Page 130 - KELAG Annual Report 2017
P. 130

(banks) are carried out only if they have a corresponding
                                                         credit rating and an associated available credit limit.
           There are risks from the incentives regulation system in the
           regulated electricity and gas grid segment. The risk that the
                                                         In the case of the company, derivative financial instruments
           regulator might fail to factor in existing cost positions when
                                                         constitute  commodity  forwards  relating  to  energy
           setting charges is mitigated by means of active regulatory
                                                         (electricity  and  gas)  as  well  as  an  interest  hedging
           and cost management.
                                                         instrument.
           In the other areas of business (production, trading, sales
           and heat), legal and regulatory risks stem from government
           intervention, such as the introduction of new duties and
           fees or the increase of existing duties and fees, and from   The  Group’s  activities  are  subject  to  a  number  of
           changes to market models that restrict business activities.   increasingly strict legal requirements aimed at protecting
                                                         human  life,  health  and  the  environment.  In  addition  to
                                                         increasingly  restrictive  regulations,  there  is  a  related
                                                         financial risk for compliance with the required measures.
           Investment  decisions  are  based  on  the  investment  and
           M&A  guideline  that  defines  clear  profitability  and  risk
           criteria.  Observance  of  high  standards  for  implementing
           investments serves to keep technical risks to a minimum.   Some of the risk management activities are also dedicated
                                                         to the identification and management of legal risks. To this
                                                         end, a group-wide compliance system was implemented in
                                                         cooperation  with  an  international  law  firm.  This  system
                                                         ensures  that  the  probability  of  legal  infringements  by
           Equity investment risks result from potential fluctuations in
                                                         employees  of  the  Group  is  kept  as  low  as  possible. The
           earnings  from  investees.  Targeted  equity  investment
                                                         compliance  system  thus  serves  to  protect  both  the
           management  in  accordance  with  the  guidelines  (early
                                                         company  as  well  as  every  individual  employee,  while
           warning indicators and ongoing monitoring and reporting)
                                                         making a contribution to safeguarding the business value
           is  used  to  mitigate  the  risk.  If  impairment  testing  of  the
                                                         in the long term.
           carrying amounts of equity investments results in the need
           for  write-downs,  impairment  losses  are  recognised
                                                         The  compliance  management  system  of  KELAG  and  its
           accordingly.
                                                         subsidiaries  (KI-KELAG  International  GmbH,  KNG-Kärnten
                                                         Netz GmbH and KELAG Wärme GmbH) should be conducive
                                                         to a greater awareness of employees and managers of legal
                                                         risks and has been certified since 2014 in accordance with
           Interest  rate  and  currency  risks  are  mitigated  using  an   ONR 192050 in the risk areas of anti-corruption law, data
           adequate internal control system for all financial products   protection  legislation,  anti-trust  law,  unfair  competition,
           used.                                         Austrian  Federal  Act  Against  Unfair  Competition
                                                         [“Bundesgesetz  gegen  den  unlauteren  Wettbewerb”  (UWG)]
           The  risk  of  counterparty  default  is  reduced  by  written   and  procurement  law.  In  the  course  of  the  annual
           regulations for Treasury. Transactions with counterparties   surveillance  audit  performed  by  the  independent
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