Page 34 - KELAG Annual Report 2017
P. 34

The KELAG Group designates individual hedging instruments (derivatives) to cash flow hedges.
           The KELAG Group has a liability subject to variable interest and hedges the risk from variable
           interest rate cash flows by means of an interest rate swap.

           The fair value of interest rate swaps is the value that the Group would receive or have to pay to
           reverse the transaction on the reporting date. This takes into account current market conditions,
           in particular the current interest rate, yield curves and the contractual partners’ credit risk. This
           relates to level 2 measurements as defined by IFRS 13.


           The effective part of the change in fair value of derivatives suitable as cash flow hedges and
           designated as such is recorded in the hedging reserve under other comprehensive income. The
           gain or loss attributable to the ineffective portion is posted directly through profit or loss and
           recognised in the income statement as the item other income/other expenses. In financial year
           2017 as in the prior year, no part of the hedge was ineffective. As such, no ineffective portion had
           to be recognised in net profit or loss.

           Amounts that are recognised in other comprehensive income are reclassified to profit or loss in
           the period in which the hedged item affects the profit or loss. The disclosure in the statement of
           comprehensive income and the income statement is made in the same line item used for the
           hedged item.

           The hedge is derecognised if the Group dissolves the hedging relationship or if the hedging
           instrument expires, is sold, cancelled, exercised or no longer suitable for hedging purposes. The
           complete amount of the gains and losses recognised at that point in time in other comprehensive
           income and accumulated in equity remains in equity and is not recycled to profit or loss until the
           expected transaction is also recognised in the income statement. If the expected transaction is no
           longer assumed to occur, the full amount of gains recognised in equity is immediately released to
           the income statement.

           Revenue is recognised when the goods are delivered to the customer or the service is performed.
           The corresponding revenue is recognised when the significant risks and rewards of ownership of
           the goods have passed to the buyer in accordance with the contractual agreements, payment –
           i.e., the fair value of the consideration received or receivable for goods or services – has been fixed
           contractually and it is probable that the trade receivable will be settled.

           Most of the revenue is generated from the sale of electricity, gas and heat to industry, retail and
           business customers, energy supply companies and electricity exchanges as well as from grid
           services.  Revenue  from  grid  services  comprises  income  from  national  grid  tariffs,  which  are
           granted  as  per E-Control’s  regulation  to cover  the costs  of  the  grid.  Revenue  from  electricity
           supplies to industrial customers and from energy trade and grid services is recognised as of the
           date  of  supply.  In  the  retail  and  business  customer  segment,  revenue  is  recorded  when  an
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