C. Consolidation

C.1. METHODS OF CONSOLIDATION

SUBSIDIARIES

The consolidated Group is defined in accordance with IFRS requirements. In addition to voestalpine AG as the parent company, the Consolidated Financial Statements of the voestalpine Group include all subsidiaries controlled by the parent. The annual financial statements of all fully consolidated entities are prepared as of March 31 using uniform accounting policies. Entities controlled by voestalpine AG that are not included in the Consolidated Financial Statements of voestalpine AG are negligible, both individually and collectively. The subsidiaries are listed in the “Investments” appendix to the Notes.

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.

Upon initial consolidation, assets, liabilities and contingent liabilities are measured at their fair value as of the acquisition date. Any excess of the consideration transferred over the remeasured net of the assets acquired and liabilities assumed is recognized as goodwill. If the net of the assets acquired and liabilities assumed exceeds the cost, the difference is recognized in profit or loss in the acquisition period after reassessing the purchase price allocation. The hidden reserves and/or hidden losses attributed to the non-controlling interests are also accounted for.

The voestalpine Group applies the partial goodwill method. Accordingly, non-controlling interests are recognized at the acquisition date at their proportionate share of the remeasured net of the assets acquired and liabilities assumed without consideration of proportionate goodwill. Non-controlling interests are presented separately in the Consolidated Statement of Financial Position from the equity attributable to equity holders of the parent. The share of non-controlling interests in the profit after tax and in the total comprehensive income for the period is disclosed in the Consolidated Statement of Comprehensive Income.

In accordance with IFRS 3, acquired companies are subsequently 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.

All intra-Group interim results, receivables, and liabilities as well as income and expenses are eliminated.

Equity transactions with non-controlling interests that do not result in a loss of control are accounted for as transactions between owners. Any difference between the consideration paid for the transferred interests and the carrying amount of the non-controlling interests is recognized directly in equity.

Put options granted to non-controlling shareholders in exchange for their shares in Group companies are recognized as liabilities in the statement of financial position, measured 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 measurement of the liability arising from the put option is recognized through profit or loss.

For liabilities from oustanding put options, the discounted cash flow method is applied for valuation purposes, taking into account the contractual maximum limits. The planning assumptions in the medium-term business plan, particularly the discount rate, are the input factors in the discounted cash flow method.

ENTITIES INCLUDED USING THE EQUITY METHOD

Investments in associates and joint ventures are accounted for using the equity method in the consolidated financial statements of voestalpine AG. The ownership interests are listed in the “Investments” appendix to the Notes.

Associates are entities over which the voestalpine Group has significant influence, typically through participation in the entities’ financial and operating policy decisions, without having control or joint control over those decisions. 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.

Acquisitions of interests in companies accounted for using the equity method are initially recognized at cost. The difference between the acquisition cost and the share of the fair value of the net assets of the investee is recognized as goodwill within the carrying amount of the investment. If the acquisition cost is lower than the share of the fair value of the net assets of the investee, the difference is recognized in profit or loss in the acquisition period. In subsequent periods, the initial acquisition cost is adjusted for the Group’s share of the investee’s profit or loss, under consideration of the amortization of hidden reserves and losses identified in the purchase price allocation, less dividends received as well as the Group’s share of other comprehensive income, and other changes in equity. Furthermore, if there is an indication of impairment, the entire carrying amount of the investment is tested for impairment.

For entities included using the equity method (associates and joint ventures), local accounting policies and different reporting dates (see “Investments” appendix to the Notes) were maintained for time reasons and cost/benefit considerations if the relevant amounts were immaterial.

OTHER EQUITY INVESTMENTS

Subsidiaries, joint ventures, and associates that are not included in these Consolidated Financial Statements by way of full consolidation or the equity method are recognized in other financial assets and other equity investments. These other assets are measured at amortized cost.

NON-CURRENT ASSETS HELD FOR SALE, DISPOSAL GROUPS, AND DISCONTINUED OPERATIONS

The Group classifies non-current assets or disposal groups as held for sale if the carrying amount of the assets or disposal groups will be recovered principally through a sale transaction rather than through continuing use. A disposal group is classified as discontinued operations once the business unit is either classified as held for sale or it has already been disposed of and if the business unit represents a separate, material division.

