37 Additional Financial Instrument Disclosures

 

 

 

 

 

 

Amounts recognized in balance sheet in accordance with IAS 39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Measurement categories and classes:

 

Measurement category in acc. with IAS 39

 

Carrying amounts Dec. 31, 2016

 

Face value

 

Amortized cost

 

Acquisition cost

 

Fair value affecting net income

 

Fair value recognized in equity

 

Amounts recognized in balance sheet in acc. with IAS 17/
IAS 28

 

Fair value Dec. 31, 2016

 

Fair value hierarchy level

in € million

                   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash on hand and deposits at banking institutions

 

LaR

 

1,540.8

 

1,540.8

 

 

 

 

 

 

 

 

 

 

 

1,540.8

 

1

Trade receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivables from the sale of properties

 

LaR

 

135.4

 

 

 

135.4

 

 

 

 

 

 

 

 

 

135.4

 

2

Receivables from property letting

 

LaR

 

28.0

 

 

 

28.0

 

 

 

 

 

 

 

 

 

28.0

 

2

Other receivables from trading

 

LaR

 

1.0

 

 

 

1.0

 

 

 

 

 

 

 

 

 

1.0

 

2

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joint ventures valued at equity

 

n. a.

 

3.9

 

 

 

 

 

 

 

 

 

 

 

3.9

 

3.9

 

n.a.

Loans to other investments

 

LaR

 

33.5

 

 

 

33.5

 

 

 

 

 

 

 

 

 

55.7

 

2

Other non-current loans

 

LaR

 

4.0

 

 

 

4.0

 

 

 

 

 

 

 

 

 

4.0

 

2

Non-current securities

 

AfS

 

7.4

 

 

 

 

 

 

 

 

 

7.4

 

 

 

7.4

 

1

Other investments

 

AfS

 

504.5

 

 

 

 

 

2.6

 

 

 

501.9

 

 

 

504.5

 

1

Derivative financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges (cross currency swaps)

 

n. a.

 

184.7

 

 

 

 

 

 

 

 

 

 

 

 

 

184.7

 

2

Embedded derivatives

 

FLHfT

 

0.2

 

 

 

 

 

 

 

0.2

 

 

 

 

 

0.2

 

2

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

FLAC

 

140.1

 

 

 

140.1

 

 

 

 

 

 

 

 

 

140.1

 

2

Non-derivative financial liabilities

 

FLAC

 

13,371.0

 

 

 

13,371.0

 

 

 

 

 

 

 

 

 

14,041.0

 

2

Derivative financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

FLHfT

 

57.2

 

 

 

 

 

 

 

57.2

 

 

 

 

 

57.2

 

3

Other swaps

 

n. a.

 

19.4

 

 

 

 

 

 

 

 

 

 

 

 

 

19.4

 

2

Liabilities from finance leases

 

n. a.

 

99.2

 

 

 

 

 

 

 

 

 

 

 

99.2

 

207.7

 

2

Liabilities to non-controlling interests

 

FLAC

 

12.6

 

 

 

12.6

 

 

 

 

 

 

 

 

 

12.6

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thereof aggregated by measurement categories in accordance with IAS 39:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and receivables

 

LaR

 

1,742.7

 

1,540.8

 

201.9

 

 

 

 

 

 

 

 

 

1,764.9

 

 

Available-for-sale financial assets

 

AfS

 

511.9

 

 

 

 

 

2.6

 

 

 

509.3

 

 

 

511.9

 

 

Financial liabilities held-for-trading

 

FLHfT

 

57.0

 

 

 

 

 

 

 

57.0

 

 

 

 

 

57.0

 

 

Financial liabilities measured at amortized cost

 

FLAC

 

13,523.7

 

 

 

13,523.7

 

 

 

 

 

 

 

 

 

14,193.7

 

 

 

 

 

 

 

 

Amounts recognized in balance sheet in accordance with IAS 39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Measurement categories and classes:

 

Measurement category in acc. with IAS 39

 

Carrying amounts Dec. 31, 2015

 

Face value

 

