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Notes to the Consolidated Financial Statements

1 Business activities

BKW AG, Bern (CH), along with its Group companies (hereinafter “BKW” or the “BKW Group”), is an international energy and infrastructure company. Its company network and extensive expertise allow it to offer its customers a full range of overall solutions. The Group plans, builds and operates infrastructure to produce and supply energy to businesses, households and the public sector, and offers digital business models for renewable energies. The BKW Group portfolio of services comprises everything from engineering consultancy and planning for energy, infrastructure and environmental projects, through integrated offers in the field of building technology, to the construction, servicing and maintenance of energy, telecommunications, transport and water networks.

2 Basis of preparation

2.1 General principles

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). They provide a true and fair view of the financial position, the results of operations and the cash flows of BKW. The consolidated financial statements also comply with Swiss company law. The closing date for the consolidated financial statements is 31 December. The consolidated financial statements are presented in Swiss francs (CHF).

The consolidated financial statements have been prepared on the historical cost basis. Exceptions are described in the accounting and valuation principles.

2.2 Change in presentation

In order to improve readability of this report, the accounting and valuation principles that were stated in a separate note in previous years have now been incorporated into the relevant notes for the items in the balance sheet and income statement.

2.3 Adoption of new standards and interpretations

BKW has applied a number of amended standards and interpretations since 1 January 2020 that have no material effect on BKW’s financial position, results of operations or cash flows.

2.4 Future adoption of new standards and interpretations

The following new and amended standards and interpretations had been published by the balance sheet date, but will not be applied until subsequent financial years. BKW intends to apply the changes from the date on which they enter into force (entry into force for financial years beginning on or after the dates in brackets):

No material effects on BKW’s consolidated financial statements are expected.

3 Consolidation

3.1 Consolidation principles

The consolidation is based on the financial statements of the individual Group companies, which have been drawn up according to uniform principles of valuation and presentation. Intragroup balances, transactions, profits and expenses are eliminated in full.

All Group companies use 31 December as their closing date. The closing date for some associates differs from that of BKW since these companies close their accounts on 30 September in line with the hydrological year. The closing date for consolidation of these companies is set at 30 September. Adjustments are made for material transactions that occur between the closing date of the companies and the closing date of BKW.

3.2 Scope of consolidation

Group companies

Group companies are included in the consolidated financial statements in their entirety from the effective date of acquisition. There are no material restrictions on the transfer of funds from subsidiaries to the parent company.

Joint arrangements

Companies over which there is joint control are treated as joint ventures or joint operations. Joint operations are accounted for in the consolidated financial statements by recognising the Group’s share of the assets and liabilities and of the revenues and expenses. The Group’s joint ventures are accounted for using the equity method.

Associates

Investments in companies in which BKW is able to exercise significant influence but not overall control are classified as associates and accounted for using the equity method. A significant influence is generally held to be a share of voting rights of between 20 and 50 %. Rights agreed in contract may in some circumstances mean that a significant influence can be exerted even though the share of voting rights is smaller than 20 %. This applies in particular in the case of partner plants.

Partner plants comprise companies that build and operate power plants or that manage energy procurement rights and plan and operate nuclear storage facilities. The energy produced by partner plants and other contractually agreed services are purchased at annual cost (including interest on capital). Partner plants are assigned to the Energy business area.

3.3 Foreign currency translation

The reporting currency is the Swiss franc (CHF). BKW records transactions in foreign currencies at the prevailing exchange rates on the transaction date. Exchange rate gains and losses arising from such transactions and the translation of foreign currency balances on the balance sheet date are charged to the financial result.

Foreign-currency financial statements of Group companies outside Switzerland are converted to Swiss francs according to the following principles:

Closing date 31.12.2019

Closing date 31.12.2020

Average 2019

Average 2020

Eurozone

1 EUR

1.0854

1.0802

1.1127

1.0704

Norway

100 NOK

11.0039

10.3168

11.3030

9.9958

Goodwill and adjustments to fair value made in the apportionment of purchase prices to the carrying amounts of identified net assets of companies in foreign currency are carried in the foreign currency.

4 Measurement uncertainties

Preparation of the financial statements in accordance with the applicable accounting standards necessitates the use of estimates and assumptions that affect the reported amounts of assets, provisions, liabilities and contingent liabilities on the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based both on past findings and on the best possible assessment of future developments. Actual results may differ from these estimates. Estimates and assumptions are regularly reviewed, and changes are recognised in the period in which they were identified.

4.1 Impairment of non-financial non-current assets

The recoverable amount calculated for the purposes of impairment testing of non-financial non-current assets is the higher of the fair value minus sale costs and value in use (present value of estimated future cash flows). The calculation of the recoverable amount is reliant to a significant extent on estimates of the expected future cash flows from use, long-term growth rates, useful life of assets and discounting rates or estimates of the potential net sale price of the asset. The actual results may differ significantly from these estimates.

4.2 Mühleberg Nuclear Power Plant/provisions for nuclear waste disposal

Measurement of the provision for nuclear waste disposal is material for the purposes of assessing BKW’s balance sheet and income statement. Detailed costs for decommissioning nuclear power plants and nuclear waste disposal are jointly calculated by the industry and updated every five years in accordance with the Ordinance on the Decommissioning and Waste Disposal Fund for Nuclear Power Plants (STENFO). These cost calculations are reviewed by independent cost specialists and the Swiss Federal Nuclear Safety Inspectorate (ENSI). The last scheduled estimate of decommissioning and disposal costs (KS16) took place in 2016. The adjustment was carried out at the request of and in accordance with the strict requirements of the Administrative Commission for the Decommissioning Fund for Nuclear Facilities and Waste Disposal Fund for Nuclear Power Plants (AC STENFO) and in collaboration with swissnuclear. The KS16 estimates the overall costs (overnight costs) in the baseline variant for the Mühleberg Nuclear Power Plant to be CHF 3.06 billion. On this basis, BKW assumes overnight costs of CHF 3.0 billion for calculating its provisions. BKW considers it most likely that the “combination repository” (cost-reducing) and “conventional dismantling” (cost-increasing) scenarios envisaged in KS16 will be implemented. In addition, BKW takes plant-specific costs into account. The difference between BKW’s estimated overnight costs and the provisions recorded on the balance sheet as at 31 December 2020 in the amount of CHF 1.4 billion is due to costs of around CHF 1,032 million that had already been paid by the end of 2020 and to discounting effects of CHF 520 million.

Following a review of KS16, AC STENFO increased the cost estimates including through flat-rate safety surcharges. The cost adjustments made by AC STENFO are not operationally justified from BKW’s perspective. For this reason, BKW is keeping to the cost estimates submitted by the industry association swissnuclear and to its own estimates for recognition of nuclear provisions on the balance sheet.

Work in connection with decommissioning is expected to last until 2034. Costs for operations related to the repository and monitoring of stored nuclear materials are expected to be incurred until 2126.

On 6 November 2019, the Federal Council approved the revised SEFV with new parameters for inflation and investment returns which will determine the size of contributions. Inflation was decreased from 1.5 % to 0.5 %, and the return on investment from 3.5 % to 2.1 %. AC STENFO issued its definitive decision on the contributions for 2017 – 2021 in March 2021. Compared with the contributions provisionally assessed to date, BKW’s annual contributions to the decommissioning fund for 2020/2021 will be CHF 6.7 million lower, while contributions to the waste disposal fund will be CHF 13 million higher.

No macroeconomic studies are available for the period up to 2126 to provide parameters for calculation of long-term provisions. For this reason, BKW applies parameters that have been agreed with other nuclear power plant operators for the purposes of decommissioning and disposal. A rate of 1 % is applied to long-term inflation, based on the Swiss National Bank’s target range of 0 – 2 %. Based on historical actual yields on long-term government bonds, an expected real interest rate of 1.75 % has been estimated, producing a nominal discount rate of 2.75 %. Due to the short-term timeframe (to 2024), 0.5 % is now used for both the interest rate and for inflation for the post-operational phase.

Changes to cost calculations and the statutory requirements for nuclear waste disposal may have a material effect on the Group’s financial position and results of operations. The inflation and discount rate parameters are also particularly relevant for determining the level of provisions for decommissioning (expected costs up to 2034) and nuclear waste disposal (expected costs up to 2126). In the event of an increase/decrease in the assumptions shown below, provisions as at 31 December 2020 would vary as follows (+ increase in provisions/– decrease in provisions):

CHF millions

Inflation + 0.5 %

Inflation – 0.5 %

Discount rate + 0.5 %

Discount rate – 0.5 %

Decommissioning

30.2

– 28.7

– 19.0

20.1

Waste disposal

114.0

– 91.4

– 86.8

108.7

Total

144.2

– 120.1

– 105.8

128.8

4.3 Provision for onerous energy procurement contract Wilhelmshaven

BKW holds a 33 % stake in the Wilhelmshaven coal power plant. The partners are under an obligation to take on the energy produced according to their stake. Due to the higher estimated production costs compared with the expected electricity market prices a provision for the obligation to purchase energy had to be made in the past.

In January 2020, the German government enacted the Coal Phase-Out Act, which set a timetable for phasing out coal by 2038. The Coal Phase-Out Act provides for compensation to lignite and coal power plant operators. BKW assumes that expected capacity bottlenecks will result in the continued operation of the latest generation of coal power plant, such as Wilhelmshaven, until the end of 2038. Moreover, BKW expects that operators of coal power plants will not only receive payments defined via the auctions, but will receive similar compensation payments to lignite power plant operators. Therefore, a compensation payment by the German Government was included in determining the provision. The estimate of future income and expenses depends largely on the estimation of future energy prices, the estimation of the power plants’ production costs, the assumed discount rates and the estimated size of the compensation payment. These estimations and assumptions constitute uncertainties and can deviate significantly from actual results. As at the end of 2020, the carrying amount of the investment was CHF 436.3 million and the provision was CHF 262.8 million.

4.4 Pension plans

The pension liabilities arising from defined benefit pension plans are calculated based on actuarial assumptions that may not reflect reality and hence may have an impact on BKW’s results of operations and cash flows. The actuarial assumptions used in the calculation and a corresponding sensitivity analysis are disclosed in Note 26.

4.5 EICom legal proceedings

The tariffs that BKW is permitted to charge to its customers for grid usage and energy are reviewed in part by the Federal Electricity Commission (ElCom). At present, there are several proceedings awaiting decisions by various bodies. The main object of the proceedings is to rule on the chargeable capital and operating costs. Decisions issued by the court of last instance may have implications for BKW’s future cash flows.

In February 2021, ElCom established the basis for the final compensation that Swissgrid must pay to BKW for its previous share of the distribution grid systems. This means that eight years after the transfer of grid systems to Swissgrid, all pending proceedings regarding the value of former BKW installations have now been drawn to a close (see also Note 40).

5 Business combinations

Business combinations in 2020

CHF millions

Total

Cash and cash equivalents

8.1

Trade accounts receivable and other receivables

6.7

Other current assets

8.5

Financial assets

0.7

Property, plant and equipment

4.6

Intangible assets

5.3

Deferred tax assets

1.3

Current liabilities

– 12.2

Financial liabilities

– 4.5

Provisions

– 2.0

Deferred tax liabilities

– 0.6

Pension liability

– 8.7

Fair value of acquired net assets

7.2

Non-controlling interests

– 1.4

Fair value of interests already held

– 0.9

Goodwill

27.2

Purchase price

32.1

Cash and cash equivalents acquired

– 8.1

Contingent consideration

– 10.3

Deferred consideration

– 1.8

Cash outflow

11.9

BKW conducted a number of corporate acquisitions in the 2020 financial year. Due to the number of acquisitions and their key financial figures, aggregated figures are shown with no separate presentation of individual business combinations. The values for the transactions listed are provisional since the purchase price allocations have not been finalised.

In the Services segment, BKW acquired 100 % of the shares of each of Elektro Nikolai GmbH, Gloor Panzer AG and Sigren Engineering AG in the area of building solutions. In the area of infrastructure engineering in Austria, the company acquired 100 % of the shares of Witrisal GmbH.

In the Energy segment, BKW acquired an additional 16.21 % of the shares of Abonax AG for the area of Energy Sales (previous stake: 34 %) and therefore now holds 50.21 %.

The contingent consideration liabilities recognised on the acquisition date are due depending on the future economic growth of the companies.

The transactions generated total goodwill of CHF 27.2 million. The goodwill recognised is mainly attributable to the expected future synergies and the acquisition of a qualified workforce. The transaction costs amounted to CHF 0.1 million.

Had the companies already been acquired as at 1 January 2020, total operating revenue for the current year would have been CHF 36.4 million higher and the net profit CHF 1.8 million higher. Between the point at which the individual companies were fully consolidated and 31 December 2020, the acquired companies recorded cumulative total operating revenue of CHF 11.8 million and a total net profit of CHF 1.3 million.

CHF 27.1 million was paid for contingent consideration liabilities and CHF 19.5 million for non-contingent consideration liabilities for acquisitions made in the previous years.

