About CLP Group We Are an Investor and Operator in the Energy Sector of the Asia-Pacific Region
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A Snapshot of CLP in 2018 About CLP Group We are an investor and operator in the energy sector of the Asia-Pacific region. For more than 100 years, we have powered Hong Kong’s dynamic and spectacular growth and we continue to deliver a highly reliable supply of electricity to over 80% of the city’s population. Today, our business has expanded to Mainland China, India, Australia, Southeast Asia and Taiwan. Where we operate, we become part of the social and economic fabric of the local communities, working together with them to achieve sustainable growth. Hong Kong CLP runs a vertically-integrated regulated business in Hong Kong, which is the core of our operations. We generate, distribute and provide a world-class electricity supply with a reliability rate of over 99.995% to 2.60 million customer accounts. Mainland China CLP has been in Mainland China’s power industry since 1979. We are one of the largest external independent power producers in the country with a focus on clean and low-carbon energy including nuclear and renewables. India We are one of the largest foreign investors in India’s renewable energy sector. After entering the market more than a decade ago, we have built a responsible, technologically-advanced and diversified generation portfolio powered by wind, solar, supercritical coal and gas. Southeast Asia and Taiwan We entered the Southeast Asia power market in the 1990s. Currently, we have interests in a solar project in Thailand and a coal-based generation plant in Taiwan. Australia EnergyAustralia operates a customer-focused energy business serving 2.55 million customer accounts across southeast Australia, supported by competitively-priced energy from a generation portfolio comprising coal, gas, wind and solar assets. 2 CLP Holdings 2018 Annual Report Financial Highlights Group operating earnings increased 5.1% to HK$13,982 million driven by higher earnings from Australia and Mainland China partially offset by lower permitted rate of return in Hong Kong since October; total earnings decreased 4.9% to HK$13,550 million. Increase / Revenue (Decrease) 2018 2017 % HK$M 100,000 For the year (in HK$ million) Revenue 80,000 Hong Kong electricity business 40,872 39,485 3.5 60,000 Energy businesses outside Hong Kong 49,793 52,101 (4.4) Others 760 487 40,000 Total 91,425 92,073 (0.7) 20,000 Earnings Hong Kong electricity business 8,558 8,863 (3.4) 0 2014 2015 2016 2017 2018 Hong Kong electricity business related 1 227 335 Hong Kong Mainland China 2,163 1,238 74.7 Australia India 572 647 (11.6) Others Southeast Asia and Taiwan 162 160 1.3 Australia 3,302 2,738 20.6 Other earnings in Hong Kong (92) (65) Total Earnings Unallocated net finance costs (54) (2) HK$M Unallocated Group expenses (607) (856) 16,000 Operating earnings 13,982 13,307 5.1 14,000 Items affecting comparability 12,000 Property revaluation 18 369 10,000 Impairment provision (450) – 8,000 Reversal of tax provision – 573 6,000 Total earnings 13,550 14,249 (4.9) 4,000 2,000 Net cash inflow from operating activities 23,951 24,417 (1.9) 0 2014 2015 2016 2017 2018 At 31 December (in HK$ million) (2,000) Total assets 230,514 228,151 1.0 Operating earnings Total borrowings 55,298 57,341 (3.6) Items affecting comparability Shareholders’ funds 109,053 108,697 0.3 Total earnings Per share (in HK$) Earnings per share 5.36 5.64 (4.9) Operating Earnings Dividends per share 3.02 2.91 3.8 (Before Unallocated Expenses) Shareholders’ funds per share 43.16 43.02 0.3 by Asset Type Ratios 2 Return on equity (%) 12.4 13.8 1% 3 Net debt to total capital (%) 25.5 27.8 2% EBIT interest cover 4 (times) 10 11 28% 32% 2018 Price / Earnings 5 (times) 17 14 6 Dividend yield (%) 3.4 3.6 49% 59% 7% 2017 4% Notes: 1 Hong Kong electricity business related includes PSDC, Hong Kong Branch Line and sales to Guangdong from Hong Kong 11% 2 Return on equity = Total earnings / Average shareholders’ funds 7% 3 Net debt to total capital = Net debt / (Equity + advances from non-controlling interests + net debt). Debt = Bank loans and other borrowings. Net debt = Debt – bank balances, cash and other liquid funds. Coal and gas 4 