2. Accounting policies, judgements and estimates

Significant judgments and estimates

Preparation of the consolidated financial statements requires management to make estimates and judgments that affect the amounts reported for assets, liabilities, income, and expenses, as well as the amounts disclosed in the notes. These estimates and assumptions are based on historical experience and other factors that are deemed reasonable at the date of preparation of these financial statements. Actual outcomes could differ from these estimates.

Key accounting estimates, assumptions, and judgments that are involved in preparing the consolidated financial statements are listed in the table below.

Significant accounting policies

The accounting policies for the individual items in the balance sheet and the income statement are presented in the respective sections of the Notes.

Principles of consolidation

The consolidated financial statements comprise the financial statements of OMV Aktiengesellschaft and the entities it controls as well as OMV’s interests in jointly controlled and equity-accounted investments.

The financial statements of all consolidated companies are prepared in accordance with uniform Group-wide accounting policies.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. Assets and liabilities of subsidiaries acquired are included at their fair value at the time of acquisition. The non-controlling interests are measured at the proportionate share of the acquiree’s identifiable net assets.

Goodwill is calculated as the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interest in the acquiree, and, if applicable, the fair value of the equity previously held by OMV in the acquired entity over the net identifiable assets acquired and liabilities assumed.

Any gain on a bargain purchase is recognized in profit or loss immediately.

Associated companies and joint arrangements

Associated companies are those entities in which the Group has a significant influence, but no control or joint control over the financial and operating policies. Joint arrangements, which are arrangements of which the Group has joint control together with one or more parties, are classified into joint ventures or joint operations. Joint ventures are joint arrangements in which the parties that share control have rights to the net assets of the arrangement. Joint operations are joint arrangements in which the parties that share joint control have rights to the assets, and obligations for the liabilities, relating to the arrangement.

Investments in associated companies and joint ventures are accounted for using the equity method, under which the investment is initially recognized at cost and subsequently adjusted for the Group’s share of the profit or loss less dividends received and the Group’s share of other comprehensive income and other movements in equity.

Significant joint exploration and production activities in the E&P business in the Energy segment are conducted through joint operations that are not structured through a separate vehicle. For these joint operations, OMV recognizes in the consolidated financial statements its share of the assets held and liabilities and expenses incurred jointly with the other partners, as well as the Group’s income from the sale of its share of the output and any liabilities and expenses that the Group has incurred in relation to the joint operation. Acquisitions of interests in a joint operation, in which the activity of the joint operation constitutes a business, are accounted for according to the relevant IFRS 3 principles for business combination accounting.

In addition, there are contractual arrangements similar to joint operations that are not jointly controlled and therefore do not meet the definition of a joint operation according to IFRS 11. This is the case when the main decisions can be taken by more than one combination of affirmative votes of the involved parties or where one other party has control. OMV assesses whether such arrangements are within or outside the scope of IFRS 11 on the basis of the relevant legal arrangements such as concession, license, or joint operating agreements which define how and by whom the relevant decisions for these activities are taken. The accounting treatment for these arrangements is basically the same as for joint operations. As acquisitions of interests in such arrangements are not within the scope of IFRS 3, OMV’s accounting policy is to treat such transactions as asset acquisitions.

Foreign currency translation

Monetary foreign currency balances are measured at closing rates, and exchange gains and losses accrued at the statement of financial position date are recognized in the income statement.

The financial statements of Group companies with functional currencies that differ from the Group’s presentation currency are translated using the closing rate method. Differences arising from statement of financial position items translated at closing rates are disclosed in other comprehensive income. Income statement items are translated at average rates for the period. The use of average rates for the income statement creates additional differences compared to the application of the closing rates in the statement of financial position, and these are directly adjusted in other comprehensive income.

The most significant rates applied in translating currencies to EUR were as follows:

Solidarity contribution on refined crude oil

As a direct consequence of the energy crisis in Europe, regulatory measures like price caps, subsidy schemes, and the EU solidarity contribution have been implemented in some of the countries in which the OMV Group is active. The Council Regulation (EU) 2022/1854 introduced a solidarity contribution, which was transposed into the local legislation of the member states and was applicable for 2022 and/or 2023.

On May 12, 2023, law no. 119/2023 for the approval of the Government Emergency Ordinance 186/2022 to implement the EU regulation regarding the solidarity contribution was published in the Official Gazette in Romania. For companies that produce and refine crude oil, the law introduced the obligation to pay a contribution of RON 350 for each ton of crude oil processed during 2022 and 2023.

In 2023, a solidarity contribution totaling EUR 552 mn was recognized for the quantities of crude oil processed during 2022 (EUR 300 mn) and 2023 (EUR 252 mn).

The aim of the EU regulation was to introduce a solidarity contribution that tackles surplus profits. However, the solidarity contribution in Romania was not based on profits but on quantities of processed crude oil and therefore did not fall within the scope of IAS 12 – Income taxes. Due to its specific nature, the solidarity contribution in Romania was not presented in the Consolidated Income Statement as part of the operating result, but as a separate line above the “Taxes on income and profit” line.

Changes in accounting policies

The Group adopted the following amendments to IFRS starting on January 1, 2024:

• Amendments to IAS 1: Classification of Liabilities as Current and Non-Current
• Amendments to IAS 1: Non-Current Liabilities with Covenants
• Amendments to IFRS 16: Lease Liability in a Sale and Leaseback
• Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements

The amendments did not have any material impact on OMV’s Group financial statements.

New and amended accounting standards that are not yet mandatory

OMV has not applied the following standards and amendments to standards that have been issued but are not yet effective. EU endorsement is still pending in some cases.

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 will replace IAS 1 – Presentation of Financial Statements and applies for annual reporting periods beginning on or after January 1, 2027. Even though IFRS 18 will not impact the recognition or measurement of items in the financial statements, its impacts on presentation and disclosure are expected to be significant.

OMV is currently assessing the detailed implications of applying the new standard on the Group’s consolidated financial statements. From the high-level preliminary assessment performed, the following potential impacts have been identified:

• OMV expects that grouping items of income and expenses in the income statement into the new categories will impact how the operating result is calculated and reported. The main impact will be related to the net income from equity-accounted investments, which will, in the future, be reported in the investing category and therefore no longer included in the operating result. However, there will not be any impact on the Group’s net income.
• In the cash flow statement, the main impact will come from changes to the presentation of interest received and paid and dividends received. Interest and dividends received will be presented as cash flows from investing activities, which is a change from their current presentation as part of cash flow from operating activities. Interest paid will be presented as cash flow from financing activities and no longer presented within cash flow from operating activities.
• New disclosures will be required for management-defined performance measures. In addition, a break-down of the defined nature of expenses for line items presented by function in the operating category of the consolidated income statement will be disclosed.

OMV will apply the new standard from its mandatory effective date of January 1, 2027. Retrospective application is required, and so the comparative information for the financial year ending December 31, 2026, will be restated in accordance with IFRS 18.

Other accounting standards

The following amended accounting standards are not expected to have a significant impact on the Group’s consolidated financial statements: