Leading provider of comprehensive energy services

Transcription

1 Leading provider of comprehensive energy services Suzanne Thoma, CEO Beat Grossenbacher, CFO

2 Overview Financials FY 2013 and Outlook Strategy Summary page 2

3 Continued challenging business environment Neighbouring countries / EU Market price New technologies Politics Significant influence of global developments in energy markets page 3

4 BKW reinvents itself BKW thinks ahead positioning itself as a service provider and integrator page 4

5 Achievements FY 2013: Basis for reinvention Juvent: Additional production thanks to repowering +40% 2019 KKM will remain in operation until Wind turbines operated by BKW with total installed capacity of around 400MW Fibre network Strategic installation partner for communication networks 1,000km From 2015, Arnold AG will perform maintenance on high voltage lines for Swissgrid Photovoltaic Integration of EES Jäggi-Bigler AG Innovation at the core 65 projects initiated 85% BKW builds Switzerland s largest LED street lighting installation. Energy savings of 85% achieved. BKW has laid foundation for future success page 5

6 Key figures: Strong operating result Total operating revenue CHF m EBIT * CHF m 2,633 2,860 2, FY 2011 FY 2012 FY 2013 FY 2011 FY 2012 FY 2013 Net profit * CHF m Cash flow from operating activities CHF m FY 2011 FY 2012 FY 2013 FY 2011 FY 2012 FY 2013 * adjusted for exceptional impairment charges for power plants page 6

7 Overview Financials FY 2013 and Outlook Strategy Summary page 7

8 Financial highlights FY 2013 Profitability Cash flow Balance sheet Strong operating profit: adjusted EBIT at CHF 317m Exceptional impairment charges of CHF 489m Adjusted net profit at CHF 166m Proposed dividend of CHF 1.20 Cash flow from operating activities solid at CHF 311m Investments: CHF 518m Net debt / EBITDA at 1.6x Balance sheet remains strong: equity ratio at 31% Successful placement of registered bond Solid financing situation On the back of strong operating result and cash flow, a dividend of CHF 1.20 is proposed page 8

9 Adjustments for exceptional impairment charges CHF m FY 2013 reported adjustments FY 2013 adjusted Operating revenue 2,734 2,734 Energy procurement -1, ,403 EBITDA Depreciation, amortisation and impairment Income from associates EBIT Income taxes Net profit/loss(-) Considerable adjustments for energy production to reflect future expectations of market prices page 9

10 Operating profit (EBIT) CHF m FY 2012 FY 2013 Operating revenue 2,860 2,734 Energy procurement -1,532-1,403 Expenses excluding energy procurement EBITDA Depreciation, amortisation and impairment Income from associates EBIT Key points Operating revenue slightly down, reflecting lower market prices Energy procurement down 8% mainly due to lower procurement volumes, use of provisions for onerous energy purchase contracts as well as to one-off relating to reimbursements to partner plants (CHF +17m) Expansion of workforce in services and new rules for pension accounting led to higher personnel cost (CHF -21m) Income from associates higher CHF 37m mainly due to lower non-capitalized cost of power plants in construction Strong operating profit in persistent challenging market environment page 10

11 Cost reduction and efficiency programme Cost reduction impact is expected to gradually grow until FY15 100% achieved FY 2013 around CHF 80m 50% FY 2012 FY 2013 FY 2014 FY 2015 Income statement position CHF m Cost basis Planned reduction Personnel expenses ~ 300 ~ 30 Material and third-party services and other operating expenses ~ 300 ~ 65 Total % Cost reduction and efficiency programme on track, in the future an ongoing process page 11

12 BKW business model and segments page 12

13 Business segments: Contribution to operating profit CHF m FY 2012 FY Production Renewables & Efficiency -133 Market Networks BKW Group Swiss supply business as solid contributor to operating profit page 13

14 Production: Portfolio management is key Mission Management of power plant portfolio with focus on hydro production Concentration of investment activities on small hydro power plants Development of service business based on comprehensive experience Key figures CHF m FY 2012 FY 2013 Operating revenue 1,188 1,203 EBITDA EBIT Investments Key points Increased generation volumes Significantly lower internal transfer prices for energy Higher production cost of power plants Positive impact of cost reduction programme One-off in relation with court decision on cost for system services (CHF +17m) page 14

