Changes in the scope of consolidated financial statements

The changes made in the scope of consolidated financial statements during the reporting period were as follows:

The following entities were deconsolidated during the first half of the business year 2016/17:

In late July, the sale of Kadow & Riese Laser- und Umformtechnik GmbH (part of the Metal Forming Division) was concluded. The company primarily makes sheet-formed parts in the form of prototypes and pilot series and small-batch series for the mobility sector. Due to the company’s growing strategic deviation from voestalpine’s core business, voestalpine decided to go forward with the sale (few synergies with other companies of the voestalpine Group because of its stand-alone location and the very volatile and short-term business in the prototype segment). The company generated revenue of around EUR 8 million in the business year 2015/16 and has around 70 employees.

The disposal had the following effect on the interim consolidated financial statements:

The following entities are being included in the interim consolidated financial statements for the first time in the first half of the business year 2016/17:

The additions to the scope of consolidated financial statements of fully consolidated entities include one acquisition, two newly established subsidiaries, and the consolidation of one entity not previously included in the scope of the consolidated financial statements.

In accordance with IFRS 3, the acquired companies are included in the interim consolidated financial statements at the fair value carried forward of the acquired assets, liabilities, and contingent liabilities determined as of the acquisition date, including depreciation and amortization as appropriate. The carrying amount of the non-controlling interests is determined based on the fair values carried forward for the assets and liabilities acquired. With regard to the first-time full consolidations in accordance with IFRS 3, due to time constraints and the fact that not all valuations have been completed, the following items are to be considered provisional: property, plant and equipment, intangible assets, inventories, and provisions—and consequently goodwill as well.

On July 11, 2016, voestalpine Rotec GmbH, a company that is part of the Metal Forming Division of the voestalpine Group, acquired assets from the sellers (asset deal) for the newly established voestalpine Rotec Summo Corp. (headquartered in Burlington, Canada) as well as 100% of the shares (share deal) for the subsequently renamed voestalpine Rotec Summo de Mexico S. de R.L. de C.V. (headquartered in Apodaca, Mexico) as part of a hybrid deal. At both locations (Canada: 135 employees; Mexico: 165 employees; an annual revenue of around EUR 40 million was most recently generated), automotive tube components are manufactured for the North American market. The primary strategic considerations of the deal are the expanded access to the North American market (NAFTA countries) by the voestalpine Rotec Group, the direct proximity of the Mexican site to a large number of local OEMs, and the expansion of market leadership for tube components for passive safety equipment.

These acquisitions have the following impact on the consolidated financial statements:

Goodwill of EUR 6.1 million results from the profit potential of the company, which cannot be allocated to individual capitalizable items according to IFRS, in particular, the comprehensive know-how relating to the technology used in the processing of tubes and access to the automotive market in North America. Goodwill is assigned completely to the “Tubes & Sections” unit, which carries the goodwill. It is not expected that any part of included goodwill will be eligible for corporate tax deductions.

Since their initial consolidation, these acquisitions have contributed revenue of EUR 7.9 million to consolidated revenue. Its share of the Group’s profit after tax was EUR 0.3 million for the same period. The consolidated revenue would have been EUR 9.7 million higher and the Group’s profit after tax would have been EUR 0.7 million higher if the acquisitions had been consolidated as of April 1, 2016.

As part of the first-time full consolidation of voestalpine Rotec Summo de Mexico S. de R.L. de C.V. and voestalpine Rotec Summo Corp., fair values for trade receivables of EUR 4.2 million (gross carrying amount: EUR 4.2 million) and other receivables of EUR 0.6 million (gross carrying amount: EUR 0.6 million) were taken over. Receivables that are expected to be uncollectible are considered immaterial and negligible. Acquisition-related costs of EUR 0.4 million were recognized in other operating expenses for this acquisition.

In the current reporting period, EUR 4.0 million were paid for earlier acquisitions made in accordance with IFRS 3.

The increase in majority interests is treated as a transaction between owners. The difference between the costs of acquisition of additional shares and the pro-rated carrying value of the non-controlling interests is recognized directly in equity. During the first half of the business year 2016/17, EUR 1.9 million (2015/16: EUR 2.4 million) was paid for the acquisition of non-controlling interests or provisions were formed for the payment thereof. Non-controlling interests amounting to EUR –1.1 million (2015/16: EUR 0.0 million) were derecognized, and the remaining amount of EUR 0.8 million (2015/16: EUR 2.4 million) was recognized directly in equity.

Put options granted to non-controlling shareholders in exchange for their shares in Group companies are recorded in the statement of financial position as liabilities stated at fair value. If the risks and rewards associated with ownership of a non-controlling interest have already been transferred at the time the majority interest was acquired, an acquisition of 100% of the entity is assumed. If, however, the risks and rewards are not transferred, the non-controlling interests continue to be shown in equity. The liability is covered by a direct transfer from retained earnings with no effect on profit or loss (double credit approach).

Outstanding put options, which are offset against equity, had a fair value of EUR 0.2 million (March 31, 2016: EUR 0.2 million) as of September 30, 2016.