26 Intangible Assets

Intangible Assets

in € million	Concessions, industrial property rights, license and similar rights	Self-developed software	Customer relationships and non- competition clause	Trademark rights	Goodwill	Total

Cost
As of Jan. 1, 2021	107.7	7.1	13.8	66.6	4,616.8	4,812.0
Additions due to business combinations	26.2	0.4	45.6	86.0	4,666.3	4,824.5
Additions	11.9	1.1	–	–	–	13.0
Disposals	-3.2	-0.4	-1.9	–	–	-5.5
Changes in value from currency translation	–	–	–	–	-19.0	-19.0
Transfers	1.0	-0.1	–	–	–	0.9
As of Dec. 31, 2021	143.6	8.1	57.5	152.6	9,264.1	9,625.9
Accumulated amortization						–
As of Jan. 1, 2021	66.3	4.7	7.2	–	3,122.1	3,200.3
Additions due to business combinations	19.6	–	8.5	–	–	28.1
Amortization in reporting year	15.4	1.3	4.2	–	–	20.9
Impairment	–	–	–	–	3,384.1	3,384.1
Disposals	-2.9	–	-1.9	–	–	-4.8
Changes in value from currency translation	–	–	–	–	-8.6	-8.6
Transfers	0.6	–	–	–	–	0.6
As of Dec. 31, 2021	99.0	6.0	18.0	–	6,497.6	6,620.6
Carrying amounts
As of Dec. 31, 2021	44.6	2.1	39.5	152.6	2,766.5	3,005.3

Cost
As of Jan. 1, 2020	85.7	5.1	10.4	66.6	4,514.9	4,682.7
Additions due to business combinations	3.5	0.2	3.4	–	66.5	73.6
Additions	24.5	1.8	–	–	–	26.3
Disposals	-4.8	–	–	–	–	-4.8
Changes in value from currency translation	–	–	–	–	35.4	35.4
Transfers	-1.2	–	–	–	–	-1.2
As of Dec. 31, 2020	107.7	7.1	13.8	66.6	4,616.8	4,812.0
Accumulated amortization
As of Jan. 1, 2020	49.7	3.1	3.7		3,122.0	3,178.5
Additions	21.4	1.6	3.5	–	–	26.5
Disposals	-4.8	–	–	–	–	-4.8
Changes in value from currency translation	–	–	–	–	0.1	0.1
As of Dec. 31, 2020	66.3	4.7	7.2	–	3,122.1	3,200.3
Carrying amounts
As of Dec. 31, 2020	41.4	2.4	6.6	66.6	1,494.7	1,611.7

Accounting Policies

Acquired other intangible assets are stated at amortized cost. Internally generated other intangible assets are stated at amortized cost provided that the requirements of IAS 38 for the capitalization of internally generated intangible assets are met. Acquired trademark rights that are identified have an indefinite useful life and are subject to regular impairment testing. All of Vonovia’s miscellaneous other intangible assets have definite useful lives and are amortized on a straight-line basis over their estimated useful lives. Software and licenses are amortized on the basis of a useful life of three years.

In accordance with IAS 36 “Impairment of Assets,” other intangible assets are tested for impairment whenever there is an indication of an impairment. Impairment testing is performed at least once a year. An impairment loss is recognized when an asset’s recoverable amount is less than its carrying amount. If the recoverable amount cannot be determined for the individual asset, the impairment test is conducted on the cash-generating unit (CGU) to which the asset belongs. Impairment losses are recognized as expenses in the income statement affecting net income.

An impairment loss recognized for prior periods is reversed if there has been a change in the estimates used to determine the asset’s (or the CGU’s) recoverable amount since the last impairment loss was recognized. The carrying amount of the asset (or the CGU) is increased to the newly estimated recoverable amount. The carrying amount is limited to the amount that would have been determined if no impairment loss had been recognized in prior years for the asset (or the CGU).