15 Renewables & Efficiency: Technological innovation Mission Technological innovation for customer solutions Development of wind power portfolio Integration of comprehensive energy services Key figures CHF m FY 2012 FY 2013 Operating revenue Income from services EBITDA EBIT 7-5 Investments Key points Further development of services business Continued expansion of generation from new renewable energy sources Additional production capacity neutralised by less favourable wind conditions in Germany and lower prices in Italy Operating profit impacted by set-up costs for services and innovation areas page 15

16 Market: Solutions at customer front Mission Management of comprehensive portfolio of products and services Market solutions at customer front Management of BKWs energy positions Key figures CHF m FY 2012 FY 2013 Operating revenue 2,191 2,118 Sales Switzerland Sales international Proprietary trading EBITDA EBIT Key points Slightly higher volumes of sales Switzerland and international; however, revenues lower due to decreased price levels Proprietary trading down, impacted by negative price development at end of year Operating profit significantly higher than previous year but still negative owing to price difference between internal procurement prices and sales prices page 16

17 Networks: Backbone of stable long-term profitability Mission Management of own distribution grid Development of innovative technological solutions of modern integrated networks Development of technological solutions for grid operators Key figures CHF m FY 2012 FY 2013 Operating revenue Grid usage fees Income from services EBITDA EBIT Investments Key points Stable grid usage fees Increased income from services, partly due to maintenance of transmission grid Operating profit positively impacted by one-offs: sale of transmission grid (surplus from disposal CHF 31m) and reimbursement of system services costs CHF 12m page 17

18 Net profit CHF m FY 2012 FY 2013 EBIT Financial result thereof Value adjustment on state funds Interest expenses Interest on provisions Income taxes Net profit Key points Good performance of 7% from state funds, but CHF 7m lower than very strong previous year Higher interest expenses due to registered bonds issued end-2012 Higher interest expenses on provisions following update of estimation for nuclear waste disposal and provisions for onerous energy procurement contracts Income taxes higher due to one-off effect from Robin Hood Tax in Italy Solid adjusted net profit as basis for attractive dividend page 18

19 Cash flow statement CHF m FY 2012 FY 2013 Key points Cash flow before change in net current assets and income taxes paid Cash flow from operating activities Cash flow from investing activities (incl. financial assets) thereof Capex (property, plant & equipment) Equity-valued comp. and group companies Cash flow from financing activities Stable cash inflow from operating activities, only slightly lower than previous year Cash outflow from investing activities significantly higher Investments in group companies refer particularly to acquisition of a wind farm and small hydro power plants Higher long-term deposits than in previous year Cash inflow from financing activities due to placement of registered bond (EUR 150m) Solid cash inflow from operating activities page 19

20 Investments FY13: Important foundation for the future Key points Investments: CHF 518m regulated regulated 2/3 of total investments in regulated area 2/3 of investments in production facilities in renewables not regulated Services: investments in knowledge as basis for innovations Energy Networks Services Diversification and cautious investments in large-scale power plants page 20

21 Balance Sheet CHF bn 2,2 5,1 Non-current assets Current assets 0,8 4,0 2,5 2,1 5,6 FY 2012 FY 2013 Equity Long-term liabilities Current liabilities 0,9 4,4 2,4 Key Points Balance sheet total 5% higher year-on-year Fixed assets higher 9% Acquisition of production plants Increase in value of state funds Rise in loans to associates Long-term liabilities rose by 9% Higher provisions for nuclear waste disposal and onerous contracts Registered bond issued Pension liabilities significantly reduced Solid balance sheet, equity ratio of 31% page 21

22 Outlook FY 2014 BKW is not expecting any change in the challenging market environment in the current financial year, with energy prices set to remain low and ongoing margin pressure on the markets. Coupled with regulatory requirements and a persistently strong Swiss franc, this will also affect the operating result for Stable networks business, production volumes that have been largely hedged for some time now and the ongoing expansion of the services business lead BKW to expect its operating profit and net profit to remain in line with the adjusted figures for the 2013 financial year, subject to any impairments. page 22

