Proactive risk management, as it has been understood by and practiced in the voestalpine Group for many years, serves both to ensure the existence of the Group as a going concern in the long term and to boost its value and thus is key to the success of the Group overall. As part of the systematic risk management process (which is undertaken Group-wide several times a year in uniform fashion) and as part of internal control systems (ICS, which are also integral elements of the Group’s structural and workflow organization) material risks are systematically recorded, analyzed, assessed, and subjected to permanent monitoring early on; appropriate measures to minimize risks are taken as necessary.
The risk environment of the voestalpine Group in the first six months of the current business year as well as compared with the prior years has remained largely unchanged. Material fields of risk—such as the availability of raw materials and energy supplies, the loss of critical production facilities, the loss of critical IT systems, the CO2 issue, knowledge management, or financial risks—and the respective precautionary measures thus have remained largely the same. The material fields of risk and the respective measures to minimize risk, which were presented and described in detail in the Annual Report 2018/19 of the voestalpine Group (Annual Report 2018/19, “Report on the Company’s Risk Exposure”), thus remain valid for this interim management report.
There were no changes with respect to the disclosures in the Management Report for the business year 2018/19 regarding the Austrian energy tax rebate. Note that the Austrian Federal Finance Court (Bundesfinanzgericht) has directed a request for a preliminary ruling to the European Court of Justice (ECJ) (BFG 10/31/2014, RE/5100001/2014). The amendment of the Austrian Energy Tax Rebate Act (Energieabgabenvergütungsgesetz) by means of the 2011 Austrian Budget Accompanying Act (Budgetbegleitgesetz – BBG 2011), which applies to periods after December 31, 2010, limited the energy tax rebate to manufacturing companies. Subsequently, the question of whether this restriction, which may be deemed state aid, violated EU law was submitted to the ECJ for a preliminary ruling; this has actually been affirmed by the court (ECJ 7/21/2016, docket no. C-493/14, Dilly’s Wellnesshotel GmbH). As a result, the restrictions pursued by the Budget Accompanying Act 2011 did not enter into force with legal effect and, therefore, service providers, in particular, can retroactively claim the energy tax rebate for periods after February 1, 2011. In its subsequent ruling, the Austrian Federal Finance Court declared that the restriction to manufacturing companies did not take effect. The Tax Office appealed this decision to the Higher Administrative Court, which in September 2017 (decision dated 9/14/2017, EU 2017/0005 and 0006-1) again sought recourse with the ECJ. The final applications of the advocate general were filed on February 14, 2019. To date, it is not known when the decision on the matter pending before the ECJ (C-585/17) will be handed down. No adverse impact is anticipated for the voestalpine Group.
Based on the insights gained as a result of past economic and financial crises and their effects on the voestalpine Group, additional steps—primarily of a corporate nature—were taken in recent years to minimize the Group’s risk exposure, which are also described in detail in the Annual Report 2018/19, and these measures have been and are being consistently implemented in the current business year. Given the ongoing difficulties in the economic environment, as before a working group is tasked with monitoring any fallout from the Brexit decision. Consequences arising from (punitive) tariffs and global trade disputes are subject to continuous monitoring as well.
The measures that have been put in place to avert or prevent identified risks aim to reduce potential losses and/or minimize the likelihood of losses occurring.
It must be stated that, as of the date of this interim management report, the risk exposure of and resulting uncertainties in the voestalpine Group are limited and manageable, and do not threaten the continuation of the Group as a going concern. There are no threats to the company as a going concern in the future, nor are any such risks discernible as of the semi-annual reporting date.
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