Annual Report 2019

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 one of the leading German, Austrian and Swedish residential real estate management companies. Thanks to the successful integration of the BUWOG Group, Vonovia also ranks among the five biggest real estate developers in Germany and is the market leader in Austria.

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 2019

Following the acquisitions of the BUWOG and conwert Groups in Austria, Vonovia initiated the financial, procedural and legal integration of the two Austrian organizations into the Vonovia organization back in 2018 in its capacity as management holding company. These efforts also include the transfer of the acquired companies’ German activities into Vonovia’s corresponding German structures, a process that also involves company law measures.

Vonovia also pursued the acquisition of additional Swedish activities via selected subsidiaries, also equipping them with the required financial resources.

In the 2019 fiscal year, Vonovia expanded its business activities further by acquiring Hembla AB and Akelius Residential Property in Sweden. Both the investment in Victoria Park AB and the investment in Hembla AB involved a squeeze-out under Swedish law to acquire the shares in full once the corresponding company law requirements had been met.

Vonovia implemented a capital increase involving 16,500,000 new shares on May 16, 2019. The new shares were placed with institutional investors in the scope of a private placement by means of an accelerated book building procedure and will carry dividend rights as of January 1, 2019. The shares were granted at a placement price of € 45.10 per share. This increased the capital reserves by € 727.7 million.

On December 13, 2019, Vonovia was awarded its very first A- rating from the largest European rating agency, Scope Group, in addition to its existing BBB+ rating awarded by Standard & Poor’s.

Vonovia SE had already successfully sold its roughly 16.8 million shares in Deutsche Wohnen SE to institutional investors as of February 1, 2019, by means of an accelerated book building procedure; the shares were sold for a price of € 41.50 per share. This corresponds to a discount of 4.8% on the closing price of € 43.59 as of January 31, 2019, equating to total proceeds of € 698.1 million. The acquisition costs at the time amounted to € 405.5 million, resulting in a book gain of € 292.6 million from this disposal in the 2019 annual financial statements of Vonovia SE in accordance with commercial law.

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 fair value principle has more of an impact than the cost principle does under HGB accounting. In the consolidated financial statements under IFRS, the properties are remeasured at periodic intervals. Under 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.

As in the previous year, business developments in 2019, and consequently the result for the 2019 fiscal year, were characterized to a considerable degree by the optimization of the corporate structures of the acquired Austrian companies in company law terms in 2018 and 2019, which resulted in a merger income of € 464.3 million in 2019. On the other hand, it incurred expenses of € 241.5 million from the assumption of losses. There were also effects resulting from the acquisition of Hembla AB and the integration of BUWOG and Victoria Park. The result for the 2019 fiscal year is also influenced to a considerable degree by the sale of the shares in Deutsche Wohnen SE, resulting in a book gain of € 292.6 million.

Personnel expenses came to € 38.3 million in 2019, up by € 6.5 million on the prior-year figure due primarily to allocations to the long-term profit-sharing model.

Depreciation and amortization fell, in a development that was consistent with the depreciation and amortization plan, by € 2.0 million.

Other operating expenses increased by € 20.2 million overall due to higher consultancy fees and the assumption of financing costs for Vonovia Finance B.V. Aside from these effects, there was a drop in other operating expenses.

Net financial expenses to affiliated companies fell by € 27.4 million. This development is due to volume-related and structural factors and can be traced back to increased income of € 17.9 million (2018: € 4.5 million) and lower expenses of € 54.5 million (2018: € 68.6 million).

The profit/loss from profit transfers was down considerably in a year-over-year comparison due to the assumption of losses totaling € 279.8 million (2018: € 66.9 million ) and lower profit transfers of € 79.5 million as against € 1,523.4 million in the previous year. The year under review was also hit by expenses associated with the acquisitions in Sweden.

In addition, the financial result in the previous year had still included the effect of dividends paid by BUWOG AG and Deutsche Wohnen SE, accounting for a total of € 91.2 million. The other interest expenses relate to debt servicing and actuarial effects.

Tax expenses came to € 8.4 million as against € 3.8 million in the previous year. As the controlling company in a VAT group, Vonovia SE owes the corresponding income taxes. € 2.1 million of the tax expenses relates to prior years.

Vonovia SE closed the 2019 fiscal year with net income of € 419,110,421.17 (2018: € 1,673,317,417.29). After offsetting this profit for the year against the profit carried forward from the previous year of € 28,611,156.66, the Management Board withdrew a further € 465,000,000.00 from revenue reserves, resulting in a net profit for the 2019 fiscal year of € 912,721,577.83.

