4.7 Provisions
|
CHF million |
Onerous contracts |
Restructuring |
Decommis- sioning own power plants |
Warranties |
Other |
Total |
|
Non-current provisions at 1 January 2020 (adjusted) 1 |
319 |
|
45 |
1 |
49 |
414 |
|
Current provisions at 1 January 2020 |
13 |
6 |
|
16 |
20 |
55 |
|
Provisions at 1 January 2020 (adjusted) 1 |
332 |
6 |
45 |
17 |
69 |
469 |
|
Allocated |
114 |
|
|
|
18 |
132 |
|
Unwinding of discount |
16 |
|
2 |
|
|
18 |
|
Utilised |
– 13 |
|
|
– 13 |
– 20 |
– 46 |
|
Unused amounts reversed |
– 6 |
|
|
– 3 |
– 28 |
– 37 |
|
Reclassified |
|
|
|
|
1 |
1 |
|
Provisions at 31 December 2020 |
443 |
6 |
47 |
1 |
40 |
537 |
|
Non-current provisions at 31 December 2020 |
430 |
|
47 |
1 |
28 |
506 |
|
Current provisions at 31 December 2020 |
13 |
6 |
|
|
12 |
31 |
1 See note 1.4
Onerous contracts
These provisions comprise the present value of the onerous contracts in place on the reporting date. The increase of CHF 114 million mainly relates to two contracts. For one, the provision for the onerous contract relating to the future procurement of energy from the Nant de Drance pumped storage power plant had to be increased by CHF 97 million. This was due to less volatility in the hourly profile, lower short-term and long-term market prices, the still-weak CHF / EUR exchange rate and the fact that the full industrial commissioning of the power plant is now expected at the end of December 2021 and not at the end of September 2021, as assumed last year. For another, lower market prices meant that the Group had to increase a provision for an onerous contract outside Switzerland by CHF 11 million. Information about discontinued operations can be found in note 5.2.
The amount of the provisions for onerous contracts depends on various assumptions, relating in particular to the development of wholesale prices on European forward markets and forecasts of medium- and long-term energy prices, long-term interest rates and currency translation effects (EUR to CHF). These assumptions associated with uncertainties are made at the reporting date, some of which can result in significant adjustments in subsequent periods.
Restructuring
The provision for restructuring covers the costs expected in future from the restructuring programmes initiated in the past.
Decommissioning own power plants
The provision for decommissioning the Group’s own power plant portfolio covers the estimated costs of decommissioning and restoration obligations associated with the Group’s existing power plants.
Warranties
The provision for warranties was calculated based on historical data and contractual agreements and also includes the provisions for warranties and indemnification in connection with the sale of the Engineering Services business to Bouygues Construction.
Other provisions
Other provisions include obligations arising from the human resources area, existing and pending obligations from litigation as well as other operating risks evaluated as probable to materialise. Provisions of CHF 9 million were released in 2020, as GSE reversed the complete revocation of the right of Società Agricola Solar Farm 4 S.r.l. to feed-in tariffs (see note 4.1)
Provisions for pending obligations from litigation are based on the information available in each case and the estimate made by management as to the outcome of the litigation. Depending on the actual outcome, the effective cash outflow can differ significantly from the provisions.
Accounting policies
Provisions cover all (legal or constructive) obligations arising from past transactions or events that are known at the reporting date and likely to be incurred, but are uncertain as to timing and / or amount. The amount is determined at the reporting date and corresponds to the best possible estimate of the expected cash outflow, discounted to the reporting date.