Page 66 - InterEnergo - Annual Report 2020
P. 66

Interenergo                       Accounting report                                                                    Interenergo                       Accounting report

            Non-derivative financial assets                                                                                        The Company enters into contracts on purchasing or selling electricity with financial or physical settlement
                                                                                                                                   for the purpose of trading (standardized futures contracts and commodity forward contracts). Standardized
            Financial assets are not reclassified upon initial recognition unless the Company changes its business model           futures contracts are binding agreements on the purchase or sale of a standard quantity of electricity on a
            for financial assets’ management; in such case, the respective financial assets shall be reclassified on the first     standard day in the future at a price agreed in the present, and they are traded with on an organized (stock
            day of the next reporting period following the change in the business model.                                           market) market and are financially settled. Commodity forward contracts are contracts on the purchase or
            The Company derecognises a financial asset when the contractual cash flow rights from the financial asset              sale of electricity with a deadline in the future at a price agreed during the contract’s signing and with which
            expire or when it transfers the rights to receive the contractual cash flow from a transaction in which all risks      the Company trades directly with partners and are physically settled, whereby the Company is also required
            and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor          to provide for cross-border transmission capacities. The Company treats these contracts as derivatives and
            retains all risks and benefits of ownership and does not retain control of the financial asset.                        does not apply an exemption based on own use (IFRS 9.2.4). The effects of trading with futures and forward
                                                                                                                                   contracts are recognized within operating income and expenses, as the Company does not avail itself of the
            Receivables are initially recognized at fair value and subsequently at amortised cost using the effective interest     possibility of using hedge accounting.
            method, less any impairment losses. Interest expenses and exchange differences are recognized in profit or
            loss. Any gain or loss arising on derecognition are also recognized in profit or loss.                                 Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at
                                                                                                                                   fair value, while changes therein are generally recognized in the statement of profit or loss.
            Trade receivables and other receivables without a fixed interest rate are measured at the initial amount of the
            invoice, less expected credit losses.                                                                                  Assets and liabilities measured at fair value through profit or loss are remeasured at fair value at least annually
                                                                                                                                   during the preparation of financial statements.
            Non-derivative financial liabilities
                                                                                                                                   Impairment of assets
            Financial liabilities are initially recognised on the date they are incurred. The Company derecognises a financial
            liability when the obligations under the contract are fulfilled, cancelled or when they expire. The Company            Impairment of financial assets and contract assets
            derecognises a financial liability even when its terms change and the cash flow of the modified liability differs
            materially; in such case, the new financial liability is recognised at fair value based on the changed conditions.     The Company recognises impairments arising on expected credit losses for:
            Upon derecognition of a financial liability, the difference between the carrying amount and the consideration          •   financial assets measured at amortised cost;
            paid (including any non-monetary assets transferred or liabilities assumed) is recognized in profit or loss.           •   contract assets;
            Financial liabilities are initially recognised at fair value less any directly attributable transaction costs. After   •   derivatives (commodity forward contracts).
            initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.
                                                                                                                                   The Company measures impairments in amounts equal to the loss over the life of the financial asset (LECL).
            Trade and other payables are not measured at the initial amount of the invoice if the effect of discounting is         The  Company  measures  impairments  equal  to  the  12-month  expected  credit  losses  for  cash  and  bank
            insignificant.                                                                                                         deposits and financial assets for which the credit risk has not increased significantly since initial recognition.
            Most of the Company’s operating and financial liabilities are disclosed at amortised cost, except for derivatives      The recognized amount of impairment of receivables and contract assets is measured at the amount of
            traded within the framework of its trading activity, such as commodity forward contracts, contracts for cross-         losses over the life of the financial asset (LECL). Losses over the life of the financial asset are expected
            border transmission capacities and foreign currency forward contracts. The fair value of these contracts is            credit losses that arise from all possible events of default over the life of the financial instrument. 12-month
            defined on the basis of the valuation model that is as at the date of the statement of financial position based        expected credit losses are those portions of expected credit losses that result from potential defaults within
            on publicly available market data on the values of such instruments and is recognized in the statement of              12 months of the reporting date (or a shorter period if the expected life of the total life of the instrument is
            profit or loss.                                                                                                        less than 12 months).
                                                                                                                                   Operating receivables that do not include a significant financial component usually have a short-term duration
            Offsetting                                                                                                             (less than 12 months), which means that the measurement of impairments in the amount of losses over the
                                                                                                                                   life of the financial asset (LECL) does not differ from that measured in 12 -monthly expected credit losses.
            Financial assets and liabilities are offset and the amount is disclosed in the statement of financial position if
            and only if the Company has a legally enforceable right to offset the recognized amounts and intends to either         While  determining  whether  the  credit  risk  of  a  financial  asset  has  increased  significantly  since  initial
            settle the net amount or cash the asset and settle its liability at the same time.                                     recognition, and while estimating expected credit losses, the Company considers reasonable and useful
                                                                                                                                   information that is relevant and available without undue cost or effort. This includes both quantitative and
            Derivatives                                                                                                            qualitative data and analyses, based on the Company’s past experience and sound credit ratings, and includes
                                                                                                                                   forward-looking information.
            Contracts relating to purchase or sale of a non-financial asset that can be settled net of cash or by means of         The Company assumes that the credit risk of a financial asset is materially increased if the maturity of the
            another financial instrument or exchange of financial instruments, are treated in accordance with IFRS 9 as if         payment is longer than 30 days. An asset is credit impaired if there is a breach of contract, for example due
            they were financial instruments, except for contracts that the Company concluded and continues to own them             to late payment or maturity.
            for the purpose of receiving or supplying the non-financial asset in accordance with the expected needs after
            the purchase, sale or use. Purchase contracts that fall within the scope of IFRS 9 are treated as derivatives
            and are valued at fair value through profit or loss.

            64    Integrated Annual Report 2020                                                                                                                                                       Integrated Annual Report 2020  65
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