CLP Group 2009 Final Results. 25 February 2010

Transcription

1 CLP Group 2009 Final Results 25 February 2010

2 Disclaimer This presentation contains some comments about future events including our expectations about the performance of CLP Group's business. The comments are not audited and are based on a number of factors that we cannot control. We cannot be certain that the comments will be accurate or complete and so they should not be relied on. As circumstances change we will update our website at and, where relevant, notify the Hong Kong Stock Exchange. 1

3 Financial Performance HK$M Change Hong Kong business 6,786 8,560 (21%) Overseas businesses 2,078 1,045 99% Others, net (327) 142 Operating earnings 8,537 9,747 (12%) Total earnings 8,196 10,423 (21%) Operating earnings per share (HK$) Total earnings per share (HK$) Dividends per share (HK$) Interim dividends Final dividend Total dividends Strong performance across the Group impacted by lower permitted SoC return 2

4 Earnings Details Change HK$M Hong Kong 5,964 7,549 (21%) PRC investments supporting HK business Sales from Hong Kong to China Australia China India Southeast Asia & Taiwan Other earnings Unallocated net finance costs (21) (21) Unallocated Group expenses (413) (345) Operating Earnings before oneoff items 8,537 9,747 (12%) Nonrecurring items for Australia Nonrecurring items for Southeast Asia & Taiwan Nonrecurring items for China (363) Total earnings 8,196 10,423 (21%) 3

5 Financial Performance Good financial performance characterised by strong 2H upturn Hong Kong: First full year earnings impact of lower permitted return on Hong Kong SoC business Australia: Continuing improvement in financial and operating performance China: Significant rebound in 2H reflecting improved economic growth and electricity demand India: Steady operating earnings Southeast Asia & Taiwan: Higher earnings due to strong performance in HoPing 4

6 Hong Kong Earnings reduction of 21% to HK$5,964m First full year with lower permitted return under new SoC Rebase of earnings following reduction in permitted return steady growth is anticipated from this lower base Capex of HK$7,798m in line with Development Plan CLP Power: HK$4,447m CAPCO: HK$3,351m (CLP s share: HK$1,341m) Electricity sales increased by 2% Local sales increased by 1.7% primarily due to warmer weather Sales to China increased by 5% due to rebound in electricity consumption in 2H Tariff increase by 2.6% effective 1 Jan 2010 First time increase in basic tariff in more than 10 years The new basic tariff is lower than that in

7 Hong Kong Obtained approval for extension of nuclear energy supply from Daya Bay for another 20 years Good progress on gas supply arrangements Progressing permitting, design and commercial arrangements for the construction of a new pipeline for gas delivery Good progress on Emissions Control Project at Castle Peak B Power Station Project commissioning in phases from 2009 to 2011 Progressing feasibility study of offshore wind farm development Target completion of site data collection by

8 Hong Kong Going Forward Stable regulatory regime through 2018 Progress implementation of Intergovernmental MOU Government s environmental objectives will require new investment in clean energy infrastructure including transition away from coalfired generation over time towards increasing nuclear energy and natural gasfired generation Delivery of Government s environmental objectives will also involve closer integration with the electricity system in Southern China 7

9 Australia Financials HK$m TRUenergy operating earnings Share of results of Roaring 40s Share of results of Solar Systems Development expenditure Provision for Solar Systems Amortisation of TIPS contracts (16) (108) Coal mine subsidence (1) 127 Gain on sale of SEAGas 432 Total earnings 373 1,055 Improvement in core operating earnings continuing the positive trend in earnings growth from 2007 Increased operating earnings result from improved performance on core operations Generation: Record high generation for Yallourn Retail: Profit improvement program continues to deliver results coupled with higher retail margins Offset by prudent provision for doubtful debt and a 7% drop in average exchange rate in 2009 Financing Refinancing the rollover of maturing term debt in Aug 09 despite difficult credit markets S&P removed the negative outlook of TRUenergy upon the completion of refinancing Full provision for investment in Solar Systems of HK$346m (31) (23) (38) 736 (346) 15 (24) (19) 604 8