Business combinations in 2019

CHF millions

ingenhoven architects

LTB Leitungsbau GmbH

swisspro

Miscellaneous

Total

Cash and cash equivalents

1.2

12.7

19.5

12.4

45.8

Trade accounts receivable and other receivables

21.6

7.1

54.5

11.8

95.0

Other current assets

11.8

22.4

21.1

11.6

66.9

Financial assets

0.0

0.1

3.9

0.6

4.6

Property, plant and equipment

4.5

28.1

20.8

13.3

66.7

Intangible assets

11.0

1.0

23.8

16.2

52.0

Deferred tax assets

0.0

0.0

6.4

2.0

8.4

Current liabilities

– 9.3

– 19.8

– 48.0

– 13.2

– 90.3

Financial liabilities

– 4.1

– 10.1

– 20.7

– 10.6

– 45.5

Provisions

– 1.1

– 1.6

– 3.5

– 0.9

– 7.1

Deferred tax liabilities

– 12.4

0.0

– 4.5

– 2.7

– 19.6

Pension liability

0.0

– 15.5

– 45.8

– 10.1

– 71.4

Fair value of acquired net assets

23.2

24.4

27.5

30.4

105.5

Non-controlling interests

– 2.4

– 2.4

Goodwill

62.4

23.6

102.2

64.6

252.8

Purchase price

85.6

45.6

129.7

95.0

355.9

Cash and cash equivalents acquired

– 1.2

– 12.7

– 19.5

– 12.4

– 45.8

Contingent consideration

– 19.4

– 10.0

– 18.3

– 47.7

Deferred consideration

– 2.8

– 3.9

– 8.5

– 7.6

– 22.8

Liabilities incurred

– 19.1

– 0.3

– 19.4

Cash outflow

43.1

29.0

91.7

56.4

220.2

In 2019 BKW acquired various companies and assigned them to the Services segment. The values for the transactions conducted in the previous year are provisional since the purchase price allocations had not been finalised. The purchase price allocations are now final and only resulted in very minor changes.

ingenhoven architects

In the engineering sector BKW had acquired 100 % of the shares in ingenhoven architects GmbH based in Düsseldorf (Germany) at the end of September 2019. The ingenhoven architects Group is assigned to the Services segment.

The contingent consideration liabilities recognised on the acquisition date are due depending on the future economic growth of the companies. The goodwill recognised is mainly attributable to the expected synergies and the acquisition of a qualified workforce. The transaction costs amounted to CHF 0.5 million.

Had the company already been acquired by 1 January 2019, total operating revenue for 2019 would have been CHF 15.4 million higher and the net profit CHF 5.1 million higher. Between the point at which the company was fully consolidated and 31 December 2019, the acquired company recorded total operating revenue of CHF 10.0 million and a net profit of CHF 4.2 million.

LTB Leitungsbau GmbH

In the infra services sector, BKW acquired 90 % of the shares in LTB Leitungsbau GmbH at the end of October 2019. Based in Radebeul (Germany), the company is active in transmission line construction and is assigned to the Services segment.

The goodwill recognised is mainly attributable to the expected synergies and the acquisition of a qualified workforce. The transaction costs amounted to CHF 0.8 million.

Had the company already been acquired by 1 January 2019, total operating revenue for 2019 would have been CHF 85.3 million higher and the net profit CHF 1.7 million higher. Between the point at which the company was fully consolidated and 31 December 2019, the acquired company recorded total operating revenue of CHF 22.8 million and a net profit of CHF 0.8 million.

swisspro

In the building solutions sector, BKW acquired 100 % of the shares in swisspro group AG, based in Oberkirch, in October 2019. swisspro Group is active in ICT and building automation solutions and electrical installation and is assigned to the Services segment.

The contingent consideration liabilities recognised on the acquisition date are due depending on the future economic growth of the companies. The goodwill recognised is mainly attributable to the expected synergies and the acquisition of a qualified workforce. The transaction costs amounted to CHF 0.4 million.

Had the company already been acquired by 1 January 2019, total operating revenue for 2019 would have been CHF 169.7 million higher and the net profit CHF 7.5 million higher. Between the point at which the company was fully consolidated and 31 December 2019, the acquired company recorded total operating revenue of CHF 62.2 million and a net profit of CHF 3.1 million.

Miscellaneous

In the 2019 financial year, BKW had conducted a number of other corporate acquisitions. All of the businesses acquired have been assigned to the Services segment. Due to the number of acquisitions, their key financial figures and their allocation to the same segment, aggregated figures are shown with no separate presentation of individual business combinations.

In the infrastructure engineering sector in Germany, BKW had acquired 100 % of the shares in Institut Gauer GmbH, Dr.-Ing. Gauer Ingenieurgesellschaft mbH, KMT Planungsgesellschaft mbH, KMT Port Consult GmbH, and osd GmbH. It had also acquired 100 % of the shares in the Austrian company Daninger + Partner Engineering GmbH, and the Swiss companies Kindschi Ingenieure und Geometer AG and Flotron AG. In Germany, Hascher Jehle Architektur, KFP Ingenieure and hydrodat were also acquired.

In the building solutions sector, 100 % of the shares in WAB Technique S.à r.l., Jaggi & Rieder AG, TECPLAN AG, Hensel AG Elektrotechnische Unternehmungen, ASAG Air System AG, b+s Elektro Telematik AG, Gebr. Bräm AG, pi-System GmbH, Monnet Holding Management SA and 70 % of the shares in R. Monnet & Cie SA were acquired in Switzerland.

The contingent purchase price liabilities recognised on the acquisition date are due depending on the future economic growth of the companies.

The transactions generated total goodwill of CHF 64.6 million. The goodwill recognised is mainly attributable to the expected future synergies and the acquisition of a qualified workforce. The transaction costs amounted to CHF 1.6 million.

Had the companies already been acquired as at 1 January 2019, total operating revenue for the current year would have been CHF 48.1 million higher and the net profit CHF 5.6 million higher. Between the point at which the individual companies were fully consolidated and 31 December 2019, the acquired companies recorded cumulative total operating revenue of CHF 50.1 million and a total net profit of CHF 4.7 million.

CHF 12.6 million was paid for contingent consideration and CHF 11.8 million for deferred consideration for acquisitions made in 2019 and earlier.

Accounting Policies

In the course of acquisitions, non-controlling interests are sometimes provided with put options, with BKW receiving call options under the same conditions. If this should cause BKW to receive economic ownership, the transaction is represented as though the shares in question had also been acquired. Otherwise, the non-controlling interest is recognised.

Acquisition-related transaction costs are recorded as “Other operating expenses”.

6 Segment reporting

Segments and segment results are defined on the basis of the management approach. In line with the strategy, BKW’s reporting lines are structured around the business areas Energy, Grid and Services. The CEO, who has prime decision-making authority, uses the operating result (EBIT) as the basis for allocating resources and measuring performance.

BKW operates the following three reportable business segments:

The column “Other” covers activities that are centrally managed within the Group; these largely consist of Group financing, real estate, fleet management, procurement, financial assets and tax. Some of the costs that arise in conjunction with the expansion of the business areas (acquisition/integration costs, technology development costs, etc.) are borne centrally.

Segment figures are determined in accordance with the same accounting and valuation principles that are applied for the Group-level presentation of consolidated figures. The prices for intercompany transactions (transfer prices) are based on the market price on the transaction date.

Information by business segment

2020 CHF millions

Energy

Grid

Services

Other

Consoli- dation

Total

External revenue

1,155.6

558.6

1,368.1

14.1

32.2

3,128.6

Net sales

1,109.3

478.6

1,346.9

0.9

0.0

2,935.7

Own work capitalised

4.8

35.0

0.9

1.0

32.2

73.9

Other operating income

41.5

45.0¹

20.3

12.2

0.0

119.0

Internal revenue

19.5

8.2

97.4

155.4

– 280.5

0.0

Net sales

14.2

0.7

89.3

0.1

– 104.3

0.0

Other operating income

5.3

7.5

8.1

155.3

– 176.2

0.0

Total operating income

1,175.1

566.8

1,465.5

169.5

– 248.3

3,128.6

Total operating expenses

– 899.5

– 287.2

– 1,321.4

– 184.1

242.6

– 2,449.6

Operating profit before depreciation, amortisation and impairment (EBITDA)

275.6

279.6

144.1

– 14.6

– 5.7

679.0

Depreciation, amortisation and impairment

– 74.0

– 89.7

– 59.8

– 23.2

3.4

– 243.3

Income from associates

16.2

22.8

0.0

0.0

0.0

39.0

Operating profit/loss (EBIT)

217.8

212.7

84.3

– 37.8

– 2.3

474.7

Financial result

– 32.0

Profit/loss before income taxes (EBT)

442.7

1 Other operating income was positively affected by a one-off compensation entitlement from Swissgrid of CHF 38.7 million for the expropriation of the transmission grid in 2013 (see Note 40).

2019 CHF millions

Energy

Grid

Services

Other

Consoli- dation

Total

External revenue

1,289.2

519.5

1,005.6

18.8

33.5

2,866.6

Net sales

1,247.7

484.5

978.0

0.6

0.0

2,710.8

Own work capitalised

4.9

32.1

0.3

1.1

33.2

71.6

Other operating income

36.6

2.9

27.3

17.1

0.3

84.2

Internal revenue

26.2

7.8

101.2

152.5

– 287.7

0.0

Net sales

15.9

0.7

91.6

0.0

– 108.2

0.0

Other operating income

10.3

7.1

9.6

152.5

– 179.5

0.0

Total operating income

1,315.4

527.3

1,106.8

171.3

– 254.2

2,866.6

Total operating expenses

– 985.6

– 278.4

– 987.0

– 185.0

247.8

– 2,188.2

Operating profit before depreciation, amortisation and impairment (EBITDA)

329.8

248.9

119.8

– 13.7

– 6.4

678.4

Depreciation, amortisation and impairment

– 126.8

– 86.7

– 47.6

– 22.7

3.1

– 280.7

Income from associates

24.2

11.5

0.0

0.0

0.0

35.7

Operating profit/loss (EBIT)

227.2

173.7

72.2

– 36.4

– 3.3

433.4

Financial result

44.1

Profit/loss before income taxes (EBT)

477.5

Information by country

Net sales to external customers by country are broken down by the place of delivery for the respective product. Non-current assets cover property, plant and equipment, intangible assets and investments in associates in the respective countries.

Switzerland

Germany

Italy

France

Other countries

Total

CHF millions

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

Net sales

1,814.3

1,984.8

645.5

701.1

95.8

84.6

47.4

42.9

107.8

122.3

2,710.8

2,935.7

Non-current assets

4,086.1

4,190.1

949.7

927.3

511.6

481.8

135.6

129.1

173.2

161.5

5,856.2

5,889.8

Information on significant customers

There are no transactions with individual external customers that generate revenue accounting for 10 % or more of net sales.

7 Net sales

Net sales per business segment are broken down as follows between Switzerland and abroad:

Switzerland

Abroad

Switzerland

Abroad

CHF millions

2019

2019

2020

2020

Energy

644.2

603.5

604.9

504.4

Grid

484.5

0.0

478.6

0.0

Services

685.0

293.0

900.4

446.5

Other

0.6

0.0

0.9

0.0

Total net sales

1,814.3

896.5

1,984.8

950.9

Of net sales, CHF 2,882.0 million or 98 % (previous year: CHF 2,603.4 million or 96 %) relates to revenues from contracts with customers in accordance with IFRS 15. In the Energy segment, certain transactions come under the provisions of IFRS 9.

Accounting Policies

BKW generates revenue in its three business segments: Energy, Grid and Services.

Energy

Sales in the Energy business segment mainly comprise income from the sale of energy to end customers and distribution partners in Switzerland, income from the sale of electricity, certificates and raw materials on the wholesale market, income from the direct feed-in of energy from power plants with feed-in remuneration and income from the production of heat.

In the energy sector, “own use” transactions (“own use exemption” under IFRS 9) fall under the provisions of IFRS 15. Sales from these business activities must be recognised over the duration of the agreed performance. However, since the energy is consumed at the same time as the delivery, the sale of energy immediately gives rise to a right to payment that is directly equivalent to the value of the energy delivered. Thus, in these cases, an exemption under IFRS 15 is applied to revenue recognition and revenue is recognised in the amount that can be invoiced. Thus, the income is considered to be realised and recognised as revenue when delivery has taken place.

Energy-trading revenue is presented according to the purpose of the underlying transaction. Energy transactions are conducted either for the purpose of actively managing the power plant portfolio or to ensure physical coverage of energy supply or purchase contracts. Such management transactions can be broken down into “own-use” and “hedging” transactions. The revenue from own-use transactions falls under the provisions of IFRS 15 and is recorded as gross in revenue at the time of delivery.

Hedging transactions result from extended activities to manage the production portfolio, comprising additional transactions undertaken to hedge BKW’s own production. These additional hedging transactions qualify as financial instruments under IFRS 9. Other energy transactions are conducted with the sole intention of achieving a trading margin. Such transactions also qualify as financial instruments under IFRS 9.

Energy transactions defined as financial instruments are measured at fair value at the closing date; realised and unrealised gains and losses from these transactions are recorded as net figures in “Income from energy hedging” and “Income from proprietary energy trading” (see Note 37.2). The income from such transactions consists of two components: on the one hand, the effective realised gains or losses from transactions in progress is recorded. On the other hand, the unrealised evaluation gains and losses flow from measurement at fair value of the open contracts.

