Notes to the consolidated financial statements: notes

1 Net sales from goods and services

Revenue from energy business and revenues from services and other usual business activities are recognised in the income statement when delivery of goods or services has been performed.

Long-term contracts are recognised in accordance with the percentage of completion method. Revenues from services and other usual business activities contain revenues of CHF 4,130 thousand (prior year: CHF 6,767 thousand).

The decline in revenue from energy business versus the prior year is connected in particular with a decline in demand from Italian SMEs that were closed down during the first wave of the pandemic (see Note 6).

The Swiss Federal Electricity Commission (ElCom) has issued a ruling on the resubmission of the operating costs and cost of capital for the 150 kV Robbia-Campocologno feeder line for the tariff years from 2009 to 2012. In the first half of 2020 Repower received CHF 7,343 thousand in subsequently declared eligible grid costs, including interest on the differences, which are recognised in net sales from goods and services in the Market Switzerland segment.

Prior-year revenues from services and other usual business activities include revenues of CHF 3,514 thousand from the trade fair business of SWIBI AG, which since 1 October 2019 has been recognised as an associate under the name of esolva ag in the consolidated financial statements.

A breakdown of net revenues by Repower business segment is presented in the note on segment reporting (Note 37).

2 Own costs capitalised

A year-on-year increase in own costs capitalised is attributable in particular to work for the company’s own power generation assets.

3 Change in inventory of sales orders

The changes in inventory of sales orders relate to work in progress in inventories.

4 Other operating income

The reimbursement of CHF 9,737 thousand from business interruption insurance in 2019 relates to the Teverola power plant, which was out of action for a protracted period owing to damage and its repair.

Furthermore in 2019 a good performance guarantee for the construction of a power plant was collected for an amount of CHF 967 thousand (see Note 15).

5 Share of earnings from associates and joint ventures

The “share of earnings from associates and joint ventures” in 2020 include in particular CHF 1,006 thousand representing the share in the accumulated start-up losses of EVUlution AG, established and in the start-up process in the year under review and assigned to the “other segments and activities”, and the reversal, amounting to CHF 5,780 thousand, recognised in the “Market Italy” segment, of the loan towards associated company Aerochetto S.r.l. (see Note 17).

6 Energy procurement

The decline in energy procurement versus the prior year is connected in particular with a reduction in sales volumes in Italy during the pandemic (see Note 1).

In the “Market Switzerland” segment, energy procurement includes recognition of provisions for long-term agreements of CHF 20,779 thousand net (prior year: provisions of CHF 5,900 thousand reversed). In the “Market Italy” segment provisions of CHF 3,122 thousand were made for long-term energy procurement agreements (versus CHF 0 thousand the prior year) (see Note 27).

7 Concession fees

8 Personnel expenses

To compensate for the future reduction in conversion rates for the occupational pensions of employees in Switzerland, Repower AG made an additional employer’s contribution of CHF 3,087 thousand in the 2019 financial year. The resulting expense is recognised in social security costs and other personnel costs.

9 Materials and third party services

The “Materials and third party services” contain expenses for maintaining and operating technical assets, external services for operational processes and the performance of services by third parties.

10 Other operating expenses

The increase in “allowances for doubtful accounts” relates in particular to the recognition of an allowance of CHF 1,964 thousand for doubtful accounts (prior year: CHF 0) for a trading partner in Italy.

Information on the development of allowances for doubtful accounts can be found in Note 21.

11 Depreciation and value adjustments of tangible assets

The balance for the 2020 financial year contains neither a reversal nor impairment, while the 2019 balance contains impairment of CHF 1,983 thousand (see Note 15).

12 Amortisation and value adjustments of intangible assets

Neither impairment gains nor impairment losses were recognised in 2019 and 2020.

13 Net financial result

In 2020 the weakening in the euro was less pronounced, resulting in a year-on-year decline in currency translation losses. In connection with the stabler euro exchange rate and lower hedging volumes, in 2020 gains on forward exchange transactions, recognised in financial income under “changes in securities held for trading”, were lower.

“Changes in securities held for trading” in financial expenses comprises income contributions from interest rate swaps and dual currency deposits (DCDs).

In 2020 the impairment loss of CHF 3,072 thousand on ENAG Energiefinanzierungs AG was reversed (see Note 18).

The reversal of CHF 4,481 thousand in 2019 relates to the reversal of the impairment for the investment and the loan to tiko Energy Solutions AG. The investment with a carrying value of CHF 2,813 thousand in this company at 31 December 2019 was fully impaired in the first half of 2020 on the basis of the company’s updated planning data.

The gains and losses on premature repayment of liabilities relate to the reimbursement of lease and loan liabilities.

