Report on the Consolidated Financial Statements
We have audited the Consolidated Financial Statements of
Energie AG Oberösterreich,
and its subsidiaries (“the Group”), comprising the Consolidated Statement of Financial Position as of 30 September 2020, the Consolidated Statement of Income, the Consolidated Statement of Comprehensive Income, the Consolidated Cash Flow Statement and the analysis of the Group's equity for the fiscal year ending on that day, as well as the Notes to the Consolidated Financial Statements.
It is our opinion that the Consolidated Financial Statements comply with the statutory requirements and offer an adequately accurate representation of the asset and financial position of the Group as at 30 September 2020, as well as the Group's earnings position and cash flows during the fiscal year ending as of that date, in accordance with the International Financial Reporting Standards (IFRS), as they are to be applied in the EU and the additional requirements stipulated in § 245a of the Austrian Commercial Code (UGB).
Basis for our audit opinion
We have conducted our audit in accordance with EU Directive No. 537/2014 (AP Directive hereinafter) and the Austrian Principles of Proper Auditing of Financial Statements. These principles require the application of the International Standards on Auditing (ISA). Our responsibilities under these regulations and standards are set out in more detail in Section “Responsibilities of the Auditor in Auditing the Consolidated Financial Statements” of the Audit Certificate. We are independent from the Group in compliance with the Austrian corporate law and professional regulation and have discharged our other professional duties in accordance with these requirements. We are of the opinion that the audit evidence obtained by us is sufficient and suitable for forming the basis for our audit opinion.
Highly significant audit findings
Audit findings bearing special significance are findings concerning circumstances that, in our professional judgement, were the most significant for our audit of the Consolidated Financial Statements for the fiscal year. These findings were considered in the context of our audit of the Consolidated Financial Statements in their entirety as well as in forming our audit opinion, which we do not present separately for these findings.
Impairment of goodwill
Please refer to the Notes – Impairment of goodwill and Intangible assets and property, plant and equipment.
Risks inherent in the Annual Financial Statements
The Consolidated Financial Statements as of 30 September 2020 of Energie AG Oberösterreich report goodwill assets of EUR 86.2 million (previous year: EUR 86.2 million). These assets were to the largest extent allocated to the cash generating units “Waste Management Austria”, “Sales” and “CEVAK a.s.”. Energie AG Oberösterreich thus conducts impairment testing for these goodwill assets at least once in each year and in cases where indications for an impairment exist.
This is done by Energie AG Oberösterreich using the discounted cash flow method to determine the cash generating units' recoverable amount. The result of impairment testing largely depends on the appraisal of the future cash flows as well as the applied discounting rates. The result of impairment testing for the goodwill assets is therefore essentially based on estimations by the management and thus subject to uncertainties.
The Consolidated Financial Statements are therefore exposed to the risk of inadequate assumptions and estimates having a significant impact on the carrying amounts of goodwill assets reported in the Consolidated Statement of Financial Position, as well as the operating result in the Consolidated Statement of Income.
Our auditing approach
We have assessed the impairment of these goodwill assets as follows:
- To form an opinion about the suitability of the underlying internal planning, we examined the planning process, the assumptions for growth rates and the operational results in discussions with the responsible managers in the company and verified the planning data on which the measurement is based against the current budget figures approved by the Supervisory Board, as well as against the mid-term planning approved by the Management Board.
- We have assessed adherence to the budget by comparing the budgets of previous years with the reported actual figures.
- Our valuation experts furthermore examined the methodology used for impairment testing and determination of the discounting rates on their conformity with the applicable standards and reviewed the accuracy of the calculation method.
- We have also examined whether the explanations pertaining to impairment testing for goodwill assets contained in the Consolidated Financial Statements are adequate.
Impairment of cash generating units
For further details, please refer to the Notes – Impairment of other intangible assets and property, plant and equipment and Intangible assets and property, plant and equipment.
Risks inherent in the Annual Financial Statements
Property, plant and equipment with a carrying amount of EUR 1,980.60 million and intangible assets with a carrying amount of EUR 149.4 million (excluding goodwill)represent around 69.2% of the assets reported in the Consolidated Statement of Financial Position of Energie AG Oberösterreich. For these assets, impairments in a total amount of EUR 14.3 million were recognised through profit or loss in fiscal year 2019/2020.
