Page 104 - KELAG Annual Report 2019
P. 104

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,
                                      receivables are recognised in the statement of financial position less these impairment losses.

                                      Other non-current and current receivables contain energy derivatives. The derivative financial
                                      instruments are recognised at fair value. Other non-current and current receivables are carried at
                                      amortised cost. Impairment losses are also recognised, if applicable.

                                      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 standard differentiates between a general and simplified impairment model.

                                      The general model, which is mainly used in the KELAG Group for securities and bank balances,
                                      calculates the impairment losses to be reported in addition to the respective carrying amounts
                                      using the probability of default and loss given default, depending on the rating category.

                                      These 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, in addition to dunning measures, 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.

                                      The simplified impairment model applies to trade receivables where the impairment loss is to be
                                      recorded  at  an  amount  equal  to  lifetime  expected  credit  losses.  KELAG  bases  its  bad  debt
                                      allowances on trade receivables on its internal dunning stages. However, historically speaking,
                                      defaults on trade receivables are usually immaterial in the KELAG Group, and this is also expected
                                      to be the case in the future. This is primarily thanks to regular instalments paid by customers, the
   99   100   101   102   103   104   105   106   107   108   109