CLP Holdings Limited · HKEX:2
CLP — FY2018 Earnings Presentation
58 slides from CLP's earnings presentation, Feb 25, 2019
Slide 1: CLP Holdings 2018 Annual Results Analyst Briefing
CLP Holdings 2018 Annual Results Analyst Briefing 25 February 2019
Slide 2: Disclaimer
Disclaimer Potential investors, analysts and shareholders of CLP Holdings Limited (the Company) and other recipients of this document are reminded that this document and any oral discussion made together with this document (the presentation) are provided for your information purposes only and you ma
Slide 3: Agenda
Agenda Performance Overview Group Financial Performance Performance by Business Units Business Trends and Outlook Questions and Answers Appendices 3
Slide 4: Performance Overview
Performance Overview Battery Storage Systems at Ballarat, Australia
Slide 5: Focused strategy delivers 5th year of earnings growth
Focused strategy delivers 5th year of earnings growth ✓ Continued dependable performance from Hong Kong business ✓ New 15-year SoC from 1 October 2018 ✓ Development Plan lays foundation for investment in cleaner and smarter energy ✓ Further growth from Mainland China and overseas ✓ Higher contributi
Slide 6: Financial strength and investments lay foundation for growth
Financial strength and investments lay foundation for growth Operating Earnings Operating Earnings Per Share HK$13,982m +5% HK$5.53 +5% Fourth Interim Dividend Total Interim Dividend HK$1.19 +4% HK$3.02 +4% Total Earnings Total Earnings Per Share HK$13,550m -5% HK$5.36 -5% Credit Ratings Capital Inv
Slide 7: Strong asset performance with 10% increase in electricity sent out
Strong asset performance with 10% increase in electricity sent out Safety Reliability in Hong Kong (1) Total recordable injury rate Average minutes lost pa (rolling 3 years) 0.25 -0.4 Excluding Typhoon Mangkhut 1.44 -0.13 Including Typhoon Mangkhut 10.29 +8.72 Customer Accounts Electricity Sales Hon
Slide 8: Group Financial Performance
Group Financial Performance Veltoor Solar Farm, Telangana, India
Slide 9: Higher operating earnings with strong overseas performance
Higher operating earnings with strong overseas performance HK$M 2018 2017 Change Revenue 91,425 92,073 1% Operating Earnings Hong Kong electricity and related activities 8,785 9,198 4% Local electricity business 8,558 8,863 Sales to Guangdong 35 65 PSDC and Hong Kong Branch Line 192 270 Outside Hong
Slide 10: Adjusted Current Operating Income (ACOI)
Adjusted Current Operating Income (ACOI) HK$M 2018 2017 Change Adjusted Current Operating Income or ACOI ▪ ACOI equals EBIT excluding items affecting Operating Earnings comparability and fair value adjustments, and 13,982 13,307 5% (Attributable to CLP) includes Group’s share in net earnings from jo
Slide 11: Adjusted Current Operating Income (ACOI)
Adjusted Current Operating Income (ACOI) HK$M 2018 2017 Hong Kong electricity and related activities 12,826 13,222 New Scheme of Control commenced with lower permitted return Mainland China 2,670 1,610 Growth in earnings from non-carbon portfolio India 1,385 1,511 Lower thermal earnings partially of
Slide 12: Performance by Business Units
Performance by Business Units Visit to Yangjiang Nuclear Power Station, China
Slide 13: New Scheme of Control commenced with lower permitted rate of return
New Scheme of Control commenced with lower permitted rate of return HK$m Hong Kong ACOI 16,000 13,222 13,123 251 12,826 (2%) 12,000 ( 99 ) (539) (9) 8,000 4,000 0 2017 FX Normalised Change in Return on Others 2018 2017 permitted rate higher fixed of return assets Operational Performance High supply
Slide 14: Growth in earnings from non-carbon portfolio