23 Overview Financials FY 2013 and Outlook Strategy Summary page 23

24 Changing market structures Global trends with influence on Swiss utilities Increasing pressure of regulation Political will to promote renewable energy production Uncertainties about development of electricity prices Growing business opportunities outside classical energy supply Possibly a fundamental shift in market structure Redesign of energy system leads to business opportunities for innovative companies BKW to capitalize on those opportunities page 24

25 BKW reinvents itself! BKW thinks ahead positioning itself as a service provider and integrator page 25

26 Management at full strength Suzanne Thoma Renato Sturani Hermann Ineichen CEO Renewables & Efficiency Production Christophe Bossel Monica Dell Anna Beat Grossenbacher Networks Market CFO Implementing the new strategy page 26

27 Focus on technology-based comprehensive customer solutions Intelligent energy management establishment of smart solutions Intelligent street lighting expansion in large parts of Switzerland Intelligent ripple control customised solution for distributors Intelligent engineering and construction services Strong growth in technology-based portfolio of services page 27

28 Direct access to end customers: Sales ~360,000 regulated customers Energy sales customer base ~20,000 30,000 Services customer base Structural change as an opportunity to further expand services customer base nationwide through innovations page 28

29 Hydro power: Question mark over large hydro production Installed capacity 1,591 MW Focus on investments in regulated small power plants Investment options in non-regulated power plants under review Development of services business on basis of existing competence in hydro engineering 4 TWh Production in FY 2013 Increased production Hagneck +35% Consistent but cautious expansion of regulated hydro power page 29

30 Wind power: Growing committment to wind +25% Production volume increased to 0.6 TWh Focus on further expansion of wind portfolio Geographical diversification Regulated production provides assurance Competence as an operator key to expand services business Installed capacity +27% Increased production Juvent +40% Leading position as Swiss operator of wind farms. Capitalize on extensive know-how page 30

31 Networks: Large distribution grid in Switzerland 22,000km distribution grid Further development of grid infrastructure System competence: Innovative technological solutions for modern integrated networks 2013 transmission grid transferred to Swissgrid Technological solutions for grid operators Regulated business with stable contribution to operating profit Solidly growing business Extensive own grid provides opportunities for development of new services page 31

32 Nuclear power: Decision on operating period of KKM Decision to operate KKM until FY 2019 Reflects an entrepreneurial decision Consideration of all known technical, economic, regulatory and political aspects Implications Reduction of business risk Decision will free up funds that can be redeployed in other strategic areas Strategic long position not lost: baseline supply of customers and supplies to distribution partners ensured Focused planning of important decommissioning phase already begun KKM to go offline in 2019 BKW decision creates clarity page 32

33 Overview Financials FY 2013 and Outlook Strategy Summary page 33

34 Committed investments 2014 to 2017: CHF 0.7 billion (ready to invest up to CHF 1.0 billion, if conditions are met) CHF m Cumulative investments Hydro: Partner plant investments not included (e.g. KWO, BIK) Depending on Opportunities; ready to make significant investments Committed Not yet committed 0 Hydro New renewable energies Wind Coal Nuclear Networks new business initiatives Other 33% 67% Investments in regulated areas Investments in non-regulated areas Investment focus: regulated areas and new business initiatives page 34

35 New business initiatives: technological innovations and product solutions Technologies & services for grid operators Technologies & services for power plant operators New products in energy trading Operation of energy systems (microgrids, heating, wind farms) BKW thinks ahead creating portfolio of innovations page 35

36 BKW is reinventing itself as a provider of comprehensive energy services Strengthening portfolio of services alongside traditional electricity production business page 36

37 Appendix page 37

38 Appendix: Financial Calendar and contact information Financial Calendar Annual General Meeting 9 May 2014 Ex-Dividend Date 13 May 2014 Dividend Payment 16 May 2014 Publication of 2014 Interim Results 11 September 2014 For further information, please contact: Thomas Herren, Investor Relations Officer Tel (+41) investor.relations@bkw.ch page 38

