Economic Development of Vonovia SE

(Reporting on the basis of the German Commercial Code (HGB))

Fundamental Information

Vonovia SE has been entered in the commercial register of Bochum Local Court under HRB 16879 since 2017. Vonovia SE was established as Deutsche Annington Immobilien GmbH on June 17, 1998, with its registered headquarters in Frankfurt am Main, to serve as an acquisition vehicle for the purchase of residential properties by financial investors. Following further successful acquisitions over the course of time, it now forms the Vonovia Group together with its subsidiaries and is Germany’s leading residential real estate management company.

Vonovia SE performs the function of the management holding company within the Vonovia Group. In this role, it is responsible for determining and pursuing the overall strategy and for implementing this strategy by setting the company’s goals. It also performs property management, financing, service and coordination tasks for the Group. Furthermore, it is responsible for the management, control and monitoring system as well as risk management. To carry out these management functions, Vonovia SE also maintains service companies to which it has outsourced selected functions, allowing it to realize corresponding harmonization and standardization effects, as well as economies of scale.

The description of the company’s net assets, financial position and results of operations is based largely on the reporting of the Vonovia Group. The net assets, financial position and results of operations of Vonovia SE as the management holding company are ultimately determined by the assets of the Group companies and their ability to make sustainable positive contributions to earnings and generate positive cash flows. The company’s risk profile is therefore largely the same as the Group’s.

The preceding reporting for the Group of Vonovia SE therefore also expresses the company’s position.

The Vonovia SE annual financial statements have been prepared in accordance with the provisions of the German Commercial Code (HGB) taking into account the supplementary regulations of the German Stock Corporation Act (AktG). As a listed company, Vonovia SE is classed as a large corporation.

The annual and consolidated financial statements as well as the combined management report are published in the Federal Gazette (Bundesanzeiger).

Development of Business in 2018

Results of Operations of Vonovia SE

The company regularly generates income from the charging of the services it provides, from income from investments in the form of dividend distributions from Group companies and from the transfer of profits. Profit-and-loss transfer agreements exist with, among other entities, the service companies, which themselves generate income by charging the real estate companies for the services they have provided. The income from investments collected is based on the net profit of the subsidiaries that is eligible for distribution, which is, in turn, calculated based on the accounting standards set out in the German Commercial Code. The main difference between these standards and the IFRS accounting principles lies in the fact that, under IFRS accounting, the principle has more of an impact than the cost principle does under HGB accounting. In the consolidated financial statements under the IFRS, the properties are remeasured at periodic intervals. Under the HGB, the fixed assets are stated at amortized cost, taking depreciation into account. The capitalization regulations also vary.

Expenses relate largely to personnel expenses and administrative expenses associated with the management holding function, as well as to losses to be compensated for in connection with profit-and-loss transfer agreements.

The financial result is governed by the Group financing.

Business developments in 2018 were characterized, among other things, by the acquisition of Victoria Park and the takeover of BUWOG, as well as the integration and structuring work that followed.

The main factor impacting the result for 2018, however, was the income from profit transfer, in particular relating to Deutsche Annington Acquistion Holding GmbH, Düsseldorf, in the amount of € 1,448.1 million. In addition to that, other operating income was positively affected by a reversal of impairments amounting to € 42.3 million from receivables from affiliated companies and the disclosure of hidden reserves in the amount of € 247.8 million. These extraordinary earnings contributions all result from a structuring measure under company law implemented at the conwert Immobilien Invest GmbH Group (hereinafter: conwert), which was acquired in 2017, as part of its integration into the Vonovia Group. This structuring measure transferred the shares in the German conwert companies from Austria to Germany using a series of conversion-related steps. The previous year had also been characterized by significant non-recurring items due to the company law structuring of the GAGFAH companies, which had a positive impact on the previous year’s other operating income.

Personnel expenses came to € 31.7 million in 2018, down on the prior-year figure of € 36.6 million due primarily to lower allocations to the long-term profit-sharing model and a drop in the number of employees.

Depreciation and amortization increased due to volume-related aspects.

Net financial expenses to affiliated companies improved considerably, from € 25.5 million to € 63.3 million, due to volume-related aspects. The extremely positive financial result of € 1,474.5 million is characterized by the profit transfer made by Deutsche Annington Acquisition Holding GmbH in the amount of € 1,448.1 million.

Tax expenses came to € 3.8 million as against € 8.9 million in the previous year. As the controlling company in a VAT group, Vonovia SE owes the corresponding income taxes. The tax expenses relate exclusively to previous years.

Vonovia SE closed the 2018 fiscal year with net income of € 1,673,317,417.29 (2017: € 398,830,574.65). Pursuant to Section 58 (2) of the German Stock Corporation Act (AktG), the Management Board may allocate up to one half of net income to retained earnings. As a result of this authorization, the Management Board has allocated € 800,000,000.00 to other retained earnings with a partial appropriation of profit. Taking into account the profit carried forward from the previous year in the amount of € 36,325,964.33, the profit for the 2018 financial year amounts to € 909,643,381.62.

The Management Board and the Supervisory Board propose to the Annual General Meeting that, of the profit of Vonovia SE for the 2018 fiscal year of € 909,643,381.62, an amount of € 135,000,000.00 be added to other revenue reserves and an amount of € 746,032,224.96 on the 518,077,934 shares of the share capital as of December 31, 2018, be paid as a dividend, corresponding to € 1.44 per share, to the shareholders and the remaining amount of € 28,611,156.66 be carried forward to the new account or be used for other dividends on shares carrying dividend rights at the time of the Annual General Meeting and which go beyond those of the share capital as of December 31, 2018.

