Auditor’s Report¹

Report on the Consolidated Financial Statements

Audit Opinion

We have audited the consolidated financial statements of

OMV Aktiengesellschaft, Vienna,

and of its subsidiaries (the Group) comprising the consolidated statement of financial position as of December 31, 2020, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the fiscal year then ended and the notes to the consolidated financial statements except for “Oil and Gas Reserve Estimation and Disclosures (unaudited)”.

Based on our audit the accompanying consolidated financial statements were prepared in accordance with the legal regulations and present fairly, in all material respects, the assets and the financial position of the Group as of December 31, 2020 and its financial performance for the year then ended in accordance with the International Financial Reporting Standards (IFRSs) as adopted by EU, and the additional requirements under Section 245a Austrian Company Code (UGB).

Basis for Opinion

We conducted our audit in accordance with the regulation (EU) no. 537/2014 (in the following “EU regulation”) and in accordance with Austrian Standards on Auditing. Those standards require that we comply with International Standards on Auditing (ISA). Our responsibilities under those regulations and standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We are independent of the Group in accordance with the Austrian General Accepted Accounting Principles and professional requirements and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion by this date.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the fiscal year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We considered the following matters as key audit matters for our audit:

1. Purchase Price Allocation for the acquisition of additional stake in Borealis AG
2. Recoverability of goodwill, property plant and equipment and equity-accounted investments
3. Recoverability of intangible exploration and evaluation (E&E) assets
4. Estimation of oil and gas reserves
5. Valuation of provision for decommissioning and restoration obligations

Key Audit Matter

Purchase Price Allocation for the acquisition of additional stake in Borealis AG

On October 29, 2020, OMV acquired an additional 39% stake in Borealis AG from Mubadala Investment Company and holds now a 75% interest in Borealis AG.

Based on the agreed purchase price of USD 4,68 bn the cash-out for OMV was EUR 3,87 bn considering adjustments (dividends, currency effects, acquired cash position of Borealis).

The previously held 36% stake was accounted at-equity. The acquisition of the additional stake is to be classified as business combination achieved in stages according to IFRS 3: the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value as well as allocate the purchase price in recognizing the newly acquired assets acquired and liabilities assumed at fair values at the acquisition date. Together with the previously held stake the acquired assets will be fully consolidated in OMV’s group financial statements.

The valuation of assets acquired and liabilities assumed is complex and requires significant judgement in applying forecasts and assumptions made by management. The principal risk relates to the estimates of the fair values of the identifiable assets and liabilities assumed together with the deferred taxes on acquisition in preparing the purchase price allocation.

Given the extent of the judgment in valuing these assets and obligations, we believe that the fair value calculation carries significant risk of material misstatement.

OMV management determined the fair values of the assets acquired and liabilities assumed under IAS 28 and IFRS 3 with its own internal experts.

OMV Group’s disclosures about the acquisition of the additional stake in Borealis AG are included in Note 3 (Changes in group structure) and Note 35 (Related parties).

How our audit addressed the key audit matter

We assessed management’s purchase price allocation. Specifically our work included, but was not limited to, the following procedures:

•  Read the purchase agreement to gain an understanding of the key terms and conditions and to assess the adequacy of the accounting treatment;
•  Assess the arm’s-length of the acquisition from a related party;
•  Assess the competence of OMV’s internal specialists and their objectivity and independence, to consider whether they were appropriately qualified to carry out the valuation;
• Engage our internal valuation specialist to assist us in the audit of the purchase price allocation and discount rates used;
•  Assess the valuation model, the cash flow forecasts, cost approaches and the key assumptions used in the calculation of the assets’ and liabilities´ fair value;
• Check the mathematical accuracy of the valuation model; and
• Assess the adequacy of the disclosures in the financial statements.

Key Audit Matter

Recoverability of goodwill, property plant and equipment and equity-accounted investments

As of December 31, 2020, the carrying value of goodwill amounted to EUR 531 mn, of property, plant and equipment to EUR 19.203 mn (after an impairment charge of EUR 683 mn mainly for oil and gas assets) and of equity-accounted investments to EUR 8.321 mn.

Under IFRS, an entity is required to assess, whether impairment indicators or indications for the reversal of impairment losses recognized in prior periods exist and if they exist, an impairment test is required. For goodwill an annual impairment test is required. The assessment of the recoverability of the carrying amount of goodwill, property, plant and equipment and equity-accounted investments requires judgement in assessing whether there is an indication that an asset should be impaired and in measuring any such impairment.

The principal risk relates to management’s estimates of future cash flows and discount rates, which are used to project the recoverability. For the cash generating units to which goodwill has been allocated, management’s annually performed impairment test did not require an impairment.

Management did not identify impairment indicators for property, plant and equipment in the Downstream segment. In the Upstream segment impairment tests for oil and gas assets were performed due to the decreased oil and gas prices. These future cash flows for oil and gas assets are mainly sensitive to assumptions in future oil and gas prices and production volumes. For one of the equity-accounted investments impairment indicators were identified. The impairment test performed by the management did not require an impairment.