Grid

The Grid business segment mostly generates income from charging distribution grid usage fees for the distribution grid. Income from the transmission of energy must be recognised over the duration of the agreed performance. When energy is transmitted, there is a direct entitlement to remuneration which corresponds directly to the value of the energy transmitted. This performance falls under the exemption in IFRS 15 for revenue recognition. BKW applies this exemption and books revenue in the amount that can be invoiced. Thus, the income is considered to be realised and recognised as revenue when delivery has taken place.

Fees charged to customers for compensatory feed-in remuneration (KEV) and grid usage fees of third-party grid operators are not recognised as revenue owing to the provisions governing principal-agent relationships, but are shown net against the corresponding energy procurement/transport costs.

Services

In the Services segment, revenues are generated mainly through the provision of engineering planning and consulting services for energy, infrastructure and environmental projects, planning and installation services in the field of building technology, and the construction, servicing and maintenance of energy, telecommunications, transport and water networks. These are principally customer-specific construction contracts. Owing to the contractual provisions governing these services, which grant BKW the right to compensation for the performance, revenue is recognised over a certain period. The extent of performance is measured using the cost-to-cost method. The costs incurred to obtain customer contracts are not capitalised if these costs are amortised within one year.

8 Energy procurement/transport 

CHF millions

2019

2020

Cost of energy procurement from third parties and associates

739.2

684.9

Provision for onerous energy procurement contracts

Provisions used

– 35.8

– 17.8

Provisions added

0.5

28.0

Total energy procurement expenses

703.9

695.1

Energy transport expenses

92.1

95.0

Total

796.0

790.1

Expenses for energy transport include expenses for system services and municipal taxes, while expenses for water rates are included in energy procurement costs.

9 Personnel expenses

CHF millions

2019

2020

Salaries and wages

629.1

706.4

Social security contributions and other personnel expenses

138.5

173.7

Total

767.6

880.1

10 Other operating expenses

CHF millions

2019

2020

Charges, levies and other taxes

21.2

20.4

Rent and maintenance of real estate and other property, plant and equipment

19.3

24.3

Miscellaneous operating expenses

161.5

164.0

Total

202.0

208.7

11 Depreciation, amortisation and impairment

CHF millions

2019

2020

Depreciation

Property, plant and equipment

219.2

207.3

Intangible assets

36.5

35.7

Impairment

Property, plant and equipment

25.5

0.3

Intangible assets

0.5

0.0

Reversal of impairments

Property, plant and equipment

– 1.0

0.0

Total

280.7

243.3

The impairments in the previous year related to wind farms and hydroelectric plants in the Energy business.

12 Financial result

CHF millions

2019

2020

Interest income

5.1

2.9

Dividend income

0.2

0.1

Value adjustment on state funds

147.7

41.8

Gains from the disposal of financial assets

1.1

0.0

Other financial income

2.5

3.7

Financial income

156.6

48.5

Interest expenses

– 42.9

– 36.5

Capitalised borrowing costs

0.2

0.4

Interest on provisions

– 61.4

– 40.5

Losses from the disposal of financial assets

– 0.2

0.0

Value adjustment on financial instruments held for trading

– 0.3

– 0.7

Impairment of financial assets

0.0

– 0.2

Currency translations

– 2.9

0.0

Other financial expenses

– 5.0

– 3.0

Financial expenses

– 112.5

– 80.5

Financial result

44.1

– 32.0

13 Income taxes

CHF millions

2019

2020

Current income taxes

80.1

87.9

Deferred taxes

– 6.2

– 27.6

Total

73.9

60.3

Reconciliation with reported income taxes

CHF millions

2019

2020

Profit/loss before income taxes

477.5

442.7

Tax expenses at anticipated rate of 22.4 % (2019: 23.4 %)

111.7

99.2

Effects of changes in tax rate

– 14.8

– 16.2

Participation reduction and non-taxable income

– 10.9

– 19.7

Use/capitalisation of uncapitalised tax losses

– 4.3

– 8.3

Non-tax-deductible expenses

2.9

6.1

Uncapitalised or partially capitalised tax losses

0.4

0.6

Taxes in respect of previous years

– 5.8

0.3

Write-down/reversal of write-down of participations

– 5.6

– 3.3

Other items

0.3

1.6

Total income taxes

73.9

60.3

Effective tax rate

15.5 %

13.6 %

The anticipated tax rate is determined annually as a weighted average (based on the pre-tax earnings of individual Group companies and the applicable local tax rate). The decrease on the previous year was due to the tax rate cuts in Switzerland arising from the STAF tax reform and the higher proportion of the overall result of the companies in Switzerland.

Changes in deferred tax assets/liabilities

CHF millions

2019

2020

Net deferred tax liabilities at 01.01.

– 412.4

– 421.4

Changes in the scope of consolidation

– 11.1

1.3

Addition/release in the income statement

6.2

27.6

Taxes on actuarial gains/losses

– 7.0

– 0.4

Currency translations

2.9

0.4

Net deferred tax liabilities at 31.12.

– 421.4

– 392.5

Deferred tax assets/liabilities by origin of temporary difference

31.12.2019

31.12.2020

CHF millions

Assets

Liabilities

Assets

Liabilities

Current assets

24.4

– 19.0

1.1

– 34.3

Financial assets and holdings

1.8

– 58.7

1.1

– 55.2

Property, plant and equipment

16.8

– 289.6

16.2

– 279.3

Intangible assets

1.9

– 39.5

1.8

– 35.8

Current liabilities

9.0

– 38.0

10.1

– 3.3

Provisions

2.6

– 125.9

2.4

– 123.2

Other non-current liabilities

94.0

– 10.0

94.8

– 8.7

Capitalised loss carry-forwards

8.8

0.0

19.8

0.0

Credit/liability for gross deferred taxes

159.3

– 580.7

147.3

– 539.8

Netting of assets and liabilities

– 125.0

125.0

– 107.3

107.3

Assets/Liabilities for deferred taxes according to balance sheet

34.3

– 455.7

40.0

– 432.5

The change in temporary differences resulted in deferred tax revenue of CHF 16.6 million recorded in the income statement (previous year: tax revenue of CHF 3.1 million).

As in the previous year, on 31 December 2020 no deferred tax liabilities were recognised in respect of temporary differences relating to associates. No deferred taxes are recognised for Group companies, joint arrangements or partner plants at which a dividend payment is contractually agreed, since BKW is able to co-determine the reversal of the temporary difference and such a difference is not probable in the foreseeable future. The temporary differences for which no deferred tax liabilities have been recognised in this respect amount to CHF 2,297.4 million (previous year: CHF 2,378.4 million).

Tax loss carry-forwards

As at 31 December 2020, there were tax loss carry-forwards of CHF 5.6 million (previous year: CHF 5.5 million) for which deferred taxes were not capitalised. These were not capitalised since their charge against future taxable earnings is not regarded as probable within the permissible tax period. The average applicable tax rate on tax loss carry-forwards will be 22.5 % (previous year: 19.7 %).

These loss carry-forwards fall due in the following periods:

in CHF millions

31.12.2019

31.12.2020

Expiry within 1 year

0.0

0.0

Expiry within 2 to 5 years

1.1

0.9

Expiry after 5 years

2.5

2.3

Valid indefinitely

1.9

2.4

Total

5.5

5.6

14 Earnings per share

The earnings per share is calculated based on the weighted average number of shares. There are no circumstances that would result in a dilution of the earnings per share.

Earnings per share

2019

2020

Net profit attributable to BKW shareholders, in CHF millions

391.2

361.7

Number of shares issued (weighted average)

52,800,000

52,800,000

Less treasury shares (weighted average)

– 66,666

– 61,138

Number of outstanding shares (weighted average)

52,733,334

52,738,862

Earnings per share in CHF

7.42

6.86

Dividend per share

The Board of Directors proposes the allocation of a dividend of CHF 2.40 per share for the 2020 financial year (previous year: CHF 2.20). Based on the shares in circulation on the balance sheet date, the proposed dividend amounts to CHF 126.6 million.

15 Trade accounts receivable and other receivables

CHF millions

31.12.2019

31.12.2020

Trade accounts receivable 1

579.3

538.7

Other financial receivables

69.6

89.4

Other receivables

38.1

31.3

Total

687.0

659.4

1 Of which, an amount of CHF 459.8 millions (previous year: CHF 491.4 million) stems from contracts with customers pursuant to IFRS 15.

The following table shows the ageing of trade accounts receivable:

31.12.2019

31.12.2020

CHF millions

Gross carrying amount

Loss allowance

Net carrying amount

Gross carrying amount

Loss allowance

Net carrying amount

Trade accounts receivable

603.8

– 24.5

579.3

562.9

– 24.2

538.7

of which:

not past due

489.3

– 1.5

487.8

462.7

– 1.7

461.0

1 – 30 days past due

48.9

– 2.0

46.9

39.8

– 0.5

39.3

31 – 360 days past due

35.8

– 4.3

31.5

35.9

– 6.5

29.4

over 360 days past due

29.8

– 16.7

13.1

24.5

– 15.5

9.0

Most of the trade accounts receivable are due for payment between 30 and 60 days. The business combinations in the reporting year increased trade accounts receivable by CHF 6.1 million.

The loss allowance for trade accounts receivable, other financial receivables, and loans are as follows:

CHF millions

Trade receivables

Other financial receivables

Loans

Loss allowances at 31.12.2018

17.3

2.7

8.4

Addition/release

10.1

0.7

Derecognition of uncollectable receivables

– 2.7

– 1.8

Currency translations

– 0.2

Loss allowances at 31.12.2019

24.5

1.6

8.4

Addition/release

3.4

– 0.1

– 0.1

Derecognition of uncollectable receivables

– 3.5

Currency translations

– 0.1

Removal from scope of consolidation

– 0.1

Loss allowances at 31.12.2020

24.2

1.5

8.3

There is no material loss allowance for other financial assets. The other balance sheet items contain no material overdue but unimpaired financial assets.

Accounting Policies

Depending on the amount, trade accounts receivable are subjected to an impairment test and, if necessary, individual writedowns are made. In the case of energy trading trade accounts receivable, probabilities of default are calculated on the basis of externally or internally calculated counterparty ratings and corresponding impairments are recognised for expected losses occurring within the next 12 months. The simplified impairment model is applied to the remaining trade receivables. Assets are assessed here on the basis of being in arrears and grouped into various categories. Different impairment rates for the expected losses over the entire residual term are allocated to these groups based on historical values.

16 Contract assets and contract liabilities

Contract assets and contract liabilities as at 31 December 2020 included a writedown of CHF 0.1 million for expected defaults on receivables in accordance with the provisions of IFRS 9 (previous year: CHF 0.1 million).

Recognised revenue from contract liabilities included at the start of the reporting period amounted to CHF 66.0 million (previous year: CHF 39.1 million).

CHF millions

2019

2020

Expected future income from existing contracts

1,015.3

1,213.5

thereof:

expected within the next 12 months

725.7

912.3

expected after 12 months

289.6

301.2

Accounting Policies

Contract assets exist in connection with the provision of engineering planning and consulting services for energy, infrastructure and environmental projects, planning and installation services in the field of building technology, and the construction, servicing and maintenance of energy, telecommunications, transport and water networks. These are primarily customer-specific construction contracts for which a right to consideration exists for goods or services that are transferred to the customer. If consideration is received before goods or services are transferred to the customer, a contract liability is recognised.

BKW evaluates the extent of performance for the purposes of valuing customer orders. The extent of performance is measured using the cost-to-cost method. Customer orders are assessed for credit risk and valued using the simplified impairment model under IFRS 9. Anticipated losses are immediately recorded in their entirety.

17 Inventories

CHF millions

31.12.2019

31.12.2020

Goods and materials

29.1

30.4

Valuation adjustment on goods and materials

– 0.8

– 0.9

Certificates (proprietary trading)

10.2

11.0

Certificates (own use)

17.4

26.2

Total

55.9

66.7

Accounting Policies

Stock materials

The acquisition/manufacturing cost of raw and auxiliary materials is measured at the weighted moving average. Semi-finished and finished products include the directly assignable cost and share of overall construction costs. Stock materials with an unsatisfactory turnover are written off in full or in part.

Emission rights and green certificates

For emission rights held under national or international emissions allowance schemes for the purpose of compliance with carbon emission allowances, the net liability method is used. These emission rights are recorded at the lower of acquisition cost or net realisable value. A provision is recognised as soon as the carbon output exceeds the emission allowances originally allocated and still held. The value of the emission rights and certificates is realised when they are sold or returned to the authorities as compensation for emissions.

Green certificates certify the generation of electricity from renewable energies and can be sold separately from the delivery of electricity. Income from green certificates from BKW’s own production is accrued at the time the energy is produced based on the expected proceeds from the sale. Purchased green certificates are carried in the balance sheet at acquisition cost.

For transactions in emission rights and certificates conducted with the sole intention of achieving a trading margin, BKW applies the brokerage exemption for traders in raw materials and commodities. The brokerage exemption stipulates that these may be recognised at fair value, less costs to sell. Changes in value on the balance sheet date as well as realised purchases and sales are recorded in the income statement. Transactions in derivatives on emission rights that are conducted with the intention of achieving a trading margin are treated in the same way as energy-trading derivatives (see Note 29).

