ÖBB Annual Report 2023

Group Management Report 100 Österreichische Bundesbahnen-Holding Aktiengesellschaft Consolidated Financial Statements | Group Management Report 55 Derivative financial instruments ÖBB Group employs derivative financial instruments to hedge against risks associated with currencies, interest rate changes and raw material prices. Furthermore, a derivative exists to offset mismatches from payment flows arising from former CBL transactions. Derivative financial instruments are concluded only with reference to a hedged item. Derivative financial instruments are measured in accordance with the applicable accounting standards. The derivatives used in the ÖBB Group are non-structured standard hedging transactions (forward exchange transactions and commodity swaps) with a nominal value of approx. EUR 466.7 million (py: approx. EUR 468.2 million). In 2023, commodity swaps were concluded for the delivery years 2024 and 2025 with a nominal value of approx. EUR 26.6 million. In 2023, currency swaps with a nominal value of approx. EUR 4.8 million were concluded. Risk definition and risk management with respect to financial instruments ÖBB-Holding AG conducts financial transactions in the name and for the account of Group companies – on their behalf and only with their consent. Exceptions are the hedging instruments of commodities ÖBB-Holding AG has created a risk- orientated control environment. It includes, among other elements, policies and procedures for the assessment of risks as well as approval, reporting and monitoring of financial instruments. Top priority in all financial activities is to safeguard the assets of the Group companies. All of this is the task of the Group Finance department. A key part of its activities is the identification, assessment and limitation of financial risks. Risk limitation does not mean absolute elimination of financial risks. Risk limitation means the reasonable and transparent control of quantifiable risk centres within a specific framework for activities that need to be agreed with the respective Group companies. A Group directive prohibits the issue or holding of derivative financial instruments for speculative purposes. In addition, Group guidelines define the authorised financial transactions. The most important financial risks are described in more detail below. Liquidity risk The primary aim of ÖBB Group in financial terms is to secure the necessary liquidity. Liquidity risk is the risk that a company may have difficulties in meeting its financial obligations arising from its contractual commitments. These may be settled by payment or delivery of another financial asset. A consistent safeguarding of the liquidity of all Group companies is one of the main tasks of the Group Finance department of the ÖBB Group. This task is accomplished through liquidity planning, the agreement of sufficient credit lines and the adequate diversification of lenders. Interest rate risk Risks from changes in market interest rates can influence the ÖBB Group’s financial result due to the existing structure of the statement of financial position. It is therefore important to limit the influence of possible market interest rate fluctuations on the development of results, while coordinating the level with the Group companies. Derivative financial instruments for managing interest rate risks are transacted on the basis of portfolio analyses and recommendations by Group Finance, and of corresponding decisions by Group companies. No new derivatives were used from 2019 to mid-2022. This is due to the fact that the majority of the financial assets and financial liabilities are at fixed interest rates. In mid-2022, three fixed interest rate swaps with a nominal value of approx. EUR 196.0 million were concluded as part of variable financing. Please refer to item 29.2.a. of the notes to the consolidated financial statements for more information on cross-border leasing contracts. Currency risk ÖBB Group companies are not exposed to any material currency risks. Most finance agreements are denominated in Euro. Only one company in the Czech Republic raised a very small proportion of its financing in local currency. There are no relevant currency risks from terminated cross-border leasing transactions. The contractual liabilities in foreign currencies are offset by corresponding investments and receivables in the same amount with matching volumes and maturities. Derivative instruments that are suitable for the management of exchange rate risks (currency swaps) are concluded based on portfolio analyses and recommendations by the Group Finance department and on corresponding decisions of the Group companies. | MR55