Notes to the consolidated financial statements: notes

1Net sales

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.

Declining energy prices have a generally curbing effect on net sales and energy procurement costs (see Note 6). Unlike the Market Italy segment, the Market Switzerland segment’s net sales from goods and services were up slightly (see Note 37). Repower’s hedging strategy of selling the majority of the electricity generated at its own power plants at hedged prices thus protected margins at its generation assets from the slump in prices.

Long-term contracts are recognised in accordance with the percentage of completion method. Revenues from services and other usual business activities contain no revenues from long-term contracts (prior year: CHF 2,690 thousand in the Market Switzerland segment).

2Own costs capitalised

As in the prior year, own costs capitalised result mainly from services in connection with the overall renovation of Robbia power plant and investments in the Repower electricity grid.

3Change in inventory of sales orders

The change in inventory of sales orders relates to work in progress in inventories. The balance reported for 2023 relates to the Market Switzerland and Market Italy segments in almost equal measure, unlike the prior year, where the majority fell to the Market Switzerland segment.

4Other operating income

Revenues from other operating activities in the Market Italy segment in 2023 include a gain of CHF 7,347 thousand from the contribution of a photovoltaic project to the joint venture Resol Ciminna S.r.l.

Prior-year, revenues from other operating activities in the Market Italy segment include insurance payments of CHF 12,371 thousand for the damage and failure suffered in 2020 by Teverola combined cycle gas turbine power plant, which was initially repaired temporarily and, as planned, fully repaired in 2022 in the course of a scheduled overhaul. Insurance payments of CHF 6,321 thousand for the damaged tangible assets are recognised in cash flow from investing activities, whereas the insurance payments for the operating loss are recognised in cash flow from operating activities in the amount of CHF 6,050 thousand.

5Earnings from associates and joint ventures

In 2023, the line “Associates” in the Other segments and activities segment contains an impairment of CHF 1,061 thousand on the interest in EVUlution AG (see Note 17).

6Energy procurement

The lower prices of energy products meant lower energy procurement costs (see Note 1).

Energy procurement consists on a net basis of CHF 1,206 thousand in income from a change in the provision for long-term contracts (prior year: CHF 18,511 thousand); of this amount income of CHF 266 thousand (prior year: CHF 18,098 thousand) falls to the Market Switzerland segment and income of CHF 940 thousand (prior year: CHF 413 thousand) falls to the Market Italy segment (see Note 27).

7Concession fees

The increase in other concession-related charges is mainly due to higher market price-dependent remuneration in the form of monetarily compensated free energy, which was agreed with the municipalities the previous year. This change affects the Market Switzerland segment.

8Personnel expenses

The increase in wages and salaries is mainly due to an increase in the number of employees as well as performance bonuses and incentives in the Market Switzerland segment.

9Materials 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.

In 2023, third party services include CHF 3,000 thousand in anticipated expenses for the dismantling of a power plant, already discontinued, in the Market Switzerland segment (see Note 27).

10Other operating expenses

Allowances for doubtful accounts include the net allowance for doubtful accounts of CHF 2,446 thousand (prior year: net allowance of CHF 14,509 thousand) for customer receivables from the sale of electricity and gas to end-consumers in the Market Italy segment.

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

11Depreciation and value adjustments of tangible assets

Depreciation and value adjustments of tangible assets include impairment losses of CHF 12,708 thousand (prior year: CHF 151 thousand) in the Market Switzerland segment and CHF 2,878 thousand (prior year: reversal of an impairment loss of CHF 3,819 thousand) in the Market Italy segment (see Note 15).

12Amortisation and value adjustments of intangible assets

Amortisation and value adjustments of intangible assets comprise impairment losses of CHF 394 thousand (prior year: CHF 0 thousand) (see Note 16).

13Net financial result

In 2023 the general level of interest rates continued to rise while the euro continued to lose value. These interest rate increases, in conjunction with higher fixed-term deposits, led to increased interest income. At the same time, the higher interest rates, particularly in connection with refinancing programmes, led to an increase in interest expenses.

