- Annual Report
- Financial Report
- Consolidated Financial Statements of the Repower Group
- Comments on the consolidated financial statements
- Consolidated statements of comprehensive income
- Consolidated balance sheet
- Changes in consolidated equity
- Consolidated cash flow statement
- Note
- 1 Total operating revenue
- 2 Personnel expenses
- 3 Depreciation/amortisation and impairment
- 4 Financial income
- 5 Financial expenses
- 6 Investments in associates and partner plants
- 7 Income taxes
- 8 Earnings per share
- 9 Property, plant and equipment
- 10 Intangible assets
- 11 Other financial assets
- 12 Inventories
- 13 Receivables
- 14 Securities and other financial instruments
- 15 Positive/negative replacement values for held-for-trading positions
- 16 Cash and cash equivalents
- 17 Share capital
- 18 Non-current financial liabilities
- 19 Pension fund obligation
- 20 Provisions
- 21 Other non-current liabilities
- 22 Other current liabilities
- 23 Current financial liabilities
- 24 Prepaid expenses, accruals and deferred income
- 25 Transactions with related parties
- 26 Additional disclosures on financial instruments
- 27 Business combinations and disposals
- 28 Assets and liabilities held for sale
- 29 Impairment of assets
- 30 Correction to prior-year figures
- 31 Segment reporting - Group-wide information
- 32 Contingent liabilities and guarantee obligations
- 33 Obligations related to operating leases
- 34 Risk assessment
- 35 Events occurring after the balance sheet date
- Notes to the consolidated financial statements
- Report of the Group auditors
- Financial Statements of Repower AG
- Income statement
- Balance sheet
- Notes
- 1 Depreciation and amortisation
- 2 Intangible assets
- 3 Financial assets
- 4 Receivables
- 5 Prepaid expenses and accrued income
- 6 Equity
- 7 Provisions
- 8 Non-current liabilities
- 9 Current liabilities
- Other information
- Disclosures in accordance with Art. 663bbis of the Swiss Code of Obligations
- Disclosures in accordance with Art. 663c of the Code of Obligations at 31 December of the financial year
- Appropriation of retained earnings
- Report of the auditors
- Consolidated Financial Statements of the Repower Group
- Graphics
- Organisation chart
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Risk management
Risk management and financial risk management
Basis
The operating activities of Repower are exposed to market, counterparty and transaction risks arising from the energy business as well as liquidity risks. Risk management aims to limit the risks specified through operational and financial measures. Financial risks are managed by the Executive Board within the framework of the strategic parameters and risk targets determined by the Board of Directors. The guidelines issued by the Board of Directors on «Risk Management in the Energy Sector» set down the principles governing the Repower Group's risk policy. They cover directives on the entry into, assessment, management and limitation of business risks in the energy sector, which were fine-tuned in 2011, and define the organisation and responsibilities. The aim is to ensure a reasonable balance between business risks entered into, earnings and risk-bearing equity. The Board of Directors and the Executive Board define risk limits in accordance with the company's risk capability. These limits are regularly reviewed for each risk category. Special measures are taken to manage risks related to personal safety, information technology and energy business (transaction, market and counterparty risks). Risk management was further developed during the year under review but there were no changes in terms of content.
Market risks
Repower is exposed to various market risks within the scope of its business activities. The most important of these are energy price risk, interest rate risk and currency risk.
Energy price risks:
Energy transactions are conducted for the main purpose of covering physical delivery contracts, energy procurement, and selling and optimising the company's own generation volumes. Energy price risks include risks arising from price volatility, changes in the price level, and changing correlations between markets and generation times. Compliance with trading limits and the risk situation of the portfolio are monitored by Risk Management and reported to the Risk Management Committee. The Risk Management Committee assesses the risk situation in the energy sector at least once a month. The Board of Directors and the Executive Board are kept informed about the risk situation by reports submitted by the Risk Management Committee on a quarterly basis and in the case of extraordinary events.
Interest rate risks:
Interest rate risks primarily concern changes in interest rates on non-current interest-bearing liabilities. In the event that the agreed interest rate is variable, changes in interest rates represent an interest rate risk. Due to the long investment horizon for capital-intensive power plants and grids, Repower primarily obtains long-term financial loans with phased terms to maturity. The interest situation and hedging options are continuously reviewed. Derivative financial instruments – in particular interest rate swaps – are used and under certain conditions recognised as hedging relationships (hedge accounting). Another interest rate risk exists with regard to variable-rate positions of current assets, in particular in the case of sight deposits. This risk is minimised by pursuing an active cash management policy.
Currency risks:
Energy goods and services are paid for and sold by Repower mainly in euros and partly in Swiss francs. The foreign Group companies conduct nearly all of their other transactions in their functional currency. These transactions are not subject to currency risks. There is, however, a risk of currency fluctuation on those positions denominated in euros for Repower AG and their Group companies with a functional currency other than the euro. Intragroup loans are particularly subject to currency risks. The currency risk is largely eliminated by netting receivables and liabilities in the foreign currency as agreed. Forward exchange transactions are conducted to reduce the currency risk. Net investments in foreign Group companies are also exposed to exchange rate fluctuations. However, these long-term commitments are not hedged since the differences in inflation rates and exchange rate fluctuations should offset each other over the long term.