Growth in earnings from non-carbon portfolio HK$m Mainland China ACOI 3,000 114 31 2,670 +62% 896 2,500 (15) 885 2,000 1,610 34 1,644 1,500 1,864 Renewables Nuclear 1,000 Thermal Others 500 39 0 (118) 2017 FX Normalised Nuclear Renewables Thermal Others 2018 (500) 2017 Operational Performance Nuclea
Slide 15: Lower thermal earnings partially offset by new solar contribution
Lower thermal earnings partially offset by new solar contribution HK$m India ACOI 1,800 1,600 1,511 74 1,440 25 1,385 (4%) 1,400 (71) 1,200 (154) 677 1,000 800 600 Renewables 400 708 Thermal 200 0 2017 FX Normalised Renewables Thermal Others 2018 2017 Operational Performance Renewables Renewables Pu
Slide 16: Stable performance at Ho Ping and NED
Stable performance at Ho Ping and NED HK$m Southeast Asia and Taiwan ACOI 200 156 5 161 1 12 161 (13) 69 100 131 Renewables Thermal Others 0 (39) (100) 2017 FX Normalised Renewables Thermal Opex & Devex 2018 2017 Operational Performance Renewables - Lopburi Renewables - Lopburi Ongoing engagement wi
Slide 17: High wholesale prices and sent out with competitive retail market
High wholesale prices and sent out with competitive retail market HK$m Australia ACOI 7,000 6,000 Enterprise 2,543 Energy (2,045) +23% 5,000 4,885 4,086 3,978 5,391 4,000 (264) (108) 3,000 2,000 (1,372) 1,000 Customer -0 1,539 2017 FX Normalised Customer Energy Enterprise 2018 2017 Operational Perfo
Slide 18: Financial strength supports growth options
Financial strength supports growth options Cash Flow Capital Investments Dividends paid Net Debt Operating Return on Equity (%) Credit Ratings S&P Moody’s Net Debt/Total Capital (%) A A2 CLP Holdings Stable Stable CLP Power A+ A1 Hong Kong Stable Stable AA- A1 CAPCO Stable Stable BBB+ EnergyAustrali
Slide 19: Business Trends and Outlook
Business Trends and Outlook SmartHUB@CLP, Hong Kong
Slide 20: New Development Plan addresses growing demand & supply reliability
New Development Plan addresses growing demand & supply reliability Guangzhou Pumped Storage Power Station Daya Bay Nuclear Power Station Maintaining Supply Reliability Black Point Power Station Meeting New Towns Needs Castle Peak Power Station Penny’s Bay Power Station Servicing New Infrastructure P
Slide 21: New initiatives moving Hong Kong towards a smarter & greener future
New initiatives moving Hong Kong towards a smarter & greener future ✓ Green initiatives to encourage community participation in renewable energy ✓ New Feed-in Tariff programme established – over 1,400 applications received ✓ Issuance of Renewable Energy Certificates commenced in January 2019 ✓ Smart
Slide 22: The Utility of the Future
The Utility of the Future Providing customers with Customers empowered data driven insights and with greater visibility & energy management tools control of energy usage Investing in smart grid Smarter, more infrastructure, smart meters sustainable, more & services combined with AI connected cities
Slide 23: Continuing our commitment to the Energy Transition
Continuing our commitment to the Energy Transition Decarbonisation Targets Clean Energy Targets Our Portfolio 2050 decarbonisation target now Milestones for renewables and CLP Group’s non-carbon emitting generation set at 0.15 kg CO2/kWh non-carbon capacity increased portfolio more than doubled sinc
Slide 24: Strengthening resilience against extreme weather events
Strengthening resilience against extreme weather events ❖ With climate change we expect the frequency and intensity of extreme weather events to increase ❖ Recent examples include: ‒ Severe Typhoon Mangkhut, the most powerful storm to hit Hong Kong & Guangdong in decades ‒ The extreme heat wave impa
