CLP Holdings 2016 Annual Results Analyst Briefing. 27 February 2017

Transcription

1 CLP Holdings 2016 Annual Results Analyst Briefing 27 February 2017

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 accurately predict or control. We cannot be certain that the comments will be accurate or complete and so they should not be relied on. From time to time as circumstances change we may update our website at and will update the Hong Kong Stock Exchange when relevant to comply with our continuous disclosure obligations. This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities in the United States must be made by means of a prospectus that contains detailed information about the issuer and its management, as well as financial statements. Maps included in this presentation are indicative only. They are provided for the purpose of showing the approximate location of CLP Group s assets, and do not purport to show the official political borders between different countries. 2

3 Agenda Performance Overview Group Financial Performance and Operating Information Performance by Business Units Strategy and Outlook Appendices 3

4 Focus Delivery Growth Dependable performance delivered across the diversified portfolio Focus on customers, reliable operations and energy transition Launch of new products and innovation initiatives Continued growth in low carbon investment Approval of CCGT in Hong Kong 322 MW renewable projects committed or under construction Acquisition of 17% in Yangjiang Nuclear Robust cash flow and credit ratings with positive outlook 4

5 Further earnings growth, total dividends increased to HK$2.80 per share Earnings and Dividends * Change Operating earnings (HK$M) 12,334 11,519 7% Total earnings (HK$M) 12,711 15,656 19% Operating earnings per share (HK$) % Total earnings per share (HK$) % Dividends per share (HK$) First to third interim dividends % Fourth interim dividend % Total interim dividends % * Comparative figures have been restated for the adoption of HKFRS 9 on hedge accounting 5

6 Strong operating performance Operating Information Change Safety (Total Recordable Injury Rate) Electricity sent out (TWh) (1) Generation Capacity (GW) (2) Total in Operation Non-Carbon Emitting (3) Committed / Under Construction Customer Number (Thousand) Hong Kong Australia 2,524 2,625 2,485 2, Hong Kong local electricity sales (TWh) % Reliability in Hong Kong (minutes lost pa) (4) % (1) Equity basis and capacity purchase arrangements. Also includes long-term power contracts from facilities in which we hold an equity interest (2) Equity basis and capacity purchase arrangements data revised to reflect definition (3) Non-carbon emitting includes wind, hydro, solar and nuclear (4) Unplanned customer minutes lost - average of the past 36 months 6

7 Group Financial Performance Sihong Solar Power Station, Jiangsu, China

8 Operating earnings up 7% HK$M * Change Revenue 79,434 80,700 2% Operating Earnings Hong Kong and related activities 8,905 8,406 6% Local electricity business 8,640 8,260 Sales to Guangdong and others 118 (5) PSDC and Hong Kong Branch Line Overseas 4,113 3,739 10% Mainland China 1,521 1,977 India Southeast Asia and Taiwan Australia 1, Others, net (684) (626) Operating Earnings 12,334 11,519 7% Items affecting comparability # 377 4,137 Total Earnings 12,711 15,656 19% * Comparative figures have been restated for the adoption of HKFRS 9 on hedge accounting # Items affecting comparability in 2016 primarily include sales of an asset and impairment of Fangchenggang mainly represents the sale of Iona, the close out of debts in Australia with proceeds from Iona sales, and impairments of assets in Australia and Mainland China 8

9 Adjusted Current Operating Income (ACOI) HK$M * Change Operating Earnings (Attributable to CLP) Exclude: Fair value adjustments 12,334 11,519 7% 341 (237) Net finance costs # (2,371) (2,957) Income tax expense (2,914) (2,370) Non-controlling interests (850) (846) ACOI 18,128 17,929 1% * Comparative figures have been restated for the adoption of HKFRS 9 on hedge accounting # Included the distribution to perpetual capital securities holders Adjusted Current Operating Income or ACOI ACOI equals EBIT excluding items affecting comparability and fair value adjustments, but includes Group s share in net earnings from joint ventures and associates Fair value adjustments Predominantly energy derivative contracts in EnergyAustralia reflecting increase in wholesale prices Net finance costs # Lower finance costs following significant amount of debt repayments mainly by CLP Power HK after CAPCO acquisition and EnergyAustralia after Iona sale Lower average blended interest rate of the Group Income tax expense Increase in line with increase in operating profits Non-controlling interests CSG s 30% share of CAPCO 9

10 Adjusted Current Operating Income (ACOI) HK$M Hong Kong and related activities 12,892 12,370 Reliable performance and steady growth in infrastructure investment Mainland China 1,863 2,310 Decline in contributions from coal assets (tariff, coal price & volume) India 1,383 1,429 Stable operations and further growth in renewables Southeast Asia and Taiwan Steady performance with lower margins from Ho-Ping Australia 2,436 2,153 Further improvement in operational performance Unallocated Group expenses (717) (643) Exchange loss in RMB deposits and higher corporate costs Total 18,128 17,929 1% increase (or 4% normalised for scope and FX) HK$M 22,000 18,000 14,000 17,929 17,356 (334) (239) 543 (350) 33 (34) 627 (47) 18,128 +4% Increase on like-for-like basis after adjusting for scope and FX Hong Kong Mainland China 10,000 India 6,000 SEA & Taiwan Australia 2,000 Unallocated Group Expenses -2, Scope FX Normalised 2015 Hong Kong Mainland China India SEA & Taiwan Australia Unallocated Group Expenses

