Annual Report 2020

5.2 Companies sold

Net cash flow from disposal

CHF million

2020

2019

Inflow of cash and cash equivalents

26

280

Selling expenses

– 1

– 6

Cash and cash equivalents disposed of with subsidiaries

 

– 9

Net cash flow from disposal

25

265

Gain on disposal

CHF million

2020

2019

Inflow of cash and cash equivalents

26

280

Remeasurement of the remaining shares at fair value 1

3

 

Sale of net assets

– 11

– 273

Selling expenses

– 1

– 6

Gain on disposal (before reclassification of cumulative translation adjustment)

17

1

Reclassification of cumulative translation adjustment

– 3

– 28

Gain on disposal

14

– 27

Of which, from the sale of Flexitricity Ltd. and Tormoseröd Vindpark AB in other operating income

14

 

Of which, from the sale of Alpiq Generation (CZ) s.r.o. in other operating expenses

 

– 27

1 Included in “Investments in partner power plants and other associates”

Assets and liabilities on the disposal date

CHF million

2020

2019

Property, plant and equipment

5

264

Intangible assets

6

 

Other non-current assets

1

 

Inventories

 

21

Receivables

1

13

Prepayments and accrued income

 

1

Cash and cash equivalents

 

9

Total assets

13

308

Non-current provisions

 

7

Deferred income tax liabilities

1

5

Current financial liabilities

 

1

Other current liabilities

 

21

Accruals and deferred income

1

1

Total liabilities

2

35

Net assets

11

273

2020: Sales

The sale of Flexitricity Ltd. to Reserve Power Holdings (Jersey) Limited, which belongs to the Quinbrook Group, was closed on 9 September 2020. The sale price amounted to CHF 18 million, which resulted in a net inflow of cash and cash equivalents of CHF 17 million. The assets and liabilities of the company were recognised as “Assets held for sale” or “Liabilities held for sale”. Alpiq had recognised an impairment loss of CHF 10 million on goodwill in 2019 in order to reduce the carrying amount to the sale price expected at that time less costs to sell. The actual sale price achieved is higher than the price expected at the end of 2019, meaning that a book gain has now been generated from the sale.

The sale of 70 % of the shares in Tormoseröd Vindpark AB to Fu-Gen (Future Generation Renewable Energy) was closed on 18 December 2020. Alpiq continues to hold 30 % of the shares in Tormoseröd Vindpark AB. Due to the remaining significant influence of Alpiq, the shares are now recognised under “Investments in partner power plants and other associates”. The sale price amounted to CHF 8 million, which resulted in a net inflow of cash and cash equivalents of CHF 8 million. The gain on disposal also comprises the remeasurement of the remaining interest at fair value of CHF 3 million.

2019: Sales

The sale of Alpiq Generation (CZ) s.r.o., which holds the two thermal power plants Kladno and Zlín, to Sev.en Zeta a.s. (CZ) was closed on 30 August 2019. The purchaser Sev.en Zeta a.s. (CZ) belongs to the Sev.en Energy Group. The sale price amounted to CHF 280 million, which resulted in a net inflow of cash and cash equivalents of CHF 265 million. Since 15 May 2019, the assets and liabilities of the company have been recognised as “Assets held for sale” or “Liabilities held for sale”. The recoverable amount of Alpiq Generation (CZ) s.r.o. was calculated directly before classification as “Assets held for sale” or “Liabilities held for sale”. A pre-tax discount rate of 5.34 % was applied. The measurement resulted in an impairment loss on property, plant and equipment of CHF 186 million. Following reclassification, another impairment loss of CHF 53 million was recognised on assets held for sale in order to reduce the carrying amount to the sale price less costs to sell.

Compensation for the transfer of the Swiss high-voltage grid

On 3 January 2013, Alpiq transferred its share in the Swiss high-voltage grid to national grid operator Swissgrid Ltd based on provisional contribution values. It is was not possible to provide a final calculation of the value of individual assets at this point in time, as proceedings relevant for the measurement were still pending. Furthermore, in the 2016 financial year, Alpiq received higher compensation for transferring its share in the Swiss high-voltage grid on account of the new ruling by the Swiss Federal Electricity Commission (ElCom) on the measurement method.

