Clp Holdings Limited · HKEX:2
Clp — FY2019 Earnings Presentation
57 slides from Clp's earnings presentation, Feb 24, 2020
Slide 1: CLP Holdings 2019 Annual Results Analyst Briefing
CLP Holdings 2019 Annual Results Analyst Briefing 24 February 2020
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 Shareholders’ Visit Programme, Hong Kong
Slide 5: Lower earnings in Hong Kong and Australia
Lower earnings in Hong Kong and Australia • 1st full year of new SoC rate of return; development projects progressed • Retail electricity prices re-regulated; coal supply issues restricted generation • Stable earnings from diversified portfolio with reliable nuclear & renewable contribution • Invest
Slide 6: Lower earnings in Hong Kong and Australia
Lower earnings in Hong Kong and Australia Operating Earnings Operating Earnings Per Share HK$11,121m -20% HK$4.40 -20% Fourth Interim Dividend Total 2019 Dividend HK$1.19 steady HK$3.08 +2% Total Earnings Total Earnings Per Share HK$4,657m -66% HK$1.84 -66% Including impairment of goodwill for Energ
Slide 7: Operating performance
Operating performance Safety Reliability in Hong Kong (1) Average minutes lost pa (rolling 3 years) Total recordable injury rate Excluding Typhoon Mangkhut 1.27 -0.17 0.38 +0.13 Including Typhoon Mangkhut 10.13 -0.16 Customer Accounts Electricity Sales Hong Kong 2.636m +39k Hong Kong (local sales) 3
Slide 8: Group Financial Performance
Group Financial Performance Gale Solar Farm, Maharashtra, India
Slide 9: Recalibration of earnings
Recalibration of earnings HK$M 2019 2018 Change Revenue 85,689 91,425 6% Operating Earnings Hong Kong electricity and related activities 7,659 8,785 13% Local electricity business 7,448 8,558 PSDC and Hong Kong Branch Line 211 192 Sales to Guangdong - 35 Outside Hong Kong 4,441 6,199 28% Mainland Ch
Slide 10: Reconciliation of Operating Earnings to ACOI
Reconciliation of Operating Earnings to ACOI Adjusted Current Operating Income or ACOI HK$M 2019 2018 Change ▪ ACOI equals EBIT excluding items affecting comparability and fair value adjustments, and Operating Earnings 11,121 13,982 20% includes the Group’s share in net earnings from (Attributable t
Slide 11: Lower ACOI mainly from Hong Kong and Australia
Lower ACOI mainly from Hong Kong and Australia HK$M 2019 2018 Hong Kong electricity and related activities 11,407 12,826 Full year of lower permitted rate of return Mainland China 2,830 2,670 Contributions mainly from non-carbon India 1,031 1,385 Lower earnings driven by the end of Paguthan PPA Sout
Slide 12: Performance by Business Units
Performance by Business Units CLP Laizhou II Wind Farm, Shandong, Mainland China
Slide 13: Full year of lower permitted rate of return
Full year of lower permitted rate of return HK$m Hong Kong ACOI 16,000 12,826 22 12,848 -11% Decrease on like-for-like 12,000 465 11,407 basis after adjusting for FX (1,877) (29) 8,000 4,000 0 2018 FX Normalised Change in Return on Others 2019 2018 permitted higher fixed return assets and others Ope
Slide 14: Contributions mainly from non-carbon
Contributions mainly from non-carbon HK$m 3,000 Mainland China ACOI +13% Increase on 2,670 248 2,830 like-for-like 84 basis after 2,506 (7) 935 adjusting for FX 2,500 (164) (1) 2,000 1,828 1,500 Renewables 1,000 Nuclear Thermal 500 Others 0 285 (218) 2018 FX Normalised Nuclear Renewables Thermal Oth
Slide 15: Lower earnings driven by the end of Paguthan PPA
