Page 112 - KELAG Annual Report 2019
P. 112

liabilities.  If  a  master  agreement  is  in  place  with  a  counterparty  that  contains  a  netting
                                      arrangement,  the  positive  and  negative  fair  values  of  the  transactions  for  the corresponding
                                      periods are netted for accounting purposes.

                                      For  own  use contracts,  i.e., contracts entered  for  the  purpose of  receiving  or  delivering  non-
                                      financial items in accordance with the expected purchase, sale or usage requirements of the
                                      KELAG Group are recognised not as derivative financial instruments but as pending transactions
                                      (own use exemption). If such an own use contract is onerous as defined by IAS 37, a provision for
                                      losses from pending transactions must be created. If the contracts contain embedded derivatives,
                                      these and the host contracts are recognised separately unless the economic characteristics and
                                      risks are closely linked to those of the host contract. Reassessment only occurs if there is a change
                                      in the terms of the contract that significantly modifies the cash flows that would otherwise have
                                      occurred.

                                      Derivative financial instruments for finance purposes are also measured at fair value, although the
                                      measurement is generally to be recognised in the income statement unless the hedge accounting
                                      regulations are applied.

                                      The KELAG Group applies hedge accounting in connection with the risk from variable interest rate
                                      cash flows by means of an interest rate swap (cash flow hedge).

                                      In general, revenue is recognised in accordance with the five-step model in IFRS 15: first, the
                                      contract(s) with customers is/are identified and thereafter the separate performance obligations
                                      in order to then determine the transaction price and allocate it to the contractual obligations in
                                      subsequent steps. In the fifth step, revenue is recognised when an entity satisfies a performance
                                      obligation, i.e., either at a point in time or over time.

                                      Most of the revenue is generated from the sale of electricity, gas and heat to industry, retail and
                                      business customers, energy supply companies and electricity exchanges as well as from grid and
                                      energy services. Revenue from grid services comprises income from national grid tariffs, which
                                      are granted as per E-Control’s regulation to cover the costs of the grid. Grid costs are also invoiced
                                      in some contracts to supply customers with electricity and gas. As KELAG has no control over the
                                      grid  services before  they  are  transferred  to the  customer, KELAG  is  regarded  as  the  agent  in
                                      relation  to  these  services.  Revenue  from  these  grid  services  is  therefore  netted  against  the
                                      corresponding grid expenses, whereby no revenue is recognised separately from this.

                                      Revenue from electricity, gas and heating as well as from grid services is generally recognised
                                      throughout the performance period. Revenue is realised in the amount of which the KELAG Group
                                      met its obligations in terms of supplying electricity and gas (i.e., the customer could and did use
                                      its power at any time) and is entitled to charge the performance already rendered. The recognition
                                      of revenue from the retail and business customer segment, which is generally invoiced once a
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