Annual Media Conference Financial year 2017/18 Andrew Walo, CEO Axpo Holding AG
Programme for the Annual Media Conference 9:30 am Review of the 2017/18 financial year Andrew Walo 10:00 am Financials in the 2017/18 financial year Ulrich Erkens 10:15 am Outlook for the 2018/19 financial year Andrew Walo 10:30 am Questions 11:00 am End of the AMC 1:1 interviews possible Axpo, Annual Media Conference 2018 2
Key points Growth, diversification, value enhancement: the strategy is taking effects. International business again records substantial increase in profits. EBIT increased by 29%; strong operating result of CHF 348 million. Revenues from electricity sales will not see significant improvement until FY 2019/20. Axpo, Annual Media Conference 2018 3
Strong year-end result EBIT and cash flow driven by operating strength EBIT in CHF million + 79 348 Free cash flow in CHF million 474 269 276 175-119 -198-294 FY 2016/17 FY 2017/18 FY 2016/17 FY 2017/18 Cash flow from operating activities Net investments Free cash flow Axpo, Annual Media Conference 2018 4
Strong year-end result Equity in CHF million Total liquidity in CHF million 4884 4978 4 747 5 044 30.09.2017 30.09.2018 30.09.2017 30.09.2018 Axpo, Annual Media Conference 2018 5
Strong year-end result Annual cost savings target of CHF 200 million exceeded in CHF million 91 167 207 242 Reduction of operating and maintenance costs Implementation of IT strategy Establishment of centralised procurement More than 200 savings projects executed in total An additional CHF 35 million savings made in 2017/18 26 FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 Axpo, Annual Media Conference 2018 6
Encouraging developments in Production & Grids Highlights 2017/18 financial year Block 1 of the Beznau nuclear power plant has been connected to the grid again since March 2018. Axpo is setting new standards worldwide with its integrity verification. Technical conditions for up to 60 years of operation are confirmed. Leibstadt nuclear power plant back to 91% output successful proof that there is no oxidation on the fuel elements. Operation at full capacity is expected in 2019. Gas-fired combined cycle power plants in Italy operating very successfully in the system services business. Axpo, Annual Media Conference 2018 7
Renewables achieve good results abroad Highlights 2017/18 financial year The Volkswind project pipeline includes wind farms with around 3,000 MW; 60 wind farms with a capacity of 700 MW have been built so far. Four wind farms were sold to Allianz Global Investors. The sale of wind farms remains one of several options in the value chain. The position as a marketer of renewable energy in Europe was strengthened. Axpo, Annual Media Conference 2018 8
Profitable growth in international business
Physical energy supplies to end customers in TWh 70 ~ 69.0 ~ 70.9 US 60 ~ 56.5 UK 50 40 ~ 39.6 ~ 42.2 ~ 45.1 Nordic and Baltic states Eastern Europe Germany, Austria 30 Belgium, Netherlands, France 20 Spain, Portugal 10 Italy 0 FY 2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 Switzerland Axpo, Annual Media Conference 2018 10
Leader in electricity trading Category Rank Overall Best dealer overall 10 Overall Natural gas dealers 7 Overall Energy dealers 4 Overall Power dealers 1 Natural gas Europe PSV Italy dealers 1 Axpo is the number 1 in electricity trading* Natural gas Europe PSV Italy brokers 1 Power Europe UK dealers 1 Power Europe Germany dealers 1 Power Europe Italy dealers 1 Power Europe Nordpool dealers 1 Power Europe Netherlands dealers 1 Power Europe Belgium dealers 1 Power Europe Spain dealers 1 Power Europe France dealers 2 Power Europe Eastern Europe dealers 2 *according to the annual survey of the trade magazines Risk and Energy Risk Axpo, Annual Media Conference 2018 11
Cash flow trading & sales in Mio. CHF 517 322 455 197 278 OCF p.a. 105 163 92 125 115 195 177 FCF p. a. OCF cumulative FCF cumulative FY 2015/16 FY 2016/17 FY 2017/18 OCF = Operating Cash Flow FCF = Free Cash Flow Axpo, Annual Media Conference 2018 12
Long-term power purchase agreements (PPAs) replace subsidies for renewable energies More renewables More market share More flexibility More PPAs The expansion targets for renewables are high in Europe. The trend is steady. Additional investment in solar, wind, hydropower and biomass is expected. Subsidy systems are being gradually phased out across the EU. Lower costs make market-oriented PPAs possible. Reliable supply is more difficult due to sporadic energy (wind/sun). The need for optimisation is increasing. Energy investors such as banks and pension funds need long-term security. With its extensive expertise in the area of risk management, Axpo is the ideal partner. Axpo, Annual Media Conference 2018 13
