Media and Financial Analysts Conference Dietlikon, 1 September 2011 Hp. Fässler / B. Fellmann / A. Henniger
Interim Financial Statements 2011 Swiss Construction and Real Estate Market Implenia Corporate Center September 2011 Page 2
Swiss real estate market Record low mortgage rates home ownership makes sense Historical mortgage interest Rates Ownership premium in percent Quotient < 1: The annual net cost of a condominium is less than the cost of renting a comparable apartment Source: Swiss National Bank, Datastream Source: Credit Suisse Economic Research Implenia Corporate Center September 2011 Page 3
Swiss real estate market Vacancies in the core regions remain low Locational quality and vacancy rates 2010 Source: Credit Suisse Economic Research, Geostat Implenia Corporate Center September 2011 Page 4
Swiss real estate market Sustained demand Breakdown of building permits by type of use Number of residential units Source: Schweizer Baublatt, Credit Suisse Economic Research Implenia Corporate Center September 2011 Page 5
Q1 1980 = 100 Swiss real estate market No indications of overheating Real estate price indices (real terms) 350 300 250 200 150 100 50 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Rental apartments, total Condominiums Single-family homes Office space Commercial permises Disposable income Source: Wüest & Partner, UBS WMR Implenia Corporate Center September 2011 Page 6
Swiss construction market Fundamentals are good but still low prices/earnings expected Market participants are confident about volumes... but sceptical about selling prices and earnings This is how sector players see the future of construction volumes selling prices earnings higher Q4 10 Q1 11 Q2 11 Q3 11 Q4 10 Q1 11 Q2 11 Q3 11 Q4 10 Q1 11 Q2 11 Q3 11 6 13 21 11 unchanged -15-13 -7-7 -7-11 -4-6 lower Max = 100 / Min = -100 Source: UBS outlook Schweiz, 3. Quartal 2011 Implenia Corporate Center September 2011 Page 7
Swiss construction market No trend reversal expected Civil works Constant investment activity in the public sector Infrastructure renewal Upside potential for investment in the energy sector (hydroelectric power stations etc.) Buildings Fundamentals still intact low interest very low vacancies strong demand Regional differentiation in terms of competition over prices/margins Implenia Corporate Center September 2011 Page 8
Interim Financial Statements 2011 Highlights and key figures Implenia Corporate Center September 2011 Page 9
Highlights Business model proving its worth major objectives achieved Performance General Contracting: best interim results ever Project Development: good project pipeline Industrial Construction: solid progress made, with good performance on the Gotthard Infrastructure Construction: well below expectations Major objectives achieved Project Development: expanded portfolio Foundations laid for improved claims management Groupwide standardized salary system in introduction Expansion Acquisition in Norway second home market for tunnelling Order successes in the Middle East with micro tunnelling Real Estate: strengthened market presence in central Switzerland Roadmap to the first Implenia sustainability report Implenia Corporate Center September 2011 Page 10
Key figures and operating income Key figures for the Group in CHF millions June 2011 June 2010 +/- in % Consolidated revenue 1'084.7 1'062.9 2.1% EBIT before special charges 13.0 16.8-22.8% Operating income 12.3 19.4-36.3% 1.1% 1.8% Consolidated profit 4.2 12.5-66.1% 0.4% 1.2% Implenia Corporate Center September 2011 Page 11
General Contracting / Services revenue and EBIT High revenue, record EBIT in CHF millions Revenue (IFRS) EBIT before special charges 524 519 513 501 555 10 9.1 9.4 3.0% 8 6 4 3.6 0.7% 6.6 1.3% 1.8% 6.1 1.2% 1.7% 2.5% 2.0% 1.5% 1.0% 2 0.5% 2007 2008 2009 2010 2011 0 2007 2008 2009 2010 2011 0.0% Implenia Corporate Center September 2011 Page 12
General Contracting / Services order books as at 30.06.2011 Still at a high level in CHF millions Order book June 2011 June 2010 Secured revenue Secured revenue in % West 662.2 587.0 Central 263.2 309.6 East 185.6 133.3 Zurich 483.0 742.1 Reuss 9.1 10.9 TOTAL order book 1'603.1 1'782.9 95.7% 66.3% 17.3% 2011 2012 2013 High-performance data centre at ETH Zurich, Lugano Europaallee, Baufeld E, Zurich Implenia Corporate Center September 2011 Page 13
