Definition and Calculation Method
In order to determine the key figures (KPIs) that are to be reported, the taxonomy-eligible and taxonomy-aligned net turnover, capital expenditure and operating expenses are calculated as a share of the total net turnover, capital expenditure and operating expenses that are to be taken into account in accordance with EU taxonomy requirements. The definition of each KPI is based on Annex I of the Delegated Act on Article 8 on the content and presentation of the information to be disclosed.
Duplicate counting is avoided by means of direct allocation of the taxonomy-eligible or taxonomy-aligned turnover, capital expenditure and operating expenses to a taxonomy-eligible or taxonomy-aligned economic activity.
The Group’s consolidated turnover is taken into account in the denominator (total net turnover). For more details on accounting methods, please refer to the accounting and valuation methods within the Notes to the IFRS consolidated financial statements [B10] Income from property management, [B11] Profit on the disposal of properties and [B12] Profit on the disposal of properties (development).
Taxonomy-aligned net turnover (numerator) is comprised of amounts generated through taxonomy-aligned economic activities. Rental income from the Rental segment accounts for the largest share of turnover (€ 593 million). In this case, compliance is assessed on a building-by-building basis taking into account the technical criteria for activity 7.7. Turnover from completed residential properties for our own use (development to hold) has been reported under turnover for 7.7. based on the completion date. The addition of Deutsche Wohnen increased the taxonomy-eligible turnover from activity 7.7 by € 2,337 million year-on-year.
The turnover from development to sell (€ 354 million), which is shown under activity 7.1, is based on the proceeds from the disposal of new builds. The turnover for activity 4.1 (€ 1.4 million) is generated by the feed-in tariff paid for supplying electricity to the grid as well as the direct sale of electricity to tenants.
Completed residential property for our own use (development to hold) is shown in the consolidated financial statements as capital expenditure under 7.7; no turnover is gained from this. The internal turnover of the Value-add companies, e.g., services provided by craftsmen, is eliminated in the course of Group consolidation and is therefore not taken into account in taxonomy-eligible turnover. If the services provided internally are larger projects, e.g., energy-efficient modernization measures, they are capitalized and shown as capital expenditure (CapEx).
In accordance with the EU taxonomy, the denominator for capital expenditure (CapEx) is composed of additions to property, plant and equipment and intangible assets. As such, Vonovia incurs amounts that are recognized as additions on the basis of IAS 16.73(e) (i) and (iii), IAS 38.118 (e) (i), IAS 40.76 (a) and (b) and IFRS 16.53 (h) pursuant to this definition. For accounting details, please refer to chapters [D26] Intangible assets, [D27] Property, plant and equipment and [D28] Investment properties in the Notes to the IFRS consolidated financial statements. The individual additions were taken into account when calculating the denominator. As far as investment properties are concerned, there were also transfers from advance payments to IPs due to the transfer, in economic terms, of a purchased new construction in the reporting year.
For projects lasting several years in the areas 7.2, 7.3 or 7.7, the capitalized amount for the relevant reporting year is reported as taxonomy-eligible and, provided the relevant criteria are met, taxonomy-aligned capital expenditure. For activities 7.4, 7.5 and 7.6, the capital expenditure is shown in the year of asset capitalization. When it comes to capital expenditure, the EU Taxonomy Regulation makes a distinction between different categories of capital expenditure. Due to Vonovia’s business model, it largely invests (activity 7.2. and 7.7.) in assets or processes associated with economic activities that are taxonomy-aligned (category A). It also makes investments (activity 7.3.–7.6.) relating to the acquisition of products from taxonomy-eligible economic activities and individual measures through which the target activities are carried out in a low-carbon manner or the emission of greenhouse gases is lowered (category C).
With regard to developed land, the CapEx for buildings and land has been included as additions, as economic activity 7.7. cannot be performed without the relevant land. In addition, as the building is one of the key components of a plot of land, the building and the plot of land are considered one and the same legal entity.
Capital expenditure in the context of Vonovia’s capitalized internal expenses is reviewed for taxonomy alignment and allocated to 7.2, 7.3 or 7.7 depending on the type of investment. In order to avoid duplicate counting of capital expenditure, the items are allocated to just one activity in each case. Taxonomy alignment is assessed for each building or project. In addition to capitalized internal expenses, the addition of other property, such as development to hold additions or other acquisitions of investment properties, is reported under 7.7.
