Quarterly Report • Aug 2, 2017
Quarterly Report
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| Key Financial Figures in € million | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Rental income | 833.2 | 774.7 | 7.6 | 1,538.1 |
| Adjusted EBITDA Operations | 607.6 | 558.1 | 8.9 | 1,094.0 |
| Adjusted EBITDA Rental | 573.5 | 535.6 | 7.1 | 1,046.2 |
| Adjusted EBITDA Value-add Business* | 45.6 | 26.0 | 75.4 | 57.0 |
| Adjusted EBITDA Other | -11.5 | -3.5 | 228.6 | -9.2 |
| Income from disposal of properties | 701.9 | 850.5 | -17.5 | 1,227.9 |
| Adjusted EBITDA Sales | 44.3 | 46.5 | -4.7 | 92.5 |
| Adjusted EBITDA | 651.9 | 604.6 | 7.8 | 1,186.5 |
| EBITDA IFRS | 651.4 | 543.9 | 19.8 | 1,083.7 |
| FFO 1 | 457.7 | 387.8 | 18.0 | 760.8 |
| thereof attributable to Vonovia shareholders | 431.1 | 362.3 | 19.0 | 713.4 |
| thereof attributable to Vonovia hybrid capital investors | 20.0 | 20.0 | – | 40.0 |
| thereof attributable to non-controlling interests | 6.6 | 5.5 | 20.0 | 7.4 |
| FFO 2 | 481.9 | 409.3 | 17.7 | 823.8 |
| AFFO | 427.2 | 358.7 | 19.1 | 689.2 |
| FFO 1 per share in €** | 0.96 | 0.83 | 15.7 | 1.63 |
| Income from fair value adjustments of investment properties | 1,164.7 | - | 100.0 | 3,236.1 |
| EBT | 1,652.6 | 257.8 | 541.0 | 3,859.8 |
| Profit for the period | 1,064.6 | 147.9 | 619.8 | 2,512.9 |
| Cash flow from operating activities | 475.4 | 432.9 | 9.8 | 828.9 |
| Cash flow from investing activities | -1,179.0 | 318.0 | – | 416.4 |
| Cash flow from financing activities | -459.1 | -748.9 | -38.7 | -2.812.4 |
| Maintenance and modernization | 456.4 | 295.3 | 54.6 | 792.4 |
| thereof for maintenance expenses and capitalized maintenance | 158.8 | 148.3 | 7.1 | 320.1 |
| thereof for modernization (incl. new construction) | 297.6 | 147.0 | 102.4 | 472.3 |
| June 30, | June 30, | Dec. 31, | ||
| Key Balance Sheet Figures in € million | 2017 | 2016 | Change in % | 2016 |
| Fair value of the real estate portfolio | 30,830.2 | 23,794.1 | 29.6 | 27,115.6 |
| Adjusted NAV | 15,771.0 | 10,952.8 | 44.0 | 14,328.2 |
| Adjusted NAV per share in €** | 33.10 | 23.50 | 40.9 | 30.75 |
| Non-Financial Key Figures | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Number of units managed | 416,282 | 394,285 | 5.6 | 392,350 |
| thereof own apartments | 352,815 | 340,442 | 3.6 | 333,381 |
| thereof apartments owned by others | 63,467 | 53,843 | 17.9 | 58,969 |
| Number of units bought | 23,745 | 2,440 | 873.2 | 2,815 |
| Number of units sold | 4,484 | 19,135 | -76.6 | 26,631 |
| thereof Privatize | 1,160 | 1,441 | -19.5 | 2,701 |
| thereof Non-Core | 3,324 | 17,694 | -81.2 | 23,930 |
| Vacancy rate in % | 2.9 | 2.8 | 0.1 pp | 2.4 |
| Monthly in-place rent in €/m² | 6.12 | 5.89 | 3.9 | 6.02 |
| Organic rent increase in % | 3.7 | 2.8 | 0.9 pp | 3.3 |
| Number of employees (as at June 30/Dec. 31) | 8,257 | 6,909 | 19.5 | 7,437 |
LTV in % 43.2 47.4 -4.2 pp 41.6
| EPRA Key Figures in € million | June 30, 2017 |
June 30, 2016 |
Change in % | Dec. 31, 2016 |
|---|---|---|---|---|
| EPRA NAV | 18,702.8 | 13,671.7 | 36.8 | 17,047.1 |
| EPRA NAV per share in €** | 39.25 | 29.34 | 33.8 | 36.58 |
* previously "Adjusted EBITDA Extension"
** Based on the shares carrying dividend rights on the reporting date June 30, 2017: 476,460,248, June 30, 2016: 466,000,624, Dec. 31, 2016: 466,000,624
Vonovia is looking back on a successful first half of 2017: the implementation of the investment program is going to plan, further efficiency potential has been exploited in the property management sector and the Value-add Business segment has been expanded. In addition, conwert's portfolio has been successfully integrated into the Group and contributed to an additional improvement in the company's operational and financial key data.
Vonovia SE
In-place rent in €/m2 rose by 3.9 % in a half-yearly comparison, with FFO climbing by 18.0 % on the back of positive core business development and the conwert acquisition.
We expect this positive business development to continue in the second half of the year and predict that the values forecast for the year as a whole will be achieved in full.
Net Assets Increase due to Profit for the Period and Inclusion of conwert
in € million
Growth in Property Assets following Inclusion of conwert and Increase in Value
in € million
The attractive risk/return profile offered by housing companies listed on the German stock market in general and the positive business development at Vonovia in particular resulted in sustained demand for shares in Vonovia in the first half of 2017. In the first six months of 2017, Vonovia's share price rose by 12.5 %, to € 34.77, compared to the closing price as of December 30, 2016. During the same period, the DAX improved by 7.4 % to 12,325.12 points. The EPRA Europe rose by 2.9 % to 2,113.43 points.
Vonovia's market capitalization amounted to around € 16.6 billion as of June 30, 2017.
Free Float and Breakdown of Major Shareholders
Based on the German stock exchange's definition of free float, only the interest held by Norges Bank (Norwegian Ministry of Finance) does not count towards the free float. This means that 92.5 % of Vonovia's shares were in free float on June 30, 2017.
In line with Vonovia's long-term strategic focus, the majority of its investors have a similarly long-term focus. The company's investors include pension funds, sovereign wealth funds and international asset managers in particular. There is also a large number of individual shareholders, although they only represent a small proportion of the total capital.
In the first half of 2017, communication with investors focused on the following issues, in particular: property valuation, the investment program, innovative property management, the immunity of Vonovia SE's business model to macroeconomic fluctuations, the importance of acquisitions and organic growth, and the takeover of conwert Immobilien Invest SE.
In the first half of 2017, Vonovia participated in a total of fifteen investors' conferences and nine roadshows in key European, North American, and Asian financial centers. In addition, our company representatives held numerous one-on-one meetings and teleconferences with investors and analysts to keep them informed of current developments and special issues.
In order to provide information for interested members of the financial community, the Investor Relations team once again carried out numerous property tours with colleagues from the operational areas of the company.
We will continue to communicate openly with the capital market as this year progresses. Various roadshows and conferences have already been planned. Information can be found in the Financial Calendar on our Investor Relations website. http://investors.vonovia.de
This year's Capital Markets Day was held on June 20, 2017, in the "Vonovia Ruhrstadion" stadium in Bochum with more than 50 participants from Germany, Europe and the U.S.
The motto of the event was "A glance into the engine room" (Blick in den Maschinenraum). Topics covered included modular construction, operational platform and customer service as well as property-related services. The event was rounded off by a visit to the modular construction project on Imigstrasse in Dortmund and a visit to the customer service center in Duisburg.
Within the first half of the year, 30 national and international analysts published studies on Vonovia. The average target share price was € 37.80, with 55 % of analysts issuing a "buy" recommendation and 45 % issuing a "hold" recommendation. No "sell" recommendation was issued for Vonovia's shares.
| First day of trading | July 11, 2013 |
|---|---|
| Subscription price | € 16.50 |
| Total number of shares |
476.5 million |
| Share capital in € | € 476,460,248 |
| ISIN | DE000A1ML7J1 |
| WKN | A1ML7J |
| Ticker symbol | VNA |
| Common code | 94567408 |
| Share class | Registered shares with no par value |
| Stock exchange | Frankfurt Stock Exchange |
| Market segment | Regulated market |
| Indices & Weight June 30, 2017 |
DAX (1.6 %), Stoxx Europe 600 (0.2 %) MSCI Germany (1.4 %), GPR 250 World (1.3 %), FTSE EPRA/NAREIT Europe Index (7.8 %) |
After making a strong start to the year, the economy is still making considerable progress, according to the Kiel Institute for the World Economy (IfW). Following the significant increase in production in the manufacturing sector at the beginning of the year, capacity utilization, which was already edging close to its limit, now appears to be moving towards overutilization. As financing conditions remain very favorable, the dynamic construction sector is also continuing to pick up speed. The ifo business climate index is currently sitting at a new all-time high after already surpassing its previous high of 2010 this May. The positive sentiment is fueling the increase in corporate investment, among other things. As the upswing is also continuing in other areas of the economy, in particular in most service sectors, economic output is expected to expand by a good 0.6 % in the second quarter of 2017, after growth of 0.6 % in the first three months of the year.
Full economic utilization, however, comes hand-inhand with the risk of the start of a cyclical downturn. Although private consumption is still on the rise compared to the previous quarter, the increase is more subdued than it was in the prior year. The general economic policy risks also remain difficult to judge. In particular, the lack of clarity regarding the conditions of the UK's exit from the EU and the uncertainty surrounding the future trading policies pursued by the world's major economic powers could pose a risk to growth. The monetary policy pursued by the European
Central Bank (ECB) remains extremely expansive, with key interest rates still sitting at an all-time low of 0.0 %.
The positive overall development on the labor market continues: according to the Federal Statistical Office (Statistisches Bundesamt), the number of people in work in May 2017 was up by 648,000 year-on-year. The German Federal Employment Agency (Bundesagentur für Arbeit) published an unemployment rate of 5.5 % for June 2017. This is down by 0.4 percentage points compared with the previous year.
Consumer price performance has been picking up again ever so slightly since the end of last year. In June 2017, the rate of inflation is likely to have come in at 1.6 % based on the consumer price index. The rate of inflation is being influenced by developments in the price of food and rent, whereas developments in the energy sector were the main influencing factor in the previous months.
Quoted rents in Germany remained on an upward trend in the second quarter of 2017, too. According to IMX, the price index of the real estate portal lmmobilienScout24, rents rose by 0.5 percentage points between March 2017 and April 2017 and by 0.4 percentage points between April 2017 and May 2017. The increase in the quoted prices for condominiums was once again much more pronounced than the increase in rents. According to IMX, the prices for existing condominiums increased by 1.8 percentage points against the previous month in April and 1.7 percentage points in May. The price index for newly built apartments rose by 1.4 percentage points and 1.1 percentage points during the same periods. Considering Germany as a whole, there do not appear to be any signs of the market potentially settling down, as had been previously discussed.
F+B Forschung und Beratung für Wohnen, Immobilien und Umwelt GmbH reports that the fast-growing cities are still characterized by high demand for rented homes and, in particular, properties to purchase. It reports that the gap between prices for condominiums in the top 7 locations and rent development is still widening considerably. Owner-occupation, however, plays a dominant role as far as apartment ownership is concerned. According to F+B, multifamily residences, which are much more important to the rental housing market, are showing price momentum that is clearly below-average across Germany. They report that the ratio of purchase prices to existing or new contract rents is unremarkable and provides no cause for concern in this segment.
In the first half of 2017, residential building bundles and residential developments of 50 units or more accounted for a total transaction volume of around € 5.9 billion on the German residential investment market, according to the real estate consultancy firm CBRE. This puts the transaction volume up by around 22 % on the same period of last year. Almost one-third of the transaction volume, or around € 1.9 billion, was invested in project developments, up by almost 40 % compared to the same period in the previous year. According to the experts, the demand for German residential real estate among institutional investors and real estate companies specializing in this segment remains high. Investors are showing a preference for top locations – in particular Berlin – with increasing interest being shown in North Rhine-Westphalia. The sustained high demand is resulting in yield compression. CBRE expects to see a transaction volume of well in excess of € 13 billion in 2017.
The demand for living space remains very high due to the high level of immigration over the last two years. Experts predict that at least 350,000 apartments will be required every year. According to the Federal Statistical Office, just under 278,000 apartments were completed nationwide last year. Although this figure is up by around 12 % year-on-year, the completion figures still lag considerably behind the number of apartments that is actually required. Deutsche Bank Research reports that the number of completed apartments could rise to 300,000 for the first time in 2017. This would result in a further increase in the excess demand.
We are continuing with our corporate strategy. In the Rental segment, we have stepped up our modernization activities and our new construction measures as planned. In the Value-add Business segment (previously known as "Extension"), we have forged ahead with the continued expansion of our housing-related services. In the Sales segment, we continued to pursue our strategy of selective sales.
The first half of 2017 developed very successfully for Vonovia on the whole. In the second quarter of 2017, we were able to follow up the good start to the fiscal year, and to expand our leading market position further. The takeover and integration of the conwert real estate portfolio increased our own residential portfolio to 352,815 apartments (H1 2016: 340,442).
The first quarter of 2017 saw the first-time consolidation of conwert, with 208 companies, as a result of the completion of the conwert takeover. The creation of the necessary exchange shares increased our total equity by € 89.7 million in net terms. The first-time consolidation resulted in goodwill of € 212.9 million. The first-time consolidation in the first quarter of 2017 allowed us to reach our first key milestone in the integration of conwert and to lay the foundation for the targeted management of the acquired portfolio.
Two EMTN tranches of € 500 million each were drawn down in January (coupons; 0.75 % and 1.75 %). The subsequent repayment of the last major former GAGFAH financing arrangement, "Taurus", in February 2017 meant that we repaid a volume of around € 1 billion.
