ÖBB Annual Report 2023

Group Management Report 102 Österreichische Bundesbahnen-Holding Aktiengesellschaft Consolidated Financial Statements | Group Management Report 57 ÖBB-Produktion Gesellschaft mbH provides its services mainly for its ÖBB Group parent companies ÖBB-Personenverkehr AG and Rail Cargo Austria AG. The strategic group purchasing department concludes framework agreements with several suppliers in order to procure the required quantities of diesel on the basis of information provided by ÖBB-Produktion Gesellschaft mbH. The term of the framework agreements is usually nine to twelve months. Fuel purchases are made on the basis of the conditions set down in the contracts plus a transport logistics premium as defined in the contract. The transport premium may vary depending on the point of delivery. This surcharge is fixed contractually in each case. Diesel as a raw material represents a financial risk for ÖBB-Produktion Gesellschaft mbH and as such for the ÖBB Group due to the fluctuating diesel prices. The price fluctuations have an impact on the cost of materials and thus on the result of ÖBB-Produktion Gesellschaft mbH and the ÖBB Group. In light of the possible procurement strategies and for risk diversification, diesel price hedging was approved for up to a maximum of 15,647 metric tonnes of diesel for the 2024 delivery year and 7,303 metric tonnes of diesel was approved and implemented for the 2025 delivery year. The aforementioned 15,647 metric tonnes correspond to 60% of the annual fuel requirements for 2024. The aforementioned 7,303 metric tonnes correspond to 30% of the annual fuel requirements for 2025. The aim of the hedging policy pursued is to stabilise the cost of materials and to achieve a reduction in earnings and cash flow volatility for Österreichische Postbus Aktiengesellschaft and ÖBB-Produktion Gesellschaft mbH and thus for the ÖBB Group for the budget period. The benchmark for the success of hedging activities for the raw material “diesel” is the respective budget rate and not to achieve the highest possible compensation of the purchase price at the monthly level. Derivative financial instruments are used exclusively for hedging purposes. That means they are only used in connection with corresponding underlying transactions from the original business activity and if the derivative financial instruments have a risk profile that is opposite to the hedging transaction with the highest possible correlation. Measures of a speculative nature are not permitted. Internal control system The members of the Boards of Management and managing directors of the Group companies acknowledge and embrace their responsibility to establish an appropriate internal control system (ICS). A Group-wide minimum standard has been formulated for the ICS, which is implemented in the subgroups. Projects for the further development of the internal control system in the ÖBB Group are set up at intervals with external support as part of a continuous improvement process. The planned measures are examined for appropriateness in terms of legal requirements. Subsequently, further steps are to be taken to develop the requisite content aspects. The ICS comprises the following elements: Identification, analysis, evaluation, management, effectiveness monitoring, documentation and communication of ICS-relevant processes, risks and controls as well as the monitoring of these activities. Scope of control The ICS in the ÖBB Group is an essential component of company-wide risk management. It contributes to the achievement of the company aims by systematically managing process-related risks. The objectives of the ICS are the conformity of financial reporting with the rules, the promotion of operational efficiency (operations) and the adherence to legal obligations and internal guidelines (compliance). The identification and assessment of risks that jeopardise these objectives and the implementation of risk-reducing controls provide reasonable assurance of achieving these objectives. The ICS is based on the internationally acknowledged COSO framework (Committee of Sponsoring Organisations of the Treadway Commission). This provides a well-recognised concept for designing an internal control system and offers management a suitable basis for analysis and control tasks. | MR57