Fixed income investor presentation
Positioning Alpiq for the future and strengthening of the capital base
April 2013
Agenda
2
3
Financial review / Q1 2013 update
Repositioning
4
5
Capital measures and fixed income investment considerations
Q&A
1 Alpiq Group overview
Alpiq Holding AG 3
Alpiq Group overview (1/2)
Alpiq at a glance
Founded in 2009 through merger of Atel and EOS
Leading Swiss power company and energy service provider with focused European reach (present in more than 20 European countries)
Specialises in electricity generation, sales and trading, as well as energy services –responsible for around one-third of Switzerland’s electricity production
Power production of c. 20 TWh (58% in CH) 2012 consolidated net revenue of approx.
CHF 12.7bn and operating EBITDA of CHF 990m
Around 8,000 employees Listed on SIX Swiss Exchange with a market
cap of CHF 3.2bn Public sector related core shareholder
structure
Key financials
April 2013
CHF million 2011 2012 Q1 2013
Net revenue 13,984 12,722 2,429
EBITDA1 1,209 990 229
Margin 8.6% 7.8% 9.4%
EBIT 630 517 163
Group profit2 258 216 65
Net debt 4,652 3,990 3,469
Current shareholder structure
31.38%
25.00%13.63%
7.12%
5.60%2.09%2.12%2.00%
0.91%10.15%
EOS Holding
EDFAI
EBM
EBL
Canton of Solothurn
EnBW
AIL
IB Aarau
WWZ
Other (free-float)1 EBITDA/EBIT after reclassification of “share of profit of associates”2 Incl. non-controlling interests3 Restated for consolidation of Kraftwerke Gougra AG and change in IAS 194 Results from operations before exceptional items
4 3,4
3
Alpiq Holding AG 4
Alpiq Group overview (2/2)
Key operating metrics 2012 Geographic footprintGeneration capacity (6,441 MW)
Energy sales
New renewables 3%
Conventional thermal40%
Nuclear29%
Hydro28%
Trading1% Switzerland
43%
International56%
Generation portfolio (19,988 GWh)
Generation
Energy Services
Conventional thermal40%
Nuclear12%
Hydro43%
New renewables5% Hydro Power Generation
Renewable Energy Sources
Thermal Power Generation
April 2013
ATCH
IT
DPL
SK
SI HRBA CS
FR
CZ
HU
DEB
RO
EAT market presence
AIT market presence
Core Markets
Nuclear Power Generation
Commerce & Trading
Market Switzerland
Portfolio Optimization CEE
Asset Optimization
Market International
International power plants
Alpiq Holding AG 5
Alpiq is well positioned to benefit from future market development
Leading Swiss power generation company with strong local roots and focused European presence
Highly flexible, diversified generation portfolio with no or low CO2 emissions which is expected to benefit from increasing need for flexibility caused by intermittent renewable generation sources
Number 1 Central and Eastern European cross-border trading business
Growth potential in Energy Services from increasing focus on energy efficiency (political energy efficiency targets)
Strong management and operational teams with long-standing expertise across the power sector
April 2013
Agenda
2
3
4
5 Q&A
1 Alpiq Group overview
Financial review / Q1 2013 update
Repositioning
Capital measures and fixed income investment considerations
Alpiq Holding AG 7
Q1 2013 results update
Note: Results from operations before exceptional items1 Restated for consolidation of Kraftwerke Gougra AG and change in IAS 192 Incl. non-controlling interests3 12 months rolling
Alpiq Holding AG
Strong contribution from hydro asset optimisation and larger hydro volumes Higher contribution from new renewables due to better wind conditions and the full
consolidation of two new production parks in Italy in H2 2012 Contribution of the restructuring program with reduction in costs and closure of non-
profitable activities Better results of the international activities (wholesales and production for grid services) Transfer of high-voltage grid to swissgrid Lower prices on the market Net debt reduction due to closing of divestments in Q1 and positive operational
performance
April 2013
CHF million Q1 2012 FY2012 Q1 2013 Q1 2013 vs. Q1 2012 vs. FY2012
Net revenue 3,412 12,722 2,429 -983 -29% -
EBITDA 222 990 229 +7 +3% -
Margin 6.5% 7.8% 9.4%
EBIT 105 517 163 +58 +55% -
Group profit 2 45 216 65 +20 +44% -
Net debt - 3,990 3,469 - - -521 / -13%
Net debt / EBITDA 4.0x 3.5x - - -0.5x
1
3-
Alpiq Holding AG 8
Main drivers 2012 compared to 2011:
+ Hydro CH, optimisation of asset park International due to flexible portfolio
+ Improved positioning of CEE operations
+ Positive cost effect from Eiger+ restructuring program
- Expiration of profitable long-term contract, loss of earnings from Hidroelectrica and EVT
- Lower price level (trading of production CH), temporary outage of KKW Leibstadt
- Higher production costs of nuclear plants, higher maintenance costs in hydro production and CCGTs
Results FY 2012P&L statement before exceptional items
1 According to FY2012 annual report; not restated for consolidation of Kraftwerke Gougra AG and change in IAS 192 EBITDA/EBIT after reclassification of “share of profit of associates”
CHF million 2011 2012 Chg.
