Comments on the consolidated financial statements of the Repower Group

Group result impacted by market situation and exceptional items

In the 2012 financial year, business performance was influenced by the poor economic situation and low prices on the energy market. Against this backdrop, Repower recorded operating income (earnings before interest and income taxes) before exceptional items of CHF 110 million. Adjusted for exceptional items, operating income was CHF 81 million. Exceptional items comprise impairment charges of CHF 10 million for small power plants and value adjustments on receivables of around CHF 19 million, in particular related to sales business in Italy. Cash flow from operating activities fell in the first half year, chiefly due to the exceptional items, but recovered in the second half to end the year at around CHF 54 million (previous year CHF 138 million). Group profit including minority interests for the 2012 financial year amounted to CHF 31 million.

Energy sales declined by 6 per cent in 2012 to CHF 2.3 billion. The reduction is attributable to the fall in demand due to the poor economic situation, and mainly affected short-term trading. Repower's trading experts successfully exploited the few opportunities on the energy market and made an encouraging contribution to the results. The gross result generated by the energy business (net sales less energy procurement) was CHF 31 million lower year-on-year at CHF 350 million. However, taking into account the positive effect brought about by the reversal in 2011 of transport rights in the amount of CHF 54 million, the gross result generated by the energy business was CHF 23 million higher than the adjusted prior-year figure of CHF 327 million, corresponding to an increase of 7 per cent.

Operating expenses excluding energy procurement rose by around CHF 30 million or 14 per cent to CHF 246 million, primarily due to an increase in head count and consequently higher personnel expenses of around CHF 10 million. Expenses for material and third-party services as well as other operating expenses also rose year-on-year by a total of CHF 20 million, mainly as a result of the aforementioned adjustment of CHF 19 million in the value of receivables.

Income before interest and income taxes amounted to CHF 81 million, representing a reduction of 37 per cent or CHF 49 million versus 2011. In 2011 the reversal of transport rights and other adjustments primarily resulted in adverse exceptional items totalling CHF 15 million and consequently an adjusted operating result of CHF 115 million. Adjusted income before interest and income taxes for 2011 and 2012 is therefore practically unchanged.

Although the Swiss National Bank's move to fix the euro-Swiss franc exchange rate at 1.20 eased the situation for exchange rate gains, the strong Swiss franc continued to have a detrimental impact in the year under review.

While income tax expense was around CHF 4 million lower than the previous year, in relative terms the tax rate was 9 per cent higher. This change is due, among other factors, to the exceptional item related to the reversal of transport rights in the 2011 financial year.

Sustainable balance sheet structure

Non-current assets rose by CHF 28 million to CHF 1.2 billion. This increase is primarily attributable to investments in existing plants and the further development of various projects.

Current assets fell year-on-year by CHF 116 million, due in particular to the decline of CHF 85 million in receivables, an increase of CHF 31 million in positive replacement values, and a reduction of CHF 78 million in cash and cash equivalents.

Non-current liabilities were CHF 22 million lower, due to the repayment of loans, primarily related to non-current financial liabilities. Current liabilities fell by CHF 72 million. This reduction mainly concerns the item “Other current liabilities“.

With total assets amounting to CHF 2,302 million (- 3 %), equity increased to CHF 983 million, corresponding to an equity ratio of 43 per cent (2 % higher than the previous year). The Repower Group therefore remains in a sound financial position and has a good foundation on which to implement its strategic projects.