Consolidated Financial Statements of the Repower Group

Notes to the consolidated financial statements: principles

1 Consolidated accounting principles

Repower AG, Brusio, is a stock company with its registered offices in Switzerland. Repower is a vertically integrated group operating in the generation, management, trading, sales, transmission and distribution of electricity in Switzerland and abroad. The company also trades and sells gas, emission certificates and certificates of origin in selected European markets. Its business activities and main operations are described in detail in this annual report.

The 2016 consolidated financial statements of the Repower Group were authorised by the Board of Directors on 30 March 2017 and are subject to the approval of the annual general meeting on 17 May 2017.

2 Summary of accounting and valuation principles


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). The consolidated financial statements 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 are essentially prepared on the basis of historical costs, with the exception of specific positions such as replacement values in respect of held-for-trading positions, part of 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.


New or revised accounting and valuation principles have no significant impact on Repower’s financial reporting for the year just passed.

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

Potential impact on the consolidated financial statement


IFRS 9 Financial Instruments replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. It contains revised guidance on classifying and measuring financial liabilities, including a new expected loss impairment model for financial assets and new general hedge accounting rules. It also carries over from IAS 39 the requirements for recognition and derecognition of financial assets and financial liabilities. The new standard is effective for annual periods beginning on or after 1 January 2018. It is applied retrospectively. Early adoption is permitted.

The Repower Group is currently analysing this standard and the related interpretations and expects to see a change in its reporting at the present time.


IFRS 15 Revenue from Contracts with Customers and its amendmends specifies in a single standard whether, when, how and in what amount an IFRS reporter will recognise revenue. The underlying rules are represented in a five-step model. The standard still contains guidance on specific themes such as warranties, options to acquire additional goods or services, breakage, loyalty schemes or licensing, guidance on the costs of obtaining and fulfilling a contract, and on the question of when such costs are to be capitalised. The standard also contains new, comprehensive rules related to the disclosures that must be made. The new standard supersedes several standards and interpretations, including IAS 11 Construction Contracts and IAS 18 Revenue. It applies to annual reporting periods beginning on or after 01 January 2018. It is applied retrospectively on the basis of simplified transitional rules. Early adoption is permitted.

The Repower Group is currently analysing this standard and expects to see a change in its reporting at the present time.


IFRS 16 Leases, published on 13 January 2016, primarily contains changes in accounting by lessees. In future, lessees will recognise a right-of-use asset and a lease liability. A lessee may elect not to separate non-lease components from lease components for short lease terms (less than 12 months) and underlying assets with a low value. There will be more stringent disclosure requirements for both lessees and lessors. IFRS 16 applies to annual reporting periods beginning on or after 1 January 2019. It must be applied with full or modified retrospective effect. Early adoption is possible if IFRS 15 Revenue from Contracts with Customers is applied.

The Repower Group is currently analysing this standard and expects to see a change in its reporting at the present time. The fact that in future more or less all facts relating to leases will have to be presented in the balance sheet will result in changes in financial figures.

In addition to the new or amended standards presented here, for the sake of completeness the following table details further new or amended standards that, as things stand at present, will have no significant impact.



Applicable for annual periods beginning on

Type of application


Annual Improvements Cycle 2014–2016




Amendments to IAS 7 due to the disclosure initiative



IAS 12

Amendments to IAS 12 concerning unrealised losses related to recognised assets measured at fair value



IAS 40

Changes related to transfers of property held as financial investments




Amendments concerning the classification and measurement of share-based payment transactions



IFRS 10/IAS 28

Changes to IFRS 10 and IAS 28 related to sales or contributions of assets between an investor and its associate or joint venture

Not defined yet



IFRIC 22 Foreign Currency Transactions and Advance Consideration



3 Correction of errors and changes in presentation

The income statement item “Depreciation/amortisation and impairment” has been renamed “Depreciation/amortisation, impairment and reversal of impairment”. In 2015 reversals of impairment on tangible assets of TCHF 5,568 were disclosed under other operating income. This balance has now been reclassified to the renamed line item. This impacts the 2015 income statement as follows:




2015 Restated

CHF thousands








Impact on the consolidated income statement








Other operating income




Total operating revenue




Income before interest, taxes, depreciation and amortisation (EBITDA)




Depreciation/amortisation, impairment and reversal of impairment




The reclassification affects the Market Switzerland segment. The disclosure in Note 27, Segment reporting, has been adjusted.

The previous year, impairment gains and losses recognised for the same financial year for individual generation assets were disclosed on a gross basis. The presentation and explanation of impairment gains and losses in Note 7, Tangible assets, and Note 3, Depreciation/amortisation, impairment and reversal of impairment, have now been harmonised from the perspective of the entire financial year. TCHF 3,060 of the impairment gains recognised in the second half of 2015 net out with the impairment losses recognised in the first half of 2015. This now results in impairment losses on tangible assets and impairment gains on tangible assets of TCHF 63,950 (previously TCHF 67,010) and TCHF 2,508 (previously TCHF 0) on balance. The impairment gains disclosed separately in the consolidated cash flow statement the previous year are now presented in the line named “Depreciation/amortisation, impairment and reversal of impairment” to correspond with the income statement, as a reconciliation item to cash flow from operating activities.

