Financial Performance Indicators

is key for managing the sustained operational earnings power of our business. It is calculated as follows:

Performance Indicators Group FFO

 

 

 

 

 

(-)

 

expenses

(-)

 

Operating expenses Rental

=

 

 

 

 

 

 

Income Value-add

 

 

thereof internal income

 

 

thereof external income

(-)

 

Operating expenses

=

 

 

 

 

 

 

Income from disposal of

(-)

 

of properties sold adjusted to reflect effects not relating to the period from assets held for Recurring Sales

=

 

Adjusted profit from disposal of Recurring Sales

(-)

 

Selling costs

=

 

 

 

 

 

 

Income from disposal of development properties to sell

(-)

 

Construction costs Development to sell

=

 

Net profit Development to sell

(+)

 

Fair value Development to hold

(-)

 

Construction costs Development to hold

=

 

Net profit Development to hold

(-)

 

Operating expenses Development

=

 

 

 

 

 

 

 

 

 

(-)

 

Interest expense FFO

(-)

 

Current income taxes FFO

(-)

 

Consolidation

 

 

 

=

 

Group FFO

 

 

 

The individual EBITDA figures, after adjustments to reflect effects that do not relate to the period, recur irregularly or are atypical for business operation, form the basis for the operational management of the segments.

The Adjusted EBITDA Rental reflects the operating profit from residential property management. It can be broken down into three central components: rental income from the Rental segment, expenses for maintenance and operating expenses in the Rental segment. The latter include all expenses and income that do not relate to expenses for maintenance or rental income in the Rental segment.

In addition to the expenses for maintenance, we make large-scale investments in our real estate portfolios, with a distinction being made between capitalized maintenance and value-enhancing investment in modernization and new construction measures for our own portfolio. The total amount of all maintenance, modernization and new construction measures includes the services performed by the Group’s own craftsmen’s organization, valued at the market price, and any third-party services that have been purchased, including the development activities for the company’s own portfolio.

The Value-add segment encompasses all of the business activities relating to the expansion of our core business to include services that are closely related to and/or influence the rental business. We manage these business activities using the Adjusted EBITDA Value-add.

In addition to the management of our residential real estate portfolio and the services that are closely related to our rental business, another business segment relates to the privatization of individual apartments. We measure the success of our sales activities using Adjusted EBITDA Recurring Sales. The Adjusted EBITDA Recurring Sales compares the proceeds generated from privatization business with the fair values of assets sold and also deducts the related costs of sale. In order to disclose profit and revenue in the period in which they are incurred and to report a sales margin, the fair value of properties sold, valued in accordance with IFRS 5, have to be adjusted to reflect realized/unrealized changes in value.

We bundle all business activities aimed at the development of attractive real estate projects both for our own portfolio and for direct sale in the Development segment. In addition to the revenue from the sale of residential properties built in the reporting year to third parties and the associated costs, we also record the that newly constructed properties create for our own portfolio, as well as the associated costs, as a means of measuring the success of the Development segment. We manage these business activities using the Adjusted EBITDA Development.

The Adjusted EBITDA Total is calculated as the sum total of the Adjusted EBITDA figures for our four segments. This means that it expresses the overall performance of our sustainable operating business before interest, taxes, depreciation and amortization.

As financing is a fundamental component for the success of our business activities, we deduct the current interest expense, adjusted for special circumstances (FFO interest expense), from the Adjusted EBITDA Total. Taking current income taxes and consolidation effects into account, this allows us to calculate Group FFO, the key figure for the sustained earnings power of our business.

In addition to our operational earnings power, the value of our property assets and our modernization and new construction measures are decisive for the further development of our company. The Net Asset Value (NAV) is used to manage the company’s value. Our NAV calculations are based on the best practice recommendations of the . The Adjusted NAV per share, after corrections for goodwill, is the relevant performance indicator.

Calculation of NAV

 

 

 

 

 

Equity attributable to Vonovia’s shareholders

(+)

 

Deferred taxes on investment properties

(+/-)

 

Fair value of derivative financial instruments

(-/+)

 

Deferred taxes on derivative financial instruments

=

 

 

 

 

(-)

 

Goodwill

=

 

Adjusted NAV

/

 

Number of shares on the reporting date

=

 

Adjusted NAV per share

 

 

 

An additional non-operational key financial figure, the loan-to-value ratio (LTV ratio), is also used for monitoring the degree to which debt is covered by the value of the properties. This key figure helps the real estate sector ensure a sustainable ratio of borrowings to the fair values of our properties.