18 Accrued/deferred income and prepaid/accrued expenses

CHF millions

31.12.2019

31.12.2020

Financial accruals

75.5

100.2

Other prepaid expenses and accrued income

16.3

25.0

Total prepaid expenses and accrued income

91.8

125.2

Financial accruals

139.6

141.3

Other deferred income and accrued expenses

58.3

62.6

Total deferred income and accrued expenses

197.9

203.9

In the case of financial accruals and deferrals, a general impairment is recognised in accordance with the simplified impairment model pursuant to IFRS 9.

19 Financial assets

CHF millions

Financial assets at fair value through other comprehensive income

Financial assets at fair value through profit or loss

Loans

Term deposits

Interest in state funds

Other non-current assets

Total

At 31.12.2019

7.2

30.9

51.3

96.7

1,301.3

42.4

1,529.8

Changes in the scope of consolidation

0.3

– 6.9

0.3

– 6.3

Additions

0.4

20.0

7.1

90.0

30.4

0.4

148.3

Disposals

– 0.5

– 0.4

– 7.2

– 95.0

– 86.5

– 19.6

– 209.2

Currency translations

– 0.2

– 0.2

Value adjustment in the income statement

– 0.1

0.9

41.8

42.6

Value adjustment in other comprehensive income

0.1

0.1

At 31.12.2020

7.5

50.4

45.0

91.7

1,287.0

23.5

1,505.1

of which:

Current financial assets

50.4

22.1

91.0

47.4

210.9

Non-current financial assets

7.5

22.9

0.7

1,239.6

23.5

1,294.2

of which:

Financial assets according to IAS 32 and IFRS 9

7.5

50.4

45.0

91.7

23.5

218.1

Other assets

1,287.0

1,287.0

The state funds are managed by the Federal Government; BKW has no access to the managed assets.

In November 2016, BKW sold a Swissgrid convertible loan totalling CHF 97.2 million to Credit Suisse. The loan was sold without the associated conversion right. As certain conditions transpire, Swissgrid can or must convert the loan into equity, and BKW undertakes to acquire the resulting share of Swissgrid equity. Thus, although BKW sold the loan, it entered into a directly linked obligation at the same time. The loan could therefore not be derecognised. By the end of the 2020 financial year, the loan had been amortised by CHF 58.2 million. As at 31 December 2020, CHF 19.5 million was still reported under “Other non-current assets” and CHF 19.5 million under “Other receivables”. The liabilities are listed as CHF 19.5 million under non-current and CHF 19.5 million under current liabilities (see Notes 23 and 27).

CHF millions

Financial assets at fair value through other comprehensive income

Financial assets at fair value through profit or loss

Loans

Term deposits

Interest in state funds

Other non-current assets

Total

At 31.12.2018

7.4

136.9

71.2

106.4

1,169.8

65.0

1,556.7

Changes in the scope of consolidation

0.2

3.4

0.1

0.9

4.6

Additions

0.2

9.7

12.9

95.3

30.4

0.1

148.6

Disposals

– 0.6

– 115.6

– 35.0

– 105.0

– 46.6

– 23.5

– 326.3

Currency translations

– 1.2

– 0.1

– 0.1

– 1.4

Value adjustment in the income statement

– 0.1

147.7

147.6

At 31.12.2019

7.2

30.9

51.3

96.7

1,301.3

42.4

1,529.8

of which:

Current financial assets

30.9

15.8

95.9

84.7

227.3

Non-current financial assets

7.2

35.5

0.8

1,216.6

42.4

1,302.5

of which:

Financial assets according to IAS 32 and IFRS 9

7.2

30.9

51.3

96.7

42.4

228.5

Other assets

1,301.3

1,301.3

Accounting Policies

Financial assets cover holdings, securities, loans, term deposits and other financial assets. Interests in state funds that are not recognised in accordance with the provisions of IFRIC 5 and do not therefore fall under the scope of IAS 32, IFRS 7 and IFRS 9 are also included as financial assets.

Financial assets are recorded and derecognised on the trade date.

Stock exchange-listed securities that constitute part of a portfolio of financial instruments, that are jointly managed and that are regularly purchased and sold are categorised as “Assets at fair value through profit or loss” and recorded under current assets. Other holdings and securities are allocated to the “Financial assets at fair value through other comprehensive income” category and reported under non-current assets. Term deposits, loans and other financial assets are valued at amortised cost. Pursuant to IFRS 9, in the case of term deposits and loans, probabilities of default are calculated on the basis of externally or internally calculated counterparty ratings, and corresponding impairments are recognised for expected losses occurring within the next 12 months.

Nuclear power plant operators are required by law to make annual payments to state funds (Federal Decommissioning and Waste Disposal Funds). The operators will be paid the future costs for disposal and decommissioning by these state funds according to the statutory requirements. Such payments are regarded as reimbursements and are capitalised as interests in state funds pursuant to IFRIC 5. Changes in fund valuations are recorded in the financial result for the period in question.

20 Investments in associates

CHF millions

Total

At 31.12.2018

1,481.7

Changes in the consolidation method

– 0.6

Disposals

– 33.4

Dividends

– 21.5

Pro rata income

35.7

Currency translations

– 21.8

Actuarial gains/losses

– 12.8

Hedging transactions

– 4.7

At 31.12.2019

1,422.6

Additions

5.1

Changes in the consolidation method

– 0.9

Disposals

– 26.1

Dividends

– 20.9

Pro rata income

39.0

Currency translations

– 14.2

Actuarial gains/losses

7.6

Hedging transactions

– 3.1

At 31.12.2020

1,409.1

The change in the consolidation method relates to Abonax AG. Following a step acquisition (see Note 5), this company no longer qualifies as an associate, but is now considered to be a Group company. Among the “Additions” is a capital increase at Nordic Wind Power DA (CHF 5.1 million).

The “Disposals” include capital reductions at Onyx Kraftwerk Wilhelmshaven GmbH & Co. KG (CHF 21.2 million) and at EP Produzione Centrale Livorno Ferraris S.p.A. (CHF 4.9 million).

Pro rata key figures for associates at 31.12.2020

The table below gives the pro rata key figures for associates by business area. In addition, the Energy business area is broken down by type of power plant.

BKW share CHF millions

Hydro

Nuclear

Fossil-fuel

New renewable energy

Other

Total Energy

Grid

Services

Total

Current assets

36.7

61.1

35.7

19.8

4.4

157.7

182.9

2.7

343.3

Non-current assets

1,002.9

811.9

473.1

187.4

26.4

2,501.7

942.3

2.2

3,446.2

Current liabilities

– 175.9

– 54.8

– 21.5

– 9.2

– 2.0

– 263.4

– 131.3

– 0.2

– 394.9

Non-current liabilities

– 578.5

– 679.6

– 9.6

– 121.9

– 17.2

– 1,406.8

– 577.8

– 0.9

– 1,985.5

Shareholders’ equity

285.2

138.6

477.7

76.1

11.6

989.2

416.1

3.8

1,409.1

Income

160.1

136.7

84.7

22.5

9.0

413.0

247.7

3.2

663.9

Expenses

– 152.2

– 134.2

– 78.7

– 23.0

– 8.7

– 396.8

– 225.0

– 3.1

– 624.9

Net profit/loss

7.9

2.5

6.0

– 0.5

0.3

16.2

22.7

0.1

39.0

Other comprehensive income

1.0

3.7

0.0

– 3.1

0.0

1.6

2.9

0.0

4.5

Comprehensive income

8.9

6.2

6.0

– 3.6

0.3

17.8

25.6

0.1

43.5

All associates are valued using the equity method.

Of the total pro rata assets and liabilities, CHF 1,380.3 million (previous year: CHF 1,360.6 million) relate to net financial debt (financial liabilities less cash and cash equivalents and current financial assets).

Associates in the Energy segment are, in particular, partner plants. For these, BKW is obliged to pay the annual costs due on its share (including interest and repayment of borrowed funds). Energy produced by partner plants is billed to shareholders on the basis of existing agreements – irrespective of the current market prices – at the cost of production. Provisions for onerous energy procurement contracts are formed if the cost of production is above the future expected market price due to the contractual obligation to pay energy production costs. Based on the obligation of the shareholders to pay production costs, it is assumed that the holdings in partner plants measured at the proportionate equity value are recoverable.

The pro rata annual costs for BKW for the purchase of energy in 2020 amounted to CHF 342.0 million (previous year: CHF 355.9 million). These are included in the energy procurement expense. The operating costs charged by nuclear storage facilities in 2020 amount to CHF 17.6 million (previous year: CHF 16.2 million) and are reported in Material and third-party services. CHF 746.4 million of the total pro rata assets and liabilities of partner plants (previous year: CHF 773.3 million) relate to net financial debt.

Pro rata key figures for associates at 31.12.2019

The table below gives the pro rata key figures for associates by business area. In addition, the Energy business area is broken down by type of power plant.

BKW share CHF millions

Hydro

Nuclear

Fossil-fuel

New renewable energy

Other

Total Energy

Grid

Services

Total

Current assets

40.1

65.0

36.5

14.8

5.2

161.6

126.1

2.6

290.3

Non-current assets

1,017.5

790.8

493.7

175.9

26.6

2,504.5

974.8

2.4

3,481.7

Current liabilities

– 111.2

– 77.1

– 20.0

– 9.8

– 1.9

– 220.0

– 248.5

– 0.3

– 468.8

Non-current liabilities

– 666.0

– 641.3

– 9.9

– 94.5

– 17.6

– 1,429.3

– 450.4

– 0.9

– 1,880.6

Shareholders’ equity

280.4

137.4

500.3

86.4

12.3

1,016.8

402.0

3.8

1,422.6

Income

148.2

136.0

117.4

18.1

8.3

428.0

265.4

2.7

696.1

Expenses

– 141.9

– 129.1

– 107.5

– 16.8

– 8.5

– 403.8

– 253.9

– 2.7

– 660.4

Net profit/loss

6.3

6.9

9.9

1.3

– 0.2

24.2

11.5

0.0

35.7

Other comprehensive income

– 4.0

– 3.4

0.0

– 4.8

0.0

– 12.2

– 5.3

0.0

– 17.5

Comprehensive income

2.3

3.5

9.9

– 3.5

– 0.2

12.0

6.2

0.0

18.2

Key figures for major associates

The table below gives the key figures for the major associates. The holdings Onyx Kraftwerk Wilhelmshaven and Kraftwerke Oberhasli are part of the Energy business area. The interest in Swissgrid is assigned to the Grid business area.

100 % key figures

Onyx Kraftwerk Wilhelmshaven GmbH & Co. KG

Kraftwerke Oberhasli AG

Swissgrid AG

CHF millions

31.12.2019

31.12.2020

31.12.2019

31.12.2020

31.12.2019

31.12.2020

Current assets

25.5

24.0

34.1

27.2

345.3

501.5

Non-current assets

1,408.9

1,355.8

809.2

801.1

2,679.6

2,589.1

Current liabilities

– 32.7

– 33.9

– 102.2

– 170.2

– 687.2

– 362.2

Non-current liabilities

– 23.6

– 23.7

– 543.1

– 454.1

– 1,246.5

– 1,598.8

Shareholders’ equity

1,378.1

1,322.2

198.0

204.0

1,091.2

1,129.6

Shareholding in % as at 31.12.

33.0 % 

33.0 % 

50.0 % 

50.0 % 

36.1 % 

36.1 % 

Goodwill

0.0

0.0

0.0

0.0

5.9

5.9

Reported carrying amount of the investment

454.8

436.3

99.0

102.0

400.0

413.9

Income

146.6

115.5

143.6

149.7

677.8

680.4

Expenses

– 123.4

– 100.1

– 137.0

– 143.2

– 646.0

– 618.4

Net profit/loss

23.2

15.4

6.6

6.5

31.8

62.0

Other comprehensive income

0.0

0.0

– 4.1

– 0.4

– 14.8

7.9

Comprehensive income

23.2

15.4

2.5

6.1

17.0

69.9

Goodwill impairment

0.0

0.0

0.0

0.0

0.0

0.0

Recognised proportionate result from associates

7.7

5.1

3.3

3.3

11.5

22.4

Dividend received

0.0

0.0

0.0

0.0

11.9

11.4

The reported figures are provisional and come from the respective companies, with the exception of Swissgrid, which has bonds listed on the SIX Swiss Exchange. BKW has no final figures for Swissgrid. The key figures as at 31.12 and the income statement including the net profit are estimated by BKW on the basis of Swissgrid’s business reports from the previous year, as well as relevant press releases issued in the current financial year and transferred to IFRS. Deviations from Swissgrid’s actual figures will be captured in profit and loss calculations for the following year.

The company Onyx Kraftwerk Wilhelmshaven GmbH & Co. KG is a limited partnership under German law. In companies with this legal form, the effective share of profit and capital of the partners may differ from their share of investment.

