36 Assets and Liabilities Held for Sale and Assets and Liabilities of 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. Investment properties held for sale are recognized at the contractually agreed sales price or, if this is not available, at the estimated sales price. If there is a disposal group, it is recognized at fair value less costs to sell, if the latter is lower than the net carrying amount of the disposal group.
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 in connection with assets 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. Investment properties held for sale are recognized at the contractually agreed sales price. If there is a disposal group, it is recognized at fair value less costs to sell, if the latter is lower than the net carrying amount of the disposal group.
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 is 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 and Liabilities Held for Sale
As part of Vonovia’s efforts to sell off a portfolio in Berlin, a notarized sales contract was successfully concluded on April 23, 2024. Two companies with around 4,500 residential units and a real estate value of approx. € 700.0 million will be disposed of within the scope of this transaction. The assets and liabilities of the two affected property-holding companies (share deal) are therefore recognized as a disposal group in the balance sheet as of December 31, 2024. Cash and cash equivalents of € 8.2 million are included as part of the disposal group. The other assets are almost exclusively composed of investment properties in the Rental segment. Liabilities mainly comprise deferred tax liabilities.
Vonovia had successfully concluded a notarized sales contract for around 1,970 residential units and six commercial units in the Rental segment on July 26, 2024. The purchase price of around € 300.0 million is slightly higher than the carrying amounts of the properties sold recognized at the time of the negotiations. Part of the portfolio had already been transferred as of the reporting date. Assets worth around € 213.0 million, for which the risks and rewards are expected to be transferred in the first half of 2025, are presented as assets held for sale in the balance sheet as of December 31, 2024.
The increase during the fiscal year is also due to other portfolios in the Rental segment where sales efforts have progressed to the point that a sale within one year can be expected. The purchase price estimates/offers to date are slightly higher than the carrying amounts recognized for the properties to be sold.
The sales during the year of real estate portfolios from the Rental segment which, as of December 31, 2023, had been classified as assets and liabilities held for sale had the opposite effect.
Impairment Losses on the Disposal Group
The management currently expects the purchase price to match the balance of IFRS 5 assets and liabilities less costs to sell.
Assets and Liabilities Held for Sale of the Discontinued Operation
As of December 31, 2024, the assets and liabilities of the discontinued Care segment were as follows:
Assets from the discontinued operations
in € million | Dec. 31, 2023 | Dec. 31, 2024 | |||
Intangible assets | 22.6 | 9.3 | |||
Property, plant and equipment | 28.9 | 34.3 | |||
Investment properties | 619.4 | 606.0 | |||
Other assets | 40.3 | 4.0 | |||
Total non-current assets of discontinued operations | 711.2 | 653.6 | |||
Inventories | 0.9 | 0.5 | |||
Trade receivables | 9.0 | 25.9 | |||
Other assets | 2.0 | 5.9 | |||
Income tax receivables | 2.6 | 0.5 | |||
Cash and cash equivalents | 44.4 | 43.5 | |||
Total current assets of discontinued operations | 58.9 | 76.3 | |||
Total assets of discontinued operations | 770.1 | 729.9 | |||
The drop in non-current assets and liabilities of the discontinued operation is due to the sale of Care properties generating proceeds on disposal of € 87.7 million (2023: € - million) with a carrying amount of € 90.8 million (2023: € - million). This was offset primarily by capitalizable maintenance and modernization expenses within investment properties.
Liabilities from the discontinued operations
in € million | Dec. 31, 2023 | Dec. 31, 2024 | |||
Provisions | 30.7 | 32.4 | |||
Non-derivative financial liabilities | 35.6 | – | |||
Lease liabilities | 3.6 | 1.7 | |||
Deferred tax liabilities | 23.2 | 5.0 | |||
Total non-current liabilities of discontinued operations | 93.1 | 39.1 | |||
Provisions | 1.0 | 13.3 | |||
Trade payables | 11.2 | 6.4 | |||
Non-derivative financial liabilities | 0.8 | – | |||
Lease liabilities | 1.0 | 1.8 | |||
Current income taxes | 11.4 | 0.3 | |||
Other liabilities | 23.5 | 16.5 | |||
Total current liabilities of discontinued operations | 48.9 | 38.3 | |||
Total liabilities of discontinued operations | 142.0 | 77.4 | |||
The earnings contribution from discontinued operations is comprised as follows.