Amortized cost

 

Acquisition cost

 

Fair value affecting net income

 

Fair value recognized in equity

 

Amounts recognized in balance sheet in acc. with IAS 17/
IAS 28

 

Fair value Dec. 31, 2015

 

Fair value hierarchy level

in € million

                   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash on hand and deposits at banking institutions

 

LaR

 

2,108.0

 

2,108.0

 

 

 

 

 

 

 

 

 

 

 

2,108.0

 

1

Commercial Papers

 

LaR

 

999.9

 

 

 

999.9

 

 

 

 

 

 

 

 

 

999.9

 

2

Trade receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivables from the sale of properties

 

LaR

 

330.0

 

 

 

330.0

 

 

 

 

 

 

 

 

 

330.0

 

2

Receivables from property letting

 

LaR

 

21.5

 

 

 

21.5

 

 

 

 

 

 

 

 

 

21.5

 

2

Receivables from other management

 

LaR

 

0.6

 

 

 

0.6

 

 

 

 

 

 

 

 

 

0.6

 

2

Receivables from affiliated companies

 

LaR

 

0.1

 

 

 

0.1

 

 

 

 

 

 

 

 

 

0.1

 

2

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joint ventures valued at equity

 

n. a.

 

3.9

 

 

 

 

 

 

 

 

 

 

 

3.9

 

3.9

 

n.a.

Long-term bank balances restricted with regard to their use

 

LaR

 

3.1

 

3.1

 

 

 

 

 

 

 

 

 

 

 

3.1

 

1

Loans to other investments

 

LaR

 

33.5

 

 

 

33.5

 

 

 

 

 

 

 

 

 

48.0

 

2

Other non-current loans

 

LaR

 

3.4

 

 

 

3.4

 

 

 

 

 

 

 

 

 

3.4

 

2

Dividends from other investments

 

LaR

 

2.0

 

 

 

2.0

 

 

 

 

 

 

 

 

 

2.0

 

2

Non-current securities

 

AfS

 

7.2

 

 

 

 

 

 

 

 

 

7.2

 

 

 

7.2

 

1

Other investments

 

AfS

 

15.4

 

 

 

 

 

2.6

 

 

 

12.8

 

 

 

15.4

 

1

Derivative financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges (cross currency swaps)

 

n. a.

 

154.3

 

 

 

 

 

 

 

 

 

 

 

 

 

154.3

 

2

Embedded derivatives

 

FLHfT

 

0.9

 

 

 

 

 

 

 

0.9

 

 

 

 

 

0.9

 

2

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

FLAC

 

92.5

 

 

 

92.5

 

 

 

 

 

 

 

 

 

92.5

 

2

Non-derivative financial liabilities

 

FLAC

 

14,939.9

 

 

 

14,939.9

 

 

 

 

 

 

 

 

 

16,270.8

 

2

Derivative financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

FLHfT

 

57.6

 

 

 

 

 

 

 

57.6

 

 

 

 

 

57.6

 

3

Standalone interest rate swaps

 

FLHfT

 

100.8

 

 

 

 

 

 

 

100.8

 

 

 

 

 

100.8

 

2

Other swaps

 

n. a.

 

44.9

 

 

 

 

 

 

 

 

 

 

 

 

 

44.9

 

2

Liabilities from finance leases

 

n. a.

 

99.3

 

 

 

 

 

 

 

 

 

 

 

99.3

 

160.5

 

2

Liabilities to non-controlling interests

 

FLAC

 

56.1

 

 

 

56.1

 

 

 

 

 

 

 

 

 

56.1

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thereof aggregated by measurement categories in accordance with IAS 39:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and receivables

 

LaR

 

3,502.1

 

2,111.1

 

1,391.0

 

 

 

 

 

 

 

 

 

3,516.6

 

 

Available-for-sale financial assets

 

AfS

 

22.6

 

 

 

 

 

2.6

 

 

 

20.0

 

 

 

22.6

 

 

Financial liabilities held-for-trading

 

FLHfT

 

157.5

 

 

 

 

 

 

 

157.5

 

 

 

 

 

157.5

 

 

Financial liabilities measured at amortized cost

 

FLAC

 

15,088.5

 

 

 

15,088.5

 

 

 

 

 

 

 

 

 

16,419.4

 

 

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 € 7.0 million (Dec. 31, 2015: € 7.6 million).
  • Amount by which the of plan assets exceeds the corresponding obligation: € 1.1 million (Dec. 31, 2015: € 1.0 million).
  • Provisions for pensions and similar obligations: € 522.6 million (Dec.31, 2015: € 495.2 million).