In the second quarter of 2017, we stepped up our efforts to achieve the organizational integration of conwert into Vonovia's organization. Furthermore, a squeeze-out process regarding the remaining conwert shares was initiated by Vonovia SE.
A resolution on the merger of GAGFAH S.A. with Vonovia SE was passed on June 27, 2017. This means that we have performed a key task which will create a more efficient legal structure within the Vonovia Group.
On June 30, 2017, we performed a valuation of our real estate portfolio due to the current market momentum. As far as our major locations are concerned, this valuation revealed an increase of € 1,164.7 million in the value of the residential real estate portfolio.
In the second quarter of 2017, we also completed a contract regarding the acquisition of PROIMMO AG's portfolio with approximately 1,000 residential units. The acquisition will take place in the third quarter of 2017.
The following key figures provide an overview of how Vonovia's results of operations and their drivers developed in the first half of 2017.
| in € million | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Income from property management | 1,192.4 | 1,119.4 | 6.5 | 2,209.3 |
| thereof rental income | 833.2 | 774.7 | 7.6 | 1,538.1 |
| Adjusted EBITDA Operations | 607.6 | 558.1 | 8.9 | 1,094.0 |
| Adjusted EBITDA Rental | 573.5 | 535.6 | 7.1 | 1,046.2 |
| Adjusted EBITDA Value-add Business | 45.6 | 26.0 | 75.4 | 57.0 |
| Adjusted EBITDA Other | -11.5 | -3.5 | 228.6 | -9.2 |
| FFO 1 | 457.7 | 387.8 | 18.0 | 760.8 |
| Income from disposal of properties | 701.9 | 850.5 | -17.5 | 1,227.9 |
| Adjusted EBITDA Sales | 44.3 | 46.5 | -4.7 | 92.5 |
| EBITDA IFRS | 651.4 | 543.9 | 19.8 | 1,083.7 |
| Adjusted EBITDA | 651.9 | 604.6 | 7.8 | 1,186.5 |
| Monthly in-place rent (€/m2) | 6.12 | 5.89 | 3.9 | 6.02 |
| Average space of own housing in the reporting period (in a thousand m2 ) |
22,226 | 21,938 | 1.3 | 21,509 |
| Number of residential units in portfolio | 355,570 | 351,720 | 1.1 | 344,884 |
| Vacancy rate (in %) | 2.9 | 2.8 | 0.1 pp | 2.4 |
| Maintenance and modernization including new construction (€/m2) | 20.53 | 13.46 | 52.5 | 36.84 |
| thereof expenses for maintenance and capitalized maintenance (€/m2) |
7.14 | 6.76 | 5.6 | 14.88 |
| thereof for modernization including new construction (€/m2) | 13.39 | 6.70 | 99.8 | 21.96 |
| Number of units bought | 23,745 | 2,440 | 873.2 | 2,815 |
| Number of units sold | 4,484 | 19,135 | -76.6 | 26,631 |
| thereof Privatize | 1,160 | 1,441 | -19.5 | 2,701 |
| thereof Non-Core | 3,324 | 17,694 | -81.2 | 23,930 |
| Number of employees (as at June 30, 2017/Dec. 31, 2016) | 8,257 | 6,909 | 19.5 | 7,437 |
When comparing the key figures shown, it is important to remember that the first half of 2017 includes the conwert acquisition, with its earnings contribution for the months from January to June, for the very first time.
Income from property management rose by 6.5 %, from € 1,119.4 million to € 1,192.4 million, in a half-yearly comparison. The increase was mainly due to the development in rental income in the Rental segment, which rose by 7.6 % from € 774.7 million to € 833.2 million. The conwert portfolio contributed € 67.1 million to this increase in rental income.
In the reporting period, we were able to increase our primary key figure for the sustained earnings power of our core business, FFO 1, by € 69.9 million or 18.0 % compared with the first half of 2016 from € 387.8 million to € 457.7 million. This trend was fueled primarily by the positive development in adjusted EBITDA Operations, which rose by 8.9 % from € 558.1 million to € 607.6 million. Positive growth was witnessed in both the Rental and Value-add Business segments.
| in € million | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Rental income | 833.2 | 774.7 | 7.6 | 1,538.1 |
| Maintenance expenses | -127.3 | -119.0 | 7.0 | -247.4 |
| Operating expenses | -132.4 | -120.1 | 10.2 | -244.5 |
| Adjusted EBITDA Rental | 573.5 | 535.6 | 7.1 | 1,046.2 |
| Value-add Business income | 483.8 | 333.6 | 45.0 | 851.2 |
| thereof external income | 80.1 | 56.7 | 41.3 | 108.1 |
| thereof internal income | 403.7 | 276.9 | 45.8 | 743.1 |
| Operating expenses | -438.2 | -307.6 | 42.5 | -794.2 |
| Adjusted EBITDA Value-add Business | 45.6 | 26.0 | 75.4 | 57.0 |
| Adjusted EBITDA Other | -11.5 | -3.5 | 228.6 | -9.2 |
| Adjusted EBITDA Operations | 607.6 | 558.1 | 8.9 | 1,094.0 |
| FFO interest expense | -138.0 | -162.8 | -15.2 | -322.7 |
| FFO 1 current income taxes | -11.9 | -7.5 | 58.7 | -10.5 |
| FFO 1 | 457.7 | 387.8 | 18.0 | 760.8 |
In the Rental segment, our apartments still had virtually full occupancy at the end of the first half of 2017. The apartment vacancy rate of 2.9 % was up slightly on the value of 2.8 % seen at the end of the first half of 2016 due to our extensive investment program. Rental income rose by 7.6 %, from € 774.7 million to € 833.2 million, in a half-yearly comparison. This corresponds to an average monthly in-place rent of € 6.12/m² at the end of the first half of 2017, compared with € 5.89/m² at the end of the first half of 2016, and to an overall increase in rent per square meter of 3.9 %. The increase in rent due to market-related factors came to 1.7 %. In addition, we were able to achieve an increase in rent of 1.9 % thanks to property value improvements achieved as part of our modernization program. If we also include the increase in rent due to new construction measures and measures to add extra stories, then we reach an organic increase in rent of 3.7 %. The corresponding like-for-like increase in rent came to 3.6 % in the first half of 2017. The average monthly in-place rent in the conwert portfolio came to € 5.93/m² at the end of the reporting period.
As planned, we increased our modernization and maintenance measures to a volume of € 456.4 million in the first half of 2017 (H1 2016: € 295.3 million). This was driven by a € 150.6 million increase in the modernization volume to € 297.6 million. In the first half of 2017, a volume of € 20.1 million was attributable to modernization and maintenance measures in the conwert portfolio.
| in € million | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Expenses for maintenance | 127.3 | 119.0 | 7.0 | 247.4 |
| Capitalized maintenance | 31.5 | 29.3 | 7.5 | 72.7 |
| Modernization work | 297.6 | 147.0 | 102.4 | 472.3 |
| Total cost of modernization and maintenance* | 456.4 | 295.3 | 54.6 | 792.4 |
* Incl. intra-Group profits for H1 2017: € 28.8 million (thereof € 1.0 million capitalized maintenance and € 10.2 million modernization); H1 2016: € 20.1 million (thereof € 0.3 million capitalized maintenance and € 3.2 million modernization); new construction in H1 2017 € 13.7 million (included in modernization measures)
In relation to the average number of apartments managed during the reporting period, this corresponds to a spending of € 20.53 Value-add Business per m² on modernization and maintenance in the first half of 2017 (H1 2016: € 13.46 per m²).
Operating expenses in the Rental segment were up by 10.2 % on the figures for the first half of 2016, from € 120.1 million to € 132.4 million, mainly due to acquisitions. All in all, adjusted EBITDA Rental increased by 7.1 % from € 535.6 million to € 573.5 million.
We boosted our earnings power further in the Value-add Business segment. In particular, we significantly improved the output of our craftsmen's organization, allowing us to make our investments in improving our portfolio as planned. In addition, we continued to expand our business activities in the areas of condominium administration, provision of cable television to our tenants, metering services and insurance and residential environment services in the first half of 2017. Vonovia Immobilien Treuhand now provides services as a leading real estate service provider to a total of more than 100,000 units across Germany, around 11,400 of which are located in Berlin.
Total income from our Value-add Business activities rose by 45.0 % from € 333.6 million to € 483.8 million. The adjusted EBITDA Value-add Business improved considerably, rising from € 26.0 million to € 45.6 million.
The EBITDA margin of the core business, calculated based on the adjusted EBITDA Operations in relation to rental income within the Group, once again showed positive development in the reporting period. It rose from 71.9 % in 2016 to 72.7 %.
We successfully continued our selective sales strategy in the Sales segment. The segment covers all business activities relating to the sale of single residential units (Privatize) and the sale of entire buildings or land and commercial units (Non-Core/Non-Strategic).
In the first half of 2017, income from the disposal of properties came to € 701.9 million, down by 17.5 % on the value for the first half of 2016 (€ 850.5 million). The growth was driven by the sales from the conwert portfolio, which accounted for a volume of € 406.4 million, whereas sales in the previous year were characterized primarily by a block sale of 13,570 units to LEG. We sold a total of 4,484 apartments in the first half of 2017 (H1 2016: 19,135). 1,160 of these apartments were attributable to the Privatize portfolio (H1 2016: 1,441) and 3,324 to Non-Core/Non-Strategic (H1 2016: 17,694). We sold 343 apartments and 763 commercial units from the conwert portfolio in the first half of 2017.
In the reporting period, adjusted EBITDA Sales came to € 44.3 million, down by 4.7 % on the comparative value of € 46.5 million. At 31.3 %, the fair value step-up in the Privatize portfolio was lower than for the previous year (34.5 %). This was due to the higher property values at the end of 2016. In addition, 100 privatizations were achieved as part of block sales. If these sales are left out of the equation, then the fair value step-up in the Privatize portfolio comes to 32.5 %.
The fair value step-up in the Non-Core/Non-Strategic portfolio, on the other hand, came in at 4.3 %, up slightly on the comparative value of 3.5 %.
| in € million | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Income from disposal of properties | 701.9 | 850.5 | -17.5 | 1.227.9 |
| Fair value of properties sold adjusted to reflect effects not relating to the period from assets held for sale |
-644.8 | -792.2 | -18.6 | -1.107.7 |
| Adjusted profit from disposal of properties | 57.1 | 58.3 | -2.1 | 120.2 |
| thereof Privatize | 34.0 | 34.2 | -0.6 | 71.1 |
| thereof Non-Core/Non-Strategic | 23.1 | 24.1 | -4.1 | 49.1 |
| Selling costs | -12.8 | -11.8 | 8.5 | -27.7 |
| Adjusted EBITDA Sales | 44.3 | 46.5 | -4.7 | 92.5 |
In the 2017 reporting period, the non-recurring items eliminated in the adjusted EBITDA as a whole came to € 46.3 million, down by 5.7 % on the prior-year value of € 49.1 million, mainly due to lower expenses for
severance payments/pre-retirement part-time work arrangements. The acquisition and integration costs rose due to the takeover of conwert.
| in € million | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Severance payments/pre-retirement part-time work arrangements | 7.1 | 16.7 | -57.5 | 23.5 |
| Business model optimization/development of new fields of business | 9.4 | 7.7 | 22.1 | 19.5 |
| Acquisition costs incl. integration costs* | 28.9 | 23.2 | 24.6 | 48.3 |
| Refinancing and equity measures | 0.9 | 1.5 | -40.0 | 3.2 |
| Total non-recurring items | 46.3 | 49.1 | -5.7 | 94.5 |
* Including takeover costs and one-time expenses in connection with acquisitions, such as HR measures relating to the integration process. Figures for the previous year shown in line with the current reporting structure for 2017
The financial result made a marked improvement in a year-on-year comparison, rising by € 127.5 million to € -148.6 million. This is due primarily to the repayment of financing in the course of 2016. In addition, the prior-year figures were hit by transaction costs
and prepayment penalties in connection with the repayment of portfolio loans. FFO 1 interest expense is derived from the financial result as follows:
| in € million | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Income from non-current loans | 0.9 | 1.0 | -10.0 | 1.9 |
| Interest income | 23.4 | 10.4 | 125.0 | 14.1 |
| Interest expense | -172.9 | -287.5 | -39.9 | -449.0 |
| Financial result* | -148.6 | -276.1 | -46.2 | -433.0 |
| Adjustments: | ||||
| Transaction costs | 6.2 | 20.0 | -69.0 | 21.5 |
| Prepayment penalties and commitment interest | 2.9 | 68.8 | -95.8 | 64.4 |
| Effects from the valuation of non-derivative financial instruments | -16.7 | -13.0 | 28.5 | -31.0 |
| Derivatives | -4.7 | -0.5 | 840.0 | 12.9 |
| Interest accretion to provisions | 4.4 | 5.9 | -25.4 | 11.2 |
| Accrued interest | 25.4 | 32.2 | -21.1 | -7.9 |
| Other effects | 3.8 | 5.1 | -25.5 | 0.6 |
| Net cash interest | -127.3 | -157.6 | -19.2 | -361.3 |
| Accrued interest adjustment | -25.4 | -32.2 | -21.1 | 7.9 |
| Adjustments EMTN interest** | – | 17.5 | -100.0 | 21.1 |
| Adjustments income from investments in other real estate companies | 12.9 | 9.5 | 35.8 | 9.6 |
| Interest payment adjustment due to taxes | 1.8 | – | 100.0 | – |
| FFO interest expense | -138.0 | -162.8 | -15.2 | -322.7 |
* Excluding income from other investments
** Interest on the difference between the taking up and making use of the € 3 billion bonds from December 2015, which were intended to be used for the financing of the Deutsche Wohnen acquisition.
Due to refinancing and lower interest rates, FFO interest expense came to € -138.0 million in the first half of 2017, down by 15.2 % on the value for the prior year of € -162.8 million.
