Development of the Economy and the Industry
Following a lively first half of 2022, the pace of economic growth in the European Union slowed down in summer, according to the European Commission. With the momentum associated with the economic recovery declining, the contractionary forces unleashed by Russia’s war of aggression against Ukraine are gaining the upper hand. Rising energy prices are having an impact on the entire economy, with high inflation devaluing earnings and household savings to an extent that has not been witnessed for many years. Not only is a recession likely this winter, but the weak economy is also expected to remain weak in 2023. Despite the challenging underlying conditions, the Federal Statistical Office estimates that the German economy grew by 1.9% in terms of gross domestic product (GDP) in 2022 compared to the previous year. Nonetheless, the energy crisis continues to have a severe adverse effect on the German economy according to the Kiel Institute for the World Economy (IfW). According to the National Institute of Economic Research (NIER), gross domestic product in Sweden is estimated to have expanded by 2.8% in 2022. High inflation and rising interest rates will contribute to a slowdown in the Swedish economy in 2023. According to the Institute of Economic Research, Austrian GDP grew 4.7% on account of the strong first half of the year, but is likely to have contracted in the winter months. For 2023, GDP growth of 0.3% is forecast for Germany (IfW), -0.9% for Sweden (NIER) and 0.3% for Austria (Institute of Economic Research, WIFO).
Overall, the labor market is stable. On average, unemployment and underemployment fell significantly in Germany in 2022, according to the Federal Employment Agency, although these declines are attributable to the favorable trend seen in the previous year and the first half of 2022. Starting midway through the year, the documentation of Ukrainian refugees resulted in a further rise. According to the German Federal Employment Agency (Bundesagentur für Arbeit), the unemployment rate based on the total civilian labor force in June 2022 fell by 0.4 percentage points year-on-year to 5.3%. The NIER estimates the unemployment rate in Sweden at 7.4%, which is approx. 1.4 percentage points down on the previous year. According to national calculations by the Austrian Public Employment Service (AMS), the unemployment rate in Austria in 2022 was 6.3% and thus 1.7 percentage points lower than in the previous year. In light of the challenges facing the economy, it is expected that the situation on the labor market will temporarily deteriorate in 2023. Based on respective national definitions, the average unemployment rate expected is 5.5% for Germany (IfW), 8.1% in Sweden (NIER) and 6.5% in Austria (WIFO).
In 2022, the pressure associated with the prices of energy, food and other raw materials led to a palpable increase in inflation. Measured against the national Consumer Price Index (CPI), figures from the national statistics offices suggest that average inflation amounted to 7.9% in Germany, and likely came to 8.4% in Sweden and 8.6% in Austria. It is expected that the price spikes will tail off in 2023 and that inflation will be slightly lower. Based on respective national definitions, a CPI increase of is 5.4% is expected for Germany (IfW), 5.2% for Sweden (NIER) and 6.5% for Austria (WIFO).
On account of high inflation, the European Central Bank (ECB) gradually increased the key interest rate from 0% in July 2022 to the level of 2.5% at year-end 2022, doing so in four steps. The ECB ceased purchasing bonds on July 1. The high inflation rate also led the Swedish Riksbank to increase the policy rate, first in May 2022 to 0.25% and then in three steps to 2.5% at year-end 2022. In June, the Riksbank also opted to purchase fewer bonds than initially decided in the second half of 2022. Further increases in the benchmark/policy rates are expected for 2023. In February 2023, for example, the ECB lifted its key interest rate, and the Swedish Riksbank its policy rate, to 3.0%. In this environment, significant year-on-year rises in interest rates for construction financing were observed in Germany, Sweden and Austria in 2022.
