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, 2017

 

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, 2017

 

Fair value hierarchy level

in € million

                   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash on hand and deposits at banking institutions

 

LaR

 

266.2

 

266.2

 

 

 

 

 

 

 

 

 

 

 

266.2

 

1

Trade receivables

 

LaR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivables from the sale of properties

 

LaR

 

201.2

 

 

 

201.2

 

 

 

 

 

 

 

 

 

201.2

 

2

Receivables from property letting

 

LaR

 

32.2

 

 

 

32.2

 

 

 

 

 

 

 

 

 

32.2

 

2

Other receivables from trading

 

LaR

 

1.5

 

 

 

1.5

 

 

 

 

 

 

 

 

 

1.5

 

2

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joint ventures measured using the equity method

 

n. a.

 

7.0

 

 

 

 

 

 

 

 

 

 

 

7.0

 

7.0

 

n. a.

Loans to other investments

 

LaR

 

33.5

 

 

 

33.5

 

 

 

 

 

 

 

 

 

54.0

 

2

Other non-current loans

 

LaR

 

4.3

 

 

 

4.3

 

 

 

 

 

 

 

 

 

4.3

 

2

Non-current securities

 

AfS

 

3.6

 

 

 

 

 

 

 

 

 

3.6

 

 

 

3.6

 

1

Other investments

 

AfS

 

644.7

 

 

 

 

 

 

 

 

 

644.7

 

 

 

644.7

 

2

Derivative financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges (cross currency swaps)

 

n. a.

 

5.5

 

 

 

 

 

 

 

 

 

 

 

 

 

5.5

 

2

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

FLAC

 

133.1

 

 

 

133.1

 

 

 

 

 

 

 

 

 

133.1

 

2

Non-derivative financial liabilities

 

FLAC

 

14,060.5

 

 

 

14,060.5

 

 

 

 

 

 

 

 

 

14,713.7

 

2

Derivative financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

FLHfT

 

4.2

 

 

 

 

 

 

 

4.2

 

 

 

 

 

4.2

 

3

Other swaps

 

n. a.

 

8.9

 

 

 

 

 

 

 

 

 

 

 

 

 

8.9

 

2

Liabilities from finance leases

 

n. a.

 

99.3

 

 

 

 

 

 

 

 

 

 

 

99.3

 

203.5

 

2

Liabilities to non-controlling interests

 

FLAC

 

33.9

 

 

 

33.9

 

 

 

 

 

 

 

 

 

33.9

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thereof aggregated by measurement categories in accordance with IAS 39:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and receivables

 

LaR

 

538.9

 

266.2

 

272.7

 

 

 

 

 

 

 

 

 

559.4

 

 

Available-for-sale financial assets

 

AfS

 

648.3

 

 

 

 

 

 

 

 

 

648.3

 

 

 

648.3

 

 

Financial liabilities held-for-trading

 

FLHfT

 

4.2

 

 

 

 

 

 

 

4.2

 

 

 

 

 

4.2

 

 

Financial liabilities measured at amortized cost

 

FLAC

 

14,227.5

 

 

 

14,227.5

 

 

 

 

 

 

 

 

 

14,880.7

 

 

 

 

 

 

 

 

Wertansatz Bilanz nach 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 leve

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 measured using the equity method

 

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

 

 

Financial assets and financial liabilities not covered by IAS 39 comprise:

  • Employee benefits in accordance with IAS 19: Gross presentation of right to reimbursement arising from transferred pension obligations in the amount of € 5.3 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: € 513.7 million (Dec. 31, 2016: € 522.6 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 valuation hierarchy (fair value 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 material 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 that are recognized in the balance sheet at fair value and their classification according to the fair value hierarchy:

in € million

 

Dec. 31, 2017

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Investment properties

 

33,182.8

 

 

 

 

 

33,182.8

Available-for-sale financial assets

 

 

 

 

 

 

 

 

Non-current securities

 

3.6

 

3.6

 

 

 

 

Other investments

 

644.7

 

613.3

 

31.4

 

 

Assets held for sale

 

 

 

 

 

 

 

 

Investment properties (contract closed)

 

142.6

 

 

 

142.6

 

 

Derivative financial assets

 

 

 

 

 

 

 

 

Cash flow hedges (cross currency swaps)

 

5.5

 

 

 

5.5

 

 

Liabilities

 

 

 

 

 

 

 

 

Derivative financial liabilities

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

4.2

 

 

 

 

 

4.2

Cash flow hedges

 

8.9

 

 

 

8.9

 

 

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 general, Vonovia measures its investment properties on the basis of the discounted cash flow (DCF) methodology (Level 3). The material valuation parameters and valuation results can be found in note [21] 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). 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 of between 25 and 60 basis points, depending on the residual maturities of financial instruments. Regarding the positive market values of the cross currency swaps, a counterparty risk of 35 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).

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 the price quoted on an active market of € 613.3 million as of the reporting date. For all of the remaining other investments, the pro rata equity of the company is used as the best estimate of the fair value. The performance of shares in Deutsche Wohnen, in particular, resulted in a positive valuation effect totaling € 133.4 million in the reporting year.

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

The fair valuation of bonds listed on the capital markets is based on the quoted market prices (Level 1). The fair values of the other non-derivative financial liabilities are measured by discounting the future cash flows using the current risk-adjusted interest rate structure curve at the reporting date (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 Dec. 31

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

57.2

 

10.1

 

-13.9

 

-1.3

 

-47.9

 

4.2

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price liabilities from put options/rights to reimbursement

 

57.6

 

6.7

 

-0.4

 

 

-6.7

 

57.2

The addition relating to the change in the scope of consolidation relates to a put option in connection with the acquisition of the conwert Group in the amount of € 10.1 million. During the reporting year, this put option was transferred to an external third party.

The changes not affecting net income are the result of corporate restructuring measures, which are also reflected in the non-controlling interests.

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 € +0.4 million or € -0.4 million (Dec. 31, 2016: € +5.2 million or € -5.2 million). The changes would be recognized in full in net interest.

Net results according to measurement category:

 

 

 

 

 

 

 

 

From subsequent measurement

 

 

 

 

in € million

 

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 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and receivables

 

LaR

 

2.5

 

1.6

 

–22.2

 

1.3

 

 

 

-16.8

Available-for-sale financial assets

 

AfS

 

 

 

 

 

 

20.1

 

20.1

Financial liabilities held-for-trading

 

FLHfT

 

13.9

 

 

 

 

 

 

13.9

Financial liabilities measured at amortized cost

 

FLAC

 

-314.5

 

 

 

 

0.9

 

 

-313.6

 

 

 

 

-298.1

 

1.6

 

-22.2

 

1.3

 

0.9

 

20.1

 

-296.4

 

 

 

 

 

 

 

 

From subsequent measurement

 

 

 

 

in € million

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

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 € -318.8 million (2016: € -385.7 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