With regard to economic activity 7.1, the corresponding properties do not constitute fixed assets but rather are reported within current assets in the real estate inventories (see [D36] Real Estate Inventories) or receivables, and are therefore not included in the denominator of the key figure for taxonomy-relevant capital expenditure.
The taxonomy-aligned capital expenditure (numerator) comprises aligned Development to Hold additions (€ 256 million), aligned modernization measures pursuant to activity 7.2 (€ 239 million), additions of purchased real estate (€ 143 million), capitalized right-of-use assets (€ 50 million), capitalization due to measures in taxonomy-aligned buildings (€ 44 million), aligned individual measures pursuant to activity 7.3 (€ 27 million) and additions relating to property, plant and equipment (€ 16 million). The property, plant and equipment comprises measurement technology (€ 6 million), photovoltaic systems (€ 6 million) and heating systems (€ 4 million). There were no additions resulting from business combinations during this reporting year. The absolute value and the relative share of taxonomy-eligible capital expenditure decreased year-on-year due to the inclusion of Deutsche Wohnen in 2021. € 28 billion in investment property additions were recorded as a result of this merger. This brought about a significant increase in the taxonomy-eligible share, which grew to 98 percent.
We have issued green bonds on the capital market based on the Vonovia Sustainable Finance Framework 2022. The proceeds from these issues are used exclusively to (re)finance real estate that has been confirmed to be green. We use a portfolio-based approach, which means that funds cannot be allocated to specific properties. As a result, it was not possible to make adjustments for the taxonomy-aligned capital expenditure financed using these bonds or debentures, or corresponding turnover from environmentally sustainable buildings for the purposes of reporting the taxonomy-aligned performance indicators.
Pursuant to the EU taxonomy, the operating expenses (OpEx) denominator encompasses direct, non-capitalized expenses relating to research and development, building renovation measures, short-term leasing, maintenance and repair, as well as all other direct expenses in connection with day-to-day maintenance of property, plant and equipment that are necessary in order to ensure the continuous and effective functionality of these assets. To this extent, this is an addition to the performance indicator of the recognized capital expenditure values rather than a full presentation of the operating expenses of Vonovia, as shown under Section [B15] Cost of Materials in the Notes to the consolidated financial statements.
We regard direct expenses as those expenses that can be clearly attributed to an identified activity, but not to a specific building. Pursuant to the requirements, we include expenses for upkeep and repair (maintenance) when defining the denominator. Expenses for research and development and short-term leasing are usually capitalized and therefore part of capital expenditure. At Vonovia, maintenance measures are mainly carried out by the internal craftsmen’s organization, which is why we also include these items (technicians’ and administrative costs) in the denominator. The non-taxonomy-eligible shares, e.g., condominium administration maintenance expenses, are not taken into account. Duplicate counting is avoided due to the fact that capitalized shares, as capital expenditure, reduce maintenance costs accordingly. The remaining maintenance expenses form the denominator. Minor repairs are therefore included in the denominator. These maintenance costs and, in particular, the personnel costs associated with the company’s own staff cannot be allocated separately to the individual buildings when posting expenses. In addition, the operating expenses incurred for the individual activities 7.2. to 7.7. cannot be attributed individually. Vonovia thus allocates all maintenance costs to activity 7.7. We use an allocation factor to determine the taxonomy-aligned data. This allocation factor for maintenance expenses is based on the area of the building (in sqm). This share is multiplied by the taxonomy-eligible operating expenses to calculate the numerator. The share of green sqm in relation to the total area is 12.9%.
In this case, operating expenses are comprised of € 729 million for maintenance (see [B15] Cost of Materials), less € 602 million for the capitalized share and € 272 million from our own craftsmen’s organization. € 19 million of the maintenance expenses is attributable to condominium administration. This activity is not taxonomy-eligible. As a result, the numerator is calculated as 12.9% of € 381 million.
The addition of Deutsche Wohnen increased the taxonomy-eligible operating expenses by € 68 million year-on-year.