10 Carbon Pollution Reduction Scheme Introduction of carbon legislation remains a considerable overhang over Yallourn significant negative impact if the proposed CPRS legislation is implemented in its current form CPRS legislation has had a troubled history in Parliament as it has been the subject of considerable disagreement between the Government, the Opposition and the Greens Although the position is uncertain, it seems unlikely that any carbon legislation will move forward until after Federal election later this year TRUenergy continues to actively engage with all political stakeholders to promote policy objectives which respect the value of our investment and would allow TRUenergy to contribute to the medium term transitioning to cleaner generation 9

11 Australia Going Forward Continued focus on operations Operational improvement through retail profit improvement program, and continued good generation performance at Yallourn and Tallawarra Review and implement opportunities to enter Queensland and NSW retail markets through organic growth Cautious approach towards new capital investment Looking to permit potential gasfired generation sites at Tallawarra and Victoria Construction of further wind projects on hold pending increase in market price of RECs Consider to review NSW privatisation opportunities 10

12 Chinese Mainland Financials HK$m Coalfired projects Renewables projects Wind Hydro Biomass Operating expenditure Operating earnings Jiangbian preoperation expenses Impairment of Boxing biomass project (16) (89) 403 (7) (15) (5) (80) 48 (26) Development expenditure (10) (17) Total Coal Major turnaround in 2H mainly due to improved earnings from coalfired units Significant improvement in earnings from Fangchenggang (2009: $238m profit; 1H09: $77m loss) mainly due to higher output and tariff Wind Higher contributions due to increase in operational wind capacity Hydro Lower earnings due to rainfall shortages 11

13 Chinese Mainland Going Forward Repositioning towards low carbon generation niche strategy looking to rationalise of legacy coal assets without operational control Disciplined growth in wind energy Continue to develop majorityowned projects Build out expansion of existing minorityowned project sites Completed strategic acquisition in CGN Wind CLP s wind energy expertise demonstrated and further strengthened by first whollyowned project in Jilin Qian an Progress construction of whollyowned hydro project in Sichuan Jiangbian on target for commissioning in 2011 Reviewing opportunities for further participation in China nuclear with CGNPC, building on existing 25% stake in Daya Bay Pursuing expansion opportunities for Fangchenggang 12

14 India Financials HK$m GPEC operating earnings Renewables wind Interest income Net gain on Jhajjar foreign exchange hedging Dividend distribution tax provision Unrealised exchange gain / (loss) on FX protection in GPEC PPA (8) (52) (50) (4) Preoperating expenses (wind and Jhajjar projects) (48) (4) Total earnings GPEC: steady earnings, reliable operations, long term gas supplies in place Higher operating earnings of GPEC in 2009 Fewer planned outages leading to lower O&M expenses and higher incentive revenue on availability Partly offset by 11% drop in average exchange rate in 2009 Ongoing legal dispute with offtaker Good progress on the construction of Jhajjar Project on target COD in 2011/2012 Net gain on Jhajjar foreign exchange hedging represented the onetime exchange gain from financial derivatives arranged for the hedging of Jhajjar EPC contract, but did not qualify for accounting hedge 13

15 India Going Forward Strong growth in electricity demand Speed and scale of CLP s growth needs to be consistent with organisational and capital resources Priority on completion of Jhajjar on time and within budget Significant and rapid growth of wind portfolio CLP is the largest wind investor / developer in India with a portfolio of 446MW whollyowned wind projects and significant development pipeline 101 MW in operation 345 MW will commission in 2010 Positioning to expand GPEC, but still subject to reliable gas supply Bidding for transmission projects in reforming states Positioning for further coalfired generation subject to satisfactory progress in Jhajjar Growth opportunities and associated capital demand create a need to review funding options 14

16 Southeast Asia & Taiwan Financials HK$m HoPing earnings EGCO earnings Interest income Development expenditure Operating expenditure Gain on sale of PGS Provision for OneEnergy Total earnings Strong financial performance Higher earnings from HoPing Higher energy charge as a result of a time lag in recovery of higher coal cost in 2008 Record generation on excellent availability EGCO benefited from higher contribution from Kaeng Khoi 2 unit 2 and full year contribution from Quezon and fair value gain on financial derivatives Recognized a gain of HK$153 million for disposal of Power Generation Services Ltd., the O&M company for BLCP which CLP owned 60% interest The HK$131 million provision for OneEnergy represented a provision for EGCO s carrying value in OneEnergy given the PPAs of REGCO and KEGCO are nearing completion 187 (14) (42) (131) (33) (47)

