Page 29 - Annual Report KELAG Group 2018
P. 29

Interest-bearing non-current receivables are recognised using the effective interest method at
                                      amortised cost less any impairment losses. In the case of impairment, measurement is at the
                                      present value of the repayments expected.

                                      All trade receivables, receivables from affiliated non-consolidated entities and receivables from
                                      other investees and investors are measured at amortised cost. If impairment losses are expected,
                                      the items are recognised in the statement of financial position less impairment losses for amounts
                                      that are uncollectible.

                                      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.

                                      Impairment  losses  for  expected  credit  losses  are  recognised  for  financial  assets  measured  at
                                      amortised cost, lease receivables as well as contract assets on each reporting date. IFRS 9 follows
                                      an  impairment  model  for  financial  assets  that  is  aligned  to  the  recognition  of  expected
                                      impairment losses in future (expected credit losses). The expected credit losses are captured in
                                      several stages. The default probabilities and contribution ratios, which are dependent on the
                                      rating category, serve to calculate the impairment losses to be reported.

                                      Financial assets with a low credit risk as of the reporting date and financial assets for which the
                                      credit  risk  has  not  increased  significantly  since  initial  recognition  are  impaired  based  on  the
                                      expected 12-month credit loss (stage 1). A low credit risk is defined as an external investment
                                      grade rating (Standard & Poor’s: at least BBB-, Moody’s: at least Baa3) or an equivalent internal
                                      rating. A significant increase in the credit risk is defined as a financial asset being more than 30
                                      days  overdue.  If  the  credit  risk  has  increased  significantly,  the  impairment  is  based  on  the
                                      expected credit losses over the entire term of the financial asset (stage 2). If there is additional
                                      objective evidence for impairment for this kind of financial asset, the calculation is also based on
                                      the expected credit losses over the entire term of the financial asset (stage 3). An example of
                                      objective evidence is if the debtor is in substantial financial difficulties, a contract is terminated or
                                      the  financial  asset  is  90  days  overdue.  A  simplified  approach  is  permitted  for  calculating
                                      impairments of trade receivables, by recording a loss allowance at an amount equal to lifetime
                                      expected  credit  losses  using  an  impairment  matrix.  Historically  speaking,  defaults  on  trade
                                      receivables were immaterial in the KELAG Group, which is also expected to be the case for a
                                      forward-looking calculation. This is primarily thanks to regular instalments paid by customers, the
                                      proportion of services to be rendered to customers as well as a strict credit risk management and
                                      the dunning function. This is why the loss allowances recorded refer to stage 3 impairments for
                                      which there is objective evidence of impairment.
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