Energie AG Oberösterreich assesses whether there are indications for an impairment or impairment reversal for all cash generating units. If indications exist, the recoverable amount for the concerned cash generating units is ascertained and the carrying amount of the respective cash generating unit is increased or decreased to match the recoverable amount.
This is done by Energie AG Oberösterreich using the discounted cash flow method to determine the cash generating units' recoverable amount. The result of impairment testing largely depends on the appraisal of the future cash flows as well as the applied discounting rates. The result of impairment testing for intangible assets and property, plant and equipment is therefore essentially based on estimations by the management and thus subject to uncertainties.
The Consolidated Financial Statements are therefore exposed to the risk of inadequate assumptions and estimates having a significant impact on the carrying amounts of intangible assets and property, plant and equipment reported in the Consolidated Statement of Financial Position, as well as the operating result in the Consolidated Statement of Income.
Our auditing approach
Our assessment of the impairment of intangible assets and property, plant and equipment presents as follows:
- We have examined the Group's analysis of external and internal indicators for an impairment or recovery in value on the basis of a review of random samples.
- Where an indicator for a potential impairment or impairment reversal was present, we assessed the Company's impairment testing for cash generating units for which a realistic change in the measurement assumptions and methodology would significantly affect the Annual Financial Statements as follows.
Our approach to reviewing the essential assumptions and applied methodology is in principle identical to our approach to the impairment testing of goodwill assets. We refer to the audit measures taken with regard to this audit area of extraordinary significance.
Responsibilities of the legal representatives and the Audit Committee for the Consolidated Financial Statements
The legal representatives are responsible for compiling the Consolidated Financial Statements in compliance with the IFRS rules applicable in the EU and the additional requirements stipulated in § 245a of the Austrian Commercial Code (UGB) and for assuring that they provide a true and fair view of the Group's assets, liabilities, financial position and profit or loss. The legal representatives are further responsible for the internal controls deemed necessary by them for preparing a set of Consolidated Financial Statements that is free from significant intentional or unintentional misrepresentations.
In compiling the Consolidated Financial Statements, the legal representatives have the duty to form an opinion on the Group's ability to continue its business operations, to disclose any relevant circumstances relating to the continuation of the business operations and to base their considerations on the principle of continued business operations, unless they intend to liquidate the Group, cease business operations or find themselves in lack of any viable alternative to such course of action.
The Audit Committee is responsible for supervising the Group's accounting processes.
Responsibilities of the auditors for the audit of the Consolidated Financial Statements
Our objective is to assure an adequate degree of certainty on whether the Consolidated Financial Statements in their entirety are free from significant intentional or unintentional misrepresentations and to issue an Audit Certificate that reflects our audit findings. An adequate degree of certainty means a high degree of certainty, but is not an absolute guarantee that the audit conducted in accordance with the AP Directive and the Austrian Principles of Proper Auditing, which require application of ISA, has in fact identified all significant misrepresentations that may be contained in the audited financial statements. Misrepresentations may result from malicious acts or misconceptions and are deemed significant if they could, individually or collectively, have a potential influence on the commercial decisions made by their readers on the basis of these Consolidated Financial Statements.
In conducting our audit in accordance with the AP Directive and the Austrian Principles of Proper Auditing, which require application of ISA, we form our opinions on the basis of our professional judgement and maintain a critical view of the circumstances presented to us throughout the entire course of the audit.
We further adhere to the following:
- We identify and assess the risks stemming from any significant intentional and unintentional misrepresentations in the financial statements, plan our audit activities as a response to these risks, perform our audit activities and gain sufficient and suitable audit evidence to serve as the basis for our audit findings. The risk of significant misrepresentations resulting from malicious acts remaining undetected is higher than the risk resulting from misconceptions, because malicious acts may include fraudulent acts, forgery, intentional omissions, deceiving representations or the circumvention of internal controls.
- In order to plan audit activities that adequately address the prevailing circumstances, we gain an understanding of the system of internal controls bearing relevance for our audit, but without the objective of forming an audit opinion on its effectiveness.
- We evaluate the appropriateness of the accounting methods applied by the legal representatives, as well as the tenability of values estimated by the legal representatives and represented in the accounts and the disclosures associated with such estimates.