11 Performance by Business Units

12 Reliable performance and new projects in Hong Kong HK$M 16,000 Hong Kong ACOI 14,000 12,370 12, ,892 +4% 12,000 10,000 (21) 8,000 6,000 4,000 2, FX Normalised 2015 Return on higher fixed assets Others 2016 Operational Performance Local sales 33.2 TWh, up 0.6% Total sales 34.4 TWh, up 0.6% Supply reliability > % (1) 2017 Tariff maintained at 2016 level with a special rebate Higher earnings reflecting Organic growth in fixed assets T&D + Retail capex HK$5.0 bn Generation capex HK$2.3 bn Others include disposal of assets and increased contribution from Hong Kong Branch Line Finalise SOC post-2018 Construction of 550MW CCGT EIA for offshore LNG terminal Engage with suppliers for long term gas requirements Progress landfill gas generation project (1) Supply reliability based on average unplanned customer minutes lost per year 12

13 Higher earnings from non-carbon assets & lower from coal assets in China HK$M 2,800 Mainland China ACOI 2,310 2, ,400 (16%) (97) (2) 1,863 2,000 1,600 (488) (31) 437 1, FX Normalised 2015 Operational Performance (176) Renewables New projects Nuclear Thermal Others 2016 Thermal Nuclear Renewables Others Renewables performed well Stable performance from renewables with contributions from new projects Nuclear Daya Bay stable operating performance Successful bid for 17% stake in Yangjiang Thermal Reliable operations with low utilisation of FCG FCG II commissioned in late 2016 Renewables (including New Projects) Diversified portfolio with contributions >20% on strong hydro & new projects Discounted tariffs for some projects as market sales reforms are introduced Nuclear: Continuing strong performance Thermal: Lower tariffs and rising coal prices Non-carbon emitting energy contributed nearly 80% of ACOI, with Renewables around 34% Complete Yangjiang acquisition Development of direct sales for Guangxi thermal assets & Yunnan renewable assets Expansion of wind and solar portfolio 13

14 Stabilised operations and additional renewable contribution in India HK$M 1,600 1,400 1,200 1,000 1,429 (79) 1,350 India ACOI (122) , % Renewables Thermal FX Normalised 2015 Thermal Renewables New Projects 2016 Operational Performance Thermal Plant availability for Jhajjar 93% and Paguthan 94% Renewables Wind resource similar to last year New contributions from Chandgarh and Tejuva projects (193MW) First solar project, Veltoor, under construction Thermal - Jhajjar (Coal) Lower contractual capacity tariff 2015 included penalty provision reversal Thermal - Paguthan (Gas) Earnings contribution broadly in line Renewables Earnings growth from new projects 2015 impacted by one-off O&M cost Continue to engage Coal India to improve coal quality at Jhajjar Pursue possible expansion opportunities at existing sites Complete Veltoor Solar and pursue targeted growth of diversified portfolio 14

15 Steady performance in Southeast Asia and Taiwan HK$M 400 Southeast Asia and Taiwan ACOI (11%) 200 (5) (21) (4) (9) Renewables Thermal Others 0 (38) FX Normalised 2015 Thermal Renewables Opex & Depex 2016 Operational Performance Thermal - Ho-Ping (Coal) High plant availability and high usage Renewables - NED (Solar) Good performance and high utilisation Thermal - Ho-Ping (Coal) Steady generation with reduction in unit margin reflecting lagging adjustment for lower coal cost Renewables - NED (Solar) Marginally lower solar resource Ongoing engagement with Vietnamese Government on Vinh Tan III and Vung Ang II projects Monitor development opportunities in other Southeast Asian countries 15

16 Further growth in earnings in Australia HK$M 5,000 Australia ACOI 4,000 3,000 2,000 1,000 2,153 (334) (10) 1, (448) 2,436 Energy 1,419 Enterprise (1,920) Customer 2, % Scope FX Normalised 2015 Customer (Retail) Energy (Wholesale) Enterprise (Corporate) 2016 Operational Performance Customer Accounts stable, C&I volumes lower Improved Net Promoter Score Lower churn, better service levels and higher E-billing achieved Energy Higher generation in volatile market together with higher utilisation of Mt Piper and Yallourn Scope change represents Iona contribution forgone Customer Operating improvements including lower bad & doubtful debt costs Energy Higher prices, increased generation Additional wholesale gas sales Lower D&A after 2015 impairment Enterprise Investment in business transformation, digitisation and regulatory compliance Focus on customer retention and value creation to meet evolving customers needs Wholesale electricity market volatility likely (Hazelwood closure, renewables build) Portfolio optimisation, integrating more renewable generation and demand side response whilst maintaining reliability and affordability Tighter gas market with higher wholesale costs as gas supply prices reset 16