Counterparty risks
Credit risks:
Credit risks arise if customers cannot meet their obligations as agreed, or the intrinsic value of financial assets is endangered in some other way. The credit risk is continuously monitored by checking outstanding payments of counterparties and by carrying out credit checks on contractual parties. Repower enters into significant business relationships only with counterparties who are creditworthy and whose solvency has been verified by a credit check.
The maximum credit risk exposure on the closing date is equal to the carrying amounts of the recognised financial assets. As the agreed offsetting of receivables and liabilities with the same counterparty has already been recognised, no other major agreements which would lessen the maximum default risk exist on the balance sheet date.
Supplier default risks:
Supplier default risks arise if suppliers cannot meet their supply obligations as agreed and a replacement can only be purchased at less favourable terms. Limits are set on purchase volumes to avoid risk concentration and to minimise supplier default risks. Observance of these limits is continuously monitored. Repower enters into significant business relationships only with counterparties who can guarantee supply readiness.
Transaction risks
During the course of business activities, operational risks arise. These transaction risks are mitigated by the skill and professionalism of the employees, and where necessary by providing them with training and further training. Other transaction risks arise as a result of political decisions and regulatory changes. Repower pays close attention to these developments at all times.
Liquidity risks
Liquidity risks arise if Repower cannot meet its obligations as agreed or is unable to do so under economically feasible conditions. Repower continuously monitors the risk of liquidity shortfalls. Cash flow forecasts are used to anticipate future liquidity performance in order to respond in good time in the event of over- or under-liquidity, taking into account the maturity terms of financial liabilities as well as the financial assets. At the balance sheet date, financial liabilities exist with the following due dates (amounts represent the contractual, undiscounted cash flows):
| CHF thousands | 31.12.2010 | 31.12.2010 Restated | 31.12.2011 |
|---|---|---|---|
| Up to 3 months | 352,314 | 353,018 | 507,064 |
| From 3 to 12 months | 214,071 | 214,356 | 231,878 |
| From 1 to 5 years | 174,114 | 174,114 | 364,422 |
| Over 5 years | 520,369 | 520,369 | 288,962 |
These financial liabilities are expected to be offset by financial assets (carrying values of balance sheet items) which are expected to become available or which can be liquidated during the following periods:
| CHF thousands | 31.12.2010 | 31.12.2010 Restated | 31.12.2011 |
|---|---|---|---|
| Up to 3 months | 926,324 | 922,788 | 1,055,296 |
| Over 3 months | 63,400 | 63,400 | 67,055 |
Cash and cash equivalents are available for the purpose of liquidity. At the balance sheet date, Repower also has the following bank credit lines which have been secured but remain unused:
| CHF thousands | 31.12.2010 | 31.12.2011 |
|---|---|---|
| Unused general credit lines | 115,000 | 155,000 |
| Additional unused credit lines for the purpose of issuing guarantees | 13,844 | 4,134 |
Sensitivity analyses of market risks
On the balance sheet date, Repower performs a sensitivity analysis for each market risk category to determine the potential impact of various scenarios on net income and equity. During this analysis, the impact of individual factors is investigated, meaning that mutual interdependencies of individual risk variables are not taken into consideration. The following scenarios were analysed for each of the individual market risk categories:
Energy price risks
When establishing energy price risks in accordance with IAS 39, a distinction is made between positions held for own use and those held for trading. In the case of positions held for own use, a potential price change on the balance sheet date will not have an impact on net income or equity since these positions are not measured at fair value. When considering positions held for trading, scenarios are assumed in which energy prices are 10 euros higher and lower per MWh.
| CHF thousands | 31.12.2010 | 31.12.2011 |
|---|---|---|
| Impact on net income and equity at a higher energy rate | -4,636 | -10,632 |
| Impact on net income and equity at a lower energy rate | 4,636 | 10,632 |
Interest rate risks
Valuation effects may occur in the case of financial instruments for which an interest rate has been agreed and which are measured at fair value. The impact of the interest swaps held to which the valuation principle of hedge accounting does not apply are shown. The analysis was performed in 2010 and 2011 for interest rates which were 50 bp higher and lower.
| CHF thousands | 31.12.2010 | 31.12.2011 |
|---|---|---|
| Impact on net income and equity at a higher interest rate | 2,916 | 4,779 |
| Impact on net income and equity at a lower interest rate | -3,165 | -5,260 |
Currency risks
Currency risks exist mainly in connection with euro positions for trade accounts receivable and payable, cash and cash equivalents, internal loans granted within the Group, open financial instruments from energy trading transactions as well as non-current financial liabilities. The analysis was performed using euro exchange rates which were 10 per cent higher and lower than the closing rate. The closing rate of the year under review was CHF/EUR 1.2156 (previous year: CHF/EUR 1.2500).
| 31.12.2010 | 31.12.2011 | |||
|---|---|---|---|---|
| CHF/EUR | TCHF | CHF/EUR | TCHF | |
| Impact on net income and equity at a higher exchange rate | 1.3750 | 13,331 | 1.3372 | 48,795 |
| Impact on net income and equity at a lower exchange rate | 1.1250 | -13,331 | 1.0940 | -48,795 |
The reason for the increase in risk in 2011 is that no forward exchange transactions existed to hedge currency risks at 31.12.2011 because the Swiss National Bank fixed the CHF to EUR exchange rate at a minimum of CHF 1.20.