B. Accounting principles

With greentec steel, the voestalpine Group is gradually implementing an ambitious step-by-step plan for decarbonization. As part of the Science Based Targets initiative (SBTi), the voestalpine Group has committed to reduce the sum of Scope 1 and Scope 2 emissions by 30% and Scope 3 emissions by 25% by 2029 compared to the reference year 2019. The achievement of the 2029 targets is subject to external factors and influencing variables such as the availability of raw materials and energy, as well as the general economic environment.

voestalpine’s long-term concept for achieving net-zero production by 2050 at the latest, in line with the EU emissions trading target pathway, consists of several modular technology steps and options. These focus equally on the greatest possible CO₂ reduction effect, taking into account the actual feasibility (e.g., regarding the respective political and legal framework, the availability of raw and input materials and renewable energies, as well as corresponding infrastructures) and economic feasibility. The most important elements of the greentec steel climate protection program are:

By 2029: Phase 1

• The first phase of greentec steel comprises an investment volume of about EUR 1.5 billion, which was approved by the Supervisory Board in March 2023. This will initially involve the installation of two electric arc furnaces, at the Linz and Donawitz sites, that will operate on green electricity. Commissioning is planned for 2027, coinciding with the decommissioning of two coal-based blast furnace units. Upon planned completion in 2027 and successful ramp-up, approximately 2.5 million tons of CO₂-reduced steel will be produced annually. Depending on the quality requirements, a mix of input materials consisting of scrap, liquid pig iron, and HBI (hot briquetted iron) will be used. voestalpine sources most of its HBI from a direct reduction plant in Texas, USA. This plant has been majority-owned by a global steel manufacturer since 2022. voestalpine holds a 20% stake, with corresponding long-term purchase agreements.

From 2030 to 2035: Phase 2

• Focus on direct CO₂ avoidance through further replacement of fossil pig iron production as well as the additional use of CO₂ capture and utilization technologies (Carbon Capture Utilization and Storage, CCUS).

By 2050 at the latest: Phase 3

• Focus on replacing the remaining fossil pig iron capacity with fossil-free energy sources, such as hydrogen and renewable energy, while continuing to apply CO₂ capture technologies (CCUS) with the aim of achieving the greatest possible flexibility while ensuring that the net-zero strategy is economically feasible. The final decisions on these options will not be made until a later date and they will be in line with investment cycles and in accordance with the foreseeable conditions.

The decarbonization activities also result in changes to the company’s energy needs. Key priorities include the systematic expansion of our own renewable energy capacities, the purchase of renewable energy based on long-term PPAs (Power Purchase Agreements), and the development of long-term partnerships with energy providers to improve the security of supply of green electricity. In addition, numerous research and demonstration projects are being actively pursued in the areas of hydrogen, biogas, and biomass as well as projects in alternative iron and steel production technologies, such as, for example, “HYFOR” (Hydrogen-Based Fine-Ore Reduction) and smelter and “SuSteel” (Sustainable Steelmaking). Continuous monitoring and efforts are also being made to optimize energy efficiency across production processes. Research into the capture and utilization of CO₂ (CCUS) supplements the overall approach.

The green transformation is also leading to changes in raw material requirements. As a result, the existing volatility in the raw materials markets is becoming increasingly important. Long-term supply relationships, the further expansion of the supplier portfolio, and the expansion of in-house supply and the circular economy form the core elements of a diversified procurement strategy.

The planning calculations for the plants affected by the technological shift (chiefly Linz and Donawitz) already reflect the estimated consequences - to the extent they can be determined at this stage. These assumptions are subject to material uncertainties in accounting estimates. They include investments of approximately EUR 1.5 billion—of which around EUR 0.5 billion had already been invested by the end of the business year 2024/25—for the two green electricity-based electric arc furnaces, as well as investments for the further replacement of fossil pig iron production and CCUS technologies in the extended rough planning stage. CO₂ allowance price increases as well as the incremental reduction and elimination of no-cost allowances by calendar year 2034, the raw material mix required due to the change in technology including effects from the CBAM (Carbon Border Adjustment Mechanism), and a price premium for greentec steel are included in the planning. As far as the CO₂ allowance price increases are concerned—which were derived from the forecasts of the emission volumes and allowance prices prepared by internal experts and external analysts, as well as from estimates of consequences prepared by the EU Commission—our planning accounts for an incremental increase of up to a near tripling by 2042 of the current price level, and considers effects from the CBAM. A price premium on greentec steel is to be expected at the start of the marketing phase. The assumptions regarding the development of the sales prices are also based on the assumption that mitigating actions (in particular the CBAM) will be introduced to offset the elimination of no-cost allowances. As a result of the revision of the EU ETS and the simultaneous introduction of the Carbon Border Adjustment Mechanism (CBAM), the steel industry is undergoing a paradigm shift (a reduction in the total number of allowances as well as the gradual elimination up to calendar year 2034 of no-cost allowance allocations, thus substantially increasing the EU steel industry’s need to purchase allowances).

In light of the changed raw material mix (scrap, liquid pig iron and HBI), corresponding price adjustments have been made in the planning calculations. voestalpine is countering the associated uncertainties by expanding or establishing supply relationships with suppliers, customers, and process partners in order to intensify the opportunities for a circular economy along the entire value chain.

