3.Scope of consolidation

3.1. Principles

Subsidiaries

All material entities that are directly or indirectly controlled by Energie AG Oberösterreich (subsidiaries) are fully consolidated according to IFRS 10 and included in the Consolidated Financial Statements. Control exists when the investor is exposed or has rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to influence the amount of the investor’s returns. In all cases, the control results from the equity instruments that are held (participating interests in the company and shares).

Joint arrangements

IFRS 11 outlines accounting by entities that jointly control an arrangement. Joint control involves the contractually agreed sharing of control. If the controlling parties have rights to the net assets of the arrangement (joint venture), the equity method is used for financial reporting. If the controlling parties have rights to the assets, and obligations for the liabilities, relating to the agreement (joint operations), the assets and liabilities, as well as the revenues and expenses, are recognised using proportionate consolidation.

Joint operations

Ennskraftwerke Aktiengesellschaft produces electricity with hydropower plants. Gas- und Dampfkraftwerk Timelkam GmbH supplies electricity from the operation of a combined cycle gas-turbine power plant.

The Group holds a strategic interest of 50% in both Ennskraftwerke Aktiengesellschaft and Gas- und Dampfkraftwerk Timelkam GmbH. The entities are not controlled by any party.

Under the existing electricity supply contracts, the investors purchase the electric energy produced by the Group companies, where the internal price is calculated on a pro-rata basis of the production costs, plus a corresponding profit margin. Due to the electricity supply contracts, the parties have rights to the assets attributable to the arrangements. As the arrangements' liabilities can only be settled with these cash flows, the parties have obligations for the liabilities relating to the joint arrangement. Ennskraftwerke Aktiengesellschaft and Gas- und Dampfkraftwerk Timelkam GmbH are therefore classified as joint operations according to IFRS 11.

The share of the assets and liabilities, as well as the revenues and expenses are reported in the Consolidated Financial Statements. The average share of the electricity supply (38%) is used to determine the share for the pro rata recognition of Ennskraftwerke Aktiengesellschaft. The share of the electricity procured from Gas- und Dampfkraftwerk Timelkam GmbH, amounting to 70%, is used for the consolidation of the company.

Joint ventures

Due to special agreements under company law, no control exists for “Papyrus” Altpapierservice Handelsgesellschaft m.b.H. (Salzburg), Papyrus Wertstoff Service GmbH (Bad Reichenhall, Germany) or for Fernwärme Steyr GmbH, despite holding a majority of the voting rights. These companies are controlled jointly with other investors and are therefore accounted for using the equity method.

Due to special agreements under company law, no control over ENAMO GmbH, ENAMO Ökostrom GmbH and Energie AG Oberösterreich Vertrieb GmbH & Co KG existed prior to 31 March 2019. ENAMO GmbH delivers electric energy to key account customers, Energie AG Oberösterreich Vertrieb GmbH & Co KG delivers electricity to private and business customers.

Energie AG Oberösterreich was the sole limited partner of Energie AG Oberösterreich Vertrieb GmbH & Co KG. ENAMO GmbH, a joint venture between Energie AG Oberösterreich Service- und Beteiligungsverwaltungs-GmbH and LINZ STROM GmbH, was general partner.

In line with IFRS 11, ENAMO GmbH, with the subsidiaries Energie AG Oberösterreich Vertrieb GmbH & Co KG and LINZ STROM Vertrieb GmbH & Co KG controlled by it, represented a joint arrangement or joint venture, as these companies were controlled jointly by Energie AG Oberösterreich and LINZ AG für Energie, Telekommunikation, Verkehr und Kommunale Dienste. In accordance with IFRS 11 i.c.w. IAS 28, these companies had to be recognised at equity in the Consolidated Financial Statements prior to 31 March 2019. Due to the contractually agreed shares of the revenues, this amounted to 80% for ENAMO GmbH, 100% for Energie AG Oberösterreich Vertrieb GmbH & Co KG, and 0% for LINZ STROM Vertrieb GmbH & Co KG.