OMV Group’s disclosures about goodwill, property plant and equipment and equity-accounted investments and the impairment testing related hereto are included in Note 2 (Accounting policies, judgements and estimates), Note 7 (Depreciation, amortization, impairments and write ups), Note 14 (Intangible assets), Note 15 (Property, plant and equipment) and Note 16 (Equity-accounted investments).

How our audit addressed the key audit matter

We assessed management’s assessment of the recoverability of the carrying value of goodwill, property plant and equipment and equity-accounted investments by evaluating if and how management determines a need of impairment or reversal. Where an impairment test was required, we evaluated management’s assumptions. Specifically, our work included, but was not limited to, the following procedures:

•  Assess the design and implementation of the controls in the valuation process;
• Review and evaluation of management’s assessment of the existence of impairment indicators;
• Assess the determination of cash generating units;
• Reconcile the assumptions used within the future cash flow models to approved budgets and business plans;
• Reconcile production profiles to oil and gas reserves and future short and long term oil and gas prices to consensus analysts’ forecasts and those adopted by other international oil companies;
•  Assess how the long-term oil and gas price assumptions consider the possible impact of climate change and energy transition;
• Assess the consideration of Covid-19-pandemic impact in the cash flow models;
• Check the mathematical accuracy of the cash flow models;
• Compare of cash flow projections with external market data and other available external sources
•  Involve our valuation specialists for analyzing of the discount-, exchange- and growth rates and assessing the valuation models;
• Assess the historical accuracy of management’s budgets and forecasts by comparing them to actual performance and to prior year;
• Review of management’s sensitivity analysis over key assumptions and perform additional own sensitivity analysis in order to assess the impact of possible changes of assumptions on the recoverability; and
• Assess the adequacy of the Group’s disclosuresin the financial statements.

Key Audit Matter

Recoverability of intangible exploration and evaluation (E&E) assets

The carrying value of intangible E&E assets amounted to EUR 1,260 mn at December 31, 2020, after a write-off (impairment) of EUR 779 mn in 2020.

Under IFRS 6, Exploration for and Evaluation of Mineral Resources, exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that the carrying value of an exploration and evaluation asset may exceed its recoverable amount.

The assessment of the carrying value requires management to apply judgement and estimates in assessing whether any impairment has arisen at year end, and in quantifying any such impairment.

The principal risks relate to the assessment of management’s intention to proceed with a future work program for a prospect or license, the likelihood of license renewal, and the success of drilling and geological analysis to date.

OMV Group’s disclosures about intangible E&E assets and related impairment testing are included in Note 2 (Accounting policies, judgements and estimates), Note 7 (Depreciation, amortization, impairments and write-ups) and Note 14 (Intangible assets).

How our audit addressed the key audit matter

We evaluated management’s assessment of the carrying value of intangible E&E assets performed with reference to the criteria of IFRS 6 and the Group’s accounting policy. Specifically, our work included, but was not limited to, the following procedures:

•  Inquire whether management has the intention to carry out exploration and evaluation activity in the relevant exploration area which included the review of management’s budget and discussions with senior management as to the intentions and strategy of the Group;
• Read Executive Board minutes of meetings and consider whether there were negative indicators that certain projects might be unsuccessful;
• Discuss with management about the status of the largest exploration projects;
• Assess whether the Group has the ability to finance any planned future exploration and evaluation activity;
• Identify the existence of any fields where the Group’s right to explore is either at, or close to, expiry and review management’s assessment whether there are any risks related to renewal of the license;
• Review of management’s assumptions where an E&E asset has been impaired and review of the valuation; and
• Assess the adequacy of the disclosures in the financial statements.

Key Audit Matter

Estimation of oil and gas reserves

Oil and gas reserves are an indicator of the future potential of the group’s performance. Furthermore, they have an impact on the financial statements as they are the basis for

• production profiles in future cash flow estimates;
•  depreciation, amortization and impairment charges and
• the valuation of the financial asset at the amount of EUR 688 mn related to the reserves redetermination right out of the acquisition of an interest in the Yuzhno Russkoye field in 2017;

The estimation of oil and gas reserves requires judgement and assumptions made by management and engineers due to the technical uncertainty in assessing quantities.

The principal risk of the oil and gas reserves estimate is the impact on the group’s financial statements through impairment testing, depreciation & amortization, decommissioning provision estimate, and the valuation of the financial asset related to the reserves redetermination right.

OMV Group’s disclosures about oil and gas reserves and related impairment testing are included in Note 2 (Accounting policies, judgements and estimates), Note 7 (Depreciation, amortization, impairments and write ups), Note 18 (Financial assets) and Note 23 (Provisions).