Customer Relationships and Similar Values

The brand names “Pflegen & Wohnen Hamburg” and “Katharinenhof” were identified as material assets with indefinite useful lives in the context of the purchase price allocation for the Deutsche Wohnen Group and were recognized at a total value of € 86.0 million. In addition, customer relationships for these activities were identified and recognized as assets with definite useful lives of between five and six years in the amount of € 37.1 million. The “BUWOG” brand name, which was acquired in the previous year, is still recognized with a value of € 66.6 million for the development business. There were no signs of impairment losses for any of the brand names or customer relationships.

Goodwill

Accounting Policies

Goodwill results from a business combination and is defined as the amount by which the total consideration for shares in a company or group of companies exceed the pro rata net assets acquired. The net assets are the total of the identifiable assets acquired that are valued at fair value in accordance with IFRS 3 as well as the assumed liabilities and contingent liabilities.

Goodwill is not subject to amortization, but rather is subjected to impairment testing on an annual basis. It is also tested for impairment whenever events or circumstances indicating an impairment arise.

The impairment testing of goodwill is performed at the level of cash generating units (CGUs) or a group of CGUs. A CGU is the smallest group of assets which generates cash inflows that are largely independent of the cash inflows generated by other assets or other groups of assets. Goodwill purchased as part of a business combination is allocated to the CGUs or groups of CGUs that are expected to produce benefits resulting from the synergy effects of the combination.

At Vonovia, each property meets the requirements for classification as a CGU as a general rule. As part of operational management, these properties are grouped first of all to form geographically structured business units and then to form regional business areas. Since the regional business areas are the lowest level within the company at which goodwill is monitored for internal management purposes, the impairment test is performed at business area level and, as a result, in accordance with IAS 36.80 for a group of CGUs. The acquired assets are allocated to the business areas based on the geographical location of the properties. A further group of CGUs for which goodwill is monitored for internal management purposes relates to the Value-add Business segment. The third group of CGUs, to which goodwill is allocated and for which goodwill is monitored for management purposes, relates to the Development segment. The acquisition of Deutsche Wohnen SE has resulted in the addition of a new CGU in the nursing and assisted living sector. Part of the goodwill resulting from the acquisition of Deutsche Wohnen SE has been provisionally allocated to this segment for the purposes of impairment testing.

The group of CGUs to which goodwill has been allocated are tested for impairment on a regular basis. This involves comparing the recoverable amount with the carrying amount of the group of CGUs. The recoverable amount of the group of CGUs is either its value in use or fair value less costs of sale, whichever is higher. When calculating the value in use, the estimated future cash flows are discounted to their cash value. Discount rates before tax are used that reflect the current market assessment of the interest rate effect and the specific risks associated with the business areas, the Value-add and Development segments, and the nursing and assisted living sector.

If goodwill has been allocated to a group of CGUs and its carrying amount exceeds the recoverable amount, the goodwill is to be written down in the amount of the difference in the first instance. Any need for impairment in excess of this amount is distributed among the other assets in the group of CGUs in proportion to their carrying amount. The individual fair value less costs to sell, value in use or zero must not be undercut in this regard.

Impairment losses that have been realized as part of the valuation of goodwill are not reversed in the following years.

Groups of Cash-Generating Units

	Rental segment
in € million	North area	East area	West area	South area	Central area	Sweden Business Area	Value- add segment	Development segment	Nursing and assisted living sector	not allocated	Group

Goodwill as of Dec. 31, 2021	73.7	0.0	84.0	0.0	0.0	885.9	278.5	138.2	0.0	34.4	1,494.7
Additions due to business combinations*	588.3	1,462.0	754.9	571.1	22.7		1,232.1		35.2		4,666.3
Allocation	34.4									-34.4	0.0
Impairment	-391.5	-1,462.0	-84.0	-571.1		-875.5					-3,384.1
Currency translation differences						-10.4					-10.4
Goodwill as of Dec. 31, 2021	304.9	0.0	754.9	0.0	22.7	0.0	1,510.6	138.2	35.2	0.0	2,766.5

