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.

The large increase in net sales from goods and services is connected in particular with a year-on-year increase in trading volume, but also to an increase in the price of energy products. The volumes of electricity and gas sold increased by 26 per cent and 98 per cent respectively. A breakdown of net revenues by Repower business segment is presented in the note on segment reporting (see Note 37). The costs of energy procurement developed analogously (see Note 6).

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 6,363 thousand (prior year: CHF 4,130 thousand) from long-term contracts in the Market Switzerland segment.

2 Own costs capitalised

3 Change in inventory of sales orders

The change in inventory of sales orders relates to work in progress in inventories.

4 Other operating income

The profits from the disposal of tangible assets in 2021 relate in particular to grid assets and land.

In the year under review, revenues from other operating activities comprise one-time items of CHF 28,559 thousand; of this amount, CHF 24,811 thousand falls to the Market Switzerland segment (a CHF 21,013 purchase price adjustment made for the transfer of transmission grids and a CHF 3,798 thousand market premium received for large hydropower projects); CHF 2,873 thousand falls to the other segments and activities segment (payments of CHF 1,918 thousand received on the basis of a legal dispute won and a CHF 955 thousand gain on the disposal of the associate EL.IT.E. S.p.A.); and a CHF 875 thousand gain on the disposal of Aerochetto S.r.l. falls to the Market Italy segment.

5 Earnings from associates and joint ventures

The share of earnings from associates and joint ventures consists in particular of a total of
CHF –4,071 thousand (prior year: CHF –1,006 thousand) representing Repower’s share in the accumulated losses and an impairment on existing loans, which are assigned to the other segments and activities segment.

In the prior year an impairment gain on the loan to the associate Aerochetto S.r.l. in the amount of CHF 5,780 thousand is recognised in the Market Italy segment (see Note 17).

6 Energy procurement

The increase in energy procurement is connected with increases in trading volumes and prices (see Note 1).

Energy procurement consists on a net basis of CHF 4,737 thousand in income from a change in the provision for long-term contracts (prior year: expense of CHF 23,901 thousand); of this amount income of CHF 5,026 thousand (prior year: expense of CHF 20,779 thousand) falls to the Market Switzerland segment and expense of CHF 289 thousand (prior year: expense of CHF 3,122 thousand) falls to the Market Italy segment (see Note 27).

7 Concession fees

8 Personnel expenses

9 Materials and third-party services

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 decline in allowances for doubtful accounts relates in particular to the reversal of an allowance of CHF 1,981 thousand (prior year: recognition of an allowance of CHF 1,964 thousand) for doubtful accounts for a trading partner in the Market Italy segment. Other operating expenses in the year under review were higher than the previous year. This was due in particular to the recognition in the 2021 financial year of CHF 3,677 thousand in other provisions for excise taxes and other contractual risks (see Note 27) as well as losses on disposal of CHF 1,058 thousand from the replacement of components of existing solar power installations (revamping) in the Market Italy segment.

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

11 Depreciation and value adjustments of tangible assets

Neither impairment gains nor impairment losses were recognised in 2020 or 2021.

12 Amortisation and value adjustments of intangible assets

Neither impairment gains nor impairment losses were recognised in 2020 or 2021.

13 Net financial result

In 2021 the weakening of the euro against the Swiss franc gained momentum. There were higher currency translation losses than in the previous year. Offsetting this were gains from forward exchange transactions recognised under changes in the value of securities held for trading in financial income.

The reversal of CHF 963 thousand relates to the reversal of the impairment loss for the investment in tiko Energy Solutions AG (prior year: impairment loss of CHF 2,813 thousand recognised), which was sold at its carrying amount in 2021. In 2020 the impairment loss of CHF 3,072 thousand on ENAG Energiefinanzierungs AG was reversed.

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

The year’s loss on premature repayment of liabilities consists in particular of the closing of a previously unrecognised interest rate swap of CHF 2,693 thousand held for hedging purposes that was released as part of a refinancing.

