Page 15 - KELAG Annual Report 2017
P. 15

Entities on which the parent company can exercise significant influence (“associates”), whether
                                      directly  or  indirectly,  are  included  in  the  consolidated  financial  statements  using  the  equity

                                      After application of the equity method, the Group determines whether it is necessary to recognise
                                      an additional impairment loss on the Group’s investment in the respective associate. At each
                                      reporting date, the Group determines whether there is any objective evidence of impairment of
                                      an  investment  in  an  associate.  It  uses  the  external  and  internal  indications  of  impairment  in
                                      accordance with the KELAG Group’s impairment guidelines (see the explanations on judgements
                                      and  forward-looking  assumptions).  If  an  impairment  test  shows  a  need  for  impairment,  the
                                      difference between the recoverable amount and the corresponding carrying amount of the share
                                      in the associate is recorded through profit or loss as an impairment loss.

                                      Due to share purchases, the shares in Quaternity GmbH (35%, with registered office in Walchwil,
                                      Switzerland) and SunnyBAG GmbH (40%, with registered office in Graz, Austria) were recognised
                                      in the KELAG Group as associates for the first time in this financial year.

                                      Transactions in foreign currency in the separate financial statements of the entities included in
                                      the Group’s consolidated financial statements are measured at the exchange rates on the date of
                                      the transaction. The rate as of the relevant reporting date is used for subsequent measurement of
                                      monetary items in the statement of financial position. Exchange gains and losses are recognised
                                      as  income/expense  in  the  income  statement  item  in  which  the  underlying  transaction  was
                                      recorded. Contrary to the principle described above, exchange differences with regard to equity
                                      instruments  classified  as  available  for  sale  (except  for  impairment  losses  where  currency
                                      translation differences are reclassified from other comprehensive income to profit or loss) are
                                      recorded under other comprehensive income.

                                      The  functional  currency  of  KELAG  and  the  reporting  currency  of  the  Group  is  the  euro. The
                                      functional currency of each entity is fixed in accordance with IAS 21. Because the foreign entities
                                      included in the consolidated financial statements conduct their business independently in their
                                      local currency, the items in the statements of financial position of all foreign entities are translated
                                      into euros at closing rates (mean rate) in the consolidated financial statements. The separate
                                      financial statements of these foreign subsidiaries are translated into euro for the consolidated
                                      financial statements using the functional currency method.

                                      The  assets  and  liabilities  of  non-Austrian  entities  are  generally  translated  at  the  reference
                                      exchange rate of the European Central Bank or national central banks as of the reporting date.
                                      Income and expenses are translated at average monthly exchange rates. Exchange differences as
                                      of the reporting date are recorded in other comprehensive income and disclosed separately in
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