Consolidated Financial Statements of the Repower Group

Notes to the consolidated financial statements: notes

1 Total operating revenue

	2016	2015
		Restated*
CHF thousands

Revenue from energy sales	1,711,699	1,834,046
Profit from held-for-trading positions	–23,619	3,946
Total net revenue	1,688,080	1,837,992

Own costs capitalised	7,971	7,100

Profit from the sale/liquidation of group companies	4,099	3,142
Profit from the disposal of tangible assets	11,178	1,102
Revenue from other operating activities	28,530	40,693
Other operating income	43,807	44,937

Total	1,739,858	1,890,029

* See «Correction of errors and changes in presentation» section

In the 2016 financial year, profits from the sale/liquidation of group companies relate to the disposal of connecta ag (TCHF 1,643) and translation gains of TCHF 2,456 on the winding-up of SEI S.p.A reclassified to profit or loss in the Market Switzerland segment. The prior year profits on disposals essentially comprise proceeds from the sales of Repower GuD Leverkusen Verwaltungs-GmbH and Repower Leverkusen GmbH & Co. KG, also in the Market Switzerland segment (see Note 25).

The profits from the disposal of tangible assets relate in particular to proceeds from the sale of properties in other segments and activities.

The previous year, TCHF 5,213 in revenues accruing on the termination of a contract were recognised under revenues from other operating activities in the Market Switzerland segment.

2 Personnel expenses

	2016	2015
CHF thousands

Wages and salaries	54,837	57,779
Social security costs and other personnel costs	16,773	17,481
Total	71,610	75,260


Headcount	31.12.2016	31.12.2015
Full-time equivalent employees	563	632
Trainees	30	30


Average	2016	2015
Full-time equivalent employees	564	643
Trainees	30	30

3 Depreciation/amortisation, impairment and reversal of impairment

	2016	2015
		Restated*
CHF thousands

Depreciation of tangible assets	42,224	44,745
Impairment of tangible assets	570	63,950
Amortisation of intangible assets	3,225	2,791
Impairment of intangible assets	-	289
Total depreciation/amortisation and impairments	46,019	111,775

Reversal of impairments of tangible assets	–15,506	–2,508
Total reversal of impairment	–15,506	–2,508

Total depreciation/amortisation, impairment and reversal of impairment	30,513	109,267

* See «Correction of errors and changes in presentation» section

Impairments and reversals of impairments of tangible and intangible assets are explained in Notes 7 and 8.

4 Financial result

	2016	2015
CHF thousands

Financial income
Interest income	1,227	3,547
Dividends income	58	128
Income from sale of investments in associates and financial assets	98	7,825
Other financial income	430	33
Changes in the value of securities held for trading	2,072	-
Financial income	3,885	11,533

Financial expenses
Interest expense	–18,004	–20,141
Provisions interest	–1,591	–1,967
Changes in securities held for trading	–633	–22,387
Currency translation	–2,056	–34,377
Impairments	–4	–13
Loss on premature repayment of liabilities	–5,207	-
Other financial expenses	–4,801	–3,312
Total finance expenses	–32,296	–82,197

Net financial result	–28,411	–70,664

The loss of TCHF 5,207 on the premature repayment of liabilities relates to the repayment of registered bonds (see Note 17).

The changes in the value of securities held for trading relate to currency and interest rate hedges.

Income from sale of investments in associates and financial assets largely relates to the sale of the convertible loan granted with respect of Swissgrid AG and the shares in Swissgrid AG.

5 Income taxes

	2016	2015
CHF thousands

Income taxes charged to the income statement
Current income taxes	2,061	2,906
Deferred income taxes	752	–18,792
Total	2,813	–15,886

Income taxes in favour of other income	596	2,039
Income taxes in favour of the equity	637	-

The reconciliation between the actual tax burden and the expected tax burden for the financial years ending on 31 December 2016 and 2015 is as follows:

	2016	2015
CHF thousands

Reconciliation
Profit/(loss) before income taxes	–9,940	–152,193
Income tax rate parent company	16.7%	16.7%

Income taxes at expected income tax rate	1,658	25,386
Tax effect from income taxed at other rates	–3,044	8,246
Tax effect from tax-free income	6,885	9,202
Tax effect from non-tax-deductible expenses	–2,923	–3,564
Tax losses in the current year for which no deferred tax assets were recognised	–1,289	–13,202
Tax loss carryforwards for which no deferred tax assets were recognised	3	61
Subsequent capitalisation of previously unrecognised deferred taxes on tax-loss carryforwards	316	-
Value adjustment of previously capitalised tax loss carryforwards	–3,233	-
Tax burden/relief subsequently recognised for previous years	725	–1,685
Regional production tax - Italy (IRAP)	–995	–70
Change in tax rate	908	–7,696
Non-usable withholding tax	–1,276	–635
Other	–548	–157
Income taxes charged to the income statement	–2,813	15,886

Effective income tax rate	–28.3%	10.4%

DEFERRED INCOME TAXES BY ORIGIN OF DIFFERENCe

	31.12.2016	31.12.2015
CHF thousands

Deferred tax assets on
Tangible assets	25,488	30,755
Other non-current assets	1,050	615
Current assets	12,731	10,259
Provisions	8,245	5,925
Liabilities	22,456	13,616
Loss carryforwards/tax credits	9,163	17,431
Total	79,133	78,601

Deferred tax liabilities on
Tangible assets	31,735	32,688
Other non-current assets	613	661
Current assets	21,902	16,285
Liabilities	8,592	8,841
Total	62,842	58,475

thereof disclosed in the balance sheet as:
Deferred tax assets	41,614	49,046
Deferred tax liabilities	–25,323	–28,920
Net deferred income tax receivables	16,291	20,126

Change in deferred taxes 2016 by category

	Tangible assets	Other non-current assets	Current assets	Pension and other provisions	Liabilities	Loss carryforwards tax credits	Total
CHF thousands

Opening balance 2016	–1,933	–46	–6,026	5,925	4,775	17,431	20,126
Changes due to sales	38	-	712	-	–1,153	-	–403
Changes in the consolidated income statement	–4,094	480	–3,915	1,734	10,386	–5,343	–752
Changes in other comprehensive income	-	-	-	596	-	-	596
Translation differences	–258	3	58	–10	–144	6	–345
Other 1)	-	-	-	-	-	–2,931	–2,931
Closing balance 2016	–6,247	437	–9,171	8,245	13,864	9,163	16,291

1) Transfer of loss carryforwards within the Italian tax group which were booked as a reduction in the current tax receivable in the tax group.

CHANGE IN DEFERRED TAXES 2015 BY CATEGORY

	Tangible assets	Other non-current assets	Current assets	Provisions	Liabilities	Loss carryforwards tax credits	Total
CHF thousands

Opening balance 2015	–16,623	2,717	–8,394	–470	21,262	4,997	3,489
Changes due to sales	-	-	-	-	-	-	-
Changes in the consolidated income statement	16,883	–2,860	1,666	4,616	–14,513	13,000	18,792
Changes in other comprehensive income	-	-	-	2,039	-	-	2,039
Translation differences	–2,264	96	701	–174	–1,974	–425	–4,040
Other 1)	71	1	1	–86	-	–141	–154
Closing balance 2015	–1,933	–46	–6,026	5,925	4,775	17,431	20,126

1) Transfer of loss carryforwards within the Italian tax group which were booked as a reduction in the current tax receivable in the tax group.

UNRECOGNISED TAX LOSS CARRYFORWARDS

Individual group companies had tax loss carryforwards totalling TCHF 203,114 (previous year: TCHF 243,275) at 31 December 2016, which they can set off in future periods with taxable profits. Deferred tax assets are recognised only to the extent that it is probable that the tax benefits can be realised. On the balance sheet date the group had not recognised tax loss carryforwards of TCHF 146,746 (previous year: 153,747), since the future utilisation of these amounts for tax purposes is not probable.

These are due on the following dates:

	31.12.2016	31.12.2015
CHF thousands

Due within 1 year	8,634	-
Due in 2-4 years	38,465	38,101
Due in 5-7 years	56,357	83,174
Due after 7 years or no due date	43,290	32,472
Total	146,746	153,747

6 Result per share

	2016	2015

Average number of shares in circulation	5,355,054 pieces	3,408,115 pieces

Share of Group result attributable to Repower shareholders and participants (CHF thousands)	-15,782	-120,363

Earnings per share (undiluted) (CHF)	-3.54	-35.32

There are no factors resulting in a dilution of earnings per share.

Dividends (CHF thousands)	0.00	0.00
Dividend per share (CHF)	0.00	0.00

16 dividend subject to approval by the annual general meeting.

The Board of Directors proposes that no divided be distributed.

In the 2016 financial year the existing bearer shares and participation certificates, each of which entitled the same participation in the profit or loss, were converted into registered shares, and new registered shares were issued as part of a rights issue to increase the capital (see Note 16).