IFRS 13 defines fair value as a price that would be received by selling an asset or paid to transfer a liability in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market. The fair value is to be determined using valuation parameters that are as market-based as possible as inputs. The measurement hierarchy ( hierarchy) categorizes the inputs for the measurement technique in three levels, giving the highest priority level to the most market-based inputs:

Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2 inputs: valuation parameters other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs: unobservable valuation parameters for the asset or liability.

When inputs used to measure the fair value are categorized within different levels of the fair value hierarchy, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Should the level of the input parameters used for a financial instrument change in a period subsequent to initial recognition, the financial instrument is reclassified to the new hierarchy level as of the end of that reporting period. No financial instruments were reclassified to different hierarchy levels during the reporting period.

The following table shows the assets and liabilities which are recognized in the balance sheet at fair value and their classification according to the fair value hierarchy:

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

 

 

in € million

 

Dec. 31, 2015

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Investment properties

 

23,431.3

 

 

 

 

 

23,431.3

Available-for-sale financial assets

 

 

 

 

 

 

 

 

Non-current securities

 

7.2

 

7.2

 

 

 

 

Other investments

 

12.8

 

12.8

 

 

 

 

Assets held for sale

 

 

 

 

 

 

 

 

Investment properties (contract closed)

 

678.1

 

 

 

678.1

 

 

Derivative financial assets

 

 

 

 

 

 

 

 

Cash flow hedges (cross currency swaps)

 

155.2

 

 

 

155.2

 

 

Liabilities

 

 

 

 

 

 

 

 

Derivative financial liabilities

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

57.6

 

 

 

 

 

57.6

Cash flow hedges

 

43.7

 

 

 

43.7

 

 

Stand-alone derivatives

 

100.8

 

 

 

100.8

 

 

Vonovia measures its investment properties on the basis of the discounted cash flow (DCF) methodology (Level 3). The main valuation parameters and valuation results can be found in note [21] Investment Properties.

Non-current securities are measured using the quoted prices in active markets (Level 1).

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).

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 of between 25 and 95 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 40 and 65 basis points was taken into account.

The non-derivative financial liabilities, the liabilities from finance leases and the liabilities to non-controlling interests are measured at fair value by discounting contractually agreed future cash flows.

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
Dec. 31

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

57.6

 

6.7

 

-0.4

 

 

-6.7

 

57.2

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

-43.6

 

77.6

 

23.6

 

-65.3

 

 

57.6

The contingent consideration component within the scope of the acquisition of GAGFAH S.A. is an option held by the co-investor J.P. Morgan Securities plc., London. The number of shares and the difference between the current and guaranteed price per share are material valuation parameters. It was stated at fair value using the Black Scholes model (Level 2). For the current price, the share price of GAGFAH S.A. at the date of delisting was taken into consideration (Level 3 valuation parameters), so as to avoid distorted stock market valuations due to the extremely low trading volume. The fair value of the option is subject to sensitivities that reflect inputs that cannot be empirically observed: the historical volatility of the share price, limited price calculation using negative yield curves in the Black Scholes model, the deviations from GAGFAH’s valuation and the uncertain term of the option. An increased level of volatility, a lower price of the underlying, a longer term and a lower interest rate reflect an increase in the value of the option, and vice versa.

The addition relating to the change in the scope of consolidation relates to a put option as part of the acquisition of the GRAINGER portfolio in the amount of € 6.7 million. In April 2016, this put option was transferred to an external third party.

The change affecting net income is largely the result of subsequent measurement effects.