Currency translation in the amount of CHF –12,822 thousand (prior year: CHF –12,137 thousand) stems primarily from Repower AG. This company’s receivables and liabilities are largely recognised in euros, the main currency for the energy business. Owing to fluctuations in the exchange rate between the euro and the Swiss franc, currency gains or losses may occur between the time of arising and the time of falling due. As in the prior year, the gains from forward exchange transactions recognised as financial income in changes in value of securities held for trading have a partially offsetting effect.

Impairment losses of CHF 2,259 thousand include the full write-down of the loan to EVUlution AG of CHF 2,252 thousand (see Note 18).

14Income taxes

The reconciliation between the actual tax burden and the expected tax burden for the financial years ending on 31 December 2023 and 2022 is as follows:

The reconciliation between the actual tax burden and the expected tax burden for the financial years ending on 31 December 2023 and 2022 is as follows:

Global minimum taxation

The Global Anti-Base Erosion (GloBE) Model Rules published by the OECD stipulate a minimum tax of 15 per cent per country (Pillar Two). The corresponding Ordinance on the Minimum Taxation of Large Corporate Groups (MindStV) came into force on 1 January 2024.

In the countries outside Switzerland in which Repower operates via its group companies, Italy and Germany, corresponding tax legislation, in force from 1 January 2024, has also been enacted. The Repower Group has evaluated the potential tax liabilities arising from implementation of the regulations.

The assessment of the potential impact on Pillar Two income taxes is based on current tax returns, country-by-country reporting (CBCR) and the financial reports of the entities included in the Group. Although the tax level of 15 percent for Switzerland was not reached when applying the safe harbour relief, the capital tax, also claimed as creditable tax under the GloBE Model Rules, will increase the effective tax rate to over 15 percent. The Group does not expect any significant effects from the minimum tax regulation.

15Tangible assets

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

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

Impairment of tangible assets

In the year under review there were impairments in the Market Switzerland and Market Italy segments on both existing power plants and a planned power plant. The main items are explained in the notes.

Market Switzerland segment

Prices in the context of Taschinas power plant are contractually fixed for the coming years, which means that it cannot benefit from current high prices. However, a weakening of price expectations is forecast for the coming years. This foreseeable decline in future earnings prospects led to a CHF 11,802 thousand impairment loss on Taschinas power plant.

Furthermore, Repower is planning to discontinue production at Papierfabrik Landqart power plant prematurely in favour of another power plant project. Owing to the assumption of a shortened useful life, the recoverability of Papierfabrik Landqart power plant was called into question and an impairment loss totalling CHF 1,104 thousand was recognised, of which CHF 394 thousand relates to intangible assets (see Note 16).

Market Italy segment

On 25 July 2023, fire broke out at a solar power installation in a building in Melti, a municipality in the region of Basilicata. It destroyed several solar panels. The night before, the solar panels of an installation in the municipality of Varmo in the Friuli Venezia Giulia region were damaged by hail. An impairment of CHF 2,878 thousand was recognised on the basis of these events.

As a project for the construction of a solar power plant on a previously impaired property was further concretised in 2022, an existing impairment of CHF 3,819 thousand was reversed.

Contributions to joint ventures

The disposals of gross assets in 2023 include assets totalling CHF 5,906 thousand that were contributed to the joint venture Resol Ciminna S.r.l. (see Changes in scope of consolidation section).

Leased power plants

The net carrying amount of the generation assets held as part of the finance leasing agreement, which are recognised in power plants, totalled CHF 7,620 thousand (prior year: CHF 8,043 thousand) at the closing date.

Total lease liabilities come to CHF 4,707 thousand (prior year: CHF 5,799 thousand).

16Intangible assets

The disposals of CHF 269 thousand are an integral part of the contributions made in connection with the 2023 establishment of the joint venture Resol Ciminna S.r.l. (see Changes in scope of consolidation section).

The goodwill stems from the acquisition of Repower Renewable S.p.A. in December 2018 and is now fully amortised.