7 Tangible assets

	Power plants	Grids	Assets under construction	Land and buildings	Other	Total
CHF thousands

Restated*

Gross values at 1 January 2015	908,209	749,196	94,333	127,369	51,326	1,930,433
Own costs capitalised	-	288	6,812	-	-	7,100
Additions	187	1,350	14,934	297	1,194	17,962
Disposals	–5,052	–5,574	–820	–1,872	–4,619	–17,937
Disposals from changes in consolidation	-	-	–10,588	-	-	–10,588
Reclassifications to «Assets held for sale»	-	–13,831	-	–16,197	–279	–30,307
Reclassifications between asset classes	9,943	12,190	–21,154	–3,497	2,548	30
Translation differences	–39,615	-	–2,290	–4,047	–1,964	–47,916
Gross values at 31 December 2015	873,672	743,619	81,227	102,053	48,206	1,848,777

Accumulated depreciation and impairments at 1 January 2015	–461,107	–409,661	–81,851	–59,272	–28,921	–1,040,812
Depreciation	–21,625	–18,094	-	–1,438	–3,588	–44,745
Impairments	–63,943	-	-	–7	-	–63,950
Reversal of impairments	2,508	-	-	-	-	2,508
Disposals	5,022	4,798	-	498	4,248	14,566
Disposals from changes in consolidation	-	-	10,588	-	-	10,588
Reclassifications to «Assets held for sale»	-	10,120	-	12,292	141	22,553
Reclassifications between asset classes	–3,443	–60	-	3,496	–11	–18
Translation differences	16,450	-	2,154	1,933	764	21,301
Accumulated depreciation and impairments at 31 December 2015	–526,138	–412,897	–69,109	–42,498	–27,367	–1,078,009
Net values at 31 December 2015	347,534	330,722	12,118	59,555	20,839	770,768
thereof security pledged for debts						2,568

Gross values at 1 January 2016	873,672	743,619	81,227	102,053	48,206	1,848,777
Own costs capitalised	-	293	7,678	-	-	7,971
Additions	5	202	16,096	185	1,227	17,715
Disposals	–4,540	–5,657	–288	–6,103	–2,094	–18,682
Disposals from changes in consolidation	-	-	–19,433	-	–188	–19,621
Reclassifications to «Assets held for sale»	-	-	–8,321	-	-	–8,321
Reclassifications from «Assets held for sale»	-	-	19,606	-	29	19,635
Reclassifications between asset classes	4,104	12,362	–17,599	-	1,133	-
Translation differences	–3,206	-	–228	–329	–164	–3,927
Gross values at 31 December 2016	870,035	750,819	78,738	95,806	48,149	1,843,547

Accumulated depreciation and impairments at 1 January 2016	–526,138	–412,897	–69,109	–42,498	–27,367	–1,078,009
Depreciation	–19,752	–17,717	-	–1,303	–3,452	–42,224
Impairments	–570	-	-	-	-	–570
Reversal of impairments	15,506	-	-	-	-	15,506
Disposals	4,540	5,167	-	4,341	1,916	15,964
Disposals from changes in consolidation	-	-	19,433	-	124	19,557
Reclassifications from «Assets held for sale»	-	-	–19,606	-	–29	–19,635
Translation differences	1,915	-	216	171	82	2,384
Accumulated depreciation and impairments at 31 December 2016	–524,499	–425,447	–69,066	–39,289	–28,726	–1,087,027
Net values at 31 December 2016	345,536	325,372	9,672	56,517	19,423	756,520
thereof security pledged for debts						2,513

* See «Correction of errors and changes in presentation» section

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.

8 Intangible assets

	Goodwill	Customer relations	Software	Other	Total
CHF thousands

Gross values at 1 January 2015	325	15,362	27,296	1,062	44,045
Own costs capitalised	-	-	-	-	-
Additions	-	-	1,355	580	1,935
Disposals	–289	-	–3,859	-	–4,148
Reclassifications to «Assets held for sale»	-	-	–130	-	–130
Reclassifications between asset classes	-	-	382	–412	–30
Translation differences	–36	–1,542	–347	–105	–2,030
Gross values at 31 December 2015	-	13,820	24,697	1,125	39,642

Accumulated amortisation and impairments at 1 January 2015	-	–12,989	–20,460	–220	–33,669
Amortisation	-	–342	–2,424	–25	–2,791
Impairments	–289	-	-	-	–289
Disposals	289	-	3,833	-	4,122
Reclassifications to «Assets held for sale»	-	-	15	-	15
Reclassifications between asset classes	-	-	18	-	18
Translation differences	-	1,303	235	19	1,557
Accumulated amortisation and impairments at 31 December 2015	-	–12,028	–18,783	–226	–31,037
Net values at 31 December 2015	-	1,792	5,914	899	8,605

Gross values at 1 January 2016	-	13,820	24,697	1,125	39,642
Own costs capitalised	-	-	-	-	-
Additions	-	-	2,392	231	2,623
Disposals	-	-	–1,606	–49	–1,655
Disposals from changes in consolidation	-	–7,289	–9	–287	–7,585
Reclassifications between asset classes	-	-	59	–59	-
Translation differences	-	–51	–68	–6	–125
Gross values at 31 December 2016	-	6,480	25,465	955	32,900

Accumulated amortisation and impairments at 1 January 2016	-	–12,028	–18,783	–226	–31,037
Amortisation	-	–349	–2,850	–26	–3,225
Impairments	-	-	-	-	-
Disposals	-	-	1,601	49	1,650
Disposals from changes in consolidation	-	7,289	9	-	7,298
Reclassifications between asset classes	-	-	–73	73	-
Translation differences	-	41	45	1	87
Accumulated amortisation and impairments at 31 December 2016	-	–5,047	–20,051	–129	–25,227
Net values at 31 December 2016	-	1,433	5,414	826	7,673

The previous year there had been an impairment charge of TCHF 289 for goodwill at the Prettin wind farm. The value of the goodwill after impairment is CHF 0.

9 Disclosures of interests in other entities

TYPE OF INTEREST AND NUMBER

	31.12.2016	31.12.2015

Subsidiaries	25	32
of which domestic	7	8
of which foreign	18	24

Associates	5	6
of which domestic	3	4
of which foreign	2	2

Joint ventures	1	-
of which domestic	1	-
of which foreign	-	-

Joint operations	1	1
of which domestic	1	1
of which foreign	-	-

Changes in the ownership interests without loss of control

Elbe Finance Holding Verwaltungs-GmbH and Repower Deutschland GmbH merged with effect 1 January 2016, with Repower Deutschland GmbH absorbing the other company. The company that disappeared with the merger was wholly owned by the Group before the combination. In the 2016 financial year the assets and liabilities of Elbe Finance Holding GmbH & Co. KG were merged with Elbe Beteiligungs AG in liquidation.

In the 2016 financial year Repower sold another 2 per cent of its interest in Repartner Produktions AG to outside energy utilities. The net cash inflow of TCHF 2,046 is offset against minority interests of TCHF 1,402. The difference of TCHF 644 was allocated to the majority shareholder’s capital.

Consequences of the loss of subsidiary control

In the 2016 financial year the companies connecta ag and Repower Furnizare România S.r.l. were sold. SEI S.p.A., Repower Macedonia DOOEL Skopje and Repower Adria d.o.o. were wound up. For these disposals a translation loss of TCHF 1,327 net was reclassified to profit or loss (see Note 25).

Change in associates

In the 2016 financial year the associate Rhiienergie AG was sold.

SUBSIDIARIES

List of fully consolidated companies as at 31 December 2016 and 2015.

Company	Head office	Currency	Issued capital	Holding 31.12.2016	Holding 31.12.2015	Purpose

Repower AG	Brusio	CHF	7,390,968	-	-	H/G/C/E/S
connecta ag	Ilanz	CHF	-	0.00%	100.00%	S
Ovra electrica Ferrera SA	Trun	CHF	3,000,000	49.00%	49.00%	G
SWIBI AG	Landquart	CHF	500,000	76.68%	76.68%	S
Alvezza SA in Liquidation	Disentis	CHF	500,000	62.00%	62.00%	RE
Elbe Beteiligungs AG in Liquidation	Poschiavo	CHF	1,000,000	100.00%	100.00%	H
Lagobianco SA	Poschiavo	CHF	1,000,000	100.00%	100.00%	PC
Repartner Produktions AG	Poschiavo	CHF	20,000,000	57.00%	59.00%	G/PC
Elbe Finance Holding GmbH & Co KG	Dortmund	EUR	-	0.00%	100.00%	H
Elbe Finance Holding Verwaltungs-GmbH	Dortmund	EUR	-	0.00%	100.00%	H
Repower Deutschland GmbH	Dortmund	EUR	25,000	100.00%	100.00%	C
Repower Wind Deutschland GmbH	Dortmund	EUR	25,000	57.00%	59.00%	H
Repower Wind Prettin GmbH	Dortmund	EUR	25,000	57.00%	59.00%	G
Repower Wind Lübbenau GmbH	Dortmund	EUR	25,000	57.00%	59.00%	G
Repower Italia S.p.A.	Milan	EUR	2,000,000	100.00%	100.00%	E
Repower Vendita Italia S.p.A.	Milan	EUR	4,000,000	100.00%	100.00%	C
SET S.p.A.	Milan	EUR	120,000	61.00%	61.00%	G
Energia Sud S.r.l.	Milan	EUR	1,500,000	100.00%	100.00%	G
SEA S.p.A.	Milan	EUR	120,000	100.00%	100.00%	G
REC S.r.l.	Milan	EUR	10,000	100.00%	100.00%	PC
MERA S.r.l.	Milan	EUR	100,000	100.00%	100.00%	PC
SEI S.p.A.	Milan	EUR	-	0.00%	57.50%	PC
Immobiliare Saline S.r.l.	Milan	EUR	10,000	100.00%	100.00%	RE
REV S.r.l.	Milan	EUR	10,000	100.00%	100.00%	S
Energia Eolica Pontremoli S.r.l.	Milan	EUR	50,000	100.00%	100.00%	PC
Repower Trading Česká republika s.r.o. v likvidaci	Prague	CZK	3,000,000	100.00%	100.00%	E
S.C. Repower Vanzari Romania S.R.L.	Bucharest	RON	165,000	100.00%	100.00%	E
Repower Serbia d.o.o. - u likvidaciji	Belgrad	EUR	20,000	100.00%	100.00%	E
Repower Macedonia DOOEL Skopje - vo likvidacija	Skopje	EUR	-	0.00%	100.00%	E
Repower Adria d.o.o "u likvidaciji"	Sarajevo	BAM	-	0.00%	100.00%	E
Repower Hrvatska d.o.o. u likvidaciji	Zagreb	HRK	366,000	100.00%	100.00%	E
Repower Furnizare România S.r.l.	Bucharest	RON	-	0.00%	100.00%	E

Key:
E Energy business
C Customer (supply/sales)
RE Real estate
G Generation company
H Holding or purchase rights
S Services
PC Project company

The date of the financial statements of the subsidiaries on which the group financial statements are based is consistent with the date of the consolidated financial statements.

Ovra electrica Ferrera SA, Trun, is a power plant company in which the local municipality holds a 51 per cent stake. The Repower Group bears full operating responsibility for this company via Repower AG, and sells 100 per cent of the energy generated on the market. The Repower Group thus exercises overall control and Ovra electrica Ferrera SA is fully consolidated.

