39 Provisions
Provisions
Dec. 31, 2020 | Dec. 31, 2021 | ||||||||
in € million | non-current | current | non-current | current | |||||
Provisions for pensions and similar obligations | 627.8 | – | 684.5 | – | |||||
Provisions for taxes (current income taxes excl. deferred taxes) | – | 124.2 | – | 233.2 | |||||
Other provisions | |||||||||
Environmental remediation | 11.5 | – | 19.8 | 16.8 | |||||
Personnel obligations | 52.3 | 56.3 | 39.0 | 84.4 | |||||
Outstanding trade invoices | – | 93.4 | – | 267.2 | |||||
Miscellaneous other provisions | 19.7 | 115.1 | 123.0 | 125.6 | |||||
Total other provisions | 83.5 | 264.8 | 181.8 | 494.0 | |||||
Total provisions | 711.3 | 389.0 | 866.3 | 727.2 | |||||
Provisions for Pensions and Similar Obligations
Accounting Policies
When valuing the provisions for pensions, the company pension obligations are determined using the projected unit credit method pursuant to IAS 19 “Employee Benefits,” whereby current pensions and vested pension rights as of the reporting date as well as expected future increases in salaries and pensions, are included in the valuation. An actuarial valuation is performed at every reporting date.
The amount shown in the balance sheet is the total present value of the defined benefit obligations (DBO) after offsetting against the fair value of plan assets.
Actuarial gains and losses are accounted for in full in the period in which they occur and recognized in retained earnings as a component of other comprehensive income and not in profit or loss. The actuarial gains and losses are also no longer recognized with effect on net income in subsequent periods.
Service cost is shown in personnel expenses. The service cost is the increase in the present value of a defined benefit obligation resulting from employee service in the reporting period.
The interest expense is recognized in the financial result. Interest expense is the increase during a period in the present value of a defined benefit obligation that generally arises due to the fact that the benefit obligation is one period closer to being discharged.
Reinsurance contracts that qualify as plan assets have been taken out to cover the pension obligations toward particular individuals. Where the value of those reinsurance contracts exceeds the related pension obligations, the excess is recognized as an asset and shown under other assets.
Obligations from joint defined benefit multi-employer plans at Versorgungsanstalt des Bundes und der Länder (VBL), a pension institution of the Federal Republic of Germany and the Federal States, are stated, in line with IAS 19.34, in the same way as obligations from defined contribution plans, insofar as the information required for the statement of defined benefit plans is not available. The obligations are based on the amounts to be paid for the current period.
Vonovia has pension obligations towards various employees which are based on the length of service. Defined benefit and defined contribution obligations – for which Vonovia guarantees a certain level of benefit – are financed through provisions for pensions. Vonovia has taken out reinsurance contracts for individual people.
Generally, they are pension benefits that depend on the final salary with percentage increases depending on the number of years of service.
The pension commitments cover 6,545 (Dec. 31, 2020: 4,523) eligible persons. The increase results mainly from first-time inclusion of the eligible personnel of the Deutsche Wohnen Group in the pension valuation.
Executives currently working for companies belonging to Vonovia have the opportunity to participate in the “Pension Instead of Cash Remuneration” model (Versorgungsbezüge anstelle von Barbezügen) (eligible persons: 307, incl. persons no longer active). Retirement, invalidity and surviving dependent benefits in the form of a lifelong pension are offered under this deferred compensation model. The retirement benefits can also be paid out as a one-time capital sum. The model was closed in 2021.
