Vonovia Annual Report 2023

2 Adjustment to Prior-year Figures

Changes in Presentation

There were various changes in presentation in the 2023 fiscal year that also required adjustments to the prior-year figures.

The two tables below illustrate the changes as against the prior-year presentation in the balance sheet:

Adjustment to Prior-year Figures – Consolidated Balance Sheet – Assets

in € million	Dec. 31, 2022	Adjustment	Dec. 31, 2022 (adjusted)

Intangible assets	1,659.5		1,659.5
Property, plant and equipment	673.4		673.4
Investment properties	92,300.1		92,300.1
Financial assets	745.0		745.0
Investments accounted for using the equity method	240.1		240.1
Other assets	380.2		380.2
Deferred tax assets	39.6		39.6
Total non-current assets	96,037.9		96,037.9

Inventories	146.4	-114.3	32.1
Trade receivables	330.2	-169.2	161.0
Financial assets	768.2		768.2
Other assets	337.5	283.5	621.0
Income tax receivables	239.9		239.9
Cash and cash equivalents	1,302.4		1,302.4
Real estate inventories	2,156.3		2,156.3
Assets held for sale	70.8		70.8
Total current assets	5,351.7	0.0	5,351.7
Total assets	101,389.6	0.0	101,389.6

The change in presentation under assets relates to contract assets from ancillary costs (€ 114.3 million) and from the development business (€ 169.2 million). Starting in the 2023 fiscal year, these will be reported under other assets as opposed to under inventories or trade receivables as in the past.

Adjustment to Prior-year Figures – Consolidated Balance Sheet – Equity and Liabilities

in € million	Dec. 31, 2022	Adjustment	Dec. 31, 2022 (adjusted)

Subscribed capital	795.8		795.8
Capital reserves	5,151.6		5,151.6
Retained earnings	25,605.1		25,605.1
Other reserves	-221.0		-221.0
Total equity attributable to Vonovia shareholders	31,331.5		31,331.5
Non-controlling interests	3,107.3		3,107.3
Total equity	34,438.8		34,438.8

Provisions	655.7		655.7
Trade payables	5.2		5.2
Non-derivative financial liabilities	41,269.7		41,269.7
Derivatives	–		–
Lease liabilities	641.0		641.0
Liabilities to non-controlling interests	220.0		220.0
Financial liabilities from tenant financing	43.0		43.0
Other liabilities	27.9		27.9
Deferred tax liabilities	18,612.4		18,612.4
Total non-current liabilities	61,474.9		61,474.9

Provisions	549.7	-311.7	238.0
Trade payables	563.3		563.3
Non-derivative financial liabilities	3,790.0		3,790.0
Derivatives	1.3		1.3
Put options	270.9		270.9
Lease liabilities	41.5		41.5
Liabilities to non-controlling interests	15.9		15.9
Financial liabilities from tenant financing	112.1		112.1
Current income taxes	–	241.3	241.3
Other liabilities	131.2	70.4	201.6
Total current liabilities	5,475.9	0.0	5,475.9
Total liabilities	66,950.8	0.0	66,950.8
Total equity and liabilities	101,389.6	0.0	101,389.6

On the liabilities side, current provisions for bonuses and current provisions for personnel expenses amounting to € 70.4 million in total were reclassified from current provisions to other liabilities, as they are classed as accruals.

The new balance sheet line item “Current income taxes” comprises current tax liabilities and current income tax liabilities, which were recognized at € 241.3 million under current provisions in the previous year.

Disclosure of the Care Segment

As part of a strategic review of the Care segment, the management decided to discontinue and sell these operations. Endeavors to sell the Care segment have begun and it is expected to have been sold before December 2024.

The criteria for presentation as a disposal group held for sale are met. At the same time, the criteria for definition as a discontinued operation are also met. Accordingly, the majority of the segment is presented separately in the balance sheet as a disposal group held for sale/discontinued operation, and the results from the discontinued operation are shown separately in the income statement. Pursuant to IFRS 5, retrospective adjustments were made to presentation in the income statement; IFRS 5 does not provide for the restatement of the prior-year figures in the balance sheet.

The share of revenue from nursing care properties that are not part of the disposal group (2022: € 23.3 million) was reclassified from other revenue from property management to revenue from property letting, as these properties will make a long-term contribution to revenue in the Rental segment by being let to third parties. The other adjustments represent the profit share attributable to the disposal group to be hived off.

Intra-Group transactions were eliminated from the consolidated financial results in full. The eliminations were allocated to continuing operations and discontinued operations so as to take account of the decision not to continue these transactions after the disposal, as the Management Board considers this type of presentation to be useful.

For this purpose, the Management Board has eliminated the revenue resulting from transactions with continuing operations generated prior to the reclassification in the result from continuing operations, as no services will be exchanged between the continuing operations and the discontinued operations after the sale.

