REPOWER

Notes to the consolidated financial statements

2) Summary of accounting and valuation principles

Preparation of financial statements

The consolidated financial statements of the Repower Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) promulgated by the International Accounting Standards Board (IASB). All current standards and interpretations were applied in preparing the consolidated financial statements, which provide a true and fair view of the assets, liabilities, financial position and profit or loss of the Repower Group and comply with Swiss law.

The reporting currency for the consolidated financial statements is the Swiss franc (CHF). With the exception of items designated otherwise, all figures are rounded to the nearest thousand Swiss francs (TCHF).

The consolidated financial statements were prepared on the basis of historical costs, with the exception of specific positions such as replacement values in respect of held-for-trading positions, inventories, and securities and other financial instruments, for which IFRS requires other valuation methods. These are explained in the following accounting and valuation principles.

The accounting and valuation principles used correspond to the principles applied in the previous year. All standards and interpretations in force on the balance sheet date were applied when preparing the consolidated financial statements.

Significant new and revised accounting and valuation principles

New and revised standards and interpretations which came into force on 1 January 2014 are listed in the following table and are assessed in quantitative terms if they have a significant impact on the consolidated financial statements of the Repower Group.

Standard/interpretation Content Applicable for annual periods beginnig on Application
       
IAS 32 Amendments related to the offsetting of financial instruments 01.01.2014 retrospective
IAS 36 Amendments to the disclosure requirements for the recoverable amount 01.01.2014 retrospective
IAS 39 Amendments related to novation of derivatives and continuation of hedge accounting 01.01.2014 retrospective
IFRS 10 Amendments related to investment entities in IFRS 10, IFRS 12 and IAS 27 01.01.2014 retrospective
IFRIC 21 Levies 01.01.2014 retrospective

The amendments to IAS 32 Financial Instruments: Presentation have no significant effect on the Repower Group's consolidated financial statements. The offsetting of financial instruments is still only possible if an entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. An amendment was also issued clarifying that offsetting is only possible if no further offsetting requirements are outstanding on the balance sheet date. In general, this affects unconditional netting rights. In the case of conditional netting rights, offsetting is permitted only if these rights have been complied with on the balance sheet date.

In the wake of the publication of IFRS 13 Fair Value Measurement there were amendments to IAS 36 Impairment of Assets relating to the disclosure requirements where the recoverable amount is based on fair value less costs of disposal. The latest amendments reverse certain earlier amendments that had resulted in the requirements being more broadly applicable than originally intended. This relates primarily to the fact that an entity had to disclose the recoverable amount of each cash-generating unit (or units) to which a significant portion of the overall carrying amount of goodwill or intangible assets with indefinite useful lives has been allocated. This applied in the case of both impairment and recoverability. The latter was not intended. Now disclosure requirements related to fair value have been added. This concerns designation of the level within the fair value hierarchy and additional information if the non-financial asset has been categorised within Level 2 or 3. In addition, the entity is required to disclose the discount rate used in determining impairment (or reversals) where the recoverable amount (based on fair value less costs of disposal) is determined using a present value technique. These amendments have no effect on the Repower Group's consolidated financial statements.

The amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting permit a hedging instrument counterparty, in certain circumstances, to change to a CCP (central counterparty) without discontinuing hedge accounting. The amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting have no effect on the Repower Group's consolidated financial statements.

The amendments to IFRS 10 Consolidated Financial Statements introduce an exception to consolidating particular subsidiaries under IFRS 10 Consolidated Financial Statements. This applies if the parent entity meets the definition of an investment entity. In the future, investment entities will measure and evaluate the performance of substantially all of their investments in certain subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments or IAS 39 Financial Instruments: Recognition and Measurement. With these amendments, additional disclosures enter into force relating to investment entities in IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements. These amendments are of no relevance to the Repower Group.

IFRIC 21 Levies provides guidance on when to recognise a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain. The application of this International Financial Reporting Interpretations Committee (IFRIC) interpretation has no significant effect on the Repower Group's consolidated financial statements.

The Repower Group is currently analysing and assessing the impact of the following new or revised standards and interpretations whose adoption in the Repower Group's consolidated financial statements is not yet compulsory. They will be adopted no later than the financial year beginning on the date given in the table.

Standard/ interpretation Summary of future requirements Possible effects on the consolidated financial statements
IAS 19 In November 2013 an amendment to IAS 19 was published, under which companies with contributions linked to the number of years of service (typical of Swiss BVG pension plans) may opt whether or not to apply risk sharing. Specifically, paragraph 93 on the accounting of employee contributions was amended and extended. The new standard must be adopted for periods beginning on or after 1 July 2014, with due consideration to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”. The amendments will be applied retrospectively. The Repower Group decided that the obligation regarding future contributions will still be considered under the risk sharing perspective. There will be no impacts to the consolidated financial statements.
IFRS 9 IFRS 9 “Financial Instruments” substitutes the existing standard IAS 39 “Financial Instruments: Recognition and Measurement”. It contains revised guidelines regarding the classification and assessment of financial instruments including a new model of expected credit losses to calculate impairments of financial instruments. The revised guidelines include also the new requirements regarding hedge accounting as well as guidelines regarding the derecognition of financial instruments under IAS 39 and the recognition of these under IFRS 9. The new standard must be adopted for periods beginning on or after 1 January 2018. The amendments will be applied retrospectively. Early application is permitted. The impact on the consolidated financial statements cannot yet be reliably determined. The Repower Group is currently analysing this standard and the related interpretations and expects to see a change in its reporting at the present point in time.
IFRS 15 IFRS 15 “Revenue from Contracts with Customers” unifies now all guidelines that define whether, when, how and to which amount revenues have to be recognised. The framework is given by a five level model. Additionally, the standard contains guidelines regarding warranties, customer options for additional goods and services, customers' unexercised rights or licensing for instance, guidelines regarding costs to obtain and fulfil contracts as well as guidelines when these costs have to be recognised. The new standard also contains new and extensive disclosure requirements. Several existing standards as IAS 11 “Construction Contracts” and IAS 18 “Revenue” next to others are substituted by the introduction of IFRS 15. The new standard must be adopted for periods beginning on or after 1 January 2017. The amendments will be applied retrospectively or using the modified approach. Early application is permitted. The impact on the consolidated financial statements cannot yet be reliably determined. The Repower Group is currently analysing this standard and the related interpretations and expects to see a change in its reporting at the present point in time.

In addition to the new or amended standards presented here, for the sake of completeness the following table details all further new or amended standards that the Repower Group does not deem to be significant at present because they will have no or insignificant impact.

Standard/interpretation Content Applicable for annual periods beginnig on Type of application
       
IAS/IFRS Annual Improvements Cycle 2010–2012 01.07.2014 prospective
IAS/IFRS Annual Improvements Cycle 2011–2013 01.07.2014 retrospective/prospective
IAS/IFRS Annual Improvements Cycle 2012–2014 01.01.2016 retrospective/prospective
IAS 16/38 Amendments concerning the Clarification of Acceptable Methods of Depreciation and Amortisation 01.01.2016 prospective
IAS 16/41 Amendments concerning the Definition of Bearer Plants 01.01.2016 retrospective
IAS 27 Amendments concerning the Equity Method in Separate Financial Statements 01.01.2016 retrospective
IAS 28/IFRS 10 Amendments concerning the Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 01.01.2016 prospective
IFRS 11 Amendments concerning the Accounting for Acquisitions of Interests in Joint Operations 01.01.2016 prospective