The sensitivity analysis has shown that if the value of the company deviates by 10% in each case, the purchase price liability from put options granted as of the reporting date would differ by € +5.2 million or € -5.2 million (Dec. 31, 2015: € +5.4 million or € -5.4 million). The changes would be recognized in full in net interest.

In order to measure interest rate swaps, future cash flows are calculated and then discounted (Level 2). The calculated cash flows result from the contract conditions. The contract conditions refer to the EURIBOR reference rates (3M and 6M EURIBOR).

The calculated cash flows of the cross currency swap result from the forward curve for US-$/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).

Financial instruments, which are not recognized in the balance sheet at fair value but at amortized cost, but whose fair values are nonetheless disclosed in the Notes, are also classified in the three-level fair value hierarchy.

The fair values of the cash and cash equivalents, trade receivables as well as other financial receivables approximate their carrying amounts at the reporting date owing to their mainly short maturities.

The fair values of the other non-current financial receivables correspond to the present values of the payments associated with the assets, taking into account the relevant current interest parameters (Level 2).

Shares in Deutsche Wohnen are reported under other investments at their fair value of € 501.9 million as of the reporting date. All other investments are measured at cost as there is no price quoted on an active market and the fair market value cannot be determined reliably.

Liabilities from property letting and liabilities from other goods and services usually have short maturities; the values recognized approximate the fair values.

The fair values of the other non-derivative financial liabilities are also measured by discounting the future cash flows using the current risk-adjusted interest rate structure curve at the reporting date (Level 2).

Net results according to measurement category:

2016

 

 

 

 

 

 

 

from subsequent measurement

 

 

 

 

 

 

Measurement category in acc. with IAS 39

 

From interest

 

Income from other non-current loans

 

Impair­ment losses

 

Derecog­nized receivables

 

Derecog­nized liabilities

 

Dividends from other invest­ments

 

Net results 2016

in € million

               

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and receivables

 

LaR

 

4.5

 

1.9

 

-24.3

 

1.1

 

 

 

-16.8

Available-for sale financial assets

 

AfS

 

0.1

 

 

 

 

 

11.1

 

11.2

Financial liabilities held for trading

 

FLHfT

 

0.4

 

 

 

 

 

 

0.4

Financial liabilities measured at amortized cost

 

FLAC

 

-381.9

 

 

 

 

1.4

 

 

-380.5

 

 

 

 

-376.9

 

1.9

 

-24.3

 

1.1

 

1.4

 

11.1

 

-385.7

2015

 

 

 

 

 

 

 

from subsequent measurement

 

 

 

 

 

 

Measurement category in acc. with IAS 39

 

From interest

 

Income from other non-current loans

 

Impair­ment losses

 

Derecog­nized receivables

 

Derecog­nized liabilities

 

Dividends from other invest­ments

 

Net results 2015

in € million

               

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and receivables

 

LaR

 

1.0

 

2.3

 

-12.9

 

-2.7

 

 

 

-12.3

Available-for sale financial assets

 

AfS

 

0.5

 

 

 

 

 

3.6

 

4.1

Financial liabilities held for trading

 

FLHfT

 

-25.9

 

 

 

 

 

 

-25.9

Financial liabilities measured at amortized cost

 

FLAC

 

-346.8

 

 

 

 

0.2

 

 

-346.6

 

 

 

 

-371.2

 

2.3

 

-12.9

 

-2.7

 

0.2

 

3.6

 

-380.7

Vonovia basically recognizes the components of the net result under financial income and financial expenses.

In the reporting year, the financial result for financial assets or financial liabilities that are not measured at fair value through profit and loss (calculated using the effective interest method) adds up to € -385.7 million (2015: € -350.5 million).

Impairment losses which can be assigned to the measurement category “Loans and receivables” (LaR) as well as income and expenses in connection with derecognized receivables are shown under other operating income or other operating expenses.

The income from derecognized liabilities assigned to the measurement category “Financial liabilities measured at amortized cost” (FLAC) was recognized under other operating income.

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.
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.