WACC before tax Dec. 31, 2021 in %	4.0	4.1	4.0	4.0	3.9	3.9	4.1	6.3	4.3	–	–
WACC before tax Dec. 31, 2020 in %	3.8	–	3.8	–	–	3.6	3.9	6.0	–	–	–

Sustainable rate of increase 2021 in %	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	–	–
Sustainable rate of increase 2020 in %	1.0	–	0.9	–	–	1.0	1.0	1.0	–	–	–

* Goodwill still not allocated, preliminary allocation for goodwill impairment test purposes

Goodwill came to € 2,766.5 million as of December 31, 2021. This means that goodwill has risen by € 1,271.8 million compared with December 31, 2020. The change is due to additions of € 4,666.3 million resulting from the acquisition of Deutsche Wohnen SE, impairment losses of € 3,384.1 million and negative exchange rate effects of € 10.4 million.

Part of the impairment loss is the result of the ad hoc impairment test performed as of June 30, 2021. Within the meaning of IAS 36, the triggering event was the increase in the value of the real estate portfolio in the first half of the 2021 fiscal year amounting to € 3,698.6 million (thereof € 3,039.5 million in Germany and € 596.8 million in Sweden) in combination with the increased cost of capital of the Rental segment’s business areas in Germany and the Sweden business area. Other than for these aforementioned business areas, no triggering events were identified for any other groups of cash-generating units in the second quarter.

The goodwill of the North (€ 108.1 million) and West (€ 84.0 million) business areas of € 192.1 million was impaired as a result of the impairment test as of June 30, 2021. There was no impairment of the Sweden business area.

In general, an increase in the value of the real estate portfolio increases the carrying amount of the CGU affected by the measurement, which can, in turn, lead to impairment losses being recognized on the goodwill allocated to the business areas.

The regular annual impairment test was performed in the fourth quarter. Other material increases in the value of the real estate portfolio in the second half of 2021 also triggered an ad hoc impairment test. For the purposes of this process, the new goodwill of € 4,666.3 million resulting from the acquisition of Deutsche Wohnen was provisionally allocated to Vonovia’s corresponding CGUs.

The allocation of goodwill to the business areas of the Rental segment, the Value-add segment and the the nursing and assisted living sector were performed based on the two indicators that reflect the synergy effects expected to be generated as a result of the business combination: “direct planned synergies” and “fair values.”

All in all, the impairment tests in the fouth quarter resulted in a further goodwill impairment of € 3,192.0 million.

As part of the impairment test in accordance with IAS 36.19, first the value in use was calculated based on the Management Board-approved detailed plan with a planning period of five years. This was derived from the five-year plan at Group level approved by the Management Board and the Supervisory Board. The main parameters for calculating the value in use are the sustainable rate of increase, the average total cost of capital (WACC) and the expected cash flows. In the Development segment, another normalized planning year was added to the five-year plan to reflect a “steady state.”

The growth rate for the CGUs of the Rental segment was limited to 1% for the CGU Germany. With regard to the regional business areas of the Rental segment, the main drivers behind the results of the five-year plan are the increase in gross rental income by an average of 2.5% every year as well as the planned vacancy rate of 2.5% at the end of the detailed planning period. The growth rate for the CGU Sweden was also set at 1%. The average gross rent increase within the five-year plan comes to 3.1%, based on an assumed vacancy rate of 2% at the end of the detailed planning period.

Developments in the Value-add segment are characterized primarily by the extension of existing business areas (craftsmen’s organization, multimedia, management of residential property, smart metering, etc.). On the other hand, there is an increase in operating expenses, taking into account the rate of inflation. The development in these values is in line with past experiences of business model development.

The Development segment is characterized by the construction of new buildings for Vonovia’s own portfolio and by the sale of properties to third parties. The main drivers of the results in the Development segment are the investment costs, the number of units sold and completed and the sales margin that can be generated.

