Statutory financial statements

1. Accounting principles

General

The financial statements for Swissgrid Ltd, Aarau, have been prepared in accordance with the Swiss Law on Accounting and Financial Reporting (Title 32 of the Swiss Code of Obligations). The valuation principles applied are described below.

Conversion of foreign currency items

The accounting records are maintained in the local currency (Swiss francs, CHF). All short-term monetary assets and liabilities recognised in foreign currencies are converted at the exchange rate as of the balance sheet date. Transactions in foreign currencies are converted at the exchange rate on the day the transaction took place. Foreign exchange gains and losses resulting from transactions in foreign currencies are recognised in the income statement and are presented in the same item as the underlying transaction.

Cash flow statement

«Cash and cash equivalents» form the basis for the presentation of the cash flow statement. The cash flow from operating activities is calculated using the indirect method.

Revenue recognition

The revenue and procurement items result from the activities defined in the Electricity Supply Act (ESA) and include services for the non-discriminatory, reliable and efficient operation of the transmission grid, in particular ancillary services and balance and congestion management.

Revenue is recognised in the income statement upon performance of Swissgrid’s obligations. For ESA activities, the measurement of performance is mainly based on energy volumes measured directly on the transmission grid or reported by downstream grid levels. For certain revenue and procurement items, initial billing values are available six weeks after delivery at the earliest, thereby rendering accruals based on historical and statistical data, as well as on estimates, necessary for the revenue recognition of these items.

The activities defined in the Ordinance on the Establishment of a Hydropower Reserve (WResO) are intermediary transactions in accordance with the accounting regulations, which is why only the value of the services provided by the company itself is reported in the power reserve segment.

Activities according to ESA/WResO

Volume- and tariff-related timing differences (surpluses and deficits)

According to Art. 14 of the Electricity Supply Act (ESA), grid usage costs must be allocated to users on a user-pays basis. The tariffs for a financial year are determined based on planned costs. Due to price and volume deviations, actual expenses and income vary from the tariff calculation on both the revenue and procurement side. This results in surpluses or deficits, i.e. the tariff revenues from a financial year are higher or lower than the actual expenses incurred during the same period. These volume- and tariff-related timing differences are transferred to the balance sheet and taken into account in cost and revenue calculations for future tariff periods. The expected reduction in volume- and tariff-related timing differences within twelve months of the balance sheet date is recognised as short-term surpluses or deficits in the balance sheet.

EBIT regulated under ESA

Earnings before interest and taxes (EBIT) from ESA activities are defined in Article 15 of the Electricity Supply Act (ESA) for chargeable costs, and are now defined in Article 18a of the Electricity Supply Ordinance (ESO) for interest on volume- and tariff-related timing differences arising from the 2024 financial year onwards. EBIT corresponds to the interest on invested operating assets (IOA) at the weighted average cost of capital rate for the current reporting year (= WACC_t+0), the interest on the volume- and tariff-related timing differences arising from the 2024 financial year onwards at the borrowing cost rate_t+2 included in WACC_t+2 and taxes. In accordance with ElCom directive 03/2024, volume- and tariff-related timing differences up to and including the end of the 2023 financial year remain subject to interest at WACC_t+2 until they have been fully eliminated, which also has an impact on EBIT.

Invested operating assets consist of net current assets calculated on a monthly basis, as well as the property, plant and equipment and intangible assets as at the end of the financial year. The weighted average cost of capital rate is based on the current international practice of the capital cost concept with reference to the Capital Asset Pricing Model (CAPM). Besides considering the findings of financial market theory, the regulatory framework conditions in Switzerland and the current situation in the money and capital market are also taken into account. The weighted average cost of capital rate for 2024 (WACC_t+0) determined by the authorities on the basis of this calculation method is 4.13%, and the borrowing cost rate_t+0 included in WACC_t+0 is 2.25%. The weighted average cost of capital rate for 2026 (WACC_t+2) applicable for the 2024 financial year is 3.43%, and the borrowing cost rate_t+2 included in WACC_t+2 is 2.0%.

EBIT according to WResO

From the 2024 financial year, the chargeable costs for the power reserve are calculated in the same way as ESA activities in accordance with Article 15 ESA. However, interest on the assets required for the power reserve is calculated according to the borrowing cost rate_t+0 included in WACC_t+0. In accordance with Article 18a ESO, interest on the volume- and tariff-related timing differences arising since 1 January 2024 is calculated at the borrowing cost rate_t+2. As previously, no interest is calculated on the volume- and tariff-related timing differences up to and including the end of the 2023 financial year until they have been fully eliminated. EBIT according to WResO is calculated from the interest on the assets required and the volume- and tariff-related timing differences arising since 1 January 2024.

