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.

Beyond the existing portfolio, we continue to build towards a regional growth platform, with near-term execution focused on long-term contracted renewables in Taiwan region.

Turning to cash flow. Cash inflows were healthy at $8.8 billion, up $1.7 billion, driven by higher EBITDA from all business units across the portfolio, together with proceeds from the Jar Jar divestment. Total cash outflows were $11.8 billion, made up of $7 billion of capital investment and $4.9 billion of dividends payment. Of the capital investment, 5.3 billion was directed to our Hong Kong SoC business and 1.6 billion mainly to renewable projects in the Chinese mainland. Cash payment for dividends was higher as a result of the higher final dividends for 2025 financial year. Finally, our financial structure remains strong. Net debt was higher than at the end of 2025, reflecting our dividend payment cycle, with the higher final dividends paid in the first half, and was broadly in line with the level of the end of the first half of 2025. Liquidity remains sound, with around 20 billion of available facilities. We were active in the debt markets. The team successfully refinanced around HK$9 billion banking facility and medium-term notes for the Hong Kong SoC business at competitive credit spread. CLP China issued its inaugural 3-year 1 billion IMB Panda bond to fund renewable growth and Enurge Australia refinanced into a larger AU$600 million syndicated facility. Our debt profile remains well structured. Maturities are well spread, with a balance mix of 50% fixed and 50% floating rate. Our prudent financial management continues to be recognized by rating agencies. S&Ps and Moody's, we affirm our strong investment grade rating for CLP Holdings, CLP Power and Capco, all with stable outlook. Our financial situation provides a solid foundation to fund our growth and returns. I'll pass it now over to TK for the strategy update.