Net revenue 13,984 12,710 -9.1%
Own work capitalised 102 121
Other operating income 103 101
Total revenue and other income 14,189 12,932 -8.9%
Energy and inventory costs -11,497 -10,538
Employee costs -986 -894
Plant maintenance costs -80 -134
Other operating expenses -417 -381
EBITDA2 1,209 985 -18.5%
Depreciation, amortisation and impairment -579 -465
EBIT2 630 520 -17.5%
Share of results of associates / joint ventures -78 -69
Finance expense -205 -218
Finance income 24 16
Profit/(loss) before income tax 371 249 -32.9%
Income tax -113 -29
Group profit/(loss) incl. non-controlling interests 258 220 -14.7%
Alpiq Holding AG April 2013
1
Alpiq Holding AG 9
Results FY 2012Balance sheet after impairments
Property, plant, equipment andother current assets affected byimpairment charges and renewalinvestments
Increase other current assetsdue to reintegration of formerlydeconsolidated EAT
“Assets held for sale" affected bydisposal EVT/EAT, Edipower, A2A and by addition of Kladno/Zlin, SES, Repower and RomandeEnergie
Other liabilities reduced due toreduction of liabilities such aslong-term power purchaseagreements and deferred taxes
CHF million 2011 2012 △ Chg.
Cash and cash equivalents 1,204 1,359 +155 +12.9%
Other current assets 2,935 3,071 +136 +4.6%
Property, plant and equipment
4,900 3,476 -1,424 -29.1%
Other non-current assets 6,569 5,029 -1,540 -23.4%
Assets held for sale 1,838 1,849 +11 +0.6%
Total assets 17,446 14,784 -2,662 -15.3%
Equity 6,205 5,010 -1,195 -19.3%
Financial liabilities 5,856 5,270 -586 -10.0%
Other liabilities 4,657 4,260 -397 -8.5%
Liabilities held for sale 728 244 -484 -66.5%
Total equity and liabilities 17,446 14,784 - 2,662 - 15.3%
April 20131 According to FY2012 annual report; not restated for consolidation of Kraftwerke Gougra AG and change in IAS 19
1
Alpiq Holding AG 10
Results FY 2012Cash flow statement
CHF million 2011 2012
EBIT -292 -928
Interest paid and income tax paid -301 -281Depreciation and amortisation 1,229 2,128Other effects -101 -487Changes in working capital -134 -98
Net cash flows from operating activities 401 334
Divestments 42 605
Investments / acquisitions -712 -160
Change in term deposits -199 212Net cash flow used in investing activities -869 657Dividends paid -245 -65
Change in borrowings / FX effects 544 -690
Cash flows (used in) / from financing activities / FX effects 299 -755
Change in cash -169 236
April 20131 According to FY2012 annual report; not restated for consolidation of Kraftwerke Gougra AG and change in IAS 19
1
Agenda
2
3
4
5 Q&A
1 Alpiq Group overview
Financial review / Q1 2013 update
Repositioning
Capital measures and fixed income investment considerations
Alpiq Holding AG 12
Alpiq’s answers to a challenging market environment
Impact on power markets
Macro environment
Impact on Alpiq Alpiq's answer
•Repositioning of the Group
•Organisational realignment
•Restructuring program
•Divestment program
• Capital measures
Low power prices and narrower spreads
Impairment of generation assets
Expiry and termination of long term contracts
Increased indebtedness / challenges to credit profile
Weak outlook for energy demand development
Massive subsidies for new renewables
Significant overcapacities in production
Low CO2 prices Political
uncertainty and new regulations
Peaking of European sovereign debt crisis
Continued economic slowdown and weak GDP forecasts across Europe
Strong Swiss Franc
Fukushima
1
2
3
4
5
April 2013
Alpiq Holding AG 13
Repositioning of the Group
Short-term objectives
Drive operational results and target commitments in an uncertain environment
Continue to streamline organisation and business model in order to reduce complexity
Streamline processes, standardise systems and reduce number of tools
Mid-term objectives
Leverage attractive generation mix - Significant and attractive generation portfolio
- Integrated portfolio optimisation for Western Europe
- Anticipation and capturing of new market opportunities
Strengthen position in profitable markets- No.1 international wholesaler in CEE with largest and geographically most diverse
