Investor Presentation Introductory Pack. August 2018

Transcription

1 Investor Presentation Introductory Pack August 2018

2 Disclaimer Potential investors, analysts and shareholders of CLP Holdings Limited (the Company) and other recipients of this document are reminded that this document and any oral discussion made together with this document (the presentation) are provided for your information purposes only and you may not forward, publish, distribute, release or disseminate any part of the presentation directly or indirectly to any other person. It is important to note that the contents of the presentation have not been audited or independently verified. Maps included in the presentation are indicative only. They are provided for the purpose of showing the approximate location of the Company's assets, and do not purport to show the official political borders between different countries. Some comments, including comments relating to future events and our expectations about the performance of CLP's business, are based on a number of factors that we cannot accurately predict or control. We do not make, and expressly disclaim, any representations and warranties in respect of any matters contained in the presentation. We cannot provide any assurance that the information contained in the presentation is or will be accurate or complete and so they should not be relied on. We assume no liability whatsoever for any loss howsoever arising from use of, or in connection with, any of the information and data contained in this presentation. From time to time as circumstances change we may update our website at and will update the Hong Kong Stock Exchange when relevant to comply with our continuous disclosure obligations. This presentation is not, and is not intended to be, for publication, distribution, release or dissemination, directly or indirectly, in or into any other jurisdiction which to do so would be restricted, unlawful or a breach of a legal or regulatory requirement. This presentation does not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any securities or other financial instruments or any recommendation in respect of such securities or instruments. By attending or reading this presentation, you will be deemed to have agreed to the terms, obligations and restrictions set out herein. 2

3 HK$'bn HK$bn Focus Delivery Growth In 2014, we introduced the Focus Delivery Growth investment strategy to guide our operations and investment decisions: focusing on business activities and initiatives that best utilise our core competencies we will be able to deliver on the potential of our investments and generate growth for our shareholders This strategy has delivered increasing earnings and dividends Operating Earnings Hong Kong India Australia 11.5 Mainland China SEA Dividends per share Q1 Q2 Q3 Q Market Capitalisation* Jun-18 * As end of each year/ period 3

4 Assets diversified by activities, geography and technology Revenue in 2017 HK$92bn (about US$12bn) MAINLAND CHINA P.31 Market Capitalisation over HK$200bn (~US$27bn as at 30 Jun18) Over 7,500employees 2.6 million in Hong Kong over 5 million customer accounts 2.6 million in Australia INDIA P.35 SE ASIA & TAIWAN P.37 For more information on company profile AUSTRALIA P.38 HONG KONG P.25 Hydro 2% 489 MW Solar 2% 412 MW Over 15,700 km transmission lines Coal 51% 12,525 MW Generation capacity # more than 24,500 MW Wind 10% Gas 22% 5,346 MW Nuclear 10% 2,488 MW For more information on the diversified assets Renewables 13% 3,301 MW # including capacity purchase arrangements 2,400 MW Others e.g. oil 900 MW 4% As at 30 Jun

5 Business Units Experience along the Value Chain Hong Kong Operating earnings: Total Assets: Mainland China Operating earnings: Total Assets: India G T D R S G T D R S Operating earnings: Total Assets: G T D R S Southeast Asia & Taiwan Operating earnings: Total Assets: G T D R S 2017 HK$9,198m HK$129.0bn HK$1,238m HK$33.7bn HK$647m HK$16.9bn HK$160m HK$2.0bn Australia Operating earnings: HK$2,738m Total Assets: HK$44.1bn G T D R S Current operations Potential Opportunities G: T: Generation Transmission R: D: Retail Mass Market Retail Distribution S: Smart Energy Services 5

6 Dividend # History and Shareholding by Category Shareholding by Category CLP Dividend H % 35% % Interests associated with the Kadoorie Family Institutional Investors Retail Investors Interim/ Final Q1 Q2 Q3 Final/ Q4 Special^ Source: Bloomberg Q1 Special^ Total # Dividend adjusted for one bonus share issued for every five existing shares in 1988, 1989, 1993 and 2001 ^ Special dividends include special cash dividends and one additional interim dividend due to change of accounting year in 1999 For more information: 6

7 Annual Financial Dashboard Free Cash Flow Capital Investments Dividends paid Net Debt Net Debt/Total Capital (%) Operating Return on Equity Credit Ratings S&P Moody s CLP Holdings A Stable A2 Stable CLP Power Hong Kong A+ Stable A1 Stable CAPCO AA- Stable A1 Stable EnergyAustralia BBB+ Stable - 7

8 Hong Kong Scheme of Control (SoC) New Hong Kong SoC secured for a further 15 years Fixed term from 1 October 2018 to 31 December % return on average net fixed assets Fuel Cost Adjustment to be adjusted more frequently Full pass through of operating costs and fuel costs Enhanced incentive schemes around operational performance, energy saving and renewable energy Continuing investment as Hong Kong grows and transitions to a low carbon economy First 5-year Development Plan approved with total investment of HK$52.9 bn, annualised increase of around 30% per annum For more information on: The Scheme of Control Agreement Scheme of Control Statement Annual Tariff Review Development Plan 8