Real Estate (Project Development) invested capital and EBIT Portfolio expanded in CHF millions Invested capital EBIT before special charges 222 192 181 149 211 12 10 8 6 4 6.4 4.2 10.3 8.9 2 1.2 2007 2008 2009 2010 2011 0 2007 2008 2009 2010 2011 Implenia Corporate Center September 2011 Page 14
Real Estate (Project Development) development projects Promising second half-year Winterthur Legend Property in the Implenia portfolio Project earnings realized in H1 2011 Project earnings forecasted for H2 2011 The circle sizes reflect the project earnings achieved or forecasted Implenia Corporate Center September 2011 Page 15
Tunnelling revenue and EBIT Strong performance! in CHF millions Revenue (IFRS) EBIT before special charges 69 83 71 83 78 20 17.1 40% 35% 15 10 12.0 17.5% 20.5% 13.2 18.6% 11.5 13.8% 11.5 14.7% 30% 25% 20% 15% 5 10% 5% 2007 2008 2009 2010 2011 0 2007 2008 2009 2010 2011 0% Implenia Corporate Center September 2011 Page 16
Tunnelling order book as at 30.06.2011 Reduction in line with expectations in CHF millions Order book June 2011 June 2010 West 247.4 291.1 German-speaking Switzerland 40.2 100.0 Alps (incl. NEAT) 227.3 309.4 Abroad 10.7 0.7 TOTAL order book 525.6 701.2 Secured revenue 98.7% 51.0% Secured revenue in % 28.1% 2011 2012 2013 Microtunnelling project, Al Ain (Abu Dhabi, UAE) A8 tunnel bypass, Lungern Implenia Corporate Center September 2011 Page 17
Prime Buildings revenue and EBIT Further improvement in CHF millions Revenue (IFRS) EBIT before special charges 5.1 0.0 2.5 1.7 3.6-0.5-1.0-1.5-2.0-2.5-0.9-2.1-1.1 0.5-3.0-3.5-3.4-3.0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Implenia Corporate Center September 2011 Page 18
Prime Buildings order book as at 30.06.2011 Torre Turin in CHF millions Order book June 2011 June 2010 Prime Buidlings 89.4 105.0 TOTAL order book 89.4 105.0 Secured revenue 99.6% 80.5% Secured revenue in % 60.9% 2011 2012 2013 Torre Banca Intesa San Paolo, Turin (IT) Central Olympia Stadium, Sochi (RUS) Implenia Corporate Center September 2011 Page 19
Infrastructure Construction revenue and EBIT EBIT slumped in the first half-year in CHF millions Revenue (IFRS) EBIT before special charges 524 535 500 505 511 0-5 -1.2% -1.2% -1.5% -1.3% 0.0% -0.5% -1.0% -1.5% -10-6.4-6.0-7.4-6.7-2.5% -2.0% -2.5% -3.0% -3.5% 2007 2008 2009 2010 2011-15 2007 2008 2009 2010-12.8 2011-4.0% -4.5% Implenia Corporate Center September 2011 Page 20
Infrastructure Construction analysis of EBIT decline Price and margin pressure, and project management errors in CHF millions -6.7-1.2-2.1-1.7-0.4-0.9 0.2-12.8 Prior-year result Lack of CM as a result of lower volumes (Zurich, Basel) Project losses Building Zurich Margin pressure in specialist fields (competitors from abroad) Forex effects Works Efficiency improvements Result 30.06.2011 Implenia Corporate Center September 2011 Page 21
Infrastructure Construction - situation analysis Positive and negative trends Market segment Civil works Buildings Foundation engineering Civil engineering Current environment Measures Trends Constant public-sector investment Fierce price competition in certain regions Opportunities in infrastructure renewal Healthy real estate market Very low entry barriers result in price and volume competition More vigorous international competition (forex problem) Importance of equipment capacity utilization Constant market volume Opportunities in infrastructure renewal (incl. energy sector) Further optimizations in equipment Exploit economies of scale Adjust capacities in the centres Maintain services in the regions (full service provider) Make further improvements / optimizations to equipment utilization Exploit economies of scale Enhance expertise Implenia Corporate Center September 2011 Page 22
Infrastructure Construction - situation analysis Colossal pressure on the price front Analysis of rejected tenders in the Bern, Solothurn region 1st half of 2011 Tender prices average 17.1 % below those of the same period in the previous year difference most expensive to best offer2 difference Implenia to best offer calc. CM Implenia 100% 80% 60% 40% 20% 0% Implenia Corporate Center September 2011 Page 23