Renewable energy portfolio 3,239 Axpo markets 14,000 MW Oslo Helsinki Country-specific risks Axpo manages one of the largest portfolios in Spain; approx. 6,000 MW of renewable energy 170 London 703 Amsterdam Düsseldorf Brussels 170 Leipzig Malmö Warsaw 923 Kiev Development of subsidies for PPAs (power purchase agreements) Lisbon 5,748 Madrid 581 Luxembourg 256 130 Vienna Bratislava Lausanne 100 Baden 489 Lyon Milan Zagreb Bucharest Genoa Belgrade Sarajevo 1,323 Pristina Sofia Rome Skopje Tirana Istanbul Jerez de la Frontera Axpo, Annual Media Conference 2018 Tunis 14
Jan 18 May 18 Sep 18 Dec 18* Retail in Italien: Alleanza 3.0 60000 50000 40000 Active contracts +88% Contracts Jan. Dec. 2018 30000 20000 10000 Acquisition trend 32,200 new customers (acquired in one year) 0 Further development of the customer base 72,000 active points of delivery of Coop Alleanza 3.0 at the end of August 2018 *Estimated Axpo, Annual Media Conference 2018 15
Further highlights in international business Renewables without subsidies Gas licence Ukraine Contract with AEB Amsterdam System services 372 MW PPAs renewable energies Evora: first PV project on the Iberian Peninsula without subsidies thanks to 10-year power purchase agreement. Axpo Ukraine receives licence for gas trading First gas transactions completed in Ukraine Ukraine is a strategic market for the gas business AEB: large waste-to-energy plant in Amsterdam Contract for the procurement of 0.5 TWh per year Access to spot market, intraday trading, derivatives market Italy 2017/18 with significantly higher demand for system services. This makes Axpo s gas-fired combined cycle power plants very successful in this market. Exceptionally high earnings contribution Axpo, Annual Media Conference 2018 16
Further expansion of business that is not dependent on electricity prices
Further expansion of business that is not dependent on electricity prices Successful integrations CKW: acquisition of the Elektro-Fürst Group as a further step towards becoming an energy service provider Axpo WZ Systems AG enjoys successful first year in business Engineering Planning and implementation of grid infrastructure projects incl. installation Grid monitoring with drones service also for third parties Data communication Axpo WZ Systems AG leads the fast-growing market for crisis-proof voice and data communications Successful test of BLUnet at Street Parade: radio data transmission network for emergency services Axpo, Annual Media Conference 2018 18
Further expansion of business that is not dependent on electricity prices Avectris Successful implementation of new strategy Avectris increases revenue and profit by around 30% each, due in particular to growth in thirdparty business Smart energy CKW successfully exploits the potential of decentralised, local energy production Revenues in the areas of energy technology and building automation on growth course Spin-off Elblox Valuable experience gained on pilot project in Wuppertal Elblox platform is met with considerable interest internationally Partnerships with well-known public utilities in Europe on the right track Axpo, Annual Media Conference 2018 19
Financial year 2017/18 Ulrich Erkens, CFO a.i. Axpo Holding AG
Income statement Total income EBIT Result for the period in CHF million in CHF million in CHF million 5 567 4 850 269 348 310 131 FY 2016/17 FY 2017/18 FY 2016/17 FY 2017/18 FY 2016/17 FY 2017/18 Lower electricity prices High revenues from energy derivatives trading Lower total income due to change in how electricity revenues are recorded in accounts Lower electricity prices partially offset by higher volumes Higher earnings contributions from sale and operation of wind farms Good result for gas-fired combined cycle power plants in Italy Previous year Swissgrid expropriation compensation Lower STENFO returns and absence of effects from securities portfolio restructuring has negative bearing on financial result Axpo, Annual Media Conference 2018 21
Total income in CHF million 5 567 86 5 610 139 176 170 760 128 80 42 4 850 Total income FY 2016/17 Swissgrid expropriation compensation Lower electricity prices Lower gas turnover Acquisitions and expansion of IT services Sale and operation of wind farms Results from energy derivatives trading Miscellaneous Subtotal Change to records of electricity turnover Total income FY 2017/18 Axpo, Annual Media Conference 2018 22
New method of recording electricity revenues before now Energy derivatives trading Energy derivatives trading Optimisation Optimisation Production Revenue Physical energy supplies Production Revenue Physical energy supplies Axpo, Annual Media Conference 2018 23
EBIT in CHF million 35 11 348 46 191 59 48 170 70 57 115 Normalised EBIT FY 2016/17 Lower electricity prices Higher depreciation Higher levels of electricity produced Gas-fired combined cycle power plants Hedging effects (hedge books) Effects of impairment on electricity prices Sale and operation of wind farms Savings Miscell aneous EBIT FY 2017/18 Axpo, Annual Media Conference 2018 24