9 Hong Kong 1st Development Plan of new SoC Hong Kong has ambitious objectives under its Climate Action Plan % 27% % 25% 25% % Natural Gas Non-fossil fuels Coal Source: Hong Kong s Climate Action Plan First Development Plan of the new SoC approved totaling HK$52.9 billion: 5 years from Oct 2018 to Dec 2023 Meet fuel mix & environmental objectives Deliver infrastructure growth Address energy security Integrate renewables initiatives Encourage energy efficiency & conservation 19 9

10 Mainland China - demand growth, reforms, energy transition Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 CNY b 100,000 80,000 60,000 40,000 20,000 TWh 7,000 6,000 5,000 4,000 3,000 2,000 1, Source: National Bureau of Statistics GDP Power Demand of China, China Electricity Council 40% Growth in GDP & Power Demand Market Sales in Guangdong Fen/kWh 8 External MW 10,000 8,000 6,000 4,000 2,000 0 CLP capacity * in Mainland China June 2018 Thermal Nuclear Renewable PSDC Under construction Nuclear investments in Guangdong Internal 30% 6 GUANGDONG 20% 10% 0% 6,000 4,000 2, H2018 % of market sales Weighted Average Discount on Tariff Source: GD Power Exchange Centre National average operating hours of coal-fired plant in Mainland China -5.6% -7.9% -4.6% +1.1% YTD +5.8% Source: China Electricity Council % 120% 110% 100% 90% 80% 70% Yangjiang Coal Price Tariff Hong Kong Macau * CLP equity interest and capacity purchase rights Daya Bay (6,516/ 1,108MW) - 17% equity - 4 of 6 units in operation - Unit 5 qualified for operation Relative volatility of Coal Price in Guangxi and Tariff of FCG (1,968/ 1,380MW) - 25% equity - Currently purchasing 80% of output Source: NDRC, GXDRC 10

11 Australia retail turnaround and wholesale price recovery Customer Churn 45% 40% 35% 30% 25% 20% 15% 10% 5% - 100% 80% 60% 40% 20% Mkt Churn 1H 2017 Mkt Churn 1H 2018 EA Churn 1H 2017 EA Churn 1H 2018 Account Numbers Churn below Market Average VIC NSW SA QLD Total Improving Efficiency Paper Bill Customer Account (million) E-Bill Customer (Retail) GW Wind, Solar etc (LHS) 30 Hydro (LHS) Gas (LHS) 26 Coal (LHS) 22 Demand (RHS) Source: Data from AEMO s Electricity Market Management System (EMMS) $/MWh 120 NSW Swap NSW Cap 100 Drought Supply & Demand Tightening Increase in Wholesale Prices VIC Swap VIC Cap Carbon scheme TWh 215 Extreme weather & plant closure Energy (Wholesale) 0% H H H H H H H 2018 Improving Service Level 10,000 8,000 6,000 4,000 2, Source: Australian Securities Exchange A$/MWh NSW Futures Prices (Contract by Expiry) 0 0 1H H H H H H H 2018 Ombudsman Complaints/10k acct (LHS) Ombudsman Complaints volumes (RHS) 20 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 1 Year Ago 3 Months Ago Today Source: Bloomberg, data as of 3 July 2018, UBS 11

12 (kg CO2/kWh) % of Generation Capacity CLP s New Climate Vision 2050 Emission Intensity Targets 2050 carbon emission intensity target reduced from 0.2 to 0.15 Clean Energy Targets Milestones for renewable and non-carbon capacity increased 1,200 Decarbonising our Portfolio Increased investment in zero and low emission technologies and reduced exposure to coal ( ) 0.69 * % * 13% * 30% 20% 40% 30% 1, Carbon Emissions Target (kg CO2/KWh) 2 /kwh) Non-Carbon Targets Renewables Targets 0- (200) Coal Gas Renewables Nuclear Commitments and actions to combat Climate Change Tightened targets for reducing carbon emissions Increased the share of renewable & non-carbon emitting generation * Equity basis and capacity purchase arrangements 12

13 Pursuing digital energy solutions & best global technologies Next Generation Renewables & Storage Data Analytics Demand Response & Energy Management Investment & partnership Smart Lightning Technology Recent developments Energy digitalisation Energy Management Software Partnership Clean energy and smart city technology 13

14 Appendix 1: Environment, Social & Governance Andhra Lake II, Harapanahalli, Theni, and Andhra Lake I Indian windfarms (clockwise from top left), from where CLP Carbon Credits are generated

15 CLP s Value Framework 15

16 CLP s Sustainability Principles Sustainability has always been integral to CLP. Our Value Framework reflects the moral compass of CLP, articulating our values, vision, mission and commitments. Our Sustainability Principles align CLP s business strategy with material sustainability issues we face. They are also supportive to several United Nations Sustainable Development Goals (SDGs). The Sustainability Principles cover four focus areas: Our Community Our People Our Environment Economic Sustainability Our People Our Environment Economic Sustainability Our Community CLP is included in a number of sustainability indices (1) (2) (1) The inclusion of CLP Holdings Limited in any MSCI Index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement or promotion of CLP Holdings Limited by MSCI or any of its affiliates. The MSCI Indexes are the exclusive property of MSCI. MSCI and the MSCI Index names and logos are trademarks or service marks of MSCI or its affiliates. (2) FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that CLP Holdings has been independently assessed according to the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and other products. 16

