Page 43 - KELAG Annual Report 2017

occurrence (see additional notes). If the probability of an outflow of resources embodying
economic benefits is not high enough to require the recognition of provisions and is not remote
either, the relevant obligations are to be disclosed as contingent liabilities. The estimates are made
by the experts responsible, taking market-related inputs into account (where possible).

In these financial statements, provisions are measured based on assumptions and estimates as of
the reporting date (Notes 23 and 27). The major factors here were the expectations regarding the
future development of energy prices, the success of negotiations and the discount rate. The
discount rate for provisions due in between one and five years is 0.75% (prior year: 1.00%), for
provisions due in more than five years it is 1.5% (prior year: 2.00%).

In previous financial years, KELAG made offers to compensate for contractually cheaper electricity
supply agreements that stem from the period before the liberalisation. In light of the changed
price situation in the market and the resulting environment, virtually the provisioning was
released in the financial year 2017. A provision of EUR 6.8m had been recognised for this matter
in the prior year.

Provisions for measures due to regulatory requirements for power plants relate to official
regulations as well as other legal requirements, such as the implementation of the EU Water
Framework Directive and pending damage claims. Accounting provisions for sediment
management measures, which are necessary for the business and envisaged by the authorities,
are also recognised under this item. Any obligations arising from the acquisition of assets for
environmental protection reasons are recorded as subsequent acquisition costs in non-current
assets in accordance with IAS 16.11. This resulted in a total amount recorded in the KELAG Group’s
books and records of EUR 9.4m (prior year: EUR 10.2m).

The company has several long-term natural gas storage agreements with different terms expiring
between 2020 and 2027. Storage capacity remains under economic pressure due to a significant
change in the market model (e.g., accounting on a daily basis for small customers), because sales
can be structured in their entirety via the market. Due to these facts, there are onerous contracts
in terms of IAS 37.10. The loss of EUR 7.7m (prior year: EUR 8.2m) to be provisioned from these
contracts is the cost of meeting the natural gas storage contract obligations net of the income
recoverable from the storage capacities.

Environmental protection notices for Austrian wind turbines impose a duty to remove the wind
turbines after decommissioning or interruption of operation for more than one year. A provision
of EUR 2.6m (prior year: EUR 2.3m) was recognised for these recultivation obligations. The present
value of the obligation calculated in accordance with IAS 37 was recorded on the assets side of
the statement of the financial position in accordance with IAS 16.16c with an increase in the
carrying amount.