Associated companies

Companies in which Energie AG Oberösterreich exercises a significant influence (associated companies) are consolidated using the equity method. Significant influence exists due to holdings of the entity's share capital. Salzburg AG für Energie, Verkehr und Telekommunikation is an infrastructure provider for energy, transport and telecommunication. Wels Strom GmbH is an energy utility and service company.

Structured entities

The Group has been leasing the property at Böhmerwaldstraße 3, Linz, where Group headquarters is located, from Power Tower GmbH since the year 2008. The Group holds a 1% share in the company.

The company is not financed by the Group. The leasing contract is for an indefinite period, cancellation by the lessee is only possible 20 years after the start of the contract at the earliest, under certain circumstances only after 23 years. The Group has the unilateral right, but no obligation, to acquire Power Tower GmbH 15 or 20 years after the commencement of the lease. Leasing payments are linked to interest rate developments. The Group is required to perform the ongoing maintenance of the property and fulfill all legal requirements that could also apply to the owner. There are no other additional risks. The leasing contract has been classified as an operating lease contract in line with IAS 17. Power Tower GmbH is to be considered a structured entity pursuant to IFRS 12, but the lack of control means that it is not to be included as a subsidiary in the Consolidated Financial Statements. The rental and leasing expenses include contingent leasing payments in the amount of EUR -1,957.8 thousand (previous year: EUR -1,965.7 thousand) calculated on the basis of variable interest rates.

Other disclosures

The changes in the scope of consolidation are as follows:

With effect on 1 April 2019 (acquisition date), the Group purchased the remaining 35% interest in ENAMO GmbH (Energy segment) in addition to the 65% equity interest held previously. This acquisition was necessary because the legal and market conditions had changed considerably and the organisational structure of ENAMO GmbH only offered limited potential to meet these challenges.

The acquisition resulted in the Group now holding 100% of interests in ENAMO GmbH and, via ENAMO GmbH, 100% of interests in ENAMO Ökostrom GmbH. ENAMO GmbH supplies electricity to key account customers, while ENAMO Ökostrom GmbH supplies electricity to commercial and private customers as well as municipalities. As their sole owner, the Group controls ENAMO GmbH and ENAMO Ökostrom GmbH with effect from 1 April 2019.

The Group was also the sole limited partner of Energie AG Oberösterreich Vertrieb GmbH & Co KG until 31 March 2019, but did not exercise control over that company due to ENAMO GmbH being its sole general partner (previously consolidated at equity). Acquisition of the remaining interests in ENAMO GmbH on 1 April 2019 resulted in the Group also gaining control over Energie AG Oberösterreich Vertrieb GmbH & Co KG. The company supplies electricity to private and commercial customers as well as business customers.

Gaining control over the above-mentioned companies constitutes a corporate merger pursuant to IFRS 3. The equity interests previously held in the acquired companies were remeasured at their fair values as of the acquisition date (successive corporate merger). The fair values for ENAMO GmbH and ENAMO Ökostrom GmbH were derived from the purchase price paid for the acquired interests after deduction of synergy effects included in the purchase price. The fair value for Energie AG Oberösterreich Vertrieb GmbH & Co KG was determined using the expected cash flow method (see section 5.1). The result from the remeasurement of the previously held equity interests' fair value amounts to EUR 48.2 million and was recognised in the other operating income.

The purchase price allocation entailed recognition of a customer base with a fair value of EUR 41.7 million. With respect to trade receivables and receivables from affiliated companies, the short maturities meant that their carrying amounts represent a realistic estimate of their fair values and correspond to the receivables' gross values.

The goodwill is essentially based on synergy effects and future opportunities for income generation. The goodwill is allocated to the cash generating unit “Sales”, amounts to EUR 20.7 million as of the acquisition date and as of 30 September 2019 and is not tax-deductible.

If the acquisition had hypothetically taken place at the beginning of the current fiscal year, the consolidated net result would have come in at EUR 56.2 million and revenues at EUR 1,921.3 million respectively.