17 Our Sustainability Focus Areas and SDGs In 2017, we streamlined our focus to four priority SDGs we believe to be most relevant to our business and on which we can make a significant impact. Supply reliable and affordable energy while seeking to reduce air pollutant emissions We launched our Climate Vision 2050 in 2007 and updated our targets in 2017 Attracting and retaining talent is a key priority Supporting diversity in all forms including gender diversity initiatives and support of equal pay for work of equal value Widening the pipeline of women to support future business strategy We have continually innovated to sustain our business over the last century Additional channels of innovation are now required to adapt to the quickening pace of change Build infrastructure to support the sustainable development of the communities we serve For more information of the SDGs, please refer to the website of United Nations: 17

18 Our Community Producing power to serve our customers and communities We are committed to developing trust through long-term relationships and engaging our customers, business partners, suppliers, associates and the local community with respect and integrity, so that we can deliver reliable and affordable power to support the sustainable development of our communities. Contributing to Energy Transition Balancing reliability, lower emission and affordability Security Nurturing our Young People Focus on youth education and development: Sustainability Supporting Our Customers 98.5% 98.2% 98.8% Energy Trilemma Affordability Public education on climate change, energy efficiency and conservation Endowing professorship in sustainability at HKUST Encouraging women to study engineering Empowering Communities 648 activities Were implemented Public Perception Survey findings on CLP Innovative online energy management tools 440,000 + people and 582 organisations Directly benefited from CLP s community initiatives 18

19 Our People 7,500 + employees across the Asia Pacific region Promoting diversity & equal opportunity New family friendly initiatives CLP Power Academy 23% females in leadership positions across the Group No gender pay gap in Hong Kong Inclusive leadership training provided to 160 managers Effective 2018, we increased Maternity leave to 16 weeks and introduced Adoption Leave Marriage leave to 5 days Cooperates with educational institutions to offer professional diploma course and other advanced programmes Develop a talent pool for the power industry 19

20 Our People Senior Leadership Team Back row from the left: Roy Anthony Massey Chief Human Resources Officer, MBA, LLB Chong Wai Yan Quince Chief Corporate Development Officer, JP, BSSc David John Simmonds Group General Counsel & Chief Administrative Officer, Company Secretary, LLB, BCom, FCIS, FCS Chan Siu Hung Managing Director China, JP, BSc(Eng.), MSc, CEng, HonFEI, MIET, MHKIE Catherine Leigh Tanna Managing Director EnergyAustralia, LLB Rajiv Ranjan Mishra Managing Director India, MBA For more information on leadership: Front row from the left: Derek Parkin Chief Operating Officer, BSc(Hons), MPhil, MBA, CEng, Eur Ing, FEI, FIMM, MIoD Geert Herman August Peeters Executive Director & Chief Financial Officer, MSc(Eng.), CEng(Belgium), ICPA Richard Kendall Lancaster Chief Executive Officer, BE Yuen So Siu Mai Betty Group Director & Vice Chairman CLP Power Hong Kong, JP, B.Comm., CPA Chiang Tung Keung Managing Director CLP Power Hong Kong, BSc(Eng.), MSc, MBA, MHKIE, CEng, MIET 20

21 Safety Performance CLP Group Safety Performance (Employees and Contractors) Fatalities Number of Lost Time Injuries (including fatality) Lost Time Injury Rate (LTIR) 2, Total Recordable Injury Rate (TRIR) 3, IMPROVING SAFETY PERFORMANCE The initiatives that we implemented in 2017 include: A new Health, Safety and Environment (HSE) Improvement Plan was approved by the Board in May The plan focuses on: Raising our safety culture, rethinking our risks and building a healthy and engaged workforce Potential exposures to serious injuries and fatalities, and prepare lessons learned to prevent them from occurring CLP Life Saving Rules, implemented across assets under CLP s operational control in the first quarter of 2017 Reporting and investigation of potential SIF events with tracking of follow-up actions and application of hierarchy of controls Behavioural based Safety Observation Programmes Notes: 1. Fatality is the death of an employee or contractor personnel as a result of an occupational illness / injury / disease incident in the course of employment. 2. An occupational illness / injury / disease sustained by an employee or contractor personnel causing him / her to miss one scheduled workday / shift or more after the day of the injury (including fatalities). A Lost Time Injury does not include the day the injury incident occurred or any days that the injured person was not scheduled to work and it does not include restricted work injury. 3. All rates are normalised to 200,000 worked hours, which is approximately equal to the number of hours worked by 100 people in one year. 4. Total Recordable Injury is the sum of all occupational injury incidents, illness other than first aid cases. They include Fatalities, Lost Time Injury, Restricted Work Injury, Medical Treatment 21

22 Our Environment CLP s integrated business includes energy retailing, transmission and distribution (T&D) and generation Over half of our earnings are contributed by our energy retailing and T&D businesses Nearly 50% of our generation portfolio is zero emission or gas-fired 100% Earnings Distribution and Coal Contribution Generation Capacity * 90% 80% 70% 60% 50% 10% 4% 6% 4% 13% 15% 22% 22% 51% 53% Dec 2017 Dec % 30% 20% 10% 0% Revenue ACOI # Fixed Assets & Interests in JV/ Associates ^ Energy Sent-Out ** 15% 14% 9% Dec % Dec % 63% 15% 61% # Before unallocated expense ^ Included fixed assets, leasehold land and land use rights, investment properties and interest in and loan to JV and Associates * Equity basis and capacity purchase arrangements ** Equity basis and capacity purchase arrangements. Also includes long-term power contracts from facilities in which we hold an equity interest 22

