37 Total Equity
Accounting Policies
Other comprehensive income includes changes in total comprehensive income not affecting net income except that resulting from capital transactions with equity holders (e. g., capital increases or dividend distributions). Vonovia includes under this item unrealized gains and losses from the fair value measurement of equity instruments and derivative financial instruments that are designated as cash flow hedges. The item also includes actuarial gains and losses from defined benefit pension commitments as well as certain currency translation differences.
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 as well as currency translation differences are recognized in other comprehensive income.
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.
in € |
|
|---|---|
|
|
As of Jan. 1, 2019 |
518,077,934.00 |
Capital increase against cash contributions on May 16, 2019 |
16,500,000.00 |
Capital increase against non-cash contributions on June 13, 2019 (scrip dividend) |
7,695,677.00 |
As of Dec. 31, 2019 |
542,273,611.00 |
|
|
in € |
|
|---|---|
|
|
As of Jan. 1, 2019 |
7,183,423,174.39 |
Premium from capital increase on May 16, 2019 |
727,650,000.00 |
Premium from capital increase for scrip dividend on June 13, 2019 |
333,622,989.30 |
Transaction costs on the issue of new shares (after allowing for deferred taxes) |
-5,047,506.00 |
Other changes not affecting net income |
44,919.29 |
As of Dec. 31, 2019 |
8,239,693,576.98 |
|
|
Cash Capital Increase
On May 13, 2019, with the agreement of the Supervisory Board’s Finance Committee, Vonovia SE increased the share capital in return for a cash contribution, partially using the 2018 authorized capital and excluding a subscription right, by € 16,500,000.00 from € 518,077,934.00 to € 534,577,934.00. The increase was entered in the commercial register on May 16, 2019.
The 16,500,000 new no-par-value registered shares were placed with institutional investors in the scope of a private placement by means of an accelerated book building procedure and carry dividend rights as of January 1, 2019.
The shares were granted at a placement price of € 45.10 per share, delivering issue proceeds to Vonovia SE in the amount of € 744.2 million before commission and expenses. The net issue proceeds from the capital increase were used to refinance the acquisition of a Swedish real estate portfolio by Vonovia’s Swedish subsidiary, Victoria Park AB, at Group level and to finance future growth, with the remaining portion being used for general business purposes.
Dividend
The Annual General Meeting held on May 16, 2019, resolved to pay a dividend for the 2018 fiscal year in the amount of € 1.44 per share.
As in previous years, shareholders were offered the option of choosing between being paid the dividend in cash or being granted new shares. During the subscription period, shareholders holding a total of 45.8% of the shares carrying dividend rights opted for the scrip dividend as opposed to the cash dividend. As a result, 7,695,677 new shares were issued using the company’s authorized capital pursuant to Section 5b of the Articles of Association (“2018 authorized capital”) at a subscription price of € 44.352, i. e., a total amount of € 341,318,666.30. This means that the total number of Vonovia’s shares has risen to 542,273,611. The total amount of the dividend distributed in cash therefore came to € 404,713,558.66.
Authorized Capital
After being used in connection with the two capital increases in 2019, the 2018 authorized capital fell by € 24,195,677.00 from € 242,550,413.00 to € 218,354,736.00 as of December 31, 2019. Shareholder subscription rights for the 2018 authorized capital can be excluded.
Retained Earnings
As of December 31, 2019, retained earnings amounted to € 10,534.4 million (Dec. 31, 2018: € 9,942.0 million). This figure includes actuarial gains and losses of € -104.6 million (Dec. 31, 2018: € -69.0 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 € -42.3 million mainly include additional purchases of shares in Victoria Park, which are not classified as a linked transaction and the allocation of guaranteed dividends.
Other Reserves
The changes in the equity instruments at fair value in other comprehensive income are mainly due to the sale of around 16.8 million shares in Deutsche Wohnen SE with effect from February 1, 2019 to institutional investors as part of an accelerated book building procedure at a price per share of € 41.50. This results in total proceeds of € 698.1 million. The total profit of € 292.6 million was reclassified, without affecting net income, from other reserves to retained earnings pursuant to the designation under IFRS 9 when the transaction was completed.
Changes in other comprehensive income during the period in the amount of € 38.1 million (2018: € 77.5 million) relate primarily to the increase in the price of shares in Deutsche Wohnen SE up until the time of sale, the increase in the value of the non-current equity investment in OCCPI JUNO and, with the opposite effect, to a drop in currency translation differences.
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.
Non-Controlling Interests
Shares of third parties in Group companies are recognized under non-controlling interests.
The changes of the retained earnings of the non-controlling interests in the amount of € 127.0 million recognized directly in equity result mainly from the purchase of further shares in Victoria Park AB on the stock exchange, the recall of preference shares in Victoria Park AB and the squeeze-out process to acquire all outstanding shares in Victoria Park (see also Business Combinations). Furthermore, the sale of the property portfolio of 12. CR Immobilien-Vermietungsgesellschaft mbH & Co. SÜDOST WOBA Striesen KG, which was included in the scope of consolidation as a special purpose entity, led to the entity being deconsolidated.