CLP Holdings 2019 Annual Results Highlights
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CLP Holdings 2019 Annual Results Highlights 24 February 2020 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 may not forward, publish, distribute, release or disseminate any part of the presentation directly or indirectly to any other person. It is important to note that the contents of the presentation have not been audited or independently verified. Maps included in the presentation are indicative only. They are provided for the purpose of showing the approximate location of the Company's assets, and do not purport to show the official political borders between different countries. Some comments, including comments relating to future events and our expectations about the performance of CLP's business, are based on a number of factors that we cannot accurately predict or control. We do not make, and expressly disclaim, any representations and warranties in respect of any matters contained in the presentation. We cannot provide any assurance that the information contained in the presentation is or will be accurate or complete and so they should not be relied on. We assume no liability whatsoever for any loss howsoever arising from use of, or in connection with, any of the information and data contained in this presentation. From time to time as circumstances change we may update our website at www.clpgroup.com and will update the Hong Kong Stock Exchange when relevant to comply with our continuous disclosure obligations. 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By attending or reading this presentation, you will be deemed to have agreed to the terms, obligations and restrictions set out herein. 2 Agenda Performance Overview Group Financial Performance Performance by Business Units Business Trends and Outlook Appendices 3 Performance Overview Shareholders’ Visit Programme, Hong Kong 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 • Investments in transmission and renewables under new partnership • Climate Vision 2050 strengthens decarbonisation commitment • Earnings recalibrated while strong fundamentals support long-term outlook ✓ Growth in SoC investments ✓ Energy transition opportunities 5 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 EnergyAustralia Credit Ratings Capital Investment (1) and Leverage S&P Moody’s SoC Capex HK$8.8bn CLP Holdings A A2 Other Capex HK$3.0bn CLP Power A+ A1 Net debt to total capital 26.7% CAPCO AA- A1 (1) On cash basis EnergyAustralia BBB+ - 6 Operating performance Safety Reliability in Hong Kong (1) Average minutes lost pa (rolling 3 years) Total recordable injury rate Excluding Typhoon Mangkhut 1.27 -0.17 0.38 +0.13 Including Typhoon Mangkhut 10.13 -0.16 Customer Accounts Electricity Sales Hong Kong 2.636m +39k Hong Kong (local sales) 34.3 TWh +1.8% Australia 2.466m -84k Australia 18.4 TWh -3.5% Generation Performance Generation Capacity (2) Electricity sent out (2) In operation 23.4GW +0.5 88.6 TWh -4% Non-carbon Emitting (3) 5.9 GW +0.5 In construction 0.6 GW -0.2 (1) Unplanned customer minutes lost - average of the past 36 months (2) Equity basis as well as long-term capacity and energy purchase arrangements (3) Non-carbon emitting includes wind, hydro, solar and nuclear 7 Group Financial Performance Gale Solar Farm, Maharashtra, India Recalibration of earnings HK$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 China 2,277 2,163 India 263 572 Southeast Asia and Taiwan 335 162 Australia 1,566 3,302 Other earnings and unallocated items (979) (1,002) Operating Earnings 11,121 13,982 20% Items affecting comparability (1) (6,464) (432) Total Earnings 4,657 13,550 66% (1) Item affecting comparability in 2019 represented the impairment of retail goodwill for EnergyAustralia and revaluation loss on investment property. 2018 represented the provision for Paguthan’s deemed generation receivables and 9 revaluation gain on investment property. For details please refer to page 25 Performance by Business Units CLP Laizhou II Wind Farm, Shandong, Mainland China Full year of lower permitted rate of return Hong Kong Operating Earnings HK$M 10,000 8,558 - 13.0% 8,000 7,448 6,000 4,000 2,000 0 2018 2019 Operational Performance High supply reliability >99.999% (1) Lower earnings from SoC due to the full year Continue the decarbonisation journey and impact of a reduced permitted rate of return lower emissions by achieving around 50% Local sales up 1.8% partially offset by increase in net fixed assets gas-fired generation in fuel mix New pipeline gas from Wenchang Capex incurred in 2019 (accrual basis) Progress investments in major projects under Development of CCGT units in progress • T&D capex HK$4.6 bn the 5-year Development Plan for 2018-2023 • Generation capex HK$4.5 bn Progress made on the offshore LNG terminal Pursue renewable energy and energy (EPC contract awarded in early 2020) efficiency & conservation initiatives WENT landfill energy-from-waste project started commissioning 6,900 applications for Feed-in-Tariff. 