23 Economic Sustainability We create value through focused and socially responsible investments, following clear governance principles and respectful of our sustainability principles. Revenue Operating Earnings Hong Kong India Australia Mainland China SEA Other earnings & unallocated items Dividend per share Dividends pay-out % (1) 0 Net Debt Net Debt/Total Capital (%) Capital Investment SoC capex Growth Acquisitions Maintenance Others Operating Return On Equity (%) (2) (1) Based on Operating Earnings (2) Operating Earnings / Average Shareholders Funds 23 0

24 Appendix 2: Business Units Background Yangjiang Nuclear Power Station, Guangdong, China

25 Hong Kong Guangzhou Pumped Storage Power Station Shenzhen - China Daya Bay Nuclear Power Station Shekou Black Point Power Station Castle Peak Power Station Lantau Island New Territories Penny s Bay Power Station Kowloon Coal Power Gas Power Nuclear Power Hydro Power Diesel Oil 132kV Circuit 132kV Submarine Cable 400kV Circuit Vertically Integrated Business 58% of Group Assets 7,533 MW generation capacity in HK territory, including capacity purchase As at 30 Jun 2018 CLP has a vertically-integrated business in Hong Kong, which is the core of our operation. The electricity supply in Hong Kong is regulated through the Scheme of Control (SoC) Agreement which is a contract signed between CLP and the Government. The current 10 year term ends on 30 September 2018 and the new SoC runs for over 15 years from 1 October 2018 to 31 December We generate, distribute and provide a worldclass electricity supply with a reliability rate of over % to 2.6 million customers, via over 15,700 km of transmission and high voltage distribution lines. A multi-fuel generation portfolio of 7,533 MW provides power for our customers. The first 5-year Development Plan under the new SoC was approved in July 2018 requiring expenditure of HK$52.9 billion over 5.25 years, a 30% increase in annualised expenditure

26 Generation Portfolio* Castle Peak Power Station - (4,108/4,108 MW) - Castle Peak A 1,400 MW, Castle Peak B 2,708 MW - Coal-fired with gas option - Coal is mainly imported from Indonesia For more information: Hong Kong Black Point Power Station (3,125/3,125 MW) - Natural gas-fired - Gas import from Mainland China and Central Asia - New gas unit (550MW) to be in commercial operation before 2020 Penny s Bay Power Station (300/300 MW) - Diesel-fired - Back-up facility Powering over 80% of Hong Kong s population Mainland China Guangdong Daya Bay Nuclear Power Station (1,968/1,380 MW) - Located in Guangdong - Proportion of supply to Hong Kong increased from 70% between 1994 and 2014 to 80% from 2015 to 2018 Guangzhou Pumped Storage Power Station (1,200/600 MW) - Located in Guangdong - CLP wholly owns Hong Kong Pumped Storage Development Company (PSDC), which has contractual rights to use 600MW generation capacity As at 30 Jun 2018 * Including capacity purchase 26

27 Annual Electricity Sales and Capex 27 Electricity Sales Capital Expenditure GWh Change HK$M Change Residential 9,217 9,394 (1.9%) CLP Power HK 4,523 4,996 (9.5%) Commercial 13,220 13,234 (0.1%) CAPCO 3,545 2, % Infrastructure & Public Services 8,987 8, % Total Capex 8,068 7, % Manufacturing 1,740 1,751 (0.6%) Total Local Sales 33,164 33,237 (0.2%) Export Sales 1,341 1, % HK$M 9,000 8,000 7,000 6,000 1, Development Plan ,368 1,735 1,607 1,064 2,481 Total Sales 34,505 34, % 5,000 GWh 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - Sales Mix Residential Commercial Infrastructure & Public Services Manufacturing 4,000 3,000 2,000 1, ,983 6,887 7,004 6,400 6,603 5,680 5,615 5,152 4,996 4, CAPCO - JV partner s share CAPCO - CLP s share CLP Power Hong Kong Total Capital Expenditure in line with Development Plan Capex incurred up to December 2017 of HK$30.8bn, vs. Development Plan from January 2014 to September 2018: HK$37.1bn

28 28 New Development Plan Allocation of capital investment Maintaining Reliability (38%) Meeting Demand (24%) Lowering Carbon & Emissions (30%) Smart City & Digitalization Digitalisation (8%) Total Investment of HK$52.9 billion (Oct 2018 Dec 2023) Key projects Two additional CCGT units including D1 (currently under construction) and D2 Enhancement of existing gas generation facilities Offshore LNG Terminal Enhancement of Clean Energy Transmission System Installation of generation units at West New Territories Landfill Smart City and Digital Developments Year (HKȼ/kWh) Q Q & 2019 New Dev Plan Period Forecast Basic Tariff Change % + 2.6% + 3.3% + 2.7% + 2.8% Fuel Clause Charge Change % +16.5% +11.7% +3.3% - Rent & Rates Special Rebate (1.1) (1.1) Average Net Tariff Change - +2% +6.9% +5.5% +2.9% +2.1%