The conversion to new production technologies involves operational risks, including possible operational downtimes or initially inefficient processes that can only be optimized over time. To counteract this, the Group plans a flexible schedule for parallel operations of electrified and blast furnace-based steel production during the transition phase.

At present, key political decisions on the topics outlined are still being debated, both at the national and at the European level. As a result, voestalpine is exposed to several risks—especially in the context of differing energy and transformation policies across EU member states.

The short and medium-term physical risks associated with climate change from natural hazards (such as fire, flooding, or low water as well as fluctuating water levels, snow load, drought, strong winds and storms, temperature fluctuations) were analyzed on the basis of detailed climate risk and vulnerability analyses for relevant operating locations. Heavy rainfall, flooding, and mudslides as well as climate-related fluctuations in river water levels that may affect navigability are significant physical climate risks for the voestalpine Group. Based on this, appropriate precautionary measures have been initiated or have already been implemented. Necessary future measures are, to a subordinate extent, included in the planning calculations.

In addition to transitional climate risks tied to decarbonization, the European Green Deal presents further challenges that are driving structural change within European industry. voestalpine is both directly and indirectly affected by this transformation. In the area of imports, mechanisms such as the Carbon Border Adjustment Mechanism (CBAM) do not fully offset competitive disadvantages. Furthermore, as a result of this structural change, voestalpine is experiencing a decline in demand from customer industries (e.g., the German automotive industry). In global export markets, voestalpine also faces competition from companies outside the EU that are not subject to the same regulatory framework.

voestalpine is implementing targeted measures to mitigate risks arising from competitive disadvantages and the structural transformation of European industry. In addition to comprehensive restructuring and cost-reduction programs, the focus is on developing innovative products to differentiate the company from competitors and on accessing new customers, industries, and geographic markets. voestalpine is concentrating on high-end market segments and increasing differentiation in product quality and service. Moreover, the Group’s intensified internationalization efforts in high-margin downstream processing areas, based on the “local for local” principle, reinforce its competitiveness.

The assumptions have been taken into account in the medium-term business plan and in an additional rough planning stage for the CGUs affected by the technology transition, based on the insights available as of the reporting date using best possible estimates.

Further information can be found in the non-financial statement in the management report (sections “ESRS2 SBM-3–E1 Climate Change” and “ESRS E1 Climate Change”).

Estimates and assumptions that—beyond the matters described above—may have a material impact on the Consolidated Financial Statements are particularly required in the following areas:

Recoverability of non-current assets

The assessment of the recoverability of intangible assets, goodwill, property, plant and equipment as well as investments in entities consolidated according to the equity method requires judgment in the application of accounting policies as well as estimates based on forward-looking assumptions.

Accounting-related judgment is particularly required in identifying and defining cash-generating units (CGUs), which may, in some cases, involve combining sites and production facilities across regions for the purpose of testing the recoverability of assets. In addition, the identification and analysis of indicators of impairment at each reporting date—beyond the mandatory annual impairment testing of goodwill—also require management judgment. In making these assessments, both quantitative analyses and qualitative considerations are taken into account.

The performance of impairment tests and the determination of any potential impairment losses require the estimation of the recoverable amounts of the affected CGUs. The recoverable amount is defined as the higher of fair value less costs to sell and value in use. Both valuation approaches are based on a number of forward-looking assumptions and estimates. These include, in particular, future cash flows from the continued use or planned disposal of assets, discount rates, growth rates, or the fair values less costs to sell of the individual assets. In estimating future cash flows, a number of uncertain assumptions were considered for CGUs affected by decarbonization and the associated technology transition. These include, in particular, the development of CO₂ allowance prices and sales prices (in particular the price premium for greentec steel), changes in the raw material mix (availability and pricing trends), and the capital expenditure required for the continued replacement of fossil-based pig iron production and for carbon capture, utilization, and storage (CCUS) technologies. The Group has taken into account heightened uncertainties due to recent developments in U.S. policy, based on management’s best estimate of the expected impact on the respective CGUs. The resulting cash flows are consistent with the most recent corporate planning available at the time of preparing the financial statements.

Although management believes that the assumptions made represent the best possible estimate of the economic conditions and the expected business development of the affected CGUs, there is a risk that changes in these assumptions or underlying circumstances could result in significant adjustments to asset values and corresponding impairment losses or reversals of impairment losses in future periods. Sensitivity analyses are presented for the key planning assumptions (discount rate and cash flows), modeling reasonably possible changes in these assumptions and their potential impact on the outcome of the impairment test (see Note D.11. Impairment losses and reversal of impairment losses). Additional information regarding the assessment of the recoverability of non-current assets can be found in Note B.3. Significant accounting policies (the section entitled “Impairment testing of CGUs with and without goodwill and of other assets”), as well as in Note D.9. Property, plant and equipment, Note D.10. Goodwill and other intangible assets, and Note D.11. Impairment losses and reversal of impairment losses.