The profit for the period came to € 1,064.6 million in the first half of 2017, up considerably on the value of € 147.9 million reported in the first half of 2016. This is primarily due to the half-year valuation result, an improved financial result as well as an increase in rental income.
| in € million | H1 2017 | H1 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Profit for the period | 1,064.6 | 147.9 | 619.8 | 2,512.9 |
| Financial result* | 148.6 | 276.1 | -46.2 | 433.0 |
| Income taxes | 588.0 | 109.9 | 435.0 | 1.346.9 |
| Depreciation and amortization | 14.9 | 10.0 | 49.0 | 27.0 |
| Net income from fair value adjustments of investment properties | -1,164.7 | – | – | -3,236.1 |
| = EBITDA IFRS | 651.4 | 543.9 | 19.8 | 1,083.7 |
| Non-recurring items | 46.3 | 49.1 | -5.7 | 94.5 |
| Total period adjustments from assets held for sale | -32.9 | 21.1 | – | 17.9 |
| Financial income from investments in other real estate companies | -12.9 | -9.5 | 35.8 | -9.6 |
| = Adjusted EBITDA | 651.9 | 604.6 | 7.8 | 1,186.5 |
| Adjusted EBITDA Sales | -44.3 | -46.5 | -4.7 | -92.5 |
| = Adjusted EBITDA operations | 607.6 | 558.1 | 8.9 | 1,094.0 |
| Interest expense FFO** | -138.0 | -162.8 | -15.2 | -322.7 |
| Current income taxes FFO 1 | -11.9 | -7.5 | 58.7 | -10.5 |
| = FFO 1 | 457.7 | 387.8 | 18.0 | 760.8 |
| Capitalized maintenance | -30.5 | -29.1 | 4.8 | -71.6 |
| = AFFO | 427.2 | 358.7 | 19.1 | 689.2 |
| Current income taxes Sales | -20.1 | -25.0 | -19.6 | -29.5 |
| FFO 2 (FFO 1 incl. adjusted EBITDA Sales/current income taxes Sales) |
481.9 | 409.3 | 17.7 | 823.8 |
| FFO 1 per share in €*** | 0.96 | 0.83 | 15.4 | 1.63 |
| AFFO per share in €*** | 0.90 | 0.77 | 16.5 | 1.48 |
* Excluding income from investments
** Incl. financial income from investments in other real estate companies
*** Based on the shares carrying dividend rights on the reporting date June 30, 2017: 476,460,248, June 30, 2016: 466,000,624 and Dec. 31, 2016: 466,000,624
At the end of the first half of 2017, the adjusted NAV per share came to € 33.10, up by 40.9 % on the value for the first half of 2016 of € 23.50 and 7.6 % above the value at the end of 2016. This is mainly due to the re-revaluation and the addition of conwert Immobilien Invest SE in 2017. The EPRA NAV per share climbed from € 29.34 at the end of the first half of 2016 to € 39.25 at the end of the first half of 2017. No NAV forecast will be provided from the 2017 fiscal year onwards.
| in € million | June 30, 2017 |
June 30, 2016 |
Change in % | Dec. 31, 2016 |
|---|---|---|---|---|
| Equity attributable to Vonovia shareholders | 13,368.0 | 10,305.5 | 29.7 | 12,467.8 |
| Deferred taxes on investment properties/asset held for sales | 5,307.9 | 3,245.0 | 63.6 | 4,550.3 |
| Fair value of derivative financial instruments* | 39.0 | 161.7 | -75.9 | 44.4 |
| Deferred taxes on derivative financial instruments | -12.1 | -40.5 | -70.1 | -15.4 |
| EPRA NAV | 18,702.8 | 13,671.7 | 36.8 | 17,047.1 |
| Goodwill | -2,931.8 | -2,718.9 | 7.8 | -2,718.9 |
| Adjusted NAV | 15,771.0 | 10,952.8 | 44.0 | 14,328.2 |
| EPRA NAV per share in €** | 39.25 | 29.34 | 33.8 | 36.58 |
| Adjusted NAV per share in €** | 33.10 | 23.50 | 40.9 | 30.75 |
* Adjusted for effects from cross currency swaps
** Based on the shares carrying dividend rights on the reporting date June 30, 2017: 476,460,248, June 30, 2016: 466,000,624 and Dec. 31, 2016: 466,000,624
| June 30, 2017 | Dec. 31, 2016 | |||
|---|---|---|---|---|
| in € million | in % | in € million | in % | |
| Non-current assets | 34,366.7 | 96.8 | 30,459.8 | 93.7 |
| Current assets | 1,154.3 | 3.2 | 2,062.3 | 6.3 |
| Total assets | 35,521.0 | 100.0 | 32,522.1 | 100.0 |
| Equity | 15,275.1 | 43.0 | 13,888.4 | 42.7 |
| Non-current liabilities | 17,057.9 | 48.0 | 16,229.1 | 49.9 |
| Current liabilities | 3,188.0 | 9.0 | 2,404.6 | 7.4 |
| Total equity and liabilities | 35,521.0 | 100.0 | 32,522.1 | 100.0 |
The Group's total assets increased by € 2,998.9 million from € 32,522.1 million as of December 31, 2016, to € 35,521.0 million, mainly due to an increase in investment properties of € 3,515.4 million to € 30,495.7 million, with € 2,404.2 million resulting from the integration of the conwert Group and € 1,164.7 million from the half-year valuation. In addition, assets rose on the back of an increase in goodwill of € 212.9 million due to the first-time consolidation of the conwert Group. Current assets fell by € 1,162.7 million to € 378.1 million, mainly as a result of the drop in cash resources due to the payment of the conwert cash component, the payment of the cash dividend and the repayment of the CMBS Taurus loan. The inflow from the January EMTN drawdown had the opposite effect.
The gross asset value (GAV) of Vonovia's property assets came to € 30,819.9 million as of June 30, 2017, which corresponds to 86.8 % of total assets compared with € 27,106.4 million or 83.3 % at the end of 2016.
The € 1,386.7 million increase in equity to € 15,275.1 million is mainly due to the non-cash capital increase and the increase in minorities due to the takeover of conwert, as well as to the half-year valuation of the real estate portfolio.
On May 16, 2017, the Annual General Meeting of Vonovia SE passed a resolution to distribute an amount of € 525,052,568.32, or € 1.12 per share, using the profit for the 2016 fiscal year. Shareholders could
opt for either a cash dividend or a non-cash dividend in the form of new shares created using authorized capital, with an exchange ratio of 30.5 old shares to 1 new share. 49.86 % of the dividend was settled in the form of new shares and € 263.3 million was paid as a cash dividend.
This brings the equity ratio to 43.0 % compared with 42.7 % at the end of 2016.
Deferred tax liabilities were up significantly as against the end of the year due to the first-time consolidation of conwert and due to the half-year valuation of the property portfolio.
The increase in current liabilities is mainly attributable to the increase in current non-derivative financial liabilities. This increase resulted in turn from the conversion of non-current liabilities due to mature within the next twelve months.
Major market developments and valuation parameters that have an impact on the fair values of Vonovia are assessed every quarter. Due to the market momentum recognized across Germany in the first half of the year, Vonovia arranged for a new valuation to be performed on around two-thirds of the portfolio. This led to net income from the valuation of € 1,164.7 million. The recognition and valuation of investment properties are explained in detail in the Notes to the consolidated financial statements (note [9]).
The following table shows the Group cash flow:
| in € million | H1 2017 | H1 2016 |
|---|---|---|
| Cash flow from operating activities |
475.4 | 432.9 |
| Cash flow from investing activities | -1,179.0 | 318.0 |
| Cash flow from financing activities | -459.1 | -748.9 |
| Net changes in cash and cash equivalents |
-1,162.7 | 2.0 |
| Cash and cash equivalents at the beginning of the period |
1,540.8 | 3,107.9 |
| Cash and cash equivalents at the end of the period |
378.1 | 3,109.9 |
The cash flow from operating activities comes to € 475.4 million for the first half of the year, compared with € 432.9 million for the same period in 2016. The increase is mainly due to the improvement in the EBITDA IFRS operating result, in particular due to the integration of the acquired conwert portfolio.
The cash flow from investing activities shows a payout balance of € 1,179.0 million for the first half of 2017, mainly due to the payment of the cash component for the conwert takeover. The payouts for the acquisition and modernization of the real estate portfolio came to € 422.5 million, whereas on the other hand, income from portfolio sales in the amount of € 687.3 million was collected.
The cash flow from financing activities is characterized by the refinancing measures taken in the first half of 2017, namely by the proceeds from the EMTN drawdown and by the fact that new mortgages were taken out (funds relating to the German government-owned development bank, KfW) totaling € 1,161.6 million. On the other hand, payouts were made in connection with scheduled and unscheduled repayments (mainly CMBS Taurus) in the amount of € 1,413.7 million, as well as for transaction and financing costs. Total dividend payments of € 271.8 million and interest payments of € 130.1 million were made.
The net drop in cash and cash equivalents in the first half of 2017 comes to € 1,162.7 million.
Vonovia's credit rating as awarded by the agency Standard & Poor's is unchanged at BBB+ with a stable outlook for the long-term corporate credit rating and A-2 for the short-term corporate credit rating. At the same time, the credit rating for the issued unsecured bonds is BBB+.
The debt maturity profile of Vonovia's financing was as follows as of June 30, 2017:
The financial covenants have been fulfilled as of the reporting date.
| in € million | June 30, 2017 |
June 30, 2016 |
Change in % |
Dec. 31, 2016 |
|---|---|---|---|---|
| Non derivative financial liabilities | 14,257.6 | 15,058.6 | -5.3 | 13,371.0 |
| Foreign exchange rate effects | -137.2 | -161.6 | -15.1 | -209.9 |
| Cash and cash equivalents | -378.1 | -3,109.9 | -87.8 | -1,540.8 |
| Net debt | 13,742.3 | 11,787.1 | 16.6 | 11,620.3 |
| Sales receivables | -180.0 | -266.8 | -32.5 | -135.4 |
| Adjusted net debt | 13,562.3 | 11,520.3 | 17.7 | 11,484.9 |
| Fair value of the real estate portfolio | 30,830.2 | 23,794.1 | 29.6 | 27,115.6 |
| Shares in other real estate companies | 564.6 | 514.4 | 9.8 | 503.1 |
| Adjusted fair value of the real estate portfolio | 31,394.8 | 24,308.5 | 29.2 | 27,618.7 |
| LTV | 43.2 % | 47.4 % | -4.2 pp | 41.6 % |
| in € million | June 30, 2017 |
June 30, 2016 |
Change in % |
Dec. 31, 2016 |
|---|---|---|---|---|
| Non-derivative financial liabilities | 14,257.6 | 15,058.6 | -5.3 | 13,371.0 |
| Total assets | 35,521.0 | 30,941.0 | 14.8 | 32,522.1 |
| LTV bond covenants | 40.1 % | 48.7 % | -8.6 pp | 41.1 % |
For the purposes of the interim financial statements as of June 30, 2017, there are no opportunities and risks over and above, or material changes to, the opportunities and risks set out in the combined management report for the 2016 fiscal year.
There are no signs of any risks that could pose a threat to the company's existence, and – as things stand at present – no such risks are expected to arise in the future.
The existing risk management organization and risk management process continue to apply unchanged.
After very strong German economic performance again in the second quarter of 2017, the economic indicators suggest that the growth trend is set to continue. The Kiel Institute for the World Economy (IfW) expects GDP to expand by 1.7 % in the course of 2017, with the slightly lower growth rate attributable exclusively to the lower number of working days. Private consumption will expand at a much slower pace due to purchasing power losses resulting from the increase in oil prices. With no further increase in spending on refugee migration, the rate of public consumption growth is likely to slow. Instead, the IfW expects investments to be the main engine driving the sustained upswing, primarily due to the further expansion in construction investments. Equipment investments are also likely to pick up again after showing slightly slower development of late due to the uncertain international environment. Foreign trade also dropped due to the uncertainties on key sales markets such as the United States and the United Kingdom. As the global economy gradually recovers, however, the IfW predicts a return to strong export
and import growth over the next two years, with the upswing, driven primarily by the domestic economy, expected to result in imports growing at a much faster rate than exports after a subdued start to the year.
Looking ahead to 2018, the IfW still expects to see a further acceleration in economic momentum, predicting GDP growth of 2.0 %. This forecast rests on the fact that the expansion forces in the domestic economy are likely to remain strong, with the monetary environment expected to continue to provide considerable stimulus and the outlook for exports expected to improve further as the global economy recovers.
Nevertheless, the downside risks are also mounting as overutilization increases. According to the IfW, risks to the growth forecast lie in the ECB's expansive monetary policy and the resulting risks for financial market stability, any sharp increase in crude oil prices, as well as the considerable differences within the EU and the associated structural threats to monetary union. It also remains to be seen to what extent the protectionist measures that President Trump has called for will be implemented, which would pose a risk to the global trading system.
The German residential real estate market is experiencing the most prolonged upswing seen in post-war history, according to experts from Scope Investor Services (Scope). The rental markets are tense in the country's major and fast-growing cities, with local signs of price overheating on the markets for condominiums as well. Scope expects the tense situation and the exaggerated trends to continue for the time being. The overall macroeconomic situation is robust and the number of private households will increase further, fueling demand on the residential real estate market. According to Scope, the market is only moving towards a better balance between supply and demand very slowly, with construction activity gradually starting to pick up. Savills believes that the overall conditions on the German residential real estate market remain positive from an investor's perspective. Given the high demand, rents will continue to rise this year unless the state steps in with clear regulatory measures to halt rent development. According to Savills, Germany's major metropolitan areas still offer positive long-term growth prospects. Investors should look not only at the areas' core cities, but also at their surrounding areas. ImmobilienScout24 believes that, in addition to rising quoted rents, the prices of existing and newly built apartments are likely to continue to rise looking at Germany on average. The state building societies (Landesbausparkassen) expect to see prices to have risen by between 3 % and 5 % on the German residential real estate market by the end of the year. According to DB Research, residential property ownership remains affordable. There are, however, pronounced differences from region to region.