All of the key financial figures shown here are so-called non-GAAP measures or alternative performance measures (APMs), i.e., key figures which cannot be taken directly from the figures in the consolidated financial statements according to IFRS. The financial performance indicators can, however, all be reconciled to the closest-possible key figure in the consolidated financial statements.

Group FFO
Group FFO reflects the recurring earnings from the sustained operating business. In addition to the Adjusted EBITDA for the Rental, Value-add, Recurring Sales and Development segments, Group FFO allows for recurring cash-effective net interest expenses from non-derivative financial instruments as well as income taxes. This key figure is not determined on the basis of any specific international reporting standard but is to be regarded as a supplement to other performance indicators determined in accordance with IFRS.
Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding lease agreements before the deduction of non-transferable ancillary costs. The rental income from the Austrian real estate portfolio also includes maintenance and improvement contributions (EVB). The rental income from the Swedish real estate portfolio shows inclusive rents, meaning that the rental amounts include operating and heating costs.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Adjusted EBITDA Rental
The Adjusted EBITDA Rental is calculated by subtracting the operating expenses of the Rental segment and the expenses for maintenance in the Rental segment from the Group’s rental income.
Adjusted EBITDA Value-add
The Adjusted EBITDA Value-add (formerly Adjusted EBITDA Value-add Business) is calculated by deducting operating expenses from the segment’s income.
Recurring Sales
The Recurring Sales segment (formerly part of the “Sales” segment) includes the regular and sustainable disposals of individual condominiums from our portfolio. It does not include the sale of entire buildings or land (Non-core disposals). These properties are only sold as and when the right opportunities present themselves, meaning that the sales do not form part of our operating business within the narrower sense of the term. Therefore, these sales will be reported under “Other” in our segment reporting.
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.
Recurring Sales
The Recurring Sales segment (formerly part of the “Sales” segment) includes the regular and sustainable disposals of individual condominiums from our portfolio. It does not include the sale of entire buildings or land (Non-core disposals). These properties are only sold as and when the right opportunities present themselves, meaning that the sales do not form part of our operating business within the narrower sense of the term. Therefore, these sales will be reported under “Other” in our segment reporting.
Adjusted EBITDA Recurring Sales
The Adjusted EBITDA Recurring Sales compares the proceeds generated from privatization business with the fair values of assets sold and also deducts the related costs of sale. In order to disclose profit and revenue in the period in which they are incurred and to report a sales margin, the fair value of properties sold, valued in accordance with IFRS 5, have to be adjusted to reflect realized/unrealized changes in value.
Adjusted EBITDA Development
The Adjusted EBITDA Development includes the gross profit from the development activities of “to sell” projects (income from sold development projects less production costs) and the gross profit from the development activities of “to hold” projects (fair value of the units developed for own portfolio less incurred production costs) less the operating expenses from the Development segment.
Adjusted EBITDA Total
Adjusted EBITDA Total is the result before interest, taxes, depreciation and amortization (including income from other operational investments and intragroup profits) adjusted for effects that do not relate to the period, recur irregularly or that are atypical for business operation, and for net income from fair value adjustments to investment properties. These non-recurring items include the development of new fields of business and business processes, acquisition projects, expenses for refinancing and equity increases (where not treated as capital procurement costs), IPO preparation costs and expenses for pre-retirement part-time work arrangements and severance payments. The Adjusted EBITDA Total is derived from the sum of the Adjusted EBITDA Rental, Adjusted EBITDA Value-add, Adjusted EBITDA Recurring Sales and Adjusted EBITDA Development.
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.
EPRA (European Public Real Estate Association)
The European Public Real Estate Association (EPRA) is a non-profit organization that has its registered headquarters in Brussels and represents the interests of listed European real estate companies. Its mission is to raise awareness of European listed real estate companies as a potential investment destination that offers an alternative to conventional investments. EPRA is a registered trademark of the European Public Real Estate Association.
EPRA NAV/Adjusted NAV
The presentation of the NAV based on the EPRA definition aims to show the net asset value in a long-term business model. The equity attributable to Vonovia’s shareholders is adjusted to reflect deferred taxes on investment properties, the fair value of derivative financial instruments and the deferred taxes on derivative financial instruments. In order to boost transparency, an adjusted NAV, which involves eliminating goodwill in full, is also reported.