17 Southeast Asia & Taiwan Going Forward Strong medium to long term prospects which present attractive growth opportunities available in regional markets Aim to increase economic stake and management participation in EGCO Vietnam projects substantial and meaningful opportunities, but challenging Leverage CLP s strength in equipment supply, construction and fuel supply management to compete in greenfield developments Progressing the development of the two greenfield coal projects, Vung Ang 2 and Vinh Tan 3 Leading development efforts for solar project in Thailand 16

18 Renewables Climate Vision 2050 RE represents over 11% of CLP Group s total generating portfolio as at Dec 2009 Utilize our RE project development experience and technical knowhow to build a meaningful regional portfolio China: A portfolio of diversified RE types; Focus on disciplined growth of wind portfolio India: Focus on development of new wind projects in states with favourable policies Southeast Asia: RE opportunities in Thailand including solar and wind Australia: Cautious on further major investments in renewables due to current low REC price YTD Financial performance is yet to be substantial Results influenced by seasonal factors and partyear commissioning More than half of the renewable energy portfolio has not yet started operating full year earnings not yet materialised Clean Development Mechanism PhaseI of the Samana Wind Farm (50.4MW) in India was registered with the UNFCCC as a CDM project CLP obtained certification from HK Government for implementation of three whollyowned RE projects in China under CDM (first for a HK company) 17

19 Renewables Going Forward Copenhagen outcome disappointing, national mitigation actions and incentives remain essential Maintain investment and disciplined growth in RE Meaningful earnings to come over time as portfolio builds out Focus predominantly on wind in China and India with selective hydro but cautious move towards projects using proven solar technology 18

20 Group Outlook Good investment opportunities across the entire range of the Group s business Hong Kong: Ongoing capital investment under approved Development Plan up to 2013 will underpin the growth of SoC business Australia Improving operating performance CPRS overhang remains Positioning TRUenergy in consolidating energy market China: Repositioning towards lower carbon generation Growth in wind and hydro Participation in China nuclear expansion Selective harvesting of legacy coalfired assets India: Good growth across the value chain Opportunities in conventional and renewable generation and transmission Southeast Asia & Taiwan Major focus in Thailand and Vietnam Support the growth and development of EGCO 19

21 Appendices

22 Financial Obligations at a Glance 31 Dec Dec 2008 Borrowings of CLPH and CLPP (a) HK$24,429m HK$15,514m Total Debt/Total Capital 26% 20% Net Debt */Total Capital 21% 20% Interest Cover 18x 23x Borrowings of CAPCO and PSDC assuming 100% HK$8,329m HK$7,931m Borrowings of TRUenergy, India & PRC subsidiaries (nonrecourse to CLPH) (b) HK$15,002m HK$11,182m CLP Group (consolidated with TRUenergy, India & PRC subsidiaries) Total Debt = (a)+(b) HK$39,431m HK$26,696m Total Debt/Total Capital 36% 30% Net Debt/Total Capital 31% 29% Interest Cover 8x 9x * As of 31 Dec 09, CLPH had a cash balance of $5 billion i

23 Credit Ratings CLP Holdings CLP Power TRUenergy S&P Moody s S&P Moody s S&P Long term Rating Foreign Currency A A2 A A1 BBB Outlook Stable Stable Stable Stable Stable Local Currency A A2 A A1 BBB Outlook Stable Stable Stable Stable Stable Short term Rating Foreign Currency A2 P1 A1 P1 Local Currency A2 A1 All ratings maintained. Negative outlook on TRUenergy removed upon successful refinancing in Aug 09 ii

24 Hong Kong Electricity Business GWh Change Electricity Sales Residential Commercial Infrastructure & Public Services Manufacturing 8,331 12,488 7,813 1,938 7,890 12,312 7,661 2, % 1.4% 2.0% (12.0%) Total Local Sales 30,570 30, % Export Sales 3,731 3, % Total Sales 34,301 33, % iii