contract portfolio
- Shift from standard sales businesses to higher margin origination activities
Grow Energy Services business- No.1 Energy Services provider in CH (building technologies and management,
traffic infrastructure technologies)
- Growth potential due to Swiss Energy Strategy 2050
- Repositioning of Plant Technologies (EAT) according to market needs
1
April 2013
Alpiq Holding AG 14
Organisational realignment
New lean structure along the value chain effective February 2013
Generation Commerce & Trading
Energy Services
Simplified and streamlined organisation and business model positions Alpiq well in the current market to benefit from future opportunities
Alpiq operates a significant, diversified and highly flexible generation portfolio
Portfolio consisting of hydro, nuclear, thermal and renewable assets in Switzerland and across other attractive markets in Europe
6,441 MW installed / 19,988 GWh in 2012
Pools market access for energy business of entire Group
Commercialisation of power portfolio including to Swiss shareholders
Optimisation of Alpiq’s generation portfolio in Switzerland and across Europe
No.1 position in Central Eastern Europe in cross-border trading
No.1 in Switzerland in building services, traffic infrastructure technologies and energy efficiency
Established market position in Germany in power and industrial plant technologies
2
Division financials (FY2012)
Revenues: CHF5,494m
Op. EBITDA: CHF953m
EBIT: CHF584m
Revenues: CHF5,575m
Op. EBITDA: CHF28m
EBIT: - CHF10m
Revenues: CHF1,992m
Op. EBITDA: CHF118m
EBIT: CHF83m
1 New divisional structure effective as of 1 February 2013; pre Group consolidation effects; restated for consolidation of Kraftwerke Gougra AG and change in IAS 19; results from operations before exceptional items
1
April 2013
Alpiq Holding AG 15
Restructuring and divestment programs
Measures leading to additional CHF 50m p.a. sustainable cost savings implemented (in addition to CHF 50m p.a. achieved from “topIQ”)
Headcount reduction of 470 FTE
- 160 FTE in Switzerland
- 310 FTE in non-Swiss entities
Exit from non-profitable sales activities in Germany, Italy, Spain and Scandinavia
Business model with less risk and complexity implemented
Total cash effect from divestments of CHF 605m in 2012
Sale of energy service division(EVT)
€ 203m
Sale of 20% in Edipower
€ 200m
Sale of 15% pump storage asset Nant de
Drance to IWB
not disclosed
Sale of 24.6% in Repower
CHF 171m
Sale of 5% in A2A
€ 68m
Sale of 6.43% in Romande Energie
(1st tranche)
CHF 78m
Transfer to swissgrid
(1st tranche shareholder
loan)
CHF 223m
Restructuring program
Completed divestments of non-core activities
Decisive measures implemented to adapt to new environment and reduce costs
2012 (Eiger +) 2013-15
3+4
2012 2013April 2013
Acceleration of cost reduction measures to achieve additional CHF 100m cost savings p.a. as of 2015 (leading to total expected savings of CHF 200m p.a. compared to 2011)
Total divestment program of c. CHF 1.2-1.6bn in 2012 and 2013
- Cash inflow achieved in Q1 2013 of CHF 472m
- Divestment evaluation of SES and Alpiq Generation (CZ) ongoing
Alpiq Holding AG 16
Capital measures supported by Swiss core shareholders
Measures taken and proposed
Swiss core shareholders (EOS and majority of KSM) have signed an agreement to subscribe for CHF 366.5m perpetual subordinated loan notes (“Shareholder Hybrid”)
In addition, intention to issue more than CHF 400m perpetual subordinated notes in the capital market (“Public Hybrid”)
Structured to achieve 100% equity treatment under IFRS and 50% equity treatment from credit research analysts
Shareholder Hybrid deeper subordinated than Public Hybrid
Rationale
Create flexibility to capture medium and long-term business opportunities by reducing net debt and preserving investment grade rating
Strengthening of balance sheet creates flexibility to
- support ongoing repositioning and divestments without undue financial constraints and preserve investment grade rating
- capture business opportunities in Alpiq’s core business in the medium and longer term
5
April 2013
Agenda