14 Income taxes

The reconciliation between the actual tax burden and the expected tax burden for the financial years ending on 31 December 2021 and 2020 is as follows:

Unrecognised tax loss carryforwards

On the balance sheet date there were unrecognised tax loss carryforwards of CHF 36,179 thousand (prior year: CHF 45,068 thousand). The offsettability of loss carryforwards against future earnings involves uncertainty.

This results in unrecognised deferred tax assets of CHF 11,000 thousand (prior year: CHF 11,948 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 generation and grid assets.

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

Leased power plants

The net carrying amount of the generation assets held as part of the finance leasing agreement totalled CHF 9,044 thousand (previous year: CHF 22,938 thousand) at the closing date.

Total lease liabilities come to CHF 6,902 thousand (prior year: CHF 16,363 thousand). A lease was terminated prematurely in the 2021 financial year.

16 Intangible assets

The addition of CHF 24,110 thousand relates to the reversion waiver compensation payments made by Repower in January 2021 to Canton Graubünden and the municipalities of Brusio and Poschiavo for the continued operation of the Campocologno I and II power plants.

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

17 Investments in associates and joint ventures

The disposals of carrying amounts of CHF 2,087 thousand relates to the investment in the associate EL.IT.E. S.p.A., which was sold in the second half of 2021 after the distribution of a dividend of CHF 1,494 thousand (see the section Disposal of associates). This resulted in a gain on disposal of CHF 955 thousand (see Note 4).

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.

Under decrease in loans receivable in 2021 there were further decreases and losses in the course of equity valuation.

The investment in Aerochetto S.r.l. and the existing loan, which was part of the net investment in the company, were disposed of in 2021 (see the section Disposal of associates»). This resulted in a gain on disposal of CHF 875 thousand (see Note 4).

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.

The investment in tiko Energy Solutions AG, which was fully impaired as at 31 December 2020, was sold in the second half of 2021 (see Note 13).

The loans receivable relate to loans to associates and joint ventures amounting to CHF 437 thousand (prior year: CHF 8,623 thousand). Accumulated impairments of CHF 4,649 thousand (prior year: CHF 1,833 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

In the 2021 financial year, the reversal of CHF 235 thousand in impairments on inventories was recognised as costs of materials (prior year: CHF 51 thousand).

21 Trade accounts receivable

The stated trade accounts receivable also include claims on associates and joint ventures amounting to CHF 285 thousand (prior year: CHF 662 thousand).

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

22 Other receivables

Security deposits paid contains security deposits paid in connection with trading activities. Margin requirements were tightened, particularly because of the greater volatility and the price levels for energy products (see Note 32).

Other receivables include accrued revenues from long-term contracts amounting to CHF 17,260 (prior year: CHF 10,897 thousand) less advance payments of CHF 13,461 thousand (prior year: CHF 6,715 thousand) received and balances from excise tax of CHF 340 thousand (prior year: CHF 4,695 thousand).

In 2021 other receivables continues to include CHF 10,321 in receivables from the purchase price adjustment for transmission grids (see Note 4).

23 Prepaid expenses and accrued income

Trade accounts receivable invoices not invoiced yet represent goods and services that have been delivered but not yet invoiced.

The increase in trade accounts receivable invoices not invoiced yet is connected in particular with a year-on-year increase in volumes and prices of energy products, which likewise had an impact on trade accounts payable to be received under deferred income and accrued expenses (see Note 33).

24 Securities

The loans receivable of CHF 4,030 thousand recognised the previous year relate to a loan to tiko Energy Solutions AG, which was sold at its carrying amount in 2021. The investment in the company was also sold (see Note 13).

25 Replacement values of held-for-trading positions

The positive and negative values of held-for-trading positions which are recognised on the assets and liabilities side of the balance sheet increased in particular in connection with the sharp increase in prices. In net terms the replacement values come to CHF 3,419 thousand (prior year: CHF 9,752 thousand).

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.

