CLP Holdings Limited · HKEX:2
CLP — FY2017 Earnings Presentation
59 slides from CLP's earnings presentation, Feb 26, 2018
Slide 1: CLP Holdings 2017 Annual Results Analyst Briefing
CLP Holdings 2017 Annual Results Analyst Briefing 26 February 2018
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. It is imp
Slide 3: Agenda
Agenda Performance Overview Group Financial Performance Performance by Business Units Outlook Questions and Answers Appendices 3
Slide 4: Performance Overview
Performance Overview The Premiere of A Century of Power
Slide 5: Operating Earnings up 8% as diversified portfolio delivers steady growth
Operating Earnings up 8% as diversified portfolio delivers steady growth ✓ Our Focus • Delivery • Growth strategy and diversified portfolio continue to deliver steady growth and position CLP to navigate the energy transition ✓ Solid portfolio performance and operational delivery ✓ New SoC lays stron
Slide 6: Earnings growth, strong financial structure and investment for the future
Earnings growth, strong financial structure and investment for the future All Outlooks are currently Stable. # First time ratings obtained in June 2017 6
Slide 7: Operating Performance
Operating Performance Favourable Stable/Satisfactory Unfavourable (1) Equity basis and capacity purchase arrangements. Also includes long-term power contracts from facilities in which we hold an equity interest (2) Equity basis and capacity purchase arrangements (3) Non-carbon emitting includes wind
Slide 8: Group Financial Performance
Group Financial Performance Cable Tunnel, Hong Kong
Slide 9: Solid financial performance with strength from diversity
Solid financial performance with strength from diversity HK$M 2017 2016 ^ Change Revenue 92,073 79,434 16% Operating Earnings Hong Kong electricity and related activities 9,198 8,843 ^ 4% Local electricity business 8,863 8,640 Sales to Guangdong 65 56 ^ PSDC and Hong Kong Branch Line 270 147 Outside
Slide 10: Adjusted Current Operating Income (ACOI)
Adjusted Current Operating Income (ACOI) Adjusted Current Operating Income or ACOI HK$M 2017 2016 Change ▪ ACOI equals EBIT excluding items affecting comparability and fair value adjustments, and Operating Earnings includes Group’s share in net earnings from joint 13,307 12,334 8% (Attributable to C
Slide 11: Adjusted Current Operating Income (ACOI)
Adjusted Current Operating Income (ACOI) HK$M 2017 2016 ^ Hong Kong electricity and related activities 13,222 12,809 ^ Dependable performance & continuing strengthening of infrastructure Mainland China 1,610 1,863 Higher earnings from non-carbon but lower earnings from coal India 1,511 1,383 Reliabl
Slide 12: Performance by Business Units
Performance by Business Units Yangjiang Nuclear Power Station, Guangdong, China
Slide 13: Dependable performance and new opportunities in Hong Kong
Dependable performance and new opportunities in Hong Kong HK$m Hong Kong ACOI 16,000 12,809 * 12,950 268 4 13,222 +2% 141 12,000 8,000 4,000 0 2016 FX Normalised 2016 Return on higher Others 2017 fixed assets Operational Performance Local sales flat reflecting mild weather in 1H • Higher earnings pr
Slide 14: Growth from non-carbon assets offset by lower thermal contribution
Growth from non-carbon assets offset by lower thermal contribution HK$m 2,400 Mainland China ACOI 142 22 34 1,863 59 1,922 (16%) 2,000 (43) 1,610 1,600 (381) (86) 755 1,200 800 964 Renewables Nuclear 400 Renewables Nuclear Thermal 53 Others 0 (162) (400) 2016 FX Normalised Existing RE New RE Nuclear