Thanks, Alex. The results Alex has walked you through show a group delivering with resilience. That's the foundation from which we are executing our strategy. Let me start with our regulated business in Hong Kong. Honours Bachelor of Science in Economics Honours Bachelor of Science in Economics Honours Bachelor of Science in Economics Honours The Schema Control Framework has stood for over 60 years, providing predictable returns and dependable earnings that are fundamental to our strength. Second, long-term infrastructure investment. The HK$52.9 billion five-year development plan anchors the CAPEX and Hong Kong's growth agenda with a major focus on expanding the power system to meet demands from data centres and investment of HK$2.5 billion for the initial phase of Northern Metropolis build-out. Third, operational excellence as the enabler. Sustaining a world-class electricity system is fundamental to how we invest and grow, underpinning our reliability, cost discipline and safety. And more broadly, the policy backdrop remains constructive, with electricity recommended as a strategic and economic infrastructure in the government's first five-year plan, reinforcing the long-term durability of our Hong Kong business. Building on that foundation, we are continuing to grow on the Chinese mainland, and doing it with discipline. We are mindful of the near-term environment, reform-driven tariff pressure, a supply-demand imbalance, and integration lacking the pace of renewables growth. We are calibrating to these conditions, focusing on three things to lift the quality of the platform as we execute towards 5 GW by 2030. First, transformation. To enhance returns and drive sustainable growth. We are centralizing operations to strengthen efficiency, with a deeper presence in Beijing and a new business center in Shanghai. At the same time, we are driving cost optimization through a more streamlined operating model, targeting around HK$100 million of savings from our current cost base. Second, and this is the heart of our discipline, value over volume. Every project must clear a minimum return hurdle, a low double-digit equity IRR. We are deliberate about where we build, targeting locations with strong demand and lower curtailment risk, and locking in fixed long-term tariffs to secure that return. and third, our self-funding model is well advanced to be in place by the end of the year. The inaugural Panda Bond gives us a low-cost onshore funding and a clean energy fund in development with further enhanced capital efficiency. The national energy transition is a powerful tailwind. 240 to 320 gigawatts of renewable energy per year 5 trillion RMB of grid investment and 300 gigawatts of storage by 2030. Our shift towards a disciplined, self-funded and return-led platform positioned us to capture that opportunity. In India, our profit growth is now about scaling a non-carbon platform in one of the world's fastest growing energy markets. With Jar Jar now sold, our earnings mix is built firmly around renewables, transmission and smart metering, while we continue to explore adjacencies like CNI and batteries. Our ambition is around 9GW of non-carbon capacity by 2030, building into India's national target of 500GW. Progress has been sound in a highly competitive market. No new bids were won in the first half, but post-period end, we secured two new transmission awards, roughly 800 MW equivalent. That is in line with our ambition of roughly a GW of growth a year, and it reflects our discipline. We bid only where returns and risks meet our thresholds. Growth is funded through a disciplined capital stack of self-generated cash and capital recycling, with projects targeting minimum low to mid-double-digit equity returns. The result is a contracted and predictable earnings base secured by long-term agreements. 35 years regulated tariffs for transmission, 25 years for renewables, 10 years for smart meters. Aprova remains a capital-efficient platform that enhances our earnings and long-term growth profile. Let's turn to Australia, where growth of flexible assets is central to delivering value and earnings resilience as the market transitions. As renewables enter the system ahead of co-retirements, flexible, dispatchable capacity becomes increasingly variable. Honours Bachelor of Science in Biomedical Engineering Honours Bachelor of Science in Biomedical Engineering We built our existing sites, making use of land, grid connections and workforce already in place, which reduces lead times and capital intensity. Execution is supported by our repeated success in winning under the Federal Capacity Investment Scheme, which supports project economics. Our partnership model on large projects delivers capital efficiency and enhanced returns, targeting minimum of high single-digit equity returns and enabling Energy Australia's energy transition on its own balance sheet. And Energy Australia's transformation program is building a more efficient and competitive business, improving customer outcomes and lowering costs over time. In the first half, Orana Battery reached commercial operations, adding 200 MW of flexible capacity through an off-tick arrangement. Hallett and Wurin Batteries are under construction, and Mount Piper Battery is progressing towards final investment decision. And that brings me to a longer-term opportunity at the Yalon site. While the retirement of Yalon in 2028 marks the end of coal-fired generation on the site, it also gives us the option to repurpose it. The hardest and most expensive parts of an energy project are already in place. Around 5,500 hectares of freehold land, existing high-voltage transmissions at 220 and 500 kilovolts, Thank you very much. and many more. Supporting energy infrastructure would be developed progressively, including battery storage and dispatchable farming generation using infrastructure already in place. These are early stages. Planning approvals and community consultations are still ahead. We will assess each pathway on its own merits. The value in the lawn is optionality, a way to extend the infrastructure we own beyond the coal plant's life and as and when the economics supports it. Before I hand over, let me bring this together in terms of what we believe makes CLP a compelling investment. Our proposition rests on four pillars. We are built by a simple idea. We are anchored in Hong Kong and growing across Asia-Pacific energy transition. Earnings resilience is the foundation. Our regulated Hong Kong business provides a stable core and our regional platforms building towards sustained earnings growth over time. The second is portfolio value creation and efficient capital growth. Through asset rotation, portfolio management and investing in the infrastructure enabling the region's energy transition while remaining firmly focused on returns. The third is operational excellence and transformation. Cost optimization, digitalization and our transformation programs in Australia and the mainland, building structural efficiencies and more competitive businesses and helping to self-funded our growth. And the fourth is shareholder returns. A commitment to consistent, sustainable dividends supported by resilient earnings, balance sheet strength and disciplined capital allocation. Taken together, these principles guide how we run the business, providing stability today and positioning CLP to create long-term value as the region's energy transition accelerates. I will now hand it over to Marissa.

Thank you, TK. Thank you, Alex. We will now move to the Q&A portion of today's briefing. For those analysts joining us on the Zoom platform, please use the raise hand function to ask a question live. And for those webcast participants, please submit your questions using the Q&A box located at the bottom right hand corner of your screen. With that, let's begin. We'd love to hear from you, Pierre. If you can hear me, go ahead and ask your question.

Hi, thanks TK, Alex and Melissa. Thanks for giving me the opportunity to ask questions. And firstly, congratulations for your first half result. I have three questions. The first one is about dividend. So I can see that in first half this year, you reduced your CapEx by 11% year-on-year, free cash flow also increased year-on-year. It seems without increase your TPS, so why don't you increase the TPS in the first half? And I remember in the last two years, you also increased the TPS by 5 cents, but mostly in the fourth quarter. Are you going to do the same thing this year? Second question is about your Australian retail business. It's good that seeing your retail customer business turn profitable in first half this year, but on page 12 of your presentation material, You mentioned that the retail electricity price in Australia will be lower because of the regulatory reform in 2026-2027. So are we expecting the improvement of the retail customer business in the first half should be relatively short term and then second half this year or 2027 would become worse again? The last question is about your Australian business as well, but is for the wholesale energy business. On page 43 of your presentation material, you show the wholesale price there. It seems that the wholesale price keep declining. So are we expecting your wholesale energy business earning will continue to drop in the second half? Or you can expect some capex mentioned by your management earlier that the contribution from the new project will be able to offset the reductions or the negative impact from the wholesale price. Thank you.