Provisions for onerous contracts for energy, certificates of origin and transport capacity totalling CHF 4,737 thousand were adjusted via energy procurement and recognised as income (prior year: CHF 23,901 thousand recognised as expense). In 2021, income of CHF 5,026 thousand (prior year: expense of CHF 20,779 thousand) falls to the Market Switzerland segment and expense of CHF 289 thousand (prior year: expense of CHF 3,122 thousand) to the Market Italy segment.

The provisions were calculated on the basis of risk-adjusted interest rates of between 8.8 and 15.0 per cent (prior year: 6.8 and 14.2 per cent).

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 2021 were recognised under tangible assets.

Other provisions

In 2021 provisions of CHF 2,812 thousand for excise taxes were recognised in the Market Italy segment. Other provisions still include severance pay paid to sales agents in Italy amounting to CHF 1,501 thousand (prior year: CHF 1,348 thousand).

28 Deferred tax liabilities

The tax rates used to calculate deferred tax liabilities 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

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

30 Other non-current liabilities

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 are recognised every year as income of CHF 745 thousand in the profit and loss item net sales from goods and services in the Market Switzerland segment.

31 Trade accounts payable

The stated trade accounts payable also include liabilities vis-à-vis associates and joint ventures amounting to CHF 1,558 thousand (prior year: CHF 3,370 thousand)

32 Other current liabilities

The customer prepayments item contains prepayments of CHF 1,032 thousand (prior year: CHF 1,032 thousand) for services for third parties.

The increased level of prices resulted in tighter margin payments on both the asset and liability side (see Note 22). Security deposits received relate to security deposits in connection with exchange trading. Other current liabilities include in particular margin payments of CHF 31,966 thousand (prior year: CHF 11,211 thousand) in connection with exchange trading.

33 Deferred income and accrued expenses

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

The increase in trade accounts payable invoices to be received is connected in particular with a year-on-year increase in volumes and prices of energy products, which likewise had an impact on trade accounts receivable invoices not issued yet under prepaid expenses and accrued income (see Note 23).

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. Subject to the approval of the pension foundation’s financial statements by the board of trustees, the share of Repower’s non-committed funds is CHF 9,774 thousand.

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 692 thousand at the average exchange rate.

35 Derivative financial instruments

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.

The high values of energy derivatives are connected with the sharp increase in the prices of energy products.

36 Transactions with related parties

The assets 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 their fully consolidated companies, associates, partner works and joint ventures of Repower AG.

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 function 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 income 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 500 shares (prior year 350) at CHF118.95 (prior year CHF 92.14) and sold 562 shares (prior year 310) at an average price of CHF 121.80 (prior year CHF 95.94).

39 Off-balance-sheet liabilities

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 189,903 thousand (prior year: CHF 129,142 thousand). Given the high level of prices and elevated volatility of energy products, the requirements for security deposits in the form of guarantees in connection with Repower’s trading activities have increased.

There is a service agreement for the Teverola power plant ending in 2038. This resulted in an irrevocable payment obligation of CHF 23,927 thousand at 31 December 2021 (prior year: CHF 26,542 thousand). Furthermore, at 31 December 2021 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 13,139 thousand (prior year: CHF 11,259 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 are litigations 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 8,920 thousand for property and buildings (prior year: CHF 10,607 thousand) and CHF 615 thousand for motor vehicles (prior year CHF 727 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

The difficult-to-predict market and price situation, which already existed at the end of the year and has been further exacerbated by the military escalation of the crisis in Ukraine, combined with the rapid rise in gas and energy prices, are increasing the counterparty risk for Repower. It could happen that gas and energy suppliers can no longer meet their obligations, meaning that Repower has to procure these commodities on the market at high prices. Even though Repower does not pursue business activities in Russia or Ukraine, the solvency of individual contractual partners could be impaired, which in turn could have consequences in terms of its asset, financial and earnings situation in 2022.

The financial statements were approved for publication by the board of directors on 30 March 2022. They are subject to the approval of the annual general meeting, which will take place on 18 May 2022.