Page 122 - KELAG Annual Report 2019
P. 122

Any contingent liabilities are regularly assessed in terms of their likelihood of occurrence. If the
                                      probability  of  an  outflow  of  resources  embodying  economic  benefits  is  not  high  enough  to
                                      require the recognition of provisions and is not remote either, the relevant obligations are to be
                                      disclosed  as  contingent  liabilities. The  estimates  are  made  by the experts  responsible,  taking
                                      market-related inputs into account (where possible).


                                      In these financial statements, provisions are measured based on assumptions and estimates as of
                                      the reporting date (Notes 23 and 27). The major factors here were the expectations regarding the
                                      future  development  of  energy  prices,  the  success  of  negotiations  and  the  discount  rate.
                                      Depending  on  the  maturity  of  the  underlying  obligation,  the  discount  rate  for  non-current
                                      provisions is between 0.00% and 0.34% (prior year: between 0.75% and 1.50%).


                                      Provisions  for  measures  for  power  plants  relate  to  official  regulations  and  other  legal
                                      requirements,  such  as  pending  damage  claims.  Accounting  provisions  for  obligations  under
                                      private law, which are necessary for the business, and sediment management measures that have
                                      been  notified  by  the  authorities,  are  also  recognised  under  this  item. This  resulted  in  a  total
                                      amount recorded in current provisions of EUR 11.8m (prior year: EUR 19.3m).

                                      The company has several long-term natural gas storage agreements that expire between 2020
                                      and 2027. Storage capacity remains under economic pressure due to a significant change in the
                                      market model (e.g., accounting on a daily basis for small customers), because sales can often be
                                      structured via the market. Due to these facts, there are onerous contracts in terms of IAS 37.10.
                                      The loss of EUR 5.7m (prior year: EUR 6.5m) to be provisioned from these contracts over the long
                                      term  is  the  cost  of  meeting  the  natural  gas  storage  contract  obligations  net  of  the  income
                                      recoverable from the storage capacities.

                                      KELAG is obliged to supply energy to contracting partners at unfavourable conditions. External
                                      offers to settle these obligations exist and these have been implemented in campaigns. The non-
                                      current provision of EUR 28.6m (prior year: EUR 18.6m) covers the expected outflow of resources
                                      using  the  lower  of  the  amounts  from  the  compensation  and  settlement  of  disadvantageous
                                      contracts. Using the experience  gained  from prior replacement  offerings,  KELAG  divided  this
                                      provision into various acceptance tranches and a non-acceptance tranche. This procedure is in
                                      line with KELAG’s expectations and strategies pursued when dealing with historically privileged
                                      contracts.

                                      In the reporting period 2015, several parties made claims for damages against VERBUND Hydro
                                      Power  GmbH  –  included  in  these  consolidated  financial  statements  as  an  associate  –  in
                                      connection with the Drau flood in 2012. The portion of the obligation attributable to KELAG is still
                                      recognised as a non-current provision of around EUR 16.2m (prior year: EUR 15.2m).
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