29 Total Equity

Subscribed Capital

The subscribed capital represents the company’s share capital in the amount of € 466,000,624.00, split into 466,000,624 no-par value registered shares.

The shares are currently uncertificated.

In the event of capital increases, the profit participation of new shares can be determined in a manner which differs from that stipulated in Section 60 (2) of the German Stock Corporation Act (AktG).

As a result of the entry in the Commercial Register made on March 6, 2015, the equity of Vonovia SE was increased by € 2,657,751,786.00 as a result of the mixed cash and non-cash capital increase as part of the completion of the voluntary public takeover offer made for all shares in GAGFAH S.A. In line with the number of newly created no-par value shares, € 82,483,803.00 of this amount was attributable to the share capital.

Out of the 82,483,803.00 no-par value shares from the capital increase, 4,423,413 shares were subscribed to in cash by J.P. Morgan Securities plc at a price of € 25.89. The remaining 78,060,390 shares were valued at an XETRA closing price of € 32.58 per share on March 6, 2015, as part of the non-cash capital increase.

Pursuant to Art. 16 in conjunction with Art. 15 of the Luxembourg law on public takeover offers dated May 19, 2006, 12,355,521 GAGFAH S.A. shares were tendered to Vonovia SE in the period leading up to May 10, 2015. 12,196,224 were attributable to the combined consideration and 159,297 to the cash consideration. This was a transaction that was linked to the actual share purchase. The 12,355,521 GAGFAH S.A. shares corresponded to 4,355,700 of the company’s shares.

On the basis of the resolution passed by the Management Board of Vonovia SE on May 15, 2015, and the consent of the Supervisory Board’s Finance Committee issued on May 18, 2015, the share capital of Vonovia SE was increased, as part of the extended tender under Luxembourg law, by € 4,355,790.00 from € 354,106,228.00 to € 358,462,018.00 as a result of the issue of 4,355,790 new shares from the 2013 authorized capital in return for contributions in kind. The new shares were issued at a price of € 1.00 per share and carry full dividend rights as of January 1, 2015. The capital increase was entered in the Commercial Register on May 22, 2015.

The share-based component relates to 4,355,790 no-par value shares in Vonovia SE, which were exchanged by Vonovia SE for the GAGFAH S.A. shares. The share-based component was valued at the XETRA closing price of € 29.45 per share on May 8, 2015. Since May 10, 2015 was a Sunday, the end of the tender period fell on May 8, 2015.

On June 14, 2015, the Management Board made the decision, following authorization by the Supervisory Board on June 12, 2015, to increase the company’s registered share capital by € 107,538,606.00, from € 358,462,018.00 to € 466,000,624.00, in return for cash contributions. The capital increase was implemented using the 2015 authorized capital by issuing 107,538,606 new registered no-par value shares, each accounting for a pro rata amount of € 1.00 of the company’s share capital and carrying full dividend rights as of January 1, 2015, as well as subscription rights for the existing shareholders. The subscription price was € 20.90 per share. 105,514,060 new shares were purchased for a price of € 20.90 per share. The 2,024,546 shares for which the subscription right has not been exercised were sold on the market at a price of € 25.80 per share. Of an issue price of € 2,257.5 million, € 107.5 million related to a resolved subscribed capital increase and € 2,149.9 million to a resolved addition to the capital reserves. The transaction costs were recognized in the capital reserves while allowing for deferred tax effects and without affecting net income. The capital increase was entered in the Commercial Register on July 3, 2015.

Development of the Subscribed Capital

in €

 

 

 

 

 

As of Jan. 1, 2015

 

271,622,425.00

Capital increase against non-cash contributions on March 6, 2015

 

78,060,390.00

Capital increase against cash contributions on March 6, 2015

 

4,423,413.00

Capital increase against non-cash contributions on May 22, 2015

 

4,355,790.00

Capital increase against cash contributions on July 3, 2015

 

107,538,606.00

As of Dec. 31, 2015

 

466,000,624.00

Capital Increases That Have Been Resolved but not Completed as Part of the Voluntary Public Takeover Offer Made to the Shareholders of Deutsche Wohnen AG

At the extraordinary general shareholders’ meeting held on November 30, 2015, in order to enable the combined cash and exchange offer for the conversion of the existing Deutsche Wohnen shares into Vonovia offer shares, Vonovia SE’s shareholders passed a resolution on a non-cash capital increase and a cash capital increase, as well as on the creation of authorized capital.

The extraordinary general shareholders’ meeting resolved that Vonovia SE’s share capital, currently amounting, as entered in the Commercial Register, to € 466,000,624.00, split into 466,000,624 no-par value registered shares (shares with no nominal value) each accounting for a pro rata amount of € 1.00 of the company’s share capital, be increased, in return for contributions in kind, by up to € 245,194,002.00 to up to € 711,194,626.00 by issuing up to 245,194,002 no-par value registered shares, each accounting for a pro rata amount of € 1.00 of the company’s share capital.

