Clp Holdings Limited · HKEX:2
Clp — H1 2018 Earnings Presentation
60 slides from Clp's earnings presentation, Aug 6, 2018
Slide 1: CLP Holdings 2018 Interim Results Analyst Briefing
CLP Holdings 2018 Interim Results Analyst Briefing 6 August 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 and you ma
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 2018 Annual General Meeting
Slide 5: Focus • Delivery • Growth
Focus • Delivery • Growth Strong first half and solid fundamentals position us for demanding second half Strong first half Second half outlook • Local demand growth ✓ Rate of return reset • High wholesale results ✓ Lower prices, intense competition • Yangjiang contribution ✓ Pressure on coal profita
Slide 6: Earnings dynamics and investments lay foundation for growth
Earnings dynamics and investments lay foundation for growth Operating Earnings Operating Earnings Per Share HK$7,886m +33% HK$3.12 +33% Second Interim Dividend First Interim Dividend HK$0.61 +3% HK$0.61 +3% Total Earnings Total Earnings Per Share HK$7,436m +26% HK$2.94 +26% Credit Ratings Capital In
Slide 7: Operating Performance
Operating Performance Safety Reliability in Hong Kong (1) Total recordable injury rate Average minutes lost pa (rolling 3 years) 0.19 -0.07 1.49 +0.13 Customer Accounts Electricity Sales Hong Kong 2.577m +36k Hong Kong 16.4 TWh +4.9% Australia 2.563m -87k Australia 9.5 TWh stable Generation Performa
Slide 8: Group Financial Performance
Group Financial Performance Battery Storage Systems at Gannawarra, Australia
Slide 9: Strong first half financial performance
Strong first half financial performance HK$M 1H2018 1H2017 Change Revenue 46,464 43,337 7% Operating Earnings Hong Kong electricity and related activities 4,628 4,504 ^ 3% Local electricity business 4,497 4,356 Sales to Guangdong 28 27 PSDC and Hong Kong Branch Line 103 121 Outside Hong Kong 3,687 1
Slide 10: Adjusted Current Operating Income (ACOI)
Adjusted Current Operating Income (ACOI) HK$M 1H2018 1H2017 Change Adjusted Current Operating Income or ACOI ▪ ACOI equals EBIT excluding items affecting Operating Earnings comparability and fair value adjustments, and 7,886 5,914 33% (Attributable to CLP) includes Group’s share in net earnings from
Slide 11: Adjusted Current Operating Income (ACOI)
Adjusted Current Operating Income (ACOI) HK$M 1H2018 1H2017 Hong Kong electricity and related activities 6,604 6,417 ^ Reliable performance and continuing capital investments Mainland China 1,359 820 Growth in earnings from non-carbon portfolio India 661 681 Stable operating performance and lower wi
Slide 12: Performance by Business Units
Performance by Business Units Yangjiang Nuclear Power Station, Guangdong, China
Slide 13: Reliable performance and continuing capital investments
Reliable performance and continuing capital investments Hong Kong ACOI HK$m 8,000 (1) 6,417 6,381 227 6,604 +3.5% 6,000 ( 36 ) (4) 4,000 2,000 -0 1H2017 FX Normalised SoC Others 1H2018 1H2017 Operational Performance Local sales increased 5% reflecting hot Higher earnings predominantly reflecting Low
Slide 14: Growth in earnings from non-carbon portfolio
Growth in earnings from non-carbon portfolio HK$m 1,600 Mainland China ACOI 1,400 119 1,359 +57% 330 1,200 (23) 517 1,000 67 820 46 866 800 797 600 Renewables Nuclear 400 Thermal 200 Others -0 82 (37) (200) (1) 1H2017 FX Normalised Renewables Nuclear Thermal Others 1H2018 1H2017 Operational Performa
