General information
The accounting policies applied to the Consolidated Financial Statements are consistent with those of the previous year with the exceptions listed below.
The following new and revised standards were adopted for the first time in the business year 2017/18:
The following new and revised standards and interpretations were adopted for the first time in the business year 2017/18 |
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Standard |
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Content |
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Effective date1 |
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IAS 12, amendments |
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Recognition of Deferred Tax Assets for Unrealized Losses |
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January 1, 2017 |
IAS 7, amendments |
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Disclosure Initiative |
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January 1, 2017 |
IFRS 12, amendments |
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Annual Improvements to International Financial Reporting Standards, 2014–2016 Cycle |
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January 1, 2017 |
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The application of the above amendments did not have any material effects on the Consolidated Financial Statements.
The following new and revised standards had already been published as of the reporting date but their application was not yet mandatory for the business year 2017/18 or they have not yet been adopted by the European Union:
Published by IASB but not yet adopted by the European Union or whose application was not yet mandatory as of the reporting date |
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Standard |
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Content |
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Effective date according to IASB1 |
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IFRS 9 |
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Financial Instruments |
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January 1, 2018 |
IFRS 15 |
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Revenue from Contracts with Customers |
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January 1, 2018 |
IFRS 15, clarifications |
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Clarifications to IFRS 15 Revenue from Contracts with Customers |
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January 1, 2018 |
IFRS 2, amendments |
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Classification and Measurement of Share-based Payment Transactions |
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January 1, 2018 |
IAS 1 and IAS 28, amendments |
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Annual Improvements to International Financial Reporting Standards, 2014–2016 Cycle |
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January 1, 2018 |
IAS 40, amendments |
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Transfers of Investment Property |
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January 1, 2018 |
IFRIC 22 |
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Foreign Currency Transactions and Advance Consideration |
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January 1, 2018 |
IFRS 4, amendments |
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Applying IFRS 9 with IFRS 4 |
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January 1, 2018 |
IFRS 16 |
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Leases |
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January 1, 2019 |
IFRS 9, amendments |
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Prepayment Features with Negative Compensation |
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January 1, 2019 |
IAS 28, amendments |
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Long-term Interests in Associates and Joint Ventures |
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January 1, 20192 |
IAS 19, amendments |
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Plan Amendment, Curtailment or Settlement |
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January 1, 20192 |
Various standards, amendments |
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Annual Improvements to International Financial Reporting Standards, 2015–2017 Cycle |
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January 1, 20192 |
IFRIC 23 |
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Uncertainty over Tax Income Treatments |
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January 1, 20192 |
Framework, amendments |
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Amendments to References to the Conceptual Framework |
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January 1, 20202 |
IFRS 17 |
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Insurance Contracts |
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January 1, 20212 |
IFRS 10 and IAS 28, amendments |
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Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |
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postponed |
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These standards—in so far as they have been adopted by the European Union—will not be adopted early by the Group. From today’s perspective, the new and revised standards and interpretations are not expected to have any material effects on the voestalpine Group’s net assets, financial position, and results of operations.
The following effects are expected from the new standards IFRS 9, IFRS 15, and IFRS 16:
IFRS 9 Financial Instruments results in amendments and revisions in the area of financial instruments and will replace IAS 39 (except for portfolio fair value hedges). Going forward, the classification rules vary according to the characteristics of the business model and the contractual cash flows of financial assets, whereas the existing requirements regarding financial liabilities were largely incorporated into IFRS 9. Depending on the characteristics, there are also changes with respect to subsequent measurements of financial assets. In the future, three measurement categories will generally be available; with the exception of a few measurement choices they must always be considered mandatory categories. Another fundamental change arises in connection with impairment, which in the future will be based on an expected loss model rather than, as has been the case to date, on incurred loss. In addition, IFRS 9 contains new general accounting requirements for hedge accounting but retains the existing provisions on the recognition and derecognition of financial instruments from IAS 39. The new rules under IFRS 9 expand the options for applying hedge accounting by shifting the focus to the risk management goals and strategies as the measurement basis. Accordingly, in the future a mostly qualitative and forward-looking approach to the measurement of the effectiveness of hedging relationships will apply.
The voestalpine Group will apply the amendments to IFRS 9 for the first time as of April 1, 2018. As far as classification and measurement are concerned, retrospective application is the rule pursuant to which the comparative periods are not adjusted and any differences in the carrying amounts are recognized in retained earnings as of April 1, 2018, due to the initial application. The accounting requirements for hedge accounting must only be applied prospectively anyway.