Accounting for leases

Prior to recognizing a lease in the financial statements, management must assess at the commencement date whether a contract constitutes or contains a lease. This is the case if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Despite existing guidance, management judgment is required in certain contractual arrangements to determine whether they meet the definition of a lease. Furthermore, in determining lease liabilities, management must make judgments regarding the lease term of each individual contract, the lease payments to be included, and the discount rate to be applied. The estimated term of a lease is based on the lease’s non-cancelable term. Lease periods comprising options to terminate or extend are included in the assessment if the non-exercise of termination options or the exercise of options to extend the lease term is deemed to be reasonably certain. This requires management judgment, taking into account all facts and circumstances that represent an economic incentive to exercise or not to exercise a given option. Following initial recognition, the lease term shall be reassessed if there is a significant event or a significant change in circumstances that the company can control and that influences its decision whether to exercise or not to exercise the given option.

The lease payments to be recognized as lease liabilities are derived from the contractual payment obligations. Variable lease payments are not included in the lease liability if they are not linked to an index or a rate. Contracts with complex payment structures may require management judgment to determine whether, and to what extent, a lease liability must be recognized, or whether and to what extent future off-balance sheet variable payment obligations need to be disclosed.

The discount rate used to measure lease liabilities is determined based on the incremental borrowing rate, which reflects a term-dependent risk-free interest rate adjusted for the currency and the credit rating of the entity. An estimate is required if observable interest rates are not available (e.g., subsidiaries that do not engage in financial transactions) or if the observable rates must be adjusted to reflect the terms and conditions of the lease (e.g., to account for a specific repayment structure).

Pensions and other employee obligations

The measurement of existing severance payment and pension obligations is based on assumptions regarding interest rates, the retirement age, life expectancy, and future salary/wage increases. See Note B.3. Significant accounting policies (section entitled “Pensions and other employee obligations”) as well as Note D.18. Pensions and other employee obligations.

Assets and liabilities associated with acquisitions

Acquisitions require estimates to determine the fair value of identified assets, liabilities, and contingent consideration. All available information on the circumstances of the acquisition date is applied. The fair values of buildings and land are typically determined by external experts or intra-Group experts. Intangible assets are measured using appropriate valuation methods depending on the type of asset and the availability of information. These measurements are closely connected to assumptions about the future development of the estimated cash flows as well as the applied discount rates.

Details on acquisitions made during the reporting period are provided in Note C.2. Changes in the scope of consolidation (section entitled “Acquisitions and other additions to the scope of consolidation“).

Other provisions

Other provisions for present obligations arising from past events, which lead to an outflow of resources embodying economic benefits, are measured at the best estimate of the expenditure required to settle the obligation. Provisions are discounted if the effect is material. Details concerning provisions are provided in Note B.3. Significant accounting policies (section entitled “Other provisions”) and in Note D.19. Provisions.

Legal risks

As an internationally active company, the voestalpine Group is exposed to legal risks. The outcome of present or future legal disputes is generally not predictable and may have a material effect on the Group’s net assets, financial position, and results of operations. To reliably assess potential obligations, management continually reviews the underlying information and assumptions; both internal and external legal counsel is used for further evaluation. Provisions are recognized for probable present obligations, including a reliable estimate of legal costs. The option to record a contingent liability is considered if the future outflow of resources is not probable or if the company has no control over the confirmation of actual events. Further information on provisions for legal risks is included in Note D.19 Provisions.

Income taxes

Income tax expense represents the total of current tax expenses and deferred taxes. The current tax expense is determined based on the taxable income using the currently applicable tax rates. Deferred taxes are determined based on the respective local income tax rates. Future fixed tax rates are also considered in the deferral. The recognition and measurement of current and deferred taxes is subject to the following significant uncertainties.

Given its international activities, the voestalpine Group is subject to different tax regulations in the respective tax jurisdictions. The tax items presented in the Consolidated Financial Statements are determined based on the relevant tax regulations and, because of their complexity, may be subject to different interpretations by taxpayers, for one, and local finance authorities, for another. Because varying interpretations of tax laws may lead to additional tax payments for past years as a result of comprehensive tax audits, they are included in the analysis based on management’s assessment.

Deferred tax assets are recognized to the extent that it is probable that sufficient taxable income will be available to utilize deductible temporary differences and/or unused tax loss carryforwards. This assessment involves assumptions about future taxable income and thus is subject to uncertainties. It is based on the planning covering a five-year period. Changes in future taxable income may result in lower or higher deferred tax assets.

Further information follows from Note B.3. Significant accounting policies (section entitled “Income taxes”) as well as Note D.8. Income taxes and Note D.13. Deferred taxes.

Presentation of long-term supply contracts

The voestalpine Group has entered into long-term suppply contracts (with purchase obligations ranging from 2 to 25 years) to secure its supply of raw materials and energy. These contracts are primarily managed by procurement management. As of the reporting date, long-term supply agreements exist for raw materials (in particular HBI, ore, coke, and coal) and operating supplies (in particular oxygen and nitrogen), most of which are based on variable pricing formulas. In addition, long-term energy purchase agreements (including band hedges with energy supply companies and Power Purchase Agreements) have been concluded, which are predominantly contracted at fixed prices. Forward transactions for CO₂ allowances (with maturities up to 2027) exist to a minor extent, and fall under the own use exemption.