With the disposal of SEI S.p.A. in the current financial year, its non-controlling interests were reviewed. In the process it was discovered that losses amounting to TCHF 2,953 had not been attributed to minority interests; this omission was rectified by way of a reclassification in consolidated shareholders’ equity. This impacts the balance sheet as follows:




1.1.2015 Restated

CHF thousands








Impact on the consolidated balance sheet








Retained earnings




Accumulated translation differences




Shareholders' equity excluding non-controlling interests




Non-controlling interests







31.12.2015 Restated

CHF thousands








Impact on the consolidated balance sheet








Retained earnings




Accumulated translation differences




Shareholders' equity excluding non-controlling interests




Non-controlling interests




4 Consolidation


The consolidated financial statements cover Repower AG and all entities over which Repower AG exercises control. Control exists when Repower has the power to decide on the relevant processes and activities of the entity, is exposed to variable returns from its involvement, and has the ability to affect those returns through its decisionmaking authority over the other entity. These entities are fully consolidated and designated as group companies. They are included in the consolidated financial statements from the date on which control has been transferred to the Repower Group, and deconsolidated when such control has ended. For all consolidated companies, the financial year ends on 31 December.

A joint arrangement is a contractual amalgamation of two or more parties that gives the parties joint management of an economic activity. IFRS distinguishes between joint operations and joint ventures. A joint operation is an arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Assets, liabilities, income and expenses arising from joint operations are recognised in relation to the partner’s ownership interest. The (proportionate) inclusion of assets, liabilities, income and expenses is based on the share (e.g. of output) contractually agreed between the parties. This need not necessarily be the same as the parties’ share of capital in the legal entity. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint ventures are recognised in accordance with the equity method.

Investments in associates whose financial and business policies Repower Group is unable to control but over which it is able to exert a significant influence are accounted for in the consolidated financial statements using the equity method. The inclusion of significant associates requires the annual financial statements to be drawn up in accordance with IFRS. Where such financial statements are not available, transitional statements are drawn up. The closing date for partner plants is usually 30 September and may therefore differ from the closing date for the Repower Group. Important events occurring between the closing date for these partner plants and the closing date for the Repower Group are taken into account in the consolidated financial statements.

Partner plants are power plants which Repower plans, builds, maintains and/or operates in conjunction with partners. By acquiring a stake in a partner plant, both the acquirer and future partners undertake, in accordance with the memorandum of association, to assume a share of the annual costs commensurate with their stake in the authorised capital. In return partners have the right to procure, at cost, a share of the services and energy produced by the partner plant that corresponds to their share of the authorised capital (electricity purchase obligation or electricity purchase right).

The partner plants are accounted for depending on the quality of the potential influence or composition of the entity’s articles of association and other agreements between the entity and/or its shareholders. Repower exercises significant influence over the main activities of partner plants AKEB Aktiengesellschaft für Kernenergie-Beteiligungen and Kraftwerke Hinterrhein AG; hence they are classified as associates and accounted for in the Repower Group’s financial statements using the equity method. Grischelectra AG is managed jointly with Canton Graubünden. Repower administers all procurement rights related to Grischelectra AG and classifies this joint arrangement as a joint operation; hence 100 per cent of Grischelectra AG’s assets, liabilities, income and expenses are included in the Group’s consolidated financial statements.

The companies included in the consolidation and any changes in the scope of consolidation are listed in Note 9.


The Repower Group accounts for business combinations using the acquisition method. In doing so the acquisition costs are compared with the purchased net assets at fair value on the date of acquisition. A positive difference is capitalised as goodwill and subject to an annual impairment test. A negative difference is recognised in profit or loss as negative goodwill on the date of acquisition. In the case of an acquisition achieved via successive share purchases, the fair value of the interests already held in the acquired entity must be remeasured at the time of acquisition. The resultant gain or loss must be recognised in profit or loss. Non-controlling interests are accounted for in accordance with their proportionate share in identifiable net assets. Acquisition-related costs are recognised as expenses in the period in which they are incurred. Conditional payments are recognised at fair value on the date of acquisition. Changes in fair value are recognised in profit or loss in subsequent periods.

Fully consolidated companies are included in the consolidated financial statements in their entirety (assets, liabilities, income and expenses). A change in the interest in an entity that does not affect its full consolidation is recognised as an equity transaction and recorded by adjusting the carrying amounts of the controlling and non-controlling interests. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the parent company. It is recognised in profit or loss only if the sale results in a loss of control and the subsidiary is therefore deconsolidated. At the same time, all positions in the statement of other comprehensive income (OCI) requiring reclassification are reclassified (recycling).

Investments in associates and joint ventures are accounted for using the equity method on the basis of the share of equity, whereby shares in an associate are initially recognised at cost. A positive difference between the total purchase price and the share of the acquired equity remeasured at the time of acquisition is capitalised as goodwill within the participating interest position. A negative difference is charged to profit or loss. The carrying amount of the investment subsequently increases or decreases depending on the investor’s share of the gain/loss of the investment, which is recognised in profit or loss. Distributions from investments reduce the carrying amount of the shares. Non-cash increases and decreases in the carrying amount in the associate’s financial statements are recognised directly in the investor’s equity. If Repower’s share of losses of an associate equals or exceeds its interest in the associate, Repower discontinues recognising its share of further losses, unless Repower has incurred obligations or made payments on behalf of the associate. If in this case there are long-term assets in relation to the associate for which no collateral has been lodged, these assets are reduced by the amount by which the loss exceeds the carrying value. If there are no such assets vis-à-vis this associate, a provision is recognised. If associates and joint ventures apply accounting and valuation principles that deviate from those adopted by the Repower Group, appropriate adjustments are made in the consolidated financial statements.


