37 Assets and Liabilities Held for Sale and Discontinued Operations
Accounting Policies
Assets held for sale include those non-current assets that can, and are extremely likely to be, sold at standard conditions in their current state. A sale is deemed to be highly probable if there is a commitment to a plan to sell the asset, an active program to locate a buyer and complete the plan has been initiated, the asset is being actively marketed for sale at a reasonable price, and a sale is expected to be completed within one year of the date on which the asset is classified as held for sale.
This item not only includes individual non-current assets that are to be sold, but also groups of assets (disposal groups). Discontinued operations are reported separately as an item in their own right. In cases involving disposal groups and discontinued operations, all liabilities to be sold together with the corresponding assets as part of one and the same transaction are also reclassified to the items “Liabilities associated with assets classified as held for sale” or “Liabilities of discontinued operations.”
Vonovia accounts for investment properties as assets held for sale when notarized purchase contracts have been signed or a declaration of intent to purchase has been signed by both parties as of the reporting date but transfer of title will, under the contract, not take place until the subsequent reporting period. Initially they are recognized at the contractually agreed selling price and subsequently at fair value following deductions for costs to sell, if the latter is lower.
A discontinued operation refers to a scenario in which a separate major line of business or a geographical area of operations is classed as held for sale, or if a business activity is part of a single coordinated plan for such a sale. A line of business has to be distinct from the other activities for accounting purposes before it can be classified as a discontinued operation. The result from the discontinued operations are presented separately from the continuing operations in the consolidated income statement. The comparative year is restated as if the discontinued operation had been classified as such from the start of that year.
Assets Held for Sale
The assets held for sale include only properties for which notarized purchase contracts had already been signed as of the reporting date as part of Vonovia’s ordinary sales activities totaling € 313.1 million. The value as of December 31, 2022, was € 70.8 million.
Discontinued Operations
As part of the strategic review, the management decided to sell the Care segment. The sale process has begun and it is expected to have been concluded before December 2024. Accordingly, the majority of the Care segment is presented as discontinued operations.
Impairment Losses on the Disposal Group
At present, the management expects the group to be sold at the relevant carrying amounts.
As a result, the valuation of the disposal group at the lower of carrying amount and fair value less costs to sell has not produced any valuation effects.
As of December 31, 2023, the disposal group comprised the following assets and liabilities:
Assets from the discontinued operations
in € million | Dec. 31, 2023 | ||
Intangible assets | 22.6 | ||
Property, plant and equipment | 28.9 | ||
Investment properties | 619.4 | ||
Other assets | 40.3 | ||
Total non-current assets of discontinued operations | 711.2 | ||
Inventories | 0.9 | ||
Trade receivables | 9.0 | ||
Other assets | 2.0 | ||
Income tax receivables | 2.6 | ||
Cash and cash equivalents | 44.4 | ||
Total current assets of discontinued operations | 58.9 | ||
Total assets of discontinued operations | 770.1 | ||
Liabilities from the discontinued operations
in € million | Dec. 31, 2023 | ||
Provisions | 30.7 | ||
Non-derivative financial liabilities | 35.6 | ||
Lease liabilities | 3.6 | ||
Deferred tax liabilities | 23.2 | ||
Total non-current liabilities of discontinued operations | 93.1 | ||
Provisions | 1.0 | ||
Trade payables | 11.2 | ||
Non-derivative financial liabilities | 0.8 | ||
Lease liabilities | 1.0 | ||
Current income taxes | 11.4 | ||
Other liabilities | 23.5 | ||
Total current liabilities of discontinued operations | 48.9 | ||
Total liabilities of discontinued operations | 142.0 | ||
The earnings contribution from discontinued operations is comprised as follows.
Earnings contribution from the discontinued operations
in € million | 2022 | 2023 | |||
Revenue from property letting | 0.5 | 0.6 | |||
Other revenue from property management | 256.8 | 266.7 | |||
Revenue from property management | 257.3 | 267.3 | |||
Net income from fair value adjustments of investment properties | -92.2 | -193.3 | |||
Capitalized internal expenses | 0.2 | – | |||
Cost of materials | -55.7 | -55.4 | |||
Personnel expenses | -150.1 | -164.3 | |||
Depreciation and amortization | -98.9 | -53.9 | |||
Other operating income | 28.7 | 27.3 | |||
Net income from the derecognition of financial assets measured at amortized cost | 0.3 | 0.4 | |||
Other operating expenses | -17.0 | -20.7 | |||
Interest expenses | -0.7 | -1.2 | |||
Earnings before tax | -128.1 | -193.8 | |||
Income taxes | 33.5 | 45.7 | |||
Profit for the period from discontinued operations | -94.6 | -148.1 | |||
As of December 31, 2023, Vonovia had 3,825 employees (December 31, 2022: 3,798) working in the business area belonging to the discontinued operations. 2,949 were female as of December 31, 2023 (December 31, 2022: 2,934) and 876 were male (December 31, 2022: 864). The average figure for the year was 3,869 employees (2022: 3,801). As of December 31, 2023, Vonovia had 385 apprentices (December 31, 2022: 305) working in the business area belonging to the discontinued operations.
Cumulative Income or Expenses Included in Other Comprehensive Income
Taking into account deferred tax effects, the cumulative result from the measurement of actuarial gains and losses in connection with the disposal group in the amount of € -12.8 million is included in other comprehensive income. € 1.1 million of the gains and losses are attributable to Vonovia’s shareholders and € 0.2 million to non-controlling shareholders.
Earnings per Share
The earnings per share attributable to the profit for the period of the discontinued operations came to € -0.16 (2022: € -0.10) for the 2023 fiscal year. Due to the small amount of cumulative income and expenses included in other comprehensive income, this also matches the earnings per share for total comprehensive income.
Cash Flows from the Discontinued Operation
Cash Flows from the discontinued operations
Key Data from the Statement of Cash Flows | |||||
in € million | 2022 | 2023 | |||
Cash flow from operating activities | 62.3 | 57.1 | |||
Cash flow from investing activities | -41.3 | -43.2 | |||
Cash flow from financing activities | -10.7 | -11.1 | |||
Net changes in cash and cash equivalents of discontinued operations | 10.3 | 2.8 | |||
Cash and cash equivalents at the beginning of the period | 31.3 | 41.6 | |||
Cash and cash equivalents at the end of the period of discontinued operations | 41.6 | 44.4 | |||