7 Tangible assets
The pledged fixed assets were put up as collateral for the investment loans and mortgages as listed in Note 17.
Disposals of consolidated companies relate to the liquidation of SEI S.p.A.
Prior-year disposals from changes in consolidation relate to the sale of Repower GuD Leverkusen GmbH & Co. KG and Repower GuD Leverkusen Verwaltungs-GmbH (see Note 25).
Impairments and reversals of impairments on tangible assets
In the 2016 financial year there were impairment losses and impairment gains on generation assets. These break down by segment as follows:
Market Switzerland segment
In 2016 an impairment gain of TCHF 2,834 was recognised on hydropower generation assets (previous year: TCHF 0) and an impairment loss of TCHF 570 (previous year: TCHF 12,589).
The impairment gain of TCHF 2,834 was recognised for the Taschinas asset. It is due to a fall in the cost of capital (WACC) prompted by the interest rate environment and a reduction in maintenance and operating expenditure in line with the current market situation.
The impairment loss of TCHF 570 in the 2016 financial year is connected with damage to machinery at the Igiser Mühlbach power plants. Repairs in 2017 will lead to additional expense and lower revenues. The impairment loss the previous year breaks down as follows: Taschinas TCHF 10,937, Ladral TCHF 834 and Ferrera TCHF 818.
No impairment losses or gains were recognised for wind power assets in 2016. The previous year there was an impairment gain of TCHF 2,508 on the Lübbenau wind farm and an impairment loss of TCHF 1,222 on the Prettin wind farm.
Generation assets are valued on the basis of their value in use calculated on a discounted cash flow basis. The value in use for the impaired assets comes to TCHF 54,559 (previous year: TCHF 92,954). WACC before tax is 5.0 per cent for the Taschinas plant and 9.6 per cent for the Igiser Mühlbach power plants. The previous year, WACC had been 5.6 per cent for the Swiss generation assets Taschinas and Ladral and 5.7 per cent for the Swiss generation asset Ferrera. WACC for the Prettin and Lübbenau wind farms were 6.4 per cent and 8.0 per cent respectively.
Market Italy segment
In the 2016 financial year an impairment gain of TEUR 11,626 or TCHF 12,672 (prior year: impairment loss of TEUR 46,992 or TCHF 50,132) was recognised for generation assets. The impairment gain for 2016 and the impairment loss recognised the previous year relate to the Teverola combined-cycle gas turbine generation asset.
This impairment gain on the Teverola combined-cycle gas turbine plant was triggered by a sharp improvement in revenues from ancillary services and an increase in the clean spark spread. The clean spark spread is the theoretical gross margin earned by a combined-cycle plant on the sale of one unit of energy, containing only the costs of the fuel and the carbon certificates. All other costs have to be covered by the gross margin. The generation asset is valued on the basis of its value in use calculated on a discounted cash flow basis. The value in use comes to TEUR 98,737 (previous year: TEUR 92,290). In Swiss francs this is equivalent to TCHF 106,034 (previous year: TCHF 99,996). WACC before tax is 9.7 per cent (previous year: 9.7 per cent).
LEASED TANGIBLE ASSETS
The net carrying amount of the motor vehicles held as part of the finance leasing agreement totalled TCHF 80 (previous year: TCHF 177) at the closing date. More information on finance leasing can be found in Note 29.