The nursing and assisted living sector comprises the rental of senior citizens’ and care facilities, as well as services for elderly people as part of the assisted living concept.

The cash flows from the last detailed planning year were derived to calculate the perpetual annuity.

A constant growth rate of 1.0% was assumed for the Value-add, Development and nursing and assisted living CGUs.

The weighted average cost of capital before tax is based on the risk-free interest rate calculated as a three-month average using the Svensson method, a market risk premium and a levered beta. The levered beta and the equity ratios used are determined on the basis of a peer comparison. In addition, a country-specific cost surcharge was also calculated for the Development segment. The main parameters are shown in the following table:

Parameters for WACC Calculation

	Rental segment
	Germany	Sweden	Value-add segment	Development segment	Nursing and assisted living sector

Dec. 31, 2021
Risk-free interest rate in %	0.08	0.08	0.08	0.08	0.08
Market risk premium in %	7.75	7.75	7.75	7.75	7.75
Levered beta	0.67	0.70	0.68	0.91	0.79
Country-specific premium in %	–	–	–	0.08	–

Dec. 31, 2020
Risk-free interest rate in %	-0.20	-0.20	-0.20	-0.20	–
Market risk premium in %	7.75	7.75	7.75	7.75	–
Levered beta	0.65	0.65	0.65	0.84	–
Country-specific premium in %	–	–	–	0.12	–

The identified impairment as of December 31, 2021 relates to the North, East, South and Sweden business areas, with the goodwill allocated in each case being completely written off, except for the North business area.

The impairment loss was recognized in the consolidated income statement under depreciation and amortization. The value in use for the East area amounted to € 22.3 billion, with a value of € 9.2 billion for the North business area, € 11.3 billion for the South business area and € 6.4 billion for the Sweden business area.

An increase in the cost of capital would result in the following need for impairment:

Results of increase in the cost of capital

	Rental segment
	North area	West area	Central area	Value- add segment	Develop- ment segment	Nursing and assisted living sector


2021 goodwill in € million	304.9	754.9	22.7	1,510.6	138.2	35.2
Impairment starts with an increase of the WACC in percentage points	0.01	0.09	0.51	2.98	1.96	0.68
Full write-off in the event of an increase in the WACC in %	0.09	0.27	0.75	16.70	2.61	1.01

2020 goodwill in € million	73.7	84.0	–	278.5	138.2	–
Impairment starts with an increase of the WACC in percentage points	0.05	0.17	–	9.70	3.40	–
Full write-off in the event of an increase in the WACC in %	0.06	0.18	–	19.50	4.40	–

If the planned sustainable rate of increase were to decline by 0.25 percentage points, this would result in a full impairment loss of € 304.9 million being recognized against the goodwill remaining in the North business area. In the West area, an impairment loss of € 670.4 million would be recognized if the sustainable rate of increase were to decline by 0.25 percentage points. A 0.28 percentage point drop in the sustainable rate of increase in West would result in a complete impairment. The estimated recoverable amount for the West business area exceeds its carrying amount by € 0.5 billion.

In the Central business area as well as in the Value-add and Development segments and the nursing and assisted living sector, a 0.25 percentage point drop in the sustainable rate of increase would not result in any goodwill impairment.

In the previous year, if the planned sustainable rate of increase had declined by 0.25 percentage points, this would have resulted in a full impairment loss of € 73.7 million being recognized against the goodwill in the North business area. In the West area, a full impairment loss of € 84.0 million would have been recognized if the sustainable rate of increase had declined by 0.25 percentage points. The estimated recoverable amount for the North business area exceeded its carrying amount by € 184.8 million and that of the West business area by € 810.3 million.

In the Value-add and Development segments, a 0.25 percentage point drop in the sustainable rate of increase in the previous year would not have resulted in any goodwill impairment.

