Utilities 502018The annual report on the worlds most valuable utilities brandsFebruary 2018Brand Finance Utilities 50 February 2018 3.Foreword.What is the purpose of a strong brand: to attract customers, to build loyalty, to motivate staff? All true, but for a commercial brand at least, the first answer must always be to make money. Huge investments are made in the design, launch, and ongoing promotion of brands. Given their potential financial value, this makes sense. Unfortunately, most organisations fail to go beyond that, missing huge opportunities to effectively make use of what are often their most important assets. Monitoring of brand performance should be the next step, but is often sporadic. Where it does take place, it frequently lacks financial rigour and is heavily reliant on qualitative measures, poorly understood by non-marketers. As a result, marketing teams struggle to communicate the value of their work and boards then underestimate the significance of their brands to the business. Sceptical finance teams, unconvinced by what they perceive as marketing mumbo jumbo, may fail to agree necessary investments. What marketing spend there is, can end up poorly directed as marketers are left to operate with insufficient financial guidance or accountability. The end result can be a slow but steady downward spiral of poor communication, wasted resources, and a negative impact on the bottom line. Brand Finance bridges the gap between marketing and finance. Our teams have experience across a wide range of disciplines from market research and visual identity to tax and accounting. We understand the importance of design, advertising, and marketing, but we also believe that the ultimate and overriding purpose of brands is to make money. That is why we connect brands to the bottom line. By valuing brands, we provide a mutually intelligible language for marketing and finance teams. Marketers then have the ability to communicate the significance of what they do, and boards can use the information to chart a course that maximises profits. Without knowing the precise, financial value of an asset, how can you know if you are maximising your returns? If you are intending to license a brand, how can you know you are getting a fair price? If you are intending to sell, how do you know what the right time is? How do you decide which brands to discontinue, whether to rebrand and how to arrange your brand architecture? Brand Finance has conducted thousands of brand and branded business valuations to help answer these questions. Brand Finances research revealed the compelling link between strong brands and stock market performance. It was found that investing in highly-branded companies would lead to a return almost double that of the average for the S&P 500 as a whole. Acknowledging and managing a companys intangible assets taps into the hidden value that lies within it. The following report is a first step to understanding more about brands, how to value them and how to use that information to benefit the business. The team and I look forward to continuing the conversation with you.David Haigh CEO, Brand FinanceBrand Finance Utilities 50 February 2018 5.Brand Finance Utilities 50 February 2018 4.Foreword 3About Brand Finance 4Contact Details 4Definitions 6Executive Summary 8Full Table 12Methodology 14Understand Your Brands Value 15Consulting Services 16Communications Services 17Contents.About Brand Finance.Brand Finance is the worlds leading independent brand valuation and strategy consultancy. Brand Finance was set up in 1996 with the aim of bridging the gap between marketing and finance. For more than 20 years, we have helped companies and organisations of all types to connect their brands to the bottom line.We pride ourselves on four key strengths: Independence Technical Credibility Transparency Expertise.Brand Finance puts thousands of the worlds biggestbrands to the test every year, evaluating which are the strongest and most valuable.For more information, please visit our website:brandfinanceContact Details.For business enquiries, please contact:Richard HaighManaging Director rd.haighbrandfinanceFor media enquiries, please contact:Konrad JagodzinskiCommunications Director k.jagodzinskibrandfinanceFor all other enquiries, please contact:enquiriesbrandfinance+44 (0)207 389 9400linkedin/company/ brand-financefacebook/brandfinancetwitter/brandfinanceFor further information on Brand Finance®s services and valuation experience, please contact your local representative:Country Contact Email addressAsia Pacific Samir Dixit s.dixitbrandfinance +65 906 98 651 Australia Mark Crowe m.crowebrandfinance +61 282 