39 Appendix: Production Production and purchases in GWh FY 2013 FY 2012 Capacity FY 2013 Hydroelectric plants 3,912 3,963 Nuclear power plants incl. purchase contracts Fossil-thermal power plants New renewable energy incl. fin. investments 5,833 5, % 44% Output FY 2013 Peak load Base load Total production 11,180 10,811 Trade (purchases) and energy buy-backs 8,221 9,229 77% 23% Peak load Base load Total 19,401 20,040 Total capacity MW 3,046 2,918 Peak load: storage, pump storage plants and CCGT Tamarete Base load: run-of-river, nuclear, other plants page 39

40 Appendix: BKW Group Generation overview Germany Generation FY TWh Switzerland (Core market) Generation FY 2013 (incl. French purchase contracts) 9.7 TWh Installed production Installed production under construction 141 MW 248 MW Installed production MW Installed production under construction 153 MW Italy Generation FY TWh Installed production MW Installed production under construction 0 MW page 40

41 Appendix: Hydro power Most recent activities Construction permit received for several small hydro power plants Concession already granted or in preparation for further small hydro power plants in Switzerland Acquisition of five small hydro power plants in Italy (10 MW) Installed capacity in MW Capacity in construction in MW Production volume FY 2013 in GWh Run-of-river ,354 Storage Pump-Storage 1, ,954 Small hydro TOTAL 1, ,002 page 41

42 Appendix: Wind power Most recent activities Acquisition of wind farm Castellaneta, Apulia (I), 56 MW Helvetic Wind Joint Venture: Acquisition of three wind farms in Germany (48 MW) and a wind farm in Italy (36 MW) Juvent: 6 MW added through repowering of wind turbines Installed capacity in MW Production volume in GWh end-2012 end-2013 Change in % FY 2012 FY 2013 Change in % % % page 42

43 Appendix: Fossil-fuelled thermal power plants Germany: Base load production capacity Project: Coal-fired power plant in Wilhelmshaven Italy: Base and flexible production capacity On-stream: Gas-fired combined cycle power plants Livorno Ferraris and Tamarete Wilhelmshaven BKW stake 33% Capacity 240 MW Production volume 1.8 TWh Investment (EUR m) 540 Operated by GDF Suez Scheduled to go on-stream Mid-2014 Livorno Ferraris Tamarete BKW stake 25% 60% Capacity 200 MW 50 MW Production volume 1 TWh 0.25 TWh Investment (EUR m) Operated by E.ON BKW On-stream Since 2008 Since 2013 page 43

44 Appendix: Sales Sales in GWh FY 2013 FY 2012 Key points Electricity sales Switzerland Electricity sales International 7,536 7,465 1,762 1,696 Delivering electricity directly and indirectly via its distribution partners to more than 1 million residents in Switzerland Electricity trading 9,637 10,384 Pump energy Transmission losses and own consumption Direct sales from fin. investments Total 19,401 20,040 Strong market position one of the most important distributors in Switzerland Energy supply prices to regulated customers increase 3%, effective 1 January 2014 Electricity sales international refer to sales activities in Italy page 44

45 Appendix: Direct access to end customers Advantageous market position through proven partnership models: Youtility (around 110 regional partners), Abonax in Eastern Switzerland and with Groupe E in Western Switzerland Energy supply prices to regulated customers increase 3%, effective 1 January 2014 Customer structure Customers FY 2013 GWh delivered Regulated customers (Switzerland) Business customers (Switzerland and Italy) Distributors (Switzerland and Italy) FY 2012 GWh delivered % change ~357,000 2,107 2,054 +3% ~3,000 3,027 3,026 +0% ~130 4,164 4,080 +2% Total ~360,000 9,298 9,160 +2% Services: expansion through innovations and focused acquisitions Services Customers ~20,000 to 30,000 Sales 198 MCHF Sales 176 MCHF +12% page 45

46 Appendix: Hedging of (outright) Swiss power generation Generation volume of around 6 TWh sold for FY Average hedge price 2014 ~64 /MWh 2014 Hedge ratio mid-march % 0% 2015 ~55 /MWh % 0% 2016 ~43 /MWh % 0% 0% 20% 40% 60% 80% 100% Hedged volumes Open volumes page 46