17 Strong FCF to fund dividend, SoC and growth capex HK$bn Free Cash Flow +30% 22.5 HK$bn Capital Investments SoC capex Growth capex Others Maintenance capex HK$bn Dividends paid % % HK$bn Net Debt Net Debt/Total Capital % % 29.5% Thousands 60% 50% 40% 30% 20% 14% 12% 10% 8% 6% 4% Operating Return on Equity* +0.2% +0.4% 12.7% 12.9% Credit Ratings CLP Holdings CLP Power Hong Kong Standard & Poor s A- Positive A Positive Moody s A2 Stable A1 Stable Dec Dec % 0% 2% 0% * Operating Earnings/Average Shareholders Fund EnergyAustralia BBB Positive Arrows indicate recent changes Details Page 28-17

18 Outlook

19 Focus Delivery Growth 19

20 Providing customer centric solutions 20

21 Embracing Innovation and new technologies 21

22 Energy Transition: increasing non-carbon emitting investment MW 7,000 Non-carbon emitting generation capacity* 6,000 5,000 4,000 3,000 2,000 1, Nuclear - Daya Bay Hydro Wind - Equity Wind - Capacity purchase Solar Nuclear - Yangjiang # * Includes equity interest & capacity purchase arrangements, including projects committed/ under construction # CLP Group entered into a conditional Equity Transfer Agreement with CGN Power to acquire a 17% equity stake in Yangjiang Nuclear. Equity interest added in above for illustrative purpose 22

23 Energy Transition: reliable, affordable, lower emission technology Source: Höegh LNG 23

24 Looking forward Mainland China India Stable earnings Growth around renewables Southeast Asia Steady performance for existing projects Growth in Vietnam Growth of non-carbon emitting generation Monitor market reforms Hong Kong Finalise Post-2018 SOC Infrastructure growth Progressive transition to gas Customer centric innovation Australia Focus on customers, market transition and value restoration 24

25 Questions and Answers Xundian I Wind Farm, Yunnan, China

26 Appendices

27 CLP Group Financial Obligations at a Glance 31 Dec Dec 2015 HONG KONG HK$M HK$M Total borrowings of CLPH, CLPP, CAPCO & PSDC 38,013 41,480 Minus: Bank balances and liquid funds (2,683) (2,425) Net Debt 35,330 39,055 OVERSEAS Total borrowings of EnergyAustralia, India and Mainland China 13,633 14,003 subsidiaries (non-recourse to CLPH) Minus: Bank balance and liquid funds (1,984) (1,374) Net debt 11,649 12,629 CONSOLIDATED total borrowings of CLP Group 51,646 55,483 Minus: Consolidated Group s bank balance and liquid funds (4,667) (3,799) Consolidated Net debt 46,979 51,684 Total Debt/Total Capital 31.5% 34.0% Net Debt/Total Capital 29.5% 32.4% Decrease in net debt amount and net debt/total capital mainly related to robust operating cash flow enabling significant amount of debt repayments and higher shareholders funds attributable to earnings during the year 27

28 CLP Group Credit Ratings CLP Holdings CLP Power EnergyAustralia S&P Moody s S&P Moody s S&P Long term Rating Foreign Currency Outlook A Positive A2 Stable A Positive A1 Stable BBB Positive Local Currency Outlook A Positive A2 Stable A Positive A1 Stable BBB Positive Short term Rating Foreign Currency A-2 P-1 A-1 P-1 - Local Currency A-2 P-1 A-1 P-1 - Arrows indicate recent changes. In 2016, S&P changed the rating outlooks of CLPH and CLP Power to positive from stable, and affirmed their ratings. Moody s affirmed the credit ratings of CLPH and CLP Power with stable outlooks. S&P upgraded the credit rating of EnergyAustralia to BBB from BBB- and outlook revised to positive from stable. These positive outcomes attributable to the further strengthening of financial and credit metrics 28

29 CLP Group Highlights of Financing Activities CLP Holdings Ample liquidity with undrawn facilities of HK$8.4bn and HK$2.2bn cash as at 31 December 2016 Refinanced HK$4.2bn one and two-year bank facilities m million bn - billion CLP Power Hong Kong New financing obtained at extremely cost effective interest rates. CLP Power Hong Kong arranged HK$6.1bn three and five-year bank loan facilities, and a HK$500m private placement bond Mainland China Continued financing at competitive terms. CLP China arranged a RMB509m (HK$566m) long-term non-recourse project loan to fund construction of Sandu II wind project India Lower interest margins after successful refinancing and negotiation with lenders. Jhajjar Power Ltd issued INR2.2 bn (HK$251m) seven and eight-year corporate bonds to refinance the existing U.S. dollar loans. CLP India entities arranged an aggregate of INR19.1bn (HK$2.2bn) and US$54m (HK$419m) financing and refinancing in 2016 EnergyAustralia Stronger balance sheet and greater financing flexibility after Iona asset sale completed in December Bank loan facilities reduced by A$1.25bn (HK$7bn) to economise finance cost and shareholder s loan repaid of A$426.5m (HK$2.4bn) 29

