Page 137 - Annual Report KELAG Group 2018
P. 137

(banks) are carried out only if they have a corresponding
                                                                  credit rating and an associated available credit limit.
                    There are risks from the incentives regulation system in the
                    regulated electricity and gas grid segment. The risk that the
                                                                  In the case of the company, derivative financial instruments
                    regulator might fail to factor in existing cost positions when
                                                                  constitute  commodity  forwards  relating  to  energy
                    setting charges is mitigated by means of active regulatory
                                                                  (electricity  and  gas)  as  well  as  an  interest  hedging
                    and cost management.
                                                                  instrument.
                    In the other areas of business (production, trading, sales
                    and heat), legal and regulatory risks stem from government
                    intervention, such as the introduction of new duties and
                    fees or the increase of existing duties and fees, and from   The Group’s activities are subject to a number of strict legal
                    changes to market models that restrict business activities.   requirements aimed at protecting human life, health and
                                                                  the  environment.  In  addition  to  increasingly  restrictive
                                                                  regulations, there is a related financial risk for compliance
                                                                  with the required measures.
                    Investment  decisions  are  based  on  the  investment  and
                    M&A  guideline  that  defines  clear  profitability  and  risk
                    criteria.  Observance  of  high  standards  for  implementing
                    investments keeps technical risks to a minimum.   Some of the risk management activities are also dedicated
                                                                  to the identification and management of legal risks. To this
                                                                  end, a group-wide compliance system was implemented in
                                                                  cooperation  with  an  international  law  firm.  This  system
                                                                  ensures  that  the  probability  of  legal  infringements  by
                    Equity investment risks result from potential fluctuations in
                                                                  employees  of  the  Group  is  kept  as  low  as  possible. The
                    earnings  from  investees.  Targeted  equity  investment
                                                                  compliance  system  thus  serves  to  protect  both  the
                    management  in  accordance  with  the  guidelines  (early
                                                                  company  as  well  as  every  individual  employee,  while
                    warning indicators and ongoing monitoring and reporting)
                                                                  making a contribution to safeguarding the business value
                    is  used  to  mitigate  the  risk.  If  impairment  testing  of  the
                                                                  in the long term.
                    carrying amounts of equity investments results in the need
                    for  write-downs,  impairment  losses  are  recognised
                    accordingly.




                    Interest  rate  and  currency  risks  are  mitigated  using  an   In  accordance  with  Sec. 82  AktG  (Austrian  Stock
                    adequate internal control system for all financial products   Corporations  Act),  it  is  the  responsibility  of  the  Board  of
                    used.                                         Directors  to  install  an  adequate  internal  control  and  risk
                                                                  management  system  relating  to  the  financial  reporting
                    The  risk  of  counterparty  default  is  reduced  by  written   process.  KELAG’s  Board  of  Directors  has  accordingly
                    regulations for Treasury. Transactions with counterparties
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