Thank you, Pierre, for the questions. I think for the dividend, our dividend policy has always been providing consistent and steadily growing dividend provided that the underlying business can be, you know, sustainably growing. So at the end it will be the board's decision on determining the level of dividend and our target obviously is to hopefully to grow the business and then providing an increasing dividend. So I think you will see in the coming quarters what kind of dividend we will provide. So for Australia, I think you rightly pointed out several challenges ahead of us. Firstly, in terms of the retail business, the video and the DMO coming out has been reduced. But that's because of the reduction in the wholesale market. So that's why the video and DMO actually came down. More importantly, I think for retail businesses, the competition between the retailers, and we do see there are increasing pressure of competition. So in the second half of the year, we do see pressure on it. But more importantly, I think, is how do we improve our business? So we are now undergoing transformation. and many more. Thank you. The Honourable Honourable Honourable Honourable More storage projects have come online, so basically the demand has been reduced and the volatility of the wholesale market has also reduced. And then at the same time, the generation plants are all quite reliable, cogeneration, renewable energy generation. So we do see this quite significant reduction in the wholesale forward price. So in the coming few months, or maybe even in 27, I think this will continue. But over medium to longer term, I think because of the retirement of cold generation, we do see support to the wholesale price. And our flexible fleet, I think the value actually would be more during that situation. And as I mentioned, for transformation, Energy Australia is going to become more competitive and we are also looking at different capital kind of efficient structure. For example, for our marine battery project, we successfully and many more. Thank you.

Thanks, TK. Next question from our analyst is from JP Morgan Vento. If you can hear me, go ahead and ask your question.

Hello, can you hear me? Yep, can. Okay. Thank you, TK, Alex, and also Marissa. Congratulations on the results as well. So I have also a few questions. So my first question would be on the Hong Kong business. So just wondering, like, do we have any update on, like, discussion or, like, Are you planning on the next development plan starting from 2028? And also, do we have any updates on our view on the potential mainland nuclear investment by our CLP? So that's the first question. On the second question, we saw from our first half results, our Chinese mainland results for the wind business, although we saw some curtailment and tariff impact, We actually see like meaningful increase in the operating earnings of the wind segment. So going into the second half or like into next year. So how should we think about like the renewables profits from Chinese mainland? And the third question would be on like our nuclear plants in China. So we saw like there was slight improvement in Daya Bay plant and Yangjiang saw some impact from tariff decline. So what should we think about the nuclear outlook into the second half and also next year? Thank you.

Thank you. Now for Hong Kong, I think for the development plan, the current plan covers the period from 24 to 28. So the process under the scheme of control is that for the next development plan, we're going to discuss with the government probably in early 28, if not late 27. So I think right now I would not have any particular information that I can share. Now regarding the potential nuclear imports, I think that's more longer term to achieve the 2035 decarbonisation target as set out by the Hong Kong government in the Climate Action Plan 2050. So by 2035 we need to achieve 60-70% zero carbon energy in our generation fuel mix. So the idea is to bring zero carbon energy from the mainland to Hong Kong, which consists of mainly nuclear but also with some renewable energy. and many more. The area 136 in Chang Kwan O, which is basically a piece of land with reclamation to be carried out, will be used or it has been earmarked for building the receiving station for that kind of zero-carbon energy from the mainland. And for that particular project, I understand the government is about to start the Thank you very much. Regarding China, now for wind resources or wind generation, because in China we have a few new wind projects coming online, so that adds to the revenue as well as profit. But at the same time, overall speaking, there is, I would say, more serious curtailment issues in China because of the supply-demand imbalance situation right now. The overall curtailment percentage in the first half is about 15%, which compares 9% last year. So we do see some increase in curtailment, which would be due to either so-called technical reasons because of the grid constraint or because of Wai Yan Chong Wai Yan Chong So we would enhance our presence, as I mentioned, in Beijing office and we will set up a new office in Shanghai so that we can be more closer to the authorities, to our stakeholders, to our partners and also to our customers. and so on. At the same time we will be going over value then volume so we will be focusing markets or provinces that are having higher growth, higher tariff level, lower curtailment risk and some of them actually we are also looking at more expansion project where our cost will be lower so that we can overall speaking we can increase our and our return. At the same time, we are also looking at some more capital efficient way of doing the business. For example, Alex also mentioned the Panda Bond. So that gives us actually a low cost funding source. We are also exploring what we call the Clean Energy Fund, which is also another platform that we can not only enhance our return, but also make our capital more efficient. So the third question, I think, is more on nuclear. Now, nuclear, Taipei and Yangcheng are quite different. Taipei is more like a cost-based return because there's a PPA signed with CLP power, so basically it's a cost-plus approach. And it depends on the performance of the plant. There could be some slight adjustment, but mainly it will be a cost-plus approach. For Yangjiang, because of higher reliability in the first half, we can see there are more generation, but which is offset by the lower tariffs in Guangdong. So there is a slight downward adjustment of the nuclear business. Now going forward, I think the nuclear business will be relatively stable in the second half because we foresee the generation will be More or less follow the same kind of reliability level.

