1 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 au ...

Financial Data and Key Metrics Changes - The group's operating earnings before fair value movements increased by 33% year-on-year to over HK$10 billion, with total earnings rebounding to HK$6.7 billion from HK$924 million in 2022 [11][31][15] - Capital investment remained healthy at HK$12.8 billion in 2023, with total dividends per share maintained at HK$3.10, the same as last year [12][32] - Net debt decreased to HK$52.3 billion from HK$54.9 billion a year ago, with a net debt to total capital ratio improving to 31.6% [23][23] Business Line Data and Key Metrics Changes - Hong Kong's operating earnings slightly increased to HK$8.8 billion, driven by investments in electricity infrastructure and decarbonization [40] - EnergyAustralia recovered from heavy losses in 2022 to close to break-even in 2023, with significant improvements in its energy segment [18][38] - In India, Apraava Energy's operating earnings rose by 43% to HK$301 million, reflecting strong momentum in its diversified portfolio [20] Market Data and Key Metrics Changes - Energy output declined by 9%, primarily due to exiting the Fangchenggang coal-fired power station and the deconsolidation of Apraava Energy [33] - The average net tariff in Hong Kong fell by 7.4% compared to the previous year, expected to remain competitive with moderate adjustments [56] - The Australian retail market faced intense competition, leading to a slight reduction in customer accounts [33] Company Strategy and Development Direction - The company aims to decarbonize operations while maintaining a reliable and affordable energy system, with a focus on expanding renewable energy and flexible assets [52][82] - The approved 2024-2028 Development Plan includes HK$52.9 billion in capital expenditure to support Hong Kong's economic infrastructure and decarbonization agenda [54][84] - The company is committed to investing in growth opportunities arising from the shift to clean energy and electrification [82] Management's Comments on Operating Environment and Future Outlook - Management highlighted the strong performance amid global economic uncertainty, emphasizing the robustness of diversified energy businesses in the Asia-Pacific region [27] - The company remains focused on operational improvements and financial performance, particularly in EnergyAustralia, while navigating challenges in the retail market [19][38] - Future cash flow generation is expected to normalize, with a focus on maintaining a solid financial position to support business growth [105] Other Important Information - The company has strengthened its greenhouse gas emission intensity target to align with limiting global warming to 1.5 degrees Celsius [7][92] - The transition to net-zero emissions by 2050 remains a core commitment, with plans to phase out coal before 2040 [92] Q&A Session Summary Question: EnergyAustralia's low sales price contracts - Management explained that contracts are progressively forward-sold over a two-year period, with most low-price contracts rolling off in 2023 [66][99] Question: Sustainability of EnergyAustralia's improvement - Management noted that while wholesale prices have softened, forward price curves indicate higher prices compared to the previous energy crisis [68] Question: Return on Tallawarra B gas power station - The station was commissioned in February 2024, and management expects acceptable returns, subject to market conditions [69] Question: Coal supply situation at Mount Piper - Management confirmed stabilization efforts at Springvale and a multi-mine contract to ensure coal supply [71][117] Question: Growth CapEx guidance - Management indicated that the new Development Plan will guide CapEx, with expectations of HK$10 billion to HK$11 billion annually [136] Question: Dividend outlook for 2024 - Management stated that dividends are subject to Board approval, aiming for stability and growth in line with business performance [135]

Financial Performance - The total profit for 2023 was HKD 6,655 million, a strong rebound from HKD 924 million in 2022, despite a non-cash goodwill impairment of HKD 5,868 million[4]. - The operating profit for 2023 increased by 33.2% to HKD 10,127 million, benefiting from reliable contributions from core businesses in Hong Kong and mainland China, as well as significant improvements in overseas operations[2]. - The comprehensive revenue decreased by 13.4% to HKD 87,169 million, impacted by a 5.1% reduction due to the termination of accounting consolidation of Apraava Energy and weak wholesale spot prices in Australia[2]. - The group reported a net profit of HKD 7,670 million for the year, down from HKD 9,511 million in 2022, representing a decline of 19.4%[46]. - The group recorded a capital expenditure impairment provision of HKD 15,402 million for the year[46]. - The company reported a total tax expense of HKD 2,973 million for 2023, up from HKD 103 million in 2022[51]. - The company reported a basic and diluted earnings per share of HKD 2.63 for 2023, compared to HKD 0.37 in 2022[53]. Dividends - The total dividend for 2023 remained unchanged at HKD 3.10 per