Notes to the Consolidated Financial Statements

1.1 Basis of preparation of the consolidated financial statements

The consolidated financial statements of the Alpiq Group have been prepared in accordance with IFRS Accounting Standards and Interpretations (IFRIC and SIC) issued by the International Accounting Standards Board (IASB), and comply with Swiss law. The consolidated financial statements give a true and fair view of the financial position, financial performance and cash flows of the Alpiq Group. They have been prepared on a historical cost basis, except for certain items such as financial instruments, which have been measured at fair value in some instances. The consolidated financial statements were authorised for issue by the Board of Directors of Alpiq Holding Ltd. on 25 February 2026 and are subject to approval by shareholders at the Annual General Meeting on 7 May 2026.

The figures reported in the tables are rounded. Therefore, totals and ratios may deviate slightly from the sum of the individual values.

Basis of consolidation

The consolidated financial statements of the Alpiq Group comprise the consolidated financial statements of Alpiq Holding Ltd. and its subsidiaries, which have been prepared by using uniform accounting policies. All intragroup balances, transactions, income and expenses are eliminated in full.

Subsidiaries are companies controlled by Alpiq Holding Ltd., either directly or indirectly. Such companies are consolidated at the date that control is obtained. Companies are deconsolidated or recognised under “Investments in partner power plants and other associates” or under “Other non-current assets” when control of the company is lost.

Investments in partner power plants and other associates in which the Alpiq Group has significant influence are included in the consolidated financial statements by application of the equity method. The Alpiq Group’s interest in the assets, liabilities, income and expenses of such companies is disclosed in note 4.3.

All other investments are recognised at fair value and included in “Other non-current assets”.

Foreign currency translation

The consolidated financial statements are presented in Swiss francs (CHF), which is both the functional currency of Alpiq Holding Ltd. and its reporting currency. The functional currency of each company in the Group is determined by the economic environment in which it operates. Transactions in foreign currencies are recorded in the group company’s functional currency at the exchange rate prevailing on the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the closing exchange rate on the reporting date. The resulting currency translation differences are recognised in the income statement.

Receivables and loans due from foreign operations for which settlement is neither planned nor likely to occur in the foreseeable future are, in substance, part of the company’s net investment in that foreign operation. The resulting translation differences are recognised separately in other comprehensive income as part of the foreign currency translation differences and reclassified from equity to the income statement on disposal of the net investment in the foreign operation.

The assets and liabilities of subsidiaries are translated into Swiss francs at the closing exchange rate at the reporting date. Income statement items are translated at the average exchange rate for the reporting period. Currency translation differences are recognised as a separate item in other comprehensive income. On disposal of a subsidiary, or loss of control, and on disposal of an associate or partner power plant, or the loss of significant influence, the cumulative currency translation differences relating to that subsidiary are recognised in the income statement as part of the gain or loss on disposal in the period in which the entity is disposed of, or control is lost.

The following exchange rates were used for currency translation:

1.2 Adoption of new and revised accounting standards

Amendments, standards and interpretations adopted for the first time in 2025

At 1 January 2025, the amendments to IAS 21 “Lack of Exchangeability” entered into force and were adopted by the Alpiq Group. As the Group is not exposed to currencies with a lack of exchangeability, the amendments had no impact on the consolidated financial statements.

IFRS Accounting Standards effective in future periods

The IASB has published the following standards and interpretations of relevance to Alpiq:

The Alpiq Group evaluates the implications of newly issued or amended accounting standards that become effective on or after January 1, 2026. Based on the current assessment, no material impact on the Group’s financial position or results of operations is anticipated, with the exception of IFRS 18.

Issued by the IASB in April 2024, IFRS 18 – Presentation and Disclosure in Financial Statements will replace IAS 1 and becomes effective for reporting periods beginning on or after January 1, 2027, with retrospective previous year restatement. Early adoption is allowed. The main changes resulting from the introduction of IFRS 18 are:

• Entities are required to classify all income and expenses in the income statement in five mandatory categories (operating activities, investing activities, financing activities, discontinued operations and income taxes) and present new sub-totals, including “Operating Profit or Loss” and “Profit or Loss Before Financing and Income Taxes”.
• Entities are required to disclose Management-Defined Performance Measures (MPMs), providing definitions, reconciliations to IFRS measures, and context for their use.
• Enhanced guidance is provided for the aggregation and disaggregation of information in the financial statements.
• In addition, amendments to IAS 7 – Statement of Cash Flows remove classification options for interest and dividend cash flows, and standardise their presentation to enhance comparability. The starting point for operating cash flows, when using the indirect method, will be the Operating Profit or Loss sub-total.

