Financial Analysts' Conference Zurich, 10 March 2011
A. Affentranger / Hp. F채ssler / B. Fellmann
Annual Financial Statements December 2010 Key points
Š
Implenia | Corporate Center | March 2011 | Page 2
Key points – Implenia in its 5th year Systematically implemented strategy pays off In year 5, a successful reality in the market based on: a motivating vision lived values a clear strategy Steadily improving profitability and balance sheet for the 5th time in succession EBITDA, operating income and consolidated profit have increased balance sheet further strengthened Sustainability embedded in the Group strategy key priorities defined consistent and transparent implementation
©
Implenia | Corporate Center | March 2011 | Page 3
Key points – Implenia in its 5th year Numerous strategic and operational highlights Management strengthened Hanspeter Fässler CEO since 1 September 2010 René Zahnd Head of Implenia Real Estate and member of Group Management since 1 March 2010 Significant strengthening of key management positions in all divisions (internal and external appointments) Acquisition of Sulzer Immobilien Significant strengthening of our project development portfolio Strategic investment in the future Breakthrough on the Gotthard 15 October 2010 Implenia is the leading company in 3 out of 5 projects Technical and logistical high performance ©
Implenia | Corporate Center | March 2011 | Page 4
Annual Financial Statements December 2010 Construction and real estate market in Switzerland
Š
Implenia | Corporate Center | March 2011 | Page 5
A 50 billion (a year) industry Stable trend over the last few years Total real construction spending in Switzerland in CHF billions (based on 2006 CPI) Source: BfS (data), SBV (graphic)) 65 60 55 50 45
Investment bonus and housing law(1990 bis 1995)
35 30
1973 First oil shock
25
Work starts on NEAT(1996)
1979/80 Second oil shock
20 15 10 5
Š
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
1959
1957
1955
1953
0 1951
CHF billions
40
Implenia | Corporate Center | March 2011 | Page 6
Prices develop slower than costs Margin pressure can only be compensated through improved productivity Cost and price trends in building construction (main contract work)
Cost and price trends in civil works (main contract work)
Price and cost index in civil works (Q1 2002=100)
Price and cost index in civil works (Q1 2002=100)
Price and cost index in building works (Q1 2002=100)
Price and cost index in civil works (Q1 2002=100)
Costs: construction cost index (Civil works, reinforced concrete) Prices: BfS construction price index (Civil works, main contract work)
Costs: construction cost index (building construction, main contract work, multi-family homes) Prices: BfS construction price index (Civil works, main contract work)
Š
Implenia | Corporate Center | March 2011 | Page 7
Real estate prices in Switzerland Healthy price level for Swiss real estate
Š
Implenia | Corporate Center | March 2011 | Page 8
Real change in the construction index At a high level, driven by civil works Swiss Construction index (in real terms) Swiss Building index (in real terms) Swiss Civil works index (in real terms)
Š
Implenia | Corporate Center | March 2011 | Page 9
Building construction Uneven trends across the country Regional breakdown of building expenditure 2010-2016 Growth construction in total 2010-2016 in % p.a. -1 0
< to to >
-1 0 1 1
Short and long term outlook Growth 2010 in % Growth 2011 in % Growth 2012-2016 in %
Source: BAKBASEL; ‘Hochbauprognose 2010 - 2016’
©
Implenia | Corporate Center | March 2011 | Page 10
Summary of construction and real estate market in Switzerland Overall positive outlook European construction market Recovery is apparent Swiss construction market Remains at a high level Continuous public investment in civil works Healthy fundamentals of the real estate market -