2
3
4
5 Q&A
1 Alpiq Group overview
Financial review / Q1 2013 update
Repositioning
Capital measures and fixed income investment considerations
Alpiq Holding AG 18
Alpiq’s investment case for fixed income investors
Diversified business portfolio well-positioned to benefit from future market development
1
Substantial support from Swiss principal shareholders, contributing CHF 366.5m hybrid capital to strengthen Alpiq's capital base
2
Liquid balance sheet, with c. CHF 1.9bn cash and cash equivalents as of Q1 2013, and staggered debt maturity profile in coming years
3
History of consistent operating cash generation and commitment to sustainable dividend policy
4
April 2013
Alpiq Holding AG 19
Alpiq well positioned to benefit from future market development
1
April 2013
Leading Swiss power generation company with strong local roots and focused European presence
Highly flexible, diversified generation portfolio with no or low CO2 emissions which is expected to benefit from increasing need for flexibility caused by intermittent renewable generation sources
Number 1 Central and Eastern European cross-border trading business
Growth potential in Energy Services from increasing focus on energy efficiency (political energy efficiency targets)
Strong management and operational teams with long-standing expertise across the power sector
Alpiq Holding AG 20
Key terms of Shareholder Hybrid and Public Hybrid2
Swiss principal shareholders have demonstrated support by committing to CHF 366.5m Shareholder Hybrid at terms less privileged vs. Public Hybrid
Features Perpetual Subordinated Loan Notes(“Shareholder Hybrid”)
Perpetual Subordinated Notes (“Public Hybrid”)
Issuer Alpiq Holding AG Alpiq Holding AG
Amount CHF 366.5 millions CHF [•] millions
Denomination CHF 500,000 CHF 5,000
Maturity Perpetual Perpetual
Issuer call Redeemable at option of the Issuer (i) after repayment of the Public Hybrid or (ii) at any time through an exchange into shares at an exchange ratio to be agreed upon by Alpiq and the holders of the Shareholder Hybrid
Redeemable at option of the Issuer at year 5.5 and on any interest payment date thereafter
Special event redemption
Issuer call at par upon occurrence of an (i) Accounting Event (ii) a Tax Event or (iii) a Capital Event
Issuer call at par upon occurrence of (i) an Accounting Event, (ii) a Tax Event, (iii) a Capital Event or (iv) in the event that less than 20% of the initial principal amount is outstanding
Interest rate Fixed rate of [•]% until year 10 Reset at year 10 and every tenth year thereafter to a rate equal
to the prevailing 10 year CHF mid-swap rate + initial credit spread + Step up
Fixed rate of [•]% until year 5.5 Reset at year 5.5 and every fifth year thereafter to a rate
equal to the prevailing 5 year CHF mid-swap rate + initial credit spread + Step up
Coupon step-up Step up of 25 bps at year 10 and a further 75 bps at year 30 Step up of 25 bps at year 10.5 and a further 75 bps at year 30.5
Deferral of interest Optional interest cancellation Non-cumulative If issuer elects not to make an interest payment, it will not
propose to pay a dividend on its share capital at the next AGM If shareholders overrule, Issuer shall reimburse holders the
missed interest payment for the relevant financial year
Optional interest deferral Deferred interest is cumulative for three consecutive deferrals
of interest and thereafter the respective portion of deferred interest shall be cancelled
Deferred interest shall be payable following (i) a payment of dividends, (ii) a payment on junior or parity securities, (iii) repurchase of any share capital, (iv) redemption of any junior or parity securities, (v) redemption or (vi) liquidation
Ranking Junior to Public Hybrid and pari passu with Issuer’s share capital Junior to unsubordinated creditors, but ahead of Shareholder Hybrid and Issuer's share capital
Listing None SIX Swiss Exchange
April 2013
Please refer to the preliminary prospectus for the full terms and conditions
Alpiq Holding AG 21
Expected impact of capital measures
Mio. CHF 2011 2012 Q1 20132012 vs.