How our audit addressed the key audit matter

Our procedures have focused on management’s estimation process in the determination of oil and gas reserves. Specifically, our work included, but was not limited to, the following procedures:

•  Walkthrough and understand the Group’s process and controls associated with the oil and gas reserves estimation process;
•  Test controls of the oil and gas reserves review process;
• Analysis of the internal certification process for technical and commercial specialists who are responsible for oil and gas reserves estimation;
• Assess the competence of both internal and external specialists and the objectivity and independence of external specialists, to consider whether they were appropriately qualified to carry out the estimation of oil and gas reserves;
• Analyze the latest reports of DeGolyer and MacNaughton (D&M) on their reviews performed in 2020 of the group’s estimated oil and gas reserves in Russia and Malaysia and analyze the report of the additional external specialist engaged by OMV for one case;
• Test whether significant additions or reductions in oil and gas reserves were made in the period in which the new information became available and in compliance with Group’s Reserves and Resources Guidelines;
• Test that the updated oil and gas reserve estimates were included appropriately in the Group’s consideration of impairment, in accounting for depreciation & amortization and the valuation of the financial asset related to the reserves redetermination right; and
• Assess the adequacy of the disclosures in the financial statements.

Key Audit Matter

Valuation of provision for decommissioning and resto-ration obligations

The total provision for decommissioning and restoration obligations amounted to EUR 3,999 mn at December 31, 2020.

Group’s core activities regularly lead to obligations related to dismantling and removal, asset retirement and soil remediation activities.

The principal risk relates to management’s estimates of future costs, discount rates and inflation rates, which are used to project the provision for decommissioning and restoration obligations.

OMV Group’s disclosures about the provision for decommissioning and restoration obligations are included in Note 2 (Accounting policies, judgements and estimates) and Note 23 (Provisions).

How our audit addressed the key audit matter

We assessed management’s estimation of the provision for decommissioning and restoration obligations. Specifically, our work included, but was not limited to, the following procedures:

• Assess the design and implementation of the controls over the decommissioning and restoration obligations estimation process;
• Compare current estimates of costs with actual decommissioning and restoration costs previously incurred. Where no previous data was available, we reconciled cost estimates to third party support or the Group’s engineers’ estimates;
• Inspection of supporting evidence for any material revisions in cost estimates during the year;
• Confirm whether the decommissioning dates are consistent with the Group’s budget and business plans;
• Involve our valuation specialists to assist us in the analysis of discount rates and inflation rates; and
• Test the mathematical accuracy of the decommissioning and restoration obligation calculation; and
• Assess the adequacy of the disclosures in the financial statements.

Other Information

Management is responsible for the other information. The other information comprises the information included in the annual report and the annual financial report, but does not include the consolidated financial statements, the directors’ report for the Group and the auditor’s report thereon. We received the “Consolidated Corporate Governance Report” and the “Consolidated Report on the Payments Made to Government” until the date of this audit opinion, the rest of the annual report and the annual financial report is estimated to be provided to us after the date of the auditor’s report. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, and, in doing so, to consider whether the other information is materially inconsistent with the consolidated financial statements or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and of the Audit Committee for the Consolidated Financial Statements

Management is responsible for the preparation of the consolidated financial statements in accordance with IFRS as adopted by the EU, and the additional requirements under Section 245a Austrian Company Code (UGB) for them to present a true and fair view of the assets, the financial position and the financial performance of the Group and for such internal controls as management determines are necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Audit Committee is responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU regulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the EU regulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, we exercise professional judgment and maintain professional scepticism throughout the audit.

We also:

•  identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
• conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern;
• evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Comments on the Director’s Report for the Group

Pursuant to Austrian Generally Accepted Accounting Principles, the directors’ report for the Group is to be audited as to whether it is consistent with the consolidated financial statements and as to whether the directors’ report for the Group was prepared in accordance with the applicable legal regulations.

Management is responsible for the preparation of the directors’ report for the Group in accordance with Austrian Generally Accepted Accounting Principles.

We conducted our audit in accordance with Austrian Standards on Auditing for the audit of the directors’ report for the Group.

Opinion

In our opinion, the directors’ report for the Group was prepared in accordance with the valid legal requirements, comprising the details in accordance with Section 243a Austrian Company Code (UGB), and is consistent with the consolidated financial statements.

Statement

Based on the findings during the audit of the consolidated financial statements and due to the thus obtained understanding concerning the Group and its circumstances no material misstatements in the directors’ report for the Group came to our attention.

Additional information in accordance with article 10 EU regulation

We were elected as auditor by the ordinary general meeting at September 29, 2020. We were appointed by the Supervisory Board on November 19, 2020. We are auditors without cease since 2011.

We confirm that the audit opinion in the Section “Report on the consolidated financial statements” is consistent with the additional report to the audit committee referred to in article 11 of the EU regulation.

We declare that no prohibited non-audit services (article 5 par. 1 of the EU regulation) were provided by us and that we remained independent of the audited company in conducting the audit.

Responsible Austrian Certified Public Accountant

The engagement partner on the audit resulting in this independent auditor’s report is Mr. Gerhard Schwartz, Certified Public Accountant.

Vienna, March 10, 2021

Ernst & Young
Wirtschaftsprüfungsgesellschaft m.b.H.