VVO Group plc
VVO Group has decided to measure the investment property of the group by applying the fair value model under IAS 40. This increased the carrying amount of the property portfolio with EUR 1,326.3 million as at 1 January 2014. The resulting increase in deferred tax liability amounts to EUR 288,3 million (applicable tax rate 20%). The fair value change arisen in the financial year 2014, EUR 26.2 million, is recognized in the income statement.
Prior to the transition VVO Group measured the property and apartment portfolio at cost deducted by depreciations and impairment losses. In the transition the Group reversed the deferred taxes related to the allocated reserves and capitalized amounts that previously included in property, plant and equipment and intangible assets.
In the transition VVO Group has reviewed the properties and apartments owned by the group and made reclassifications, as applicable. Nearly all properties and apartments meet the definition of an investment property. Investment property refers to land or building, or part of a building, held by VVO for rental yields or capital appreciation, or both.
Since 1 January 2014 fair value changes are recognized in profit or loss and net value is reported as a separate line item in the income statement. As the fair value model is applied, depreciations are not recorded on investment property any more. In the future, changes in fair values may cause volatility to the result of VVO Group.
The Group determines quarterly the fair value of the rental apartments and business premises in the rental apartment buildings owned by VVO Group based on the company’s own estimates. An external expert has issued a statement on the valuation.
VVO Group has presented the fair value of the investment property in the Board of Director's Report for 2013 and 2014 respectively, as supplementary information. In the transition the fair value accounting principles and procedures of the rental apartments and business premises in the rental apartment buildings have been adjusted to meet the related requirements under various IFRSs. The impacts were not significant.