Low interest rates Immigration / housing needs No real estate bubble But trends vary in different parts of the country
Margin pressure Remains a characteristic of the construction industry Must be offset by improvements in productivity ©
Implenia | Corporate Center | March 2011 | Page 11
Annual Financial Statements 2010 Key figures and operating income
Š
Implenia | Corporate Center | March 2011 | Page 12
Key figures and operating income Highlights Operational Operating income (+ 14.8 %) and consolidated profit (+ 11.5%) strict cost management Invested capital (excluding acquisition of Sulzer) once more reduced ROIC exceeds the 20 percent mark for the first time Order books remains high Financial Free cash flow
- at record levels (due to effective NWC management, disciplined investments) - Acquisition of Sulzer Immobilien AG 100% financed with cash flow
Financing situation
- Funding base significantly bolstered with the proceeds of the new bond (CHF 200 million) - Net cash position CHF 150 million ©
Implenia | Corporate Center | March 2011 | Page 13
Key figures and operating income Key group figures 2010
2009
2'388.4
2'279.8
4.8%
EBIT before special charges
72.6
75.5
-3.8%
Operating income
77.7
67.6
14.8%
3.3%
3.0%
52.5
47.1
2.2%
2.1%
in CHF million
Consolidated revenue
Consolidated profit
+/- in %
11.5%
Š
Implenia | Corporate Center | March 2011 | Page 14
General contracting / Services â&#x20AC;&#x201C; revenues and EBIT Record EBIT in 2nd half of the year
IFRS revenue
1,111 598
1,137 636
EBIT before special charges
EBIT before special charges
17.4
20
15.4
8.3 9.3
15
12.1
10
501
9.1
10.2
3.0%
17.4
15.5
1.0%
513
in CHF million
15.4
2.0%
1.6% 1.4%
1.4%
0.9%
2010
2009
5
0.5%
6.1 2010
1.5% 1.0%
0 2009
2.5%
0.0 2006
2007
2008
2009
2010
HY2
HY2
EBIT before special charges
HY1
HY1
EBIT margin
Š
Implenia | Corporate Center | March 2011 | Page 15
GC / Services â&#x20AC;&#x201C; Regional distribution and orders as of 28.2.2011 2011 volumes secured in CHF million Production output 2% 29%
33%
West (379.8m) Central (268.3m) East (131.8m) Zurich (335.2m)
12%
24%
Reuss (21.6m)
Maintower, Zurich
Order book
Feb. 2011
Feb. 2010
West
700.0
551.7
Central
292.1
315.8
East
159.3
165.9
Zurich
586.0
743.6
Reuss
11.1
13.0
1'748.5
1'790.0
TOTAL order book
Secured revenue 94.9%
57.8%
9.1% 2011
2012 Š
2013
Implenia | Corporate Center | March 2011 | Page 16
Real estate (project development) – invested capital and EBIT ROIC 18.1% in CHF million
Invested capital
178
200
EBIT before special charges / ROIC (like for like)
EBIT before special charges
21.4
20.9
25
21.4
20
65 10.6 17.2
15.4
15
10.3 4.2
2009
2010
2009
6.0 5
20.9 18.1%
15.9%
20.0%
10.0%
7.7% 5.2%
3.6%
5.0%
0 2010
25.0%
15.0%
10.3
10 134
30.0%
0.0. 2006
2007
2008
2009
2010
SIMMO
HY2
EBIT before special charges
Implenia ex. SIMMO
HY1
ROIC (like for like)
©
Implenia | Corporate Center | March 2011 | Page 17
Real estate (project development) â&#x20AC;&#x201C; development projects Good, regionally well distributed portfolio
Winterthur
Š
Implenia | Corporate Center | March 2011 | Page 18
Infrastructure – Revenue and EBIT Record result
IFRS revenue
1,123 618
1,201
EBIT before special charges
EBIT before special charges
24.6
25.1
30
2009
4.0%
25
32.0
31.8
535
2010
21.5
20
666
-7.4
-6.7
2009
2010
24.6
24.4
25.1
3.5% 3.0%
2.2%
2.2%
1.9%
15 10
505
in CHF million
2.1%
2.5% 2.0%
8.8
1.5%
0.8%
1.0%
5
0.5%
0
0.0 2006
2007
2008
2009
2010
HY2
HY2
EBIT before special charges
HY1
HY1
EBIT margin
©
Implenia | Corporate Center | March 2011 | Page 19
Infrastructure – Regional breakdown and order book as of 28.2.2011 Excellent regional anchoring in CHF million Production output 24%
26%
West (322.2m) East/Zurich (344.8m) Alps (194.2m)
7% 13%
14% 15%
Central (205.2m) Engineering (177.7m) Other (100.8m)
