C. Scope of consolidation

The consolidated Group (see the “Investments” appendix to the Notes) is defined in accordance with IFRS requirements. In addition to the annual financial statements of voestalpine AG, the Consolidated Financial Statements also include the financial statements of entities controlled by voestalpine AG (and its subsidiaries). Entities controlled by voestalpine AG that are not included in the Consolidated Financial Statements of voestalpine AG are negligible, both individually and collectively.

Subsidiaries are entities controlled by the Group. Control exists when the voestalpine Group has power over the investee, is exposed to fluctuating returns on its investment, and has the ability to use its power over the investee to affect the amount of the investor’s returns. The annual financial statements of subsidiaries are included in the Consolidated Financial Statements as of the point in time at which the Group acquires control over the subsidiary up to the point in time at which the Group ceases to exercise control over it.

Associates are entities over which the voestalpine Group has significant influence because it participates in the entities’ financial and operating policy decisions, but the decision-making processes are not controlled nor jointly managed. Joint ventures are joint arrangements in which partner companies (the voestalpine Group and one or more partners) exercise joint control over the arrangement and possess rights to the entity’s net assets. The annual financial statements of associates and joint ventures are included in the Consolidated Financial Statements using the equity method from the acquisition date until the disposal date. The Group’s associates and joint ventures are listed in the “Investments” appendix to the Notes.

Changes in the scope of consolidation

The scope of consolidation changed as follows during the past business year:

 

 

Full consolidation

 

Equity method

 

 

 

 

 

As of April 1, 2021

 

280

 

11

Additions from acquisitions

 

 

 

 

Change in the consolidation method and incorporation

 

 

 

 

Additions

 

8

 

2

Disposals

 

 

 

 

Reorganizations

 

–5

 

 

Divestments or disposals

 

 

 

–1

As of March 31, 2022

 

283

 

12

Of which foreign companies

 

225

 

4

The following fully consolidated entities were merged during the business year 2021/22:

Name of entity

 

Date of merger

 

 

 

EschmannStahl GmbH

 

April 1, 2021

voestalpine Metal Engineering US LLC

 

April 1, 2021

voestalpine Metal Forming US LLC

 

April 1, 2021

voestalpine High Performance Metals Corporation

 

April 1, 2021

voestalpine Steel US LLC

 

April 1, 2021

The following at-equity-consolidated entities were deconsolidated during the business year 2021/22:

Name of entity

 

Date of
deconsolidation

 

 

 

SBI GmbH

 

December 31, 2021

Discontinued operations

On March 22, 2022, the Supervisory Board approved the decision to sell 80% of the Steel Division’s Texas cash generating unit, which comprises a single facility and produces hot briquetted iron (HBI). The agreement regarding the sale of an equity interest of 80% of the unit was signed on April 14, 2022.

Furthermore, an agreement was made to secure an annual supply of 420,000 tons of the HBI produced at the plant in Corpus Christi, Texas, USA, for voestalpine in the long term. These deliveries will be essential to the ongoing decarbonization of steel production at the voestalpine Group’s plants in both Linz and Donawitz, Austria, as part of its greentec steel project. This partnership reduces the spot market risk arising from the quantities not required by voestalpine. The HBI plant has an annual production capacity of about two million tons.

The criteria for classifying the assets as held for sale were satisfied in the fourth quarter of the business year 2021/22. Management has classified the Texas CGU as discontinued operations because it represents a separate significant line of business. The transaction will likely be closed about three months from the reporting date.

The result thereof is as follows:

 

 

2020/21

 

2021/22

 

 

 

 

 

Revenue

 

364.7

 

589.4

Expenses incl. other expenses

 

–592,91

 

–589.2

Other operating income

 

5.2

 

1.8

Financial results

 

–1.0

 

–0.7

Profit before tax and valuation result at fair value less costs to sell

 

–224.0

 

1.3

Tax expense according to IAS 12.81 h (ii)

 

0.0

 

0.0

Valuation result at fair value less costs to sell

 

0.0

 

256.6

Tax expense according to IAS 12.81 h (i)

 

0.0

 

0.0

Profit after tax

 

–224.0

 

257.9

Thereof attributable to equity holders of the parent

 

–224.0

 

257.9

 

 

 

 

 

Diluted and basic earnings per share (euros) from discontinued operations

 

–1.25

 

1.44

Weighted average number of outstanding ordinary shares

 

178,520,595

 

178,520,616

 

 

 

 

 

1
Including impairment losses of EUR –163.1 million.

 

 

In millions of euros

A total of EUR 55.4 million in cumulative earnings are allocable to the discontinued operations in other comprehensive income (OCI). They only consist of differences from currency translation.

The main groups of assets and liabilities related to the discontinued operations as of March 31, 2022, are as follows:

 

 

2021/22

 

 

 

Property, plant and equipment

 

659.0

Goodwill

 

22.4

Other intangible assets

 

10.2

Inventories

 

130.9

Trade and other receivables

 

99.0

Total assets

 

921.5

 

 

 

Financial liabilities

 

30.5

Trade and other payables

 

64.6

Total equity and liabilities

 

95.1

 

 

 

In millions of euros

The Group measures the discontinued operations at fair value less costs to sell. The fair value less costs to sell of EUR 727.9 million is derived from the expected proceeds (Fair Value Level 3) of the sale of the equity interest of 80%. As of March 31, 2022, a write-up of EUR 256.6 million was recognized in “Land, land rights, and buildings” as well as in “Plant and equipment” in the revaluation gain from the fair value less costs to sell.

In the business year 2020/21, a total of EUR 163.1 million in impairment losses on “Land, land rights, and buildings” as well as on “Plant and equipment” were recognized in other operating expenses for the Steel Division’s aforementioned Texas CGU, which produces hot briquetted iron (HBI). Economic developments owing to the COVID-19 crisis led to yet another adjustment of the short-term earnings forecasts initially issued as of March 31, 2020. The HBI spot market price disintegrated to a much greater degree than anticipated due to the deteriorating scrap/iron ore price ratio. The strong price sensitivity of the HBI spot market prices as well as the expectation that volatilities in the raw materials markets would continue unabated also led to the reversal, in particular, of the medium-term earnings forecasts and the cash flows for the Texas unit. The recoverable amount (value in use) for this unit as of September 30, 2020, was EUR 447.8 million. At the time, an after-tax discount rate of 6.79% was applied; the pre-tax WACC was 7.98%.

Acquisition
Takeover or purchase of companies or of interests in companies.
Equity
Assets made available to a corporation by the owners through deposits and/or contributions or from retained profits.
IFRS (International Financial Reporting Standards)
Accounting regulations developed to guarantee comparable accounting and disclosure.
Weighted average cost of capital (WACC)
Average capital costs for both borrowed capital and equity.