Auditor’s report
Report on the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of voestalpine AG, Linz and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at March 31, 2022, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the financial year then ended, and notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements comply with legal requirements and give a true and fair view of the consolidated financial position of the Group as at March 31, 2022, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and the additional requirements under section 245a UGB.

Basis for opinion

We conducted our audit in accordance with Regulation (EU) No. 537/2014 and with the Austrian Generally Accepted Auditing Standards. Those standards require the application of the International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with laws and regulations applicable in Austria, and we have fulfilled our other professional responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The following matters have been of most significance in our audit:

• Valuation of goodwill, other intangible assets and property plant and equipment
  
  
• Valuation and presentation of discontinued operations (Texas CGU)

Valuation of goodwill, other intangible assets and property plant and equipment

• Description and Issue
  Goodwill, other intangible assets and property plant and equipment are presented in the amounts EUR 1,448.6 million, EUR 289.9 million and EUR 5,635.9 million in the consolidated financial statements of voestalpine AG and represent a significant part of the assets of the group. Impairment losses of EUR 80.2 million and reversals of impairment losses of EUR 11.8 million were recognized within the business year 2021/22.
  
  An impairment loss is recognized at the amount by which the carrying amount of an asset or cash generating unit exceeds the recoverable amount. For detailed explanations with regard to the determination of impairments and further information, please refer to Section B. Summary of accounting policies, “Uncertainties in accounting estimates and assumptions”, “Impairment testing of cash generating units with and without goodwill and of other assets” as well as “9. Property, plant and equipment”, “10. Goodwill and other intangible assets” and “11. Impairment losses and reversal of impairment losses” in the notes to the consolidated financial statements.
  
  The assessment of the recoverability is based on assumptions concerning the future. The determination of the recoverable amount in the course of an impairment test is based on several assumptions such as future net cash flows, discount rates or alternatively derived fair values. Estimates of future cash flows are subject to uncertainties, which have increased due to the Ukraine-crisis. The determination of the discount rate is complex and depends to a high degree on management’s estimates and market data. Small changes of the assumptions applied can significantly influence the recoverable amount. Due to these facts and also given the significance of goodwill, other intangible assets, property, plants and equipment and impairment losses and reversals of impairment losses accounted for in the consolidated financial statements we identified this position as a key audit matter.
  
  
• Our Response
  We have audited the process implemented by the management to identify triggers for impairments and reversal of impairments with regard to design and implementation. We assessed the appropriateness of the assumptions underlying the planning of future cash flows made by the management of the divisions and compared these to the five-year mid-term planning approved by the Management of the group. We compared the parameters of the impairment tests, such as planned development of revenue or profit, working capital or capital expenditure, with internal information and available industry-specific market expectations derived from external sources, validated them based on historical data and discussed them with management.
  
  Furthermore we verified the appropriateness of the valuation model by involvement of internal experts. We assessed the applied discount rates by determining a range for plausible discount rates.
  
  For assets valued at the fair value less cost to sell of the individual assets we have in addition assessed the assumptions of the management and the fair values estimated by external experts and discussed them with management.

Valuation and presentation of discontinued operations (Texas CGU)

• Description and Issue
  End of March 2022 the Supervisory Board approved the decision to sell 80% of the Texas cash-generating unit and therefore satisfied the criteria for classifying the assets as held for sale. Management has classified the Texas CGU as discontinued operations because it represents a separate significant line of business. The assets from discontinued operations are presented in the amount of EUR 921.5 million and the liabilities from discontinued operations in the amount of EUR 95.1 million. Derived from the fair value less cost to sell a reversal of impairment loss of EUR 256.6 million has been recorded.
  
  Assets held for sale are measured at the lower of the carrying amount and fair value less costs to sell. The fair value less cost to sell is derived from the expected proceeds of the sale of the equity interest of 80% of voestalpine Texas LLC (part of Texas Group). For detailed explanations please refer to Section B. Summary of accounting policies, “Non-current assets held for sale, disposal groups, and discontinued operations” and “Uncertainties in accounting estimates and assumptions”, as well as Section C. Scope of consolidation, “Discontinued operations” in the notes to the consolidated financial statements.
  
  The determination of the fair value of the Texas CGU is based on estimates and assumptions. Due to these facts and also given the significance of the discontinued operations and the reversal of impairment loss accounted for in the consolidated financial statements we identified this position as a key audit matter.
  
  
• Our Response
  We have reviewed the criteria for the presentation as discontinued operations and the approval of the sale. We critically assessed management’s derivation of the fair value less cost to sell, reconciled it to the purchase agreement and discussed it with management.

Other information

Management is responsible for the other information. The other information comprises the information in the annual report, excluding the consolidated financial statements, the consolidated management report and the audit opinion as well as the separate consolidated report on non-financial information (Corporate Responsibility Report). We received the annual report (not including the report of the Supervisory Board) and the report on non-financial information (Corporate Responsibility Report) prior to the date of our independent auditor’s report; the report of the Supervisory Board will be provided to us after this date.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. With respect to the information in the consolidated management report beyond the consolidated non-financial statement we refer to the section “Report on the Audit of the Consolidated Management Report”.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and audit committee for the consolidated financial statements

Management is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, the additional requirements under section 245a UGB and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The audit committee is responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Regulation (EU) No 537/2014 and with Austrian Generally Accepted Auditing Standards, which require the application of the ISAs, will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Regulation (EU) No 537/2014 and with Austrian Generally Accepted Auditing Standards, which require the application of the ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  
  
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
  
  
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
  
  
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
  
  
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that gives a true and fair view.
  
  
• We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
  
  
• We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
  
  
• We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
  
  
• From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the audit of the consolidated management report

Pursuant to statutory provisions, the consolidated management report is to be audited as to whether it is consistent with the consolidated financial statements and whether it has been prepared in accordance with the applicable legal requirements.

Management is responsible for the preparation of the consolidated management report in accordance with the Austrian Commercial Code.

We conducted our audit in accordance with laws and regulations applicable with respect to the consolidated management report.

Opinion

In our opinion, the consolidated management report is prepared in accordance with the applicable legal requirements, includes appropriate disclosures according to section 243a UGB and is consistent with the consolidated financial statements.

Statement

In the light of the knowledge and understanding of the Group and its environment obtained in the course of our audit of the consolidated financial statements, we have not identified material misstatements in the consolidated management report.

Other Matters which we are required to address according to Article 10 of Regulation (EU) No 537/2014

We were appointed as auditors by the annual general meeting on July 7, 2021 and commissioned by the supervisory board on July 8, 2021 to audit the consolidated financial statements for the financial year ending March 31, 2022. We have been auditing the Group since the financial year ending March 31, 2020.

We confirm that our opinion expressed in the section “Report on the Audit of the Consolidated Financial Statements” is consistent with the additional report to the audit committee referred to in Article 11 of Regulation (EU) No 537/2014.

We declare that we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 and that we remained independent of Group in conducting the audit.

Engagement Partner

The engagement partner responsible for the audit is Marieluise Krimmel.

Vienna

May 24, 2022

Deloitte Audit Wirtschaftsprüfungs GmbH

This English translation of the audit report was prepared for the client’s convenience only. It is not a legally binding translation of the German audit report.

The consolidated financial statements and our auditor’s report may be published or transmitted together only if the consolidated financial statements and the consolidated management report are identical with the confirmed version. Section 281 para 2 Austrian Commercial Code applies to versions that differ.