All intragroup transactions (receivables and payables, income and expenses) as well as the share of a subsidiary’s equity attributable to a parent company are eliminated. Existing shares of equity attributable to minority shareholders, as well as their share in the results of consolidated entities, are recognised separately. Gains arising from intragroup transactions and holdings are eliminated in the income statement.

The agreed prices, which are based on market prices, apply for internal billing between group companies. Electricity purchased from partner plants is billed at actual cost to the Repower Group on the basis of existing partner contracts – irrespective of market prices.


Each group company determines the functional currency in which it draws up its individual financial statements. Foreign currency transactions are converted using the group company’s functional currency at the exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are converted to the functional currency at the closing rate on the balance sheet date. Currency translation differences are recognised in profit or loss. Non-monetary foreign currency items carried at fair value are translated at the rate that existed on the date on which the fair values were determined.

The consolidated financial statements are drawn up and presented in Swiss francs. The functional currency for the significant foreign group companies is the euro. Assets and liabilities of group companies are translated into Swiss francs at the closing rate on the balance sheet date. Income statement items are translated using the average exchange rate for the year. The following exchange rates are incorporated in the Repower Group’s consolidated financial statements:



Closing exchange rate

Average exchange rate















































































When translating the functional currency into the reporting currency, the translation differences between the closing exchange rate and the average exchange rate are recognised as an effect of currency translation under other comprehensive income in the statement of comprehensive income. If group companies, a foreign operation or associates are disposed of, the cumulative amount of the translation differences is reclassified to profit or loss.

SEGMENT reporting

Repower’s segment reporting reflects internal management and reporting structures (management approach) to provide the information used by management for steering and assessing the business performance and development of the individual segments. The CEO of the Repower Group has been designated as the chief operating decision maker. For each business segment, internal steering, performance measurement and capital allocation are carried out on the basis of the segment’s income before interest and income taxes (EBIT). Segment income is calculated on the basis of the accounting and valuation principles used at Group level.

Repower’s Market Switzerland and Market Italy have been identified as reportable segments.

  • Market Switzerland covers the generation of electricity in Repower’s own power plants and in plants operated by partners, as well as trading in electricity, gas and other commodities and certificates. Other elements in the value chain comprise the distribution and sale of energy to end-customers and distribution partners in Switzerland. Additional business activities cover the provision of energy services. The unit providing communication services, connecta ag, was disposed of in 2016. Given the disposal of the sales business in Germany, since 2015 German generation activities have been shown in the Market Switzerland segment.
  • Market Italy covers the generation of electricity in Repower’s own power plants, trading in electricity, gas and certificates, and the delivery of electricity and gas to end-customers. Energy efficiency services are also offered.

No operating divisions were combined to create the reportable business segments. Other Repower Group business operations are combined under the “other segments and activities” segment. The main sources of revenue were the distribution and trading activities of Repower companies in Romania and Eastern Europe. Energy trading in this segment was discontinued at the end of 2015. In November 2016 Repower sold its supply business in Romania. Reconciliation with the consolidated figures of the Repower Group is based on the two reportable business segments plus other segments and activities, which are shown together with the consolidation effects.

5 Accounting and valuation principles


Tangible assets are recognised at acquisition or production cost less accumulated depreciation and any impairment losses. The acquisition or production cost of tangible assets covers the asset’s purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, less government grants. The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also considered part of acquisition/production costs. Significant individual components are recorded and depreciated separately. Depreciation is calculated using the straight-line method based on the estimated technical and economic life of the asset or, at most, over the concession period in the case of energy generating facilities. Any residual values are taken into account when determining an asset’s useful life. An asset’s useful life and residual value are reviewed annually. If an asset is sold or for any other reason is no longer able to provide future economic benefits, it is derecognised from property, plant and equipment. The resulting gain or loss (difference between the net selling price and the net carrying amount of the derecognised asset) is recognised in profit or loss in the period in which the asset is derecognised.

Estimated useful lives are calculated in accordance with the recommendations of the Association of Swiss Electricity Companies and are within the following ranges for each category:


Useful life



Power plants and concession period

20 – 80 years depending on the type of facility


15 – 40 years




30 – 60 years

Plant and business equipment

3 – 20 years

Assets under construction

Reclassification to the corresponding category when available for use; any impairments are recognised immediately

Investments in upgrades or improvements to plant and equipment are capitalised if they significantly extend the useful life, increase the original capacity or substantially enhance the quality of generation. Repairs, maintenance and regular servicing of buildings and operating installations are expensed as incurred. Costs for regular major overhauls are capitalised and depreciated.

Assets under construction cover property, generation assets and equipment not yet completed. Generally, during the construction phase these items are not depreciated unless impairment is recognised immediately. Borrowing costs related to construction are capitalised along with other acquisition and production costs. Depreciation of the asset commences only when the asset under construction is completed/ready for use and the borrowing costs are no longer capitalised.

Tangible assets are tested on each balance sheet date for indications of impairment. If indications of impairment are identified, the recoverable amount is measured and an impairment test is performed. If the recoverable amount (the higher of the value less costs to sell and value in use) is below the carrying amount, the asset’s carrying amount is reduced to the recoverable amount. The value in use is calculated based on an underlying business plan which projects the terms and useful lives of individual projects and assets. These are discounted using an appropriate rate of interest before tax. If the reasons for a previously recognised impairment no longer exist, the impairment is reversed, at most, to what the carrying amount would have been had the impairment not been recognised.


Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset or funds that are part of a general pool are considered part of the acquisition/production costs of the asset and are capitalised. Other borrowing costs are recognised as an expense.


Leasing agreements are recognised if all the risks and rewards incident to ownership of the asset are substantially transferred to the company. A leased object and a corresponding liability are capitalised at the lower of the fair value or present value of the minimum leasing payments. They are amortised over the shorter of their estimated useful lives or the duration of the lease if there is uncertainty as to whether ownership of the leased object will be transferred to the Repower Group on expiry of the lease. Any impairment losses are recognised in profit or loss. If the reasons for a previously recognised impairment no longer exist, the impairment is reversed, at most, to what the carrying amount would have been had the impairment not been recognised. The lease payments are apportioned between the finance charge and the reduction of the outstanding liability. Interest and amortisation components are charged to profit or loss.


Income and expenses for operating leases are recognised in profit or loss on a straight-line basis over the lease term.


Self-constructed assets are capitalised at production cost if they meet the criteria for recognition. If the criteria for capitalisation are not fulfilled, the costs are recognised as an expense in profit or loss in the year in which they were incurred. Self-constructed intangible assets in the Repower Group primarily consist of software, which are recognised under other intangible assets. Intangible assets acquired against payment are recognised at cost and have either a definite or an indefinite useful life.

Intangible assets with a limited useful life are amortised using the straight-line method over their useful lives. Anticipated residual values are included when determining the amortisation. They are tested for indications of impairment on each balance sheet date. If indications of impairment are identified, the recoverable amount of the intangible assets is determined in the same way as for property, plant and equipment, and an impairment test is performed. The estimated useful lives for the individual categories are within the following ranges:


Useful life



Customer relations

13 - 15 years


15 years

Other intangible assets

3 - 5 years

Intangible assets with an indefinite useful life are not amortised but tested annually for indications of impairment. The recoverable amount is determined in the same way as for property, plant and equipment. Any impairment losses are recognised in profit or loss. The assumption of an indefinite useful life is also reviewed annually. If events or circumstances indicate that a definite or indefinite useful life needs to be revised, this revised estimate is carried out in the current period.


Goodwill is allocated to a cash-generating unit from the date of acquisition for the purpose of impairment testing. A cash-generating unit corresponds to the smallest identifiable group of assets that generates cash inflows within a company whose goodwill is monitored by internal management for impairment purposes. Goodwill is tested for impairment at least once a year. If the carrying amount of the unit is higher than the recoverable amount in accordance with IAS 36, an impairment loss is recognised in profit or loss in the reporting period in question.


All financial assets are recognised initially at fair value. Purchases are recorded on the settlement date. For financial assets or financial liabilities that are not measured at fair value through profit or loss, transaction costs must also be factored in if they are directly attributable to the acquisition of the asset or financial liability. Transaction costs for assets and liabilities measured at fair value through profit or loss are therefore immediately recognised in profit or loss.

In the event of a premium or discount for assets and liabilities not measured at fair value through profit or loss, the financial asset or liability is measured at its present value and accumulates interest or is discounted in the income statement over its term by applying the effective interest method. The result is recognised in profit or loss in the period in which it was incurred.

Options (conditional forward transactions) are recognised at cost in the amount of the option premium. Other derivatives (unconditional forward transactions) have acquisition costs that are equal to zero and are not recognised on initial measurement.

Different methods are used to measure the various categories of financial assets. Loans and receivables are measured at amortised cost using the effective interest method. If financial assets are classified as short term, the present value is not discounted. The fair value is assumed to be the carrying amount less any necessary impairment losses. For financial assets measured at fair value through profit or loss, the gain or loss that results from a change in the fair value and is not part of a hedge is recognised in profit or loss. A profit or loss that results from a change in the fair value of financial assets classified as available for sale that are not part of a hedge is recognised in other income until the asset is derecognised. Profits or losses entered before the asset is derecognised are reclassified in the income statement on disposal of the asset (recycling). Any impairment losses are recognised in profit or loss. Equity instruments which are neither listed nor permit a reliable estimate to be made of their fair value are recognised at acquisition value less impairments.

Financial assets not recognised at market values are tested for impairment on each balance sheet date. If there is objective evidence that an impairment loss has occurred, such as insolvency, payment default or other significant financial difficulties on the part of the issuer or debtor, an impairment calculation is performed. For interest-bearing assets carried at amortised cost, the impairment is measured as the difference between the carrying amount and the lower present value of estimated future cash inflows, discounted at the asset’s original effective interest rate.

Trade accounts receivable from customers who are also suppliers and trade accounts payable to suppliers who are also customers are offset respectively against trade accounts payable or trade accounts receivable if the contract terms provide for this, the intention to offset exists and is legally permitted (netting).

Financial assets are no longer recognised if the rights, obligations, opportunities and risks associated with their ownership have largely been transferred.


Contracts in the form of forward transactions (forwards and futures) conducted with the intention of achieving a trading profit or margin (held for trading) are treated as derivative financial instruments and recognised as held-for-trading positions. On the balance sheet date, all open derivative financial instruments from energy trading transactions are measured at fair value through profit or loss, and the positive and negative replacement values are recognised under assets and liabilities. The open contracts are measured on the basis of market data from electricity exchanges (e.g. EEX Leipzig). For contracts for which no liquid market exists, measurement is based on a valuation model.

Current transactions are offset at positive and negative replacement value if the respective contract terms provide for this and the intention to offset exists and is legally permitted. Realised and unrealised income from held-for-trading positions is recognised net as profit from held-for-trading positions.