Slide 15: Stable operating performance and lower wind resources
Stable operating performance and lower wind resources India ACOI HK$m 800 700 681 1 682 58 13 661 -3% 600 ( 21 ) (71) 500 294 400 300 Renewables Thermal 200 367 100 -0 1H2017 FX Normalised Wind Solar Thermal Others 1H2018 1H2017 Operational Performance Renewables Renewables Maintain operational exce
Slide 16: Lower earnings from extended overhaul and tax rate increase at Ho Ping
Lower earnings from extended overhaul and tax rate increase at Ho Ping HK$m Southeast Asia and Taiwan ACOI 100 6 85 1 -27% 79 80 7 62 60 (31) 36 Renewables 40 Thermal 42 Others 20 -0 (16) (20) 1H2017 FX Normalised Renewables Thermal Opex & Depex 1H2018 1H2017 Operational Performance Renewables - Lop
Slide 17: High wholesale prices and competitive retail market
High wholesale prices and competitive retail market HK$m Australia ACOI 5,000 4,000 Enterprise 2,316 3,095 Energy (945) +125% 3,000 (20) 3,039 2,000 1,350 27 1,377 1,000 ( 578 ) Customer -0 1,001 1H2017 FX Normalised Customer Energy Enterprise 1H2018 1H2017 Operational Performance Customer Customer
Slide 18: Financial strength supports business acquisitions
Financial strength supports business acquisitions Free Cash Flow Capital Investments Dividends paid Net Debt Net Debt/Total Capital Credit Ratings S&P Moody’s A A2 CLP Holdings Stable Stable CLP Power A+ A1 Hong Kong Stable Stable AA- A1 CAPCO Stable Stable BBB+ EnergyAustralia Stable - Details on P
Slide 19: Outlook
Outlook Training in a virtual reality environment, Hong Kong
Slide 20: New Development Plan addresses growing demand & supply reliability
New Development Plan addresses growing demand & supply reliability Guangzhou Pumped Storage Power Station Maintaining Daya Bay Nuclear Power Station Supply Reliability Black Point Power Station Enhancing Clean Energy Transmission Castle Peak Power Station Penny’s Bay Power Station Servicing New Infr
Slide 21: The Plan drives the transition to cleaner and smarter energy
The Plan drives the transition to cleaner and smarter energy… New Gas Infrastructure Clean Energy RE Feed-in Tariff Offshore RE certificates LNG Terminal Energy efficiency Smart Meters RE Gas Nuclear 2023 Black Point Coal Clean Energy New CCGT save Transmission Units D1 & D2, System Black Point upgr
Slide 22: Delivering major benefits while maintaining a competitive tariff
…delivering major benefits while maintaining a competitive tariff ✓ Secure and reliable supply Globally Competitive Tariff* HK$/kWh maintained and enhanced 3.0 2.5 ✓ Environmentally responsible as we transition to gas and 2.0 continue to reduce emissions 1.5 1.0 ✓ Globally competitive tariff maintai
Slide 23: Investment in digital energy solutions and the best global technologies
Investment in digital energy solutions and the best global technologies Next Generation Data Renewables Analytics & Storage Demand Recent developments Response & Investment & Energy partnership Management Artificial & Energy Digital energy digital Management technologies technologies Systems Partner
Slide 24: Continuing our commitment to the Energy Transition
Continuing our commitment to the Energy Transition Emission Intensity Targets Clean Energy Targets Decarbonising our Portfolio 2050 carbon emission intensity target Milestones for renewables and Increased investment in zero and low reduced from 0.2 to 0.15 non-carbon capacity increased emission tech
