Page 109 - KELAG Annual Report 2019

Public investment subsidies are offset against the corresponding cost.

The construction cost subsidies recognised in the statement of financial position are those
received from customers for the grid business and connection costs to the electricity and gas grid
as well as other connection cost contributions from the heat segment, which are classified as
contract liabilities pursuant to IFRS 15. These are reported as a liability and released through profit
or loss over a period of 20 years. The amounts released are reported in revenue.

If grid user charges are set by a regulator on the basis of cost or earnings estimates and lower or
higher costs or earnings in the past are considered during the future rate setting procedure, the
grid operator is entitled to raise its charges to recover additional costs or lower earnings from the
grid users by raising its charges and is required to reduce its charges to reimburse users for lower
costs or earnings increases by setting lower user charges in future years. Such claims or
obligations are referred to as regulatory assets or liabilities.

In the grid business, the KELAG Group is subject to a regulated tariff regime; E-Control Austria (the
government regulator for electricity and natural gas markets) acts as the regulatory authority in
Austria.

Neither regulatory assets nor regulatory liabilities are recognised in these consolidated financial
statements as the recognition of such assets and liabilities is inappropriate pursuant to the current
applicable interpretation of IFRSs.

Energy certificates in the KELAG Group primarily relate to green certificates. These qualify as
grants related to income and, pursuant to IAS 20.7, are recognised when there is assurance that
the company will comply with the conditions attached to them and the grants will be received. In
this event, the certificates and allowances are recorded at fair value in the KELAG Group.

Measuring certificates at fair value means that the certificates are presented under inventories
upon acquisition of the legal right (generally when electricity is produced in certified power
plants). Income from the allocation of certificates and allowances is reported under other
operating income. If necessary, subsequent measurement is at the lower net realisable value.
Income from the sale of green certificates is included under revenue.

The income tax expense reported in the income statement for the past financial year comprises
the income tax calculated from the taxable income and the applicable tax rate for the individual
entities as well as the change in deferred tax liabilities and assets.

With a group and tax equalisation agreement dated 7 December 2004, KELAG formed a tax group
pursuant to Sec. 9 KStG (Austrian Corporate Income Tax Act) as a member with KEH as the group
parent. Since 2005, several new members from the Group have been added to this tax group. The