Lower earnings driven by the end of Paguthan PPA HK$m India ACOI 1,500 1,385 1,344 30 47 -23% Decrease on (41) 1,031 like-for-like 5 basis after adjusting for FX 1,000 (395) 687 500 Renewables 5 Transmission Thermal 339 0 2018 FX Normalised Renewables Thermal - Thermal - Transmission 2019 2018 Jhajj
Slide 16: Higher energy tariff and lower coal costs at Ho-Ping
Higher energy tariff and lower coal costs at Ho-Ping HK$m Southeast Asia and Taiwan ACOI 400 335 +108% 22 144 Increase on 300 80 like-for-like basis after adjusting for FX 200 8 161 Others 272 Renewables 100 Thermal 0 (17) (100) 2018 Renewables Thermal Opex & Devex 2019 Operational Performance Renew
Slide 17: Earnings impacted by regulatory changes, competition & operational challenges
Earnings impacted by regulatory changes, competition & operational challenges HK$m 5,000 4,885 4,559 Australia ACOI -49% 4,000 (326) Decrease on like-for-like Enterprise basis after 3,000 (948) Energy (1,969) adjusting for FX 2,331 3,621 2,000 (1,219) (61) 1,000 Customer 679 -0 2018 FX Normalised Cu
Slide 18: Lower cash flow, modest increase in debt
Lower cash flow, modest increase in debt Cash Flow Capital Investments Dividends paid Cash from divestment HK$bn SoC Maintenance HK$bn HK$b Free Cash Flow Growth Others 25 25 24.2 25 Acquisitions 2.4 -11% 21.5 20 1.4 20 20 15 15 15 1.2 12.0 -2% 11.9 0.2 21.8 0.5 1.1 10 20.0 10 0.7 0.6 10 +4% 1.2 1.1
Slide 19: Business Trends and Outlook
Business Trends and Outlook Installation of Solar Panel, Hong Kong International Airport, Hong Kong
Slide 20: Energy transition and decarbonisation journey in Hong Kong continues
Energy transition and decarbonisation journey in Hong Kong continues © Photo by Peter Littlewood First new gas-fired unit commissioning, Offshore LNG Terminal to second under development commence construction in 2020 Solar PV Landfill energy- Smart meter installation from-waste project roll-out 20
Slide 21: Better emission performance balanced with pressure on tariffs
Better emission performance balanced with pressure on tariffs ✓ Gas-fired generation will increase to Electricity Price about 50% in 2020 (HK$/kWh) Germany 3 Denmark ✓ Carbon intensity will reduce by around 20% to be amongst the best in Asia Singapore 2 Japan ✓ Tariff increase limited to 2.5% 1 CLP
Slide 22: Innovation Focus
Innovation Focus Investing in Operational assets and Improvements infrastructure New Customer Technology, Centric Investments & Services Partnerships Sustainability Global energy Building & resource start-up energy Innovation for Sustainable Businesses efficiency programme solutions Partnership Ene
Slide 23: Climate Vision 2050: Our commitment to decarbonise
Climate Vision 2050: Our commitment to decarbonise Key commitments under the updated Climate Vision 2050 kg CO2/kWh • No additional coal-fired power generation 1.00 2010 • Phase out remaining coal-fired assets by 2050 0.80 • Strengthen our targets at least every 5 years 0.90 kg CO2/kWh 0.80 2020 0.6
Slide 24: Focus • Delivery • Growth
Focus • Delivery • Growth Hong Kong Deliver clean energy infrastructure and enhance customer experience Mainland China Australia Explore Focus on opportunities in customer Greater Bay Area experience, Climate Vision 2050 efficiency and Work towards our asset reliability decarbonisation goals Utility
Slide 25: Questions and Answers