2011 Q1 2013 Q1 2013
Liquidity 1,204 1,385 1,906 +15% 2,706 2,706
Operating EBITDA 1,209 990 229 -18% 229 229
Net debt 4,652 3,990 3,469 -14% 2,669 3,069
Net debt / EBITDA 3.8x 4.0x 3.5x 2.7x 3.1x
Use of proceeds for the envisaged transaction Reduce leverage via repayment of outstanding debt of Alpiq Holding AG maturing in 2013
(including repayment of CHF 320m shareholder loan from EOS) Take advantage of potential early repayment opportunities in longer-dated debt in order to
accelerate optimisation of capital structure Strengthening of balance sheet by improving the equity base General corporate purposes
2
Reported Pro-forma – IFRS view
Pro-forma – credit analyst view
1 As reported2 12 months rolling3 Assuming total hybrid issuance in the amount of CHF 800 m (100% equity credit under IFRS and 50% equity credit under credit rating analyst view)4 Before exceptional items 5 Restated for consolidation of Kraftwerke Gougra AG and IAS 19
2
3 3
2 24
4
5
April 2013
1
Alpiq Holding AG 22
Maturity profile as of 31 December 2012Staggered redemption out to 2022
3
Liquid balance sheet with CHF 1.9bn liquidity as of 31 March 2013 plusCHF 1.2bn unused committed credit lines vs. balanced maturity profile in coming years
1 As of 31 December 2012; restated for consolidation of Kraftwerke Gougra AG2 Of which CHF 320m will be repaid to EOS by mid of May
April 2013
1
2
,Total: CHF 5,375m1
Alpiq Holding AG 23
Operating cash flow generation and dividend history
4
Operating cash flow Dividend history by fiscal year
698
1036
582
401334
2008 2009 2010 2011 2012
(CH
F m
)
10.00
8.70 8.70
2.00 2.00
2008 2009 2010 2011 2012
(CH
F pe
r sh
are)
History of consistent operating cash generation and sustainable dividend policy even in challenging times
April 2013
,
Agenda
2
3
4
5 Q&A
1 Alpiq Group overview
Financial review / Q1 2013 update
Repositioning
Capital measures and fixed income investment considerations
25
Thank you for your attention
Alpiq Holding AG 26
Appendix
April 2013
Alpiq Holding AG 27
EnPlus Wind parks IT
Emosson
Rest (incl. margins)
Alpiq Holding AG
Gougra
Bonds
Bilateral credits
Shareholder loans
Private Placements
Margin liabilities
Bonds comprise c. 2/3 of outstanding debtMajority of debt issued by Alpiq Holding AGAverage interest rate of group c. 3% p.a.