Chargeability of operating and capital costs

ElCom has the right to verify ex post the chargeability of Swissgrid’s operating and capital costs for tariff-setting purposes. In case of an ex post cost adjustment, an appeal can be lodged with the Federal Administrative Court with an ultimate possibility of appeal to the Federal Supreme Court. A cost adjustment impacting Swissgrid’s operating result is applied whenever no appeal is lodged, or whenever an appeal’s prospects for success are judged to be less than 50% on the basis of a reappraisal, or whenever a legally binding ruling is issued.

Property, plant and equipment

Property, plant and equipment are recognised at the cost of acquisition or production less accumulated amortisation and any impairment losses. Significant spare parts which are likely to be used for a longer period and whose use only takes place in connection with a non-current asset item are recognised in non-current assets and depreciated over the remaining useful life of the relevant asset.

Depreciation/amortisation is calculated using the straight-line method on the basis of the estimated useful technical and economic service life. The service life is within the following ranges:

• Lines: 15 to 60 years
• Substations: 10 to 35 years
• Buildings and expansions: 5 to 50 years
• Other property, plant and equipment: 3 to 8 years
• Construction in progress and properties: only applicable in the case of an impairment loss

Intangible assets

Intangible assets are recognised at the cost of acquisition or production less accumulated amortisation and any impairment losses. Depreciation/amortisation is calculated using the straight-line method on the basis of the estimated useful technical and economic service life.

The service life is within the following ranges:

• Rights of use: contract term
• Software: 3 to 5 years
• Intangible assets under development: only applicable in the case of an impairment loss

The merger losses (goodwill) resulting from the mergers on 3 January 2013 and 5 January 2015 are also recognised in this item. Goodwill is depreciated on a straight-line basis over 20 years and is reviewed annually for impairments. The rights of use include easements and rights of use to mixed-use assets that were compensated once before 1 June 2019.

Impairment losses

The value of property, plant and equipment and intangible assets is reviewed annually. If there is an indication of an impairment loss, the book value is reduced to the realisable value and an impairment loss is charged to the results of the period.

Construction in progress/intangible assets under development

Construction in progress and intangible assets under development are non-current assets that are not yet completed or not yet operational. All items of property, plant and equipment and intangible assets, including self-constructed assets, are classified as non-current assets. As of each balance sheet date, a review is performed to determine whether any construction in progress or intangible assets under development have to be impaired. These are recognised as impairment losses in the year of completion. Ordinary depreciation or amortisation of these assets begins once they are completed or are ready for operation.

Financial assets

Financial assets are measured at acquisition costs less any impairment losses. Employer contribution reserves without conditional renounced use are also recognised in financial assets.

Shareholdings

Shareholdings are measured at acquisition costs less any impairment losses. These include shareholdings with a capital share of over 20%, but which do not have a significant impact on the financial statements, as well as shareholdings with a capital share of less than 20% that do have a significant impact.

Inventory

Inventory includes waste material for maintaining the grid systems. Inventory is measured at the lower of acquisition cost or market price.

Accounts receivable

Accounts receivable are reported at their nominal value less any impairment losses required for business reasons.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, cash at banks and deposits at banks maturing in 90 days or less. They are recognised at their nominal value.

Bonds

Bonds issued on the capital market are recognised at their nominal value. Deviations from the nominal value in the case of below- or above-par issues are recognised as accruals and deferrals and are reversed on a straight-line basis over the term of the bond.

Liabilities

Liabilities are recognised at their nominal value.

Provisions

Provisions are recognised if there is a probable obligation based on an event that took place prior to the balance sheet date, the amount and/or due date of which is uncertain but capable of being estimated.

Contingent liabilities

Contingent liabilities are measured as of the balance sheet date. A provision is reported if a cash outflow without a usable countervalue is probable and assessable. Otherwise, contingent liabilities are disclosed in the notes to the financial statements.

Interest on borrowed capital

Interest on borrowed capital is recognised as an expense in the period in which it arises.

Income taxes

Current income taxes are calculated based on the taxable results on an accrual basis.

Derivative financial instruments

Swissgrid may use derivative financial instruments to hedge against currency and market price risks. If the conditions are met, Swissgrid will apply hedge accounting to hedge expected future cash flows. The instruments used for this purpose will be disclosed in the notes to the financial statements until the underlying transaction is realised.

2. Estimation uncertainty

Financial-statement reporting requires estimates and assumptions to be made that may have a significant impact on Swissgrid’s financial statements. With respect to assets and liabilities recognised in the balance sheet, accruals and deferrals (prepaid expenses and accrued income/accrued expenses and deferred income) and volume- and tariff-related timing differences in particular are based on various assumptions and estimates that may necessitate significant adjustments. This is due to specific volumes not being available for certain revenue and procurement items when the financial statements are prepared, as well as regulatory uncertainties. The volume- and tariff-related timing differences are also influenced by estimates in the allocation of operating expenses to the segments.

