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Thomas Bucher, CFO & Member of the Executive Board Alpiq Holding AG, 23.06.2017
Future opportunities of a former traditional electricity company
Agenda
1. Financial results 2016 2. Transformation of the Group 3. Energy sector of tomorrow 4. Questions and answers
2 2 Vontobel Investor Forum Schweizer Stromversorger
Alpiq Holding Ltd., 2017-06-23
Demanding environment 1 International factors result in low wholesale prices
3
Low commodity and CO2 prices
Subsidies for new renewable energies
Moderate economic growth
Production overcapacities
30
35
40
45
50
55
60
65
70
Jan.2012 Jul.2012 Jan.2013 Jul.2013 Jan.2014 Jul.2014 Jan.2015 Jul.2015
EUR
/MW
h
Cal-16 CH Base Cal-16 CH Peak
Hedging period: Jan 2012–Dec 2014
Cal-16: Avg. obtained hedging prices of EUR 47/MWh
Pressure on Swiss hydropower and nuclear power plants
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
Demanding environment 2 Regulatory framework conditions distort the Swiss market
Pressure on electricity producers without end customers and distribution grid 4 Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
2016 Key Financial Figures
5
Results of operations before exceptional items (EI) • EBITDA of CHF 395 million; down CHF 85 million on previous year • Cash flow from operating activities of CHF 94 million; cash-relevant effect in 2016 from the
change of valuation method regarding entitlements from the Federal decommissioning and waste disposal funds of CHF -151 million in the previous year
• Net debt at CHF 856 million; decrease of CHF 443 million compared to the end of 2015, due to disposals
Net debt EBITDA Net revenue Net income Operating cash flow
-9%
2016
6,078
FX effect
57
2015
6,715
-18%
2015 FX effect
10
2016
395 480
24
46
2015
115
FX effect
>100%
2016
94
461
2015 2016
-80%
856
1,299
31 Dec 2016 31 Dec 2015
-34%
CH
F m
illio
n
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
Commerce & Trading • Swiss and international optimisation up on the previous year • Eastern and South-Eastern Europe down on the previous year • No contribution from AVAG after disposal in July 2016
EBITDA development of the business divisions
6
Generation • Lower wholesale prices hedged at lower level • Unscheduled downtime at Leibstadt nuclear power plant • Cost management yielding positive effects • International production achieved a profit
392 316
3 -79
5052
9-11
101 95
FX e
ffec
ts
EBIT
DA
2015
be
fore
EI
-7
EBIT
DA
2016
be
fore
EI
Bus
ines
s de
velo
pmen
t
1
CH
F m
illio
n CH
F m
illio
n CH
F m
illio
n
Energy Services • Increased order intake and order backlog • Higher revenue compared to previous year • Market remains competitive • Targeted acquisitions in growth areas
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
Transformation of the Group Structural measures being implemented
Opening up to 49 % of hydropower portfolio • Is not completed • Criteria for completion:
- Price - Contractual conditions - Transaction security
Streamlining the portfolio and cost management • Disposal of AVAG, AEK, REC • Sale of Swissgrid
completed • Cost management
continued
Creating structures for future growth • Pooling profitable
business divisions • Open up growth areas to
investors • Alpiq retains control
7 Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
Digital transformation isn't a threat or a risk for energy sector, but rather a leverage and a chance to enter in a new world!
Source: Handelsblatt Jahrestagung Energiewirtschaft 2016
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger 8
The energy sector is undergoing a transformation
Implications ▪ Value pools will
shift from traditional to new businesses
▪ Innovative energy players can drive new businesses – need to stay ahead of the game, in finding future winning models
▪ Opportunities emerge for new partnerships, with adjacent or completely different industry sectors
Phase of market evolution
Drivers
Decentralization Decarbonization
Digitization Sector compounding
▪ Electrification across sectors
▪ Advancements in battery technology
▪ Emission regulations
▪ Changed customer behavior
▪ New market entrants and business models
▪ Improved data processing capabilities
▪ Public commitment to low- carbon society
▪ Political push towards energy efficiency and "green" power
▪ Subsidies for re-newable generation technology
▪ Political push towards liberalization
▪ Political shaping and shifting of balances between incumbent and new industries
▪ Power sector as a key driver for GHG emission needs to contribute significantly in reaching reduction targets
▪ Energy efficiency targets directly affect B2B and B2C end-users who require clean energy and smart solutions to reduce energy demand
▪ Advanced analytics define future industry leaders
▪ Central relevance of digital and social channels for customer interaction
▪ Unlocking of big potential in internal processes through digital
▪ New organizational and leadership challenges
Core elements
▪ Blurring sector boundaries due to increasing electrification
▪ Sectors that are especially affected include electric power utilities, mobility providers, and heating companies
▪ Volatile generation (wind, solar) will require system int-egration, via remote asset management: curtailment of load or generation, DRM/DSM
▪ Distributed gene-ration at prosumer sites will lead to new business models for B2B and B2C segments
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
9
The old energy world At a glance
Clearly defined market roles Unilateral energy flows Only a few competitors
Power Plants
Transmission & Distribution Network
Households
Industrials
Commercial Buildings
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
10
The new Energy World At a glance
Power Plants Wind Farm with Energy Storages
Large Buildings with PV
Utility / Community PV
Homes with PV and
Storages
E-Mobility
Industrial Areals with
Micro-Ecosystems Homes with
PV and Storages
Wind Farm with Cogeneration
Variety of diversified market roles Two-way energy and data flows Many different competitors
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
11
The new Energy World Disrupting Market Development
The old Utility Business
Model Renewables
Energy Sources
Disrupting value chains
„Merging“ markets
Trends and customer
expectation
New „outside“ competitors
New Technologies
(PV, Batteries, EV, Smart Home etc.)
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
12
The new Energy World 5 main areas of changes
Source: Capgemini Consulting Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
13
The new Energy World Digital Economy in a nutshell
Digital Swordfish
- Big, fast, rarely get eaten -
Digital Piranhas
- Small but aggressive for prey -
Blue Whale - Huge, slow but persevering-
Digital White Sharks
- At the top of the food chain -
• (Very few) digital economy leaders • Wide, diverse product portfolio • Coupling the traditional sectors with their digital expertise
• (Few) big industry shaping players • Deep, vertical specific product • Already near peak growth
• (Many) product specific players • Huge, product centric competition • Peak growth not yet reached
• (Few) traditional economy leaders • Heavy footprint in single sector • just launch the digital transformation • Gigantic assets
Source: Alpiq / Statista Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
14
Transformation of the Group Investors gain access to an attractive portfolio
Digital & Commerce New opportunities thanks to digitalisation
Industrial Engineering Competent partner for industrial customers in Europe
Building Technology & Design Focus on smart buildings and mobility
15 Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger
Transformation of the Group Alpiq is creating structures for future growth
16
Digital & Commerce
Alpiq Holding AG
Industrial Engineering
Building Technology & Design
100% >51% >51% >51%
Strategic Investors
Strategic Investors
Strategic Investors
Financial Investors
Generation Switzerland
Digital & Commerce
Industrial Engineering
Alpiq Holding Ltd., 2017-06-23 Vontobel Investor Forum Schweizer Stromversorger