Adjusted EBITDA Development

The Adjusted EBITDA Development includes the gross profit from the development activities of “to sell” projects (income from sold development projects less production costs) and the gross profit from the development activities of “to hold” projects (fair value of the units developed for the company’s own portfolio less incurred production costs) less the operating expenses from the Development segment.

Adjusted EBITDA Deutsche Wohnen

The Adjusted EBITDA Deutsche Wohnen is calculated by deducting the operating expenses of the Deutsche Wohnen segment and the carrying amount of properties sold from the segment revenue of the Deutsche Wohnen Group.

Adjusted EBITDA Recurring Sales

The Adjusted EBITDA Recurring Sales compares the proceeds generated from the privatization business with the fair values of assets sold and also deducts the related costs of sale. In order to disclose profit and revenue in the period in which they are incurred and to report a sales margin, the fair value of properties sold, valued in accordance with IFRS 5, has to be adjusted to reflect realized/unrealized changes in value.

Adjusted EBITDA Rental

The Adjusted EBITDA Rental is calculated by deducting the operating expenses of the Rental segment and the expenses for maintenance in the Rental segment from the Group’s rental income.

Adjusted EBITDA Total

Adjusted EBITDA Total is the result before interest, taxes, depreciation and amortization (including income from other operational investments and intragroup profits) adjusted for effects that do not relate to the period, recur irregularly and that are atypical for business operation, and for net income from fair value adjustments to investment properties. These non-recurring items include the development of new fields of business and business processes, acquisition projects, expenses for refinancing and equity increases (where not treated as capital procurement costs), IPO preparation costs and expenses for pre-retirement part-time work arrangements and severance payments. The Adjusted EBITDA Total is derived from the sum of the Adjusted EBITDA Rental, Adjusted EBITDA Value-add, Adjusted EBITDA Recurring Sales, Adjusted EBITDA Development and Adjusted EBITDA Deutsche Wohnen.

Adjusted EBITDA Value-add

The Adjusted EBITDA Value-add is calculated by deducting operating expenses from the segment’s income.

COSO

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a private-sector U.S. organization. It was founded in 1985. In 1992, COSO published the COSO model, an SEC-recognized standard for internal controls. This provided a basis for the documentation, analysis and design of internal control systems. In 2004, the model was further developed and the COSO Enterprise Risk Management (ERM) Framework was published. Since then, it has been used to structure and develop risk management systems.

Covenants

Requirements specified in loan agreements or bond conditions containing future obligations of the borrower or the bond obligor to meet specific requirements or to refrain from undertaking certain activities.

EPRA Key Figures

For information on the EPRA key figures, we refer to the chapter on segment reporting according to EPRA.

EPRA NTA

The presentation of the NTA based on the EPRA definition aims to show the net asset value in a long-term business model. NTA stands for Net Tangible Assets. The equity attributable to Vonovia’s shareholders is adjusted by deferred taxes, real estate transfer tax and other purchasers’ costs in relation to the existing portfolio and the fair value of derivative financial instruments after taking deferred taxes into account. Stated goodwill and other intangible assets are also deducted.

European Public Real Estate Association (EPRA)

The European Public Real Estate Association (EPRA) is a non-profit organization that has its registered headquarters in Brussels and represents the interests of listed European real estate companies. Its mission is to raise awareness of European listed real estate companies as a potential investment destination that offers an alternative to conventional investments. EPRA is a registered trademark of the European Public Real Estate Association.

European Public Real Estate Association (EPRA)

Fair Value

Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

Fair Value

GAV

The Gross Asset Value (GAV) of the recognized real estate investments. This consists of the owner-occupied properties, the investment properties including development to hold, the assets held for sale and the development to sell area. In the latter, both residential properties for which a purchase contract has been signed and those with the intention to sell – i.e., a purchase contract has not yet been signed – are included.

GAV

Group FFO

Group FFO reflects the recurring earnings from the operating business. In addition to the adjusted EBITDA for the Rental, Value-add, Recurring Sales and Development segments, Group FFO allows for recurring current net interest expenses from non-derivative financial instruments as well as current income taxes. This key figure is not determined on the basis of any specific international reporting standard but is to be regarded as a supplement to other performance indicators determined in accordance with IFRS.