Thank you. We've got Yong Hwa from HSBC on the line. Yong Hwa, go ahead and unmute yourself and ask your question.

Thank you. Can you hear me?

Yes, we can. Thank you.

Thank you. Congratulations for your good measure. And I would like to ask two questions. So I would like to ask about EA's plan to monetize the Yalung portfolio. Currently, EA operates only in Australia's retail and wholesale markets. So in the longer term, is EA looking to expand business beyond traditional utilities into areas like property development or EPC services? And the second question is, Could you please provide update for your new business entrance into the Vietnam East Power Market you discussed in the previous earnings report? And can I add one more? And if possible, could you please provide any breakdown in the current SOC CAPEX or the Northern Metropolis project? And if possible, could you please provide SOC CAPEX outlook for the Northern Metropolis project in the future? Thank you.

Thank you. Thank you, Yonghua. Now for EA, I think for the Yalon Energy Security Precinct, that is a piece of land with all the infrastructure ready, transmission, connections, water access. So it is, I would say, a very good site that we can and many more. Thank you very much. So I think that's more the current thinking. But I think you're currently still in a very early stage. We have not worked out the exact business model for this one. And we are now planning to do kind of like market sounding and try to collect more feedback from the market, what the market wants. The second question is more the new investment in the region, the growth market. I think near term we are more focusing on Taiwan region. In Taiwan, the regime is very mature. We have PPAs with Thai power. We have also corporate PPAs with big corporations, in particular TSMC. and more. So that will be the more near-term focus. For Vietnam or for Laos, I think it's more medium-term, because I think doing business in those markets will take some time. And also, for example, in Vietnam, I think the market is also developing. There are new regulations that are favouring corporate PPAs, which we think is good. So we are also Director General of the Department of Health and Human Services and many more. I think the discussion with the government

And Yonghua, if you refer on slide 18, that gives you the breakdown 72% into T&D for the SOC CapEx for this development plan. We've got a question from Qi Kang from Huatai. Qi, if you can hear us, please go ahead and ask your question.

And thanks to Kei, Alex and Marissa. I appreciate the opportunity to ask questions and it is encouraging to see CLP3DOS grow in the first half of 2026. I have a question related to the Hong Kong business. Could you please provide further details regarding the Compon O zero carbon power receiving terminal? We would like to know the projected capacity of the power terminal. The expected year to commence capital spending and the types of electricity to be imported in the future. Specifically, can we confirm whether the imported power will be 100% nuclear power? Can we understand that projects capex will likely to be covered under the capital expenditure envelope of the next five-year SOC development plan? Could you advise whether this view holds? Thanks.

Okay, thank you. Thank you for the question. Now, for the so-called zero carbon receiving station in Chang Kwan O, that will be built in the area 132. As I mentioned, because this is to fulfill the target set by the Hong Kong government in the climate action plan 2050, so by 2035, we need to have that zero carbon energy. and many more. Building such a facility, the building time may not be that long. More importantly, actually, is the design, the planning, as well as the permitting for such project, because this is a cross-border kind of project from Guangdong to Hong Kong. So I do not expect... Now, obviously, for this development plan, there would not be any significant capex. There could be some studies that will be done. But then maybe even in next year plan from 2020, I think that would be the time that will capture most of the capex of the project, if there are any, because the commissioning year probably will be 2035. So in terms of the types of import, again, if you look at government's climate action plan, 2050, Tung Keung Chiang MHKIE The Waste to Energy Facilities in Hong Kong. And CLP is also doing fee-in tariff, so we have actually more than 400 MW rooftop solar already in Hong Kong. Tung Keung Chiang MHKIE, and many more. Thank you very much. and many more. We will see when we have more information. For renewable energy import, the lead time is even shorter. For example, building a wind farm, it could be two to three years. Importing renewables from the mainland, also the lead time will be shorter. I think the focus is more on importing nuclear rather than talking about renewable in the short to medium term.