The accounting for long-term supply contracts requires judgment and a thorough analysis of the specific contractual terms. voestalpine first assesses whether any of the concluded supply agreements imply control or joint control over the contracting party, or whether, due to additional equity interests and/or significant business relationships, the arrangement constitutes an associate. Furthermore, it also requires judgment to assess as to whether these long-term supply contracts constitute a lease under IFRS 16 (e.g., in the case of Power Purchase Agreements). If this is not the case, a (price-hedged) supply agreement for a marketable non-financial item may fall under the definition of a derivative financial instrument and would therefore have to be measured at fair value through profit or loss. However, this is not required if the contract qualifies for the own use exemption. Applying the own use exemption, in turn, requires judgment in defining similar contracts, which ultimately need to be assessed collectively, as well as in dealing with past or expected future sales of the contracted resource. If a concluded supply contract does not contain a derivative or qualifies for the own use exemption, it is considered an executory contract, that is generally not accounted for. At the same time, ongoing management judgment is required to determine whether the supply contract is deemed onerous and therefore necessitates the recognition of a provision for contingent losses.

Following a detailed analysis, management concludes that the material long-term supply contracts, that do not fall under IFRS 16 either do not constitute derivatives or qualify for the own use exemption. As a result, these are accounted for as executory supply contracts, based on the assumption that procurement prices can generally be passed on to the market through sales. Disclosure of these non-recognized contractual obligations from long-term supply agreements may, in some cases, also require judgment regarding the future price development of the contracted non-financial resources due to variable pricing formulas. In addition, long-term energy purchase agreements (PPAs) with purchase commitments, in particular, require assumptions about expected production volumes. Further details are provided in Note D.23. Other financial obligations.

In the voestalpine Group, revenue is realized when a customer obtains control over goods or services. See the disclosures in Note D.2. Operating segments regarding the type of goods and services offered by the individual business segments.

As a rule, revenue is recognized at the time the goods or services are delivered, taking into account the stipulated terms and conditions. This is generally the time at which risks and opportunities are transferred in accordance with the stipulated Incoterms. The payment terms typically range from 30 to 90 days.

The transaction price corresponds to the contractually stipulated consideration, taking into account any variable components. Variable consideration is recognized only if it is highly probable that there will be no material revenue reversals in the future.

Revenue from series products that meet the revenue recognition criteria of IFRS 15.35 (c) is recognized over time. This mainly concerns products of the automotive and aerospace segments for which there are no alternative uses because they are developed and produced specifically for a customer based on the latter’s specific requirements and thus may generally not be used for any other purpose or where any alternative use would result in significant losses. Furthermore, a legally or contractually enforceable right to payment of consideration, including a reasonable margin, applies to any components under construction as well as to finished goods, provided the company is not responsible for the termination of the contract.

Where revenue is recognized over time, such recognition must be prorated based on the ratio of the costs incurred to the estimated total costs. This method is the most reliable way to reflect progress in performance. Expected losses under a contract are recognized immediately. The cash flows are obtained in accordance with the contractual arrangements. The payment terms typically range from 30 to 90 days.

The voestalpine Group’s rights to consideration for completed performance not yet billed as of the reporting date are recognized as contract assets in trade receivables, other receivables, and other assets. The contract liabilities presented in trade and other payables primarily relate to consideration received from customers in advance for performance not yet delivered.

Investment grants are treated as deferred items and recognized as income over the useful life of the asset. Cost subsidies are recognized on an accrual basis, in line with the associated expenses. Government grants of EUR 25.7 million (2023/24: EUR 123.1 million) for capital expenditures, research and development, and promotion of job opportunities were recognized as income in the reporting period.

Operating expenses are recognized when goods or services are used or when the expense is incurred. In the business year 2024/25, expenses for research and development were EUR 218.9 million (2023/24: EUR 213.9 million).

Property, plant and equipment are measured at cost less accumulated depreciation and any impairment losses.

The cost of self-constructed property, plant and equipment includes direct costs and appropriate portions of materials and indirect labor costs required for production as well as borrowing costs in case of qualifying assets. The capitalization date is the date from which expenditures for the asset and borrowing costs are incurred and activities necessary to prepare the asset for its intended use or sale are undertaken.

Depreciation is recognized on a straight-line basis over the expected useful life. Land is not subject to depreciation. The expected depreciation for each asset category is as follows:

The Group determines at lease inception whether a given lease satisfies the definition of a lease as per IFRS 16. As of the commencement date, the Group recognizes an asset for the right of use granted as well as a lease liability. The right of use is depreciated over the lease term on a straight-line basis. However, the right of use is depreciated over the asset’s economic life if a transfer of title is stipulated or if it is reasonably certain that a purchase option will be exercised. The right of use must also be tested for impairment.

For the most part, the following depreciation/amortization periods are applied to right-of-use assets:

The lease liability is measured using the incremental borrowing rate, provided the interest rate underlying the lease cannot be readily determined.

In subsequent measurements, the lease liability is measured using the effective interest method and adjusted. The associated interest expense is included in finance costs. The lease liability is remeasured if, for example, future lease payments will change due to changes in an index or interest rate or if there is a change in the assessment regarding the exercise of a purchase, renewal, or termination option. The carrying amount of the right-of-use asset is generally adjusted directly in equity after such remeasurement.

