CLP Holdings Limited · HKEX:2
CLP — H1 2017 Earnings Presentation
52 slides from CLP's earnings presentation, Aug 7, 2017
Slide 1: CLP Holdings 2017 Interim Results Analyst Briefing
CLP Holdings 2017 Interim Results Analyst Briefing 7 August 2017
Slide 2: Disclaimer
Disclaimer Potential investors, analysts and shareholders of CLP Holdings Limited (the Company) 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 important to note that the contents of th
Slide 3: Agenda
Agenda Performance Overview Group Financial Performance and Operating Information Performance by Business Units Strategy and Outlook Appendices 3
Slide 4: Focus • Delivery • Growth
Focus • Delivery • Growth New SoC lays strong foundation for future investment Dependable performance in Hong Kong Challenging market conditions in Mainland China and Australia Focus • Delivery • Growth strategy continues to position us to actively address evolving market trends and the ener
Slide 5: Satisfactory performance in challenging markets - dividend increased
Satisfactory performance in challenging markets - dividend increased Earnings and Dividends 1H2017 1H2016 Change Operating earnings (HK$M) 5,914 6,149 4% Total earnings (HK$M) 5,909 6,125 4% Operating earnings per share (HK$) 2.34 2.43 4% Total earnings per share (HK$) 2.34 2.42 4% Dividends per sha
Slide 6: Operating performance
Operating performance Operating Information 1H2017 1H2016 Change Safety (Total Recordable Injury Rate) 0.26 0.13 0.13 Electricity sent out (TWh) (1) 38.4 38.5 0.1 Generation Capacity (GW) (2) Total in Operation 22.9 21.8 1.1 Non-Carbon Emitting (3) 4.6 4.4 0.2 Committed / Under Construction 0.8 1.4
Slide 7: Group Financial Performance
Group Financial Performance
Slide 8: Satisfactory performance in challenging markets
Satisfactory performance in challenging markets HK$M 1H2017 1H2016 Change Revenue 43,337 38,671 12% Operating Earnings Hong Kong and related activities 4,467 4,432 1% Local electricity business 4,356 4,276 Hong Kong related 148 113 Others (37) 43 Outside Hong Kong 1,718 2,057 16% Mainland China 637
Slide 9: Adjusted Current Operating Income (ACOI)
Adjusted Current Operating Income (ACOI) Adjusted Current Operating Income or ACOI HK$M 1H2017 1H2016 Change ACOI equals EBIT excluding items affecting comparability and fair value adjustments, and Operating Earnings 5,914 6,149 4% includes Group’s share in net earnings from joint (Attributable to
Slide 10: Adjusted Current Operating Income (ACOI)
Adjusted Current Operating Income (ACOI) HK$M 1H2017 1H2016 Hong Kong and related activities 6,386 6,328 Reliable performance and ongoing capital investments Mainland China 820 1,029 Higher earnings from non-carbon but lower from coal India 681 648 Stable asset performance Southeast Asia and Taiwan
Slide 11: Performance by Business Units
Performance by Business Units
Slide 12: Dependable performance and new opportunities in Hong Kong
Dependable performance and new opportunities in Hong Kong HK$m Hong Kong ACOI 8,000 6,328 6,377 129 6,386 7,000 49 6,000 (120) 5,000 4,000 3,000 2,000 1,000 0 1H2016 FX Normalised Return on higher Others 1H2017 1H2016 fixed assets Operational Performance Local sales 15.1 TWh, down 2.6% Higher earnin
Slide 13: Higher earnings from non-carbon assets & lower from coal assets
Higher earnings from non-carbon assets & lower from coal assets HK$m Mainland China ACOI 1,400 1,200 1,040 100 41 (21%) 1,029 11 1,000 (53) 820 800 (307) (1) 418 600 Renewables 400 Nuclear 464 200 Thermal Others 0 (33) (29) (200) 1H2016 FX Normalised Renewables New RE Nuclear Thermal Others 1H2017 1
Slide 14: Reliable operations across the portfolio
Reliable operations across the portfolio HK$m India ACOI 800 68 679 681 648 31 (66) 241 600 400 440 Renewables Thermal 200 0 1H2016 FX Normalised Thermal Renewables 1H2017 1H2016 Operational Performance Thermal - plant availability: Thermal - Jhajjar Focus on operational excellence of existing • Pag