Alpiq has completed its assessment of the implications of IFRS 18. The most significant impact arises from the required categorisation of income and expenses into five mandatory categories, which necessitates the redesign of the statement of profit or loss.

With respect to the statement of cash flows, only limited modifications were identified, as the Group’s existing mapping largely aligns with the revised classification principles introduced by the amendments to IAS 7. The only substantive change for the Group will be the requirement to use the “Operating Profit or Loss” subtotal as the starting point for calculating operating cash flows under the indirect method.

Furthermore, certain existing key performance indicators will be designated as Management-Defined Performance Measures (MPMs). As a result, additional disclosures – including definitions, reconciliations and explanatory context – will be required in the notes to the annual report. Alpiq already discloses most of the relevant information in its Financial Review, so the impact will mainly involve incorporating these disclosures into the audited section of the annual report and adapt wording to IFRS 18.

1.3 Significant uncertainty in estimation and judgement

The preparation of the consolidated financial statements requires the management to exercise judgement and make estimates and assumptions. These may significantly affect recognised assets and liabilities, reported income and ex­penses and disclosures. Estimates and assumptions are based on historical experience and expectations of future events that are believed to be reasonable under the circumstances. Actual amounts may differ from these estimates. Any revisions to estimates and assumptions are recognised and disclosed in the period in which they are identified.

Explanations of significant judgments and estimation uncertainties that may lead to material adjustments in recognized assets and liabilities, reported income and expenses, and other disclosures are outlined below and highlighted in the respective notes.

1.4 Events after the reporting period

Subsequent to the reporting date, on 21 January 2026, the Alpiq Group acquired the Cheviré battery energy storage system in France with an installed capacity of 100 MW and an energy capacity of 200 MWh. On 19 February 2026, the Alpiq Group acquired the Navaleo pumped hydro storage project in Castilla y León, Spain, a 535 MW project with at least eight hours of storage backed by a 75-year water concession and expected to be commissioned in the early 2030s. Both transactions represent asset acquisitions and had no impact on the consolidated financial statements for the year ended 31 December 2025.

2.1 Segment information

Alpiq Group segment reporting is based on the Group’s internal management structure and the internal financial information provided to the chief operating decision maker. The reportable segments at Alpiq are structured along the company’s value chain and comprise Assets, Trading, and Origination. The Executive Board evaluates each of them separately for the purposes of performance assessment and resource allocation. Segment results (EBITDA and adjusted EBITDA) are the key performance indicators used for internal management and assessment purposes at Alpiq. For more information about adjusted EBITDA, please refer to the unaudited explanations in the Financial Review. In addition to energy procurement and production costs, operating costs comprise all costs of operations, including personnel and service expenses.

• The Assets segment covers the production of electricity by Alpiq’s Swiss and international power plants through different technologies such as hydro (including small-scale hydropower), nuclear, thermal, wind and solar, as well as the operation and optimisation of these power plants. It also comprises several wind farm projects in Switzerland and abroad. The Alpiq Swiss power plant portfolio includes run-of-river power plants, storage and pumped storage power plants (including Nant de Drance), as well as interests in the Gösgen and Leibstadt nuclear power plants. In addition, the Assets segment manages shares in HYDRO Exploitation SA and Kernkraftwerk-Beteiligungsgesellschaft AG (KBG). It also covers the production of electricity and heat at thermal power plants in Hungary, Italy and Spain. The power plant portfolio is made up of gas-fired combined-cycle power plants and gas-fired turbine power plants. Power is sold on the European electricity trading market, and the power plants are used by the respective grid operators to balance the grids. Battery energy storage systems (BESS) complete the flexibility portfolio.
• The Trading segment covers proprietary trading activities with standardised and structured products for electricity and gas, as well as emission allowances and certificates. The Trading segment also includes liquidity management.
• The Origination segment covers activities to optimise electricity production from third-party renewable energy and direct marketing and energy management for industrial and business customers. This includes the trading and sale of standardised and structured products in various countries, with the aim of helping partners to achieve their cost efficiency and sustainability goals, thereby creating value and increasing customer benefit. Non-standard products like long-term power purchase agreements complete Alpiq’s product offering. The Origination segment also covers the company’s Swiss sales and origination activities as well as retail activities in France.

