Page 40 - Annual Report KELAG Group 2018
P. 40

underlying revenue and incidental purchasing costs are offset against each other and presented
           net in revenue.

           Preparation  of  the  consolidated  financial  statements  in  accordance  with  IFRSs  requires
           judgements in the application of accounting policies. In addition, assumptions must be made by
           management about future developments that can materially affect the recognition and value of
           assets  and  liabilities,  the  disclosure  of  other  obligations  as  of  the  reporting  date  and  the
           presentation of income and expenses during the financial year.

           The following section provides a description of material judgements exercised and assumptions
           made regarding future developments on which these IFRS consolidated financial statements are

           If an equity investment is less than 20%, the company assumes that it has no significant influence
           unless this influence can be clearly demonstrated.

           For KELAG, it is an indisputable certainty that significant influence in accordance with IAS 28.6 is
           established by the granting of a contractually guaranteed dilution and squeeze-out protection
           clause and the joint realisation of significant capacity increases in the area of power plants as well
           as the provision of significant technical information and the appointment of a member of the
           Supervisory Board and the related participation in decision-making processes.

           Borrowing costs are capitalised in the Group when the requirements of a qualifying asset are met.
           The accounting principles this is based on provide that a project only becomes a qualifying asset
           if the construction period is longer than six months and the forecast production cost exceeds a
           materiality threshold of EUR 2.0m. If the qualifying asset is financed by means of a loan, the actual
           borrowing costs are capitalised. If, however, the asset is financed by means of group financing,
           average borrowing costs are capitalised. The average cost of capital for investments made in the
           financial year 2018 amounts to 2.70% (prior year: 2.65%).
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