share, consistent with 2022, including a fourth interim dividend of HKD 1.21 per share[4]. - The fourth interim dividend for 2023 was declared at HKD 1.21 per share, consistent with the previous year[70]. Operational Developments - The company plans to construct a 300 MW wind farm in Karnataka and has commenced partial operations at the Sidhpur wind project in Gujarat, showcasing its commitment to zero-carbon projects[4]. - EnergyAustralia's operational performance significantly improved in 2023 after the energy crisis in 2022, with the highest number of customers receiving support for cost-of-living pressures[5]. - The company successfully launched Hong Kong's first offshore liquefied natural gas receiving station in September 2023, enhancing energy supply stability[4]. - The company is focused on carbon reduction as a primary objective, with a strategy aligned with the "Climate Vision 2050" to achieve net-zero greenhouse gas emissions by mid-century[5]. - The company is constructing an advanced combined cycle gas turbine unit D2 at the Lung Kwu Tan Power Station to phase out coal-fired generation[11]. - The company plans to explore the feasibility of natural gas and hydrogen co-firing at the Lung Kwu Tan Power Station as part of its clean energy initiatives[12]. - The company has connected over 2.23 million smart meters for customers since the start of its meter replacement program in 2018, with completion expected by 2025[13]. - The company is actively involved in the development of electric vehicle infrastructure and has formed an alliance with 14 like-minded organizations to promote electric commercial vehicle adoption[13]. Renewable Energy Initiatives - The company has accelerated the expansion of its renewable energy portfolio to meet growing energy demands, aligning with national carbon peak and neutrality goals[15]. - The company has secured construction quotas for multiple renewable energy projects, totaling 1,190 megawatts across Guangxi and Shandong provinces[16]. - Apraava Energy's renewable energy assets saw a 23% increase in generation due to improved wind resources and partial commissioning of the Sidhpur project[24]. - The company is actively expanding its renewable energy portfolio to meet the growing demand for corporate power purchase agreements and green power certificates[17]. - EnergyAustralia aims to increase its renewable energy projects to a maximum of 3,000 MW by 2030, with an investment exceeding AUD 5 billion planned[21]. Market and Customer Insights - In 2023, the local electricity sales volume in Hong Kong increased by 1.6% to 35,392 million kWh, driven by economic recovery and record high summer temperatures[9]. - The electricity sales volume for residential customers decreased by 1.8% to 9,929 million kWh, while commercial and public service sectors saw increases of 3.3% and 3.4% respectively[10]. - EnergyAustralia's customer base decreased by approximately 20,700 (or 0.8%) in 2023, although the customer attrition rate remains better than the market average[21]. Leadership and Governance - The leadership team has undergone changes, with the appointment of Mr. Jiang Dongqiang as CEO and Mr. Luo Jiajin as President, both bringing extensive experience to the company[6]. - The board of directors of CLP Holdings includes Sir Michael Kadoorie, Mr. Paul Poon, Mr. Li Yuen, Mr. Fok Ying Tung, and Ms. Yuen So Siu Mei as non-executive directors[73]. - Independent non-executive directors consist of Sir Adrian Montague, Mr. Nicholas Allen, Ms. Mu Xiu Xia, Ms. Chan Siu Mei, Ms. Wu Yan An, Mr. Gu Chun Yuan, Mr. Chan Zhi Si, and Ms. Wang Xiao Jun[73]. - Executive directors are Mr. Jiang Dongqiang and Mr. Lan Lingzhi[73]. Financial Position and Assets - Non-current assets totaled HKD 202,121 million in 2023, slightly up from HKD 201,565 million in 2022[39]. - Current assets decreased to HKD 26,930 million in 2023 from HKD 34,461 million in 2022[39]. - The group’s total assets as of December 31, 2023, amounted to HKD 229,051 million, while total liabilities were HKD 116,669 million[46]. - The company’s cash and cash equivalents decreased significantly, with other receivables dropping from HKD 6,499 million in 2022 to HKD 1,700 million in 2023[56]. Sustainability and Environmental Goals - The company is committed to exploring growth opportunities in renewable energy, transmission, and AMI projects, supported by major stakeholders[25]. - Apraava Energy's greenhouse gas reduction targets have been certified by the Science Based Targets initiative (SBTi), highlighting its leadership in decarbonization[24]. - The company reported a one-time income from a mid-term compensation related to a dispute, impacting comparable items[25]. Future Outlook - The development plan for 2024 to 2028 has been approved, with a capital expenditure of approximately HKD 52.9 billion to meet growing electricity demand[11]. - The company plans to continue expanding its renewable energy projects and improve operational efficiency in its various segments[32]. - The company expects to maintain a high level of liquidity in 2024 due to dividend income and cash inflows from subsidiaries, joint ventures, and associates[64].