The following overview provides information on the subsidiary with significant non-controlling interests:

Key figures for subsidiary with significant non-controlling interests

	2016	2015
	SET S.p.A.	SET S.p.A.
CHF thousands

Non-controlling interest	39%	39%

Balance sheet at 31.12.
Non-current assets	129,194	129,741
Current assets	38,641	47,446
Non-current financial liabilities	–86,434	–94,238
Other non-current liabilities	–263	–281
Current financial liabilities	–2,898	–2,825
Other current liabilities	–42,070	–54,084
Share of equity attributable to Repower shareholders and participants	–22,064	–15,713
Share of equity attributable to non-controlling interests	–14,106	–10,046

Income statement
Revenues	107,822	80,426
Expenses	–97,061	–119,108
Net result	10,761	–38,682

Share of Group profit attributable to Repower shareholders and participants	6,564	–23,596
Share of Group profit attributable to non-controlling interests	4,197	–15,086

Share of profit or loss and other comprehensive income attributable to Repower shareholders and participants	–214	–4,699
Share of profit or loss and other comprehensive income attributable to non-controlling interests	–137	–3,004

Share of profit or loss and comprehensive income attributable to Repower shareholders and participants	6,350	–28,295
Share of profit or loss and comprehensive income attributable to non-controlling interests	4,060	–18,090

Dividends payment to non-controlling interests	-	-

Cash flow from operating activities	10,498	7,920
Cash flow from investing activities	–118	–116
Cash flow from financing activities	–7,730	–4,902
Effect of currency translations	–112	–544
Total cash flow	2,538	2,358

ASSOCIATES AND JOINT VENTURES

Partner plants classified as associates are listed under associated partner plants. The other holdings categorised as associates form the group designated as other associates. Both classes are accounted for using the equity method.

Associate partner plants	Head office	Currency	Issued capital	Holding	Closing date	Purpose

AKEB Aktiengesellschaft für Kernenergie-Beteiligungen	Lucerne	CHF	90,000,000	7.00%	31.12.	H
Kraftwerke Hinterrhein AG	Thusis	CHF	100,000,000	6.50%	30.09.	G


Other associates	Head office	Currency	Issued capital	Holding	Closing date	Purpose

EL.IT.E. S.p.A.	Milan	EUR	3,888,500	46.55%	31.12.	GC
Aerochetto S.r.l.	Catania	EUR	2,000,000	39.00%	31.12.	G
Swisscom Energy Solutions AG	Ittigen	CHF	13,342,325	35.00%	31.12.	S


Joint ventures	Head office	Currency	Issued capital	Holding	Closing date	Purpose

Kraftwerk Morteratsch AG	Pontresina	CHF	500,000	10.00%	31.12.	G

Key:
E Energy business
C Customer (supply/sales)
GC Grid company
G Generation company
H Holding or purchase rights
S Services

Repower’s holdings in the AKEB and KHR partner plants amount to only 7 per cent and 6.5 per cent respectively. Repower does, however, have the binding right of nomination of a mandate and can make use of this guaranteed seat on the Board of Directors to be involved in the financial and business policy decisionmaking processes of the partner plants.

Investments in associates changed as follows:

Investments in associates and joint ventures

	2016	2015
CHF thousands

Carrying amounts at 1 January	24,272	34,866
Investments	100	-
Reclass of active loans	371	768
Disposals	–3,779	-
Dividends	–196	–203
Effect of currency translations	–34	–841
Share of result	1,247	–9,545
Actuarial profit/loss	10	–575
Impairments	–1,463	–198
Carrying amounts at 31 December	20,528	24,272

Decrease of active loans
1 January	–3,708	–34

Share of result	–3,030	–3,247
Actuarial profit/loss	287	–427
31 December	–6,451	–3,708

Share of equity of associates and joint ventures at 31 December	14,077	20,564

Part of the net investment in associate Swisscom Energy Solutions AG is a loan extended to Swisscom Energy Solutions AG recognised under other financial assets. The pro-rata loss of TCHF 6,451 in excess of the carrying value of the holding was netted with the existing loan.

Disposals amounting to TCHF 3,779 related to the sale of the interest in Rhiienergie AG in the Market Switzerland segment. This resulted in income of TCHF 98 that is disclosed under financial income. The transaction resulted in a cash inflow of CHF 3,877.

In 2016 Repower joined forces with Reichmuth Infrastruktur Schweiz KGK to establish Kraftwerk Morteratsch AG for the construction and operation of the Morteratsch hydropower plant. The establishment of the company in cash entailed investment of TCHF 100 on Repower’s part. Reichmuth has financed 90 per cent of the company and Repower 10 per cent. Under the terms of the agreement, all relevant decisions have to be made unanimously. Kraftwerk Morteratsch AG is a joint venture.

In 2016 an impairment requirement was identified at Aerochetto S.r.l., assigned to the Market Italy segment, with an impairment loss of TCHF 1,463 recognised in the consolidated financial statements under the share of results of associates. The reason for the impairment is that the expected revenues on wind power fail to cover the pro-rata value of the interest. The generation asset is valued on the basis of its value in use calculated on a discounted cash flow basis. The pro-rata value in use comes to TCHF 2,745. WACC before tax is 10.1 per cent.

In 2015 an impairment requirement was identified at Aerochetto S.r.l., assigned to the Market Italy segment, with an impairment loss of TCHF 198 recognised in the consolidated financial statements under share of results of associates. The impairment was the result of a decline in expected revenues on wind power due to lower energy prices, and lower night-time output in an effort to reduce noise emissions. The generation asset is valued on the basis of its value in use calculated on a discounted cash flow basis. An impairment test yielded a value in use of TCHF 4,961 for the asset. WACC before tax is 11.2 per cent.

Associated partner works, other associates and joint ventures are each presented together.

Key figures for associated partner plants

	2016	2015	2016	2015
	Gross values	Gross values	Repower share	Repower share
CHF thousands

Balance sheet at 31.12.
Non-current assets	921,242	882,207	62,177	59,485
Current assets	55,234	51,609	3,777	3,527
Pension provisions	–13,566	–13,079	–882	–850
Non-current financial liabilities	–540,000	–365,491	–36,300	–24,109
Other non-current liabilities	–132,125	–154,247	–9,247	–10,797
Current financial liabilities	–25,000	–155,000	–1,650	–10,800
Other current liabilities	–57,459	–57,306	–3,830	–3,786
Equity of associate partner plants at 31 December	208,326	188,693	14,045	12,670

Income statement
Revenues	289,835	300,902	19,930	20,715
Expenses	–227,976	–355,941	–15,738	–24,656
Depreciation and impairments	–45,698	–53,482	–3,105	–3,652
Interest income	25,821	1,445	1,801	94
Interest expense	–17,581	–32,255	–1,195	–2,220
Income taxes	–2,753	7,749	–180	503

Gain or loss	21,648	–131,582	1,513	–9,216

Other comprehensive income	156	–8,854	10	–575

Comprehensive income	21,804	–140,436	1,523	–9,791

Key figures for other associates

	2016	2015	2016	2015
	Gross values	Gross values	Repower share	Repower share
CHF thousands

Balance sheet at 31.12.
Non-current assets	50,508	78,798	19,784	28,005
Current assets	18,768	23,886	7,399	7,977
Non-current liabilities	–69,038	–67,722	–25,844	–24,893
Current liabilities	–3,535	–9,055	–1,392	–3,195
Equity of other associates at 31 December	–3,297	25,907	–53	7,894

Income statement
Revenues	28,490	28,127	8,843	8,658
Expenses	–41,769	–39,252	–13,588	–12,432

Gain or loss	–13,279	–11,125	–4,745	–3,774

Other comprehensive income	819	–1,219	287	–427

Comprehensive income	–12,460	–12,344	–4,458	–4,201

Key figures for joint ventures

	2016	2015	2016	2015
	Gross values	Gross values	Repower share	Repower share
CHF thousands

Balance sheet at 31.12.
Current assets	3,924	-	392	-
Non-current liabilities	–3,000	-	–300	-
Current liabilities	–70	-	–7	-
Equity of joint ventures at 31 December	854	-	85	-

Income statement
Revenues	7	-	1	-
Expenses	–152	-	–15	-

Gain or loss	–145	-	–14	-

Other comprehensive income	-	-	-	-

Comprehensive income	–145	-	–14	-

Reconciliation of the share of equity of associates and joint ventures at 31 December

	2016	2015
	Repower share	Repower share
CHF thousands

Share of equity of associate partner plants	14,045	12,670
Share of equity of other associates	–53	7,894
Share of equity of joint ventures	85	-
Share of equity of associates and joint ventures at 31 December	14,077	20,564

JOINT OPERATIONS

Joint operations	Head office	Currency	Issued capital	Holding	Closing date	Purpose

Grischelectra AG	Chur	CHF	1,000,000 (20% paid in)	11.00%	30.09.	H

Key:
H Holding or purchase rights

Grischelectra AG is classified as a joint arrangement. The company’s business is selling electricity procurement rights. Based on the interest of 11 per cent and other votes granted through a guaranteed proxy, Repower manages the company together with Canton Graubünden. Repower procures 100 per cent of the energy bundled in Grischelectra AG from hydropower in return for reimbursement of the generation costs. From an economic perspective, Repower is indirectly responsible for Grischelectra’s liabilities. The holding in Grischelectra was classified as a joint operation. In contrast to the shares held, Repower includes 100 per cent of the company assets, debts, expenses and earnings in its consolidated financial statements.

10 Other financial assets

	31.12.2016	31.12.2015
CHF thousands

Active loans	3,934	13,024
Other non-current securities	3,388	3,390
Total	7,322	16,414

The loans granted are allocated to the category loans and receivables and recognised at amortised cost. This also includes a loan to Swisscom Energy Solutions AG, which is viewed as part of the net investment in this associate (see Note 9). All other non-current securities are classified as available for sale and measured at fair value. This affects not listed shares or equity securities for which there is no active market and hence for which the fair value cannot be reliably determined. The fair value corresponds to the acquisition value less impairments.

11 Inventories

	31.12.2016	31.12.2015
CHF thousands

Guarantees of origin	-	15,914
Emissions certificates	4,147	2,249
Gas	2,588	3,022
Material inventories	9,608	9,554
Total	16,343	30,739

Inventories consist of material inventories, gas inventories and certificates, and are measured at the lower of acquisition costs and net realisable value. Certificates that are not necessary for own generation needs and which are held for trading purposes are measured at fair value less selling costs. No inventories were held for trading purposes in 2016 and 2015.

