2. Operating segment information

An operating segment is a component of VVO Group that engages in business activities from which it may earn revenues and incur expenses. Separate financial information is available about it and VVO’s chief operating decision-maker evaluates it on a regular basis in order to make decisions on the allocation of resources to the segment and to assess its performance.

VVO Group’s business operations are divided into two segments: VVO Non-subsidised and VVO State-subsidised.

The VVO Non-subsidised segment contains the Group’s parent company VVO Group plc and the group companies VVO Kodit Oy, VVO Vuokra-asunnot Oy, VVO Vuokratalot Oy and VVO Palvelut Oy, as well as those other group companies in whose apartments the restrictions on the determination of rent, related to the ARAVA and interest subsidy legislation, will end by the close of 2017. The division of Korkotukikiinteistöt Oy into seven receiving companies took effect on 1 September 2015. Some of the housing included in the VVO Non-subsidised segment is subject to property-specific restrictions in accordance with the ARAVA Act.

Until 30 September 2015, VVO Asunnot Oy was included in the VVO State-subsidised segment. The company’s division into fourteen receiving companies took effect on 1 October 2015. As a result of the division, some of the companies were transferred to the VVO Non-subsidised segment.

The Group companies in whose apartments the restrictions on the determination of rent, related to the ARAVA and interest subsidy legislation, will end after 2017 belong to the VVO State-subsidised segment. The companies of the VVO State-subsidised segment are subject to the profit distribution restriction, and they can pay their owner an eight per cent return on own funds invested in them that have been confirmed by the Housing Finance and Development Centre of Finland (ARA). The return payable from the annual profits of companies subject to revenue recognition restrictions totals approximately EUR 3 million. Some of the housing in the VVO State-subsidised segment is not subject to property-specific restrictions in accordance with the ARAVA Act.

The principles for preparing operating segment information are the same as the accounting principles for the Group.

Group consolidation measures include mainly expenses, assets and liabilities of the Group’s joint operations.

M €	VVO Non-subsidised 1-12/2015	VVO State subsidised 1-12/2015	Group consolidation methods	VVO Group Total 1-12/2015
Rental income	203.3	164.4	1.9	369.6
Sales income, other	1.9	1.0	-1.6	1.4
Internal income	3.6	0.4	-3.9	0.0
Total revenue	208.8	165.8	-3.6	370.9
Maintenance expenses	-53.5	-44.9	1.4	-97.0
Repair expenses	-20.6	-25.9	0.0	-46.5
Net rental income	134.6	94.9	-2.2	227.4
Administrative expenses	-24.1	-18.9	3.3	-39.7
Other operating income	1.3	1.9	-1.1	2.1
Other operating expenses	-0.4	-0.2	0.2	-0.4
Profit/loss on sales of
investment properties	2.2	0.6	0.0	2.7
Fair value change of investment properties	32.7	38.4	-0.8	70.3
Depreciation, amortisation and impairment losses	-1.2	0.0	0.0	-1.2
Operating profit / loss	145.1	116.7	-0.6	261.2
Financial income				7.8
Financial expenses				-44.8
Total amount of financial income and expenses				-37.1
Share of result from associated companies				0.6
Profit before taxes				224.7
Current tax expense				-22.1
Change in deferred taxes				-23.2
Profit/loss for the period				179.4

Investments	228.1	6.9	-0.1	235.0

Investment properties	3,331.7	133.1	0.2	3,464.9
Investments in associated companies	1.0	0.0	0.0	1.0
Investment properties held for sale	0.0	541.0	0.0	541.0
Liquid assets	14.9	101.2	0.0	116.0
Other assets	213.5	81.3	-181.7	113.1
Total Assets	3,561.2	856.5	-181.6	4,236.1

Interest bearing liabilities	1,435.1	235.2	-175.7	1,494.6
Liabilities held for sale	0.0	467.1	0.0	467.1
Other liabilities	500.7	39.8	-5.1	535.4
Total Liabilities	1,935.7	742.1	-180.8	2,497.1

M €	VVO Non-subsidised 1-12/2014	VVO State subsidised 1-12/2014	Group consolidation methods	VVO Group Total 1-12/2014
Rental income	171.6	183.5	0.0	355.1
Sales income, other	0.9	0.6	0.0	1.5
Internal income	3.9	0.8	-4.7	0.0
Total revenue	176.4	184.9	-4.7	356.5
Maintenance expenses	-47.5	-51.5	2.0	-97.1
Repair expenses	-17.1	-32.4	0.0	-49.5
Net rental income	111.8	100.9	-2.7	210.0
Administrative expenses	-20.6	-22.2	4.2	-38.7
Other operating income	2.2	2.1	-1.4	2.9
Other operating expenses	-0.9	-0.3	0.3	-0.9
Profit/loss on sales of
investment properties	-4.6	0.0	0.0	-4.6
Profit/loss on sales of
trading properties	0.0	0.0	-0.2	-0.2
Fair value change of investment properties	13.3	13.0	-0.1	26.2
Depreciation, amortisation and impairment losses	-1.2	-0.5	0.0	-1.7
Operating profit / loss	99.8	92.9	0.2	192.9
Financial income				2.7
Financial expenses				-50.0
Total amount of financial income and expenses				-47.3
Share of result from associated companies				0.9
Profit before taxes				146.5
Current tax expense				-23.5
Change in deferred taxes				-12.2
Profit/loss for the period				110.8

Investments	187.8	13.3	0.0	201.1

Investment properties	2,300.7	1,407.8	0.2	3,708.8
Investments in associated companies	0.9	2.6	0.0	3.5
Liquid assets	52.0	62.4	0.0	114.4
Other assets	158.6	62.4	-90.4	130.6
Total Assets	2,512.3	1,535.2	-90.2	3,957.2

Interest bearing liabilities	972.7	955.8	-78.4	1,850.1
Other liabilities	390.4	144.4	-7.1	527.7
Total Liabilities	1,363.1	1,100.1	-85.5	2,377.8