14 Income taxes

The reconciliation between the actual tax burden and the expected tax burden for the financial years ending on 31 December 2020 and 2019 is as follows:

Not yet used tax loss carryforwards

On the balance sheet date there were not yet used tax loss carryforwards of CHF 45,068 thousand (prior year: CHF 106,960 thousand). The offsettability of loss carryforwards against future earnings involves uncertainty.

This results in unrecognised deferred tax assets of CHF 11,948 thousand (prior year: CHF 22,395 thousand). Given the uncertainty involved in offsetting loss carryforwards against future earnings, deferred taxes are not capitalised (Swiss GAAP FER 11/23).

15 Tangible assets

Land and buildings connected with power generation and grid facilities are stated under power plants and grids.

The increase in the net values of tangible assets pledged as security for debts relates in particular to bank loan taken up in connection with the early redemption of financial leases.

The subsidies received stated are subsidies received in connection with the total renovation of Robbia power plant.

The impairment charge recognised in 2019 related to a payment to a supplier that was unable to meet its obligation. In this context use was made of a contract bond amounting to CHF 967 thousand. The income was recognised as other operating income (see Note 4).

Leased power plants

The net carrying amount of the generation assets held as part of the finance leasing agreement totalled CHF 22,938 thousand (previous year: CHF 41,057 thousand) at the closing date.

Total lease liabilities come to CHF 16,363 thousand (prior year: CHF 27,431 thousand).

16 Intangible assets

The goodwill stems from the acquisition of Repower Renewable S.p.A. in December 2018.

17 Investments in associates and joint ventures

The investment of CHF 428 thousand relates to the investment in the associate EVUlution AG, which was established on 30 January 2020 by Repower and other partners (see the “Additions to the scope of consolidation” section). The share of start-up losses accumulated in the current year have eroded the entire value of the investment.

Losses in excess of the carrying value of the investments from measurement according to the share of equity are netted with the loans that also exist (see Note 18) as a component of the net investment, and are presented in the table above.

The loss carryforward of CHF 6,713 thousand as of 1 January 2020 relates to the loan to the associate Aerochetto S.r.l, which was continued in 2020. The equity of Aerochetto S.r.l. has developed positively, and in 2020 Repower was still in sales negotiations concerning its net investment in this company. The realisable amount was calculated. The loss carryforward for the loan receivable was reversed via the pro rata earnings except for a remaining amount of CHF –1,255 thousand, while the reversal of the impairment loss at the valuation date amounts to CHF 5,780 thousand.

Furthermore, as of 31 December 2020 there is a loss carryforward in the amount of CHF –578 thousand relating to the loan receivable to the associate EVUlution AG.

Since 1 October 2019, SWIBI AG has no longer been recognised as a subsidiary, but as an associate under the name of esolva ag in the consolidated financial statements (see the “Transition from full consolidation to equity method” section).

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 carrying amount of the investment was CHF 0 thousand, and the carrying amount of the loss carried forward for the loan was CHF 12,843 thousand. The investment and loan are amortised at cost under financial assets (see Note 18).

18 Financial assets

Repower holds interests of 7.0 per cent and 6.5 per cent respectively in the partner plants AKEB Aktiengesellschaft für Kernenergie-Beteiligungen, Lucerne, and Kraftwerke Hinterrhein AG, Thusis. Repower’s interest in tiko Energy Solutions AG, Ittingen, is 19.85 per cent.

The investment with a carrying value of CHF 2,813 thousand in tiko Energy Solutions AG at 31 December 2019 was fully impaired in the first half of 2020 on the basis of the company’s updated planning data (see Note 13).

In 2020 the impairment of CHF 3,072 thousand on ENAG Energiefinanzierungs AG, recognised in “non-current securities”, was reversed (see Note 13). As part of a reduction in the company’s capital, Repower received a repayment of its contribution in the amount of CHF 2,739 thousand. The new carrying value of the investment corresponds to its pro rata nominal value of CHF 2,739 thousand. The interest in the company is unchanged at 5.48 per cent.

The active loans relate to loans to associates and joint ventures amounting to CHF 8,623 thousand (prior year: CHF 486 thousand). Accumulated impairments of CHF 1,833 thousand (prior year: CHF 6,713 thousand) were recognised under this item (see Note 17).

19 Deferred tax assets

The tax rates used to calculate deferred income tax items are 14.8 per cent for Switzerland, 28.0 per cent for Italy, and 29.0 per cent for Germany.

20 Inventories

21 Trade accounts receivable

The stated trade accounts receivable also include claims on associates and joint ventures amounting to CHF 662 thousand (prior year: CHF 476 thousand).