30 CLP Group Loan Balances by Type and Maturity Proportion of debt on fixed and floating rate 43% 43% 57% 57% December 2016 December 2015 Floating rate (2) Fixed rate 1) Loan balances between two to five years included loan drawdown with current tenor less than one year under revolving facilities with maturity falling beyond one year 2) For floating rate borrowings, if assuming 1% increase in interest rate and based on outstanding debt balance as at 31 December 2016, the additional interest payment is around HK$220m per annum 30

31 CLP Group Reconciliation of Operating Earnings and ACOI HK$M Hong Kong Mainland China India SEA & Taiwan Australia Unallocated Items Group total 2016 Annual results Operating earnings 8,905 1, ,849 (684) 12,334 Add back Non-controlling interests Net finance costs/(income) * 1, (3) 207 (33) 2,371 Income tax expense 1, ,914 Fair value adjustments # (367) - (341) ACOI 12,892 1,863 1, ,436 (717) 18, Annual results ^ Operating earnings 8,406 1, (626) 11,519 Add back Non-controlling interests Net finance costs/(income) * 1, (2) 682 (17) 2,957 Income tax expense 1, ,370 Fair value adjustments # (4) ACOI 12,370 2,310 1, ,153 (643) 17,929 * Including net fair value loss/(gain) on financing related derivative financial instruments, and other net exchange loss/(gain) on financing activities and distribution to perpetual capital securities holders # Including net fair value loss/(gain) on derivative financial instruments relating to transactions not qualifying as hedges and ineffectiveness of cash flow hedges ^ Comparative figures have been restated for the adoption of HKFRS 9 on hedge accounting 31

32 CLP Group Cash Flow and Financial Structure HK$M Cash Flow EBITDAF 25,355 31,267 Less: Items affecting comparability (318) (6,573) Recurring EBITDAF 25,037 24,694 Less: Movement in SoC items 1,184 (860) Less: Movement in working capital & others (868) (2,840) Funds from operations 25,353 20,994 Less: Tax paid (1,814) (1,987) Less: Net finance costs paid (2,255) (4,205) Less: Maintenance capex (723) (748) Add: Dividends from joint ventures & an associate 1,924 3,236 Free Cash Flow 22,485 17,290 Capital Investments (1) SoC capex (2) 7,123 7,328 Growth capex (2) 635 2,795 Maintenance capex (2) Others (3) 2,385 1,096 Total 10,866 11,967 Dividend paid 6,973 6,695 End of period Net Debt (4) (HK$M) 46,979 51,684 Net Debt/Total Capital (%) 29.5% 32.4% Cash Flow Free cash flow increased by HK$5.2 billion primarily due to increase in inflows from SoC, improvement in working capital from Australia and lower finance costs paid offset by lower dividend from joint ventures Capital Investments HK$7.1 billion SoC capex on cash basis related to enhancing transmission and distribution networks, generation and customer services in Hong Kong Growth capex mainly related to our renewable projects in Mainland China Maintenance capex mainly represented capital expenditure on existing power plants in Australia Net Debt/Total Capital Decrease in net debt amount and net debt/total capital mainly related to robust operating cash flow enabling significant amount of debt repayments and higher shareholders funds attributable to earnings during the year (1) Capital investments include fixed assets, leasehold land and land use rights, investment properties, intangible assets and investments in and advances to joint ventures and associates (2) Capital expenditure on fixed assets and leasehold land and land use rights are further analysed into SoC capex - capital expenditure related to the SoC business Growth capex - capital expenditure for additional generation capacity Maintenance capex - capital expenditure other than the above (3) Capital investments on investment properties and intangibles assets, and investments in and advances to joint ventures and associates, deposit for acquisition of an associate, and considerations paid for acquisitions of Sihong Solar in Mainland China and Veltoor Solar in India (4) Net of bank balance, cash and other liquid funds 32

33 Hong Kong Growing Business Scale Generation Transmission Distribution Retail 8,913 MW of installed capacity > 15,200 km of transmission and high voltage distribution lines 230 primary and > 14,200 secondary substations 34,442 GWh sold and 2.52 million customer accounts During 2016: Local electricity sales increased 0.6% to 33,237 GWh No. of customers increased by 39k to 2,524k Major infrastructure projects ongoing Upgraded one gas turbine unit at Black Point Power Station, increasing its generation capacity by 25MW Commissioned new 132kV substations at the West Kowloon Cultural District and Mongkok West, to provide electricity supply to the new development area as well as for the Hong Kong section of the Guangzhou-Shenzhen- Hong Kong Express Rail Link Commissioned the 2nd 400kV Yuen Long Lai Chi Kok circuit to reinforce 400kV power networks Over 300 km of new transmission and high voltage distribution lines & over 200 new substations added Launched Eco Rewards Scheme to enable sustainable customer engagement We generate, transmit and distribute electricity to over 80% of Hong Kong s population through Kowloon, the New Territories and Lantau Island 33