Slide 25: Looking forward
Looking forward Hong Kong Deliver new Development Plan and SoC initiatives Australia Mainland China Support customer Energy transition base and target Climate Vision 2050 and optimising value creating assets across assets Pursue energy transition targets the portfolio Digital Transformation Utility
Slide 26: Questions and Answers
Questions and Answers CLP and CGNPC renewed the Strategic Partnership Partnership Agreement between CLP and TUS-Clean Energy
Slide 27: Appendices
Appendices CLPV Appreciation Ceremony
Slide 28: CLP Group – Financial Highlights – Additional Information
CLP Group – Financial Highlights – Additional Information Earnings and Dividends 1H2018 1H2017 Change Operating earnings (HK$M) 7,886 5,914 +33% Total earnings (HK$M) 7,436 5,909 +26% Operating earnings per share (HK$) 3.12 2.34 +33% Total earnings per share (HK$) 2.94 2.34 +26% Dividends per share
Slide 29: CLP Group – Operating Highlights – Additional Information
CLP Group – Operating Highlights – Additional Information Operating Information 1H2018 1H2017 Change Safety (Total Recordable Injury Rate) 0.19 0.26 -0.07 Electricity sent out (TWh) (1) 44.7 38.4 +16% Generation Capacity (GW) (2) Total in Operation 23.5 22.9 +0.6 Non-Carbon Emitting (3) 5.3 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$M electricity and Mainland China India SEA & Taiwan Australia Group total unallocated items related 2018 Interim results Operating Earnings (as per Segment 4,522 1,219 251 63 2,257 (426) 7,886 Information in Inte
Slide 31: CLP Group – Cash Flow and Financial Structure
CLP Group – Cash Flow and Financial Structure HK$M 1H2018 1H2017 Cash Flow Cash Flow ▪ Higher SoC inflow mainly due to increase in units sold, basic tariff and EBITDAF 14,936 12,600 higher fuel cost recovery from customers (as opposed to the payment of Less: Items affecting comparability 450 5 speci
Slide 32: CLP Group – Financial Obligations at a Glance
CLP Group – Financial Obligations at a Glance 30 Jun 2018 31 Dec 2017 HONG KONG HK$M HK$M Total borrowings of CLPH, CLPP, CAPCO & PSDC 45,816 44,954 Minus: Bank balances and liquid funds (4,731) (5,964) Net Debt 41,085 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$24.1 billion and HK$8.5 billion bank balances as at 30 June 2018 • CLP Holdings completed HK$2.5 billion refinancing t
Slide 35: CLP Group – Loan Balances by Type and Maturity
CLP Group – Loan Balances by Type and Maturity Proportion of debt on fixed and floating rate 48%48% 52%52% Jun 2018 Dec 2017 Floating rate (2) Fixed rate 1) The maturity of revolving loans is in accordance with the maturity dates of the respective facilities instead of the current loan drawdown teno
Slide 36: Hong Kong – Growing Business Scale
Hong Kong – Growing Business Scale Generation Transmission Distribution Retail 8,963 MW of > 15,700 km of transmission and 233 primary and > 14,500 15,831 GWh sold and installed capacity high voltage distribution lines secondary substations 2.58 million customer accounts During 1H2018: ▪ Local elect
Slide 37: Hong Kong – Electricity Sales and Capex
Hong Kong – Electricity Sales and Capex Electricity Sales Capital Expenditure GWh 1H2018 1H2017 Change HK$M 1H2018 1H2017 Change Residential 4,077 3,820 6.7% CLP Power Hong Kong 1,930 1,957 (1.4%) Commercial 6,458 6,226 3.7% CAPCO 1,957 1,580 23.9% Infrastructure & Public Services 4,479 4,246 5.5% T