Financial Performance - Total profit for the first half of 2023 was HKD 5,060 million, reversing a loss of HKD 4,855 million in the same period last year[3]. - Revenue for the six months ended June 30, 2023, was HKD 43,302 million, a decrease of HKD 4,292 million or 9.0% compared to HKD 47,594 million in the same period of 2022[10]. - EBITDAF for the same period was HKD 9,449 million, down HKD 227 million or 2.3% from HKD 9,676 million in 2022[10]. - The share of profit from joint ventures and associates after tax was HKD 1,931 million, an increase of HKD 763 million or 65.3% compared to HKD 1,168 million in 2022[10]. - The profit from the Hong Kong segment increased slightly by 2.3% to HKD 8,644 million, supported by ongoing investments in infrastructure projects[14]. - The company reported a net profit of HKD 5,060 million, compared to a loss of HKD 4,855 million in the same period of 2022, marking a significant turnaround[95]. Revenue Breakdown - Revenue from Hong Kong electricity business was HKD 24,252 million, while revenue from energy business outside Hong Kong was HKD 18,161 million, resulting in a total revenue of HKD 43,302 million, a decrease of 9.0% compared to the previous year[4]. - Revenue from Hong Kong increased by HKD 2,248 million or 9.8% to HKD 25,126 million, primarily due to higher fuel adjustment charges and a slight increase in electricity sales[12][13]. - Revenue from Australia decreased by HKD 4,104 million or 19.3% to HKD 17,199 million, impacted by a 6% drop in average AUD exchange rate and lower wholesale market prices[12][13]. - Revenue from electricity sales outside Hong Kong decreased to HKD 15,259 million, down 25.0% from HKD 20,368 million in the previous year[99]. Dividends and Shareholder Returns - The company declared an interim dividend of HKD 0.63 per share, consistent with the previous year[6]. - The company paid dividends totaling HKD 4,649 million to shareholders during the first half of 2023, consistent with the previous year's dividend payments[96]. Investments and Projects - The company is actively expanding its renewable energy investments in mainland China, with new projects including a 150 MW wind farm in Guangxi and an 80 MW solar photovoltaic power station in Jiangsu expected to commence operations soon[7]. - In India, the joint venture Apraava Energy is planning two wind farms with a total capacity exceeding 550 MW and has secured contracts for approximately 3 million smart meters[7]. - The company invested HKD 4.6 billion in major decarbonization infrastructure projects in Hong Kong, including offshore LNG receiving stations[19]. - The company is investing in new infrastructure projects, including a floating storage regasification unit for liquefied natural gas, which has commenced operations and will support Hong Kong's energy transition[32]. Financial Position and Assets - Total assets at the end of the reporting period were HKD 234,934 million, with total borrowings of HKD 61,228 million and shareholders' equity of HKD 105,534 million[4]. - The net debt to total capital ratio was 33.6%, an increase from 32.0% at the end of the previous year[4]. - The company's fixed assets, right-of-use assets, and investment properties totaled HKD 156,572 million as of June 30, 2023, a slight increase of 0.5%[18]. - The total liabilities of the company amounted to HKD 119,304 million, an increase from HKD 113,000 million in the previous year[100]. Operational Performance - The group's operating profit before fair value changes increased by 19.3% to HKD 4,955 million, driven by strong performance in Hong Kong and increased electricity generation from two nuclear power stations in mainland China[3]. - Operating cash flow improved significantly to HKD 7.5 billion for the six months ended June 30, 2023, compared to a cash outflow of HKD 1.7 billion in the same period of 2022[23]. - The group achieved a significant recovery in operating cash flow in Australia, returning to an inflow of HKD 400 million compared to an outflow of HKD 6.9 billion in 2022[23]. Debt and Financing - The net debt as of June 30, 2023, was HKD 58,861 million, reflecting an increase of 7.2% from HKD 54,931 million at the end of 2022[18]. - The group maintained a strong liquidity position with HKD 31.2 billion in undrawn bank loan facilities and HKD 2.4 billion in bank balances as of June 30, 2023[24]. - EnergyAustralia secured a three-year loan facility of AUD 630 million (approximately HKD 3.3 billion) from nine banks to refinance existing loans, ensuring ample liquidity for operations[25]. Regulatory and Governance - The company continues to collaborate closely with the Hong Kong government on the regulatory framework for the 2024-2028 development plan, which is crucial for long-term planning and investment[6]. - The company fully