Slide 15: Steady operational performance in Southeast Asia and Taiwan
Steady operational performance in Southeast Asia and Taiwan HK$m Southeast Asia and Taiwan ACOI 200 150 9 127 (38%) 118 100 79 (40) 32 (8) 50 Renewables 70 Thermal Others 0 (23) (50) 1H2016 FX Normalised Thermal Opex & Depex 1H2017 1H2016 Operational Performance Thermal - Ho-Ping (Coal) Thermal - Ho
Slide 16: Challenging Energy wholesale conditions offset strength in Customer
Challenging Energy wholesale conditions offset strength in Customer HK$m Australia ACOI 2,500 2,000 Energy 639 Enterprise 291 (907) 1,500 1,317 44 1,361 1,350 (1%) (263) (39) 1,000 Customer 1,618 500 0 1H2016 FX Normalised Customer Energy Enterprise 1H2017 1H2016 Operational Performance Customer Cus
Slide 17: Working capital increases drive reduction in FCF
Working capital increases drive reduction in FCF HK$bn Free Cash Flow HK$bn Capital Investments HK$bn Dividends paid 10 10 10 SoC capex Growth capex Others Maintenance capax 9.0 8 8 8 -30% 6.0 6 6 0.3 6 6.3 4.9 1.3 0.3 +4% 0.4 -19% 0.2 4 4 0.4 4 4.1 4.2 2 2 3.9 4.0 2 0 0 0 1H2016 1H2017 1H2016 1H201
Slide 18: Outlook
Outlook New SoC lays stable foundation for the Hong Kong business to 2033
Slide 19: Hong Kong – New Scheme of Control (SoC)
Hong Kong – New Scheme of Control (SoC) New Hong Kong SoC secured for a further 15 years Fixed term from 1 October 2018 to 31 December 2033 8% return on average net fixed assets Fuel cost adjustment to be revised more frequently Enhanced incentive schemes around operational performance, en
Slide 20: Hong Kong Climate Action Plan 2030+
Hong Kong Climate Action Plan 2030+ Hong Kong’s Climate Action Plan 2030+ outlines HKSAR Government’s ambition for changes in fuel mix… 25% 25% 25% 2015 48% 2020 2030 27% 50% Source: Hong Kong’s Climate Action Plan 2030+ … requiring investments for gas generation and infrastructure to meet the energ
Slide 21: New initiatives under new SoC
New initiatives under new SoC Promoting renewable energy development Feed-in-Tariff Renewable Energy Certificates Connection of renewable energy systems to the grid Energy saving incentive scheme Energy audits, energy saving, new Eco-Building Fund, Community Energy Saving Fund and demand
Slide 22: Transition to a low carbon economy
Transition to a low carbon economy Market Status Our response Hong Kong • Regulatory clarity and certainty • Concluded new SoC to 2033 • Clear Climate Action Plan 2030+ • Invest to meet policy objectives • Balance cost, environmental performance and reliability Mainland China • Extensive power marke
Slide 23: Looking forward
Looking forward Mainland China Challenging environment particularly for coal generation. India Continue to invest in nuclear and renewables Exploring renewables and other growth opportunities along the energy supply chain Hong Kong New 15-year SoC provides certainty to invest for energy Southeast As
Slide 24: Questions and Answers
Questions and Answers Huai’an Solar Power Station, Jiangsu, China
Slide 25: Appendices
BBE RH Bi EV Quick Charging Station Appendices
Slide 26: CLP Group – Financial Obligations at a Glance
CLP Group – Financial Obligations at a Glance 30 Jun 2017 31 Dec 2016 HONG KONG HK$M HK$M Total borrowings of CLPH, CLP Power Hong Kong, CAPCO & PSDC 40,685 38,013 Minus: Bank balances and liquid funds (1,230) (2,683) Net Debt 39,455 35,330 OUTSIDE HONG KONG Total borrowings of EnergyAustralia, Indi
Slide 27: 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 28: CLP Group – Highlights of Financing Activities
CLP Group – Highlights of Financing Activities CLP Holdings For more information • Ample liquidity with undrawn facilities of HK$8.8bn and HK$961m cash as at 30 June 2017 on CLP Climate Action Finance • Adequate funding commitments obtained for settlement of prospective acquisition of 17% equity sta
Slide 29: CLP Group – Loan Balances by Type and Maturity
