29 Total Equity
The subscribed capital represents the company’s share capital. As of December 31, 2017, the share capital amounted to € 485,100,826.00, split into 485,100,826 no-par-value registered shares. The shares are uncertificated.
The non-cash capital increases in connection with the takeover of the conwert Group were made using the 2015 authorized capital. A shareholder in conwert Immobilien Invest SE received 74 shares in Vonovia in return for 149 shares. The calculation of the consideration in the form of exchange shares was based on the price as at January 10, 2017 and March 23, 2017.
For detailed information, reference is made to the note on Scope of Consolidation and Business Combinations.
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 scrip dividend as opposed to the 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 corresponding amount of € 261,778,737.92. The premium in the amount of € 254,115,425.92 was added to the capital reserves.
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 entered on July 12, 2017. The valuation was based on the XETRA closing price of € 34.82 per share on July 12, 2017. The compensatory shares for the merger with Gagfah S. A. 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 with the consent of the company’s Supervisory Board.
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, which was still unutilized as of December 31, 2017.
2017 Authorized Capital
On the basis of the resolution passed by the Annual General Meeting on May 16, 2017, the Management Board was authorized, pursuant to Section 5c of the Articles of Association and with the consent of the Supervisory Board, to increase the company’s share capital by up to € 66,556,874.00 once or several times on or before May 15, 2022, by issuing new shares in return for cash contributions and/or contributions in kind (2017 authorized capital). 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.
2016 Authorized Capital
On the basis of the resolution passed by the Annual General Meeting on May 12, 2016 in accordance with Section 5b of the Articles of Association, the Management Board is authorized, with the consent of the Supervisory Board, to increase the company’s share capital by up to € 167,841,594.00 once or several times on or before May 11, 2021, by issuing up to 167,841,594 new registered shares in return for cash contributions and/or contributions in kind (2016 authorized capital). The 2016 authorized capital still amounts to € 151,537,704.00 following its partial utilization as part of the issue of new shares as a scrip dividend and following the merger with Gagfah S. A. as of December 31, 2017. 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.
2016 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 may be issued on the basis of the authorization of issuance resolved by the Annual General Meeting held on May 12, 2016. The share capital is conditionally increased by up to € 233,000,312.00 through the issuance of up to 233,000,312 new no-par value registered shares with an entitlement to dividend (2016 conditional capital).
Based on the resolution passed by the company’s Annual General Meeting on May 12, 2016, 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, and to grant the creditors/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 € 233,000,312.00 according to the detailed terms and conditions of the bonds carrying option/conversion rights and/or the terms and conditions of the participating rights.
Authorization to Purchase Own Shares
On the basis of the resolution passed by the Annual General Meeting in 2013, the Management Board was authorized to purchase shares in the company on or before June 29, 2018, of up to a total of 10% of the company’s share capital at the time of the resolution.
The capital reserves increased in the 2017 fiscal year due to the premiums that arose in the context of the non-cash capital increases as part of the takeover of conwert, the Gagfah merger and the scrip dividend.
Retained earnings of € 8,471.6 million (Dec. 31, 2016: € 6,665.4 million) were reported as of December 31, 2017. This figure includes actuarial gains and losses of € -64.0 million (Dec. 31, 2016: € -67.1 million), which cannot be reclassified and therefore may no longer be recognized in profit or loss in subsequent reporting periods.
The other reserves contain cumulative changes in equity not affecting income. At Vonovia, the effective portion of the net change in the fair value of cash flow hedging instruments, the cumulative net change in the fair value of available-for-sale financial assets, are recognized within this reserve, as well as the balance resulting from currency translation.
The other reserves from cash flow hedges, available-for-sale financial assets and the balance resulting from currency translation 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. In the event of the disposal of a foreign business resulting in a loss of control, joint control or significant influence, the corresponding reserves are reclassified.
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 which represents a total amount of € 525,052,568.32. 49.86% of shareholders opted for the scrip dividend as opposed to the cash dividend. In connection with the corresponding capital increase, 7,663,312 new shares were issued using the company’s authorized capital in a total amount of € 261,778,737.92. The total amount of the dividend distributed in cash therefore came to € 263,273,830.40.
Equity Attributable to 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. If the bond is not terminated, then the coupon for the next five-year period increases automatically (step-up clause). The bond terms and conditions do not provide for any unconditional legal obligations to pay interest. Interest that is not paid out is carried forward to the new account and accumulated. If a resolution is passed on a dividend, or if a voluntary payment is made in connection with comparable subordinated bonds, then this triggers an interest payment obligation for this bond.
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.
Shares of third parties in Group companies are recognized under non-controlling interests.