complied with the corporate governance code as of June 30, 2023, with only one deviation regarding the publication of quarterly results[65]. - The board of directors saw changes, including the appointment of Ms. Ruan Su Shaomei as a non-executive director and Mr. Bao Lixian as vice chairman on January 1, 2023[66]. Sustainability and Environmental Initiatives - The company is committed to ensuring stable and sustainable electricity services to support Hong Kong's economic recovery and development[8]. - The company is committed to supporting the Hong Kong government's long-term economic and infrastructure development while promoting energy transition towards a lower carbon future[37]. - The company is collaborating with public transport operators to support the electrification of public transport, including the provision of charging specifications for over 50 new double-decker electric buses[36]. - The company has installed rainwater harvesting systems and automatic drip irrigation systems at five new substations in Hong Kong to reduce water usage[50]. Employee and Community Engagement - As of June 30, 2023, the company employed 7,879 full-time and part-time employees, a decrease from 8,183 in the same period of 2022[46]. - The company engaged in community service projects, benefiting approximately 28,000 local residents through healthcare initiatives in India[56]. - The company awarded scholarships of HKD 10,000 each to students overcoming adversity through its "New Generation • New Power Award Scheme"[59]. Future Outlook - The company plans to expand its operations in Australia and India, focusing on increasing market share in these regions[100]. - The company plans to continue its market expansion and product development strategies to enhance future growth prospects[103].

CLP Holdings Limited (OTCPK:CLPHY) Q2 2023 Earnings Conference Call August 7, 2023 4:00 AM ET Company Participants Marissa Wong - Director, Investor Relations Richard Lancaster - Chief Executive Officer Nicolas Tissot - Chief Financial Officer Conference Call Participants Evan Li - HSBC Pierre Lau - Citibank Ken Liu - UBS Robert Koh - Morgan Stanley Marissa Wong Good afternoon, everybody, and welcome to CLP's 2023 Interim Results Briefing. My name is Marissa Wong, Director of Investor Relations, and I'm joi ...

Financial Performance - For the first half of 2023, CLP Holdings reported an operating profit of HKD 4,955 million, a 19.3% increase compared to the previous year, driven by strong performance in Hong Kong and mainland China [3]. - The total profit for the group turned around from a loss of HKD 4,855 million in the same period last year to a profit of HKD 5,060 million this year, after accounting for unrealized fair value changes [3]. - Consolidated revenue decreased by 9.0% to HKD 43,302 million, impacted by a 5.0% reduction due to the termination of the merger with Apraava Energy [3]. - The group's operating profit before fair value changes increased by 19.3% to HKD 4,955 million in the first half of 2023, driven by strong performance in Hong Kong and increased electricity generation from two nuclear power stations in mainland China [9]. - Total profit for the first six months turned around to HKD 5,060 million from a loss of HKD 4,855 million in the same period last year, as unusual fair value changes from 2022 (HKD 8 billion loss) did not recur [9]. - Revenue for the first half of 2023 was HKD 43,302 million, a decrease of 9.6% compared to HKD 47,594 million in 2022 [41]. - Operating profit for the first half of 2023 was HKD 5,225 million, a significant recovery from an operating loss of HKD 8,124 million in the same period of 2022 [41]. - Net profit for the first half of 2023 was HKD 5,548 million, compared to a net loss of HKD 4,954 million in 2022 [42]. - Basic and diluted earnings per share for the first half of 2023 were HKD 2.00, recovering from a loss of HKD 1.92 per share in 2022 [41]. - Total comprehensive income for the first half of 2023 was HKD 5,144 million, compared to a total comprehensive loss of HKD 1,468 million in 2022 [42]. Dividends and Shareholder Returns - The board declared an interim dividend of HKD 0.63 per share, consistent with the previous year [5]. - The company announced a second interim dividend of HKD 0.63 per share for 2023, consistent with the previous year, to be distributed on September 15, 2023, based on 2,526,450,570 shares issued [71]. Operational Developments - In mainland China, the company is expanding its renewable energy investments, with a 150 MW wind farm in Guangxi starting construction and an 80 MW solar photovoltaic plant expected to commence operations soon [6]. - The company is committed to investing in a new offshore liquefied natural gas receiving station in Hong Kong to support the transition to a low-carbon