Questions and Answers Veltoor Solar Farm, Telangana, India
Slide 26: Appendices
Appendices CLP Laizhou II Wind Farm, Shandong, China Battery Storage Systems at Ballarat and Gannawarra, Australia Tornado Solar Farm, Maharashtra, India (clockwise from top left)
Slide 27: CLP Group – Financial Highlights – Additional Information
CLP Group – Financial Highlights – Additional Information Financial Information 2019 2018 Change Operating earnings (HK$M) 11,121 13,982 -20% Total earnings (HK$M) 4,657 13,550 -66% Operating earnings per share (HK$) 4.40 5.53 -20% Total earnings per share (HK$) 1.84 5.36 -66% Dividends per share (H
Slide 28: CLP Group – Operating Highlights – Additional Information
CLP Group – Operating Highlights – Additional Information Operating Information 2019 2018 Change Safety (Total Recordable Injury Rate) 0.38 0.25 +0.13 Electricity sent out (TWh) (1) 88.6 92.3 -4% Generation Capacity (GW) (1) Total in Operation 23.4 22.9 +0.5 Non-Carbon Emitting (2) 5.9 5.4 +0.5 Comm
Slide 29: Items affecting comparability
Items affecting comparability HK$M 2019 2018 Australia Impairment on retail goodwill (1) (6,381) - India Provision for deemed generation receivables - (450) Hong Kong Revaluation (loss)/gain on investment property (83) 18 Items affecting comparability (6,464) (432) Australia Impairment of retail goo
Slide 30: CLP Group – Reconciliation of Operating Earnings and ACOI
CLP Group – Reconciliation of Operating Earnings and ACOI Hong Kong Other earnings & HK$M electricity and Mainland China India SEA & Taiwan Australia Group total unallocated items related 2019 Annual results Operating Earnings (as per Segment 7,249 2,488 263 335 1,566 (780) 11,121 Information in Ann
Slide 31: CLP Group – Cash Flow and Financial Structure
CLP Group – Cash Flow and Financial Structure HK$M 2019 2018 Cash Flow Cash Flow ▪ Lower free cash flow mainly reflected lower EBITDAF and unfavorable EBITDAF 18,656 28,571 working capital movements in Australia Less: Items affecting comparability 6,464 432 ▪ Cash from divestment represents remainin
Slide 32: CLP Group – Dividend History
CLP Group – Dividend(1) History CLP’s Dividends Policy aims to provide reliable and consistent ordinary dividends with steady growth when supported by our earnings whilst ensuring that a solid financial position can be maintained to fund our business growth. In line with our established practice, ou
Slide 33: CLP Group – Financial Obligations at a Glance
CLP Group – Financial Obligations at a Glance 31 Dec 2019 31 Dec 2018 HONG KONG HK$M HK$M Total borrowings of CLPH, CLPP, CAPCO & PSDC 41,378 43,247 Minus: Bank balances and liquid funds (4,747) (4,437) Net Debt 36,631 38,810 OVERSEAS Total borrowings of EnergyAustralia, India and Mainland China sub
Slide 34: 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 35: CLP Group – Highlights of Financing Activities
CLP Group – Highlights of Financing Activities CLP Holdings • Ample liquidity in the Group at 31 Dec 2019. Undrawn facilities HK$18.9 billion, bank balances HK$8.3 billion For more information on CLP Scheme of Control – Green financing Climate Action Finance Framework • New financing obtained at cos
Slide 36: CLP Group – Loan Balances by Type and Maturity
CLP Group – Loan Balances by Type and Maturity Proportion of debt on fixed and floating rate 46%47% 53%54% Dec 2019 Dec 2018 Floating rate (2) Fixed rate 1) The maturity of revolving loans is in accordance with the maturity dates of the respective facilities instead of the current loan drawdown teno
