ÖBB Annual Report 2023

Consolidated Financial Statements 240 Österreichische Bundesbahnen-Holding Aktiengesellschaft Consolidated Financial Statements | Group Management Report 22 Financial liabilities (FLAC) are initially measured at their fair value and subsequently at amortised cost using the effective interest method. Financial liabilities (FVTPL) are measured at fair value, and any gain or loss from the subsequent measurement is recognised through profit or loss. Fair value of financial instruments The carrying amounts of cash and cash equivalents, trade receivables and payables, receivables due from and liabilities due to related companies approximate their fair values. The fair value hierarchy level applied is 3, with the exception of cash and cash equivalents. The fair value of non-current financial receivables, other financial assets without quoted market prices, financial liabilities and swap agreements is based on the present value of future cash flows, discounted at the ÖBB Group’s estimated current interest rate at which comparable financial instruments may be concluded. Existing credit risk is considered when determining the fair values. This is fair value at hierarchy Stage 2. The fair value of listed securities and bonds is allocated to either fair value hierarchy level 1 or 2 (Note 29.6). The fair value of equity instruments is determined using multiples where appropriate and allocated to fair value hierarchy level 3. Inventories Inventories include, in the first instance, stocks of materials and spare parts used for the company’s own rail network expansion, the maintenance and fault clearance of rail network operations and the technical servicing of the rolling stock, and, in the second instance, realisation properties. Material stocks and spare parts are valued at the lower of acquisition or production cost and net realisable value, whereby acquisition and production costs are determined using the moving average price method. The net realisable value is determined on the basis of the estimated selling prices in a normal business development less the costs still to be incurred until completion. Internally produced inventories and refurbished reusable materials are capitalised at production cost. Appropriate loss allowances are made for non-current stock material and excessive manufacturing costs attributable to own production. For spare parts and materials, replacement costs are deemed to be the best available measure of their net realisable value. Inventories also include properties no longer used for operational purposes that are being developed for subsequent sale (“realisation properties”). These are former station and railway facilities as well as service buildings that were used for permanent operations. These include substantial projects such as the areas of the former Südbahnhof and the Vienna North freight terminal, which are being developed on a major scale. Realisation properties are held for sale in the ordinary course of business or are in the process of production or development for such sale. Realisation properties are capitalised at acquisition or production cost and valued at the lower of book value and net realisable value as at the reporting date. The net realisable value is the estimated selling price less the production costs still to be incurred and any costs of disposal. Provisions Provisions are recognised when the ÖBB Group has a present obligation (legal or constructive) arising from a past event and it is probable that the settlement of the obligation will result in an outflow of resources and the amount of the obligation can be measured with sufficient reliability. The amount of the provision recognised is the best estimate at the reporting date of the expenditure required to settle the present obligation. In doing so, the inherent risks and uncertainties must be taken into consideration in the obligation. If a provision is measured based on estimated cash flows for the fulfilment of the obligation, such cash flows are discounted if the interest effect is material. If it can be assumed that some or all of the provision necessary for the fulfilment of the economic benefits will be reimbursed by an outside third party, this claim is recognised as an asset when the reimbursement is virtually certain and its amount can be reliably estimated. See Note 26.2 for further details.