4.7 Provisions
|
CHF million |
Onerous contracts |
Restructuring |
Decommis- sioning own power plants |
Warranties |
Other |
Total |
|
Non-current provisions at 1 January 2021 (adjusted) 1 |
431 |
|
47 |
1 |
28 |
507 |
|
Current provisions at 1 January 2021 (adjusted) 1 |
23 |
6 |
|
|
12 |
41 |
|
Provisions at 1 January 2021 (adjusted) 1 |
454 |
6 |
47 |
1 |
40 |
548 |
|
Allocated |
186 |
|
|
|
6 |
192 |
|
Unwinding of discount |
19 |
|
1 |
|
|
20 |
|
Utilised |
– 78 |
– 5 |
|
|
– 9 |
– 92 |
|
Unused amounts reversed |
– 38 |
|
|
|
– 5 |
– 43 |
|
Currency translation differences |
– 6 |
|
|
|
|
– 6 |
|
Provisions at 31 December 2021 |
537 |
1 |
48 |
1 |
32 |
619 |
|
Non-current provisions at 31 December 2021 |
416 |
|
48 |
1 |
25 |
490 |
|
Current provisions at 31 December 2021 |
121 |
1 |
|
|
7 |
129 |
1 See note 1.4
Onerous contracts
These provisions comprise the present value of the onerous contracts in place on the reporting date.
Due to changing electricity prices, own use contracts for the physical purchase or sale of electricity can become loss making. Although Alpiq hedges these contracts from an economic perspective, this in part involves financial contracts. As Alpiq does not use hedge accounting, own use contracts and associated financial hedges have to be evaluated and presented separately. Due to the sharp rise in electricity and gas prices, Alpiq had to recognise provisions for hedged own use contracts of CHF 186 million in 2021. One portion of these own use contracts was due for delivery in 2021, which is why the corresponding provision of CHF 78 million could be used.
The provision for the onerous contract relating to the future procurement of energy from the Nant de Drance pumped storage power plant was reduced by CHF 29 million, primarily on account of the development of electricity prices. Higher market prices also meant that the Group could reverse the existing provision for an onerous contract abroad of CHF 8 million in full at 30 June 2021.
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 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.