34 Hong Kong Electricity Sales and Capex Electricity Sales GWh Change Capital Expenditure HK$M Change Residential 9,394 9, % CLP Power HK 4,996 5,152 (3.0%) Commercial 13,234 13, % Infrastructure & Public Services 8,858 8, % CAPCO 2,296 2,478 (7.3%) Total Capex 7,292 7,630 (4.4%) Manufacturing 1,751 1,791 (2.2%) Total Local Sales 33,237 33, % HK$M 9,000 8,000 1, DP Export Sales 1,205 1, % 7, , Total Sales 34,442 34, % Sales Mix 5% 5% 28% 27% 28% 27% Residential Commercial Infra & Public services Manufacturing 6,000 5,000 4,000 3,000 2,000 1,000 1, ,838 5,650 5,680 6,400 1,368 5,615 1,735 1,607 6,983 6,887 5,152 4,996 6, % 40% CAPCO - JV partner s share CAPCO - CLP s share CLP Power Total Capital Expenditure in line with Development Plan Capex incurred up to December 2016 of HK$22.7bn, vs. Development Plan from January 2014 to September 2018: HK$37.1bn 34

35 Hong Kong Tariff, Reliability, Fuel Mix & Environmental Improvement HK$/kWh Low Tariff 0.0 CLP Power Singapore London New York Sydney Remarks: Comparison based on average monthly domestic consumption of 275kWh Tariff and exchange rate at Jan 2017 Unplanned customer minutes lost per year 50 Environmental Improvement Over 86% emissions reduction even with 84% increase in electricity sales since Singapore 1.5 CLP Power High Reliability 18 Sydney (CBD) 20 New York 24 London More Reliable Less Reliable Remarks: average for CLP Power, average for all other cities There is no overhead lines in Singapore Fuel Mix (based on MWh generated/purchased) Total Emissions Reduction RSP 91% SO 2 94% 32% 32% 1% 1% 41% 42% NO X 86% 84% Total Electricity Demand 25% % Coal Gas Nuclear Others (e.g. Oil) Respirable Suspended Particulates (RSP) Sulphur Dioxide (SO2) Nitrogen Oxide (NOx) Electricity Sales 35

36 Hong Kong Tariff Management and Energy Cost HK /kwh HK$M Average tariff Energy Cost Average Net Tariff Basic Tariff Fuel Cost Adjustment 21 Ongoing challenge in tariff management Cost control enables Basic Tariff to increase by less than 7% in the last two decades The average total tariff for 2017 will be the same as 2016 with a special fuel rebate of 2.3 cents per unit based on consumption in 2016 A total of HK$2 billion will have been returned to customers over the course of the last two years Continuous cost containment measures to minimise future tariff increases Gas Volume 20,000 15,000 10,000 5,000 17, ,284 7,827-10% 16, ,312 6,543 Others Nuclear Gas Coal WEP II Gas Short Term South China Sea Gas Yacheng Gas 0 3,419 2,

37 Mainland China Financials (HK$) HK$M Operating/Total Earnings ACOI Renewable Wind Hydro Solar Nuclear Thermal Shandong Guohua Fangchenggang Operating expenditure (120) (92) (121) (97) Earnings from operations 1,576 2,010 1,918 2,343 Development expenditure (16) (9) (16) (9) RMB exchange loss (39) (24) (39) (24) Operating earnings /ACOI 1,521 1,977 1,863 2,310 Impairment provision for Beijing Yire Power Station Impairment provision for Fangchenggang Reversal of over-provision on capital gain tax (58) (243) (199) Total earnings 1,347 1,734 The average foreign exchange rates used to convert Mainland China Segment earnings to Hong Kong dollars are for 2015 and for Note that in the ACOI variance analysis presented in the body of the presentation 2015 earnings are adjusted for changes in scope and foreign exchange before period on period variance in underlying performance is illustrated 37

38 Mainland China Financials (Local Currency) RMB M Operating/Total Earnings ACOI Renewable Wind Hydro Solar Nuclear Thermal Shandong Guohua Fangchenggang Operating expenditure (103) (75) (104) (79) Earnings from operations 1,354 1,631 1,647 1,901 Development expenditure (14) (7) (14) (7) Operating earnings /ACOI 1,340 1,624 1,633 1,894 Impairment provision for Beijing Yire Power Station Impairment provision for Fangchenggang Reversal of over-provision on capital gain tax (50) (197) (171) Total earnings 1,190 1,427 38

39 Mainland China Renewable and Power Generation HK$M 2,800 2,400 2,000 1,600 1, Operating Earnings ACOI (125 ) (175 ) (130 ) (176 ) Renewable Nuclear Thermal Others Contributions of renewables in ACOI were higher than thermal and both earnings & ACOI were higher than 2015 China remains a primary growth market for CLP MW 10,000 8,000 6,000 4,000 2,000 0 CLP capacity (1) in Mainland China Thermal Nuclear Renewable PSDC Under construction Government support for renewable development within the Five Year Plan, Power Sector Reform and from COP21 provides strong impetus to investors such as CLP to make selective investments in renewables CLP s focus on the development of renewables and high-efficiency coal projects means we are well-positioned to capitalise on these opportunities In 2016, CLP has completed the following projects Commenced commercial operation of Xundian I Wind (49.5MW, Jan), Sandu I Wind (99MW, Jul) and CLP Laizhou I Wind (49.5MW, Oct) Acquired 49% remaining shareholding of Sihong Solar (total 93MW) from PRC partner in July 2016 Both units of FCG II (1,320MW, CLP share 924MW) ultra-supercritical plant commenced commercial operation in 4Q2016 CLP has committed to or commenced construction of the following projects (1) CLP equity interest and capacity purchase rights Laiwu II Wind (49.5MW) and CLP Laizhou II Wind (49.5MW) in Shandong, Sandu II Wind (99MW) in Guizhou and Huai an Solar (13MW) in Jiangsu 39