Earnings contribution from the discontinued operations
in € million | 2023 | 2024 | |||
Revenue from property letting | 0.6 | – | |||
Other revenue from property management | 266.7 | 296.2 | |||
Revenue from property management | 267.3 | 296.2 | |||
Income from disposal of properties | – | 87.7 | |||
Carrying amount of properties sold | – | -90.8 | |||
Profit from the disposal of properties | – | -3.1 | |||
Net income from fair value adjustments of investment properties | -193.3 | -8.2 | |||
Cost of materials | -55.4 | -54.5 | |||
Personnel expenses | -164.3 | -184.0 | |||
Depreciation and amortization | -53.9 | – | |||
Other operating income | 27.3 | 17.6 | |||
Net income from the derecognition of financial assets measured at amortized cost | 0.4 | 0.3 | |||
Other operating expenses | -20.7 | -22.1 | |||
Interest income | 0.2 | ||||
Interest expenses | -1.2 | -1.7 | |||
Earnings before tax | -193.8 | 40.7 | |||
Income taxes | 45.7 | -0.7 | |||
Profit for the period from discontinued operations | -148.1 | 40.0 | |||
Valuation result from discontinued operations | – | -13.4 | |||
Profit for the period from discontinued operations | -148.1 | 26.6 | |||
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 generated from transactions with continuing operations in the result from continuing operations, as no services will be exchanged between the continuing operations and the discontinued operations after the sale.
In the fiscal year, in addition to the sale of three nursing care properties for which the transfer of title had already been completed in 2024, further sales contracts were signed for 40 nursing care properties and the “Katharinenhof” and “PFLEGEN & WOHNEN HAMBURG” nursing care businesses. The transactions for which the contracts have been signed include all assets and liabilities of the discontinued operations and are scheduled to result in a transfer of title in the first nine months of 2025.
Disclosures on Employees
As of December 31, 2024, Vonovia had 3,912 employees (December 31, 2023: 3,806) working in the business area belonging to the discontinued operations. 2,977 were female as of December 31, 2024 (December 31, 2023: 2,931) and 935 were male (December 31, 2023: 875). The average figure for the year was 3,881 employees (2023: 3,864). As of December 31, 2024, Vonovia had 417 apprentices (December 31, 2023: 385) working in the business area belonging to the discontinued operations.
Cumulative Income or Expenses Included in Other Comprehensive Income
A cumulative result from the measurement of actuarial gains and losses in connection with the disposal group in the amount of € -10.0 million taking into account deferred tax effects (December 31, 2023: € -12.8 million), and € -11.9 million excluding tax effects (December 31, 2023: € -15.2 million), is included in other comprehensive income.
€ -2.4 million (2023: € 1.1 million) of the gains and losses recognized in other comprehensive income during the period, or € -2.8 million (2023: € 0.9 million) excluding tax effects, are attributable to Vonovia’s shareholders and € -0.3 million (2023: € 0.2 million), or € -0.4 million (2023: € 0.1 million) excluding tax effects, is attributable to non-controlling shareholders.
Earnings per Share
The earnings per share attributable to the profit for the period of the discontinued operations came to € 0.03 (2023: € -0.16) for the 2024 fiscal year.
Cash Flows From the Discontinued Operation
Cash Flows from the discontinued operations
Key Data from the Statement of Cash Flows | |||||
in € million | 2023 | 2024 | |||
Cash flow from operating activities | 57.1 | 47.1 | |||
Cash flow from investing activities | -43.2 | -46.4 | |||
Cash flow from financing activities | -11.1 | -1.6 | |||
Net changes in cash and cash equivalents of discontinued operations | 2.8 | -0.9 | |||
Cash and cash equivalents at the beginning of the period | 41.6 | 44.4 | |||
Cash and cash equivalents at the end of the period of discontinued operations | 44.4 | 43.5 | |||
Impairment Losses on the Discontinued
Operations
Impairment Losses on the Discontinued Operations at the lower of its carrying amount and fair value less costs to sell produced impairment losses of € 13.4 million (tax effect: deferred tax income of € 3.0 million). The impairment losses relate to the impairment of the customer base within the disposal group.