Funding mix as of 31 December 2012Limited reliance on bank lending
April 2013
By entity (CHFm)By instrument (CHFm)
Total: CHF 5,375m Total: CHF 5,375m
1 As of 31 December 2012; restated for consolidation of Kraftwerke Gougra AG
1
1 1
Alpiq Holding AG 28
Market environmentBas
e lo
ad –
Peak
load
–Spr
ead
(EU
R/M
Wh)
Source: EPEX SPOT
Increase in subsidies for renewable energy drove market prices down and changed supply profiles in the electricity market
EUR/MWh
Source: EPEX SPOT
Market backdrop Pricing environment (EEX) Performance of forward prices (EEX Peak and Off-Peak)
April 2013
30
35
40
45
50
55
60
65
70
75
80
Cal 13 Peak Cal 13 Off-Peak Cal 14 Peak
Cal 14 Off-peak Cal 15 Peak Cal Off-Peak
0
20
40
60
80
100
120
140
Spread (rhs) Baseload (lhs) Peakload (lhs)
Alpiq Holding AG 29
Results FY 2012Impairments, provisions and other exceptional items
As a result of reduced price expectations, impairment on: Production park Switzerland CCGT plants in Italy, France,
Hungary and Spain Coal power plants in Czech
Republic Domestic and foreign renewable
energy assets
Cancellation of long-term supply contracts in Romania due to insolvency of the counterparty
Further impairments on and provisions for long-term supply contracts
CHF million Total
Power generation Switzerland 786
Power generation International 571
Renewable energy sources Switzerland 17
Renewable energy sources International 196
Sales International 79
Holding, Corporate Centre, AIT and other 21
Total impairment of assets 1,670
Provisions for loss-making contracts 27
Liabilities for loss-making contracts -98
Other provisions 16
Total impairments and provisions 1,615
Alpiq Holding AG 29April 2013
Alpiq Holding AG 30
Results FY 2012Operating results vs. IFRS results
CHF million 2012Results of operations
Impairments and exceptional items
2012IFRS
Net revenue 12,710 12,710Own work capitalised 121 121
Other operating income 101 210 311Total revenue and other income 12,932 210 13,142Operating costs -11,947 5 -11,942
EBITDA 985 215 1,200
Depreciation and amortisation -465 -1,663 -2,128EBIT 520 -1,448 -928Share of results of associates and JV -69 12 -57
Finance expense -218 -46 -264Finance income 16 16
Profit/(loss) before income tax 249 -1,482 -1,233Income tax -29 176 147Group profit/(loss) incl. non-controlling interests 220 -1,306 -1,086
Alpiq Holding AG 30April 20131 According to FY2012 annual report; not restated for consolidation of Kraftwerke Gougra AG and change in IAS 19
1
Alpiq Holding AG 31
Overview on restatement of FY2012 results
Alpiq Holding AG 31April 2013
CHF millionAlpiq Groupas reported
Consolidation effect of
Kraftwerke Gougra AG
Impact of IAS 19
Alpiq Group restated
Total revenues 12,710 12 0 12,722
EBITDA 985 11 -6 990
EBIT 520 3 -6 517
Net Profit 220 0 -5 216
Net debt 3,911 79 0 3,990
32
This presentation contains forward-looking statements and information
In particular, certain statements with regard to management objectives, trends in results of operations, margins,
costs, return on equity, risk management and competition are speculative by nature. Words such as "expects",
"anticipates", "targets", "goals", "projects", "intends", "plans", "believes", "seeks", "estimates", variations of such
words, and similar expressions are intended to identify forward-looking statements. Such statements are based on
our current expectations and certain assumptions and are therefore subject to certain risks and uncertainties.
Consequently, Alpiq's results may differ materially and adversely from those expressed or implied in any forward-
looking statements. Factors that might cause or contribute to such differences include, but are not limited to,
economic conditions, the impact of competition, political and economic developments in the countries in which Alpiq
operates, regulatory developments in the energy market in Switzerland and abroad, and fluctuations in energy prices
and margins for Alpiq products. Forward-looking statements made by or on behalf of Alpiq reflect only the assessment
of the situation on the date on which such statements are made.
This presentation does neither constitute an offer to buy or to subscribe for securities of Alpiq Holding AG. Investors
should make their decision to buy or to subscribe to securities solely based on the official listing prospectus which will
be published by Alpiq Holding AG
This presentation does not constitute a prospectus as such term is understood pursuant to article 652a or article 1156
of the Swiss Federal Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX
Swiss Exchange Ltd. Accordingly, the investor protection rules otherwise applicable to investors in Switzerland do not
apply to this presentation.
Disclaimer
Alpiq Holding AG April 2013
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