32 Total Equity
On May 11, 2018, Vonovia SE increased the share capital in return for a cash contribution, partially using the 2016 authorized capital and excluding a subscription right, by € 26,000,000.00 from € 485,100,826.00 to € 511,100,826.00.
The 26,000,000 new no-par-value registered shares were placed with institutional investors in the scope of a private placement by means of an accelerated bookbuilding procedure and carry dividend rights as of January 1, 2018.
The shares were granted at a placement price of € 38.30 per share, delivering issue proceeds to Vonovia SE in the amount of € 995.8 million before commission and expenses.
The 2016 and 2017 authorized capital was canceled by way of a resolution passed by the Annual General Meeting on May 9, 2018, in Bochum, and a new 2018 authorized capital was created in the amount of € 242,550,413.00. Shareholder subscription rights for the 2018 authorized capital can be excluded.
As of December 31, 2018, retained earnings of € 9,942.0 million (Dec. 31, 2017: € 8,471.6 million) were recognized. This figure includes actuarial gains and losses of € -69.0 million (Dec. 31, 2017: € -64.0 million), which cannot be reclassified and therefore may no longer be recognized in profit or loss in subsequent reporting periods. The changes not affecting net income in the amount of € -150.7 million mainly include additional purchases of shares in BUWOG and Victoria Park, which are not classified as a linked transaction.
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 equity instruments at fair value under other comprehensive income as well as the balance resulting from currency translation are recognized within this reserve.
The other reserves from cash flow hedges and from currency translation differences 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. If a foreign business is disposed of, the reserves attributable thereto are reclassified.
The Annual General Meeting held on May 9, 2018, resolved to pay a dividend for the 2017 fiscal year in the amount of € 1.32 per share.
As in the previous year, Vonovia offered its shareholders the option of choosing between being paid the dividend in cash or being granted new shares. During the subscription period, 40.9% of shareholders opted for the stock dividend as opposed to the cash dividend. As a result, 6,977,108 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 € 37.488 per share, i.e. a total amount of € 261,557,824.70. The total amount of the dividend distributed in cash came to € 378,775,265.62.
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.
The further purchases of shares in BUWOG and Victoria Park are no longer to be considered a linked transaction, meaning that they are reported under non-controlling interests with a neutral impact.