The segment results are reconciled to the Alpiq Group’s consolidated figures by incorporating the units with limited market operations (Corporate), Group consolidation effects and other reconciliation items. The latter primarily comprises reallocations between external net revenue and other income totalling CHF 15.2 million (previous year: CHF 13.4 million), which arise from differences in the account structures used for internal and external reporting. This column also includes foreign currency effects resulting from the use of alternative average exchange rates applied in management reporting that differ from those required under IFRS Accounting Standards. Corporate comprises the financial and non-strategic investments that cannot be directly allocated to the value chain, as well as the activities of the Group headquarters, including Alpiq Holding Ltd. and the functional units.

2025: Information by segment

2024: Information by segment

2025: Information by geographical area

2024: Information by geographical area

Net revenue from external customers by country is allocated based on the customer’s country of domicile. Those countries in which Alpiq generated the most net revenue in the reporting period are presented separately in this segment information. There were no transactions with any single external customers that amounted to 10% or more of the consolidated net revenue of the Alpiq Group. Non-current assets consist of property, plant and equipment (including right-of-use assets), intangible assets and investments in the respective countries.

2.2 Net revenue

The Alpiq Group’s net revenue comprises revenue from contracts with customers (IFRS 15) and the results of energy and financial derivatives measured at fair value (IFRS 9).

2025: Disaggregation of net revenue

2024: Disaggregation of net revenue

Accounting policies

Alpiq generally satisfies its performance obligations as principal. However, for performance obligations related to the transmission of energy, Alpiq acts as agent in all represented markets. Where Alpiq acts as agent, revenue is recognised net of the corresponding costs.

Revenue from energy and grid services

Revenue from energy supply contracts that qualify for the “own use exemption” under IFRS 9 is recognised over the period agreed for the completion of performance. However, if Alpiq has a right to consideration that directly reflects the value of the energy already delivered to the customer, Alpiq applies the practical expedient and recognises revenue in the amount that can be invoiced. For contracts in which Alpiq sells a proportionate share of a power plant’s energy production, revenue is recognised over time in line with the pattern of the related costs.

Revenue from stand-ready obligations to deliver ancillary services is recognised on a straight-line basis during the period in which Alpiq is available to render these services. Revenue for called ancillary services is recognised when the energy is delivered. 

Revenue from other services

Revenue from other services from contracts with customers is recognised generally over the time period over which the performance obligation is satisfied on a straight-line basis. However, Alpiq applies the following practical expedient: if Alpiq has a right to consideration that directly corresponds to the value to the customer, then revenue is recognised in the amount that can be billed.

Practical expedients applied regarding revenue from contracts with customers

Alpiq exercises the practical expedient provided in IFRS 15 and, wherever possible, opts not to disclose the remaining performance obligations at the end of the reporting period. After application of this practical expedient, the remaining performance obligations disclosed by Alpiq at the end of the reporting period are not significant.

Alpiq applies the practical expedient and does not capitalise incremental costs of obtaining a customer contract, as far as these costs would be amortised within one year. Due to the application of this practical expedient, Alpiq did not disclose any significant costs of this type.

Income from energy and financial derivatives

Energy and financial derivatives are measured at fair value through profit or loss. Changes in the fair value of derivatives that relate to Alpiq’s energy trading, optimisation or hedging activities – including foreign currency derivatives used to hedge energy transactions in foreign currencies – are recognised in net revenue in the period in which they arise. Revenue from derivative trading comprises net realised gains and losses from settled contracts as well as unrealised fair value changes on open positions. For further details on measurement, refer to note 3.2. Derivatives used for treasury and financing purposes are reported in the financial result.

2.3 Energy and inventory costs

The item “Other energy and inventory costs” comprises mainly water taxes, concession fees and plant maintenance costs.

2.4 Employee costs and employee benefits

Number of employees at the reporting date

Defined benefit plan

The Group operates a number of pension schemes as required by law. The group companies in Switzerland participate in PKE Pensionskasse Energie, a legally independent pension scheme that meets the criteria of a defined benefit plan in accordance with IAS 19. Employees of foreign subsidiaries are generally covered by state social security schemes or independent defined contribution pension plans in accordance with national practices. These plans meet the criteria of a defined contribution plan according to IAS 19.