To reduce currency risks, forward exchange transactions are conducted in euros. Interest rate swaps can also be employed to reduce the interest rate risk of variable interest loans. If these types of financial instruments exist at the end of the year, they are measured at fair value through profit or loss. For accounting purposes, these and similar financial transactions are treated as derivative financial instruments, and if the values are positive they are reported as replacement values under securities and other financial instruments and other financial assets. If the values are negative, they are reported under current financial liabilities and non-current financial liabilities.


Inventories comprise materials used for operating purposes (e.g. operating materials, replacement parts and consumables) as well as certificates for CO2 or electricity quality certificates (origin, generation type). As long as these assets are not held for trading purposes, they are measured at the lower of acquisition/production cost and net realisable value. Acquisition/production costs are measured using the weighted average cost method. The net realisable value corresponds to the estimated selling price less the estimated costs necessary to make the sale. Inventories for trading purposes are measured at fair value less costs of disposal.


Assets or groups of assets as well as directly attributable liabilities (disposal groups) are classified as held for sale if the benefit embodied in the residual carrying amount is not to be realised through their continued use but primarily from their sale. The prerequisite is that the asset can be sold directly and the sale is sufficiently probable. Non-current assets (or disposal groups) are recognised at the lower of the carrying amount and the fair value less costs of disposal. The value of assets and liabilities held for sale is reported separately under current assets and current liabilities as assets held for sale and liabilities held for sale.

A discontinued operation is a part of the company that was sold or held for sale and represents a separate major business line or geographic branch of business. The results of discontinued operations are shown separately from the ongoing business activities (continued operations).


Treasury shares and participation certificates are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of an entity’s own equity instruments.


Provisions are recognised for obligations (legal or constructive) resulting from a past event when it is probable that an outflow of resources will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. If some or all of the expenditure required to settle a provision is expected to be reimbursed by another party (e.g. due to an insurance policy), the reimbursement is recognised separately when it is virtually certain that the reimbursement will be received. If the interest effect is a significant influencing factor, estimated future cash flows are discounted to determine the provision amount.

Provisions are reviewed periodically and revised in line with current developments. Pre-tax interest rates are used as discount rates that reflect current market assessments of the interest effect and the risks specific to the liability.


Financial liabilities are subdivided into financial liabilities held for trading and other financial liabilities. Financial liabilities held for trading are the opposite of financial assets. They consist of financial obligations which are entered into with the intention of repaying them or profiting from them in the short term. This category also includes financial derivatives not included under hedge accounting which are currently accorded a negative market value. They are initially and subsequently measured at fair value. Transaction costs are recognised directly as an expense. Other financial liabilities include all debts not measured at fair value through profit or loss. The debts are initially recognised at fair value on the date of acquisition and measured at amortised cost using the effective interest method.


On the balance sheet date, employees of the Repower Group in Switzerland were members of the PKE Vorsorgestiftung Energie pension fund. This is a legally independent pension fund operating as a defined contribution plan in accordance with the Federal Law on Occupational Pensions for Old Age, Survivors and Disability (BVG).

The costs and obligations of the Group arising from defined benefit pension plans are calculated using the projected unit credit method. In line with actuarial calculations performed on the balance sheet date, the total cost of a pension plan is based on the regular years of service rendered by the respective employees until retirement, and is charged annually to the income statement. Pension fund obligations are measured according to the present value of estimated future pension benefits based on the yields on corporate bonds with an AA rating or higher and similar residual terms to maturity. The interest rate used to calculate the expected return on plan assets must correspond to the discount rate for pension obligations. At Repower, the net interest rate components calculated in this way are allocated to the financial result. The difference versus the effective return on plan assets, as well as the actuarial gains and losses from adjustments to actuarial parameters (e.g. discount rate, retirement age, life expectancy, changes in salaries and returns), is recognised in other income under equity in the period in which it is incurred. Past service cost is accounted for under pension costs (personnel expenses).

Employees at foreign group companies are insured under state pension plans which are independent of the Group. With the exception of the above pension plans, there are no significant long-term employee benefits provided by the Group.


Income taxes comprise current and deferred income taxes. Current income taxes are calculated based on the current tax rates on the earnings of the individual group companies reported in the consolidated income statement.

Deferred taxes are recognised in the consolidated financial statements based on the measurement of differences between the taxable value of the assets and liabilities and their carrying amounts. Deferred income taxes are calculated using the balance sheet liability method based on temporary differences, i.e. differences between the taxable value of an asset or liability and its carrying amount in the balance sheet. The taxable value of an asset or liability is the value of this asset or liability for tax purposes.

Deferred tax assets related to loss carryforwards are recognised only to the extent that it is probable that temporary differences or taxable profit will be available against which the tax loss carryforward can be netted.


Revenue covers sales and services to third parties after deducting price discounts and value added tax. Revenue is recognised in the income statement when delivery of goods or services has been performed.

Energy transactions conducted for the purpose of managing the Group’s own energy-generating plants, as well as energy procurement contracts for the physical delivery of energy to customers, are treated as own use transactions and settled gross under revenue from energy sales and energy procurement. Energy transactions conducted with the intention of achieving a trading margin are treated as held-for-trading transactions and recognised net under profit from held-for-trading positions.

On the balance sheet date, all open derivative financial instruments from energy trading transactions are measured at fair value and the positive and negative replacement values are recognised under assets and liabilities. Realised and unrealised income from these transactions is disclosed net as net result from held-for-trading positions under net sales.