Slide 25: Looking forward
Looking forward Hong Kong Deliver new Development Plan & SoC initiatives to become a greener & smarter city Australia Mainland China Pursue opportunities Explore opportunities to bring reliable and in Mainland China affordable energy to with a focus in the customers Climate Vision 2050 Greater Bay A
Slide 26: Questions and Answers
Questions and Answers Black Point Power Station, Hong Kong
Slide 27: Appendices
Appendices Lingyuan Solar Farm, Liaoning, China
Slide 28: CLP Group – Financial Highlights – Additional Information
CLP Group – Financial Highlights – Additional Information Financial Information 2018 2017 Change Operating earnings (HK$M) 13,982 13,307 +5% Total earnings (HK$M) 13,550 14,249 -5% Operating earnings per share (HK$) 5.53 5.27 +5% Total earnings per share (HK$) 5.36 5.64 -5% Dividends per share (HK$)
Slide 29: CLP Group – Operating Highlights – Additional Information
CLP Group – Operating Highlights – Additional Information Operating Information 2018 2017 Change Safety (Total Recordable Injury Rate) 0.25 0.29 -0.4 Electricity sent out (TWh) (1) 91.9 83.9 +9.5% Generation Capacity (GW) (1) Total in Operation 22.9 23.5 -0.6 Non-Carbon Emitting (2) 5.4 5.2 +0.2 Com
Slide 30: CLP Group – Reconciliation of Operating Earnings and ACOI
CLP Group – Reconciliation of Operating Earnings and ACOI Hong Kong Other earnings & HK$M electricity and Mainland China India SEA & Taiwan Australia Group total unallocated items related 2018 Annual results Operating Earnings (as per Segment 8,501 2,355 572 162 3,302 (910) 13,982 Information in Ann
Slide 31: CLP Group – Cash Flow and Financial Structure
CLP Group – Cash Flow and Financial Structure HK$M 2018 2017 Cash Flow Cash Flow ▪ Higher cash inflow mainly due to the strong underlying performance EBITDAF 28,571 27,662 across the portfolio Less: Items affecting comparability 432 (369) ▪ Cash from divestment represents proceeds received from the
Slide 32: CLP Group – Financial Obligations at a Glance
CLP Group – Financial Obligations at a Glance 31 Dec 2018 31 Dec 2017 HONG KONG HK$M HK$M Total borrowings of CLPH, CLPP, CAPCO & PSDC 43,247 44,954 Minus: Bank balances and liquid funds (4,437) (5,964) Net Debt 38,810 38,990 OVERSEAS Total borrowings of EnergyAustralia, India and Mainland China sub
Slide 33: CLP Group – Credit Ratings
CLP Group – Credit Ratings CLP Holdings CLP Power CAPCO EnergyAustralia S&P Moody’s S&P Moody’s S&P Moody’s S&P Long term Rating Foreign Currency A A2 A+ A1 AA- A1 BBB+ Outlook Stable Stable Stable Stable Stable Stable Stable Local Currency A A2 A+ A1 AA- A1 BBB+ Outlook Stable Stable Stable Stable
Slide 34: CLP Group – Highlights of Financing Activities
CLP Group – Highlights of Financing Activities For more information on CLP Climate Action Finance Framework CLP Holdings • Ample liquidity in the Group with undrawn facilities of HK$24 billion and HK$12.1 billion bank balances as at 31 December 2018. • CLP Holdings refinanced HK$2.5 billion loan fac
Slide 35: CLP Group – Loan Balances by Type and Maturity
CLP Group – Loan Balances by Type and Maturity Proportion of debt on fixed and floating rate 47% 48% 52% 53% Dec 2018 Dec 2017 Floating rate (2) Fixed rate 1) The maturity of revolving loans is in accordance with the maturity dates of the respective facilities instead of the current loan drawdown te
Slide 36: Hong Kong – Growing Business Scale
Hong Kong – Growing Business Scale Generation Transmission Distribution Retail 8,963 MW of > 15,800 km of transmission and 232 primary and > 14,600 33,662 GWh sold and installed capacity high voltage distribution lines secondary substations 2.60 million customer accounts During 2018: ▪ Local electri