29 Gas-Fired Generation Unit D1 Under Construction Dec 2016 Construction approved by Government Jul 2017 Main civil works commenced Before 2020 Enter commercial operation Support Government target of 50% gas-fired generation in 2020 Meet tighter emissions caps Provide cleaner electricity supply to meet HK s continuing development Key Statistics Capacity Technology Location Total est. CAPEX 550 MW Efficiency > 60% Emissions Commercial Operation Combined Cycle Gas Turbine Black Point Power Station HK$ 5.5bn (HK$3.6bn in current SoC) NO x : equivalent to only 10% of CLP s existing gas-fired generation units in HK SO 2, RSP: Far less than other fossil fuels Before 2020 New CCGT to be built next to existing gas-fired generation units 29

30 Hong Kong Offshore LNG Terminal Project Black Point Power Station (BPPS) Proposed location for HK Offshore LNG Terminal Lamma Power Station (LPS) A critical infrastructure project that will improve Hong Kong s energy security and diversity of gas supply, and provide access to the competitive international market. The Project was approved by the HKSAR Government on 4 July as part of its approval of the Development Plan. Consists of a floating storage and regasification unit (FSRU) vessel and an offshore jetty that is connected by subsea pipelines to the Black Point and Lamma Power Stations. The FSRU vessel is a dedicated facility with specialized equipment that will be permanently moored at the jetty. Good progress has been made on finalising the contractual arrangements for the supply of LNG and the FSRU vessel for the Project. The environmental impact assessment report for the project was submitted and we expect the permitting process to complete in the coming months. Please refer to the video for more information 30

31 31 Mainland China Generation Business, 14% of Group Assets 8,806 MW generation capacity, including capacity purchase As at 30 Jun 2018 Annual ACOI Jilin Inner Mongolia Hebei Liaoning Tianjin Gansu Shandong Jiangsu Shanghai 54% 3% 43% Sichuan Coal Power Hydro Power Nuclear Power Solar Power Yunnan Guizhou Guangxi Guangdong Wind Power One of China s largest external independent power producers Generation portfolio diversified by geography and fuel type Challenges include overcapacity, strengthened environmental regulations, electricity sector reforms and coal price fluctuations Growth opportunities remain as markets reform and transition away from coal In 2017, 97% of ACOI (or EBITF) came from non-carbon emitting generation

32 Generation Portfolio* Wholly-owned Majority-owned Equally/ Minority-owned (2,465/1,865 MW) (2,709/1,916 MW) (19,924/5,026 MW) Wind Coal Coal For more information: Wind Projects (593/593 MW) Fangchenggang I (1,260/882 MW) Fangchenggang II (1,320/924 MW) Guohua (7,470/1,248 MW) SZPC (3,060/900 MW) Hydro Hydro Nuclear Jiangbian (330/330 MW) Dali Yang_er (50/50 MW) Guangzhou Pumped Storage Power Station (1,200/600 MW) # Huaiji (129/110 MW) Daya Bay (1,968/1,380 MW) 25% equity; currently purchasing 80% of output Yangjiang (6,516/1,108 MW) 17% equity, 5 of 6 units operational Solar Wind Jinchang (85/85MW) Xicun I & II (84/84 MW) Sihong (93/93 MW) Huai an (13/13 MW) Lingyuan (17/17 MW) Other wind projects (910/391 MW) # CLP wholly owns Hong Kong Pumped Storage Development Company (PSDC), which has contractual rights to use 600MW generation capacity * Including capacity purchase As at 30 Jun

33 On-grid Tariffs Electricity market in the Mainland China is regulated and on-grid tariffs are determined by National Development and Reform Commission (NDRC) Benchmark tariffs of RMB /kWh depending on location Additional De-NOx, De-SOx and dust-removal tariffs depending on individual plants Tariffs set periodically by NDRC to reflect coal input costs Coal Four-tier tariffs which vary by region depending on wind resource RMB /kWh, for existing projects approved before 1 Jan 2016 RMB /kWh for projects approved during 1 Jan 2016 to 31 Dec 2017 RMB /kWh for projects approved after 1 Jan 2018 Wind CLP Mainland China 2017 ACOI Non-carbon 97% 3% 20% 21% 45% 54% 14% 13% 13% % % Coal Wind Hydro Solar Nuclear A wide range of tariffs may apply depending on the individual project, seasonality and time of the day Hydro CLP Mainland China 2017 Approximate % Allocation of Market Sales Three-tier tariffs which vary by region depending on solar resource RMB /kWh, incl. national subsidies, for existing projects approved before 2016 RMB /kWh for projects approved during 2016 RMB /kwh for projects approved during 2017 RMB /kWh for projects approved after 1 Jan 2018 Solar 62% 78% 22% 38% Market Sales Planned Sales Benchmark Tariff for 2 nd generation technology in operation from 2013: RMB 0.43/kWh Tariffs for individual facilities may vary by technology employed or COD date Nuclear Market sales in 2017 predominately related to Fangchenggang coal-fired power station in Guangxi 33