In the 2016 financial year an impairment loss of TCHF 98 (previous year: TCHF 74) was recognised and TCHF 0 (previous year: TCHF 219) released. The balance of guarantees of origin the previous year, amounting to TCHF 15,914, was related to the holdings of Repower Furnizare România, which was sold in the 2016 financial year.

12 Receivables

	31.12.2016	31.12.2015
CHF thousands

Trade accounts receivable	357,659	381,718
Allowances for doubtful accounts	–43,807	–31,014
Other receivables	39,343	40,323
Total	353,195	391,027

All receivables fall into the category loans and receivables and are measured at amortised cost. The total sum of receivables at 31 December 2016 (and 31 December 2015) falls due within one year. Owing to their short-term nature, the carrying amounts are assumed to be fair values.

Receivables include collateral in the form of deposits lodged by Repower in the context of its business, particularly with respect of its trading operations. These came to TCHF 3,566 (previous year: TCHF 12,392) for the year under review.

The maturity structure of the receivables and the development of impairments are shown in the risk management and financial risk management section.

13 Securities and other financial instruments

	31.12.2016	31.12.2015
CHF thousands

Fixed term deposits (4-12 months)	35,000	15,169
Other securities	125	125
Positive replacement values	2,160	82
Total	37,285	15,376

Fixed term deposits fall into the category loans and receivables and are measured at amortised cost. Other securities, and positive replacement values, fall into the held-for-trading category and are measured at fair value. The positive replacement values are related to forward exchange transactions.

14 Positive/negative replacement values for held-for-trading positions

	31.12.2016	31.12.2015
CHF thousands

Positive replacement values	147,772	103,300
Negative replacement values	141,941	77,154

The figures for the replacement values correspond to all financial instruments from energy trading transactions open on the balance sheet date. The replacement value corresponds to the fair value of the open financial instruments. Positive replacement values represent receivables. Positive replacement values represent liabilities.

Replacement values of held-for-trading positions relate to forward contracts measured at current market values. Forward contracts cover forwards and futures with flexible profiles. The replacement value is the difference in price compared to the closing price. The price fluctuations of forward contracts are recorded by adjusting the replacement values, since there is no daily financial balancing of fluctuations in value.

The employment of held-for-trading positions exposes the company to credit and market risks. If the counterparty fails to fulfil its obligations arising from the contract, the counterparty risk for the company corresponds to the positive replacement value. These risks related to held-for-trading positions are limited by imposing stringent requirements on the creditworthiness of contracting parties. An obligation by Repower towards the counterparty exists in the event of a negative replacement value. In this case the counterparty bears the risk.

15 Cash and cash equivalents

	31.12.2016	31.12.2015
CHF thousands

Sight deposits	221,120	395,372
Cash invested for less than 90 days	77,300	1,393
Total	298,420	396,765

All cash and cash equivalents fall into the category loans and receivables and are measured at amortised cost. The average interest rate on CHF-denominated cash and cash equivalents was -0.20 per cent (previous year: 0.05 per cent) and -0.10 per cent for EUR-denominated cash and cash equivalents (previous year: 0.00 per cent).

Cash and cash equivalents are held in the following currencies:

	31.12.2016	31.12.2015
CHF thousands

Swiss francs	107,585	134,374
Euro (translated)	189,838	259,623
RON (translated)	749	1,539
Other currencies (translated)	248	1,229
Total	298,420	396,765

All positions are freely disposable or are due within 90 days. The carrying amounts correspond approximately to the fair values.

CASH AND CASH EQUIVALENTS FOR THE CASH FLOW STATEMENT

	31.12.2016	31.12.2015
CHF thousands

Cash and cash equivalents	298,420	396,765
Cash and cash equivalents held for sale	-	1,368
Total	298,420	398,133

Cash and cash equivalents held for sale are disclosed under assets held for sale (Note 26). These must be added again to cash and cash equivalents for the cash flow statement.

16 Share capital

		31.12.2016	31.12.2015
CHF thousands

Bearer shares	2,783,115 at a par value of CHF 1	-	2,783
Participation capital	625,000 at a par value of CHF 1	-	625
Registered shares	7,390,968 at a par value of CHF 1	7,391	-
Share and participation capital		7,391	3,408

Existing shareholders and their direct share of voting rights:

Elektrizitätswerke des Kantons Zürich (EKZ)		28.32%	0.00%
Canton of Graubünden		21.96%	58.30%
UBS Clean Energy Infrastructure KGK (UBS-CEIS)		18.88%	0.00%
Axpo Holding AG, Baden		12.69%	33.70%
Other (free float)		18.15%	8.00%

CONVERSION OF BEARER SHARES AND PARTICIPATION CERTIFICATES

In the first half of 2016 the existing bearer shares and participation certificates with a nominal value of CHF 1 were converted into 3,408,115 registered shares, also with a nominal value of CHF 1, on a one-for-one basis. Participation certificates carried no voting rights at the general meeting but were otherwise subject to the same provisions as shares.

INCREASE IN CAPITAL VIA RIGHTS ISSUE

The Repower extraordinary general meeting (EGM) held on 21 June 2016 resolved to increase the company’s capital by means of a rights issue to shareholders. The period for subscription to the new shares began on 24 June 2016 and lasted until 4 July 2016. Existing shareholders were allocated one subscription right per share held. Five subscription rights entitled the holder to subscribe to 7 new shares at a subscription price of CHF 43.00 per share. The two existing main shareholders, Canton Graubünden and Axpo Holding AG, waived their subscription rights in favour of Elektrizitätswerke des Kantons Zürich (EKZ) and UBS Clean Energy Infrastructure Switzerland KGK (UBS-CEIS); these rights were allotted to the two new shareholders. After the subscription period had closed, on 5 July 2016, and with an addendum dated 14 July 2016, the Board of Directors of Repower AG resolved to increase the company’s capital from CHF 3,408,115, divided into 3,408,115 fully paid-up registered shares each with a nominal value of CHF 1.00, by issuing 3,982,853 new fully paid-up registered shares each with a nominal value of CHF 1.00; the rights issue generated gross proceeds of TCHF 171,263. The share capital now comes to CHF 7,390,968.

The four shareholders with major interests are bound by a shareholders’ agreement.

TREASURY SHARES

On 31 December 2016, 382 treasury shares were held (previous year: 0).

17 Non-current financial liabilities

				31.12.2016	31.12.2015
CHF thousands

	Currency	Due date	Nominal interest rate
Private placement	CHF	10.04.2017	3.625%	-	15,000
Private placement	CHF	28.03.2018	3.660%	25,000	25,000
Private placement	CHF	20.03.2023	3.625%	10,000	10,000
Private placement	CHF	28.06.2030	2.500%	20,000	20,000
Bank loan	CHF	11.12.2020	3.100%	10,000	10,000
Bank loan	CHF	04.07.2026	2.070%	50,000	50,000
Bank loan 1)	CHF	31.03.2017	variable	-	1,090
Loans				115,000	131,090

Bond par value	CHF	20.07.2022	2.375%	115,000	115,000
Net expenditures	CHF			–1,187	–1,432
Bonds				113,813	113,568

Registered bond	EUR	08.08.2034	3.400%	2,685	91,014
Net expenditures	EUR			–130	–4,260
Registered bond	EUR	18.03.2027	1.920%	-	37,923
Net expenditures	EUR			-	–830
Registered bond				2,555	123,847

Investment loan 2)	CHF	31.12.2020	no interest	638	850
Loan (non-controlling interest) 3)	CHF	31.12.2070	no interest	9,588	9,219
Interest rate swap	CHF	11.12.2020		1,406	1,713
Interest rate swap	CHF	28.06.2024		4,529	4,832
Interest rate swap	CHF	01.07.2031		6,392	6,344
Interest rate swap	CHF	18.11.2031		7,409	6,362
Other financial liability	EUR	31.12.2021	no interest	551	711
Loan (non-controlling interest)	EUR	30.06.2027	3.900%	31,835	34,864
Liabilities for financial leasing	CHF		2.500%	53	88
Other financial liabilities				62,401	64,983
Total				293,769	433,488

Financial liabilities are carried in the following currencies:
Swiss francs				258,828	274,066
Euro (translated)				34,941	159,422

1) An amount of TCHF 1,090 is assigned to current financial liabilities for the bank loan of TCHF 0 (previous year: TCHF 1,090) due on 31 March 2017. Mortgage assignments were pledged as security for this bank loan. The fixed assets pledged in this connection are disclosed in Note 7.

2) Mortgage assignments were pledged as security for the investment loan of TCHF 638 (previous year: TCHF 850). The fixed assets pledged in this connection are disclosed in Note 7.

3) In the 2011 financial year the minority shareholders of Repartner Produktions AG granted an interest-free loan of TCHF 15,925 commensurate with their interests to finance the expansion of Repower’s Taschinas hydropower plant in Grüsch. The terms of the loan stipulate repayment on a straight-line basis originally over 59 years as well as pro-rata compensation based on the EBIT generated by the Taschinas power plant. Financial liabilities are to be recognised at the time they are acquired at fair value. Since no market price is available, this is determined on the basis of the present value of expected future cash flows. The interest rate applied is 2.7 per cent. The interest rate advantage for the interest-free shareholder loan amounted to TCHF 8,004 and was classified as a hidden contribution which was taken into account at Group level as a capital increase in non-controlling interests. Over the course of 2012 other partners were acquired for Repartner Produktions AG that also granted the company interest-free loans. Entry into the partnership was with retrospective effect and under the same terms and conditions as the previous partners. The additionally granted loan amount at the beginning of 2012 totalled TCHF 1,356. In the 2014 financial year the interest-free loan was adjusted by TCHF 315. During 2016 further partners were acquired for Repartner Produktions AG, contributing TCHF 386 for a pro-rata share of the company’s existing capital. Entry into the partnership was likewise with retrospective effect and under the same terms and conditions as the previous partners. At the end of 2016 the liability component of the interest-free loan amounted to TCHF 9,669 (previous year: TCHF 9,295); it is amortised using the effective interest method, with the short-term portion recognised under current financial liabilities in the amount of TCHF 81 (previous year: TCHF 76).