Slide 15: Reliable performance across all assets
Reliable performance across all assets HK$m India ACOI 1,800 131 3 18 1,511 1,600 86 1,469 +3% 1,383 1,400 (110) 562 1,200 1,000 800 949 Renewables 600 Thermal 400 200 0 2016 FX Normalised Thermal Renewables New solar Others 2017 2016 project Operational Performance Thermal Thermal - Jhajjar Focus o
Slide 16: Lower earnings from thermal asset in Southeast Asia and Taiwan
Lower earnings from thermal asset in Southeast Asia and Taiwan HK$m 400 Southeast Asia and Taiwan ACOI 19 (46%) 300 290 271 200 3 156 (124) (13) 65 100 Renewables 142 Thermal 0 Others (51) (100) 2016 FX Normalised Thermal Renewables Opex & 2017 2016 Devex Operational Performance Thermal - Ho-Ping Th
Slide 17: Value restoration and higher wholesale prices drive earnings growth
Value restoration and higher wholesale prices drive earnings growth HK$m Australia ACOI 6,000 5,000 Enterprise 4,086 Energy (1,829) 1,302 169 +61% 4,000 2,778 3,000 99 80 2,436 2,535 2,000 Customer 1,000 3,137 0 2016 FX Normalised Customer Energy Enterprise 2017 2016 Operational Performance Customer
Slide 18: Financial strength unaffected by significant capex
Financial strength unaffected by significant capex Free Cash Flow Capital Investments Dividends paid Net Debt Financing initiatives Credit Ratings S&P Moody’s Net Debt/Total Capital (%) • HK$5.1 bn bank loan facilities arranged to A A2 CLP Holdings Stable Stable fund the acquisition of 17% equity st
Slide 19: Robust financial position and resilient growth
Robust financial position and resilient growth Dividend per share Revenue Operating Earnings Total Dividends Hong Kong Mainland China HK$’b India SEA Australia Other earnings & unallocated items Net Debt Operating Return Capital Investment Net Debt/Total Capital (%) On Equity (%) * SoC capex Mainten
Slide 20: Outlook
Outlook “Strike the Dragon” pre-launch event at Lumieres Hong Kong
Slide 21: Hong Kong – 1st Development Plan of new SoC
Hong Kong – 1st Development Plan of new SoC Hong Kong has ambitious objectives under its Climate Action Plan 2030+ 25% 25% 25% 2015 48% 2020 2030 27% 50% Natural Gas Non-fossil fuels Coal Source: Hong Kong’s Climate Action Plan 2030+ The Development Plan we have submitted aligns with these objective
Slide 22: Hong Kong – New Initiatives on Renewables and Energy Efficiency
Hong Kong – New Initiatives on Renewables and Energy Efficiency Feed-in-Tariff New Eco Building Fund Renewable Energy Certificate Community Energy Saving Fund To achieve lower carbon and emission targets for a smarter and sustainable Hong Kong 22
Slide 23: Driving Innovation and Powering a Smart, Sustainable City
Driving Innovation and Powering a Smart, Sustainable City Smart Smart Government Living Smart Smart Smart Mobility Sustainable People City Smart Smart Environment Economy Source: Hong Kong Smart City Blueprint 23
Slide 24: New Climate Vision Targets and Energy Transition
New Climate Vision Targets and Energy Transition CLP’s New Climate Vision 2050 Carbon Emissions Targets Clean Energy Targets Reduction of emission Increasing share of intensity target for 2050 renewable and non-carbon from 0.2 to 0.15 generation capacity 40% * 0.69* % of Generation Capacity CO2/kWh)
Slide 25: Looking forward
Looking forward Mainland India China Broaden portfolio along the Optimise portfolio energy supply chain as energy reforms evolve Southeast Asia and Taiwan Hong Kong Progress Vietnam opportunities Deliver new Development Plan and SoC initiatives Climate Vision 2050 Actively pursue our energy Australi