Liabilities arising from a past event for which the probability of an outflow of funds is considered possible but not probable, or for which the obligation cannot be reliably estimated, are not recognised in the balance sheet but disclosed in the notes to the consolidated financial statements.

6 Capital and enterprise value management

Capital management practices are based on the Repower Group’s overall strategic goals. The most important goals of capital management are:

  • Optimised allocation of capital, taking returns and risk into account
  • Achievement of market-appropriate interest on deployed capital
  • Timely availability of sufficient liquidity
  • Acceptable cap on debt

These objectives are measured and monitored using the strategic performance indicators of economic value added, the equity ratio and the net debt ratio (net debt/EBITDA). Targets for the strategic parameters are determined by the Board of Directors. The Board of Directors also specifies the risk targets to be monitored by the Executive Board.

Repower’s capital is managed and allocated taking into account the Group’s financial development and risk structure. To manage this capital the Group can, for instance, borrow or repay capital, increase or reduce the capital, or change its dividend policy. The Repower Group is not subject to any prescribed regulatory minimum capital requirements.

Positive economic value added means that the company has generated economic added value within a defined period. This is the case if operating income is higher than borrowing costs. The borrowing costs reflect the expected interest on net operating assets (NOA).

Repower calculates economic value added as follows: economic value added = NOPAT – (NOA x WACC).

Operating income corresponds to net operating profit after tax (NOPAT). Borrowing costs are obtained by multiplying average net operating assets by the borrowing rate. This rate reflects the weighted average cost of capital (WACC). The parameters used to calculate WACC are regularly reviewed and adjusted if necessary to take account of significant market developments. In 2016, WACC after tax was 5.2 per cent (previous year: 5.9 per cent ). Interest-bearing capital results from current and non-current operating assets, adjusted by cash and cash equivalents not required for operational purposes and available non-interest-bearing capital. The average net operating assets are calculated as a mean between the value at the start and end of the financial year in order to obtain a better picture of tied-up capital throughout the year.

The equity ratio describes the relationship between equity including non-controlling interests and total assets.

The net debt ratio is the ratio between net debt (interest-bearing liabilities plus provisions for pensions and reversions, minus cash and cash equivalents and securities) and EBITDA. This figure indicates the number of years within which the company is likely to be able to meet its financial obligations, assuming the amounts remain unchanged. It expresses a company’s ability to reduce debts or raise further loans for the purpose of business development.

The target figure for economic value added is CHF –50 million, accumulated over a period of ten years since the 2013 financial year, while the equity ratio must be kept within the 35–45 per cent range. In principle, the net debt ratio must not exceed 3. These key figures and their individual parameters also have an impact on Repower’s credit rating and thus its borrowing costs.

Economic Value Added




in CHF millions









Calculatory tax rate






NOA 1)






Capital costs



Economic Value Added



1) Average based on start and end of year

equity ratio




in CHF millions






Balance sheet total



Equity including non-controlling interests



Equity ratio including non-controlling interests



Net debt ratio




in CHF millions






Net debt






Net debt ratio



1) 2016 figure adjusted for exceptional items of CHF 23.1 million (previous year adjusted for exceptional items of CHF 18.0 million).

As in the previous year, negative economic value added was generated. The equity and net debt ratios improved, with the results within the target range.

7 Risk management and financial risk management


The Repower Group identifies and manages risks on the basis of a Group-wide risk management approach. A number of different components are used to put this approach into practice: the enterprise risk management (ERM) function, the concept of three lines of defence against risk, an integrated risk management process, and a specific risk culture fostered throughout the business. There are four main categories of risk to which Repower is exposed: business and strategic risks, market and credit risks, compliance risks, and financial reporting risks.

Repower assesses business risks for each division and the Repower Group on an ongoing basis. The ERM and controlling functions support this process by providing independent assessments. Controls for managing risks are identified, evaluated and improved as part of the risk assessment, or in separate processes.

Internal controls are applied to financial reporting risks. One of the aims of this system of internal controls is accurate, full and reliable reporting. Repower regularly reviews and updates the system.

The group compliance officer helps Repower manage compliance risks. This is the person responsible for propagating Repower’s code of conduct and developing additional measures in line with the requirements of the Board of Directors. The group compliance reports direct to the CEO and the chairman of the Board of Directors.

The market and credit risk manager monitors Repower’s trading activities in accordance with a dedicated market and credit risk management process. The risk manager analyses market and credit risks on an ongoing basis, reporting on and discussing these risks in meetings with the people responsible for energy trading and members of the risk management committee.

The parameters set by the Board of Directors and the Executive Board are implemented in the form of guidelines, directives and risk limit systems. The aim is to ensure a reasonable balance between business risks entered into, earnings, investments and risk-bearing capital. Compliance with the parameters set for each risk category is regularly reviewed and reported to the Executive Board and Board of Directors.

This report focuses on market and counterparty risks and liquidity risks as the main risks to which the operating activities of Repower are exposed.


Repower is exposed to various market risks within the scope of its business activities. The most important of these are energy price risks, interest rate risks and currency risks.

Energy price risks

Energy transactions, including proprietary trading, are conducted for the purpose of procuring energy and fuels in order to cover physical delivery contracts, to sell Repower’s own generation volumes and to optimise the overall portfolio. When establishing energy price risks, a distinction is made between positions held for own use and those held for trading. The units responsible for sales and generation conduct transactions on the basis of the internal market model to ensure that a structure is in place to mitigate trading risks. Energy price risks arising from price volatility, changes in the price level and pricing structures and from changing market correlations are subject to defined limits and monitored by risk management on trading days. Each month the risk management committee (RMC) assesses the risk situation in the energy business. The Board of Directors and the Executive Board are kept informed about the risk situation through reports submitted by the RMC on a quarterly basis and ad hoc reports in the case of extraordinary events.