In the statement of financial position, the Group recognizes right-of-use assets (that do not satisfy the definition of investment property) in property, plant and equipment, and lease liabilities in financial liabilities.

The Group has elected the option not to determine a right-of-use asset or lease liability for leases with terms of up to 12 months (short-term leases) and for leases where the underlying asset is of low value. In the voestalpine Group, leased assets whose cost does not exceed EUR 5,000 are considered low-value assets.

No separation is made with respect to contracts containing both lease and non-lease components; this does not apply to land and buildings, however.

IFRS 16 is not applied to intangible asset leases.

The Group does not act as a lessor.

All acquisitions are accounted for using the purchase method. Goodwill arises from the acquisition of subsidiaries and equity investments in associates and joint ventures.

Goodwill is allocated to CGUs or groups of CGUs and, pursuant to IFRS 3, is not amortized but tested for impairment at least annually as well as additionally if circumstances indicate possible impairment. The carrying amount of investments in associates and joint ventures also includes the carrying amount of goodwill.

On disposal of a subsidiary, the goodwill associated with the subsidiary is included in the determination of the profit or loss on disposal based on the relative value pursuant to IAS 36.86.

Expenses for research activities that are undertaken with the prospect of gaining new scientific or technical insights are immediately recognized as an expense. Pursuant to IAS 38.57, development expenditure is capitalized from the date on which the relevant criteria are satisfied. This means that the expenses incurred are not capitalized subsequently if all the above conditions are met only at a later date. Expenditures for internally generated goodwill and brands are immediately recognized as an expense.

Other intangible assets are stated at cost less accumulated amortization and impairment losses. In the case of a business combination, the fair value as of the acquisition date is the acquisition cost. Amortization is recognized on a straight-line basis over the expected useful life of the asset. The maximum useful life based on previous transactions is as follows:

Goodwill-allocated CGUs as well as other intangible assets with an indefinite useful life are tested for impairment at least annually at the beginning of March as well as additionally if circumstances indicate possible impairment. All other assets and CGUs without goodwill (asset CGUs) are tested for impairment if there are any indications of impairment.

For impairment testing, assets are grouped at the lowest levels at which cash flows are independently generated (CGUs). Goodwill is allocated to those CGUs or groups of CGUs that are expected to benefit from synergies of the related acquisition, and this must be on the lowest level at which the goodwill in question is monitored for internal management purposes.

An impairment loss is recognized at the amount by which the carrying amount of the individual asset or CGU exceeds the recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use. Impairment losses recognized for goodwill-allocated CGUs are applied first against the carrying amount of the goodwill. Any remaining impairment loss reduces the carrying amounts of the assets of the CGU on a pro rata basis, with the fair values less costs to sell of the individual assets representing the lower limit.

If the goodwill impairment test is conducted for CGUs to which goodwill has been allocated and if this results in an impairment loss, the individual asset CGUs included therein are also tested for impairment and any resulting impairment of assets is recognized at this level first. Subsequently, this is followed by another impairment test for the CGU to which goodwill has been allocated.

Property, plant and equipment, intangible assets, and goodwill are generally tested for impairment using the discounted cash flow method (typically based on the value-in-use approach). The calculations are based on the cash flows derived from a five-year, medium-term business plan prepared by management. The budget is approved by the Supervisory Board, and the medium-term business plan for the following four years is acknowledged. This medium-term business plan is based on historical data as well as on assumptions regarding the expected future market performance. The Group’s planning assumptions are expanded by sectoral planning assumptions in this connection. Intra-Group evaluations are supplemented by external market studies. For CGUs affected by the technological transformation—particularly the major goodwill-carrying CGUs Steel Division and Railway Systems—the medium-term business plan was extended by an additional rough planning stage through to 2042. This was modeled based on the investment calculation that formed the basis for the Supervisory Board’s approval of the greentec steel investment in March 2023. This extended planning period ensures a steady-state scenario for these investments, which serves as the basis for determining the perpetual annuity. For details on the underlying assumptions, see the Note B.2. Significant judgments and estimates (the section entitled “Effects of sustainability strategy—decarbonization and green transformation”).

The determination of the perpetual annuity is based on country-specific growth figures derived from external sources. The capital costs are calculated as the weighted average cost of equity and borrowings using the capital asset pricing model (weighted average cost of capital (WACC)). The parameters used in connection with the determination of WACC are established on an objective basis. For both the determination of the expected inflation rate within the WACC and the growth rate of cash flows in the perpetual annuity, the projected and long-term expected inflation rate in the fifth year of the planning period is applied.

If there is any indication that an impairment loss recognized in prior periods for an asset, an asset CGU, or a group of CGUs (assets other than goodwill) no longer exists or may have declined, the recoverable amount must be estimated and any reversal of the impairment recognized. For further information, see Note D.11. Impairment losses and reversal of impairment losses.

