4 – Segment Reporting

Business operations and key markets

For business management purposes, OMV is divided into two operating Business Segments: Upstream and Downstream, as well as the segment Corporate and Other (Co&O). Each segment represents a strategic unit with different products and markets. Each Business Segment is managed independently. Strategic business decisions are made by the Executive Board of OMV. With the exception of Co&O, the reportable segments of OMV are the same as the operating segments.

Upstream (U/S) engages in the business of oil and gas exploration, development and production and focuses on the regions Central and Eastern Europe, North Sea, Russia, Middle East and Africa and Asia-Pacific.

The Downstream (D/S) Business Segment refines and markets crude, petrochemicals and other feedstock. It operates the refineries Schwechat (Austria), Burghausen (Germany) and Petrobrazi (Romania) with an annual capacity of 17.8 mn t. In these refineries, crude oil is processed into petroleum products, which are sold to commercial and private customers. Furthermore, it operates across the gas value chain with a successful gas sales and logistics business in Europe. OMV has operating storage capacities in Austria and Germany. The business segments’ activities also cover supply, marketing and trading of gas in Europe and Turkey and the Group’s power business activities, with one gas-fired power plant in Romania.

OMV has a strong position in the markets located within the areas of its supply, serving commercial customers and operating a retail network of approximately 2,100 filling stations.

Since October 29, 2020 Borealis Group is fully-consolidated, following the increase of the stake from 36% to 75%. Borealis is a leading provider of base chemicals, polyolefins, and fertilizers and is the second-largest polyolefin producer in Europe and among the top-ten producers globally. Borealis base chemical production capacity amounts to 3.6 mn t (including Borouge at-equity participation) and has a polyolefin production capacity of 5.7 mn t. The majority of Borealis’ production is located in Europe, with three overseas manufacturing facilities in the United States, one in Brazil and one in South Korea.

OMV holds minority stakes in various equity-accounted investments, the most significant ones being the 15% participation in ADNOC Refining (United Arab Emirates) with annual capacity of 7.1 mn t OMV share, Borouge (United Arab Emirates) Borealis’ joint venture with ADNOC that operates the largest petrochemical complex in the world and the Baystar joint venture (United States) which serves the customer base in the North American markets with Borstar polyethylene.

Group management, financing and insurance activities and certain service functions are concentrated in the Co&O segment.

The key measure of operating performance for the Group is Clean CCS Operating Result. Total assets include intangible assets as well as property, plant and equipment. Sales to external customers are split up by geographical areas on the basis of where the risk is transferred to the customers. Accounting policies of the operating segments are the same as those described in the summary of significant accounting policies, with certain exceptions for intra-group sales and cost allocations by the parent company, which are determined in accordance with internal OMV policies. Management is of the opinion that the transfer prices of goods and services exchanged between segments correspond to market prices. Business transactions not attributable to operating segments are included in the results of the Co&O segment.

The disclosure of special items is considered appropriate in order to facilitate analysis of ordinary business performance. To reflect comparable figures, certain items affecting the result are added back or deducted. These items can be divided into four subcategories: personnel restructuring, unscheduled depreciation and write-ups, asset disposals and other.

Furthermore, to enable effective performance management in an environment of volatile prices and comparability with peers, the Current Cost of Supply (CCS) effect is eliminated from the result. The CCS effect, also called inventory holding gains and losses, is the difference between the cost of sales calculated using the current cost of supply based on purchases from the most recent month and the cost of sales calculated using the weighted average method, after adjusting for any changes in valuation allowances. In volatile energy markets, measurement of the costs of petroleum products sold based on historical values (e.g. weighted average cost) can have distorting effects on reported results. This performance measurement indicator enhances the transparency of results and is commonly used in the oil industry. OMV, therefore, publishes this measure in addition to the Operating Result determined according to IFRS.

For further details on impairments see Note 7 – Depreciation, amortization, impairments and write-ups.

Other special items in Upstream mainly consisted of the reassessment of reserves redetermination rights related to the field Yuzhno Russkoye and temporary hedging effects. Downstream other special items were mainly related to the acquisition of 39% additional shares in Borealis AG (for further details refer to Note 3 – Changes in group structure) partly offset by temporary hedging effects.

In 2019 other special items in Upstream mainly comprised the reassessment of reserves redetermination rights related to the field Yuzhno Russkoye partly offset by temporary hedging effects. Downstream other special items consisted of temporary hedging effects partly offset by environmental provisions in Romania.

Not allocated assets contained goodwill in amount of EUR 297 mn (2019: EUR 325 mn) related to the cash-generating unit ‘Middle East and Africa’, EUR 183 mn (2019: EUR 199 mn) related to the cash generating unit ‘SapuraOMV’ and EUR 18 mn (2019: EUR 26 mn) related to the cash-generating unit ‘Refining West’ as these CGUs are operating in more than one geographical area.