34 Mainland China Yangjiang Nuclear On 12 December 2017, we completed the acquisition of a 17% interest in 6,516 MW Yangjiang nuclear facility in Guangdong (1,108 equity MW) GUANGDONG Earnings sharing commenced from 12 December 2017 Consideration Purchase consideration of RMB5.0bn (around HK$5.9bn) plus audited completion payment Total Investment: Not exceeding RMB7.0bn (~ HK$8.3bn) to full COD of 6 Units in 2019 Yangjiang Hong Kong Macau Daya Bay Units 1-4 in operation; Unit 5 commenced operation in July 2018; Unit 6 under construction and expected to commission during 2019 Market in 2018 Majority of output will be paid according to the nuclear benchmark tariff with the remainder subject to a competitive discount process MW 5,000 4,000 3,000 2,000 1,000 Non-carbon emitting portfolio(1) in Mainland China June 2018 Nuclear Under construction - Nuclear Renewables Under construction - Renewables (1) CLP equity interest and capacity purchase rights 34

35 India Generation Business 7% of Group Assets 2,948 MW generation capacity As at 30 Jun 2018 Annual ACOI Sipla Bhakrani Samana Mahidad Paguthan Jhajjar Tejuva New Delhi Khandke Mumbai Andhra Lake Chandgarh India Coal Power Gas Power Wind Power Solar Power Jath Veltoor Saundatti Harapanahalli Theni CLP has been investing in renewable energy in India for over a decade Diversified portfolio of wind, solar, gas and coal providing stable earnings platform Growth opportunities remain in renewable energy, particularly solar, but are becoming more competitive We will continue to look for investment opportunities in renewables and along the energy supply chain 35

36 Generation Portfolio Jhajjar (1,320/1,320MW) - 2x660MW supercritical coal-fired units - Return based on availability Paguthan (655/655MW) - Combined-cycle gas-fired power plant - Return based on availability Veltoor (100/49MW) - Return based on fixed tariff for 25 years at INR 5.59/kWh - CLP has option to acquire the balance of 51% owned by Suzlon India is a developing economy with a need for new generation capacity. It is a land of great potential and represents a primary growth market for CLP, with focus for growth on renewables and transmission business. It is expected that country will overachieve its 175GW renewable energy generation capacity target by end of March 2022 on the back of new schemes like floating solar, manufacturing-linked solar and offshore wind projects, new target for March 2022 is 227GW. CLP is committed to further expand its renewable energy portfolio on the back of supportive government policies. We are also seeking out opportunities along the energy supply chain to broaden the scope of our business in the country. Wind Projects (924/924MW) Return based on fixed tariff per individual power purchase agreement For more information: - Khandke 50/50 MW - Sipla 50/50 MW - Samana I & II 101/101 MW - Bhakrani 102/102 MW - Saundatti 72/72 MW - Mahidad 50/50 MW - Theni I 50/50 MW - Jath 60/60 MW - Theni II 50/50 MW - Tejuva 101/101 MW - Harapanahalli 40/40 MW - Chandgarh 92/92 MW - Andhra Lake 106/106 MW 36 As at 30 Jun

37 Southeast Asia and Taiwan Generation Business, 1% of Group Assets 285 MW generation capacity As at 30 Jun 2018 For more information: Taiwan Ho-Ping Vietnam Chiang Mai Thailand Vung Ang II Stable earnings from existing projects in Thailand and Taiwan Opportunities for low emission, high-efficiency coal-fired generation in Vietnam Watching brief with further potential for renewables Lopburi Bangkok Vinh Tan III HoChi Minh City Coal Power Solar Power Potential Development Ho-Ping (1,320/264MW) Coal-fired 20% equity interest Return based on availability and output Taiwan Vung Ang II (2x660MW) Potential development Coal-fired 24.2% equity interest Vietnam Lopburi (63/21MW) Full commercial operation in % equity interest Return based on utilisation Thailand Vinh Tan III (3x660MW) Potential development Coal-fired 24.5% equity interest Vietnam 37

38 Australia Cathedral Rocks Australia SA Retail 0.1M accounts Coal Power Gas Power Wind Power Solar Power Gas Reserve Hallett Qld Retail 0.1M accounts NSW/ACT Retail 1.4M accounts Adelaide Gannawarra Vic Retail 1.0M accounts Melbourne Mortons Lane Newport Generation & Retail Business 20% of Group Assets 4,989 MW generation capacity As at 30 Jun 2018 Waterloo Taralga Gullen Range Yallourn Jeeralang Integrated energy business serving 2.6 million customer accounts across southeast Australia Asset portfolio includes coal, gas and wind generation with an extensive range of long term renewables contracts Brisbane Narrabri Gas Project Mount Piper Sydney Boco Rock Tallawarra Coal (2,880/2,880MW) Yallourn (1,480/1,480MW) Mount Piper (1,400/1,400MW) Wind (580/494MW) Cathedral Rocks (64/32 MW) Mortons Lane (20/20MW)* Waterloo (111/56MW)* * Including capacity purchase arrangements Gas Resources Narrabri gas project (2C contingent resource of up to 1,795/359PJ) Gas Generation (1,579/1,566MW) Hallett (203/203MW) Tallawarra (420/420MW) Newport (500/500MW) Wilga Park (16/3MW) Jeeralang (440/440MW) Solar (50/50MW) Gannawarra (50/50 MW)* Contracted Renewables under development Additional 309MW of renewable capacity contracted and due to come online during 2018 and 2019 Gullen Range (166/166MW)* Boco Rock (113/113MW) * Taralga (107/107MW) * For more information: 38