Slide 37: Hong Kong – Growing Business Scale
Hong Kong – Growing Business Scale Generation Transmission Distribution Retail 9,185 MW > 16,000 km of transmission and 232 primary and > 14,800 34,284 GWh sold and generation portfolio high voltage distribution lines secondary substations 2.64 million customer accounts During 2019: ▪ Local electric
Slide 38: Hong Kong – Electricity Sales and Capex
Hong Kong – Electricity Sales and Capex Electricity Sales Capital Expenditure (Accrual basis) GWh 2019 2018 Change HK$M 2019 2018 Change Residential 9,451 9,191 2.8% CLP Power Hong Kong 4,584 4,411 3.9% Commercial 13,584 13,425 1.2% CAPCO 4,513* 4,511 - Infrastructure & 9,586 9,342 2.6% Total Capex
Slide 39: Hong Kong – Tariff, Reliability & Environmental Improvement
Hong Kong – Tariff, Reliability & Environmental Improvement HK$/kWh Low Tariff Unplanned customer High Reliability 3.0 minutes lost per year 30 2.5 19 2.0 20 17 1.5 13 10.1 10 1.0 1.4 1.3(1) 0.5 0 Singapore CLP Power Sydney London New York 0.0 (CBD) CLP Power Singapore London Sydney New York Remarks
Slide 40: Hong Kong – Tariff, Energy Cost, Fuel Mix and Gas Volume
Hong Kong – Tariff, Energy Cost, Fuel Mix and Gas Volume HK¢/kWh Tariffs Energy Cost 140 HK$M Average Net Tariff 120 121.8 20,000 18,645 18,793 +1% 296 237 100 Basic Tariff 92.2 80 15,000 6,750 6,787 Others 60 40 Fuel Cost Adjustment 10,000 Nuclear 30.8* Gas 20 Special Rebate 6,986 0 5,000 8,115 Coa
Slide 41: Mainland China – Financials (HK$)
Mainland China – Financials (HK$) HK$M Operating/Total Earnings ACOI 2019 2018 2019 2018 Renewables 547 530 935 885 - Wind 270 314 405 452 - Hydro 104 93 230 211 - Solar 173 123 300 222 Nuclear 1,688 1,720 1,828 1,864 - Daya Bay 938 920 988 968 - Yangjiang 750 800 840 896 Thermal 264 36 285 39 - Sha
Slide 42: Mainland China – Financials (Local Currency)
Mainland China – Financials (Local Currency) RMB’M Operating/Total Earnings ACOI 2019 2018 2019 2018 Renewables 482 448 824 748 - Wind 237 265 357 382 - Hydro 92 79 203 178 - Solar 153 104 264 188 Nuclear 1,488 1,454 1,612 1,577 - Daya Bay 827 778 871 819 - Yangjiang 661 676 741 758 Thermal 233 31 2
Slide 43: Mainland China – Renewables and Generation
Mainland China – Renewables and Generation HK$M MW 3,500 CLP capacity(1) in Mainland China 10,000 Operating Earnings ACOI 3,000 2,500 935 8,000 547 885 2,000 530 6,000 1,500 1,688 1,828 1,000 1,864 1,720 4,000 500 0 36 264 39 285 (123) (222) (118) (218) 2,000 -500 2018 2019 2018 2019 0 Renewable Nuc
Slide 44: Mainland China – Market sales in 2019
Mainland China – Market sales in 2019 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 HEBEI TIANJIN Inner Zhungeer therm
Slide 45: India – Financials
India – Financials HK$ Local Currency 2019 2018 2019 2018 HK$M HK$M Rs M Rs M Renewables 687 677 6,174 5,905 Thermal (Jhajjar) 507 474 4,556 4,135 Thermal (Paguthan) (168) 234 (1,510) 2,041 Transmission 5 - 46 - ACOI 1,031 1,385 9,266 12,081 Renewables 357 244 3,208 2,128 Thermal (Jhajjar) 86 102 77
Slide 46: India – Broadening the portfolio
India – Broadening the portfolio HK$M 1,800 Acquisition of power transmission assets Operating Earnings ACOI ▪ CLP India has entered into a binding agreement to purchase three 1,600 1,400 Renewables power transmission assets (with total length 815km) from Transmission Kalpataru Power Transmission Li