PKE-CPE Vorsorgestiftung Energie

PKE Pensionskasse Energie is a pension fund with the legal form of a foundation and pension fund under the Swiss Civil Code (ZGB) and the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG). The objective of the foundation is to provide occupational benefits in accordance with the BVG and its ordinances, protecting the employees of the affiliated companies and their families and survivors against the financial consequences of old age, invalidity and death. The Board of Trustees is the most senior governing body of PKE Pensionskasse Energie. It is composed of an equal number of employee and employer representatives of the affiliated companies and constitutes itself. The benefits provided by PKE Pensionskasse Energie and their financing, the organisation and administration and the relationship with the affiliated companies, the active insured members and the pensioners are defined in the pension fund and organisational regulations.

The plan assets are invested by PKE Pensionskasse Energie jointly for all affiliated companies, which share the actuarial and investment risks of the pension fund. The Board of Trustees is responsible for the investment of the plan assets. The organisation of the investment activities and the related competencies are specified in the investment regulations and investment strategy. The pension fund is exposed to actuarial and investment risks. In the event of underfunding, the Board of Trustees, in collaboration with a recognised actuarial expert, implements suitable measures to eliminate the underfunding. If necessary, the interest rate on the retirement savings capital, the financing and the benefits in excess of the minimum requirement under BVG may be adjusted to bring them into line with the funds available. If other measures are not sufficient, PKE Pensionskasse Energie may require the employer and the employee to pay additional contributions to eliminate the underfunding.

Defined benefit liabilities / assets in the balance sheet

Reconciliation of net defined benefit liabilities / assets

Changes in the present value of the defined benefit obligation

The weighted average duration of the defined benefit obligation at the reporting date is 12.6 years (previous year: 13.2 years).

Changes in the fair value of the plan assets

Asset classes of plan assets

Accounting policies

The defined benefit obligation is calculated annually by independent pension experts using the projected unit credit method. Under this method, benefits are attributed to periods of service, taking into account benefits accrued at the reporting date as well as expected future salary and pension increases. Mortality assumptions are derived from the Continuous Mortality Investigation (CMI) model with generation tables, reflecting long-term trends in mortality rates. The net interest result is recognised in finance costs / income. Actuarial gains and losses are recorded in other comprehensive income within equity. Past service costs and remaining employee benefit expenses are recognised in the income statement as employee costs.

As a rule, all plans are funded by both employer and employee contributions. Employer contributions paid or owed to pension schemes that provide defined contribution pension plans are recognised directly in the income statement.

Actuarial assumptions

Sensitivity analysis

In each case, the sensitivity analysis takes into consideration the influence on the net defined benefit obligation in the event that one assumption changes while all other assumptions remain unchanged. This approach does not take into account that some assumptions are dependent on others.

Expected contributions by the employer and plan participants for the next period

Employer social security contributions are estimated at CHF 14.4 million and employee contributions are estimated at CHF 8.9 million for 2026.

2.5 Finance costs and finance income

2.6 Income tax

Reconciliation

Income tax expense charged to the income statement

Change in deferred tax assets and liabilities

Deferred tax assets and liabilities by origination of temporary differences

At 31 December 2025, individual subsidiaries held tax loss carryforwards totalling CHF 195.8 million (previous year: CHF 201.3 million), which are available for offsetting against future taxable profits. Of these, the Alpiq Group has not recognised tax benefits on tax loss carryforwards of CHF 99.0 million (CHF 106.4 million) in the balance sheet item “Deferred tax assets”, as these are recognised only to the extent that realisation of the related tax benefit is probable. The average tax rate on tax loss carryforwards not eligible for capitalisation is 16.3% (17.9%). These tax loss carryforwards expire in the following periods:

In addition, there are unrecognised deductible temporary differences totalling CHF –0.8 million (CHF 1.9 million).

Global minimum corporate taxation

Under the OECD Inclusive Framework, more than 140 jurisdictions agreed to enact a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. Pillar Two introduces a global minimum Effective Tax Rate (ETR), where multinational groups with consolidated revenue of more than EUR 750.0 million are subject to a minimum ETR of 15% on income arising in low-tax jurisdictions. Various jurisdictions have enacted corresponding legislation with effect from 1 January 2024. In Switzerland, the Qualified Domestic Minimum Top-up Tax (QDMTT) applies to financial years beginning on or after 1 January 2024, while the Income Inclusion Rule (IIR) applies to financial years beginning on or after 1 January 2025.

For the financial year 2025, the Alpiq Group applied the transitional CbCR safe harbour provisions in most jurisdictions. In jurisdictions where the safe harbour is not applied, the Group performed a jurisdiction-level Pillar Two assessment in accordance with the OECD GloBE rules. Based on these assessments, any potential impacts arising from BEPS 2.0 Pillar Two are not expected to have a material effect on the Group’s income tax expense or effective tax rate.

