Risk management*

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 Group as a whole. As part of the systematic risk management process, which is run several times 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, and appropriate risk-minimizing measures are taken.

The risk environment of the voestalpine Group in the first six months of the current business year remained practically unchanged—including in comparison to the previous years; the main risk areas (for example supply of the required quantity and quality of raw materials, outages of critical production facilities, CO₂-related issues, outages of critical IT systems, knowledge management, and financial risks) and the preventative measures have remained largely the same. The main risk areas and their risk-minimizing measures, which were presented and described in detail in the Annual Report 2015/16 of the voestalpine Group (Annual Report 2015/16, “Report on company risk exposure”), therefore continue to be applicable for the Management Report for the first half of the business year.

With regard to the remarks set forth in the Management Report for the business year 2015/16, it should be added in reference to the energy tax rebate that the Federal Tax Court has submitted a request for a preliminary ruling to the ECJ (Federal Tax Court 10/31/2014, RE/5100001/2014). The energy tax rebate was restricted to production companies through the amendment to the Energy Tax Rebate Act in the Budget Accompanying Act 2011, applicable to the periods after December 31, 2010. Subsequently, the question of whether this restriction that can be deemed to constitute state aid violated EU law was submitted to the European Court of Justice for a preliminary ruling; this has now actually been affirmed by the highest court (ECJ 7/21/2016, case no. C-493/14, Dilly’s Wellnesshotel GmbH). Thus, the restrictions pursued by the Budget Accompanying Act 2011 did not enter into force with legal effect and therefore, service providers specifically, among others can retroactively assert the energy tax rebate for periods after February 1, 2011. No adverse impact is anticipated for the voestalpine Group.

Based on the knowledge gained as a result of the recent economic and financial crises and their effect on the voestalpine Group, additional—primarily corporate—measures were taken during the past several years to minimize risk exposure; these measures were also described in detail in the Annual Report 2015/16, and they continued and still continue to be consistently implemented in the current business year. In an economic environment that remains difficult, the impact of the British Brexit decision is being monitored and analyzed on an ongoing basis.

The measures to avert or prevent identified risk factors are aimed at reducing potential losses and/or minimizing the likelihood of losses occurring.

It can be stated that at the time of preparation of the Management Report for the first half of the business year, the risks and the resulting uncertainties for the voestalpine Group are limited and manageable and do not endanger the company’s survival. There are no risks that endanger the future survival of the Group, and as of the reporting date for the first half of the year, no such risks are discernible.