future [5]. - The company plans to enhance its operational reliability in Australia by addressing issues at its major power plants, which is expected to improve overall performance in the second half of the year [5]. - The construction of the 600 MW combined cycle gas turbine unit D2 at the Lung Kwu Tan Power Station is progressing and is expected to be fully operational next year, complementing the 550 MW D1 unit that was commissioned in 2020 [15]. - The second new gas turbine unit D2 at the Lamma Power Station is expected to be operational next year, utilizing selective catalytic reduction technology to reduce nitrogen oxide emissions [35]. - The new offshore liquefied natural gas receiving station commenced operations in summer 2023, enhancing the stability of gas supply for Hong Kong [36]. - The second combined cycle gas turbine unit at Lamma Power Station is anticipated to be fully operational next year, increasing the share of natural gas in the fuel mix and further reducing carbon emissions [36]. Renewable Energy Initiatives - The company continues to invest in large infrastructure projects to support carbon reduction efforts in Hong Kong, including the operation of an offshore LNG receiving station [14]. - As of June 30, the approved renewable energy generation capacity under the "Feed-in Tariff" scheme has increased to 356 MW, equivalent to the annual electricity consumption of 85,000 residential customers [16]. - The company is collaborating with public transport operators to promote electrification, including providing technical support for the construction of two multi-storey electric bus parking facilities with a total of 850 parking spaces [17]. - The company has received over 20 orders for battery energy storage systems to replace polluting diesel generators at construction sites, aiming to reduce carbon emissions [17]. - The company continues to expand its renewable energy portfolio, with new projects including a 50 MW wind farm in Yunnan and an 80 MW solar power station in Jiangsu expected to be operational in the second half of 2023 [36]. - China Power is expanding its renewable energy portfolio, with the construction of a 150 MW wind farm in Guangxi and an 80 MW solar project in Jiangsu set to commence operations later this year [22]. Customer and Market Insights - Electricity sales volume in Hong Kong rose by 3.7% year-on-year to 16,319 million kWh, with commercial customer sales increasing by 6.6% and infrastructure and public service customer sales up by 6.5% [12]. - The residential electricity demand decreased by 2.7%, reflecting changes in consumer behavior post-COVID-19 [13]. - EnergyAustralia's customer base decreased by approximately 23,000, a decline of about 0.9%, although the churn rate remains below the market average [24]. - Revenue from electricity sales in Hong Kong increased to HKD 23,637 million, up 8.1% from HKD 21,876 million in the previous year [46]. - Revenue from electricity sales outside Hong Kong decreased significantly to HKD 15,259 million, down 25% from HKD 20,368 million in 2022 [46]. Safety and Governance - The company reported a decrease in total recordable injury rate and lost time injury rate compared to the same period last year, reflecting improved workplace safety measures [33]. - The lost time injury rate for the first half of 2023 was 0.03, a decrease from 0.05 in the same period of 2022, while the total recordable injury rate improved to 0.10 from 0.19 [34]. - The company has fully complied with its corporate governance code as of June 30, 2023, with only one deviation regarding the publication of quarterly results, opting instead for quarterly briefings [67]. - The internal audit department submitted eight audit reports and two special review reports during the first half of 2023, with one report indicating less than ideal results, but no significant impact on financial statements [69]. Leadership and Management - The appointment of a new CEO, Jiang Dongqiang, is part of the company's commitment to talent development and succession planning [7]. - The new CEO, Mr. Jiang Dongqiang, will take over on October 1, 2023, with Mr. Lan Lingzhi transitioning to an advisory role [65]. - The board of directors was updated with the election of new members, receiving strong support from shareholders, while one member retired due to retirement [67]. Future Outlook - The company plans to focus on market expansion in India and Australia, where it has seen promising growth trends [47]. - Future guidance indicates a positive outlook for revenue growth, particularly in the Asia-Pacific region, driven by strategic initiatives and market demand [47]. - The company plans to continue its market expansion and product development strategies, focusing on enhancing operational efficiency and customer service [57].

