Annual Report 2020

3.6 Leases

The Alpiq Group is the lessee in several cases, particularly in connection with power production from wind farms as well as land and building and IT infrastructure rentals. These leases are generally concluded for a fixed term of one month to 20 years, and may contain renewal or termination options. The table below shows the change in net carrying amounts of the right-of-use assets capitalised in the line item property, plant and equipment:

CHF million

Rights of use for buildings

Rights of use for power plants

Rights of use for others

Total

Net carrying amount at 1 January 2020

16

28

4

48

Investments

2

2

Depreciation

– 3

– 2

– 1

– 6

Impairments

– 1

– 1

Reversal of impairment

1

1

Currency translation differences

– 1

– 1

Net carrying amount at 31 December 2020

16

24

3

43

Of which, cost value

22

38

5

65

Of which, accumulated depreciation

– 6

– 14

– 2

– 22

CHF million

Rights of use for buildings

Rights of use for power plants

Rights of use for others

Total

Net carrying amount at 1 January 2019

20

33

4

57

Investments

1

 

1

2

Reclassified to “Assets held for sale”

 

– 1

 

– 1

Depreciation

– 3

– 3

– 1

– 7

Impairments

– 1

 

 

– 1

Currency translation differences

– 1

– 1

 

– 2

Net carrying amount at 31 December 2019

16

28

4

48

Of which, cost value

20

38

5

63

Of which, accumulated depreciation

– 4

– 10

– 1

– 15

The change in carrying amounts of the lease liabilities included under financial liabilities can be seen in note 3.5. The total cash outflow from leases amounted to CHF 9 million in 2020 (previous year: CHF 9 million).

Accounting policies

The Alpiq Group applies a uniform procedure for the recognition and measurement of leases. It does not make use of the practical expedients for short-term and low-value leases permitted under IFRS 16. It is assessed upon concluding a contract whether it constitutes a lease in accordance with IFRS 16 or contains such an element. A lease exists if a contract grants Alpiq the right to control a certain asset over a period of time in exchange for payment. The right-of-use assets and the lease liabilities representing Alpiq’s obligation to make lease payments are recognised in the balance sheet at the time when the lease asset becomes available. The right-of-use assets are included under property, plant and equipment in the balance sheet. They are measured at amortised cost and depreciated on a straight-line basis over the lease term or their lifetime taking any impairment losses into account. Acquisition costs include the amount of recognised lease liabilities plus any dismantling obligations, directly attributable acquisition costs and one-off payments made at or before the start of the contract, less any lease incentives received.

The lease liabilities are initially recognised at the present value of the expected future lease payments. The present value is calculated with the lessee’s incremental borrowing rate applicable for the country, the term and the currency. In subsequent periods, the lease liabilities are measured at amortised cost by applying the effective interest method. The lease liabilities are recognised in current or non-current financial liabilities as appropriate.

The determination of the lease term as a basis for the expected future payments may require various estimates from management regarding the future use of the leased asset. Extension options are only taken into account in the contractual term if it is reasonably certain that the option will be exercised. Termination options are only taken into account if it is reasonably certain that the option will not be exercised. Alpiq takes into account all relevant factors that create an economic incentive to exercise the option. Alpiq has internally defined the following limits to determine the contractual term for callable leases with an unlimited term: for buildings, car parks and power plants a maximum of ten years, and for all others such as furniture, IT equipment and vehicles a maximum of two years.

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