IFRS 9 contains three measurement categories which—apart from a few measurement choices—must always be considered mandatory:

• Measured at amortized cost (Amortized Cost, AC);
• Measured at fair value through other comprehensive income (Fair Value through Other Comprehensive Income, FVOCI); and
• Measured at fair value through profit or loss (Fair Value through Profit or Loss, FVTPL).

Currently, measurement at FVOCI is not applied in the voestalpine Group.

Other financial assets

The other financial assets include non-current receivables and loans that are measured at amortized cost. Equity instruments held (especially equity investments) are measured at FVTPL, because the option of measurement at FVOCI was not excercised.

All other current and non-current financial assets (particularly securities) must be measured at FVTPL, because they are either allocated to a business model oriented toward active purchases and sales or do not meet the cash flow requirement (cash flows at specified dates comprising solely payments of interest and principal).

Trade and other receivables

Trade and other receivables are always recognized at amortized cost. Identifiable risks are mainly covered by buying credit insurance. Interest-free or low-interest receivables with a remaining term of more than one year are recognized at their discounted present value. Sold receivables are derecognized in accordance with the provisions of IFRS 9 (see Note D.29. Disclosures of transactions not recognized in the statement of financial position).

Trade receivables held for sale under an existing factoring agreement are measured at FVTPL, because they are allocated to the “sale” business model.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash at banks, and checks and are carried at amortized cost.

Loss allowance

The voestalpine Group recognizes loss allowances for expected credit losses on financial assets measured at amortized cost and on contract assets (portfolio loss allowance, stage 1, and stage 2). The Group applies the simplified approach to trade receivables and contract assets, pursuant to which any impairment determined with respect to such financial assets must, under certain conditions, equal the lifetime expected credit losses.

Historical data derived from actual historical credit losses in the past five years are used as the basis for the estimated expected credit losses. Differences between the economic conditions at the time the historical data were collected, the current conditions, and the Group’s view of the economic conditions over the expected maturities of the receivables must be considered. There is no significant concentration of default risks, given the existent credit insurances and a diversified customer portfolio that is dominated by very good to good credit ratings. Loss allowances on an individual basis are recognized for receivables with impaired credit ratings (stage 3). Receivables are classified as financial assets with impaired credit ratings when specific indicators of impairment are present (in particular, substantial financial difficulties on the part of the debtor, default or late payments, heightened risk of insolvency). Receivables are written off (derecognized) when they become uncollectible (especially when the counterparty becomes insolvent). A write-up to the amortized cost is made if the reasons for the write-down no longer exist. Note D.24. Financial instruments contains additional information on impairment.

Derivative financial instruments

The voestalpine Group uses derivative financial instruments exclusively for the purpose of hedging the interest rate, foreign currency, and raw materials price risks. Derivative financial instruments are measured at fair value through profit or loss. Hedge accounting, as defined in IFRS 9, is applied to some of the Group’s derivative financial instruments. Accordingly, gains or losses resulting from changes in the value of derivative financial instruments are recognized either in profit or loss or in other comprehensive income (for the effective portion of a cash flow hedge). Positive fair values from derivative financial instruments are shown in trade receivables, other receivables, and other assets. Negative fair values from derivative financial instruments are shown in trade and other payables.

Derivative transactions are marked to market on a daily basis by determining the value that would be realized if the hedging position were closed out (liquidation method). Observable currency exchange rates and raw materials prices as well as interest rates are the inputs for determining the fair values. The fair values are calculated based on the inputs using generally accepted financial mathematical formulas.

Unrealized profits or losses from hedged transactions are treated as follows:

• If the hedged asset or liability has already been recognized in the statement of financial position, or if an obligation not recognized in the statement of financial position is hedged, the unrealized profits and losses from the hedged transaction are recognized through profit or loss. At the same time, the hedged item is also measured at fair value, regardless of the initial valuation method used. Any resulting unrealized profits and losses are offset against the unrealized results of the hedged transaction in the income statement so that, in sum, only the ineffective portion of the hedged transaction is recognized in profit or loss for the period (fair value hedges).
• If a future transaction is hedged, the effective portion of the unrealized profits and losses accumulated up to the reporting date is recognized in other comprehensive income. Ineffective portions are recognized through profit or loss. If the transaction results in the recognition of a non-financial asset or a liability in the statement of financial position, the amount recognized in other comprehensive income is considered in the determination of the carrying amount of this item. Otherwise, the amount reported in other comprehensive income is recognized through profit or loss in keeping with the effectiveness of the future transaction or existent obligation (cash flow hedges).

Trade and other liabilities and liabilities from supplier finance arrangements

Liabilities (except liabilities from derivative financial instruments) are measured at amortized cost. The voestalpine Group has three different types of supplier finance arrangements. Trade payables affected by these agreements are reported in a separate item, “Liabilities from supplier finance arrangements.” This item primarily consists of liabilities from the bills of exchange payment program, which mainly applies to raw material and energy purchases. In addition, liabilities from reverse factoring and from a program involving a payment service provider are also reported under this item. For further information, see Note D.22. Liabilities from supplier finance arrangements.