Slide 26: Questions and Answers
Questions and Answers Huai’an Solar Power Station, Jiangsu, China incorporating greenhouse enclosures for agriculture
Slide 27: Appendices
Appendices CLP Power Low Carbon Energy Education Centre, Hong Kong
Slide 28: CLP Group – Financial Highlights – Additional Information
CLP Group – Financial Highlights – Additional Information Earnings and Dividends 2017 2016 Change Operating earnings (HK$M) 13,307 12,334 8% Total earnings (HK$M) 14,249 12,711 12% Operating earnings per share (HK$) 5.27 4.88 8% Total earnings per share (HK$) 5.64 5.03 12% Dividends per share (HK$)
Slide 29: CLP Group – Operating Highlights – Additional Information
CLP Group – Operating Highlights – Additional Information Operating Information 2017 2016 Change Safety (Total Recordable Injury Rate) 0.29 0.16 (5) +0.13 Electricity sent out (TWh) (1) 83.9 79.6 +4.3 Generation Capacity (GW) (2) Total in Operation 23.5 22.9 +0.6 Non-Carbon Emitting (3) 5.2 4.6 +0.6
Slide 30: CLP Group – Reconciliation of Operating Earnings and ACOI
CLP Group – Reconciliation of Operating Earnings and ACOI Hong Kong Other earnings & HK$M electricity and Mainland China India SEA & Taiwan Australia Group total unallocated items related 2017 Annual results Operating Earnings (as per Segment 8,863 1,508 647 160 2,738 (609) 13,307 Information in Ann
Slide 31: CLP Group – Cash Flow and Financial Structure
CLP Group – Cash Flow and Financial Structure HK$M 2017 2016 Cash Flow Cash Flow ▪ Free cash flow increased slightly from last year as cash proceeds EBITDAF 27,662 25,355 from the upfront payment of the Argyle Street co-development Less: Items affecting comparability (369) (318) substantially offset
Slide 32: CLP Group – Financial Obligations at a Glance
CLP Group – Financial Obligations at a Glance 2017 2016 HONG KONG HK$M HK$M Total borrowings of CLPH, CLPP, CAPCO & PSDC 44,954 38,013 Minus: Bank balances and liquid funds (5,964) (2,683) Net Debt 38,990 35,330 OVERSEAS Total borrowings of EnergyAustralia, India and Mainland China subsidiaries (non
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 CLP Holdings For more information • Ample liquidity in the Group with undrawn facilities of HK$25.9bn and HK$9.9bn bank balances as at 31 December 2017 on CLP Climate Action Finance Framework • Arranged HK$5.1bn 2-year bank loan facilities at preferenti
Slide 35: CLP Group – Loan Balances by Type and Maturity
CLP Group – Loan Balances by Type and Maturity (1) Proportion of debt on fixed and floating rate 52% 57% 43% 48% Dec 2017 Dec 2016 Floating rate (2) Fixed rate 1) The maturity of revolving loans is in accordance with the maturity dates of the respective facilities instead of the current loan drawdow
Slide 36: Hong Kong – Growing Business Scale
Hong Kong – Growing Business Scale Generation Transmission Distribution Retail 8,913 MW of > 15,600 km of transmission and 232 primary and > 14,400 33,164 GWh sold and installed capacity high voltage distribution lines secondary substations 2.56 million customer accounts During 2017: ▪ Local electri
Slide 37: Hong Kong – Electricity Sales and Capex
Hong Kong – Electricity Sales and Capex Electricity Sales Capital Expenditure GWh 2017 2016 Change HK$M 2017 2016 Change Residential 9,217 9,394 (1.9%) CLP Power Hong Kong 4,523 4,996 (9.5%) Commercial 13,220 13,234 (0.1%) CAPCO 3,545 2,296 54.4% Infrastructure & Public Services 8,987 8,858 1.5% Tot
Slide 38: Hong Kong – Tariff, Reliability & Environmental Improvement