- We draw inferences about the appropriateness of the legal representatives operating under the accounting principle of continued business operations, as well as, on the basis of the evidence presented to us for our audit, whether any events or circumstances are subject to a considerable uncertainty that would give rise to doubts about the viability of the Group continuing its business operations. If we arrive at the conclusion that a material uncertainty exists, we are obliged to draw attention to the associated disclosures contained in the Consolidated Financial Statements in our Audit Certificate, or to modify our Audit Certificate if these disclosures are inappropriate. We draw our conclusions on the basis of the audit evidence gathered by the date of our audit certificate. Future events or circumstances may however result in the Group resolving to discontinue its business operations.
- We form an opinion on the overall presentation, structure and contents of the Consolidated Financial Statements including the disclosures therein, as well as on whether they present a true and fair view of the underlying business transactions and events.
- We issue our audit opinion on the Consolidated Financial Statements on the basis of sufficient and suitable audit evidence for the financial information of the business units or the business activities of the Group. We are responsible for managing, supervising and performing the audit of the Consolidated Financial Statements. We bear the sole responsibility for our audit opinion.
- We consult with the Audit Committee on matters such as the planned scope and timing of the audit as well as significant audit findings, including any significant defects in the system of internal control system detected during our audit.
- We also issue a statement to the Audit Committee confirming our adherence to the relevant professional requirements pertaining to our independence, and exchange information with the Audit Committee on all relationships and other circumstances that may reasonably be expected to affect our independence and, if applicable, any associated precautionary measures.
- From the circumstances discussed with the Audit Committee, we determine those that had the highest significance for the audit of the Consolidated Financial Statements for the fiscal year and are therefore the circumstances bearing special audit significance. We describe these circumstances in our audit certificate, unless public disclosure of a certain circumstance is prohibited by law or other legal requirement, or determine in very rare cases that certain circumstances should not be disclosed in our audit certificate because the negative implications of disclosing them could reasonably be expected to exceed the benefits for the public interest.
Other statutory and legal requirements
Report on the Group Management Report
Austrian corporate law requires an assessment of whether the Group Management Report reconciles with the Consolidated Financial Statements and whether it was compiled in accordance with the applicable legal requirements.
The legal representatives are responsible for compiling the Group Management Report in compliance with the requirements under Austrian corporate law.
We have conducted our audit on the basis of the professional principles for the auditing of the Group Management Report.
We have formed the opinion that the Group Management Report complies with the applicable legal requirements, that it contains accurate information pursuant to § 243a UGB, and that it reconciles with the Consolidated Financial Statements.
Our audit of the Consolidated Financial Statements and the knowledge gained about the Group and its business environment has not identified any material misrepresentations in the Group Management Report.
The legal representatives are responsible for the other required disclosures. Such other disclosures encompass all information presented in the Group annual report, with the exception of the Consolidated Financial Statements, the Group Management Report and the Audit Certificate. We expect to be provided with the Group Annual Report after the date of this Audit Certificate.
These other disclosures are not included in our audit opinion for the Consolidated Financial Statements and we give no assurance for their accuracy.
The audit of the Consolidated Financial Statements requires us to read these other disclosures as soon as they are made available and to decide whether, considering our understanding formed during the audit, they represent a material inconsistency to the Consolidated Financial Statements or are otherwise misrepresented in a significant way.
Additional information pursuant to Article 10 AP Directive
Our firm was elected auditors of the financial statements by the General Meeting held on 18 December 2019. On 21 February 2020, the Supervisory Board has granted our firm the mandate to audit the company's financial statements for the fiscal year ending on 30 September 2020.
We have been licensed auditors of the Group's Consolidated Financial Statements for more than 25 years.
We hereby declare that our audit opinion presented in section “Report on the Consolidated Financial Statements” reconciles with the additional report to the Audit Committee pursuant to Article 11 of the AP Directive.
We hereby declare that we have not performed any prohibited non-audit services (Article 5 para 1 AP-VO) and that we have maintained our independence from the audited company during the conduct of our audit of the financial statements.
Mrs Mag. Gabriele Lehner is the auditor in charge of the audit of the Annual Financial Statements.
Linz, 2 December 2020
KPMG Austria GmbH
Chartered Accountants and Tax Consultants
Mag. Gabriele Lehner
The Consolidated Financial Statements with our Audit Certificate may only be published or disclosed in the format certified by us. This Audit Certificate refers exclusively to the full original Consolidated Financial Statements and the Group Management Report issued in German. The provisions of § 281 para 2 of the Austrian Commercial Code (UGB) must be observed for any other versions.