Overview of the most important basic data for existing pension plans (all of which have already been closed):
Overview basic date for existing pension plans
VO 1/VO 2 Veba Immobilien | VO 60/VO 91 Eisenbahnges. | Bochumer Verband | ||||
Type of benefits | Retirement, invalidity and surviving dependent benefits | Retirement, invalidity and surviving dependent benefits | Retirement, invalidity and surviving dependent benefits | |||
Pensionable remuneration | Final salary | Final salary | Not applicable | |||
Max. pension level | Yes | Yes | Depends on individual grouping | |||
Total pension model based on final salary | Yes | No | No | |||
Net benefit limit incl. state pension | None | Yes | None | |||
Gross benefit limit | Yes | None | None | |||
Adjustment of pensions | Section 16 (1,2) BetrAVG | Section 16 (1,2) BetrAVG | Adjustment every 3 years by Bochumer Verband (Manage- ment Board resolution) | |||
Supplementary periods | Age of 55 | Age of 55 | Age of 55 (half) | |||
Legal basis | Works agreement | Works agreement | Commitment to executives in individual contracts | |||
Number of eligible persons | 374 | 654 | 391 | |||
VO 1991/VO 2002 GAGFAH | VO guideline GAGFAH M | VO 2017 VBL-Ersatzversorgung | ||||
Type of benefits | Retirement, invalidity and surviving dependent benefits | Retirement, invalidity and surviving dependent benefits | Retirement, invalidity and surviving dependent benefits | |||
Pensionable remuneration | Salary for September of each year | Final salary | Salary of each year | |||
Max. pension level | Module p.a. | Yes | Module p.a. | |||
Total pension model based on final salary | No | Yes | No | |||
Net benefit limit incl. state pension | None | None | None | |||
Gross benefit limit | None | Yes | None | |||
Adjustment of pensions | 1% p.a. | Section 16 (1,2) BetrAVG | 1% p.a. | |||
Supplementary periods | Age of 55 | Age of 55 | None | |||
Legal basis | Works agreement | Works agreement | Individual agreement | |||
Number of eligible persons | 1,110 | 379 | 107 | |||
The current pensions according to the classic pension benefit regulations of Bochumer Verband are adjusted in line with Section 20 of those regulations. Section 20 is a rule which is based on Section 16 (1,2) of the German Occupational Pensions Improvement Act (BetrAVG) but which, according to a ruling of the Federal Labor Court of Germany, is an independent rule. Other company pensions are reviewed and adjusted under the terms of the agreement according to Section 16 (1,2) BetrAVG. On every review date, the development of the cost of living since the individual retirement date is reviewed and compensated for. Only in the aforementioned deferred compensation model is the option, available since January 1, 1999, used to raise the current pensions every year by 1% (Section 16 [3] No. 1 BetrAVG). No further risks are seen.
The company has decided to use the internal financing effect of the provisions for pensions and only to back a relatively small portion of the pension obligations with plan assets. Reinsurance policies have been taken out for former Management Board members against payment of a one-time insurance premium in order to provide additional protection against insolvency; these reinsurance policies were pledged to the eligible persons. They constitute plan assets, which are offset against the gross obligation. The fair value of the reinsurance policies for individual persons is higher than the extent of the obligations towards the respective person. This surplus of the fair values of the assets over the obligation is shown under non-current other assets. The conclusion of further reinsurance policies is not planned.
Pension plan obligations and the expenses necessary to cover these obligations are determined using the projected unit credit method prescribed by IAS 19. Both pensions known on the reporting date and vested rights as well as expected future increases in salaries and pensions are included in the measurement. The following actuarial assumptions were made at the reporting date – in each case related to the end of the year and with economic effect for the following year.
Actuarial Assumptions
Actuarial Assumptions
The 2018 G mortality tables of Prof. Dr. Klaus Heubeck have been taken for the biometric assumptions without any changes.
The defined benefit obligation (DBO) developed as follows:
Defined benefit obligation (DBO)
in € million | 2020 | 2021 | |||
DBO as of Jan. 1 | 591.0 | 648.1 | |||
Additions due to business combinations | – | 110.4 | |||
Interest expense | 5.8 | 4.6 | |||
Current service cost | 12.2 | 14.6 | |||
Actuarial gains and losses: | |||||
Changes in the biometric assumptions | -8.4 | 4.8 | |||
Changes in the financial assumptions | 27.4 | -41.1 | |||
Transfer | 44.9 | – | |||
Benefits paid | -24.8 | -29.6 | |||
DBO as of Dec. 31 | 648.1 | 711.8 | |||
The present value of the pension obligation is divided among the groups of eligible persons as follows:
Value of the defined benefit obligation
Plan assets comprise solely reinsurance contracts. The fair value of the plan assets has developed as follows:
Fair value of plan assets
The actual return on plan assets amounted to € 0.8 million during the fiscal year (2020: € 0.6 million).