2.7 Earnings per share

No circumstances exist that would lead to a dilution of earnings per share.

3.1 Financial risk management

General principles

Risk management is integral to the successful strategic, operational and financial management of Alpiq Group, and management of risk is crucial for its financial performance. Robust and comprehensive risk governance is therefore both a business and a strategic necessity.

The principles of the Group’s risk management policy are established by the Board of Directors. The Executive Board is responsible for their development and implementation and the Risk Management Committee monitors compliance with the principles and policies. The principles of risk management in the Alpiq Group are outlined in the Group Risk Policy, which comprises guidelines for entering into, measuring, managing and mitigating business risks, and specifies the organisation and responsibilities related to risk management. The responsible units manage their risks within the framework of the risk management policy and the limits defined for their areas of activity. The objective is to maintain a reasonable balance between the business risks incurred, earnings generated and risk-bearing equity.

The Group Risk Policy governs a number of directives divided into three main categories: Energy Risk Management, Business Risk Management and Financial Risk Management. The Energy Risk Management directives define the processes and methods to manage market and credit risks in the energy business. They also regulate the management of liquidity fluctuations caused by trading activities on stock exchanges and under bilateral arrangements (over-the-counter; OTC) to settle margin differences. The Business Risk Management directives govern the annual risk assessments, the process for approval of new energy products and the definition and monitoring of measures to reduce exposure to operational and strategic risks. They also define the principles of the hedging strategy for energy production trading books. The Financial Risk Management directive defines the substance, organisation and system for financial risk management within the Alpiq Group, including management of financing, working capital, liquidity, foreign currency and interest rate risks.

The Risk Management functional unit is responsible for the overarching enterprise risk management and reports to the CFO. It provides methods and tools for implementation of risk management and actively steers energy-related risks. The unit ensures timely reporting to the Board of Directors, Executive Board and the Risk Management Committee. During the annual business risk assessment process, strategic and operational risks throughout the Group are recorded and assessed, and then assigned to the identified risk owners for mana­gement and monitoring. The Risk Management functional unit monitors implementation of the measures. Exposure limits are set for market, credit and liquidity risks, which are adjusted in the context of the company’s overall risk-bearing capacity and with compliance monitored on an ongoing basis.

Energy risk

The management of energy risk covers credit risks, liquidity risk and market risks. Although market, credit and liquidity risks are addressed in separate directives, the three are interdependent and need to be managed with an integrated approach. This does not imply that each risk factor is of equal weight or importance. Whereas market or credit risk potentially results in effective losses, liquidity risk impacts cashflow and operational capital temporarily (until the cash collateral is returned).

Credit risk

Credit risk is managed primarily by application of rating-based credit limits. The Alpiq Group classifies counterparties or groups of counterparties (with similar risk characteristics) in risk categories (AAA to CCC) based on probability of default. Once established, these ratings are applied as the basis for setting credit limits. Such limits may be increased if collateral (such as guarantees, advances or insurance cover) is provided. The ratings of active counterparties are reviewed periodically, and credit limits are adjusted where appro­priate. Contracts are entered into only with counterparties that meet the requirements outlined in the Credit Risk Directive.

Credit risk management deals with potential losses arising from business partners’ inability to meet their contractual obligations to the Alpiq Group. It encompasses all business units and subsidiaries that transact significant business volumes with external counterparties. It entails regular monitoring of outstanding receivables from counterparties and their expected future developments, as well as analysis and monitoring of the creditworthiness of new and existing counterparties. In addition to energy derivatives recognised as financial instruments on the balance sheet, credit risk management also covers physical receipt and delivery contracts.

The maximum credit risk corresponds to the carrying amount of the financial assets and was calculated at CHF 3,687.5 million at 31 December 2025 (previous year: CHF 3,981.6 million). The replacement values of energy derivatives and receivables, and thus the credit risk associated with several counterparties in various countries, slightly decreased compared to the previous year. Overall credit risk is a consistent but not significant input factor in fair value measurement.

In addition to the strict monitoring and management of credit risk by means of internal rating-based credit limits per counterparty and the retention of collateral, Alpiq has various counterparties and customers in different countries, which prevents a concentration of risk. Thus, credit risk for derivatives and receivables is broadly diversified and there was no concentration of risk with any counterparty at year end. Information about the effect of credit risk on receivables is disclosed in note 4.5.