25 Hong Kong Capex Total Capital Expenditure in line with Financial Plan 8,000 HK$M Change CLP Power HK 4,447 4, % 7,000 6,000 5,000 4, ,972 2, ,314 1,341 CAPCO 3,351 3, % Total 7,798 7, % 3,000 2,000 1,000 5,311 5,142 5,296 5,693 5,788 4,849 4,788 4,745 4,379 4,447 0 FY 2005 FY2006 FY2007 FY2008 FY2009 Capex incurred up to Dec 09 of HK$10.0 billion, vs. Development Plan up to Dec 2013 of HK$39.9 billion CAPCO EM s share CAPCO CLP s share CLP Power iv

26 Historical Basic Tariff and Total Tariff First time increase of basic tariff in the last 10 years 2010 Basic Tariff is lower than it was in Cents per unit Basic Tariff Total Tariff * * Total tariff = Basic Tariff + Fuel Clause Rebates v

27 Renewables Portfolio 31 Dec 09 Operational and under construction Equity Capacity Hydro (407 MW) Wind (1,051MW) 22 wind farms in China (463 MW) 3 hydropower projects in China (371MW) 1 hydropower project in Laos (36MW) 4 wind farms in Australia (142 MW) 6 wind farms in India (446 MW) Biomass (14 MW) 1 plant in China (11MW) 3 plants in Thailand (3MW) About 1,472 Equity MW (over 11% of total generating capacity) vi

28 CLP Group portfolio 31 Dec ,817 MW equity and capacity purchase INDIA total 2,421 MW Operational GPEC 655/655 MW (g) Wind Projects 101/101 MW (w) Construction Jhajjar 1,320/1,320 MW (c) Wind Projects 345/345 MW (w) THAILAND total 568 MW Operational EGCO 6,179/532 MW Gasfired Projects3,566/376 MW (g) BLCP 1,434/96 MW (c) Small Power 512/39 MW (g/b) Others 667/21 MW (c,d) Construction EGCO 1,087/36 MW Nam Theun 2 1,087/36 MW (h) AUSTRALIA total 3,188MW Operational Yallourn 1,480/1,480 MW (c) Hallett 180/180 MW (g) Ecogen 966/966* MW (g) Tallawarra 420/420 MW (g) Wind Projects 206/86 (w) Construction Wind Projects 111/56MW (w) India China Thailand Hong Kong Taiwan Australia HONG KONG total 6,908 MW* Operational Castle Peak 4,108/1,643 MW (c) Black Point 2,500/1,000 MW (g) Penny s Bay 300/120 MW (d) CHINA total 6,468 MW Operational Daya Bay 1,968/1,380* MW (n) Pumped Storage 1,200/600* MW (h) Fangchenggang 1,260/882 MW (c) SZPC 3,060/900 MW (c) CSEC Guohua 5,870/1,141 MW (c) & Shenmu Anshun II 600/420 MW (c) Boxing Biomass 14/11 MW (b) Hydro projects 175/156 MW (h) Wind Projects 626/276 MW (w) Construction Suizhong II 2,000/300 MW (c) Jiangbian 330/215 MW (h) Wind Projects 362/187 MW (w) TAIWAN total 264 MW Operational HoPing 1,320/264 MW (c) Station Name Gross MW / CLP Equity MW * Capacity purchase Fuel Source: (c) coalfired (g) gasfired (w) wind (h) hydro (n) nuclear (b) biomass (d) diesel vii

29 Equity MW Attributable to CLP Group 31 Dec 09 by fuel mix Capacity by Energy Type Total Equity MW (a) + (b) % No. of projects Equity MW in operation (a) % No. of projects MW under construction/ financial commitment (b) % No. of projects Coal 8,463 64% 21 6,843 52% 19 1,620 12% 2 Gas 2,667 20% 11 2,667 20% 11 Nuclear 492 4% % 1 Diesel 124 1% % 3 Wind 1,073* 8% % * 5% 14 Hydro 407 3% % % 2 Solar 0 0% Biomass 14 0% % 3 Total 13, % 77 10,759 81% 58 2,481 19% 19 * Included Hailing wind project (22 equity MW): Expect completion of the sale of this project by 1Q 2010 viii