With the exception of interest rate swaps, all non-current financial liabilities fall into the category of other financial liabilities and are recognised at amortised cost using the effective interest method. The weighted average interest rate based on the nominal value on the balance sheet date was 2.84 per cent (previous year: 2.91 per cent). The fair value of non-current financial liabilities amounted to TCHF 328,929 (previous year: TCHF 509,429). Repower has fully complied with all credit and loan agreements. The registered bonds (“Namensschuldverschreibungen”) totalling EUR 35 million and EUR 84 million contain clauses pertaining to change of control. With the new investors joining on 5 July 2016, creditors had made use of their right of termination. Repayment of registered bonds totalling EUR 116.5 million was demanded, and was effected in the form of payments amounting to TCHF 126,995. A TCHF 5,207 loss on premature repayment is recognised under financial income.

18 Pension fund obligation

The pension plans operated by Repower qualify as defined benefit plans, with the main plan established in Switzerland. Employees in Switzerland are members of the legally independent pension fund PKE Vorsorgestiftung Energie. This is a pension fund within the meaning of the Federal Law on Occupational Pensions for Old Age, Survivors and Disability (BVG). The law governs the benefits employees are entitled to as well as the organisation and financing of pension funds. The fund is designed to provide occupational pensions for employees of the affiliated companies and their family members and survivors that cover the economic consequences of old age, disability and death. PKE Vorsorgestiftung is a defined contribution plan in Switzerland in accordance with the BVG. Under the defined contribution plan, the benefits paid out in the case of an insured event are based on the insured’s contributions plus interest.

An equal number of employer and employee representatives make up the fund’s Board of Trustees. The Board of Trustees defines the fund’s objectives and principles and regulates and monitors the investment process (investment strategy, investment policy and investment guidelines). In the management of the fund’s assets, the financial interests of the insureds are given top priority. Assets must be managed in accordance with the respective investment regulations so as to guarantee the timely payment of benefits and compliance with the risk limits laid down in the investment policy.

In the event of any necessary restructuring measures, the companies determine the interest rate and shortfall contributions to be paid together with their insureds. The contribution of the companies must be at least as high as the sum of the contributions of the insureds. This means that Repower may have a legal or constructive obligation to pay additional benefits. For this reason, a defined contribution plan also constitutes a defined benefit plan under IFRS.

The probability and scope of any restructuring measures as a result of a plan shortfall can be reduced in the defined contribution plan (in accordance with BVG) by lowering the interest rate applied to the capital accrued by beneficiaries.

The defined contribution plan operated by PKE Vorsorgestiftung Energie will pay out pensions in two parts: 90 per cent of the pension will be guaranteed as a basic pension and 10 per cent as a variable pension, depending on PKE’s coverage ratio. If the coverage ratio is below 90 per cent, only the basic pension will be paid out. If the coverage ratio is higher than 120 per cent, the target pension will be increased by a maximum of 10 per cent. The variable component will be redefined each year and be valid for an entire year. This rule makes it possible for future retirees to also contribute to eliminating a potential coverage shortfall. They can, however, also participate in a positive development.

PKE Vorsorgestiftung Energie was converted from a joint foundation into a collective foundation with effect 1 January 2015. Rather than a single binding coverage ratio, there is a separate coverage ratio for each affiliated company.

The following table provides an overview of the balances recognised in relation to the pension plans in the consolidated financial statements:

	Swiss pension plans	Italian pension plans	Total
CHF thousands

2016

Fair value of plan assets	177,958	-	177,958
Present value of funded obligations	–222,874	-	–222,874
Deficit of funded plans	–44,916	-	–44,916

Present value of unfunded obligations	-	–3,625	–3,625
Total of defined benefit pension plans	–44,916	–3,625	–48,541

Current service cost	–5,471	–465	–5,936
Administration cost	–371	-	–371
Interest cost	–330	–70	–400
Loss from plan change	–350		–350
Income statement charge	–6,522	–535	–7,057

Other comprehensive income	–3,808	121	–3,687

	Swiss pension plans	Italian pension plans	Total
CHF thousands

2015

Fair value of plan assets	175,600	-	175,600
Present value of funded obligations	–214,711	-	–214,711
Deficit of funded plans	–39,111	-	–39,111

Present value of unfunded obligations	-	–3,506	–3,506
Total of defined benefit pension plans	–39,111	–3,506	–42,617

Thereof disclosed in liabilities held for sale	–519	-	–519
Pension provisions according to the balance sheet position	–38,592	–3,506	–42,098

Current service cost	–4,933	–528	–5,461
Administration cost	–203	-	–203
Interest cost	–331	–86	–417
Loss from plan change	–133	-	–133
Income statement charge	–5,600	–614	–6,214

Other comprehensive income	–12,226	–358	–12,584

The present value of the defined benefit obligation of the Swiss pension plans is broken down as follows into the individual groups of pension beneficiaries:

	31.12.2016	31.12.2015
CHF thousands

Swiss pension plans
Active members	–135,435	–133,548
Pensioners	–87,439	–81,163
Total present value of obligation	–222,874	–214,711

All pension commitments are vested. The weighted average term of the defined benefit pension obligation under the defined contribution plan totalled 17.7 years (previous year: 16.6 years) at 31 December 2016.

The investment strategy is based on the results of an asset and liability analysis. The following table provides a breakdown of the plan assets and strategy of the investment portfolio:

	Quoted market price	Non quoted market price	Total	in %	Strategy in %
CHF thousands

31.12.2016

Cash and cash equivalents 1)	1,780	-	1,780	1.00%	2.00%
Debt instruments	43,244	-	43,244	24.30%	35.00%
Equity instruments	72,251	-	72,251	40.60%	39.00%
Real estate	9,787	25,271	35,058	19.70%	15.00%
Other	-	25,625	25,625	14.40%	9.00%
Total	127,062	50,896	177,958	100.00%	100.00%

1) Economic exposure, including foreign exchange hedge and associated liquidity

	Quoted market price	Non quoted market price	Total	in %	Strategy in %
CHF thousands

31.12.2015

Cash and cash equivalents	2,107	-	2,107	1.00%	2.00%
Debt instruments	45,657	-	45,657	26.00%	30.00%
Equity instruments	70,415	-	70,415	40.00%	39.00%
Real estate	10,536	23,530	34,066	19.00%	17.00%
Other	6,145	17,210	23,355	14.00%	12.00%
Total	134,860	40,740	175,600	100.00%	100.00%

Fluctuations in pension provisions with separate reconciliation statements for the plan assets and the present value of the defined benefit obligation are shown in the table below:

	Present value of obligation	Fair value of plan assets	Total
CHF thousands

At 1 January 2015	–204,029	175,365	–28,664
Current service cost	–5,461	-	–5,461
Administration cost	-	–203	–203
Interest expenses/income	–2,673	2,256	–417
Loss from plan change	–133	-	–133
Income statement	–8,267	2,053	–6,214

Remeasurements
Return on plan assets, excluding amounts included in interest expense/income	-	1,806	1,806
Actuarial losses from changes in financial assumptions	–5,923	-	–5,923
Experience gains/losses	–8,467	-	–8,467
Other comprehensive income	–14,390	1,806	–12,584

Exchange differences	315	-	315

Contributions
Employer contributions	-	4,530	4,530
Employee contributions	–2,424	2,424	-
Benefits paid	10,578	–10,578	-
At 31 December 2015	–218,217	175,600	–42,617

At 1 January 2016	–218,217	175,600	–42,617

Current service cost	–5,936	-	–5,936
Administration cost	-	–371	–371
Interest expenses/income	–1,865	1,465	–400
Loss from plan change	–350	-	–350
Income statement	–8,151	1,094	–7,057

Remeasurements
Return on plan assets, excluding amounts included in interest expense/income	-	7,809	7,809
Actuarial losses from changes in demographic assumptions	–5,211	-	–5,211
Actuarial losses from changes in financial assumptions	–7,435	-	–7,435
Experience gains/losses	1,150	-	1,150
Other comprehensive income	–11,496	7,809	–3,687

Disposals from changes in consolidation	4,038	–3,346	692

Exchange differences	34	-	34

Contributions
Employer contributions	-	4,094	4,094
Employee contributions	–2,473	2,473	-
Benefits paid	9,766	–9,766	-
At 31 December 2016	–226,499	177,958	–48,541

The key actuarial assumptions are as follows:

	2016	2015
CHF thousands

Weighted average of assumptions used to determine the defined benefit obligations at 31 December
Discount rate	0.62%	0.88%
Salary growth rate	0.51%	0.50%
Mortality table
Swiss pension plans	BVG 2015 GT	BVG 2010 GT
Italian pension plans	ISTAT-2015	ISTAT-2014

The average retirement age is 63.

An increase or decline in the key actuarial parameters would affect the present value of the defined benefit obligation at 31 December 2016 as follows:

	Impact on present value of obligation at 31.12.2016
	Change in assumptions	Increase in assumption	Decrease in assumption
CHF thousands

Discount rate	0.25%	7,351	–7,807
Salary growth rate	0.50%	–1,680	1,634

	Impact on present value of obligation at 31.12.2015
	Change in assumptions	Increase in assumption	Decrease in assumption
CHF thousands

Discount rate	0.25%	6,564	–6,947
Salary growth rate	0.50%	–1,612	1,564

Employer contributions of TCHF 3,943 (previous year: TCHF 4,048) are expected for the 2017 financial year.

19 Other provisions

	Reversion provisions	Litigations and court proceedings	Dismantling provisions	Provisions for onerous contracts	Other provisions	Total
CHF thousands

Other current provisions	472	374	-	-	3,723	4,569
Other non-current provisions	13,028	758	2,428	9,164	3,218	28,596
At 31 December 2015	13,500	1,132	2,428	9,164	6,941	33,165
Additions	-	959	-	5,531	368	6,858
Utilisations	–531	–314	-	-	–4,607	–5,452
Reversals	-	-	-	–4,846	–562	–5,408
Interests	431	-	28	732	-	1,191
Disposals from changes in consolidation	-	–63	-	-	-	–63
Translation differences	-	–17	–16	-	–10	–43
At 31 December 2016	13,400	1,697	2,440	10,581	2,130	30,248

Expected maturity up to 1 year	472	-	-	-	20	492
Other current provisions	472	-	-	-	20	492

Expected maturity in more than 1 year	12,928	1,697	2,440	10,581	2,110	29,756
Other non-current provisions	12,928	1,697	2,440	10,581	2,110	29,756

REVERSION PROVISIONS

Reversion provisions have been set aside for the extensive deliveries of free energy to the municipality of Poschiavo.