Offsetting of financial assets and liabilities

A substantial portion of the Group’s energy contracts is subject to master netting arrangements. Such arrangements are commonly used in energy trading to mitigate counterparty credit risk and to reduce the volume of gross settlement cash flows. Financial assets and financial liabilities with the same counterparty are presented on a net basis in the statement of financial position only when the Group has a legally enforceable right to offset the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Financial collateral

Additional collateral, such as guarantees, variation margin payments or insurance cover, is obtained where necessary in order to hedge the risk of the failure of one party to fulfil its part of the deal and defaulting on its contractual obligations. The amount to be provided changes according to the net obligation calculated every day on the basis of price fluctuations. As a rule, the collateral held by the Alpiq Group covers both un­recognised energy transactions involving physical delivery and transactions recognised as financial instruments. Financial collateral received and issued in connection with bilateral agreements to settle margin differences is presented as follows:

Liquidity risk

Margin agreements are commonly used on energy commodity exchanges and among energy traders to reduce counterparty risk. A margin agreement is a collateralisation agreement to ensure both parties’ performance. Consequently, Alpiq has to provide or can demand significant collateral in the form of cash or bank guarantees depending on energy price movements and related to the value of the net obligation. In addition, these can result in significant changes in liquidity, as both Alpiq and its counterparties are in most cases contractually entitled to replace cash collateral with bank guarantees in the short term and vice versa. The Alpiq Group manages such variable liquidity requirements by means of an early warning system, con­tinuous balancing of the underlying positions, maintenance of sufficient liquidity resources and committed credit lines from banks. The role of liquidity management is to plan, monitor, provide and optimise liquidity of the Alpiq Group on a monthly rolling basis.

The anticipated cash flows of financial liabilities and derivative financial instruments are disclosed in the table below. Where the intention exists to refinance loans at the end of the contract term but refinancing has not yet been contractually secured, a cash outflow on maturity is assumed. Accordingly, actual cash flows can differ significantly from the contractual maturities. The cash flows from derivatives are presented net when netting arrangements are in place with counterparties and the amounts are expected to be settled net. Depending on the future changes in value of the derivatives until maturity, the effective cash flows may deviate significantly from the amounts reported. In order to demonstrate the effective liquidity risk from derivative financial instruments, the cash inflows and outflows from contracts with positive and negative replacement values are shown in the following table.

2025: Maturity analysis of financial liabilities and derivative financial instruments

2024: Maturity analysis of financial liabilities and derivative financial instruments

Market risk

The Alpiq Group’s exposure to market risk comprises primarily energy price risk, foreign currency risk and interest rate risk. These risks are monitored on an ongoing basis and managed using financial instruments. Market risk is measured in accordance with the Market Risk Directive; handling of currency risk and interest rate risk is defined in the Financial Risk Directive. The Market Risk Directive sets out rules on taking, measuring, limiting and monitoring risks. The Risk Management Committee monitors compliance with risk limits through regular reports provided by the Risk Management functional unit.

Energy price risk

Energy price risk represents the risk that fluctuations in energy prices adversely affect the Alpiq Group’s earnings and financial position. The risk arises primarily from changes in market prices, price volatilities and correlations between different markets and products and includes market liquidity risk, i.e. the risk that open energy positions cannot be closed, or can only be closed at unfavourable terms, due to insufficient market liquidity. Contracts entered into for the purpose of receiving or delivering energy in accordance with the Group’s expected purchase, sale or usage requirements (“own-use contracts”) are generally not recognised as financial instruments unless the fair value option is applied in accordance with IFRS 9. In addition to hedging transactions, the Group enters into energy transactions to optimise its power plant portfolio and engages in energy derivatives trading. The energy derivatives mainly consist of forward and futures contracts and are measured at fair value based on the difference between the contractually agreed forward prices and the prevailing forward prices at the reporting date. A significant portion of the recognised replacement values relates to optimisation positions, with positive and negative fair values largely offsetting each other. Energy price risks are managed through clearly defined responsibilities and risk limits in accordance with the Market Risk Directive. Compliance with these limits is monitored on a regular basis and reported to the Risk Management Committee, the Executive Board and the Board of Directors. Risk positions are measured and monitored using industry-standard Value at Risk (VaR) methodologies.