Hong Kong – Tariff, Reliability & Environmental Improvement HK$/kWh Low Tariff High Reliability 3.0 Unplanned customer minutes lost per year 2.5 50.0 2.0 40.0 20 21 30.0 1.5 20.0 8.5 1.0 10.0 1.6 0.5 0.5 0.0 Singapore 0.5 CLP Power Sydney New York London 0.0 (CBD) CLP Power Singapore London New York
Slide 39: Hong Kong – Tariff, Energy Cost, Fuel Mix and Gas Volume
Hong Kong – Tariff, Energy Cost, Fuel Mix and Gas Volume Average tariff Energy Cost HK¢/kWh HK$M Average Net Tariff 115.4 20,000 120 17,281 16,176 +7% 439 100 489 15,000 6,540 80 Basic Tariff 94.5 6,312 Others 60 10,000 Nuclear Gas 40 6,532 6,543 Coal Fuel Cost Adjustment 22 5,000 20 Special Rebate
Slide 40: Mainland China – Financials (HK$)
Mainland China – Financials (HK$) HK$M Operating/Total Earnings ACOI 2017 2016 2017 2016 Renewable 441 404 755 694 - Wind 245 202 352 283 - Hydro 100 121 228 272 - Solar 96 81 175 139 Nuclear 913 863 964 908 Thermal 45 429 53 437 - Shandong 58 250 63 265 - Guohua 67 170 70 168 - Fangchenggang (80) 9
Slide 41: Mainland China – Financials (Local Currency)
Mainland China – Financials (Local Currency) RMB’M Operating/Total Earnings ACOI 2017 2016 2017 2016 Renewable 381 347 653 596 - Wind 212 173 304 243 - Hydro 86 104 197 234 - Solar 83 70 152 119 Nuclear 789 741 833 780 Thermal 39 369 46 375 - Shandong 50 215 54 228 - Guohua 58 146 61 144 - Fangcheng
Slide 42: Mainland China – Yangjiang Nuclear
Mainland China – Yangjiang Nuclear ▪ On 12 December 2017, we completed the acquisition of a 17% interest in 6,516 MW Yangjiang nuclear facility in Guangdong (1,108 equity MW) ▪ Earnings sharing commenced from 12 December 2017 GUANGDONG ▪ Consideration Daya Bay ▪ Purchase consideration: RMB5.0bn (aro
Slide 43: Mainland China – Coal-fired projects
Mainland China – Coal-fired projects NDRC Coal Price Index Tariff setting mechanism Changes to on-grid coal-fired power tariff (RMB fen/kWh) RMB/tonne 600 Tariff increase based on the new mechanism <0.2 fens/kWh => no 500 change in 2017 tariff 400 300 Change in coal price to end 2017 200 should theo
Slide 44: Mainland China – Market sales in 2017
Mainland China – Market sales in 2017 Province Projects (Equity MW) Guangxi FCG thermal (1,806MW) Yunnan Xundian Wind (50MW) Xicun Solar (84MW) Dali Yang_er Hydro (50MW) JILIN Sichuan Jiangbian Hydro (330MW) LIAONING GANSU Gansu Jinchang Solar (43MW) INNER MONGOLIA TIANJIN Liaoning Suizhong thermal
Slide 45: Mainland China – Climate Policy and National Carbon Market
Mainland China – Climate Policy and National Carbon Market China set ambitious climate change targets 2020 2030 • Reduce CO2 emissions per unit of GDP by • Reduce CO2 emissions per unit of GDP by 40-45% compared to 2005 level 60-65% compared to 2005 level • Increase share of non-fossil fuel energy t
Slide 46: India - Financials
India - Financials HK$ Local Currency 2017 2016 2017 2016 HK$M HK$M INR’M INR’M ACOI Thermal (Jhajjar) 676 492 5,633 4,270 Thermal (Paguthan) 273 266 2,275 2,309 Renewables 562 625 4,683 5,424 Total 1,511 1,383 12,591 12,003 Operating earnings Thermal (Jhajjar) 315 117 2,625 1,015 Thermal (Paguthan)
Slide 47: India - Renewable Generation
India - Renewable Generation HK$M CLP Renewable Portfolio(1) in India MW Operating Earnings ACOI 1,600 1,200 1,400 1,200 562 1,000 1,000 625 800 800 600 600 110 949 400 400 135 758 200 537 200 334 0 0 2016 2017 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Thermal Renewables Wind Solar
Slide 48: Southeast Asia & Taiwan – Financials