Slide 38: Hong Kong – New Development Plan 2018-2023
Hong Kong – New Development Plan 2018-2023 Allocation of capital investment Total Investment of HK$52.9 billion (Oct 2018 – Dec 2023) Key projects • Two additional CCGT units including D1 (currently under construction) and D2 Maintaining Lowering Carbon & Reliability (38%) Emissions (30%) • Enhancem
Slide 39: Hong Kong – Tariff, Reliability & Environmental Improvement
Hong Kong – Tariff, Reliability & Environmental Improvement HK$/kWh Low Tariff High Reliability Unplanned customer 3.0 minutes lost per year 50 2.5 40 2.0 19 21 30 1.5 20 8.5 1.0 10 1.6 0.5 0.5 0 0.5Singapore CLP Power Sydney New York London 0.0 CLP Power Singapore London New York Sydney (CBD) Remar
Slide 40: Hong Kong – Tariff, Energy Cost and Gas Volume
Hong Kong – Tariff, Energy Cost and Gas Volume HK¢/kWh Average tariff • CLP will increase the use of natural gas for power generation 120 Average Net Tariff 117.7 in order to meet the fuel mix target set by the Government 100 Basic Tariff 91.0 of around 50% gas-fired power generation in 2020 80 • As
Slide 41: Mainland China – Financials (HK$)
Mainland China – Financials (HK$) HK$M Operating/Total Earnings ACOI 1H2018 1H2017 1H2018 1H2017 Renewables 335 262 517 418 - Wind 249 161 332 215 - Hydro 16 42 70 109 - Solar 70 59 115 94 Nuclear 740 441 797 464 - Daya Bay 409 441 430 464 - Yangjiang 331 - 367 - Thermal 80 (35) 82 (33) - Shandong 1
Slide 42: Mainland China – Financials (Local Currency)
Mainland China – Financials (Local Currency) RMB’M Operating/Total Earnings ACOI 1H2018 1H2017 1H2018 1H2017 Renewables 273 231 421 368 - Wind 203 142 270 189 - Hydro 13 37 57 96 - Solar 57 52 94 83 Nuclear 602 388 649 409 - Daya Bay 333 388 350 409 - Yangjiang 269 - 299 - Thermal 65 (31) 67 (29) -
Slide 43: Mainland China – Renewables and Generation
Mainland China – Renewables and Generation HK$M Operating Earnings ACOI MW 1,500 CLP capacity(1) in Mainland China 10,000 1,200 517 8,000 900 335 600 418 6,000 262 740 797 300 464 441 4,000 -0 80 82 (35) (39) (33) (37) (31) (29) 2,000 -300 1H2017 1H2018 1H2017 1H2018 0 Renewable Nuclear Thermal Othe
Slide 44: 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 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 60- 40-45% compared to 2005 level 65% compared to 2005 level • Increase share of non-fossil fuel energy
Slide 46: Mainland China – Market sales in 1H2018
Mainland China – Market sales in 1H2018 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 (85MW) INNER MONGOLIA TIANJIN Inner Zhungeer thermal (
Slide 47: India – Financials
India – Financials HK$ Local Currency 1H2018 1H2017 1H2018 1H2017 HK$M HK$M Rs’M Rs’M Thermal (Jhajjar) 246 284 2,073 2,391 Thermal (Paguthan) 121 156 1,020 1,313 Renewables 294 241 2,477 2,029 ACOI 661 681 5,570 5,733 Thermal (Jhajjar) 50 94 421 791 Thermal (Paguthan) 115 120 969 1,010 Renewables 8
Slide 48: India – Renewable Generation
India – Renewable Generation HK$M 800 CLP Renewable Portfolio (1) in India Operating Earnings ACOI MW 700 1,200 600 241 1,000 500 294 800 400 600 300 28 440 400 200 86 367 214 200 100 165 -0 0 1H2017 1H2018 1H2017 1H2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 June Thermal Renewables 2018 Wind
Slide 49: Southeast Asia & Taiwan – Financials