Furthermore, in respect of the cash capital increase, the general shareholders’ meeting resolved that Vonovia SE’s share capital, currently amounting, as entered in the Commercial Register, to € 466,000,624.00, split into 466,000,624 no-par value registered shares (shares with no nominal value) each accounting for a pro rata amount of € 1.00 of the company’s share capital, be increased, in return for cash contributions, from the future amount of the share capital as it will stand once the previously described non-cash capital increase has been conducted, by up to € 12,266,064.00 by issuing up to 12,266,064 no-par value registered shares, each accounting for a pro rata amount of € 1.00 of the company’s share capital. The agreed subscription price of the new Vonovia shares is € 28.96 per share in Vonovia.

The issue price of the new Vonovia shares in connection with both the non-cash capital increase and the cash capital increase will be € 1.00. If the new Vonovia shares are issued before the Annual General Meeting that makes the decision on the appropriation of profit for the fiscal year ending on December 31, 2015, then the new Vonovia shares will first carry dividend rights for the fiscal year ending on December 31, 2015. Otherwise, they will carry dividend rights from the start of the fiscal year that is ongoing at the time they are issued. Subscription rights for Vonovia SE’s shareholders are excluded.

The aforementioned resolutions regarding the increase of the share capital in return for non-cash and cash contributions become invalid if this capital increase is not conducted within three months following the entry of these resolutions in the Commercial Register or, at the latest, on July 15, 2016.

In addition, Vonovia SE’s shareholders made the decision, at the extraordinary general shareholders’ meeting held on November 30, 2015, to create authorized capital (2015/II authorized capital). The Management Board is authorized, with the consent of the Supervisory Board, to increase Vonovia SE’s share capital by up to 12,266,064 no-par value registered shares in return for cash contributions and/or contributions in kind on or before November 30, 2016.

Development of the 2013 Authorized Capital

in €

 

 

 

 

 

As of Jan. 1, 2015

 

83,331,111.00

Offer capital increase on March 6, 2015

 

-77,074,531.00

Offer capital increase on May 22, 2015

 

-4,355,790.00

As of Dec. 31, 2015

 

1,900,790.00

The Management Board is authorized, with the consent of the Supervisory Board, to increase the company’s share capital by up to € 1,900,790.00 once or several times on or before June 29, 2018, by issuing up to 1,900,790 new registered no-par value shares in return for cash contributions and/or contributions in kind (2013 authorized capital). Shareholders are to be granted the statutory subscription right to the new shares as a general rule.

The Management Board is, however, authorized, with the consent of the Supervisory Board, to exclude shareholder subscription rights in full or in part, once or several times, subject to the detailed conditions set out in Section 5 of the Articles of Association.

Development and Cancellation of the 2014 Authorized Capital

in €

 

 

 

 

 

As of Jan. 1, 2015

 

5,410,101.00

Offer capital increase on March 6, 2015

 

-5,409,272.00

As of April 30, 2015

 

829.00

Cancellation

 

-829.00

As of Dec. 31, 2015

 

0.00

The existing authorization for the 2014 authorized capital was canceled at the Annual General Meeting held on April 30, 2015.

Development of the 2015 Authorized Capital

in €

 

 

 

 

 

As of May 1, 2015

 

170,796,534.00

Offer capital increase on July 3, 2015

 

-107,538,.606.00

As of Dec. 31, 2015

 

63,257,928.00

On the basis of the resolution passed by the Annual General Meeting on April 30, 2015, the Management Board is authorized, with the consent of the Supervisory Board, to increase the company’s share capital by up to € 63,257,928.00 once or several times on or before April 29, 2020, by issuing up to 63,257,928 new registered no-par value shares in return for cash contributions and/or contributions in kind (2015 authorized capital). Shareholders shall generally be granted a subscription right.

The shares may be acquired by one or several financial institutions provided that such institutions undertake to offer them for subscription to the shareholders (known as an “indirect subscription right”). The Management Board is authorized, with the consent of the Supervisory Board, to exclude subscription rights for one or several capital increases as part of the authorized capital subject to the detailed conditions set out in Section 5a of the Articles of Association.

2013 Conditional Capital

The existing authorization for the existing conditional capital (2013 conditional capital) was canceled at the Annual General Meeting held on April 30, 2015, and replaced by a new authorization and a new conditional capital (2015 conditional capital).

2015 Conditional Capital

A conditional capital was resolved in order to issue shares required to satisfy conversion rights stemming from convertible bonds, bonds with warrants, participating rights and/or participating bonds (or a combination of these instruments) (hereinafter collectively “debentures”) that are issued on the basis of the authorization of the issuance resolved by the Annual General Meeting held on April 30, 2015. The share capital is conditionally increased by up to € 177,053,114.00 through the issuance of up to 177,053,114 new no-par value registered shares with an entitlement to dividend (2015 conditional capital).