CLP Group – Loan Balances by Type and Maturity June 2017 June 2016 Floating rate (2) Fixed rate 1) The maturity of revolving loans is in accordance with the maturity dates of the respective facilities instead of the current loan drawdown tenors 2) For floating rate borrowings, if assuming 1% increas
Slide 30: CLP Group – Reconciliation of Operating Earnings and ACOI
CLP Group – Reconciliation of Operating Earnings and ACOI HK$M Hong Kong Mainland China India SEA & Taiwan Australia Unallocated Items Group total 2017 Interim results Operating earnings 4,467 637 242 81 758 (271) 5,914 Add back Non-controlling interests 412 9 (1) - - - 420 Net finance costs/(income
Slide 31: CLP Group – Cash Flow and Financial Structure
CLP Group – Cash Flow and Financial Structure HK$M 1H2017 1H2016 Cash Flow Cash Flow Free cash flow decreased by HK$2.7 billion primarily due EBITDAF 12,600 12,301 to decrease in inflows from SoC and unfavourable Less: Items affecting comparability 5 107 working capital movements in Australia Recu
Slide 32: Hong Kong – Growing Business Scale
Hong Kong – Growing Business Scale Generation Transmission Distribution Retail 8,913 MW of > 15,400 km of transmission and 231 primary and > 14,300 15,115 GWh sold and installed capacity high voltage distribution lines secondary substations 2.54 million customer accounts During 1H2017: Local elect
Slide 33: Hong Kong – Electricity Sales and Capex
Hong Kong – Electricity Sales and Capex Electricity Sales Capital Expenditure GWh 1H2017 1H2016 Change HK$M 1H2017 1H2016 Change Residential 3,820 4,244 (10.0%) CLP Power Hong Kong 1,957 2,146 (8.8%) Commercial 6,226 6,246 (0.3%) CAPCO 1,580 933 69.3% Infrastructure & Public Services 4,246 4,202 1.0
Slide 34: Hong Kong – Tariff, Reliability, Fuel Mix & Environmental Improvement
Hong Kong – Tariff, Reliability, Fuel Mix & Environmental Improvement Low Tariff Unplanned customer HK$/kWh minutes lost per year High Reliability 2.5 50 2.0 40 24 30 18 20 1.5 20 1.0 10 0.5 1.5 0.5 0 Singapore CLP Power Sydney New York London 0.5 Hong Kong (CBD) 0.0 CLP Power Singapore London New Y
Slide 35: Mainland China – Financials (HK$)
Mainland China – Financials (HK$) HK$M Operating/Total Earnings ACOI 1H2017 1H2016 1H2017 1H2016 Renewable 262 233 418 386 - Wind 161 111 215 145 - Hydro 42 71 109 169 - Solar 59 51 94 72 Nuclear 441 401 464 422 Thermal (35) 273 (33) 287 - Shandong 2 169 3 179 - Guohua 13 100 14 103 - Fangchenggang
Slide 36: Mainland China – Financials (Local Currency)
Mainland China – Financials (Local Currency) RMB’M Operating/Total Earnings ACOI 1H2017 1H2016 1H2017 1H2016 Renewable 231 197 368 325 - Wind 142 94 189 122 - Hydro 37 60 96 142 - Solar 52 43 83 61 Nuclear 388 338 409 356 Thermal (31) 230 (29) 242 - Shandong 2 143 3 151 - Guohua 11 84 12 87 - Fangch
Slide 37: Mainland China – Renewables and Generation
Mainland China – Renewables and Generation HK$M Operating Earnings MW ACOI CLP capacity(1) in Mainland China 1,200 10,000 1,000 8,000 800 386 233 600 418 6,000 401 262 422 400 4,000 464 200 441 273 287 2,000 - (35) (33) (66) (31) (66) (29) -200 0 1H2016 1H2017 1H2016 1H2017 2008 2009 2010 2011 2012
Slide 38: Mainland China – Yangjiang Nuclear
Mainland China – Yangjiang Nuclear On 30 November 2016, CLP entered into a conditional equity transfer agreement to acquire a 17% interest in 6,516 MW Yangjiang nuclear facility in Guangdong (1,108 equity MW) Aligned with our long term “Focus • Delivery • Growth” strategy Close to major load c
Slide 39: Mainland China – Market updates
Mainland China – Market updates NDRC Coal Price Index Tariff setting mechanism Tariff increase based on the new mechanism <0.2 fens/kWh => no change in 2017 tariff Likely large change in coal price to end 2017 will lead to tariff change for 2018 (see chart to right) Monthly coal price Average price
Slide 40: India - Financials