90MW approved (1) Supply reliability based on average unplanned customer minutes lost per year 11 Contributions mainly from non-carbon Mainland China Operating Earnings HK$M 2,277 2,400 2,163 + 5.3% 2,100 1,800 1,500 1,200 900 600 300 0 2018 2019 Operational Performance Nuclear Nuclear Monitor the evolution of market regulations. • Yangjiang: Final unit commissioned in July • Highly reliable contribution of about 2/3 of Market competition anticipated to continue • Daya Bay: Steady output China earnings with higher pressure on margins • Stable earnings from Daya Bay Renewables • Higher output from Yangjiang Units 5 & 6 Continue to look for value adding renewable • Existing projects: Solid underlying offset by higher service & statutory charges, energy opportunities and further increase performance from diversified portfolio planned outages and lower VAT refund contribution from non-carbon generation • 36MW solar & 50MW wind added in 2019 Renewables Continue to explore opportunities with Thermal • Higher earnings mainly from new projects strategic partners, with focus in • Reliable operation, higher demand at and strong performance from Huaiji Hydro Greater Bay Area Fangchenggang (FCG), lower sent-out from • Continuing delay in payment of subsidies other assets impact cash flow Thermal New opportunities • Higher earnings mainly reflects lower coal • FCG Incremental Distribution Network (IDN) cost and higher sent-out at FCG. Coal-fired commenced initial services in early 2020 generation margins remain under pressure from low tariffs 12 Lower earnings driven by the end of Paguthan PPA and earnings dilution India Operating Earnings HK$M 700 600 572 500 - 54.0% 400 300 263 200 100 0 2018 2019 Operational Performance Renewables Renewables Continue to pursue investments in non- • Higher wind resource and higher solar • Higher earnings including benefits from carbon assets under new partnership generation from new projects new solar projects acquired in 4Q2018, • Successfully bid for the 251 MW Sidhpur receipt of delayed payment charges and Complete the acquisitions of the remaining wind project in Gujarat province lower finance costs two transmission assets and progress • Continuing delay in collecting revenue construction of the Sidhpur wind project Thermal impacts cash flow • Jhajjar: High availability of 89% on Actively pursue overdue receivables for improved coal supply. Flue gas Thermal renewable generation desulphurisation operational on both units • Higher capacity revenue at Jhajjar • Minimal generation from Paguthan • End of Paguthan PPA Transmission Transmission • Acquired intra-state asset in Madhya • Earnings from the first asset since Pradesh in November 2019 (1st part of 3 November asset acquisitions announced in July 2019) 40% earnings attributed to CDPQ 13 Higher energy tariff and lower coal costs at Ho-Ping Southeast Asia & Taiwan Operating Earnings HK$M 400 350 335 300 + 106.8% 250 200 162 150 100 50 0 2018 2019 Operational Performance Renewables - Lopburi Renewables - Lopburi Complete withdrawal from two legacy • Good performance and utilisation • Higher solar resource and earnings coal-fired projects in Vietnam Thermal - Ho-Ping Thermal - Ho-Ping Explore renewable energy opportunities in • Good plant availability and high usage • Higher earnings reflecting margin the region expansion as coal costs declined in 2019 and energy tariff increased Opex & Devex • Partial recovery of development expenditure 14 Earnings impacted by regulatory changes, competition & operational challenges Australia Operating Earnings HK$M 4,000 3,302 3,000 - 52.6% 2,000 1,566 1,000 0 2018 2019 Customer business • Competition remains intense and • Lower generation due to coal supply issues Customer Governments implemented retail at Mount Piper & safety works • Focus on service excellence and customer electricity price caps from 1 July at Yallourn.