According to information released by the Cologne Institute for Economic Research as part of a study commissioned by gif – Gesellschaft für immobilienwirtschaftliche Forschung e.V. and others, the sharp increase in real estate prices for all forms of investment since 2010 is of fundamental significance. The prices of residential real estate in major cities stand out in particular. Nevertheless, the Cologne Institute still believes that a speculative bubble is unlikely, arguing that the price development can be explained and that financing behavior remains virtually unchanged. It does, however, point out that interest rates, economic developments and demand are currently providing
extremely positive overall conditions, and that market corrections are likely to be made to one or several of these factors over the next few years. The empirica bubble index did not increase any further in the first quarter of 2017 and there is no conventional nationwide price bubble at the moment. Rents and purchase prices in 230 out of 402 administrative districts and self-governing cities are no longer developing in tandem, with the bubble index indicating a medium to high risk for 155 districts.
Due to the significant increase in rents in many places, there are calls for greater regulation of the residential property market in the run-up to the German Bundestag elections. The most significant new regulatory measure from a property owner's perspective, the rent ceiling, is in place in more than 300 municipalities in twelve federal states. In Mecklenburg-West Pomerania, the federal state government has been tasked with introducing the regulations as soon as possible. Following the state parliamentary elections in North Rhine-Westphalia and Schleswig-Holstein, the rent ceiling could well be axed based on the coalition agreements.
The first half of 2017 was very successful for Vonovia on the whole. With the expansion of our investment program, the further improvements to efficiency when managing our properties and the expansion of the Value-add Business activities, we have consistently implemented our corporate strategy. Bolstered by the acquisition of conwert, we were able to further expand our leading market position.
We expect the positive business developments to continue over the coming quarters and that we will achieve the forecast figures as published in our 2016 Annual Report. Given the dynamic development of the German real estate market, which has already been reflected in an increase in the value of our portfolio in the first half of 2017, we expect to see a further increase in value in our investment properties in the second half of 2017, too, and with this a further boost to NAV.
Our forecast is based on the current outlook for the Vonovia Group as a whole, which includes the original overall plans for the 2017 fiscal year, as well as current
business developments and possible opportunities and risks. Beyond this, the Group's further development remains exposed to general opportunities and risks. These have been described in the chapter on opportunities and risks. The forecast was based on the accounting principles used in the annual financial statements, with the adjustments described elsewhere in the management report being made.
We confirm our previous forecast for the main performance indicators for the 2017 fiscal year:
| Actual 2016 | Forecast for 2017* | Current forecast for 2017 Interim statement Q1 2017 |
Current forecast for 2017 Interim report H1 2017 |
|
|---|---|---|---|---|
| Adjusted EPRA NAV/share | 30.75 € | 31–32 € | suspended | suspended |
| EPRA NAV/share | 36.58 € | 37–38 € | suspended | suspended |
| FFO 1 | € 760.8 million | € 830–850 million | € 900–920 million | € 900–920 million |
| FFO 1/share | 1.63 € | 1.78–1.82 € | approx. 1.88 € | 1.86–1.90 € |
| CSI | Increase of 8 % | Similar CSI as 2016 | Similar CSI as 2016 | Similar CSI as 2016 |
| Rental income | € 1,538 million | € 1,530–1,550 million | € 1,660–1,680 million | € 1,660–1,680 million |
| Organic rent increase | 3.3 % | Increase of 3.5–3.7 % |
Increase of 3.8–4.0 % |
Increase of 3.8–4.0 % |
| Vacancy rate | 2.4 % | < 2.5 % | < 2.5 % | < 2.5 % |
| Maintenance incl. capitalized maintenance |
€ 320.1 million | approx. € 340 million | approx. € 340 million | approx. € 340 million |
| Modernization | € 472.3 million | € 700–730 million | approx. € 730 million | approx. € 730 million |
| Number of units sold Privatize |
2,701 | approx. 2,300 | approx. 2,300 | approx. 2,300 |
| Step-up Privatize | 36.2 % | approx. 35 % | approx. 30 % | approx. 30 % |
| Number of units sold Non-Core | 23,930 | Continue opportunistic sales |
Continue opportunistic sales |
Continue opportunistic sales |
| Step-up Non-Core | 5.4 % | > 0 % | > 0 % | > 0 % |
* According to the Group management report 2016 excl. conwert
Düsseldorf, July 25, 2017
Management Board
| in € million | Notes | Jan. 1– June 30, 2017 |
Jan. 1– June 30, 2016 |
Apr. 1– June 30, 2017 |
Apr. 1– June 30, 2016 |
|---|---|---|---|---|---|
| Income from property letting | 1,171.6 | 1,100.0 | 584.9 | 543.4 | |
| Other income from property management | 20.8 | 19.4 | 10.8 | 10.1 | |
| Income from property management | 3 | 1,192.4 | 1,119.4 | 595.7 | 553.5 |
| Income from disposal of properties | 701.9 | 850.5 | 209.7 | 160.0 | |
| Carrying amount of properties sold | -664.9 | -830.4 | -188.2 | -147.4 | |
| Revaluation of assets held for sale | 53.1 | 17.0 | 43.7 | 11.4 | |
| Profit on disposal of properties | 4 | 90.1 | 37.1 | 65.2 | 24.0 |
| Net income from fair value adjustments of investment properties |
5 | 1,164.7 | – | 1,164.7 | – |
| Capitalized internal expenses | 199.5 | 125.0 | 114.1 | 75.6 | |
| Cost of materials | 6 | -569.5 | -506.6 | -295.2 | -262.5 |
| Personnel expenses | -207.6 | -184.6 | -105.6 | -91.7 | |
| Depreciation and amortization | -14.9 | -10.0 | -7.8 | -5.6 | |
| Other operating income | 51.5 | 49.8 | 25.0 | 26.2 | |
| Other operating expenses | -124.4 | -106.4 | -64.7 | -49.1 | |
| Financial income | 7 | 43.7 | 21.6 | 36.4 | 12.1 |
| Financial expenses | 8 | -172.9 | -287.5 | -88.9 | -146.7 |
| Earnings before tax | 1,652.6 | 257.8 | 1,438.9 | 135.8 | |
| Income taxes | -588.0 | -109.9 | -505.0 | -67.1 | |
| Profit for the period | 1,064.6 | 147.9 | 933.9 | 68.7 | |
| Attributable to: | |||||
| Vonovia's shareholders | 993.2 | 110.0 | 876.6 | 53.5 | |
| Vonovia's hybrid capital investors | 14.8 | 14.8 | 7.4 | 7.4 | |
| Non-controlling interests | 56.6 | 23.1 | 49.9 | 7.8 | |
| Earnings per share (basic and diluted) in € | 2.12 | 0.24 | 1.87 | 0.12 |
| in € million | Jan. 1– June 30, 2017 |
Jan. 1– June 30, 2016 |
Apr. 1– June 30, 2017 |
Apr. 1– June 30, 2016 |
|---|---|---|---|---|
| Profit for the period | 1,064.6 | 147.9 | 933.9 | 68.7 |
| Cash flow hedges | ||||
| Change in unrealized gains/losses | -51.4 | -118.3 | -50.9 | 8.6 |
| Taxes on the change in unrealized gains/losses | 18.7 | 19.2 | 17.7 | -12.8 |
| Net realized gains/losses | 78.4 | 67.5 | 60.7 | 26.5 |
| Taxes on the change in net realized gains/losses | -26.0 | -17.2 | -20.1 | -6.8 |
| Total | 19.7 | -48.8 | 7.4 | 15.5 |
| Available-for-sale-financial assets | ||||
| Changes in the period | 61.7 | 107.3 | 44.4 | 53.9 |
| Taxes on changes in the period | -1.1 | -1.8 | -0.8 | 15.5 |
| Total | 60.6 | 105.5 | 43.6 | 69.4 |
| Items which will be regonized in profit or loss in the future | 80.3 | 56.7 | 51.0 | 84.9 |
| Actuarial gains and losses from pensions and similar obligations | ||||
| Change in actuarial gains/losses, net | 15.6 | -65.3 | 11.6 | -34.3 |
| Tax effect | -5.2 | 21.7 | -3.9 | 11.4 |
| Items which will not be recognized in profit or loss in the future | 10.4 | -43.6 | 7.7 | -22.9 |
| Other comprehensive income | 90.7 | 13.1 | 58.7 | 62.0 |
| Total comprehensive income | 1,155.3 | 161.0 | 992.6 | 130.7 |
| Attributable to: | ||||
| Vonovia's shareholders | 1,083.7 | 124.0 | 935.1 | 116.1 |
| Vonovia's hybrid capital investors | 14.8 | 14.8 | 7.4 | 7.4 |
| Non-controlling interests | 56.8 | 22.2 | 50.1 | 7.2 |
Also see the corresponding explanations in the Notes.
| in € million Notes |
June 30, 2017 | Dec. 31, 2016 |
|---|---|---|
| Assets | ||
| Intangible assets 2 |
2,957.8 | 2,743.1 |
| Property, plant and equipment | 130.5 | 115.7 |
| Investment properties 9 |
30,495.7 | 26,980.3 |
| Financial assets | 648.4 | 585.9 |
| Other assets | 109.4 | 15.2 |
| Deferred tax assets | 24.9 | 19.6 |
| Total non-current assets | 34,366.7 | 30,459.8 |
| Inventories | 5.8 | 5.0 |
| Trade receivables | 220.7 | 164.4 |
| Financial assets | 102.1 | 153.2 |
| Other assets | 165.1 | 102.7 |
| Income tax receivables | 28.4 | 34.6 |
| Cash and cash equivalents | 378.1 | 1,540.8 |
| Assets held for sale | 254.1 | 61.6 |
| Total current assets | 1,154.3 | 2,062.3 |
Total assets 35,521.0 32,522.1
Consolidated Balance Sheet
| in € million | Notes | June 30, 2017 | Dec. 31, 2016 |
|---|---|---|---|
| Equity and liabilities | |||
| Subscribed capital | 476.5 | 466.0 | |
| Capital reserves | 5,673.4 | 5,334.9 | |
| Retained earnings | 7,136.3 | 6,665.4 | |
| Other reserves | 81.8 | 1.5 | |
| Total equity attributable to Vonovia's shareholders | 13,368.0 | 12,467.8 | |
| Equity attributable to hybrid capital investors | 1,021.4 | 1,001.6 | |
| Total equity attributable to Vonovia's shareholders and hybrid capital investors | 14,389.4 | 13,469.4 | |
| Non-controlling interests | 885.7 | 419.0 | |
| Total equity | 10 | 15,275.1 | 13,888.4 |
| Provisions | 595.4 | 607.9 | |
| Trade payables | 0.6 | 1.3 | |
| Non-derivative financial liabilities | 11 | 11,771.1 | 11,643.4 |
| Derivatives | 18.0 | 19.1 | |
| Liabilities from finance leases | 94.5 | 94.7 | |
| Liabilities to non-controlling interests | 4.9 | 9.9 | |
| Other liabilities | 80.8 | 83.3 | |
| Deferred tax liabilities | 4,492.6 | 3,769.5 | |
| Total non-current liabilities | 17,057.9 | 16,229.1 | |
| Provisions | 360.8 | 370.8 | |
| Trade payables | 123.5 | 138.8 | |
| Non-derivative financial liabilities | 11 | 2,486.5 | 1,727.6 |
| Derivatives | 29.9 | 57.5 | |
| Liabilities from finance leases | 11.2 | 4.5 | |
| Liabilities to non-controlling interests | 0.4 | 2.7 | |
| Other liabilities | 175.7 | 102.7 | |
| Total current liabilities | 3,188.0 | 2,404.6 | |
| Total liabilities | 20,245.9 | 18,633.7 | |
| Total equity and liabilities | 35,521.0 | 32,522.1 |
Also see the corresponding explanations in the Notes.