39 Positive Momentum for Value Restoration ahead of plan Our Restore Value program has positive momentum and is ahead of plan Customer Business Improved customer service with higher transactional Net Promoter Score Introduction of mobile phone application A$m ACOI & ROIC % % 8% Significant investment in retail systems Energy Business Optimising asset portfolio to support the Customer Business including battery storage, flexible capacity and demand response Initial tailwind from strong increase in wholesale prices following closure of Hazelwood. Wholesale prices likely to soften as new renewables come on line Underpinned development of around 500MW renewables 500 6% % 200 2% % ACOI 2016 ROIC % 2017 A$m Actuals ACOI (before tax) ACOI (post-nominal tax) Invested Capital (Avg.) (1) 6,037 5,686 5,065 5,178 ROIC (2) 3.3% 4.6% 5.9% 9.2% EnergyAustralia will continue to drive process efficiency and invest in systems (1): Average Invested Capital consists of net fixed assets, net working capital, equity investments and intangibles, excluding deferred tax assets & liabilities, financial assets, cash and cash equivalents, and short and long-term debt. Asset values are based on written down and post-impairment positions. (2): Return on Invested Capital = ACOI (post-nominal tax) / Invested Capital (Average). Note that ACOI is adjusted for nominal tax payable at 30%. 39

40 Energy Retail Market Conditions 100% Customer Churn 45% 40% 35% 30% 25% 20% 15% 10% 5% 80% 60% 40% 20% 0% EnergyAustralia Churn vs Market Churn Mkt Churn 1H 2017 Mkt Churn 1H 2018 EA Churn 1H 2017 EA Churn 1H 2018 Account Numbers VIC NSW SA QLD Total EnergyAustralia E-Billing Update 1H H H H H H H ,000 Ombudsman Complaints Paper Bill Customer Account (million) E-Bill 8,000 6,000 4,000 2, H H H H H H H 2018 Ombudsman Complaints/10k acct (LHS) Ombudsman Complaints volumes (RHS) EnergyAustralia continues to have below market churn rates (blended across electricity and gas) in the key states of Victoria and New South Wales, at 19% and 16% respectively. Continue to invest to improve customer experience and support customers including: Implementation of the new, simpler e-bill and proactive customer alerts Introduction of our first mobile app, which provides customers with usage and cost information Removal of fees to receive paper bills and settle accounts over-the-counter at Australia Post branches for all our customers Introduction of a fixed rate commitment plan (Secure Saver) which caps rates for a 2 year period Delivering initiatives through the A$10m additional funding for our hardship program announced in 2017 Cost to serve has increased with pressure from regulatory changes, energy affordability issues and implementation of Power of Choice reforms Ombudsman complaints have decreased despite disruptive conditions across the industry 40

41 Wholesale Market Conditions GW NEM Generational Capacity and Operational Demand Wind, Solar etc (LHS) 30 Hydro (LHS) Gas (LHS) 26 Coal (LHS) Demand (RHS) Source: Data from AEMO's Electricity Market Management System (EMMS) TWh Lower volatility reduced the cost to procure peak energy in NSW during H After a period of very high prices reflecting shortage after Hazelwood closing, forward prices are now moving downwards as market prices and regulatory schemes continue to promote renewable build National Energy Guarantee (NEG) design progressing, which will provide increased certainty on future investment decisions $/MWh Drought NSW Swap NSW Cap Year Ahead Swap & Cap Prices VIC Swap VIC Cap A$/MWh NSW Futures (A$/MWh) (Contract by Expiry) 80 Carbon scheme Extreme weather & plant closure Source: Australian Securities Exchange 0 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 1 Year Ago 3 Months Ago Today Source: Bloomberg data as of 3 July 2018, UBS 41

42 Appendix 3: Group Financials Ecogen Newport Gas-fired Power Station, Australia

43 Annual Group Financial Performance HK$M ^ Change Revenue 92,073 79,434 16% Operating Earnings Hong Kong and related activities 9,198 8,843 4% Local electricity business 8,863 8,640 Sales to Guangdong PSDC and Hong Kong Branch Line Outside Hong Kong 4,783 4,113 16% Mainland China 1,238 1,521 India Southeast Asia and Taiwan Australia 2,738 1,849 Others, net (674) (622) Operating Earnings 13,307 12,334 8% Items affecting comparability # Total Earnings 14,249 12,711 12% Operating earnings per share (HK$) % Dividends per share (HK$) % # Items affecting comparability in 2017 primarily include revaluation gains on investment properties and reversal of tax provision for acquired derivatives at EnergyAustralia mainly represented sales of an asset and impairment of Fangchenggang. ^ Comparative numbers have been restated for a change of presentation of other earnings from Hong Kong business to other earnings and unallocated items. 43