Infrastructure Construction list of measures Numerous measures have been initiated Measures initiated: Transfer of capacities Structural adjustments Headcount adjustments in sustainably unprofitable markets Optimization of purchasing abroad Transfer of product mix Flexibilization of fixed costs (equipment) Implenia Corporate Center September 2011 Page 24
Infrastructure Construction headcount Headcount adjustments primarily in Buildings segments Total, last 12 months 12% 6% 82% reduction in temporary staff reduction in permanent staff remaining headcount Headcount of Infrastructure Construction, total 4,960 July 2010 78 perm +/- staff -168 temp 4,870 July 2011 Basel Berne Zurich 13% 4% 5% 27% 10% Implenia Corporate Center September 2011 Page 25
Infrastructure Construction order book as at 30.06.2011 Discipline is key to winning orders in CHF millions Order book Juni 2011 Juni 2010 West 217.7 239.2 East / Zurich 145.0 233.5 Alps 115.0 143.2 Central 129.7 151.0 Civil engineering 182.8 183.9 TOTAL order book 790.2 950.8 Secured revenue 83.0% 23.5% Secured revenue in % 2.3% 2011 2012 2013 Electrolux Professional AG, Sursee NEAT lots 033 and 041, Erstfeld Implenia Corporate Center September 2011 Page 26
Interim Financial Statements 2011 IFRS reporting Implenia Corporate Center September 2011 Page 27
EBIT Operating income Consolidated earnings Below the previous year in CHF millions June 2011 June 2010 +/- in % EBIT divisions 15.7 19.1-17.6% Holding costs and special charges -3.4 0.3 Operating income 12.3 19.4-36.3% 1.1% 1.8% Financial result (net) -5.6-3.2 Profit before tax 6.8 16.1-58.2% 0.6% 1.5% Tax -2.5-3.7 Consolidated profit 4.2 12.5-66.1% 0.4% 1.2% Implenia Corporate Center September 2011 Page 28
Income statement Key figures Heavily seasonal in CHF millions Consolidated earnings EBITDA 60 50 40 30 20 10 0 25.5 22.0 1.1% 3.5 2007 40.0 23.2 1.7% 11.3 5.5 2008 47.1 40.9 2.1% 6.2 2009 52.5 40.0 2.2% 12.5 2010 4.2 2011 6% 5% 4% 3% 2% 1% 0% 120 100 80 60 40 20 0 84.7 3.6% 60.5 24.2 2007 98.5 4.2% 54.8 11.3 32.4 2008 112.6 104.6 4.6% 4.7% 75.5 76.0 29.1 36.6 2009 2010 29.4 2011 8% 7% 6% 5% 4% 3% 2% 1% 0% Margin Sale of Privera HY2 Margin Sale of Privera HY2 Implenia Corporate Center September 2011 Page 29
Balance sheet Assets High liquidity NWC under control in CHF millions June 2011 June 2010 +/- in % Cash and cash equivalents, securities 246.9 250.1 Debtors / work in progress 712.5 767.3 Real estate operations 229.4 169.9 Other current assets 112.1 88.1 Total current assets 1'300.9 1'275.4 2.0% Total non-current assets 368.8 352.6 4.6% Total ASSETS 1'669.7 1'628.0 2.6% Implenia Corporate Center September 2011 Page 30
Balance sheet Liabilities Equity ratio at a good 30% in CHF millions June 2011 June 2010 +/- in % Current financial liabilities 1.4 3.2 Creditors / work in progress 706.6 759.7 Other current liabilities 190.4 166.9 Total current liabilities 898.4 929.8-3.4% Non-current financial liabilities 198.4 198.1 Deffered taxes, provisions 76.7 42.2 Total non-current liabilities 275.1 240.3 14.5% Equity and non-controlling interest 496.2 457.9 8.4% Total LIABILITIES 1'669.7 1'628.0 2.6% Implenia Corporate Center September 2011 Page 31
Cash flow statements Reduction in advance payments 12.5 in CHF millions 2010: -64.4-3.0 0.6 3.8-11.0-61.5 Result 4.2 Change in NWC (excl. advance payments and real estate transactions) Change in advance payments Cash flow for real estate transactions Non-monetary and other transactions Cash flow investments Free cash flow 2011: -50.8-28.0-12.6-6.9-7.3-101.4 Implenia Corporate Center September 2011 Page 32
Currency situation Very small exposure Assets Liabilities Revenue 6.6% 4.1% 9.3% 3.4% 2.9% 2.9% 89.4% 87.3% 94.2% share FX excl. NOK share FX NOK share CHF Currency translation effect (equity) CHF 2.6 mn 1 Currency transaction effect (P/L) CHF 0.2 mn 1 incl. CHF 51 mn in intercompany loans Implenia Corporate Center September 2011 Page 33
Interim Financial Statements 2011 Acquisition of Betonmast Anlegg AS Implenia Corporate Center September 2011 Page 34