Slide 37: Hong Kong – Electricity Sales and Capex
Hong Kong – Electricity Sales and Capex Electricity Sales Capital Expenditure (Accrual basis) GWh 2018 2017 Change HK$M 2018 2017 Change Residential 9,191 9,217 (0.3%) CLP Power Hong Kong 4,411 4,523 (2.5%) Commercial 13,425 13,220 1.6% CAPCO 4,511 3,545 27.2% Infrastructure & Public Services 9,342
Slide 38: Hong Kong – Tariff, Reliability & Environmental Improvement
Hong Kong – Tariff, Reliability & Environmental Improvement HK$/kWh Low Tariff Unplanned customer High Reliability 3.0 minutes lost per year 30 2.5 18 19 2.0 20 1.5 11 10.3 10 1.0 0.4 1.4* 0.5 0 Singapore CLP Power Sydney London New York 0.0 (CBD) CLP Power Singapore London New York Sydney Remarks:
Slide 39: Hong Kong – Tariff, Energy Cost, Fuel Mix and Gas Volume
Hong Kong – Tariff, Energy Cost, Fuel Mix and Gas Volume HK¢/kWh Tariffs Energy Cost Average Net Tariff 117.7 120 HK$M 20,000 18,645 100 Basic Tariff 91.0 17,281 +8% 296 439 80 15,000 60 6,750 Others 6,540 40 10,000 Nuclear Fuel Cost Adjustment 27.8 # Gas 20 6,986 Coal Special Rebate (1.1) * 5,000 6
Slide 40: Mainland China – Financials (HK$)
Mainland China – Financials (HK$) HK$M Operating/Total Earnings ACOI 2018 2017 2018 2017 Renewables 530 441 885 755 - Wind 314 245 452 352 - Hydro 93 100 211 228 - Solar 123 96 222 175 Nuclear 1,720 913 1,864 964 - Daya Bay 920 879 968 930 - Yangjiang 800 34 896 34 Thermal 36 45 39 53 - Shandong 13
Slide 41: Mainland China – Financials (Local Currency)
Mainland China – Financials (Local Currency) RMB’M Operating/Total Earnings ACOI 2018 2017 2018 2017 Renewables 448 381 748 653 - Wind 265 212 382 304 - Hydro 79 86 178 197 - Solar 104 83 188 152 Nuclear 1,454 789 1,577 833 - Daya Bay 778 760 819 804 - Yangjiang 676 29 758 29 Thermal 31 39 33 46 - S
Slide 42: Mainland China – Renewables and MW Generation
Mainland HK$M China – Renewables andMWGeneration 3,000 10,000 Operating Earnings ACOI CLP capacity(1) in Mainland China 2,600 885 8,000 2,200 530 1,800 6,000 1,400 755 441 1,000 1,720 1,864 4,000 600 913 964 200 2,000 0 45 36 53 39 -200 (161) (123) (162) (118) 0 2017 2018 2017 2018 2007 2008 2009 20
Slide 43: Mainland China – Market sales in 2018
Mainland China – Market sales in 2018 Province Projects (Equity MW) Yunnan Xundian Wind (50MW) Xicun Solar (84MW) Dali Yang_er Hydro (50MW) Guangxi FCG thermal (1,806MW) JILIN Sichuan Jiangbian Hydro (330MW) LIAONING GANSU Gansu Jinchang Solar (85MW) INNER MONGOLIA TIANJIN Inner Zhungeer thermal (25
Slide 44: India – Financials
India – Financials HK$ Local Currency 2018 2017 2018 2017 HK$M HK$M Rs M Rs M Thermal (Jhajjar) 474 676 4,135 5,633 Thermal (Paguthan) 234 273 2,041 2,275 Renewables 677 562 5,905 4,683 ACOI 1,385 1,511 12,081 12,591 Thermal (Jhajjar) 102 315 890 2,625 Thermal (Paguthan) 226 222 1,971 1,850 Renewabl
Slide 45: India – Renewable Generation
India – Renewable Generation HK$M Introduction of CDPQ as a 40% shareholder of CLP India 1,800 1,600 Operating Earnings ACOI ▪ In September 2018, CLP introduced Caisse de dépôt et 1,400 Thermal placement du Québec (CDPQ), one of Canada’s largest fund Renewables 562 managers, as a strategic 40% share
Slide 46: Southeast Asia & Taiwan – Financials
Southeast Asia & Taiwan – Financials HK$ Local Currency 2018 2017 2018 2017 HK$M HK$M M M ACOI Thermal 131 142 NT$503 NT$554 Renewables 69 65 THB284 THB281 Operating expenditure (11) (13) - - Development expenditure (28) (38) - - Total 161 156 Operating earnings Thermal 131 142 NT$503 NT$554 Renewab
Slide 47: Australia – Financials