| in € million Notes |
Jan. 1– June 30, 2017 |
Jan. 1– June 30, 2016 |
|---|---|---|
| Profit for the period | 1,064.6 | 147.9 |
| Net income from fair value adjustments of investment properties | -1,164.7 | – |
| Revaluation of assets held for sale 4 |
-53.1 | -17.0 |
| Depreciation and amortization | 14.9 | 10.0 |
| Interest expenses/income | 148.7 | 275.7 |
| Income taxes | 588.0 | 109.9 |
| Results from disposals of investment properties | -37.0 | -20.1 |
| Results from disposals of other non-current assets | -0.1 | -0.4 |
| Other expenses/income not affecting net income | 2.2 | -0.1 |
| Change in working capital | -66.1 | -61.6 |
| Income tax paid | -22.0 | -11.4 |
| Cash flow from operating activities | 475.4 | 432.9 |
| Proceeds from disposals of investment properties and assets held for sale | 687.3 | 905.4 |
| Proceeds from disposals of other assets | 0.5 | 0.9 |
| Payments for acquisition of investment properties | -422.5 | -170.1 |
| Payments for acquisition of other assets | -34.2 | -421.2 |
| Payments (last year: proceeds) for acquisition of shares in consolidated companies, in due consideration of liquid funds 2 |
-1,412.9 | 0.3 |
| Interest received | 2.8 | 2.7 |
| Cash flow from investing activities | -1,179.0 | 318.0 |
Consolidated Statement of Cash Flows
| in € million | Notes | Jan. 1– June 30, 2017 |
Jan. 1– June 30, 2016 |
|---|---|---|---|
| Cash paid to shareholders of Vonovia SE and non-controlling interests | 10 | -271.8 | -445.2 |
| Proceeds from issuing financial liabilities | 11 | 1,161.6 | 1,043.0 |
| Cash repayments of financial liabilities | 11 | -1,413.7 | -1,046.3 |
| Payments for transaction costs in relating to capital measures | -9.4 | -13.6 | |
| Payments for other financing costs | -34.6 | -126.5 | |
| Payments for the acquisition of shares in non-controlling interests | -9.0 | – | |
| Proceeds for the sale of shares of consolidated companies | 247.9 | – | |
| Interest paid | -130.1 | -160.3 | |
| Cash flow from financing activities | -459.1 | -748.9 | |
| Net changes in cash and cash equivalents | -1,162.7 | 2.0 | |
| Cash and cash equivalents at the beginning of the period | 1,540.8 | 3,107.9 | |
| Cash and cash equivalents at the end of the period 1) | 378.1 | 3,109.9 |
Also see the corresponding explanations in the Notes
1) Thereof restricted cash € 55.5 million (June 30, 2016: € 78.0 million)
Other reserves
Can be reclassified
| in € million | Sub scribed capital |
Capital reserves |
Retained earnings |
Cash flow hedges |
Available-for-sale financial assets |
|---|---|---|---|---|---|
| As of Jan. 1, 2016 | 466.0 | 5,892.5 | 4,309.9 | -48.3 | 0.4 |
| Profit for the period | 110.0 | ||||
| Other comprehensive income | |||||
| Changes in the period | -42.7 | -99.1 | 105.5 | ||
| Reclassification affecting net income | 50.3 | ||||
| Total comprehensive income | 67.3 | -48.8 | 105.5 | ||
| Dividend distributed by Vonovia SE | -438.0 | ||||
| Changes recognized directly in equity | -1.1 | 0.1 | |||
| As of June 30, 2016 | 466.0 | 5,891.4 | 3,939.3 | -97.1 | 105.9 |
| As of Jan. 1, 2017 | 466.0 | 5,334.9 | 6,665.4 | -93.2 | 94.7 |
| Profit for the period | 993.2 | ||||
| Other comprehensive income | |||||
| Changes in the period | 10.2 | -32.7 | 60.6 | ||
| Reclassification affecting net income | 52.4 | ||||
| Total comprehensive income | 1,003.4 | 19.7 | 60.6 | ||
| Capital increase | 10.5 | ||||
| Premium on the issue of new shares | 342.1 | ||||
| Transaction costs in connection with the issue of shares |
-2.0 | – | |||
| Dividend distributed by Vonovia SE | -525.1 | ||||
| Acquisition of conwert | – | – | |||
| Changes recognized directly in equity 1) | -1.6 | -7.4 | |||
| As of June 30, 2017 | 476.5 | 5,673.4 | 7,136.3 | -73.5 | 155.3 |
1) The main changes in the changes (share disposals) recognized directly in equity relate to company law change in connection with preparations for the merger of GAGFAH S.A. with Vonovia SE.
Consolidated Statement of Changes in Equity
| Non | Equity attributable to Vonovia's shareholders and |
Equity attributable | Equity attributable | ||
|---|---|---|---|---|---|
| controlling | hybrid capital | to Vonovia's hybrid | to Vonovia's | ||
| Total equity | interests | investors | capital investors | shareholders | Total |
| 11,866.9 | 244.8 | 11,622.1 | 1,001.6 | 10,620.5 | -47.9 |
| 147.9 | 23.1 | 124.8 | 14.8 | 110.0 | |
| -37.2 | -0.9 | -36.3 | -36.3 | 6.4 | |
| 50.3 | 50.3 | 50.3 | 50.3 | ||
| 161.0 | 22.2 | 138.8 | 14.8 | 124.0 | 56.7 |
| -438.0 | -438.0 | -438.0 | |||
| 8.4 | 4.4 | 4.0 | 5.0 | -1.0 | |
| 11,598.3 | 271.4 | 11,326.9 | 1,021.4 | 10,305.5 | 8.8 |
| 13,888.4 | 419.0 | 13,469.4 | 1,001.6 | 12,467.8 | 1.5 |
| 1,064.6 | 56.6 | 1,008.0 | 14.8 | 993.2 | |
| 0.2 | 38.1 | 38.1 | 27.9 | ||
| 52.4 | 52.4 | 52.4 | 52.4 | ||
| 1,155.3 | 56.8 | 1,098.5 | 14.8 | 1,083.7 | 80.3 |
| 10.5 | – | 10.5 | |||
| 342.1 | 342.1 | 342.1 | |||
| -2.0 | -2.0 | ||||
| -525.1 | – | -525.1 | -525.1 | ||
| 129.4 | 129.4 | – | – | ||
| 280.5 | -4.0 | 5.0 | -9.0 | ||
| 15,275.1 | 885.7 | 14,389.4 | 1,021.4 | 13,368.0 | 81.8 |
Vonovia SE is incorporated and domiciled in Germany; its registered office is located in Düsseldorf. The head office (principal place of business) is located at Philippstrasse 3, Bochum.
The consolidated financial statements as of June 30, 2017, were prepared in line with the International Financial Reporting Standards (IFRS) as they are to be applied in the European Union for interim financial statements in accordance with IAS 34 and include the company and its subsidiaries.
Recognition and measurement, as well as the explanatory information and notes, are based on the same recognition and measurement methods used to prepare the consolidated financial statements for the 2016 fiscal year. In accordance with IAS 34, the scope of Vonovia's interim consolidated financial statements as of June 30, 2017, is condensed compared with the consolidated financial statements as of December 31, 2016.
All estimates, assumptions, options and judgments remain unchanged from the last consolidated financial statements as of December 31, 2016.
There were no seasonal or economic influences that had an impact on Vonovia's business activities in the reporting period.
In connection with the voluntary public takeover offer that Vonovia SE made on November 17, 2016, to the shareholders of conwert Immobilien Invest SE, Vienna (conwert), a total of 72,902,498 or 71.54 % of the shares had been tendered after the end of the acceptance deadline on December 19, 2016; 682,852 of which were tendered as part of an alternative exchange offer. This corresponds to 339,135 new Vonovia shares to be created.
The acquisition date, the time at which Vonovia SE obtained control of the conwert Group, was January 10, 2017. Vonovia SE's non-cash capital increase, using authorized capital, was entered in the commercial register of Düsseldorf Local Court on this day, and was formulated as a suspensive condition of the takeover offer. This transaction shall be treated as a business combination in accordance with IFRS 3.
Pursuant to Section 19 (3) UebG, the acceptance deadline was extended by three months, starting at the time the result was announced, namely until March 23, 2017 (grace period), for those shareholders who had not yet accepted the offer. The conwert shareholders who wanted to accept this offer were given the option, as with the first tender period, to choose between a cash offer (payment of the cash purchase price of € 16.16 per share in conwert) and an alternative exchange offer (74 shares in Vonovia for every 149 shares in conwert). The extended
acceptance period ended on March 23, 2017, with a further 21,965,224 shares in conwert being tendered. 4,947,554 shares were tendered in exchange for shares in Vonovia. This corresponds to 2,457,177 new Vonovia shares to be created. The capital increase was entered in the Commercial Register on March 31, 2017. This is a transaction that is linked to the actual share purchase (linked transaction). This means that the result of the grace period has to be taken into account when allocating the purchase price as of the acquisition date in respect of the consideration transferred and the resulting goodwill.
The consideration transferred for the acquisition of 93.09 % of the shares in the share capital of the conwert Group in total comprises the following:
| Net cash purchase price component | 1.44 |
|---|---|
| Equity instruments | 0.09 |
| Total consideration | 1.53 |
As part of the first tender, the share-based component relates to 339,135 no-par value shares from the non-cash capital increase of Vonovia SE, which were exchanged by Vonovia SE for the conwert shares. This share-based component was valued at the XETRA closing price of € 31.48 per share on January 10, 2017, and amounts to € 10.7 million.
As part of the extended tender, the share-based component relates to 2,457,177 no-par value shares from the non-cash capital increase of Vonovia SE, which were exchanged by Vonovia SE for the conwert shares. This share-based component was valued at the XETRA closing price of € 32.59 per share on March 23, 2017, and amounts to € 80.1 million.
The provisional allocation of the total purchase price to the acquired assets and liabilities (PPA) of the conwert Group as of the date of first-time consolidation is based on a preliminary external valuation report that was commissioned for this purpose to calculate the fair values of these assets and liabilities.
The assets and liabilities assumed in the course of the business combination had the following provisional fair values as of the date of first-time consolidation:
| Investment properties | 2.47 |
|---|---|
| Cash and cash equivalents | 0.03 |
| Assets held for sale | 0.35 |
| Fair value of other assets | 0.15 |
| Total assets | 3.00 |
| Non-controlling interests | 0.13 |
| Non-derivative financial liabilities | 1.23 |
| Deferred tax liabilities | 0.16 |
| Fair value of other liabilities | 0.16 |
| Total liabilities | 1.68 |
| Fair value net assets | 1.32 |
| Consideration | 1.53 |
| Goodwill | 0.21 |
The goodwill represents synergies from the future integration of the conwert Group.
Out of the trade receivables that were acquired, an amount of € 19.8 million is likely to have been uncollectible at the time of acquisition. The gross amount of the acquired trade receivables was € 110.7 million. The net carrying amount, which corresponds to the fair value, was € 90.9 million.
Since January 2017, the conwert Group has recognized income from property management in the amount of € 94.9 million, as well as an earnings contribution in terms of earnings before fair value adjustments of investment properties, interest, taxes, depreciation and amortization (EBITDA IFRS) of € 45.1 million, which are already reflected in Vonovia's consolidated financial statements in accordance with the IFRS.
Transaction costs of € 4.7 million have been incurred in the 2017 fiscal year, with € 3.0 million recognized as other operating expenses. In addition, other transaction costs in connection with the capital increase were offset against the capital reserves outside profit or loss, taking deferred taxes into account.
A total of 118 domestic and 90 foreign companies of the conwert Group will be newly included in the scope of consolidation as of the date of acquisition.
The figures from the previous year are only comparable to a limited extent due to acquisitions made in the first quarter of 2017.
| in € million | Jan. 1- June 30, 2017 |
Jan. 1- June 30, 2016 |
|---|---|---|
| Rental income | 835.4 | 776.7 |
| Ancillary costs | 336.2 | 323.3 |
| Income from property letting | 1,171.6 | 1,100.0 |
| Other income from property management |
20.8 | 19.4 |
| Income from property management |
1,192.4 | 1,119.4 |
| in € million | Jan. 1- June 30, 2017 |
Jan. 1- June 30, 2016 |
|---|---|---|
| Income from disposal of investment properties |
251.6 | 142.4 |
| Carrying amount of investment properties sold |
-214.6 | -122.3 |
| Profit on disposal of investment properties |
37.0 | 20.1 |
| Income from sale of assets held for sale |
450.3 | 708.1 |
| Retirement carrying amount of assets held for sale |
-450.3 | -708.1 |
| Revaluation of assets held for sale | 53.1 | 17.0 |
| Profit on disposal of assets held for sale |
53.1 | 17.0 |
| 90.1 | 37.1 |
The fair value adjustment of investment properties held for sale for which a purchase contract had been signed but for which transfer of title had not yet taken place led to a gain of € 53.1 million as of June 30, 2017 (1st half of 2016: € 17.0 million).
The measurement of the investment properties led to a valuation gain as of June 30, 2017 of € 1,164.7 million (1st half of 2016: € 0.0 million) (see explanatory information in note [9] Investment Properties).
| in € million | Jan. 1- June 30, 2017 |
Jan. 1- June 30, 2016 |
|---|---|---|
| Expenses for ancillary costs | 317.5 | 310.8 |
| Expenses for maintenance | 204.0 | 155.2 |
| Other cost of purchased goods and services |
48.0 | 40.6 |
| 569.5 | 506.6 |
8 Financial Expenses
| non-derivative financial liabilities | 153.8 | 172.8 |
|---|---|---|
| Swaps (current interest expense for the period) |
1.7 | 19.6 |
| Effects from the valuation of non-derivative financial instruments |
-16.7 | -13.0 |
| Effects from the valuation of swaps |
9.9 | 6.8 |
| Transaction costs | 6.2 | 20.0 |
| Prepayment penalties and commitment interest |
2.9 | 68.8 |
| Interest expenses purchase price liabilities from put options/rights to reimbursement |
7.6 | 2.2 |
| Interest accretion to provisions | 4.6 | 5.9 |
| Other financial expenses | 2.9 | 4.4 |
| 172.9 | 287.5 |
| in € million | Jan. 1- June 30, 2017 |
Jan. 1- June 30, 2016 |
|---|---|---|
| Income from other investments | 19.4 | 10.2 |
| Income from non-current securi ties and non-current loans |
0.9 | 1.0 |
| Other interest and similar income | 23.4 | 10.4 |
| 43.7 | 21.6 |
The income from other investments comprises financial income from investments in other real estate companies in the amount of € 12.9 million (1st half of 2016: € 9.5 million) and also € 6.3 million (1st half of 2016: € 0.6 million) in financial income from the collection of the profit participation in AVW GmbH & Co. KG, Hamburg, for the previous fiscal year in each case.
Jan. 1- June 30, 2016
| As of Jan. 1, 2017 | 26,980.3 |
|---|---|
| Additions due to business combinations | 2,469.6 |
| Additions | 26.1 |
| Capitalized modernization costs | 303.3 |
| Grants received | -1.5 |
| Transfer from property, plant and equipment | 6.1 |
| Transfer from assets held for sale | 0.6 |
| Transfer to assets held for sale | -292.0 |
| Disposals | -214.7 |
| Net income from fair value adjustments of investment properties |
1,164.7 |
| Revaluation of assets held for sale | 53.2 |
| As of June 30, 2017 | 30,495.7 |
| As of Jan. 1, 2016 | 23,431.3 |
|---|---|
| Additions | 304.8 |
| Capitalized modernization costs | 518.8 |
| Grants received | -1.2 |
| Transfer from property, plant and equipment | 14.1 |
| Transfer to property, plant and equipment | -27.1 |
| Transfer from assets held for sale | 0.1 |
| Transfer to assets held for sale | -230.8 |
| Disposals | -317.0 |
| Net income from fair value adjustments of investment properties |
3,236.1 |
| Revaluation of assets held for sale | 51.2 |
| As of Dec. 31, 2016 | 26,980.3 |
Vonovia determines fair value in accordance with the requirements of IAS 40 in conjunction with IFRS 13. We refer to the detailed information set out in the consolidated financial statements for 2016.