Assets held for sale are measured at the lower of the carrying amount and fair value less costs to sell. To the extent that any impairment requirement exceeds the non-current assets, other assets within the disposal group are also written down accordingly.

Upon consolidation, the assets and liabilities are shown separately in the line items, “assets held for sale” and “liabilities held for sale,” in the statement of financial position. In the consolidated income statement, results from discontinued operations are shown separately from those of continuing operations, and the entries for the previous year are adjusted accordingly. In the consolidated statement of cash flows, cash flows from discontinued operations are shown separately in the item “thereof.”

C.2. Changes in the scope of consolidation

DEVELOPMENT OF THE SCOPE OF CONSOLIDATION

The number of entities included in the Consolidated Financial Statements has developed as follows during the business year:

DISPOSALS AND OTHER CHANGES IN THE SCOPE OF CONSOLIDATION

The following entities were deconsolidated during the business year 2024/25:

DISCONTINUED OPERATIONS AND DISPOSAL GROUPS

The result from discontinued operations reported in the previous year related to the Texas unit, USA, which was sold with closing on June 30, 2022.

On March 14, 2024, the Management Board decided to sell Buderus Edelstahl (consisting of the two asset CGUs Buderus Edelstahl ohne Schmiede with the steel mill, rolling lines, drop forge, and Buderus Edelstahl Schmiede consisting of the open-die forging, which are mainly involved in the production of drop-forged parts, tool steel, high-grade engineering steel, and rolled products) in the High Performance Metals segment. The decision to sell was made as the High Performance Metals division intends to focus on its core business of high-alloy steel. Buderus Edelstahl, with its range of low-alloy steel products, no longer fitted into the portfolio.

The criteria for classification as “held for sale” were met in the fourth quarter of the business year 2023/24, and Buderus Edelstahl was classified as a disposal group by management until the transaction was completed on January 31, 2025. As of March 31, 2024 (comparative period 2023/24), an impairment loss of EUR 86.2 million was recognized in other operating expenses, resulting in the full write-down of non-current assets. In addition, EUR 91.6 million in impairment of current assets was recognized in the cost of sales. The proportionate goodwill allocated as part of the reclassification in accordance with IFRS 5 in the amount of EUR 2.9 million was fully impaired.

As of September 30, 2024, based on binding offers received and the ensuing purchase price negotiations further impairment losses totaling EUR 82.6 million were required, of which EUR 81.0 million was allocated to current assets and recognized in cost of sales. EUR 1.6 million related to non-current assets and was recognized in other operating expenses, resulting in the full write-down of non-current assets capitalized during the current business year. Between September 30, 2024, and the closing date on January 31, 2025, additional non-current assets totaling EUR 5.0 million were capitalized and subsequently fully impaired. In total, impairment losses recognized in the 2024/25 business year amounted to EUR 6.6 million for non-current assets (recognized in other operating expenses) and EUR 76.0 million for current assets (recognized in cost of sales).

On October 22, 2024, negotiations for the sale as an asset deal were concluded with the signing of a purchase agreement. The buyer, Mutares SE & Co. KGaA, agreed to acquire the key operating assets and liabilities of the stainless steel company based in Wetzlar, Germany.

At the closing of the transaction on January 31, 2025, voestalpine made a payment of EUR 47.0 million and transferred the main operating assets and liabilities to the buyer. In addition, it was agreed that EUR 6.9 million would be repaid to voestalpine upon receipt of electricity price subsidies. As a result, the transaction reflects a negative purchase price of EUR 40.1 million.

The following table shows the main groups of assets and liabilities disposed of as part of an asset deal involving the Buderus Edelstahl business, the result from the sale of the disposal group and the net cash outflow:

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 2024/25:

The additions of fully consolidated entities to the scope of consolidation include one acquisition, and one newly established entity.

On July 10, 2024, voestalpine Böhler Welding Group GmbH, Germany, a company of the Metal Engineering Division, acquired control of over 90% of the shares in Italfil S.p.A., a premium welding wire manufacturer based in Gazzo Padovano, Italy, with around 110 employees.