India - Financials HK$ Local Currency 1H2017 1H2016 1H2017 1H2016 HK$M HK$M INR’M INR’M ACOI Thermal (Jhajjar) 284 235 2,391 2,037 Thermal (Paguthan) 156 115 1,313 997 Renewables 241 298 2,029 2,584 Total 681 648 5,733 5,618 Operating earnings Thermal (Jhajjar) 94 51 791 442 Thermal (Paguthan) 120 9
Slide 41: India - Renewable Generation
India - Renewable Generation HK$M MW CLP Renewable Portfolio in India Operating Earnings ACOI 800 1,200 1,000 600 241 800 298 400 600 400 200 28 440 52 350 200 214 148 - 0 1H2016 1H2017 1H2016 1H2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jun-17 Thermal Renewables Commissioned - Wind Under Con
Slide 42: Southeast Asia & Taiwan – Financials
Southeast Asia & Taiwan – Financials HK$ Local Currency 1H2017 1H2016 1H2017 1H2016 HK$M HK$M M M ACOI Thermal 70 102 NT$276 NT$431 Renewables 32 31 THB143 THB141 Operating expenditure (9) (6) - - Development expenditure (14) (9) - - Total 79 118 Operating earnings Thermal 70 102 NT$276 NT$431 Renew
Slide 43: Australia – Financials
Australia – Financials HK$ Local Currency 1H2017 1H2016 1H2017 1H2016 HK$M HK$M A$M A$M EBITDAF 1,955 1,907 331 334 Depreciation & Amortisation (605) (590) (102) (103) ACOI Customer (Retail) 1,618 1,285 274 225 Energy (Wholesale) 639 874 109 153 Enterprise (Corporate) (907) (842) (154) (147) Total 1
Slide 44: Australia – Customer Operations
Australia – Customer Operations Improved Customer Experience and Reduced Costs EnergyAustralia Ebilling Uptake While the retail environment remains competitive, 100% 95% focus has been on improving customer experience 90% 85% and reducing costs. 80% 75% Ombudsman complaints and Net Promoter scor
Slide 45: Australia – Customer Operations
Australia – Customer Operations 1H2017 1H2016 Customer Account numbers ('000) Electricity Gas Total Electricity Gas Total Mass Market 1,758.3 876.5 2,634.8 1,774.7 848.1 2,622.8 Commercial & Industrial 15.1 0.5 15.5 16.9 0.4 17.4 Total Account Numbers 1,773.4 877.0 2,650.4 1,791.6 848.5 2,640.2 Weig
Slide 46: Australia – Wholesale Market Conditions
Australia – Wholesale Market Conditions High wholesale prices and volatility in 1H2017 Baseload reduction with Hazelwood exit High peak demand events in NSW and QLD from extreme weather More gas powered generation at high gas fuel cost New renewable energy capacity Government action targ
Slide 47: CLP Group – Generation Portfolio – 30 Jun 2017
CLP Group – Generation Portfolio – 30 Jun 2017 18,608 Equity MW and 5,159MW Capacity Purchase (total 23,768MW) 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 48: CLP Group – Renewable Generation Portfolio – 30 Jun 2017
CLP Group – Renewable Generation Portfolio – 30 Jun 2017 3,077 Equity MW and 461MW Capacity Purchase (total 3,538MW) MAINLAND Operational CHINA total 2,050 MW - 17% of CLP total equity generation portfolio Wind 1,080 MW Hydro 489 MW AUSTRALIA total 494 MW Solar 234 MW Operational Changdao 27 / 12 Wa
Slide 49: CLP Group – Energy Sent Out – 1H 2017
CLP Group – Energy Sent Out – 1H 2017 Energy Sent Out* TWh 40 CLP 2017 Interim Generation 35 as Sent Out* Hydro 30 2% Solar <1% Nuclear 25 16% Coal 20 Wind 61% 16.7 16.2 7% 15 Others Gas 14% 10.9 <1% 10.6 10 8.0 7.3 5 2.8 2.7 0.8 0.9 0 -5 1H2016 1H2017 1H2016 1H2017 1H2016 1H2017 1H2016 1H2017 1H201
Slide 50: CLP Group – Equity MW by Fuel Mix – 30 Jun 2017
CLP Group – Equity MW by Fuel Mix – 30 Jun 2017 18,608 Equity MW Attributable to CLP Group Total Equity Equity MW MW under construction Capacity by MW in operation and development/ % % % Energy Type financially committed (a) + (b) (a) (b) Coal 11,396 61% 11,396 61% - - Gas 3,434 18% 3,049 16% 385 2%
Slide 51: Additional Resources
Additional Resources Annual Report Sustainability Interim Report Introductory Pack Analyst Presentation 2016 Report 2017 August 2017 Feb 2017 Scan or click on the QR codes to go to appropriate pages Website: www.clpgroup.com Investor Relations contact: ir@clp.com.hk CLP@) +8 51
Slide 52: Thank you
CLP@ +z CLP Holdings Thank you Energy for Brighter Tomorrows