Performance Indicators at Group Level

The profit for the period under the IFRS accounting standards is reconciled to earnings before tax (EBT), as taxes do not form part of operating performance.

This EBT will be adjusted to reflect non-recurring items based on the definition that has applied to date (effects that do not relate to the period, recur irregularly or are atypical for business operation). The net financial result is also adjusted to reflect non-cash and actuarial valuation effects that recur irregularly. The further adjustments to reflect the effects of IAS 40 measurement, write-downs, other (Non Core/Other result), net income from non-current financial assets accounted for using the equity method and effects from residential properties held for sale produce the Group’s Adjusted EBT (continuing operations) and, taking into account current tax expenses (core business), an adjusted earnings for the period. This is attributable to non-controlling interests and to Vonovia’s shareholders.

Adjusted EBT (continuing operations) is the leading indicator of profitability.

In operational terms, Adjusted EBT (continuing operations) is calculated as follows:

Adjusted EBT (continuing operations) and Adjusted EBITDA Total (continuing operations) can be calculated based on the profit for the period as follows:

The Adjusted EBT (continuing operations) is used as a basis for a reconciliation to the Operating Free Cash Flow (OFCF) as the leading indicator of internal financing. Depreciation and amortization will be added to Adjusted EBT (continuing operations) and the change in Development to sell/Manage to Green working capital, as well as reductions in the carrying amounts of investment properties (core business), will be taken into account. Capitalized maintenance and dividend payments made to parties outside of the Group, as well as income tax paid, are subtracted from this figure. The item “Intragroup profits/losses” is also taken into account to reflect the cash advantage associated with services rendered in-house. The Operating Free Cash-Flow is a measure of the Group’s operational capacity to generate cash surpluses and, as a result, of its internal financing power.

At the level of the Group as a whole, the EPRA Net Tangible Assets (EPRA NTA) per share and the Sustainability Performance Index (SPI) are our most meaningful performance indicators.

The EPRA Net Tangible Assets (EPRA NTA) is used to review how the company’s value is developing. Our calculations are based on the best practice recommendations of the EPRA (European Public Real Estate Association).

In addition to our key financial figures, we also focus on non-financial operating performance indicators.

Our business activities are aimed at protecting the environment, ensuring trustworthy, transparent and reliable corporate governance and taking social responsibility for our customers and employees.

Sustainability Performance Index (SPI)

In line with this focus, the Sustainability Performance Index is used as a key non-financial control parameter. Indicators used in the new Sustainability Performance Index are the carbon intensity of the housing stock, the average primary energy consumption of new buildings, the share of accessible (partial) modernization measures in relation to newly let apartments, customer and employee satisfaction, and the proportion of female managers in the company’s top management team. Each component is assigned an individual factor and a defined annual target amount. The weighted targets add up to a target of 100% that we aim to achieve every year. In the reporting on the levels of the individual indicators within the Sustainability Statement, the business activities of Deutsche Wohnen are included, unless otherwise stated.

Other non-operating financial key figures include the loan-to-value (LTV) ratio, which is used for monitoring the degree to which debt is covered by the value of the properties, the net-debt/EBITDA ratio, which is used for monitoring the degree to which debt is covered by our sustained operating result and the Interest Coverage Ratio (ICR = total Adjusted EBITDA/adjusted net financial result), which expresses the extent to which interest is covered by our sustained operating result.