Slide 47: Southeast Asia & Taiwan – Financials
Southeast Asia & Taiwan – Financials HK$ Local Currency 2019 2018 2019 2018 HK$M HK$M M M ACOI Thermal 272 131 NT$1,072 NT$503 Renewables 80 69 THB317 THB284 Operating expenditure (16) (11) - - Development expenditure (1) (28) - - Total 335 161 Operating earnings Thermal 272 131 NT$1,072 NT$503 Rene
Slide 48: Australia – Financials
Australia – Financials HK$ Local Currency 2019 2018 2019 2018 HK$M HK$M A$M A$M EBITDAF (before items affecting 4,231 6,566 777 1,125 comparability) Depreciation & Amortisation (1,900) (1,681) (349) (288) ACOI Customer (Retail) (1) 679 1,744 125 299 Energy (Wholesale) (1) 3,621 5,186 665 888 Enterpr
Slide 49: Australia – Customer Operations
Australia – Customer Operations Customer Account Numbers 2019 2018 (000s) Electricity Gas Total Electricity Gas Total Mass Market 1,617.4 836.1 2,453.5 1,671.6 866.0 2,537.6 Commercial & Industrial 12.3 0.3 12.6 12.2 0.3 12.5 Total Account Numbers 1,629.7 836.4 2,466.1 1,683.8 866.3 2,550.1 Weighted
Slide 50: Australia – Customer Operations
Australia – Customer Operations 47% of bills issued in Commitment to the Energy 2019 were E-bills Charter - to deliver better - Compared with 5% in 2015 customer service 20pts improvement in 26 Ombudsman customer satisfaction complaints/10k accounts since 2015 - 54% reduction since 2015 Delivery of
Slide 51: Australia – Wholesale Market Conditions
Australia – Wholesale Market Conditions Year Ahead SWAP Prices (1) ▪ Average wholesale prices in 2019 remained high driven by low baseload 120 generation. This included periods of very high spot prices, offset somewhat by periods of sustained low and even negative pricing. 100 ▪ As more intermittent
Slide 52: CLP Group – Generation Portfolio – Dec 2019
CLP Group – Generation Portfolio – 31 Dec 2019 19,238 Equity MW and 4,777MW Long Term Purchase (total 24,015MW) HONG KONG total 7,568MW* AUSTRALIA total 5,330MW* Operational Operational Castle Peak 4,108 / 4,108* (c) Yallourn 1,480 / 1,480 (c) Black Point 2,600 / 2,600* (g) Mount Piper 1,400 / 1,400
Slide 53: CLP Group – Renewable Generation Portfolio – Dec 2019
CLP Group – Renewable Generation Portfolio – 31 Dec 2019 2,469 Equity MW and 825 MW Long Term Purchase (total 3,294MW) HONG KONG total 10 MW Under Construction - 14% of CLP total generation portfolio West New Territories Landfill 10/10 AUSTRALIA total 854 MW* Operational MAINLAND CHINA total 1,752 M
Slide 54: CLP Group – Generation Capacity by Fuel Mix – Dec 2019
CLP Group – Generation Capacity(1) by Fuel Mix – 31 Dec 2019 24,015 MW Attributable to CLP Group Total Operational Under construction Capacity by MW % MW % MW % Energy Type (a) + (b) (a) (b) Coal 11,997 50% 11,997 50% - - Gas 5,139 21% 4,559 19% 580 2% Nuclear 2,685 11% 2,685 11% - - Wind 2,049 9% 1
Slide 55: CLP Group – Energy Sent Out – 2019
CLP Group – Energy Sent Out – 2019 Energy Sent Out(1) TWh 40 CLP 2019 Generation 35.5 35.6 as Sent Out(1) 35 2019 30 28.1 22% 20% 2018 25.5 55% 25 60% 2% 1% 20.6 2% 5% 20 2% 18.4 5% 12% 15 2018: 92.3 TWh 14% 2019: 88.6 TWh 10 8.9 5 4.7 1.8 1.7 0 -5 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 H
Slide 56: Additional Resources
Additional Resources (1) To be published in March 2020 56
Slide 57: Thank you
CLP Holdings Thank you Energy for Brighter Tomorrows