Pont de le Poya, Fribourg
Order book
Feb. 2011
Feb. 2010
West
188.5
215.4
East/Zurich
173.2
237.3
Alps
125.4
145.9
90.5
107.8
130.2
198.1
20.0
2.1
727.9
906.6
Central Engineering Miscellaneous TOTAL order book
Secured revenue 55.2%
11.7% 1.3% 2011
2012 ©
2013
Implenia | Corporate Center | March 2011 | Page 20
Tunnelling – Revenue and EBIT High production output
IFRS revenue
137 66
71
2009
152
in CHF million
EBIT before special charges
EBIT before special charges
30
24.4
25 69
11.2
18.6 7.1
83
2010
13.2
2009
11.5
2010
20 15
30.0%
26.5 20.7 14.5%
24.4
22.1 16.2%
17.8%
17.4%
25.0%
18.6
20.0%
12.3%
15.0%
10
10.0%
5
5.0%
0
0.5 2006
2007
2008
2009
2010
HY2
HY2
EBIT before special charges
HY1
HY1
EBIT margin
©
Implenia | Corporate Center | March 2011 | Page 21
Tunnelling – Regional distribution and orders as of 28.02.2011 2011 secured in CHF million Production output 2%
16% West (53.2m)
50%
D- Switzerland (107.6m)
32%
Alps/NEAT (168.7m) Abroad (6.1m)
Cross-City Link, Zurich
Order book West German-speaking Switzerland Alps (inc. NEAT) Abroad TOTAL order book
Feb. 2011
Feb. 2010
260.8
248.3
60.9
139.6
285.1
365.4
12.0
2.6
618.7
755.9
Secured revenue 93.3%
51.4% 26.3%
2011
2012 ©
2013
Implenia | Corporate Center | March 2011 | Page 22
Prime Buildings â&#x20AC;&#x201C; Revenue and EBIT First results take effect
IFRS revenue
-1.0 -4.9
10
6 5 1 2009
2010
-2
-3.1
-4
-3.1 -4.1
-6
-6.6
-8
-7.9 2009
0
-2.1
-3.0 4
EBIT before special charges
EBIT before special charges
14
in CHF million
2010
HY2
HY2
HY1
HY1
-7.9 2006
2007
2008
2009
2010
EBIT before special charges
Š
Implenia | Corporate Center | March 2011 | Page 23
Prime Buildings – Order book as of 28.02.2011 Turin: a highlight
New headquarters of Banca Intesa Sanpaolo, Turin
Order book
Feb. 2011
Feb. 2010
Prime Buildings
91.1
4.6
TOTAL order book
91.1
4.6
in CHF million
Sochi Stadium, Russia Secured revenue 73.5%
70.1%
31.3%
2011
2012 ©
2013
Implenia | Corporate Center | March 2011 | Page 24
Key figures and operating income Operating income in CHF million
2010
2009
+/- in %
Real estate
36.3
38.9
-6.5%
Infrastructure
25.1
24.6
1.9%
Industrial construction
15.6
16.5
-5.6%
0.7
-12.4
105.4%
77.7
67.6
14.8%
3.3%
3.0%
Holding overhead costs and special charges TOTAL operating income
Š
Implenia | Corporate Center | March 2011 | Page 25
Annual Financial Statements IFRS Reporting
Š
Implenia | Corporate Center | March 2011 | Page 26
Holding cost and special charges No more burden from special charges 2010 5,000 2,500 0 -2,500 -5,000 -7,500 -10,000 -12,500 -15,000
in CHF million
2009 0
- 1.871
661
6.880 -4.348
Holding overhead costs
IAS 19
Special charges
Immat. depreciation
Impact on operating income
5,000 2,500 0 -2,500 -5,000 -7,500 -10,000 -12,500 -15,000
-4.437
- 2.411 - 3.405
Holding overhead costs
IAS 19
Special charges
Š
- 2.075
-12.328
Immat. depreciation
Impact on operating income
Implenia | Corporate Center | March 2011 | Page 27
Operating income â&#x20AC;&#x201C; Group earnings CHF 50 million exceeded in CHF million
2010
2009
+/- in %
Real estate Infrastructure Industrial construction Holding overhead costs and special charges
36.3 25.1 15.6 0.7
38.9 24.6 16.5 -12.4
105.4%
TOTAL operating income
77.7
67.6
14.8%
3.3%
3.0%
-9.6
-5.0
92.0%
Taxes
-15.6
-15.6
0.0%
Consolidated profit
52.5
47.0
11.5%
2.2%
2.1%
112.6
104.6
4.7%
4.6%
Financial income (net)
EBITDA
-6.5% 1.9% -5.6%
7.6%
Š
Implenia | Corporate Center | March 2011 | Page 28
Income statement â&#x20AC;&#x201C; key figures Continuation of positive earnings trends Group earnings
EBITDA
120 100 80 60 40 20 0
84.7 54.4
98.5 4.2%
104.6 4.6%
112.6 4.7%
3.6% 11.3
2.3%
18.0
23.8
32.4
2006
2007
2008
in CHF million
29.1
36.6
2009
2010
6% 5% 4% 3% 2% 1% 0%
60 50
40.0
40
25.5
30 20 10 0 -10
1.7%
6.1
47.1 2.1%
52.5 2.2%
4% 3% 2%
1.1%
1%
0.3%
11.3
5.5
3.5
6.2