40 Mainland China Yangjiang Nuclear On 30 November 2016, CLP entered into a conditional equity transfer agreement to acquire a 17% interest in 6,516 MW Yangjiang nuclear facility in Guangdong (1,108 equity MW) Aligned with our long term Focus Delivery Growth strategy Close to major load centres in Guangdong Safe, reliable and economic second generation nuclear facility with three out of six units operational Earnings accretive from Completion (equity accounting) and financed using existing internal resources and third party debt Purchase Consideration RMB5.0 billion (around HK$5.6 billion) plus audited completion payment Total Investment : Approximately RMB7.0 billion (around HK$7.8 billion) to full COD of 6 Units by 2019 Project schedule Operational : Units 1, 2 & 3 Under Construction: Units 4 (connected to the grid for trial operation), 5 & 6 GUANGDONG Yangjiang Hong Kong Macau Daya Bay Completion of transaction targeted in 1H

41 Mainland China 13 th 5-Year Plan on Power Sector Power supply structure Increase non-fossil fuels target Reduce dependence on coal Non-fossil Fuels in Consumption Mix Installed Capacity 25% 20% 15% 10% 12% 15% 20% Target at % 10% 21% 19% 2% 7% 3% 1% 8% % 55% Coal-fired Nuclear Hydro Wind Solar Others* 5% 0% 2015 Target at 2020 Target at 2030 source: National Development and Reform Commission 3% *Others represent gas-fired and biomass generation Installed Capacity (GW) Coal-fired Nuclear Hydro Wind Solar Others Target at , source: National Energy Administration Power grid development The west-east power transmission project featuring UHV and conventional technology will have total transmission capacity of 270GW, to achieve the balance of supply and demand as well as to improve reliability Power sector reform targets Standardised power transmission and distribution tariffs are to be ratified by end 2017 Power trading mechanism Ancillary service market commenced in Northeast China for testing purpose in 2016 and will be extended nationwide when it is matured By end 2018, spot market pilot testing will be launched By 2020, spot market will be opened nationwide 41

42 India - Financials HK$ Local Currency HK$M HK$M INR M INR M ACOI Thermal (Jhajjar) ,270 5,455 Thermal (Paguthan) ,309 2,313 Renewable ,424 4,078 Total 1,383 1,429 12,003 11,846 Operating earnings Thermal (Jhajjar) * 1,015 1,227 Thermal (Paguthan) ,883 2,752 Renewable ,172 1,111 Total ,070 5,090 * Restated for the adoption of HKFRS 9 on hedging accounting The average foreign exchange rates used to convert Indian Segment earnings to Hong Kong dollars are for 2015 and for Note that in the ACOI variance analysis presented in the body of the presentation 2015 earnings are adjusted for changes in scope and foreign exchange before period on period variance in underlying performance is illustrated 42

43 India - Renewable Generation HK$M 1,600 Operating Earnings ACOI MW 1,200 1,000 CLP Renewable Portfolio in India 1, Thermal Renewables Commissioned - Wind Under Construction - Wind Under Construction - Solar Increasing contribution from new wind assets India is a developing economy with a need for new generation capacity to address a continuing shortage of power This provides us with a range of investment opportunities and India is a primary growth market for CLP We are one of the largest foreign investors in the power sector, and the largest developer of wind power in India The renewable generation portfolio in India has been diversified with our first solar project Veltoor under construction. Lower wind capacity reflects the downsizing of the Yermala project 43

44 Southeast Asia & Taiwan Financials HK$ Local Currency HK$M HK$M M M ACOI Thermal NT$1,033 NT$1,123 Renewables THB271 THB290 Operating expenditure (13) (12) - - Development expenditure (25) (17) - - Total Operating earnings Thermal NT$1,033 NT$1,123 Renewables THB271 THB290 Operating expenditure (13) (12) - - Development expenditure (22) (15) - - Total The average foreign exchange rates used to convert SEA & Taiwan Segment earnings to Hong Kong dollars are and for 2015 and and for 2016 for Thai Baht and New Taiwan Dollars respectively. Note that in the ACOI variance analysis presented in the body of the presentation 2015 earnings are adjusted for changes in scope and foreign exchange before period on period variance in underlying performance is illustrated 44