The following table shows a reconciliation of the defined benefit obligation to the pension obligation recognized in the balance sheet:
Reconciliation of the defined benefit obligation to the pension obligation recognized in the balance sheet
in € million | Dec. 31, 2020 | Dec. 31, 2021 | |||
Present value of funded obligations | 31.2 | 36.2 | |||
Present value of unfunded obligations | 616.9 | 675.6 | |||
Total present value of defined benefit obligations | 648.1 | 711.8 | |||
Fair value of plan assets | -21.1 | -28.3 | |||
Net liability recognized in the balance sheet | 627.0 | 683.5 | |||
Other assets to be recognized | 0.8 | 1.0 | |||
Provisions for pensions recognized in the balance sheet | 627.8 | 684.5 | |||
In 2021, actuarial gains of € 37.0 million (excluding deferred taxes) were recognized in other comprehensive income (2020: € -18.6 million).
The weighted average term of the defined benefit obligations is 15.5 years (Dec. 31, 2020: 16.1 years).
The following table contains the estimated, undiscounted pension payments of the coming five fiscal years and the total of those in the subsequent five fiscal years:
Projected, undiscounted pension payments of the coming five fiscal years and the total of those in the subsequent five fiscal years
Sensitivity Analyses
An increase or decrease in the material actuarial assumptions would have led to the following defined benefit obligation, providing the other assumptions did not change:
Material actuarial assumptions effects on the DBO
An increase in life expectancy of 4.9% would have resulted in an increase in the DBO of € 27.9 million as of December 31, 2021 (Dec. 31, 2020: € 31.0 million). This percentage rise corresponds to a one-year increase in the life expectancy of a man who was 65 at the reporting date.
If several assumptions are changed simultaneously, the cumulative effect is not necessarily the same as if there had been a change in just one of the assumptions.
The provisions for pensions include € 3.5 million (Dec. 31, 2020: € 4.3 million) for pension obligations which were transferred to third parties as part of an assumption of debt and which relate to vested rights and the payment of current pensions. A corresponding non-current receivable is shown under miscellaneous other assets.
Other Provisions
Accounting Policies
Other provisions are recognized when there is a present obligation, either legal or constructive, vis-à-vis third parties as a result of a past event if it is probable that a claim will be asserted and the probable amount of the required provision can be reliably estimated. Provisions are discounted if the resulting effect is material. The carrying amount of discounted provisions increases in each period to reflect the passage of time and the unwinding of the discount is recognized within interest expense. The discount rate is a pre-tax rate that reflects current market assessments.
Provisions for restructuring expenses are recognized when the Group has set up and communicated a detailed formal plan for restructuring and has no realistic possibility of withdrawing from these obligations.
Provisions for onerous contracts are recognized when the expected benefits from a contract are lower than the unavoidable cost of meeting the obligations under the contract. The provision is stated at the lower of the present value of the fulfillment obligation and the cost of terminating the contract, i.e., a possible indemnity or fine for breach or non-fulfillment of contract.
Provisions are reviewed regularly and adjusted to reflect new information or changed circumstances.
The provisions for pre-retirement part-time work arrangements are basically to be classified as other long-term employee benefits that are to be accrued over the employees’ service periods.
The assets of the insolvency policy to secure fulfillment shortfalls arising from pre-retirement part-time work arrangements are offset against the amounts for fulfillment shortfalls contained in the provisions for pre-retirement part-time work arrangements.
A contingent liability is a possible obligation toward third parties that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events or a present obligation that arises from past events for which an outflow of resources is not probable or the amount of which cannot be estimated with sufficient reliability. According to IAS 37, contingent liabilities are not generally recognized.