21 Property, plant and equipment

CHF millions

Power plants

Mühleberg Nuclear Power Plant

Distribution grid

Buildings and land

Other property, plant and equipment

Construction in progress

Right-of-Use Assets

Total

Gross values at 31.12.2019

2,136.4

1,306.8

3,289.6

239.5

296.9

198.2

302.2

7,769.6

Changes in the scope of consolidation

– 5.5

– 0.2

3.3

– 2.4

Additions

1.1

12.8

15.1

178.2

35.8

243.0

Disposals

– 0.2

– 35.5

– 1.9

– 12.9

– 0.3

– 6.1

– 56.9

Reclassifications

24.5

– 0.2

131.8

22.2

18.9

– 196.5

– 0.7

0.0

Contract modifications

11.6

11.6

Currency translations

– 4.8

– 0.1

– 0.9

– 5.8

Gross values at 31.12.2020

2,151.5

1,306.6

3,398.7

259.8

317.8

179.5

345.2

7,959.1

Accumulated depreciation and impairments at 31.12.2019

1,016.2

1,306.8

1,627.4

121.4

186.3

0.7

90.9

4,349.7

Changes in the scope of consolidation

– 3.3

– 0.3

– 0.2

– 3.8

Depreciation

58.1

77.3

5.6

28.2

38.1

207.3

Impairment

0.3

0.3

Disposals

– 0.3

– 34.3

– 0.3

– 10.3

– 0.3

– 4.8

– 50.3

Reclassifications

– 0.2

0.2

0.5

– 0.5

0.0

Currency translations

– 1.4

– 0.2

– 1.6

Accumulated depreciation and impairments at 31.12.2019

1,069.3

1,306.6

1,670.4

126.9

204.4

0.7

123.3

4,501.6

Net values at 31.12.2020

1,082.2

0.0

1,728.3

132.9

113.4

178.8

221.9

3,457.5

thereof pledged for liabilities

16.9

3.5

0.1

20.5

The change in the scope of consolidation relates to business combinations to the amount of CHF 4.6 million (see Note 5) and disposals of companies to the amount of CHF – 7.0 million.

Additions of CHF 35.5 million for rights of use arising from leases do not impact cash and additions to assets under construction include a contribution in kind of CHF 4.0 million in a newly formed subsidiary with non-controlling interests.

Borrowing costs amounting to CHF 0.4 million were capitalised in the reporting year (previous year: CHF 0.2 million). In the year under review, compensation of CHF 4.7 million for property, plant and equipment that was impaired, lost or decommissioned was charged to the income statement (previous year: CHF 2.9 million).

The following table contains information on the rights of use under leases (see Note 32) per asset class.

CHF millions

Power plants

Distribution grid

Buildings and land

Other property, plant and equipment

Total

Gross values at 31.12.2019

122.0

6.0

162.3

11.9

302.2

Changes in the scope of consolidation

3.3

3.3

Additions

23.7

12.1

35.8

Disposals

– 0.2

– 4.8

– 1.1

– 6.1

Reclassifications

0.4

– 1.1

– 0.7

Contract modifications

0.9

10.8

– 0.1

11.6

Currency translations

– 0.6

– 0.3

– 0.9

Gross values at 31.12.2020

121.4

6.7

195.4

21.7

345.2

Accumulated depreciation and impairments at 31.12.2019

65.8

1.6

20.8

2.7

90.9

Changes in the scope of consolidation

– 0.2

– 0.2

Depreciation

4.3

1.9

26.9

5.0

38.1

Disposals

– 0.2

– 3.5

– 1.1

– 4.8

Reclassifications

– 0.5

– 0.5

Currency translations

– 0.3

0.1

– 0.2

Accumulated depreciation and impairments at 31.12.2019

69.8

3.3

44.1

6.1

123.3

Net values at 31.12.2020

51.6

3.4

151.3

15.6

221.9

of which land lease for wind parks

37.5

CHF millions

Power plants

Mühleberg Nuclear Power Plant

Distribution grid

Buildings and land

Other property, plant and equipment

Construction in progress

Right-of-Use Assets

Total

At 01.01.2019

2,079.1

1,468.3

3,174.7

225.5

261.7

256.4

268.7

7,734.4

Changes in the scope of consolidation

2.1

14.3

20.0

1.4

31.8

69.6

Additions

18.9

19.6

4.9

0.1

8.2

195.4

14.4

261.5

Disposals

– 3.4

– 185.2

– 30.2

– 6.9

– 18.5

– 1.3

– 3.7

– 249.2

Reclassifications

77.3

4.1

140.2

6.7

26.3

– 253.4

– 1.2

– 0.0

Contract modifications

– 0.1

– 0.1

Currency translations

– 37.6

– 0.2

– 0.8

– 0.3

– 7.7

– 46.6

Gross values at 31.12.2019

2,136.4

1,306.8

3,289.6

239.5

296.9

198.2

302.2

7,769.6

At 01.01.2019

954.2

1,468.3

1,582.7

118.6

177.5

1.7

56.9

4,359.9

Changes in the scope of consolidation

– 0.2

– 0.2

Depreciation

58.4

23.7

74.9

5.0

26.1

31.1

219.2

Impairment

18.7

0.3

6.5

25.5

Disposals

– 2.3

– 185.2

– 30.2

– 2.5

– 17.2

– 0.6

– 238.0

Reversal of impairment

– 1.0

– 1.0

Reclassifications

0.4

– 0.4

0.0

Currency translations

– 12.8

– 0.3

– 2.6

– 15.7

Accumulated depreciation and impairments at 31.12.2019

1,016.2

1,306.8

1,627.4

121.4

186.3

0.7

90.9

4,349.7

Net values at 31.12.2019

1,120.2

0.0

1,662.2

118.1

110.6

197.5

211.3

3,419.9

thereof pledged for liabilities

19.0

10.8

0.1

29.9

In the change in the scope of consolidation in the previous year, CHF 66.7 million related to business combinations, CHF 3.3 million was associated with a change in the consolidation method of Wärme Mittelland AG and CHF – 0.4 million related to disposals.

The non-cash additions of CHF 19.6 million to the Mühleberg Nuclear Power Plant were the result of revalued and additional disposal costs incurred up to the decommissioning at the end of 2019. The disposals related to the nuclear fuel which was derecognised after the decommissioning of the power plant (net value: CHF 0).

Further non-cash additions for power plants comprised the entry of a CHF 4.9 million provision for restoration obligations in respect of wind farms, as well as entries of CHF 14.4 million for rights of use arising from leases.

The following table contains information from the previous year on the rights of use under leases per asset class.

CHF millions

Power plants

Distribution grid

Buildings and land

Other property, plant and equipment

Total

At 01.01.2019

126.7

6.0

129.8

6.2

268.7

Changes in the scope of consolidation

29.2

2.6

31.8

Additions

9.6

4.8

14.4

Disposals

– 3.3

– 0.4

– 3.7

Reclassifications

– 1.2

– 1.2

Contract modifications

– 0.1

– 0.1

Currency translations

– 4.7

– 2.9

– 0.1

– 7.7

Gross values at 31.12.2019

122.0

6.0

162.3

11.9

302.2

At 01.01.2019

56.1

0.0

0.0

0.8

56.9

Depreciation

5.5

1.6

21.5

2.5

31.1

Impairment

6.5

6.5

Disposals

– 0.5

– 0.1

– 0.6

Reclassifications

– 0.4

– 0.4

Currency translations

– 2.3

– 0.2

– 0.1

– 2.6

Accumulated depreciation and impairments at 31.12.2019

65.8

1.6

20.8

2.7

90.9

Net values at 31.12.2019

56.2

4.4

141.5

9.2

211.3

of which land lease for wind parks

38.6

Accounting Policies

Property, plant and equipment are recorded at acquisition or manufacturing cost less accumulated depreciation and recognised impairment losses. Depreciation is calculated systematically using the straight-line method and based on the useful lives of the assets. Property, plant and equipment dependent on concessions that will revert without compensation are written down at most over the expected term of the concession.

The present values of estimated costs for dismantling power plants are charged to the balance sheet together with acquisition or manufacturing costs (see also Note 25).

For long-term investment projects, the borrowing interest is charged to the balance sheet during the set-up phase. Land is valued at acquisition cost.

The estimated useful lives of property, plant and equipment lie within the ranges listed below and are unchanged compared with the previous year:

Buildings

50 years

Power plants

12 to 80 years

Distribution grid

20 to 60 years

IT systems

10 to 30 years

Operating facilities and vehicles

3 to 20 years

22 Intangible assets

CHF millions

Rights of use

Goodwill

Other

Total

Gross values at 31.12.2019

171.7

863.3

354.5

1,389.5

Changes in the scope of consolidation

26.2

4.9

31.1

Additions from acquisitions

2.3

6.5

8.8

Additions from internally generated intangible assets

8.2

8.2

Disposals

– 4.2

– 4.2

Currency translations

– 0.4

– 1.6

– 0.4

– 2.4

Gross values at 31.12.2020

173.6

887.9

369.5

1,431.0

Accumulated depreciation and impairments at 31.12.2019

130.6

93.6

151.6

375.8

Changes in the scope of consolidation

– 0.1

– 0.1

Depreciation

2.3

33.4

35.7

Disposals

– 3.1

– 3.1

Currency translations

– 0.4

– 0.1

– 0.5

Accumulated depreciation and impairments at 31.12.2019

132.5

93.6

181.7

407.8

Net values at 31.12.2020

41.1

794.3

187.8

1,023.2

Changes in the scope of consolidation relate to business combinations to the amount of CHF 32.5 million (previous year: CHF 304.2 million) and disposals of companies to the amount of CHF – 1.3 million (previous year: CHF – 1.9 million).

CHF millions

Rights of use

Goodwill

Other

Total

Gross values at 31.12.2018

174.3

621.5

297.8

1,093.6

Changes in the scope of consolidation

0.1

250.6

51.0

301.7

Additions from acquisitions

0.5

5.1

5.6

Additions from internally generated intangible assets

6.1

6.1

Disposals

– 2.9

– 2.9

Currency translations

– 3.2

– 8.8

– 2.6

– 14.6

Gross values at 31.12.2019

171.7

863.3

354.5

1,389.5

Accumulated depreciation and impairments at 31.12.2018

131.3

93.9

121.0

346.2

Changes in the scope of consolidation

– 0.3

– 0.3

– 0.6

Depreciation

2.4

34.1

36.5

Impairment

0.5

0.5

Disposals

– 2.9

– 2.9

Currency translations

– 3.1

– 0.8

– 3.9

Accumulated depreciation and impairments at 31.12.2019

130.6

93.6

151.6

375.8

Net values at 31.12.2019

41.1

769.7

202.9

1,013.7

On the balance sheet date, goodwill was distributed among the following cash-generating units:

CHF millions

31.12.2019

31.12.2020

Energy

107.9

107.6

Services

661.8

686.7

Total

769.7

794.3

The goodwill carried in the balance sheet was tested for impairment by comparing the carrying amount with the recoverable amount of the cash-generating units. The recoverable amount corresponds to the value in use. The calculations were made on the basis of estimated cash flows from business projections approved by management over a period of four years. Cash flows beyond this period were extrapolated using an estimated growth rate. The impairment test on goodwill did not identify any need for impairment.

The value in use is measured on the basis of the following material assumptions:

WACC (before tax)

WACC (after tax)

Long-term growth rate

%

31.12.2019

31.12.2020

31.12.2019

31.12.2020

31.12.2019

31.12.2020

Energy

7.6

7.6

5.9

5.9

1.0

1.0

Services

8.3

8.8

6.5

6.9

1.0

1.0

Based on the findings of a sensitivity analysis, realistic changes in the material assumptions do not suggest that the recoverable amount could fall below the carrying amount.

Accounting Policies

Intangible assets include rights of use, contractual or legal rights acquired as a result of acquisitions, brands, customer relationships, software and goodwill.

Rights of use comprise contractually agreed one-off amounts to a contractual partner for the use of its operating installations as well as licences for the construction and operation of BKW’s own installations.

Intangible assets are amortised over the period of use, or at most the contract period, using the straight-line method. Goodwill and brands are not written down but assigned to the relevant cash-generating unit and subjected to annual impairment tests or ad hoc tests whenever impairment is indicated.

Rights of use

Licences

60 to 80 years

Energy procurement rights

36 to 60 years

Installation utilisation rights

7 to 50 years

Transit rights

25 to 60 years

Other

Software

3 to 8 years

Customer lists, technologies

4 to 10 years

Brands

indefinite

23 Trade accounts payable and other liabilities

CHF millions

31.12.2019

31.12.2020

Trade accounts payable

334.5

366.0

Other financial liabilities

165.4

120.6

Other liabilities

39.2

35.5

Pension plans

12.5

10.1

Total

551.6

532.2

Other financial liabilities include the short-term portion of the sold Swissgrid convertible loan (see Note 19) in the amount of CHF 19.5 million (previous year: CHF 19.5 million).

24 Financial liabilities

Financial liabilities comprise interest-bearing financial obligations, namely bonds, loans and lease liabilities. Bonds and loans are carried at amortised cost using the effective interest method. Lease liabilities are accounted for in accordance with IFRS 16.

CHF millions

31.12.2019

31.12.2020

Bonds

891.9

894.0

Registered bonds

284.4

283.9

Lease liabilities

180.1

191.5

Bank liabilities

86.6

80.6

Other financial liabilities

93.4

88.1

Total

1,536.4

1,538.1

of which:

Current financial liabilities

89.1

108.0

Non-current financial liabilities

1,447.3

1,430.1

CHF millions

31.12.2019

Financing cash flows

Currency translations

Changes in fair values

Other

31.12.2020

Current financial liabilities

89.1

– 46.9

– 0.2

0.0

66.0

108.0

Lease liabilities

32.9

– 37.5

0.0

42.9

38.3

Bank liabilities

6.2

– 3.2

0.0

22.8

25.8

Other financial liabilities

50.0

– 6.2

– 0.2

0.3

43.9

Non-current financial liabilities

1,447.3

– 0.7

– 2.0

1.2

– 15.7

1,430.1

Bonds

891.9

1.2

0.9

894.0

Registered bonds

284.4

– 1.4

0.9

283.9

Lease liabilities

147.2

0.3

– 0.5

6.2

153.2

Bank liabilities

80.4

– 1.8

– 0.1

– 23.7

54.8

Other financial liabilities

43.4

0.8

0.0

0.0

44.2

Other non-current liabilities

410.5

14.9

– 0.5

– 70.5

354.4

Total liabilities from financing activities

1,946.9

– 32.7

– 2.7

1.2

– 20.2

1,892.5

In the reporting year, changes in the scope of consolidation have increased the liabilities from financing activities by CHF 2.4 million (previous year: CHF 55.2 million).

