Clp Holdings Ltd S/Adr

Good afternoon, everyone, and welcome to CLP Holdings' 2026 Interim Results Briefing. My name is Marissa Wong, Head of Investor Relations, and it's a pleasure to have you with us today. I'm joined by our Chief Executive Officer, Mr TK Cheung, and our Chief Financial Officer, Mr Alex Kaiser. Our interim results was announced with the Hong Kong Exchange at midday today. Both that announcement and today's presentation are now available on the CLP IR website. Today's session is being recorded. The archive will be posted on our website shortly after we conclude. Before we begin, I'll direct your attention to the disclaimer on slide two. And today's agenda will start with TK providing our first half highlights. Alex will then talk us through the financial results and TK will return to share our strategic outlook. We will then move to a Q&A session, and we very much welcome your questions and engagement. With that, I'll now hand over to TK to begin the briefing. Over to you, TK.

Thank you, Marissa. Good afternoon, everyone, and thank you for joining us. The first half of 2026 was a strong start to the year, set against continued global energy market volatility and evolving market conditions. The group delivered solid earnings growth while positioning itself to capture the opportunities reshaping our sector, rising demand from data centres and accelerating energy transition. Our performance reflects three consistent themes. First, a strong earnings performance led by our regulated Hong Kong business, where continued capital investment is driving stability and growth, alongside improved contributions from every region. Second, we made tangible progress on portfolio value creation and capital discipline. We delivered a decarbonisation milestone with the sale of Jajaco plants. We delivered capital-efficient funding through our inaugural PandaBond issuance, enabling self-funded structure for our Chinese mainland renewables platform. and we continue to direct growth capital towards enabling infrastructure for the energy transition with a clear focus on returns. And third, our operational excellence and transformation remain at our core. Our group-wide efficiency and digitalization agenda is delivering recurring benefits while our transformation programs are building leaner businesses, positioning us for the next phase of performance. Now turning to the highlights. Financially, the Group's operating earnings before fair value movements were up 10% to over HK$5.7 billion. Total earnings have risen 7% to nearly HK$6 billion on the gain of Jar Jar sale. The Board has recommended a second interim dividend of 63 cents per share, bringing total interim dividends to $1.26 per share. Safety remains our highest priority. Following the loss of a contractor working at Castle Peak Power Station in May, actions from the investigation are being implemented across the group. Total recordable injury rate improved during the half as we continue to strengthen critical risk management and safety controls. Reliability measured by unplanned customer minute loss was slightly impacted by extreme weather and power supply incidents in Hong Kong. Nevertheless, Hong Kong's network reliability stood at 99.999%, which remains exceptional by world standards. On the customer front, we added more accounts in Hong Kong, while competitive dynamics in Australia led to a decline in numbers. In terms of generation, electricity send-outs and capacity declined marginally, a result of our exit from Jaja. I will now hand over to Alex for the financial results.