Based on the resolution passed by the company’s Annual General Meeting on April 30, 2015, the Management Board was authorized, with the consent of the Supervisory Board, to issue bonds carrying conversion rights, bonds carrying option rights, participating rights and/or participating bonds (or combinations of these instruments) (hereinafter collectively referred to as “debentures”) in bearer or registered form, once or several times on or before April 29, 2020, with a par value of up to € 5,311,000,000.00 with or without definite maturity, and to grant the holders of the debentures conversion or option rights for the shares of the company in a pro rata amount of the share capital of up to € 177,053,114.00 according to the detailed terms and conditions of the bonds carrying option/conversion rights and/or the terms and conditions of the participating rights. The terms and conditions in question may also provide for mandatory conversion at maturity or at other points in time, including the obligation to exercise the conversion or option right. The debentures may also be issued against contributions in kind.

In addition to issues in euros, the debentures may also be issued in the legal currency of an OECD country – limited to the appropriate equivalent amount in euros. Furthermore, the debentures may also be issued by companies that are dependent on, or in which a majority interest is directly or indirectly held by, the company; in such cases, the Management Board shall be authorized, on behalf of the company that is dependent on, or in which a majority interest is held by, the company, to assume the guarantee for the debentures and to grant the holders of such debentures conversion or option rights relating to shares in the company. When the debentures are issued, they may/generally shall be split into partial debentures of equal rank. Shareholders shall generally be granted a subscription right to acquire the debentures. The Management Board is, however, authorized to exclude shareholder subscription rights to the debentures with the consent of the Supervisory Board.

Capital Reserves

Capital reserves amounted to € 5,892.5 million (Dec. 31, 2014: € 2,076.0 million).

The capital reserves increased by a total of € 4,849.2 million in the fiscal year under review as a result of the premium on the issue of new shares. The capital procurement costs of € 48.6 million attributable to the company in connection with the issuing of the new shares were offset against the capital reserves allowing for deferred tax effects of € 15.3 million.

Development of Capital Reserves

in €

 

 

 

 

 

As of Jan. 1, 2015

 

2,075,982,333.34

Capital increase on March 6, 2015

 

2,575,267,982.84

Capital increase on May 22, 2015

 

123,922,225.50

Capital increase on July 3, 2015

 

2,149,946,025.62

Transaction costs on the issue of new shares (after deferred taxes)

 

-33,260,358.25

Withdrawal from capital reserve

 

-1,000,000,000.00

Other changes not affecting net income

 

581,867.50

As of Dec. 31, 2015

 

5,892,440,076.55

Dividend

The Annual General Meeting held on April 30, 2015, in Düsseldorf resolved inter alia to pay a dividend for the 2014 fiscal year in the amount of 78 cents per share and subsequently distributed € 276.2 million.

Retained Earnings

Retained earnings of € 4,309.9 million (Dec. 31, 2014: € 2,643.4 million) were reported as of December 31, 2015. This figure includes actuarial gains and losses of € -45.9 million (Dec. 31, 2014: € -69.8 million), which cannot be reclassified and therefore may no longer be recognized in profit or loss in subsequent reporting periods.

Other Reserves

The other reserves contain cumulative changes in equity not affecting income. At Vonovia, the hedge-effective portion of the net change in the of cash flow hedging instruments, as well as the cumulative net change in the fair value of available-for-sale financial assets, are recognized within this reserve.

The other reserves from cash flow hedges and available-for-sale financial assets can be reclassified. When the underlying hedged item of the cash flow hedge affects net income, the reserves attributable thereto are reclassified to profit or loss. The other reserves from available-for-sale financial assets are reclassified if the asset is derecognized or impaired.

The changes in the cash flow hedges and the cumulative net change in the fair value of available-for-sale financial assets, as well as actuarial gains and losses from pensions and similar obligations, lead to the other comprehensive income shown in the consolidated statement of comprehensive income.

Equity of Hybrid Capital Investors

In December 2014, Vonovia issued a hybrid bond with a nominal volume of € 1.0 billion via a subsidiary, Vonovia Finance B.V., Amsterdam/Netherlands (issuer). This subordinated hybrid bond is of unlimited duration and can only be terminated by Vonovia on certain contractually fixed dates or occasions. Up until the first termination date in December 2021, the hybrid bond shall bear interest at a rate of 4.0% p.a.

Pursuant to IAS 32, the hybrid bond is to be classified as equity in full. The interest payments to be made to the bondholders are recognized directly in equity.

Non-Controlling Interests

Shares of third parties in Group companies are recognized under non-controlling interests.

Fair Value
Valuation pursuant to IAS 40 in conjunction with IFRS 13. The estimated value of an asset. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.