Consolidation principles (joint arrangements)

The consolidation principles applied to those housing companies and mutual real estate companies, in which VVO’s ownership is less than 100%, have been adjusted. Since 1 January 2014 these investments are treated as joint operations as defined under IFRS 11 Joint Arrangements. In a joint operation VVO Group has rights to the assets, and obligations for the liabilities, relating to the arrangement. The shares held by the Group entitle VVO to control specified premises in the mentioned companies.

In the IFRS financial statements the Group recognizes its interest in housing companies and mutual real estate companies using the proportional consolidation method, based on its shareholding. VVO Group consolidates assets, liabilities, revenues and expenses in these companies in proportion to the Group’s holding, on a line-by-line basis to the similar items of the consolidated financial statements, including its share of any assets held, liabilities incurred, revenues as well as expenses incurred jointly.

As a result of the change in the consolidation method the following adjustments have been made to the assets and liabilities in the FAS balance sheet. The adjustments are derived from the fact that the investments in the mentioned companies are no more fully consolidated (100%) and therefore no non-controlling interest is recorded in the consolidated financial statements. The counter entry of the consolidation adjustments is the non-controlling interest under equity.

The impact of these changes on the opening IFRS balance sheet amounted to EUR -7.5 million and on the closing IFRS balance sheet EUR -7.3 million, respectively.

The effect on the profit due to the change in the consolidation method was not significant. The impacts on the items of the income statement for 2014 have been presented above in the reconciliation of the income statement.