Development of Other Provisions During the Fiscal Year
Development of Other Provisions during the Fiscal Year
in € million | As of Jan. 1, 2021 | Changes in scope of consolidation | Additions | Reversals | Interest accretion to provisions | Revaluation from currency effects | Utilization | As of Dec. 31, 2021 | |||||||||
Other provisions | |||||||||||||||||
Environmental remediation | 11.5 | 10.7 | 16.6 | – | – | – | -2.2 | 36.6 | |||||||||
Personnel obligations | 108.6 | 37.2 | 55.1 | -3.1 | 0.1 | -0.1 | -74.4 | 123.4 | |||||||||
Outstanding trade invoices | 93.4 | 172.0 | 156.5 | -8.6 | – | -0.1 | -146.0 | 267.2 | |||||||||
Miscellaneous other provisions | 134.8 | 124.3 | 45.1 | -31.6 | 5.6 | -0.1 | -29.5 | 248.6 | |||||||||
348.3 | 344.2 | 273.3 | -43.3 | 5.7 | -0.3 | -252.1 | 675.8 | ||||||||||
Development of Other Provisions During the Previous Year
Development of Other Provisions during the Previous Year
in € million | As of Jan. 1, 2020 | Changes in scope of consolidation | Additions | Reversals | Interest accretion to provisions | Netting plan assets | Utilization | As of Dec. 31, 2020 | ||||||||
Other provisions | ||||||||||||||||
Environmental remediation | 13.0 | – | – | – | 0.2 | – | -1.7 | 11.5 | ||||||||
Personnel obligations | 133.5 | 0.1 | 55.8 | -5.1 | 0.1 | – | -75.8 | 108.6 | ||||||||
Outstanding trade invoices | 109.8 | 2.8 | 97.2 | -13.6 | – | – | -102.8 | 93.4 | ||||||||
Miscellaneous other provisions | 155.3 | 13.9 | 45.5 | -17.2 | 0.4 | – | -63.1 | 134.8 | ||||||||
411.6 | 16.8 | 198.5 | -35.9 | 0.7 | – | -243.4 | 348.3 | |||||||||
Reversals of provisions are generally offset against the expense items for which they were originally established.
The provisions for environmental remediation primarily refer to site remediation of locations of the former Raab Karcher companies and the Kabelwerk Köpenick cable factory. Remediation has either already begun or an agreement has been reached with the authorities as to how the damage is to be remedied. The cost estimates are based on expert opinions detailing the anticipated duration of the remediation work and the anticipated cost.
The personnel obligations are provisions for pre-retirement part-time work arrangements, provisions for bonuses, severance payments not relating to restructuring and other personnel expenses. The other personnel expenses include a provision for the long-term incentive plan (LTIP) determined in accordance with IFRS 2 of € 22.6 million (Dec. 31, 2020: € 30.0 million) (see chapter [E48] Share-Based Payments).
The material individual cost items under miscellaneous other provisions include costs associated with legal disputes in the amount of € 34.2 million (Dec. 31, 2020: € 23.6 million), litigation costs in the amount of € 31.4 million (Dec. 31, 2020: € 10.7 million), costs associated with company tax audits in the amount of € 8.2 million (Dec. 31, 2020: € 6.0 million), provisions for other contractually agreed guarantees in the amount of € 4.2 million (Dec. 31, 2020: € 3.2 million) and onerous contracts in the amount of € 1.8 million (Dec. 31, 2020: € 2.1 million).
The Group expects to settle the lion’s share of the provision over the coming year.
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 the company’s own portfolio less incurred production costs) less the operating expenses from the Development segment.
Adjusted EBITDA Deutsche Wohnen
The Adjusted EBITDA Deutsche Wohnen is calculated by deducting the operating expenses of the Deutsche Wohnen segment and the carrying amount of properties sold from the segment revenue of the Deutsche Wohnen Group.
Adjusted EBITDA Recurring Sales
The Adjusted EBITDA Recurring Sales compares the proceeds generated from the 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, has to be adjusted to reflect realized/unrealized changes in value.
Adjusted EBITDA Rental
The Adjusted EBITDA Rental is calculated by deducting the operating expenses of the Rental segment and the expenses for maintenance in the Rental segment from the Group’s rental income.
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 and 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, Adjusted EBITDA Development and Adjusted EBITDA Deutsche Wohnen.
Adjusted EBITDA Value-add
The Adjusted EBITDA Value-add is calculated by deducting operating expenses from the segment’s income.
COSO
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a private-sector U.S. organization. It was founded in 1985. In 1992, COSO published the COSO model, an SEC-recognized standard for internal controls. This provided a basis for the documentation, analysis and design of internal control systems. In 2004, the model was further developed and the COSO Enterprise Risk Management (ERM) Framework was published. Since then, it has been used to structure and develop risk management systems.
Covenants
Requirements specified in loan agreements or bond conditions containing future obligations of the borrower or the bond obligor to meet specific requirements or to refrain from undertaking certain activities.