Southeast Asia & Taiwan – Financials HK$ Local Currency 1H2018 1H2017 1H2018 1H2017 HK$M HK$M M M ACOI Thermal 42 70 NT$161 NT$276 Renewables 36 32 THB144 THB143 Operating expenditure (5) (9) - - Development expenditure (11) (14) - - Total 62 79 Operating earnings Thermal 42 70 NT$161 NT$276 Renewab
Slide 50: Australia – Financials
Australia – Financials HK$ Local Currency 1H2018 1H2017^ 1H2018 1H2017 HK$M HK$M A$M A$M EBITDAF (before items 3,913 1,955 650 331 affecting comparability) Depreciation & Amortisation (818) (605) (136) (102) ACOI Customer (Retail) 1,001 1,548^ 166 263^ Energy (Wholesale) 3,039 709^ 505 120^ Enterpri
Slide 51: Australia – Customer Operations
Australia – Customer Operations Customer Account Numbers 1H2018 1H2017 (000s) Electricity Gas Total Electricity Gas Total Mass Market 1,689.1 861.8 2,550.9 1,758.3 876.5 2,634.8 Commercial & Industrial 12.1 0.3 12.4 15.1 0.5 15.5 Total Account Numbers 1,701.2 862.1 2,563.3 1,773.4 877.0 2,650.4 Weig
Slide 52: Australia – Customer Operations
Australia – Customer Operations Continue to Improve Customer Experience 100% Improving Efficiency Paper Bill E-Bill ▪ Continue to invest to improve customer experience including: 80% ▪ Implementation of the new, simpler e-bill and pro- 60% active customer alerts 40% ▪ Introduction of our first mobil
Slide 53: Australia – Wholesale Market Conditions
Australia – Wholesale Market Conditions $/MWh Average Monthly Electricity Spot Price ▪ Lower volatility reduced the cost to procure peak energy 200 in NSW during H1 2018 ▪ After a period of very high prices reflecting shortage after 150 Hazelwood closing, forward prices are now moving downwards as m
Slide 54: Australia – Value Restoration
Australia – Value Restoration ▪ Our Restore Value programme has positive momentum and is ahead of plan A$m ▪ Customer Business 800 ACOI & ROIC % 10% 700 ▪ Improved customer service with higher 8% 600 transactional Net Promoter Score 500 6% ▪ Introduction of mobile phone application 400 ▪ Significant
Slide 55: CLP Group – Generation Portfolio – 30 Jun 2018
CLP Group – Generation Portfolio – 30 Jun 2018 20,303 Equity MW and 4,258MW Capacity Purchase (total 24,561MW) AUSTRALIA total 4,989MW* HONG KONG total 7,533MW* 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 / 2,5
Slide 56: CLP Group – Renewable Generation Portfolio – 30 Jun 2018
CLP Group – Renewable Generation Portfolio – 30 Jun 2018 2,791 Equity MW and 511MW Capacity Purchase (total 3,302MW) MAINLAND Operational CHINA total 1,765 MW - 13% of CLP total generation portfolio Wind 835 MW Hydro 489 MW AUSTRALIA total 543 MW* Solar 275 MW Operational Weihai I & II 69 / 31 Water
Slide 57: CLP Group – Generation Capacity by Fuel Mix – 30 Jun 2018
CLP Group – Generation Capacity* by Fuel Mix – 30 Jun 2018 24,561 MW Attributable to CLP Group Total Operational Under construction / Committed Capacity by MW % MW % MW % Energy Type (a) + (b) (a) (b) Coal 12,525 51% 12,525 51% - - Gas 5,346 22% 4,796 20% 550 2% Nuclear 2,488 10% 2,118 9% 369 2% Win
Slide 58: CLP Group – Energy Sent Out – 1H2018
CLP Group – Energy Sent Out – 1H2018 Energy Sent Out* TWh 40 CLP 2018 Interim Generation as Sent Out* 35 1H2018 30 18% 16% 1H2017 25 2% 61% 1% <1% 63% <1% 7% 20 5% 16.2 17.0 14% 15 12% 11.9 1H2017: 38.4 TwH 10.6 10.5 1H2018: 44.7 TwH 10 8.0 4.6 5 2.7 0.9 0.8 0 -5 1H2017 1H2018 1H2017 1H2018 1H2017 1
Slide 59: Additional Resources
Additional Resources * To be published in mid-August 2018 59
Slide 60: Thank you
CLP Holdings Thank you Energy for Brighter Tomorrows