Active risk management, as it has been understood and practiced in the voestalpine Group for many years, serves to ensure both the continued long-term existence of the Group and an increase in its value, thus representing a key factor in the success of the voestalpine Group as a whole. As part of the systematic risk management process, which is run at least once a year uniformly across the entire Group, and internal control systems, which are also integral parts of the organizational and operational structures, potential risks are recognized systematically and early on, analyzed, assessed and monitored on an ongoing basis so that appropriate preventative measures can then be implemented.
The risk environment of the voestalpine Group in the first six months of the current business year remained by and large unchanged in comparison to the previous year. The main risk areas (for example, supply of the required quantity and quality of raw materials, outages of critical production facilities and/or IT systems, knowledge management, and financial risks) and the appropriate preventative measures are predominantly stable. It should be pointed out, however, that while medium- and long-term risks resulting from EU climate protection legislation have not changed as to their content, they have escalated technically compared to the end of the previous business year due to the decisions made by EU bodies, which have now confirmed this legislation. The description of the most significant other risk areas and the preventative measures being taken, which were depicted in detail in the voestalpine Group’s Annual Report 2014/15 (Annual Report 2014/15, “Report on company risk exposure”), continues to be valid for the report on the first half of the current business year.
With regard to the remarks set forth in the Management Report for the business year 2014/15 regarding goodwill amortization under Austrian tax law within the framework of the group taxation regime in Austria, it should be added that in its decision C-66/14 on October 6, 2015, the Court of Justice of the European Union (CJEU) has ruled that limiting goodwill amortization to Group members with unlimited tax liability is incompatible with the freedom of establishment as set forth in Section 49 of TFEU. The first question referred to the court, the subject of which was whether State aid is deemed unlawful, was held inadmissible under the decision of the Court of Justice of the European Union, as it obviously has nothing to do with the subject of the original dispute. This issue referred to the court was thus not addressed as to its content. In the proceeding before the Court of Justice of the European Union, the Advocate General (AG Kokott) argued in her concluding motion C-66/14, dated April 16, 2015, that the goodwill amortization under Austrian tax law does not represent prohibited State aid. Now it remains to be seen what the decision of the Austrian Supreme Administrative Court will be. Against the backdrop of the cited decision by the Court of Justice of the European Union and the concluding motion of the Advocate General in this proceeding, the risk of a reversal has been reduced even further and is viewed as being very unlikely.
Additional measures that minimize risk exposure, which were implemented in recent years based on knowledge gained as a result of the recent economic and financial crisis and which were described in detail in the Annual Report 2014/15, were consistently put into action in the current business year and will continue to be implemented.
These measures to avert or prevent risks are aimed at reducing potential losses and/or minimizing the likelihood of losses occurring.
In summary, it can be stated that at the time of presentation of the Management Report for the first half of the business year 2015/16, the risks and the resulting uncertainties in and for the voestalpine Group are limited and manageable and do not endanger the company’s survival. As of the reporting date for the first half of the year, there is no indication of any risks that endanger the future survival of the Group.
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