45 Australia Financials HK$ Local Currency EBITDAF (before items affecting comparability) HK$M HK$M A$M A$M 3,756 3, Depreciation & Amortisation (1,320) (1,454) (229) (251) ACOI Customer (Retail) 2,937 2, Energy (Wholesale) 1, Enterprise (Corporate) (1,920) (1,480) (333) (255) Total 2,436 2, Fair value adjustments 367 (241) 64 (42) Net finance costs (207) (682) (36) (118) Income tax expense (747) (394) (130) (69) Operating earnings 1, Impairment & other charges 54 (1,480) 9 (261) Net gain on sale of Iona - 6,619-1,180 Debt Close out - (858) - (155) Total earnings 1,903 5, The average foreign exchange rates used to convert Australian Segment earnings to Hong Kong dollars are for 2015 and for Note that in the ACOI variance analysis presented in the body of the presentation 2015 earnings are adjusted for changes in scope and foreign exchange before period on period variance in underlying performance is illustrated. 45

46 Australia Customer Operations Improved Customer Experience and Reduced Costs While the retail environment remains competitive, focus has been on improving customer experience and reducing costs. Successful implementation of the Net Promoter System including new procedures for complaints handling and ongoing stability in IT platforms resulting in Ombudsman complaints reducing by 34% yoy. Successful transition of a significant proportion of customer service to the newly established centre in Manila, and closure of the Mill Park centre in Australia. Digitisation of activities continue with significant progress on electronic billing and welcome packs. Total Bad and Doubtful Debt as a % of Revenue has continued to improve as a result of significant advancement in debtor management and collections Initiated programs to further reduce costs and increase our ability to respond to changing customer demands. 46

47 Australia Customer Operations Customer Account numbers ('000s) Electricity Gas Total Electricity Gas Total Mass Market 1, , , ,621.0 Commercial & Industrial Total Account Numbers 1, , , ,638.0 Weighted Average Mass Market 1 1, , , ,602.2 Sales Volumes and Revenue Electricity (TWh) Gas (PJ) Electricity (TWh) Gas (PJ) Mass Market Commercial & Industrial Total Sales Volume Sales Revenue (A$m) 3, , , ,035.2 Customer Churn 30% 25% 20% 15% 10% 5% 0% VIC NSW SA QLD Total Mkt Churn 2015 Mkt Churn 2016 EA Churn 2015 EA Churn 2016 Accounts Customer Accounts 3.0m 2.5m 2.0m 1.5m 1.0m 0.5m 0.0m Mass Market Customer accounts stable despite strong competition in the retail market Decreased sales volume and revenue driven by lower sales to lower margin Commercial & Industrial customers EnergyAustralia continues to have below market churn rates (blended across electricity and gas) in the key states of Victoria and New South Wales 1 Weighted Average Mass Market is the average accounts of our mass market customer base during the year Note: Individual items and totals are rounded to the nearest appropriate number. Some totals may not add down the page due to rounding of individual components 47

48 Australia Wholesale Market Conditions ASX monthly average 2017 forward swap prices Price ($/MWh) Month NSW VIC Source: Australian Securities Exchange The market in 2016 was characterised by an improved alignment between demand for electricity and generation supply, with Permanent capacity reductions and outages at baseload plant and interconnectors Higher gas spot prices from LNG and generation demand and less exploration due to regulatory restrictions and weaker oil price Flat demand, excluding QLD resulting in increased wholesale electricity prices and price volatility Existing, committed and proposed wind and solar Generation generation build* capacity (MW) 7,000 Proposed 6,000 5,000 4,000 3,000 2,000 1,000 - Committed Existing VIC NSW SA QLD State * Excludes rooftop PV installations Source: Data from AEMO, published 18 November 2016 Wholesale electricity prices expected to remain higher and more volatile in the short term 1,600MW Hazelwood closure in 2017 Gas supply constraints Renewable build to meet regulatory targets Demand outlook remains flat Evolution and affordability of new technologies Key challenge of integrating more renewable generation whilst maintaining reliability and affordability 48

