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8.1 Reporting on financial instruments

IAS 32 and IAS 39 make a distinction between primary and derivative financing instruments.

Primary financing instruments include investments in other companies that are reported under financial instruments as well as securities and loans granted, trade accounts receivable, available-for-sale securities and deposits with financial institutions. Available-for-sale financial assets are carried at fair value; all other financial assets are shown at purchase price less amortisation. The determination of fair value is based on market prices or calculated in accordance with recognised valuation methods. Primary financial instruments recorded under liabilities are comprised primarily of financial liabilities and trade accounts payable, which are shown at acquisition cost less amor- tisation.

The volume of primary financing instruments held by the Group is shown on the balance sheet. The value of financial assets represents the maximum risk of default. Any default risks identified for financial assets are reflected in valuation adjustments.

As an internationally active company, the Group is exposed to various financial risks that arise from business operations and financing activities. The most important financial risks for IMMOFINANZ Immobilien Anlagen AG are associated with possible changes in foreign exchange rates, interest rates, and stock prices as well as the creditworthiness and liquidity of the Group's customers and business partners. The business policies of the Group are oriented to actively limiting these risks through systematic management. Therefore these risks are countered in part by hedging transactions, which do not qualify as hedge accounting as defined in IAS 39.85 – IAS 39.102. Derivative financial instruments are used to counter the following risks: foreign exchange and interest rate risks arising from business operations as well as risks from the investment of funds and financing transactions. The instruments used include above all forward exchange contracts, foreign exchange options, cross currency swaps and interest rate swaps.

Derivative financing instruments are comprised of the following, and included under the following balance sheet items:

30 April 2005 30 April 2004 Reference value Market value Reference value Market value Currency in TEUR in TEUR in TEUR in TEUR Financial assets

Interest rate swap USD 0.0 0.0 10,522.8 1,362.1

EUR 0.0 0.0 0.0 0.0

Other liabilities

Interest rate swap EUR 90,576.6 3,576.5 47,151.7 695.5

Cross currency swap CHF 39,970.1 1,558.8 39,970.1 1,143.1

The reference value forms the basis value for derivatives outstanding as of the balance sheet date.

Credit risks arise from the possibility that the counterparty to a transaction is unable or unwilling to meet his/her obligations, and the Group incurs financial damages as a result. The maximum credit risk for assets is represented by the amounts shown on the balance sheet. The risk associated with receivables due from tenants is low because the credit standing of all tenants and customers is reviewed on a regular basis, and no single tenant or customer is responsible for more than 5% of total outstanding receivables. The risk of non-payment associated with other primary or derivative asset instruments is also low because all financing transactions are concluded with financial institutions that have excellent credit ratings. Interest rate risks result from fluctuations in interest rates, which have a negative impact on the asset and/or earnings position of the Group. Interest rate fluctuations lead to fluctuations in interest income and expense as well as the balance sheet value of interest-bearing assets and liabilities. Risks associated with interest rate fluctuations are chiefly related to long-term debt and changes in the fair value of derivative instru- ments. A list of all major interest-bearing liabilities with information on the effective interest rate and remaining term as well as information on existing hedges are provided under Note 4.10.

Foreign exchange risks are related primarily to assets and liabilities denominated in US dollars. The general foreign exchange risk associated fluctuations in the more volatile currencies of Central Europe are countered above all with euro-based financing and the linkage of rental con- tracts to the euro. The risks resulting from normal foreign exchange fluctuations in the value of balance sheet items have a direct – but non- cash – impact on the income statement through the valuation effect.

The fair value of financial assets and financial liabilities is indicated by the relevant item.

8.2 Earnings per share

In accordance with IAS 33, earnings per share are calculated by dividing net profit for the period by the weighted average number of issued shares.

2004/05 2003/04

Total number of shares 251,730,560 201,384,448 Weighted average number

of shares 248,006,327 184,748,009

Net profit in EUR 47,458,000 11,854,200

Earnings per share in EUR 0.19 0.06

The shares of common stock that would result from the convertible bond (15,000,000 shares) and the related net interest expense would not have a diluting effect on earnings per share under the cost model. In accordance with IAS 33.41, no information on diluted earnings per share may be provided.

8.3 Information on the company

The members of the Executive Board and Supervisory Board of IMMOFINANZ Immobilien Anlagen AG are as follows:

EXECUTIVE BOARD:

Karl Petrikovics– CEO

Norbert Gertner – Member SUPERVISORY BOARD:

Helmut Schwager– Chairman

Erhard Schaschl– Vice-Chairman

Michael Kaufmann Guido Schmidt-Chiari

PROXY:

Michael Wurzinger Daniel Joachim Riedl Thomas Hetz

Brigitta Schwarzer(up to 9 February 2005)

Martina Postl(since 25 August 2004) 8.4 Relations with related parties

The company has concluded an agreement with Constantia Privat- bank Aktiengesellschaft, Vienna, for the provision of administrative services (asset management, finance and accounting, reporting etc). Constantia Privatbank Aktiengesellschaft provides IMMO- FINANZ with a complete infrastructure and personnel.

Payment for the calendar year was set at 1% of new investments and commissioned projects plus 0.60% of existing properties at the beginning of the year. This second component is linked to the consumer price index. Administrative fees are charged out to the subsidiaries with a mark-up of 5%. For WIPARK Garages, the admin- istration fee equals 0.25% of existing property.

For the 2004/05 Business Year, Constantia Privatbank Aktienge- sellschaft charged administrative fees of TEUR 20,987.4 (2003/04: TEUR 12,303.7) to the IMMOFINANZ Group.

In addition, the company conducts investment and service transac- tions with the Constantia Privatbank Group at arm's length conditions. The Executive Board receives no additional compensation from the company. Plans call for the submission of a motion to the next annual general meeting, which would provide for total remuneration of EUR 110,000 for the members of the Supervisory Board. The mem- bers of the Executive Board and Supervisory Board hold a total of 1,711,247 shares of stock. There are no options outstanding for the company's shares.

8.5 Subsequent events

The company completed an extensive capital increase in May 2005, which raised share capital from EUR 261,342,474.90 by EUR 87,114,158.64 to EUR 348,456,633.54. Prior to this increase, share capital totalled 251,730,560 shares with zero par value; it comprised 6 registered shares and 251,730,554 bearer shares. After the capital increase, share capital comprised 6 registered shares and 335,640,741 bearer shares.

The Stop Shop specialty shopping centre in Hungary was acquired after the end of the reporting year. A number of the 13 locations are completed, and the remainder is under construction or in planning. The letable space in all locations totals 120,000 sqm and the investment volume for the acquisition equalled EUR 210 million. The Olympia shopping centre in Olomouc, Czech Republic, with 31,520 sqm of usable space was purchased for EUR 56 million. The company took its first step on the booming residential market in the Baltic States through a joint venture with the leading British investor Grainger Trust Plc and a local development partner, Nordic Property Consultants (NPC). Activities will focus on the construc- tion of up to 3,000 apartments in the Latvian capital of Riga and the Estonian capital of Tallinn.

In Bulgaria the company acquired an approx. 20% stake in this country's leading property developer, Prime Property BG REIT (for- merly TBI-BAC).

A stake in Eastern Property Holding Ltd., a Russia specialist, was also purchased after the close of the reporting year. This firm holds investments in three major shopping centre chains with more than 15 facilities in Russia.

In Prague, the Airport Business Centre was acquired. It is the only office building available to external companies at the international airport in the Czech capital. The facility is fully rented and has 15,000 sqm of usable space.

Major differences between