Consolidation
The financial statements of the domestic and foreign companies included in the consolidated group are drawn up in accordance with uniform methods of accounting and valuation. The annual financial statements of the domestic and foreign Group companies are adapted accordingly.
Subsidiaries
Entities whose financial and operating policies are controlled by the Group constitute subsidiaries.
The consolidated financial statements include the financial statements of the parent and entities (including structured entities) over which the Group has control. An entity is considered to be under control if the following criteria are met:
- The parent has power over the investee.
- The parent is exposed to variable returns on the investment.
- The parent has the ability to affect the returns from the investment through its power over the investee.
Control over an entity is reassessed if facts and circumstances indicate that there are changes to one or more of the three elements of control discussed above.
Owning a majority of the voting rights is not always necessary to have power and control over an investee. Control can be achieved through other rights or contractual agreements which give the parent the possibility to affect the returns of the investee.
A subsidiary is included in the consolidated financial statements from the date on which the parent acquired control. Conversely, the entity is deconsolidated when control ends.
Capital consolidation is performed in accordance with IFRS 3 using the acquisition method. The acquisition costs of the subsidiary are measured as the sum of the fair values of assets given, equity instruments issued and liabilities assumed. Contingent considerations are also measured at their fair value from the date of the business combination. Later deviations from this value are recognised in profit or loss. Transaction costs are also recognised immediately in profit or loss.
Non-controlling interests are recognised based on their proportional interest in the net assets of the acquired entity (partial goodwill method). The option of recognising non-controlling interests at fair value is not used.
In business combinations achieved in stages (step acquisitions), the existing equity interest of the entity is remeasured at fair value from the date of acquisition. The resulting profit or loss is recognised in the income statement.
The acquisition costs, contingent considerations, existing equity interests and non-controlling interests are to be compared with all identifiable assets and liabilities of the subsidiary measured at fair value. Any remaining difference on the assets side is classified as goodwill. Differences arising from the capital consolidation on the liabilities side are recognised immediately in profit or loss following another review. Goodwill is subjected to impairment testing in accordance with IAS 36 at least once a year.
In the 2023 financial year, T€ 53,258 (2022: T€ 0) in goodwill arising from capital consolidation was recognised as assets. Impairment losses on goodwill in the amount of T€ 7,454 (2022: T€ 6,700) were recognised.
Transactions with non-controlling interests that do not result in loss of control
Differences arising from the acquisition or disposal of investments in affiliated entities without acquisition or loss of control are recognised in full in equity outside profit or loss.
Disposal of subsidiaries
When control over a subsidiary is lost, the assets and liabilities of the former subsidiary are derecognised. The resulting profit or loss attributable to the former controlling interest is recognised in profit or loss. The amounts recognised in other comprehensive income are reclassified to the income statement or recognised directly against profit or loss brought forward. The profit or loss from deconsolidation is recognised as an amount in other operating income or expense.
When control over a subsidiary is lost, any remaining investment is remeasured at fair value. The difference to the existing carrying amounts is recognised in profit or loss. Associates, joint arrangements or financial assets are initially recognised at this fair value. All previous amounts recognised to date in other income are accounted for as if the assets and liabilities of the affected entities had been sold directly.
When a real estate project company is deconsolidated and sold under a share deal in the course of the project development business, the disposal profit is not presented as a deconsolidation gain but - from an economic point of view - as gross revenue and expenses from the project development. This ensures that asset deals and share deals are presented in the same way in the project development business.
Structured entities
Structured entities are entities that are not controlled by voting rights, but mainly through contractual arrangements for a specific business purpose. The business purpose is usually restricted to a narrow field of activity. Structured entities typically have little equity capital and rely on owner financing. There are no structured entities within the STRABAG SE Group.
Associates
Entities in which the Group exercises significant influence constitute associates. This is generally the case with a holding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method and recognised in the item equity-accounted investments. The acquired investment is initially measured at cost. Any differences that arise are treated according to the principles of consolidation. In subsequent years, the carrying amount of the investment increases or decreases in proportion to the share of profit or loss and/or the investee’s other income. Distributions reduce the carrying amount of the investment. As soon as the Group’s share of losses equals or exceeds the interest in the associate, no further losses are recognised unless the Group is liable for the associate’s losses.
At the end of every accounting period, the Group determines whether there are any indications for an impairment of the investment in the associate. If there are, then the difference between the carrying amount and the recoverable amount is recognised as an impairment expense in the income statement.
In the year under review, the initial equity measurement of newly acquired entities resulted in goodwill in the amount of T€ 84,030 (2022: T€ 0), which is reported under equity-accounted investments.
Joint arrangements
Joint ventures are entities over which the Group exercises joint control together with a third entity. Joint control exists when the determination of the financial and operating policies requires the unanimous consent of all parties to the joint control. STRABAG accounts for joint ventures using the equity method and these are recognised in the item equity-accounted investments.
Consortia are quite common in the construction industry in Austria and Germany. According to the Institute of Public Auditors in Germany (IDW) and a statement by the Austrian Financial Reporting and Auditing Committee (AFRAC), the typical German and Austrian construction consortium meets the requirements to be classified as a joint venture. Earnings from construction consortia are presented proportionately under share of profit or loss of equity-accounted investments. The receivables from and payables to construction consortia include mainly in- and outflows of cash, charges resulting from services as well as proportional contract results and are recorded under trade receivables and trade payables.
Joint arrangements for the execution of construction work in the remaining countries are accounted for either as joint ventures or as joint operations depending on the substance of the arrangement.
Other investments
In accordance with IFRS 9, investments which do not constitute subsidiaries, joint ventures or associates are recognised at fair value through profit or loss and are stated under other investments.
Subsidiaries, joint ventures and associates which, being immaterial, are not consolidated or accounted for using the equity method are measured at amortised cost and reported under other investments.
Consolidation procedures
As part of the consolidation of intercompany balances, any trade receivables, loans and other receivables existing within the Group are set off against the corresponding liabilities and provisions of the subsidiaries included in the consolidated financial statements.
Expenses and revenues from intra-group transactions are eliminated. Results incurred from intra-group transactions that are recognised in the non-current and current assets are eliminated if they are material. Non-controlling interests are taken into consideration during the elimination of intra-group profits or losses.
Unrealised profits from transactions between Group entities and associates are eliminated in proportion to the Group’s share in the associate.
Non-controlling interests in equity and profits of companies controlled by the parent are shown separately in the consolidated financial statements.
The necessary tax deferrals are made for consolidation procedures.