Provisions for onerous contracts

Provisions were recognised for onerous energy procurement contracts. The creation of the provision in the amount of TCHF 685 (previous year: 1,706) was recognised under energy procurement in the Market Switzerland segment.

OTHER PROVISIONS

Repower has a sub-participation in the Gösgen nuclear power plant, from which it purchases electricity. In the 2015 financial year Repower had recognised a provision of TCHF 3,000 in the Market Switzerland segment in anticipation of the charge for the pro-rata valuation difference for the plant’s decommissioning fund. This provision was released in the 2016 financial year. Taken individually, the other components of the other provisions item are immaterial.

20 Other current liabilities

	31.12.2016	31.12.2015
CHF thousands

Trade accounts payable	346,003	333,165
Other liabilities	16,718	34,859
Total	362,721	368,024

All positions fall into the category other liabilities and are recognised at amortised cost. They are due within one year. The fair values have been taken as the carrying amounts.

21 Current financial liabilities

	31.12.2016	31.12.2015
CHF thousands

Current financial liabilities	19,482	202,823
Negative replacement values	308	1,663
Liabilities for financial leasing	21	77
Total	19,811	204,563

Current financial liabilities and leasing commitments fall into the other financial liabilities category and are recognised at amortised cost. Owing to their short-term nature, the carrying amounts are assumed to be fair values. The previous year the item current financial liabilities included the CHF 200 million bond. This amount was repaid in 2016. The replacement values consist of forward exchange transactions and currency options and correspond to the market value.

22 Prepaid expenses and accrued income/deferred income and accrued expenses

PREPAID EXPENSES AND ACCRUED INCOME

	31.12.2016	31.12.2015
CHF thousands

Other prepaid expenses	2,122	4,304
Non-financial assets	2,122	4,304

Other accrued income	39	248
Financial assets	39	248

Prepaid expenses and accrued income	2,161	4,552

DEFERRED INCOME AND ACCRUED EXPENSES

	31.12.2016	31.12.2015
CHF thousands

Other deferred income	780	916
Accrued capital, other taxes, charges and levies	5,130	4,757
Non-financial liabilities	5,910	5,673

Accrued interests	3,001	6,053
Accrued annual leave and overtime	6,454	6,692
Accrued other personnel expenses	1,590	1,689
Other accrued expenses	822	3,440
Financial liabilities	11,867	17,874

Deferred income and accrued expenses	17,777	23,547

The financial assets under prepaid expenses and accrued income are allocated to the category other financial receivables, and financial liabilities under deferred income and accrued expenses are allocated to the category other financial liabilities. They are measured at amortised cost and are due within one year. The fair values have been taken as the carrying amounts.

23 Transactions with related parties

SCOPE OF TRANSACTIONS BETWEEN THE GROUP AND RELATED PARTIES

	2016	2015	2016	2015	2016	2015	2016	2015
	Energy sales		Financial and other incomes		Energy procurement		Financial and other expenses
CHF thousands

Canton of Graubünden	81	81	-	-	-	-	-	-
Axpo Group	25,293	64,304	149	237	13,159	22,741	184	511
Elektrizitätswerke des Kantons Zürich (EKZ)	1,611	-	-	-	-	-	97	-
UBS Clean Energy Infrastructure KGK (UBS-CEIS)	-	-	-	-	-	-	43	-
Main shareholders	26,985	64,385	149	237	13,159	22,741	324	511

Kraftwerke Hinterrhein AG	178	391	21	20	2,984	3,946	12	8
AKEB Aktiengesellschaft für Kernenergie-Beteiligungen	-	-	18	23	13,689	13,083	-	-
Associate partner plants	178	391	39	43	16,673	17,029	12	8

Rhiienergie AG, Tamins	1,173	1,843	6	4	212	103	-	29
EL.IT.E S.p.A.	-	-	239	250	1,542	1,089	-	-
Aerochetto S.r.l.	-	-	376	370	-	-	-	-
Swisscom Energy Solutions AG	502	417	19	11	-	-	-	-
Other associates	1,675	2,260	640	635	1,754	1,192	-	29

Kraftwerk Morteratsch AG	-	-	81	-	-	-	-	-
Joint ventures	-	-	81	-	-	-	-	-

	2016	2015	2016	2015	2016	2015	2016	2015
	Receivables at 31 December		Current liabilities at 31 December		Other non- current liabilities at 31 December		Active loans at 31 December
CHF thousands

Axpo Group	6,283	3,460	8,053	710	-	-	-	-
Elektrizitätswerke des Kantons Zürich (EKZ)	276	-	-	-	-	-	-	-
Main shareholders	6,559	3,460	8,053	710	-	-	-	-

Kraftwerke Hinterrhein AG	837	12	21	240	-	-	-	-
AKEB Aktiengesellschaft für Kernenergie-Beteiligungen	-	-	-	-	-	-	-	10,000
Associate partner plants	837	12	21	240	-	-	-	10,000

Rhiienergie AG, Tamins	-	158	-	1	-	234	-	-
EL.IT.E S.p.A.	230	228	382	384	-	-	320	968
Aerochetto S.r.l.	-	-	-	-	-	-	-	-
Swisscom Energy Solutions AG	-	108	-	46	-	-	3,314	2,057
Other associates	230	494	382	431	-	234	3,634	3,025

Kraftwerk Morteratsch AG	1	-	3,600	-	-	-	300	-
Joint ventures	1	-	3,600	-	-	-	300	-

The positive replacement values of held-for-trading positions in respect of the Axpo Group amounted to TCHF 869 (previous year: TCHF 1,424).

The negative replacement values of held-for-trading positions in respect of the Axpo Group amounted to TCHF 15,125 (previous year: TCHF 10,613).

MEMBERS OF THE BOARD OF DIRECTORS AND EXECUTIVE BOARD

In the 2016 and 2015 financial years Repower paid the following compensation to members of the Board of Directors and Executive Board:

	2016	2015
CHF

Gross salaries (fixed) and reimbursements	2,462,682	2,425,008
Gross salaries (variable)	611,140	62,200
Pension funds and other personnel costs	578,789	704,660
Total	3,652,611	3,191,868

Additional disclosures on compensation and shareholdings of group governing bodies in accordance with the Swiss Code of Obligations are provided in the Compensation, shareholdings and loans section of the annual report.

24 Additional disclosures on financial instruments

	31.12.2016	31.12.2015
	Carrying amount	Carrying amount
CHF thousands

Assets


Forward foreign currency contracts	2,160	82
Energy trading transactions	147,772	103,300
Held for trading	149,932	103,382

Derivative financial instruments	149,932	103,382

Active loans	3,934	13,024
Fixed term deposits (4-12 months)	35,000	15,169
Receivables	344,465	379,767
Trade accounts receivables	313,852	350,704
Other receivables	30,613	29,063
Prepaid expenses and accrued income	39	248
Cash and cash equivalents	298,420	396,765
Loans and receivables	681,858	804,973

Shares, bonds, other securities	125	125
Held for trading	125	125

Other financial assets	3,388	3,390
Available for sale	3,388	3,390

Non-derivative financial instruments	685,371	808,488

Total	835,303	911,870

	31.12.2016	31.12.2015
	Carrying amount	Carrying amount
CHF thousands

Liabilities

Forward foreign currency contracts	308	1,663
Energy trading transactions	141,941	77,154
Interest rate swaps	19,736	19,251
Held for trading	161,985	98,068

Derivative financial instruments	161,985	98,068

Received loans	273,980	414,149
Current financial liabilities	19,482	202,823
Liabilities for financial leasing	74	165
Other current liabilities	361,216	363,863
Trade accounts payable	346,003	333,165
Other liabilities	15,213	30,698
Accrued expenses	11,867	17,874
Other financial liabilities	666,619	998,874

Non-derivative financial instruments	666,619	998,874

Total	828,604	1,096,942

The following tables show the reconciliation of the figures presented here.

RECONCILIATION 31.12.2016 CARRYING VALUE (ASSETS)

	Securities and other financial instruments	Receivables	Positive replacement values HfT-positions	Other financial assets	Prepaid expenses and accrued income	Cash and cash equivalents
CHF thousands

Derivative financial instruments
Held for trading
Forward foreign currency contracts	2,160
Energy trading transactions			147,772

Non-derivative financial instruments
Loans and receivables
Active loans				3,934
Fixed term deposits (4-12 months)	35,000
Receivables		344,465
Prepaid expenses and accrued income					39
Cash and cash equivalents						298,420
Held for trading
Shares, bonds, other securities	125
Available for sale
Other financial assets				3,388
Total	37,285	344,465	147,772	7,322	39	298,420

Non-financial instruments		8,730			2,122
Balance sheet amount	37,285	353,195	147,772	7,322	2,161	298,420

RECONCILIATION 31.12.2015 CARRYING VALUE (ASSETS)

	Securities and other financial instruments	Receivables	Positive replacement values HfT-positions	Other financial assets	Prepaid expenses and accrued income	Cash and cash equivalents
CHF thousands

Derivative financial instruments
Held for trading
Forward foreign currency contracts	82
Energy trading transactions			103,300

Non-derivative financial instruments
Loans and receivables
Active loans				13,024
Fixed term deposits (4-12 months)	15,169
Receivables		379,767
Prepaid expenses and accrued income					248
Cash and cash equivalents						396,765
Held for trading
Shares, bonds, other securities	125
Available for sale
Other financial assets				3,390
Total	15,376	379,767	103,300	16,414	248	396,765

Non-financial instruments		11,260			4,304
Balance sheet amount	15,376	391,027	103,300	16,414	4,552	396,765

RECONCILIATION 31.12.2016 CARRYING VALUE (LIABILITIES)

	Non-current financial liabilities	Current financial liabilities	Negative replacement values HfT positions	Other current liabilities	Deferred income and accrued expenses
CHF thousands

Derivative financial instruments
Held for trading
Forward foreign currency contracts		308
Energy trading transactions			141,941
Interest rate swaps	19,736

Non-derivative financial instruments
Other financial liabilities
Received loans	273,980
Current financial liabilities		19,482
Liabilities for financial leasing	53	21
Other current liabilities				361,216
Accrued expenses					11,867
Total	293,769	19,811	141,941	361,216	11,867

Non-financial instruments				1,505	5,910
Balance sheet amount	293,769	19,811	141,941	362,721	17,777

RECONCILIATION 31.12.2015 CARRYING VALUE (LIABILITIES)

	Non-current financial liabilities	Current financial liabilities	Negative replacement values HfT positions	Other current liabilities	Deferred income and accrued expenses
CHF thousands

Derivative financial instruments
Held for trading
Forward foreign currency contracts		1,663
Energy trading transactions			77,154
Interest rate swaps	19,251

Non-derivative financial instruments
Other financial liabilities
Received loans	414,149
Current financial liabilities		202,823
Liabilities for financial leasing	88	77
Other current liabilities				363,863
Accrued expenses					17,874
Total	433,488	204,563	77,154	363,863	17,874

Non-financial instruments				4,161	5,673
Balance sheet amount	433,488	204,563	77,154	368,024	23,547

The carrying amount of each financial instrument represents a reasonable estimate for the fair value, with the exception of the following positions:

	31.12.2016	31.12.2016	31.12.2015	31.12.2015
	Carrying amount	Fair value	Carrying amount	Fair value
CHF thousands

Received loans (incl. long term leasing)	274,033	309,193	414,237	490,178

MEASUREMENT HIERARCHY

Measurements at fair value in the balance sheet are classified using a three-level hierarchy based on the type and quality of the fair values (market prices). The following levels exist:

Level 1: Publicly quoted market prices for the respective financial instrument (e.g. stock market prices).