Energie AG Oberösterreich Vertrieb GmbH (formerly: EAG WSGT GmbH) was established on 7 December 2018 as a sales company for electricity, gas, heat and telecommunication services. This company is fully consolidated in the Consolidated Financial Statements (Energy segment). The reporting year also saw the disposal of Komunala ODTOK d.o.o. (Slovenia, Waste Management segment). The effects of this disposal are immaterial.

Joint ventures

The Statement of Financial Position and the Statement of Income of the joint ventures (100%) are as follows:

Associated companies

The Statement of Financial Position and the Statement of Income of the associated companies (100%) are as follows:

Restructuring measures took place in the second half year of the 2018/2019 fiscal year. The restructuring measures aim at consolidating the sales activities (electricity, gas, heat, telecommunications services) in Energie AG Oberösterreich Vertrieb GmbH. The electricity and heat generation segments were consolidated in Energie AG Oberösterreich Erzeugung GmbH (previously: Energie AG Oberösterreich Kraftwerke GmbH). The heating companies in the Czech Republic were merged with the Water segment companies in the Czech Republic, forming the Czech Republic segment now. Energie AG Teplo Bohemia s.r.o. was merged with ENERGIE AG BOHEMIA s.r.o.

The 65% participating interest stake in ENAMO GmbH held by Energie AG Oberösterreich Service- und Beteiligungsverwaltungs-GmbH was transferred to Energie AG Oberösterreich, which fully owns ENAMO GmbH. The general partner's interest in Energie AG Oberösterreich Vertrieb GmbH & Co KG held by ENAMO GmbH was transferred to Energie AG Oberösterreich Vertrieb GmbH. The subsequent contribution of Energie AG's limited partner stake in Energie AG Oberösterreich Vertrieb GmbH & Co KG to Energie AG Oberösterreich Vertrieb GmbH will terminate Energie AG Oberösterreich Vertrieb GmbH & Co KG and the company's assets will transfer to Energie AG Oberösterreich Vertrieb GmbH. The Sales business unit of Energie AG Oberösterreich Telekom GmbH was spun off to Energie AG Oberösterreich Vertrieb GmbH with retrospective effect on 1 October 2018. The participating interests in Energie AG Oberösterreich Renewable Power GmbH, Windpower EP GmbH, ECOFE S.R.L. and Salvatonica Energia S.R.L. held by Energie AG Oberösterreich Power Solutions GmbH were spun off to Energie AG Oberösterreich Kraftwerke GmbH. This was followed by merging Energie AG Oberösterreich Power Solutions GmbH with Energie AG Oberösterreich Vertrieb GmbH. The participating interest in Energie AG Teplo Bohemia s.r.o. (Energy segment, Czech Republic) held by Energie AG Oberösterreich Wärme GmbH (Energy segment) was spun off to Energie AG Oberösterreich Wasser GmbH (Czech Republic segment). As the Water segment now also includes heat generation in the Czech Republic, it was renamed Czech Republic segment. The participating interests in Energie-Contracting-Steyr GmbH, Fernwärme Steyr GmbH, Bioenergie Steyr GmbH, Geothermie-Wärmegesellschaft Braunau-Simbach mbH, Geothermie-Fördergesellschaft Simbach-Braunau mbH and Energie Ried Wärme GmbH held by Energie AG Oberösterreich Wärme GmbH were spun off to Energie AG Oberösterreich Kraftwerke GmbH (now: Energie AG Oberösterreich Erzeugung GmbH). Following the spin-off of the heat generation and heating grids business unit to Energie AG Oberösterreich, Energie AG Oberösterreich Wärme GmbH was merged with Energie AG Oberösterreich Vertrieb GmbH. This was followed by spinning off the heat generation and heating grid business unit to Energie AG Oberösterreich Kraftwerke GmbH. The non-current assets are retained. Energie AG Oberösterreich Kraftwerk Labenbach GmbH was merged with Energie AG Oberösterreich.

3.2.Group companies