Interest rate risks

Interest rate risks primarily concern changes in interest rates on non-current interest-bearing liabilities. In the event that the agreed interest rate is variable and fixed-rate contracts are maturing, interest rates represent an interest rate risk. Owing to the long investment horizon for capital-intensive power plants and grids, Repower primarily obtains long-term financial loans with phased terms to maturity. The interest situation and hedging options are continuously reviewed. Derivative financial instruments – in particular interest rate swaps – are used and under certain conditions recognised as hedging relationships (hedge accounting). Another interest rate risk exists with regard to variable-rate positions of current assets, in particular in the case of sight deposits. This risk is minimised by pursuing an active cash management policy.

Currency risks

Energy deliveries and services are paid for and sold by the Repower Group mainly in euros and partly in Swiss francs. The foreign group companies conduct nearly all of their other transactions in their functional currency. These transactions are not subject to currency risks. There is, however, a risk of currency fluctuation on those positions denominated in euros for Repower AG and its group companies with a functional currency other than the euro. Intragroup loans in particular are subject to currency risks. The currency risk is eliminated in part by agreements for netting receivables and liabilities in the foreign currency. Forward exchange transactions are conducted to reduce the currency risk. Selected refinancing is also done in euros. Net investments in foreign group companies are also exposed to exchange rate fluctuations. However, these long-term commitments are not hedged.


Counterparty risks consist of settlement risks and replacement risks:

Settlement risks

Settlement risks arise if customers are unable to meet their financial obligations as agreed. These risks are managed on the basis of ongoing credit checks on counterparties and collateral management.

Replacement risks

Replacement risks arise if, as a result of the counterparty defaulting, the position can only be procured or sold on the market at less favourable conditions.

Settlement and replacement risks are taken into account in the limit system and when measuring risk exposure.


Liquidity risks arise if the Repower Group cannot meet its obligations as agreed or is unable to do so under economically viable conditions. Repower continuously monitors the risk of liquidity shortfalls. Cash flow forecasts are used to anticipate future liquidity performance in order to respond in good time in the event of a surplus or a shortfall.

Liquidity risk is based exclusively on financial liabilities. To indicate the effective liquidity risk related to derivative financial instruments, the next table in the section “Derivative financial liabilities” shows cash inflows and outflows from contracts with negative and positive fair values.

At the balance sheet date, financial liabilities exist with the following due dates (amounts represent the contractual, undiscounted cash flows):


Carrying amount

Cash flows

Until 3 months

4-12 months

1-5 years

> 5 years

CHF thousands




























Derivative financial liabilities







Forward foreign currency contracts







Cash inflow







Cash outflow







Energy trading transactions







Cash inflow







Cash outflow







Interest rate swaps







Cash inflow







Cash outflow














Non derivative financial liabilities







Non-current financial liabilities







Current financial liabilities







Other current liabilities







Deferred income and accrued expenses








Carrying amount

Cash flows

Until 3 months

4-12 months

1-5 years

> 5 years

CHF thousands




























Derivative financial liabilities







Forward foreign currency contracts







Cash inflow







Cash outflow







Energy trading transactions







Cash inflow







Cash outflow







Interest rate swaps







Cash inflow







Cash outflow














Non derivative financial liabilities







Non-current financial liabilities







Current financial liabilities







Other current liabilities







Deferred income and accrued expenses







Forward exchange transactions and interest rate swaps are disclosed on the balance sheet under current financial liabilities and non-current financial liabilities.

The stated prior year cash flows from the interest rate swaps were corrected.

Trade accounts receivable include the following overdue and non-impaired amounts:




CHF thousands






Less than 30 days overdue



31-60 days overdue



61-90 days overdue



91-180 days overdue



181-360 days overdue



More than 360 days overdue



The total amount of receivables which are neither impaired nor overdue is TCHF 292,657 (previous year: TCHF 304,202). There are no indications that would necessitate an impairment loss being recognised for these receivables.

Allowances for doubtful accounts amounted to:




CHF thousands






At 1 January












Reclassifications IFRS 5



Translation differences









In the case of single significant items where receipt of payment is uncertain, individual impairments are determined based on internal and external credit rating information. In addition, lump-sum impairments are calculated based on historical accounts receivable losses and current information. Neither collateral nor any other enhancements are available for doubtful receivables.


On the balance sheet date, Repower performs a sensitivity analysis for each market risk category to determine the potential impact of various scenarios on net profit for the year and equity. In the course of this analysis the impact of individual factors is investigated, meaning that mutual dependencies of individual risk variables are not taken into consideration. The following scenarios were analysed for each of the individual market risk categories:

Energy price risks

Own use positions are not measured at fair value and, accordingly, net profit for the year and equity are not affected. In the case of positions held for trading, the value at risk (VaR) for the open positions of the next 24 months is calculated with a confidence level of 99 per cent based on the changes in the trading price corresponding to the historical 180-day volatility.




CHF thousands






Energy, gas, CO2



Interest rate risks

Valuation effects may occur in the case of financial instruments for which an interest rate has been agreed and which are measured at fair value. The impact of the interest rate swaps held to which the valuation principle of hedge accounting does not apply is shown along with the financial liabilities with variable interest rates. The analysis was performed in 2016 and 2015 for interest rates which were 50 bp higher and lower.