EBIT by segment (excluding special items previous year) Assets in CHF million 83 CKW in CHF million 106 103 52 FY 2016/17 FY 2017/18 FY 2016/17 FY 2017/18 Lower electricity prices partially offset by higher production High revenues for system services at gas-fired combined cycle power plants in Italy Higher depreciation due to full commissioning of Linth-Limmern pumped-storage power plant (FY 2016/17: 97 CHF million accounted) Stable earnings contribution Lower electricity prices offset by improved result in optimisation and proprietary trading (FY 2016/17: 78 CHF million accounted) Axpo, Annual Media Conference 2018 25
EBIT by segment (excluding special items previous year) Trading & Sales in CHF million -57 230 in CHF million FY 2016/17 FY 2017/18 EBIT as reported -57 230 Foreign currency effects 153-72 Hedging effects -32-91 FY 2016/17 FY 2017/18 EBIT adjusted 63 67 Good earnings contributions from Italy, Northern Europe and USA Results in accordance with IFRS positively influenced by foreign currency and hedging effects (FY 2016/17: -58 CHF million accounted) Axpo, Annual Media Conference 2018 26
Cash flow from operating activities 474 in CHF million 37 35 29 75 53 175 91 139 115 170 173 FY 2016/17 Swissgrid expropriation compensation Lower electricity prices NWC change Higher levels of electricity produced Gas-fired combined cycle power plants Sale and operation of wind farms Cost settlement between partner plants Cost savings Miscellaneous Asymmetrical margin calls FY 2017/18 Axpo, Annual Media Conference 2018 27
Investitionen in CHF million FY 2016/17 FY 2017/18 Change Hydro energy 134 105-29 Nuclear energy 46 31-15 Grid 80 90 +10 New energies 4 37 +33 Other 30-65 -95 Wind farms built for own power plant portfolio Stakes sold in GeoEnergie Taufkirchen and Elektrizitätswerke des Kantons Schaffhausen Completion of investments in Linth-Limmern pumped-storage power plant Stable investment in grids Net investments 294 198-96 Axpo, Annual Media Conference 2018 28
Free cash flow in CHF million 474 276 Above-average cash flow from operating activities and sale of participating interests leads to positive free cash flow 175-119 -198-294 FY 2016/17 FY 2017/18 Cash flow from operating activities Net investments Free cash flow Axpo, Annual Media Conference 2018 29
Balance sheet in CHF million 1 437 4 112 5 033 10 027 12 553 1 305 6 452 6 897 10 785 14 014 Total assets increased by CHF 3.2 billion Rising electricity prices lead to sharp increase in derivative financial instruments and other receivables/ payables Solid equity of around CHF 5 billion Assets 4 884 Liabilities Assets 30.09.2017 30.09.2018 4 979 Liabilities Non-current assets Current assets Cash and cash equivalents Equity Non-current liabilities Current liabilities Axpo, Annual Media Conference 2018 30
Net financial assets in CHF million 4 747 5 044 Stable net financial assets position High free cash flow has a positive effect on net financial assets 56 206-4 691-4 838 30.09.2017 30.09.2018 Financial liabilities Cash, time deposits, financial assets Net financial assets Axpo, Annual Media Conference 2018 31
Maturity profile in Mio. CHF 5 000 4 000 3 000 2 000 1 000 0 30.9.2018 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 after FY 27/28 Cash and cash equivalents, time deposits, securities (AFS), financial investments Bonds, loans, private placements Axpo, Annual Media Conference 2018 32
Employees Full-time equivalents 4 441 66 25 48 61 4 222 34 48 101 30.09.2017 Large projects, discontinued activities Increase in efficiency Acquisitions Expansion of trade and retail business IT services New business Miscell 30.09.2018 areas aneous Axpo, Annual Media Conference 2018 33
Outlook Andrew Walo, CEO Axpo Holding AG
Outlook FY 2017/18 Calendar year 2021 - Baseload in EUR nominal 60 Cal-21 in EUR/MWh 50 40 30 20 10 0 Deutschland Germany Axpo, Annual Media Conference 2018 35
Outlook FY 2018/19 Current hedged positions and prices 100% 100% 100% 98% 92% 38.50 34.10 92% 28.80 36.20 39.40 FY 2016/17 FY 2017/18 FY 2018/19 E 2019/20 E 2020/21 (As at 30/09/2018) ᴓ hedged price (EUR/MWh) Axpo, Annual Media Conference 2018 36
Ambition 2020/21 Growth, optimisation, diversification Growth Wind, retail, Origination Avectris Axpo WZ Systems Optimisation Safe operation of assets Coast basis of the group and the assets Diversification new business areas investments business that is not dependent on electricity prices Axpo, Annual Media Conference 2018 37
Ambition 2020/21 EBIT target of CHF 500 million in CHF million Target value ~ 500 500 348 269 250 191 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 Normalised EBIT Axpo Group One-off effect Positive effects, not predictable Axpo, Annual Media Conference 2018 38
Summary Andrew Walo, CEO Axpo Holding AG
Key points Growth, diversification, value enhancement: the strategy is taking effects. International business again records substantial increase in profits. EBIT increased by 29%; strong operating result of CHF 348 million. Prospects much better from FY 2019/20 onwards: EBIT target of over CHF 500 million for 2020/21. Axpo, Annual Media Conference 2018 40
Annual Media Conference Questions