2.Change of Accounting Methods

2.1.Standards and Interpretations Applied or Amended and Adopted by the EU for the First Time

New applicable amended standards and interpretations adopted by the EU, taking effect on 1 January 2017 or later:

• IAS 7 (Amendments: Disclosure Initiative)
• IAS 12 (Amendments: Recognition of Deferred Tax Assets for Unrealised Losses)
• Annual Improvements to IFRS Standards 2014-2016 Cycle

The initial application does not result in any material changes.

2.2.Standards and Interpretations that Have Not Been Applied Early

In the 2017/2018 consolidated financial statements, the following amendments adopted by the EU were not applied early:

Entry into force in the EU on 1 January 2018 or later:

• IFRS 9 (Financial Instruments)
• IFRS 15 (Revenue from Contracts with Customers)
• IFRS 15 (Clarifications: Revenue from Contracts with Customers)
• IFRS 2 (Amendments: Classification and Measurement of Share-based Payments Transactions)
• IAS 40 (Amendments: Transfer of Investment Property)
• IFRS 4 (Amendments: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts)
• Annual Improvements to IFRS Standards 2014-2016 Cycle
• IFRIC 22 (Foreign Currency Transactions and Advance Consideration)

Entry into force in the EU on 1 January 2019:

• IFRS 16 (Leases)
• IFRS 9 (Amendments: Prepayment Features with Negative Compensations)
• IFRIC 23 (Uncertainty over Income Tax Treatments)

The following standards and interpretations, amendments and improvements of standards enter into force on 1 January 2018 or later, although they have not yet been adopted by the European Union at this time:

• IFRS 17 (Insurance Contracts)
• IAS 28 (Amendments: Long-Term Interests in Associates and Joint Ventures)
• IAS 19 (Amendments: Plan Amendment, Curtailment or Settlement)
• Annual Improvements to IFRS Standards 2015-2017 Cycle
• Amendments References to the Conceptual Framework in IFRS Standards
• IFRS 3 (Amendments: Definition of business plan)
• IAS 1 (Amendments), IAS 8 (Amendments: Definition of material)

These standards are expected to be applied on their date of entry into force.

Entry into force on 1 January 2016, adopted by the European Union but postponed for an indefinite time:

• IFRS 10 and IAS 28 (Amendments: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture)

IFRS 9 (Financial Instruments)

IFRS 9, issued in July 2014, replaces the existing guidelines in IAS 39 (Financial Instruments: Recognition and Measurement). IFRS 9 contains revised guidelines for the classification and measurement of financial instruments, including a new Expected Credit Losses Model to calculate the impairment of financial assets, as well as the new general reporting requirements for hedge accounting. It also incorporates the guidelines for the recognition and the derecognition of financial instruments from IAS 39. IFRS 9 is to be used for the first time in the 2018/2019 fiscal year, although early use is permitted.

IFRS 9 is applied for the first time in fiscal year 2018/2019. The option to provisionally maintain the guidelines of IAS 39 for the accounting of hedging transactions is not exercised. IFRS 9 is applied prospectively, where applicable.

In accordance with IAS 39, unlisted equity instruments classified as available for sale did not have to be measured at their fair value if the value cannot be reliably ascertained. IFRS 9 does however strictly require their measurement at fair value. This results in an increase in value of a participating interest recognised in the item Other investments (previously AFS (at cost), now FVOCI) by EUR 4.7 million. The other effects are insignificant.

IFRS 9 no longer permits the reclassification of accumulated profits or losses from equity instruments recognised in the other comprehensive income to profit or loss.

An impairment for expected credit losses must be recognised for financial assets measured in accordance with IFRS 9.4.1.2 or IFRS 9.4.1.2.A. If the credit risk has increased since the initial recognition, or where trade receivables are concerned, the impairment will correspond to the amount of credit losses expected over the term. If the credit risk has not increased since the initial recognition, an impairment in the amount of the credit losses expected over a period of 12 months must be recognised. In the Energie AG Group, this rule particularly concerns the items “Trade receivables”, “Fixed term deposits” and “Cash and cash equivalents”. Impairments in the amount of EUR 0.3 million were recognised for previously unimpaired trade receivables.

Derivatives with a cash flow-hedge relationship and derivatives with a fair value-hedge relationship are also classified effective hedging transactions under IFRS 9.

IFRS 15 (Revenue from Contracts with Customers)

IFRS 15 was published in May 2014 and replaces the previous rules set out in IAS 18, IAS 11, IFRIC 13, IFRIC 15 and IFRIC 18. In the future, new qualitative and quantitative information will be required to allow the target audience of the financial statements to understand the type, amount, time and uncertainty of sales revenues and cash flows from contracts with customers. Using a five-step model, companies must determine at what time (or period) and what amount sales revenues are recognised. The model specifies that sales revenues must be reported at the time (or over the period) of the transfer of control over goods or services from the company to the customer with the amount which the company is expected to be entitled to. Depending on the fulfilment of various criteria, revenues are recognised as follows:

• Over a period such that the service provision of the company is reflected; or
• At a time at which the control over the goods or services is transferred to the customer.

IFRS 15 is applied for the first time in fiscal year 2018/2019. Its first-time application had retrospective effect, with any accumulated adjustment amounts from the initial application being recognised at the time of the initial application (modified retrospective application).

Major components of the sales revenues were analysed with regard to potential implications from the initial application of IFRS 15. This analysis concerns in particular:

• Sales revenues from the delivery of electricity
• Sales revenues from the sale of natural gas
• Sales revenues from the electricity and gas grid
• Sales revenues from the Waste Management Segment
• Sales revenues from the delivery and disposal of waste water

Contracts exist within the Group that provide for contractual obligations consisting of discrete and distinct goods or services. As the different components are already being factored in, recorded and billed separately, no significant changes are expected to result from these circumstances.

The overall result of the analysis showed that, based on the currently available information, no significant changes are expected from the initial application of IFRS 15. In accordance with IFRIC 18, revenues from construction cost subsidies in the amount of EUR 25.8 million are currently recognised as sales revenues over the respective useful life of the asset. In the future, construction cost subsidies will be recognised in accordance with IFRS 15. This will not result in any changes to the recognition and measurement of construction cost subsidies under IFRIC 18.

IFRS 16 (Leases)

IFRS 16, published in January 2016, replaces IAS 17, IFRIC 4, SIC-15 and SIC-27. The new standard provides that in future all leases and the contractual rights and obligations associated with these must be reported on the balance sheet of the lessee. This resolves the current differences in the recognition of operating and finance leases under IAS 17. The lessee will recognise a right-of-use asset representing its right to use an underlying asset and a lease liability in the amount of the lease's present value. The right of use asset must then be amortised and the lease liability carried forward using the effective interest method. There are exemptions possible for short-term leases and leased properties of low value. IFRS 16 will have to be applied for the first time in fiscal year 2019/2020. Early application is permitted, but not intended by Energie AG.

The most material change concerns the Group's head office in Linz. The use of the Group's head office is currently arranged on the basis of an operating lease. Under the current conditions, it is expected that a right-of-use asset and a lease liability in the amount of EUR 40.2 million (estimated lease liability as per 1 October 2019) will have to be recognised. In addition, portfolio contracts regarding property were localised in the Waste Management Segment resulting, based on the currently available information, in the recognition of a right of use asset and a corresponding liability in the amount of EUR 17.4 million.

Current finance leases (carrying amount as of 30 September 2018: EUR 22.3 million) will be continued; there will only be a reclassification of the asset as a right-of-use asset.