Page 84 - KELAG Annual Report 2017
P. 84

Market value of derivatives (assets)   0.0   16.7       0.0       16.7
            Market value of derivatives      0.0       19.0         0.0       19.0
            Cash flow hedge (liabilities)    0.0        2.0         0.0        2.0

           The aforementioned cash flow hedge is an interest rate swap concluded to hedge a variable-
           interest rate financial liability of EUR 14.4m (prior year: EUR 18.0m) against interest rate increases.
           The future interest payments hedged by the interest rate swap will become due and affect profit
           or loss between 2018 and 2021.

           The  net  loss  from  the  measurement  of  the  derivatives  used  came  to  EUR 0.7m  (prior  year:
           EUR 0.8m). Because earnings are recognised in the corresponding income and expense accounts
           for energy, these earnings are part of the operating result.

            Financial assets and liabilities at fair value through profit or loss   0.7   0.8
              thereof held for trading                              0.7        0.8

           The risks from the area of derivative financial instruments are essentially market and credit risks
           that arise from the company’s trading activities with, and the sale of, energy. In terms of market
           risks, adverse price developments represent the main risk for KELAG. This risk is counteracted by
           a  commodity  risk  management  system  with  limit  mechanisms  derived  from  the  central  risk
           management  system. The  same  applies  to  the  area  of  credit  risk,  where  bad  debts  and  the
           replacement and resale risks are limited and controlled by strict selection and intense monitoring
           of the trading and distribution partners.

           The fair value of derivative financial instruments used in energy trading reacts to price fluctuations
           of +/- 10% by an amount of approximately EUR 1.5m (prior year: approximately EUR 0.2m).
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