The impairment losses of CHF 394 thousand recognised in 2023 relate to the Papierfabrik Landqart power plant (see Note 15).

17Investments in associates and joint ventures

To construct a solar power installation in Italy, in 2023 Repower and a partner established the joint venture Resol Ciminna S.r.l., each taking a 50 per cent interest. The company is managed jointly and valued at equity. The initial carrying value comes to CHF 13,030 thousand, of which CHF 47 thousand was contributed in cash and the remainder in kind.

In the current year, Repower acquired 20 per cent of Elettrostudio Energia S.r.l. with the aim of encouraging the expansion of renewable energy in Italy. The company is managed jointly and valued at equity. The purchase price recognised at the time of acquisition amounts to CHF 2,306 thousand, of which CHF 769 thousand was already paid in December 2023. The goodwill of CHF 1,792 thousand recognised at the time of acquisition is part of the investment and will be amortised over a period of five years. The financial impact of the earn-out agreements made is currently uncertain and its amount cannot be predicted with sufficient accuracy, meaning that this component of the purchase price has not yet been recognised. It is possible that earn-outs to be paid could lead to adjustments to goodwill in the future. The adjusted goodwill will be amortised over the remaining useful life.

The economic prospects of the associate EVUlution AG have deteriorated, with the balance sheet burdened by historical losses and further losses foreseeable. For this reason, an impairment loss of CHF 1,061 thousand, corresponding to the entire investment, was recognised via earnings from associates and joint ventures in the other segments and activities segment (see Note 5). At the same time the loan that exists, which is not part of the net investment in the company, has been fully impaired through financial expenses in the amount of CHF 2,252 thousand (see Note 13 and Note 18).

In 2022, Repower Italia S.p.A. acquired interests in the two companies Erreci S.r.l. and Erreci Impianti S.r.l. for CHF 6,983 thousand; the earn-outs recognised in the initial consolidation came out at the expected amount and payments of CHF 1,539 thousand were made in 2023.

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 (Loss carryforward for loan receivable). Currently and at the end of the prior year, there were no losses recognised on loans from the application of the equity method.

18Non-current 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 loans receivable relate to loans to associates and joint ventures amounting to CHF 410 thousand (prior year: CHF 1,849 thousand). Accumulated impairments of CHF 2,252 thousand (prior year: CHF 0 thousand) were recognised under this item (see Note 17).

19Deferred tax assets

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

Given that offsetting loss carryforwards against future earnings and offsetting interest carryforwards against future earnings for tax purposes involves uncertainty, deferred taxes on offsettable loss and interest carryforwards are not always capitalised (see Note 14).

20Inventories

In the 2023 financial year, CHF 8 thousand in impairments on inventories was recognised as costs of materials (prior year: CHF 33 thousand).

21Trade accounts receivable

The decline in trade accounts receivable stems mainly from the Market Italy segment’s sales business.

The stated receivables from goods and services also include claims on associates and joint ventures amounting to CHF 298 thousand (prior year: CHF 81 thousand).

The valuation of accounts receivable is conducted by means of specific allowances for doubtful accounts and a general allowance on accounts not individually assessed for impairment, based on their maturity structure and historical experience.

22Other receivables

Security deposits paid contain security deposits paid in connection with trading activities. At the end of the prior year, this item included deposits from over-the-counter energy trading (direct trading) with a trading partner totalling CHF 42,145 thousand, which were repaid in 2023.

Other receivables include receivables in connection with the total modernisation of Robbia power plant in the amount of CHF 4,480 thousand (prior year: CHF 5,276 thousand).

23Prepaid expenses and accrued income

24Current financial assets

25Replacement values of held-for-trading positions

Repower’s trading position developed positively. Positive replacement values outweigh the negative replacement values, and an increase in the difference from CHF 51,227 thousand to CHF 149,056 thousand was recorded. This positive development made a significant contribution to the trading results (see Note 35).

26Cash and cash equivalents

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

27Provisions

Provisions for onerous contracts

Provisions of CHF 3,403 thousand (prior year: CHF 4,126 thousand) for onerous contracts comprise CHF 468 thousand for guarantees of origin (prior year: CHF 690 thousand) and CHF 2,935 thousand for transport capacity (prior year: CHF 3,436 thousand).