This information shows that Vonovia values its portfolio using a method known as the discounted cash flow (DCF) method. Under the DCF methodology, the expected future income and costs of a property are forecast over a period of ten years and discounted to the date of valuation as the net present value. In addition, the terminal value of the property at the end of the ten-year period is determined using the expected stabilized net operating income and again discounted to the date of valuation as the net present value.
Due to the market momentum recognized across Germany in the first half of 2017, Vonovia decided to perform a new valuation on the 20 German locations that account for the largest fair value shares. This list was extended to include Vienna and four other locations that were expected to have seen more significant changes in value. The selection constitutes the major share of the portfolio, accounting for around 2/3 of the total fair value.
As for the purposes of the annual financial statements, Vonovia determined the fair values as of June 30, 2017, in its in-house valuation department on the basis of the methodology described above. The property assets are also assessed by the independent property appraiser CBRE GmbH. The market value resulting from the external review deviates from the internal valuation result by less than 0.1 %. For the part of the portfolio that was not revalued, the valuation from the end of 2016 is applied again, with updates to reflect capitalization.
As far as conwert's portfolio is concerned, the result of the valuation performed by the external expert CBRE was applied to the interim financial statements. The fair values for the conwert portfolio in Germany were calculated using a DCF methodology that is comparable to the procedure used by Vonovia, as explained above. The properties in Austria were also valued by CBRE using a gross rental method. This involved calculating the value of a property by multiplying the net income (income that can be generated in the long term less property management costs that cannot be passed on, the risk of loss of rent and maintenance measures) by a multiplier. This multiplier depends on the capitalized interest rate and the remaining useful life.
The real estate portfolio of Vonovia is to be found in the balance sheet items investment properties, property, plant and equipment (owner-occupied properties) and assets held for sale. The fair value of the real estate portfolio comprising residential buildings, commercial properties, garages and parking spaces as well as undeveloped land and any inheritable building rights granted was € 30,830.2 million as of June 30, 2017 (Dec. 31, 2016: € 27,115.6 million). This corresponds to a net initial yield of 3.9 %* (Dec. 31, 2016: 4.0 %) for the developed land, an in-place-rent multiplier of 18.5 (Dec. 31, 2016: 17.6) and a fair value per m² of € 1,341 (Dec. 31, 2016: € 1,264).
The material valuation parameters for the investment properties (level 3) are as follows as of June 30, 2017, broken down by regional markets:
| Valuation results* | ||||
|---|---|---|---|---|
| June 30, 2017 | Fair Value | thereof Assets held for sale |
thereof Owner-occupied properties |
thereof Investment properties |
| Regional Market | (in € million) | (in € million) | (in € million) | (in € million) |
| Berlin | 4,624.8 | 16.4 | 7.8 | 4,600.7 |
| Rhine Main Area (Frankfurt, Darmstadt, Wiesbaden) |
3,196.4 | 15.8 | 4.9 | 3,175.7 |
| Rhineland (Cologne, Düsseldorf, Bonn) | 3,105.1 | 2.8 | 4.6 | 3,097.6 |
| Dresden | 2,697.4 | 0.0 | 5.3 | 2,692.0 |
| Southern Ruhr Area (Dortmund, Essen, Bochum) |
2,678.5 | 5.0 | 4.2 | 2,669.3 |
| Hamburg | 1,786.6 | 3.8 | 2.7 | 1,780.2 |
| Munich | 1,691.9 | 9.6 | 2.4 | 1,679.9 |
| Stuttgart | 1,591.6 | 2.8 | 7.5 | 1,581.3 |
| Northern Ruhr Area (Duisburg, Gelsenkirchen) | 1,325.9 | 4.2 | 4.1 | 1,317.7 |
| Hanover | 1,100.1 | 1.9 | 1.3 | 1,096.9 |
| Kiel | 928.3 | 0.3 | 3.1 | 925.0 |
| Bremen | 853.7 | 0.0 | 4.1 | 849.6 |
| Leipzig | 679.6 | 0.1 | 0.5 | 679.0 |
| Westphalia (Münster, Osnabrück) | 613.4 | 0.2 | 1.1 | 612.1 |
| Freiburg | 508.4 | 0.5 | 1.7 | 506.1 |
| Other Strategic Locations | 1,966.9 | 4.1 | 3.2 | 1,959.6 |
| Total Regional Market | 29,348.6 | 67.3 | 58.5 | 29,222.8 |
| Non-Strategic Locations | 711.6 | 164.6 | 1.0 | 546.0 |
| Total | 30,060.2 | 231.9 | 59.5 | 29,768.8 |
| Vienna (Austria)** | 614.0 | 21.5 | 0.0 | 592.5 |
* Fair value of the developed land excluding € 156.0 million for other countries, undeveloped land, inheritable building rights granted and other, thereof € 134.4 million investment properties.
** The gross rental method for the portfolio in Austria uses valuation parameters that are only partially comparable.
The inflation rate applied to the DCF procedure is 1.5 %. This led overall to net income from fair value adjustments of € 1,164.7 million in the first half of 2017 (2016 fiscal year: € 3,236.1 million).
Explanatory information on the prior-year figures can be found in the 2016 Annual Report of Vonovia SE.
The sensitivity analyses performed on Vonovia's real estate portfolio show the impact of the value drivers influenced by the market. Those influenced in particular are the market rents and their development, the amount of recognized administrative expenses, maintenance expenses, cost increases, vacancy rate and interest rates. The effect of possible fluctuations in these parameters is shown separately for each parameter according to regional market in the following.
| Capitalized interest rate |
Discount rate |
Stabilized vacancy rate residential |
Market rent increase residential |
Market rent residential (per m² p.a.) |
Maintenance costs residential (per m² p.a.) |
Management costs residential (€ per residential unit p.a.) |
|---|---|---|---|---|---|---|
| 3.1 % | 4.5 % | 1.5 % | 1.4 % | 6.71 | 13.95 | 248 |
| 4.0 % | 5.4 % | 1.3 % | 1.4 % | 8.25 | 14.07 | 268 |
| 4.2 % | 5.4 % | 2.1 % | 1.3 % | 7.26 | 13.73 | 264 |
| 4.4 % | 5.5 % | 2.2 % | 1.2 % | 6.30 | 14.51 | 236 |
| 4.8 % | 5.7 % | 2.6 % | 1.1 % | 5.97 | 13.27 | 262 |
| 4.0 % | 5.0 % | 1.3 % | 1.2 % | 7.49 | 14.32 | 255 |
| 3.6 % | 5.1 % | 0.8 % | 1.5 % | 10.56 | 13.84 | 258 |
| 4.2 % | 5.5 % | 1.6 % | 1.4 % | 8.18 | 14.06 | 266 |
| 5.4 % | 6.0 % | 3.9 % | 0.9 % | 5.56 | 13.30 | 262 |
| 4.3 % | 5.5 % | 2.1 % | 1.3 % | 6.41 | 13.77 | 255 |
| 4.5 % | 5.5 % | 1.8 % | 1.2 % | 6.21 | 14.46 | 254 |
| 4.0 % | 5.2 % | 2.6 % | 1.3 % | 5.90 | 13.37 | 259 |
| 4.3 % | 5.5 % | 3.8 % | 1.2 % | 5.98 | 14.20 | 241 |
| 4.7 % | 5.7 % | 2.3 % | 1.2 % | 5.97 | 13.60 | 256 |
| 3.6 % | 4.9 % | 1.1 % | 1.4 % | 7.58 | 14.24 | 264 |
| 4.4 % | 5.6 % | 2.3 % | 1.2 % | 6.68 | 13.59 | 264 |
| 4.1 % | 5.3 % | 2.1 % | 1.3 % | 6.79 | 13.84 | 256 |
| 5.2 % | 5.9 % | 5.3 % | 0.9 % | 5.17 | 13.38 | 260 |
| 4.1 % | 5.3 % | 2.3 % | 1.2 % | 6.72 | 13.82 | 257 |
| n.a. 3.5 % |
n.a. | n.a. | 9.40 | n.a. | n.a. |
Interactions between the parameters are possible but cannot be quantified owing to the complexity of the interrelationships. The "vacancy" and "market rent" parameters, for example, can influence each other. If rising demand for housing is not met by adequate supply developments, this can result in lower vacancy rates and, at the same time, rising market rents. If, however, the rising demand is compensated for by a high vacancy reserve in the location in question, the market rent level does not necessarily change.
Changes in the demand for housing can also impact the risk associated with the expected payment flows, which is then reflected in adjusted amounts recognized for discounting and capitalized interest rates. The effects do not, however, necessarily have to have a favorable impact on each other, for example if the changes in the demand for residential real estate are overshadowed by macroeconomic developments.
In addition, factors other than demand can have an impact on these parameters. Examples include changes in the housing stock, in seller and buyer behavior, political decisions and developments on the capital market.
The table below shows the percentage impact on values in the event of a change in the valuation parameters. The absolute impact on values is calculated by multiplying the percentage impact by the fair value of the investment properties.
| Change in parameters | |||
|---|---|---|---|
| June 30, 2017 | Management costs residential |
Maintenance costs residential |
cost increase/inflation |
| Regional Market | -10 % / +10 % | -10 % / +10 % | -0.5 % / +0.5 % points |
| Berlin | 0.6 / -0.6 | 2.0 / -2.0 | 4.4 / -4.5 |
| Rhine Main Area (Frankfurt, Darmstadt, Wiesbaden) |
0.6 / -0.6 | 1.8 / -1.8 | 3.0 / -3.1 |
| Rhineland (Cologne, Düsseldorf, Bonn) | 0.6 / -0.6 | 2.0 / -2.0 | 3.3 / -3.4 |
| Dresden | 0.8 / -0.8 | 2.6 / -2.6 | 4.3 / -4.4 |
| Southern Ruhr Area (Dortmund, Essen, Bochum) | 1.0 / -1.0 | 2.8 / -2.8 | 4.2 / -4.3 |
| Hamburg | 0.6 / -0.6 | 2.1 / -2.1 | 3.8 / -3.9 |
| Munich | 0.4 / -0.4 | 1.4 / -1.4 | 3.1 / -3.2 |
| Stuttgart | 0.6 / -0.6 | 1.8 / -1.8 | 3.2 / -3.3 |
| Northern Ruhr Area (Duisburg, Gelsenkirchen) | 1.1 / -1.1 | 3.3 / -3.3 | 4.6 / -4.7 |
| Hanover | 0.8 / -0.8 | 2.4 / -2.4 | 4.0 / -4.1 |
| Kiel | 0.9 / -0.9 | 2.7 / -2.7 | 4.3 / -4.4 |
| Bremen | 0.9 / -0.9 | 2.8 / -2.8 | 5.2 / -5.3 |
| Leipzig | 0.8 / -0.7 | 2.1 / -2.1 | 2.2 / -2.5 |
| Westphalia (Münster, Osnabrück) | 0.9 / -0.9 | 3.0 / -3.0 | 4.5 / -4.6 |
| Freiburg | 0.6 / -0.6 | 2.0 / -2.0 | 3.7 / -3.9 |
| Other Strategic Locations | 0.7 / -0.7 | 2.3 / -2.3 | 3.7 / -3.8 |
| Total Regional Market | 0.7 / -0.7 | 2.2 / -2.2 | 3.8 / -3.9 |
| Non-Strategic Locations | 1.2 / -1.2 | 3.2 / -3.3 | 4.3 / -4.4 |
| Total | 0.7 / -0.7 | 2.2 / -2.2 | 3.8 / -4.0 |
| Vienna (Austria)* | n.a. | n.a. | n.a. |
* The gross rental method for the portfolio in Austria uses valuation parameters that are only partially comparable.
| Change in parameters | |||
|---|---|---|---|
| Discounting and capitalized interest rates |
Stabilized vacancy rate residential |
Market rent increase residential |
Market rent residential |
| -0.25 % / +0.25 % points | -1 % / +1 % points | -0.2 % / +0.2 % points | -2.0 % / +2.0 % |
| 9.1 / -7.7 | 1.6 / -1.7 | -7.8 / 9.1 | -2.3 / 2.3 |
| 6.7 / -5.9 | 1.3 / -1.6 | -5.8 / 6.5 | -2.2 / 2.2 |
| 6.6 / -5.9 | 1.7 / -1.7 | -5.7 / 6.5 | -2.2 / 2.3 |
| 6.4 / -5.7 | 2.0 / -2.0 | -5.9 / 6.6 | -2.4 / 2.3 |
| 5.7 / -5.1 | 2.1 / -2.1 | -5.5 / 6.1 | -2.4 / 2.4 |
| 7.1 / -6.3 | 1.4 / -1.8 | -6.2 / 7.0 | -2.2 / 2.2 |
| 8.0 / -7.0 | 0.8 / -1.5 | -6.5 / 7.4 | -2.0 / 2.0 |
| 6.7 / -5.9 | 1.6 / -1.6 | -5.8 / 6.5 | -2.2 / 2.2 |
| 5.0 / -4.6 | 2.3 / -2.3 | -5.2 / 5.8 | -2.6 / 2.6 |
| 6.4 / -5.7 | 1.9 / -1.9 | -5.8 / 6.5 | -2.3 / 2.3 |
| 6.1 / -5.4 | 2.0 / -2.0 | -5.8 / 6.5 | -2.4 / 2.3 |
| 6.9 / -6.1 | 2.0 / -2.1 | -6.5 / 7.4 | -2.4 / 2.3 |
| 6.2 / -5.5 | 1.6 / -1.6 | -5.3 / 5.9 | -2.3 / 2.3 |
| 5.8 / -5.2 | 2.1 / -2.1 | -5.6 / 6.3 | -2.3 / 2.3 |
| 7.6 / -6.7 | 1.4 / -1.7 | -6.7 / 7.7 | -2.3 / 2.3 |
| 6.2 / -5.5 | 1.8 / -1.9 | -5.7 / 6.4 | -2.3 / 2.3 |
| 6.9 / -6.1 | 1.7 / -1.8 | -6.1 / 7.0 | -2.3 / 2.3 |
| 5.1 / -4.7 | 2.2 / -2.2 | -5.2 / 5.8 | -2.5 / 2.6 |
| 6.9 / -6.0 | 1.7 / -1.8 | -6.1 / 6.9 | -2.3 / 2.3 |
| 7.0 / -6.3 | n.a. | n.a. | -1.6 / 1.4 |
| As of Jan. 1, 2017 | 466,000,624.00 |
|---|---|
| Capital increase against non-cash contributions on January 10, 2017 (First tender conwert) |
339,135.00 |
| Capital increase against non-cash contributions on March 31, 2017 (Second tender conwert) |
2,457,177.00 |
| Capital increase against non-cash contributions on June 16, 2017 (share dividend) |
7,663,312.00 |
| As of June 30, 2017 | 476,460,248.00 |
| As of Jan. 1, 2017 | 5,334,898,463.89 |
|---|---|
| Premium from the first tender conwert on January 10, 2017 |
10,335,140.12 |
| Premium from the second tender conwert on March 31, 2017 |
77,622,252.60 |
| Permium from the capital increase share dividend on June 16, 2017 |
254,115,425.92 |
| Transaction costs on the issue of new shares (after allowing for deferred taxes) |
-1,993,577.30 |
| Other changes not affecting net income | -1,601,759.80 |
| As of June 30, 2017 | 5,673,375,945.43 |
The non-cash capital increases in connection with the takeover of the conwert Group were made using the 2015 authorized capital. For detailed information, reference is made to note [2] Scope of Consolidation and Business Combinations.
