3 Consolidation

Scope of consolidation

The present consolidated financial statements encompass the financial statements of Repower AG and all investments where Repower holds, directly or indirectly, more than 50 per cent of the votes or can exercise control in some other way. These investments are fully consolidated. Associated organisations and joint ventures are included in the financial statements in accordance with the equity method.

OVERVIEW OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

All subsidiaries, associates and joint ventures with the exception of Grischelectra AG, which closes its accounts on 30 September, close their accounts at the end of the calendar year.

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.

In contrast to the share capital held, Repower exercises 30 per cent of the votes in Grischelectra AG and on the basis of contractual arrangements controls Grischelectra AG in conjunction with Canton Graubünden. Grischelectra AG is a joint venture.

Under the contractual arrangements governing the interests in Kraftwerk Morteratsch AG and Terra di Conte S.r.l., all relevant decisions must be made unanimously. Kraftwerk Morteratsch AG and Terra di Conte S.r.l. are joint ventures.

ADDITIONS TO THE SCOPE OF CONSOLIDATION

There were no additions to the scope of consolidation in 2019.

In 2018 Repower acquired an interest of 65 per cent in Repower Renewable S.p.A., which for its part has holdings in hydro-, solar and wind power assets, by way of a contribution of the existing group companies SEA S.p.A. and REC S.r.l. and a cash payment.

The table below summarises the material amounts booked for assets and liabilities acquired on the date of acquisition, plus the purchase price and goodwill resulting from the acquisition.

The goodwill was capitalised as intangible assets and will be amortised over a period of five years.

TRANSITION FROM THE EQUITY METHOD TO RECOGNITION AT COST

In March 2019 Engie New Business acquired an interest in tiko Energy Solutions AG by way of a unilateral capital increase. Repower’s interest in tiko Energy Solutions AG declined from 35.0 to 19.85 per cent. The existing investment and loan receivable that compose the net investment in the company are recognised at cost; the recognised value is based on the equity value of Repower’s interest in the company at the moment the significant influence ceased to be exercised. Impairment of CHF 4,481 thousand on the investment and loan receivable resulting from the application of the equity method was reversed.

TRANSITION FROM FULL CONSOLIDATION TO EQUITY METHOD

At the end of November 2019, energy services companies EcoWatt AG, Sacin AG and SWIBI AG merged, commencing joint operations as esolva ag on 1 December 2019.

In the run-up to the merger, to create the target shareholder structure Repower sold 10 per cent of its shares in SWIBI AG to one of the participating shareholders for CHF 2,486 thousand. With effect 30 September 2019 the previous shareholders of EcoWatt AG and Sacin AG deposited their shares in return for new shares in SWIBI AG. Repower AG’s interest in the capital and votes of SWIBI declined from 76.58 per cent to 42.05 per cent. The investment is no longer fully consolidated, but is recognised in the consolidated financial statements as an associate.

The investment in the associate is initially recognised in the transitional consolidation according to the proportional carrying value (CHF 2,396 thousand) of the net assets of SWIBI AG measured  at the time of disposal. The investment is then recorded in accordance with the equity method.

The transitional consolidation gives income of CHF 518 thousand, disclosed in the consolidated income statement under other operating income. Net cash outflow of CHF 2,313 thousand is disclosed in the cash flow statement in disposals of group companies (less cash and cash equivalents) under cash flow from investing activities.

The material balance sheet effects are shown in the following table:

CHANGES IN THE OWNERSHIP INTERESTS WITHOUT LOSS OF CONTROL

On 1 January 2019 the wholly-owned subsidiary Lagobianco SA was merged into Repower AG.

In 2019, non-controlling interests were acquired in ESE Salento S.r.l. and ESE Nurra S.r.l. The net cash outflow of CHF 554 thousand is offset by non-controlling interests of CHF 700 thousand. The difference was allocated to the majority shareholder’s capital.

In connection with the acquisition of Repower Renewable S.p.A. in the 2018 financial year, the group’s interest in SEA S.p.A. and REC S.r.l. has declined to 65 per cent.

CONSOLIDATION METHOD

Capital consolidation is done in accordance with the purchase method. When an entity is purchased its assets and liabilities as of the date of acquisition are revalued in accordance with uniform group principles. Any remaining goodwill (the difference between the purchase price and the share of equity) is capitalised and amortised over 5 years or a maximum of 20 years. Assets and liabilities and income and expenses at fully consolidated entities are integrated in their entirety in the consolidated financial statements. Minority interests in the equity and minority interests in the profits of fully consolidated entities are stated separately.

Intragroup receivables and liabilities, income and expenses and investments are netted out and interim gains eliminated. Investments in associates and joint ventures are accounted for using the equity method.

CONVERSION OF FOREIGN CURRENCIES

Each group company determines the functional currency in which it draws up its individual financial statements. Company financial statements in foreign currencies are converted as follows: assets and liabilities at the closing rate on the balance sheet date, equity at historical rates. The income and cash flow statements are converted at the average rate for the year. The resulting translation differences are recognised directly in equity. On the disposal of entities the translation differences attributable to them are reclassified in the consolidated statement of changes in equity from accumulated translation differences to retained earnings.

Foreign currency transactions contained in the individual financial statements of consolidated entities are converted at the relevant daily rate, and foreign currency balances are converted on the closing date at the closing rate on the balance sheet date. The resulting differences in rates are recognised in profit or loss.

The following exchange rates were used for the most important foreign currency:

CASH FLOW STATEMENT

The cash and cash equivalents fund form the basis of the consolidated cash flow statement. Cash flow from operating activities is calculated by the indirect method.