The interest rate rises are adversely affecting real estate markets. Residential property ownership markets cooled during the course of the year, with the days of sharp price increases likely consigned to the past. According to Savills, the fundamental conditions for landlords in Germany remain favorable. Demand for rental apartments has noticeably increased, partly due to rapid population growth and because many households are currently unable to afford to buy their own homes and therefore continue to rent. Quoted rents continued to increase across Germany; empirica reports that they were 6.6% higher on average over all years of construction in the fourth quarter of 2022 (new construction 6.3%) than in the same quarter of the previous year. Further rent increases are likely in 2023. DB Research believes that it would be no surprise if existing rents were to increase by far more than 2% per annum for structural reasons. Savills estimates that average rental growth for apartments in Sweden in 2022 came in between 3% and 5%. It is expected that it will take three to five years for the rental trend to catch up with inflation. Measured against the index for actual rental payments for primary residences as part of the consumer price index, rents in Austria also rose from the beginning of the year and were approx. 5.4% higher in December 2022 than in the comparable prior-year month. According to RE/MAX, Austrian rents not subject to rent restrictions are likely to rise marginally in 2023 and may even fall in rural districts.
Although residential real estate prices were still climbing at the start of the year, price growth slowed down noticeably in Germany, Sweden and Austria. The empirica price index for condominiums in Germany (all years of construction) was nonetheless 0.6% higher in the fourth quarter of 2022 compared to the same period of the previous year (new construction 5.2%). According to Svensk Mäklarstatistik, prices for tenant-owned apartments (Bostadsrätter) in Sweden fell by 8.6% in December 2022 compared with the same month of last year. The values of the current residential real estate price index of the Austrian central bank (OeNB) on the basis of new and used condominiums and single-family residences show an increase in Austria in the fourth quarter of 2022 of 5.2% compared to the previous year. Prices of condominiums in Germany and tenant-owned apartments in Sweden peaked within the first half of the year. As a result, the prices of apartments declined during the rest of the year. In Austria, the OeNB residential real estate price index indicated virtual stagnation in the third quarter, following increases in the previous quarters, and did not show a decline until the fourth quarter. Despite the continued high demand for housing in some areas, the changes in the underlying conditions dampened demand for residential property ownership in all three countries. Given the fundamental shortage on the supply side, DB Research only expects a temporary dip in prices in Germany. According to Boverket and RE/MAX, the price trend for residential property in Sweden and Austria will initially take a downward trajectory in 2023.
The size of the population in Germany, Sweden and Austria is estimated to have risen again in 2022 and is expected to increase further. There is still a shortage of apartments in many large cities and urban areas. However, construction activity is declining in Germany. According to an estimate of Zentralverband Deutsches Baugewerbe, only 280,000 apartments were built in 2022; this figure may only stand at 245,000 for 2023 (2021: 293,393). The German federal government set itself the goal of building 400,000 new apartments per year in Germany. For 2023 and 2024, CBRE estimates that a further increase in regular immigration (workers, joining family members, students) of more than 350,000 people per annum is realistic. As a consequence of the Russian war of aggression against Ukraine, there are currently about one million Ukrainian refugees in Germany. As a result, the housing shortage is likely to intensify. Boverket estimates that approximately 63,400 apartments have to be built per year in Sweden by 2030. In 2022, around 64,000 apartments were completed (2021: just under 53,000), meaning that the additional need for the year was met. The conditions for housing construction, however, have deteriorated rapidly since the start of 2022. According to Bank Austria, residential construction activity in Austria has largely addressed the marked increase in the demand for homes in recent years. However, gaps are likely to be found primarily in the sector comprising low-cost rental apartments in bigger cities. In light of the aftermath of the COVID-19 pandemic and the impact of the war in Ukraine, the construction industries faced higher prices, disrupted supply chains, actual/impending material shortages and rising interest rates in 2022. In addition, Germany and Austria are suffering from a shortage of skilled labor. According to DB Research, construction costs will hardly decrease in Germany in 2023. In light of declining construction investment, however, the disruption to supply chains may ease and, for instance, the cost of raw materials may fall further, as already witnessed in recent months. According to Boverket, in Sweden the prices of building materials may fall slightly in the first half of 2023.