On 9 February 2021, ElCom issued rulings on the margin differences of the former company Alpiq Grid Ltd. Gösgen and Alpiq Grid Ltd Lausanne in 2011 and 2012. It also issued a ruling on their regulatory values at 31 December 2012. Both Alpiq and Swissgrid can file an appeal with the Federal Administrative Court against these rulings within 30 days. If they fail to do so within that period, the rulings become legally binding. As soon as these rulings are legally binding, the second measurement adjustment will be made to offset the remaining difference between the amount already compensated at the transfer date and the amount ordered by the court ruling. In addition, the final value is calculated in accordance with the new ruling in 2016. The calculations for all parties providing in-kind contributions are carried out by the same independent company. Provided that neither Alpiq nor Swissgrid file an appeal against these rulings, Alpiq expects the result of the valuations in the second half of 2021.

At present, Alpiq does not have all the information required to provide an accurate calculation of the final compensation amount. This matter is therefore subject to estimation uncertainty. Based on the information available and considering the fact that the rulings are not yet legally binding when the 2020 consolidated financial statements are approved by the Board of Directors of Alpiq Holding Ltd., Alpiq used judgments to estimate the fair value of the final compensation amount expected (including interest). In this context, additional sales proceeds of CHF 39 million, including margin differences in 2011 and 2012, were recorded under “Other operating income”. Interest components of CHF 11 million were recognised as interest income. The final compensation amount (including interest) will not be known until all calculations have been completed by the independent valuation company. This is expected to result in a further positive effect on earnings for Alpiq.

Discontinued operations

In 2018, Alpiq sold the Engineering Services business, which comprises the Alpiq InTec Group and the Kraftanlagen Group. These operations were classified as discontinued operations. Therefore, all income and expenses in connection with this sale continue to be posted to “Earnings after tax from discontinued operations”.

There were diverging views on the definitive sale price between Alpiq and Bouygues Construction. In order to enforce their claims arising from the price adjustment mechanism, both parties therefore filed for arbitration proceedings pursuant to the arbitration regulations of the Swiss Chambers’ Arbitration Institution on 12 February 2019. On 22 December 2020, Alpiq and Bouygues Construction reached an out-of-court settlement. Alpiq refunded CHF 54.5 million to Bouygues Construction. The arbitration proceedings, which were simultaneously initiated by both parties on 12 February 2019, therefore came to an end. The settlement agreement states that this payment is to be treated as an adjustment to the sale price. The payment posted to “Earnings after tax from discontinued operations” is therefore contained under “Net cash flows from investing activities of discontinued operations”. Alpiq and Bouygues Construction have also entered into indemnification and warranty agreements in connection with the sale of the Engineering Services business. The settlement agreement therefore states that the parties release each other from any indemnification and warranties contained in the sales agreement, except for the antitrust proceedings described below, which were not part of the arbitration proceedings.

As part of the sale of the Engineering Services business, Alpiq must bear any costs of Kraftanlagen München GmbH resulting from the proceedings started by the state prosecutor of Munich I and the German Federal Cartel Office in the first quarter of 2015. In the course of these proceedings, the German Federal Cartel Office imposed a fine of EUR 47.5 million, translated CHF 51 million, on Kraftanlagen München GmbH in December 2019. Kraftanlagen München cooperated fully with the authorities from the outset in order to support them in investigating the allegations in question. Despite extensive investigations, a law firm commissioned by Kraftanlagen München to clarify the facts of the case could not find any evidence of misconduct by Kraftanlagen München or the accused former employees. Kraftanlagen München does not believe that it is in the wrong and refutes the allegations. This fine is justified neither by the facts nor the legal situation, which is why Kraftanlagen München GmbH filed an appeal against the administrative order imposing the fine. Alpiq has recognised a provision for the expected costs associated with these proceedings.

Kraftanlagen München and Alpiq continue to deem a conviction unlikely and Alpiq has therefore decided not to record a liability for this matter.

Income statement of discontinued operations

CHF million

2020

2019

Expenses

– 4

– 8

Effect from reviewing the provisions for warranties and indemnification

3

– 34

Adjustment of the purchase price / loss on disposal

– 55

 

Earnings after tax from discontinued operations 1

– 56

– 42

1 No income tax was incurred on the earnings from discontinued operations.

By the time the out-of-court settlement was reached, the cash outflow in connection with indemnification and warranties to Bouygues Construction came to CHF 13 million in the 2020 financial year (previous year: CHF 28 million). According to the sales agreement, these payments are treated as an adjustment to the sale price. They are therefore contained in the statement of cash flows under “Net cash flows from investing activities of discontinued operations”.

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