Proactive risk management—as it has been understood by and practiced in the voestalpine Group for many years—serves both to ensure the existence of the Group as a going concern in the long term and to boost its value and thus is key to the success of the Group as a whole. Material risks are systematically recorded, analyzed, and assessed early on and subjected to permanent monitoring as part of both the systematic risk management process (which is undertaken uniformly and group-wide several times a year) and additional internal control systems (which are also integral elements of the Group’s structural and workflow organization); appropriate measures to minimize risks are taken as necessary.
The risk environment of the voestalpine Group in the first six months of the current business year as well as compared with the previous years has remained largely unchanged. Material fields of risk (such as the availability of raw materials in the required quantity and quality; the loss of critical production facilities; the loss of critical IT systems; the CO2 issue; knowledge management; or financial risks) and the respective precautionary measures thus have remained largely the same. The material fields of risk, including the associated measures to minimize risk, which are presented and described in detail in the Annual Report 2017/18 of the voestalpine Group (Annual Report 2017/18, “Report on the Company’s Risks”) thus remain valid at the time this semi-annual Management Report for the current business year was prepared.
There were no changes with respect to the disclosures in the Management Report for the business year 2017/18 regarding the Austrian energy tax rebate. Note in this connection that the Austrian Federal Finance Court (Bundesfinanzgericht) has directed a request for a preliminary ruling to the European Court of Justice (ECJ) (BFG 10/31/2014, RE/5100001/2014). The amendment of the Austrian Energy Tax Rebate Act (Energieabgabenvergütungsgesetz) by means of the 2011 Austrian Budget Accompanying Act (Budgetbegleitgesetz (BBG 2011)), which applies to periods after December 31, 2010, limited the energy tax rebate to manufacturing companies. Subsequently, the question as to whether this restriction, which may be deemed state aid, violated European Union law was submitted to the ECJ for a preliminary ruling; the highest court actually answered the question in the affirmative (ECJ 7/21/2016, docket no. C-493/14, Dilly’s Wellnesshotel GmbH). This means that the restrictions envisioned in the BBG 2011 have not taken effect. Therefore, service providers, in particular, can retroactively apply for the energy tax rebate for periods after February 1, 2011. In its subsequent ruling, the Austrian Federal Finance Court declared that the restriction to manufacturing companies did not take effect. The Austrian fiscal authorities appealed this decision to the Austrian Higher Administrative Court (Verwaltungsgerichtshof), which in September 2017 (Decision dated 09/14/2017, EU 2017/0005 and 0006-1) again sought recourse with the ECJ. No adverse effects are anticipated for the voestalpine Group from this approach.
Based on the insights gained from the economic and financial crises in the recent past and their effects on the voestalpine Group, in recent years additional—primarily corporate—measures were taken to minimize the Group’s risk exposure, which are also described in detail in the Annual Report 2017/18, and these measures have been and are being consistently implemented in the current business year. In a complex economic environment, any fallout from the Brexit decision is monitored and analyzed on a continuous basis. The developments in the wake of the (punitive) tariffs and their ramifications for the voestalpine Group are also subject to continuous monitoring.
The measures that have been put in place to avert or prevent identified risks always serve to reduce potential losses and/or minimize the likelihood of losses occurring.
It must be stated that, as of the date of this semi-annual Management Report for the current business year, the risk exposure of and resulting uncertainties in the voestalpine Group are limited and manageable and do not threaten the continuation of the Group as a going concern. Considered from our current vantage point, there are no such threats to the Group in the future, nor are any such risks discernible as of the semi-annual reporting date.
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