Foreign currency risk

The Alpiq Group seeks wherever possible to mitigate foreign currency risks through natural hedging of operating income and expenses denominated in foreign currencies. The remaining foreign currency risk is hedged by means of forward transactions in accordance with the Group’s Financial Risk Directive. Foreign currency risk arising from energy generation or purchasing is contractually transferred to the counterparty wherever possible. Where this is not possible or is only partly possible, forward currency contracts with a medium-term hedging horizon are deployed to manage exposure centrally on the market in line with the Group’s Financial Risk Directive. Hedge accounting is used to avoid fluctuations in results. The foreign currency derivatives are all OTC products. The fair values are calculated on the basis of the difference between the contractually fixed forward prices and forward prices applicable at the reporting date. Net investments in foreign subsidiaries are also exposed to changes in foreign exchange rates, although the difference in inflation rates should offset these changes in the long term. Investments in foreign subsidiaries (translation risks) are therefore not hedged.

Interest rate risk

The risks arising from volatility in interest rates relate to the interest-bearing financial assets and liabilities of the Alpiq Group. According to the Group’s Financial Risk Directive, liquidity is invested for a maximum of two years. This means that a change in interest rates applied to interest-bearing assets has an impact on financial income. The funding required for the business is obtained on a long-term basis at fixed interest rates. Financing instruments with variable interest rates, particularly those that are long-term, are generally hedged by means of interest rate swaps. The interest rate derivatives are all OTC products. The fair value is determined by discounting the contractually agreed payment streams with current market interest rates.

Sensitivity analysis

To illustrate the sensitivity of the Alpiq Group’s financial results to market risks, the effects of reasonably possible changes in the market risks listed above are set out in the table below. The sensitivities are based in each case on financial instruments recognised on the reporting date. The possible annual percentage changes in the fair value of energy derivatives are derived from the commodity market prices for electricity, gas, coal and oil over the past year. The sensitivities are calculated by applying maximum deviations from the mean with a 99% confidence level. Taking into consideration historical fluctuations, the reasonably possible changes in foreign currency prices are estimated at 5%. Interest rate swap sensitivity is shown as the effect on the change in fair value that would arise from a 1% parallel shift in the yield curve. Alpiq quantifies each type of risk on the assumption that all other variables remain constant. The effects are shown before tax.

3.2 Financial instruments

Carrying amounts and fair values of financial assets and liabilities

The table below presents the fair values of the Group’s financial assets and financial liabilities. Cash and cash equivalents, trade receivables, trade payables and other receivables and liabilities are excluded from the table, as their carrying amounts do not differ materially from their respective fair values.

Fair value hierarchy of financial instruments

The fair value hierarchy shown below was used to classify the financial instruments:

Level 1:
Quoted prices in active markets for identical assets or liabilities

Level 2:
Valuation model based on prices quoted in active markets that have a significant effect on the fair value

Level 3:
Valuation models utilising inputs that are not based on quoted prices in active markets and which have a significant effect on the fair value

At the reporting date, the Alpiq Group measured the following assets and liabilities at their fair value or disclosed a fair value.

The energy, currency and interest rate derivatives comprise only OTC products, the majority of which are classified as Level 2. Fair value of energy derivatives is determined using a price curve model. The observable input factors (market prices) in the price curve model are supplemented by hourly forward prices, which are arbitrage-free and compared with external price benchmarking on a monthly basis.

The fair value of the loans payable correspond to the contractually agreed interest and amortisation payments discounted at market rates.

Level 3 energy derivatives

The following table shows the development of Level 3 energy derivatives:

Transfers from Level 2 to Level 3 relate to energy derivatives measured on the basis of input factors that are no longer observable in an active market due to decreased market activity. Transfers out of Level 3 relate to energy derivatives measured on the basis of input factors that became observable in the financial year. Alpiq always applies reclassifications between Level 2 and Level 3 at the end of the reporting period. Both in the reporting year and during the previous year, no transfers between Level 1 and 2 took place.

A change of EUR 1 in the price of the underlying commodity would increase or decrease the fair value of Level 3 instruments by CHF 8.0 million. The sensitivity analysis does not consider any interdependencies between different commodities. Furthermore, it reflects only the standalone effect on these instruments and does not include any offsetting effects from related hedging positions.

Development of day one gains and losses

Measurement of financial instruments that rely on valuation inputs not directly observable in active markets may give rise to differences between the fair value determined at initial recognition and the transaction price. Such differences (“day-one gains or losses”) are deferred at inception and recognised in profit or loss over time, typically on a straight-line basis, until the underlying valuation inputs become observable or the instrument is derecognised.

The following table shows the reconciliation of the change in deferred day one gains and losses. These items relate entirely to Level 3 energy derivatives.

Expense / income related to financial assets and liabilities

For information on the impairment of trade receivables, see note 4.5.