Provisions are reviewed and adjusted on the balance sheet date. The decision on whether there is an indication 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 future procurement or sales prices.

The adjustment of provisions for onerous contracts has the effect of reducing the total costs of energy procurement by CHF 1,206 thousand (prior year: CHF 18,511 thousand). In the prior year, the entire CHF 16,841 thousand provision for onerous energy contracts was written back because of increases in market prices for energy (see Note 6).

The provisions were calculated on the basis of risk-adjusted interest rates of between 11.3 and 21.3 per cent (prior year: 7.0 and 18.5 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 contains various provisions for the dismantling of operating installations. The recognition of a provision of CHF 2,287 (prior year CHF 162 thousand) and the utilisation of the provision of CHF 1,099 thousand (prior year CHF 0 thousand) were recognised in tangible assets. The remaining provision of CHF 3,000 thousand relates to the expected costs of dismantling a power plant that has already been taken out of service, and is recognised under third party services in the Market Switzerland segment.

Other provisions

In the year under review, provisions of CHF 985 thousand for excise taxes were recognised in the Market Italy segment.

In 2022, provisions of CHF 1,546 thousand for contractual penalties that are no longer expected were written back in the Market Italy segment.

28Deferred tax liabilities

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

29Current and non-current financial liabilities

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

30Other 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.

31Trade accounts payable

The decline in trade accounts payable stems mainly from the Market Italy segment’s sales business.

The stated trade accounts payable also include liabilities vis-à-vis associates and joint ventures amounting to CHF 1,132 thousand (prior year: CHF 1,574 thousand)

32Other current liabilities

Owing to good results from companies in the Market Switzerland segment there was a year-on-year increase in income tax liabilities.

The “Customer prepayments” item contains no prepayments (prior year: CHF 6,491 thousand) from customers for future deliveries of inventory.

Other current liabilities include in particular margin payments of CHF 16,484 thousand (prior year: CHF 16,917 thousand) in connection with exchange trading.

33Deferred income and accrued expenses

The year-on-year increase in accrued other personnel expenses is particularly the result of the increase in headcount and the accrual of performance bonuses and incentives in the Market Switzerland segment.

34Pension schemes

Economic benefit/economic liability and pension benefit expenses

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 577 thousand at the average exchange rate.

35Derivatives

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.

36Transactions 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’s energy business is transacted via Grischelectra AG, which is included as a related party in the table above. 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.

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

37Segment 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.

38Treasury shares

Purchases/disposals of treasury shares relate to Repower AG registered shares. In the year under review Repower AG bought 962 shares (prior year 603) at CHF 168.14 (prior year CHF 136.98) and sold 731 shares (prior year 590) at an average price of CHF 171.71 (prior year CHF 143.69).

39Off-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 226,965 thousand (prior year: CHF 220,206 thousand).

There is a service agreement for the Teverola power plant ending in 2038. This resulted in an irrevocable payment obligation of CHF 18,834 thousand at 31 December 2023 (prior year: CHF 21,417 thousand). Furthermore, at 31 December 2023 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 14,398 thousand (prior year: CHF 17,320 thousand).

At the reporting date of the financial year under review, the outstanding minimum lease payments consisted of CHF 3,144 thousand for property and buildings (prior year: CHF 6,806 thousand). There are no outstanding minimum lease payments for motor vehicles (prior year: CHF 503 thousand).

The procurement contracts are primarily electricity supply agreements.

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.

40Events occurring after the balance sheet date

In January 2024, Repower Italia S.p.A. acquired further interests in Erreci S.r.l. and Erreci Impianti S.r.l., two companies based in Busto Arsizio. The interests were raised from 30 per cent to 70 per cent.

Since 31 December 2023 there have been no other events which require disclosure.

The financial statements were approved for publication by the board of directors on 4 April 2024. They are subject to the approval of the annual general meeting, which will take place on 15 May 2024.