Level 2: Market prices that are not generally accessible and possibly derived from prices for similar financial instruments or underlying goods.

Level 3: Prices that are not based on market data.

FAIR VALUE HIERARCHY

Recurring measurement of assets

	31.12.2016	Level 1	Level 2	Level 3
CHF thousands

Forward foreign currency contracts	2,160	-	2,160	-
Energy trading transactions	147,772	-	147,772	-
Derivative financial instruments	149,932	-	149,932	-

Shares, bonds, other securities	125	-	125	-
Non-derivative financial instruments	125	-	125	-

Recurring measurement of liabilities

	31.12.2016	Level 1	Level 2	Level 3
CHF thousands

Forward foreign currency contracts	308	-	308	-
Energy trading transactions	141,941	-	141,941	-
Interest rate swaps	19,736	-	19,736	-
Derivative financial instruments	161,985	-	161,985	-

Received loans (incl. long term leasing)	309,193	-	309,193	-
Financial instruments that are not measured at fair value	309,193	-	309,193	-

Recurring measurement of assets

	31.12.2015	Level 1	Level 2	Level 3
CHF thousands

Forward foreign currency contracts	82	-	82	-
Energy trading transactions	103,300	-	103,300	-
Derivative financial instruments	103,382	-	103,382	-

Shares, bonds, other securities	125	-	125	-
Non-derivative financial instruments	125	-	125	-

Recurring measurement of liabilities

	31.12.2015	Level 1	Level 2	Level 3
CHF thousands

Forward foreign currency contracts	1,663	-	1,663	-
Energy trading transactions	77,154	-	77,154	-
Interest rate swaps	19,251	-	19,251	-
Derivative financial instruments	98,068	-	98,068	-

Received loans (incl. long term leasing)	490,178	-	490,178	-
Financial instruments that are not measured at fair value	490,178	-	490,178	-

There are currently no indications for a one-time measurement of a fair value.

In the Repower Group, transfers of positions measured at fair value to and from a level generally take place at the end of the period. There were no transfers between levels at the end of 2016. There were no changes in the measurement methods nor were items measured at fair value shifted within the individual categories.

Basic measurement methods and assumptions

Fair values are determined by applying standard market measurement methods taking into account the market data available on the measurement date. The measurement methods and assumptions used to calculate fair values are as follows:

The price curves of the last trading day for the various products and maturities on stock exchanges or with brokers are incorporated into the measurement of the energy trading transactions (positive/negative replacement values of the held-for-trading positions) classified as Level 2. The replacement value is the difference in price compared to the closing price.

Observable currency curves of active markets are incorporated into the fair value measurement of forward exchange transactions. Interest rate differences between individual currencies are taken into account when determining the fair value.

Observable yield curves of active markets are incorporated into the fair value measurement of interest rate swaps.

A present value calculation is used to determine the fair value of the non-current loans. Observable capital market rates on active markets are used as input parameters and increased by Repower’s observable credit risk. Loans in euros are converted to Swiss francs at the closing rate.

The table below shows the financial assets that were netted as well as enforceable global netting agreements and similar agreements:

	31.12.2016	31.12.2015	31.12.2016	31.12.2015
	Receivables / other current liabilities	Receivables / other current liabilities	Positive / negative replacement values	Positive / negative replacement values
CHF thousands

Assets
Gross amount of financial assets before offsetting	466,568	517,617	383,261	221,469
Gross amount of financial liabilities that have been offset with financial assets in the balance sheet	–113,373	–126,590	–235,489	–118,169
Net amount of financial assets in the balance sheet	353,195	391,027	147,772	103,300

	31.12.2016	31.12.2015	31.12.2016	31.12.2015
	Other current liabilities / receivables	Other current liabilities / receivables	Negative / positive replacement values	Negative / positive replacement values
CHF thousands

Liabilities
Gross amount of financial liabilities before offsetting	–476,094	–494,614	–377,430	–195,323
Gross amount of financial assets that have been offset with financial liabilities in the balance sheet	113,373	126,590	235,489	118,169
Net amount of financial liabilities in the balance sheet	–362,721	–368,024	–141,941	–77,154

25 Business combinations, disposals and liquidations

BUSINESS DISPOSALS IN THE 2016 FINANCIAL YEAR

In the first half of 2016 Repower sold connecta ag, a company operating communications networks in Canton Graubünden. The pre-tax gain on the disposal is recognised under other operating income in the Market Switzerland segment.

In November 2016 MET Holding AG acquired Repower Furnizare România S.r.l., classified as held for sale in the 2016 interim financial statement. The pre-tax loss on the disposal is recognised under other operating expense in other segments and activities.

Before they were disposed of the two companies were classified as held for sale.

In the second half of the year SEI S.p.A., Repower Macedonia DOOEL Skopje – vo likvidacija and Repower Adria d.o.o “u likvidaciji” were wound up. Cumulative translation gains of TCHF 2,456 were reclassified in the Market Switzerland segment and translation losses of TCHF 335 in other segments and activities. The impact on income is shown under other operating income and other operating expenses.

Before SEI S.p.A. was wound up, in particular its shareholders converted the shareholders’ loans granted to the company into shareholders’ equity. The total converted from liabilities to shareholders’ equity came to TCHF 8,817.

	connecta ag	Repower Furnizare România S.r.l.	Total
CHF thousands

Book value of net assets over which control was lost

Non-current assets	4,325	803	5,128
Property, plant and equipment	4,210	64	4,274
Intangible assets	115	287	402
Deferred tax assets	-	452	452

Current assets	898	39,540	40,438
Inventories	32	13,528	13,560
Receivables	2	26,536	26,538
Current income tax receivables	-	138	138
Prepaid expenses and accrued income	-	435	435
Cash and cash equivalents/overdraft facility	864	–1,097	–233

Non-current liabilities	–704	–80	–784
Pension provisions	–692	-	–692
Non-current provisions	-	–63	–63
Non-current financial liabilities	-	–17	–17
Deferred tax liabilities	–12	-	–12

Current liabilities	–1,162	–25,590	–26,752
Current income tax liabilities	–139	-	–139
Other current liabilities	–912	–25,590	–26,502
Deferred income and accrued expenses	–111	-	–111

Net assets derecognised	3,357	14,673	18,030

Consideration received
Cash consideration received	5,000	16,304	21,304
Total consideration	5,000	16,304	21,304

Result on disposal
Total consideration	5,000	16,304	21,304
Net assets derecognised	–3,357	–14,673	–18,030
Cumulative translation differences reclassified from equity on P/L	-	–3,448	–3,448
Result on disposal	1,643	–1,817	–174

Net cash inflow/outflow arising on disposal
Cash consideration received	5,000	16,304	21,304
Cash and cash equivalents disposed of	–864	1,097	233
Net cash inflow/outflow arising on disposal	4,136	17,401	21,537

BUSINESS DISPOSALS IN THE 2015 FINANCIAL YEAR

In the first half of 2015 Repower sold the project to construct a combined-cycle gas turbine plant in Leverkusen to STEAG GmbH in Essen. This included the disposal of Repower GuD Leverkusen Verwaltungs-GmbH and Repower Leverkusen GmbH & Co. KG. The pre-tax gain on the disposal is recognised under other operating income in the Market Switzerland segment.

On 2 July 2015, Enovos Deutschland SE took over the sales activities of Repower Deutschland GmbH. The pre-tax loss on the disposal is recognised under other operating expense in the Market Switzerland segment.

In the second half of 2015, Repower Polska Sp. z.o.o. was wound up. As a result of this liquidation, cumulative translation gains of TCHF 37 were reclassified to profit or loss. The pre-tax gain was recognised under other operating income in other segments and activities.

	Repower GuD Leverkusen GmbH und Co. KG und Repower GuD Leverkusen Verwaltungs-GmbH	Sales Germany	Total
CHF thousands

Book value of net assets over which control was lost

Non-current assets	-	4	4
Property, plant and equipment	-	4	4

Current assets	939	8,187	9,126
Receivables	35	8,187	8,222
Cash and cash equivalents	904	-	904

Non-current liabilities	-	–55	–55
Non-current provisions	-	–55	–55

Current liabilities	–37	–6,536	–6,573
Other current liabilities	–37	–5,917	–5,954
Deferred income and accrued expenses	-	–619	–619

Net assets derecognised	902	1,600	2,502


Consideration received
Cash consideration received	1,754	836	2,590
Total consideration	1,754	836	2,590


Result on disposal
Total consideration	1,754	836	2,590
Net assets derecognised	–902	–1,600	–2,502
Cumulative translation differences reclassified from equity on P/L	2,253	–155	2,098
Utilisations of non-current provisions	-	687	687
Gain/loss on disposal	3,105	–232	2,873


Net cash inflow/outflow arising on disposal

Cash consideration received	1,754	836	2,590
Cash and cash equivalents disposed of	–904	-	–904
Net cash inflow/outflow arising on disposal	850	836	1,686

26 Assets and liabilities held for sale

	31.12.2016	31.12.2015
CHF thousands

Tangible assets	8,321	7,754
Intangible assets	-	115
Deferred tax assets	-	25
Inventories	-	32
Receivables	-	415
Accrued income and prepaid expenses	-	96
Cash and cash equivalents	-	1,368
Assets held for sale	8,321	9,805

Pension provisions	-	519
Current income tax liabilities	-	121
Current financial liabilities	-	7,389
Other current liabilities	-	1,963
Deferred income and accrued expenses	-	833
Liabilities held for sale	-	10,825

Morteratsch power plant held for sale

Tangible assets with a carrying value of TCHF 8,321 held for sale at 31 December 2016 relate to the Morteratsch hydropower plant, in the Market Switzerland segment, which under the terms of an agreement is to be sold in 2017 to Kraftwerk Morteratsch AG, a joint venture established in 2016.

