ÖBB Annual Report 2025

265 Consolidated Financial Statements Österreichische Bundesbahnen-Holding Aktiengesellschaft Consolidated Financial Statements | Group Management Report 73 effective portion of the change in the fair value of the hedging instrument is recognized under other comprehensive income in equity (cash flow hedge reserve) until the cash flow resulting from the hedged item affects profit or loss; the ineffective portion of the change in the fair value of the hedging instrument is recognized in the Consolidated Income Statement. Fair value hedges, on the other hand, require the carrying amount of the hedged item to be adjusted for changes in the fair value of the hedged risk through profit or loss. The ÖBB Group meets the requirements of IFRS9 for hedge accounting as follows: At the inception of the hedge, the relationship between hedging instrument and hedged item, and the reason for the hedge are documented. The documen- tation includes allocation of the hedging instruments to the respective hedged assets and liabilities as well as planned transactions and an assessment of the effectiveness of the hedging instruments. Existing hedging measures are reviewed on an ongoing basis to ensure that the requirements for hedge effectiveness continue to be met. If this is not the case and a recalibration of the hedge relationship is not possible, or if the hedging instrument expires or is sold or terminated, then the hedge relationship is terminated. The ÖBB Group also enters into hedges which do not comply with the formal requirements of IFRS 9 but which contribute to economically effective hedging of financial risks in accordance with the principles of the risk management. Cash flow hedges – Interest rate risks Interest rate risks arise primarily from variable interest payments on financial assets and liabilities (i.e. cash flow risks) or from market value risks, i.e. changes in the present value of fixed-interest financing. Within the ÖBB Group, an interest rate risk may occur in the existing financing portfolio and in the planned new business portfolio in accordance with budget/medium-term planning (BUD/MFP). The interest expense from refinancing raised during BUD/MFP is based on for- ward interest rates according to planning premises. The actual interest expense is only fixed when the contract is concluded (fixed interest rate) or when the interest rate is fixed (variable interest rate). The ÖBB Group has entered into payer interest rate swaps (receive variable – pay fixed) to hedge interest payment risks for underlying transactions with variable interest rates. The changes in cash flows of the hedged item resulting from changes in the EUR IBOR rate are offset by the changes in cash flows of the interest rate swaps. The objective of these hedges is to transform the variable interest rate bonds into fixed interest rate debts, thus hedging the cash flow from the financial liabilities. The following table shows the range of maturities of the cash flow hedges: Dec 31, 2025 End of term Quantity Swaps Nominal volume in EUR million Portfolio 18 395.6 thereof maturing 2026 11 199.6 thereof maturing 2027 1 59.5 thereof maturing as of 2028 and onwards 6 136.5 Dec 31, 2024 End of term Quantity Swaps Nominal volume in EUR million Portfolio 15 420.9 thereof maturing 2025 1 25.3 thereof maturing 2026 11 199.6 thereof maturing 2027 and beyond 3 196.0 The effectiveness of the hedging relationship is assessed using the Critical Terms Match method. Ineffectiveness is deter- mined using the dollar offset method. For this purpose, a hypothetical derivative is formed for cash flow hedges that reflects the conditions contained in the hedged underlying transaction. Hedging relationships affected by the IBOR reform may become ineffective due to a timing mismatch between the hedged item and the hedging instrument with regard to the transition from IBOR. If a hedging relationship is directly affected by the uncertainty arising from the IBOR reform, the Group assumes for this purpose that the reference interest rate will not change as a result of the reform of the reference interest rate. Changes in the fair value of interest rate swaps designated as hedging instruments with respect to future interest payments for variable interest liabilities are recognized in equity through other comprehensive income (see Consolidated Statement of Changes in Shareholders’ Equity). These amounts are recognized as finance costs in the period in which the correspond- ing interest payments from the hedged item affect profit or loss (EUR 2.6 million income [py: EUR 3.4 million expense]). Further, ineffective portions of hedge accounting relationships amounting to EUR 0.0 million (py: EUR 0.0million) were rec- ognized through profit or loss. As of the reporting date, EUR 0.2 million (py: EUR 0.7 million) from the settlement of cash flow hedges has been recognized in other comprehensive income, which will be reversed in 2026.