Convertible bond

The convertible bond issued is separated into a liability component and an equity component. For this purpose, the fair value of the liability component was determined at the time of issue by applying a market interest rate of a comparable non-convertible bond. This amount is recognized as a financial liability and measured at amortized cost using the effective interest method until the maturity or conversion date. If the conversion right is exercised, the liability component is reclassified to equity with no effect on profit or loss. The equity component is recognized in the amount of the difference between the nominal value of the entire convertible bond and the fair value of the liability component. As part of equity, the carrying amount of this conversion option is not remeasured in subsequent years.

Income tax expense represents the total of current tax expenses and deferred taxes. The current tax expense is determined based on the taxable income using the currently applicable tax rates.

Pursuant to IAS 12, all temporary differences between the income tax base and the Consolidated Financial Statements are recognized as deferred taxes. Deferred tax assets on unused tax loss carryforwards are recognized to the extent that sufficient taxable (deferred) temporary differences between carrying amounts are available or to the extent that, based on the planning, sufficient taxable profit is expected to be available against which the loss carryforwards can be utilized.

In accordance with IAS 12.39 and IAS 12.44, deferred taxes on differences arising from investments in subsidiaries, associates, and joint ventures are generally not recognized. However, deferred tax liabilities are recognized for planned dividend distributions that are subject to withholding tax.

Deferred taxes are determined based on the applicable local income tax rates. Future fixed tax rates are also considered in the deferral. Deferred tax assets and deferred tax liabilities are offset when they relate to the same tax authority and when a claim to offset exists.

The Group applies the mandatory temporary exemption from accounting for deferred taxes in connection with Pillar 2. Accordingly, no deferred taxes are recognized in relation to income taxes under the Pillar 2 rules and no related information is disclosed.

On December 30, 2023, the Austrian legislator—where the parent company is domiciled—transposed the Pillar 2 rules into national tax law with effect from January 1, 2024 through the Minimum Taxation Reform Act (Mindestbesteuerungsreformgesetz). If the effective tax rate in a tax jurisdiction is below 15%, the application of the Pillar 2 rules may result in an additional tax burden. In addition to Austria, local Pillar 2 laws exist in various tax jurisdictions where the Group is economically active.

As of March 31, 2025, an actual tax expense of EUR 0.5 million was recognized as a result of such minimum tax laws. This amount primarily arises from the tax jurisdictions of the United Arab Emirates, Bulgaria, Lithuania, Romania, and Saudi Arabia. The impact of the Pillar 2 rules on the Group’s future earnings capacity is reviewed on an ongoing basis.

Inventories are measured at the lower of cost and the net realizable value. The net realizable value is the estimated selling price less estimated costs of completion and sale. In exceptional cases, the replacement cost of raw materials and supplies may serve as the basis of measurement in accordance with IAS 2.32.

The cost of inventories of the same type is determined using the weighted average price method or a similar method. The cost includes directly attributable costs and all prorated material and production overheads based on normal capacity utilization. Borrowing costs, general administrative expenses, and distribution costs are not capitalized.

Free allowances are measured at zero cost over the entire holding period, as the rights are allocated free of charge. Purchased emission allowances are recognized in current assets at their actual cost and written down to fair value if it is lower at the reporting date.

Amounts for CO₂ emissions allowances are included in other provisions. The measurement is based on the fair value for the part of the under-allocation and the carrying amount for the allowances already acquired.

The number of emission allowances has developed as follows:

For the total expenses for emissions allowances see further Note D.19. Provisions.

Pensions and other employee obligations include provisions for severance payments, pensions, and long-service bonuses and are recognized in accordance with IAS 19 using the projected unit credit method.

Actuarial gains and losses from severance and pension provisions are recognized directly in other comprehensive income in the year in which they are incurred. Actuarial gains and losses from provisions for long-service bonuses are recognized immediately in profit or loss.

Severance obligations

Employees of Austrian entities whose employment started before January 1, 2003, are entitled to severance payment if their employment contract is terminated by the employer or if they retire. The amount to be paid depends on the number of years of service and on the employee’s salary or wage at the time employment ends. A contribution-based system is provided for employees whose employment started after December 31, 2002. The contributions to external employee pension funds are recognized as expenses.

Defined contribution plans

Defined contribution plans do not entail further obligations on the company’s part once the premiums have been paid to the managing pension fund or insurance company.

Defined benefit plans

Under defined benefit plans, the company promises a given employee that they will be paid a pension in a specified amount. The pension payments begin upon retirement (or disability or death) and end upon the death of the former employee (or that of their survivors). Widow’s and widower’s pensions (equivalent to between 50% and 75% of the old age pension) are paid to the surviving spouse until their death or remarriage. Orphan’s pensions (equivalent to between 10% and 20% of the old age pension) are paid to dependent children until the completion of their education, but at most up to the age of 27.

Longevity thus is the central risk to the Group under the defined benefit pension plans. All measurements are based on the most recent mortality tables. Given a relative decrease or increase of 10% in mortality, the defined benefit obligation (DBO) of pensions changes by +3.4% or –3.0% as of the reporting date. Other risks such as the risk of rising medical costs do not materially affect the scope of the obligation.

Almost all the Group’s pension obligations concern claims that have already vested.

Austria

The amount of the pension is based either on a certain percentage of the final salary depending on the years of service or on a fixed, valorized amount per year of service. Most of the obligations under defined benefit plans is transferred to a pension fund, but the liability for any shortfall rests with the company.

