Page 26 - KELAG Annual Report 2017
P. 26

Impairment losses charged as an expense in the form of specific bad debt allowances sufficiently
           provide for the expected default risks. Actual default leads to derecognition of the receivables in
           question.

           Current  other  receivables  contain  energy  derivatives. The  derivative  financial  instruments  are
           recognised at fair value. The carrying amount of derivatives with a netting agreement are offset
           and  thus  shown  as  net  figures in  the  statement  of  financial  position.  Other non-current  and
           current receivables are carried at amortised cost. Any impairment losses are also recognised.


           The carrying amounts of financial assets not carried at fair value through profit or loss are tested
           on  each  reporting  date  for  objective  evidence  of  impairment  as  defined  by  IAS  39  (such  as
           significant  financial  difficulties of  the  debtor  or  a  high  probability  of  insolvency  proceedings
           against the debtor). If such evidence exists, the related impairment losses are recorded in the
           income statement.

           For  equity  instruments  classified  as  “available-for-sale,”  the  Group  regards  in  particular  a
           significant (more than 20%) or prolonged (more than nine months) decline in the fair value of the
           investment below its cost as objective evidence of impairment. If there is an impairment, it is
           recognised through profit or loss.

           Natural gas stock is measured at the lower of cost or net realisable value using the FIFO method.
           For recognition at net realisable value, it is assumed that natural gas stock will be withdrawn
           steadily over the three months after the reporting date. Hence, the net realisable value is the
           average of the market prices for the January to March front-months gas forwards (monthly band
           deliveries) quoted at NetConnect Germany.

           Materials and supplies are measured at the lower of cost or net realisable value on the reporting
           date. For marketable inventories, this is the current market price. For all other inventories, the net
           realisable  value  can  be  derived  from  the  planned  income  less  costs  yet  to  be  incurred.
           Measurement is based on the moving average price method.

           Services not yet invoiced and work in process are measured at cost, which comprises direct labour
           and materials costs as well as an appropriate portion of overheads.

           The cash and cash equivalents item in the statement of financial position comprises cash in hand,
           bank balances as well as highly liquid short-term deposits that can be converted into a fixed
           amount of cash at any time and are only subject to immaterial risks of changes in value.


           Cash and cash equivalents as reported in the statement of cash flows comprise the items defined
           above.
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