Economic Challenges - In 2022, the company faced significant challenges due to the COVID-19 pandemic and the energy crisis caused by the Ukraine war, impacting commodity prices[2]. - The operating profit decreased by HKD 2,291 million to HKD 7,560 million, primarily due to operational challenges in the Australian power generation segment[15]. - The net cash inflow from operating activities decreased by 28.5% to HKD 12,734 million[16]. - The total assets as of December 31 were HKD 236,026 million, a decrease of 1.6% from the previous year[16]. - The company reported a total profit of HKD 924 million, significantly down from the previous year due to unrealized fair value losses[15]. - EnergyAustralia faced operational issues in 2022, leading to significant financial impacts, and plans to initiate major maintenance at Yallourn Power Station in 2023-2024[39]. - The company recorded a loss of HKD 185 million from the sale of its 70% stake in the Fangchenggang Power Plant, one of the most efficient coal power projects in mainland China[122]. Financial Performance - Total revenue increased by 19.9% to HKD 100,662 million, with Hong Kong power business revenue rising by 14.2% to HKD 50,600 million and revenue from outside Hong Kong increasing by 25.5% to HKD 48,873 million[16]. - Total profit reached HKD 924 million, with operating profit at HKD 4,623 million, and total dividends of HKD 7,832 million[22]. - The company maintained its dividend at the same level as 2021, reflecting a commitment to shareholder returns[15]. - The company’s credit ratings were confirmed as stable by S&P and Moody's, with ratings of A and A2 for the company and its subsidiaries[94]. - The group maintained a strong financial position with a debt ratio of 52% for fixed-rate debt excluding perpetual capital securities, and 55% including them[183]. - The group achieved a refinancing of non-recourse project loans totaling RMB 1.1 billion (HKD 1.2 billion) for four renewable energy projects, enhancing their economic value[183]. Sustainability and ESG Commitment - The company reported a commitment to ESG performance, aligning with regulatory frameworks such as the Hong Kong Stock Exchange's Listing Rules and GRI standards[2]. - The company emphasized the importance of sustainable development, releasing a separate Climate-Related Disclosure Report detailing its climate actions and commitments[2]. - The company aims to enhance its sustainable business portfolio and enhance resilience against climate change[19]. - The company is committed to digital transformation and decarbonization as key trends driving future opportunities in the energy sector[9]. - The dual materiality concept is adopted to assess both financial impacts and significant issues affecting humanity, the environment, and the economy[54]. - The company has optimized its dual materiality assessment process to better identify and evaluate ESG risks and opportunities[55]. - The total greenhouse gas emissions (Scope 1, 2, and 3) of the company decreased by 7.4% year-on-year to 60,223 kilotons of CO2 equivalent (kt CO2e) in 2022[171]. - The company plans to fully phase out coal-fired power generation by 2040 as part of its Climate Vision 2050 initiative[173]. Renewable Energy Initiatives - The company is focused on developing clean energy and customer-centric energy solutions in India through its Apraava Energy brand[13]. - Renewable energy generation capacity was 3,611 MW, slightly down from 3,624 MW in 2021[22]. - The renewable energy projects and nuclear power investments in mainland China showed strong performance, with three projects totaling 280 MW under construction[38]. - The company plans to focus on developing new renewable energy projects that are cost-competitive and contribute to local energy supply security[46]. - The total installed capacity of renewable energy projects reached 1,010.3 MW, with a generation output of 2,146 million kWh in 2022, up from 1,893 million kWh in 2021[124]. - The company is exploring offshore wind farm construction in Hong Kong and enhancing cross-border clean energy transmission systems[178]. Operational Improvements and Technology Investments - The company is investing in technology to improve operational performance and customer experience[21]. - The company aims to enhance its technology capabilities and develop an integrated energy service business model[34]. - The company is collaborating with universities and research institutions to conduct in-depth energy analysis for high-energy-consuming sectors like hospitals and data centers[200]. - The company is developing two new battery storage projects in New South Wales in collaboration with Edify Energy, aiming to support the transition to clean energy[47]. - The company signed a memorandum of understanding with the Shenzhen Longhua District People's Government for energy digitalization[24]. Customer Engagement and Service Reliability - The company aims to enhance its service reliability, providing power to over 2.75 million customers in Hong Kong with a reliability rate exceeding 99.997%[10]. - The reliability of power supply in Hong Kong was 99.997%, a decrease from 99.999% in 2021[23]. - The company connected over 1.78 million smart meters for customers in Hong Kong since 2018[27]. - Over 60% of common customer service requests were processed through electronic channels, a significant increase from 7% in 2018, with a target to raise this figure to over 80% in the coming years[107]. - The company provided a special rebate of HKD 715 million to alleviate customer burdens in 2022[97]. Strategic Partnerships and Collaborations - The company is collaborating with DBS Bank to provide energy management solutions to help businesses achieve sustainability goals and access sustainable financing[109]. - The company has received over 500 government funding applications for electric vehicle charging infrastructure, completing about 96% of preliminary assessments by the end of 2022[110]. - CLP Power has established a joint venture with Qingdao Tairui Electric Co., Ltd. to invest in electric vehicle charging infrastructure in the Greater Bay Area, focusing on Shenzhen, Dongguan, and Zhuhai[126]. - The company is exploring pilot projects with Israeli firm Hydro X, focusing on innovative hydrogen storage technology to reduce carbon emissions in the power sector[180]. Future Outlook and Growth Strategies - The company plans to expand its operations in Hong Kong, with a capital expenditure and investment growth strategy for 2024-2028[4]. - The company aims to strategically invest in growth opportunities while focusing on carbon reduction and sustainable energy solutions in Hong Kong and mainland China[42]. - The company plans to continue its focus on capital investments and market expansion strategies in the coming years[76]. - The company is prepared to invest in and implement more integrated energy service projects to shape the future of new energy in mainland China[127].