Acquisition of Betonmast Anlegg AS Strong player with firm roots Concrete pole locations 1. Oslo head office 2. Bergen 3. Sandnes 4. Ålesund 5. Trondheim Logistical locations 1. Sande i Vestfold 2. Hakadal 246 strong Vikings Employees No. Ø age 2 3 4 1 1 5 2 White collar 109 43.4 years women 13 n/a men 96 n/a Blue collar 137 39.7 years women 0 n/a men 137 n/a TOTAL 246 41.4 years Implenia Corporate Center September 2011 Page 35
Acquisition of Betonmast Anlegg AS Activities Tunnelling 107 Volume in EUR mn 122 100 99 Civil engineering 2008 2009 2010 E 2011 Revenue breakdown by divisions 1 39% 7% 41% Tunnelling Road building Civil engineering Road building Other 14% 1 Base: 2010 revenue Implenia Corporate Center September 2011 Page 36
annual avarage, in NOK millions Acquisition of Betonmast Anlegg AS Norway an attractive market with growth potential Constant growth in construction market volumes of approx. NOK 45 bn, based on and supported by a strong Norwegian economy public-sector economic initiatives during the financial crisis of 2010 National Transport Plan 2010-2019 The Norwegian infrastructure construction is picking up National Transport Plan 2010 2019: an investment in the Norwegian future Roads (incl. bridges and tunnels) Power & energy Railways 25'000 20'000 15'000 10'000 5'000 Road Railway - 2002-2005 2006-2009 2010-2013 2014-2019 Quelle: Prognosesenteret AB Quelle: Norwegian Ministry of Transport an Communications, National Transport Plan 2010-2019 Implenia Corporate Center September 2011 Page 37
Acquisition of Betonmast Anlegg AS The perfect WIN WIN situation Compensation for revenue from expiring NEAT lots Consistent implementation of international strategy in the area of infrastructure and tunnel construction Amalgamation with partner to finance its growth strategy Lack of expertise on major projects Insufficient logistical capacities Major-project expertise TBM technology Logistics Resources (manpower, financing) Win-win situation Market presence, contacts Reputation Market knowledge Technical specialists In Norway arises a new, powerful construction services provider with growth potential Implenia Corporate Center September 2011 Page 38
Interim Financial Statements 2011 Outlook Implenia Corporate Center September 2011 Page 39
Current order books Still high with good visibility 95.7% Secured revenue 49.6% 14.1% 2011 2012 2013 Implenia Corporate Center September 2011 Page 40
Outlook Good reasons for confidence The market in 2011 Struggle for volumes in building production Infrastructure construction still at a high level Intact demand for investment properties, location is crucial Regional differences are sharpening The outlook for business performance in 2011 High order books provide security General Contracting on levels Good, expanded portfolio for Project Development Tunnelling Switzerland: discernible improvements on the Gotthard Overseas business picking up speed, first consolidation of Norway Infrastructure Construction: an appealing H2 2011 result despite strong headwinds Implenia Corporate Center September 2011 Page 41
Disclaimer THESE MATERIALS DO NOT CONSTITUTE OR FORM PART OF ANY OFFER TO SELL OR ISSUE, OR ANY SOLICITATION OR INVITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE FOR, ANY SECURITIES, NOR SHALL PART, OR ALL, OF THESE MATERIALS OR THEIR DISTRIBUTION FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR INVESTMENT DECISION IN RELATION TO ANY SECURITIES. THE MATERIALS MIGHT CONTAIN FORWARD-LOOKING STATEMENTS BASED ON THE CURRENTLY HELD BELIEFS AND ASSUMPTIONS OF THE MANAGEMENT OF IMPLENIA AG (THE "COMPANY", AND TOGETHER WITH ITS SUBSIDIARIES, THE "GROUP"), WHICH ARE EXPRESSED IN GOOD FAITH AND, IN THE MANAGEMENT S OWN OPINION, REASONABLE. FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS, WHICH MAY CAUSE THE ACTUAL RESULTS, FINANCIAL CONDITION, PERFORMANCE, OR ACHIEVEMENTS OF THE GROUP, OR INDUSTRY RESULTS, TO DIFFER MATERIALLY FROM THE RESULTS, FINANCIAL CONDITION, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. GIVEN THESE RISKS, UNCERTAINTIES AND OTHER FACTORS, RECIPIENTS OF THIS DOCUMENT ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. THE GROUP DISCLAIMS ANY OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR DEVELOPMENTS. OPINIONS AND FORWARD-LOOKING INFORMATION PRESENTED HEREIN ARE BASED ON GENERAL INFORMATION GATHERED AT THE TIME OF WRITING. Implenia Corporate Center September 2011 Page 42