EPRA Key Figures
For information on the EPRA key figures, we refer to the chapter on segment reporting according to EPRA.
EPRA NTA
The presentation of the NTA based on the EPRA definition aims to show the net asset value in a long-term business model. NTA stands for Net Tangible Assets. The equity attributable to Vonovia’s shareholders is adjusted by deferred taxes, real estate transfer tax and other purchasers’ costs in relation to the existing portfolio and the fair value of derivative financial instruments after taking deferred taxes into account. Stated goodwill and other intangible assets are also deducted.
European Public Real Estate Association (EPRA)
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.
European Public Real Estate Association (EPRA)
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.
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.
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.
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.
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.
GAV
The Gross Asset Value (GAV) of the recognized real estate investments. This consists of the owner-occupied properties, the investment properties including development to hold, the assets held for sale and the development to sell area. In the latter, both residential properties for which a purchase contract has been signed and those with the intention to sell – i.e., a purchase contract has not yet been signed – are included.
GAV
The Gross Asset Value (GAV) of the recognized real estate investments. This consists of the owner-occupied properties, the investment properties including development to hold, the assets held for sale and the development to sell area. In the latter, both residential properties for which a purchase contract has been signed and those with the intention to sell – i.e., a purchase contract has not yet been signed – are included.
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.
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.
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.
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.
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.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
LTV Ratio (Loan-to-Value Ratio)
The LTV ratio shows the extent to which financial liabilities are covered. It shows the ratio of non-derivative financial liabilities pursuant to IFRS, less foreign exchange rate effects, cash and cash equivalents less advance payments received by Development (period-related), receivables from disposals, plus purchase prices for outstanding acquisitions to the total fair values of the real estate portfolio, fair values of the projects/land currently under construction as well as receivables from the sale of real estate inventories (period-related) plus the fair values of outstanding acquisitions and investments in other real estate companies.
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 property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.
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 property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Sustainability Performance Index (SPI)
Index to measure non-financial performance. Vonovia’s sustainable activities are geared towards the top sustainability topics that we have identified, which are bundled in the Sustainability Performance Index. The Customer Satisfaction Index (CSI) is included in the calculation of the Sustainability Performance Index. The CSI is determined at regular intervals in systematic customer surveys conducted by an external service provider and shows the effectiveness and sustainability of our services for the customer. Other indicators used in the Sustainability Performance Index are the carbon savings achieved annually in housing stock, the energy efficiency of new buildings, the share of accessible (partial) modernization measures in relation to newly let apartments, the increase in employee satisfaction and diversity in the company’s top management team.
Sustainability Performance Index (SPI)
Index to measure non-financial performance. Vonovia’s sustainable activities are geared towards the top sustainability topics that we have identified, which are bundled in the Sustainability Performance Index. The Customer Satisfaction Index (CSI) is included in the calculation of the Sustainability Performance Index. The CSI is determined at regular intervals in systematic customer surveys conducted by an external service provider and shows the effectiveness and sustainability of our services for the customer. Other indicators used in the Sustainability Performance Index are the carbon savings achieved annually in housing stock, the energy efficiency of new buildings, the share of accessible (partial) modernization measures in relation to newly let apartments, the increase in employee satisfaction and diversity in the company’s top management team.
Non-core Disposals
We also report on the Other segment, which is not relevant from a corporate management perspective, in our segment reporting. This includes the sale, only as and when the right opportunities present themselves, of entire buildings or land (Non-core Disposals) that are likely to have below-average development potential in terms of rent growth in the medium term and are located in areas that can be described as peripheral compared with Vonovia’s overall portfolio and in view of future acquisitions.
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.
Fair Value Step-up
Fair value step-up is the difference between the income from selling a unit and its current fair value in relation to its fair value. It shows the percentage increase in value for the company on the sale of a unit before further costs of sale.
Fair Value Step-up
Fair value step-up is the difference between the income from selling a unit and its current fair value in relation to its fair value. It shows the percentage increase in value for the company on the sale of a unit before further costs of sale.
Cash-generating Unit (CGU)
The cash-generating unit refers, in connection with the impairment testing of goodwill, to the smallest group of assets that generates cash inflows and outflows independently of the use of other assets or other cash-generating units (CGUs).