19. Provisions

The provisions for personnel expenses mainly include bonuses. Provisions for warranties and other risks as well as onerous contracts apply to current operating activities. The other provisions mainly consist of provisions for commissions, litigation, legal, and consulting fees, and environmental protection obligations.

The amount recognized as a provision for warranties and other risks is calculated as the most reliable estimated value of the amount that would be required to settle these obligations at the reporting date. The statistical measure is the expected value, which is based on the probability of occurrence of an event according to past experience.

Provisions for onerous contracts are recognized when the earnings expected to be derived by the Group from contracts are lower than the unavoidable cost of meeting its obligations under these contracts. Before recognizing a separate provision for onerous contracts, the Group recognizes an impairment loss on the assets associated with such contracts.

The provisions recognized in the annual financial statements 2014/15 in the amount of EUR 53.6 million for the antitrust proceedings and associated actions and costs relative to railway superstructure material as well as for the closure of TSTG Schienen Technik GmbH & Co KG have been reduced to EUR 43.1 million due to the use of these provisions in the business year 2015/16.

The European Court of Justice (ECJ) has now reduced the fines handed down by the EU Commission (in October 2010) in connection with the European prestressing steel cartel. voestalpine also profits from this decision; its fine was reduced from the original amount of EUR 22 million to EUR 7.5 million. The provisions from the previous year of EUR 19.0 million (including provisions for interest) were reduced by the amount of the fine, which was EUR 8.4 million (including interest). The remaining provisions amounting to EUR 10.6 million were released to income.

Companies of the Special Steel Division of the voestalpine Group are affected by proceedings of the German Federal Cartel Office (Bundeskartellamt) that became known as of November 26, 2015 due to searches of the premises of voestalpine’s competitors. voestalpine is taking these proceedings very seriously, is cooperating with the authorities, and currently does not expect that significant fines will be imposed against voestalpine in these proceedings. No provisions were formed in this regard in the current reporting period.

Increases in provisions totaling EUR 6.4 million (2014/15: EUR 3.5 million) are included in the reporting period, based on accrued interest and on changes in the discount rate.