Dr Eduard Rikli, Chairman of the Board of Directors (right), and Kurt Bobst, CEO:

“By repositioning as a sales and service organisation, Repower is attempting to reduce its dependence on the absolute price of electricity.”

Foreword from the Chairman of the Board of Directors and CEO

Repower finished 2015 with the announcement of a strategic realignment, designed to respond to changes in the energy industry and position the company for the future. In the year under review the group generated total operating revenue of CHF 1.9 billion in a challenging environment.

Highlights of 2015

Last year the Executive Board and Board of Directors embarked on the intensive process of formulating the new 2025 corporate strategy. The overarching goal is to reduce dependence on the absolute price of energy and to increasingly market services. Efforts to restructure to become a sales and service organisation will be built on the company's core generation, grid, trading and sales competencies. At the same time we are very keen to collaborate with partners. The cornerstones of the repositioning are described on page 11 of this report.

The year under review saw a reorganisation of Repower's energy trading business. This entailed withdrawing from the eastern European markets and ceasing trading operations out of Prague.

In 2015 the company also worked on numerous contracts for outside companies. These included maintaining power grids for other grid operators, planning the renovation of switching stations in Ticino and the Lower Engadine, developing a power generation optimisation tool for the Swiss Federal Railways, and managing portfolios and balance groups on behalf of energy utilities.

Last year 2015 Repower also continued to develop offerings related to electric vehicles, comprising electric vehicle charging stations for private or public use bundled with services such as installation, operation and maintenance.

Last but not least, in 2015 Repower completed the sale of interests in Swissgrid AG that had been announced the previous year. The transaction brought Repower around CHF 59 million.

Operating environment

The year under review was dominated by weak economic growth around the world. There was another dramatic year-on-year drop in forward prices of oil, gas, coal and electricity traded on the energy market. Added to this was the continued weakness of the euro zone and the decision to remove the floor on the EUR/CHF exchange rate in January 2015. All these factors had a massive impact on Repower's annual results.

Not only this, but the political framework shaping the future of energy set out in the Swiss government's 2050 energy strategy remains the subject of parliamentary debate, meaning companies operating in the energy industry still have no reliable points of reference to work from.

Results

In 2015 the Repower Group generated total operating revenue of CHF 1.9 billion, a decline of 17 per cent versus the prior year. Operating income (EBIT) came to CHF - 69 million. This figure includes impairments on the combined-cycle gas turbine plant in Teverola, Italy (CHF 50 million), and power plants in Switzerland and Germany (CHF 17 million), provisions for long-term agreements (CHF 2 million), interests in nuclear power (CHF 3 million), impairment on overdue receivables in Italy (CHF 12 million), and expenses in connection with the discontinuation of trading in Prague (CHF 2 million). EBIT before these exceptional items came to CHF 12 million. The net loss came to CHF 136 million, or CHF 47 million before exceptional items. There was a decline in cash flow owing to a persistently tough market environment. The balance sheet total was CHF 1,828 million, while equity came to CHF 600 million.

Efficiency programme

Since the launch of our efficiency programme in 2013 we have implemented numerous measures that have resulted in sustained savings of more than CHF 20 million a year. The last projects under the programme are close to completion. The strategic realignment we have decided on should continue where the efficiency programme left off and generate further cost synergies.

Thank you

In the year under review we could again count on the hard work and dedication of our staff and the loyalty of our shareholders and customers. We would like to express our warmest thanks to them and to all the other people and partners connected with our organisation.

Outlook and objectives

The energy industry is changing, and Repower is changing with it. Building on its know-how in generation, grids, trading and sales, the company will gradually transform from a pure power producer into a full-blown energy services provider. This new strategic alignment will reduce our dependence on the absolute price of electricity and create the foundation for sustained, successful development. There should be no doubt, however, that the general market environment will remain tense in the next few years. Existing long-term agreements mean that the persistently low price of electricity will continue to impact Repower until its procurement portfolio has been streamlined, and we can expect results to remain weak in the short to medium term. However, we are convinced that the strategic decisions we have made have put us on the right course for the longer term. Repower has the professionalism and expertise, the capacity to innovate, the flexibility, and the ability to forge partnerships it needs, to not only face these challenges but to also see and exploit the opportunities they bring.

Dr Eduard Rikli
Chairman of the Board of Directors

Kurt Bobst
CEO