The Annual General Meeting held on May 16, 2017, resolved to pay a dividend for the 2016 fiscal year in the amount of € 1.12 per share.
For the first time, Vonovia offered its shareholders the option of choosing between being paid the dividend in cash or being granted new shares. During the subscription period, 49.86 % of shareholders opted for the stock dividend instead of a cash dividend. As a result, 7,663,312 new shares were issued using the company's authorized capital pursuant to Section 5b of the Articles of Association ("2016 authorized capital") at a subscription price of € 34.16 per share, i.e. a total
amount of € 261,778,737.92. This means that the total number of Vonovia's shares has risen to 476,460,248. The total amount of the dividend distributed in cash therefore came to € 263,273,830.40.
The 2013 and 2015 authorized capital was canceled by way of a resolution passed by the Annual General Meeting held on May 16, 2017, in Düsseldorf, and a new 2017 authorized capital was created in the amount of € 66,556,874.00. Shareholder subscription rights for the 2017 authorized capital can be excluded.
The 2016 authorized capital still amounts to € 160,178,282.00, following its partial utilization for the issue of new shares as a stock dividend.
At the extraordinary Annual General Meeting of GAGFAH S.A. held on June 27, 2017, a resolution was passed on a cross-border merger of GAGFAH S.A. with Vonovia SE. In order to implement the merger, Vonovia increased the share capital by € 8,640,578.00 by issuing 8,640,578 new no-par-value registered shares in the company, each accounting for a pro rata amount of € 1.00 of the share capital (compensatory shares). The non-cash capital increase was registered on July 12, 2017.
The compensatory shares were created using the 2016 authorized capital. The 2016 authorized capital was used accordingly by way of a resolution passed by the Management Board on May 16, 2017, and with the consent of the company's Supervisory Board on May 16, 2017.
| June 30, 2017 | Dec. 31, 2016 | ||||
|---|---|---|---|---|---|
| in € million | non-current | current | non-current | current | |
| Non-derivative financial liabilities | |||||
| Liabilities to banks | 2,406.6 | 972.1 | 3,259.1 | 180.3 | |
| Liabilities to other creditors | 9,364.5 | 1,417.6 | 8,384.3 | 1,474.7 | |
| Deferred interest from non-derivative financial liabilities | - | 96.8 | - | 72.6 | |
| 11,771.1 | 2,486.5 | 11,643.4 | 1,727.6 |
The US dollar bonds issued in 2013 are translated at the exchange rate at the end of the reporting period in line with applicable IFRS provisions. Allowing for the hedging rate prescribed through the interest hedging transaction entered into, this financial liability would be € 137.2 million (Dec. 31, 2016: € 209.9 million) lower than the recognized value.
Issue of Bonds under the EMTN – Tap Issuance (European Medium-Term Notes Program)
Based on the current tap issuance master agreement dated April 12, 2016, with the corresponding supplements (€ 15,000,000,000 debt issuance program), Vonovia issued two bonds of € 500 million each via its Dutch financing company in January 2017. The bonds were issued at an issue price of 99.863 %, a coupon of 0.75 % and with a maturity of five years for one tranche, and at an issue price of 99.266 %, a coupon of 1.75 % and with a maturity of ten years for the other.
The nominal obligations of the liabilities to banks and the liabilities to other creditors developed as follows:
| in € million | June 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Bonds* | 600.0 | 600.0 |
| Bonds (US dollar)* | 739.8 | 739.8 |
| Bonds (EMTN)* | 8,500.0 | 7,500.0 |
| Bond (Hybrid)* | 700.0 | 700.0 |
| Taurus* | - | 1,020.4 |
| Portfolio loans: | ||
| Berlin-Hannoversche Hypothe kenbank (Landesbank Berlin)* |
495.4 | 501.4 |
| Berlin-Hannoversche Hypothe kenbank, Landesbank Berlin and Landesbank Baden-Würt temberg* |
391.3 | 401.5 |
| Corealcredit Bank AG* | 146.5 | 147.7 |
| Deutsche Hypothekenbank* | 170.2 | 174.5 |
| HSH Nordbank AG* | - | 17.1 |
| Nordrheinische Ärzte versorgung |
32.2 | 33.3 |
| Norddeutsche Landesbank* | 118.7 | 120.4 |
| Mortgages | 1,310.8 | 1,238.3 |
| conwert: | ||
| Mortgages | 912.4 | - |
| 14,117.3 | 13,194.4 |
* Under the conditions of existing loan agreements, Vonovia is obliged to fulfill certain financial covenants.
Half-Year Report 2017
| Measurement categories and classes: | Measurement | Carrying |
|---|---|---|
| in € million | category in acc. with IAS 39 |
amounts June 30, 2017 |
| Assets | ||
| Cash and cash equivalents | ||
| Cash on hand and deposits at banking institutions | LaR | 378.1 |
| Trade receivables | ||
| Receivables from the sale of properties | LaR | 180.1 |
| Receivables from property letting | LaR | 35.1 |
| Other receivables from trading | LaR | 5.5 |
| Financial assets | ||
| Joint ventures valued at equity | n.a. | 7.4 |
| Loans to other investments | LaR | 33.4 |
| Other non-current loans | LaR | 15.5 |
| Non-current securities | AfS | 7.8 |
| Other investments | AfS | 566.5 |
| Derivative financial assets | ||
| Cash flow hedges (cross currency swaps) | n.a. | 119.9 |
| Liabilities | ||
| Trade payables | FLAC | 124.1 |
| Non-derivative financial liabilities | FLAC | 14,257.6 |
| Derivative financial liabilities | ||
| Purchase price liabilities from put options/rights to reimbursement | FLHfT | 26.1 |
| Stand-alone interest rate swaps | FLHfT | 3.5 |
| Other swaps | n.a. | 18.3 |
| Liabilities from finance leases | n.a. | 105.7 |
| Liabilities to non-controlling interests | FLAC | 5.3 |
| Thereof aggregated by measurement categories in accordance with IAS 39: | ||
| Loans and receivables | LaR | 647.7 |
| Available-for-sale financial assets | AfS | 574.3 |
| Financial liabilities held-for-trading | FLHfT | 29.6 |
| Financial liabilities measured at amortized cost | FLAC | 14,387.0 |
| Fair value Fair value June 30, 2017 hierarchy level |
Amounts recognized in balance sheet in acc. with IAS 17/IAS 28 |
Fair value recognized in equity |
Fair value affecting net income |
Acquisition cost |
Amortized cost |
Face value |
|---|---|---|---|---|---|---|
| 378.1 | 378.1 | |||||
| 180.1 | 180.1 | |||||
| 35.1 | 35.1 | |||||
| 5.5 | 5.5 | |||||
| 7.4 | 7.4 | |||||
| 67.0 | 33.4 | |||||
| 15.5 | 15.5 | |||||
| 7.8 | 7.8 | |||||
| 566.5 | 563.3 | 3.2 | ||||
| 119.9 | ||||||
| 124.1 | 124.1 | |||||
| 14,821.1 | 14,257.6 | |||||
| 26.1 | 26.1 | |||||
| 3.5 | 3.5 | |||||
| 18.3 | ||||||
| 207.9 5.3 |
105.7 | 5.3 | ||||
| 681.3 | 269.6 | 378.1 | ||||
| 574.3 | 571.1 | 3.2 | ||||
| 29.6 | 29.6 | |||||
| 14,950.5 | 14,387.0 |
| Measurement categories and classes: | Measurement | Carrying | |
|---|---|---|---|
| in € million | category in acc. with IAS 39 |
amounts Dec. 31, 2016 |
|
| Assets | |||
| Cash and cash equivalents | |||
| Cash on hand and deposits at banking institutions | LaR | 1,540.8 | |
| Trade receivables | |||
| Receivables from the sale of properties | LaR | 135.4 | |
| Receivables from property letting | LaR | 28.0 | |
| Other receivables from trading | LaR | 1.0 | |
| Financial assets | |||
| Joint ventures valued at equity | n. a. | 3.9 | |
| Loans to other investments | LaR | 33.5 | |
| Other non-current loans | LaR | 4.0 | |
| Non-current securities | AfS | 7.4 | |
| Other investments | AfS | 504.5 | |
| Derivative financial assets | |||
| Cash flow hedges (cross currency swaps) | n. a. | 184.7 | |
| Embedded derivatives | FLHfT | 0.2 | |
| Liabilities | |||
| Trade payables | FLAC | 140.1 | |
| Non-derivative financial liabilities | FLAC | 13,371.0 | |
| Derivative financial liabilities | |||
| Purchase price liabilities from put options/rights to reimbursement | FLHfT | 57.2 | |
| Other swaps | n. a. | 19.4 | |
| Liabilities from finance leases | n. a. | 99.2 | |
| Liabilities to non-controlling interests | FLAC | 12.6 | |
| Thereof aggregated by measurement categories in accordance with IAS 39: | |||
| Loans and receivables | LaR | 1,742.7 | |
| Available-for-sale financial assets | AfS | 511.9 | |
| Financial liabilities held-for-trading | FLHfT | 57.0 | |
| Financial liabilities measured at amortized cost | FLAC | 13,523.7 | |
| Fair value hierarchy level |
Fair value Dec. 31, 2016 |
Amounts recognized in balance sheet in acc. with IAS 17/IAS 28 |
Fair value recognized in equity |
Fair value affecting net income |
Acquisition cost |
Amortized cost |
Face value |
|---|---|---|---|---|---|---|---|
| 1 | 1,540.8 | 1,540.8 | |||||
| 2 | 135.4 | 135.4 | |||||
| 2 | 28.0 | 28.0 | |||||
| 2 | 1.0 | 1.0 | |||||
| n.a. | 3.9 | 3.9 | |||||
| 2 | 55.7 | 33.5 | |||||
| 2 | 4.0 | 4.0 | |||||
| 1 | 7.4 | 7.4 | |||||
| 1 | 504.5 | 501.9 | 2.6 | ||||
| 2 | 184.7 | ||||||
| 2 | 0.2 | 0.2 | |||||
| 2 | 140.1 | 140.1 | |||||
| 2 | 14,041.0 | 13,371.0 | |||||
| 3 | 57.2 | 57.2 | |||||
| 2 | 19.4 | ||||||
| 2 | 207.7 | 99.2 | |||||
| 12.6 | 12.6 | ||||||
| 1,764.9 | 201.9 | 1,540.8 | |||||
| 511.9 | 509.3 | 2.6 | |||||
| 57.0 | 57.0 | ||||||
| 14,193.7 | 13,523.7 |
Financial assets and financial liabilities not covered by IAS 39 comprise:
Employee benefits IAS 19: gross presentation of right to reimbursement arising from transferred pension obligations in the amount of € 6.6 million (Dec. 31, 2016: € 7.0 million).
Amount by which the fair value of plan assets exceeds the corresponding obligation: € 1.1 million (Dec. 31, 2016: € 1.1 million).
Provisions for pensions and similar obligations: € 505.5 million (Dec.31, 2016: € 522.6 million).
The following table shows the assets and liabilities that are recognized in the balance sheet at fair value and their classification according to the fair value hierarchy:
| in € million | June 30, 2017 |
Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Assets | ||||
| Investment properties | 30,495.7 | 30,495.7 | ||
| Available-for-sale financial assets | ||||
| Non-current securities | 7.8 | 7.8 | ||
| Other investments | 563.3 | 563.3 | ||
| Assets held for sale | ||||
| Investment properties (contract closed) | 254.1 | 254.1 | ||
| Derivative financial assets | ||||
| Cash flow hedges (cross currency swaps) | 119.9 | 119.9 | ||
| Liabilities | ||||
| Derivative financial liabilities | ||||
| Purchase price liabilities from put options/ rights to reimbursement |
26.1 | 26.1 | ||
| Cash flow hedges | 14.5 | 14.5 | ||
| Stand-alone derivatives | 3.5 | 3.5 |
| in € million | Dec. 31, 2016 | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Assets | ||||
| Investment properties | 26,980.3 | 26,980.3 | ||
| Available-for-sale financial assets | ||||
| Non-current securities | 7.4 | 7.4 | ||
| Other investments | 501.9 | 501.9 | ||
| Assets held for sale | ||||
| Investment properties (contract closed) | 61.6 | 61.6 | ||
| Derivative financial assets | ||||
| Cash flow hedges (cross currency swaps) | 184.9 | 184.9 | ||
| Liabilities | ||||
| Derivative financial liabilities | ||||
| Purchase price liabilities from put options/ rights to reimbursement |
57.2 | 57.2 | ||
| Cash flow hedges | 19.1 | 19.1 |
Vonovia measures its investment properties generally on the basis of the discounted cash flow (DCF) methodology (Level 3). The main valuation parameters and valuation results can be found in note [9] Investment Properties.
