided into the asset classes media, real estate and large-
scale facilities.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
The extent of the structured entities is based on the amount of historical
fund assets under management. As at 31 December 2021, Corestate‘s non-
consolidated structured entities are as follows:
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
Name
Media
Property
Large Installations
Total
Fund Volume 2021
836.0
404.0
188.0
1,428.0
Potential Financial Risk
Fund Volume 2020
0.8
903.0
0.8
-
-
0.8
1,495.0
0.8
404.0
188.0
potential Financial Risk
CORESTATE –
ANNUAL REPORT
2021
182
F.9 SIGNIFICANT EVENTS AFTER THE REPORTING
DATE
TO OUR SHAREHOLDERS
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
In connection with the changes in the shareholder base of Corestate Capital
Holding S.A. (“Corestate”) at the end of 2021, Mr. Stavros Efremidis and
Dr Bertrand Malmendier were appointed as new members of the Supervisory
Board with effect from 01 January 2022. Mr. Friedrich Munsberg and
Prof. Dr Hermann Wagner stepped down from the Supervisory Board
correspondingly as at 31 December 2021.
On 07 March 2022 the Supervisory Board decided to strengthen the governance
structure and resolved to appoint the former Chairman of the Supervisory Board
Stavros Efremidis as CEO with immediate effect. The former CEO René Parmantier
left the Group’s Management Board to fully focus his activities on Corestate’s
Real Estate Debt business, incl. HFS and Corestate Bank. In addition, the Group’s
Management Board was extended to four members by Izabela Danner as Chief
Operating Officer (COO) and Ralf Struckmeyer as Chief Investment Officer (CIO).
The new members of the Management Board are appointed for a term of three
years.
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
The Supervisory Board of Corestate Capital Holding S.A. resolved on 07 February
2022 to remove Johannes Märklin and Sebastian Ernst from the Management
Board of Corestate Capital Holding S.A. and all further group functions. On
08 February 2022, the Group announced that René Parmantier will assume full
responsibility for the Real Estate Debt segment in addition to his role as CEO of
Corestate, and thus also the management of Corestate Bank.
FURTHER INFORMATION
On Supervisory Board level, the former Deputy Chairman Dr Bertrand
Malmendier took over as Chairman of the Supervisory Board. As a new member
Dr Roland Folz joined the Supervisory Board on 07 March 2022.
On 04 February 2022, Hannover Leasing placed out an additional share
amounting to € 12.5m (12.5%) in its project VISION ONE. By doing so, the
investment of Hannover Leasing decreased to € 10.1m and is therefore reclassified
from joint ventures and associates to other financial instruments accordingly as at
the aforementioned date.
Luxembourg, 20 April 2022
Stavros Efremidis
Chief Executive Officer
Udo Giegerich
Chief Financial Officer
The invasion of Ukraine by the Russian Federation on 23 February 2022 and the
resulting sanctions with regard to Russian state-owned companies and Russian
individuals could also result in restrictions on investments in which Corestate is
involved as a co-investor. Corestate has set up a task force to analyse and closely
monitor both compliance with the sanction restrictions and their impact on
Corestate‘s operating business. Risks would not directly concern the operating
business of the underlying investment structures but potentially the restrictions
on financing and distributions of cash. A final assessment of the consequences
of this situation for the company is not yet possible at the time of finalisation of
the financial statements.
Izabela Danner
Chief Operating Officer
Ralf Struckmeyer
Chief Investment Officer
CORESTATE –
ANNUAL REPORT
2021
183
TO OUR SHAREHOLDERS
RESPONSIBILITY STATEMENT
OF CONSOLIDATED AND
CORPORATE GOVERNANCE
GROUP MANAGEMENT REPORT
CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
STATUTORY ACCOUNTS CORESTATE
CAPITAL HOLDING S.A.
ANNUAL ACCOUNTS
NOTES TO THE
ANNUAL ACCOUNTS
FURTHER INFORMATION
We confirm in accordance to Article 3 (2) c of the Luxembourg Law on Transparency
requirements for the Issuers, to the best of our knowledge, that the consolidated
financial statements of Corestate Capital Holding S.A. and its subsidiaries
(“Group”) which have been prepared in accordance with the International Financial
Reporting Standards as adopted by the European Union, and the annual accounts
of Corestate Capital Holding S.A. (“Company”) which have been prepared in
accordance with Luxembourg legal and regulatory requirements relating to the
preparation and presentation of the annual accounts, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the Group and the
Company, and that the Group management report includes a fair review of the
development and performance of the business and the position of the Group,
together with a description of the principal opportunities, uncertainties and risks
associated with the expected development of the Group.
Luxembourg, 20 April 2022
Stavros Efremidis
Chief Executive Officer
Udo Giegerich
Chief Financial Officer
Izabela Danner
Chief Operating Officer
Ralf Struckmeyer
Chief Investment Officer
CORESTATE –
ANNUAL REPORT
2021