D. Acquisitions and other additions to the scope of consolidation

The following entities were included in the Consolidated Financial Statements for the first time in the business year 2019/20:

The additions of fully consolidated entities to the scope of consolidation include two acquisitions, one newly established entity, and the consolidation of one entity not previously included in the Consolidated Financial Statements.

In accordance with IFRS 3, acquired companies are included in the Consolidated Financial Statements at the fair value carried forward of the acquired assets, liabilities, and contingent liabilities determined as of the acquisition date, taking into account depreciation, amortization, and impairment 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. As regards the first-time full consolidations pursuant to IFRS 3, note that due to time constraints and/or the fact that not all valuations have been completed, the following items shall be considered provisional: property, plant and equipment; intangible assets as well as inventories and provisions—and consequently goodwill as well.

The increase in majority interests is treated as a transaction between owners. The difference between the acquisition costs of additional shares and the pro-rated carrying amount of the non-controlling interests is recognized directly in equity. In the reporting period, EUR 4.8 million (2018/19: EUR 2.4 million) was paid for the acquisition of non-controlling interests or provisions were formed for the payment thereof. Non-controlling interests in the amount of EUR 1.1 million (2018/19: EUR 2.4 million) were derecognized and the remaining amount of EUR 5.9 million (2018/19: EUR 0.0 million) was recognized directly in equity.

Put options granted to non-controlling shareholders in exchange for their shares in Group companies are recognized in the statement of financial position as liabilities stated at fair value. If, in individual cases, the risks and rewards associated with ownership of a non-controlling interest had already been transferred at the time the majority interest was acquired, the assumption is that 100% of the entity was acquired. 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). The subsequent fair value measurement is recognized through profit or loss.

The liabilities for outstanding put options as of March 31, 2020, are EUR 9.5 million (March 31, 2019: EUR 6.4 million). The discounted cash flow method is applied for valuation purposes, taking the contractual maximum limits into account. The medium-term business plan and the discount rate, in particular, are some of the input factors in the discounted cash flow method.

On December 18, 2019, voestalpine Railway Systems GmbH acquired 100% of the shares of Société d’Equipement Industriel.Lietaert, SASU, from a French company, La Ferroviaire de la Brie SAS, Rozay-en-Brie, France. The acquisition serves to enable voestalpine to penetrate the railway market in the Paris metropolitan area, where its footprint so far has been limited to minor and niche activities. From now on, the acquired company will be known as voestalpine Railway Systems France SAS.

On February 28, 2020, voestalpine Böhler Welding Group GmbH acquired 88.9% of the shares of Selco S.r.l., an Italian company, and the remaining 11.1% by way of a firmly agreed put option. This expansion of voestalpine Böhler Welding’s portfolio by welding machinery will enable the company to offer not only comprehensive solutions in the welding industry, but also a perfectly coordinated combination of welding consumables and welding equipment. From now on, the acquired company will be known as voestalpine Böhler Welding Selco S.r.l.

These acquisitions have the following impact on the Consolidated Financial Statements:

The above table contains negative goodwill of EUR 0.3 million from the acquisition of voestalpine Böhler Welding Selco S.r.l., which was recognized in total in other operating income. The acquisition of voestalpine Railway Systems France SAS gives rise to goodwill of EUR 2.6 million resulting from the company’s earnings potential (which, according to IFRS rules, may not be allocated to items that can be capitalized individually), in particular, improved access for the Group to the railway market in France and Francophone territories (especially in North Africa). This goodwill is allocated to the goodwill-carrying Railway Systems business unit. It is not expected that portions of the recognized goodwill are deductible for corporate tax purposes.

Since their initial consolidation, the acquisitions have contributed revenue of EUR 1.1 million to consolidated revenue. Their share in the Group’s profit after tax for the same period was EUR –0.3 million. The reported consolidated revenue would have been EUR 13.2 million higher and the reported Group’s profit after tax would have been EUR –0.1 million higher if the acquisitions had been consolidated as of April 1, 2019.

As part of the first-time full consolidation of voestalpine Böhler Welding Selco S.r.l. and voestalpine Railway Systems France SAS, fair values for trade receivables of EUR 3.2 million (gross carrying amount: EUR 3.2 million), tax assets of EUR 0.1 million, and for other receivables of EUR 0.5 million (gross carrying amount: EUR 0.5 million) were taken over. Receivables that are probably uncollectible are considered immaterial.

In the current reporting period, EUR 1.4 million were paid for earlier acquisitions made in accordance with IFRS 3.