Page 30 - Annual Report KELAG Group 2018

Natural gas stock is measured at the lower of cost or net realisable value using the FIFO method.
For recognition at net realisable value, it is assumed that natural gas stock will be withdrawn
steadily over the three months after the reporting date. Hence, the net realisable value is the
average of the market prices for the January to March front-months gas forwards (monthly band
deliveries) quoted at NetConnect Germany.

Materials and supplies are measured at the lower of cost or net realisable value on the reporting
date. For marketable inventories, this is the current market price. For all other inventories, the net
realisable value can be derived from the planned income less costs yet to be incurred.
Measurement is based on the moving average price method.

Services not yet invoiced and work in process are measured at cost, which comprises direct labour
and materials costs as well as an appropriate portion of overheads.

The cash and cash equivalents item in the statement of financial position comprises cash in hand,
bank balances as well as highly liquid short-term deposits that can be converted into a fixed
amount of cash at any time and are only subject to immaterial risks of changes in value.

Cash and cash equivalents as reported in the statement of cash flows comprise the items defined
above.

Financial liabilities are recognised at fair value less transaction costs. A premium, debt discount or
other difference between the amount received and the repayment amount is spread over the
term using the effective interest method and recognised in the financial result.

The provisions for current pensions, claims to future pensions and pension-related obligations are
calculated using the projected unit credit method in accordance with IAS 19. The Group fully
recognises the remeasurement gains or losses on the net liability from defined benefit plans in
other comprehensive income in the period in which they occur. Any remeasurement gain or loss
on the net liability from defined benefit plans is transferred directly to accumulated profits/losses
and not reclassified to profit or loss in subsequent periods. The net interest expense is recorded
under interest expenses in the income statement.

Pension obligations are determined on the basis of actuarial reports. The biometrical assumptions
used for the first time in these consolidated financial statements were the “AVÖ 2018-P –
Rechnungsgrundlagen für die Pensionsversicherung” for employees. The “AVÖ 2008-P –
Rechnungsgrundlagen für die Pensionsversicherung” were still used as the basis for these
calculations in the prior year. This change in the assumptions caused an increase of around
EUR 12m in the KELAG Group’s social capital, the share of which posted in the consolidated
income statement comes to around EUR 0.8m. The effect from the new assumptions is therefore
mainly recorded directly in equity through other comprehensive income. Apart from death and