Thank you TK and good afternoon. A summary of the key metrics. Earnings before interest, taxes, depreciation and amortization and fair value movements increased by 9% year-on-year to HK$13.6 billion. Operating earnings before fair value movements increased by 10% to HK$5.7 billion. Adjusted for the fair value movements and items affecting comparability, total earnings were close to 6 billion, an increase of 7%. Capital investment of 7.3 billion was lower despite higher Hong Kong SOC capex, reflecting disciplined capital allocation across our businesses outside of Hong Kong, where we continue to invest selectively. Total dividends per share declared for the first half to 26 was $1.26, same as last year. Let's go now into the details. The group performance was anchored by a strong Hong Kong business performance and supported by improved contributions from every region. Corporate cost allocation optimisation improved our unallocated expenses by 17% coming into a fourth consecutive year of savings. Below the line, fair value movements on Energy Australia's forward energy contracts were less favourable compared to a year ago. Together, with a $356 million contribution in items affecting comparability, primarily the gain on Georgia divestment, total earnings rose to nearly $6 billion. I'll now take you through the detailed performance and outlook for each business unit. All variances will exclude foreign exchange to reflect underlying performance of the business. Beginning with Hong Kong. Hong Kong delivered another strong result, with operating earnings up 6% to 4.8 billion. Earning growth reflected continued capital investments expanding the asset base, together with lower interest costs on a lower rate environment and proactive refinancing. We invested 4.8 billion of CAPEX, the majority in transmission and distribution, supporting Northern Metropolis development, data center expansion and grid upgrades. On daemon, local electricity sales rose 3.6%, reflecting stronger economic daemon. Data center daemon grew close to 12%, and transport electrification continued to accelerate, reinforcing their roles as key structural growth drivers. Looking forward, our 52.9 billion development plan remains on track. Near term, we are expanding infrastructure for the northern metropolis and data center connections alongside continuous grid reinforcement. As the Hong Kong government develops its first five-year plan, electricity will be central to Hong Kong's long-term growth and energy security. On decarbonization, we completed the clean energy transmission system upgrade and continue to work with government to expand zero-carbon imports over time. On supply security and tariffs, our policy remains resilient despite global volatility underpinned by a diversified fuel mix. Higher international fuel costs have led to an increase of 4% in average net tariff and we will continue to support customer affordability through a special fuel rebate for eligible customers from August to October. Turning to the Chinese mainland. The sector is in transition. Tariff reform, a supply demand imbalance amid softer economic demand, and renewables building out ahead of grid and storage capacity. Against this backdrop, operating earnings held broadly stable at 899 million, as nuclear reliability and renewable capacity additions absorb tariff pressures and renewable curtailment. Nucleur contributed positively with strong generation and reliable operation at Daibei and Yangjiang. Renewables also contributed positively as five new projects offset higher curtailment and lower tariff as well as weaker resources. Our minority coal portfolio saw stable dispatch at lower tariffs reflecting market competition partially offset by lower coal cost. Looking ahead, we are executing our transformation program, which TK will cover later in the presentation. We do expect continued market exposure to weight on Yangjiang's earnings as well as renewable and coal-fired tariffs. And we are actively managing our growth development of renewable investment in national load centers. Growth is self-funded, anchored in our PandaBond program and the Clean Energy Fund now in development. New earnings will be underpinned by long-term fixed revenues through Mechanics Tariff, Corporate PPA and Green Energy Certificates. The pipeline remains healthy with close to 1 GW in execution, including CLP China's largest wind projects to date. To Energy Australia, operating earnings were up 22% to 223 million. Energy Australia benefited from strong retail recovery that was partially offset by the energy business due to a softer market condition. On the energy side, good commercial availability across Yalloon, Mount Piper and the gas portfolio helped mitigate softer wholesale prices and lower price volatility. Higher fuel costs and the non-repeat of last year's late-clial gain also shaped the results. The customer business saw improved margins on the carry-through of last year's repricing and recontracting, as well as lower bad and doubtful debt, notwithstanding softer customer demand and continued competitive intensity. Enterprise costs were higher, as anticipated, reflecting continued investment into the multi-year transformation program, including the Tata Consulting Service Partnership. On outlook, we expect conditions to remain challenging. Wholesale prices and volatility have softened materially over the past six months, reflecting additional renewable and storage capacity, milder weather and fewer supply disruptions across the NEM. We expect the retail environment to remain competitive with margins aligned with this year's DMO and VDO determinations. Near-term, current conditions will weight on earnings. Though our long-term views remain constructive, underpinned by electrification, data center load and the pace of call exit. Against that backdrop, the reliability and flexibility of our portfolio and our transformation program are central to mitigating the changing market conditions. The transformation program is a deliberate cost-out, targeting around 250 million of enterprise cost savings by 2027 from the current cost base, excluding customer platform transformation costs and benefits. And on flexible capacity, we are advancing close to a gigawatt of new battery and pump hydro, with Vurin and Hallett batteries under construction. Moving to APRAVA, the completion of Jar Jar's sale marked a strategic milestone. Our Indian non-carbon platform continues to scale, with operating earnings up 41% to 105 million, though lifted by one of items. Thermal contribution was lower, as Jar Jar contributed for only part of the period ahead of the March divestment. Renewable platform performance was affected by softer wind resources and generation. Transmission was the largest contributor to growth, reflecting reliable operations and the non-repeat of last year's KMTL impairment. AMI earnings held steady but with lower than planned revenue realisation due to delayed project executions. And group adjustments and corporate expenses were lower, reflecting interest income received on delayed payments thanks to the resolution of the non-operational Paguthan dispute. With Jar Jar now exited, APRAVA's earnings mix shifts fully to non-carbon, contracted, regulated, and scaled into India's energy transition. In renewables, near-term generation will be shaped by monsoon season. Across renewables and transmission, we continue to build out our portfolio. Post-period end, we secured two new transmission projects of roughly 4.5 billion Hong Kong dollars, adding to our platform of long-dated revenues. And finally, smart metering continues to scale, with nearly 3.7 million meters installed, with roll-out continuing across seven states. Returning to Taiwan region and Southeast Asia.