The investment properties classified as assets held for sale are recognized at the time of their transfer to assets held for sale at their new fair value, the agreed purchase price (Level 2).
No financial instruments were reclassified to different hierarchy levels compared with the comparative period.
Non-current securities are measured using the quoted prices in active markets (Level 1).
For the measurement of financial instruments, cash flows are initially calculated and then discounted. In addition to the tenor-specific EURIBOR rates (3M; 6M), the respective credit risk is taken as a basis for discounting. Depending on the expected cash flows, either Vonovia's own credit risk or the counterparty risk is taken into account in the calculation. For the consolidated financial statements, Vonovia's own credit risk was relevant for interest rate swaps. This credit risk is derived for material risks from rates
observable on the capital markets and ranges between 20 and 80 basis points, depending on the residual maturities of financial instruments. Regarding the positive market values of the cross currency swaps, a counterparty risk of between 30 and 50 basis points was taken into account.
The calculated cash flows of the cross currency swap result from the forward curve for USD/EUR. The cash flows are discounted on the basis of the reference interest rate of each currency (LIBOR and EURIBOR) and translated into euros at the current exchange rate (Level 2).
The fair value of the purchase price liabilities from put options/rights to reimbursement granted to minority shareholders is generally based on the going concern value of the respective company; if a contractually agreed minimum purchase price is higher than this amount, this purchase price is recognized (Level 3). The unobservable valuation parameters may fluctuate depending on the going concern values of these companies. However, a major change in value is not likely, as the business model is very predictable.
The following table shows the development of the put options recognized at fair value:
| Change in | Change | ||||||
|---|---|---|---|---|---|---|---|
| in € million | As of Jan. 1 |
Scope of consolidation |
affecting net income |
cash effective |
not affecting net income |
As of June 30 |
|
| 2017 | |||||||
| Purchase price liabilities from put options/rights to reimbursement |
57.2 | 10.1 | -14.7 | – | -26.5 | 26.1 | |
| 2016 | |||||||
| Purchase price liabilities from put options/rights to reimbursement |
57.6 | 6.7 | -0.4 | – | -6.7 | 57.2 |
The following table shows the segment information for the first half of 2017: The segment previously referred to as "Extension" is being continued as the "Value-add Business" segment, without any changes being made to the content of its activities.
| in € million | Rental | Value-add Business |
Sales | Other* | Group |
|---|---|---|---|---|---|
| Jan. 1–June 30, 2017 | |||||
| Segment income | 833.2 | 483.8 | 701.9 | -124.6 | 1,894.3 |
| thereof external income | 833.2 | 80.1 | 701.9 | 279.1 | 1,894.3 |
| thereof internal income | 403.7 | -403.7 | |||
| Carrying amount of assets sold | -664.9 | ||||
| Revaluation from disposal of assets held for sale | 20.1 | ||||
| Expenses for maintenance | -127.3 | ||||
| Operating expenses | -132.4 | -438.2 | -12.8 | 113.1 | |
| Adjusted EBITDA | 573.5 | 45.6 | 44.3 | -11.5 | 651.9 |
| Non-recurring items | -46.3 | ||||
| Period adjustments from assets held for sale | 32.9 | ||||
| Income from investments in other real estate companies | 12.9 | ||||
| EBITDA IFRS | 651.4 | ||||
| Net income from fair value adjustments of investment properties | 1,164.7 | ||||
| Depreciation and amortization | -14.9 | ||||
| Income from other investments | -19.4 | ||||
| Financial income | 43.7 | ||||
| Financial expenses | -172.9 | ||||
| EBT | 1,652.6 | ||||
| Income taxes | -588.0 | ||||
| Profit for the period | 1,064.6 |
* The income for the segments Rental, Value-add Business and sales constitutes income that is regularly reported to the Management Board as the chief operating decision-maker. The income in the column "Other" results from the onward charging of ancillary costs amounting to € 336.2 million, as well as consolidation effects. These are not part of the regular reporting to the Management Board and have thus been presented in the "Other" column. The cost side is also part of the reporting to the Management Board in order to ensure efficient property management.
| in € million | Rental | Value-add Business |
Sales | Other* | Group |
|---|---|---|---|---|---|
| Jan. 1–June 30, 2016 | |||||
| Segment income | 774.7 | 333.6 | 850.5 | 11.1 | 1,969.9 |
| thereof external income | 774.7 | 56.7 | 850.5 | 288.0 | 1,969.9 |
| thereof internal income | 276.9 | -276.9 | |||
| Carrying amount of assets sold | -830.4 | ||||
| Revaluation from disposal of assets held for sale | 38.2 | ||||
| Expenses for maintenance | -119.0 | ||||
| Operating expenses | -120.1 | -307.6 | -11.8 | -14.6 | |
| Adjusted EBITDA | 535.6 | 26.0 | 46.5 | -3.5 | 604.6 |
| Non-recurring items | -49.1 | ||||
| Period adjustments from assets held for sale | -21.1 | ||||
| Income from investments in other real estate companies | 9.5 | ||||
| EBITDA IFRS | 543.9 | ||||
| Net income from fair value adjustments of investment properties | - | ||||
| Depreciation and amortization | -10.0 | ||||
| Income from other investments | -10.2 | ||||
| Financial income | 21.6 | ||||
| Financial expenses | -287.5 | ||||
| EBT | 257.8 | ||||
| Income taxes | -109.9 | ||||
| Profit for the period | 147.9 |
* The income for the segments Rental, Value-add Business and sales constitutes income that is regularly reported to the Management Board as the chief operating decision-maker. The income in the column "Other" results from the onward charging of ancillary costs amounting to € 323.3 million, as well as consolidation effects. These are not part of the regular reporting to the Management Board and have thus been presented in the "Other" column. The cost side is also part of the reporting to the Management Board in order to ensure efficient property management.
The following table gives a detailed list of the nonrecurring items for the reporting period:
| in € million | Jan. 1– June 30, 2017 |
Jan. 1– June 30, 2016 |
|---|---|---|
| Severance payments/ Pre-retirement arrangements |
7.1 | 16.7 |
| Business model optimisation/ Development of new fields of business |
9.4 | 7.7 |
| Acquisition costs incl. integration costs* |
28.9 | 23.2 |
| Refinancing and equity measures | 0.9 | 1.5 |
| Total non-Recurring Items | 46.3 | 49.1 |
* Including takeover costs and one-time expenses in connection with acquisitions, such as HR measures relating to the integration process. Figures for the previous year shown in line with the current reporting structure for 2017.
Düsseldorf, July 25, 2017
(CEO) (COO)
Rolf Buch Klaus Freiberg
Dr. A. Stefan Kirsten Gerald Klinck (CFO) (CCO)
We have reviewed the condensed interim consolidated financial statements – comprising Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and Selected Explanatory Notes to the condensed interim consolidated financial statements – together with the interim group management report of the Vonovia SE, Düsseldorf, for the period from January 1 to June 30, 2017 that are part of the half year financial report according to § 37w WpHG ["Wertpapierhandelsgesetz": "German Securities Trading Act"]. The preparation of the condensed interim consolidated financial statements in accordance with those IFRS applicable to interim financial reporting as adopted by the EU, and of the interim group management report in accordance with the requirements of the WpHG applicable to interim group management reports, is the responsibility of the company's management. Our responsibility is to issue a report on the condensed interim consolidated financial statements and on the interim group management report based on our review.
We performed our review of the condensed interim consolidated financial statements and the interim group management report in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW) as well as in supplementary compliance with the International Standard on Review Engagements "Review of interim Financial information performed by the Independent Auditor of the Entity" (ISRE 2410). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with a certain level of assurance, that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, and that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports. A review is limited primarily to inquiries of company employees and analytical assessments and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot issue an auditor's report.
Based on our review, no matters have come to our attention that cause us to presume that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, or that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.
Essen, July 31, 2017
KPMG AG Wirtschaftsprüfungsgesellschaft
Ufer Bornhofen
German Public Auditor German Public Auditor
"To the best of our knowledge and in accordance with the applicable reporting principles, the interim consolidated financial statements give a true and fair view of the Group's net assets, financial position and results of operations, and the combined Group management report includes a fair view of the business development including the results and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group in the remainder of the fiscal year."
Düsseldorf, July 25, 2017
Rolf Buch Klaus Freiberg Dr. A. Stefan Kirsten Gerald Klinck (CEO) (COO) (CFO) (CCO)
Vonovia manages its own real estate portfolio with a fair value of € 30.8 billion as of June 30, 2017. The vast majority of our apartments are located in regions with positive economic and demographic development prospects.
| Fair value* | In-place rent (in €/m²) |
||||
|---|---|---|---|---|---|
| As at June 30, 2017 | (in € million) | (in €/m²) | Residential units |
Vacancy rate (in %) |
|
| Strategic | 27,925.1 | 1,360 | 320,311 | 2.6 | 6.18 |
| Operate | 9,654.4 | 1,344 | 105,972 | 2.8 | 6.29 |
| Upgrade Buildings | 10,055.3 | 1,312 | 125,064 | 2.7 | 6.03 |
| Optimize Apartments | 8,215.5 | 1,444 | 89,275 | 2.1 | 6.25 |
| Privatize | 1,531.2 | 1,357 | 16,180 | 4.3 | 6.01 |
| Non-Strategic | 336.7 | 616 | 8,862 | 8.9 | 4.85 |
| Non-Core | 267.2 | 732 | 5,259 | 8.2 | 4.99 |
| Vonovia Germany | 30,060.2 | 1,332 | 350,612 | 2.9 | 6.12 |
| Vonovia Austria | 614.0 | 2,071 | 2,203 | 3.1 | 6.24 |
| Total | 30,674.2 | 1,341 | 352,815 | 2.9 | 6.12 |
| Fair value* | In-place rent (in €/m²) |
||||
|---|---|---|---|---|---|
| As at June 30, 2017 | (in € million) | (in €/m²) | Residential units |
Vacancy rate (in %) |
|
| Regional market** | |||||
| Berlin | 4,624.8 | 1,820 | 38,582 | 1.7 | 6.21 |
| Rhine Main Area | 3,196.4 | 1,757 | 28,052 | 1.8 | 7.54 |
| Rhineland | 3,105.1 | 1,464 | 30,756 | 3.1 | 6.65 |
| Dresden | 2,697.4 | 1,153 | 38,603 | 2.5 | 5.67 |
| Southern Ruhr Area | 2,678.5 | 963 | 44,528 | 3.3 | 5.52 |
| Hamburg | 1,786.6 | 1,648 | 16,584 | 2.2 | 6.67 |
| Munich | 1,691.9 | 2,564 | 9,752 | 0.8 | 7.60 |
| Stuttgart | 1,591.6 | 1,717 | 14,235 | 1.8 | 7.42 |
| Northern Ruhr Area | 1,325.9 | 774 | 27,281 | 4.1 | 5.24 |
| Hanover | 1,100.1 | 1,236 | 13,826 | 3.0 | 6.01 |
| Kiel | 928.3 | 1,103 | 13,983 | 1.8 | 5.60 |
| Bremen | 853.7 | 1,147 | 11,921 | 3.7 | 5.34 |
| Leipzig | 679.6 | 1,096 | 9,171 | 4.2 | 5.69 |
| Westphalia | 613.4 | 968 | 9,651 | 2.2 | 5.46 |
| Freiburg | 508.4 | 1,816 | 4,055 | 1.8 | 6.83 |
| Other strategic locations | 1,966.9 | 1,261 | 24,012 | 2.9 | 6.22 |
| Total strategic locations | 29,348.6 | 1,361 | 334,992 | 2.6 | 6.17 |
* Fair value of the developed land excluding € 156.0 million for undeveloped land, inheritable building rights granted and other.
** With regard to the residential real estate market, regional markets are largely similar metropolitan areas based on the definition of the German Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR). In addition to the strategic housing stock, they also include stocks for privatization in strategic locations.
Philippstrasse 3 44803 Bochum Phone +49 234 314-0 Fax +49 234 314-1314 [email protected] www.vonovia.de
Klaus Markus Head of Corporate Communications Phone +49 234 314-1149 Fax +49 234 314-1309 Email: [email protected]
Rene Hoffmann Head of Investor Relations Phone +49 234 314-1629 Fax +49 234 314-2995 Email: [email protected]
August 2, 2017 Publication of Interim Report January–June 2017
November 8, 2017 Publication of Interim Statement January–September 2017
This Interim Financial Report is published in German and English. The German version is always the authoritative text. The Interim Financial Report can be found on the website at www.vonovia.de.
EPRA is a registered trademark of the European Public Real Estate Association.
This report contains forward-looking statements. These statements are based on current experience, assumptions and forecasts of the Management Board as well as information currently available to the Management Board. The forward-looking statements are not guarantees of the future developments and results mentioned therein. The future developments and results depend on a large number of factors. They involve certain risks and uncertainties and are based on assumptions that may prove to be inaccurate. These risk factors include, but are not limited to, those discussed in the risk report of the 2016 Annual Report. We do not assume any obligation to update the forward-looking statements contained in this report. This financial report does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any securities of Vonovia SE.
Published by: The Management Board of Vonovia SE Concept and Realization: Berichtsmanufaktur GmbH, Hamburg Translation: EnglishBusiness AG, Hamburg Illustrations: Thomas Kappes (Hamburg) As of August 2017 © Vonovia SE, Bochum
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