CHF thousands






Impact on net income and equity due to a higher interest rate



Impact on net income and equity due to a lower interest rate



Currency risks

Currency risks exist mainly in connection with euro positions for trade accounts receivable and payable, derivative receivables and payables from forward exchange transactions, cash and cash equivalents, intragroup loans, open financial instruments from energy trading transactions, and non-current financial liabilities. The analysis was performed using euro exchange rates which were 10 per cent higher and lower than the closing rate. The closing rate for the year under review is CHF/EUR 1.0739 (previous year: CHF/EUR 1.0835).





Exchange rate EUR/CHF


Exchange rate EUR/CHF


CHF thousands










Impact on net income and equity due to a higher exchange rate





Impact on net income and equity due to a lower exchange rate





8 Estimation uncertainty


Management makes estimates and assumptions in line with IFRS accounting rules that affect the assets, liabilities, income and expenses of the reported figures and how they are presented. The estimates and assumptions are made taking into account past findings and various factors that exist at the time the financial statements are drawn up. These are used as the basis for all assets and liabilities in the balance sheet that cannot be directly measured or have other sources. The actual values may deviate from the estimated values. Estimates and assumptions are periodically reviewed. Changes to estimates are necessary if the circumstances on which the assumptions are based change or have changed and are recognised in the respective period. The following section describes the most important estimates and assumptions in the assets and liabilities in the balance sheet that could render important changes necessary:


The Repower Group reported tangible assets at a total carrying amount of CHF 757 million at 31 December 2016 (Note 7). These values are tested for indications of impairment on each balance sheet date. If indications of impairment are identified, the recoverable amount is calculated and, if necessary, an impairment is recognised. Estimates of the useful life and residual value of the asset are reviewed annually based on technical and economic developments, and revised as necessary. Changes to laws or ordinances, particularly relating to the environment and energy, could lead to significant changes in useful lives and thus depreciation periods or impairments of parts of assets.


The Swiss Electricity Supply Act (StromVG) and Electricity Supply Ordinance (StromVV) came into force on 1 January 2008. Under the terms of the Electricity Supply Act, the high-voltage grid (220/380kV) must be transferred to the national grid operator (Swissgrid) within five years. The high-voltage grids of Repower AG were fully integrated into Repower Transportnetz AG. Repower Transportnetz AG was transferred to the national grid operator on 3 January 2013. The provisional transfer value of the company is based on the ElCom ruling on 2012 costs and tariffs with value of plant calculated as of 31 December 2012, results of post-closing due diligence, and the financial statements of 31 December 2012. The provisional transfer value of the company came to CHF 73.5 million. The definitive values of the integrated transmission grids are determined taking account of the principle of equal treatment of all former transmission grid owners under the scope of what is known as revaluation 2. The prerequisite here is that all legally enforceable rulings on the still ongoing tariff proceedings of the years 2009 to 2012 and the currently suspended proceedings on margin differences 2011 and 2012 are available. In its ruling of 11 November 2013 relating to “Transaction transmission grid/definitive value”, the Swiss Federal Administrative Court upheld the appeals of several former transmission grid owners, particularly their objection to the valuation method used to determine the definitive value for the transfer. ElCom subsequently reviewed the valuation method to be used. The valuation method to be applied was set down firmly and decreed in October 2016. In the 2015 financial year the interests received with respect to Swissgrid in return for the contribution were disposed of at the current carrying value. In the event of a higher valuation, the buyers will acquire the additional interests or loan from Repower. In the event of a lower valuation, Repower will pay the buyers compensation for the redemption of the interest or the reduction in the loan. The final transfer value may differ significantly from the provisional transfer value. Management is of the opinion that the definitive transfer value will not be lower than the transfer value that has appeared so far in the consolidated financial statements.


Trade accounts receivable amounting to CHF 314 million (previous year: CHF 351 million) are measured by applying individual and lump-sum adjustments to the non-impaired positions based on their maturity structure and historical experience. Effective losses on receivables may deviate from these estimates.

In individual countries, invoicing and payment of the national grid operator and any rulings of the regulator sometimes involve a delay of more than a year. The best possible estimates have been made in the cases where indicated. Definitive invoicing, payments and rulings may vary from these estimates and affect the overall results. Deviations of this kind are recognised in profit or loss for the following year.


Provisions are recognised taking into account the best possible estimate of the amount and date of the probable cash outflow. Provisions for onerous energy contracts are recognised if the unavoidable costs of fulfilling a contractual obligation are higher than the economic benefit expected to flow from the contract. The parameters used to calculate onerous energy procurement contracts include anticipated developments in the price of energy on the supply and trading market, the exchange rate used, and the discount rate.


Most employees of the Repower Group are insured with the PKE Pensionskasse Energie pension fund. The liabilities reported for this fund are calculated on the basis of statistical and actuarial assumptions. This is the case with the recognised pension fund obligation, which totalled around CHF 49 million at 31 December 2016 (previous year: CHF 42 million), which is dependent on assumptions such as the discount rate, future wage and salary rises and expected increases in pension benefits. Factors such as the rate of employee turnover and the life expectancy of insureds are defined by independent actuaries. The assumptions underlying the actuarial calculations can deviate considerably from the actual results owing to changes in the market and economic environment, higher or lower rates of turnover, longer or shorter life expectancy of insureds or as a result of other estimated factors.