2020 Annual Results Company Presentation
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2020 Annual Results Company Presentation 22nd March 2021 Resilient Performance amid Challenging Environment Retail gas sales volume up 10.2% to 21.95 bcm Added C/I customers with 17.08 mil m3 installed designed daily capacity & 2.29 million new residential customers Added 20 City-gas projects & 21 IE projects Further expanded operating regions Core profit up 18.2% to RMB6.24 bil Free cash flow up 12.0% to RMB3.02 bil DPS up 25.7% to HKD2.10 + Special Dividend HKD0.32 1 Corporate Social Responsibility Employees Customers Society • Disinfected workplace, arranged COVID • Strengthened safety inspection to ensure • Solicited and delivered emergency supplies Test and provided personal protective safe operation and stable gas supply to Wuhan equipment for employees • Ensured gas safety in the rural areas • Donated RMB16 million to medical • Organized live online psychological • Arranged urgent construction of gas workers on the front line of epidemic counseling classes for employees to help pipelines for crucial users on the front line prevention and control them regulate their physical and mental of epidemic prevention and control such as • Launched ENN Charity Day “Food stress hospitals, to meet their gas demand to fight Saving” online campaign • Provided free medical counseling for against the epidemic • Joined the Earth Hour campaign and employees • Promptly responded to flooding threats and proactively invited all employees and • Social media online check-in activity to took urgent measures to eliminate potential business partners to save energy and encourage employees to exercise hazards reduce emissions 2 Enhanced ESG Performance & Governance Environment Society Governance ESG Rating Included in GHG Anti- 22.1% corruption emissions Percentage of women training for Hang Seng ESG50 Index above mid-level 1,766 key roles Hang Seng Corporate Sustainability 20.2% management 2019:21.6% All Benchmark Index Helped society Completed compliance & clients reduce training & pledged emissions A BBB 42.11 mil tons Corruption case, Hang Seng Corporate MSCI ESG Rating 94.1% Sustainability Index 2019:35.11 mil tons Complaint, Customer satisfaction Environmental 0 2019:A 2019:BB No. of member 2019:93.0% illegal case company obtained ISO Plan to identify climate change risk certifications 17 1.27 & opportunity, quantify impacts, progressively align with 2019:6 Occupational injury case/mil hrs Modify ESG policies & Trenchless 2019:1.04 disclosure, strive to achieve TCFD pipe laying 34.31 international best practices Charity engagement ratio mil m3 283,580hrs Whistle-blower 35% BOG protection policy 8,176persons Climate change policy 3 Growth·Value Creation Total gas sales volume (mil m3) Core profit (RMB mil) DPS(HKD) + Special dividend 6,237 2.42 29,569 26,963 23,328 5,278 19,617 4,474 1.67 3,731 1.19 14,329 3,212 1.08 0.83 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Share price performance (HKD) Effective business development strategy creates growing returns for shareholders Total shareholder return* in 2020 36.5% Total shareholder return = (Share price movement + total dividend payment)/base price (closing price on 31 Dec 2019 HKD85.15) 4 Content 1. Results Review 2. Financial Highlights 3. Development Strategy 4. Appendix Higher Operating Profits (RMB mil) 2020 2019 Change Key Financial Data Revenue 71,617 70,183 2.0% Segmental Revenue Retail Gas Sales 40,510 40,049 1.2% Higher vol,lower gas price 83.4% Higher utilisation, new projects IE Business 5,042 2,749 commenced operation Value Added Business 1,685 1,988 15.2% Affected by COVID-19 Wholesale of Gas 17,936 18,465 2.9% LNG price down,wholesale vol up Construction & Installation 6,444 6,932 7.0% Less connections,stable fees Gross Profit 12,332 11,265 9.5% EBITDA^ 12,207 10,960 11.4% Profit attributable to 6,278 5,670 10.7% Shareholders Core Profit* 6,237 5,278 18.2% Core DPS (RMB) 5.55 4.70 18.1% ^ EBITDA = Incl. JCE, Asso, excl. one-off items * Core profit= Profit attributable to shareholders – other gains & losses (excluding net settlement amount realised from commodity derivative contracts) and amortisation of share option expenses 6 Retail Gas Sales Business Citygate price reduced, coupled with lower LNG import cost, stimulated gas demand from customers Volume growth driven by our C/I-focused clientele which benefited from rapid work resumption policy and lower winter temperatures 2020 Gross profit (RMB mil) Performance C/I vol Residential vol Vehicle gas refuelling vol Yoy change -28.5% +13.5% +10.1% 12,332 3 3 3 16,878 1,245 mil m mil m mil 4,185 3,264 m mil 890 14,877 362 3,802 1,312 2019 2020 2019 2020 2019 2020 903 Dollar margin increased by 0.01/m3 Diversified gas source (RMB/m3) 2020 2019 Imported 1.95 mil tons of LNG Average all-in import cost was 6,491 +820 +14.5% Residential 2.81 2.88 10-15% below citygate prices C/I 2.76 3.14 Non-majors conventional & Large customer* 2.34 2.77 unconventional gas purchase 56 member companies were Small-mid customer 3.14 3.36 2020 