47 Appendix: Extensive distribution network in Switzerland BKW grid covering local, regional and interregional lines at all voltage levels BKW and ten other Swiss electrical utilities combined activities under Swiss Smart Grid Association with long-term goal to drive forward rollout and implementation of smart grid in Switzerland Transmission grid transferred to Swissgrid on 3 January Grid usage fees increase 4%, system service costs 2% and compensatory feed-in remuneration 1%, effective 1 January 2014 Distribution grid Voltage (kv) Length of lines (km) Interregional distribution (high voltage) 132 & 65 & 50 ~1,000 Regional distribution (medium voltage) 16 ~6,000 Local distribution (low voltage) 0.4 & 0.23 ~15,000 page 47

48 Appendix: Shareholder structure free float of 22.3% BKW Inc. shares are listed on the main standard of SIX Swiss Exchange (SIX) and are included in the Swiss Performance Index (SPI) Significant shareholders 22.3% 8.5% 6.7% 10.0% 52.5% Canton of Berne Groupe E Ltd. E.ON Energie AG Treasury shares Free float page 48

49 Appendix: State funds for nuclear waste disposal and decommissioning Financial assets: Two state funds cover future cost of nuclear waste disposal and plant decommissioning Basis: Ordinance on Decommissioning and Waste Disposal Funds for Nuclear Installations (SEFV) Calculation based on following assumptions: Operating period of 50 years Average inflation rate of 3% Interest rate of 5% Payments per year: ~CHF 30m Value of funds December 2013: CHF 783m CHF m 1'500 1'300 1' actual value and estimated development reference value and reference development Planned Revision of Regulation: SEFV In August, the Federal Council communicated its intention to revise the Ordinance on Decommissioning and Waste Disposal Funds for Nuclear Installations (SEFV) Suggested parameters: inflation rate: 1.5%, interest rate: 3.5%, additional cost for uncertainty: 30% Consultation began 21 August and lasts until 22 November 2012, enactment mid-2014 at the earliest Impact if applied: payments until FY 2022 increase to a total of CHF 600m instead of CHF 300m page 49

50 Appendix: Provision for nuclear waste disposal and decommissioning CHF m Decommissioning Disposal of spent fuel elements Plant specific activities Total Cost calculation (price level 2011) 891 1, ,983 Provisions as per , ,351 Paid as per Net provisions as per ,587 Actualisation of cost calculation every 5 years Calculation based on following assumptions: Operating period of 50 years, average inflation rate of 3%, interest rate of 5% Provision also covers post-operational phase after shutdown, change management, disposal of spent fuel elements before shutdown and plant specific activities (activities not covered by state funds) Planned Revision of Regulation: SEFV Impact of suggested revision of SEFV if fully used for calculation of provision: Provision for nuclear waste disposal and decommissioning needed to be increased up to CHF 300m Trigger for a impairment test on KKM page 50

51 Appendix: Investments FY 2013 amount to CHF 518m (FY 2012: CHF 241m) CHF m FY 2012 FY Hydro New renewable energies Wind Coal Nuclear Networks Other page 51

52 Appendix: Net debt CHF m FY 2012 FY Net debt / EBITDA* FY 2013: 1.6 FY 2012: 1.0 Cash & equivalents & current financial assets Financial debt Net financial debt * adjusted for exceptional impairment charges for power plants page 52

53 8 yrs, 1.875% 10 yrs, 3.375% 15 yrs, 3% 15 yrs 20 yrs, 2.5% 20 yrs 20 yrs Appendix: Long-term financing framework in place CHF m 350 Bonds Registered notes Other financial liabilities Strong liquidity reserves through flexible and as yet unused syndicated loan (CHF 300m, minimum term 3 years) raised in FY 2011 Placement of registered note in FY 2013 (150 MEUR, 20 years) page 53

54 Disclaimer This presentation contains forward-looking statements which are made on the basis of current expectations and assumptions. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Potential risks and uncertainties include, among others, such factors as market and economic conditions, governmental regulations, competitive conditions, interest rates and fluctuation in currency exchange rates. Although BKW believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved. BKW undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. page 54