Page 99 - KELAG Annual Report 2019
P. 99

is remeasured using recognised financial methods. Leases in the KELAG Group primarily relate to
           agreements for the use of (parts of) buildings, land, lines and vehicles.

           There are simplification options for short-term leases and leased assets of low value, for which
           IFRS  16  provides  recognition  exemptions. The  KELAG  Group  makes  use  of  the  two  practical
           expedients  and  therefore  continues  to  recognise  the  lease  payments  from  the  contracts
           concerned through profit or loss. A lease is considered to be short-term when the contractual
           term  does  not exceed  12  months  or  the  remaining contractual  term  as  of  the  date  of initial
           application does not exceed 12 months. Leases of low-value assets generally exist in the KELAG
           Group when the new value of the underlying asset does not exceed approximately EUR 5k.

           Furthermore, the KELAG Group made use of the option to not perform an impairment test of
           leases. Instead, it drew on the assessment of provisions from onerous contracts; there was no
           resulting adjustment to the right-of-use assets. A uniform discount rate was used for the first-time
           application to portfolios of similar leases. In accordance with the option available, the KELAG
           Group also did not reassess whether or not a contract constitutes a lease as defined by IFRS 16 if
           this  already  existed  at  the  time  of  first-time  application,  but  instead  drew  on  the  previous
           classification pursuant to IAS 17 or IFRIC 4 for these contracts. The KELAG Group also opted not to
           voluntarily apply IFRS 16 to leases of intangible assets.

           Within the KELAG Group, IFRS 16 was applied for the first time with retrospective effect in the
           financial year 2019. The cumulative adjustment amounts were recorded as of 1 January 2019. The
           leases  within  the  KELAG  Group  that  are  now  to  be  recognised  by  the  lessee  totalled  around
           EUR 12.2m  as  of  1 January  2019;  around  EUR 0.9m  relates  to  discounting,  although  the
           undiscounted obligation from the newly recognised lessee contracts made up around EUR 13.1m
           as of 1 January 2019. In the statement of financial position, right-of-use assets are included in the
           line items where the assets underlying the leases would also have been presented. Lease liabilities
           are presented in financial liabilities.

           The weighted average incremental borrowing rate for all newly recognised leases under IFRS 16
           as of 1 January 2019 was roughly 0.86%.
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