Page 37 - Annual Report KELAG Group 2018
P. 37

Derivative financial instruments in connection with the trade and sale of energy are measured at
                                      fair  value.  Unrealised  measurement  gains  and  losses  are  generally  recognised  in  the  income
                                      statement unless the requirements for hedge accounting pursuant to IFRS 9 apply. The KELAG
                                      Group currently does not use hedge accounting in the energy business.

                                      For  own  use contracts,  i.e., contracts entered  for  the  purpose of  receiving  or  delivering  non-
                                      financial items in accordance with the expected purchase, sale or usage requirements of the
                                      KELAG Group are recognised not as derivative financial instruments but as pending transactions
                                      (own use exemption). If such an own use contract is onerous as defined by IAS 37, a provision for
                                      losses from pending transactions must be created. If the contracts contain embedded derivatives,
                                      these and the host contracts are recognised separately unless the economic characteristics and
                                      risks are closely linked to those of the host contract. Reassessment only occurs if there is a change
                                      in the terms of the contract that significantly modifies the cash flows that would otherwise have
                                      occurred.

                                      All  transactions  from  the  company’s  own  trading  activities  constitute  derivative  financial
                                      instruments as defined by IFRS 9. They are reported in other assets if they have a positive fair value
                                      and in other liabilities if they have a negative fair value.

                                      The fair values of the derivatives used in the KELAG Group can be measured reliably as of each
                                      reporting date. The measurement of derivative financial instruments relating to energy is based
                                      on market prices and a forward price curve derived from market prices. As already mentioned, in
                                      the  field  of  gas,  listings  for  the  corresponding  virtual  trading  points  are  used  directly  for
                                      measurement.


                                      The results of fair value measurement are recorded in the corresponding energy-industry-related
                                      income and expense items. The respective total result is part of the operating result.


                                      Positive and negative fair values are presented separately. If a master agreement is in place with a
                                      counterparty that contains a netting arrangement, the positive and negative fair values of the
                                      transactions are netted for accounting purposes.
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