Report of the CEO

Segment reporting introduced

Repower reports its financial figures by market for the first time in the 2013 financial statements. This is based on the rule on segment reporting in the international financial reporting standards (IFRS 8). The Repower Group's Swiss and Italian markets were identified as segments subject to reporting requirements.

Market Switzerland

Repower's “Market Switzerland” business segment includes activities along the entire electricity value chain, from generation to trading, sales and distribution, as well as activities in the innovative “New Tech Business”. In 2013, adjusted EBIT from the Swiss market amounted to CHF 51 million, which is 46 per cent less than the previous year, primarily due to the low level of prices.

Electricity generation from the company's own hydropower plants in the Canton of Graubünden was an impressive 730 gigawatt hours in 2013, exceeding expectations. Although the current environment is not making it easier to maintain capital expenditure for modernisation and maintenance, Repower is determined to keep its 17 hydropower plants in good shape. The company spent around CHF 11 million on doing so in 2013. Full renovation of the Palü and Cavaglia power plants is worthy of particular mention in this regard.

Repower also invests in the maintenance of its distribution grids and substations on an ongoing basis to ensure supplies; in 2013, for example, the Schiers and Disentis substations were fully renovated. Investments in this area amounted to around CHF 24.5 million. In total, Repower invested around CHF 35 million in its generation and grid infrastructure in the Canton of Graubünden in 2013.

As envisaged in the Electricity Supply Act, Repower Transportnetz AG and thus Repower's transmission grids were ceded to Swissgrid AG at the start of 2013. Repower will retain responsibility for maintenance work at its former plants in 2014. The company secured an initial maintenance contract for 2015 to 2019 in an invitation to tender.

Via its Trading Poschiavo wing, Repower sold a total of around eight terawatt hours of electricity in 2013. In particular, the traders were able to optimise the cross-border activities that had been built up over years and the generation of Repower's power plants in a profitable manner. Repower launched its “Repricer” procurement platform as a new offering for small and medium-sized energy supply companies and business customers. The online portal allows them to obtain an offer based on current wholesale prices to cover their electricity needs and, if they wish, to conclude the transaction online straight away. Further information on Repricer is presented on page 21. In addition, Trading Poschiavo conducted its first forays into cross-commodity trading in 2013.

In Sales, Repower sold nearly 800 gigawatt hours of electricity to its customers in Switzerland. Since the start of 2013, Repower has supplied its customers with its Aquapower product, which is generated 100 per cent from Swiss hydropower, as standard. In total, around 77 per cent of its customers were supplied with this product by the end of 2013. Almost 20 per cent actively chose the cheapest “Mixpower” and around three per cent opted for one of the two green electricity products, “Purepower” and “Solarpower”, or for an individual renewable mix. In addition to these four aforementioned products, Repower launched the innovative “Privapower” offering for owners of photovoltaic systems. The new pricing model allows small producers to use the electricity generated on their roofs themselves. Repower also contributed to the greater use of solar energy in the Canton of Graubünden by introducing a solar energy register for a large proportion of the canton.

Repower continued to pursue its cooperation strategy in 2013: the generation investment company Repartner Produktions AG (see also page 18 ff.) was successfully further developed. Repower also intensified its contacts with municipal utilities to which it offers grid operation services. Finally, a mention must be made of the collaboration with SWiBi: the Repower subsidiary, which offers services from metering to energy billing, increased its proportion of external customers by over 30 per cent in 2013. EKT Holding AG in Arbon acquired a 22.5 per cent stake in SWiBi on 1 October 2013.

Repower also successfully drove forward its activities in the innovative “New Tech Business” in 2013. The number of customers in the BeSmart project has now grown to more than 4000 households (see pages 28 and 29 for more information). Finally, Repower entered the electromobility business in 2013 and is currently looking at setting up a charging infrastructure in the Canton of Graubünden.

Market Italy

The “Market Italy” business segment also includes activities along the entire electricity value chain, as well as the gas business and innovative solutions. As in the Swiss market, adjusted EBIT from the Italian market (CHF 38 million) posted a decline in 2013. Given the strained economic situation, Italy's contribution to results can be described as good overall, although the high tax burden narrowed the result.

In Generation, the gas-fired combined cycle power plant in Teverola 2013 faced challenges due to low margins and was used in the ancillary services market in particular. Wind power generation met the expectations.

In Trading Milan, electricity sales rose substantially to 1.8 terawatt hours, while the gas business was also expanded and is therefore achieving greater significance. Trading sold a total of almost 1.3 billion cubic metres of gas. In addition, procurement for the sale and development of tailored products was optimised. There was also a further system-side development in Trading: The cross-location Allegro platform was expanded to include the electricity trading activities of Trading Milan.

In correlation with the increase in Trading, Repower Italy's Sales saw its gas business grow thanks to a successfully expanded customer portfolio. A total of 209 million cubic metres of gas was sold to customers. Sales of electricity were on a similar level to the previous year. Repower continued to successfully optimise its customer portfolio and stabilise its receivables. The services that Repower offers its customers in Italy again proved their worth in 2013. Thanks to a network of almost 500 sales consultants, its customers benefit from individual energy advice. The Verde Dentro offering remains extremely popular. Verde Dentro includes both the supply of green electricity and the provision of electric vehicles ranging from electric cars to scooters and e-bikes. E-mobility does, however, require the presence of charging stations. Repower developed such a station and successfully launched “PALINA” in 2013. The additional activities in the “New Tech Business”, the pilot projects involving thermal imaging and intelligent electricity meters must also be mentioned at this point.

Other segments and activities

This segment produced an adjusted EBIT of CHF - 15 million. In the German market, Repower remains committed to its SME customer segment, focusing on high quality and excellent customer service. It was therefore no coincidence that the sales company was again rated as one of the “most customer-oriented service providers in Germany” in 2013. In generation, income from the company's wind farms was below expectations in 2013. In the Romanian market, Repower achieved a marked improvement in its results in 2013, despite unchanged sales volumes, with the positive trend set to continue. This promising development is largely due to the optimisation of electricity procurement and the customer portfolio. Repower is also constantly in touch with its customers in Romania and offers them tailored offerings and competent energy advice. Trading Prague posted encouraging results in 2013. The Corporate Centre sector was impacted by the aforementioned efficiency programme in 2013, under whose auspices enormous efforts were made to reduce costs.