498 320Brazil Geoffrey Hamilton-Jones g.hamilton-jonesbrandfinance +55 1196 499 9963Canada Bill Ratcliffe b.ratcliffebrandfinance +1 647 3437 266Caribbean Nigel Cooper n.cooperbrandfinance +1 876 8256 598China Scott Chen s.chenbrandfinance +86 1860 118 8821East Africa Jawad Jaffer j.jafferbrandfinance +254 204 440 053France Victoire Ruault v.ruaultbrandfinance +44 0207 389 9427Germany Holger Mühlbauer h.muehlbauerbrandfinance +49 1515 474 9834India Ajimon Francis a.francisbrandfinance +91 989 2085 951Indonesia Jimmy Halim j.halimbrandfinance +62 215 3678 064Ireland Simon Haigh s.haighbrandfinance +353 087 6695 881Italy Massimo Pizzo m.pizzobrandfinance +39 0230 312 5105Mexico & LatAm Laurence Newell l.newellbrandfinance +52 1559 197 1925Middle East Andrew Campbell a.campbellbrandfinance +971 508 113 341Nigeria Babatunde Odumeru t.odumerubrandfinance +234 012 911 988Romania Mihai Bogdan m.bogdanbrandfinance +40 728 702 705Spain Teresa de Lemus t.delemusbrandfinance +34 654 481 043 South Africa Jeremy Sampson j.sampsonbrandfinance +27 828 857 300Sri Lanka Ruchi Gunewardene r.gunewardenebrandfinance +94 114 941 670Turkey Muhterem Ilgüner m.ilgunerbrandfinance +90 216 3526 729UK Richard Haigh rd.haighbrandfinance +44 0207 389 9400USA Amy Rand a.randbrandfinance +44 0207 389 9432Vietnam Lai Tien Manh m.laibrandfinance +84 473 004 468Brand Finance Utilities 50 February 2018 7.Brand Finance Utilities 50 February 2018 6.Definitions.Definitions. Brand Value+ Enterprise Value The value of the entire enterprise, made up of multiple branded businesses. Where a company has a purely mono- branded architecture, the enterprise value is the same as branded business value.+ Branded Business Value The value of a single branded business operating under the subject brand. A brand should be viewed in the context of the business in which it operates. Brand Finance always conducts a branded business valuation as part of any brand valuation. We evaluate the full brand value chain in order to understand the links between marketing investment, brand- tracking data, and stakeholder behaviour.+ Brand Contribution The overall uplift in shareholder value that the business derives from owning the brand rather than operating a generic brand.The brand values contained in our league tables are those of the potentially transferable brand assets only, making brand contribution a wider concept. An assessment of overall brand contribution to a business provides additional insights to help optimise performance.+ Brand Value The value of the trade mark and associated marketing IP within the branded business. Brand Finance helped to craft the internationally recognised standard on Brand Valuation ISO 10668. It defines brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.Brand ValueEnterpriseValueBrandedBusinessValueBrandContributionBrand Strength IndexWidely recognised factors deployed by marketers to create brand loyalty and market share. Marketing Investment A brand that has high Marketing Investment but low Stakeholder Equity may be on a path to growth. This high investment is likely to lead to future performance in Stakeholder Equity which would in turn lead to better Business Performance in the future. However, high Marketing Investment over an extended period with little improvement in Stakeholder Equity would imply that the brand is unable to shape customers preference.Stakeholder Equity The same is true for Stakeholder Equity. If a company has high Stakeholder Equity, it is likely that Business Performance will improve in the future. However, if the brands poor Business Performance persists, it would suggest that the brand is inefficient compared to its competitors in transferring stakeholder sentiment to a volume or price premium.Business Performance Finally, if a brand has a strong Business Performance but scores poorly on Stakeholder Equity, it would imply that, in the future, the brands ability to drive value will diminish. However, if it is able to sustain these higher outputs, it shows that the brand is particularly efficient at creating value from sentiment compared to its competitors.MarketingInvestmentPerceptions of the brand among different stakeholder groups, with customers being the most important.Quantitative market and financial measures representing the success of the brand in achieving price and volume premium.StakeholderEquityBusinessPerformanceBrand StrengthBrand Strength is the efficacy of a brands performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.Analysing the three brand strength measures helps inform managers of a brands potential for future success.InvestmentEquityPerformanceENEL SPAEndesaEndesaEndesaBrand