Accounting policies

Financial investments, securities and derivatives are measured at fair value through profit or loss. All other financial assets and liabilities are measured at amortised cost. The Alpiq Group does not have financial instruments measured at fair value through other comprehensive income.

Financial assets and liabilities at fair value through profit or loss

Changes in value of the financial instruments measured at fair value are recognised through profit or loss in the financial result, with the exception of energy derivatives and currency derivatives concluded in connection with the hedging of energy transactions. Changes in the fair value of derivatives in connection with the energy business are presented in net revenue.

In principle, contracts entered into for the purchase or sale of energy for the Group’s own use are not recognised in the balance sheet until delivery. This also includes contracts to buy or sell non-financial items that can be settled net, provided they are entered into and continue to be held for the purpose of receipt or delivery in accordance with the Group’s expected purchase, sale or usage requirements. By way of exception, Alpiq irrevocably designates some of these transactions as contracts measured at fair value through profit or loss, if otherwise an accounting mismatch would occur.

Hedging is usually carried out using physical forwards or futures contracts and is related mainly to Alpiq’s own asset portfolio in Switzerland. Such non-speculative hedging transactions are treated as own-use contracts. They are not reported as derivative financial instruments measured at fair value, but rather as executory contracts. Revenue or costs from such activities is recognised on delivery. Margin calls related to these futures are recognized as other receivables or other liabilities.

Financial assets and liabilities at amortised cost

With the exception of trade receivables, financial assets and financial liabilities at amortised cost are initially recognised at fair value plus or minus direct transaction costs. Trade receivables are measured at transaction price.

For the subsequent measurement of financial assets at amortised cost, any impairments are calculated using the expected credit loss model according to which losses on unsecured financial assets expected in future are also recognised. Impairment losses expected in the future are determined using publicly available probability of default, which takes into account forward-looking information and historical probabilities of default. For financial assets, losses that are expected to occur in the next 12-month period are generally recognised. If the credit risk increases significantly for specific counterparties, impairment is recognised on the assets affected over the entire residual term of the asset. In accordance with IFRS 9, the simplified approach is applied to trade receivables for the measurement of the expected losses by recognising the lifetime expected credit losses (see note 4.5).

Cash flow hedge accounting

Foreign currency hedges

Foreign currency positions arising from the sale of Swiss production capacity in euros are hedged with forward contracts based on expected transaction volumes. The hedge accounting programme applied up to year-end 2024 was subsequently terminated, with accumulated amounts in other comprehensive income being recycled to profit or loss when the underlying transactions occur. In 2025, Alpiq introduced a new hedge accounting programme that continues to designate the spot component as the hedging instrument, while also applying the cost-of-hedging approach whereby changes in the forward components are recognised in other comprehensive income and reclassified upon realisation of the hedged transactions. At the reporting date, no ineffectiveness was identified in relation to the foreign currency hedges. The underlying forecasted transactions will affect the income statement in the years 2026 to 2030.

Change in cash flow hedge reserves

Interest rate swaps

In previous years, interest rate swaps were used to hedge the interest rate exposure arising from project financing facilities in Italy. In 2024 and 2025, parts of these financing facilities were repaid, resulting in the partial discontinuation of the associated hedge accounting relationships. Besides the remaining interest rate swaps related to these facilities, one additional interest rate swap is in place for a partner power plant.

3.3 Financing

Capital management

Capital management includes financing and debt structuring, oversight of trade financing activities, management and control of guarantees, cash and liquidity management, and safeguarding the Group against the risk that Alpiq Holding Ltd., or any other group company becomes unable to meet its payment obligations. All these activities are governed by the Financial Risk Directive.

As part of the budgeting and planning process, the Board of Directors takes note of the financial targets and the required target liquidity on an annual basis. Target liquidity consists of risk capital and required working capital. In addition, the Board of Directors is regularly provided with reports on the Group’s liquidity position and compliance with the defined targets.

Alpiq Holding Ltd. procures a significant portion of financing centrally for the Alpiq Group. The Swiss capital market remains the main source of financing. The aim pursued in financing the Group is that the level of financial liabilities contributes to a solid credit rating in line with industry standards.

The capital management strategy in principle focuses on the Group’s reported consolidated equity and net debt-to-EBITDA ratio. At 31 December 2025, the Group reported an equity ratio of 60.8%, which is 2.5 percentage points above the previous year.

The net debt-to-EBITDA ratio before non-operating effects is calculated and compares with the previous year as follows:

Financial liabilities