As a reflection of the change in interest rate policy, it is not only the German market for residential property investment that was more cautious in 2022. According to CBRE, the transaction volume on the residential investment market in Germany stood at € 13.5 billion and was therefore 73% down on the previous year. This difference is, on the one hand, attributable to the major transaction conducted in 2021 – the takeover of Deutsche Wohnen SE by Vonovia SE; on the other hand, CBRE believes that the market is in a phase of price adjustment triggered by the new interest rate environment and that this is also contributing to the decline in investment volume. Against this backdrop, prime yields rose in the top seven cities. At the same time, rents rose in the top seven cities. According to Colliers, properties worth € 19.3 billion were traded on the Swedish transaction market in 2022, representing a year-on-year decrease of approx. 42%. In terms of transaction volume, residential properties were the preferred asset class with a share of 29% (2021: 33%). According to EHL, the Austrian real estate investment market saw a transaction volume of approximately € 4 billion in 2022, roughly 10% less than in the previous year. The share of the residential segment stood at 31.3% and was therefore down on the previous year (2021: 34.8%).
Housing policy developments in 2022 and at the start of 2023 in Germany included changes to the Federal Funding for Efficient Buildings (BEG). In February, it once again became possible to apply for BEG renovation programs. In April, BEG funding for new builds was relaunched subject to new conditions. A reform of the BEG came into effect on January 1, 2023; as such, new conditions apply in respect of refurbishments to achieve energy-efficiency building standards as well as for individual measures. Since March 1, 2023, the German government has also been promoting the construction of particularly climate-friendly buildings by making loans available on more favorable terms. In the German Buildings Energy Act (GEG), the permissible primary energy level was tightened as of January 1, 2023. Moreover, the reform of rent indices legislation came into effect as of July 1, 2022. Rent indices have since been compulsory for cities with more than 50,000 inhabitants. Furthermore, the German cabinet also approved a draft bill for dividing CO2 costs between landlords and tenants in 2022, with the act coming into effect on January 1, 2023. An increase in the CO2 price scheduled for 2023 has been postponed until 2024. The straight-line rate for the amortization of residential buildings was increased from 2% to 3% as of January 1, 2023. This applies to residential buildings completed as of the start of 2023. Investment subsidies for rental apartments in Sweden were discontinued; as of the end of 2022, these subsidies are no longer available. According to Savills, the program may be reintroduced in amended form. In Austria, indicative and category-based rents were increased as of April 1, 2022. Moreover, an agreement was reached in 2022 in respect of the reform of real estate agent fees; starting July 1,2023, the party hiring an agent will be responsible for paying for their services in connection with the letting of apartments.
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 Care
The Adjusted EBITDA Care is calculated by deducting maintenance expenses and operating costs from the segment revenue.
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 (Earnings Before Interest, Taxes, Depreciation and Amortization)
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 Care.
Adjusted EBITDA Total (Earnings Before Interest, Taxes, Depreciation and Amortization)
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 Care.
Adjusted EBITDA Total (Earnings Before Interest, Taxes, Depreciation and Amortization)
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 Care.
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 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 NAV 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 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)
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.
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
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
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
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.
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
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.
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, Development and Care 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.
ICR (Interest Coverage Ratio)
The interest coverage ratio is the ratio of Adjusted EBITDA Total to net cash interest.
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
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
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
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.
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, as well as loans to companies with holdings of real estate and land.
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
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.
MFH Sales
We also report on the Other segment, which is not relevant from a corporate management perspective, in our segment reporting. This portfolio involves the sale of multifamily homes largely located outside of our urban quarters.
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.
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
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
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
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.
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)
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.
Non-core
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) 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.
Recurring Sales
The Recurring Sales segment includes the regular and sustainable disposals of individual condominiums and single-family houses from our portfolio. It does not include the sale of entire buildings or land (MFH Sales/Non Core). 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
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.
Cash-generating Unit (CGU)
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.