All assets and liabilities held for sale the previous year were disposed of in 2016.

Assets and liabilities held for sale: SEI S.p.A.

In the 2016 financial year the assets and liabilities of SEI S.p.A. were reassigned to their original balance sheet items, and the company was wound up. Translation gains of TCHF 2,456 were reclassified to profit or loss as other operating income in the Market Switzerland segment. Non-controlling equity interests of TCHF 177 were eliminated. At the end of the previous year the net assets of the disposal group, totalling TCHF -8,203, had been assigned to the Market Italy segment. At 31 December 2015 translation gains for SEI S.p.A., which were contained in Repower Group’s equity, amounted to TCHF 2,522 for the Repower Group and TCHF 1,704 for the minority interests.

Assets and liabilities held for sale: connecta ag

In June 2016 connecta ag was sold (see Note 25 on business combinations, disposals and liquidations). At 31 December 2015 connect ag and associated fully-consolidated assets and liabilities were classified as held for sale. connecta ag operates communications networks in Canton Graubünden, and was included in the Market Switzerland segment. On 31 December 2015 its net assets came to TCHF 3,278.

Properties held for sale

The administrative building in Ilanz was sold in the 2016 financial year. The pre-tax gain of TCHF 6,046 on the disposal is recognised under other segments and activities. At 31 December 2015 the administrative building in Ilanz was classified as held for sale and was recognised under other segments and activities. At 31 December 2015 its carrying value was TCHF 3,905.

27 Segment reporting

	Market Switzerland	Market Italy	Other segments and activities and consolidation	Group
CHF thousands

2016

Net sales from energy sales - third parties	488,985	1,111,316	111,398	1,711,699
Net sales from energy sales between segments	61,959	35,280	–97,239	-
Income from held for trading positions - third parties	2,723	–26,331	–11	–23,619
Income from held for trading positions between segments	–2,283	2,229	54	-
Own costs capitalised	7,970	-	1	7,971
Other operating income - third parties	30,398	1,106	12,303	43,807
Other operating income between segments	2,827	613	–3,440	-
Operating revenue	592,579	1,124,213	23,066	1,739,858

Energy procurement - third party	–417,893	–966,192	–109,247	–1,493,332
Energy procurement between segments	–35,167	–61,497	96,664	-
Operating expenses (without energy) - third parties	–81,802	–78,333	–34,161	–194,296
Operating expenses (without energy) between segments	–14,362	–8,736	23,098	-
Income before interest, taxes, depreciation and amortisation (EBITDA)	43,355	9,455	–580	52,230

Depreciations	–32,386	–11,753	–1,310	–45,449
Impairment and reversal of impairment	2,264	12,672	-	14,936
Income before interest and taxes (EBIT)	13,233	10,374	–1,890	21,717

Financial income				3,885
Financial expenses				–32,296
Share of results of associates				–3,246
Income before taxes				–9,940

Headcount at 31 December	325	157	81	563

Tangible assets	592,757	140,968	22,795	756,520
Intangible assets	2,957	4,080	636	7,673
Investments in associates and partner plants	17,180	3,348	-	20,528
Total non-current assets	612,894	148,396	23,431	784,721

Investments in tangible and intangible assets	16,868	3,085	385	20,338

	Market Switzerland	Market Italy	Other segments and activities and consolidation	Group
CHF thousands

2015 Restated*

Net sales from energy sales - third parties	542,014	1,149,165	142,867	1,834,046
Net sales from energy sales between segments	81,849	33,778	–115,627	-
Income from held for trading positions - third parties	14,926	–2,946	–8,034	3,946
Income from held for trading positions between segments	–7,764	7,048	716	-
Own costs capitalised	6,964	-	136	7,100
Other operating income - third parties	39,407	2,216	3,314	44,937
Other operating income between segments	2,456	662	–3,118	-
Operating revenue	679,852	1,189,923	20,254	1,890,029

Energy procurement - third party	–483,191	–1,030,945	–146,076	–1,660,212
Energy procurement between segments	–33,616	–80,253	113,869	-
Operating expenses (without energy) - third parties	–84,821	–67,432	–36,836	–189,089
Operating expenses (without energy) between segments	–17,325	–8,938	26,263	-
Income before interest, taxes, depreciation and amortisation (EBITDA)	60,899	2,355	–22,526	40,728

Depreciations	–33,035	–12,630	–1,871	–47,536
Impairment and reversal of impairment	–11,592	–50,132	–7	–61,731
Income before interest and taxes (EBIT)	16,272	–60,407	–24,404	–68,539

Financial income				11,533
Financial expenses				–82,197
Share of results of associates				–12,990
Income before taxes				–152,193

Headcount at 31 December	430	154	48	632

Tangible assets	606,570	138,606	25,592	770,768
Intangible assets	3,983	3,771	851	8,605
Investments in associates and partner plants	15,613	4,745	3,914	24,272
Total non-current assets	626,166	147,122	30,357	803,645

Investments in tangible and intangible assets	15,755	2,172	1,970	19,897

* See «Correction of errors and changes in presentation» section

INFORMATION BY PRODUCT

	2016	2015
CHF thousands

Power, including considerations for energy transmission	1,381,428	1,485,646
Gas	223,315	266,028
Other	83,337	86,318
Net sales	1,688,080	1,837,992

INFORMATION BY COUNTRY

The information on income from external customers broken down by country can be found in the tables above. The non-current assets are allocated to the location of the accounting entity. They do not contain financial instruments or deferred tax assets.

Non-current assets

	31.12.2016	31.12.2015
CHF thousands

Switzerland	605,488	622,738
Italy	148,821	147,552
Other countries	30,413	33,355
Total	784,722	803,645

Customers with a share of revenue of more than 10 per cent

In the year under review the Repower Group had no individual customer with a share of net sales of more than 10 per cent.

28 Contingent liabilities and warranty liabilities

Certain countries have regulatory authorities overseeing the electricity sector. One of their tasks is to monitor the legitimacy of prices. Regulators can initiate retrospective pricing adjustments after the end of the financial year, which should subsequently be recognised in profit or loss. Liabilities can arise if the regulators do not recognise cost declarations.

Repower is involved in various legal disputes arising from its day-to-day business operations. However, as things stand at present these are not expected to give rise to any significant risks and costs for the Group. The Executive Board has set aside the requisite provisions based on currently available information and estimates.

There are no other contingent liabilities, warranty liabilities or other obligations stemming from litigation risks.

29 Obligations under leasing arrangements

Leasing contracts that mainly transfer the economic risk to Repower are recognised as finance leasing arrangements. All other leasing contracts are classified as operating leasing arrangements. Assets which are recognised in connection with a finance lease are depreciated in accordance with the guidelines explained under property, plant and equipment. If the depreciation period of the asset is greater than the length of the lease agreement, the asset is depreciated over the term of the leasing contract.

The total of the future minimum leasing payments for the periods is:

operating LEASING ARRANGEMENTS

	31.12.2016	31.12.2015
CHF thousands

Due within 1 year	3,607	3,250
Due in 1-5 years	7,380	5,100
Due after 5 years	10,877	7,253
Total	21,864	15,603

The outstanding minimum lease payments comprise the following:

	31.12.2016	31.12.2015
CHF thousands

Land and buildings	20,300	14,073
Motor vehicles	1,474	1,478
IT hardware	90	52
Total	21,864	15,603

Lease expenses of TCHF 4,310 were recognised in the financial year under review. Lease expenses came to TCHF 4,890 the previous year.

Only in the case of motor vehicle leasing contracts is Repower required to pay a standard market surcharge if it uses the vehicles beyond the contractually agreed kilometre limit.

FINANCE LEASING ARRANGEMENTS

The finance leasing arrangements only cover motor vehicles. The lease liabilities are contained in financial liabilities. If Repower uses the vehicles beyond the agreed kilometre limit, it must pay a standard market surcharge.

	31.12.2016	31.12.2015
CHF thousands

Sum of minimum lease payments
Due within 1 year	24	80
Due in 1-5 years	59	97
Due after 5 years	-	-
Total	83	177
Future interests	–9	–12
Liabilities for financial leasing	74	165

Present value of liabilities for financial leasing
Due within 1 year	21	77
Due in 1-5 years	53	88
Due after 5 years	-	-
Total	74	165

30 Events occurring after the balance sheet date

The group financial statements were approved for publication by the Board of Directors on 30 March 2017. They are subject to the approval of the annual general meeting, which will take place on 17 May 2017.

The shareholders have granted Repartner Produktions AG a loan as part of a plant-based energy supply agreement involving the supply of around 240 GWh per year, starting 1 January 2017, from the electricity generated by the Klosters, Schlappin and Küblis plants. On a consolidated basis CHF 51.6 million in liquid assets flowed to Repower in January 2017.

Repower placed two green bonds (Schuldscheindarlehen), issue date 23 January 2017, totalling EUR 50 million (divided into two tranches with terms of 7 and 8 years respectively and fixed rates of interest of 1.7 and 1.9 per cent respectively).

In January 2017 Repower settled the two interest rate swaps recognised under non-current financial liabilities, due on 11 December 2020 and 28 June 2024, with the counterparty by means of a payment of TCHF 6,083. In March 2017 Repower repayed prematurely the TCHF 10,000 bank loan, originally due on 11 December 2020, recognised under non-current financial liabilities.