Notes to the financial statements: principles

1. Accounting principles

The present financial statements were prepared in accordance with the provisions of Swiss financial reporting law (Title Thirty-Two of the Code of Obligations).

2. Accounting and valuation principles

The main items are recognised as follows:

Cash and cash equivalents

Cash and cash equivalents comprise cash holdings and bank and postal account balances, and are recognised on the balance sheet at nominal value.

Replacement values of held-for-trading positions

Derivative financial instruments held for trading with a directly observable market price or directly observable input parameters are recognised at fair value. Fluctuation reserves are not created.

Current financial assets

The balance sheet item current financial assets comprises fixed-term deposits and derivatives that are realised within 3–12 months of the balance sheet date. Fixed-term deposits are recognised at cost less any impairment. Derivatives are recognised at current values.

Trade accounts receivable

Trade accounts receivable are recognised at nominal value and impaired if necessary. The amount at the end of the period may be subjected to a flat rate impairment at a rate accepted for tax purposes.

Other receivables

Other receivables are measured at nominal values. Any counterparty risks are accounted for by means of necessary impairment.

Significant service-related orders received by Repower are recognised under other receivables. They are recognised in proportion to revenue net of any amounts already invoiced and prepayments received. The percentage of completion for application of the percentage of completion method is calculated individually for each contract using the cost to cost method.

Inventories and work in progress

Inventories and work in progress are recognised at acquisition or production cost taking account of economically necessary impairments. Otherwise impairment may be done at a rate accepted for tax purposes.

Prepaid expenses and accrued income / deferred income and accrued expenses

Prepaid expenses and accrued income / deferred income and accrued expenses comprise the asset and liability items resulting from the accrual and deferral of individual items of expense and income in accordance with the accrual and matching principle. The origination costs of interest-bearing liabilities are capitalised under prepaid expenses and accrued income. Accruals and deferrals for goods and services delivered or received but not yet invoiced are recognised in prepaid expenses and accrued income / deferred income and accrued expenses. Prepaid expenses and accrued income / deferred income and accrued expenses are recognised at nominal values.

Non-current financial assets

Non-current financial assets comprise financial investments (minority interests <20 per cent), loans receivable and fixed-term deposits. They are recognised at cost less any impairment. Items that are realised within 3 to 12 months of the balance sheet date are recognised as current financial assets on the balance sheet.

Tangible assets

Tangible assets are recognised at acquisition or production cost less accumulated depreciation and any impairment losses. Self-constructed tangible assets are to be capitalised if the expenses incurred can be individually recognised and measured. Own costs capitalised are measured on the basis of hours actually incurred, which are multiplied by hourly rates calculated for the current financial year. Amortisation is done on a straight-line basis over the subsequent useful life.

Intangible assets

Intangible assets are initially recognised at the lower of cost (acquisition or manufacturing cost). Provided the prerequisites for capitalisation are met, intangible assets generated internally are capitalised. If there are indications of overvaluation, necessary impairments are taken into account. Amortisation is done on a straight-line basis over the subsequent useful life.

Current liabilities

Current liabilities are recognised at nominal value.

Non-current liabilities

Non-current liabilities comprise long-term, interest-bearing financial liabilities at nominal value and other non-interest-bearing long-term liabilities.

Provisions

A provision is a probable liability on the basis of a past event; the amount of the liability and / or the date on which it will fall due is uncertain but can be estimated. The amount of provisions is based on the managementʼs assessment, and reflects the future outflows of funds that can be anticipated as of the balance sheet date.

Treasury shares

Treasury shares are recognised as a negative item in shareholders’ equity on the date of acquisition, without any subsequent measurement. On resale the profit or loss is booked directly to free reserves from earnings.