CLP Holdings 2022 Annual Results Presentation 27 February 2023 Energy for Brighter Tomorrows Disclaimer 1 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 ...

Financial Data and Key Metrics Changes - CLP Holdings reported a steady growth in earnings in core markets, with earnings of HKD10.9 billion, an 8% increase from 2021. However, the overall performance was impacted by EnergyAustralia's operating loss and unrealized accounting fair value movements, leading to a 23% reduction in operating earnings to HKD7.6 billion before fair value loss adjustments [11][12][15] - After factoring in the unrealized fair value loss, operating earnings were HKD4.6 billion, a 51% decrease compared to 2021 [12][18] - The Board approved a fourth interim dividend of HKD1.21 per share, maintaining the total dividend for 2022 at HKD3.10 per share, yielding 5.4% based on year-end closing share price [12][44] Business Line Data and Key Metrics Changes - In Hong Kong, the ACOI slightly increased due to ongoing investments in electricity infrastructure, with capital expenditure of HKD12.6 billion, a 12% increase from 2021 [22][23] - Mainland China achieved an ACOI of HKD2.8 billion, a 38% increase from the low point of 2021, driven by strong performance in nuclear and renewable energy [27][28] - EnergyAustralia faced significant challenges, reporting an ACOI of minus HKD3.1 billion due to high wholesale prices and low utilization rates of coal plants [31][32] Market Data and Key Metrics Changes - The energy market in Australia experienced extreme volatility, with high wholesale prices impacting profitability and leading to a suspension of the national electricity market [31][36] - Forward prices in Australia have shown signs of recovery, with expectations of improved margins and earnings in 2023 and 2024 [36][37] Company Strategy and Development Direction - The company aims to invest in a diverse mix of carbon-free assets, decarbonize operations, and enhance capabilities to support growth in a transitioning energy landscape [49][50] - In Hong Kong, the company is prepared to support government plans for economic growth and infrastructure development, while ensuring reliable and cost-effective power delivery [51][52] - In Mainland China, the focus is on expanding renewable energy investments and capturing growth opportunities in the Greater Bay Area [56][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the Russia-Ukraine conflict, inflation, and rising interest rates, emphasizing the need for reliable, affordable, and cleaner energy [4][5][6] - The company remains positive about long-term prospects in Mainland China, driven by government commitments to carbon neutrality and increasing demand for green products [30][58] Other Important Information - Free cash flow decreased to HKD11.1 billion from HKD16.8 billion in 2021, primarily due to lower funds from operations in Australia and unfavorable working capital movements [41][42] - Net debt increased to HKD54.9 billion, with a net debt to total capital ratio of 32%, influenced by temporary cash deposits in Australia and accelerated capital expenditures [45][46] Q&A Session Summary Question: Anticipated development plan in Hong Kong - Management is in discussions with the government regarding the 2024-2028 development plan, which will include projects related to the Northern Metropolis and decarbonization efforts [65] Question: EnergyAustralia's negative free cash flow outlook - Management indicated that improvements in cash flow are expected as margin deposits roll off and operational reliability is enhanced [72][73] Question: Plans for coal-fired plants in China - Management confirmed plans to progressively close legacy coal plants by 2030, replacing them with investments in renewable energy and nuclear power [82] Question: Dividend policy and future hikes - The Board aims for a flat or growing dividend, with future increases dependent on the recovery pace in Australia [88] Question: Coal supply contract for Mount Piper - Management has negotiated alternative coal supply arrangements to improve reliability and utilization at Mount Piper [86]

