Agenda SWISS EQUITIES CONFERENCE BKW 11.01.2018 2 Overview Strategy Q&A
Overview
BKW 11.01.2018 4 Key figures 2016 Operating revenue CHF 2.9bn EBIT CHF 384m Operating Cash flow CHF 358m Liquidity CHF 1.2bn Net debt CHF 439m Employees Generation Distribution grid 6,100 FTE 11.2 TWh ~22'000 km 37.5% 10.0% 52.5% Shareholders Canton of Berne Groupe E Free float
BKW business areas SWISS EQUITIES CONFERENCE BKW 11.01.2018 5 Energy Grid Services Production (capacity: ~3'700 MW), trading, sales Distribution grid: ~22'000km Services around infrastructure Revenue: CHF 1,500m Employees: 1,000 FTE Revenue: Employees: CHF 900m 800 FTE Revenue: Employees: CHF 570m 4,300 FTE
BKW 11.01.2018 6 BKW growth strategy 2017 2007 BKW Energie AG
BKW 11.01.2018 7 Negative price effects on operating revenue successfully compensated on EBIT-level CHF m 500 140 - CHF 600m 240 150 70 Market price of electricity 400 60 EUR/MWh 300 324 317 347 309 346 200 239 182 182 30 EUR/MWh 100 0 2011 2012 2013 2014 2015 2016 HY 2017 price effect on operating revenue
BKW 11.01.2018 8 Share price and volume both increased CHF 65 Share price 30.80 CHF Daily volume CHF 0.4m Share price 34.60 CHF Daily volume CHF 0.5m Share price 42.80 CHF Daily volume CHF 1.0m Share price 55.60 CHF Daily volume CHF 2.1m Volume in pcs 40'000 60 35'000 55 30'000 50 25'000 45 20'000 40 15'000 35 10'000 30 5'000 25 0 BKW SPI
Strategy
BKW 11.01.2018 10 Market environment Market price of electricity 60 EUR/MWh International factors - Low commodity and CO2 prices - Subsidies for renewable energies - Economic policy 30 EUR/MWh 2012 2013 2014 2015 2016 2017 Classical energy business under heavy pressure BKW responds with its forward strategy
BKW 11.01.2018 11 BKW strategy based on three business areas Existing competencies as platform for growth - Grow services - Grow regulated energy income - Foster regulated grid income Keep recovery potential in energy A robust business model: growth, risk diversification and sustainability
BKW 11.01.2018 12 Strengthen energy Investment in renewable energies: wind & small hydro power Installed capacity in MW 700 600 500 400 300 200 100 2011 2012 2013 2014 2015 2016 2017 2018 2019 Focus on operating cost of energy production CHF m 380 360 340 320 300 280 260 358-4% 319-11% 305 2014 2015 2016 Cost/TWh 32 27 27 Buildup and strengthen energy trading Integrated approach: optimisation energy production trading sales Reducing dependency on energy exposed to market while keeping recovery potential
BKW 11.01.2018 13 Electricity grid: regulated business model Regulatory EBIT Regulated WACC on Regulatory Asset Base (RAB): 3.8% in 2018 generates Cash inflows WACC and depreciation charged to customers used for Investments in grid Maintenance and modernisation; influence on RAB leads to Free Cash flow Used to finance equity and debt Grid business ensures stability in EBIT and cash flow generation
BKW 11.01.2018 14 Develop grid Owner of largest distribution grid in Switzerland Investments: CHF 120m p.a. ~22,000 km Largest shareholder of Swissgrid: 36.4% (transmission grid owner) Increase efficiency, implement "smart grid" Size of grid business adequate; optimized to ensure reliable EBIT-contribution
BKW 11.01.2018 15 Buildup services Business fields: services around infrastructure Building technologies Engineering Grid infrastructure Digital management of decentralized production Business rationale Reduce dependency on energy prices Capability to add value in growth markets through existing expertise and new integrated offerings Fast and profitable growth CHF m operating revenue >1bn 1000 900 800 700 +31% 600 500 +34% 565 400 +19% 430 300 200 320 270 100 0 2013 2014 2015 2016 2017 Target Acquisitions - 5 15 17 22 BKW delivers integrated solutions into large, sustainable and growing markets
Building technologies: buildings are in the middle of an intelligent and integrated energy supply system Business rationale Market volume CHF 20bn p.a.; fragmented structure BKW solutions meet market trends Decentralisation of energy production Trend towards integrated solutions, driven by increasing complexity of new technologies Major potential in energy efficiency and need for comfort Regional structure BKW 11.01.2018 16 Execution Successful growth: more than 25 acquisitions Regional approach: matches industry structure and ensures margins Synergies: sales competencies, procurement and administrative costs Effizienzsteigerung CHF m operating revenue 300 CAGR 35.9% 200 100 planning/consulting installation maintenance 0 2013 2014 2015 2016 2017 New market opportunities due to increasing complexity match with BKW strategy and expertise
BKW 11.01.2018 17 Grid infrastructure: multi-grid services Business rationale Swiss market for grid services > CHF 1.5bn p.a. Largely identical customer base for multi-grid infrastructure services Increased complexity of networks BKW with longtime expertise Extensive and widespread networks need considerable maintenance Water grid: significant needs for maintenance and renovation Structure Execution Successful growth: more than 5 acquisitions Electricity grid: strong track record with major market share: High tension >60%, medium/low tension >20% High competencies and experience: capability to exploit synergies of scale CHF m operating revenue 300 200 100 CAGR 8.0% planning/consulting installation maintenance 0 2013 2014 2015 2016 2017 BKW successfully provides comprehensive services in the growing markets of complex networks
Engineering: acquired groups as basis for further growth BKW 11.01.2018 18 Business rationale Infrastructure Germany: investments of EUR 260bn until 2030 Considerable need to invest in improving and expanding infrastructures Growing demand for engineering services BKW with wide-ranging expertise Resilient business: diversified customer segments (manufacturing, public sector) Target market positioning: local based service provider with capability to operate complex projects Business with attractive margins Structure and market positioning Large international players with wide competencies gap Small regional players with limited competencies BKW network of regional players with wide competencies Execution Successful growth: more than 15 acquisitions Buildup of strong engineering network in D-A-CH region Risk limitation: focus on planning/consulting only CHF m operating revenue 150 100 CAGR 27.6% 50 planning/consulting installation maintenance 0 2013 2014 2015 2016 2017 Wide-ranging expertise to provide comprehensive solutions for infrastructure, energy and environment
BKW 11.01.2018 19 Growth investments in services and energy business Other Maintenance/ replacement 56% Grid CHF 1.3bn in next 4 years Services Growth 44% Energy Significant maintenance/replacement investments in grid business
BKW 11.01.2018 20 BKW strategy shaped to create value Existing competencies as platform for growth - Grow services - Grow regulated energy income - Foster regulated grid income Keep recovery potential in energy Investments: CHF 1.3bn in 4 years Financed by: strong operating cash flow BKW business model geared toward growth: robust, profitable and sustainable
Questions?
Disclaimer SWISS EQUITIES CONFERENCE BKW 11.01.2018 22 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.