CHF millions

01.01.2019

Financing cash flows

Currency translations

Changes in fair values

Other

31.12.2019

Current financial liabilities

435.6

– 383.9

– 1.9

0.0

39.3

89.1

Bonds

349.5

– 350.0

0.5

0.0

Lease liabilities

27.2

– 28.9

– 0.6

35.2

32.9

Bank liabilities

18.8

– 15.4

– 0.1

2.9

6.2

Other financial liabilities

40.1

10.4

– 1.2

0.7

50.0

Non-current financial liabilities

1,273.5

171.8

– 15.1

– 2.9

20.0

1,447.3

Bonds

693.9

200.0

– 2.9

0.9

891.9

Registered bonds

294.4

– 10.8

0.8

284.4

Lease liabilities

142.9

0.0

– 3.3

7.6

147.2

Bank liabilities

100.5

– 22.9

– 1.0

3.8

80.4

Other financial liabilities

41.8

– 5.3

6.9

43.4

Other non-current liabilities

407.7

22.4

– 0.9

– 18.7

410.5

Total liabilities from financing activities

2,116.8

– 189.7

– 17.9

– 2.9

40.6

1,946.9

25 Provisions

CHF millions

Nuclear waste disposal

Onerous contracts

Other provisions

Total

At 31.12.2018

1,513.7

282.2

48.9

1,844.8

Changes in the scope of consolidation

7.0

7.0

Provisions added

5.7

10.2

13.4

29.3

Interest

53.0

7.7

0.7

61.4

Provisions used

– 63.6

– 35.8

– 5.3

– 104.7

Provisions released

– 9.7

– 6.0

– 15.7

Change in estimate for nuclear disposal

13.9

13.9

Currency translations

– 1.1

– 1.1

At 31.12.2019

1,522.7

254.6

57.6

1,834.9

Changes in the scope of consolidation

2.0

2.0

Provisions added

34.4

10.1

44.5

Interest

33.4

6.4

0.7

40.5

Provisions used

– 132.8

– 17.8

– 5.7

– 156.3

Provisions released

– 4.8

– 1.7

– 6.5

Currency translations

– 0.2

– 0.2

At 31.12.2020

1,423.3

272.8

62.8

1,758.9

of which:

Current provisions

143.0

25.1

10.7

178.8

Non-current provisions

1,280.3

247.7

52.1

1,580.1

Nuclear waste disposal

At 31 December 2020, the provision for nuclear waste disposal comprised the following:

In the previous year there was an allocation of CHF 5.7 million owing to the annual additional disposal costs of operating the power plant. This allocation resulted in an equivalent increase in acquisition costs of nuclear fuel without affecting income. No further allocations were made during the reporting year owing to the decommissioning of the power plant.

Due to the adjustment in the parameters of inflation and return on investment in connection with the revised SEFV (see Note 4.2), an estimate adjustment of CHF 13.9 million was carried out in 2019. The adjustment increased the acquisition costs for the power plants in the same amount without affecting income.

As the owner of Mühleberg Nuclear Power Plant, BKW is required by law to decommission the plant after the operating phase ending on 20 December 2019 and to dispose of the nuclear waste. The expected costs of decommissioning and disposal were capitalised and a corresponding provision was recognised on the date on which the plant went into operation. Furthermore, the additional disposal costs incurred by power plant operation were capitalised annually and subsequently written down and the corresponding provision was recognised. The decommissioning and waste disposal costs are subject to regular review. The present value of estimated decommissioning and disposal costs is provisioned and adjusted annually subject to interest. The same amount was capitalised during operations together with the acquisition/manufacturing costs of the plant and written down over the useful life using the straight-line method.

For calculating provisions for decommissioning and disposal, the following assumptions were made that have not changed since the previous year:

Due to the short-term timeframe (to 2024), 0.5 % is now used for both the interest rate and for inflation for the post-operational phase.

Since 2019, the assumptions used no longer correspond to the parameters defined in the Decommissioning and Waste Disposal Funds Ordinance (SEFV), as BKW no longer considers them appropriate due to the adjustments made. Instead, BKW applies its own estimates (see Note 4.2 for an explanation).

Until 2022, BKW is required to make payments to the state funds for decommissioning and nuclear waste disposal. These funds reimburse the costs of decommissioning and disposal on behalf of operators following shutdown of the plants. During the reporting year, BKW received reimbursement from the funds amounting to CHF 86.5 million (previous year: CHF 46.6 million). The state fund receivables are disclosed under financial assets (see Note 19).

Onerous contracts

The majority of the provisions for onerous contracts relate to energy procurement contracts and cover the future purchase of energy from partner plants at production costs that exceed the expected realisable selling prices. These provisions are associated with the energy procurement contracts agreed with the fossil-fuel power stations at Wilhelmshaven in Germany and Livorno Ferraris in Italy. In the reporting year, the provisions were increased by a net CHF 10.2 million owing to updated expectations for future electricity price developments (previous year: decrease of CHF 35.3 million).

The cash outflow from provisions results from BKW’s obligation to take the electricity produced at production cost and extends over a period of seven years. The provisions for onerous contracts also include provisions for impending losses from customer contracts. The cash outflow from these provisions is largely anticipated in the subsequent two years.

Other provisions

Other provisions include guarantee obligations, obligations related to personnel, estimations of probable payments in respect of legal disputes and various minor operating obligations. Cash outflows in respect of these provisions are largely anticipated over the next three years. There are also provisions for the dismantling and break-up of power plants and for rehabilitation of the environment. These costs will be incurred at the end of the useful life of the respective power plants; the cash outflow is anticipated within the next 20 to 25 years.

Accounting Policies

BKW holds non-controlling interests in power plant companies, under the terms of which it is committed to purchasing the energy generated by these plants at production cost. Provisions are recognised for obligations to purchase energy at production costs that exceed the expected future realisable sales prices. The calculations are made using the discounted cash flow method.

Interest on provisions calculated at present value is charged through financial expenses.

26 Pension plans

Pension funds are regulated by the Federal Act on Occupational Retirement, Survivors’ and Invalidity Pension (BVG). This requires pension funds to be managed by independent, legally autonomous bodies. Employees and their survivors are insured through the pension plan against the economic consequences of old age, invalidity and death. All actuarial risks are borne by the BKW pension fund (Pensionskasse BKW). The pension plan is financed through contributions and revenue from the assets. The member companies and insured persons pay the premium contributions to the pension scheme, as a percentage of the insured salary of the insured person. Responsibility for investing the pension assets is held by the Board of the foundation.

Employees of BKW in Switzerland are covered by Pensionskasse BKW and other autonomous pension funds, which are classed as defined benefit plans under IAS 19. Outside of Switzerland, some employees are also covered by defined pension plans in accordance with IAS 19. Independent pensions experts carry out annual assessments in line with the terms of IAS 19, based on the projected-unit-credit method.

Pensionskasse BKW

The majority of employees working in Switzerland are covered by the Pensionskasse der Bernischen Kraftwerke (Pensionskasse BKW) pension fund. Pensionskasse BKW takes the form of a pension fund organised as a foundation established under private law. Its pension plan corresponds to a defined contribution plan under Swiss law. The supreme governing body of the Pensionskasse BKW foundation is the Board of Trustees, which is composed of an equal number of representatives of the employer and the employees. The benefits and financing of Pensionskasse BKW are stipulated in pension regulations. These are issued by the Board of the foundation. The Board delegates the management of the business to the executive management. The foundation is subject to supervision by the relevant authority of the Canton of Bern.

The pension plan assets are invested in a widely diversified portfolio in Switzerland and abroad in line with the statutory requirements and the guidelines issued by the Board. Assets are invested to guarantee security and an appropriate return on the investment, with a balanced distribution of risks and coverage of the forecast requirement of cash and cash equivalents. The occupational pensions expert prepares the annual actuarial valuation and verifies the financial and actuarial situation of Pensionskasse BKW. The unaudited actuarial coverage rate of Pensionskasse BKW in accordance with BVG at 31 December 2020 with an actuarial interest rate of 1.50 % (previous year: 1.75 %) was 111.7 % (previous year: 112.9 %). In the event of a coverage shortfall according to BVG, the Board must, in agreement with the occupational pensions expert, agree suitable recovery measures (such as increasing the ordinary contributions or collecting recovery contributions). The contribution made by the employer must be at least equivalent to the total contributions paid by the employee.

The pension liabilities of various smaller Group companies were previously reported net in the following table. Following an update to the underlying data for these companies, plan assets and pension liabilities are now reported gross. The reporting change was introduced on 1 January 2019 and resulted in an increase of CHF 189.4 million in both plan assets and pension liabilities. There was therefore no effect on the income statement, statement of comprehensive income or balance sheet for the years shown.

26.1 Pension liability recorded in the balance sheet

CHF millions

31.12.2019

31.12.2020

Present value of defined benefit obligations

– 2,587.7

– 2,667.1

Fair value of plan assets

2,348.9

2,409.3

Net pension liability recorded in the balance sheet

– 238.8

– 257.8

of which amount disclosed as credit

0.0

0.0

of which amount disclosed as liability

– 238.8

– 257.8

26.2 Pension expense according to IAS 19

CHF millions

2019

2020

Current service cost (employer)

36.4

47.9

Past service cost (employer)

0.0

– 0.4

Interest expenses on defined benefit obligation

14.7

5.7

Interest income from plan assets

– 13.3

– 5.0

Administration costs excluding costs for management of plan assets

0.9

1.1

Pension plan expenses

38.7

49.3

26.3 Remeasurement of employee pension plans

CHF millions

2019

2020

Actuarial gains/losses

Change in financial assumptions

119.7

31.6

Change in demographic assumptions

0.0

– 25.4

Adjustments based on experience

19.6

56.7

Return on plan assets (excluding interest based on discount rate)

– 170.9

– 67.0

Total revaluation reported in other comprehensive income

– 31.6

– 4.1

26.4 Change in present value of defined benefit obligation

CHF millions

2019

2020

Present value of defined benefit obligation at 01.01.

2,197.0

2,587.7

Interest expenses on defined benefit obligation

14.7

5.7

Current service cost (employer)

36.4

49.9

Contributions paid/benefits paid out

– 62.2

– 90.1

Employee contributions

22.8

28.4

Past service cost (employer)

0.0

– 0.4

Business combination

237.6

21.9

Administration costs (excluding asset management costs)

0.9

1.1

Actuarial gains/losses

140.5

62.9

Present value of defined benefit obligations at 31.12.

2,587.7

2,667.1

At the balance sheet date, the active members’ share of the defined benefit obligation was CHF 1,644.3 million (previous year: CHF 1,600.3 million). The share of those drawing a pension in the defined benefit obligation was CHF 1,022.8 million (previous year: CHF 987.4 million).

26.5 Change in fair value of plan assets

CHF millions

2019

2020

Fair value of plan assets at 01.01.

2,005.3

2,348.9

Interest income from plan assets

13.4

5.0

Employer contributions

31.2

37.9

Employee contributions

22.9

28.4

Contributions paid/benefits paid out

– 62.3

– 91.2

Business combination

167.5

13.3

Return on plan assets (excluding interest based on discount rate)

170.9

67.0

Fair value of plan assets at 31.12.

2,348.9

2,409.3

26.6 Asset structure of plan assets

CHF millions

31.12.2019

%

31.12.2020

%

Cash and cash equivalents

87.8

3.7

81.6

3.4

Equity instruments

772.7

32.9

825.5

34.3

Debt instruments

817.6

34.8

824.0

34.2

Other instruments

218.3

9.3

210.1

8.7

Properties

452.5

19.3

468.1

19.4

Total plan assets

2,348.9

100.0

2,409.3

100.0

thereof own transferrable financial instruments

3.4

4.7

thereof properties used by BKW

19.1

17.0

Equity capital instruments include investments in shares and are generally listed at their market price in an active market. As a percentage of the total assets, the proportion of Swiss shares at the end of the reporting period was 17.8 % (previous year: 15.4 %) and that of foreign shares was 16.4 % (previous year: 17.6 %). Investments in Swiss and foreign shares are made directly (through external asset managers) and through investment foundations and funds.

The composition of debt instruments as a percentage of total assets on 31 December 2020 was 17.2 % (previous year: 16.3 %) for Swiss bonds, 7.9 % (previous year: 8.4 %) for foreign bonds with currency hedging and 8.8 % (previous year: 9.6 %) for mortgage loans and mortgage bonds. The bonds and mortgage bonds are listed in an active market at their market price, whereas there is no market price listing in an active market for the mortgage loans.

Most of the other instruments are listed in an active market at their market price.