The Management Board and the Supervisory Board propose to the Annual General Meeting that, of the profit of Vonovia SE for the 2019 fiscal year of € 912,721,577.83, an amount of € 851,369,569.27 on the 542,273,611 shares of the share capital as of December 31, 2019 (corresponding to € 1.57 per share) be paid as a dividend to the shareholders, and that the remaining amount of € 61,352,008.56 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 as of December 31, 2019.

As with the 2018 fiscal year, the dividend for the 2019 fiscal year, payable after the Annual General Meeting in May 2020, will again include the option of a non-cash dividend in shares, to the extent that the Management Board and the Supervisory Board consider this to be in the interests of the company and its shareholders.

Income Statement

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Other operating income



Cost of purchased services



Personnel expenses



Other administrative expenses



Profit before financial result and tax



Income from profit transfer



Income from investments



Write-downs of long-term financial assets


Interest and similar income



Expense from the assumption of losses



Interest and similar expenses



Financial result






Net income






Net Assets and Financial Position of Vonovia SE

The company’s non-current assets of € 20,509.0 million are characterized by financial assets in the amount of € 20,475.9 million. The increase in 2019 is due primarily to the addition of a receivable to the capital reserves of a subsidiary in connection with the acquisitions in Sweden and the company law measures in Austria.

Intangible assets increased due to the purchase of software, while property, plant and equipment decreased due to depreciation.

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 € 4,207.4 million to Vonovia SE in 2019. The drop in receivables from affiliated companies is due to the collection of the profit transferred by Deutsche Annington Acquisition Holding GmbH in 2018. The increase in liabilities to affiliated companies can be attributed to the increase in liabilities to Vonovia Finance B.V. as a result of the acquisitions in Sweden and the company law transfer of the German BUWOG and conwert companies to Germany.

Provisions came to € 163.6 million at the end of the year (2018: € 134.9 million), with € 67.5 million attributable to provisions for pensions and € 23.0 million to income tax provisions. All in all, provisions increased by € 28.7 million due to the increase in provisions for pensions of € 7.7 million, the increase in the provisions for taxes of € 6.5 million and the increase in other provisions in the amount of € 14.5 million. The increase in other provisions was mainly due to outstanding invoices.

Total equity rose to € 10,280.6 million at the end of 2019 (2018: € 9,522.1 million). This increase is due to the capital increase in connection with the scrip dividend, the cash capital increase on May 16, 2019, in the context of accelerated book building and the net income for the year in the amount of € 419.1 million. The cash dividend distribution had the opposite effect of reducing total equity in 2019.


in € million

Dec. 31, 2018

Dec. 31, 2019







Financial assets



Other assets



Receivables from affiliated companies



Other receivables and assets



Cash and cash equivalents



Total assets






in € million

Dec. 31, 2018

Dec. 31, 2019




Equity and liabilities



Total equity






Liabilities to banks



Liabilities to affiliated companies



Other liabilities



Total equity and liabilities






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 € 166.4 million to € 92.9 million in 2019.

Employees of Vonovia SE

At the end of the 2019 fiscal year, an average of 168 people were employed at the company (2018: 179), 134 of whom were full-time employees and 34 of whom were part-time.

Opportunities and Risks for Vonovia SE

The likely development of Vonovia SE in the 2020 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.

As in previous years, the company’s result for the 2019 fiscal year is characterized by special effects resulting from company law restructuring measures, mainly with regard to the company law transfer of the German business activities of the former BUWOG and conwert to Germany. There was also a considerable book gain from the sale of shares in Deutsche Wohnen SE. Leaving these special effects out of the equation, the company’s earnings for the 2019 fiscal year would be a negative figure in the mid-double-digit millions, on a par with the level seen in previous years.

The results for the 2020 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. We expect to see increased expenses in the 2020 fiscal year due to the takeovers of Victoria Park and Hembla and the resulting integration and structuring expenses. By contrast, the extraordinary special effects seen in 2019 will cease to apply.

All in all, we expect the company’s result for the 2020 fiscal year to again be on a par with the figure seen in the previous years without special effects.

It is still generally planned for Vonovia SE to distribute 70% of the Group FFO to the shareholders as a dividend, which would correspond to a dividend of € 1.57 per share for the 2019 fiscal year.

Statement of the Management Board on the Economic Situation

The net assets, financial position and results of operations of the company are extremely positive, particularly given the solid financing, the resulting balanced maturity profile and the financing flexibility gained through the rating-backed bond financing with a view to both organic and external growth. The ongoing improvements to the property management processes, the expansion of the Value-add segment, the steady Recurring Sales and a successful development business promote ongoing improvement in profitability. Developments in Germany are supported by equally positive developments in Sweden and Austria.

Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. 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 operating business. In addition to the adjusted EBITDA for the Rental, Value-add, Recurring Sales and Development segments, Group FFO allows for recurring current net interest expenses from non-derivative financial instruments as well as current 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.
Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.
Recurring Sales
The Recurring 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.