44 Annual Adjusted Current Operating Income (ACOI) HK$M Change Operating Earnings (Attributable to CLP) Exclude: Fair value adjustments 13,307 12,334 8% (138) 341 Net finance costs # (2,278) (2,371) Income tax expense (3,353) (2,914) Non-controlling interests (849) (850) ACOI 19,925 18,128 10% # Included the distribution to perpetual capital securities holders Operating Earnings Operating earnings was up from 8% to 10% excluding fair value adjustments of EA Adjusted Current Operating Income or ACOI ACOI equals EBIT excluding items affecting comparability and fair value adjustments, and includes Group s share in net earnings from joint ventures and associates Fair value adjustments Predominantly energy derivative contracts in EnergyAustralia reflecting a significant increase in wholesale prices (2017: Loss of HK$182m, before tax) Net finance costs # Lower finance costs as continued efforts to reduce costs more than offset a modest increase in borrowings Income tax expense Increase in earnings from Australia drives increase in tax expense Non-controlling interests CSG s 30% share of CAPCO 44

45 Annual Adjusted Current Operating Income (ACOI) HK$M ^ Hong Kong and related activities 13,222 12,809 ^ Dependable performance & continuing strengthening of infrastructure Mainland China 1,610 1,863 Higher earnings from non-carbon but lower earnings from coal India 1,511 1,383 Reliable performance across all assets Southeast Asia and Taiwan Higher coal costs & lower energy tariff in Ho-Ping Australia 4,086 2,436 Strong operational performance & favourable wholesale prices Unallocated Group expenses (660) (634) ^ Higher innovation and corporate costs partially offset by FX gains Total 19,925 18,128 10% increase (or +7% normalised for FX) HK$'m 22,000 Bridge from 16 ACOI to 17 ACOI Reconciliation from 17 ACOI to 17 Operating Earnings 20,000 18,000 18, , (312) 42 (134) 1,551 (194) 19,925 (2,278) 16,000 14,000 12,000 (3,353) (138) 13,307 13,307 (849) 0 10, ACOI FX Normalised Hong Kong 2016 ACOI Mainland China India SEA and Taiwan Australia Others 2017 ACOI Net Finance Costs Taxation FV NCI 2017 Operating Earnings ^ Comparative numbers have been restated for a change of presentation of other earnings from Hong Kong business to other earnings and unallocated items 45

46 Financial Capital Loan Balance - Type Currency of Bond Funding Export Credit Loan Term Loans Medium Term Notes/ Private Placement/ Bonds Money Market Line HK$M 30,000 AUD JPY USD HKD INR 30,000 25,000 25,000 20,000 36% 20,000 32% 15,000 15,000 10,000 52% 10,000 53% 5,000 5, % Note: The 2014 to 2017 figures include CAPCO and PSDC as subsidiaries of the Group after the acquisitions. For comparative purposes, we have included CLP Group, CAPCO and PSCD in the 2013 figures. 0 9% 100% 100% 3% 0 CLP Power EnergyAustralia CLP India 1 Hong Kong Dec 2014 Dec % 5% CLP Power Hong Kong CAPCO Dec % 100% EnergyAustralia CLP India1 Note: All foreign currency bonds issued by CLP Power HK were swapped back to HK dollars to fully mitigate exchange rate risk. The Group engaged in new financing activities during the year in support of the operation and business growth. In addition, we continue to solicit re-financing at competitive terms. 46

47 CLP CAFF & Credit Ratings CLP Climate Action Finance Framework (CAFF) Support the transition to a low carbon economy by attracting socially responsible, sustainable financings, to support qualified investments that reduce the carbon content of energy generated and increase the efficiency of energy usage DNV GL is the second opinion provider In Jul 2017, the first Energy Transition Bond (US$500m 3.25% due 2027) was issued under CLP CAFF Energy Transition Bonds Use of Proceeds Natural gas fired power plants with emissions less than 450 gco2/kwh to support the transition from coal fired power in markets with limited renewable energy resources Project Evaluation Proceeds Management Reporting CLP Climate Action Finance Committee Dedicated bank accounts Annual report assured by third party New Energy Bonds Renewable energy Energy efficiency Low emissions transport infrastructure Long Term Rating Foreign & Local Currency (Outlook) Short Term Rating Foreign & Local Currency Standard & Poor s A (Stable) CLP Holdings CLP Power HK CAPCO EnergyAustralia Moody s A2 (Stable) Standard & Poor s A+ (Stable) Moody s A1 (Stable) Standard & Poor s AA- (Stable) Moody s A1 (Stable) Standard & Poor s A-1 P-1 A-1 P-1 A-1+ P-1 -- BBB+ (Stable) Over the years, CLP remains committed to maintain strong investment grade credit rating. For more information please refer to our website. 47

48 Relative Performance % Total Returns - CLP vs HSI and BWEI (2013 to 1H2018) (Base: 31 December 2012 = 0%) H 2018 CLP Holdings Hang Seng Index (HSI) Bloomberg World Electric Index (BWEI) Total Returns = capital gain plus dividends, and assuming dividends are reinvested at the prevailing price Source: Bloomberg CLP Holdings Limited listed on the Stock Exchange of Hong Kong (00002) Constituent of the HSI, BWEI & Dow Jones Sustainability Asia Pacific Index One of the eligible stocks included in Southbound Trading through Shanghai Hong Kong Stock Connect and Shenzhen Hong Kong Stock Connect Traded over the counter in the form of American Depositary Receipts in the U.S. (ADR code CLPHY) 48

49 Additional Resources * To be published in mid-august

50 Notes Thank you 50