On 31 December 2020, the proportion of property as a percentage of total assets was spilt between 9.5 % (previous year: 10.1 %) for properties (direct investments in Switzerland) and 6.5 % (previous year: 7.0 %) for property funds listed in active markets (of which almost half involved foreign properties).

The effective return from the plan assets was 3.0 % in the current year (previous year: 11.2 %).

26.7 Actuarial assumptions

Switzerland

Germany

Switzerland

Germany

2019

2019

2020

2020

Discount rate

0.25 % 

1.11 % 

0.15 % 

0.74 % 

Expected rate of future salary increases

0.50 % 

2.75 % 

0.50 % 

2.75 % 

Expected rate of future pension increases

0.00 % 

1.75 % 

0.00 % 

1.75 % 

Mortality table

BVG 2015 GT

Heubeck 2018 G

BVG 2015 GT

Heubeck 2018 G

The weighted average term of the employee pension plan obligation amounted to 14.7 years (previous year: 14.8 years). The change in demographic assumptions (Note 26.3) relates to an update assessment of the likelihood of departure and of the level of lump-sum withdrawals on the basis of Pensionkasse BKW’s past experience.

Sensitivities of the major actuarial assumptions

The discount rate, changes in salaries and pensions, and life expectancy constitute significant actuarial assumptions and were therefore subjected to a sensitivity analysis. In the event of an increase/decrease in the assumptions shown below, the employee pension plan obligation will vary as follows:

31.12.2020

Defined benefit obligation

CHF millions

Increase

Decrease

Discount rate (0.25 % change)

– 85.3

90.8

Salary increase (0.25 % change)

5.4

– 5.9

Changes in pensions (+ 0.20 % change)

67.7

Life expectancy (1 year change)

79.3

– 80.7

31.12.2019

Defined benefit obligation

CHF millions

Increase

Decrease

Discount rate (0.25 % change)

– 80.9

86.5

Salary increase (0.25 % change)

4.7

– 4.8

Changes in pensions (+ 0.20 % change)

69.0

Life expectancy (1 year change)

76.8

– 78.0

The sensitivity analysis was conducted on the basis of a method that extrapolates the impact on the employee pension plan obligation through changes in the above assumptions at the end of the reporting period.


26.8 Estimated contributions for the next period

CHF millions

2019

2020

Expected employer contributions

35.7

40.8

Expected employee contributions

26.9

30.2

27 Other non-current liabilities

CHF millions

31.12.2019

31.12.2020

Assigned rights of use

306.1

307.6

Other non-current financial liabilities

104.1

46.6

Other non-current liabilities

0.3

0.2

Total

410.5

354.4

Liabilities resulting from the sale of the Swissgrid convertible loan in November 2016 are now recorded at CHF 19.5 million under “Other non-current liabilities”. The transaction is detailed in Note 19.

The assigned rights of use consist of third-party payments for transit rights to transmission systems, plant usage rights and contributions to grid costs (connection contributions). Such assigned rights are recognised in the balance sheet at the nominal value of the cash inflow less any reversed amounts charged to income. The liability is reversed on a straight-line basis over the useful life of the facility but for no longer than the life of the relevant assigned right.

28 Share capital and reserves

28.1 Share capital

The issued and fully paid-in share capital of BKW AG amounting to CHF 132.0 million consists of 52,800,000 registered shares at a par value of CHF 2.50 each.

Major shareholders

To BKW’s knowledge, the following shareholders held more than 3 % of the shares as at 31 December.

31.12.2019

31.12.2020

Canton of Bern

52.54 % 

52.54 % 

Groupe E Ltd.

10.00 % 

10.00 % 

Transactions in treasury shares

Number

Carrying amount CHF millions

Cash-relevant proportion CHF millions

31.12.2018

70,094

4.8

Purchases

466,915

32.2

32.2

Sales

– 515,985

– 35.5

– 30.3

31.12.2019

21,024

1.5

1.9

Purchases

520,814

44.5

44.5

Sales

– 502,764

– 42.3

– 36.5

31.12.2020

39,074

3.7

8.0

28.2 Reserves

Capital reserves

Capital reserves include reserves paid in by shareholders.

Retained earnings

Retained earnings consist of legal and statutory reserves (excluding capital reserves), retained earnings from previous years and gains/losses on the sale of treasury shares.

Treasury shares

BKW shares held by BKW or its Group companies are deducted from equity at acquisition cost. As at 31 December 2020, 39,074 shares (previous year: 21,024) were held by BKW AG and its Group companies.

Other reserves (attributable to BKW shareholders)

CHF millions

Currency translations

Valuation reserve of financial assets measured at fair value

Hedging

Actuarial gains/losses

Total

At 31.12.2018

– 302.1

– 0.1

1.8

60.1

– 240.3

Currency translations

Currency translations

– 42.3

– 42.3

Hedging transactions

Value adjustments of associates

– 4.7

– 4.7

Actuarial gains/losses

of Group companies

31.6

31.6

of associates

– 10.9

– 10.9

Income taxes

– 6.2

– 6.2

At 31.12.2019

– 344.4

– 0.1

– 2.9

74.6

– 272.8

Currency translations

Currency translations

– 19.0

– 19.0

Reclassification to the income statement

1.0

1.0

Financial assets at fair value through other comprehensive income

Value adjustments

0.1

0.1

Reclassification to retained earnings

– 0.1

– 0.1

Hedging transactions

Value adjustments of Group companies

– 0.1

– 0.1

Value adjustments of associates

– 3.1

– 3.1

Actuarial gains/losses

of Group companies

4.2

4.2

of associates

6.4

6.4

Income taxes

– 0.6

– 0.6

At 31.12.2020

– 362.4

– 0.1

– 6.1

84.6

– 284.0

Currency translations

Reserves for currency translations contains currency differences arising from the translation of the financial statements drawn up in foreign currencies of foreign Group companies and associates.

Valuation reserve of financial assets at fair value through other comprehensive income

This valuation reserve includes changes in the value of financial assets at fair value through profit or loss until their realisation. When these financial assets are sold, the valuation reserve is reclassified to retained earnings.

Hedging

The hedging reserve comprises unrealised changes in the value of financial instruments as a hedge of payment streams (cash flow hedge) and as a hedge of net investment in a foreign business operation (net investment hedge) in the amount of the effective portion of the hedge, as well as the realised gains and losses from completed hedging transactions that have not yet been recognised in profit or loss since the underlying transaction has not yet been recognised in income.

Actuarial gains/losses

The reserve for actuarial gains and losses recognises the effect of periodic actuarial recalculations.

28.3 Capital management

BKW pursues a strategy aimed at the sustainable increase and retention of corporate value. The aim of BKW capital management is to ensure the Group’s long-term capital market standing and financing capability by maintaining a balance sheet structure that is compatible with the defined target rating, and to keep the potential impact of fluctuations in the value of the entire financial and risk portfolio within narrow boundaries. BKW is committed to a consistent dividend payout based on a ratio of 40 to 50 % of net profit adjusted for special effects. BKW’s financial resources primarily serve the core business and provide the requisite scope for action in accordance with the requirements of the Group strategy. There were no changes in capital management in 2020.

29 Derivatives

The following table provides information on replacement values and contract volumes for derivative financial instruments open on the balance sheet date in respect of energy trading, and of interest and exchange rate hedging. Derivatives that qualify as hedging instruments under IFRS 9 and are treated according to hedge accounting provisions are disclosed separately.

Positive replacement value

Negative replacement value

Contract volume

CHF millions

31.12.2019

31.12.2020

31.12.2019

31.12.2020

31.12.2019

31.12.2020

Futures (energy trading)

367.7

480.5

Forward contracts (energy trading)

138.5

143.1

124.5

205.5

2,091.6

1,825.1

Swaps

3.8

4.7

15.0

15.0

Exchange rate hedging

0.9

0.3

0.1

0.3

228.7

269.7

Hedge accounting

Swaps

0.3

1.2

100.0

100.0

Exchange rate hedging

0.1

36.8

Total

139.4

143.7

129.6

210.6

2,803.0

2,727.1

of which:

Current derivatives

132.4

131.1

106.8

178.7

Non-current derivatives

7.0

12.6

22.8

31.9

Accounting Policies

Derivatives are recorded at fair value in the balance sheet, as positive replacement values (receivables) or negative replacement values (liabilities). The contract volume corresponds to the basic value or contract volume of the underlying derivative financial instrument.

The replacement value for futures is zero, since price fluctuations are offset daily compared with the agreed closing prices. Forward energy trading contracts include forwards with fixed and flexible profiles.

Energy derivatives

BKW trades in contracts in the form of forwards with fixed and flexible profiles, and futures on electricity, gas, oil, coal and certificates. Contracts concluded with the sole intention of achieving a trading margin, as well as hedging transactions resulting from extended production portfolio management, are treated as financial instruments and designated as energy derivatives.

Transactions that are open on the balance sheet date are measured at fair value. BKW receivables in respect of counterparties are recorded under assets as positive replacement values (under Derivatives), while payables are recorded under liabilities as negative replacement values (under Derivatives). Positive replacement values correspond to the costs that BKW would incur to replace all transactions that represent benefits for BKW if all counterparties were simultaneously unable to pay and the transactions could be immediately replaced. Negative replacement values correspond to the costs that counterparties would incur to replace all transactions that represent benefits for them if BKW were no longer able to meet its obligations. Ongoing transactions with positive or negative replacement values are netted if the respective contract terms provide for this, and settlement is legally enforceable and intended.

Realised and unrealised gains and losses from energy derivatives are recorded as income from proprietary energy trading or as income from energy hedges as applicable within net revenue.

30 Hedge accounting

Financial instruments can be used to hedge fluctuations in the fair value of an asset or liability (fair value hedge), to hedge exposure to variability in cash flows (cash flow hedge) and to hedge exposure of net investments in business operations abroad (net investment hedge). This is done in accordance with the existing guidelines governing BKW’s hedging and credit risk policy.

Realised and unrealised changes in the value of financial instruments that serve economically and according to Group guidelines to hedge against exchange rate and interest rate risks related to ongoing business activities, but which do not qualify as hedging transactions, are charged to income as financial income/expenses.

The following hedging transactions were open on 31 December 2020:

Fair value hedge

An interest rate swap exists for conversion of fixed interest rates into variable rates/to hedge against fluctuations in the fair value of a portion of the Green Bond issue. This hedging relationship is assessed as highly effective and qualifies as a fair value hedge. The change in the fair value of the Green Bond amounted to CHF – 1.2 million (previous year: CHF + 1.0 million). No ineffective portion of this hedging relationship was reported in the financial result either in the reporting year or in the previous year.

Due to the imminent replacement of the CHF LIBOR by a new interest rate benchmark, the contractual provisions of the interest rate swap will need to be amended in 2021. The assessment of the effectiveness of the hedging relationship and calculation of the value adjustment of the fair value of the Green Bond are based on the expectation that the change in interest rate benchmark will not have any impact. The contract volume of the interest rate swap is CHF 100 million.

Cash flow hedge

Various forward contracts exist for the purpose of hedging exchange rate fluctuations in respect of energy procurement in EUR. These hedging instruments were assessed as highly effective and qualify as cash flow hedges. In the reporting year, a loss of CHF 0.1 million was recorded in other comprehensive income for this hedging activity. No ineffective portion was reported in the financial result of the reporting year.

Net investment hedge

In previous years, BKW placed three registered bonds with nominal amounts of EUR 275.0 million in total. The registered bonds were placed in Germany and hedge a part of its investment projects in that country. The registered bonds have been designated as a net investment hedge. Foreign exchange gains or losses on the registered bonds are recognised in other comprehensive income and correspondingly offset the gains or losses from currency conversion of the designated net investments. No ineffective portion of the hedging relationships was reported in the financial result either in the reporting year or in the previous year.

31 Related parties

The following financial relationships between BKW and related parties existed in the periods reported. Unless stated otherwise, all transactions were conducted under the same terms and conditions as with independent third parties:

Parent

Associates

Pension funds

CHF millions

2019

2020

2019

2020

2019

2020

Income

Energy sales

2.7

2.4

39.3

36.5

Other sales and services

5.4

2.3

21.3

79.0

1.3

2.7

Interest and dividends

2.3

0.2

23.3

22.3

Expenses

Energy purchases

218.0

245.7

Water charges

19.0

15.7

Other purchases and services

0.4

0.4

95.1

96.2

32.0

35.3

Taxes and charges

2.5

2.2

Interest and dividends

50.1

61.1

0.1

0.0

Income taxes

20.5

23.9

Assets

Cash and cash equivalents

23.1

23.8

Receivables and accruals

1.5

1.3

40.9

51.7

0.0

0.4

Current financial assets

14.3

20.8

Loans

24.8

18.7

Rights of use

9.2

9.9

Liabilities

Liabilities and accruals

19.9

24.7

23.1

33.2

11.7

9.5

Loans

3.7

4.8

Rights of use

0.6

0.6

Transactions with the parent

The Canton of Bern is the majority shareholder of BKW. As such, it has a controlling influence on all decisions at the Annual General Meeting, including the election of members of the Board of Directors and the appropriation of retained earnings. The relationship with the Canton of Bern, its authorities, public-law institutions and the private-law companies it controls takes place on many levels: BKW delivers energy and other services, purchases material and services, and pays taxes, water rates and other levies and charges. In addition, financial transactions are conducted with Berner Kantonalbank, in which the Canton of Bern holds a majority interest.