Financial Performance - The group's operating profit decreased by 25.4% to HKD 4,111 million, primarily due to a decline in profitability from the Australian power generation portfolio and high coal prices[4]. - The total revenue for the first six months was HKD 47,594 million, an increase of 16.9% compared to HKD 40,729 million in the same period last year[4]. - The total loss for the period amounted to HKD 4,855 million, compared to a profit of HKD 4,615 million in the same period last year[4]. - The company reported a loss attributable to shareholders of HKD 4,855 million, compared to a profit of HKD 4,615 million in the same period last year[23]. - The operating profit before fair value adjustments was HKD 4,111 million, down HKD 1,397 million or 25.4% from HKD 5,508 million in the previous year[23]. - The consolidated EBITDAF for 2022 was HKD 10,844 million, a decrease of HKD 2,109 million (19.4%) compared to 2021[26]. - The company reported a significant increase in revenue from the Hong Kong segment, totaling HKD 22,878 million[131]. - The company reported a net loss of HKD 4,855 million for the first half of 2022, compared to a profit of HKD 4,615 million in the same period of 2021[117]. Dividends and Shareholder Returns - The company maintained an interim dividend of HKD 0.63 per share, consistent with the previous year, reflecting confidence in its business strategy[8]. - The interim dividend declared for the first half of 2022 was HKD 0.63 per share, totaling HKD 1,592 million, consistent with the dividend declared in 2021[137]. Operational Developments - The company is advancing the construction of a new 600 MW combined cycle gas turbine unit at the Lung Kwu Tan Power Station, expected to be operational in 2023[9]. - The company is conducting geotechnical surveys for a proposed offshore wind farm project in Hong Kong, which could become its first offshore wind farm[9]. - The company is deepening its partnership with Edify Energy to build two new battery storage projects in New South Wales, expected to be completed by the end of 2023, promoting renewable energy integration in Australia[10]. - The company is committed to exploring sustainable business opportunities through strategic partnerships while maintaining rigorous capital discipline[10]. Market and Regional Performance - In mainland China, the profit of several thermal power projects was impacted by rising coal prices, while nuclear power operations remained stable with increased generation from Daya Bay and Yangjiang nuclear power stations[10]. - Revenue from Australia increased by HKD 4,126 million or 24.0% to HKD 21,303 million, despite a negative impact of approximately HKD 1,100 million from the average depreciation of the Australian dollar[24]. - The company noted an increase in electricity generation from the Yangjiang Nuclear Power Station and stable operations at the Daya Bay Nuclear Power Station[26]. - The company is focusing on developing a business model that combines energy infrastructure and services to meet the growing demand for smarter and cleaner energy solutions in the Greater Bay Area[55]. Financial Position and Liquidity - The total assets at the end of the reporting period were HKD 260,522 million, with total borrowings of HKD 62,584 million[4]. - The net debt as of June 30, 2022, was HKD 58,924 million, an increase of 18.0% from HKD 49,955 million in the previous year[29]. - The group maintained a strong liquidity position with HKD 19.5 billion in undrawn bank loan facilities and HKD 3.7 billion in bank balances as of June 30[36]. - The group has arranged multiple new loan facilities to maintain a strong financial position amid liquidity challenges[121]. Challenges and Risks - The group reported a negative operating cash flow of HKD 3.4 billion for the first half of 2022, compared to HKD 6.1 billion in the same period of 2021[35]. - EnergyAustralia faced significant operational challenges due to unprecedented conditions in the Australian energy market, with electricity prices increasing over threefold amid tight supply and high fuel costs[57]. - The company experienced a significant decrease in contributions from its energy business in Australia due to falling realized prices[27]. Sustainability and Community Engagement - The company aims to achieve net-zero greenhouse gas emissions across its entire value chain by the end of 2050, with new science-based targets set for 2030[75]. - The company is committed to improving community welfare, supporting education and youth development, and enhancing environmental protection through stakeholder engagement[78]. - CLP Holdings donated HKD 2 million to support community pandemic efforts, providing personal protective equipment for volunteers[79]. Governance and Compliance - The company’s governance practices exceed the principles outlined in the corporate governance code, with full compliance reported as of June 30, 2022[89]. - The company confirmed compliance with the "Standard Code" and its own "Securities Trading Code" throughout the period from January 1 to June 30, 2022[101]. - The company’s board composition remained unchanged as of June 30, 2022, with a high approval rate of over 99.61% for the reappointment of the independent auditor[90].