qualified to use PipeChina’s Vehicle gas station 3.41 3.93 transmission capacity, lowering ASP 2.79 3.14 Retail gas sales IE business gas cost Value added business Wholesale of gas Average cost 2.14 2.50 Intelligent dispatching system Construction & Installation optimised gas supply & demand Dollar margin (ex. VAT) 0.60 0.59 matching * Large customer refers to annual gas consumption capacity of over 50 mil m3 7 Construction & Installation Affected by COVID-19, number of new residential connection reduced by 104,000 households, newly installed C/I daily designed capacity reduced by 1.08 mil m3 Continue to explore C/I users development potential, push forward industrial coal replacement progress Urbanisation & people’s pursuit of quality life, brings huge opportunity of urban residential users development 2020 Gross profit (RMB mil) Performance Accumulated C/I installed capacity Accumulated residential customers Yoy change ’000 m3/day ( ) 141,787 (‘000 households) 23,213 12,332 +17,078 +2,293 3,264 -455 -12.2% 124,709 20,920 362 1,312 903 FY2019 FY2020 FY2019 FY2020 6,491 New C/I customers breakdown New residential customers breakdown 2020 59% 28% 13% 2020 74% 5% 21% 2019 58% 32% 10% 2019 67% 12% 21% 2020 2018 55% 36% 9% 2018 70% 10% 20% 2017 54% 36% 10% 2017 72% 12% 16% Retail gas sales IE business 2016 52% 40% 8% 2016 83% 17% Value added business Wholesale of gas Construction & Installation 2015 51% 39% 10% 2015 84% 16% New site Coal LPG & others New building Old building Rural 8 Integrated Energy Business (IEB) Projects gradually ramped up, integrated energy (cooling & heating, electricity, steam) sales volume increased significantly Developed IE projects incorporating the use of low-carbon sources such as biomass, solar & geothermal heat, and tapped into distributed clean heating projects around Yangtze River areas 2020 Gross profit (RMB mil) Performance IE Sales Vol(mil kWh) Operational Under Construction Yoy change (No. of projects) (No. of projects) 12,042 +75.9% 12,332 3,264 6,847 362 1,312 119 24 903 +430 +90.9% Energy Sales Potential FY2019 FY2020 >30 bil kWh 6,491 Steam Cooling & Heating Electricity Clean energy solutions for customers: Positive environmental impact for customers: (No. of projects) 21 6 Energy Consumption CO2 Emission 2020 Industrial Waste Solar (standard coal) Heat Retail gas sales IE business 6 110 Value added business Wholesale of gas Construction & Installation Biomass Natural Gas & 1,476,085 tons 4,444,264 tons others clean energy 9 IEB – Typical Projects According to the local resources available and customer needs, choose the best technical route and provide customers with low-carbon energy solutions based on renewable energy 30% out of 143 IE projects in operation and under construction adopt renewable energy such as biomass, photovoltaic and geothermal energy Hainan Yangpu Industrial Inner Mongolia Deyu Biomass Park Project Phase I Cogeneration Project Solution: Designing & Planning + Integrated Energy Station Solution: Biomass cogeneration unit + steam Construction + PV + Heating Network pipeline network Standard coal Standard coal Steam Steam 170,000 tons/yr 107,000 tons/yr 160,000 tons/yr 600,000 tons/yr Reduce CO Reduce CO2 Clean power 2 Clean power emissions emissions 66 million kWh/yr 16 mil kWh/yr 280,000 tons/yr 426,000 tons/yr Pharmaceutical evaporation and concentration process – Low-temperature drying room for furniture production – Shijiazhuang Weisheng Pharmaceutical Qidong Zhuolang Furniture ENN managed gas boilers for this Using air source heat pumps to 60℃ 30℃ customer which is not located in our replace biomass boilers to supply boiler GGH boiler concessions energy for the drying room, resolved exhaus exhaus Installed GGH+lithium bromide heat pump customers' pain points due to t t to recover flue gas waste heat from the 35℃ hot 25℃ hot environmental non-compliance, boilers water water developed customers outside our It’s expected to save 870,000 cubic 90℃ hot concessions Return metres of gas per annum Lithium Bromide Heat water Continued to retrofit other drying hot water Pump Unit We will continue to explore more business supply room energy facilities, strive to tap opportunities with this customer in into electricity sales and develop terms of waste heat recovery & central Low- integrated energy business in this Condensate control of more gas boilers pressure industrial zone steam 10 10 IEB – Green and Low-carbon Heating Solutions Adaptive to Local Conditions Reduce total energy consumption through energy saving on demand-side and waste heat re-use Reduce CO2 intensity by adjusting energy structure; priority use of zero carbon resources such as waste heat re-use and geothermal energy, supplemented by low carbon energy such as natural gas Based on users’ distribution and demand, incorporating centralised, distributed and individual heating methods to reduce energy loss, and achieve CO2 reduction, energy saving and economic benefits, through multi-technology use and integration, ensuring sustainable development of the project Tapped into traditional heating areas incl.