12.5
0% -1%
-11.9
-2%
-20 2006
2007
2008
EBITDA margin
Margin
HY2
HY2
Privera sale
Privera sale
HY1
HY1
Š
2009
2010
Implenia | Corporate Center | March 2011 | Page 29
Balance sheet – assets High liquidity – working capital under control in CHF million
2010
2009
+/- in %
Cash and cash equivalents, securities
349.6
129.8
Real estate operations
218.0
168.7
Other current assets
733.9
725.8
1'301.5
1'024.3
27.1%
375.5
357.5
5.0%
1'677.0
1'381.8
21.4%
Total current assets Total non-current assets Total ASSETS
©
Implenia | Corporate Center | March 2011 | Page 30
Balance sheet â&#x20AC;&#x201C; liabilities Financing secured for the next five years in CHF million
Current financial liabilities
2010
2009
+/- in %
1.6
42.2
Other current liabilities
903.6
871.7
Total current liabilities
905.2
913.9
Non-current financial liabilities
198.2
0.7
78.2
40.9
Total non-current liabilities
276.3
41.6
564.3%
Equity and non-controlling interests
495.5
426.3
16.2%
1'677.0
1'381.8
21.4%
Deferred taxes, provisions
Total LIABILITIES
-0.9%
Š
Implenia | Corporate Center | March 2011 | Page 31
Cash flow statements Implenia as a cash machine in CHF million
in CHF million
2010
2009
+/- in %
Consolidated profit
52.5
47.1
Depreciation / non-cash expenses
32.3
46.3
Movement in net current assets
57.6
31.0
Interest / taxes / miscellaneous
-3.9
-5.2
Cash flow from operating activities
138.5
119.1
Investment activities
-31.5
-26.5
Acquisition of businesses (Sulzer Immob. AG)
-67.1
-
Cash flow from investment activities
-98.6
-26.5
272.3%
Free cash flow
39.9
92.7
-56.9%
Acquisition of businesses (Sulzer Immob. AG)
67.1
-
107.1
92.7
Free cash flow (like for like)
11.5%
16.3%
15.6% Š
Implenia | Corporate Center | March 2011 | Page 32
Return on invested capital (ROIC) Sustainable value creation! in CHF million
550
522.1
22.4%
500
19.9%
450 400 350 300 250
340.4
347.0
9.4%
9.3%
9.5%
150 50
15.0%
15.3% 9.6%
9.4%
200 100
20.0%
386.6
358.0
25.0%
7.4%
10.0% 5.0%
4.8%
0.0%
0 2006
2007
2008
2009
2010
Invested capital ROIC (operating income/invested capital) Pre-tax WACC
Š
Implenia | Corporate Center | March 2011 | Page 33
Media and Financial Analysts' Conference Analysis of annual results for 2010 and outlook
Š
Implenia | Corporate Center | March 2011 | Page 34
Assessment of the 2010 annual results Implenia is well on track Strong market position High level of good quality orders Operationally on the right track Good productivity trend of construction activities Project development underway at a level above CHF 20 million Situation for renovations corrected, solide 2nd half for GC Tunnelling highly profitable in Switzerland International business clearly better Holding cost and special charges well under control Strong balance sheet Broader based financing with good capital base High net liquidity Excellent cash flow ©
Implenia | Corporate Center | March 2011 | Page 35
Order intake since the end of July 2010 Well diversified
Wohnüberbauung Le Nouveau Prieuré Bürogebäude Centre CSS Romandie Wohn- und Gewerbeüberbaung Areal Brückenweg Wohnüberbaung Birnbäumen UBS Branch Format Wohnüberbauung Wiesental Wohnüberbauung Centralpark Wohn-/Geschäftshaus Liebefeld K5 Fabrikumbau Usine 56, Philip Morris International Fabrik- und Verwaltungsgebäude Electrolux Centre socio-cultures Gewerbeüberbauung Murtenstrasse Geschütztes Wohnen Le Croset - Résidence du Bois Wohnüberbauung Résidence des vignes Überbauung Brückenweg Al Ain Asset Enhancement Bahngallerie Arge GEZIM, Zen Hohen Flühen Aufstockung T echnopark Zürich Wohnüberbauung Kolbenstrasse Wohnüberbauung Residenza Giardino Kindekrippe NEMO, Crèche Philip Morris Int. Wohnüberbauung Mürgelistrasse
Genève Lausanne Visp St.Gallen ganze Schweiz Horgen Dietikon Bern Neuchâtel Sursee Ecublens Bern Ecublens La Neuveville Visp Al Ain (Emirat Abu Dhabi) Bitsch Zürich Emmen Minusio Boudry Zuchwil
Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate INFRA Real Estate Real Estate INFRA IIC INFRA Real Estate Real Estate Real Estate Real Estate Real Estate
TOTAL
Volume in Mio. CHF
*
57.4 41.4 38.6 26.4 24.3 22.5 21.9 21.2 17.2 16.0 13.3 12.9 12.7 12.3 11.9 11.7 11.5 11.2 10.9 10.6 10.5 10.2
426.5
516
3,525
427
975 projects
1,281
3,186
22 projects
At endJuly 2010
order book revised since 1.8.2010
Division
Order intake projects < CHF 10 million
City
Order intake projects > CHF 10 million
Project
in CHF million
At endFeb 2011
* execution in joint ventures
©
Implenia | Corporate Center | March 2011 | Page 36
Order book as of 28.2.2011 Orders assured â&#x20AC;&#x201C; good quality Order book
Feb. 2011
Feb. 2010
1'748.5
1'790.0
Infrastructure
727.9
906.6
Industrial construction
709.9
760.5
3'186.2
3'457.1
Real estate
TOTAL order book
in CHF million
Secured revenue 79.5%
37.4% 8.0% 2011
Order book by customer category as %
2012
2013
Trend in orders 3,500
22%
40%
in PK nur Jahreswerte!
3,186
3,000 2,500 2,000
External External AAA Public sector and agencies
38%
1,500 Feb 2007
Feb 2008
Feb 2009 Š
Feb 2010
Feb 2011
Implenia | Corporate Center | March 2011 | Page 37
Outlook Confidence for 2011 Market in 2011 No significant changes of the economic condition of the construction industry - Stable high-level demand in civil engineering and infrastructure works - Building construction/ residential construction stable thanks to continued high demand
Increased regional differences
2011 Outlook Optimism because of full order books (= our main indicator) We continue to pursue our strategy consistently Further improvements are possible in all divisions - systematic risk, claim and cost management - Standardization of processes
Medium term target of CHF 100 million in operating income confirmed ©
Implenia | Corporate Center | March 2011 | Page 38
Media and Financial Analysts' Conference Other topics
Š
Implenia | Corporate Center | March 2011 | Page 39
Investigation by the Competition Commission (COMCO) Internal investigation completed and conclusions drawn Background COMCO has been investigating the Implenia branch in Buchs (Aargau) since 10.6.2009 as well as numerous other road and civil engineering companies in the canton of Aargau to determine whether competition regulation has been violated Implenia is cooperating with COMCO Internal investigation and consequences Our internal investigation has been finalized The concerned employees has been transferred internally or issued written warnings Internal control processes have been modified and strengthened Our position We clearly advocate open competition and are against practices that hinder competition ©
Implenia | Corporate Center | March 2011 | Page 40
Organisation Personnel changes New Board members Strengthening the sustainability, industrial and financial expertise of the Implenia Board of Directors Moritz Leuenberger Theophil Schlatter Changes in Group Management Peter Bodmer (Co-Head of the Industrial Construction Division) is leaving Implenia New management responsibilities will be communicated in due course
©
Implenia | Corporate Center | March 2011 | Page 41
General Meeting of 19 April 2011 Further proposals to the shareholders Compensation report Consultative ballot will be taken for the first time In accordance with recommendations from Ethos Foundation Dividend Dividend increased from CHF 0.70 to CHF 0.90 per share Payment once again in the form of a par-value reduction
©
Implenia | Corporate Center | March 2011 | Page 42
Performance of Implenia shares SPI outperformed by 63% TSR: 12.6% Dividend yield: 2.8% (4.2%)
Δ = 10%
Δ = 63%
©
Implenia | Corporate Center | March 2011 | Page 43
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 | March 2011 | Page 44