49 CLP Group Generation Portfolio 31 Dec ,622 Equity MW and 5,159MW Capacity Purchase (total 23,781MW) AUSTRALIA total 4,966MW* Operational Yallourn 1,480 / 1,480 (c) Mount Piper 1,400 / 1,400 (c) Hallett 203 / 203 (g) Ecogen 966 / 966* (g) Tallawarra 420 / 420 (g) Wind Projects 602 / 494* (w) Wilga Park 16 / 3 (g) INDIA total 2,978 MW Operational Jhajjar 1,320 / 1,320 (c) Paguthan 655 / 655 (g) Wind Projects 924 / 924 (w) Under Construction/ Committed Wind Project 30 / 30 (w) Solar Project # 100 / 49 (s) TAIWAN total 264 MW Operational Ho-Ping 1,320 / 264 (c) THAILAND total 21 MW Operational NED Solar # 63 / 21 (s) India China Thailand Hong Kong Taiwan Australia Fuel Source: (c) coal-fired (g) gas-fired (w) wind (h) hydro (n) nuclear (d) diesel (s) solar HONG KONG total 7,483MW* Operational Castle Peak 4,108 / 4,108* (c) Black Point (a) 2,525 / 2,525* (g) Penny's Bay 300 / 300* (d) Under Construction/ Committed Black Point - D1 (b) 550 / 550* (g) MAINLAND CHINA total 8,069* MW Operational Daya Bay (c) 1,968 / 1,380* (n) Pumped Storage 1,200 / 600* (h) Fangchenggang I & II (d) 2,580 / 1,806 (c) SZPC 3,060 / 900 (c) Guohua & Shenmu 7,660 / 1,350 (c) Hydro Projects 509 / 489 (h) Wind Projects 1,331 / 798 (w) CGN Wind 1,993 / 282 (w) Solar Projects # 262 / 221 (s) Under Construction/ Committed Wind Projects 198 / 198 (w) CGN Wind 200 / 32 (w) Solar Project # 13 / 13 (s) Yangjiang (e) Station Name * including capacity purchase # Solar projects in AC output Gross MW / CLP Equity MW (a) Gas turbine upgrade of Black Point Power Station Unit C1. (b) A new gas-fired generation unit of 550MW at Black Point Power Station is targeted to be put in commercial operation before (c) Agreement has been reached to increase proportion of supply to Hong Kong to about 80% from 2015 to 2018, with the remainder continuing to be sold to Guangdong. (d) FCG II became operational in December (e) Conditional Equity Transfer Agreement was entered with CGN Power to acquire a 17% equity stake in Yangjiang Nuclear. 49

50 CLP Group Renewable Generation Portfolio 31 Dec ,090 Equity MW and 461MW Capacity Purchase (total 3,551MW) - 17% of CLP total equity generation portfolio AUSTRALIA total 494 MW Operational Waterloo 131 / 56* Cathedral Rocks 66 / 33 Boco Rock 113 / 113* Taralga 107 / 107* Mortons Lane 20 / 20* Gullen Range 166 / 166* INDIA total 1,003 MW Operational Wind 924 MW Khandke 50 / 50 Samana I & II 101 / 101 Saundatti 72 / 72 Theni I 50 / 50 Theni II 50 / 50 Harapanahalli 40 / 40 Andhra Lake 106 / 106 Sipla 50 / 50 Bhakrani 102 / 102 Mahidad 50 / 50 Jath 60 / 60 Tejuva 101 / 101 Chandgarh 92 / 92 Under Construction/ Committed Wind 30 MW Solar 49 MW Yermala (a) 30 / 30 Veltoor Solar # (b) 100 / 49 THAILAND total 21 MW Operational NED Solar # 63 / 21 India China Thailand Please update to 1H2016 Wind projects Hydro projects Solar project Station Name Gross MW / CLP Equity MW * including capacity purchase # Solar projects in AC output Australia (a) Project has been downsized from 101MW to 30MW due to land issue. (b) CLP India has the option to acquire the remaining 51% in the future. (c) Acquisition of remaining 49% interest was completed on 11 July MAINLAND CHINA total 2,033 MW Operational Wind 1,080 MW Hydro 489 MW Solar 221 MW Changdao 27 / 12 Weihai I & II 69 / 31 Nanao II & III 60 / 15 Shuangliao I & II 99 / 48 Datong 50 / 24 Laizhou I 41 / 18 Changling II 50 / 22 Guohua Wind 395 / 194 Qujiagou 49 / 12 Mazongshan 49 / 12 Qian'an I & II 99 / 99 CGN Wind 1,993 / 282 Penglai I 48 / 48 Chongming I 48 / 14 Laiwu I 50 / 50 Xundian I 50 / 50 Sandu I 99 / 99 CLP Laizhou I 50 / 50 Jiangbian Hydro 330 / 330 Huaiji Hydro 129 / 110 Dali Yang_er Hydro 50 / 50 Jinchang Solar # 85 / 43 Xicun I & II Solar # 84 / 84 Sihong Solar # (c) 93 / 93 Under Construction/ Committed Wind 230 MW Solar 13 MW Sandu II 99 / 99 Laiwu II 50 / 50 CLP Laizhou II 50 / 50 CGN Wind 200 / 32 Huai'an Solar # 13 / 13 50

51 CLP Group Energy Sent Out TWh Energy Sent Out* Hong Kong Mainland China India SEA Australia Pumped Storage Nuclear Coal Gas Wind Solar Hydro Others * Equity basis and including capacity purchase arrangements 51

52 CLP Group Equity MW by Fuel Mix 31 Dec ,622 Equity MW Attributable to CLP Group Capacity by Energy Type Total Equity MW (a) + (b) % Equity MW in operation (a) % MW under construction and development/ financially committed (b) % Coal 11,396 61% 11,396 61% - - Gas 3,434 18% 3,049 16% 385 2% Nuclear % 492 3% - - Diesel 210 1% 210 1% - - Wind 2,298 12% 2,038 11% 260 1% Hydro 489 3% 489 3% - - Solar 303 2% 241 1% 62 <1% Total operating 18, % 17,915 96% 707 4% Note 1: CLP owns 25% of GNPJVC which owns Daya Bay units 1 and 2 52

53 Additional Resources 53

54 CLP Holdings Thank you