Trade accounts receivable are measured by applying individual and lump-sum adjustments to the non-impaired positions based on their maturity structure and historical experience.

22 Other receivables

The item “security deposits paid” include a receivable from a margin call of CHF 7,648 that was paid at the beginning of 2021.

The item “other receivables” includes accrued revenues from long-term contracts amounting to CHF 10,897 (prior year: CHF 6,767 thousand) less advance payments of CHF 6,715 thousand (prior year: CHF 5,761 thousand) received and balances from excise tax of CHF 4,695 thousand (prior year: CHF 127 thousand).

23 Prepaid expenses and accrued income

The item “trade accounts receivable invoices not issued yet” includes goods and services that have been delivered but not yet invoiced.

24 Securities

25 Replacement values of held-for-trading positions

26 Cash and cash equivalents

At the balance sheet date, Repower also has the following unused bank credit lines:

27 Provisions

Provisions for onerous contracts

The decision on whether there is a threat of loss on a long-term sales or procurement contract and the resulting recognition of a provision essentially depends on the situation regarding the relevant contractual prices and expected procurement or sales prices.

In the 2020 financial year additions in provisions totalling CHF 24,124 thousand were recognised under energy procurement for identifiable losses on procurement contracts. Of this, CHF 16,469 thousand and CHF 4,533 thousand fall to procurement contracts for electricity and guarantees of origin respectively in the “Market Switzerland” segment, and CHF 3,122 thousand to procurement contracts for gas transport capacity in the “Market Italy” segment.

The provisions were calculated on the basis of risk-adjusted interest rates of between 6.8 and 14.2 per cent.

The provision that existed on 1 January 2019 was reversed in full the prior year via energy procurement in the “Market Switzerland” segment.

Severance pay

When an employment relationship is terminated in Italy, the employee is entitled to severance pay corresponding to almost one month’s pay for each year of employment (see Note 34).

Dismantling provisions

The dismantling provisions category comprises various provisions for the dismantling of operating installations. Taken individually they are immaterial. Additions in 2020 were recognised under tangible assets.

Other provisions

In 2020 provisions of CHF 763 thousand were recognised for expected repayments of investment contributions. Other provisions still include severance pay paid to sales agents in Italy amounting to CHF 1,348 thousand.

In 2019 a supplier of wind power equipment was unable to meet its commitment (see Note 15), delaying the construction of a Repower AG wind power installation for which a minimum feed-in tariff had already been agreed. Given the threat of a penalty resulting from the delay in the commencement of production, a provision of CHF 818 thousand was made.

28 Deferred tax liabilities

The tax rates used to calculate deferred income tax items are 14.8 per cent for Switzerland, 28.0 per cent for Italy, and 29.0 per cent for Germany.

29 Current and non-current financial liabilities

In 2020 the interest rate swaps recognised under financial liabilities the prior year were released at the current value through payment of CHF 14,091 thousand. The cash outflow is included in the “repayment of financial liabilities” item in the consolidated cash flow statement.

The carrying value of the financial liabilities acquired in the current financial year from additions to the scope of consolidation (see the “Additions to the scope of consolidation” section) came to CHF 27,661 thousand on 31 December 2020.

Negative amounts presented in the table are scheduled allocations of net expenditures.

30 Other non-current liabilities

The item “connection fees and grid cost contributions” consist of accrued connection fees and grid cost contributions received from customers, which are charged to profit or loss over a period of 35 years via “net sales from goods and services” in the “Market Switzerland” segment.

“Advance payments on energy deliveries” stem from the transfer of Repower AG’s Prättigau power generation assets to Repartner Produktions AG on 1 January 2020. In connection with this transaction the minority shareholders of Repartner Produktions AG transferred their shareholder loans of CHF 49,176 thousand to Repower AG. These transfers are seen as down payments received for energy deliveries, recognised under other non-current and current liabilities. The down payments will be charged to profit or loss on a linear basis over the remaining 66-year concession period via “net sales from goods and services” in the “Market Switzerland” segment. Income of CHF 745 thousand was recognised in 2020.

31 Trade accounts payable

The stated trade accounts payable also include liabilities vis-à-vis associates and joint ventures amounting to CHF 3,370 thousand (prior year: CHF 838 thousand).

32 Other current liabilities

The “customer prepayments” item contains prepayments of CHF 1,032 thousand (prior year: CHF 1,032) for third-party contracts.

The “other current liabilities” item include payments received from hedging transactions, in particular margin payments, amounting to CHF 11,211 thousand (prior year: CHF 845 thousand).

33 Deferred income and accrued expenses

Trade accounts payable invoices to be received are goods and services that have been received but not yet invoiced.