Transactions with associates

Reported transactions consist of energy deliveries, energy transports, dividends, construction/engineering services (income), operational management and maintenance/servicing (income), energy purchases, energy transport, material/third-party services and other services (expense). Energy produced by partner plants is billed to shareholders at production cost (including interest and repayment of borrowed funds) on the basis of existing partner contracts. In the 2020 financial year, associates borrowed CHF 6.6 million in loans from BKW (previous year: CHF 10.8 million in loans granted). Repayments reduced loans in the current year by CHF 6.1 million (previous year: CHF 28.5 million in repayments and a reduction of CHF 1.4 million owing to changes in the scope of consolidation). In the current year, BKW capitalised services and materials from associates worth CHF 0.5 million (previous year: CHF 18.8 million).

Transactions with pension funds

Transactions with pension funds are conducted as part of the occupational pension plan and consist of employer contributions, administrative charges (personnel, operational and administrative costs), real estate services (management of properties) and financial transactions (liquidity management).

Transactions with the Board of Directors and Group Executive Board

Remuneration

CHF millions

2019

2020

Short-term benefits

4.5

4.8

Contributions to pension plans

0.9

1.0

Share-based payments

1.5

1.7

Total

6.9

7.5

The performance-related payments contained in short-term benefits reflect the variable profit shares for the corresponding financial year.

Detailed information on the remuneration paid to the Board of Directors and the Group Executive Board can be found in the Remuneration Report, which is published in accordance with the Ordinance against Excessive Compensation in Listed Stock Companies.

Transactions with companies in which members of the Board of Directors and Group Executive Board have significant influence

In the 2020 financial year, BKW conducted no transactions with companies in which members of the Board of Directors and Group Executive Board have significant influence. In the 2019 financial year, BKW supplied energy amounting to CHF 2.8 million and provided services amounting to CHF 0.5 million. At 31 December 2019, there were outstanding receivables from these companies in the amount of CHF 0.7 million.

32 Leasing

The lessee arrangements relate to wind farms, leases for land and distribution facilities, easements on land, building rentals, vehicles and other movable property, plant and equipment.

CHF millions

2019

2020

Leases in the consolidated income statement

Income from operating leases

0.8

0.7

Expense relating to short-term leases

2.4

0.5

Expense relating to low-value assets

0.7

0.8

Expense relating to variable lease payments not included in the measurement of lease liabilities

0.4

0.4

Interest expense on lease liabilities

2.3

2.1

Leases in the consolidated cash flow statement

Total cash outflows from lessee arrangements

34.8

41.7

The lessor arrangements mainly concern heating systems under heating contracts. The future undiscounted lease payments as at the balance sheet date were:

CHF millions

31.12.2019

31.12.2020

Up to 1 year

0.7

0.7

Later than 1 year and not later than 2 years

0.7

0.7

Later than 2 years and not later than 3 years

0.6

0.5

Later than 3 years and not later than 4 years

0.5

0.4

Later than 4 years and not later than 5 years

0.4

0.3

More than 5 years

4.0

3.5

Total

6.9

6.1

Accounting Policies

Assets from rights to use leased assets are reported in the balance sheet item “Property, plant and equipment”. See Note 21.

Lease liabilities are presented in the balance sheet under current and non-current financial liabilities.

The terms of the lease liabilities are disclosed in Note 38.3. The lease liability is discounted by applying an incremental borrowing rate specific to maturities and countries, unless the interest rate on which the lease payments are based is available.

33 Additional disclosures on the cash flow statement

Cash and cash equivalents covers cash on hand, bank account balances and cash invested with financial institutes for a maximum period of three months.

CHF millions

31.12.2019

31.12.2020

Bank and cash balances

668.6

810.1

Term deposits

14.9

15.0

Total cash and cash equivalents

683.5

825.1

Adjustments to the operating cash flow for non-cash transactions are composed as follows:

CHF millions

2019

2020

Depreciation, amortisation and impairment

280.7

243.3

Income from associates

– 35.7

– 39.0

Gains/losses from sale of non-current assets

– 1.5

0.5

Change in non-current provisions (excl. interest and excl. utilisation of nuclear provisions)

– 1.3

26.8

Change in assigned rights of use

– 12.5

– 13.6

Change from the valuation of energy derivatives

– 25.2

76.4

Other non-cash positions

9.6

12.7

Total adjustment for non-cash transactions

214.1

307.1

The cash outflow of CHF 57.9 million (previous year: CHF 244.6 million) for the acquisition of Group companies corresponds to the cash outflow for business combinations in the reporting year amounting to CHF 11.9 million (previous year: CHF 220.2 million, see Note 5 for details) plus the payments made in 2020 of deferred and contingent consideration liabilities amounting to CHF 46.0 million (previous year: CHF 24.4 million).

Sub-total “cash flow from operating activities before utilisation of nuclear provisions”

To facilitate comparison and interpretation of the effective operating cash flow, the “cash flow from operating activities” item includes a sub-total of the cash flow before utilisation of provisions for nuclear decommissioning and waste disposal.

This is because the costs for nuclear decommissioning and waste disposal will continue to be incurred in connection with the decommissioning of the Mühleberg Nuclear Power Plant in the future. These costs represent the utilisation of existing provisions and are therefore charged to “cash flow from operating activities” determined in accordance with IAS 7. However, the nuclear decommissioning is not related to BKW’s actual operating performance, and reported “cash flow from operating activities” is therefore not a suitable metric for assessing operating cash generation in BKW’s view.

Most of the costs for nuclear decommissioning and waste disposal are borne by the state-run decommissioning and waste disposal funds. BKW is thus entitled to a refund of the costs incurred, although the costs incurred and the refund do not coincide chronologically. Both payments into and refunds from the state funds are classified in the cash flow statement as part of “cash flow from investing activities”. This means there is therefore a discrepancy in the presentation of these directly related cash flows. To adequately interpret cash flow, the corresponding individual items presented separately in the cash flow statement should be considered together. Therefore, the utilisation of provisions with and without claim to refunds is now reported separately in “cash flow from operating activities”.

34 Share-based payment

BKW employees have the opportunity to purchase BKW AG share capital on preferential terms. Full-time employees of BKW and members of the Board of Directors (except the Group Executive Board and senior management) are offered a limited number of BKW shares every year at a fixed preferential price, set for that year, subject to a blocking period. In the reporting year, employees had the opportunity to acquire up to 371,675 shares in BKW (previous year: 348,650 shares) at a preferential price. In the 2020 financial year 85,464 shares (previous year: 79,148 shares) were purchased at a price of CHF 50.45 per share (previous year: CHF 45.45). The underlying present value per share was CHF 73.50 (previous year: CHF 68.30) The personnel expense for this share-based payment was CHF 2.0 million (previous year: CHF 1.8 million). No purchase rights remained open on the balance sheet date.

In addition, a performance-related bonus has been allocated to members of the Group Executive Board and senior management in the form of BKW shares as part of their fixed annual base salary. The allocation of shares to members of the Group Executive Board is decided on an annual Basis for the current financial year. The shares are subject to a blocking period. In the 2020 financial year, 21,065 shares (previous year: 28,608 shares) with an underlying fair price of CHF 94.00 per share (previous year: CHF 69.70) were allocated. As part of the performance management process, BKW shares are allocated to senior management in March of the following year. In the 2020 financial year 20,221 shares (previous year: 22,314 shares) with an underlying fair price of CHF 78.20 per share (previous year: CHF 67.00) were allocated. The shares are subject to a blocking period. The total personnel expense booked for profit-sharing to the Group Executive Board and senior management amounted to CHF 3.6 million (previous year: CHF 3.5 million). No purchase rights remained open on the balance sheet date.

Allocation of shares to employees is not subject to any other conditions in either of the aforementioned cases, hence there is no vesting period and the compensation is recorded on the grant date. Fair value is measured on the basis of the share price. The corresponding expense is recognised in personnel expenses at the time of the grant being made. In relation to the share purchase programme, the personnel expense corresponds to the difference between the fair value and the preferential price paid by employees.

35 Group companies with material non-controlling interests

With BKW Netzbeteiligung Ltd., which is headquartered in Switzerland, BKW holds a Group company with material non-controlling interests. BKW Netzbeteiligung Ltd. holds interests in Swissgrid Ltd.

The financial information of BKW Netzbeteiligung Ltd. is disclosed separately in the table below. The breakdown is before the elimination of inter-company transactions.

BKW Netzbeteiligung Ltd.

CHF millions

31.12.2019

31.12.2020

Non-controlling interests in %

49.9 %

49.9 %

Carrying amount of non-controlling interests

180.6

180.5

Net income allocated to non-controlling interests

5.9

5.7

Dividends on non-controlling interests

5.9

5.7

Balance sheet

Non-current assets

361.7

361.7

Current assets

0.3

0.1

Non-current liabilities

0.0

0.0

Current liabilities

0.0

0.0

Income statement

Financial income

11.8

11.4

Net profit

11.8

11.4

Cash flow statement

Cash flow from operating activities

11.8

11.4

Cash flow from investing activities

0.0

0.0

Cash flow from financing activities

– 11.8

– 11.5

36 Assets and liabilities measured at fair value

Assets and liabilities measured at fair value are classified according to the following hierarchy:

CHF millions

Carrying amount at 31.12.2020

Level 1

Level 2

Level 3

Financial assets at fair value through profit or loss

Financial assets (current and non-current)

Interest in state funds

1,287.0

1,287.0

Debt instruments

50.4

50.4

Derivatives (current and non-current)

143.7

143.7

Inventories

Certificates (proprietary trading)

11.0

11.0

Financial assets at fair value through other comprehensive income

Non-current financial assets

Equity instruments

7.5

7.5

Financial liabilities at fair value through profit or loss

Other financial liabilities (current and non-current)

Contingent purchase price liabilities in relation to business combinations

56.6

56.6

Liabilities relating to non-controlling interests

6.8

6.8

Derivatives (current and non-current)

210.6

210.6

CHF millions

Carrying amount at 31.12.2019

Level 1

Level 2

Level 3

Financial assets at fair value through profit or loss

Financial assets (current and non-current)

Interest in state funds

1,301.3

1,301.3

Debt instruments

30.9

1.0

29.9

Derivatives (current and non-current)

139.4

139.4

Inventories

Certificates (proprietary trading)

10.2

10.2

Financial assets at fair value through other comprehensive income

Non-current financial assets

Equity instruments

7.2

7.2

Financial liabilities at fair value through profit or loss

Other financial liabilities (current and non-current)

Contingent purchase price liabilities in relation to business combinations

79.0

79.0

Liabilities relating to non-controlling interests

10.8

10.8

Derivatives (current and non-current)

129.6

129.6

In addition, the liabilities on 31 December 2020 include the following at fair value:

The Level 3 debts and assets measured at fair value developed as follows during the period under review:

Equity instruments

Contingent purchase price liabilities

Liabilities to non-controlling interests

CHF millions

2019

2020

2019

2020

2019

2020

At 01.01.

7.4

7.2

56.8

79.0

8.1

10.8

Additions

0.5

0.7

47.6

10.3

5.0

Disposals

– 0.7

– 0.4

– 11.2

– 27.1

– 1.5

– 3.6

Value adjustment

Transfer to income statement

n/a

n/a

– 13.1

– 5.2

– 0.8

– 0.4

Changes in value included in other comprehensive income

0.0

0.0

– 1.1

– 0.4

0.0

0.0

At 31.12.

7.2

7.5

79.0

56.6

10.8

6.8

37 Disclosure of financial assets and liabilities

37.1 Carrying amount by balance sheet item and allocation to individual categories in accordance with IFRS 9

Financial assets

Note

Financial assets at amortised cost

Financial assets at fair value through profit or loss

Financial assets at fair value through other comprehensive income

Total

CHF millions

2019

2020

2019

2020

2019

2020

2019

2020

Cash and cash equivalents

33

683.5

825.1

683.5

825.1

Trade accounts receivable

15

579.3

538.7

579.3

538.7

Other current financial receivables

15

69.6

89.4

69.6

89.4

Current financial assets

19

111.7

113.1

30.9

50.4

142.6

163.5

Derivatives (current and non-current)

29

139.4

143.7

139.4

143.7

Financial accruals

18

75.5

100.2

75.5

100.2

Non-current financial assets

19

78.7

47.1

7.2

7.5

85.9

54.6

Total

1,598.3

1,713.6

170.3

194.1

7.2

7.5

1,775.8

1,915.2

Financial liabilities

Note

Financial liabilities at amortised cost

Financial liabilities at fair value through profit or loss

Lease liabilities

Total

CHF millions

2019

2020

2019

2020

2019

2020

2019

2020

Trade accounts payable

23

334.5

366.0

334.5

366.0

Other current financial liabilities

23

135.8

82.7

29.6

37.9

165.4

120.6

Current financial liabilities

24

56.2

69.7

32.9

38.3

89.1

108.0

Derivatives (current and non-current)

29

129.6

210.6

129.6

210.6

Financial accruals

18

139.6

141.3

139.6

141.3

Non-current financial liabilities

24

1,201.1

1,176.7

99.0

100.2

147.2

153.2

1,447.3

1,430.1

Other non-current financial liabilities

27

43.9

21.1

60.2

25.5

104.1

46.6

Total