Southeast Asia & Taiwan – Financials HK$ Local Currency 2017 2016 2017 2016 HK$M HK$M M M ACOI Thermal 142 249 NT$554 NT$1,033 Renewables 65 60 THB281 THB271 Operating expenditure (13) (13) - - Development expenditure (38) (25) - - Total 156 271 Operating earnings Thermal 142 249 NT$554 NT$1,033 Ren
Slide 49: Australia – Financials
Australia – Financials HK$ Local Currency 2017 2016 2017 2016 HK$M HK$M A$M A$M EBITDAF (before items affecting 5,421 3,756 905 652 comparability) Depreciation & Amortisation (1,335) (1,320) (223) (229) ACOI Customer (Retail) 3,137 2,937 523 510 Energy (Wholesale) 2,778 1,419 463 246 Enterprise (Cor
Slide 50: Australia – Customer Operations
Australia – Customer Operations Customer Account Numbers 2017 2016 (000s) Electricity Gas Total Electricity Gas Total Mass Market 1,738.0 872.2 2,610.2 1,750.2 859.8 2,610.0 Commercial & Industrial 12.8 0.4 13.2 14.9 0.4 15.2 Total Account Numbers 1,750.9 872.5 2,623.4 1,765.0 860.2 2,625.2 Average
Slide 51: Australia – Customer Operations
Australia – Customer Operations Improved Customer Experience and Reduced Costs Continued Improving Efficiency ▪ EnergyAustralia’s overall customer service performance 100% and cost to serve delivered an improved result year on 80% year despite a challenging industry wide year of 60% negative public
Slide 52: Australia – Wholesale Market Conditions
Australia – Wholesale Market Conditions $/MWh Electricity Spot Price ▪ Wholesale prices remain at historically high levels due to: 200 ▪ Closure of Hazelwood at short notice ▪ Continued subsidised operation of Portland smelter 150 ▪ High peak demand events in New South Wales and 100 Queensland from
Slide 53: Australia – Value Restoration
Australia – Value Restoration ▪ Our Restore Value program has positive momentum and is ahead of plan A$m ▪ Customer Business 800 ACOI & ROIC % 10% 700 ▪ Improved customer service 8% 600 ▪ Reduced cost and enhanced operating efficiency 500 6% ▪ Increased the range of products through the 400 NextGen
Slide 54: CLP Group – Generation Portfolio – 31 Dec 2017
CLP Group – Generation Portfolio – 31 Dec 2017 19,395 Equity MW and 5,159MW Capacity Purchase (total 24,554MW) AUSTRALIA total 4,966MW* HONG KONG total 7,483MW* Operational Operational Yallourn 1,480 / 1,480 (c) Castle Peak 4,108 / 4,108* (c) Mount Piper 1,400 / 1,400 (c) Black Point 2,525 / 2,525*
Slide 55: CLP Group – Renewable Generation Portfolio – 31 Dec 2017
CLP Group – Renewable Generation Portfolio – 31 Dec 2017 2,751 Equity MW and 461MW Capacity Purchase (total 3,211MW) MAINLAND Operational CHINA total 1,723 MW - 13% of CLP total generation portfolio Wind (b)(c) 835 MW Hydro 489 MW AUSTRALIA total 494 MW* Solar 234 MW Operational Weihai I & II 69 / 3
Slide 56: CLP Group – Generation Capacity by Fuel Mix – 31 Dec 2017
CLP Group – Generation Capacity* by Fuel Mix – 31 Dec 2017 24,554 MW Attributable to CLP Group Total Operational Under construction / Capacity by MW MW Committed % % % Energy Type MW (a) + (b) (a) (b) Coal 12,633 51% 12,633 51% - - Gas 5,322 22% 4,772 19% 550 2% Nuclear 2,488 10% 2,118 9% 369 2% Win
Slide 57: CLP Group – Energy Sent Out – 2017
CLP Group – Energy Sent Out – 2017 Energy Sent Out* TWh 40 CLP 2017 Annual Generation 35.9 35.9 as Sent Out* 35 2017 30 15% 14% 2016 25 2% 2% 63% 61% 1% <1% 6% 6% 20.8 20.4 20 17.9 14% 16.3 15 15% 2016: 79.6 TwH 2017: 83.9 TwH 10 7.6 5.2 5 1.8 1.7 0 -5 2016 2017 2016 2017 2016 2017 2016 2017 2016 20
Slide 58: Additional Resources
Additional Resources * To be published in March 2018 58
Slide 59: Thank you
CLP Holdings Thank you Energy for Brighter Tomorrows