More information is given in the sections on «Revenue recognition» and «Activities according to ESA/WResO» in Note 1, as well as in Note 25.

3. Net turnover and procurement costs

Net turnover

For the 2024 financial year, net turnover across all segments amounted to CHF 1,825.1 million. This represents an increase of CHF 605.9 million in relation to the previous year’s figure of CHF 1,219.2 million. The rise is mainly attributable to the CHF 417.8 million and CHF 156.2 million increase in net turnover in the general ancillary services and active power loss segments respectively. Both segments recorded higher tariff income and were allocated higher pro rata auction income to cover the chargeable costs of the transmission system. The increase in tariff income is due to the regulatory requirement to reduce the deficit from previous years. In addition to higher tariff income and auction income, higher revenue from balance group balancing energy in the general ancillary services segment also led to a rise in net turnover.

Procurement costs

At CHF 684.5 million, procurement costs were CHF 215.4 million lower than the previous year’s figure of CHF 899.9 million. This decrease is due to a reduction in costs of CHF 186.1 million and CHF 48.3 million respectively in the general ancillary services and active power loss segments. The reduction in the general ancillary services segment is attributable to lower costs for control power provision. The decrease in the active power loss segment is due to lower procurement costs for the energy required to compensate for active power losses. By contrast, higher national redispatch costs in the grid usage segment led to an increase of CHF 29.1 million in procurement costs. Costs in the reactive energy segment remained at the previous year’s level.

More detailed comments on the individual segments, including the effects on the volume- and tariff-related timing differences, can be found in Note 4 to the financial statements in accordance with Swiss GAAP FER.

4. Other operating income

5. Materials and third-party supplies

Other grid-related services consist of remuneration for easements, including easement management services performed by third parties and operating expenses for mixed-use plants.

6. Personnel expenses

Other personnel expenses include, in particular, the costs of training and further education, recruitment, lump-sum expenses, as well as contributions to external catering for employees.

The average number of full-time equivalents exceeded 250 in the reporting period, as was the case in the previous year.

7. Other operating expenses

Other administrative costs included borrowing costs of CHF 6.2 million (previous year: CHF 6.1 million), which were incurred in connection with the additional tasks transferred to Swissgrid by the federal government in the power reserve segment and represent chargeable costs in accordance with Art. 22 WResO.

Board of Directors’ fees and expenses represent fixed gross remuneration including the deduction of any employee contributions to the employee pension plan. The remuneration paid to the Chairman of the Board of Directors amounted to CHF 250,000, including lump-sum expenses (previous year: CHF 250,000). The remaining members of the Board of Directors received remuneration of between CHF 57,500 and CHF 77,500 pro rata temporis for 2023, including lump-sum expenses (previous year: between CHF 57,500 and CHF 77,500).

Further information on the members of the Board of Directors can be found in the Corporate Governance Report.

8. Trade receivables

As at 31 December 2024, trade receivables included CHF 107.2 million (previous year: CHF 57.2 million) in relation to companies with a direct or indirect shareholding in Swissgrid.

9. Other receivables

Other receivables included the receivable for the 2024 enforcement costs for handling congestion management amounting to CHF 16.2 million (previous year: CHF 16.3 million).

10. Prepaid expenses and accrued income

In particular, other prepaid expenses and accrued income include the discount on bond issues and financing and issue costs, which are amortised over the term of the financing instrument.

11. Balance sheet items held on a fiduciary basis

12. Shareholdings

Letters used for locations and currencies:
A = Luxembourg (Lux) | Currency EUR
B = Munich (D) | Currency EUR
C = Paris (F) | Currency EUR
D = Frick (CH) | Currency CHF
E = Winterthur (CH) | Currency CHF
F = Arnheim (NL) | Currency EUR

Swissgrid is not legally obliged to prepare consolidated financial statements. Either the control principle necessary to prepare a consolidated financial statement (Art. 963 of the Swiss Code of Obligations (CO)) is not met, or the subsidiaries do not have a material influence on Swissgrid’s financial statements. In particular, Pronovo AG is regulated by the Swiss Federal Office of Energy (SFOE) and is explicitly excluded from any consolidation with Swissgrid based on Art. 64 (5) of the Energy Act (EnA).

The figures are unchanged from the previous year.

13. Property, plant and equipment

The book values of the individual categories are as follows:

14. Intangible assets

The book values of the individual categories are as follows:

15. Trade accounts payable

As at 31 December 2024, trade accounts payable included CHF 70.9 million (previous year: CHF 65.6 million) in relation to companies with a direct or indirect shareholding in Swissgrid. No liabilities existed in relation to the external auditor as at 31 December 2024 (previous year: CHF 0.1 million).