Income Statement

The table below illustrates the changes as against the prior-year presentation in the income statement:

Adjustment to Prior-year Figures – Consolidated Income Statement

in € million	2022	Adjustment	2022 (adjusted)

Revenue from property letting	4,724.6	22.8	4,747.4
Other revenue from property management	427.2	-280.1	147.1
Revenue from property management	5,151.8	-257.3	4,894.5

Income from disposal of properties	3,242.4		3,242.4
Carrying amount of properties sold	-3,172.0		-3,172.0
Revaluation of assets held for sale	68.0		68.0
Profit from the disposal of properties	138.4		138.4

Revenue from disposal of real estate inventories	588.4		588.4
Cost of sold real estate inventories	-460.9		-460.9
Profit from disposal of real estate inventories	127.5		127.5

Net income from fair value adjustments of investment properties	-1,269.8	92.2	-1,177.6
Capitalized internal expenses	673.3	-0.2	673.1
Cost of materials	-2,501.5	55.7	-2,445.8
Personnel expenses	-863.8	150.1	-713.7
Depreciation and amortization	-1,279.1	98.9	-1,180.2
Other operating income	218.8	-28.7	190.1
Impairment losses on financial assets	-49.8		-49.8
Net income from the derecognition of financial assets measured at amortized cost	-2.6	-0.3	-2.9
Other operating expenses	-397.5	17.0	-380.5
Net income from investments accounted for using the equity method	-436.6		-436.6
Interest income	115.5		115.5
Interest expenses	-367.6	0.7	-366.9
Other financial result	10.3		10.3
Earnings before tax	-732.7	128.1	-604.6
Income taxes	63.3	-33.5	29.8
Profit for the period from continuing operations	-669.4	94.6	-574.8
Profit for the period from discontinued operations		-94.6	-94.6
Profit for the period	-669.4	0.0	-669.4

Attributable to:
Vonovia’s shareholders	-643.8		-643.8
Non-controlling interests	-25.6		-25.6

Earnings per share (diluted) in €	-0.82		-0.82
Earnings per share (basic) in €	-0.82		-0.82

Segment Report

In the 2023 fiscal year, Vonovia continued with the 2022 management system unchanged for the time being. Vonovia’s business was managed via the five segments: Rental, Value-add, Recurring Sales, Development and Care. For detailed information, please refer to the chapter entitled Corporate Governance in Vonovia’s published 2022 Annual Report.

At the end of the fourth quarter of 2023, the presentation of earnings contributions from the Development to hold sales channel was adjusted within the Development segment. In the 2023 annual financial statements, the earnings contributions from development to hold are recognized exclusively in net income from fair value adjustments of investment properties, i.e., outside of the Adjusted EBITDA Total. The adjusted presentation is due to the greater transparency and traceability of the key figures that are relevant to governance. Furthermore, the adjustment results in a more balanced presentation of the earnings situation in the Development segment now that market conditions have changed.

The majority of the current Care segment, which is to be discontinued, is presented as a discontinued operation. This means that the Care segment is no longer included in the segment reporting.

As part of a strategic review of the Care segment, the management decided to discontinue and sell these operations. Endeavors to sell the Care segment have since begun and it is expected to have been sold before December 2024. A small part of the segment, with a business volume of € 23.3 million in segment revenue, was transferred to the Rental segment. Specifically, this relates to rental income for 25 properties operated by third parties. The previous year’s figures were adjusted accordingly:

Adjustment to 2022 segment figures

in € million	Rental	Value-add	Recurring Sales	Develop- ment	Care Business	Segments total	Other*	Consolida- tion*	Group

Jan. 1–Dec. 31, 2022 changes
Segment revenue	23.3			-433.9	-280.1	-690.7	-0.5	433.9	-257.3
thereof external revenue	23.3			–	-280.1	-256.8	-0.5		-257.3
thereof internal revenue				-433.9		-433.9		433.9
Carrying amount of assets sold							-20.5
Revaluation from disposal of assets held for sale
Expenses for maintenance	-0.3				7.0	6.7
Cost of development to sell
Cost of development to hold**				340.6		340.6		-340.6
Operating expenses	-2.2			0.1	188.5	186.4	9.5	–
Ancillary costs							11.5
Adjusted EBITDA Total	20.8			-93.2	-84.6	-157.0	–	93.3	-63.7

Non-recurring items									0.1
Period adjustments from assets held for sale
Income from investments/‌ amortization in other real estate companies
Net income from fair value adjustments of investment properties									92.2
Depreciation and amortization (incl. depreciation on financial assets)									98.8
Net income from investments accounted for using the equity method
Income from other investments
Interest income
Interest expenses									0.7
Other financial result
EBT									128.1

Income taxes									-33.5
Profit from continuing operations									94.6
Profit from discontinued operations									-94.6
Profit for the period

* The revenue for the Rental, Value-add, Recurring Sales and Development segments constitutes income that is regularly reported to the Management Board as the chief operating decision-maker and that reflects Vonovia’s sustainable business. The revenue/costs in the “Other” and “Consolidation” columns are not part of the Management Board’s segment management.
** Excluding capitalized interest on borrowed capital of € 2.5 million.