We have Rob Coe, Morgan Stanley, thanks for joining us from Australia. Go ahead and ask your question.

Hello, can you hear me?

We can, thank you.

Yes, thank you very much. Congratulations on the result. My first question is in relation to the Energy Australia transformation program and I guess you had previously flagged the Tata back office side to that and I hope that's going well. Is there any update on billing platform for Energy Australia? And then my second question is in relation to the Yallourn data centre precinct that you have announced, which looks very exciting. I guess just to try to understand the opportunity for COP in that opportunity, could you maybe comment on whether developing the data centre helps you to defer rehabilitation or is it mainly about the power development? Thank you for joining us.

Thank you for the question. Now for the Energy Australia transformation, I would say the progress has been good. It's pretty much on track. So our plan is to Thank you very much. This transformation can bring down the back office cost, the overhead, by about HK$250 million basically next year based on the current cost base. So I think that's pretty much on track. Now for the billing platform, we are in an advanced stage of developing this. I'm sorry. And the current plan is to come to a conclusion on the solution towards Q4 this year. So with that decided then, the project will take about two and a half year to complete, but the benefit actually will only materialise when the project is completed. Transcription by CastingWords The initial idea, obviously, is the development of the site itself is already something that can add value to the business. But as I just mentioned, what would be the business model with data center operators? At this moment, we do not have any particular idea yet. We have some options in mind and we are going to do some market sounding exercise and hear feedback from the From the question of whether it delays the exit of your lawn? Oh no, at this moment I don't think there will be any so-called delay of exit of Yallon. We have an agreement with the Victorian Government on closing Yallon in middle of 28th and there has been no discussion about so-called extending or delaying the closure of the power station.

We have Pierre Lau with a follow-up question from City. Pierre, go ahead.

Hi, thank you for your time. Just one simple question. So regarding the data center project's potential to be built at the Yalon site, may I confirm that it will not be invested by CLP, it will be invested by third party, is it correct?

Thank you, Pierre. As I mentioned, the business model, we still have not come to so-called conclusion. It's still in the very early stage. We are going to do some market sounding, but EA being an electricity, I would say utility, obviously we will be looking at the electricity service first, but I think we will keep an open mind about the business model of the data centre development.

We do have one question online from Ortis Phan, Bloomberg Intelligence. He's asked about nuclear, which I think we've answered quite comprehensively, but maybe a position on where we are For the business in terms of geopolitics and impact from the Iran war, can you provide a response to that?

You mean the overall CLP business, right? Okay. Now, I think the Middle East conflicts or war basically resulted in very volatile international fuel market prices. And in different markets, actually, there are different impacts. In Hong Kong, it will be more relevant because Hong Kong, all the fuels are imported from outside Hong Kong. Right now, we have, from generation fuel mix perspective, more than 50% from gas, one third from nuclear, and then the rest coal. So gas will be the major fuel for generation in Hong Kong and the gas price is linked with oil price. So the way how we try to mitigate is first we have to ensure that we have sufficient gas for Hong Kong and right now we have three sources of gas, two from the mainland and one through LNG from the global market. In terms of supply, I would say we are slightly impacted because of the LNG supply, there have been some issues. But overall speaking, we do not have any problem of having sufficient supply for generation in Hong Kong. Now in terms of price, because of the linkage with brand oil price, so there will be some Tung Keung Chiang MHKIE, David John Simmonds, Eileen Burnett-Kant So from that angle, actually, we are pretty much protected in the Hong Kong market. But we will ensure that we will continue to provide sufficient supply to ensure reliable electricity supply. Now in Australia, we do not see any particular volatility in the wholesale market because of this Middle East war. But at the same time, we are also mindful about The potential impact on gas but in Australia we have our gas contract which has oil exposure basically pretty much hatched already and is in the coming few years so we do not see any particular issue. Now for China and India they are not exposed to this so called you know oil or international fuel price issue so

Thank you. Thank you, TA. Thank you, Alex. I think that's all the questions that we have. So thank you all very much for the very good questions and for taking your time to join us. Should you have any other follow up questions, my team and I will be available after this briefing to assist. And with that, we will conclude today's session. Thank you all and goodbye.