Page 19 - KELAG Annual Report 2017
P. 19

IFRS 9.B5.5.35 regarding trade receivables and use a provision matrix as a way to simplify the
                                      calculation of the impairment.

                                      Furthermore, the option in IFRS 9 to classify equity instruments as FVTOCI will be applied. The
                                      first-time application of IFRS 9 within the KELAG Group will be retroactive in the financial year
                                      2018. The cumulative adjustment amounts will be recorded at the time of initial application.

                                      From financial year 2018, IFRS 15 will replace IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31.
                                      This new standard on revenue recognition provides a five-step model to recognise revenue. Firstly,
                                      the contract(s) with customers are identified and thereafter the separate performance obligations
                                      in order to then determine the transaction price and allocate it to the contractual obligations in
                                      subsequent steps. In the fifth step, revenue is recognised when an entity satisfies a performance
                                      obligation, i.e., either at a specific point in time or over time. Revenue in the Group is mostly
                                      generated from the following areas: sale of electricity, gas and heat, as well as the provision of grid
                                      services.  A  large  portion  of  contracts  in  the  KELAG  Group  relate  to  own-use  contracts  and
                                      therefore fall within the scope of IFRS 15. Contracts that are recognised as derivatives pursuant to
                                      IAS 39 or subsequently IFRS 9 are excluded from IFRS 15 regulations.

                                      Aside from the requirement to provide further disclosures in the notes on revenue, implementing
                                      IFRS 15 in the KELAG Group will have a negligible effect overall. This is primarily due to the fact
                                      that an analysis of the agreements for electricity, gas and heating and of the rendering of grid
                                      services  has  shown  that in  each  case  revenue  recognition  under  IFRS  15  will  be  in line  with
                                      revenue recognition patterns under IAS 18, either as a collective of performance obligations from
                                      a  series  of  similar  (supply)  obligations  or  as  a  stand-ready  obligation. This  is  in  line  with  the
                                      methods practiced under IAS 18. In this connection, the KELAG Group will apply the practical
                                      simplification of IFRS 15.B16, thereby recognising revenue according to the invoiced amount,
                                      provided  that  the  pertinent  requirements  are  met.  Furthermore,  the  issues  of  gross  or  net
                                      presentation, especially in connection with the principal-agent topic, were examined, along with
                                      the existence of contracts with several performance obligations. With regard to the principle-
                                      agent topic, the analysis found that the previous method pursuant to IAS 18 corresponds to that
                                      of IFRS 15. The analysis also found that contracts with customers containing several performance
                                      obligations currently play only an insignificant role in the KELAG Group.

                                      The first-time application of IFRS 15 within the KELAG Group will be retroactive in the financial
                                      year 2018. The cumulative adjustment amounts will be recorded at the time of initial application.

                                      IFRS 16 will replace IAS 17, IFRIC 4, SIC 15 and SIC 27 for financial years beginning on or after
                                      1 January 2019 and provides that, in future, the lessee must recognise all leases and all associated
                                      contractual rights and obligations. The changes to recognition for the lessor are minimal. Lease
                                      agreements that had previously, that is under IAS 17, been classified by lessees as operating leases
                                      are now, under IFRS 16, treated like finance leases under IAS 17. Leases reclassified in this way
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