Germany

There are different pension schemes in Germany, with benefit rules that can be described as follows:

• A certain percentage of the final salary depending on the years of service;
• A rising percentage of a fixed target pension depending on the years of service;
• A stipulated, fixed pension amount;
• A fixed, valorized amount per year of service that is linked to the average salary in the company;
• A fixed, valorized amount per year of service.

A small portion of the pensions are financed by insurance companies, but liability for the obligations themselves rests with the given companies.

In all countries with significant defined benefit plan obligations, the employee benefits are determined based on the following parameters:

Net interest expenses resulting from employee benefits are included under finance costs in the consolidated income statement.

Long-service bonus obligations

In most of the Group’s Austrian companies, employees are entitled to payment of a long-service bonus, which is based either on a collective agreement or on a provision in a works agreement. This is a one-time payment that is made when the respective service anniversary has been reached; depending on the length of service, the bonus generally equates to between one and three monthly salaries.

The amount recognized as a provision for warranties and other risks is calculated as the most reliable estimated amount that would be required to settle these obligations as of the reporting date. The statistical measure is the expected value. In turn, this is based on the probability of an event occurring in the light of past experience.

Provisions for onerous contracts are recognized when the unavoidable cost of meeting the given contractual obligations exceeds the expected revenue. Before recognizing separate provisions for an onerous contract, an entity recognizes an impairment loss on the assets associated with the given contract.

Provisions for restructuring costs must be recognized when a detailed formal plan for the restructuring has been established, and a valid expectation has been raised in those affected that the restructuring will be carried out—by starting to implement the plan or by communicating its main features to those affected by it. The amount of the provision is based on the best estimate of the expenditures necessarily entailed by the restructuring and not associated with the ongoing activities of the entity. This means that only direct expenditures arising from the restructuring are included in the measurement of the provision.

The assumptions underlying the provisions are reviewed on an ongoing basis. Actual figures may differ from the assumptions if these underlying parameters as of the reporting date do not develop as expected. As soon as better information is available, changes are recognized through profit or loss and the assumptions are adjusted accordingly.

Pursuant to the safeguard clause under IAS 37.92, information on provisions is not disclosed if doing so could seriously and adversely impact the company’s interests.

Contingent liabilities are present obligations arising from past events (where it is not probable that an outflow of resources will be required to settle the obligation) or possible obligations arising from past events (whose existence or non-existence depends on less certain future events that the company cannot control in full). A contingent liability must also be recognized if, in extremely rare cases, an existing liability cannot be recognized in the statement of financial position as a provision because the liability cannot be reliably estimated.

With respect to possible obligations, note that pursuant to IAS 37.92 information on contingent liabilities is not disclosed if doing so could seriously and adversely impact the company’s interests.

The employee shareholding scheme of the Group’s Austrian companies is based on the appropriation of a portion of employees’ salary and wage increases under collective bargaining agreements over several business years. The business year 2000/01 was the first time employees were granted voestalpine AG shares in return for a reduction by 1% of their salary or wage increase.

In each of the business years 2002/03, 2003/04, 2005/06, 2007/08, 2008/09, 2014/15, and 2018/19, between 0.3 percentage points and 0.5 percentage points of the collectively agreed pay increases were allocated to provide voestalpine AG shares to employees, in addition to the amounts previously agreed. The actual contribution amounts are based on the collective agreements in effect as of November 1 in the years 2002, 2003, 2005, 2007, 2008, 2014, and 2018, and reflect an annual increase of 3.5%. In the business years 2012/13, 2013/14, 2016/17, 2017/18, 2021/22, and 2022/23, additional contributions of between 0.27 percentage points and 0.50 percentage points of the collective pay increases for 2012, 2013, 2016, 2017, 2021, and 2022, respectively, were allocated to the employee shareholding scheme for Austrian Group companies that joined the program a later date.

The Works Council and each company enter into an agreement to implement the Austrian employee shareholding scheme. Shares are acquired by voestalpine Mitarbeiterbeteiligung Privatstiftung (a private foundation that manages the company’s employee shareholding scheme), which transfers the shares to employees according to the wages and salaries they have waived. The value of the consideration provided is independent of share price fluctuations. Therefore, IFRS 2 does not apply to the allocation of shares based on collective bargaining agreements that stipulate reduced salary or wage increases.

An international employee shareholding model developed for Group companies outside Austria was initially implemented in the business year 2009/10 in several companies in the United Kingdom and Germany. Due to the highly positive experience gained from these pilot projects, the model was expanded in these two countries and gradually introduced in the Netherlands, Poland, Belgium, the Czech Republic, Italy, Switzerland, Romania, Sweden, and Spain in subsequent business years. In the business year 2024/25, a total of 93 companies across these 11 countries participated in the international employee shareholding scheme.

As of March 31, 2025, the voestalpine Mitarbeiterbeteiligung Privatstiftung held approximately 14.7% (March 31, 2024: 14.3% for employees and 0.5% for former employees) of voestalpine AG’s share capital. The voting rights from shares held by former employees were retransferred to them in the business year 2024/25.