Page 108 - KELAG Annual Report 2019
P. 108

the amount of the obligation. Provisions are stated at the amount needed to settle the obligation
                                      and are not netted against any rights to reimbursement. The settlement amount is calculated
                                      based on the best estimate of the amount with which a present obligation could be settled or
                                      transferred to a third party on the reporting date. Future cost increases that are foreseeable and
                                      probable as of the reporting date are taken into account.


                                      Provisions for potential losses from onerous contracts are also recognised in KELAG’s consolidated
                                      financial statements in accordance with the requirements of IAS 37. The carrying amount reflects
                                      the amount of the expected unavoidable outflow of resources at full cost. This is the lower amount
                                      of  the  cost  of  fulfilling  the  agreement  and  any  compensation  payments  if  it  is  not  fulfilled.
                                      However,  recognising  impairment  losses  on  assets  associated  with  onerous  contracts  has
                                      precedence over recognising provisions for potential losses.

                                      Non-current provisions are discounted if the present value of the expected settlement amount
                                      differs significantly from its nominal value. As a rule, the provisions due to be settled in more than
                                      12 months are discounted in accordance with the Group’s accounting and measurement rules.
                                      The discount rate is a risk-free pre-tax interest rate with matching terms; any risks are taken into
                                      account in the future cash flows. The amounts from unwinding the discount are recognised as an
                                      interest expense; any effects from interest rate changes are disclosed under the operating result.

                                      Trade payables and other liabilities are measured at amortised cost.


                                      Current  other  liabilities  contain  energy  derivatives.  The  derivative  financial  instruments  are
                                      recognised at fair value.


                                      Contingent liabilities  are  possible  obligations to  third parties  or  existing  obligations  that  will
                                      probably not lead to an outflow of resources or whose amount cannot be reliably measured.
                                      Contingent  liabilities  are  recognised  in  the  statement  of  financial  position  only  if  they  were
                                      assumed  as  part  of  a  business  combination.  They  are  recognised  at  fair  value  and  then
                                      subsequently measured at the higher of:

                                          the amount that would be recognised in accordance with the guidance for provisions above
                                          (IAS 37); or
                                          the amount initially recognised less, when appropriate, cumulative amortisation recognised in
                                          accordance with the guidance for revenue recognition.

                                      Government grants are recognised at fair value where there is reasonable assurance that the grant
                                      will be received and all attached conditions will be complied with. When the grant relates to an
                                      expense item, it is recognised as income over the period necessary to match the grant on  a
                                      systematic basis to the costs that it is intended to compensate.
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