Australia – Financials HK$ Local Currency 2018 2017^ 2018 2017^ HK$M HK$M A$M A$M EBITDAF (before items 6,566 5,421 1,125 905 affecting comparability) Depreciation & Amortisation (1,681) (1,335) (288) (223) ACOI Customer (Retail) 1,539 2,990 264 499 Energy (Wholesale) 5,391 2,925 923 487 Enterprise
Slide 48: Australia – Customer Operations
Australia – Customer Operations Customer Account Numbers 2018 2017 (000s) Electricity Gas Total Electricity Gas Total Mass Market 1,671.6 866.0 2,537.6 1,738.0 872.2 2,610.2 Commercial & Industrial 12.2 0.3 12.5 12.8 0.4 13.2 Total Account Numbers 1,683.8 866.4 2,550.1 1,750.9 872.5 2,623.4 Weighted
Slide 49: Australia – Customer Operations
Australia – Customer Operations Customer Focussed; Leadership in an Industry with Low Trust Improving Efficiency Paper Bill E-Bill ▪ Ongoing market competition, regulatory changes and 100% affordability have adversely impacted our cost to serve 80% and reduced customer trust in the industry. In ligh
Slide 50: Australia – Wholesale Market Conditions
Australia – Wholesale Market Conditions Year Ahead Swap Prices 140 ▪ Recent forward electricity price increase driven 120 by increasing fuel costs, reducing hydro storage and new entrant project delays SWAP Price $/MWh 100 ▪ Longer term electricity prices are trading lower 80 from more renewables, i
Slide 51: Australia – Value Creation
Australia – Value Creation ▪ With Value Restoration delivered successfully, EnergyAustralia is investing in Value Creation ▪ Value Restoration ▪ Improved customer service with higher transactional Net Promoter Score ▪ Optimising asset portfolio to support the Customer Business including battery stor
Slide 52: CLP Group – Generation Portfolio – 31 Dec 2018
CLP Group – Generation Portfolio – 31 Dec 2018 19,108 Equity MW and 4,597MW Long Term Purchase (total 23,705MW) AUSTRALIA total 5,128MW* HONG KONG total 7,543MW* Operational Operational Yallourn 1,480 / 1,480 (c) Castle Peak 4,108 / 4,108* (c) Mount Piper 1,400 / 1,400 (c) Black Point (b) 2,575 / 2,
Slide 53: CLP Group – Renewable Generation Portfolio – 31 Dec 2018
CLP Group – Renewable Generation Portfolio – 31 Dec 2018 2,387 Equity MW and 652MW Long Term Purchase (total 3,039MW) HONG KONG total 10 MW Under Construction - 13% of CLP total generation portfolio West New Territories Landfill 10/10 AUSTRALIA total 681 MW* Operational MAINLAND CHINA total 1,716 MW
Slide 54: CLP Group – Generation Capacity by Fuel Mix – 31 Dec 2018
CLP Group – Generation Capacity* by Fuel Mix – 31 Dec 2018 23,508 MW Attributable to CLP Group Under construction / Total Operational Capacity by Committed MW % MW % % Energy Type MW (a) + (b) (a) (b) Coal 11,997 51% 11,997 51% - - Gas 5,084 22% 4,534 19% 550 2% Nuclear 2,685 11% 2,500 11% 185 1% Wi
Slide 55: CLP Group – Energy Sent Out – 2018
CLP Group – Energy Sent Out – 2018 Energy Sent Out* TWh 40 CLP 2018 Annual Generation 35.9 35.5 as Sent Out* 35 2018 30 20% 15% 2017 25.5 25 2% 1% 61% 60% 2% 6% 20.8 1% 20.6 20 5% 17.9 15% 15 12% 2017: 83.9 TWh 2018: 92.3 TWh 10 8.9 7.6 5 1.7 1.8 0 -5 2017 2018 2017 2018 2017 2018 2017 2018 2017 201
Slide 56: CLP Group – Financial Metrics and Generation by Activity – 2018
CLP Group – Financial Metrics and Generation by Activity – 2018 ✓ CLP’s integrated business includes energy retailing, transmission and distribution (T&D) and generation ✓ Approximately half of our earnings are contributed by our energy retailing and T&D businesses ✓ Nearly 50% of our generation por
Slide 57: Additional Resources
Additional Resources * To be published in March 2019 57
Slide 58: Thank you
CLP Holdings Thank you Energy for Brighter Tomorrows