Significant effects on the classification of financial assets are not currently expected. At this time, trade and other receivables are recognized at amortized cost less value adjustments. In the future, a portion of these receivables, which are intended for factoring, will be measured at fair value through profit or loss (FVTPL), which is not expected to give rise to any valuation adjustments, however. As of March 31, 2018, the voestalpine Group is holding an equity instrument valued at EUR 32.1 million, which was classified as available for sale at fair value. In the future, this will be classified as FVTPL under IFRS 9.
A valuation model was created in the voestalpine Group to abide by the requirements of IFRS 9 regarding the impairment model. The actual historical losses in the past five years will serve as the basis for estimating expected credit losses. Given the existing credit insurances and a diversified customer portfolio dominated by very good to good credit ratings, there is no concentration of default risks. Due to low historical and expected loan losses, the application of the new impairment method will not result in any material adjustments of the allowances for trade receivables.
With respect to hedge accounting, there are additional options for raw materials hedges, in particular, those that will lead to an expansion of the hedging relationships that qualify for hedge accounting. The hedges existing at the date of transition meet the requirements of IFRS 9 and correspond to the risk management strategies and goals of the voestalpine Group; as a result, initial application is not expected to have any significant effect at this point.
Given the explanations in the foregoing, the voestalpine Group does not expect the initial application of IFRS 9 to have any significant effects.
IFRS 15 Revenue from Contracts with Customers brings together the rules for revenue recognition and replaces IAS 18 and IAS 11 as well as the related interpretations. In the future, it is no longer determined by transfers of significant opportunities and risks but rather the point in time when the transfer of control over the goods and services occurs and thus the benefits to be derived through it. Both the scope and the timeframe for the recognition of revenue are determined based on the newly introduced five-step model.
The voestalpine Group evaluated the effects in a Group-wide implementation project and will apply the new standard for the first time as of April 1, 2018, using the modified retrospective method. It will be applied to all open contracts. The resulting cumulative initial application effect of about minus EUR –7 million after taxes will be recognized in retained earnings as of April 1, 2018. This effect results mainly from customer-specific series production subject to the applicability of IFRS 15.35c which, in contrast to IAS 11, in turn leads to the earlier recognition of revenue as well as the reversal of previously capitalized pre-series losses; in the future, under the requirements of IFRS 15 these must be recognized in income in the period in which they occur.
Aside from the initial application effect, the new standard will also result in reclassifications to contract liabilities and contract assets of advances received and existing PoC receivables.
IFRS 16 Leases governs accounting for leasing arrangements and will replace IAS 17 as well as previous interpretations. The new rules eliminate the prior distinction between finance and operating leasing arrangements by the lessee. In this respect, operating leases will essentially be treated in the same way as finance leases in the future.
The voestalpine Group plans to apply the new standard using the modified retrospective method for the first time as of April 1, 2019. Accordingly, the resulting cumulative initial application effect will be recognized in retained earnings as of April 1, 2019, but no adjustment of the comparative data is made at the same time. voestalpine Group companies currently operate as lessees in operating leases and so the application of IFRS 16 is expected to have an impact on net assets, financial position, and results of operations. In its initial assessment, the voestalpine Group identified the future capitalization of right-of-use assets and the corresponding liabilities as the most significant effect. As a result, instead of recognizing lease expenses on a straight-line basis as in the past, depreciation expenses for right-of-use assets and interest on lease liabilities are recognized. This will lead to an improvement in EBITDA and EBIT as well as a shift between cash flows from operating activities and financing activities. However, it is not possible to quantify these effects at the moment since the underlying contracts have not yet been examined in detail with respect to the applicability of IFRS 16. Aside from the composition of the leasing portfolio, as of April 1, 2019, the actual effects will also be shaped by the interest rate, the assessments regarding the exercise of any renewal options as well as the utilization of exceptions and exemptions from recognition rules. In any case, the initial application will not make it impossible to satisfy permitted caps on borrowings (Chapter 23, Financial Instruments). In order to be able to ensure proper accounting treatment under the requirements of IFRS 9, in the new business year an IT solution serving to provide a system-based presentation of the leases will be implemented in the voestalpine Group. For a list of existing operating leases as of the reporting date, see Note 9. Property, plant and equipment. No significant effects are expected for existing finance leases.
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