With the acquisition of Italfil S.p.A., the Welding Division is taking another step toward becoming a full-service provider for the “perfect weld seam”. The in-house production range is thereby significantly supplemented by unalloyed and low-alloy solid wires, which are used in particular for demanding, highly automated welding applications and for surface protection.

This acquisition has the following impact on the Consolidated Financial Statements:

The above table contains goodwill of EUR 8.5 million, that results from the company’s earnings potential and the effects of the integration and expansion of the overall portfolio of the Welding business unit. In accordance with IFRS rules, this goodwill may not be allocated to items that can be capitalized individually and is allocated to the goodwill-carrying Welding business unit. It is not expected that portions of the recognized goodwill will be deductible for corporate tax purposes.

Since its initial consolidation, the acquisition has contributed revenue of EUR 20.7 million to consolidated revenue. Its share of the Group’s profit after tax for the same period amounted to EUR –1.0 million. The reported consolidated revenue would have been EUR 9.9 million higher and the reported Group’s profit after tax would have been EUR 1.1 million lower if the acquisitions had been consolidated as of April 1, 2024.

As part of the first-time full consolidation of Italfil S.p.A., fair values for trade receivables in the amount of EUR 9.2 million (gross carrying amount: EUR 9.2 million) and other receivables in the amount of EUR 1.6 million (gross carrying amount: EUR 1.6 million) were recognized. Receivables that are probably uncollectible are considered immaterial.

In August 2024, as part of an asset deal, voestalpine Railway Systems Nortrak LLC, USA, a company of the Metal Engineering Division, acquired the facilities for the production of turnouts and turnout components with around 75 employees at the Knoxville, Tennessee, USA site from Wabtec Components LLC. This asset deal accelerates the necessary capacity expansions for the growing North American rail market and strengthens the strategic market position on the US East Coast.

The asset deal has the following impact on the Consolidated Financial Statements:

C.3. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

In the reporting period, the total of all non-controlling interests was EUR 239.9 million (March 31, 2024: EUR 311.2 million), of which EUR 140.9 million (March 31, 2024: EUR 215.0 million) is attributable to voestalpine Tubulars GmbH & Co KG and EUR 22.6 million (March 31, 2024: EUR 25.9 million) to CNTT Chinese New Turnout Technologies Co., Ltd. The remaining non-controlling interests, considered individually, may be considered immaterial to the Group.

Summarized financial information for each subsidiary with non-controlling interests that are material to the Group is shown below. The figures correspond to the amounts prior to the elimination of intra-Group transactions.

In the reporting period, EUR 0.2 million was paid for the acquisition of non-controlling interests. Non-controlling interests totaling EUR 0.1 million were derecognized, and an amount of EUR 0.1 million was recognized directly in equity.

C.4. ENTITIES INCLUDED USING THE EQUITY METHOD

SHARES IN MATERIAL ASSOCIATES

Following the sale of 80% of its equity interest in the ArcelorMittal Texas HBI Group (formerly the voestalpine Texas Group) domiciled in the State of Delaware, USA, voestalpine now holds a 20% share and exercises substantial influence over this group of companies. This share is accounted for at equity.

The deal was closed on June 30, 2022. Control was transferred to the buyer as of said date. This was followed by the deconsolidation of the subsidiary and its initial recognition as an associate. The ArcelorMittal Texas HBI Group operates a direct reduction plant and supplies hot briquetted iron (HBI) to the voestalpine Group. The company is not a listed entity.

The following tables contain the financial data on the ArcelorMittal Texas HBI Group.

SHARES IN IMMATERIAL JOINT VENTURES

In each case, this information relates to the equity interests of the voestalpine Group in immaterial joint ventures and is broken down as follows:

voestalpine Camtec GmbH holds an interest of 51.0% in Jiaxing NYC Industrial Co., Ltd. The entity’s Articles of Incorporation require at least one vote from the other partner for all material decisions (budget, investments). It is assumed, therefore, that control is not exercised over the entity despite the 51.0% interest.

SHARES IN IMMATERIAL ASSOCIATES

This information relates to the interests of the voestalpine Group in associates and is broken down as follows:

Associates and the interests in them are presented in the “Investments” appendix to the Notes.