Page 129 - KELAG Annual Report 2017
P. 129

addition, corresponding up-to-date hardware and software   line with the value of contracts with each trading partner or
                    ensures  the  high  availability  of  IT  operations  which  is   customer. Market risks stem from changes to volumes and
                    secured by geographically split data centres. The high level   prices, which develop differently than initially expected on
                    of qualification of employees, which is maintained through   the  purchasing  or  sales  side  between  the  inception  and
                    appropriate employee training schedules, also constitutes   settlement of the contract. These risks are countered using
                    a further basis for minimising risk in business processes. The   a high degree of standardisation for contracts as well as by
                    function of a security officer was established as a central   passing the risks from the purchasing side onto the sales
                    point of contact for all issues in the area of IT security.   side.  Risks  also  arise  from  changes  in  demand  due  to
                                                                  economic  developments  and  changes  in  retail  customer
                                                                  demand.

                                                                  The  company  is  a  net  importer  of  electricity  and  has  to
                    The Group is exposed to typical market competition in the
                                                                  purchase additional fuels in the areas of gas and heat. It is
                    Electricity/Gas,  Heat  and  Investments/Misc.  business
                                                                  therefore exposed to the risk of markets not being liquid
                    divisions. It operates primarily in Austria, where it competes
                                                                  enough to allow corresponding commodities to be bought
                    with  a  large  number  of  other  players  and  their  pricing
                                                                  at economically feasible conditions at all times.
                    policies as well as their established business relationships
                    with customers. The company also faces competition from
                                                                  Special  commodity  and  credit  risk  guidelines  have  been
                    a  range  of  international  energy  companies  that  have
                                                                  developed to manage market and credit risks.
                    become increasingly active on the Austrian market over the
                    past few years.
                    The aforementioned risks are countered by means of active
                    price  and  product  management,  developing  customer
                    loyalty as well as targeted image and marketing activities.   In  the  case  of  hydroelectric  power,  whether  a  planned
                                                                  production quantity is reached or not depends largely on
                                                                  the water levels and, in turn, on the weather. Apart from
                                                                  quantity, the market price level is another factor influencing
                                                                  revenue. Risks are mitigated by means of a long-term sales
                    The company is exposed to a number of counterparty and
                                                                  strategy  and  by  updating  forecasts  of  water  levels  on  a
                    credit  risks.  Third  parties  that  owe  group  entities  cash,
                                                                  rolling basis.
                    securities or other assets may not fulfil obligations towards
                    these  group  entities  in  good  time  or  at  all  because  of
                    insolvency  or  insufficient  liquidity. The  default  of  trading
                    partners  or  customers  in  the  Electricity/Gas  and  Heat
                    business  divisions  entails  the  risk  that  energy  already
                    supplied may not be paid, that energy may have to be re-
                    sourced or resold (replacement and settlement risk). Risks
                                                                  The risk of defects in technical plant and equipment due to
                    also  arise  due  to  changes  in  the  value  of  commodity
                                                                  major  widespread  weather  events  (wind  storms,  sleet)  is
                    positions as well as regulatory changes to transfer prices.
                                                                  mitigated using an appropriate maintenance strategy and
                    Risks are mitigated by carrying out initial credit-worthiness
                                                                  minimised by concluding suitable insurance contracts.
                    screening  and  ongoing  credit-worthiness  monitoring  in
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