34 Pension schemes

Economic benefit/economic liability and pension benefit expenses

The pension fund for employees of Repower AG is organised as a joint pension scheme of the PKE Vorsorgestiftung foundation.

To compensate for the future reduction in conversion rates for the occupational pensions of employees in Switzerland, Repower AG made an additional employer’s contribution of CHF 3,087 thousand in the 2019 financial year (see Note 8).

The item “pension institutions with unfunded obligations” relates to the obligation to pay severance pay in Italy (see Note 27). The change in the stated provision related to pension benefit expenses in the income statement comes to CHF 561 thousand at the average exchange rate.

35 Derivative financial instruments

In 2020 the interest derivatives in held for trading were liquidated (Note 29).

The line “netting” refers to the netting of energy derivatives transactions entered into with the same counterparty and with whom there are enforceable netting agreements.

Cash flow hedges used as hedging transactions are not recognised on the balance sheet and therefore do not yet impact the balance sheet. Off-balance-sheet energy and interest derivatives are used to hedge future cash flows with a high probability of occurrence.

36 Transactions with related parties

The balances and liabilities reported on the balance sheet and the transactions contained in the income statement vis-à-vis related parties are related to business with the main shareholders and Repower AG entities, associates, partner works and joint ventures controlled by them.

The following balance sheet and profit and loss items contain the following amounts vis-à-vis related third parties:

Transactions are at market prices, or in the case of Grischelectra AG at annual costs.

Canton Graubünden is deemed to be a related party in its capacity as a shareholder. Official business such as levying taxes, concession-related charges, fees, etc., is done on a statutory basis and is therefore not included here. Canton Graubünden’s energy business is transacted via Grischelectra AG, which is included as a related party in the table above.

Compensation paid to members of the board of directors and executive board is disclosed in the Corporate Governance section.

37 Segment reporting

Segment reporting is done by geographic market and reflects internal management and reporting structures. The information provided is that used by management for steering and assessing the business performance and development of the individual segments. For each business segment, internal steering, performance measurement and capital allocation are carried out on the basis of the segment’s income before interest and taxes (EBIT). Segment income is calculated on the basis of the accounting and valuation principles used at group level.

38 Treasury shares

Purchases/disposals of treasury shares relate to Repower AG registered shares. In the year under review Repower AG bought 350 shares (prior year 351) at CHF 92.14 (prior year CHF 86.12) and sold 310 shares (prior year 480) at an average price of CHF 95.94 (prior year CHF 90.29).

39 Off-balance-sheet business

In the course of regular business the group granted guarantees, bank guarantees and sureties in favour of third parties, directly and via commercial banks. These came to CHF 129,142 thousand (prior year: CHF 144,431 thousand).

There is a service agreement for the Teverola power plant, concluded for 25 years and ending in June 2029. This resulted in an irrevocable payment obligation of CHF 9,288 thousand at 31 December 2020 (prior year: CHF 10,431 thousand). Furthermore, at 31 December 2020 there were various full maintenance contracts, taken out for several years for hydro, solar and wind power plants in Germany and Italy, with irrevocable payment obligations amounting to CHF 11,259 thousand (prior year: CHF 11,003 thousand).

In the course of usual business, litigation can arise which results in contingent liabilities. These contingent liabilities are not expected to result in material liabilities within Repower Group in addition to the provisions already made for litigation (see Note 27). On the other hand there is litigation under way where Repower is asserting its rights, which, if it is successful, could result in inflowing payments.

At the reporting date of the financial year under review, the outstanding minimum lease payments consisted of CHF 10,607 thousand for property and buildings (prior year: CHF 12,297 thousand) and CHF 727 thousand for motor vehicles (prior year CHF 1,023 thousand).

Obligations to take delivery of electrical energy on the basis of the interests in AKEB Aktiengesellschaft für Kernenergie, Lucerne, Kraftwerke Hinterrhein AG, Thusis, and Grischelectra AG are not included in the above table. The volume and price of electricity delivered depend on actual future production and costs incurred by these companies.

Pledges are recognised under the relevant assets.

40 Events occurring after the balance sheet date

In January 2021, Repower AG paid out reversion waiver compensation amounting to CHF 24 million (Canton Graubünden and the municipalities of Brusio and Poschiavo) for the continued operation of the Campocologno I and II (lower stage) power plants. This investment has been recognised under intangible assets and will be amortised on a straight-line basis to 2089 under depreciation and value adjustments in the income statement.

The financial statements were approved for publication by the board of directors on 1 April 2021. They are subject to the approval of the annual general meeting, which will take place on 19 May 2021.