Page 38 - Annual Report KELAG Group 2018
P. 38

Energy trading transactions that are allocable to the value-added activities in the energy industry
           and are settled physically are not netted in the income statement, whereas transactions purely
           from the company’s own trading activities are presented net. Contracts that satisfy the own use
           exemption in IFRS 9 are always allocable to the value-added activities in the energy industry.

           The KELAG Group designates individual hedging instruments (derivatives) to cash flow hedges.
           The KELAG Group applies hedge accounting in connection with the risk from variable interest rate
           cash flows by means of an interest rate swap.


           The fair value of interest rate swaps is the value that the Group would receive or have to pay to
           reverse the transaction on the reporting date. This takes into account current market conditions,
           in particular the current interest rate, yield curves and the contractual partners’ credit risk. This
           relates to level 2 measurements as defined by IFRS 13.

           The effective part of the change in fair value of derivatives suitable as cash flow hedges and
           designated as such is recorded in the hedging reserve under other comprehensive income. The
           gain or loss attributable to the ineffective portion is posted directly through profit or loss and
           recognised in the income statement as the item other income/other expenses. In the financial
           year 2018 as in the prior year, no part of the hedge was ineffective. As such, no ineffective portion
           had to be recognised in net profit or loss.

           Amounts that are recognised in other comprehensive income are reclassified to profit or loss in
           the period in which the hedged item affects the profit or loss. The disclosure in the statement of
           comprehensive income and the income statement is made in the same line item used for the
           hedged item.

           The hedge is derecognised if the hedging instrument expires or is sold, terminated or exercised,
           or if the requirements for hedge accounting are no longer satisfied. The complete amount of the
           gains  and  losses  recognised  at  that  point  in  time  in  other  comprehensive  income  and
           accumulated in equity remains in equity and is not recycled to profit or loss until the expected
           transaction is also recognised in the income statement. If the expected transaction is no longer
           assumed to occur, the full amount of gains recognised in equity is immediately released to the
           income statement.
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