16. Other liabilities

17. Accrued expenses and deferred income

18. Financial liabilities

The maturities of bonds are as follows:

Convertible loans and loans

Convertible loans have a term of nine years and one-fifth of the loans become payable annually from year five. Moreover, loans are also assigned a conversion right by Swissgrid in the event of occurrence of contractually defined events and an associated conversion obligation by the creditors. Creditors are compensated by a premium on the interest rate for the conversion right assigned to Swissgrid. Convertible loans are recognised in full in liabilities.

The interest conditions and maturities of convertible loans and loans are as follows:

Convertible loans and loans are assessed at their nominal value.

As at 31 December 2024, convertible loans of CHF 10.8 million (previous year: CHF 40.1 million) existed towards companies with a direct or indirect shareholding in Swissgrid.

19. Provisions

Procedural costs

The provision amount includes the estimated compensation payable to parties and the court costs imposed on Swissgrid due to the administrative procedures in conducting proceedings.

20. Share capital and reserves from capital contributions

The share capital consists of 334,495,151 (previous year: 334,495,151) fully paid-up registered shares with a par value of CHF 1 per share.

21. Intermediary business

This segment handles the orders regulated by the Winter Reserve Ordinance (WResO) for the use of the hydropower reserve and reserve power plants, pooled emergency power groups and combined heat and power plants (CHP plants). In accordance with the accounting regulations, these activities are intermediary transactions, which is why only the value of the services provided by the company itself (operating and capital costs) and the associated net turnover are reported in the power reserve segment.

The expenses resulting from the intermediary business amounted to CHF 186.5 million in the reporting year (previous year: CHF 403.2 million). In addition, tariff income of CHF 645.2 million was received for the first time in 2024.

22. Derivative financial instruments

Swissgrid made use of derivative financial instruments to partially hedge against market price risk from future procurement costs for active power losses. The nominal amount of these instruments was EUR 116.1 million or CHF 109.3 million (previous year: EUR 208.5 million or CHF 193.1 million). As at 31 December 2024, the positive replacement values stood at EUR 3.3 million or CHF 3.1 million (previous year: EUR 0.1 million or CHF 0.1 million) and the negative replacement values amounted to EUR 15.9 million or CHF 15.0 million (previous year: EUR 97.0 million or CHF 89.8 million), resulting in net negative replacement values of EUR 12.6 million or CHF 11.9 million (previous year: EUR 96.9 million or CHF 89.7 million).

23. Other off-balance sheet commitments

Off-balance-sheet lease commitments

Swissgrid has the following off-balance-sheet lease commitments for vehicles and office equipment:

Long-term rental contracts

Long-term rental contracts with fixed terms exist with several parties. These result in the following obligations:

The long-term rental obligations primarily include the rental commitments for Swissgrid’s head office in Aarau.

24. Legal proceedings

Swissgrid’s legal mandate and business activities expose the company to costs that can be passed on to the lower grid levels and end consumers in the form of tariff revenues if EICom deems the costs to be chargeable. ElCom has the right to verify ex post the chargeability of Swissgrid’s costs for tariff-setting purposes.

At present, ElCom has not initiated any proceedings to examine Swissgrid’s chargeable costs. Swissgrid’s Board of Directors and Executive Board believe that all costs were incurred within the framework of Swissgrid’s legal mandate and should therefore qualify as chargeable. Based on this assessment, Swissgrid has treated all operating and capital costs as chargeable and consequently recognised them in full in the volume- and tariff-related timing differences. If, contrary to Swissgrid’s assessment, the costs claimed are ruled to be non-chargeable, this would be reflected in future financial statements.

Third-party proceedings

The financial impact of third-party proceedings in which Swissgrid is involved are included in Swissgrid’s financial statements if the Swiss GAAP FER criteria for recognition have been met. However, they have no direct impact on Swissgrid’s results as they are included in the volume- and tariff-related timing differences.

25. Audit fees

In the 2024 financial year, the fees for auditing services amounted to CHF 198,900 (previous year: CHF 214,000) and CHF 34,000 (previous year: CHF 146,200) for other services.

26. Government grants

In the reporting year, Swissgrid received government grants related to assets totalling CHF 6.2 million for the modernisation and maintenance of the grid, which were offset against the asset (no government grants were received in the previous year).

27. Events after the balance sheet date

There are no events after the balance sheet date that would require disclosure or recognition in the 2024 financial statements.

On 14 April 2025, the Board of Directors of Swissgrid Ltd approved the 2024 financial statements for submission to the General Assembly and for publication.