As with the 2017 financial year, the dividend for the 2018 fiscal year, payable after the Annual General Meeting in May 2019, will again include the election of a non-cash dividend in shares, to the extent deemed economically sensible by the Supervisory Board.

Income Statement

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Net Assets and Financial Position of Vonovia SE

The company’s non-current assets of € 15,289.9 million are naturally characterized by financial assets in the amount of € 15,259.6 million. The increase in 2018 is due primarily to the acquisition of the shares in BUWOG, as well as to the adjustments made to the statement of the equity investments in conwert Invest GmbH and Deutsche Annington Acquisition Holding GmbH as a result of the company law structuring measures relating to the conwert Group.

Intangible assets and property, plant and equipment increased as a result of the investments to equip the Group’s new head office.

Net current assets (current assets less current liabilities) including net liquidity are governed by the Group financing structure, in which Vonovia SE assumes the function of the cash pool leader. The Group’s net lending/borrowing position led to charges of a total of € 1,106.3 million to Vonovia SE in 2018. The company was also hit by a change in the amount of € 187.3 million in the “net liquidity from cash and cash equivalents and bank liabilities,” which corresponds to an overall change in Vonovia SE’s net financial position of € 1,293.6 million. The change in the Group’s net lending/borrowing position is mainly due to the payment of the BUWOG shares and the payment of the cash component of the dividend. The integration of the conwert and BUWOG companies into the Group cash pool also results in a net investment. As of December 31, 2018, the Group’s net lending/borrowing position also includes the amounts already credited from the profit-and-loss transfer agreements, with the profit transfer of € 1,448.1 million made by Deutsche Annington Acquisition Holding GmbH reducing the Group’s net lending/borrowing position considerably. The increase in liabilities to financial institutions relates to the subsidized development loans taken out with the European Investment Bank (EIB) and the German government-owned development bank Kreditanstalt für Wiederaufbau (KfW) that Vonovia SE passes on to its subsidiaries.

Provisions came to € 134.9 million at the end of the year (2017: € 119.8 million), with € 59.7 million of this amount attributable to provisions for pensions, € 16.4 million to income tax provisions and € 5.6 million to HR-related provisions. Provisions increased by € 15.1 million in total, largely driven by the rise in provisions for pensions.

Total equity increased in 2018 as a result of the profit for the period, the capital increase for the stock dividend and the cash capital increase implemented on May 11, 2018, as part of accelerated bookbuilding. 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 cash dividend distribution had the opposite effect of reducing total equity.

The profit for the period 2018, which increased considerably compared to 2017, is also reflected in the net income for the year in 2018. For the 2018 fiscal year, a dividend distribution of € 746,032,224.96 is to be resolved at the Annual General Meeting to be held on May 16, 2019. This corresponds to € 1.44 per share. A further € 135 million will be allocated to other retained earnings in addition to the € 800 million already allocated here according to Section 58 (2) of the AktG.


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Dec. 31, 2017


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Dec. 31, 2017


Dec. 31, 2018








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Cash flow from operating activities is characterized by the income and expenses relating to the performance of the management holding functions. Vonovia SE only has appreciable cash flows from investing activities when acquisitions are made. Cash flows from financing activities regularly result from changes in Group financing, selective borrowing and the repayment of debt financing, mainly subsidized development loans and/or promissory note loans, as well as the corresponding interest payments. Liquidity dropped from € 184.8 million to € 166.4 million in 2018.

Employees of Vonovia SE

At the end of the 2018 fiscal year, an average of 179 people were employed by Vonovia SE (2017: 198 employees).

Opportunities and Risks for Vonovia SE

The likely development of Vonovia SE in the 2019 fiscal year depends to a considerable extent on the development of the Group as a whole and its opportunity and risk situation. This situation is set out in the Group’s opportunity and risk report, meaning that the statements set out there in regard to the opportunity and risk situation of the Group also apply to the annual financial statements of Vonovia SE prepared in accordance with German commercial law, where the risks can have an impact on the valuation of long-term financial assets and on the amount of the results of subsidiaries collected/compensated for.

Forecast for Vonovia SE

Since the company’s net assets, financial position and results of operations are determined solely by the ability of the Group companies to make positive earnings contributions and generate positive cash flows in the long term, we refer at this point to the Forecast Report for the Group. The most important financial performance indicator for the annual financial statements of Vonovia SE is the annual result.

The company’s earnings for 2018 are exceptionally positive and were influenced primarily by positive earnings contributions made by company law structuring measures. Leaving these special effects out of the equation, the company’s earnings for the 2018 fiscal year would be well in the red, on a par with the level seen in previous years, as predicted.

The results for the 2019 fiscal year will in turn be characterized by the results of subsidiaries collected/compensated for on the basis of income from investments and profit-and-loss transfer agreements, income from services, personnel and administrative expenses and the financial result. Looking ahead to the 2019 fiscal year, we expect to see expenses increase again due to the integration and structuring measures associated with the BUWOG takeover. By contrast, the extraordinary special effects seen in 2018 will cease to apply.

All in all, we expect the result for the 2019 fiscal year to again be on a par with the figure seen in the previous year without special effects.

It is still generally planned for Vonovia SE to distribute 70% of the to the shareholders as a dividend, which would correspond to a dividend of € 1.44 per share for the 2018 fiscal year.

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.
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.