Earnings before interest and taxes (EBIT) interest cover = Profit before income tax and interest / (Interest charges + Nuclear capitalised interest) Renewable 5 Price / Earnings = Closing share price on the last trading day of the year / Earnings per share Transmission, distribution and retail 6 Dividend yield = Dividends per share / Closing share price on the last trading day of the year Others CLP Holdings 2018 Annual Report 3 Building a Utility of the Future CLP aims to power the se sustainable dev Our purpo elopment o operate by providing reliable an f commu d affordable nities in minimal impact electricit which to the environment. y to our we We aim to custom energy provider in the be the le ers w Asia-Pacific reg ading re ith ion, from spons one gene ible ration t o the n CLP cares for ext. Our values people, the c We ommunit ide us in fulfilling our purpose care about per y and t what gu formance, he envi and valu respect ronme e innovation laws an nt. and know d stand ledge. ards, Our s how tra we ser teg ve our y purpo To l se ever o age ur po new eratio rtfo and Gen n the lio, em Our T incr emp erg perate and invest in centr ran eas ow ing • Design, build, o alised and sm ing er te • Design iss ly c ou chn ness alised power stations and generation facili , build and ion om r cu ol usi decentr ties: operate ple sto og b • Enha transm x p m ies • Coal (baseload) • Gas (flexible) • Nuclear (baseload) nce transm ission ow ers to el ission ne netwo er in ai od bles (intermittent) • Energy storage (flexible integr twork rks sy m d t m • Renewa ) ation of mo s to fac ste ak he re clean ilitate m ing pr ppropriate energy • D D . b og Procure adequate and a fuel into th esig is ett re • e grid n, bu t er ss y resources from diversified • In ild a ri en iv and energ tegr nd o b er e d ate d per ut gy ec sources istri ate io c ar bute dist n ho bo d en ribu ice n erg tion s isa y re ne an t logies sou tw d io l techno rce ork m n o Digita s in s an f cs, to t ag ta analyti he e h as da grid suc • telligence De icial in vel artif t op C ngs (IoT) ech an u et of Thi no d d s Intern be log ep t and iencies co y-e loy o w effic me na cu m ble ne ac bl st ena er tiv ed om e of smart e en e r elivery pa er r-o s and d d rti gy ri connecte cip s en d more an erv te an ts ic d, services of es energy a th po at Dynami we he c sys r s lp tem ys cu ba te st lan Desi m om cin gn, b e g an uild rs d ba and lanc ope cost e dy rate effi nam sy cien ic c stem cy, r usto s t Growing our business elia me hat bilit r de int with purpose Responding to y an ma egr Our d e nd ate nvi aga ce ron ins ntr We create value for shareholders, customers, climate change me t d ali material nta iffe sed employees, communities and the environment l p re an We aim to address the enormous erf nt d based on our purpose-led approach to deliver Harnessing the orm gen de challenges associated with climate an er cen topics ce ati tr R reliable, affordable and sustainable power of technology on ali ea change while keeping our business p se t d what will shape energy. rof d ra a sustainable to power economic growth. We embrace the opportunities ile ge n bo s ne C sf u our prospects to ra ha or t o inherent within the digital evolution, op ti a ir m u t on nd m at r im , t an io and continually refresh our operations, is R h ’s n e ev e S st to ie CE t ra products and services capturing the Reinforcing cyber 2 w O at t 2 o ’s em eg n S e y latest in innovation, efficiency and pa tr n in resilience and g a t t es te h CLP Holdings 2018 Annual Report customerCLP Holdingsconvenience. 2018 Annual Report 1 gi e data protection 4 c 4 Our governance CLP Holdings 2018 Annual Report how we hold ourselves accountable We focus on investing in people and resources to manage the increasing scale and severity of Good corporate governance is a key cyber security risks. enabler of long-term value creation, which enhances Building an agile, inclusive our credibility and safeguards the interests of our stakeholders. and sustainable workforce We remain committed to doing the right thing at all times, We maintain a workforce with the skills, and to embedding a corporate governance framework that mindset and agility to thrive in our stakeholders respect and understand.