Notes to the interim consolidated financial statements
1 Information on the company
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.
2 Principles of consolidation
The unaudited interim consolidated financial statements of the Repower Group as at 30 June 2017 have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. The interim consolidated financial statements do not include all the information disclosed in the consolidated annual financial statements, and should therefore be read in conjunction with the consolidated annual financial statements for the period to 31 December 2016.
The following exchange rates were used for the most important foreign currency:
Unrealised gains and losses on transactions resulting from exchange rate fluctuations between group companies are recognised in the consolidated cash flow statement under other income and expenses not affecting cash.
Accounting and valuation principles
The accounting and valuation methods used in these interim consolidated financial statements correspond to the methods applied in the consolidated annual financial statements for the period to 31 December 2016. New or revised accounting and valuation principles have no significant impact on Repowerʼs financial reporting for the six-month period just passed.
3 Changes in consolidations
Changes in the ownership interests without loss of control
In the first half of 2017 Repower sold another 6 per cent of its interest in Repartner Produktions AG to the related party Elektrizitätswerke des Kantons Zürich (EKZ). The net cash inflow for the sale of the interest and the shareholderʼs loans granted to date come to TCHF 8,996 and TCHF 6,504 respectively. The disposal of the loans generated financial income of TCHF 466. The net cash inflow of TCHF 8,996 is offset against minority interests of TCHF 6,705. The difference of TCHF 2,291 was allocated to the majority shareholderʼs capital.
Consequences of the loss of subsidiary control
In the first six months the companies Elbe Beteiligungs AG in Liquidation, Repower Trading Ceská republika s.r.o. v likvidaci, Repower Hrvatska d.o.o. u likvidaciji and S.C. Repower Vanzari Romania S.R.L. were wound up. Cumulative translation gains and losses amounting to TCHF 659 and TCHF 98 respectively were reclassified in other segments and activities. The impact on income is shown under other operating income and other operating expenses.
4 Impairment losses and gains on non-current assets
The first half of 2017 saw neither impairment losses nor gains.
In the equivalent prior-year period impairment losses on tangible assets of TCHF 17,459 were disclosed.
5 Cash and cash equivalents for the cash flow statement
6 Additional disclosures on financial instruments and positions measured at fair value
Reconciliation 30.06.2017 carrying value (assets)
Reconciliation 31.12.2016 carrying value (assets)
Reconciliation 30.06.2017 carrying value (liabilities)
Reconciliation 31.12.2016 carrying value (liabilities)
The carrying amount of each financial instrument represents a reasonable estimate for the fair value, with the exception of the following positions:
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
Recurring measurement of liabilities
Recurring measurement of assets
Recurring measurement of liabilities
There is currently no incident-related measurement at fair value of assets and debts after their first-time use.
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 in the first half of 2017. 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 credits. Observable capital market rates on active markets are used as input parameters and increased by Repowerʼs observable credit risk. Credits in euros are converted to Swiss francs at the closing rate.
7 Assets and liabilities 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.
In the first half of 2017, the Morteratsch hydropower plant was sold to the joint venture Kraftwerk Morteratsch AG. Gains on disposal of TCHF 501 were disclosed under other operating income in the Market Switzerland segment.
8 Segment reporting
On 30 June 2017 the non-current assets are allocated to the segments as follows:
9 Additional disclosures
Repower placed two green bonds (Schuldscheindarlehen), issue date 23 January 2017, totalling TCHF 53,635 (TEUR 50,000), with terms of 7 and 8 years respectively.
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. TCHF 51,600 flowed to Repower from a consolidated point of view. The terms of the loan stipulate repayment on a straight-line basis over 69 years at a nominal interest rate of 0.25 per cent. The fair value (present value of expected future cash flows) of the loan is TCHF 33,601. The interest rate advantage, amounting to TCHF 17,999, was classified as a hidden contribution which was taken into account as a capital increase in non-controlling interests.
Profits from the sale/liquidation of group companies comprise proceeds of TCHF 10,056 from the sale of Morteratsch power plant to Kraftwerk Morteratsch AG and a payment on account of TCHF 4,612 received on an adjustment in the purchase price for Repowerʼs high-voltage grid, which was transferred to Swissgrid in 2013. The payment on account received was classified as a liability.
Acquisitions of tangible and intangible assets totalled TCHF 8,322 in the first half of 2017. These mainly relate to investments in various grid installations, power plants, hardware and software.
10 Contingent liabilities and warranty liabilities
The Repower Group 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 made the requisite provisions based on currently available information and estimates. There are no other contingent liabilities or guarantees.
11 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 actual values may deviate from the estimated values.
12 Events occurring after the balance sheet date
The interim consolidated financial statements were approved by the Board of Directors on 21 August 2017.
Since 30 June 2017 there have been no other events which require disclosure.