Finance Utilities 50 February 2018 9.Brand Finance Utilities 50 February 2018 8.Executive Summary.State Grid Electrifies Utilities RankingState Grid, the electric utility giant from China, has made a commanding entrance to the Brand Finance Utilities 50 league table. With a brand value of US$40.9 billion, over four times more than Frances EDF, it is by far the most valuable uitlity brand in the world. The companys service covers the majority of Chinas land area, with a population of more than 1.1 billion. The brands success is supported through strategic investment, innovative technology, responsible operations, and environmental stability efforts. State Grid is committed to an electrification revolution in China that would connect all networks across the country. The brand is known for investing in Smart Grid electrical systems using Ultra High Voltage (UHV) lines, among other projects which enable a cleaner and more efficient transmission of electricity.State Grid is also admired in China for their sense of corporate social responsibility. Their tagline Your power, our care aligns with the governments projection of the national brand which underscores the need for state institutions to balance authority with consideration.The success of Chinese brands can be attributed to the government policy of promoting green and renewable energy solutions. As China takes on a global leadership role, also in environment protection, corporate brands benefit from the momentum. David HaighCEO, Brand FinanceExecutive Summary.Three smaller Chinese brands have also made an entrance into the Brand Finance Utilities 50 league table this year: GD Power Development (28th, US$1.4 billion), Datang Power (33rd, US$1.2 billion), and CGN (39th, US$1.1 billion).European Giants Reorganise The changing landscape towards an ever growing renewables and alternative energy offering has resulted in a need for European utilities companies to consider the best ongoing strategy for the use of their brands. E.ON and RWE have both chosen to divide their business and use distinct brands for the two sets of operations in the past year. RWE, a European giant in the utility market, separated its operations into two segments: Innogy and RWE. Innogy oversees renewables, grids, and retail, whereas RWE is centred towards conventional power generation and energy trading. As a result, RWE dropped out of the Brand Finance Utilities 50, replaced by Innogy which entered the table in 6thplace.Brand Value Change 2017-2018 (%)Top 10 Most Valuable BrandsRank 2018: 1 2017: New BV 2018: $40,944m Brand Rating: AA+1Rank 2018: 9 2017: 10 BV 2018: $3,630m BV 2017: $3,132mBrand Rating: AA-9+16%Rank 2018: 10 2017: 6 BV 2018: $3,265m BV 2017: $3,717mBrand Rating: AA-10-12%Rank 2018: 7 2017: 5 BV 2018: $3,857m BV 2017: $4,126mBrand Rating: AA+7-7%Rank 2018: 8 2017: 8 BV 2018: $3,666m BV 2017: $3,367mBrand Rating: AA-8+9%Rank 2018: 6 2017: New BV 2018: $4,068m Brand Rating: A+6Rank 2018: 2 2017: 2 BV 2018: $9,869m BV 2017: $8,268mBrand Rating: AA+2+19%Rank 2018: 3 2017: 3 BV 2018: $8,608m BV 2017: $7,936mBrand Rating: AAA-3+8%Rank 2018: 4 2017: 1 BV 2018: $8,386m BV 2017: $10,078mBrand Rating: AA4-17%Rank 2018: 5 2017: 4 BV 2018: $5,035m BV 2017: $4,353mBrand Rating: AAA-5+16%Saudi Electricity CompanyWaste ManagementEDFTEPCOKEPCOE.ONKyushu Electric PowerSSEEnelTohoku Electric Power-22%-23%-23%-24%-25%-25%-27%-30%-31%-32%62%25%19%16%16%14%13%9%8%8%ChubuScottish PowerconEdisonPG&EXcel EnergyEDPDirect EnergyDTE EnergyBritish GasDOMINIONBrand Finance Utilities 50 February 2018 11.Brand Finance Utilities 50 February 2018 10.Executive Summary.Brand Value Over TimeBrand Value by Country Executive Summary.Top 10 Strongest BrandsBSI Score82.8BSI Score75.7BSI Score75.1BSI Score76.5BSI Score76.5BSI Score77.1BSI Score82.4BSI Score82.2BSI Score79.0BSI Score77.7E.ON demerged its business into two sections, renewable energy networks and fossil fuel. The latter was rebranded as Uniper, and entered the table in 11th place. As a result of the split, E.ON dropped from 4thto 13thwith its new focus on green energy.Enel has done the converse to these two brands and over the last few years has been embarking on an overhaul of their brand in an attempt to change consumer perceptions towards a more environmentally friendly option.Enel Emerges as Strongest Brand Enel, one of the worlds leading integrated electricity and gas operators, emerged as the strongest brand this year with a brand strength index (BSI) score of 82.8 and a brand rating of AAA-. Enel has undergone a strategic repositioning and brand refresh, successfully establishing itself as a consumer focused and envir