Maintenance

Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.

Maintenance

Vacancy Rate

The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.

Vacancy Rate

The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.

Vacancy Rate

The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.

Vacancy Rate

The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.

LTV Ratio (Loan-to-Value Ratio)

The LTV ratio shows the extent to which financial liabilities are covered. It shows the ratio of non-derivative financial liabilities pursuant to IFRS, less foreign exchange rate effects, cash and cash equivalents less advance payments received by Development (period-related), receivables from disposals, plus purchase prices for outstanding acquisitions to the total fair values of the real estate portfolio, fair values of the projects/land currently under construction as well as receivables from the sale of real estate inventories (period-related) plus the fair values of outstanding acquisitions and investments in other real estate companies.

Rental Income

Rental income refers to the current gross income for rented units as agreed in the corresponding lease agreements before the deduction of non-transferable ancillary costs. The rental income from the Austrian property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.

Rental Income

Modernization Measures

Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.

Modernization Measures

Monthly In-place Rent

The monthly in-place rent is measured in euros per square meter and is the current gross rental income per month for rented units as agreed in the corresponding rent agreements at the end of the relevant month before deduction of non-transferable ancillary costs divided by the living area of the rented units. The rental income from the Austrian property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.

The in-place rent is often referred to as the “Nettokaltmiete” (net rent excl. ancillary costs such as heating, etc.). The monthly in-place rent (in € per square meter) on a like-forlike basis refers to the monthly in-place rent for the residential portfolio that was already held by Vonovia 12 months previously, i.e., portfolio changes during this period are not included in the calculation of the in-place rent on a like-forlike basis. If we also include the increase in rent due to new construction measures and measures to add extra stories, then we arrive at the organic increase in rent.

Monthly In-place Rent

Sustainability Performance Index (SPI)

Index to measure non-financial performance. Vonovia’s sustainable activities are geared towards the top sustainability topics that we have identified, which are bundled in the Sustainability Performance Index. The Customer Satisfaction Index (CSI) is included in the calculation of the Sustainability Performance Index. The CSI is determined at regular intervals in systematic customer surveys conducted by an external service provider and shows the effectiveness and sustainability of our services for the customer. Other indicators used in the Sustainability Performance Index are the carbon savings achieved annually in housing stock, the energy efficiency of new buildings, the share of accessible (partial) modernization measures in relation to newly let apartments, the increase in employee satisfaction and diversity in the company’s top management team.

Sustainability Performance Index (SPI)

Non-core Disposals

We also report on the Other segment, which is not relevant from a corporate management perspective, in our segment reporting. This includes the sale, only as and when the right opportunities present themselves, of entire buildings or land (Non-core Disposals) that are likely to have below-average development potential in terms of rent growth in the medium term and are located in areas that can be described as peripheral compared with Vonovia’s overall portfolio and in view of future acquisitions.

Rating

Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.

Rating

Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.

Rating

Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.

Rating

Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.

Recurring Sales

The Recurring Sales segment includes the regular and sustainable disposals of individual condominiums from our portfolio. It does not include the sale of entire buildings or land (Non-core Disposals). These properties are only sold as and when the right opportunities present themselves, meaning that the sales do not form part of our operating business within the narrower sense of the term. Therefore, these sales will be reported under “Other” in our segment reporting.

Fair Value Step-up

Fair value step-up is the difference between the income from selling a unit and its current fair value in relation to its fair value. It shows the percentage increase in value for the company on the sale of a unit before further costs of sale.

Fair Value Step-up

Cash-generating Unit (CGU)

The cash-generating unit refers, in connection with the impairment testing of goodwill, to the smallest group of assets that generates cash inflows and outflows independently of the use of other assets or other cash-generating units (CGUs).

Cash-generating Unit (CGU)